1650 E. River Road
Standard Pacific Homebuilder Says “Goodbye Tucson”
National homebuilder Standard Pacific has left the Tucson marketplace, selling their business to local Arizona real estate executives Chris Kemmerly and Steve Quinlan. Standard Pacific entered the Tucson market in 2004 when they purchased Chris Kemmerly’s Kemmerly Homes which owned and built the Miramonte brand, which was very successful and well known in Tucson. I believe the reasons for their departure are self-evident. Standard Pacific was taking significant losses. Their stock price indicated serious trouble at the company. Standard Pacific is selling their Tucson operations to raise cash and prevent future losses. Standard Pacific sold about 700 lots ready for homes to be built and about 70 homes that are all currently in some phase of construction. The new company says they will be also be looking to purchase more land and subdivisions later in the year for additional building.
My take on this is that Standard Pacific, a large national homebuilder, got caught up in the super-hot market of 2004-2005 and decided that they were coming to Tucson. Kemmerly, a very successful and astute businessman, sold at the top of the cycle. Now he has bought back essentially the same company he sold 4 years ago. I think he stayed on as the president of the local operations for Standard Pacific after they bought him out. Kemmerly, like many real estate professionals, must be starting to say, “The current prices and marketplace are getting way too cheap.” Therefore, he decided to make a deal to purchase his old company back. While no details were given about the price of the sale, I am positive Standard Pacific took a very large loss in selling their assets back to the same person who sold them his company a couple of years prior.
This transaction is a great sign for the Tucson real estate marketplace. When men like Kemmerly and Quinlan (Chairman of the Board for Long Realty — the largest real estate brokerage in Southern Arizona) decide they want to buy large positions in a particular company, to me it is equivalent to men like Warren Buffet or Carl Ichan having done so. When that happens, many other investors will ride their coattails because they know those men almost always make substantial profits when they get involved in a company. These local real estate heavyweights understand the Tucson marketplace and have been through the cycles many times. Their decision to step up and buy suggests that the Tucson marketplace “may” be starting to turn a corner, and this is when the opportunity for large profits presents itself. As always, I will keep you abreast of new developments and will also talk with my local contacts that work for Kemmerly and see what seems to be in store for the new company.