Recently invited to speak at the ULI lecture series, “Leaders in Planned Communities, Residential Design & Urban Infill”, Doug Bauer is Chairman and CEO of TRI Pointe Group. Part of an 8-week program co-hosted and moderated by John Martin of Martin & Associates, speakers include some of the most distinguished leaders in the homebuilding industry. Doug’s lecture emphasized that life and business is about fostering relationships.
In 2009, Doug Bauer, Tom Mitchell and Mike Grubbs shared a vision and concept for a new kind of homebuilding company – one driven by the insight and agility of regional homebuilders, combined with the resources, relationships and reputation of a national organization.
“We see the industry as a life-changing business, designing smarter homes that inspire better lives,” said Doug. “A culture of innovation is at the heart of the company. We started making money day one as a fee builder, in 2013 we took the company public and in 2014 we completed a $2.7 billion merger with Weyerhaeuser Real Estate Company (WREC), creating a national builder operating under six brands.
Prior to forming TRI Pointe Homes, Doug was the President and Chief Operating Officer for William Lyon Homes where he also served as Chief Financial Officer and President of its Northern California Division. “One of the biggest lessons I learned from Bill Lyon is that company culture starts at the top and sets the tone,” said Doug. “It’s about how you treat people, being visible and accessible, delivering messages with intention and disclosing those intentions. I take this lesson to heart and continually aspire to provide team members with a great place to work.”
“Interpersonal skills, being engaged and approachable are critical components of any team,” Doug continued. “A couple of the things we do to foster relationships include awarding honors regularly to acknowledge outstanding contributions and performance, and also convene leadership meetings that encourage the participation of spouses so everyone is on board. It’s also about how you treat customers, trade partners and investors. I’ve found the best way to communicate is to keep it personal, and I use written notes a good deal of the time. We realize our most important asset is not on the balance sheet, it’s our people.”
Another important relationship Doug talked about was with Barry Sternlicht of Starwood Capital Group who became an investor in 2010, trusting in the knowledge and experience of the three partners of TRI Pointe Homes with a $150 million capital investment.
The TRI Pointe Group (NYSE: TPH) includes six home building brands which are each managed locally including TRI Pointe Homes, Quadrant Homes, Pardee Homes, Maracay Homes, Trendmaker Homes and Winchester homes. The company is one of the top 10 largest public homebuilders by equity market capitalization in the Unites States.
“Homebuilding must be a local business to be successful,” said Doug. “Consumers resonate more easily with homebuilding brands that are local, being able to trust in customer service and being guided through the home buying process with the attention they deserve.”
Doug understands that the purchase of a new home can be life changing for people and he thanks as many buyers as he can for their business by a personal phone call. “It is very important our buyers have a relationship with the seller,” said Doug. “They need to be confident in our ability to perform.”
Doug also shared lessons learned throughout the years, having gained invaluable experience through multiple housing cycles. “Financial discipline is critical to maintain a strong balance sheet and a focus on cash flow is very important,” advised Doug. “It is also important to stay disciplined in underwriting land acquisition with manageable community size. We keep everything under 400 lots with an average of just 75 units, although Pardee Homes is an exception. Smart growth means not growing just for growths sake.”
Where is the housing industry today? Doug believes we are in an elongated cycle and sees moderation price appreciation. He cited demand drivers for homebuilding as jobs and household formations, with supply constraints including available land, entitlement, capital and labor. He sees huge demographic opportunities with Millennials and Baby Boomers.
“According to research Millennials are looking for more space, particularly outdoor space and a home that is personalized to them, but are not comfortable with home buying and the process.” One of Doug’s goals is to work toward becoming more engaged with these first time buyers.