WCI Cuts Staff, Sales Plummet Amid sputtering South Florida new-home sales that have plunged 50 percent or more since this time last year, Bonita Springs, Fla.–based WCI Communities confirms it laid off an undisclosed number of its corporate staffers early last month. However, former employees say that roughly 400 management, administrative, and operations workers across all of WCI's offices and corporate disciplines were let go to cut expenses, offsetting shriveling sales.
Concentrated in formerly high-flying South Florida, Washington, D.C., and New York metro area markets, WCI's high-end single-family, attached, and tower business has taken a painful hit, especially as it brings as many as 19 towers online in a market that's pounding condo sales.
Adding financial complexity to WCI's fall in fortunes is its accounting method of recognizing revenue for units based on orders and deposits, versus waiting until a tower building has been completely sold out. As the condo-selling market forces sellers to add incentives and discount prices, an increasing number of orders—even ones with nonrefundable 20 percent deposits—become susceptible to cancellation. Buyers walk away and WCI retains the deposit, but it still needs to resell the unit, setting up a revenue-recognition nightmare.
KB/Shaw Break Ground in NOLA The joint venture formed between KB Home and the Shaw Group following Hurricane Katrina is helping to rebuild New Orleans. Shovels recently hit the ground on a 73-home community in the city's Garden District, making it the partners' first ground breaking. Fifty-eight of the homes will go at market rate; 15 will be affordably priced, as determined by the Housing Authority of New Orleans. The first model is on track to be completed this month.
Park Square Widens Scope Park Square Homes will have to drop the handle of Orlando, Fla.'s, hometown builder in 2007. The 22-year-old company announced that for the first time it's looking outside Central Florida for new business and moving operations into Tampa, Fla., by the second quarter of next year. President and CEO, Jim Bagley, says the business is evaluating six to 10 opportunities in Hillsborough County.
The company plans to expand its product line, too. Park Square will move into the active adult market in Central Florida with a 200-acre property in Polk County, near Avatar Properties' Solvita active adult community. The project calls for roughly 600 units.
Lyon Kicked off NYSE General William Lyon's attempts to take his namesake company, William Lyon Homes, private scored a small victory in June when the New York Stock Exchange suspended trading of its common stock, saying there were insufficient shares left for public auction and that it plans to petition the SEC to delist the stock.
Still, a roadblock remains. Polygon Global Opportunities Master Fund, a London-based hedge fund, snatched up almost 10 percent of the company's stock in May, paying as much as $131 a share and announcing it planned to oppose the company's privatization.
However, Lyon controls more than 90 percent of the Newport Beach, Calif.–based company's stock, enough to take the company private under the laws of Delaware, where the company is incorporated. He intends to force a sale of the remaining stock to his company for $109 a share.
The delisting leaves Polygon with few potential buyers. Either it deals with Lyon on his terms, or remains a minority shareholder with little power holding stock for which it paid a high price.
Lyon has worked for more than a year to gain total control of the 50-year-old company. In spring 2005, Lyon, who already owned the majority of the stock, offered to buy the minority shares for $82 a share in cash. Shareholders filed lawsuits charging that Lyon was failing in his fiduciary responsibility.
Learn more about markets featured in this article: Orlando, FL.