Home Builder’s CEO Sets Sights on Bigger Playing Field

At the annual banquet for employees of John Laing Homes, the most coveted award is called the Larry.

Named for and presented by the Newport Beach-based home builder’s chief executive, Larry Webb, the Larry honors silly employee performances, such as acting like a diva or being the most awkward dancer.

“We’ll do anything to have fun here,” says Steve Kabel, president of the company’s South Coast division and a Larry winner for dressing up as Darth Vader and other characters during a skit at a sales staff meeting. His Larry -- a plastic figure bearing a photo of Webb with his tongue sticking out -- takes a prominent spot on his desk, right next to a photo of his wife and four daughters.

The focus on fun is serious business for Webb, 58, a former high school teacher and soccer coach. His methods for crafting a creative esprit de corps -- even the wacky ones -- are credited with making John Laing a leading regional player with 1,000 employees.

“Larry’s different because Larry’s a true leader,” says Jeffrey Meyers, a longtime building industry consultant and now a real estate developer. “Look at what he has built, a truly managed organization where there’s a culture.”

Now Webb’s people-oriented and easy-going leadership style -- he has been known to personally drive home job candidates after interviews -- could be put to the test. This month he and other top stakeholders, including renowned local builder Ray Watt, agreed to sell the company for $1.05 billion to Emaar Properties, a Dubai-based multinational developer with an ambitious expansion plan for becoming a top player in the U.S. home-building market, using John Laing as its launchpad.

“Sure, it’s a big change, but I really think it will be fun,” says Webb with his characteristic cheeriness.

Just as a slowdown in the U.S. housing market is causing many builders such as John Laing to warn of diminishing profits, dwindling orders and staff reductions, Webb is certain he’s found a way to keep the good times rolling. His deal with Emaar lets him continue to run the company as he has, which has meant giving managers and division heads broad latitude in decision making.

“Everything will be exactly as before, with the exception of having a significant amount of new capital,” Webb says, adding that there are no plans at this time for any Emaar executives to move to Newport Beach.

Although it builds about 2,900 homes a year -- less than a tenth of giant KB Home -- John Laing consistently ranks at the top of customer service surveys and collects industry praise by the boatload. Building houses ranging from $200,000 town homes to $7-million custom-designed mansions, privately held John Laing operates in 11 markets in California and Colorado and controls 15,000 undeveloped lots.

“Larry has built a very good team and it’s a company that’s done a good job in all the categories that count: with customers, with employees and with land sellers,” says Randall Lewis, a principal of Upland-based land developer Lewis Group of Cos. and a former home-building executive.

Since Webb took over the company in a 2001 management-led buyout, annual deliveries have soared 70% while revenue more than doubled to $1.6 billion in 2005, putting it into the top 20 of U.S. builders.

Emaar’s financial muscle could make those numbers grow much larger.

Formed in 1997 and owned in part by the seven ruling families of the United Arab Emirates, publicly traded Emaar is behind many of the colossal construction projects underway in the Middle East, as well as residential and commercial ventures in India and North Africa. The company is building the $20-billion Burj Dubai Downtown, which includes, at more than 2,300 feet high, what would be the world’s tallest skyscraper, and the King Abdullah Economic City, a $26.6-billion mixed-use development in Saudi Arabia. The company reported a 14% increase in first-quarter profit, to $413 million. Emaar gets a boost from its royal shareholders, who have been known to sell the company land below market rates.

Its new-home communities in places such as Dubai; Karachi, Pakistan; Marrakech, Morocco; and Hyderabad, India, often have the look of any newer suburban California housing tract, and even sport such similar-sounding names as the Highlands, Crescent Bay, Arabian Ranch and Boulder Hills. Emaar has delivered 13,000 homes since 1997, while John Laing has built 16,000 in roughly the same period but spread over more communities. Indeed, Emaar tends to construct projects that often incorporate retail centers, luxury hotels and even mosques -- structures not found in John Laing communities.

Beyond its deep pockets, Emaar has strengths that will benefit Webb’s organization in ways that would have been unimaginable before, Lewis says.

John Laing’s new parent “is expert at creating a sense of place, at dealing with different cultures and taking on large-scale projects,” he says. “As Laing tries to go to the next level, the lessons from the Dubai company will be very important.”

Meshing Webb’s informal style and employee devotion with Emaar’s sophisticated global outlook, in addition to its obligation to its shareholders, could be a tough fit.

One industry observer, who asked not to be named because he does business with John Laing, noted that Webb’s priorities, which include heavy expenditures on staff training and charitable projects and affordable housing initiatives, “wouldn’t play well on Wall Street” and might not go over well on Sheik Zayed Road, Dubai’s most prominent street.

At one of John Laing’s numerous staff development meetings recently -- the company sends managers to at least four weeks of training each year -- Webb was peppered with questions about the potential for a culture clash -- corporate and otherwise. Female managers in particular were concerned about working for a company whose business practices are reviewed by Islamic scholars to ensure adherence to Islamic law. Webb told them that during meetings in Dubai with Emaar executives this year he was chided for having no female division heads, while Emaar has at least one.

Emaar’s leaders, he says, “are totally supportive” of women in executive roles.

The next stage for Webb will be the biggest challenge yet for the 20-year housing veteran. Emaar has made it clear that it wants John Laing to expand its presence in existing markets while delving into new ones, particularly in the South and Southwest, through acquisitions and internal growth -- looming slowdown or not.

Emaar, Webb says, “knows what’s happening in the housing market” and its purchase of John Laing is “a long-term investment.”

“They understand that housing is cyclical,” Webb says.

Webb, too, knows a thing or two about cycles. Born in upstate New York and earning a master’s degree in planning from Harvard University, Webb was Orange County division chief at the former Kaufman & Broad (now KB Home) at the peak of the last growth cycle in the late 1980s. He had just been named president of local builder A-M Homes in 1990 when the market started its six-year slide.

“Having managed home builders in the early 1990s, we’re in much better shape today,” Webb says. “There’s no comparison.”

Still, John Laing is forecasting 100 to 150 fewer home closings this year, with revenue even with 2005.

In 1996, with Southern California home prices and sales bottoming, Webb jumped ship to head John Laing Homes, then a subsidiary of British builder John Laing. Three years later, the company merged with Watt Residential Partners to create WL Homes, with Webb as CEO. The company continued to use the John Laing brand. Five years later, when the company’s foreign owner put it up for sale, Webb, Watt and other senior executives put together a complex financing plan to join the bidding, eventually succeeding.

John Laing has long been eyed by bigger builders, and Webb had always batted them away. It was purely coincidental, he says, that Emaar happened to come calling late last year about the time he and his team were hoping to expand but realized they were hindered by insufficient capital and staff.

“We were simply at the right place at the right time,” Webb says.

For its part, Emaar may have paid a premium for John Laing at a time when the market value of large publicly traded builders is about half their annual revenue. But the Dubai company seemed to take into consideration other, intangible “assets” specific to John Laing.

“Larry’s extensive experience in the industry and top-notch management skill, and indeed the management skills of John Laing’s entire senior leadership team, was an important factor in our decision to create this partnership,” Emaar Chairman Mohamed Ali Alabbar said. “Larry and his team have demonstrated that they are on the forefront of best practices in the industry, including customer service and product quality. We’re confident that we can apply these assets with great success in markets throughout the world.”

Webb says he is preparing a strategic plan, to be presented in August, that will detail U.S. expansion for Emaar. And he’s planning a trip to the Middle East next fall.

The added responsibility and extensive traveling will become a routine part of Webb’s role in leading the new John Laing. But it’s also a bit of a disappointment for his employees.

“Each one of us,” Kabel says, “wants more time with Larry.”