Nov. 7, 2013, 4:40 AM
- Toll Brothers (TOL) has agreed to acquire the home-building business of privately owned Shapell Industries for $1.6B in a transaction that will boost the company's presence in California. Toll will pay for the purchase in debt and equity.
- The luxury home-builder will gain Shapell's land portfolio of 5,200 home sites, most of which are entitled and which are located in many of California's most affluent and high-growth markets.
- After the deal is closed, Toll plans to sell around $500M worth of land.
- Toll believes that the acquisition will add to its earnings within the first year, excluding transaction costs.
- News of the purchase comes just a few days after Tri Pointe Homes agreed to merge with Weyerhaeuser's home-building division in a $2.7B deal. (PR)
- Meanwhile, Toll estimated that its FQ4 revenue rose a preliminary 65% to $1.04B, topping consensus of $921.03M, and lifted by price increases and an acceleration in the pace of sales.
- The average price of homes delivered climbed to $703,000 from $582,000 a year earlier.
- Contracts +23% in dollars and +6% in units.
- 2013 backlog increased to 3,679 units and about $2.63B. (PR)
Oct. 24, 2013, 3:47 PM
- With interest rates already sharply lower than during Q3, investors look past the slowdown in new home orders last quarter at PulteGroup (PHM +7.6%) . Also reporting today, M/I Homes (MHO +7.6%) records a similar gain after new contracts of 869 homes gained 15% from a year ago.
- Not unnoticed is the average 30-year fixed mortgage rate falling 15 bps last week to a 4-month low of 4.13%.
- Other builders: Toll Brothers (TOL +2.5%), KB Home (KBH +2.9%), Ryland RYL, Hovnanian (HOV +2.5%), Standard Pacific (SPF +2.5%).
- ETFs: ITB +3.1%, XHB +2.4%.
Oct. 14, 2013, 11:35 AM
- The average mortgage payment on a median-priced U.S. home as a share of income rose to 16% in August, according to the NAR. It's all about interest rates, as the rise occurred even as median prices slipped slightly this summer.
- Still - by this measure - homes are still more affordable than at any time between 1989 and 2008.
- The homebuilding sector is among the worst-performing today amid this news and word of rising incentives (lower profit margins) now necessary to move product.
- ETFs: ITB -1.9%, XHB -1.6%.
- TOL -2.1%, RYL -3.1%, HOV -1.4%, WLH -3.5%, PHM -2.9%.
Oct. 7, 2013, 3:59 PM
- Credit Suisse's homebuyer traffic index slumped to a near 2-year low of 36 in September from 45 in August, with agents blaming increases in rates and home prices. The recent pull-back in interest rates hasn't yet led buyers to re-engage. Investor-heavy markets like Atlanta, Phoenix, Las Vegas continue to take a hit as investors pull back (some Wall Street heavyweights like Oaktree are exiting).
- Toll Bros. (TOL -0.9%) got the highest percentage of agent recommendations across all markets, with a net 34% of agents saying they would recommend the builder. Next is D.R. Horton (DHI -0.2%) with 24%. Standard Pacific (SPF -1.2%) and PulteGroup (PHM -1.1%) polled at 23%.
- XHB, ITB, PKB.
Oct. 7, 2013, 8:29 AM
- Goldman likes the brokerage business, upping Realogy (RLGY) to Buy saying worries about royalty rates and commission splits, broad housing concerns, and large stock sales are already priced into the stock. "We expect these issues to diminish over the coming quarters."
- How to buy Realogy? Take the cash from a sale of Toll Bros. (TOL), says Goldman, removing its Buy rating on the homebuilder. Despite the downgrade, Goldman still likes Toll's position at the high end of the market and sees room for material margin expansion as the company works through its land-development progress.
- TOL -2.4%, RLGY +0.4% premarket.
Sep. 24, 2013, 11:40 AM
- The Dow Jones U.S. Home Construction ETF (ITB +2.6%) gains following earnings reports from Lennar (LEN +5%) and KB Home (KBH +4.5%) - both of which showed interest rate hikes taking at least some bite out of results. Also, Case-Shiller data pointed to a slight slowing in home price increases. Homebuilders have been knocked for a loop since rates started going up in May - perhaps some sell the rumor, buy the news action is warranted today.
- In other homebuilder news, RBC Capital initiates coverage on Brookfield Residential Properties (BRP +4.1%) with a Buy and $27 price target.
- Toll Brothers (TOL +3.7%), M/I Homes (MHO +3.9%), Ryland (RYL +6%), D.R. Horton (DHI +2.2%), Hovnanian (HOV +2.1%).
- Other ETFs: XHB, PKB.
Sep. 18, 2013, 5:52 PM
- Home builders enjoyed a double boost today from the Fed's decision to maintain QE and keep interest rates low plus a report of resilient construction of single-family homes in August, but the Fed’s action simply kicks the can on a reduction of the bond-buying program and a subsequent increase in rates.
- ISI Group thinks the move doesn’t bode well in the long term for home builders: "It speaks of prolonged economic weakness that ultimately may negatively affect the builders if job growth continues its puny pace."
- But investors today were enjoying the short term, hoping a halt or slight reversal in the rise in rates will help spark home sales: BZH +4.4%, CVCO +4.8%, DHI +6.9%, HOV +5.3%, KBH +8.2%, LEN +6.5%, MDC +5.2%, MHO +5%, MTH +6.8%, NVR +3.9%, PHM +5.4%, RYL +8.7%, SPF +4.4%, TOL +5.1%.
- ETFs: XHB, ITB, PKB.
Sep. 6, 2013, 10:33 AM
- Toll Brothers (TOL), Standard Pacific (SPF), and Brookfield Homes are reportedly among the finalists for California homebuilder Shapell Homes at a price of about $1.5B.
- Shapell owns one of the largest portfolios of residential land for sale in California, with more than 5K home sites in various master-planned communities.
Aug. 26, 2013, 8:31 AM
- "Could there be more evidence in a single day that housing blew up on the rate 'surge' catalyst," asks Doug Kass following Friday's dive in new home sales and word American Homes 4 Rent has cut about 15% of its workforce.
- Hedge funds, P-E firms, and REITs have raised more than $18B to purchase over 100K homes the last two years and - if AMH is any indication - find themselves with a lot more property than they can profitably rent out. It's more than an issue for the companies and their investors - one wonders how much of this unprofitable (and apparently about to slow) activity has boosted the housing stats.
- Other stocks of interest include Silver Bay (SBY) and American Residential Properties (ARPI).
- Housing construction ETFs: XHB, ITB, PKB.
- Homebuilders of note: KBH, DHI, PHM, LEN, RYL, TOL.
Aug. 23, 2013, 10:12 AM
- July new home sales fell 13.4% to an adjusted annual rate of 394K, far below expectations of 487K. The 394K pace is still 6.8% above the pace of one year ago. Given the current pace of sales, inventory rose to 5.2 months worth of homes from 3.9 in June.
- The U.S. Home Construction ETF (ITB -3%). Weighted more heavily on building suppliers than the builders themselves, the S&P Homebuilders ETF (XHB -1.9%).
- Lennar (LEN -3.8%), Toll Brothers (TOL -4.1%), Ryland (RYL -5.1%), KB Home (KBH -4.4%), D.R. Horton (DHI -3.7%), Hovnanian (HOV -3.3%).
- Treasury prices cut sizable losses and turn green, TLT +0.3%.
- Treasury ETFs: TLH, TLT, IEF, DTYL, DLBL, ILTB, TENZ, ITE, TLO, EDV, VGIT, VGLT, TMF, TYD, LBND, UBT, UST, TMV, TYO, DSTJ, DSXJ, SBND, PST, TBT, DTYS, DLBS, TBF, TTT, TYNS, TYBS, TBX.
Aug. 21, 2013, 7:25 AM
- Toll Brothers (TOL) net profit -24% to $46.6M as the company takes a tax expense of $21.7M vs a benefit of $18.7M last year.
- Pretax profit $68.3M vs $43M.
- Signs contracts for 1,405 homes at a value of $992.6M, up from 1,119 homes and $674.4M last year.
- Cancellation rate 4.6%, unchanged from last year.
- Backlog +75% to $2.84B and +56% to 4,001 units.
- We believe the recovery is real and we are in the early stages of the rebound," says CEO Douglas Yearley. "Our average sales contracts per community are about where they were in 1997-1998.
- Guidance: FY 2013 revenue of $2.46-2.62B vs $1.88B in FY 2012 and consensus of 2.53B; deliveries of 3,925-4,125 homes vs 3,286 homes last year. (PR)
Aug. 21, 2013, 5:54 AM
Aug. 21, 2013, 12:05 AM
Aug. 20, 2013, 5:30 PM
Aug. 19, 2013, 12:13 PM
- Off more than 20% since its May high, the iShares U.S. Home Construction ETF (ITB -1.6%) is officially in a bear market, notes Ryan Detrick. The previous 3 instances the ETF fell 20%, it declined another 7.7% in the following month.
- Know your ETF: The S&P Homebuilders ETF (XHB -0.8%) has strongly outperformed the ITB during this 3-month slump.
- While ITB's main holdings are concentrated in actual homebuilders like LEN, PHM, DHI, TOL, and NVR, top holdings in the XHB are supply companies like Lumber Liquidators, Lennox, Lowe's/Home Depot, and A.O Smith - a homebuilder can't be found in its top 10 names.
- Other related ETF: PKB.
Aug. 16, 2013, 12:48 PM
- Struggling home builders are jumping ahead on respectable but in-line housing data, as at least overall construction has climbed in two of the past three months.
- "Looking at the underlying trend in one-family starts suggests that the pace of groundbreaking activity is actually fairly steady," an RBS economist says, unconcerned about July's drop in single-family starts since "anecdotal evidence suggests builders may be holding back on new construction in part to reap the benefits of higher prices."
- Raymond James "continue[s] to believe we are in the early stages of a sustainable up-cycle in U.S. housing," and favors Toll Brothers (TOL +1.5%), which it sees as less sensitive to mortgage rates.
- PHM +3.4%, LEN +3.1%, KBH +2.9%.
- ETFs: XHB, ITB, PKB, REZ.
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