Three major investments reveal the long-term opportunity Berkshire Hathaway sees in America’s housing shortage.
Berkshire Hathaway CEO Greg Abel. Photo: Getty Images
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Berkshire Hathaway is snapping up homebuilding companies across the United States in a major bet on the housing market.
The Omaha, Nebraska-based holding company has made three major investments in homebuilding since Greg Abel succeeded Warren Buffett, according to Fortune.
In May, Berkshire acquired Taylor Morrison, the sixth-largest homebuilder in the U.S. The deal, which closed in July, was worth $6.8 billion in equity value and about $8.5 billion in enterprise value including debt. Taylor Morrison is set to become an even larger homebuilder under Berkshire’s ownership by combining its operations with the holding company’s Clayton Properties Group.
“Over time, we expect to unify our site-built homebuilding operations into a combined platform enabling us to deliver the dream of homeownership to more Americans,” Abel said in a press release.
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In early July, Mungo Homes, part of Clayton Properties Group, acquired South Carolina builder McGuinn Homes. The deal expands Berkshire’s footprint in the South. “Together, we’re well positioned to provide more attainable homeownership opportunities through a shared commitment to customer service and operational excellence,” said Wade McGuinn, founder and managing shareholder of McGuinn Homes, in a press release.
Most recently, in September, Berkshire increased its stake in homebuilder Lennar by 94 percent, according to calculations by housing research company ResiClub. It now owns roughly 11 percent of the Miami-based company, SEC filings show.
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In a September interview with CNBC, Abel stated that the Taylor Morrison deal reflects the holding company’s long-term position on the U.S. housing market.