The Top 100 Private Companies in Memphis [Crye-Leike Ranked No. 33 ]
By Kate Miller Morton
2002 was a mixed year for real estate companies included on Memphis Business Journal’s Top 100 private companies list.
Low interest rates continued to fuel home sales, benefiting companies like Crye-Leike, while low demand for commercial and industrial space stymied development and lowered revenues at Weston Cos.
Weston Cos. had the biggest year-over-year change with its revenue reduced by three-fifths from $76.7 million to $46.5 million, falling on the list from number 49 to number 78.
Weston president and CEO David Peck says the drop was due to the market and hasn’t raised alarm within the company.
“The business in real estate development just basically came to a screeching halt or at least the opportunity for new development,” he says. “We just felt like it was the wise thing to do to not start any new speculative projects because of the uncertain economic environment that we’re living in.”
Although it was a big dip in revenue, Peck says it wasn’t necessarily bad for the company.
“We might have a more profitable or two or three more profitable deals even when the revenue is low,” Peck says. “As far as the money we take home, we made more money in 2002 than in 2001. It was because of the type of projects we were developing.”
Peck says demand for office and industrial space remains low but fortunately so does Weston’s available inventory. Weston has a small amount of vacant space remaining in its Renaissance Center office tower and about half of its Airport Logistics Center remains empty.
Although the office market was more stable, Peck says the industrial segment of Weston’s business was actually the bright spot in 2002.
“The industrial market, even though it was probably the most depressed segment of commercial real estate in the city, it was more profitable for us just because of the timing of some of our development as far as being able to put permanent financing on them or sell them.”
Peck says he expects the company’s revenues to level out in 2003.
“I don’t think we’ll do $70 million this year in 2003,” he says. “Time will tell but it takes you awhile to gear back up.”
Although Crye-Leike, Inc.’s revenue appeared to take a hit in 2002, dropping from $120.4 to $108.4 million, the drop was due to First Trust Bank for Savings, in which Crye-Leike no longer has majority ownership. The company’s 2001 revenue included $21.5 million for First Trust.
Co-owner Harold Crye says 2002 revenue was up 5% in Memphis, but the company’s revenue from Mississippi grew 51% from $129 million in 2001 to $196 million in 2002. Crye-Leike has offices in only three Mississippi markets –Southaven, Olive Branch and Hernando.
Crye says 2003 will be another strong year of the company. The first four months have been better than 2002, up 14% in Memphis alone.
Residential home sales account for 90% of Crye-Leike’s business and the company has benefited greatly from historically low interest rates. Crye says interest rates alone can’t drive sales indefinitely.
“What we need is some job creation, because the interest rates can only keep it there for so long,” Crye says. “A lot of people have already bought houses and have taken advantage of what’s been record low interest rates the past few years. Some people have refinanced two or three times in the last few years as rates have continued to drop.”
Kemmons Wilson Cos.’ revenue slipped from $291 million to $281 million. The companies have diverse real estate holdings in the hotel, time-share and office areas and has several residential projects under way as well.
While fears of terrorism and a down economy continue to suppress tourism and hotel revenues, Kemmons Wilson Jr. says the company’s Orange Lake Resort & Country Club time-share property in Orlando, Fla., continues to perform well. Wilson says Orlando is considered a drive-to market by many, and time-share arrangements aren’t as flexible as hotel or condo rentals.
The new Holiday Inn at the University of Memphis is another bright spot.
“It has done extremely well,” Wilson says. “For a new property that really just opened a year ago we’re extremely pleased with the progress it’s made.”
CONTACT staff writer Kate Miller Morton at 259-1764 or email@example.com
? 2003 American City Business Journals Inc.