With the financial clout of Berkshire Hathaway Inc. at its back, an Austin-based production homebuilder has ambitious plans to move into other Texas markets.
Brohn Homes, co-founded by brothers Adam Boenig and Aaron Boenig, has been acquired by Tennessee-based Clayton Properties Group, a division of Clayton Home Building Group, which is part of the Berkshire Hathaway (NYSE: BRK) empire. Terms of the deal, which closed April 6, weren’t disclosed.
Formed in 2003 as a custom builder, Brohn Homes has seen solid organic growth since pivoting after the recession and housing downturn in 2008 into a production builder focused on affordable homes. Last year, the company sold 270 houses and closed on 253 homes across 12 communities.
By contrast, Clayton, which is based in Maryville, south of Knoxville, built more than 48,000 homes nationwide in 2017 — from site-built houses to college dormitories, apartments and tiny homes.
Aaron Boenig said he and his brother, who are both co-presidents at the company, were introduced to Clayton Properties last summer through a builder advisor group. At the time, Brohn was really not intending to sell the company, but Boenig quickly realized the two sides were on the same page, so the deal was done after a nine-month “dating process,” he said.
“It’s not a full takeout where you’ll work for two years and then leave. It’s a long-term play. We can use Berkshire Capital’s deep pockets to pull our personal risk off the table that had constrained our growth,” he said. “[Clayton]’s culture is aligned with ours. It’s a people-oriented company, and that’s hard to find.”
The company has been focused on its Waterloo line of affordable homes that start at less than $200,000. The entry-level product is a 1,300-square-foot home with three bedrooms for $180,000, increasing up to the $260s.
Keith Holdbrooks, president of Clayton Home Building Group, said in a statement that the Waterloo line was an attractive part of the equation in inking the acquisition.
“Brohn Homes immediately impressed us with their creativity and variety of homes,” Holdbrooks said. “Their willingness to try new ventures, such as the innovative affordable line, and focus on growth, are areas of importance for our industry.”
More chunks of land under contract
Though Brohn has been strictly focused on the Austin market, and has four new parcels of land under contract for its next phase of local growth, the company is already eyeing a land deal in San Antonio that it hopes to close by the end of the year.
The long-term goal is to enter the Houston and Dallas-Fort Worth markets in 2019 when the full clout of the Clayton deal is in force, Boenig said.
For now, Boenig said the company is extremely bullish on a pair of emerging Central Texas markets, Kyle and Elgin.
Adam Boenig told ABJ that the company has four parcels of land now under contract and working through entitlements that stretch across the Central Texas footprint, and that he already has “four other deals on his desk.” The four recent closings include:
234 acres in Elgin, east of Austin on State Highway 290;98 acres in Kyle, south of Austin, close to Lehman High School on the east side of I-35;71 acres in Austin, off State Highway 290 near Circle Drive and Fitzhugh Road, about a mile from another Brohn development, Cover Bridge;A 25-acre infill project in Round Rock on Sam Bass Road on the west side of I-35 near Behrens Ranch, for its Brohn product homes aimed at first-time and move-up buyers ranging from $218,000 to the $500s.
Last September, Brohn moved its headquarters into a 6,000-square-foot space at 6720 Vaught Ranch Road near FM 2222. It has 46 employees but more hiring is expected in light of the acquisition, Aaron Boenig said.
Largest Austin-area homebuilders by Metrostudy
Ranked by Metrostudy annualized production builder rankings: No of homes closed from Q3 2016 through Q2 2017
Rank Homebuilder Metrostudy annualized production builder rankings: No of homes closed from Q3 2016 through Q2 2017 1 D.R. Horton Homes Inc. 1,272 2 KB Home 1,014 3 Lennar Homes of Texas 660 View This List