Irvine’s SunCal Cos., one of the country’s biggest developers of masterplanned communities, has a new line of business: homebuilding.
The company is starting up Mosaic Homes, which will build on SunCal’s land in Southern and Northern California.
Mosaic’s chief executive is Jay Moss, most recently the Southern California regional general manager of Los Angeles’ KB Home.
It’s a big shift in strategy for SunCal, which to date has left the homebuilding duties on its large land holdings to other companies.
Much like Newport Beach’s The Irvine Company, SunCal plans housing projects and then sells land to homebuilders and retail developers who build to its specifications. SunCal has developed more than 250,000 lots that way and has projects in the works for California, Arizona and Nevada.
A majority of SunCal’s California developments still will be built by other homebuilders. But Mosaic gives the company another option to turn to as some homebuilders have backed away from building during the downturn.
“SunCal wanted to control its destiny,” Moss said.
Large, publicly traded homebuilders have been looking to cut down their land holdings, leaving SunCal with fewer buyers for its projects.
“With the struggles of public homebuilders right now, it made sense for SunCal. They decided it was time to fully integrate” its development business with homebuilding, Moss said.
Funding for the new company still is being finalized. It will be based in Irvine.
Mosaic has targeted about 20 locations where it’s likely to build. Two local projects could be its Marblehead Coastal development in San Clemente and Pacifica San Juan in San Juan Capistrano.
The new company isn’t in a rush to break ground.
“We’ll be strategic. The market is very treacherous right now,” Moss said. “You have to recognize the building landscape.”
Building Next Year?
There could be some construction starting next year, and perhaps as many as 1,000 homes built in 2009. Those plans are still very tentative.
“The market really is in freefall right now,” Moss said. “When the time is right, we’ll begin building.”
Moss said he’s relishing the chance to run his own company after a long career at KB Home, most recently leading the publicly traded company’s Southern California and Orange County operations.
“I’ve been preparing 30 years for this,” Moss said.
Taking over the top spot of a homebuilder during a downturn isn’t fazing Moss.
“I think the greatest opportunities are when things are bad,” he said. “When it’s good, anyone thinks they can run a business.”
Expect to see big national builders to continue to pull back in California, Moss said.
“Some builders will leave the state. Some will consolidate their four or five divisions in California to one or two,” he said. “They’ll focus on areas they know best.”
Mosaic has about 20 employees to date. Four division presidents have been hired: for OC, Los Angeles, the Inland Empire and Northern California.
Hires include former executives from other builders, including Dallas-based Centex Corp. and Newport Beach’s Fieldstone Communities Inc.
Mosaic isn’t planning to build high-rises or other condominiums and apartments, which will keep it separate from two of SunCal’s more notable projects of late.
SunCal is planning a 1,500-apartment infill project on a 27-acre site near Disneyland in Anaheim, which has been a source of controversy and litigation.
And in Los Angeles, the company owns a 2.3-acre site in Century City where it plans to build luxury condos. SunCal outbid Donald Trump for the land last year, paying some $110 million.
SunCal isn’t alone among local developers of masterplanned communities that are taking different steps to weather the downturn.
Newport Beach’s Bluestone Communities has turned its attention to buying fire-sale land from other developers, said Mike Kerr, the developer’s president and cofounder.
“We’re buying land with the assumption that we’ll be sitting on it for three to five years,” Kerr said at recent event in Costa Mesa hosted by the local commercial real estate and construction division of the Jewish Federation.
Bluestone,which most recently completed a 940-home project in Murrieta,hasn’t sold a lot in the past two years, he said.
