Gone, Gone, Gone
Five Builder 100 companies filed for bankruptcy within the last year, most of them victims of expansion at the peak of the market or exposure to particularly weak markets in Florida and Phoenix. TOUSA, the 13th largest builder in 2006, was the biggest to go out. The announcement followed two defaults on interest payments in January on $685 million in notes. Over the years, TOUSA had rolled up companies in Arizona and Texas, among other places.
The next largest company to declare was Levitt & Sons (No. 50 in 2006), which was operating in Florida, Georgia, South Carolina, and Tennessee. The decision came after the company tried unsuccessfully to restructure its bank debt. Lawrence E. Young has stepped into the position of chief restructuring officer.
When Neumann Homes, (59), filed, it had as many as 1,000 creditors, more than $100 million in liabilities, and assets valued at more than $100 million. The bankruptcy also includes its subsidiary companies, Precision Framing Systems, NDC Fabrications, and NeuPro Co. Neumann was done in by ill-timed expansions into Detroit and Denver, among other factors.
America’s First Home, (71), a Florida-based builder that once built more than 1,000 homes a year, called it quits, turning over the keys to a court-appointed receiver. The fast-growth company rode the Florida wave, going from 91 sales in 2001 to 1,129 in 2005.
Trend Homes, (85), announced in February that it was selling assets from Trend and sister company Classic Communities to Najafi Cos., a Phoenix-based private investment firm for $65 million.
Drees Wins ABB Award
The Drees Company won the America’s Best Builder award in the large builder category for the third time in the company’s history. CEO David Drees said in an upcoming interview for BuilderTV that his company earned profits of 5 percent last year and expects to be in the black again this year. Drees attributed the performance to strong cost controls.
For 2008, Drees has a three-pronged plan: Invest in sales and marketing, sell and build homes for less, and reduce land holdings and speculative inventory. The end goal is to reduce debt and get out from under carrying costs. Drees said in the forthcoming interview that he likes the company’s land positions and won’t be selling much, if any, land.
Slimming Down
As expected, many of the largest home building companies reduced the size of their footprints last year, pulling out of marginal markets. Most recently, KB Home announced it had pulled out of Albuquerque, N.M., Chicago, and Washington, D.C. The Las Angeles-based company had previously pulled up stakes in Indianapolis.
Beazer recently suspended operations in five Midwestern and Southern markets—Charlotte, N.C., Cincinnati-Dayton, Ohio, Columbia, S.C. Columbus, Ohio, and Lexington, Ky. The Atlanta-based company also got out of the mortgage origination business.
Pulte started a staged exit from Kansas City late last year, a market in which it had built as many as 300 homes a year. And, Kimball Hill left Florida.
Centex announced it planned to leave Columbus, Ohio and the North Carolina Triad area.
The full Builder 100 and Next 100 lists will be revealed in the May 2008 issue of BUILDER. The online versions of those lists will be posted to Builderonline.com in mid-May. In the meantime, be sure to check out the full Builder 100 online archive.