Kaufman & Broad Targets Mid-Range Buyers : Housing: The L.A.-based builder hires a former Irvine Co. executive to head a new subsidiary designed to widen the firm’s market. It will build homes for $200,000 to $300,000.
Roland F. Osgood, former head of residential development for the Irvine Co., has been named by Kaufman & Broad Home Corp. to start a new subsidiary to crack the mid-range Southern California housing market that has eluded K&B; for years.
The as-yet-unnamed division will not carry a Kaufman & Broad designation--a deliberate effort to create a separate identity for the new unit in the minds of home buyers.
Osgood, in a telephone interview Wednesday, said the unit will have headquarters in Orange County and operate in Orange, Riverside and San Bernardino counties, initially building homes in the $200,000 to $300,000 market.
Michael Meyer, managing partner for accounting and consulting company Kenneth Leventhal & Co. in Newport Beach, said K&B;, based in Los Angeles, is known for “functional homes at the bottom end of the pricing scale, and a lot of buyers--especially in Orange County--are label conscious, so creating a separate company is a good strategy.”
Meyer added: “It is a coup for them to sign Osgood. He has the skills of an entrepreneur and the ability to work in a large organization. He is a businessman and he knows what the consumer wants.”
Osgood, 52, said the new company’s first project should be under way by early next year. The subsidiary will first concentrate on the Orange County market “because that’s where my most recent experience has been.”
He said the idea of creating a separately named division to build more expensive homes is borrowed from the automobile industry.
“This is a market of a lot of segments,” he said, “and we are trying to capture more of them, just like General Motors does by selling both Chevrolets and Cadillacs.”
Osgood said he has hired Patricia White, a former Irvine Co. financial executive, as the new division’s chief financial officer.
While K&B; has tried in the past to break into the move-up market, the company has had problems persuading consumers that it can compete with the premier high-end builders. Osgood has been involved in the Southland home-building industry since 1968, when he joined Broadmoor Homes.
He was chief financial officer of that company during its heyday, “as it grew into one of the premier-quality . . . move-up builders in the state, probably the nation,” Irvine marketing consultant Ken Agid said.
At Broadmoor, Agid said, Osgood “was part of an organization that built a very strong reputation in exactly the market this new K&B; division is aiming at.”
Osgood joined the Irvine Co. as president of its Irvine Pacific home-building unit in 1978. When the company stopped building homes in 1986, Osgood was picked to head the developer’s land management arm and coastal development operations. He resigned from the company in August.
He said Wednesday he left because “I am a home builder, and I wasn’t able to build homes for five years.”
Agid said many observers believe that just two types of home builders will survive the industry’s financing crisis: small entrepreneurial builders doing one project at a time, and large corporations with deep pockets and ongoing relationships with strong lenders.
But the new K&B; unit might be a third type, Agid said, “one that is financially attached to a giant while retaining the ability to act on an entrepreneurial basis.”
The new division will be financed as K&B; does its eight other home-building divisions in the state: with working capital and land acquisition costs drawn from the company’s unsecured revolving credit facilities.
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