CHARLOTTE, N.C., Oct. 23, 2023 /PRNewswire/ — JTW Advisors LLC served as the buy-side M&A advisor to California-based Trumark Homes in its acquisition of Wathen Castanos Homes. The expansion into Central California will connect Trumark’s existing Northern California and Southern California divisions into one contiguous footprint. The transaction is structured as a “land light” deal. Trumark has acquired the homebuilding operations, 270 work-in-process (WIP) homes, 121 finished lots and an option to purchase 3,306 additional future finished lots. The Wathen Castanos ownership group will retain their land development business and will sell finished lots to Trumark over time.
Trumark Homes was co-founded by Co-CEOs Gregg Nelson and Michael Maples and is majority-owned by Japan’s Daiwa House Group. Trumark closed 448 homes in 2022 with revenue of $419 million.
“The Wathen Castanos acquisition is the next step on our path to building a homebuilding footprint from the Rocky Mountains to the Pacific Ocean,” said Trumark’s Chief Administrative Officer, John Willsie. “We are excited to welcome Wathen Castanos’ high-quality team into the Trumark family. The land-light structure will allow us to increase our overall capital turns and return on capital.”
Wathen Castanos Homes was founded in 1983. Joshua Peterson, Wathen Castanos CEO and co-owner, will stay on as the division president of Trumark’s newly formed Central California division. Wathen Castanos’ ownership group will maintain ownership of the land and will develop and deliver finished lots to Trumark.
“We are proud to have played a key role in structuring this transaction between Trumark and Wathen Castanos,” said Chris Jasinski, CEO of JTW Advisors. “The creative deal structure maximizes the objectives of both parties. Trumark inherits a proven homebuilding team that can focus on growing the homebuilding business in Central California with a dependable lot pipeline. Likewise, the selling group will continue owning and developing their land with the benefit of having Trumark serving as their well-capitalized lot monetization engine. This innovative and thoughtful deal structure maximizes value for both parties.”
Jasinski added, “We are honored Trumark has entrusted our firm with the responsibility of helping Trumark build out their west coast footprint. JTW is actively pursuing quality homebuilders on Trumark’s behalf. This Wathen Castanos transaction is a great example of the creativity Trumark will embrace in order to structure an M&A deal that is mutually beneficial to both the private builder selling his/her company and Trumark.”
This is the second homebuilder M&A transaction JTW has advised on in the past week, having also advised Richfield Homes in the sale of their Denver homebuilding operation to Landsea Homes. JTW maintains a healthy pipeline of homebuilder M&A deals in various stages.
In the context of the current mergers and acquisitions (M&A) environment for homebuilders, this transaction signifies the ongoing trend of consolidation within the industry. The housing market is poised for a wave of M&A activities, driven by various factors motivating both buyers and sellers. Buyers are pursuing economies of scale, geographic expansion, and enhanced market presence. Sellers are capitalizing on the opportunity to monetize their business. Well-run private builders with strong management teams and robust land positions should continue to attract attention from larger builders with greater access to capital, especially as capital becomes scarcer and more expensive in the current interest rate and lending environment. This creates attractive opportunities for private builders to consider strategic alternatives, including selling or recapitalizing their companies.
About JTW Advisors
JTW Advisors LLC is a boutique investment bank focused exclusively on the residential housing industry. With offices in Charlotte, Philadelphia, and Los Angeles, the firm provides mergers & acquisitions and capital advisory services to homebuilders, land developers, and building products companies. JTW provides both sell-side and buy-side M&A advisory services, including guiding clients through all stages of the M&A process: financial modeling, valuation, deal prep, positioning & marketing, diligence, and closing. For more information, visit http://jtwadvisors.com/.
Chris Jasinski, JTW Advisors,
, (704) 412-3080
SOURCE JTW Advisors LLC