IRVINE — The former top officers of financially battered Woodcrest Development Inc. said Tuesday that they are starting a new company and hope to have as many as 525 houses under construction within a few months.
Ronald Gilles, formerly Woodcrest's corporate president, will be chairman and chief executive of the new StoneBrook Homes and will operate from offices in Irvine. Wayne A. Barnett, who had headed Woodcrest's San Diego division, will be president and chief operating officer of the new company. He will be based in San Diego.
The two partners have hired 45 Woodcrest employees, including four former top managers, to staff StoneBrook and its two divisional offices.
Barnett said he and Gilles left their executive posts at Woodcrest earlier this year as part of a plan by that company's sole owner, John E. Wertin, to end its involvement in new home construction. Late last week, Wertin filed in U.S. Bankruptcy Court in Santa Ana to liquidate four of Woodcrest's development partnerships.
Woodcrest is a 20-year-old Irvine company that has been among the top 10 Southern California home builders since the late 1980s. Gilles said last week that Wertin plans to keep 25 of the company's 90 employees to finish several of Woodcrest's current projects but will start no new ones.
The remaining Woodcrest employees have been notified that their jobs will end as of Thursday--though, with the StoneBrook hirings, only about 20 will be unemployed.
Barnett would not discuss StoneBrook's financing except to say that he and Gilles are providing all the seed money.
StoneBrook, which officially begins operations Thursday, is negotiating with several banks and several other builders--including Woodcrest--to take over development and marketing of some of their troubled projects, Barnett said Tuesday. Those deals, if concluded successfully, would give the new company about 400 homes to build under contracts that would pay StoneBrook a percentage of the selling price for its work.
Barnett wouldn't disclose the size of the commissions being negotiated. Industry insiders say so-called fee builders generally get 3% to 5%.
The company also is in escrow on properties in Orange and San Diego counties, Barnett said, that are zoned for a total of 125 homes. If the two purchases are completed, StoneBrook would develop the properties under its own name, he said.
As do most home builders in recessionary times, Gilles and Barnett said they intend to focus their efforts on the lower end of the price scale, building single-family detached homes aimed at what Barnett called the first-time, move-up buyer. Homes in that category are bought by people with some equity from the sale of a previous home and range in price from $180,000 to $250,000 in today's market.
Joining Gilles and Barnett on StoneBrook's management team will be James A. Highland, executive vice president; David Arnold, vice president and chief financial officer; Robert R. Mosier Jr., vice president and treasurer; and Thomas L. Evans, vice president and chief purchasing officer. Each held a similar position at Woodcrest.