Koll Construction Unit Gets Facelift Under New Owner
REAL ESTATE
by Daniel D. Williams
The sale of Don Koll’s construction unit is the real estate mogul’s latest move to divest from companies that hold his name.
Donald Dreusike and Terry Lysek acquired Newport Beach-based Koll Construction LP for an undisclosed amount two weeks ago. Dreusike and Lysek, who were the top executives at Koll Construction, have renamed the entity Arris Builders Inc.
Arris already has three projects on tap: construction of the Grand Pacific Resort in Carlsbad and new church campuses in Rancho Santa Margarita and San Diego.
Last year, Koll left Koll Development Co., unable to reconcile differences with New York-based NorthStar Capital Investment Co., which financed the Don Koll-led buyout of the company in 1998. Koll then started a new firm, The Koll Company, whose construction unit was Koll Construction.
Although Koll was not available for an interview, he said in a statement that he would remain involved in Arris Builders throughout the transition.
“Although I am focused on The Koll Company, I am confident that the management team will continue the success we have enjoyed at Koll Construction,” Koll said.
In a recent interview, Dreusike, who had been Koll’s president since 2000, said that Koll approached the duo about a buyout earlier this year.
“He asked us if we would like to take over the company,” Dreusike said. “The company never went out on the market, so no one else was making offers.”
Dreusike would not disclose the terms and conditions of the buyout, but did talk strategy.
“In the past, Koll Construction was a general contractor,” he said. “Now, as Arris, we will be undertaking design-build projects and construction consulting.”
Dreusike said these are tough times to be in the building business. So diversifying the company gives Arris the best chance for success, even during down-market times.
“We’re taking the best of Koll Construction and adding earlier-stage expertise so now we won’t just get in on projects downstream,” Dreusike said.
The opportunities for builders are out there, but players must be willing to adapt and be proactive, he added.
“The market is a difficult one for the traditional general contractor,” Dreusike said. “If he wants to stay the course, he’s in for a difficult time.”
Though the market’s soft, some submarkets are seeing activity.
“There’s interesting government work out there as well as opportunities in healthcare and education,” he said.
He believes Arris already is lean enough. Koll cut the worker count at the construction unit from nearly 60 two years ago to the current 35.
“We won’t have to go through the downsizing that many other builders will be dealing with,” he said.
Prior to joining Koll, Dreusike was a principle with the United Kingdom’s Bovis Lend Lease and an interim president of now-shuttered Paragon Construction, a former unit of golf legend Jack Nicklaus’ Golden Bear Golf Inc.
Lysek also has worked with Bovis Lend Lease and has more than 12 years of experience in senior positions with San Francisco-based Swinerton Inc.
RESIDENTIAL
Stress in the bubble?
Some analysts predict that the residential market will pop, but the latest numbers from the California Association of Realtors show that California home prices keeping powering ahead. The bad news: sales volume is down.
But first the good news. Median home prices rose 18.3% to $334,100 in August vs. a year ago, according to the trade group.
At $772,000, Newport Beach made the top-10 at No. 8. Meanwhile, Brea and San Clemente were among the 10 highest percentage gainers, jumping 38.2% and 37.4%, respectively.
Overall, OC posted a 17% home-price gain to $437,360. But volume was off 9.8%
“The residential real estate market continued to post impressive gains in median home prices in nearly every region of the state last month,” said Robert Bailey, president of the California Association of Realtors. “While prices have increased by double digits statewide in 10 of the past 12 months, we anticipate the pace of home-price increases to taper off somewhat as the market enters what is typically a slower season in the next few months.”
The volume of sales for the state was off 1.5% from a year ago.
Mark the Calendars
Two big events are upcoming for real estate folks.
The first is a discussion called “Real Estate and the Economy.” Speakers include Richard Green, principal economist at McLean, Va.-based Freddie Mac, Howard Roth, chief economist for the California Department of Finance, Jack Kyser, senior vice president and chief economist for the Los Angeles County Economic Development Corp. and Lisa Grobar, professor of economics for California State University, Long Beach.
The lecture is Wednesday, Oct. 9, 2 p.m.-3 p.m., at the California Realtor Expo in Long Beach.
Also at the Expo, the California Association of Realtors will detail its 2003 California Housing Market Forecast on Thursday, Oct. 10 from 4 p.m.-5 p.m.
If you’re interested, you can find out more online at www.realtorexpo.org or by phoning (866) 830-1924. The expo runs Oct. 8-10.
A second event has Bill Halford, president of office properties at The Irvine Company, emceeing “Family Night at Abravida”,featuring former cast members of Cirque du Soleil.
Sponsored by the Southern California region of the National Association of Industrial and Office Properties, the night includes dinner, music and acrobatics, and is a fund-raiser for Community Service Programs Inc., which helps high-risk kids.
The event is Thursday, Oct. 10, 5p.m.-8:30p.m., at the Hyatt Regency in Irvine. The cost is $35 for kids, $75 for adults.
For more information, call (714) 979-9131.
