New Player, New Court?

Expect to see John Laing signs pop up on A-rated home building sites in your market within a year, if they are not there already.

Armed with Middle Eastern oil money, Larry Webb's growth plans for WL Homes (Professional Builder's 2004 Builder of the Year that markets under the name John Laing Homes) just took a quantum leap into the league where public Giants play after Dubai-based Emaar Properties' $1 billion-plus cash acquisition of the company.

"No one's leaving. I gave them my word that all 41 of our former employee owners will stay in place." - Larry Webb

The deal changes a lot. Laing will grow fast, both organically and by acquisition. And it comes at a time when public builders face tough sledding, with sales and share prices tumbling, in widespread market downturns. Look for Webb to spring into the void left as the public builders walk away from land deals in many markets. And Laing will be a tough competitor on the mergers and acquisitions front. Many private builders will prefer Laing's quiet cash to Wall Street's public scrutiny and strings-attached deals.

Webb and his senior management team are under contract for five years. "We had a handshake deal with the Emaar folks in December," Larry says, "with two contingencies: they wanted a guarantee that (Laing CFO) Wayne Stelmar and I would stay with the company, and I wanted to go to Dubai, walk their houses and feel good about who these people are. That happened in mid-February.

"I spent a week there," Webb says. "I saw more growth in Dubai than I have ever seen in the U.S. And these are very progressive people. All of Emaar's senior managers were educated in the U.S. or England. I asked tough questions about relations with Israel and the role of women in the workforce. They have a better record than we do on promoting women. The most important aspect is that we will be able to keep our culture."

Webb says nothing will change at Laing. "No one's leaving. I gave them my word that all 41 of our former employee owners will stay in place. Everyone [has the same incentives] exactly as in the past. We'll develop a stock option plan within six months," he says.

Laing is working on a strategic growth plan. "We'll spend eight weeks studying where we want to be and how to get there," Webb says. "We're looking at Georgia, Florida, Texas, Arizona, and we might want to move up the (west) coast into Portland and Seattle. But first, we want to grow our existing divisions by 150 houses a year in every market."

Emaar Properties, led by Chairman Mohamed Ali Alabbar, is already one of the largest real estate developers in the world.

"It's possible," says Wall Street housing stock analyst Ivy Zelman of Credit Suisse. "It was a surprise to me that Dubai would go from buying ports to real estate, but I guess it makes sense. Emaar is the kind of company that looks for the best quality player in a market. They certainly got one in Laing."