BUILDERONLINE.COM
DECEMBER 2016
CASE STUDIESthat. We are their capital so they can focus
exclusively on operations.”
Green Brick also sells lots to these builders.
“In the mid 2000 s, there were a lot of lot
developers and there was a lot more capital
available to builders,” Brickman says. “But as
the banks retreated and land developers went
out of business, the business became very
capital intensive. These guys recognized they
needed somebody with a lot of capital if they
wanted to compete with public builders in
their markets.”
Green Brick also provides its builders with
almost 100% of their construction financing.
The company buys lots and sells them to its own
builders and other builders, as well.
“O ur goa l is to ma ke a decent ret urn on being
a land developer and to make a good return on
being a lender,” Brickman says. “And we hope to
juice that through our 50% controlling interest
in builders as an equity kicker.”
A Public Decision
In October 2014 , JBGL Capital—which stood
for Jim Brickman and Greenlight—was
merged to form a NASDAQ-listed company.
For Brickman, it was a big transition. He went
from being a fund adviser and active manager
of home building businesses with JBGL Cap-
ital to a CEO. The transaction took more
effort than he initially anticipated, but it
raised $ 240 million.
“It was quite challenging just from the
administrative aspect of the business,” Brick-
man says. “But obviously the benefit is that we
have access to public capital markets. We
entered it very cost effectively where we didn’t
have a lot of investment banking fees. It’s been
an unbelievably efficient capital raise for our
investors because Greenlight Capital is a big
investor for us side by side.”
While going public was relatively cost effi-
cient for Green Brick, it did require a ramp up
for staffing, SEC compliance, and internal
auditors. “We have our platform pretty fine-
tuned right now as a public company in terms
of reporting,” Brickman says.
Future Path
With the public capital and a clean balance
sheet with 11% net debt to capital, Brickman
expects to make investments in more builders.
“We’re a small company and we have a lot
capital to grow with,” Brickman says. “Our
[low-leveraged] balance sheet gives us a lot of
growth opportunities.”
Green Brick already is in Atlanta and
Dallas, two of the top three starts markets in
the country. “There are a lot of growth oppor-
tunities,” Brickman says. “We’re still a very
small player in those two markets. We do have
a big runway for growth in those markets, but
we’re also looking at other markets.”
Brickman mentioned Nashville, Tenn., as
a market with strong upside. But wherever
Green Brick goes, it’s going to be careful.
“Right now there’s a lot of capital in the
business,” Brickman says. “I’m more interested
in who the operator would be in the market,
what their relationships are, and their ability
to acquire and entitle land.”
Unlike some other builders, Brickman says
he wants to keep the team and platform in
place of anyone that Green Brick buys.
“We think real estate is a local business,” he
says. “All things being equal, people would
rather buy a home from a well-managed and
capitalized local builder.” B“OUR GOAL IS
TO MAKE A
DECENT RETURN
ON BEING A LAND
DEVELOPER AND
TO MAKE A GOOD
RETURN ON
BEING A LENDER.”