Sue Smith/Sue Smith – stock.adobe.com
Cavco Industries, a manufactured housing construction company, agreed to buy competitor Solitaire Homes a little over one year after the acquirer purchased The Commodore Corp.
The purchase price for this deal totals $93 million before certain adjustments that will be determined upon close of the transaction. Cavco expects to fund the acquisition entirely with cash it has on hand.
The Commodore deal, valued at $153 million, was also funded by Cavco using cash on hand.
For calendar year 2021, privately held Solitaire Homes had pro-forma earnings before taxes, depreciation and amortization of $16.5 million.
On the other hand, Cavco reported for the three-month period ended July 2, 2022 — its fiscal first quarter of 2023 — net income of $59.6 million. But its financial services line, which includes its mortgage banking business, had a loss from operations of $75,000 for the quarter.
Cavco is the parent company of CountryPlace Mortgage, which is approved by Fannie Mae and Freddie Mac as a seller/servicer, and by Ginnie Mae as an issuer. Solitaire’s website mentions it can assist borrowers in getting a Federal Housing Administration mortgage or bank loan, as well as chattel financing and land in lieu financing.
Supporting manufactured housing is a requirement in the government-sponsored enterprises’ Duty-to-Serve plans
On Oct. 18, the FHA put out a proposal looking to boost the loan limits in its Title 1 Manufactured Home Loan Program to $109,805 for both land and lot from $92,904 currently.
Solitaire operates retail stores in Oklahoma, Texas and New Mexico. It has factories in Mexico, as well as in Oklahoma and New Mexico.
“The addition of Solitaire Homes to our existing manufacturing and retail system strengthens our position in the Southwest and expands our manufacturing capabilities into Mexico,” said Bill Boor, Cavco’s president and CEO, in a press release.
Cavco will still have a significant cash position available for other strategic investments after it completes this acquisition, expected by the end of its fiscal year on April 2, 2023.
