Weekley, via a cash and options deal, has purchased most of the remaining home building lots of T.W. Lewis and will begin building in the Phoenix market within 90 days, under the name T.W. Lewis Collection of David Weekley Homes.

The deal fulfills two of Tempe, Ariz.-based  T.W. Lewis Homes owner and CEO Tom Lewis’ near-term goals: 1) a leadership succession plan, and 2) a welcome new source of access to capital to accelerate opportunities as the dig out from the housing recession takes hold. To date, Lewis, 62, has been the sole source of his home building operation’s capital financing, and, especially in a protracted brutal market, capital options have become increasingly critical. Lewis notes that his company paid off its land and housing debt in 2008 and 2009, and asserts that he’s profitable on a run-rate basis now.

However, expecially in light of the opportunities that will be there for those with bigger treasure troves of cash, Lewis can now breathe a sigh of relief on behalf of his team of 35 employees that the company will tap into the deep pockets and deep leadership bench at Weekley, which is regarded as private home building’s preeminent business culture.

Lewis sent a note yesterday to friends, partners, and associates that says:

“Under the new agreement, T.W. Lewis will complete all of our homes started through 2011 and transition to ‘The T.W. Lewis Collection by David Weekley Homes’ during 2012. I will remain active in management and will be a partner in the new venture for five years. All current T.W. Lewis employees also will remain with the organization.”

In an interview this morning with Builder Pulse, Lewis explained some details of the structure of the deal:

• David Weekley Homes acquires for cash about 42 lots across T.W. Lewis’ 11 active communities in the Phoenix market.
• David Weekley Homes has assigned one of its executives to operate out of the Phoenix operation, serving as David Weekley Homes’ division president, reporting through to Austin, Texas-based area president Jim Rado. The assignment’s going to Jason Hill, up to now a project manager
• Weekley enters into an option deal to take down about 120 lots across three additional parcels T.W. Lewis owns, where Lewis will serve as developer and land banker.
• Tom Lewis says he’s closing today on yet another 30-lot deal in the master-planned community of Seville in Gilbert, and he plans to work as a land acquisition partner with Weekley and continue in an ongoing role as a land banker.
• Additionally, an office building that T.W. Lewis owns in Tempe and serves as the builder’s headquarters will be part of a lease agreement, and the offices will now be home to David Weekley Homes’ Phoenix operation.

T.W. Lewis, per Builder, ranked 165 in 2010 in Builder‘s Next 100, with revenues of about $52 million on closings of 111 homes.

Tom Lewis notes that his company will close about 100 homes in 2011, and “this deal will allow David Weekley to get a fast start, with about 100 closings in 2012.”

Weekley’s Rado confirmed that plans call for 10 to 15 home starts under the T.W. Lewis Collection by David Weekley Homes in 2011. “We plan to close about 100 homes in 2015, and our five-year plan is to close about 250 homes, because we believe that’s where this market is going,” said Rado.

Avila Advisors served as representative to Tom Lewis interests in seeking a capital partner.

This arrangement gives Weekley a presence in a market that it has coveted a position in earlier but failed to establish. Now it has a running start with a lot pipeline, a partner with a strong name as a land buyer and home builder in the market; a set of relationships with trade contractors that stretches back 20 years, and an alignment with a business culture that’s a good match with the Weekley ethic of quality.

Earlier, in April, Weekley joined Indianapolis-based Estridge Homes‘ operations into David Weekley Homes, with principal Paul Estridge, another regional private builder with a strong reputation for customer care and quality.

In an April, 2010 profile of Campbell, just shy of two years into his resuscitation efforts at Standard Pacific, we wrote:

His m.o. is simple. Come in. Listen. Do the obvious. Give others credit for success. Then, move on, making Matlin-Patterson’s $5 billion distressed market fund investors a little—or a lot of—money in the bargain. It’s become an iterative play because it’s his makeup—a good listener, a rapid learner, a dispassionate decision-maker, an impatient doer, and—what strikes many as an oxymoron but shouldn’t—a deeply caring pragmatist with little-to-zero need to prove anything to anybody … except maybe himself.

Home building, they say, is different. It’s local. It’s real estate. It’s manufacturing. It’s marketing and sales. It’s trade relationships. It’s logistics and distribution. It’s the business of dreams. It eats “outsiders” for lunch. You have to be there. You have to do it to know it. Public home building company CEOs are a club not looking for new members.

Campbell stepped into the StanPac arena with fluid three-part goal: 1). stop the bleeding, 2). prevent the venerable company from going into bankruptcy, and 3) establish a platform from which the company could grow.

Industry insiders, observers, and analysts may have their say about Campbell’s three-year tenure now that he’s chosen this moment–before the destiny of both the company and the home building industry itself is clear–to exit.

Whatever the subjective comment might be, the facts of Campbell’s Standard Pacific performance are pretty clear. Here’s some of what that tenure looks like:

• Overhead: reduced overhead by $145 million to $145 million … i.e. cut overhead by 50% from end of 2008 to present
• during that period sales went from 5,000 to 2,500
• Debt: Standard Pacific had a balance of $2.2 billion in May 2008, all of it due to mature before 2016; now, the debt balance is $1.3 billion, and less than $100 million of it is due before 2016
• JV debt went from $178 million to zero
• Operating Profit: EBIDTA is 12%, highest in the industry … actual dollars went from $44 million to $132 million
• Per unit margin: breakeven in terms of sales per month per  community was 3.2  … now the breakeven on per sales per community is 1.1
• ASP: Average selling s price in 2008 was $300,000; now, in StanPac’s new communities, the ASP is close to $390,000 …. Opened 100 new communities in last 2 years… all new home designs…. Another 50 are scheduled to open in the next year
• JD Power noted in its final series of rankings of that Standard Pacific ranked No. 1 in customer satisfaction among public home builders in its markets

Not a bad report card to add to the resume of a “fixer.”

Thing is, Campbell lives up to another standard on all that one might consider an accomplishment, his own.

“The real measure of whether I’ve succeeded is does the company  do better after I’ve left. Standard Pacific is in a position to do that.”

As was his plan practically from the get-go Campbell’s operational mantel goes now to Scott Stowell, who’s worked yeoman’s service at the company since 1986, in various division, region, and headquarters titles, most recently as president. In June, the team added an industry outsider, Jeffrey J. McCall,  as chief financial officer and executive vice president, who’d worked in the past with Campbell, and who represents continuity in asking questions, raising challenges, and thinking outside prevailing industry conventional wisdom.

“I used to say in analyst calls that it was easy for me to think out of the box because I didn’t know where the box was,” says Campbell. “Now, that role goes to Jeff, who also doesn’t know where the box is. The issue is fatigue… people are tired but they get it… Sitting around and waiting for the market to recover is not a good operating strategy. Jeff is not tired. He’ll  keep people focused on what’s going on as opposed to what they hope will go on.”

Campbell is a big believer in Stowell, McCall, and the team of 750 associates who currently work for a company founded and built by Ron Foell and Art Svendson, starting 45 years ago. Going from losing $1.2 billion to actually making money didn’t happen without a lot of inspired, committed, sweat equity.

“A turnaround as successful as this was only possible because of the solid “bones” the company had,” says Campbell.

The afternoon of the announcement of his forthcoming status as an expert in sand saves, Campbell was riding an exercycle at the gym.

“Exactly what I was doing the morning I finished at Railworks….was asked to run Ormet that afternoon….weird.”

Today, Ormet, the Hannibal, Ohio-based aluminum plant Campbell “fixed” before his StanPac term of service thrives, and is hiring.

That’s what he wants for Standard Pacific three years from now.

As this is a first pass, and as yet,  incomplete, we’re going to refrain from comments about the specifics of each executive’s compensation package in relation to company performance, individual achievement, and the nuances of stock equity and options and other incentive compensation and bonuses.

Instead we’ll offer some broad-brush observations regarding the environment in which each of these gentlemen toiled.

Among the key challenges each faced in their role to preserve and if possible increase shareholder value was to size their corporations’ balance sheets in the most adverse imaginable business conditions. Shedding costs, brutally recognizing opportunities to pare down non-performing operations, capturing efficiencies in the building process, dealing as ably as possible with legacy land issues, and taking out overhead structural layers one after another after another was part of the story of 2010.

Simultaneously, CEOs had to lead a charge to drive new opportunity against the last gasp flurry of purchasing during the federal home buyer tax credit period that ended April 30 of last year. This meant pushing new communities with reset land-base costs, trotting out “new normal” home designs, and building specs well beyond the level of visibility of demand.

CEOs were primarily adversity managers. They redefined focus. They retained, where possible, their most highly-regarded talent. They cut ferociously. They got into the re-stocking of their land pipelines, and some, like Lennar and Toll Brothers, introduced real estate finance plays that recognize that home building may not be quite the business a dozen or more public companies need it to be over the next couple of years.

Once we get the data in from the remaining proxy statements — missing are Avatar, M/I Homes, Meritage, PulteGroup, and Standard Pacific Homes — will take a dive into the whys and wherefores and WTFs of the comp packages.

Meanwhile, here’s a teaser. Enjoy:

Correction: Doug Yearley, Toll Brothers, became CEO effective June 16, 2010, having been elected to Toll’s board of directors in mid-May that year. His prior title was executive vice president, a promotion from an earlier role as regional president.

“We had to listen to people tell us we’d lost our minds,” Scott Gallivan says to us in a brief update on Integrity’s progress three years into its life as a fledgling in home building’s most inhospitable of times in memory. No surprise there. “We have been to the wall and back,” Gallivan adds. “For a while there we were thinking we’d need to go in and start finishing basements and re-doing kitchens.” But it didn’t come to that.

Partly, of course, their good fortune is that they didn’t pick South Florida, nor Atlanta, nor Vegas, as their Square One. They picked the D.C. metro area, which Builder just noted is the 11th Healthiest Market in the country, based on what new-home construction may be expected to occur there in 2011.

The surprise is that, here they are now, Gallivan, Dec, and Hutzel, along with the vaunted addition of a fourth principal just recently–Bruce Gould, former vice president of residential for the Peterson Co.–on their way from zero to $35 million in about four years time. But maybe it shouldn’t come as such a surprise. They’ve got the pedigree, the disciplines, the relationships, and the sense of scale from years as public home builder divisional stars.

“Here we were, a group of national home builders, and in a way, those companies created their own worst nightmare,” says Gallivan. “They put us in the markets where we built the contacts with people,  the resources, and we knew how to develop deals, but we could do it all without the cost overhead structure of the corporation. ”

Gallivan, whose Chantilly, Va.-based company has grown from his two brave compadres in 2008 to 14 people, says Integrity will generate about 75 closings in 2011, and that the 2012 revenue figure of $35 million will be an increase of 75% over last year, which was double 2009′s $9 million.

Most of the volume growth this year will come on the back of a deal with Peterson to be the for-sale townhome and manor home builder at Peterson’s National Harbor mixed-use masterplanned development in the high $500s and $600s. Integrity already has work going there on four buildings, and will open its Potomac Overlook models in May, and has booked sales of 35 units so far of a pipeline of 220 lots.

Since Integrity can bring developers big builder operational discipline and scale with its labor and materials base–minus the overheads, it can structure lot deals to pay about a 20% premium to what publics would pay for land, and build in a profit-sharing component on the back end of the deal, Gallivan says. For many developers, soundly beat up and beat down by the publics during the downturn, this sounds like a win.

Gallivan and Integrity Homes grinded out an upstart’s humble existance through 2008 and 2009, with opportunistic deals, primarily with Peterson.  After selling through a few smaller deals, Gallivan is focusing on the National Harbor projects to keep the company busy momentarily, but he’s also scoping out opportunities in Virginia’s Shenandoah Valley, an area he says Ryland once did pretty well competing in.

At the same time, through a relationship the principals had with another company they share offices with in Chantilly, The Evergreene Cos., Gallivan became receiver on the high-profile 2,000-acre Harbor Station development in South Prince William County.

Gallivan expects that deals to conclude the restructuring of ownership and a monitization plan will come to light over the next several weeks. What’s more, he says that this type of real estate role–as a receiver who can put value back on partially developed land that languished after deals failed, and then activate a home building operations component–may soon take Integrity to Southeast Florida, where Gallivan had been head of a Pulte division for years before he joined Ryland.

“With Bruce [Gould], we now have the land, housing, sales, and mortgage parts of the company in place,” says Gallivan. He sees a near-term future–say 2012 or so–of reaching a 150-home a year plateau, which he envisions somewhat as an annuity program.

A $70 million to $100 million home building company that started in the blackest, deadest, most inauspicious of moments in the Winter of 2008 and made it there in about five years time is no mean feat, even in one of this tough environment’s healthiest of markets.

The two came of note as two of the executive-rank breakaways from the John Wieland Homes team in 2007, as the Southeast’s home building boom quickly busted. For the past three-plus years, they’ve been toiling under the Reynolds Signature Communites aegis, and now they’re hanging up a shingle of their own in this most opportunistic of moments before recovery actually takes hold.

Their new corporate aegis is FrontDoor Communities, and although they’re both currently based in Atlanta, the footprint of their eventual activities is the greater Southeast, with an emphasis on Florida and South Carolina.

Terry Russell--FrontDoor Communities

Russell and Langella, you see, had been the nucleus of the go-vertical team at Reynolds Signature Properties’ Linger Longer Homes. When they joined on with the Reynolds Plantation team, they’d brought with them a strong tie with a rather vaunted financial services client with considerable interests in the high-end residential resort types of properties that Reynolds planned to develop in two northern Georgia golf-course retirement/resort communities, Achasta and Reynolds Plantation.

According to a series of reports about three weeks ago, developers of Reynolds Plantation were under duress to make a $45 million payment to impatient lenders in the weeks ahead.

The World Property Channel, a real estate information source, reported on Feb. 16.

According to the letter, signed by Reynolds Plantation Chairman Mercer Reynolds III, a group of banks is demanding a hasty payment of $45 million by April. The payment was requested while the development company was negotiating renewal of a line of credit.

In the letter, Reynolds says he and his cousin, Jamie Reynolds, had “pledged a number of additional assets (totaling approximately $60 million) to the banks,” but the banks still want the large payment in two months. The cost of construction of the amenities being sold is about $136 million, the letter says.

The Reynolds empire at Lake Oconee spans more than 14,000 acres and 90 miles of shoreline, comprised of three gated communities–Reynolds Plantation, The Landing and Great Waters– a golf academy, and six golf courses, with a seventh on the drawing board. There are around 2,000 residences between the three communities.

The letter says the line of credit was used by Reynolds Plantation, Linger Longer Development Co., and its affiliates to buy land for further development of the ritzy subdivisions and golf courses that are near the Ritz Carlton Lodge, a popular destination for Atlantans.

Mike Langella

Langella, who was chief financial officer at Linger Longer, says that Reynolds successfully recapitalized since the emergency, but that the recapitalization would “suck cash for an extended period of time, leaving no cash to move ahead with vertical.”

Hence, Russell and Langella’s exit from Reynolds, but the departure only opened the FrontDoor to new opportunities with some familiar backing.

Says Langella, “Terry and I had existing clients for real estate advisory services when we started at Reynolds, and built the home building operations from scratch starting three years ago. Now, we’re continuing to do work for this client [a well-known real estate fund that happens to be 80% owners of a highly visible portfolio of upscale vacation-and-or-retirement oriented masterplanned communities in the Southeast that Langella requested not be mentioned at the moment].

“Each of these communities has a unique set of challenges that Terry and I represent a fair amount of value to address–ranging from a need to change the business model, to operations management, to finding ways to take costs out to reflect business realities today,” Langella tells Housing Crisis.

What’s more, there are thousands of home building lots across these masterplans, and chances are pretty strong that Russell and Langella can make some sense of ways their client could “maximize the return” on those lots by building some homes.

That’s when FrontDoor Communities busts wide open for the next stretch of these two home builders’ careers.

On the other hand, economists like Ed Sullivan (hmmmm) of the Portland Cement Association, focus more on the could-be downers in the near-term landscape. Sullivan’s forecast for single-family starts in 2011 is for a niggly 492k s.f.s, a mere 3.4% increase of this horrible floor.

In between the extremes, economist Tom Lawler is guessing there’s reason to project 520,000 single family starts, based on the drivers he stacks up in his model.

Pretty big spread, eh?

Well, the home builders we’re in conversations with here at the International Home Builders’ Show in Orlando this week are approaching the coming buying season (should it develop) with guarded optimism.

“We’ve got to feed the beast or we’re out of business,” one private home building company president tells us. “Our job now is to win share at somebody else’s expense.” The hope for new-home builders is that they can win it mostly at the expense of distressed and existing sales, which outnumber new-home sales by 12 or 14 to 1 these days, depending on where you’re doing the counting.

With distressed clearing, well, in distress due to robo-boneheads moves by the mortgage servicers and actual property ownership open to debate thanks to “shoddy” documentation, the window is open for smart new-home communities to pull out the stops to bring  home buyers out to the neighborhoods and start tugging on their heartstrings.

Now that the home buyer tax credit adrenaline is long forgotten and slight interest rate upward gyrations have started to play on people’s trigger fingers, the biggest clouds of uncertainty we’re hearing about from the folks gearing up for Spring selling fall into these categories:

• pricing – how quickly will the big nationals concede to slower-than-modeled absorption rates, drop pricing, impair more land, and  bring the market down in its entirety another notch or two?
• credit tightening — on the one hand, we hear that a builder can work a prospective home buyer’s credit score up as much as 100 points within a year if they’re willing to pay down credit cards, clean up their unpaid balances, etc.; on the other, banks are being more stringent than ever in running credit, and will knock a potential buyer’s rating down below FHA minimums of 640 and VA and USDA minimums of 620 at the drop of a hat. Will policy and market conditions put banks back into the business of trying to lend more to home buyers, or while those conditions continue to make it a hostile borrowing environment?
• renegade appraisers — what recourse do builders have when he as seller agrees on a selling price, the buyer agrees on the price, but the appraisal comes in sometimes significantly lower than the contracted selling price? most private home builders will scotch the deal, even at the risk of having to take a home off the market for four months to comply with FHA rules and try to resell the home with a more appropriate appraisal? Will an increase in new home sales transactions solve this problem? It’s hard to know, at least while the banks seem to have no incentive to value properties at higher prices these days.
• differentiation — every community needs a story; price alone won’t do it. What are the memory points? where’s the magic? is the home going to save $1000s a year in energy costs? is there a design difference? a service level narrative that makes your homes stand out?

We’re impressed about companies like Orlando-start up Surrey Homes, which has placed most of the eggs in its basket in the move-up mid-$300s to mid-$400s market, which enable principal Jay Lewis and his team to offer a high finish product that works as a more-than-feisty competitor to a David Weekley community across the street in the Belle Isle.

What appears to work for Surrey–which closed 31 homes, with 38 sales in its first year of operation in 2010, and made money–not only is its position, not competing with all the entry-level players, but its DNA.

Surrey’s, “The Surrey Home Difference” offers a 4-year wall-to-wall warranty on all its homes, and a monthly scheduled maintenance visit for that period of time as part of the price of the home.

Lewis points out that, by and large, builders support their new homes this way anyway, so why not leverage the service in the marketing message?

Differentiation, service, credibility… these elements will eventually be the components of what we’ll refer to as the turning point in creating urgency, but only in hindsight.

More to come on our community visits in the next couple of days.

What’s clear is that builders are building. Starts will likely be up, more in the middle range than the high or low previously mentioned. But a big part of what happens with the number will be home builders’ collective and individual ability to create urgency …. where there is none.

What’s gone on, why the recent mainstream media eclat? First, on November 30, the Financial Times’ Ed Hammond reported:

Taylor Wimpey has launched the sale process of its North American business in a move that could earn the UK’s second-largest housebuilder an expected £600m (about U.S. $928 million).

Then, just after the New Year, Reuters’ Helen Chernikoff reports:

British homebuilder Taylor Wimpey (TW.L) could sell its U.S. homebuilding subsidiary Taylor Morrison to current management, a private builder or private equity firms, people familiar with the matter said.

Forget for a moment that our own publication, Big Builder had this to say in concluding a cover story on Taylor Morrison for its September issue:

Bottom line, Redfern and Palmer have four legitimate and one long-shot option—with sundry variations—to consider as the marketplace improves or gets worse on its way to an eventual recovery in the next 12 to 24 months.

From their vantage point, they may be motivated to:

Do nothing

Issue an IPO

Sell to a financial player (or possibly more likely a club deal)

Sell to a home builder (or possibly more likely parse up the regions to optimize value)

Allow Palmer to try to take the U.S. operation private via a leveraged buyout with a private equity partner

It’s been noted that [Taylor Wimpey chief Peter] Redfern brought on last year J.P.Morgan Cazenove to explore alternatives, and there’s no paucity of scrutiny and criticism of the company’s every move. It’s widely thought that whatever the entity may be worth, now—while stocks of the home builders as a sector are getting hammered by the markets—is not the moment to push for a deal.

But who’s to say what might happen if recovery gains a toehold as 2010 closes out, suggesting a real-live selling season in 2011? Then, land, specifically lots in various stages of development, becomes scarce again.

Usually, this volume level of noise means either that a deal’s already in the works, or that it’s nowhere near being done.

We think it’s the latter–that nobody’s about to land Taylor Morrison this week, or this month, or possibly even this quarter.

The much more likely disposition of assets near term is the sale of the Lehman-SunCal portfolio of tracts, some of whose early recovery viability make them highly desirable to a number of the operators. It wouldn’t be surprising to see transactions on Lehman-SunCal parcels as soon as the next week or two, and certainly by the end of the month.

Still, people were talking Taylor Morrison just before the year ended, and although to hear them you might think otherwise, it’s because there’s an awful lot of interest among home builders in the Taylor Morrison “thing.”

We call it that because, among the most likely buyer universe for Taylor Morrison–the public national home builders–there are three distinct value propositions through which to assess whether it’s worth incurring the $1 million 0r so in due diligence costs and put in a bid.

Those three value propositions would be:

• The 14,000 lots that make up the lions’ share of Taylor Morrison North American assets, a pretty healthy chunk of which are raw/unfinished lots that would timeline years hence before they’d be ready to for inventory turn primetime, and also a pretty healthy chunk of which are located in Arizona and Florida, which it’s hard to see as near-future high-demand markets;
• The operation Taylor Morrison–an intensely lean overhead structure that blends a high-end land planning and design culture with a merchant-builder bang-em-out ethic–which has proven to be a feisty operational competitor in its respective arenas
• The brand Taylor Morrison, which, arguably connotes upper market quality and attention to design.

As a matter of fact, our industry sources say that the first round of invited bidders needed to respond to JP Morgan–which is handling Taylor Wimpey’s exploration of a sale–by yearend. According to executives who would have reason to be familiar with the process, about half of the organizations JP Morgan invited to bid actually put in a bid.

A few of the folks on the public home builder side tried to, let’s just say, work on the asking price a little bit by indicating they’re not currently a bidder in this round. We’re of the understanding that there’ll probably be several go-rounds of invitations to organizations, working with bidders, and making one or more of the deals stick.

Chernikoff’s article reflected what we’d heard from several of the public home builders–that the geographic footprint concentration in Arizona and Florida, the number of raw lots versus finished lots, and Canadian Monarch division, which represents a high-rise product that is a challenge or opportunity to a U.S.-based operator all its own–make Taylor Morrison an overly complex, if not too big, a pill to swallow right now.

This, we’re regarding as negotiation speak, pending what the shape of demand for new homes takes as the 2011 Spring selling fest gets underway.

In a sense, some of the urgencies and ultimately the motivations around the sale of Taylor Morrison will base themselves more on how sensitized a potential buyer is to the tipping point in home buyer demand. If it’s not going to materialize in 2011, then the raw lot pipeline and complexity around re-selling a segment like the Canadian operation become obstacles for those who have more immediate business motivations, i.e. the public home building companies.

This is why Chernikoff emphasizes the possibility of purchase by a financial player–a fund that might have longer term horizon on returns, playing time against money. Here’s Chernikoff’s analysis on that point:

Other sources said private equity firms, including Starwood Land Ventures and hedge fund billionaire John Paulson’s Rain Tree Investment Corp, are also evaluating the deal. Those firms could retain the current management team, which wants private equity backing to buy the company.

It’s been speculated that Paulson’s significant moves into land deals in the past couple of years presage a Matlin Patterson-style play into an operator platform. Actually, someone we were talking to noted that Paulson is a major–if not the largest–shareholder of Beazer Homes stock right now, which may or may not explain why Beazer took a good hard look at the Taylor Morrison book, before saying, “no thank you, not just now.”

 Starwood might be thinking similarly. Starwood has a vested stake in what happens with its land pipeline, and as yet, has a relatively minor invested stake among operators. So it too might be looking for a platform such as Taylor Morrison to help it monetize its land and generate greater value in the equation.

Chernikoff ably reported that she’d confirmed that at least one private home building operating company had submitted a bid, but heaven forbid she speculate on which of the private builders could do that.

If the near-$1 billion value on the land is Taylor Wimpey ceo Peter Redfern’s line in the sand, there are not even a handful of private home builders with the capital to buy it. It might make sense that the Canadian owners of Ashton-Woods or Mattamy Homes–both of which have been in expansion mode through the downturn could assemble capital.

What we’re not counting out, however, is that after a bit of haggling and creativity vis a vis some of the incongruous pieces of this deal, plus a bit of clarity on what happens with the 2011 home buyer demand trajectory, we’ll see a legit public company acquisition.

Or we’ll see Ms. Sheryl Palmer succeed in reeling in a financial backer for an operation she’s shown a passion for and level of competence.

But if you’re looking for a deal fix, look first to the Lehman-SunCal parcels. They’re going to be a load of fun as they go down.

The story of 2011 for Big Builder will be what happens at the 4% to 5% of neighborhoods that just have or will “grand open” to today’s new-home buyers, reduced in national terms to a trickle below 400,000 in 2010.

These new neighborhoods–we’re guessing in the range of 200 to 300 production home builder communities–most likely concentrated in the states of Florida, Georgia, Ohio,  North and South Carolina, and Texas, with the metro areas of D.C., Phoenix, and Riverside-San Bernadino thrown in for good measure will serve as a proxy for the narrative that will be high volume home building’s recovery program for 2011 and 2012.

At an absorption rate of 1 per week per new home community, this sets up a run-rate of about 15,600 new-homes in a 12-month period (assuming 300 new neighborhoods) once all of these new communities open their doors for sales.

How can the sale of just under 4% of the new-homes sold in a 12-month period, a mere $3 billion or so in home building revenues, figure so importantly as to stand for example as a proxy for the big builder universe?

Here’s how.

• many of the new communities are or will open on lots that have reset in price to levels builders assumed they could sell profitably out of the gate, or at least appreciate into profitability with velocity, scale, and lot appreciation
• many of the home products in the new communities have been transformed around heat-mapped value features in the homes, design and construction features that zero in on buyer preferences rather than scatter-shot expense … i.e., perceived value is in, while
• cost engineering has taken out expense on items that consumers don’t say they prefer
• waste has been eradicated, operational efficiency optimized, and suppliers have been hammered down to shadows of their former selves on pricing
• selling, merchandising, and marketing disciplines are in take-no-prisoners mode

What happens at the builders’ new communities in 2011 and 2012 will add two more chapters to the plotline of The Great Recession–New Home Edition. One will be about market share. The other will be about demand creation.

Public home builders have worked for more than two years to get their financial houses in order and what 2010 proved is that most of them are at or close to profitability even in the sub-400k new-home sales universe. An increase in market share over the next 12 to 18 month stretch will go far to improve their profit picture because they’ll generate more revenue without needing to spend all that much more to get it.

This is why they’ve tightened their geographies and focused.

What’s interesting in looking at the kind of land purchases builders made during the Spring 2009 to Spring 2010 lot-buying spree is that one can see each builders DNA play out in their land acquisitions. Some, like D.R. Horton and NVR (in its markets) locked up everything they could. Others were selective, with an emphasis on large-tract, multi-year build-out horizons in master planned communities. Still others bought lots to turn them soon–like now. They’re not interested in pipelining lots and playing a real estate land appreciation game with them as part of their business plan; they want cash, sales, turns, and profits sooner than later.

Come Super Bowl Sunday this year, they’ll be weeding out the garden beds and spiffing up the model park to show their new communities for all they’re worth. Do they know that if they build it, the buyers will come?

Of course not. “But this is what we do,” says the CEO of one of the top 10 nationals. “We build now.”

So, the new neighborhoods in places like Jacksonville, Dallas-Fort Worth, Cincinnati/Dayton, Orlando, Ft. Meyers/Naples, Denver, and Atlanta, are going to tell us a lot about how the high-volume sector is going to work.

Publics aim now for market share, and they’re going to leverage that for profits so they can corner even greater share of markets that are responsive to new-home appeal vs. available existing supply.

What they’re also going to do–particularly if the broader economy performs as it has begun to show itself–is to try to time the inflection point on shadow inventory supply to where they will focus on demand creation.

The story at last will be scarcity. Once distressed inventory peaks this year and starts to turn, focus will shift to how little new-home supply there actually is. That much of the plotline will begin in 2011: market share and demand creation.

Stay tuned as we begin to focus on builders’ new communities–the ones big builders opened in late 2010 or early this year. We’ll see recovery math in how they perform, especially if some of the early job creation that’s taking place occurs where there are operational footprints.

The W Hotel seemed to be first with the practice, and we liked it. “Sweat,” it exhorted via a little sign with a finger on it pointing to the gym. “Dine,” steered us to the overpriced ambiance of meals, and “Sleep,” “play,” etc. directives made their simple messages clear, and at the same time stripped the establishment of corporate hospitality’s onerous ennui and stodge.

Then, here in home building starting this time last year, we saw a wonderful use of the notion with the introduction of Shea Homes’ Spaces models. Mike Woodley’s flexplan floor diagrams go so far as to instruct potential buyers that in such and such a space, they’d work or sleep, they’d park, they’d eat, they’d cook, they’d even dream.

Hollywood, usually a setter of trends, couldn’t resist and picked up on the idea with the Julia Roberts movie “Eat, Pray, Love.” (Apologies to Elizabeth Gilbert, the author of the book of this title that inspired the movie, but once Julia Roberts deigns to star, it becomes a movie foremost.)

Let’s just say that like the Julia Roberts/Elizabeth Gilbert character in the Hollywood movie, you start out in a state of depression. Hmmm, not much of a stretch there.

The idea, then, would be to figure out what to do to get out of it, to recover and go on to have a semi-fulfilling life. This could work in the business community of home building.

Right now, to listen to home builders who offer their friendly perspective on what they’ve experienced, what’s been happening, and what to expect, two scenarios appear to be plausible.

One scenario embraced by many home builders with long experience — the multi-cyclers — is that this thing will end, and “thing will resume being more or less the way they’ve been” when recovery cycles occur. Same patterns of demand starting with entry level, same segmentation, slight variations on product preferences that follow the general fashion trends of the moment, and an unvarying true north around location–schools, job centers, shopping, etc.

Anecdotally, we hear often of an opposite scenario as well. This one presupposes that, this time, things are really different. Homeownership itself has lost its luster. Young adults aren’t going to want kids. Older people aren’t going to gravitate to warmth, physical amenity, active adult lifestyle, etc. Houses are going to be forever smaller. Suburbs will no longer exert appeal. etc., etc.

Certainly, as we’ve said, either of these scenarios is plausible to us. The uncertainties around whether our broader economic predicament is more cyclical or more structural, doubts as to whether policy will ever get sane control of the runaway irrationalities of housing finance; global ups and domestic downs conspire to convince us that nobody really know which camp is correct.

It may be the ones who say that, once the economy starts to recover, housing and the new-home construction segment of the housing industry, will crank back up and what was working before–from a discipline standpoint on marketing and sales, design, operations, purchasing, etc.–will essentially start working again. In other words, demand is demand is demand.

Or reality may take shape the way the others argue it will. Product would need to be retooled, land strategy re-envisioned, finance restructured, and operations management made over.

Which school are you from?

You think 2012 will bring a rising tide that will raise all ships once again, or will the then-36-year-old leading edge of Generation Y, and the then 67-year-old leading edge of the Baby Boom, as well as the then 46-year-old leading edge of Generation X have begun to change the core “who?” of your buyer segmentation assumptions?

Either way, whether things don’t change or change completely, the way to get from here to there–across a tricky 2012 landscape–is to verb, not noun.

One area of your offices should be labeled “study,” and that area should be all about every competitive and marketplace intelligence dimension you can imagine. Another section of the offices would best be called “break it” so that your best ideas one day can get stress-tested the next. A third would be entitled “start,” assuming a blank sheet approach to your firm’s capacity to meet a marketplace need; and, “sell,” “buy,” and “profit,” and so on.

All verbs. No lobby. No conference room. No office.

In an environment with so few transactions, money is hugely expensive, since every dollar is put out at considerable risk of its ever coming back. Since money is so expensive, the indulgence of the moment is you choosing how you spend your time.

Wall Street and Washington haven’t figured out how to commoditize, do a structured investment vehicle, regulate, or tax your time.

The thing is to use it for verbs. Eat, pray, and love if you want. But do.

Thing is, if you’re Horton’s Tomnitz–and, face it, there’s only one of those–it’s practically the only thing to say a year after the only thing going for your home building sales velocity was a re-upped and juiced up home buyer tax credit, and that’s one for the history books.

Saying, “hey, our sole tail wind for spurring sales in a significant way is bye-bye, and now we’re left with an absolutely hostile lending environment for our kind of home buyer, an economy stuck in park, and a hemmorhage of supply spurting into the market,” is probably about the only way to put it.

The only thing between now and Tomnitz’s being absolutely correct that 2011 will make 2010 look slightly better than one would imagine is possible is psychology.

Whether or not the recent positive retail numbers signal buoyancy among consumers, and that that spending will continue through the holidays is questionable. Most analysts would say that consumer spending behavior could go either way.

Home buying “Animal Spirits” are, of course, a horse of a different color. Tomnitz can’t predict exactly how “fundamentals,” “technicals,” and “psychology” will weave themselves into the narrative for 2011 any better than he could predict with certainty that D.R. Horton would double in sales unit volume between 2005 and 2010.

[It shrank by about half during that time period, which could be said to be an enormous accomplishment given the circumstances.]

So, clearly, for 2011, the smart thing to say is, it’s going to be harder, slightly slower, etc.

And the smart thing to do?

You see, now it’s time to ice budgets and sign off on business plans for 2011. We don’t imagine there are too many executive leadership teams tolerating a sandbag strategy from unit chiefs. In other words, operations have a lot at stake, and giving up volume compared with 2010 is not going to make for a persuasive story among stakeholders who are invested in home builders.

So home builders will need to continue to fight the laws of submarket gravity and take share not only from one another but conduct guerilla warfare against sudden foreclosure syndrome on their respective turfs.

Private builders, if they’re blessed with another 12 months of fight in them, need to take a chance right now with some hard dollars placed on just enough lots to get them through another 12 or 14 months. They can’t sit out, and they can’t get their cash commitment wrong.

That’s why intelligence–any little extra help a builder can get to match up the budget, the product, the competitive arena, the home buyer target, and the program–is not an option.

Right now, two streams of money ache to make their way into land purchases. They’re symbiotic insofar as each depends on end-user transactions–home sales–to make senses. Strategic lot buyers are looking to wring a few more cents off the dollar to get what they need to start communities with products and prices that mesh with their new retooled portfolios; and financial players in the “buy and hold” mode are leveraging desperation for tomorrow’s profits.

This is why it’s more important than ever to put intelligence tools into action, whether the program is a tactical survival plan to build through 2011, or its a strategic master play that puts 2011 into the context of a five year cycle that will ultimately favor builders.

Hanley Wood Market Intelligence has recently introduced a its Housing Intelligence Pro, which can help home builders match up opportunity with resources in most U.S. markets.

Also,  in a couple of weeks, Land Advisors Organization will be hosting a conference aimed at deciphering what’s next for one of America’s most enigmatic markets, Phoenix. For the second year running, will convene the Metro Phoenix Land and Housing Forecast conference Dec. 1, a one-day symposium featuring Tim Sullivan, principal at John Burns Real Estate Consulting; Jim Belfiore, president of Belfiore Real Estate Consulting; and Mike Orr, a principal of the Cromford Report.  The venue is the Sheraton Downtown Phoenix. All net proceeds will benefit Friends of ASU Real Estate Programs.

Don Tomnitz is not holding out a lot of hope for 2011, but home builders and developers learned in bygone cycles that hope is not a strategy. Being smarter is. See you at the Sheraton Downtown Phoenix on December 1.