A good first year for merged homebuilding companies

It's been a year since the merger of Ryland Homes and Standard Pacific, creating CalAtlantic Group Inc., the nation's fourth-largest residential builder by revenue.

For Chris Gillen, the Broomall native who steers regional operations as president of CalAtlantic's Philadelphia division, it has been a good year.

"The merger put CalAtlantic in 26 markets," said Gillen, a veteran of 22 years in homebuilding who had joined Ryland about 18 months before the two companies decided to join forces.

"I am proud of our accomplishments," said Gillen, who oversees 20 communities in the Philadelphia region. The merger has opened up "growth opportunities" here and elsewhere, he said.

Both Ryland and Standard Pacific "were strong companies," with more than 100 years of homebuilding combined, he said.

"It is unusual in this business when two strong companies get together," Gillen said.

Typically, when builders "merge," a strong company with deep pockets buys a smaller one that is well-placed in a desirable market and offers an opportunity for the bigger firm to be the dominant player in that area.

Right before the merger was consummated, CalAtlantic had an equity market capitalization of about $5.4 billion and an enterprise value of about $8.4 billion, and it owned or controlled about 76,000 home sites.

In the 12 months ended June 30, 2015, the pro forma combined company delivered more than 12,786 homes, with combined pro forma revenues of $5.2 billion.

CalAtlantic anticipated that production, purchasing and other synergies from the transaction could result in annual cost savings of $50 million to $70 million.

Locally, Gillen said, CalAtlantic is third largest in market share.

Although many suburban builders have ventured into the city of Philadelphia in recent years with great success, "we will stick to the suburbs," at least for now, he said.

"It is harder to find large parcels in the city," Gillen said, adding that CalAtlantic favors developing near shopping, schools and transit.

"Still, we will look for opportunities in the city," he said.

The newest CalAtlantic project is Marshallton Walk in West Bradford Township, Chester County, which will have 12 "paired" homes and one single-family detached dwelling.

Much of what CalAtlantic is building in the area is developments of 25 lots or fewer - "more boutique," he said.

The exception is the Reserve at Rose Tree, a 113-unit townhouse community in Media, where prices start at $399,900.

"We look for bigger opportunities, but they must be closer to the community," said Gillen, who lives in Montgomery County outside Ambler and expressed enthusiasm for the revitalization of that town, Media and other Pennsylvania boroughs.

Marshallton Walk is an easy walk to the Marshallton Village Historic District, and thus to the Marshallton Inn and the Four Dogs Cafe.

It is one of the developments that "sets us apart from the competition," Gillen said, because of its emphasis on design and location.

"We worked very closely with the township and the district," he said, right down to the "herringbone brick sidewalks that tie into those" in the 18th-century village.

Home exteriors were designed in accordance with the historic guidelines of Marshallton and embody the stone-accented character of the village, he said.

"Everything has been designed to pick up on the unique character of the adjacent historic neighborhood," Gillen said.

Marshallton Walk is in "the land-development phase," he said. The model "paired" home has been completed, he added, emphasizing that these are not "twins" and that although they may share some walls, "there are no duplicated floor plans."

All have first-floor master suites, which indicates the downsizing target audience of these houses, which start in the low $600,000s.

aheavens@phillynews.com

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