Bluegreen Corp. Q4 2007 Earnings Call Transcript

Mar. 3.08 | About: BFC Financial (BFCF)

Bluegreen Corp. (BXG) Q4 2007 Earnings Call February 29, 2008 11:00 AM ET

Executives

Devin Sullivan - SVP of The Equity Group

John Maloney - President and CEO

Tony Puleo - SVP and CFO

Alan Levan - Chairman of the Board of Directors

Analysts

Michael Millman - Soleil Securities

Robert Jordan - Warden Glen

John Ziegelman - CD Capital Management

Operator

Good day, ladies and gentlemen, and welcome to the fourth quarter 2007 Bluegreen Earnings Call. My name is Latasha, and I will be your coordinator for today. (Operator Instructions)

I would now like to turn the call over to Mr. Devin Sullivan, Senior Vice President of The Equity Group. Please proceed, sir.

Devin Sullivan

Thank you, and good morning, everyone. Thank you for joining us today. Our speakers on the call will be John Maloney, President and Chief Executive Officer of Bluegreen and Tony Puleo, Bluegreen's Senior Vice President and Chief Financial Officer. Also joining us on today's call is Alan Levan, Chairman of the Board of Directors of Bluegreen.

Before we get started, I would like to remind everyone that statements made during today's call may constitute forward-looking statements and are made pursuant to the Safe Harbor provision of the Private Securities Litigation Reform Act of 1995.

Forward-looking statements are based largely on expectations and are subject to a number of risks and uncertainties including but not limited to the risks and uncertainties associated with economic, competitive and other factors affecting the company and its operations, markets, products and services, as well as the risk that growth and profitability will not occur as anticipated.

Business strategies pursued may not be successful; the company may be unable to sell notes receivable on satisfactory terms, if at all, adversely impacting the company's liquidity and profitability; the performance of the company's vacation ownership notes receivables may deteriorate in the future; the company may not be in a position to draw down on its existing credit lines or may be unable to renew or replace such lines of credit.

Real estate inventories, notes receivable, retained interests in notes receivable sold or other assets will be determined to be impaired in the future; risks relating to pending or future litigation, claims and assessments; that the company will not be able to acquire land or identify new projects, as anticipated.

Sales and marketing strategies related to new Resorts and Communities properties will not be as successful as anticipated. New Resort and Communities properties will not open when expected, will cost more to develop or may not be as successful as anticipated. Retail prices and homesite yields for Communities properties will be below the company's estimates. Cost of sales will not be as expected.

Resort sales to existing owners and growth generally will not continue at current levels; deferred sales will not be recognized to the extent or at the time anticipated. And the risks and other factors detailed in the company's SEC filings, including its most recent Annual Report on Form 10-K filed on March 16, 2007, its Form 10-K/A filed on July 3, 2007 and its most recent Form 10-Q filed on November 9, 2007.

In addition, matters discussed concerning the company's rights offering contain forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended, that involve substantial risks and uncertainties, including but not limited to the risk that a registration statement relating to the Bluegreen's rights offering may not be filed or declared effective by the Securities and Exchange Commission, that because of business, economic or market conditions Bluegreen may decide not to pursue the rights offering and that the rights offering may not be consummated in the amounts contemplated, if at all.

In addition to the risks and uncertainties identified above, reference is also made to other risks and uncertainties detailed in reports filed by Bluegreen with the Securities and Exchange Commission.

The company cautions that the foregoing factors are not exclusive. The discussions regarding the rights offering shall not constitute an offer to sell or the solicitation of an offer to buy any securities. Securities may not be sold nor may offers to buy be accepted prior to the effectiveness of a registration statement nor shall there be any sale of the securities in any state in which such offer, solicitation or sale would be unlawful prior to registration or qualification under the securities laws of any state.

I would now like to turn the call over to John Maloney, President and Chief Executive Officer of Bluegreen. Please go ahead, John.

John Maloney

Thank you, Devin. Good morning and thank you for joining us today. After Tony, Alan and I deliver our prepared remarks, we will open the floor to questions.

We ended the solid 2007 with strong fourth quarter results, most notably in our Bluegreen Resort segment, which posted its 25th consecutive quarter of comparable quarterly sales growth and generated field operating profit of approximately $22.6 million in the fourth quarter of 2007.

Higher sales during the fourth quarter were due to significant increase in sales to existing owners of the Bluegreen Vacation Club, which we view as perhaps the ultimate validation of the quality and value of our vacation ownership product and higher same-resort sales of several of our properties and our newest sales office in Las Vegas.

We also benefited from a systemwide price increase that went into effect last year and appears to have been well accepted by customers. At December 31, 2007 we had approximately 185,000 owners, up from approximately 184,000 owners on September 30, 2007. We are very excited that our newest resort properties in Las Vegas and Williamsburg, Virginia will begin welcoming guests this summer. And we also expect to open permanent sales offices in Williamsburg and Las Vegas at about that same time.

Tour flow in 2007 remained robust with approximately 326,000 tours being generated during the year as compared to 310,000 tours in 2006. Our overall conversion rate for owners and non-owners was 13% in both 2007 and 2006, and for new owners only, our conversion rate was 10% in both of these years.

Improving the quality of our sales leads remains an integral part of our marketing strategy. As many of you may be aware, we've had a successful partnership with Bass Pro Shops since 2000. In late 2007, we renewed and extended until December 31, 2014 this exclusive resorts marketing agreement. Bass Pro Shops is the world's leading supplier of outdoor gear, with 47 destination retail stores in 26 states in Canada. Over 90 million people visit the stores annually, with several stores being their states number one tourist attraction and several others placing among the top five.

Our agreement with Bass Pro Shops allows consumers to shop onsite, online and via catalogue, to have an opportunity to preview the Bluegreen Vacation Club by purchasing three-day, two-night, mini vacations to Bluegreen Resorts destinations, which typically requires the buyer to attend the sales presentation.

These mini vacations are sold at Bass Pro Shops' retail locations through integrated themed kiosks that are staffed by Bluegreen Resorts sales professionals and marketed under the Outdoor Traveler brand. At December 31, 2007 Outdoor Travel kiosks were located in 44 of Bass Pro Shops.

Since launching this program in 2000, Bluegreen has sold approximately 350,000 mini vacation packages thorough various Bass Pro Shops customer channels in a competition free environment. In 2007, our Bass Pro marketing channels generated approximately 48,000 tours, with an 11% conversion rate.

Regarding the current credit environment, we remain pleased with the performance of our resorts loan portfolio. Delinquencies and default rates for 2007 remained generally consistent with those of December 31, 2006 and below historical norms. Tony will provide additional details on these metrics later in the call.

Bluegreen Communities posted higher quarter-over-quarter sales growth and operated profitably for both the fourth quarter and the full year of 2007. Like numerous companies in this industry, Communities sales have been impacted by a difficult real estate market. However, the average retail sales price for our Bluegreen Communities homesite sold during 2007 remained consistent to last year's pricing.

Communities also generated an 18% field operating profit this year, which we believe is a direct result of our disciplined approach to this business. We acknowledge the challenges at Communities and are working towards designing and implementing additional strategies that both enhance sales and continue to generate profitable returns despite the current market environment.

I will now turn the call over to Tony, who's going to take us through the numbers. Tony?

Tony Puleo

Thank you, John, and good morning, everyone. Net income for the fourth quarter of 2007 was $8.5 million, or $0.27 per diluted share, which was a fourth quarter record. This compares to net income of $1.8 million, or $0.06 per diluted share, in the fourth quarter of 2006. You may recall that net income in the 2007 fourth quarter included certain additional expenses of $5.4 million or $0.17 per diluted share.

Resort sales rose 8.5% to a fourth quarter record $112 million. Sales to existing owners rose significantly as John noted and comprised 44% of Resort sales in the fourth quarter as compared to 38% in the fourth quarter of 2006.

We generated higher same-resort sales led by sales offices at the Smoky Mountain Preview Center in Sevierville, Tennessee, The Falls Village Resort in Branson, Missouri and an offsite sales office in Las Vegas, Nevada.

Resort sales for the fourth quarter also included an $11.3 million gain on sale of notes receivable debt after applying the required accounting standards, added about $10 million to resorts top-line. Last year the same accounting produced the gain of $13.4 million including an $11.6 million increase in resort sales during the fourth quarter.

In accordance with Statement of Financial Accounting Standards No. 152, Accounting for Real Estate Time-sharing Transactions, as of December 31, 2007 approximately $24.6 million and $14.3 million of Resorts sales and profits, respectively, were deferred as these contracted sales had not yet met the requirements for revenue recognition. These amounts compared to $32.9 million and $18.5 million of Resorts sales and profits, respectively, which were deferred as of September 30, 2007. Deferred amounts are expected to be recognized in the future periods.

In addition, Statement 152 requires that Resort sales to be reduced by estimated uncollectible timeshare notes receivable, which were estimated to be $19.1 million for the fourth quarter of 2007 and $15.5 million for the fourth quarter of 2006.

Resorts cost of sales, as a percentage of resort sales, for the fourth quarter of 2007 increased to 24.6% from 22.6% in the fourth quarter of 2006, due primarily to a higher percentage of Resort sales in relatively higher cost properties. We expect Resorts cost of sales will range between 23% and 27% of sales for 2008.

Resorts field operating profit, which is defined as operating profit prior to the allocation of corporate overhead, interest income, other income and expense, interest expense and income taxes, was $22.6 million or 22% of resort sales for the fourth quarter of 2007 and $69.9 million or 15% of resort sales for the full year. This compares to $17.3 million or 17% for the fourth quarter of 2006 and $53.9 million or 14% for all of 2006.

Lower selling and marketing expenses and higher profits from other resort services partially offset by higher cost of sales, drove our improved profitability.

John mentioned earlier that the performance of our Resorts loan portfolio has been very good. Delinquencies over 30 days were 4.5% at December 31, 2007. This compares to 4% at December 31 '06 and 5.9% at December 31, 2005. We ended the year with an average annual default rate of 7.4% slightly lower than our default rate of 7.5% in 2006 and significantly lower than our default rate of 8.5% in 2005.

While January delinquency rates were slightly lower than our December delinquency rates, default rates since the 2007 year end are trending higher but within historical norms for this time of the year.

Communities sales rose by just under $1 million in the fourth quarter of 2007, due primarily to revenue recognition policies. Communities also continued to operate profitably, generating field operating profit of approximately $3.7 million or 15% of Communities sales in the fourth quarter of 2007, compared to $340,000 or 1% in the same period last year.

For all of 2007, field operating profit at Communities was $23.6 million or 18% of Communities sales as compared to $35.8 million or 22% in 2006.

As of December 31, 2007 approximately $13.2 million and $5.5 million of Bluegreen Communities sales and profits, respectively, were deferred under the percentage of completion method of accounting. It is expected that these amounts will be recognized in the future periods ratably with the development of the Communities. These amounts compared to $14.3 million and $6.3 million of sales and profits respectively deferred as of September 30, 2007.

Therefore, net recognition in the fourth quarter of 2007 of revenues and profits previously deferred under the percentage of completion method of accounting, totaled $1.1 million and $800,000 respectively. In the fourth quarter of 2006, net deferral of revenue and profits under the percentage of completion method of accounting, totaled $1.4 million and $1.1 million respectively.

Our balance sheet at December 31, 2007 remained quite strong. At that date, we had unrestricted cash of $125.5 million, up from $113.1 million at September 30, 2007. Book value at year end was $12.34 per share, up from $12.04 per share at September 30, 2007. And we reported a debt-to-equity ratio of $1.03 to $1.

Before we start the Q&A, I would like to introduce our Chairman, Alan Levan. Alan has some prepared remarks and will be available to help address any questions you may have. Alan?

Alan Levan

Thank you, Tony. Good morning everyone. I have not been on this Bluegreen conference call before, so I wanted to extend my personal thank you to all of you for being Bluegreen shareholders and also for calling in this morning. I am on the call really to address several issues, but primarily around the issue of shareholder value, and we are faced with the dilemma here at Bluegreen.

We continue to believe that our share price is undervalued, and I would like to go through a number of reasons that that may be that way. And secondly, at the same time, we've reached a size and reputation where we are seeing opportunities being presented to us for strategic joint ventures or possible acquisitions where we could acquire other entities or companies.

As we've looked at and talked to shareholders and the investment community, it appears that our stock price is undervalued for a number of reasons. Number one, we are one of the very few public timeshare companies in the public space today. Most other previously existing timeshare companies that were public have been acquired and are now part of larger other entities.

We have very little in analyst coverage and so it's kind of hard for investors to get through our numbers and really see analyst's reports in print with regard to our company. There is always, in this particular market, concern over our cash position, our liquidity, concern over the securitization market, and also with regard to our business plan, there appears to be continued confusion over the compatibility of our two lines of businesses.

We have two wonderful businesses at Bluegreen, our Resorts division and our Communities Land division. But in terms of tracking them together in one company has created some issues for analysts and investors, and as a result we see that has been a problem.

So we've looked at this dilemma and we've tried to address issues and come up with a program that can over time strengthen our shareholder base and build shareholder value. In order to reach our full potential, we believe the best strategy for us is to raise cash now, solidify our balance sheet, put to rest any of these liquidity issues, clarify our business plans and take advantage of some of the opportunities that are presented to us, and then within a three to five year period, look at strategic alternatives for the company in order to maximize shareholder value.

So if I can just address some of these issues in these remarks to give you just a better feel for what we're talking about and then any one of the three of us would be happy to spend more time on this in the Q&A.

With regard to raising capital; as you know, we previously announced a $100 million rights offering that we intend to file shortly and go to the shareholders and raise excess capital. We've got approximately $55 million of debt, that's due in April. And while we have $125 million in unrestricted cash, as Tony indicated, there seems to be this continual question as to whether our balance sheet is strong enough to withstand the current market and credit issues.

So we believe that by raising $100 million in this market that it will put to rest these issues, it will demonstrate to the shareholders that we have a very strong balance sheet and it will also give us the ability to pursue some of these joint ventures and acquisition opportunities that are presented to us all the time and have been presented to us for a number of years.

Secondly; we with regard to our business plan, we are constantly looking at the differing issues between our Resorts addition and our Communities Land division. We are in a process where we are trying to evaluate how to maximize both of those opportunities for us, particularly in the Community Land division. This is a wonderful business, but as I have indicated, is confusing to some of our shareholders in looking at the reports combined with our Resorts division. And so, over time we are going to look at exploring strategic alternatives for this land division to see what the best way is for maximizing shareholder value in that regard.

Additionally in order to move this whole shareholder value issue forward, we anticipate that we will be filing a proxy statement in connection with our annual meeting, which will be shortly after we file our 10-K and we'll be asking our shareholders to vote and approve a new option plan for management and we expect to provide substantial incentives for management to increase shareholder value and our current thinking is that these incentives would start to kick in today at approximately book value, which is substantially above our current market price. And we think that when you see the proxy, you will be pleased that management is focused on the same objectives that our shareholders are and that is to increase shareholder value.

This plan will incent management and allow them to participate in increasing the shareholder value and participate down the road in the event that were to be a change of control. As I mentioned earlier, we over the years have had lots of opportunities for joint ventures and strategic acquisitions. The course for that continues to increase as our reputation and our branding has increased in the marketplace and we have a number of those opportunities in front of us as we have for quite some time, but in light of the market, we've been reluctant to spend the lot time doing due diligence or taking advantage of them.

With the advent of a rights offering and raising additional strong capital for the company, we believe that because of our brand we will be able to take advantage of some of these opportunities as time goes on.

And lastly, we believe that in a three to five year timeframe will be the appropriate time for us to be looking at strategic alternatives. We think that we need the next few years between raising capital, streamlining our operations, focusing on the confusion between the two divisions. We believe we're working very hard to enhance earnings of the company that at that point strategic alternatives would be very much in order and in line for our Board to be considering all with an eye toward maximizing shareholder value.

So John, at this point why don't I turn it back to you and see if there is any questions from our callers.

John Maloney

Thanks, Alan. And again thanks to all of you for your participation today. At this point I would like to ask the operator to open the floor to questions please.

Question-and-Answer Session

Operator

(Operator Instructions) The first question comes from the line of Michael Millman with Soleil Securities. Please proceed.

Michael Millman - Soleil Securities

Yes, this is Michael Millman with Soleil Securities. Just a couple of questions, but just a follow up on the last thing you said regarding the proxy statement. Would that book value be the current book value or would that be the diluted book value after I guess the dilution from this rights offering.

Alan Levan

This is Alan. This is just an evolving process and that will be determined at some point by the compensation committee and the Board of Directors before the proxy is filed. So we don’t have an answer for that, we just wanted to give you a heads up that it will be included in the proxy, we believe it will be significantly above where the stock price is trading today, but will be a real incentive for management to build shareholder value.

Michael Millman - Soleil Securities

This is Michael Millman with Soleil Securities. Just a couple of questions, but just a follow-up on the last thing you said regarding the proxy statement. Would that book value be the current book value or that be the diluted book value after I guess the dilution from this rights offering?

Alan Levan

This is Alan. This is just an evolving process and that will be determined at some point by the Compensation Committee and the Board of Directors before the proxy is filed. So we don't have an answer for that. We just wanted to give you a heads up that it will be included in the proxy. We believe it will be significantly above where the stock price is trading today, but will be a real incentive for management to build shareholder value.

Michael Millman - Soleil Securities

Regarding the business, I guess one of the great concerns about the timeshare business is the expectation, rightly or wrongly, that the recession will adversely affect it. So while you have given us fourth quarter and full year, can you talk about what the current trends that you may be seeing in terms of closing efficiency in terms of the average prices, whether you're selling to existing owners full weeks or are they more being sold on the points or limited amounts, just looking for broad flavor as to the very current trends?

Tony Puleo

Sure, Mike. Hi, good morning. This is Tony Puleo. Good to hear from you. To address your question, yeah, the things we look at of course would be things like tour flow and I think in John's comments, he indicated that our tour flow was definitely up for the year, I believe it was 326,000 tours versus 310,000.

For the fourth quarter taking that as a snapshot in terms of what's happening now of our tour flow increase from about 69,000 tours last year to about 77,000 tours this year, all of that at a very consistent conversion rate in terms of the front line, it's still about 10 to 1 in terms of conversion rates, so all that is holding up very nicely.

As you will see in the 10-K when it gets filed, our average sale prices in terms of sale price per transaction, so that takes into account the fact that we do a lot of equity upgrades but on blended basis between all of our equity trades and our new sales. You will see that our average sale price in the year increased from about $10,500 in '06 to about $11,100 in '07.

So price increase has been met with acceptance by the consumer base, they're still buying, they're still come to tour and they are still converting. So we've been very, very pleased with that. And that's not really inconsistent I think with what you are probably hearing Mike from others in this space. I know you cover Wyndham and some others, and it's very consistent with the history of this industry in terms of two prior recessions continuing to show sales growth.

Michael Millman - Soleil Securities

Okay. Marriott said that they were seeing and I am not really talking about more December, January and February, rather than the fourth quarter. Seeing a little what they thought was a little bit of slowness and may be a slight decline in conversion efficiencies. Can you give us a snapshot of the current couple of months?

John Maloney

Hi, Michael. This is John. Obviously, we can't comment on what's happening so far in the first quarter of '08. But in our scripted comments, to kind of mirror with Tony's comments, we mentioned that we've had 25 consecutive quarters of comparable sales growth and I would just point out that the third and fourth quarters of last year had some degree of economic uncertainties to them. So as we've said in the past timeshare has been somewhat resilient to economic condition and we expect it will continue to be.

Michael Millman - Soleil Securities

Okay. I am not sure when you gave the sales numbers for Resorts, if that number was a contracted sale or was that revenue recognition, but to be specific in the fourth quarter what was the contract sales?

Tony Puleo

In terms of what you are talking about on a pre-GAAP kind of basis.

Michael Millman - Soleil Securities

Yes, a non-GAAP measurement for actual sales?

Tony Puleo

That number never really sees the light of day from a GAAP perspective that is a non-GAAP measure that we can't show really without proper reconciliation. I can tell you though that that is basically what you see is it was still double-digit growth quarter-over-quarter in terms of contracts being written.

Michael Millman - Soleil Securities

Okay. And just step back, when you talked about the average territory was up from 10.5% to 11.1%, that's somewhat less than the 8% increase. So does that mean that actually unit sales were down?

Tony Puleo

No, actually unit sales were up year-over-year. Actual sales transactions in '07 were about 42,800 and in '06 you may recall it was about 41,000 sales transactions. But keep in mind that our percentage of owner upgrade sales continues to increase and those are usually at smaller bite sizes because we only basically record the incremental sales on those.

Michael Millman - Soleil Securities

Can you remind me, do you have a point system?

Tony Puleo

We are a point system. We do still the real estate underlying it, but basically the way it's used is through points.

Michael Millman - Soleil Securities

Great, thank you.

John Maloney

Thank you very much, Mike.

Tony Puleo

Thanks, Mike.

Operator

Your next question comes from the line of [Robert Jordan from Warden Glen]. Please proceed.

John Maloney

Robert?

Robert Jordan - Warden Glen

Yeah. This comment is for Alan Levan. Like with the disasters under your mismanagement at Bank Atlantic, Levitt and BFC Financial, there is no confusion to blame for BXG stock price. You seem to be a serial killer of public companies through operating losses and equity dilution. How can Bluegreen's Board continue to support your strategy with such a horrific track record of stock down over 90% over long-term versus short-term periods of time?

Alan Levan

Operator, we'll take another call.

Operator

Next question comes from the line of John Ziegelman. Please proceed.

John Ziegelman - CD Capital Management

Well, it's John Ziegelman. Tony and John, you have done a great job in Q4 in a difficult environment and thank you for doing that. Alan, it's nice to hear your voice on this call with fellow shareholders.

Alan Levan

Thank you.

John Ziegelman - CD Capital Management

Guys, your results to me are an example why I love the timeshare business so much and why I got involved at Centerra. It's a non-cyclical, generally 8% to 15% top-line grower. From my perspective, the business model is simple and the keys to success are delivering product to your customers that they want while controlling costs?

And secondly, access to affordable capital and I have size affordable. Could you guys comment on both and in particular while I know you ultimately put the rights offering capital to work and create value. I am concerned about the size, the timing and the form of the capital raise, especially in light of your good and accurate comment that the stock is trading well below the $12.34 book value?

Alan Levan

Well, I will address the rights offering and then turn it over to John and Tony to address the other part of your question. Our rights offering, when you have stock that's trading substantially below book value and the company desires to have capital. And as we've indicated our desire for capital really is twofold, one it's putting a bow around what we think is a wonderful company.

But the marketplace is concerned with issues, if you look at the most recent reported that the one analyst that's covering us came out with. They are concerned about our liquidity. They are concerned about the ability of the company to securitize and basically very, very negative with regard to our balance sheet.

There is not much we can do with that. We think a $125 million in unrestricted cash is pretty good. We think the results that we've been performing at as John and Tony have indicated a pretty strong, but there seem to be still a significant number of naysayers in the marketplace, that come up with these issues as to why the company that might be a casualty in this credit cycle. And so as we all know, there is nothing like cash and strong capital to put to rest those issues and those naysayers.

So if we want to raise capital, there is a several ways to do that and we could do a public offering which may or may not be available to us and we could do a private offering which probably is available to us or we could do a rights offering.

The first two, while lots of companies do that and the fact is that's not to say we wouldn't ever consider doing that either, but where you have a stock, that's trading at substantially below book value, we believe that it is extreme, it is much more shareholder friendly to raise that money from existing shareholders in their pro-rata, because at the end of the day they either participate and protect their pro-rata or they don't participate. But if they don't participate it's not any different than if we had just announced that we were doing a public offering or we had done a private transaction such as a pipe.

So ultimately we think that this is much fair to the shareholders. We think it's whether the shareholders participate in it or not, we think that it puts to rest these issues of what if we can't pay the $55 million debt, what if the securitization market dries up, what if our cash disappears. And we think that by reducing the leverage and by increasing our cash position, ultimately it's a very fair transaction.

Now some may disagree, but I am sure there are lots of shareholders that disagreed when Citicorp raised their $12 billion in one day and nobody got a chance to comment on it. We just have to do what we believe to be in the best interest of the shareholders and there is no fair transaction than rights offering that considers all shareholders in their pro-rata.

John Ziegelman - CD Capital Management

Can I comment?

Alan Levan

Sure.

John Ziegelman - CD Capital Management

First of all would be the debt coming due of $50 million some odd seems to be covered, I guess worst case by cash on hand. Secondly, I am struggling with the concept of fairness. Fairness in not part of the definition of fiduciary responsibility as far as I know, I am not a lawyer. But I've just never heard fairness being described as a reason to do or not do a particular type of financing.

And mostly I am struggling with the fact that and I think that all of your shareholders agree and I think the market agrees that your stock is undervalued. But there is a disconnect between saying we have to have liquidity and paying almost any price for that, and on the other hand saying the shares are cheap, especially vis-à-vis the comparison to book value.

I don't know that there is a magic bullet here, but a rights offering when you think about companies that have done in the past, there is also a belief that it's a most expensive form of capital and a form of capital where you don't have a lot of choices. I agree with your statement, I think you do have choices. So and I don't even need a response to this. My thought is that the capital that you've raised is an unusual type of capital in this market, given your book value and given the cost of it. And that's a statement not a question.

Alan Levan

Thank you. I appreciate your comments on that. John or Tony?

John Maloney

Yeah, John, the second part of your question again was?

John Ziegelman - CD Capital Management

The question was raising revenue and controlling cost, that's the key to this business. It is a capital intensive business. And I think the first question came from somebody that was wondering whether there was cyclicality to it. I don't believe there is. So, the question really is how do you increase revenues and control cost while you are growing the business. If you are flushed with capital and there are great opportunities to grow the business, a concern that could develop is you just start spending madly? So that's the question.

John Maloney

Okay, it's an excellent question. Again John I know first hand that you have got some experience in this space, with your prior relationship with Centerra. And I think as you experienced even with the difficulties they had, they produced pretty good, albeit unaudited results during that period. And so I think we're somewhat immune to some of the cyclical activities that might hamper other industries, if you will. But of course, we watch that carefully every quarter.

And it's our view that we created just an outstanding operating platform Bluegreen Resorts and frankly we're at a size and sort of a breadth that we are an unprecedented opportunities to grow the Resorts business on a non-organic basis and that's going to require some capital do so.

In terms of our ability through hopefully very deliberate acquisition and growth, we mentioned we're disciplined in our scripted comments relative to our Communities business. I think we are very disciplined organization and I think you can count on us not to make reckless acquisition for the sake of acquisition. There is a number of strategic sort of prisms that we'll look through, be it geography, new points of distribution, fulfillment from a club perspective, cultural compatibility and all the above.

John Ziegelman - CD Capital Management

Okay. Thank you.

John Maloney

Thanks John.

John Ziegelman - CD Capital Management

Thank you.

Operator

Your next question is a follow-up from Michael Millman with Soleil Securities. Please proceed.

Michael Millman - Soleil Securities

Thank you. Looking at just again more on the number side, can you give us some idea of what the ROIC on development is and the trends in that? And also relatively may be break out the development from revenues, from the service management revenues?

Tony Puleo

Hi Mike. This is Tony. We definitely do break that out separately in terms of the other services which as you may recall encompass a number of different things. It's our property management division, the profits from managing the Vacation Club, our title company, other retail operations that we have.

For the year we ended up in the Resorts division with about $53.6 million of revenue, with a corresponding amount of about $36.6 million in cost. That piece is part of that $69.9 million of field operating profit, that really comes from the combination of that and the selling and marketing arm which I guess you are referring to is the development profit, but that would be really where the profits from development come from, from selling and marketing.

Michael Millman - Soleil Securities

Are you saying the $36 million of the total is from all those servicing pieces?

Tony Puleo

No, it's about $17 million of profit on that other services of $17 million.

Michael Millman - Soleil Securities

And that was for the full year?

Tony Puleo

Exactly.

Michael Millman - Soleil Securities

And can you talk about what the growth has been?

Tony Puleo

Last year that same number was about $9 million of profit. So we've had very good growth there. I mean as we continue to grow the Club, as we continue to expand that owner base and it grows, I mean our management fees increase in the Club as we've got more resorts that while we own them, we rent. We get increased rental income from that and as our volumes go up, of course our title company makes more money and so on and so forth. So that it is a good recurring kind of growth revenue stream.

Michael Millman - Soleil Securities

And the ROIC?

Tony Puleo

We don't measure in that regard. I mean we kind of look at the profitability of these projects and as you see we have been very consistent in terms of our cost, in terms of generating anywhere from 75% to 80% gross profits as we sell through these projects. So we are very happy with the returns we are getting.

Michael Millman - Soleil Securities

And on Communities, can you talk about what the trend is in the build-out from the purchasers? And also what trends there might be in foreclosures in some of your Communities, recognizing you are not the builder but just to get some idea?

John Maloney

It really depends, Michael market-by-market. The Communities we have been involved recently in North Carolina had rooftops appeared at an unprecedented rate, and frankly, our most recent Communities are essentially filled out. Texas moves at an altogether different pace. So it really is a market-by-market phenomena.

Michael Millman - Soleil Securities

Are there any generalizations to be made?

John Maloney

We are not seeing necessarily, but remember we sell to the end users, so we are not working with lenders and builders directly. So we wouldn't probably have first hand knowledge of it. We are not necessarily seeing high amount of foreclosures on these home sites. So it really would be tough for me to make a generalization.

Tony Puleo

And the other thing, Mike, to remind you too is that basically our product doesn't require the buyers to build within any certain period of times, it's really up to them. It's their kind of step acquisition means of getting into their ultimate home sites. So really the pace of the rooftops as John said is more market-by-market and to what the individual buyers want to do.

Michael Millman - Soleil Securities

I guess, I was asking that because I would assume that the more building goes on and more excitement that creates and the more likely that you will get additional buyers. And I suppose to converse is true, there is lot of vacant land, it's not too exciting. I am sorry, trying to get a feel for that?

Tony Puleo

I think that varies, I think our guys on the sales side of that division will tell you that that really what we are selling is to dream really of your dream home at some point in time and some times the vision of that with that lot of construction going on around is pristine and it does still continue to generate sales.

Michael Millman - Soleil Securities

Okay. Great, thank you.

Tony Puleo

Thanks Mike.

John Maloney

Operator, in the interest of the time, perhaps, we could take one more call.

Operator

I show no further questions in the queue. I would now like to turn the call over for any closing remarks.

John Maloney

Thank you very much. Once again, thanks for your participation today and support of Bluegreen. We look forward to that continue support.

Operator

This concludes the presentation and you may all now disconnect.

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