Scott Stowell, the former executive chairman of Irvine-based CalAtlantic Group Inc. and chief executive of its predecessor company, Standard Pacific Corp., had a firsthand view of two of the homebuilding industry’s largest mergers and acquisitions in recent memory.
In 2015, he oversaw the creation of CalAtlantic, through the merger of Standard Pacific and Ryland Homes of Westlake Village, a $5.2 billion deal.
In February, CalAtlantic was acquired by Miami-based Lennar Corp., a nearly $9.3 billion transaction that created the country’s largest homebuilder.
“It’s been a whirlwind few years for us” said Stowell, who along with former chief executive and turnaround specialist Ken Campbell helped Standard Pacific survive the Great Recession, a time when many had left the builder for dead.
The company slimmed down its operations during the downturn, but ultimately managed to balance its books without going bankrupt or out of business, unlike several competitors.
“The industry’s gotten a lot stronger [since then],” Stowell said. “But it’s changed a lot, too. There’s been a big restructuring of talent, and of business models.”
“It’s also gotten harder to raise capital; underwriting has been a lot more careful,” Stowell said. “But that’s a good thing.”
Now with the housing industry in a much stronger position, and builders on the lookout for new efficiencies via acquisitions, Stowell said he’s not counting out more blockbuster deals, including some involving other area builders.
“I expect to see a lot more consolidation,” Stowell said. “It will continue.”
Farewell Act
Stowell, now a board member for Lennar (NYSE: LEN), spoke to the Business Journal last week prior to a groundbreaking ceremony for the newest addition to the 1,600-acre Tustin Legacy development, a 218-home project being headed up by the builder called Levity.
The project marks Lennar’s first post-recession project on the city’s former marine helicopter base; it’s already the largest builder at Irvine’s Great Park Neighborhoods, which is going up at that city’s former El Toro Marine base.
The Tustin groundbreaking also closes a chapter on the local activities of CalAtlantic and Standard Pacific, whose history dates back more than 50 years, when it was founded by Ronald Foell and Art Svendsen in Costa Mesa.
The builder moved to Irvine in 2000. It had long been the largest builder based in Orange County, and was the country’s fifth-largest builder, prior to the acquisition by Lennar.
Standard Pacific’s first community, which opened in 1965, was built a little more than a mile from where Levity will go up, Stowell told attendees at the July 31 event.
Stowell joined the company in 1986; before then he worked for Newport Beach’s Irvine Co. “I started my career building homes in Tustin,” he said.
CalAtlantic completed the purchase of the land for the Tustin project in February, paying about $35.5 million for the site, or about $163,000 per home lot, according to city officials.
In addition to the base purchase price, Tustin will receive profit participation at a rate of 50% in the event the developer’s net revenue exceeds 8.5%, according to the city.
The February deal—headed up by CalAtlantic’s Gary Jones, who now serves as the vice president of land acquisition for Lennar’s California Coastal division—was the builder’s last big local land transaction prior to the Lennar deal closing.
Homes at Levity will be branded under the Lennar name. They will include the builder’s newer features, such as built-in Wi-Fi, locks, lights, doorbells, thermostats and lights that are controlled by Alexa, Amazon’s voice-activated digital assistant.
Levity will hold a mix of townhomes, stacked flats and single-family detached homes, ranging from 1,383 square feet to 2,748 square feet. Pricing is expected to start in the $600,000 range.
Prices for the homes are designed to be “within reach for a larger number of young families, first-time buyers and empty nesters,” said Tustin mayor Al Murray, who attended last week’s groundbreaking ceremony.
Models for Levity should open next year.
Board Hunt
Stowell, who is the only former CalAtlantic executive to join Lennar’s board following the acquisition, said he’ll be keeping a small office at Lennar’s new soon-to-open regional headquarters at Irvine’s Five Point Gateway campus.
He said he’s looking at taking on another board position—he also serves on the board of Pacific Mutual Holding Co., the parent company of Newport Beach’s Pacific Life Insurance Co., and also is chairman for HomeAid America, a non-profit provider of housing for the homeless.
A few other former CalAtlantic execs have taken on positions at other firms since the Lennar deal was completed.
Chief executive Larry Nicholson now serves on the board of Toronto’s Mattamy Homes, which bills itself as the largest privately-held builder in North America.
Mattamy late last month appointed Pete Skelly as president of the company’s U.S. group, which is based in Orlando; he had been chief operating officer and an executive vice president at CalAtlantic.
