JOHN LAING HOMES, THE INDUSTRY'S 34TH-largest builder, plans to expand into several Western and Southern states and could soon be exporting its construction and operational disciplines to other countries, as part of Emaar Properties, the Dubai-based real estate developer/builder, which on June 2 took its first step into America's housing market via its $1.05 billion acquisition of the Newport Beach, Calif.–based builder.
With revenue last year of 8.36 billion Arab Emirate dirhams (US$2.28 billion), virtually no debt, and $2 billion in cash on its balance sheet, Emaar is well-positioned to make good on its promise to provide “significantly more than the selling price” in capital to fund John Laing Homes' growth, according to the builder's CEO, Larry Webb. Laing will continue to seek opportunities for its 11 divisions in California and Colorado, where it closed 2,891 homes in 2005. But with a deep-pocketed financial backer, Laing can now make aggressive forays into other markets in the South and the West through startups and acquisitions, with its probable initial targets being Texas, Arizona, Georgia, and Florida, says Webb.
Webb says that Laing had spurned buyout offers from other suitors in recent years, but found Emaar to be “culturally” compatible, with a strong emphasis on customer service, personnel development, and financial strength. He and Mohammed Ali Alabbar, Emaar's chairman, hit it off immediately, and Emaar made it clear that it wanted Webb and his management team to stay on to run and enlarge the business.
Prior to this deal, which the Committee on Foreign Investment in the United States has approved, Emaar had searched 18 months for an American builder to buy, says Robert Auer, a managing director with financial services consultant KPMG, which Emaar retained to assist in that effort. The developer focused on Florida, California, and Phoenix and actually wanted to acquire a smaller builder, but couldn't find one with John Laing Homes' management depth, says Auer.
Emaar also liked John Laing Homes for the best-practices expertise that the builder could share with its far-flung global operations, say Auer and Webb. The residential and commercial developer builds in 12 European, Middle Eastern, and Asian countries.