J. M. Peters Co. Sold Again, This Time to Denver Firm for $100 Million
Newport Beach home builder J. M. Peters Co. will be sold for the second time in less than three years, this time to MDC Holdings Inc. in Denver.
MDC is paying $100 million for Peters, almost five times the $21 million that Dallas-based Southmark Corp. paid to acquire the firm in 1985.
Peters is a prime acquisition for MDC, which is trying to expand its home-building operations in Southern California after home sales in Texas and Colorado dried up when oil prices dropped.
MDC already owns Richmond American Homes, based in Irvine, and acquisition of Peters would make MDC one of Southern California’s biggest home builders.
Seeks Cash
Southmark Corp., the giant real estate and financial services company, owns J.M. Peters through its San Jacinto Savings & Loan subsidiary. It has decided to sell the profitable building firm as part of an effort to raise cash to alleviate a $2.4-billion load of debt.
Barring objections by federal regulators, MDC should complete the deal by March, said Brian Theriot, director of investor relations at J.M. Peters.
MDC told Peters executives it planned few changes at the company, Theriot said, and that Peters and Richmond American would continue to be run as separate companies.
‘Move-Up’ Homes
Peters builds more expensive, “move-up” homes for second- and third-time buyers in Orange, San Diego and Los Angeles counties. Richmond American builds less expensive homes for first-time buyers in Riverside and San Bernardino counties.
Together, the two companies have about 6,400 homes planned or under construction in Southern California.
Southmark tried to raise more cash by offering shares of J.M. Peters to the public last year, but due to indifference by investors, the amount of stock to be sold was scaled back twice.
Southmark finally sold nearly 2 million shares of Peters, or about 13% of the company, in September for only $12 million. The sale of Peters to MDC marks Southmark’s exit from the home-building business.
Peters is in the midst of a good year: The company recently reported nine-month profits of $6.3 million on sales of $139 million, up from last year.
The $100-million price tag for the company equals about $8.20 a share, or 36% more than investors paid in the September offering.
The Newport Beach home building company was founded in 1975 by J.M. Peters, a local home builder. Incidentally, MDC entered the California market in 1986 by buying another company started by Peters, Ponderosa Homes in Irvine.
MDC earnings began to slow in the last few years because of the recession in the oil states of the Southwest. In addition to California, it has also entered new markets in other prosperous Sunbelt states such as Virginia and Georgia.
