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Meritage Homes
Corporation to Acquire
Colonial Homes of
Fort Myers/Naples Florida
- Meritage also Considering
Bond Refinancing -
Dallas
and Scottsdale, Arizona (February 9, 2005) — Meritage Homes Corporation (NYSE:
MTH) today announced that it has entered into a definitive
agreement to purchase the homebuilding assets of Colonial Homes of Fort
Myers/Naples Florida (“Colonial”), a privately held builder of single-family
homes and condominiums. The acquisition
is expected to close within the next week and is subject to the satisfaction of
certain conditions. Colonial closed 355
homes in 2004 at an average selling price of approximately $347,000, resulting
in home closing revenue of $123 million.
“We consider
Colonial Homes to be an ideal acquisition candidate,” said John R. Landon,
Meritage Co-Chairman and CEO. “Colonial
has a solid land position, controlling about 1,800 lots, and an excellent
product line. The Colonial culture is
compatible with ours, and we are confident that the Colonial management team is
capable of growing this division rapidly.
This acquisition is an important part of the Meritage growth strategy
that includes selective acquisitions, greenfield
start-up operations and expansion in existing markets. After completing our 17th
consecutive record year and announcing our start-up operation in Orlando, this
is a great way to begin the year. We
expect this transaction to be accretive to 2005 earnings and anticipate closing
approximately 400 homes in this division in 2005,” concluded Mr. Landon.
Tony Persichilli,
Division President of Colonial, will remain with the Company as President of
the Fort Myers/Naples division. “Tony
has a wealth of homebuilding and land development experience in the Florida
housing market and we are very pleased that he will continue to manage these
operations for Meritage,” added Mr. Landon.
“We look forward to the growth opportunities that he and his team will
bring to the Company.”
“I am very excited
to be a part of the Meritage team and look forward to helping grow this
division with such a well respected and quality homebuilder,” said Tony
Persichilli. “Meritage has a proven
track record as a leader in our industry and I am eager to be part of its
future success.”
Colonial Homes was
advised by Michael P. Kahn & Associates.
Meritage Considering Bond Refinancing
The Company is
considering refinancing all or a portion of its outstanding $280 million 9¾%
notes. If completed, this refinancing
would result in a significant one-time charge to earnings, but would also
result in significant ongoing interest savings.
About Meritage Homes
Corporation
Meritage Homes Corporation is one of the nation’s
largest single-family homebuilders, and is traded on the NYSE, symbol:
MTH. The Company is included in the
S&P SmallCap 600 Index and appears on Forbes’
“Platinum 400” list as number one in terms of five-year annualized total
return. Fortune
magazine recently named Meritage to its “Fortune 1000” list of America’s
largest corporations and included the Company as a “top pick from 50 great
investors” in its Investor’s Guide 2004.
Additionally, Meritage is ranked as one of Fortune’s Fastest Growing Companies in America, its fourth
appearance on this list in six years. In
its 18-year history the Company has built approximately 35,000 homes, ranging
from entry-level to semi-custom luxury.
Meritage operates in fast-growing states of the Southern and Western
U.S., including six of the top ten single-family housing markets in the
country. For more information about the
Company, please visit the Meritage website located at www.meritagehomes.com.
# # #
This press release
contains forward-looking statements within the meaning of the Private
Securities Litigation Reform Act of 1995.
Such statements include statements concerning our anticipation that we
can grow this division rapidly, that this transaction will close in the next
week, that it will be accretive to 2005 earnings, our anticipated number of
closings in Fort Myers/Naples Florida in 2005 and that we may refinance our
notes. Such statements are based upon
the current beliefs and expectations of our management and are subject to significant risks and uncertainties. Actual results may differ from those set
forth in the forward-looking statements.
With respect to the
Colonial Homes acquisition, these uncertainties include: that the Colonial Homes acquisition will not
close; the risks that the Colonial Homes business will not be integrated
successfully; that market and financing synergies anticipated from the
acquisition may not be fully realized or may take longer to realize than
expected; that unanticipated expenses and liabilities may be incurred; and that
the combined companies will lose key employees or suppliers.
With respect to the
potential refinancing of our outstanding bonds, these uncertainties include: that interest rates may increase and make
such a refinancing unattractive, that the costs and charges associated with
such a refinancing may be more than expected and that such a refinancing may
not be consummated.
Meritage’s business is
subject to a number of risks and uncertainties including: the strength and
competitive pricing of the single-family housing market; demand for and
acceptance of our homes; changes in the availability and pricing of real estate
in the markets in which we operate; our ability to continue to acquire
additional land or options to acquire additional land on acceptable terms,
particularly in our greenfield start-up markets; general economic slow downs;
consumer confidence, which can be impacted by economic and other factors such
as terrorism, war, or threats thereof and changes in stock markets; the impact
of construction defect and home warranty claims; the cost and availability of
insurance, including the unavailability of insurance for the presence of mold;
interest rates and changes in the availability and pricing of residential
mortgages; our lack of geographic diversification; our level of indebtedness
and our ability to raise additional capital when and if needed; our ability to
take certain actions because of restrictions contained in the indentures for
our senior notes and the agreement for our senior unsecured credit facility;
legislative or other initiatives that seek to restrain growth in new housing
construction or similar measures; the success of our program to integrate
existing operations with any new operations or those of past or future
acquisitions; our success in locating and negotiating favorably with possible
acquisition candidates; our ability to achieve certain pre-tax margins; our
dependence on key personnel and the availability of satisfactory
subcontractors; the impact of inflation; our potential exposure to natural
disasters; the impact of new accounting principles; and other factors
identified in documents filed by us with the Securities and Exchange Commission,
including those set forth in our Form 10-K for the year ended December 31, 2003
under the caption “Management’s Discussion and Analysis of Financial Condition
and Results of Operations — Factors That May Affect Our Future Results and
Financial Condition” and in Exhibit 99.1 of Meritage’s Form 10-Q for the
quarter ended September 30, 2004. As a
result of these and other factors, the Company’s stock and note prices may
fluctuate dramatically.
# # #