Winn Enterprises Changes Policy, to Buy Developer

Winn Enterprises, which for nearly two years has unloaded its real estate holdings, apparently reversed that policy Friday with the announcement that it intends to acquire an East Coast developer of housing projects.

The Fullerton-based company, whose stated strategy had been to concentrate on specialty foods and savings and loan operations, said it had signed a letter of intent to acquire the privately owned developer. Although it declined to name the company, Winn did say that the purchase price would be $122 million and 1 million shares of new Winn stock valued at more than $3 million.

The soon-to-be-acquired company specializes in developments financed by the federal Department of Housing and Urban Development. It has built more than 100 rural housing projects, most of them HUD-financed apartments, according to Winn officials.

So interested is Winn, once again, in acquiring real estate that the company is considering setting up a third division that will concentrate exclusively on real estate.

The move would appear to fly in the face of the company’s recent efforts to sell off huge chunks of real estate, such as the Buena Park Hotel, which it sold for $7.6 million in 1983.

But R. Sam Christensen, vice president of corporate development of the company, said: “Our game plan has always been to get into real estate in a more focused manner.” Winn acquired Knudsen Corp., a Los Angeles-based dairy products company, and Ogden, Utah-based Mountain West Savings & Loan Assn. in 1983.

Although the move back into real estate may be profitable for Winn, it will only further confuse investors as to Winn’s direction, said Scott Gillespie, general manager at First Wilshire Securities Management Inc. of Los Angeles. “Winn does a good job of making itself misunderstood by the investment community, but I still say it’s one of the most underrated companies around,” Gillespie said.

Formerly known as Builders Investment Group, the 15-year-old company changed its name to Winn in mid-1983 when it began selling off distressed property that it owned in 40 states. That goal--to sell off its real estate--was even printed in the front of Winn’s 1984 annual report.

“We wanted to wind down those real estate operations and focus on a new game plan,” said Christensen.

The plan calls for Winn to return to real estate and concentrate on HUD-financed projects in non-urban areas, as well as to continue enlarging its food and financial divisions, Christensen said.

Analyst Gillespie views the purchase favorably. “Even though this looks like a lot of new debt, I think it will have a positive affect on the company,” he said. “Winn is only taking on operations that will have positive cash flow.”