The race for Utah's homebuilding top spot is heating up.
The parent company of Richmond American Homes, the Wasatch Front's second-largest homebuilder, announced Tuesday it has agreed to buy certain assets of Springville-based Salisbury Homes for an undisclosed amount, putting the company in even closer competition with long-standing local leader Ivory Homes.
Ivory has led the field along the Wasatch Front for 18 consecutive years, according to Construction Monitor, a publication that tracks home construction.
In 2005, Ivory homes pulled 1,023 home permits valued at $208 million, according to Construction Monitor's year-end tally. Richmond American Homes, a subsidiary of Denver-based MDC Holdings Inc., pulled 878 permits valued at $141.8 million.
The Richmond American/Salisbury Homes deal included 467 finished lots and 11 model homes in 10 communities, from northern Utah County to southern submarkets around Provo. Upon completion of the deal, Richmond American said it will be building in every major submarket in the Salt Lake area.
"We are excited about the strong economic indicators in this market and believe there is a bright future for Richmond American Homes' Utah operations," said John Stubbs, president of Richmond American Homes of Utah Inc. "Richmond American Homes is dedicated to the Utah market and will continue a strategy of wise growth to further establish ourselves as a market leader."
According to Construction Monitor, the Wasatch Front market has seen a near-40 percent bump in single-family homebuilding permits since 2000.
As part of its growth strategy, Stubbs said Richmond American will add about 30 employees — in sales, construction and administration.
No other acquisitions are planned at this time, but Stubbs said the transaction with Salisbury Homes will serve as a potential source of additional residential lots for future growth. The deal announced this week gives Richmond American the chance to buy up to 725 additional finished lots throughout the Wasatch Front market, including Salt Lake, Utah, Davis and Tooele counties.
Richmond American said it expects its purchase to lead to more than 100 home closings in 2006 and more than 250 home closings in 2007. The company's acquisition of these assets will not have a significant impact on its balance sheet or debt-to-capital ratio, MDC Holdings said in a statement, and no goodwill will be recorded in connection with the purchases.
Rick Salisbury, owner of Salisbury Homes, said Tuesday that his company will continue, but it will shift its focus from building single-family homes to land acquisition and lot development.
"The offer was good. The timing was good for them, and for me," Salisbury said.
As part of the agreement with Richmond American, Salisbury will no longer build homes along the Wasatch Front. However, it will continue its building activities in Washington County, Salisbury said.
Going forward, Salisbury Homes will trim its roster by about 70 percent, or 20 to 25 people.
E-mail: jnii@desnews.com