N.J. Builder Buys Newport Firm, Yorba Linda Project : Real estate: Hovnanian Enterprises official says county ‘is positioned for some pretty strong growth.’
In another sign that Orange County’s housing market is recovering, a New Jersey home builder has purchased StoneBrook Homes in Newport Beach and acquired 98 housing sites in Yorba Linda.
Hovnanian Enterprises Inc., the nation’s 10th-largest home builder, purchased StoneBrook for less than $1 million, but possible incentives to management if the company is successful could push the purchase price to about $2 million, according to Nick Pappas, president of K. Hovnanian Cos. of California, the company’s new division in Newport Beach.
With the purchase, Hovnanian joins other large national developers, including Centex Corp. of Dallas and Del Webb Corp. of Phoenix, that have recently established home-building operations in Orange County.
“This appears to be a window and we wanted to establish a presence here,” Pappas said. “Orange County is positioned for some pretty strong growth. But we are just starting in Orange County; the acquisition of StoneBrook puts us in position to do business in San Diego and the Inland Empire.”
Top StoneBrook executives Jim Highland and Wayne Barnett will join Hovnanian as division presidents. All of StoneBrook’s 45 employees also will join Hovnanian.
The company plans to build 300 to 400 entry-level, or first-time move-up, single-family homes in Southern California by October, 1995, in addition to finishing all StoneBrook projects still under construction, he said.
StoneBrook is currently building four residential developments, representing 180 homes, in the San Diego area and two smaller projects in Los Angeles and Riverside counties, said Pappas, a Riverside native who was formerly head of Hovnanian’s New Jersey housing division.
Based in Red Bank, N.J., Hovnanian has major operations in Washington, D.C., North Carolina, New Jersey and Florida. Known as a builder of entry-level homes (those priced below $200,000), the company built 3,828 homes during its fiscal year that ended in February, as compared to 2,999 homes built during its previous fiscal year.
“They’ve been strong in a number of East Coast markets and have talked for a number of years about expanding their geographic reach,” said Stephen J. Dobi, housing analyst with Goldman, Sachs & Co., an investment bank in New York. “I think that they have rightly concluded that the Southern California housing market will be quite strong.”
StoneBrook was formed in March, 1993, by the top officers of financially battered Woodcrest Development Inc., a 20-year-old Newport Beach home builder that had been among the top 10 Southern California home builders until the real estate downturn crippled its operations in the early 1990s and it ceased operating as an active builder.
Woodcrest built several projects in Orange County, including the Sycamore Canyon development in Anaheim Hills.
StoneBrook officials had claimed last March that they would build as many as 525 homes in Southern California, but the company was hampered by its inability to obtain financing and only built about 250 homes.
“Now we have the financing to go out and buy some land for projects,” Highland said.
For an undisclosed price, Hovnanian also purchased La Terraza in Yorba Linda, a former Woodcrest Development project that was taken over by Bank of America. The company expects to complete 98 homes there early this fall.
