UDC Homes

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Homes in Warner Ranch, Tempe, Arizona.jpg
Homes in Ironwood Village, Scottsdale, Arizona.jpg
Homes built by UDC Homes in Warner Ranch, Tempe, Arizona (above) and Ironwood Village, Scottsdale, Arizona

UDC Homes was an American homebuilder that operated from 1968 to 1998. The company, founded as the Universal Development Company in Chicago in 1968, became an active homebuilder in the Southwest and Southeast. The firm changed its name to UDC Homes in 1986; the next year, it completed a move of its corporate headquarters to Tempe, Arizona, a suburb of Phoenix. UDC was a highly productive builder, the ninth-largest in the U.S. by 1992; it was the second-largest in Phoenix, a market that represented most of its revenues, and the third-largest in Charlotte, North Carolina. Its homes largely targeted the "move-up" market.

The company converted to a corporation in 1992, but a complicated three-tier share structure led to indebtedness as dividends paid to prime preferred stockholders further drained its finances. The firm filed a pre-packaged Chapter 11 bankruptcy case in 1995, emerging as a subsidiary of developer DMB Property Ventures and exiting its unprofitable operations in the Southeast. Shea Homes acquired UDC in 1998, at which time it was the largest homebuilder in Phoenix.

History

UDC was founded by Gary Rosenberg in Chicago in 1968 [1] and began operating as a company by 1972. [2] The firm began developing Fountain of the Sun, an adult living community in Mesa, in 1971; [3] home sales began in 1976, with models named the Pima, Papago, and Hopi. [4] Over the course of the 1980s, UDC expanded beyond the Phoenix area. As early as 1980 with homes in the Rancho Bernardo development near San Diego, UDC entered California; [5] while it built single-family homes in Southern California, its two developments in Northern California by 1991 were adult communities. [6] In 1983, UDC bought Mulvaney Builders and entered the Charlotte, North Carolina, market. [7] That same year, the firm opened its first development in Florida, an adult community in Boynton Beach. [8]

UDC Development renamed itself UDC Homes in 1986; the name change coincided with a reorganization as a limited partnership, [9] ending four years on the public markets, [1] and the relocation of its operational headquarters from Chicago to Tempe, Arizona, [10] [1] which was completed in 1987. [11] In the late 1980s, UDC established a reputation in the Phoenix high-end "move-up" market for homes that backed onto golf courses, artificial lakes, and mountains. [12] It was the second-largest homebuilder in Phoenix in the early 1990s, with 1,654 permits in 1994 alone; that year, it was the ninth-largest homebuilder in the country. [13] Likewise, Phoenix represented more than half of UDC's revenue for 1993. [4] In Charlotte, it peaked at third in market share in 1992, with more than 300 housing permits issued, though it slid to fifth in 1994. [14]

UDC entered the Tucson, Arizona, market in 1994 with the purchase of land in the Rancho Vistoso development in Oro Valley. [15] This was its first new market since its 1987 entrances into Atlanta and Riverside, California. [16] Citing a more sluggish real estate submarket than expected, the company exited Tucson in 1997 to focus on higher-volume areas. [17]

In 1992, UDC Homes converted from a limited partnership to a public corporation so it could issue stock. After going public, UDC was saddled with issues, including $340 million in debt and softness in its Southeastern submarkets. Preferred units in the limited partnership were converted to prime preferred stock, with a high annual dividend, draining the company's profits and leading to payments it could not afford; UDC had to pay its prime preferred shareholders in stock instead of cash, which only increased the dividend requirement. [18] It also struggled with writedowns on land it bought, mostly in southern California, in 1989–90, prior to a national recession. In 1994, officials began searching for a buyer for the homebuilder as its stock price steadily declined. [2] No deal was reached, and in May 1995, UDC filed a pre-packaged Chapter 11 bankruptcy. As part of a debt restructuring, the company announced its intention to exit the Southeast. [19]

UDC exited bankruptcy in November as a subsidiary of DMB Property Ventures, LP, in a $108 million transaction. [20] Shortly after, AEW Capital Management acquired half of UDC from DMB. [21] Litigation from the bankruptcy outlived the company. Shareholders split $12.7 million in a 1996 deal with UDC's officers and $4 million in a 1998 settlement with accountants Coopers & Lybrand, both over claims that UDC officers sought to inflate the firm's stock price and concealed the company's actual financial condition. [22] Also implicated was auditor Arthur Andersen, which was cleared of wrongdoing in a 1999 civil jury trial but paid a $755,000 settlement to the state two years later. [23] Under DMB management, UDC continued developing homes, including an aggressive effort to buy land in Southern California. [24]

Shea Homes and Standard Pacific made offers to buy UDC in June 1998, [25] by which time it had become the number-one homebuilder in Phoenix with 1,041 starts over the first six months. Shea acquired UDC for an undisclosed price that July; it was billed as the largest transaction in industry history, surpassing D. R. Horton's $350 million purchase of Phoenix builder Continental Homes earlier that year. [21] Standard Pacific bought more than 100 parcels from the company. [26]

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References

  1. 1 2 3 Reagor, Catherine (May 4, 1995). "UDC chairman to lose job in restructuring". Arizona Republic. Phoenix, Arizona. pp. E1, E2 . Retrieved March 20, 2024– via Newspapers.com.
  2. 1 2 Reagor, Catherine; Gilbertson, Dawn (May 28, 1995). "Financial structure leads to bankruptcy court: Debt buries UDC Homes". Arizona Republic. Phoenix, Arizona. pp. D1, D4 . Retrieved March 20, 2024– via Newspapers.com.
  3. ↑ Hernandez, Mal (February 3, 1971). "$60 million town is planned near Mesa". Arizona Republic. Phoenix, Arizona. p. A-1. Retrieved March 20, 2024– via Newspapers.com.
  4. 1 2 Doerfler, Susan (February 26, 1994). "Home builder has the right chemistry". Arizona Republic. Phoenix, Arizona. p. WV-4. Retrieved March 23, 2024– via Newspapers.com.
  5. ↑ "UDC Development Co. plans Rancho Bernardo homes". Evening Tribune. September 5, 1980. p. E-11.
  6. ↑ "UDC-Universal report 36 percent increase in sales". The Californian. Temecula, California. August 9, 1991. p. C-6. Retrieved March 20, 2024– via Newspapers.com.
  7. ↑ Van Hecke, M.S. (April 2, 1987). "2 Charlotte Home Builders Team Up". The Charlotte Observer. Charlotte, North Carolina. p. 24A. Retrieved March 20, 2024– via Newspapers.com.
  8. ↑ "Arizona firm developing the Villages of Parkwalk". Fort Lauderdale News/Sun-Sentinel. Fort Lauderdale, Florida. July 30, 1983. p. Advertising 47. Retrieved March 20, 2024– via Newspapers.com.
  9. ↑ "UDC Development Co. Changes Its Name". The Los Angeles Times. Los Angeles, California. September 8, 1985. p. VIII:28. Retrieved March 20, 2024– via Newspapers.com.
  10. ↑ "UDC Homes names president". Arizona Republic. Phoenix, Arizona. October 18, 1985. p. H3. Retrieved March 20, 2024– via Newspapers.com.
  11. ↑ "UDC moving offices to Tempe: Decision proves 'our confidence' in Valley growth". Arizona Republic. Phoenix, Arizona. May 15, 1987. p. C1. Retrieved March 23, 2024– via Newspapers.com.
  12. ↑ "Homing In on Excellence: Aiming high, UDC targets 'move-ups,' builds reputation". Arizona Republic. Phoenix, Arizona. April 30, 1989. pp. S1, S7 . Retrieved March 20, 2024– via Newspapers.com.
  13. ↑ Reagor, Catherine (May 1, 1995). "UDC scrambling to fix financial woes". Arizona Republic. Phoenix, Arizona. pp. 1A, 2A . Retrieved March 20, 2024– via Newspapers.com.
  14. ↑ Jamieson, Sean (December 2, 1994). "UDC Homes struggles with debt: Struggling builder to stay in Charlotte". The Charlotte Observer. Charlotte, North Carolina. pp. 1D, 6D . Retrieved March 20, 2024– via Newspapers.com.
  15. ↑ Heltsley, Ernie (February 19, 1994). "Rancho Vistoso to provide entry for top builder". Arizona Daily Star. Tucson, Arizona. p. 4B. Retrieved March 20, 2024– via Newspapers.com.
  16. ↑ Ray, Keith (May 16, 1994). "UDC here for the long haul, home builder says". Arizona Daily Star. Tucson, Arizona. p. 6D. Retrieved March 20, 2024– via Newspapers.com.
  17. ↑ Heltsley, Ernie (February 21, 1997). "Slower market forces UDC Homes to leave". Arizona Daily Star. Tucson, Arizona. p. 3B. Retrieved March 20, 2024– via Newspapers.com.
  18. ↑ Reagor, Catherine (October 28, 1994). "UDC Homes shopping for partners". Phoenix Business Journal. Gale   A16433214.
  19. ↑ Reagor, Catherine (May 2, 1995). "UDC plans to restructure debt: Home builder will infuse capital, sell Southeast operations". Arizona Republic. Phoenix, Arizona. pp. A1, A2 . Retrieved March 20, 2024– via Newspapers.com.
  20. ↑ "UDC out of Chapter 11 with court-OK'd plan". Arizona Republic. Phoenix, Arizona. Bloomberg Business News. November 15, 1995. p. D2. Retrieved March 20, 2024– via Newspapers.com.
  21. 1 2 Reagor, Catherine (July 11, 1998). "Shea Homes buys UDC: Merged firm state's biggest". Arizona Republic. Phoenix, Arizona. pp. A1, A20 . Retrieved March 20, 2024– via Newspapers.com.
  22. ↑ "Shareholders of UDC Homes set to split $4 million". Arizona Daily Star. Tucson, Arizona. Capitol Media Services. October 25, 1998. p. 3D. Retrieved March 20, 2024– via Newspapers.com.
  23. ↑ Harris, Craig (January 24, 2001). "A. Andersen pays $755k in settlement". Arizona Republic. Phoenix, Arizona. pp. B1, B2 . Retrieved March 20, 2024– via Newspapers.com.
  24. ↑ Ibrahim, Nidal M. (March 16, 1998). "UDC For-Sale Rumors Premature, Chairman Says". Orange County Business Journal. ProQuest   211070544.
  25. ↑ Reagor, Catherine (June 13, 1998). "2 firms interested in UDC". Arizona Republic. Phoenix, Arizona. pp. E1, E3. Retrieved March 20, 2024– via Newspapers.com.
  26. ↑ Reagor, Catherine (September 19, 1998). "Builder has big stake in Valley: Standard Pacific sets goal to sell 1,000 homes in year". Arizona Republic. Phoenix, Arizona. pp. E1, E3 . Retrieved March 20, 2024– via Newspapers.com.
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