The owners of Newport Beach-based WL Homes LLC,holding company for John Laing Homes, the sixth most active homebuilder in Orange County,are looking to sell the company, according to industry sources.
WL Homes has put together a package on the company detailing its financial status, land inventory and project locations, among other things Credit Suisse First Boston Corp. is marketing WL Homes to interested companies, according to sources.
John Laing, one of the most active homebuilders in Southern California, decided to market itself after exploring the prospects of an initial public offering. But at $700 million in annual revenue, industry sources believe the company is too small to draw the interest of major investors, which would hamper its efforts to go public. The company also faces the prospect of a slowing housing market in 2001.
Larry Webb, chief executive of WL Homes, declined to comment for this story.
In the past, Webb has made the point that his goal was to grow the homebuilder in order to take it public or sell it. Webb joined the company from Los Angeles-based Pacific Greystone Homes.
WL Homes is owned by London-based John Laing PLC, longtime Southern California developer Ray Watt and Whitehall Street LP III, a real estate investment fund administered by Goldman, Sachs & Co. A sale would put WL Homes on a long list of OC and Southern California homebuilders that have decided to sell after finding themselves at a disadvantage to the big public homebuilders that dominate the real estate landscape today. The latter include Dallas-based Centex Corp. and Los Angeles-based Kaufman & Broad Home Corp.
The big public homebuilders have an easier time getting capital to fund their activities. And, given their size, most big homebuilders get cost savings in buying land and materials through the sheer number of homes they build.
What’s unique about WL Homes is that most of the homebuilders that have merged or been acquired in the past few years predominantly have been smaller entities with operations in a few markets.
WL Homes is a mid-size company operating in six states. In California, the company operates in OC, Los Angeles, the Inland Empire and Sacramento. WL Homes also builds in Nevada, Colorado, Virginia, Maryland and Utah.
Soon after arriving from Pacific Greystone Homes, Webb began buying up land and expanding John Laing Homes’ geographic reach, all in an effort to make the company more attractive to Wall Street. That plan took a major leap forward in 1998, when John Laing merged with Encino-based Watt Residential Partners to create WL Homes. The company has continued to market homes under the John Laing Homes name. With that deal, the firm gained a national presence. With the strong housing market, WL Homes has seen a growth spurt that’s driven revenue from $384 million in 1998 to nearly $700 million in 2000.
The strong housing market in Southern California has made ready-to-build land one of the most sought-after resources, and WL Homes has plenty of it. As of June, the firm owned or controlled 5,248 lots. The company has a large presence in OC, including a major stake in the 1,970-acre Forster Ranch planned community in San Clemente.
John Laing already has drawn the interest of most of the major players in real estate today, including Miami-based Lennar Corp., Kaufman & Broad and Centex. A source familiar with the marketing of the company said the sale process is far enough along that these three entities were recently named finalists for WL Homes. A decision was expected in December, but now has been pushed into January, according to sources.
Emile Haddad, a senior executive with Mission Viejo-based Lennar Homes of California, the Miami company’s local entity, said his firm has been in contact with John Laing officials and remains actively interested.
“It’s a good company,” Haddad said. “They have some good people.”
Among national, public builders, Lennar has by far been the most aggressive acquirer of smaller builders, having already added Bramalea Homes, Greystone Homes, West Venture Homes and several smaller local builders to its fold. Lennar recently completed one of the biggest homebuilding acquisitions in the country when it added the operations of Phoenix-based U.S. Homes.
Haddad said that in addition to land, one of the major shortages in the building industry is that of qualified people. In John Laing, he sees an opportunity to address both of those needs.
“The (land) assets, from my opinion, whether it be Laing or anybody else, are not worth as much without the people,” he said. “There’s a continuity that comes with the same people managing the asset and staying involved with it.” n
