Quotes of the Day
"As we transition into 2009, we are paying especially close attention to these companies, because the longer [the housing downturn] lasts, the more challenging it is for the companies.” - Bob Curran, managing director at Fitch Ratings Ltd. on overleveraged homebuilders, whose options are running out as the housing slump drags on. (Investment News, Aug. 25)
"We have a lot of positive hope for the short term and the long term.” - David Pelletz of Standard Pacific Homes. (Bay News 9, Aug. 24)
"We perceive we have seen an uptick in sales.” - Jay Mason, VP Sales for Pulte Homes in Dallas-Fort Worth. (Star Telegram, Aug. 26)
That Housing Recovery? Keep Waiting. “UBS: Builders that have concentrated on “proactively” reducing land positions are better-positioned for the recovery, whenever it happens. Those include Toll Brothers (NYSE:TOL), Ryland Group (NYSE:RYL), and Centex (CTX). Shares of those stocks have been mixed on the year; Toll has gained 16% on the year, Ryland is down by 24%, and Centex is down 39%.” (WSJ, Aug. 25)
Beazer Moves To Smaller Digs, KB Slims Down.
Home Builder's Travails Make Some Wonder Which Others Are At Risk. “David Goldberg, UBS: If the industry doesn't bottom in H2’09, [more] builders could [fail]… Companies that are overleveraged need to conserve capital… Bank covenants could pose the biggest risk… Hovnanian Enterprises (NYSE:HOV) recently issued $600 million of five-year senior secured notes to offset its smaller credit line... Toll Brothers, recently announced a relationship with a Middle Eastern sovereign fund that could give the company… more liquidity and growth capital… Moody’s: The builder with the biggest cash balance as a percentage of total assets at the end of Q1 — and therefore the least at-risk from covenant issues — was MDC Holdings (NYSE:MDC) at 42.5%. MDC was followed by NVR (NYSE:NVR) at 34.7%, KB Home (KBH) at 25.8%, and Toll Brothers at 17.8%. The companies with the smallest cash balance were M/I Homes (NYSE:MHO) at just 0.2%, and Meritage Homes (NYSE:MTH) at 1.7%.” (Investment News, Aug. 25)
What the Homebuilders Are Telling Us. “’At market lows, the next leaders are born.’ We saw that… in the late 90s with tech's accelerating to the upside. Could 2008's low candidates, the financials and the homebuilders… be [indicating that] credit conditions are now in place for housing to stop falling? …The CME Housing futures have stabilized over the past few months... My own models show that we are in the third wave down for housing right now (we had three rising ones in the earlier part of the decade). We have bounced each time for this level but [without] the homebuilders. Thus, we have the CME futures, the homebuilders and my own indicator all at extremes or turning.” (Timothy Charles in Seeking Alpha, Aug. 24)
KB Home Combines Norcal Division Offices, Cuts Jobs. “KB Homes, the
CCDC to Put Projects Under Scrutiny
Beazer Homes Selects Brunner.
KB Home, Other Builders Sued Over Internet Patent. “A group of homebuilders including Toll Brothers Inc. and KB Homes were sued over claims they wrongfully use patented technology linking builders, manufacturers, and buyers online. OLA LLP, the owner of HomeBuilderShowroom.com, claims that several builders had signed confidentiality agreements to learn of its "Builder's On-Line Assistant,'' before declining to purchase the service. The builders then offered an identical product, OLA claims in the suit filed Wednsday in federal court in
Technology Provider Sues Top Builders, Manufacturers. “Home builders named in the OLA LLP suit include: Beazer Homes USA, Capital Pacific Holdings, Centex Real Estate Corp., David Weekley Homes, KB Home, Lennar Corp., Pulte Homes (NYSE:PHM), Standard Pacific Corp. (SPF), and Toll Brothers.” (Builder Online, Aug. 21)
Seeking Alpha's Housing Tracker is a collection of housing-related excerpts from various sources, grouped by topic. Feel free to post any interesting links on the subject in the comments section below.
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