One of Hawaii's largest home builders, Schuler Homes Inc., said Monday it acquired Rielly Homes Inc. of Newport Beach, one of the few large independent home builders remaining in Orange County.
Terms were not disclosed. Rielly sold 165 homes last year, primarily in Southern California and Arizona, generating sales of about $50.6 million. The privately held company does not disclose profits.
More important, Rielly controls about 3,200 lots that are earmarked for residential development in the two states. Schuler acquired Rielly for its management team and its land holdings, said James Schuler, chairman and chief executive of Schuler.
The acquisition continues a trend in the Southland in which national and global companies are building the lion's share of new homes, forcing smaller builders to compete for market niches, be acquired or simply leave the market.
Orange County was dominated by major independent home builders through the 1980s. But federal reform of banking laws, which limited the amount of money financial institutions could lend to builders, and the recession of the early 1990s caused many developers to sell or go out of business.
The trend has claimed even the region's biggest independents. Los Angeles-based Kaufman & Broad Inc. last year bought Lewis Homes of Upland, once the nation's largest privately held home builder, for $593 million.
Of the Southland's 85 largest home builders, only seven independents based in Orange County had more sales than Rielly did in 1998, according to a Times survey of the industry. Eight others are either publicly held or are divisions of bigger companies.
Rielly was founded in 1987 by Tom Rielly, who headed the U.S. operations of the Canadian building giant BCE Enterprises Development until it was sold in the mid-1980s.
Rielly said he decided in January to sell Rielly Homes, noting that larger companies can borrow money at lower rates, putting them in better position to acquire building lots. With Schuler's deeper pockets, "we'll be more competitive in the marketplace," he said.
Schuler, which reported earnings last year of $12.7 million on revenues of $283 million, has been expanding into Oregon, Washington, Colorado and Northern California to offset slowing sales in Hawaii. Of the 1,800 homes Schuler sold last year, only 300 were in Hawaii.
Rielly will head Schuler's Southern California and Arizona divisions, while his brother, Bruce Rielly, will become executive vice president of those units. They will report to Schuler. Rielly's 30 employees will be retained.
The Newport Beach home builder has housing projects in five Southern California counties, including a 180-home project in Tustin called Venturanza del Verde and more than 600 homes in Palm Springs, Carlsbad, Lancaster and Riverside.
Schuler's stock closed at $7.13 Monday, down 25 cents on Nasdaq.