London Bay Homes, Naples, Fla.
27 Units
Made-To-Order Home Builder
From its roots in custom building, to semi-custom and villa homes, and now with condo projects in the works, London Bay Homes has grown up–and the industry is taking notice.
What’s a pair of brothersfrom the central England city of Birmingham doing in a corner of Southwest Florida building luxury mansions and villas? Creating beautifully designed homes and making money, that’s what.
Looking back, it seems inevitable that Mark and Stephen Wilson would end up building something. Their father was a developer and builder in England, and family conversations often centered on land deals and development, says Stephen, vice president and CFO of London Bay Homes.
Mark, now president and CEO of London Bay, came to Florida in 1984 as part of his father’s business to find commercial development opportunities between Ft. Myers and Tampa Bay. Somehow, he missed Naples.
“Naples was kind of sleepy; there didn’t seem to be a whole lot going on,” Mark says.
Since splitting with his father’s company and starting London Bay Homes with his wife, Gemma, in 1990 (she has since retired), Mark has put considerable thought into what to build, where, how, and with whom. Building high-end, design-driven homes offered him an avenue to pursue his artistic and entrepreneurial desires, and he saw a niche for just such homes in Southwest Florida.
“When you looked at the luxury market 17 years ago, there were some big boxes being built, but with very little design, and some of the builders were concentrating on how big, how cheap,” Mark says. “I knew there was a luxury segment that would pay for good design, good quality, and top-of-the-line materials. And if you structured a business around that while providing this luxury segment with excellent service, we could build a successful company.”
SERVICE ORIENTED
It is London Bay’s single-minded focus on service, to the extent that all its operational decisions are reached only after considering the impact on customers, that sets it apart.
“If you’re building for CEOs of large companies, then the process is as important as the product,” Mark says.
London Bay, owned by Mark and Stephen along with a Wilson family trust and vice president Steve Miller, builds custom homes, semi-custom homes, and villa homes. Never ones to stand still, the company is developing two condo projects, as well as spreading out geographically with its first planned project outside Naples, a 50-unit villa development in Sarasota.
For a custom project, London Bay assigns two employees to a customer who will follow the buyer from initial contact, through design, construction, and even into the warranty phase. But it’s not just a matter of getting phone calls to stay in touch; clients have the ability, through Web-based software solutions, to check the progress of their home 24 hours a day and see photos and construction schedules. Clients can also make design changes and get financial ramifications in real-time from London Bay to help guide their decisions.
“You can map a client’s emotional reaction to information across the life of a project, and it’s going to go up and down regardless of how you perform, because they are going to have anxious times and relaxed times,” says Miller, who runs the company’s custom home and semi-custom home divisions, as well as London Bay’s design company, Romanza. “And knowing how to manage that is something the team has worked hard to perfect.”
All that information, from choices of plumbing fixtures, to daily reports, to documentation of key decisions, are recorded digitally, and at the end of the process, both the client and the company each receive a CD with all the information on it, so if there is ever a question of why something happened, they can go back to the disk.
If a consumer is considering buying a villa home in a production neighborhood development, they get nearly the same level of service, says Stephen Wilson, head of London Bay’s neighborhood division.
“We can take them through a full selections process in a matter of two to three days, rather than stretching it out over six months,” Stephen says. “It makes for a very different buying experience for that client.”
Because their clients rarely live full-time in Naples, being able to give real-time pricing information to clients on either the custom side through a giant Excel spreadsheet, or via BuilderMT software on the neighborhood side, gives London Bay a big boost with their customers, the three owners say.
GETTING BETTER ALL THE TIME
Despite a down market in Southwest Florida in 2007, London Bay had a great year.
“Bizarrely enough, $5 million and up houses appear to be having their best year ever in Naples,” Stephen says.
London Bay had 18 closings in 2006, and 27 through the first half of 2007. While much of that is off backlog, 2007 will be London Bay’s best year to date, and Stephen projects 2008 will fall back to 2006 levels, when the company saw sales revenues of $73.4 million.
A key to the company’s financial success is its innovative financing strategy that puts a lot of the risk on outside investors, while recouping much of the profits. It has cut its debt-to-equity ratio by more than half over the last two years while nearly doubling net margins.
Outside investors, many of them former London Bay clients, are generally worth in the hundreds of millions of dollars, and are interested only in their own internal rate of return on their investment, Stephen says.
“We’re doing something that has to stand up to an alternative investment that might be in the stock market or derivatives or commercial property,” he says. “We’re not working with somebody who is the typical ego investor who says, ‘That big house on the beach, I did that.’ It’s a very different mindset.”
Stephen’s background working as an accountant in mergers and acquisitions and in special assets, a bank division dedicated to collecting what it is owed, in the United Kingdom allowed London Bay to look at creative funding sources. He joined London Bay in 1999 after he tired of corporate culture and London Bay had reached a size where he could put his financial skills to use to help secure funding.
Another key to London Bay’s success has been building its team of employees. Six years ago, the company was struggling to retain employees, Mark says. In an effort to weed out employees who do not fit London Bay’s culture, all three owners now separately interview all job candidates, and all three must sign off on any hiring.
“If people are really hard working and intelligent, but they don’t have the right attitude, don’t have them,” Mark Wilson says. “Smarts and hard work aren’t enough without the right attitude.”
Learn more about markets featured in this article: Cincinnati, OH, Naples, FL.
