In a deal worth upward of $450 million, PulteGroup is buying most of the assets of John Wieland Homes and Neighborhoods.
The arrangement calls for Wieland — whose namesake founder is a homebuilding icon who helped shaped Atlanta’s suburbs — to sell Pulte about 7,400 lots and 280 homes in a number of other cities, the two Atlanta companies announced Wednesday.
The deal has been in the works for several months as Pulte outbid several other suitors during negotiations with Wheelock Street Capital, which had bought control of the company in 2012.
For PulteGroup, which moved its headquarters from metro Detroit to Atlanta in 2014, the deal with Wieland is an opportunity to bulk up market share in coming years, since the two companies have virtually no overlap in the kinds of homes they build, Richard Dugas, the company’s chief executive, told the AJC.
“I would say you will see more housing built, not less.”
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The pact, to be completed in the first quarter of 2016, continues a trend toward consolidation in construction. Eight years after collapse of the housing bubble, homebuilding has not returned to pre-recession levels, while bigger builders account for more of what’s going up.
The share of construction by the top 10 builders has doubled in the past decade, according to Smart Numbers, an Atlanta-based real estate research company.
Pulte ranks sixth in homes built this year, with 455 by the end of October. Wieland ranks 12th, with 225. Combined they would vault into third place.
Wieland homes tend to be more expensive than average, so in terms of dollar volume, Wieland ranks 8th.
Long, spectacular boom
The company’s 45-year history echoes the long, spectacular boom of metro Atlanta, now the nation’s third-largest construction market, and the name has more cachet than most, said John Hunt, president of ViaSearch, an Atlanta-based market research company.
Branding usually matters only with items that a consumer repeatedly purchases, so it is rare in housing, said Hunt.
“It is difficult to brand housing, but if anybody has been able to brand it, John Wieland has.”
Founder John Wieland had remained chairman after the 2o12 deal with Wheelock but will have no role after the sale to Pulte.
A Harvard Business School grad who came south for an early career change, Wieland initially worked out of his Volkswagen. His first home site was in Clayton County.
Over time his subdivisions, and his signature sky-blue billboards, appeared all across the metro area.
Homebuyers became willing to pay a premium to purchase Wieland homes, Hunt said. His designs, characterized by traditional brick-and-siding exteriors and spacious interiors with high ceilings and lavish master bathrooms, set the tone for the market in the ’80s and ’90s.
An RV tour of homes
Wieland expanded into other southeastern markets but cut back after the housing bust. At one point in 2009, John Wieland personally went on an RV tour of his developments and spent the night in unsold homes in a bid to boost sales.
Connecticut-based Wheelock pledged a partnership that would bring new growth capital. During the 12 months ended September, Wieland finished 565 homes in all its markets. The homes sold for an average of $495,000 and generated $280 million in revenue, the company said.
“John Wieland’s legacy is tremendous in this city,” Dugas told the AJC. “John Wieland has been an innovator, not only in housing design, but in community design.”
Calls to John Wieland Homes and Neighborhoods were not returned on Wednesday.
In an interview with the AJC in 2011, Wieland said a builder must adapt no matter what happens with demand. That attitude made the difference, he said, after the bubble collapsed, the economy fell into recession and home prices in Atlanta plunged.
“We kept selling houses for the best price we could get for them,” he said. “And so I think that we are still here because we decided we could not change the environment. We had to go with the hand that we were dealt and that has always been my philosophy of life.”