After building houses in Las Vegas for decades, Larry Canarelli has cashed in and sold his local construction operations to a rival developer.
Canarelli, founder of Las Vegas-based American West Homes, said last week that he sold the firm’s homebuilding operations to PulteGroup.
He declined to disclose the full terms but confirmed that Pulte acquired 1,200 lots comprising 200-plus acres for more than $150 million. Pulte also has an option to buy an additional 2,400 lots comprising about 450 acres, he said.
The land is concentrated in the southwest and southern Las Vegas Valley.
Canarelli, 72, told the Review-Journal that he still owns more than 6,000 acres of land in Southern Nevada. But with the sale to Pulte, he has stopped building houses.
The transaction follows the best-selling year for Southern Nevada homebuilders in more than a decade and marks the end of an era in Las Vegas’ residential construction industry.
The market is dominated by out-of-state, publicly traded homebuilders. Launched in 1984, Canarelli’s firm was the only locally based developer to crack the top 10 in sales last year, ranking fifth with 814 closings, according to Home Builders Research.
Atlanta-based PulteGroup — whose developer brands include Pulte Homes and Del Webb — was sixth-best at 700 closings.
Las Vegas used to have more locally based homebuilders, but several shut down after the mid-2000s bubble burst, and others were bought out before the market tanked, said Dennis Smith, founder of Home Builders Research.
Canarelli is “one of the smartest builders I’ve ever met,” and it’s “almost a surprise that he hasn’t sold before now,” Smith said.
He noted that Canarelli has one of the largest inventories of land and lots in town, and PulteGroup’s purchase price was likely “much higher” than it would have been just a few years ago, given the market’s increased activity.
“Wouldn’t it be nice to walk away with $150 million?” Smith said.
Neither American West nor PulteGroup issued a news release to announce the transaction, though PulteGroup executives discussed it in an earnings call last week with analysts.
Chief Financial Officer Bob O’Shaughnessy said Pulte is “not providing the terms” of the deal. But he disclosed the same lot totals as Canarelli and said the purchase “will enable us to dramatically increase our local market share in Las Vegas” starting next year, according to a transcript of the call on financial-news site Seeking Alpha.
Overall, “we think it was a very good transaction, and we’re excited to have the American West brand part of our family,” PulteGroup President and CEO Ryan Marshall said during the call.
In an email, PulteGroup’s Las Vegas division president, Ryan Breen, told the Review-Journal on Monday that the company has initially purchased 11 subdivisions from American West.
He also confirmed that Pulte acquired “the rights to use the American West name and, given the positive brand awareness in Las Vegas, we will continue to sell under the name for the foreseeable future.”
Canarelli said he built 20,000 homes in the Las Vegas Valley through American West, as well as 25,000 in other parts of the country.
He will still do land development, noting he is not prevented from selling parcels to other homebuilders but that he wants to support Pulte.
“We have land everywhere,” he said, “but they bought a lot.”