Let's say would-be white knight Jeffrey Croft succeeds in leading Dublin, Ohio–based Dominion Homes wholly intact to the other side of the next 36 months. Industry experts who would credit Croft as a miracle worker would more than likely outnumber those who'd regard the former Pulte Homes division chief as a turn-around specialist of the mere mortal variety.
And if he doesn't? Many in the know about the company's woes, its grim market outlook, and a litigiously irate band of its customers would say, “no harm, no foul.” They believe there might just be too many forces stacked against him and the 52-year-old company. Already resigned to losses in 2006 as the nation's 44th largest home builder, according to BIG BUILDER sister publication's BUILDER 100 rankings, Croft's immediate task is to persuade people inside and outside the company that things will get better starting at the beginning of 2007. The problem is that's exactly when most people in the home building business reckon things are going to deteriorate from shaky to brutal; and that goes for healthy players in markets with far stronger fundamentals than beleaguered Columbus, Ohio.
Croft's mission is also to sell land, which ties directly to things getting better for the company by early next year. If they don't, Dominion's chances of escaping potentially fatal financial straits shrink from slim to zero. Now, how would you like to be slim to zero. Now, how would you like to be the one promising better times for your company by first quarter of 2007, and at the same time, asserting that the vow to improve depends on selling off millions of dollars of land in moribund geographies? What a moment to have to sell lots when the market, for even the most desirable tracts, is practically at a standstill.
“There doesn't seem to be any light at the end of the tunnel” as far as the markets go, says Rick Murray of Raymond James & Associates, the rare equity research analyst who covers publicly traded Dominion. “What concerns me most is that [Dominion] is already in a fair spot of trouble, and the housing market hasn't finished doing what it's going to do, in my opinion. If you add in the potential for the economy to slow down in the next 12 months or so, things could get kind of dicey for them.”
KEY WORD: SEARCH It took headhunters 14 months to identify a qualified candidate willing to take the top day-to-day operating job, which was open since Jon Donnell unceremoniously vacated the office in October 2004. Many able candidates got the call, and many declined.
Who blames them? Dominion's orbit is a market that has virtually imploded over the past two years. Plus, the company's land supply is bloated at a moment when land assets do a balance sheet no good; its pipeline contains a 10-year lot supply—only 15 percent of which is controlled on option.
Furthermore, a pall has hovered over Dominion in connection with high foreclosure rates among its customers, first reported by The Columbus Dispatch last fall. In April, a U.S. Department of Housing and Urban Development report revealed Dominion was in violation in more than a quarter of the mortgage loans in the audit's random sample. Separately, Ohio Attorney General Jim Petro's office may or may not be investigating Dominion's earlier mortgage practices in connection with scores of consumer complaints since 2004. A Petro representative would neither confirm nor deny the report.
In February, three Dominion home buyers filed class-action lawsuits citing that, because of high-pressure sales tactics, they were allegedly sold houses that were overvalued and overpriced. Court papers also charge that the builder misrepresented mortgages as FHA-insured when, in fact, they were not.
But if Croft felt doubts last fall after a recruiter friend suggested that he consider the position, no one knew. After 19 years at Pulte—most recently as area president for Philadelphia and areas north—he left in 2003, with a severance package and separation agreement that allowed him at least 24 months to ponder his next move. By the end of last year, he was talking with the company's key directors, Douglas G. Borror, his brother David, and their father and company founder, Don, about joining on as a $400-million public home building enterprise's answer to Ty Pennington. What we don't know is what kind of window of tolerance the Borrors have set for Croft, as they refused BIG BUILDER'S requests to speak with them for this story.