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Acquisition Gives J.M. Peters Entry to Texas Housing Mart : Home building: Newport Beach company pays about $14 million to establish a presence across the Southwest.

November 18, 1994|DEBORA VRANA | TIMES STAFF WRITER

NEWPORT BEACH — J.M. Peters Co. said Thursday that it has acquired a Texas home builder in a transaction worth about $14 million, a move that gives the Newport Beach company a foothold in Texas and signals a spectacular recovery for the once-beleaguered builder.

Its acquisition of privately held Clark Wilson Homes in Austin will make J.M. Peters one of the top 40 home builders in the nation next year, the company projected. Coming on the heels of several large land purchases this year and a $5-million acquisition of Las Vegas builder Durable Homes in 1993, Thursday's announcement gives J.M. Peters a presence across the Southwest.

"We've repositioned the company to prevent problems of the past. We're on solid footing now and ready to compete with larger builders," said Dale Dowers, chief operating officer. "We're trying to become diversified in price and geographic location."

Acquired for about $11 million in cash and a note for about $3 million, Clark Wilson Homes builds mostly in the Austin area. It was founded in 1992 by Texas developer Clark Wilson.

Specializing in new homes for move-up buyers, Clark Wilson Homes prices its houses in a range of $100,000 to $150,000. Wilson will remain president of the company, which plans to build 340 homes this year and projects $7 million in earnings.

In addition, J.M. Peters announced Thursday that it is opening new division offices in Phoenix, Sacramento and Las Vegas. The company is in escrow on several land deals in those areas and expects to start building homes through its new divisions in 1995.

"We're not a Southern California builder anymore," Dowers said. "We're really a regional builder now."

Alfred Gobar, a real estate consultant in Placentia, hailed the geographic expansion as a "savvy move" by J.M. Peters as long as the company can manage its far-flung operations effectively.

"The whole industry is moving this way--into more diversified home-building areas," Gobar said. "It will be more like Wal-Mart and less like Nordstrom."

At one time considered the premier builder of luxury homes in Southern California, J.M. Peters was hit especially hard by the real estate downturn, reporting a string of losses in the early 1990s. However, the company reported a profit of $4.3 million for the six months ended Aug. 31, contrasted with a loss of $3.5 million for the same period a year earlier. J.M. Peters, which built only 28 homes in 1992, expects to close escrow on more than 1,000 homes, some priced as low as $200,000, for its fiscal year ending Feb. 28.

After being sold by founder James M. Peters in 1985 to San Jacinto Savings & Loan Assn., the company fell on hard times. The thrift was seized by federal regulators in December, 1990, and J.M. Peters was taken over along with other assets.

In 1992, builders Hadi Makarechian and Dowers bought the company from the Resolution Trust Corp. for $47 million. Since then, they have worked to return the company, founded in 1975, to its former glory. Their strategy has centered on buying land and acquiring other companies.

J.M. Peters has been on a spending spree after selling $100 million worth of bonds in May, using the proceeds to pay down debt and make acquisitions.

In July, the company paid $26 million in cash for 175 estate-sized lots in Tarzana. Called Mulholland Park, the 125-acre community in the Santa Monica Mountains was sold by Bank of America, which had acquired the property from a development partnership in a foreclosure.

That same month, J.M. Peters paid $17.8 million in cash for 216 lots in Rancho San Clemente, a master-planned community in the coastal hills above San Clemente.

J.M. Peters, which has built single-family homes in Rancho Santa Margarita, Portola Hills and Coto de Caza, now has 24 active products, including seven in Orange County and 10 in Nevada. It will start construction on eight new projects next year.

J.M. Peters Advancing J.M. Peters, the Newport Beach home builder plagued by a string of quarterly losses in the early 1990s, is profitable again. Revenue and earnings in millions:

Revenue

First quarter 1994: $28.8

Second quarter 1995: $33.3

Earnings

First quarter 1994: -$1.9

Second quarter 1995: $0.4 Note: Fiscal years ending Feb. 28 Stock Value

Peters' stock price has drifted down since the beginning of the calendar year: 1/28: $3.63

11/17*: $2.00

* Thursday's close

Source: Times reports

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