The Level playing field – Real estate may be only a side venture for H CEO John Engquist, but his Level Homes is rapidly growing into a regional homebuilder.

Most people know John Engquist as CEO of H&E, the integrated equipment dealership founded by his father in 1961. Under the younger Engquist’s leadership, H&E grew into a public company with nearly 70 locations and more than $837 million in annual revenues.

Outside real estate circles, few people know that Engquist is also one of the area’s largest residential real estate developers, with a development and construction company that has more than 3,000 home sites in three states and a business plan that calls for an aggressive expansion throughout the Southeast.

In just the past year, Engquist’s Level Homes has made significant acquisitions in the Carolinas, most notably buying and agreeing to develop the 150-acre residential portion of 5401 North, a traditional neighborhood development in Raleigh, N.C., owned by the Baton Rouge Area Foundation’s real estate company, Commercial Properties. Earlier this month, Level also opened a Coastal Carolinas division, spawned by the acquisition of 400 planned home sites in Charleston, S.C.

Engquist downplays his involvement with Level and says, for him, it’s just a side venture, a good investment. He credits a first-rate team, both here and in the Carolinas, with actually running the company, finding good property and building good homes.

But whether he is calling the shots or functioning behind the scenes as principal investor, Engquist is on to something big, and he and his partners have their sights set on only getting bigger.

“It’s exciting times for us, and I think Level has a really shiny future,” he says. “I think the timing is right, and with the real estate position we have I think there is an opportunity to do something real special.”

In the scheme of things, Engquist came late to real estate development. Though he had invested in various real estate assets over the years, he didn’t get involved in any big deals until the Americana TND in Zachary in 2006. The project proved to be something of a baptism by fire, becoming entangled in a protracted legal battle and then getting stalled by the recession. Though Engquist eventually ended up with the property, he describes Americana as “a very, very, very challenging project for a lot of reasons.”

While some might have been tempted to throw up their hands and walk away, Engquist dug in, convinced he had a good investment and that the market would come back strong. His instincts proved correct, and today the 90-lot first phase of Americana is under construction, as is a community center. Earlier this year, a new YMCA opened on the property to much fanfare, and plans are afoot to begin marketing the property to downtown workers, particularly those who will work in the new IBM center on the riverfront.

“There are only two stoplights between downtown and Americana [on Highway 64],” says real estate attorney Charles Landry, who represents Engquist on some of his real estate deals. “It is an 18-minute commute. We are going to be promoting that to the downtown crowd.”

Around the same time Engquist was in the throes of the Americana lawsuit, he got involved with Level Homes, then called Level Construction and Development. The company had been formed in 2000 by Kelly Sills and Todd Waguespack—a longtime friend of Engquist’s son, Ryan—and concentrated primarily on doing small-scale, residential developments in the Capital Region. Engquist invested in Level and today is the principal investor in the company, while Waguespack, Sills and Ryan Engquist, who has since joined Level as a part-owner, tend to the construction side of the business.

While Level Homes might have been content to stay local, Engquist’s growing investments in real estate caught the attention of investors with a Raleigh, N.C.-based investment firm called L Star Management, which controls more than $400 million worth of real estate assets. They brought some projects to Engquist in 2012, and he bought in.

“Just getting to know these guys and their talent level, we realized we needed to be in Raleigh,” Engquist says.

Late last year, Level hired away one of L Star’s top executives, Ric Rojas, to run its new Raleigh division. More recently, it brought on board Bob Hilliard, who heads up the Coastal Carolina Division, based in Charleston.

“The Carolinas are great markets,” Waguespack says. “Raleigh-Durham has been very stable, even throughout the downturn, because of the Research Triangle. You did not have the ebbs and flows of a south Florida or a California.”

As for the coastal Carolinas, they too have been strong, though Level’s real advantage there is the connections Rojas, Hilliard and others have brought to the table.

“We can go in there very easily and compete,” Waguespack says. “We know where the good deals are.”

With Level operating as both a development and construction company, it has a strategic advantage over competitors, particularly when it comes to financing deals, Landry says.

“On the development side you typically have developers who have all sorts of requirements and need capital, then the builder has the same thing,” he says. “But here there is just one entity, and John has the ability to deliver the capital.”

The company also has an advantage in that it is new—though with experienced players in key positions—and got into the residential real estate market at the bottom, without a lot of baggage. As a result, it doesn’t have a spotty track record.

“A lot of companies are still trying to shed bad decisions that they will not recover from for years,” Landry says. “Our group did not have that. We got started at the bottom of the market to find true value and to acquire those projects at that point, and now it looks like a lot of those decisions are well made.”

With a growing portfolio, Level is focused on increasing efficiency and leveraging its various developments to help one another. Americana, for instance, is being used as something of a model for product that can be used at 5401 North, Spring Grove Plantation in Charleston and other developments.

“We felt the community in Zachary was something we could mimic in other markets,” Waguespack says.

Though Level only recently moved into the Carolinas, it is already looking to other states in the Southeast, specifically Florida. Texas is also a possibility down the line.

The company is trying to be strategic in its acquisitions and doesn’t want to “just go out there and gobble up everything,” Rojas says.

It is also trying to be selective in how it positions itself, not just in terms of acquisitions but also in the marketing and branding of the company.

Rojas is careful to describes Level Homes as a “regional boutique builder” that targets first-time and move-up buyers. As a practical matter, how that differs from a builder like D.R. Horton or KB Homes depends on who’s talking.

But Rojas says there is a subtle distinction.

“Though we are a production builder, we like to qualify ourselves as a boutique builder,” Rojas says. “It is a differentiator for us because we really try to stay true to our architectural style. If it’s a Craftsman-style house, then every detail in the house will be Craftsman style.”

For his part, Engquist contends the long-term goal is to take advantage of good markets and make sure the company is buying first-rate assets, though he says his first and highest priority is still H&E.

“Real estate is just a side thing,” he says. “I am very fortunate to have a very talented group that I am supporting financially.”

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