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Mayer Homes - St. Louis-area residential builders

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2009-05-28

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stories: builderonline.com

The "seventh" largest builder in the St. Louis area has shut down under the pressure of defaults, because of the bear market. Per the article above:

Slow home sales caused the Town and Country-based company to default on bank loans in late March, said Randy Mayer, the company's chief executive. The company's costs were simply too high compared with its sales in recent years, he said.

"It's just the downturn in the market was longer than we could withstand," Mayer said Wednesday. "I don't think anybody should write off the industry. But when you have so many good years in a row, you can only imagine the valley we're going through has been deeper than normal."

The article gives the output as 8,500 homes over the company's 30 years of existence; so we estimate 250-500 homes were built annually at the company's peak. This places them unambiguously on our "major" builder list, but they wouldn't likely be a "mega" builder by any stretch.

Further describing the default situation, the article goes on:

The company's lender, Bank of America, is working with Mayer to allow it to finish selling homes that are being built or already completed, including about 90 to 100 display homes and speculative homes, Mayer said. The company owns another 900 lots it planned to develop that likely will be sold by the bank to another developer.

Though there is no written agreement, the bank and Mayer have agreed that the company will officially shut down once it sells homes that are under way, Mayer said. The company will continue to honor escrow agreements to keep up infrastructure in subdivisions where it is still building, he added.

Rather sadly, Mayer commented "I wish we would have just held in there for another year... I think (the market) is coming out of it.". That is sad because there is of course no sign the market will be recovering any time soon -- the most optimistic projections based on the fundamentals we have seen are 2011. Really, if all the intervention was working towards a recovery (as opposed to just dragging out the bear market), we should be well into a recovery already. But that is clearly not the case.

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Important: This company is on our list of builder operations that have "imploded" (see also ailing lenders). This is a somewhat subjective call, and does not necessarily mean total shutdown or bankruptcy. It can also mean steep and rapid declines in enterprise value; or abnormal "bail-out" by corporate parents or peers in order to continue to operate. The builders may be residential or commercial.