In today’s housing environment it’s beneficial to have a different approach. And, that’s exactly what Dallas-based Green Brick Partners (NASDAQ: GRBK) has. The publically traded company has access to funds that it’s using to support private builders and each of the builder’s niches.
In this short video, Jim Brickman, CEO at Dallas-based Green Brick Partners, speaks to the how he’s managing growth in very crowded markets.
Green Brick leverages its volume to provide builders, of which it owns a 50% to 80% controlling interest, with land and other opportunities. And balances that, cumulatively, to create a strong balance sheet. Working with the different builders and encouraging them to keep their brand also provides Green Brick with the ability to offer a wide range of product and price points in strong markets.
Currently, Green Brick has nearly 4,600 lots in Dallas, a market that is entering year seven of constrained supply, where most communities are 80% built out. As Brickman points out in the video, markets that have such limited supply are much more involved in the entitlement process, creating additional barriers to entry for builders. Green Brick is able to help the builders work with local jurisdictions, providing information and resources that would be much more taxing for the small builder.
The company is focused on high growth markets in Texas, Georgia, Colorado, and Florida and now has approximately 6,300 well-located residential lots.
A recent builder addition was GHO Homes. Bill Handler, CEO of GHO Homes, says that Green Bricks extensive knowledge of the industry helps him manage his operation, narrowing his focus to what he needs to focus on to keep his competitive edge.
“This local approach, to me, provides the ability to compete and do what we have done to be successful, including adapt quickly and target product and policies to our local market,” says Handler. “In addition keeping our identity and brand but having the support, and capital that Green Brick can provide was very attractive. Due to the flexibility and creativity in the structure of our deal, I feel we are aligned in our goals, and interests.”
The marriage of the two companies provides GHO Homes capital opportunities that they wouldn’t have otherwise had, and, that will lead to practical growth. As Handler says, “We are focused on solid returns on capital and not just doing more to do more.”
Handler also admits that Green Brick will help GHO Homes react quickly and aggressively to opportunities, without losing its conservative nature. The scale is the important part. Green Bricks will be able to leverage scale for all its builders.
