New chief executive named at Ryland

November 30, 1993|By Timothy J. Mullaney | Timothy J. Mullaney,Staff Writer

Ryland Group Inc. of Columbia yesterday tapped the finance chief of a smaller West Coast competitor to be its new president and chief executive, a choice a Wall Street analyst said was "better than I thought they could get."

R. Chad Dreier started his new job yesterday, Ryland said, taking the helm of the nation's third-largest homebuilding company.

He replaces Roger W. Schipke, who left unexpectedly in August to become the head of Sunbeam-Oster Co., a Rhode Island-based small appliance company.

"I think he's an excellent choice," said Lawrence Horan, who follows Ryland for Prudential Securities Inc. in New York. "I've known Chad for five years. He's a real straight shooter."

Mr. Dreier, 46, comes to Ryland from Kaufman & Broad Corp. of Los Angeles, the biggest builder in the California market, an area that has caused Ryland problems as the Southern California economy has staggered in recession. He was executive vice president and chief financial officer at K&B, where he also headed the company's mortgage banking unit.

Andre W. Brewster will remain as chairman, a post the longtime director has held since Mr. Schipke left. Mr. Brewster also served as interim CEO.

Mr. Dreier said his first mission at Ryland will be to improve profit margins in the company's homebuilding business, which has lost money this year, mostly because of a $45 million write-down of the value of land the company owns in California.

"The homebuilding side, I think, needs a little focus," Mr. Dreier said.

Ryland's other major business is its mortgage banking operation, which has posted record results this year.

In selecting Mr. Dreier, Ryland appears to have decided to return to its roots in the real estate business.

Its last two chief executives -- Mr. Schipke and Charles E. "Ted" Peck -- came to Ryland from manufacturing companies, because Ryland believed manufacturing executives could help the company manage its operations in a way that took advantage of its size.

But Mr. Schipke came under criticism from Wall Street analysts who contended that his team's inexperience in real estate led Ryland to miss opportunities to buy land cheaply when the economy began to recover.

Mr. Horan, of Prudential Securities, said only 5 percent of Ryland's land inventory represents land bought at distress-sale prices, compared with 25 percent to 40 percent for Centex Corp. of Dallas and Pulte Corp. of suburban Detroit. Centex and Pulte are the top companies in the business.

"I hope I'm able to institute some disciplines that will enable us to take advantage of market opportunities," Mr. Dreier said.

But he said it was too soon to say what changes he might make in Ryland's land purchasing policies, or what other changes might be needed to make the building operations more profitable.

"They've got a guy who was on the land committee at K&B," Mr. Horan said. "It's not too late. The land market has firmed up, but it hasn't moved [prices] up because there's not enough capital to push prices higher."

Mr. Horan said Ryland's operating profit margins in homebuilding improved during the third quarter, but are still 25 percent below what analysts expect of Ryland.

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