The acquisition will significantly increase DFH’s geographic operations in the
Deal Highlights:
- DFH acquired a backlog of 1,845 units that are expected to generate revenues in excess of
$1 billion over the next 12 to 18 months. - The majority of the assets acquired are homes under construction, which are anticipated to be delivered from the period immediately after closing and over the next 270 days.
- MHI stakeholders retained approximately
$100 million of finished lots previously held on balance sheet, effectively restructuring MHI as an asset-light homebuilder. This land bank structure provides DFH the option to take down the retained home sites over a 2-year period post-acquisition, and will remain in place as a revolving facility to finance MHI’s future land acquisition activity off-balance sheet. - During a second closing in the fourth quarter of 2021, DFH expects to acquire MHI’s model home portfolio of 90 units with an estimated retail value of
$65 million . DFH plans to market this portfolio to investors in a sale and leaseback arrangement, immediately generating significant cash flows that the Company plans to use to pay down its outstanding debt under the unsecured credit facility. - DFH issued Convertible Preferred Stock that is fully redeemable at the Company’s option in years 4 and 5, with the goal of zero shareholder dilution at a competitive annual rate of 9%.
MHI, doing business as
As part of the asset acquisition, MHI’s CEO and all of their employees will remain with the combined company and continue to operate the existing and new home communities under the
To consummate the transaction, DFH used cash on hand of
DFH is committed to its asset-light business model, and continues to hold land off-balance sheet, maintaining its discipline to carry outstanding debt in relation to work in process inventory only, which is short-term in nature.
The acquisition of MHI is the fourth in DFH’s history since May of 2019.
About
Forward-Looking Statements
Certain statements in this press release constitute “forward-looking statements” under the federal securities laws. These forward-looking statements are intended to be covered by the safe harbors created by the Private Securities Litigation Reform Act of 1995. When we use words such as “anticipate,” “intend,” “plan,” “believe,” “estimate,” “expect,” or similar expressions, we do so to identify forward-looking statements. These forward-looking statements regarding future events include, but are not limited to: future annual home production levels of MHI; the accretive nature of the MHI acquisition; DFH’s maintenance of industry-leading returns on shareholder equity; the level of shareholder dilution arising from the issuance of convertible preferred stock; the expected timetable and ability to consummate the model home portfolio acquisition and subsequent sale and leaseback arrangement; expectations for employees; the ability to integrate the MHI acquisition and to timely achieve the resulting expected operational and financial benefits; and market conditions and possible or assumed future results of operations, including statements regarding DFH’s strategies and expectations as they relate to market opportunities and growth. All forward-looking statements are based on DFH’s beliefs as well as assumptions made by and information currently available to DFH. Actual events and/or results may differ materially and adversely from such forward-looking statements as a result of certain risks and uncertainties including, but not limited to, DFH’s ability to successfully integrate the assets acquired and employees transferred in the MHI acquisition; the risk that DFH may not realize the anticipated benefits from the MHI acquisition; risks that the MHI acquisition disrupts current plans and operations and the potential difficulties in employee retention as a result of the acquisition; adverse effects of the COVID-19 pandemic on DFH’s business, financial conditions and results of operations and suppliers and trade partners; adverse effects of the COVID-19 pandemic and other economic changes either nationally or in the markets in which DFH operates, including, among other things, increases in unemployment, volatility of mortgage interest rates and inflation and decreases in housing prices; a slowdown in the homebuilding industry or changes in population growth rates in DFH’s markets; and other risks and uncertainties described herein, as well as those risks and uncertainties discussed from time to time in DFH’s other reports and other public filings with the
SOURCE:
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Media Contact – mediainquiries@dreamfindershomes.com
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