Incentives and Dividends - Homebuilders Keep Trying [Housing Tracker]

Homebuilder Stocks 

Long a Reliable Profit Source, Dividends Start to Crumble.  “The credit crisis and economic slowdown have become so grave that many companies are chopping dividend payments to their shareholders… Howard Silverblatt, senior index analyst at S&P. "Dividends are usually the last thing you want to cut… You're telling the marketplace: 'I have a cash flow problem.' "  La-Z-Boy (LZB), the furniture manufacturer, reduced its payout by two-thirds during an industry-wide downturn. And homebuilder D.R. Horton (DHI) cut its dividend in half. Donald Tomnitz, CEO of Horton: "As long as we are producing an operating loss, then it doesn't make sense to continue to pay the level of dividend that we were.”  (Washington Post, July 6^th)

Their Homes Were Built Atop Fill From St. Joe's Mill; Now, Homeowners Hope For Relief. Northern Florida: “[Some] North Bay homes have been tearing apart for years… It's what happens when concrete-slab-foundation houses are built atop wetlands filled with pine bark, wood chips and other paper-mill waste — like these lots The St. Joe Co. (JOE) sold to black families in the 1980s. In summer 2004 the seven North Bay property owners still living in town sued the timber giant turned upscale developer. But the sluggish pace of the court case hasn't kept up with the rapid deterioration of their homes.  (Tallahassee.com, July 6^th)

Meritage Homes/Euless.  Texas: “Meritage Homes (MTH) is offering grand opening specials this weekend in its newest master-planned community, in Euless… Meritage homes in Villas at Texas Star are priced from the $190s to the $290s, with home sizes ranging from about 1,604-4,571-sf. Buyers who purchase this weekend and finance with MTH Funding will receive a $4,000 incentive toward closing costs.”  (Star Telegram, July 5^th)

Meritage Homes/Keller.  Texas: “Homebuyers are responding enthusiastically to the resort-style community of Marshall Ridge in Keller, where every Meritage home offers a minimum of $40,000 in included features. Almost half of the Phase I homes have been sold in the past four months… "The Springs Collection features Marshall Ridge’s most affordable homes, yet we include luxury features such as granite countertops, that you’d typically see only in more expensive homes," said Rob Sandefur, community sales manager.”  (Star Telegram, July 4^th)

Maryland New Homes: Closing Assist In Brandywine.  “K. Hovnanian Homes (HOV) is building 63 town homes at the Lakes at Chaddsford in Brandywine, a planned community with a lake, fitness trails, playgrounds, tennis courts, a clubhouse and swimming pool… The builder is offering up to 6% closing costs, a finished recreation room and a free luxury master bath to buyers who use the preferred lender and title company.”  (Washington Times, July 4^th)

More Bad News For Home Builders. “Moody's cut the rating of luxury homebuilder Toll Brothers (TOL) [on Thursday] to junk status. Their rating was cut to Ba1 from Baa3. Moody's: "While the company is one of the only remaining home builders that is currently generating earnings before impairment charges, Moody's does not expect this to continue, as falling prices and lower absorption rates continue to impact margins.” For long term, contrarian investors, shares in Toll Brothers are certainly intriguing under $19.” (Blogging Stocks, July 3^rd)

Home Builder Buys Lots In Hope Of Turnaround  “A Beverly Hills homebuilder has purchased 163 finished residential lots in Victorville, in hopes that the High Desert residential market will rebound during the next few years. Kennedy Wilson Residential Development and Investments Group bought the lots from Pulte Homes (PHM), said Eric Taylor, managing director with Kennedy Wilson, a national real estate/investment firm and the residential division's parent company.  Similar land sales have become common in the High Desert recently, according to one homebuilder familiar with the market.”  (Press Enterprise, July 3^rd)

Old Buildings Yield To Development.  New Jersey: “On Tuesday, builders and city officials will gather for a celebration marking both the groundbreaking for the Cooper Crossing town houses and the demolition of the 102-apartment Kerney Homes project… Westrum Development Co. and its partner Ryan Homes (NVR) plan to start construction early next year on the 88-unit Cooper Crossing.  Westrum CEO John Westrum said that while his company is the developer, Ryan Homes will build the houses. The three-story town houses will be roughly 1,200-1,400-sf. The prices will start around $170,000 and will likely be below $200,000.” (NJ.com, July 3^rd)

Trustee Sale Yields $27M for Rancho El Dorado.  “Harvard Investments Inc. and Meritage Homes of Arizona Inc. paid $27 million to acquire 650 acres of residential development land in the Lakes at Rancho El Dorado. The Arizona-based companies bought the property at auction from Wachovia Bank and Wells Fargo Bank, which had taken it back from a previous Meritage partnership… The acreage is approved for construction of 1,985 single-family homes. It originally was bought for $39M by Maricopa Lakes LLC, a partnership of Meritage and Hacienda Builders Inc. formed in November 2004. The purchase included an additional 384 lots, where homes have been built and subsequently sold.”  (Globe St., July 2^nd)

Lennar Corporation Declares Quarterly Dividends.  “Lennar Corporation (LEN), one of the nation's largest homebuilders, announced that its Board of Directors has declared a quarterly cash dividend of $0.16 per share for both Class A and Class B common stock payable on August 5, 2008 to holders of record at the close of business on July 24, 2008.”  (Press Release, July 1^st)

 

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Comments

[specks:]

Fascinating... The dividends are being cut while the management are keeping and/or increasing their own pay packages as well as stock options.
The business must fold! It no longer seems to belong to the shareholders ... but only to the managers. And what have they accomplished? Billions of dollars lost! WOW! Can I take a shot at it?

2008 Jul 07 11:27 AM

[gordon:]

How are banks "borrowing" @ 2.25% from the TAF window and NOT CUTTING OR ELIMINATING DIVIDENDS? This is a FED bailout, it should be MANDATORY! Only in America. I work for Lennar, they are one foot in the grave and have NO BUSINESS PAYING DIVIDENDS! They let-go all but one VP/sales in the entire Inland Empire division, they are a skeleton crew, for 4-5 offices.

2008 Jul 07 01:57 PM