Expansion, going public may be in builder's future


Landmark Homes is again flirting with going public.

The 7-year-old Towson-based company, which now builds more than 300 homes a year, is looking to expand by buying several builders in Frederick County, the Delaware Valley and Northern Virginia over the next three years.

After that, the company might try to raise money by selling stock in the company, according to the co-owners, Richard S. Yaffe and Gary S. Houston.

The strategy is sound, according to Liam Burke, an analyst at Ferris Baker Watts Inc. who follows the building industry.

While homebuilders can build 300 homes a year, the trend is for companies to either stay local, about 100 homes a year, or grow to 1,000 a year, as Landover-based Washington Homes Inc. has done, Mr. Burke said.

"You can be a successful 300-homes builder, but typically a larger company would have the financing clout to be able to go and negotiate more favorable land deals," said Mr. Burke, adding that that is one of the keys to success for a builder. "Once a builder has property at a good price, that gives it greater pricing flexibility."

Landmark, one of the fastest-growing builders in the state, had planned to take the company public in 1995, which would have given the company access to far more capital so that it could expand further. But Mr. Yaffe and Mr. Houston said they were not ready to relinquish control over their company.

Only two Maryland-based residential builders are public companies -- The Ryland Group Inc. and Washington Homes Inc. -- according to Legg Mason Wood Walker Inc.

Landmark, which builds semi- custom single-family houses and condominiums based on 28 design models, has a reputation for putting out "a very nice house and giving a lot of house for the money," said builder Lawrence Mack of Mack's Homes.

Mr. Houston and Mr. Yaffe left Ryland in 1987 to start the company. According to Mr. Yaffe, he told Mr. Houston that if he located the first lot, they'd quit their jobs and start the company.

"I didn't expect him to do that. But lo and behold, he went out and found the lot."

Forging partnerships

Mr. Yaffe and Mr. Houston financed the company at first principally by forging partnerships with two local Harford County developers, Mr. Yaffe said.

They bought out one developer four years ago and the second last month, he said.

Landmark made its name in Harford County and has since expanded into Howard, Baltimore, Anne Arundel and Cecil counties.

They are active in 23 communities around the area, including Quelet Place in Perry Hall, Watermill in Ellicott City, Woodland Hills in Bel Air and Lyonswood in Owings Mills.

The company unveiled a line of homes priced under $170,000 in the fall of 1993 that it expects to account for a substantial portion of their business.

According to Mr. Yaffe, he expects sales of single-family homes priced under $260,000 to be 60 percent of the company's business.

Another 25 percent will be condominium sales and the remaining 15 percent will be homes priced over $260,000.

Landmark has also earned a reputation for its community service. Each year, the company brings local building suppliers and contractors together to perform major repairs and winterization free for a low-income senior citizen.

Landmark has about 100 employees, said Mr. Yaffe, who expects sales this year to be just under $60 million.

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