Publicly Traded Community Developer, Land Manager, and Home Builder
Background: As President, Chief Executive Officer, and Director provided leadership during a turnaround or what would be more accurately described as a stabilization and sale of a distressed highly leveraged company in a severe real estate recession and down market. The company had a substantial portfolio of land owned in fee, option rights in very large parcels, and had direct interests in agricultural and water resources. The company had several active single family home and also lot subdivisions in construction and sale mode. In addition to the general financial and operational stresses there were a couple of thorny organizational behavior problems impacting performance as well as unresolved construction defect matters and a poorly received, but unfortunately large, product offering. Complicating matters, the company was both a land developer and home builder requiring substantial capital for both activities and, having used a lot of leverage in the cap structure, was caught in a bad place when the downturn started as are most with this type of balance sheet. Cash flow was not adequate to fully fund operations at a proper level and also fund debt service. The company owned about 5,000 acres of land with option rights over another 25,000 acres or so. Home and lot sales were about $20 million per year.
Scope: Responsibilities included general management, P&L, market strategy, and investor and banking relationships.
Result: Advised company that values would increase substantially as would cash flow once the recession ended, but the company decided that it was unable to wait for a recovery to take action and decided to sell the company. The company was reorganized and de-listed, but stabilized operationally and positioned for sale to private investors with creditor approval. Assisted with the sale of the company.