Starwood Capital infuses TRI Pointe Homes with $150 million for home building operations

Southern California home builder TRI Pointe Homes, LLC, Newport Beach, Calif., has entered into a strategic partnership with an affiliate of Starwood Capital Group Global, LP, a leading global private equity firm focused on real estate. The partnership infuses TRI Pointe Homes with $150 million in new strategic growth equity capital to drive the expansion of its home building operations in California and the Western Region.

TRI Pointe Homes is currently building distinctive single-family home communities in Irvine, Chula Vista, Riverside, and Oceanside, California. Using the significant capital investment provided by Starwood Capital Group, the company intends to seek market opportunities within an expanded geographic footprint and build a profitable home building platform that delivers more than 1,000 homes a year within the next five years.

“We have a very clear strategic vision to expand and fortify our position in the housing market,” stated TRI Pointe CEO Douglas Bauer. “Building upon our presence in Southern California, we plan to establish a Northern California Division in early 2011. Our alliance with Starwood Capital Group provides us with a capital structure and transaction pipeline to take advantage of local and regional market opportunities.”

Barry Sternlicht, chairman and CEO of Starwood Capital Group added, “Starwood Capital Group has consistently generated attractive returns for our investors through a disciplined investment strategy that is often counter-cyclical. We focus on strong partners and opportunities that can benefit from our market and operational expertise. I have known Doug for more than 20 years and followed his successes at William Lyon Homes. We are excited to be partners with the seasoned management team of TRI Pointe Homes, a team that has deep market knowledge and critical relationships in a growing region of our country. We look forward to working alongside them to build a successful homebuilding business and develop memorable communities across California and the West.”   

Responsible for originating and structuring the new partnership, Marc Perrin, Managing Director of Starwood Capital Group added, “Critical to our investment was the management team’s operational history of working together. The team’s operating philosophy revolves around their core values of quality, integrity and excellence and we are confident we will benefit from their authentic commitment to these values as we move forward as partners.”

TRI Pointe Homes was established in 2009 by Doug Bauer, Thomas Mitchell, and Michael Grubbs, three executives who have worked together for over 15 years in the home building and real estate development industries. Their combined real estate industry experience includes entitlement, land development, master planned communities, multi-use infill, and single-family home construction of a broad spectrum of product, in a variety of markets.    

“The dynamics of our industry have undergone transformative change,” Mitchell said. “We believe the diverse background in residential development that all of us bring to the table gives the company a unique ability to understand and take advantage of land acquisition and residential development opportunities in local and regional markets. Our partnership with Starwood Capital Group, will allow us to execute our business plan, take advantage of specific market opportunities and position the company to access both private and public equity and debt markets for future growth.”  

Grubbs emphasized that ready access to capital in responding to local market opportunities underscores the importance of TRI Pointe Homes’ partnership with Starwood Capital Group. “Experience is a key to success in this business, and we have that,” said Grubbs. “But capital is essential. Unencumbered by legacy assets or liabilities, combining our industry experience and coveted relationships in the financial sector, with our new capital strength, enables us to take advantage of market demand with greater flexibility than others in the industry.”

Bauer added, “The Company will focus its home design and building model around creating “a positive, memorable experience for the customer tailored to the unique lifestyle needs of the individual homebuyer. The new generation of home buying families have radically different ideas about the kind of home buying experience they want”.  Mitchell also added “they want to be engaged by the homebuilder at every stage in the process. We’re going to be combining personal interaction with technology so that we’re responsive to our customers needs.”

The investment bank, Moelis & Company, served as the exclusive financial advisor to TRI Pointe Homes on this transaction.