by Ryan Flinn
April 14, 2005

Wall Homes, a home construction company founded by former Choice Homes CEO Steve Wall, just received USD 50m in capital from Warburg Pincus and will look for acquisitions after the start-up phase, said Reuben Leibowitz, a Warburg Pincus managing director.

Privately held Wall Homes, based in Arlington, Texas, will build affordable homes mainly for first-time and first- and second-move-up buyers. The company plans to break ground on the first Wall Homes neighborhood, in metropolitan Dallas/Fort Worth, this spring.

Leibowitz said once the company gets out of the start-up phase, it will look to acquire similar companies outside the Dallas area. He would not specify target size, saying it is too preliminary to tell.

In terms of geographic reach, Leibowitz said Wall Homes is likely to focus on Texas specifically and the Southwestern region generally as ownership in those areas is increasing compared to the rest of the country. The company may target Arizona as well.

Rising interests are not too much of a concern for the home builders' market, Leibowitz said, because in his experience, buyers tend not to flee the market unless rates get into double digits. The current national average for a 30-year mortgage stands at 5.91% this week, according to Freddie Mac.

The main draw of Wall Homes for Warburg Pincus was its strong management team and clear vision for growth, Leibowitz said. The company might receive another infusion of cash from Warburg if it grows at a rapid rate, he said, similar to StorageMart, another of Warburg's portfolio companies, which received an initial USD 50m investment in 1999 and another USD 50m investment two years later.