GRAPEVINE, Texas, Sept. 3, 2014 /PRNewswire/ — United Development Funding IV (“UDF ” or the “Trust”) (NASDAQ: UDF) announced today a strategic financing transaction with BR Homebuilding Group, L.P., a newly formed holding company founded by long-time homebuilding veteran Bobby Ray. Under the terms of the agreement, UDF will provide a portion of the acquisition financing required to support BR Homebuilding Group’s acquisition of award winning homebuilder Scott Felder Homes, with operations in Austin and San Antonio, Texas. UDF is providing a subordinated loan with a maturity date in September 2021, which can be converted at the Trust’s option into an equity interest of up to 25% in Scott Felder Homes.
UDF Chairman and CEO Hollis Greenlaw commented, “The two biggest challenges for homebuilders in this economic recovery are land and capital. This strategic financing aligns UDF with another prominent regional homebuilder, Scott Felder Homes, in two of the strongest homebuilding markets in the country, as well as forming a strategic relationship with BR Homebuilding Group. The strategic relationship with BR Homebuilding Group will provide UDF shareholders the potential to participate in the growth of regional homebuilders in addition to the strong, stable distribution they already enjoy.”
UDF COO Stacey Dwyer added, “Participating in the acquisition financing with BR Homebuilding Group allows UDF to remain focused on its core lending business, while the conversion feature also provides our shareholders the potential upside of a homebuilder investment. We continue to believe that the homebuilding industry is in a multi-year recovery that will be driven by jobs and economic improvement, dynamics that are already in place in the Austin and San Antonio markets. Scott Felder Homes represents the best in the industry and reflects the quality of our relationships.”
The BR Homebuilding Group, L.P., was formed in 2014 to conduct homebuilding operations in the largest homebuilding markets of Texas, Florida, North Carolina, South Carolina and Georgia. The acquisition of Scott Felder Homes is the first acquisition made by BR Homebuilding Group, L.P. and is expected to provide a platform for its future growth in Texas. Scott Felder Homes builds in 19 communities throughout Austin and San Antonio, Texas and was named Homebuilder of the Year in Texas in 2012 and 2013 and was named Homebuilder of the Year in Austin in 2012, 2013, and 2014.
Bobby Ray, President of BR Homebuilding Group, L.P., is a trustee of UDF IV, and Hollis Greenlaw, the CEO and a trustee of UDF IV, is an investor in BR Homebuilding Group, L.P. UDF IV will provide a guarantee for $25 million of additional bank financing for the acquisition of Scott Felder Homes.
About United Development Funding IV
United Development Funding IV is a publicly traded Maryland real estate investment trust listed on The NASDAQ Global Select Market. UDF IV was formed primarily to generate current interest income by investing in secured loans and producing profits from investments in residential real estate. Additional information about UDF IV can be found on its website at www.udfiv.com. UDF IV may disseminate important information regarding its operations, including financial information, through social media platforms such as Twitter, Facebook and LinkedIn.
About BR Homebuilding Group
BR Homebuilding Group was formed in 2014 to conduct homebuilding operations in the largest homebuilding markets of Texas, Florida, North Carolina, South Carolina and Georgia. Entry into those markets may be through acquisitions of successful and seasoned homebuilding companies or through new start-up operations. Bobby Ray, a prominent homebuilding executive, is the CEO and Chairman, as well as one of the founders. Michael Moore, CFO, is an accomplished financial executive with extensive experience working as a consultant and as the CFO of one of the nation’s largest private builders.
About Scott Felder Homes
Scott Felder Homes is one of the premier homebuilders of Central Texas, with a reputation for integrity, diversity, outstanding customer service and attention to detail. Scott Felder Homes has been honored with the “Volume Builder of the Year” award in 2012, 2013 and 2014 by the Homebuilders Association of Greater Austin and in 2012 and 2013 by the Texas Association of Builders.
Important Notice Cautionary Note Regarding Forward-Looking Statements
This press release may contain forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. These forward-looking statements may relate to anticipated financial performance, business prospects, outcome of regulatory proceedings, market conditions and other matters. We make these forward-looking statements in reliance on the safe harbor protections provided under the Private Securities Litigation Reform Act of 1995. All statements included in this press release that address activities, events or developments that we expect, believe or anticipate will exist or may occur in the future, are forward-looking statements. These forward-looking statements are based on management’s current intents, beliefs, expectations and assumptions and on information currently available to management that are subject to risks and uncertainties, many of which are outside of our control, and could cause future events or results to be materially different from those stated or implied in these forward-looking statements. Words such as “may,” “anticipates,” “expects,” “intends,” “plans,” “believes,” “seeks,” “estimates,” “would,” “could,” “should” and variations of these words and similar expressions are intended to identify forward-looking statements.
Forward-looking statements that were true at the time made may ultimately prove to be incorrect or false. We caution you not to place undue reliance on forward-looking statements, which reflect our management’s view only as of the date of this press release. We undertake no obligation to update or revise any forward-looking statements made by us or on our behalf to reflect changed assumptions, the occurrence of unanticipated events or changes as a result of new information, future developments, subsequent events or circumstances or otherwise. Factors that could cause actual results to differ materially from any forward-looking statements include but are not limited to changes in general economic conditions; changes in real estate conditions; development costs that may exceed estimates; development delays; increases in interest rates or decreases in residential lot take down or purchase rates or prices; our borrowers’ inability to sell residential lots; and the potential need to fund development costs not completed by the initial borrower or other capital expenditures out of operating cash flows. These factors should not be construed as exhaustive and should be read in conjunction with the other cautionary statements set forth in our Annual Report on Form 10-K for the fiscal year ended December 31, 2013 and in subsequent filings with the U.S. Securities and Exchange Commission.