High Laing-xiety
From BUILDER, by John Caulfield: The story here increasingly reminds us of the famous Charlie Partanna line from Prizzi’s Honor, which is not exactly for family-oriented information channels like this one. The line goes roughly like this: “Marxie Heller so f-in’ smart, how come he’s so f-in’ dead?”
Jack Nicholson priceless.
Now here’s the low-down on John Laing Homes, as super-reported by Builder senior editor John Caulfield. The cut-to-the-chase nut paragraph:
This communications vacuum inevitably invites questions about John Laing Homes’ operations and its financial standing wth Emaar, one of the biggest developers in the Middle East. Indeed, at least two sources contacted for this story, who profess knowledge about Laing’s situation, said that what precipitated the review process was Emaar’s decision to cut off the builder from new working capital. (One source said that Emaar, which paid $1.05 billion to acquired John Laing Homes, has since pumped at least $600 million more into the company.) Sources also contend that Laing stopped paying its trades and suppliers in December.
HousingCrisis.com has weighed in recently on the goings-on at Laing, since some big money interests expressed curiousity as to weather Emaar might be looking to unload the whole kit-and-kaboodle for a song after shelling out a billion for it in 2006.
The number of variations on the same plotline goes on and on. But Laing’s tale is wrenching. It went from being what longtime former CEO Larry Webb described as a “pretty good builder” to perhaps the richest single private to private M&A deal there’ll ever be. The drama stars an international cast of young bright lights with Oxford degrees and business track records with soaring trajectories.
Only thing is, there’s probably a very strong correlation between Ivy League degrees and personal and corporate wealth destruction these days. On the surface, the smarter the deader. And the strongest plotline in residential real estate seems to be “the faster one got big, the harder one has fallen” as the vortex of home price deflation, consumer confidence, and credit plays out.
For one of America’s better privately held home builders, it’s high-Laing-xiety time.
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I heard similar rumblings from IBS. Although rather than a sale, I think it’s more reasonable to expect either (a) the company will shrink until it’s small enough to hibernate until better days or (b) it could be forced into bankruptcy. Either way, the John Laing that will come out the other side is likely to be a company with an exclusive focus on the luxury market.