Schuler said it bought Melody Homes Inc., the third-largest home builder in the Denver metropolitan area, for an undisclosed price. Schuler also acquired a related firm, Melody Mortgage Co., which provides mortgages for buyers of Melody homes.
The Denver move is actually the third mainland entry by Schuler. The company last year registered new subsidiaries in California, Washington and Oregon.
"We already have operations up and we have acquired property there and expect to be producing closings out of those regions in late 1997," James K. Schuler, president, chief executive and chairman of Schuler Homes, said today.
Meanwhile, the Denver acquisition is expected to have a positive effect on Schuler's 1997 earnings, he said.
Schuler said his Honolulu-based company is in no way abandoning its base in Hawaii, where it is a major home developer.
The mainland expansion, he said, is aimed at enhancing the company's value for shareholders.
"We have, for quite some time, been exploring opportunities for expansion into the mainland United States in the interest of increasing the long-term value of our shareholders," said Schuler. "This transaction represents a significant step in that direction."
In Hawaii, Schuler Homes recently has had significant losses, which the company attributes to the poor state economy. In the nine months that ended Sept. 30, Schuler Homes had a loss of $11.6 million on sales of $71.7 million. That was a plunge from a year-earlier profit of $10.5 million from nine-month sales of $93.4 million.
Melody Homes had sales of about $94 million in the 12 months ended Dec. 31, according to Schuler's announcement.
Home prices in Denver are clearly different from those in Hawaii.
Melody's homes range in price from $109,000 to $175,000 while Schuler's sales in the first nine months of 1996 averaged $236,000.
Schuler said that in 1994, before the current slump, his company sold 1,200 homes. Schuler sold about 650 in 1995 and 500-plus in 1996. So in terms of sales, Melody which sold 639 homes last year, is bigger, Schuler said.
He described Melody Homes as a 43-year old company with an excellent reputation, a strong management team, an excellent land position and a proven track record of profitability.
It will be able to use Schuler Homes' capital base to finance more expansion, he said.
David Oyler, President of Melody Homes, said that the transaction will enable his company to pursue new market areas.
On Wall Street, Schuler's stock climbed 62 1/2 cents to close at $6.871/2 in Nasdaq market trading. Melody is privately held.