Arizona Republic - February 2008
Phoenix-based private-equity company Najafi Cos. said today it agreed to purchase Trend Homes of Gilbert and some of its affiliates for $65 million.
The announcement came a day after the parent of Engle Homes, another Arizona home builder, filed for bankruptcy protection in Florida.
Under the Najafi-Trend agreement, Trend also will file for bankruptcy protection.
Assuming the U.S. Bankruptcy Court agrees, the home builder would emerge from the reorganization 90 days later as a company that is "healthier, stronger, better-capitalized and better positioned for growth than Trend has been in its 30-year history," according to a news release.
Trend Homes moved to the Valley from Salt Lake City in 1989 and has been building more than 1,000 homes a year since 2002. Housing analyst RL Brown said it was one of the pioneers of cluster housing, the trend toward putting full-sized homes on small lots.
Najafi makes investments of up to $2 billion in size across a variety of industries. In 2002, it purchased Network Solutions, a clearinghouse for ".com" and ".net" names, and sold it in early 2007 for $800 million.
Brown said the Trend sale is not a surprise because the home building industry is in such a slump. He expects more consolidations.
"I think it's clear that for a number of builders, the change in the market has caught them with excess inventory of houses, excess inventory of land and excess organization," he said. "And that all leads to financial stress. I think we'll see continued consolidation in the industry, in the region and nationally."
He predicts some builders will quit and others will try to buy competitors to gain market share.
Brown expects only 22,000 to 24,000 permits to be issued for new homes in the Phoenix area this year, a one-third of those issued in 2005.
