Builder Capital and 400 Capital Management Close $400mm Land Banking Arrangement with Dream Finders Homes

Rhea-AI Summary

Builder Capital and 400 Capital Management have secured a $412 million land banking arrangement with Dream Finders Homes (NYSE: DFH). This deal involves the acquisition of over 4,000 residential home sites across Charleston, SC, Greenville, SC, and Nashville, TN. These sites, part of 25 active communities, will serve entry-level and move-up homebuyers with home prices starting in the low-$300,000s. This transaction supports DFH’s recent acquisition of core assets from Cresent Homes and strengthens its market presence. Builder Capital's portfolio has now grown to over 11,250 lots, reflecting a total project cost of over $1.4 billion.

Positive

• Builder Capital and 400 Capital Management secured a $412 million deal.
• Acquisition includes over 4,000 residential home sites in key markets.
• Sites span 25 active selling communities, targeting entry-level and move-up buyers.
• Home prices are competitively positioned starting in the low-$300,000s.
• The deal supports DFH's acquisition of Cresent Homes' core assets.
• Builder Capital's portfolio has grown to over 11,250 lots with a total project cost of over $1.4 billion.
• The transaction showcases strong strategic partnerships and market positioning.

Negative

• The $412 million transaction represents a significant capital outlay, which may affect DFH's short-term financial liquidity.
• High dependence on entry-level and move-up segments, potentially impacted by market volatility.

Insights

Financial Analyst

The land banking arrangement between Builder Capital, 400 Capital Management and Dream Finders Homes involves a substantial transaction worth $412 million. This deal significantly enhances DFH’s capacity to provide affordable housing in highly competitive markets like Charleston, Greenville and Nashville.

Key financial implications include:

- Capital Allocation: The acquisition of over 4,000 residential home sites will bolster DFH’s inventory, potentially leading to increased future revenue streams as these sites are developed and sold.

- Cost Efficiency: Acquiring land in bulk often results in cost savings compared to smaller, incremental purchases, which might positively impact DFH’s margins.

- Market Positioning: The transaction strengthens DFH's competitive position in the affordable housing segment, catering to both entry-level and move-up homebuyers, which is a growing market.

For retail investors, the scale of this acquisition could signal strong growth potential and a solid strategic direction for DFH. However, it’s essential to monitor how effectively DFH manages these new assets and integrates them into their broader portfolio.

Market Research Analyst

The acquisition of land across 25 active selling communities addresses a critical issue in the current housing market: supply constraints. By securing a substantial number of home sites, DFH can better meet the demand for affordable housing, particularly in regions where such options are limited.

Market Dynamics Insight: Entry-level and move-up homes are in high demand, but supply has been lagging, particularly in the southeastern United States. This strategic move allows DFH to capitalize on the unmet demand in these markets.

Long-Term Growth: The focus on markets like Charleston, Greenville and Nashville, where there is a robust population growth, positions DFH well for sustained growth. These regions are experiencing heightened demand due to factors like job growth, quality of life and relatively lower costs compared to other metropolitan areas.

For a retail investor, understanding the regional growth dynamics and the unmet demand in these areas can provide a clearer picture of DFH's growth potential. It is a positive sign that DFH is proactive in addressing market needs, which could lead to long-term value creation.

NEW YORK--(BUSINESS WIRE)-- Builder Capital (“Builder Capital”) and 400 Capital Management LLC (“400CM”) announced today the closing of a land banking arrangement with Dream Finders Homes (NYSE: DFH), acquiring over 4,000 residential home sites in Charleston, SC, Greenville, SC, and Nashville, TN. The $412mm transaction occurred in connection with DFH’s acquisition of the core homebuilding assets of Cresent Homes and will enhance DFH’s ability to deliver affordable housing products to these supply-constrained markets.

The acquired home sites, spanning over 25 active selling communities, will ultimately serve entry-level, as well as first and second time move-up homebuyers with finished home price points starting in the low-$300,000s.

“We are pleased to execute this transaction and acquire a great portfolio of home sites at significant scale,” said Bill Southworth, managing partner at Builder Capital. “This transaction shows our ability to meet the needs of our homebuilder partners, in this case a repeat customer.”

“With the closing of this transaction, our strategic partnership with Builder Capital has grown to over 11,250 lots of inventory and over $1.4 billion of total project cost,” said Chris Schiavone, Head of Private Credit Strategies at 400CM. “Builder Capital and 400 Capital have positioned themselves as leading providers of acquisition and development capital solutions to the residential housing market as evidenced by this large and important transaction.”

“The housing market is competitive and having strong partners allows us to be nimble and make better strategic decisions,” said Patrick Zalupski, CEO and Founder of Dream Finders Homes. “This transaction is a reflection of the strength of our partnerships and we look forward to exploring future opportunities together.”

About Builder Capital

Builder Capital was formed in 2017. Builder Capital’s mission is to provide capital for finished lot inventory to production homebuilders. The Builder Capital team has established relationships with production homebuilders throughout the U.S. and over the last 25 years has provided over $1.7 billion in funding for the acquisition and development of more than 30,000 residential lots across 275 projects.

About 400 Capital Management LLC

Founded in 2008, 400CM is an alternative credit asset manager led by a management team with over three decades of experience investing and trading in credit markets. The Firm is an established, process-oriented platform with a demonstrated ability to consistently generate competitive returns, develop capital markets businesses and create innovative solutions utilized throughout the market. The Firm offers investors a global platform that accesses differentiated credit investment opportunities through total and absolute return strategies in flagship funds and customized portfolio solutions. The team consists of 65 professionals across offices in New York and London, who collectively manage $6.4 billion for global institutional investors. To learn more about 400 Capital Management, please visit www.400capital.com.

About Dream Finders Homes

Dream Finders Homes (NYSE: DFH) is a homebuilder based in Jacksonville, FL. Dream Finders Homes builds single-family homes throughout the Southeast, Mid-Atlantic and Midwest, including Florida, Texas, Tennessee, North Carolina, South Carolina, Georgia, Colorado, and the Washington, D.C. metropolitan area, which comprises Northern Virginia and Maryland. Through its financial services joint ventures, DFH also provides mortgage financing and title services to homebuyers. Dream Finders Homes achieves its industry-leading growth and returns by maintaining an asset-light homebuilding model. For more information, please visit www.dreamfindershomes.com.

View source version on businesswire.com: https://www.businesswire.com/news/home/20240529391384/en/

Media

Prosek Partners

Ben Howard

(914) 552-4281

bhoward@prosek.com

Investors

400 Capital Management

Meghan Munchoff

(212) 312-3101

meghan.munchoff@400capital.com

Source: 400 Capital Management

FAQ

What is the value of the land banking arrangement between Builder Capital and Dream Finders Homes (DFH)?

The land banking arrangement is valued at $412 million.

How many residential home sites are included in the DFH land banking deal?

The deal includes over 4,000 residential home sites.

In which locations are the acquired home sites situated?

The home sites are located in Charleston, SC, Greenville, SC, and Nashville, TN.

What is the starting price point for homes in the newly acquired sites?

Homes in the newly acquired sites start in the low-$300,000s.

How many active selling communities are included in the DFH land banking acquisition?

The acquisition includes over 25 active selling communities.

What is the significance of the $412 million transaction for Dream Finders Homes?

The transaction enhances DFH's ability to deliver affordable housing products and supports its acquisition of core homebuilding assets from Cresent Homes.

How has Builder Capital's portfolio grown as a result of this transaction?

Builder Capital's portfolio now includes over 11,250 lots with a total project cost exceeding $1.4 billion.