The booming housing market has created a lot of wealth in Orange County in the past five years,including for homebuilders themselves.
The wealth of executives at the county’s largest homebuilders has risen with the price of houses here, and, in some cases, even faster.
Many homeowners have seen their houses or condominiums double in value in the past few years. Impressive. But how about seeing your wealth increase nine times since 2000.
That’s what happened to shares of Irvine’s Standard Pacific Corp., which often ranks as the top homebuilder in OC. An investor in mid-2000 could have bought a Standard Pacific share for $10. Today it trades for around $95.
2000 was the year Stephen Scarborough became chief executive of Standard Pacific,a profitable midsize homebuilder with a long history in OC.
The Business Journal estimates Scarborough’s worth in the $100 million range, based on his shares in the company as well as his salary for the past few years.
Scarborough owns or controls 1 million shares of Standard Pacific, a stake with a recent market value of about $95 million, before the cost of exercising options.
Last year, Scarborough saw $19.3 million in salary, bonuses and exercised stock options.
Scarborough has been rewarded for his work steering Standard, which saw profits of $316 million last year, up 55% from a year earlier. 2004 revenue was up 42% to $3.4 billion.
Scarborough, who has spent some 25 years with Standard, has led the company on a buying spree in the past few years. He’s acquired regional builders in Florida and the Carolinas as well as in Central California. He’s setting up a division in Las Vegas.
The moves have paid off,Standard ranked No. 11 nationally by Builder Magazine last year, based on its sales of 9,000 houses and condominiums.
Another prominent builder in OC is Miami-based Lennar Corp., which has its regional headquarters in Aliso Viejo.
This year, the company acquired the former El Toro Marine base near Irvine from the Navy. It’s also building at the former Tustin Marine base and is set to revamp a large swath of Anaheim near Angel Stadium.
Jonathan Jaffe, Lennar’s OC-based chief operating officer, has spearheaded the company’s rise on the West Coast. His efforts earned him a promotion last year from Western region president to Lennar’s No. 2 executive.
Jaffe’s income got a 20% boost last year to about $5.6 million in salary and bonuses. He also owns or has the option to buy about 380,000 shares. The stock he owns free and clear is worth about $17 million.
Pay for homebuilding executives is yet to reach the level of those at other large public companies, according to Walter Hahn, a real estate consultant in Irvine.
Top executives at some large public companies in other industries receive annual pay packages or special bonuses in the $100 million to $150 million range, he said.
The exception is executives who own all or a majority of their companies, Hahn said.
“That’s where you make your big money, by owning,” Hahn said.
William Lyon, who owns most of his namesake Newport Beach company, is worth about $675 million by our estimation.
Newport Beach-based William Lyon Homes Inc. saw profits more than double last year to $171 million. Its revenue doubled to $1.8 billion.
Lyon’s big gain came with the rise in the company’s value on Wall Street. Shares of William Lyon Homes are up 50% in the past year with a recent market value of $1 billion. Lyon owns or controls about 70% of the company’s shares.
Earlier this year, Lyon made an unsuccessful bid to take the company private, offering $82 per share for outstanding stock he didn’t already control.
Lyon’s wealth also comes from owning and managing 11,000 apartments, as well as a prized classic car collection.
Another sizeable local builder is Newport Beach’s WL Homes LLC, which does business as John Laing Homes.
Chairman Ray Watt and Chief Executive Larry Webb are part of an investment group that owns the majority of the private company.
WL Homes did about $1 billion in revenue last year. Assuming a conservative level of debt, Watt and Webb could be worth about $150 million each or more.
Peter Shea Jr., chief executive of Walnut-based J.F. Shea Co., has gotten richer in recent years thanks to his company’s housing arm, Shea Homes. It’s the largest privately held builder in the nation.
Peter Shea, who lives in Newport Beach, is the only top executive at the family business who lives in OC. The family fortune is worth an estimated $1.1 billion, with John Shea and cousins Peter Sr. and Edmund owning the majority.
Of course, a big beneficiary of the hot housing market here is Donald Bren, sole owner of Newport Beach’s The Irvine Company. He owns some of the most valuable land in the county and is selling to homebuilders at premium prices, up to $3 million an acre for choice lots.
We figure his vacant land, which would also include some future commercial buildings, is worth about $3 billion alone. Bren’s total worth by our count is $8 billion.
