Builder Suspends Investors’ Monthly Returns

Hill Williams Development Corp., a home builder that raises capital through limited partnerships, announced Monday that it has temporarily suspended monthly returns to its 6,000 investors.

“The slowdown in the real estate market has hindered our ability to make those payments,” said the company’s president, Donald Williams.

Hill Williams, based in Anaheim Hills, specializes in building affordable homes priced from $80,000 to $150,000. The 8-year-old company has built more than 1,000 homes in Southern California, most in San Bernardino and Riverside counties, although its projects include a 60-unit condominium complex in Lake Forest and about 30 homes in Anaheim Hills.

Williams said January marks the first time in more than three years that investors will not receive their monthly returns. He emphasized, though, that the investments themselves are not at risk.

“We don’t want our investors to panic,” he said. “It’s not a question as to whether people will ultimately recoup their investments; it’s only a question as to how fast they will get paid back.”

Williams said that the monthly checks will be suspended indefinitely “pending a re-evaluation of our properties.”

All of the investors are Californians, many of whom live in Orange County, Williams said.

Over the past three years, Hill Williams has taken advantage of the recession to pick up land at bargain prices. “But there’s the other side of the transaction--development” of the land, Williams said. “Construction lending is almost nonexistent these days. The market has not allowed us to be as aggressive as we would like to be in developing properties.”

The company now has 1,500 to 2,000 lots under development, Williams said.

“We are optimistic that things will start moving again before the end of the year,” he said. “We are in the segment of the market--affordable housing--that is now showing signs of life.”

Michael Meyer, managing partner in the Newport Beach office of real estate consultant Kenneth Leventhal & Co., agreed that affordable housing has held its own during the real estate slump.

“Entry-level housing is still very viable,” Meyer said. “It will lead not only the housing industry but the entire county out of the recession.”