Irvine’s Fieldstone Group of Cos. is cautiously restarting its Southern California homebuilding operations.
The company, which also operates under the Fieldstone Homes name, was one of the area’s largest privately held builders near the peak of the market, selling close to 2,000 homes a year.
It’s sold more than 26,000 homes since the early 1980s.
The past few years have been focused more on shoring up Fieldstone’s balance sheet, with little building locally.
That’s set to change, according to Chief Executive Bill McFarland, who took over the company’s top spot last year.
Fieldstone has four projects totaling about 50 homes in the works in Southern California, right now, including two in Orange County.
Each is expected to see construction this year.
“We’re going to try to be opportunistic,” said McFarland, a former executive vice president and director at Newport Beach’s Irvine Company.
Fieldstone is looking for other deals in coastal areas but doesn’t plan to be overly aggressive on land buying, he said.
The Inland Empire, a focus during busier years, is less of a priority now, according to McFarland.
The general market is “still very fragile, still spotty,” he said. “It’s going to be a slow return.”
A return to building of any type signals a turnaround for Fieldstone, which had more than $640 million in annual revenue as recently as 2006, according to Builder Magazine.
The company ranked as the county’s 15th largest privately held company that year, according to the Business Journal. That was Fieldstone’s highest-ever ranking on our annual list of private companies.
Like most longtime area builders, Fieldstone’s operations took a big hit during the downturn.
In 2009, the company’s sales fell to less than $100 million, according to Builder Magazine. The bulk of the company’s sales now are in its Utah and Texas divisions. 2010 revenue is expected to show another decline.
The down market brought about a boardroom change. Fieldstone sold debt to a group of investors that included McFarland a few years ago.
Debt Holders Turned Owners
When the market collapsed, investors converted their debt to shares in the company. In 2009, a number of them became board members, including McFarland.
The board put McFarland in charge last year. The company’s finances now are in order, he said.
“Our legacy issues are behind us,” McFarland said. “There were some projects under way that suffered, but those (issues) were worked out with lenders. It took time and effort.”
The tone still is cautious: “I’m not sure now’s the time to throw cash around,” he said.
Fieldstone’s projects in the area illustrate the company’s plans for the short term.
Last summer, the company bought a six-lot property near Dana Point’s boundary with San Juan Capistrano. It’s planning homes as large as 3,600 square feet, some with ocean views. The company expects sales in the first half of the year.
Fieldstone also recently bought an eight-home lot on what it calls one of the last undeveloped properties in Rancho Santa Margarita. It has plans for homes that will be about 3,500 square feet as part of the Trabuco Highlands master planned community. Sales are expected to begin in early 2012.
Other projects under way include two in San Diego County: a 29-home project in San Marcos that saw construction start about a month ago, and a smaller beach cottage project in Encinitas.
Additional deals the company’s looking at might be “a little bigger,” McFarland said. But there are no specific parameters for the size of land the company is looking to buy, he said.
“It’s a period where you’re looking for land, and looking for financing at the same time,” McFarland said. “We’re not going to limit ourselves, but we’re not meeting a quota, either.”
Fieldstone’s relaunched California operations include land entitlement and development activities.
They are run out Fieldstone’s offices in the Irvine Spectrum, where about a dozen employees are on staff.
Shift in Scope
The company’s modest pipeline of projects is a switch for McFarland, who has overseen the development of more than 40,000 homes and apartments during his career—a majority of those with Irvine Co.
Until stepping back in the late 1990s, McFarland was an Irvine Co. executive vice president and director. He also served as chief executive of Irvine Community Development Co., the housing and retail development arm of the master developer.
A longtime member of Irvine Co. Chairman Donald Bren’s inner circle, McFarland also once was chief executive of Bren’s separately run homebuilder, Bren Co., which later became California Pacific Homes Inc.
“It’s about as opposite an extreme as you can get,” McFarland said of Irvine Co.’s operations and Fieldstone.
