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Standard Pacific Buys Kemmerly Homes

The purchase of the Tucson builder allows the Irvine firm to widen its market in Arizona.

August 25, 2004|Annette Haddad | Times Staff Writer

Standard Pacific Corp. wants to build more homes away from home.

The Irvine-based company said Tuesday that it acquired Kemmerly Homes of Tucson as it looked to further diversify operations and broaden its presence in the sizzling Arizona housing market.

Terms of the deal weren't disclosed. Privately held Kemmerly controlled 1,100 buildable lots as of July 31 -- all in Tucson, where it is based -- and expects to sell 180 homes bringing revenue of $47.5 million by the end of the year, Standard Pacific said.

Standard Pacific is already one of the top builders in the fast-growing Phoenix metropolitan area, where it expects to sell 1,700 homes in 2004. The purchase of Kemmerly will give the company its first toehold beyond Phoenix and its suburbs.

"The Phoenix market continues to be very vibrant, and Tucson is close enough to add to that volume," Standard Pacific Chief Financial Officer Andrew Parnes said.

The acquisition also helps the company further expand its business outside of California, where it derives more than 70% of its $400 million in annual operating profit, according to a recent report by Credit Suisse First Boston.

To be sure, California housing prices have risen much higher and faster than those of almost any other region of the country, giving builders such as Standard Pacific an opportunity to fortify their coffers and snap up smaller companies.

Since 1998, Standard Pacific has purchased seven companies outside of the state. Today, it builds homes in Colorado, North Carolina, Texas and Florida in addition to California and Arizona.

Although the Kemmerly purchase is considered a small deal, it represents "an additional growth opportunity," said analyst James Wilson at JMP Securities in San Francisco. "Diversification diversifies risk," he said.

The acquisition also is likely to lift the average sales price of the company's Arizona houses. Kemmerly's homes in Tucson sell in the $200,000 to $250,000 range; Standard Pacific's units in Phoenix range from $180,000 to $190,000, Parnes said.

Kemmerly has operated in the Tucson market since 1993. Standard Pacific said it would retain Kemmerly's staff, including President Chris Kemmerly, who will become president of Standard Pacific's Tucson division.

Last month, Standard Pacific reported a 43% jump in quarterly profit and raised its guidance for the full year to $8.60 to $8.70 a share.

Standard Pacific shares rose 11 cents to $50.96 on the New York Stock Exchange.

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