John Laing Homes, which was bought by Dubai-based Emaar Properties for $1.1 billion in 2006 and then poured another $600 million into the home builder, pulled its funding in 2008 as the U.S. market continued to deteriorate, making it only a matter of time before Laing was forced to file for bankruptcy. This marks one of the largest private builder bankruptcies so far in this downturn.
On a side note, for my January column in Builder & Developer magazine, I discussed the ramifications of supposedly objective real estate consultants working during the boom years who deliberately bid up achievable prices by proposed new home communities in order to obtain more work from clients. I know of one division of John Laing Homes that was one of those clients, in which the consultants would claim that new housing in mostly built-out areas could command premiums of up to 50% over neighboring properties simply because they were new (whereas the rule of thumb is more like 20% to 25%).
From a BuilderOnline.com story:
The handwriting was on the wall for John Laing Homes. Earlier this year, the Southern California-based builder stopped building and selling homes in several markets, laid off employees, and hired a business consultant experienced with Chapter 11 bankruptcies.
And today Laing filed for bankruptcy in U.S. Bankruptcy Court in Delaware, seeking protection from tens of thousands of creditors and between $500 million and $1 billion in liabilities. It says it has more than $1 billion in assets...
WL Homes, which does business under the Laing name, is owned by Dubai-based Emaar Properties, which recently posted a loss for 2008’s fourth quarter due to its struggling U.S. businesses. The foreign parent, which has invested more than $600 million in the U.S. builder since its 2006 purchase, indicated in December that it would no longer fund Laing on an unsecured basis, leaving the builder in a precarious financial position.
