Could some of the most in-demand housing markets be cooling off?
The North American subsidiaries of British Giant Taylor Woodrow plc used to operate in Canada, California, Florida and Texas essentially as three independent companies, but that has changed.
Taylor Woodrow has always been the housing industry’s most schizophrenic big player. The North American subsidiaries of British Giant Taylor Woodrow plc operated in Canada, California, Florida and Texas essentially as three independent companies. Last April, PB’s Giants ranked the firm No. 36 with $457 million in U.S. home building revenues, but it was a stretch to call this one company.
That’s all changed now, as those three disparate operations united as one organization, headquartered in Sarasota, Fla., under the leadership of CEO John Peshkin.
"It’s not a simple change, and we’re still not what you would call a conventional home building company," says Peshkin, "but we’re now more unified, and a little closer to the mainstream.
"Our three operations remain largely autonomous. We don’t want to dampen that entrepreneurial spirit. They are all opportunity-driven, rather than structured, in their approach to business. But I think everyone is now comfortable with this new organizational approach."
Count us in. Before, Taylor Woodrow’s organization chart was about as easy to understand as Hammurabi’s Code in the original cuneiform.
Peshkin ran Florida and Texas, but that operation was a joint venture of Taylor Woodrow plc and Monarch Development, a Canadian public development company in which the British parent held a controlling interest. So Peshkin reported to London through Toronto. Meanwhile, Richard Pope ran the operation with the highest public profile, Laguna Hills-based Taylor Woodrow California. He reported directly to London, but not to the same person as Peshkin. To complicate things even more, there was a separate Monarch division also operating in Southern California, and the Texas operation under Peshkin was originally a Monarch division and still carried that name. Until last year, there was also a Monarch division in Atlanta, but Peshkin sold the remaining land there to D.R. Horton and closed the branch.
All of this confusion is now slowly dissipating. The British parent bought out the minority shareholders in Monarch in May of 2000 and the Canadian company now reports to Peshkin. Peshkin blended the Monarch division in Southern California into Pope’s Taylor Woodrow California operation, which now also includes a Northern California branch operating in Silicon Valley. Texas operations are now under the Taylor Woodrow name, including the recent acquisition of Steiner Ranch, one of Austin’s largest masterplanned communities.
Even operationally, the three TW branches are beginning to look a little more alike. California used to be almost exclusively a luxury production builder purchasing finished lots from masterplanned developers. But now the company is developing its own infill communities in Northern California, and seeking opportunities in a masterplanned community development in Southern California.
That’s been a big part of Peshkin’s Florida business for a long time. TW’s many highly amenitized masterplanned communities there often sell more lots to other builders than they build on themselves. A curious twist to that strategy is the fact that TW usually sells off the entry-level lots and keeps the higher priced lots for itself. The firm’s average new home sale price in Florida is now $440,000 and climbing fast.
Condo high-rise buildings are becoming big in TW’s Florida communities. For instance, Taylor Woodrow is now building a 21-unit, five-story condo building on Longboat Key in Sarasota County. Average sale price is above $2 million.
Peshkin plans to continue growing TW’s operations in Florida, California and Texas, and would like to add masterplanned communities elsewhere. He mentions Hilton Head, S.C., as a target, and he has a land acquisition budget of $70 million this year.
The British parent is on a fiscal year ending in March, so Peshkin cannot yet reveal his final numbers for 2000. However, in 1999, TW had 1125 employees (300 working at country club facilities in Florida), and total revenues of $680 million (including Canada). Peshkin’s North American operations contributed more than 40 percent of Taylor Woodrow plc’s worldwide revenues.
In 2000, average sale prices advanced to $353,000 in Texas, and $793,000 for all of California. "When we are able to reveal our revenue numbers for 2000, you’re going to see substantial growth from 1999," says Peshkin.