Willowdale Asset Management (Willowdale) and one of its portfolio companies have recently undergone some big structural changes. 

Willowdale is now owner and manager of six portfolio companies, while Empire Continental Land, formerly the land division of Empire Communities, is now rebranded as standalone entity Precedent Land Company (Precedent).

Established in 1993 as the former corporate division of Empire Communities, Willowdale has grown from a single-project homebuilder into a diversified real estate organization. The company, headquartered in Toronto, runs a portfolio spanning North America with operations in Ontario, Texas, Georgia, Tennessee, North Carolina, South Carolina and most recently, Colorado.

Empire Continental Land was established in 2012 when Willowdale first entered the American market. "It was specifically to develop a single project in Houston, Texas," Andrew Guizzetti, Willowdale's co-founder and co-CEO, told RENX.

The name Empire Continental Land was chosen to differentiate the division from Empire Communities, he said. "We quickly expanded into other projects in Texas and other U.S. markets with our learnings from developing master plans there and in Ontario."

Rationale for the Willowdale rebranding

Why the rebrand?

Guizzetti explained that since Empire Continental Land isn't an exclusive service to Empire Communities (the company sells lots to other American homebuilders), it wanted to differentiate the division from the Empire brand altogether. This way, "we could look at other opportunities and perhaps joint ventures with strategic land developers and/or capital partners."

All told, the move is designed to give Precedent a much broader reach and deeper impact.

The goal, Guizzetti said, is to provide more formalized central oversight of six distinct businesses with three elements: strategic oversight and direction, set best practices in each vertical and more setup for capital allocation.

He explained the change will create less confusion, allowing Precedent to operate somewhat independently.

"What's very typical in the U.S. particularly when developing large master plans is you're not exclusive to (it). You typically invite (several) large builders to help cycle through lots."

The number of lots can reach upwards of 100,000, so alleviating any confusion will certainly be helpful.

Challenges and opportunities

When asked about the main challenge his team experienced with the change, "It's signalling to the market that this is part of a broader organization and there's a certain financial strength and connection behind it," Guizzetti noted.

On the flip side, he said the opportunity has allowed management to consider taking on larger master-planned communities or joint ventures.

By having centralized oversight for each of Willowdale's independent businesses, Guizzetti sees growth opportunities in three areas:

• more structured growth through independent management teams and management accountability;
• transparency giving a better view of each business and how it is operating;
• having separate and distinct capital structures in each business.

An organization that 'relies heavily on talent'

Each Willowdale division and the geography in which it operates has nuanced skill requirements. Operating the companies as dedicated verticals expands each team's local knowledge base and operational and financial expertise.

"Land development is very different by geography, so the more you have skill sets on the ground that understand how to navigate through challenges of each business, the more likely you'll succeed and attract the right talent," Guizzetti explained. "We're still an organization that relies heavily on talent."

He feels the change will open up the broader organization to more opportunities, as people cross-train in different verticals or find their strengths in different aspects of the business.

Market dynamics: What's on the horizon

The residential market has remained strong in the U.S., and Guizzetti notes Canada has shown signs of a resurgence in the past 18 months thanks to interest rate cuts and more buyer confidence.

"It's hard to predict interest rates in our business, (which) is the single thing that drives the cost of ownership," Guizzetti noted. But with rates easing, he feels more buyers will likely enter the market, plus, "The decline in home prices over the last two years will help restore affordability to the market."

While the highrise market is lagging, Guizzetti noted many developers are still considering transitioning projects from condominiums to purpose-built rentals.

"In Canada's lowrise development, we're still critically undersupplied, especially in the Greater Golden Horseshoe region," he said.

As well, Guizzetti said industrial land activity has slowed from its peak but is still strong.

The big picture

In terms of how Willowdale's recent changes align with broader company goals, Willowdale sees it as the next evolution stage across the real estate value chain.

"Each vertical is set up to grow independently while remaining in the Willowdale real estate ecosystem," Guizzetti explained.

Ultimately, the goal is to continue to support the growth of all Willowdale portfolio companies. From a market dynamics perspective moving forward, it's about positioning them in their own verticals to adapt to what Guizzetti described as a "volatile, uncertain, chaotic and ambiguous world."