Economy rattles residential real estate developer ranks.

The law of the jungle rules home development market

Economic Darwinism reigns supreme on this year's List of the 25 largest L.A. County-based residential real estate developers, ranked by 1992 company-wide sales.

With perennial No. 1 Kaufman & Broad Home Corp. of Westwood putting even more distance between itself and the rest of the pack, the strong indeed seem to be getting stronger at the expense of less financially heeled players.

This and other trends defining today's struggling home building industry have generated a substantial shakeout within L.A.'s development community.

Eight firms from last year's List -- including four of its top 10 -- either declined to participate in this year's survey or didn't qualify for The List. Hence, nearly a third of this year's members weren't featured last year, and several veterans moved closer to the top.

Access to capital is the key to the game today, executives at the growing firms insist. Backed by bullish financial sources, K&B and other winners have been acquiring home sites at favorable prices directly from developers idled by the construction credit crunch. The financially sound firms are also buying foreclosed land from motivated institutional sellers.

What this means in competitive terms is that financially strong builders can leverage their advantages into lower asking prices at their latest projects, many execs noted. Most added that their primary targets are the "entry-level" and "first-time move-up" markets, and that soft local demand has sent them seeking profits in peripheral or distant markets.

K&B Executive Vice President Roger Menard noted that recent market-bottom site acquisitions help the builder offer "the best value" to entry-level and move-up buyers "in every market we're in."

The thriving, publicly held corporation's "tremendous" capital resources are helping boost sales from $867 million in 1991 to just over $900 million last year and on to a projected $1.3 billion during 1993, Menard continued. The firm will be selling homes at 100 California communities by June, he predicted.

While No. 2 Pardee Construction Co. saw its sales drop from about $300 million in 1991 to $250 million last year, the Westwood-based firm projects a 40 percent increase to $350 million in 1993. Illustrating today's real estate turmoil, however, last year's No. 3 MJ Brock & Sons Inc., which posted 1991 sales of $250 million, declined to offer 1992 figures or 1993 projections.

Other builders among last year's 10 largest that didn't make this year's List or didn't respond to the survey include former No. 6 GBW Properties Inc., ex-No. 7 Griffin Homes and 1992's No. 8 Lycon Group.

New players are picking up some of the slack, however. A former Brock president has founded a new firm, taken over Brock's previous Forest Lawn Drive executive offices, teamed up with a major venture capital outfit, and acquired another big home building operation.

After teaming with New York-based equity investor Warburg Pincus Ventures and buying the assets of the AM Homes operation, Greystone Homes Inc. debuts this year at No. 6 with $110.5 million in 1992 sales.

Greystone Chairman Jack Harter, former Brock president, noted that his new firm bought AM's project sites "near the bottom" of the "de-escalating" California residential real estate market and therefore boasts a substantial market advantage over any competitor with a higher "land basis." Construction lenders have responded bullishly to Warburg Pincus' $85 million equity infusion, Harter said.

Along with Greystone, seven other firms qualifying for 1993's List weren't featured a year ago. They include No. 12 RWR Development Inc., No. 16 JCC Development, No. 17 USA Properties Fund Inc., No. 20 Future Estates Inc. and No. 22 Spelman-Cohen Builders.