MONTREAL—Canadian firms beyond lumber producers are expanding their reach in the United States to capitalize on the ongoing housing recovery.
The head of Richelieu Hardware says the Montreal-based firm has completed a series of acquisitions over the past few years to position itself as among the leaders in a market that is creeping back from the 2008 housing crash.
“We should be as big in the U.S. as we are in Canada, it’s only a matter of time,” Richard Lord said Thursday following Richelieu’s annual meeting.
He anticipates demand for many of its popular products like door handles and kitchen organizers will grow as rising consumer confidence and employment prompt more Americans to remodel their homes and new construction continues to improve.
The U.S. accounted for 36 per cent of Richelieu’s sales in the first quarter, up from 32 per cent a year earlier.
Some of North America’s largest homebuilders—including Canadian-based Mattamy Homes, Brookfield Residential Properties and Tricon Capital Group—have also expanded their reach south of the border by buying undeveloped land or properties when prices fell.
Brookfield Residential Properties says 75 per cent of the $2 billion it has invested over the last seven to eight years has been in the U.S.
“We’re not negative on Canada,” CEO Alan Norris said in an interview from Calgary. “We just think there’s still more of a cycle to run in the U.S. and it’s a broader and more diverse market.”
He said the company has been “big beneficiaries” by capitalizing on increased demand which he said has been slow and steady.
Pent-up demand from first-time buyers should propel continued improvements, Norris added.
Tricon, which has about 88 per cent of its US$3 billion of assets under management in the U.S., has made a big bet on the growing American rental market.
It recently agreed to pay about US$1.4 billion for Silver Bay Realty Trust Corp. to create the fourth-largest public owner and operator of rental homes in the United States.
Analyst Trevor Johnson of National Bank Financial said Tricon’s willingness to ink the largest deal in its history signals the company’s bullishness about the recovery.
“We’re seeing frothier returns come from the U.S.,” said Johnson, noting that growth in Canada outside the Toronto area is weaker. “Tricon is still doing a few things in Canada but most of their efforts would be in the U.S.”
The expanding U.S. rental market has also attracted the attention of large investors like private equity firm BlackRock and the Ivanhoe Cambridge, the real estate arm of the Caisse de depot.
The pair partnered more than a year ago in a US$5.3-billion deal to buy Manhattan’s largest apartment complex.