Green Brick Partners, Inc., Plano, Tx. (NASDAQ: GRBK) on Tuesday afternoon announced that Challenger Homes, one of Colorado’s leading private home builders, has become Green Brick’s sixth builder partner, giving Green Brick its first presence in the state.
Headquartered in Colorado Springs, Challenger Homes constructs townhouses, single family homes and luxury patio homes. Challenger is projected to deliver more than 400 homes in 2017, generating roughly $125 million in annual revenue.
Green Brick issued 1,497,000 new shares and, through a wholly owned subsidiary, acquired a 49.9% ownership of Challenger Homes through an investment in a newly formed entity, GB Challenger, LLC (“GBCH”). Green Brick may also have the opportunity to acquire an additional 20.1% of the Challenger Homes’ interest in GBCH or, in certain circumstances, all of Challenger Homes’ interest in GBCH on or after the third anniversary of the transaction.
With this strategic investment in Challenger Homes, Green Brick has expanded into Colorado Springs and the Pikes Peak Region. In January, Forbes declared the region one of the “10 Hottest Real Estate Markets to Watch” this year. One month later, Colorado Springs nabbed the No. 2 spot in U.S. News and World Report’s ranking of the “Most Desirable Places to Live” in 2017.
Green Brick said its acquisition of this interest in Challenger Homes fits neatly with the company’s five other builder partners. Tony McGill, Head of Investment Banking at Zelman & Associates, who advised Challenger Homes on the transaction, said, “Challenger Homes primarily focuses on the entry-level and move-down home-buyer market, so this new investment nicely diversifies Green Brick’s product and geographic offering while positioning the company for faster growth.”
Jim Brickman, Green Brick’s CEO, added, “Challenger has a superior culture, an exceptional management team, and a great lot position to fuel growth in 2018 and beyond. We are excited about entering into this partnership with Challenger Homes and gaining a presence in the dynamic Colorado Springs market. Our future plans include expanding Challenger Homes’ production efficiencies, operating skills and lower-price-point home-building model into other markets. This transaction should be immediately accretive to earnings per share.”
Brian Bahr, founder of Challenger Homes, said, “Green Brick is an award-winning, publicly owned home building and development company, so becoming their builder partner is very exciting. Unlike many public builders that only care about the numbers, Green Brick is committed to helping Challenger Homes maintain our great culture, retain our employees, and fulfill our mission of “Making Life Better One Home at a Time”. With Green Brick’s strong financial resources and Challenger Homes’ deep local relationships, the new partnership accelerates Challenger Homes’ vision for growth.”
