Real Estate Powerhouses Return to O.C. : Construction: Brandon Birtcher and Roger C. Hobbs re-enter the cutthroat home-building business.
They fled Southern California’s recession in 1991, one to the ranges of Montana, the other to the bustle of a Mexico promising to explode with opportunity under the North American Free Trade Agreement.
Now they’re back. Orange County real estate powerhouses Brandon Birtcher and Roger C. Hobbs have joined forces under the Birtcher family’s banner to re-enter the cutthroat home-building business as B.Birtcher/R.Hobbs Communities.
The company is a hired gun--taking a fee for jump-starting projects that stalled because the original builder ran into financial problems, or building for landowners who don’t want to sell their property to a conventional developer.
In its first outing, the Laguna Niguel-based business--a subsidiary of Birtcher Enterprises--is taking advantage of the lingering impact of the recession to tackle building and marketing chores for a Taiwanese investment venture with holdings in Fullerton, Carlsbad and Chula Vista.
Birtcher/Hobbs hasn’t invested in the projects, owned by Chanco Development Corp. It simply sold its founders’ expertise in construction management and marketing.
The practice, called fee development because the builder generally gets a flat fee or percentage for each home built and sold, isn’t a new one. Builders like Newport Beach-based Aikens Cos. launched fee-development ventures years ago.
In a weak market--and housing in Southern California is sickly, with sales and prices falling steadily all year--fee-building makes a lot of sense, analysts say.
“You don’t have to be constantly reaching into your own pockets [for cash] to do things,” Irvine real estate consultant Ken Agid said. “After all, why risk your own money when others are willing to take the risks for you? Fee-building is a great cash cow.”
Because of that, however, there is a lot of competition for such jobs--which often are put out to bid by banks and other financial institutions that have repossessed tracts of residential land from other builders and are looking for someone to help them complete the project.
Birtcher and Hobbs say they plan to focus on fee-building at first, rather than making it just a sideline, as most other players in the field have. Agid said he believes Hobbs’ extensive residential development and marketing background will give the new company instant credibility.
Additionally, Birtcher and Hobbs come into the business with a huge number of connections, as well as the sizable financial backing of the Birtcher family’s privately owned real estate development and management conglomerate.
One of the businesses of Birtcher Enterprises in recent years, for instance, has been to buy income properties all over the United States on behalf of Asian investors--individuals and companies. “That’s where we developed our relationship with Chang Ku Group,” the Taiwanese owner of Chanco Development, Birtcher said.
Birtcher companies also have developed office and retail properties across the nation for major investment companies, and Brandon Birtcher, 41, has been running a building business for the family in Mexico since 1991. His projects have included Mexico City headquarters for General Electric, Levi-Strauss and Bechtel Corp.
Hobbs, 44, has been raising cattle, building custom homes and buying and subdividing land in Montana for two years. Before that, he built more than 4,000 homes and apartments in Southern California under the Century American banner in the 1980s. He also helped found a successful community bank in Orange in 1983. That background, he said, gives him a wealth of local banking and building relationships that the pair hope to draw on.
Birtcher said he pulled out of Mexico earlier this year after political and economic events, including the new government’s devaluation of the peso, dried up U.S. corporate interest in investing in Mexican real estate.
“We’d been building corporate headquarters for U.S. companies in Mexico City, and that work has come to an almost complete halt,” he said. “We had a [full-time] crew of 10 Americans in Mexico to oversee things, and I was commuting there four days a week, but we pulled the last people out in March.”
He said he and Hobbs have known each other about 10 years and started talking about a partnership at the beginning of this year.
Hobbs said he was simply homesick for Orange County and looking for a way back into the business he knows while Birtcher was wrapping up the Mexican venture and is always looking for new ventures for Birtcher Enterprises--which had not done residential work in the past.
The first active construction project is for Chanco in Chula Vista--a blue-collar suburb of San Diego. There, Birtcher/Hobbs took over a 100-unit project in a development called Eastlake. Under the previous builder, only five homes had been sold in three months.
Birtcher/Hobbs cut prices by 5%--the range now is $160,000 to $180,000--simplifying floor plans and making other cost-cutting changes to enable them to market the homes at a competitive price. Since April, 35 of the homes have been sold, including 23 in a phase still under construction.
The company also is handling planning matters for Chanco for a 101-home project in Carlsbad and a 192-home development in Fullerton, scheduled to begin construction in 1996 after Unocal finishes cleaning up oil field waste on the property.
Birtcher said the company “is reviewing several properties for other Asian investment companies, and there also is a Southern California landowner who wants to retain control of the property and have us build the homes.” He declined to identify any prospective clients.
He and Hobbs said, however, that while building for others let them get their new company running quickly, it won’t be their only line of business.
“We plan to do joint ventures and strategic alliances with various sources of capital,” Hobbs said. “That’s the more traditional approach.”
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Combining Connections
Two Orange County real estate magnates have joined forces, but not to build. Instead, they will offer their expertise in construction management and marketing. A look at the company and the two principals:
B.BIRTCHER/R.HOBBS IN PROFILE
Founded: April, 1995 (subsidiary of Birtcher Enterprises)
Headquarters: Laguna Niguel
Business: Residential development firm providing planning, design, construction and marketing services to landowners and institutional investors
Current projects: Three, in Chula Vista, Carlsbad and Fullerton
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BRANDON BIRTCHER
Title: Chairman
Age: 41
Education: Bachelor’s degree in economics, Claremont Men’s College, 1976
Background: Joined Birtcher Property Management division in 1976, after working seven years as a laborer and apprentice carpenter; became partner in 1985
Major projects: Xerox Centre (1.1 million square feet), Santa Ana; Lakeshore Towers (800,000 square feet), Irvine; Levi-Strauss, General Electric and Bechtel Corp. Mexico City headquarters
Activities: Chairman of the Rose Institute of State and Local Government at Claremont McKenna College; co-founder and past national president of Young Executives of America; several board memberships
Family: Grandson of Fayette Birtcher, who founded Birtcher Construction in 1939; married, two children
Residence: San Juan Capistrano
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ROGER C. HOBBS
Title: President
Age: 44
Education: Bachelor’s degree in finance, 1972; master’s degree in administration, 1974, both from USC
Background: Founded Century American, real estate brokerage and development firm in 1976; founding chairman of California City Bank, 1983
Major projects: Embassy Pointe, Anaheim Hills; Hampton Court, Orange
Faculty positions: UCI, Cal State Fullerton, Chapman University, University of Montana, Real Estate Development Institute and Graduate Builder Institute
Board memberships: Chapman University, Lambda Alpha Honorary Society of Real Estate Professionals and the California Housing Development Corp.
Personal: Married, three children
Residence: Orange
Source: B.Birtcher/R.Hobbs Communities
Los Angeles Times
