Beazer Homes, GSO Capital announce land deal

Beazer Homes, GSO Capital announce land buying deal worth up to $150 million

Associated Press

ATLANTA (AP) -- Beazer Homes USA Inc. and GSO Capital Partners announced Wednesday a deal in which funds managed by GSO will buy new land parcels from the major homebuilder for up to $150 million.

GSO is the financing arm of private equity firm Blackstone Group.

Under the deal, the GSO funds will acquire the land parcels identified by Beazer and then option finished lots back to the homebuilder.

Sterne Agee analyst Jay McCanless said in a note that the agreement should help Beazer boost its building. It's an "incrementally positive event" that bolsters confidence in Sterne Agee's estimates for Beazer in fiscal 2014, McCanless wrote.

The firm has a $21 price target on Beazer stock. Beazer shares have traded between $10.90 and $20.15 in the past 52 weeks.

Like other homebuilders, Atlanta-based Beazer was hit hard by the downturn in the home construction industry. The housing market began to recover last year, about five years after the housing bubble burst. Builders began to increase construction of new homes, partly because the supply of homes had thinned to extremely low levels.

Beazer said Wednesday that the infusion of capital from GSO will enable the company to expand its land development and take advantage of the strengthening housing market. The company, which builds homes in 16 states, completed 1,038 home sales during the October-December quarter, an increase of nearly 20 percent from a year earlier.

Doug Ostrover, a senior managing director of Blackstone and GSO co-founder, said in a statement that GSO views the deal with Beazer as the first step in "many successful future ventures" with the homebuilder.

Beazer shares rose 39 cents to $16.03 in midday trading. Blackstone shares declined 5 cents to $19.95.

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