Conference Call Highlights: Who Will Buy Land?

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 |  Includes: BZH, CAA, IBCP, ICF, IYR, KBH, LEN, PLD, XHB
by: Judy Weil
Plenty of land for sale out there, not many buyers:

From Lennar’s Q408 conference call: (NYSE:LEN)

We generated positive cash flow this quarter and that was a result of our operational focus on significantly reducing land purchases… to only $64 million during the quarter, which is approximately 75% below the quarterly land purchase run-rate through the first nine months of 2008.

Lennar is setting up a fund to make land purchases, but isn’t buying yet:

While it is still premature to be making asset purchases right now, our strategy going forward will be to segregate our homebuilding manufacturing program from our more capital intensive asset opportunity program, much as we did in the early 1990s, as we built what became LNR Property Corporation. We are confident that as the market corrects and ultimately it will that we will be able to create meaningful value for the company through this vehicle.

KB Homes' Q408 conference call: (NYSE:KBH)

We are also thinking creatively about how best to seize opportunities for land and lots in our markets without compromising our substantial liquidity. While 2009 will likely offer attractive land acquisition opportunities we intend to reload conservatively in a capital-sensitive manner… When the time is right and where possible we will acquire lots on a rolling option basis. We are also exploring creating alliances with investors for land and lot opportunities where bulk purchases are required.

Standard Pacific Corp.’s Q308 conference call: (SPF)

Land sale revenues decline from $49 million last year to $5 million this year.

Q: Given you guys have a decent amount of drive power to look for opportunities to buy land, what do you think that the government taking more action maybe to bail some of the banks out or potentially help support home prices; what do you think that does to the opportunities in the land market?

A: I certainly don’t see anything near term that says land prices are going to spike at all. I think it’s more trying to put a floor on that as opposed to stimulating a price increase.

Beazer Homes’ FQ408 conference call: (NYSE:BZH)

We have been focused on generating liquidity, reducing overhead and direct costs and limiting investment in land and unsold home inventory.

For the fourth quarter we experienced a total revenue decline of 35% from the same period in the prior year. This decline was driven by a 45% decrease in home building revenues offset by an increase in land sales revenue.

For fiscal 2008 we spent $333 million on land and land development compared to $824 million in fiscal 2007. Based on current sales paces we have relatively few active communities that will require significant land or land development spending in 2009. In light of this and with our intense focus on maintaining liquidity our current expectation is that land and land development expenditures will be further reduced in fiscal 2009.

Regional banks and developers have plenty of land and are probably not buying much:

ProLogis (NYSE:PLD) has $2.7 billion worth of land, $1.1 billion in the U.S. alone.

Independent Bank Corp.’s Q308 conference call: (NASDAQ:IBCP)

For fiscal 2008 we spent $333 million on land and land development compared to $824 million in fiscal 2007. Based on current sales paces we have relatively few active communities that will require significant land or land development spending in 2009. In light of this and with our intense focus on maintaining liquidity our current expectation is that land and land development expenditures will be further reduced in fiscal 2009.

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