Barratt American Retrenches; Peters Shows Signs of Life : Home construction: Slimmed-down company prepares move to San Diego, while the luxury builder is at work on 180 news homes in existing projects.
Barratt American Inc., once one of the county’s largest home builders, has pared its staff by nearly 30% since early September, changed presidents several weeks ago and is preparing to move its U.S. headquarters to north San Diego County to help cut operating costs.
Separately, officials at J.M. Peters Co., the Newport Beach luxury home builder whose financial woes stretch back nearly a year to the collapse of the Texas thrift that was its majority owner, said Wednesday that the company has more than 180 homes under construction.
Peters’ chief operating officer, Christopher Gibbs, said the activity involves new phases in existing projects and doesn’t indicate a major surge in business.
But because the Peters homes are priced as high as the upper $700,000s, said real estate consultant Michael Meyer, the construction shows that there has been at least a slight resurgence of interest in more expensive residences.
“That is interesting,” Meyer said, “because they were the part of the market that was hit first when people stopped buying.”
He said he believes that sales of $500,000 to $1-million homes in the county recently have been spurred by “a new move-down market. People who found they were stretched trying to pay for a $2-million home have sold and are buying $1-million or $750,000 homes instead.”
Gibbs said, however, that Peters’ orders have slowed down again in the past 30 days after picking up slightly during the summer.
At Barratt American, problems have developed at the other end of the scale. The company builds homes in a variety of price ranges but is best know as a builder of entry-level and affordable, move-up housing, typically priced at about $200,000 to $250,000 in Orange County and in the $100,000 to $200,000 range in other parts of the Southland.
As the recession continues and as other builders turn to lower-priced homes in an effort to find buyers, that so-called affordable segment of the market has become almost as crowded as the high end of the market was at the apex of the building boom in late 1989.
Barratt American has been forced to write down the value of much of its Southern California landholdings as land values have dropped in recent years and that was a major contributing factor to the $170-million loss reported for 1990 by the company’s London-based parent, Barratt Developments.
In addition, Barratt American, which in the late 1980s had more than 20 projects under way in Southern California, has seen its sales drop by about 50% in the past two years.
The British housing market has been in a similar slump and in the wake of Barratt Developments’ disappointing financial report, company founder Sir Lawrie Barratt came out of retirement earlier this year to resume operational control of the firm.
Corporate Chief Executive John Swanson immediately lost his job to Barratt and the shake-up hit the company’s U.S. arm late last month, when longtime Barratt American President Mark Frazier quietly resigned.
“It’s not unlike what is happening with the banks in this country,” said consultant Meyer, managing partner of Kenneth Leventhal & Co.’s Newport Beach office. “Sometimes, when there is a change at the top, heads roll all down the ladder . . . often just for the sake of change.”
Frazier, Meyer said, “was very highly regarded and was not only in charge of the U.S. company but was on the corporate board of directors in London” before Swanson was ousted.
Mick Pattinson, the former head of Barratt American’s San Diego division, was selected to replace Frazier. A native of Britain, Pattinson headed the San Diego division from 1984 through 1987, returned to London in 1988 as a corporate director, and was transfered back to San Diego in July, just two months before being picked to replace Frazier.
In a brief interview Wednesday, Pattinson said the company has laid off about 100 people in the past year, including 30 since early September, and now has about 100 employees.
The offices in Orange and San Diego counties are being consolidated, Pattinson said, and a new office, which will also serve as U.S. headquarters, is being planned “for somewhere around the Carlsbad area” of north San Diego County.
One development industry insider, who asked to remain unidentified because of ongoing business relationships with Barratt, said that Pattinson has been told to focus on fixing projects and deals that have gone sour.
One of those deals is the company’s Pacific Hills development in Mission Viejo, originally planned for about 200 units priced from $350,000 to $500,000. The project is a joint development with the Home Capital unit of Home Federal Savings, a troubled San Diego thrift.
