As it struggles to keep its financial head above water, Standard Pacific Homes in recent weeks liquidated its real estate position in several markets. Its lots and home units have been scooped up by builders and developers whose purchases demonstrate there's still room for optimism in the worst of times.
Two of these deals stand out and effectively led to the builder's exit from the Tucson and San Antonio markets, both of which the Irvine, Calif.-based company had entered with high hopes and considerable fanfare.
Standard Pacific sold its southern Arizona division, consisting of about 700 lots and 70 homes in various stages of completion, to Chris Kemmerly and Steve Quinlan, who operate Miramonte Homes. In essence, Kemmerly reacquired the company he sold StanPac in August 2004 under the name Kemmerly Homes, which was StanPac's entry into that market. The two owners kept on Craig Campbell, who had been president of Standard Pacific's Southern Arizona division, as president of Miramonte Homes. Kemmerly could not be reached for comment, but he told Inside Tucson Business that Miramonte would complete the homes already under construction and start another 70 this year. Quinlan, who is chairman of Long Realty Co., predicts that the local housing market would start showing signs of recovery by this summer.
Standard Pacific entered San Antonio in 2005, when that had emerged as one of the hottest homebuilding markets in the country. It grew to become San Antonio's fifth-largest builder in 2006, according to BUILDER's annual Local Leaders compilation. However, other builders also swarmed that market, and by late 2007 Standard Pacific had determined that San Antonio no longer figured in its survival strategy.
Initially, Standard Pacific intended to just reduce its position there. "They were talking about two big land positions, with about 1,200 lots," recalls Dean Wingert, senior vice president with Forest City Land Group in Tucson, Ariz. Those talks, though, quickly expanded to include all of Standard Pacific's assets in that market: 2,560 lots, which include a mixture of completed lots, partially improved lots and undeveloped land.
"We saw this as an opportunistic buy," says Wingert, whose company acquired the property with Covington Capital Corp., with which it owns master planned communities in El Paso, Texas, and Albuquerque, N.M. He said the transaction was completed in three weeks, as Standard Pacific needed to sell this real estate before its fiscal year ended on December 31. Unlike its other two projects with Covington, however, Forest City will not be the primary developer in San Antonio, because the vast majority of Standard Pacific's lots are in five or six master planned communities. "There are merchant lots that have already been planned and engineered and are ready to be peeled off to builders."
Wingert declined to state what Forest City and Covington paid for the land. He notes, though, that as builders are buying less land and selling more of what they own, "we've seen some slippage" in land prices. However, Wingert also wonders how many bargains there will be out there, when so many private equity funds are being created to buy distressed residential real estate.