Iowa's largest homebuilder lays off 103 workers
Posted: Saturday, April 26, 2008
DES MOINES, Iowa (AP) -- Iowa's largest homebuilder, Regency Homes Inc., laid off all its employees except for top management in its homebuilding and land development companies Friday.
A letter addressed to friends and partners of the West Des Moines-based privately held company said 103 employees were told Friday afternoon they had been laid off.
Company officials did not immediately return calls seeking comment, and it was unclear whether the company planned to halt construction.
In the letter, Regency said it is working with financial advisers and legal counsel on the issue of vendor payments and other cash obligations "that our current situation does not allow us to fulfill."
"We do believe that our equity outweighs our current obligations," according to the letter, which was obtained by The Associated Press.
The company has been struggling for months and laid off 26 workers in January as the housing industry slump hurt homes sales.
Then, company officials said the home building business had shrunk by about 40 people -- nearly half -- over the past two years.
The company reported in January that it expected to sell 550 houses this year, a 43 percent decline from the high of 2005 when 1,000 homes were sold, a record for any single home builder in the state.
Regency was founded in 1986 by Michael R. Myers and Richard D. Moffitt, who joined their individual building and carpentry companies into one company. It has grown into a diverse company with land development, apartment management and commercial services divisions.
It builds single family homes, condominiums and town homes ranging in price from $170,000 to more than $600,000.
In addition to the Des Moines market, Regency serves other areas including Cedar Rapids, Iowa City, Ames and Cedar Falls.
The layoffs raised concerns among companies that do business with Regency.
"There's a significant concern related to those people that have bought homes that have not yet been delivered. We'll be working through the process of identifying the best way to move forward," said Mike Knapp, president of Iowa Realty, Iowa's largest real estate company, which markets more than 90 percent of Regency Homes in the Des Moines market.
Knapp said his real estate company has about 60 pending sales with Regency, and he is listing about 225 homes for Regency.
While the Regency announcement is significant for Des Moines, Knapp said it shouldn't scare away anyone considering a home purchase.
"It certainly is the biggest thing that has occurred as it relates to a builder, a home construction company, but as it relates to the entire market, it's certainly something that can be worked through in a relatively short order."
Mark Thompson is president of Forefront Economics Inc., a Beaverton, Ore., construction trends consultant. He said home construction is still deeply in a slump and does not appear to be emerging.
"Obviously, it will change as these things do turn around," he said. "But the tea leaves we're reading right now are saying it hasn't turned yet."
For Iowa, he said the outlook for single-family home construction remains negative, according to data he's reviewed through March.
Regency's commercial business designs and builds facilities and acts as a general contractor for business projects. It has offices in Iowa, Minnesota and Arizona. The company also is licensed in Florida and Louisiana, according to the company's Web site.
Its real estate management company had 1,500 residential units and 2 million square feet of commercial property under management throughout Iowa and in the Omaha, Neb., area.
A letter addressed to friends and partners of the West Des Moines-based privately held company said 103 employees were told Friday afternoon they had been laid off.
Company officials did not immediately return calls seeking comment, and it was unclear whether the company planned to halt construction.
In the letter, Regency said it is working with financial advisers and legal counsel on the issue of vendor payments and other cash obligations "that our current situation does not allow us to fulfill."
"We do believe that our equity outweighs our current obligations," according to the letter, which was obtained by The Associated Press.
The company has been struggling for months and laid off 26 workers in January as the housing industry slump hurt homes sales.
Then, company officials said the home building business had shrunk by about 40 people -- nearly half -- over the past two years.
The company reported in January that it expected to sell 550 houses this year, a 43 percent decline from the high of 2005 when 1,000 homes were sold, a record for any single home builder in the state.
Regency was founded in 1986 by Michael R. Myers and Richard D. Moffitt, who joined their individual building and carpentry companies into one company. It has grown into a diverse company with land development, apartment management and commercial services divisions.
It builds single family homes, condominiums and town homes ranging in price from $170,000 to more than $600,000.
In addition to the Des Moines market, Regency serves other areas including Cedar Rapids, Iowa City, Ames and Cedar Falls.
The layoffs raised concerns among companies that do business with Regency.
"There's a significant concern related to those people that have bought homes that have not yet been delivered. We'll be working through the process of identifying the best way to move forward," said Mike Knapp, president of Iowa Realty, Iowa's largest real estate company, which markets more than 90 percent of Regency Homes in the Des Moines market.
Knapp said his real estate company has about 60 pending sales with Regency, and he is listing about 225 homes for Regency.
While the Regency announcement is significant for Des Moines, Knapp said it shouldn't scare away anyone considering a home purchase.
"It certainly is the biggest thing that has occurred as it relates to a builder, a home construction company, but as it relates to the entire market, it's certainly something that can be worked through in a relatively short order."
Mark Thompson is president of Forefront Economics Inc., a Beaverton, Ore., construction trends consultant. He said home construction is still deeply in a slump and does not appear to be emerging.
"Obviously, it will change as these things do turn around," he said. "But the tea leaves we're reading right now are saying it hasn't turned yet."
For Iowa, he said the outlook for single-family home construction remains negative, according to data he's reviewed through March.
Regency's commercial business designs and builds facilities and acts as a general contractor for business projects. It has offices in Iowa, Minnesota and Arizona. The company also is licensed in Florida and Louisiana, according to the company's Web site.
Its real estate management company had 1,500 residential units and 2 million square feet of commercial property under management throughout Iowa and in the Omaha, Neb., area.
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