84 Lumber bolts on installer, component plant
Signaling a change in its growth strategy, 84 Lumber has purchased JAC & Co. and Front Range Panel, a Denver-area framing installer and component plant, for an undisclosed sum. Previous to this, the company preferred to expand from the ground up, building its own lumberyards and manufacturing plants as needed.
In an interview with HCN last year, 84 Lumber president Maggie Hardy Magerko said she was scouting for acquisition targets in construction services and component manufacturing.
“You’ve never known us to make a true acquisition,” Hardy Magerko said. But the $3.92 billion pro dealer has an ambitious three-year growth plan that mandates turnkey solutions to production builders. Scaling up on a national level may require even more acquisitions, and the company has been looking at plumbing, electrical and HVAC service providers as well as framers.
“Who we would really search for now are companies that have a similar culture,” Hardy Magerko added.
Based in Lafayette, Colo., JAC & Co. is a seven-year-old framing and trim installer co-located with Front Range Panel, a wall panel plant. “JAC [brings] an experienced labor management team,” said Mike McCrobie, vp-installed sales for 84 Lumber. In addition to shell construction and wall panels, JAC also installs roof and floor trusses, McCrobie said. Its customer base, which centers on the Denver metro area but extends up the I-80 corridor, serves a number of builders in the multi-family housing market.
Paired with 84 Lumber’s other Colorado locations, JAC and its component plant will provide a total package for production builders in the Front Range market. The company currently operates stores in Greeley, Loveland, Henderson, Colorado Springs and Grand Junction. Plans call for another unit in Aurora this fall.
Denver will serve as 84 Lumber’s first western hub for materials, services and manufacturing. A similar triad exists in Baltimore, where the company established a stand-alone distribution center to support 14 stores and a crew of window and door installers. McCrobie said the company plans to establish more “hubs” like the ones in Baltimore and Denver.
84 Lumber is mum on future acquisitions, but the company certainly has some cash at its disposal now, given the deal it cut last month with Spirit Finance, a real estate investment trust (REIT) that specializes in single tenant retail properties. Spirit paid 84 Lumber $200 million in a sale/leaseback transaction involving 52 lumberyards and one component plant. The 20-year leases contain renewal and purchase options.
“This initial transaction serves to fund a stable organic growth strategy, and Spirit has provided us a follow-on commitment for future transactions,” said 84 Lumber chief financial officer Dan Wallach, in a statement.
Headquartered in Scottsdale, Ariz., Spirit has a portfolio worth approximately $3 billion, with properties split between discount retailers, specialty retailers and restaurants, as well as movie theaters, automotive dealers and supermarkets.