Bramalea Unit Buys L.A. Home Builder for $250 Million

Bramalea California Inc. of Costa Mesa, one of Southern California’s largest home builders, said Tuesday it has bought a large local home builder, Marlborough Development Corp. in Los Angeles, for $250 million.

Marlborough, builder of Marlborough Homes, will continue to operate under its own name as a separate unit, Bramalea said. But together the companies will be one of the largest home builders in the state: The two firms combined would have ranked sixth in sales among Southern California builders in 1987.

The seller is Olympia & York Developments Ltd., the privately held Toronto company said to be the largest developer in North America. The company has extensive holdings in the United States, including the four-tower World Financial Center in New York City.

Marlborough, ranked in 1987 as Southern California’s 17th-largest home builder in sales, had been Olympia & York’s only venture into home building. The company is known primarily for building offices.

The Canadian company is controlled by the Reichmann family, said to be one of the wealthiest families in the world. The family also has interests in newsprint and oil and gas.

Bramalea, too, is a unit of a huge Canadian developer, publicly held Bramalea Ltd. of Ontario.

Bramalea ranked 28th in sales in Southern California in 1987. It entered the market only 7 years ago.

Both companies were attracted to Southern California’s booming housing market, where home builders have grown to become some of the largest in the nation.

But Bramalea, which had already built homes in Canada, elected to start from scratch. It went slowly at first while it learned the market. While it was learning, it also built office parks, a big part of its business now.

Olympia & York, on the other hand, with little experience in the home building industry, bought Marlborough as a going concern. Marlborough Homes began in Southern California in 1952 and was sold in 1980 to Olympia & York.

In its purchase of Marlborough, Bramalea also got Marlborough Development Corp. in Arizona, a large builder in that state.

The Arizona company has 1,200 lots and 120 homes under construction; the California company has 4,500 lots and 800 homes under construction.

Bramalea tends to build more lavish, expensive homes than Marlborough. But the two companies tend to turn up in many of the same Southern California markets.

In fact, they are building subdivisions across the freeway from each other in the southwestern Riverside County town of Menifee.

Bramalea Ltd. began building homes outside Toronto in the 1950s and has grown into a diversified real estate company that earned $47.4 million on revenue of $806 million for the fiscal year ending in October. Earnings rose 22% from $38.7 million last year on revenue of $862 million.

Most of that came from developing commercial buildings in the United States and Canada, although home building remains a significant part of the company’s business in Ontario and Southern California.

In fact, this year Bramalea California surpassed Marlborough for the first time in revenue and units built.

Marlborough fell from $146 million in sales in 1987 to an estimated $120 million last year. Bramalea sales, on the other hand, rose to an estimated $200 million from $106 million in 1987.

Marlborough sold 768 homes in 1988; Bramalea sold 831.

Marlborough had a tough year in 1988, said President Donald B. Edwards. It had trouble finding enough land to build on and difficulties getting approval from local governments to build on land it already owned.

While declining to disclose specifics, Edwards said the company has been profitable and he expects to recover from last year’s dip in revenue this year.

Bramalea, said President Peter B. Perrin, bought Marlborough “not so much because it’s a good fit as because it’s an exceptionally well-run company.” Perrin said Bramalea would keep existing Marlborough management on the job, including Edwards, who joined the company in 1981.