Good luck finding a local chief financial officer who’s been part of as many complex transactions—including a corporate restructuring, initial public offering, acquisition push, and a string of big-dollar financing deals—as Colin Severn has during his seven-year tenure at William Lyon Homes.
He’s been part of a management team that’s helped take the iconic Newport Beach-based homebuilder from near liquidation to one of the Western U.S.’s top-selling builders over that period.
Good luck, too, finding a CFO tapped at a more stressful period in their industry—the bottom of the last housing crash.
“I was the only one left in the room” at the time of his 2009 promotion from corporate controller and secretary to CFO, Severn quipped at the Business Journal CFO of the Year awards dinner on Jan. 25 at Hotel Irvine. He was one of five CFOs to receive honors at the annual event (see profiles of his fellow winners, pages 1, 7 and 10).
Guiding William Lyon Homes through the downturn and into financial strength today is one reason Severn was honored as outstanding CFO of a public company.
William Lyon Homes’ market value is about $560 million. The company and its predecessors have sold about 100,000 homes since 1956, making it one of the best-known builders on the West Coast over that time.
Problems, Problems
Its stock wasn’t publicly traded at the time of Severn’s appointment. Founder and current Chairman Emeritus, Gen. William Lyon, and his family took the company private in 2006 near the peak of the last housing cycle. The ensuing downturn quickly put it on the defensive, along with most other local builders, as new-home sales plummeted across the country.
The builder made a large number of cuts to local operations, but General Lyon “gave me an opportunity” in 2009 with the promotion to CFO, said Severn, a graduate of California State University-Fullerton who’s been with the builder for 13 years altogether.
He spent his first several years as CFO restructuring the company’s balance sheet and operations as it scaled back operations to match demand.
A number of large U.S. builders ultimately shuttered operations during that period, and William Lyon Homes was among those that many industry watchers thought would follow suit. Instead, it was able to work out a deal with its lenders that ultimately led to a prepackaged bankruptcy filing in late 2011.
From the Ashes
The restructuring reduced its debt load by about $180 million while securing it an additional $85 million in capital. Severn worked with Matt Zaist, then an executive vice president in charge of restructuring and now chief executive, on the deals.
The company emerged from bankruptcy early the following year and soon moved into growth mode.
By the end of 2012 it had already restructured the secured debt from the bankruptcy into an unsecured bond with a lower cost of capital.
In 2013 it raised $217.5 million in its return to the New York Stock Exchange, one of the first homebuilder IPOs in years.
Other local builders that went public around the same time included Irvine-based TRI Pointe Group Inc. and Aliso Viejo-based New Home Co.
In 2014 the company made the biggest acquisition in its history, paying $520 million for Bellevue, Wash.-based Polygon Northwest Co. LLC, which was reported to be the largest privately owned homebuilder in the Pacific Northwest at the time. The buy gave William Lyon Homes a new presence in that market.
Its other main markets are California, Arizona, Nevada and Colorado.
The builder’s local projects range in price from the Grand Monarch development in Dana Point whose homes start around $2.6 million, in addition to more affordable projects at Rancho Mission Viejo, where homes start around $450,000.
More to be Done
Last month it opened Celadon, a project at Great Park Neighborhoods in Irvine, where its attached three-story homes are listed for a little more than $700,000.
The builder owned or controlled 264 home lots in Orange County as of last September, according to regulatory filings.
Companywide sales were up about 36% year-over-year in the first nine months of last year to $928 million.
Severn’s heavy lifting isn’t done. He’s been overseeing a series of restructuring deals in recent months, including one in January in which the company priced $450 million in 5.875% senior notes, which are due in 2025. Proceeds from the offering are being used to purchase its outstanding 8.5% senior notes, which are due in 2020.
Severn said on the company’s latest earnings call with analysts that, “We remain focused on reducing our leverage and improving our balance sheet in the fourth quarter and making progress towards our longer-term balance sheet goals.”
