After sale of homebuilder, Pulte signs replacing Dominion's
August 26, 2014
Pulte Homes signs replaced Dominion Homes signs yesterday throughout central Ohio subdivisions, the first visible sign of a major change in central Ohio homebuilding.
Pulte, the huge Atlanta-based homebuilder, announced yesterday that it had acquired Dominion, which means that for the first time, the largest builder in central Ohio will not be based in the area.
Within hours, signs welcoming buyers to Dominion communities were replaced by banners broadcasting Pulte Homes and Centex Homes, another Pulte brand. Beyond that switch, homebuyers might not notice much, at least at first, said Keith Tomlinson, the former CEO of Dominion Homes who will be Pulte's division president for central Ohio and Kentucky.
"We don't envision any major changes," Tomlinson said. "If anything, I think Pulte will be looking to invest more here."
Tomlinson said most of Dominion's staff will become Pulte employees, and he does not expect the acquisition to affect significantly the company's contractors. The Dominion name will remain only on a small company servicing warranties for existing Dominion homeowners, Tomlinson said.
In the deal, Pulte acquired about 8,100 lots owned by, or under option to, Dominion. The assets include 27 subdivisions in central Ohio, 11 in the Louisville, Ky., area and three in greater Lexington, Ky. Terms of the deal were not disclosed.
Richard J. Dugas Jr., chairman, president and CEO of PulteGroup, said Pulte had been looking to get into the Columbus and Louisville markets for some time and was attracted by Dominion's "fantastic land assets" in the two communities.
"In purchasing Dominion's real-estate portfolio, we acquired a number of well-located communities and immediately establish PulteGroup among the top builders in three new markets," he said.
Dugas said Pulte also was attracted to the Dominion management team, including Tomlinson, a former Pulte executive who took over Dominion in 2011.
Pulte will sell homes through its Pulte brand, which caters to move-up buyers, and its Centex brand, which targets entry-level buyers.
Dugas and Tomlinson said Pulte will introduce its home designs into the Columbus market but expects to keep some Dominion plans, at least in the short term, to keep architectural continuity in existing Dominion subdivisions.
"We've been on a consumer-inspired journey for four years now, retooling our product lineup," Dugas said.
"We tailor it to the region we build in and have a Midwest set of plans. We'll bring those to the Columbus market."
Dugas highlighted two features available in most Pulte and some Centex homes: an "everyday entry" akin to a mudroom off the garage where residents can unload; and a "Pulte planning center," a room off the kitchen with a counter where children can do homework or surf the Web. "Those have been very popular with homeowners," Dugas said.
Dominion is Pulte's first acquisition since it bought Centex in 2009, two years after Centex left the Columbus market.
Dominion, which at one time was publicly traded, has been privately owned since 2008, largely by Silver Point and Silver Oak investment funds. The company was founded by Don Borror in the early 1950s and changed its name to Dominion Homes in 1997.
PulteGroup, which operates the Pulte, Centex and Del Webb home brands, is the nation's third-largest homebuilder, according to Builder magazine. Last year, the company sold 17,766 homes and recorded total revenue of $5.7 billion. Pulte's average home selling price was $328,000 in its most recent quarterly report.
By contrast, Dominion Homes sold 857 homes for $168 million in revenue last year, for an average sales price of about $200,000, according to Builder.
Dominion has grown considerably in the past few years, last year overtaking rival M/I Homes as central Ohio's largest homebuilder.
The two builders, both based in central Ohio, have dominated central Ohio homebuilding for decades and have fended off efforts to penetrate the market by national builders such as Toll Brothers, Centex and Beazer Homes.
Ken Danter, who runs the Columbus housing analysis firm the Danter Co., said Pulte's entrance into the market could pay off for consumers.
"Pulte brings some national perspective to their product line, and I think that's good for the buyer," Danter said. "You'll see different floor plans and elevations."
Vicki Bryan, an analyst who covers the housing industry for Gimme Credit, cautioned that central Ohio consumers could suffer from Pulte's high home prices.
"What Pulte and most of the rest do is try to jump profits by jumping prices," Bryan said. "Most of the major builders, including Pulte, have outpaced the capacity of the buyer to afford the pricing."
Bryan said Pulte has an excellent balance sheet but has fallen behind other builders in opening subdivisions. Acquiring Dominion allows Pulte to instantly add more than 40 communities.