Weyerhaeuser may expand its U.S. home-building business through acquisitions after the world's biggest lumber maker posted record profit...

Share story

Weyerhaeuser may expand its U.S. home-building business through acquisitions after the world’s biggest lumber maker posted record profit last year from sales of residential property, Chief Executive Steve Rogel said.

The home-building unit, which boosted operating profit 56 percent last year, has “earned the right to grow,” Rogel said yesterday before meeting with investors in New York. “We’d look at the top 50 markets,” including properties in the Southwest, Southeast and Chicago, he said.

Rogel, who has reduced the Federal Way company’s debt and boosted its dividend, said Weyerhaeuser has plenty of room to grow even as interest rates rise because the U.S. population is growing. The company also is benefiting from sales in areas with land shortages, such as San Diego and Las Vegas.

Weyerhaeuser is the 16th-biggest national homebuilder, selling 5,264 houses last year in the Seattle area, Las Vegas, San Diego, Houston, Baltimore and Washington, D.C. The company is the eighth-most profitable in that business.

Most Read Stories

Unlimited Digital Access. $1 for 4 weeks.

Deutsche Bank Securities analyst Mark Wilde said the company may be taking on more risk by acquiring homebuilders now, as interest rates rise with the possibility that the building boom will slow. “You kind of wonder about adding too much,” Wilde said.

In 2004, Weyerhaeuser’s real-estate unit had pretax profit of $610 million, 22 percent of total pretax profit of $2.77 billion, which more than doubled after a jump in profit from lumber and wood-products businesses.

Real-estate profit benefited from rising home prices, land sales and historically low interest rates that may lead to a record year for U.S. home building in 2005. Earnings at the unit have risen an average 24 percent a year from 2000 to 2004, the company said.

Eighty-eight percent of the real-estate unit’s sales last year were for single-family homes that range in prices from $185,000 to $2.1 million.