Dealmakers are constantly looking for specific subsectors and niche markets available to create value in this questionable economy. With strong overall population growth in the Sunbelt states, Monomoy Capital Partners is creating a foundation in homebuilding in the region.

Monomoy acquired Cast-Crete in early 2022, a manufacturer and distributor of precast and prestressed concrete lintels and sills designed for single-family and multifamily homes and used in block construction. Additionally, the firm delivers a line of complementary products and concrete accessories for masonry contractors.

Looking to make the most of the long-term geographical tailwinds and migration to Florida and the Sunbelt region, paired with underbuilding across the past decade has created a shortage of homes that make the area prime for opportunity for homebuilders explains Jim Connelly, CEO and president of Cast-Crete in the Monomoy’s recent construction and concrete outlook. Connelly notes that despite the notion the state is stuffed with real estate, outside the coastlines the state has development growth opportunities for years to come.

“The increase in mortgage rates will have a short-term impact on the demand and prices of single-family homes,” says Kevin Mulligan, director of the investment team with Monomoy Capital Partners. “However, because of all the benefits and attractions of the Sunbelt / Florida, this region will likely experience a more muted slowdown. We believe any temporary decrease in demand will correct as market uncertainty subsides.”

Rather than investing in the construction and ownership of properties in a burgeoning region that would require loads of capital and investment, Monomoy is investing in suppliers for those that build these homes. In an effort to make the most of a region teeming with opportunity, Monomoy has invested in the inputs that, according to the firm, are absolutely necessary when building concrete block residential homes.

“Cast-Crete benefits from its strong reputation and recognition among contractors and builders for the highest quality precast products,” Mulligan says. “Cast-Crete has highly invested production assets and scalable manufacturing. The logistical advantages of Cast-Crete’s distribution density in its core geographies, including nine shipping points, allow the company to most efficiently service customers.”

On top of Cast-Crete’s precast lintels and sills and complementary block construction products like rebar the Monomoy and Cast-Crete look to continue adding on to the platform through additional M&A activity with the intent of expanding its value to its builder customers.

Interest rates are rising, but these regions of the country are growing. What’s your view on this sector? Let me know your thoughts at [email protected].

Cole Lipsky