Quote Of The Day
"If I knew the answer to that, I'd be a potential Vice Presidential candidate. I'm shocked by it. I'm upset by it. If you agree that we need stabilization in [housing], why take the buying decision away from 10%, 20%, 30% [of the market] at the time we did?" – D.R. Horton CEO Don Tomnitz on the housing bill recently passed, which eliminates the down payment assistance program. (Big Builder Online, Aug. 5)
Pulte Homes Gives Discount to New Buyers. “Pulte Homes Inc. (PHM), one of the country's largest home builders, says it will match a new $7,500 tax credit for first-time home buyers with its own $7,500 discount on homes.” (WSJ, Aug. 6)
Toll Brothers Enters New York State's Capital District Region. “Toll Brothers, Inc., (TOL) today announced its further expansion in the Northeast with its entry into Saratoga County, New York. The move expands Toll Brothers' presence in the state, where it currently operates communities in Dutchess, Westchester, and Ulster Counties, and in the NYC boroughs of Brooklyn, Manhattan, and Queens. Rob Parahus, Toll Brothers Regional President: “As the center of NY State Government, the Albany market operates to a somewhat different economic drumbeat than other parts of the state and its role as the State Capitol provides somewhat of a buffer from forces that have slowed a number of the other markets.” (Press Release, Aug. 6)
D.R. Horton Reports Net Loss as Housing Woes Deepen. “D.R. Horton Inc. (DHI), the largest U.S. homebuilder, reported its fifth straight quarterly loss as rising foreclosures and stricter mortgage requirements deepened the housing recession. The fiscal third-quarter net loss narrowed to $399 million, or $1.26/share, from $823.8M, or $2.62, a year earlier. Revenue declined 44% to $1.43 billion and new orders and the number of homes sold each fell 36%. The company recorded $330.4M in pretax expenses to write down the value of property and walk away from planned land purchases. D.R. Horton also recorded a tax-related expense of $168.7M.” (Bloomberg, Aug. 5th)
KB Home Employees Go Unpaid. Texas: “The Workers Defense Project will hold a protest Thursday for a group of seven construction workers who labored on several of KB Home's premier properties in South Austin. Immigrant workers and their supporters will gather to hold KB Home (KBH) accountable for labor abuses taking place on several of their housing projects in Austin. In April 2008, [seven] workers were hired… to complete framing and interior detail work on seven new KB Home properties located in South Austin. However, the workers were never paid for their last two weeks of work [and are] owed nearly $10,000.” (KXAN, Aug. 5th)
WCI Trading On Pink Sheets. “One day after filing for Chapter 11 bankruptcy, WCI Communities announced that its common stock would be traded on the Pink Sheets under the symbol “WCIMQ.” Pink Sheets is a daily listing of bid and ask prices for over-the-counter stocks not included in the daily OTC Bulletin Board. WCI said it will not request a hearing to appeal the NYSE’s determination to suspend trading and seek delisting of the company’s common stock.” (South Florida Business Journal, Aug. 5th)
Hovnanian Adopts Shareholder Rights Plan. “Hovnanian Enterprises Inc (HOV) has adopted a shareholder rights plan to protect its right to future tax rebates... For more than a year, the company has posted substantial operating losses, which under U.S. tax rules may be used to offset future earnings and reduce federal income tax. However, if certain shareholders increase their ownership, that could be seen as an "ownership change" under the tax code and limit its abilities to use the tax benefit, the company said. CEO Ara Hovnanian "The rights plan is not intended for defensive or anti-takeover purposes and is in the best interests of all stockholders of Hovnanian. Once the tax benefits of the net operating losses and built in losses have been utilized, the board intends to terminate the rights plan." (Reuters, Aug. 4th)
Lyon Homes Reports $38.9 Million 2nd-QTR Loss. “Despite a considerable drop in revenue, continued pressure on margins, and impairment charges, William Lyon Homes (WLS) was able to tamp its losses for its most recent quarter compared to Q2’07. The company logged a net loss of $38.9 million in Q2’08 versus a $76.9M loss in Q2’07. Consolidated operating revenue decreased 48% from a year ago to $140.1M as new-home deliveries fell 42% to 319 homes for Q2. WLS netted 418 new-home orders this quarter, down 15% from Q2’07… The company's backlog of homes sold but not closed at the end of the quarter was down 44% from 796 homes in Q2’07.” (Big Builder Online, Aug. 4th)
M/I Homes Files To Raise Cash. “M/I Homes, Inc. (MHO) has just filed for a mixed shelf registration statement with the SEC that will give it the right to sell up to $250 million in securities. The company can sell debt, common stock, preferred stock, depository shares, and/or warrants in any combination accepted… The company has noted that the specific allocations of the proceeds for such purposes have not been made at this time, and pending their ultimate use it intends to invest the net proceeds in short-term, interest-bearing, investment grade securities.” (24/7 Wall St., Aug. 4th)
A Battered Beazer Holds On. “If Beazer does bounce back, "it could take them a number of years," according to James Wilson, an analyst with JMP Securities. Wilson ranks Beazer Homes (BZH) in the bottom-third compared to other big homebuilders because of its substantial land holdings and debt. "They got started late in terms of entering the growth phase and buying land," he said. But bankruptcy, he said, is unlikely because Beazer can simply give troubled communities to the banks in order to keep going.” (AJC, Aug. 3rd)
Developer Delays Vote On Downsized Home Plans. “The Fallbrook Community Planning Group’s vote in regards to the plans of KB Home’s strategy to downsize home models in the Shady Grove development was [delayed] until next month at KB’s request... The original development plans were [for] 101 homes… ranging from 2,600-3,500-sf. Thirty-six of the homes in the community were built according to these plans. But on March 20, KB Homes Project Manager Eric Scheck informed the Shady Grove residents that the remaining homes would be modified in size, ranging from 1,600-2,200-sf, which would directly lower the selling price of the homes to between $300,000-$500,000... much to the disapproval of the area’s existing residents.” (Village News, July 31st)
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