Kent Crandall joined MBK Real Estate LLC in 2006, when the Irvine-based company was largely focused on building for-sale homes.
Now he’s the chief financial officer of a diversified real estate company that has a growing apartment development line of business and an established senior-housing division in addition to its homebuilding operations.
The privately held company thinks the switch in strategy and new business lines will help MBK weather the next housing downturn. It’s a strategic move steeped in the memory of seeing competitors fall by the wayside during the Great Recession.
“We’re well-positioned now,” Crandall said. “We needed to have a more balanced organization.”
Downturn
Guiding MBK through the last downturn is one reason that Crandall was honored as one of Orange County’s top financial professionals at the Business Journal’s annual CFO of the Year Awards on Jan. 21 at Hotel Irvine (see related stories 1, 4, 9).
When Crandall joined MBK—just prior to the last housing crash—the company ranked as OC’s 13th largest builder by sales, with 125 local sales the prior year.
The housing downturn quickly put the company on the defensive, along with most other local builders, as sales of attached homes in particular felt the brunt of declining sales. The company’s sales had fallen below 40 units in OC by 2008, according to Business Journal data.
Company sales fell from about $250 million in 2006 to less than $70 million within a few short years, Crandall said.
The first several years of Crandall’s tenure were spent restructuring MBK’s homebuilding division as the company scaled back operations to match demand.
One positive for MBK during that period was that it had a secure parent company.
It’s a subsidiary of Mitsui & Co., a Japanese industrial conglomerate.
Mitsui & Co. was able to recapitalize MBK’s business, lessening a reliance on lenders that were skittish about the housing sector or were in financial distress themselves.
Shelter Strategy
MBK returned to profitability in 2010, according to the company. Crandall and other executives began to explore other product lines as they decided the company’s mission was to be “a provider of shelter” rather than strictly a homebuilder.
One of the first opportunities the company saw was senior housing, a business line that began in earnest around 2008, and started to hit its stride a few years later.
The company had acquired more than $600 million in senior housing properties in various western U.S. markets within a few years of starting that product line. That division now employs more than 1,100.
More growth in the division is expected. Last year, Crandall and the company’s investment bankers helped MBK finalize a $150 million joint venture for the division, after leading a road show.
New projects in development for the division include a 74-unit assisted living and memory care retirement community in Santa Rosa, according to the company’s website.
A strategy review headed by Crandall in 2012 also resulted in the company diversifying into Southern California’s multifamily development business.
MBK’s rental division now has a book value in excess of $200 million, factoring in completed properties and in-development projects.
Projects scheduled to open this year include Metro Gateway, a 188-unit apartment development in Riverside designed to appeal to transit-oriented millennials and commuters.
Homebuilding remains a big part of the company’s operations—MBK had eight communities in the works in the state as of late last year.
In December, an affiliate of the builder closed on a nearly 5-acre land site about a mile north of the ocean in Newport Beach, just off Superior Avenue.
That site, which long held the Ebb Tide Mobile Home Park, is expected to be converted into a single-family community. City filings show that the project will hold 81 single-family homes running from 1,600 square feet to 2,100 square feet.
MBK is estimated to have paid $22 million for the land at 1560 Placentia Ave., according to CoStar Group Inc. records.
Sales should begin at the Ebb Tide project this fall, Crandall said.
Among other home projects in the works, MBK also has a 40-unit development on Brookhurst Street in Anaheim, called Anacasa. It’s scheduled to open in April.
