Great Southern Homes and DiamondHead Holdings To Merge

COLUMBIA, S.C. & NEW YORK–(BUSINESS WIRE)–Great Southern Homes, Inc. announced today that it has entered into a definitive merger agreement with DiamondHead Holdings Corp. (NASDAQ: DHHC), a special purpose acquisition company. Upon closing of the transaction, GSH will become a publicly traded company, and DiamondHead Holdings Corp. will be renamed United Homes Group, Inc. DiamondHead is expected to remain listed on the Nasdaq Capital Market and is expected to trade under the new ticker symbol “UHG.” 

GSH is currently one of the largest homebuilders in the Southeast. The Company builds homes in South Carolina and Georgia, focusing on the entry level and first time move up home buyer segments. GSH plans to employ a capital efficient “land-light” operating model that is expected to generate higher returns with lower cyclical risk compared to a traditional homebuilding operating model. Through organic growth, GSH has become the 25th ranked starter-home builder and the 41st ranked single-family detached home builder in the United States, respectively, based on 2021 home closings according to Pro Builder’s 2022 Housing Giants Report.

DiamondHead is a special purpose acquisition company led by Co-CEO and Chairman David Hamamoto, who has over 40 years of experience in real estate investing, as well as operating both private and publicly held real estate businesses. David Hamamoto was the founder and Chairman of the previously publicly-traded NorthStar real estate related companies: NorthStar Realty Finance Corp., NorthStar Asset Management Group, Inc. and NorthStar Realty Europe Corp. In addition, David Hamamoto was a former partner at Goldman, Sachs & Co. and the co-founder of its Real Estate Principal Investment Group and Whitehall funds.

DiamondHead is co-sponsored by Antara Capital, which is an event-driven hedge fund founded by Himanshu Gulati in 2018 that invests across a wide variety of financial instruments, including loans, bonds, convertible bonds, stressed/distressed credit and special situation equity investments.

Industry / Company Highlights

  • Attractive Long-Term Industry Tail Winds: Sustained underbuilding of single-family homes since 2007. A 2021 FHLMC (Freddie Mac) study estimated that the U.S. is 4.4 million homes short of demand (based on household formations).
  • Established Track Record: Founded by Michael Nieri and based in Columbia, South Carolina, GSH is one of the largest private homebuilders in the Southeast. GSH and its predecessors have a 20+ year proven track record of strong organic growth, constructing over 11,000 homes to date with industry leading gross profit margins and a strong EBITDA profile.
  • “Land-Light” Operating Model: GSH plans to employ a “land-light” operating model. By controlling land supply primarily through lot option contracts versus carrying lot inventory on-balance sheet, GSH is expected to generate higher returns on invested capital with more flexibility, while de-risking the balance sheet to better operate through industry cycles. Today, GSH has access to over 11,000 finished lots in high demand submarkets.
  • High Growth Geographic Footprint: GSH’s markets in South Carolina and Georgia have enjoyed faster growth and in-migration patterns than national averages historically, and these trends are expected to continue in the future. According to Zonda, the population in GSH markets has grown 5% since 2017 whereas the national figure is up only 2% for the same period, and single-family starts in GSH markets have outperformed the national average as builders and developers work to meet housing demand.
  • Affordable Entry-Level Focus: GSH’s core affordable product expertise aligns with consumer demand. Entry level and first time move up homes represented approximately 80% of sales revenue for 2021. Housing starts for these product segments are at multi-decade lows, resulting in significant supply constraints.
  • Transaction Provides Capital for Future Expansion: Committed capital from the sponsor group of DHP SPAC-II Sponsor LLC, David Hamamoto and Antara Capital. Expected proceeds from the transaction will allow GSH to augment organic growth by executing on its strategy of opportunistic M&A and the development of a programmatic institutionally focused build-to-rent platform.

Michael Nieri, Founder and CEO of Great Southern Homes, said, “For over 20 years I have worked to build GSH into the leading Southeast homebuilder it is today. I am excited for the next chapter for GSH, where through the combination of my operational expertise with David Hamamoto’s public company and capital markets experience, we plan to grow UHG into a national homebuilder. Our growth plans include both continued organic expansion as well as becoming a merger partner of choice for smaller regional homebuilders located in high growth markets. Additionally, we are building out a programmatic, institutional build-to-rent platform, where our current product set and geographic footprint are well positioned to meet the demands of the strong and growing rental market for single family homes.”

David Hamamoto, Chairman and co-CEO of DiamondHead Holdings Corp., commented: “We are thrilled to partner with Michael Nieri and the GSH team and look forward to executing on our shared long-term vision. We are impressed with the scale and operational performance of GSH, and we are excited to work with the GSH team in continuing their growth as a public homebuilder. We believe there continues to be a massive undersupply of single family homes in the U.S., especially in starter and first move up products which will result in significant demand for the foreseeable future. In addition, as Michael mentioned, we believe there are extremely compelling opportunities to generate accretive growth through M&A as well as a programmatic build-to-rent platform.”

Himanshu Gulati, Founder and CIO of Antara Capital, says, “We are excited to partner with Michael and David on this opportunity. We believe GSH is a best in class operator with significant potential to grow throughout the United States. We look forward to supporting the company’s growth trajectory and future M&A plans.”

Transaction Overview

The transaction values the combined company at a pro forma enterprise value of approximately $572 million, as of December 31, 2022.

As part of the transaction, all of GSH’s existing shareholders will roll 100% of their shares into shares of the combined company and, assuming no redemptions from DHHC public shareholders, will hold approximately 51% of the shares of the combined company on closing.

Assuming no redemptions from DHHC shareholders, the transaction will deliver approximately $320 million in cash proceeds, net of estimated transaction costs, to the combined company including a $25 million commitment to purchase and not redeem DHHC public shares from the DHHC sponsor group, including David Hamamoto and Antara Capital.

The transaction includes an earn-out provision pursuant to which GSH stockholders are entitled to receive up to an aggregate maximum of 20 million additional shares, over a five year period, as and when the share price of the combined company reaches certain thresholds. In addition, approximately 2.1 million shares owned by the Sponsor currently will be subject to the earn-out. The transaction also provides that additional Sponsor shares will become subject to the earn-out to the extent there is not $100 million of common stock at closing (including shares of common stock not redeemed, newly issued common stock and common stock subject to any convertible securities issued by DHHC prior to the closing).

The Board of Directors of GSH and DHHC have approved the transaction. The obligation of GSH to complete the transaction is subject to a minimum cash condition of $125 million. For purposes of the minimum cash condition, cash includes cash in the DiamondHead trust account after giving effect to redemptions (including the $25 million commitment to purchase and not redeem DHHC public shares from the DHHC sponsor group, including David Hamamoto and Antara Capital) and any other permitted financings obtained in connection with the completion of the transaction. There can be no assurances that the minimum cash condition, which may be waived by GSH, will be satisfied. The transaction will also require the consent of GSH’s lenders and the approval of DHHC stockholders, and is subject to customary closing conditions. The transaction is expected to close during the first quarter of 2023.


BTIG, LLC is acting as exclusive sell-side advisor to GSH. Nelson Mullins Riley & Scarborough LLP is acting as counsel to GSH.

Zelman Partners is acting as exclusive M&A advisor to DiamondHead. Sullivan & Cromwell LLP is acting as counsel to DHHC.

About DHHC

DiamondHead Holdings Corp. is a blank check special purpose acquisition company formed for the purpose of effecting a merger, capital stock exchange, asset acquisition, stock purchase, reorganization or similar business combination with one or more businesses.

About GSH

Great Southern Homes (GSH) is one of the largest and most established homebuilders in the Southeast, having built more than 11,000 homes over the last two decades. The Company currently has a presence in South Carolina and Georgia and focuses on providing high-quality, affordable homes for the entry-level and first move-up segments. GSH was the 25th ranked starter-home builder and the 41st ranked single-family detached home builder in the United States, respectively, based on 2021 home closings according to Pro Builder’s 2022 Housing Giants Report.