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A new tract for Walter

The Tampa company wants to expand its housing offerings by building subdivisions.

By SCOTT BARANCIK, Times Staff Writer
© St. Petersburg Times
published February 8, 2002


TAMPA -- Walter Industries Inc. made its name building low-cost homes on customer-owned lots. But in its latest effort to bust out of that niche, the Tampa company said Thursday it wants to start building entire subdivisions.

Walter owns roughly 50,000 acres of land it could build on in Alabama, Georgia, Louisiana and nearby states. Much of the property has sat unused since the 1960s, when it was acquired as part of a deal to purchase U.S. Pipe, a maker of municipal water pipe.

The efficiencies are obvious, chief financial officer Joe Troy said in an interview. It might take a construction supervisor a week to inspect a dozen scattered-site homes, he said, but just a few hours to check an equal number at one location. In addition, large, highly visible construction sites market themselves.

Two locations are under consideration: Houma, La., a town of 33,000 about 60 miles southwest of New Orleans, and Birmingham, Ala. Troy said the company plans to break ground on one or the other by the end of 2002."We are extremely confident," he said.

Still, Walter has not completed its analysis of the plan's financial feasibility. And the company has yet to deal with zoning issues, building permits and infrastructure such as water, sewer and electric hookups.

The subdivision plan builds on other initiatives the company began last year. Until recently, Walter's Jim Walter Homes subsidiary built houses only on property already owned by the customer.

Then Walter introduced a lending subsidiary, Walter Mortgage Co. The new unit can help customers buy land, remove liens from an existing parcel and even buy out partners. Building subdivisions was suddenly possible.

Barbara Allen, a consultant at the New York brokerage firm Arnhold & S. Bleichroeder and a Walter shareholder, is enthusiastic about the plan. "There's a real dearth of housing product available in the price points Walter specializes in," she said. "I think it's extremely smart."

Troy would not speculate on the potential prices of its subdivision homes. The average Jim Walter home sells for less than $60,000; it has roughly 30 models.

Troy said the timing is right for Walter's subdivision initiative. Its competitors in the manufactured housing industry are facing an exodus by their financing partners. Also, the recession is causing many homebuyers to lower both their expectations and their price limits.

In a conference call with Wall Street analysts Thursday, Walter forecast earnings of 23 cents to 28 cents for the quarter ending March 31, and $1.57 to $1.67 for all of 2002. The company earned 95 cents a share in 2001.

Walter's stock closed at $10.50 Thursday, up 56 cents, or 6 percent.

-- Scott Barancik can be reached at barancik@sptimes.com or (727) 893-8751.

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