A lot of Hoboken's bubble financing was carried out by major regional institutions focused on NYC development since there were housing synergies. Their fate will only add to the difficult credit conditions for buyers here.
I'm waiting for the duplicate (downtown vs uptown) branches to announce closure or consolidation. Realtor space occupants should take note!
From the Blogosphere:
"Washington Mutual (WM), Sovereign (SOV) (was Independence) and Capital One (COF) (was North Fork) are the three horsemen of New York multi-family lending and have potential exposure to the problematic multi-family environment. Signature Bank (SBNY) has recently recruited away a lending team from North Fork and may be able to cherry pick better margin and more tightly underwritten new loans to buyers of multi-family properties in NYC."
Tuesday, September 9, 2008
Monday, September 8, 2008
Toll Bros. Loses Appeal, Lawsuit Proceeds
Publication Date: Saturday September 06, 2008
Business/Financial Desk; Section C; Page 2; Column
c. 2008 New York Times Company
By BLOOMBERG NEWS
Toll Brothers, the largest United States luxury homebuilder, lost a bid to have a shareholders' securities-fraud lawsuit against it dismissed. Investors who bought shares in the company from December 2004 to November 2005 made claims specific enough in their complaint to survive Toll Brothers' motion to dismiss it, a United States District Court judge in Philadelphia, James T. Giles, said in his order. He did not rule on the merits of the claims. The plaintiffs alleged that the company and individual defendants misrepresented or omitted facts "regarding, but not limited to, traffic, demand and defendants' ability to add new selling communities in fiscal year 2005," the judge wrote.
Business/Financial Desk; Section C; Page 2; Column
c. 2008 New York Times Company
By BLOOMBERG NEWS
Toll Brothers, the largest United States luxury homebuilder, lost a bid to have a shareholders' securities-fraud lawsuit against it dismissed. Investors who bought shares in the company from December 2004 to November 2005 made claims specific enough in their complaint to survive Toll Brothers' motion to dismiss it, a United States District Court judge in Philadelphia, James T. Giles, said in his order. He did not rule on the merits of the claims. The plaintiffs alleged that the company and individual defendants misrepresented or omitted facts "regarding, but not limited to, traffic, demand and defendants' ability to add new selling communities in fiscal year 2005," the judge wrote.
Saturday, September 6, 2008
Beware REX - The Latest RE Vulture Scheme
As the outlook on home prices slides unabated, schemes that prey on cash flow needs are emerging - only to apply the equivalent of a shark loan on what remains of owners' equity. While this is a method that MP resellers are already considering as an exit strategy, it's result will only worsen their financial predicament.
There is no free lunch. There is only one way out... much lower prices at a cost per square foot equivalent to 2005 valuations!
As I write this, the Treasury Dept. is believed to prepare an announcement on Freddie Mac and Fannie Mae before the Asian markets open on Sunday night. Looks like they are finally ready to execute the new powers afforded to them months ago. All this in an effort to stabilize the housing market. Many will declare the bottom to prices due to this net. Far from it!
--------------------------------------------------------------------------
By Chuck Jaffe, MarketWatch
BOSTON (MarketWatch) -- The sales pitch is simple: Tap into your home equity without taking on more debt, without paying any interest and without having to worry about additional monthly payments, ever.
It's getting thousands of people each week to look into something called a "REX Agreement," which might best be described as a home-equity-risk/return-sharing arrangement, a phrase so mind-numbingly complex that it makes it clear this deal is anything but simple.
While there is some truth to the hype, there's also no denying that REX agreements -- and similar "alternative-to-mortgage" deals popping up around the country -- have real potential to turn into something with long-lasting and expensive side effects.
The one thing that is most clear about a REX agreement is that it's a huge bet on the appreciation of your home, and that it looks like a sweet deal, but it has a lot of sour potential. Worse yet, it's almost impossible to tell who these deals will actually work out for, and who is finding a new way to mortgage their financial future.
But because they appeal to the consumer's most basic desires -- cash now, no payments, no interest rate to worry about -- REX agreements are something that a consumer can easily bungle, even under the best of market conditions.
To see why that is, let's dive into the workings of a REX agreement.
REX stands for Real Estate Equity Exchange, and the deals are marketed by REX & Co., a San Francisco-based company currently offering its agreements in 11 states (and adding more seemingly every few weeks). REX has been advertising heavily on television and the Internet.
The agreement involves selling an option lasting five to 50 years, where you get cash now and REX shares in the future sale price of your home. If the home increases in value before the deal terminates, REX gets a chunk of the gain; in nine out of 10 deals, homeowners take the maximum upfront cash and give up a 50% share of the home's value, according to Tjarko Leifer, managing partner for REX.
You read that right. If your home is valued at $500,000 today -- and you have at least 20% equity in your home -- you can get $75,000 today and $175,000 when the home eventually is sold. REX, however, will get half of your home's value at closing time, or when the deal is terminated.
"About 60% of Americans have more than 80% of their net worth tied up in their home," says Leifer. "The mantra for investing has been to diversify, and yet people aren't diversified because of their home. ... Our product offers people a way to access some of their equity, and to do it in a way that decreases their risk. By comparison, a home-equity loan increases your leverage and maintains the exposure to real estate."
Cuts both ways
To truly diversify risk, the homeowner should invest the proceeds into other asset classes and securities. That same kind of thinking spurred many people to take option ARMs, adjustable mortgages with low payments where the best way to come out ahead was to invest the savings; it sounded great, except almost no one actually invested the savings from lower payments.
With a REX agreement, rates are a nonissue, but the diversification advantage evaporates if the money is plowed back into the house, and is minimized if the cash is used to pay off other debts.
A key sales point is that the "sharing" works in both directions, a particularly attractive feature given the current housing meltdown. If a home's price falls while the agreement is in place, REX shares in the loss at closing time. (One other key point: Home improvements are credited to the owner, so that if the REX money is used on an addition, the value of the home would be adjusted upward before REX's share of final appreciation is calculated.)
"With home prices sliding in so many markets, consumers may assume they can get a partner to share the pain, but if you end the agreement in the first five years, REX doesn't share in any home-value decline," says Greg McBride, senior financial analyst for BankRate.com. "They take their share of the home's value at the time the agreement was signed, plus an exit fee."
That fee starts at 25% of the original cash advance and drops by five percentage points per year until it is phased out after five years. In the meantime, it's a nasty penalty for the homeowner who needs to make a change. After the penalty phase, you can end the agreement by selling the home or refinancing the deal, keeping the property but getting a new appraisal and paying off REX's share in any appreciation.
The longer the homeowner is in the agreement, the better the chance that the real estate market will make the deal work out in REX's favor. Technically speaking, the deal is not a loan, but that hardly makes the money free, not when REX could walk away from the sale of your home with a six-figure payday.
Numbers game
Let's run an example:
Say your home goes through the appraisal process and is valued at $500,000. That independent appraisal is crucial, since it determines the basis for the future sharing; if you dislike the appraisal number after starting in the deal, you'll pay $500 for walking away from the application process.
Now you decide how much of the home's future value you want to share; the more you give REX in the future, the more money REX gives you today. In exchange for a 50% stake in the future value of the home, the homeowner can access from 12.5% to 15% of current value; we'll say $75,000.
This is your "advance payment" from REX, and you'll get it immediately, with no interest and no taxes due and no payments to make.
When the agreement is terminated by the sale of your home or by a refinancing, REX will owe you a "remaining payment," which in this case would be $175,000. That's the difference between the "option exercise price" -- the current value of the home multiplied by the percentage of future value being shared with REX; in short, you sold a $250,000 option on your home, based on its current value, for $75,000 today and $175,000 at closing. You get your $75,000 immediately, with no interest, no taxes due and nothing to repay (although homeowners do pay some fees on the deal).
A decade later, let's say the home is sold for $700,000. REX gets half of that money, or $350,000, and it pays you the remaining payment of $175,000. It walks away from the deal with $175,000, which equals the advance you got, plus half of the home's appreciation from where the deal got done.
Effectively, that means the homeowner actually spent $100,000 to borrow 75 grand for a decade. By comparison, a $75,000 interest-only second mortgage or home-equity deal at 7% interest would have meant 120 payments of $437.50, so that when the house sold and the loan was repaid from the proceeds, the consumer would have paid $52,500 in borrowing costs. And unlike the $100,000 in appreciation that goes to REX, the mortgage interest is tax deductible.
That's how REX's easy money can become expensive, although it is important to recognize that terms and conditions can go in almost any direction, which is part of the problem in sizing up whether a REX is right for you.
Clearly, it's not right for everyone who sees the ads on television.
Fine print
REX only works with owners of single-family homes who are taking the agreement on their primary residence and who have at least 25% equity in that home. Credit scores need to be high -- the average REX client is 56 years old, has a 50% loan-to-value ratio on their home and has a FICO score of 723, according to Leifer -- so it's the upper echelon of "average consumer" who is actually interested and able to qualify.
These deals won't work for someone who put no money down and bought at the height of the market, or who is now underwater or in danger of foreclosure.
Leifer concedes that the deal also is not right for two groups of people, those who are bullish on real estate and expect a market bounce and seniors who have no interest in leaving remaining home equity to their heirs, as those homeowners can typically access more cash through a reverse-mortgage arrangement. He acknowledges the danger of people using their home as a piggybank.
"This is not quick money, it's a major part of your net worth," Leifer says. "You're re-allocating your assets, making major investments in the home, alternative investments or in paying off debt. If you go spend this on a new Escalade and the car is gone in five years and you're sharing in the upside of your home for years, you've made a bad deal."
McBride noted that the deals may be best for homeowners who expect to move in 5-10 years, and whose local market looks like it will remain sluggish for the foreseeable future. "Selling a small share of your home today may sound like a good deal, but it could cost you a lot more than traditional borrowing," says McBride. "It's hard to tell, but since a home isn't just the biggest investment most people make but the best one they make, I think you have to think pretty hard before you jump at this." End of Story
Chuck Jaffe is a senior MarketWatch columnist. His work appears in dozens of U.S. newspapers.
There is no free lunch. There is only one way out... much lower prices at a cost per square foot equivalent to 2005 valuations!
As I write this, the Treasury Dept. is believed to prepare an announcement on Freddie Mac and Fannie Mae before the Asian markets open on Sunday night. Looks like they are finally ready to execute the new powers afforded to them months ago. All this in an effort to stabilize the housing market. Many will declare the bottom to prices due to this net. Far from it!
--------------------------------------------------------------------------
By Chuck Jaffe, MarketWatch
BOSTON (MarketWatch) -- The sales pitch is simple: Tap into your home equity without taking on more debt, without paying any interest and without having to worry about additional monthly payments, ever.
It's getting thousands of people each week to look into something called a "REX Agreement," which might best be described as a home-equity-risk/return-sharing arrangement, a phrase so mind-numbingly complex that it makes it clear this deal is anything but simple.
While there is some truth to the hype, there's also no denying that REX agreements -- and similar "alternative-to-mortgage" deals popping up around the country -- have real potential to turn into something with long-lasting and expensive side effects.
The one thing that is most clear about a REX agreement is that it's a huge bet on the appreciation of your home, and that it looks like a sweet deal, but it has a lot of sour potential. Worse yet, it's almost impossible to tell who these deals will actually work out for, and who is finding a new way to mortgage their financial future.
But because they appeal to the consumer's most basic desires -- cash now, no payments, no interest rate to worry about -- REX agreements are something that a consumer can easily bungle, even under the best of market conditions.
To see why that is, let's dive into the workings of a REX agreement.
REX stands for Real Estate Equity Exchange, and the deals are marketed by REX & Co., a San Francisco-based company currently offering its agreements in 11 states (and adding more seemingly every few weeks). REX has been advertising heavily on television and the Internet.
The agreement involves selling an option lasting five to 50 years, where you get cash now and REX shares in the future sale price of your home. If the home increases in value before the deal terminates, REX gets a chunk of the gain; in nine out of 10 deals, homeowners take the maximum upfront cash and give up a 50% share of the home's value, according to Tjarko Leifer, managing partner for REX.
You read that right. If your home is valued at $500,000 today -- and you have at least 20% equity in your home -- you can get $75,000 today and $175,000 when the home eventually is sold. REX, however, will get half of your home's value at closing time, or when the deal is terminated.
"About 60% of Americans have more than 80% of their net worth tied up in their home," says Leifer. "The mantra for investing has been to diversify, and yet people aren't diversified because of their home. ... Our product offers people a way to access some of their equity, and to do it in a way that decreases their risk. By comparison, a home-equity loan increases your leverage and maintains the exposure to real estate."
Cuts both ways
To truly diversify risk, the homeowner should invest the proceeds into other asset classes and securities. That same kind of thinking spurred many people to take option ARMs, adjustable mortgages with low payments where the best way to come out ahead was to invest the savings; it sounded great, except almost no one actually invested the savings from lower payments.
With a REX agreement, rates are a nonissue, but the diversification advantage evaporates if the money is plowed back into the house, and is minimized if the cash is used to pay off other debts.
A key sales point is that the "sharing" works in both directions, a particularly attractive feature given the current housing meltdown. If a home's price falls while the agreement is in place, REX shares in the loss at closing time. (One other key point: Home improvements are credited to the owner, so that if the REX money is used on an addition, the value of the home would be adjusted upward before REX's share of final appreciation is calculated.)
"With home prices sliding in so many markets, consumers may assume they can get a partner to share the pain, but if you end the agreement in the first five years, REX doesn't share in any home-value decline," says Greg McBride, senior financial analyst for BankRate.com. "They take their share of the home's value at the time the agreement was signed, plus an exit fee."
That fee starts at 25% of the original cash advance and drops by five percentage points per year until it is phased out after five years. In the meantime, it's a nasty penalty for the homeowner who needs to make a change. After the penalty phase, you can end the agreement by selling the home or refinancing the deal, keeping the property but getting a new appraisal and paying off REX's share in any appreciation.
The longer the homeowner is in the agreement, the better the chance that the real estate market will make the deal work out in REX's favor. Technically speaking, the deal is not a loan, but that hardly makes the money free, not when REX could walk away from the sale of your home with a six-figure payday.
Numbers game
Let's run an example:
Say your home goes through the appraisal process and is valued at $500,000. That independent appraisal is crucial, since it determines the basis for the future sharing; if you dislike the appraisal number after starting in the deal, you'll pay $500 for walking away from the application process.
Now you decide how much of the home's future value you want to share; the more you give REX in the future, the more money REX gives you today. In exchange for a 50% stake in the future value of the home, the homeowner can access from 12.5% to 15% of current value; we'll say $75,000.
This is your "advance payment" from REX, and you'll get it immediately, with no interest and no taxes due and no payments to make.
When the agreement is terminated by the sale of your home or by a refinancing, REX will owe you a "remaining payment," which in this case would be $175,000. That's the difference between the "option exercise price" -- the current value of the home multiplied by the percentage of future value being shared with REX; in short, you sold a $250,000 option on your home, based on its current value, for $75,000 today and $175,000 at closing. You get your $75,000 immediately, with no interest, no taxes due and nothing to repay (although homeowners do pay some fees on the deal).
A decade later, let's say the home is sold for $700,000. REX gets half of that money, or $350,000, and it pays you the remaining payment of $175,000. It walks away from the deal with $175,000, which equals the advance you got, plus half of the home's appreciation from where the deal got done.
Effectively, that means the homeowner actually spent $100,000 to borrow 75 grand for a decade. By comparison, a $75,000 interest-only second mortgage or home-equity deal at 7% interest would have meant 120 payments of $437.50, so that when the house sold and the loan was repaid from the proceeds, the consumer would have paid $52,500 in borrowing costs. And unlike the $100,000 in appreciation that goes to REX, the mortgage interest is tax deductible.
That's how REX's easy money can become expensive, although it is important to recognize that terms and conditions can go in almost any direction, which is part of the problem in sizing up whether a REX is right for you.
Clearly, it's not right for everyone who sees the ads on television.
Fine print
REX only works with owners of single-family homes who are taking the agreement on their primary residence and who have at least 25% equity in that home. Credit scores need to be high -- the average REX client is 56 years old, has a 50% loan-to-value ratio on their home and has a FICO score of 723, according to Leifer -- so it's the upper echelon of "average consumer" who is actually interested and able to qualify.
These deals won't work for someone who put no money down and bought at the height of the market, or who is now underwater or in danger of foreclosure.
Leifer concedes that the deal also is not right for two groups of people, those who are bullish on real estate and expect a market bounce and seniors who have no interest in leaving remaining home equity to their heirs, as those homeowners can typically access more cash through a reverse-mortgage arrangement. He acknowledges the danger of people using their home as a piggybank.
"This is not quick money, it's a major part of your net worth," Leifer says. "You're re-allocating your assets, making major investments in the home, alternative investments or in paying off debt. If you go spend this on a new Escalade and the car is gone in five years and you're sharing in the upside of your home for years, you've made a bad deal."
McBride noted that the deals may be best for homeowners who expect to move in 5-10 years, and whose local market looks like it will remain sluggish for the foreseeable future. "Selling a small share of your home today may sound like a good deal, but it could cost you a lot more than traditional borrowing," says McBride. "It's hard to tell, but since a home isn't just the biggest investment most people make but the best one they make, I think you have to think pretty hard before you jump at this." End of Story
Chuck Jaffe is a senior MarketWatch columnist. His work appears in dozens of U.S. newspapers.
Friday, September 5, 2008
Toll Bros. Poker Face Called - Raymond James Analysis
TAKING TOLL TO TASK
Toll Brothers (TOL) has outperformed many of its homebuilding kin in the sector’s half-hearted, only occasionally successful recovery effort. Buyers seemed to be attracted by the company’s differntiating business model, relatively strong balance sheet, and cash-flow generation. However, as Raymond James noted in downgrading Toll Friday, the valuation itself has become a problem, because the homebuilder hasn’t been able to avoid the continuing pitfalls in the industry. The firm warned that investors could see an expansion of impairment charges, and warned that Toll might have to make more-substantial concessions on price or incentives to maintain its sales pace. Shares have declined 5% Friday.
---------------------------------------
RE.ality Check:
As I've mentioned before, Toll has applied a time lag strategy to their MP sales in Hoboken. They could care less if buyers can't resell their homes at breakeven or profitable levels.
What knowledge or thought process are MP buyers applying when deciding NOT to walk away from their deposits? Is it the fact that a portion of cash is harder to lose than their long term balance sheet and well being? Or do we still have enough hogs out there playing with the bulls and bears - that Toll can entice?
I think it's the latter and they are tying their decisions to history. They seem to have forgotten that history got a jump ramp through loose credit and qualification processes but do they realize that they are already on the other side of that lift now?
Toll Brothers (TOL) has outperformed many of its homebuilding kin in the sector’s half-hearted, only occasionally successful recovery effort. Buyers seemed to be attracted by the company’s differntiating business model, relatively strong balance sheet, and cash-flow generation. However, as Raymond James noted in downgrading Toll Friday, the valuation itself has become a problem, because the homebuilder hasn’t been able to avoid the continuing pitfalls in the industry. The firm warned that investors could see an expansion of impairment charges, and warned that Toll might have to make more-substantial concessions on price or incentives to maintain its sales pace. Shares have declined 5% Friday.
---------------------------------------
RE.ality Check:
As I've mentioned before, Toll has applied a time lag strategy to their MP sales in Hoboken. They could care less if buyers can't resell their homes at breakeven or profitable levels.
What knowledge or thought process are MP buyers applying when deciding NOT to walk away from their deposits? Is it the fact that a portion of cash is harder to lose than their long term balance sheet and well being? Or do we still have enough hogs out there playing with the bulls and bears - that Toll can entice?
I think it's the latter and they are tying their decisions to history. They seem to have forgotten that history got a jump ramp through loose credit and qualification processes but do they realize that they are already on the other side of that lift now?
Thursday, September 4, 2008
Toll Adds Color to NYC Condo Expectations
Toll Brothers "scared" about NYC condo market
NEW YORK, Sept 4 (Reuters) - Toll Brothers Inc said on Thursday the condo market in New York City is not as strong as it was, and the company is "scared" about the market's future amid deterioration in the financial industry.
"It has felt some of the storm that's come to the residential real estate market in the country," Chief Executive Bob Toll said during the company's third-quarter conference call.
Toll will soon open a 12-story plus penthouse condominium project in Manhattan's Murray Hill neighborhood.
Demand in New York is more price sensitive today, although demand is still strong, Toll said.
It is the financial industry that tends to spend on condos, Toll said.
"If we sense any slowdown, we'll take the money and run, instead of hanging around and waiting," Toll said.
Nearby Hoboken and Jersey City, New Jersey, are still "doing well" for Toll, he said.
Toll's comments came a day after PropertyShark.com, a real estate research web site, reported a 13 percent rise in foreclosure auctions in New York City to 383 from July and 53 percent from last year.
While New York's numbers were relatively low, with 254 in the borough of Queens, they indicate future price declines of as much as 20 percent, PropertyShark.com Chief Executive Bill Staniford said.
Foreign investment in New York real estate will fall off as the European economy softens, and cuts to bonuses and staffing on Wall Street will also sap demand, he said.
"It's not a crisis. New York is a desirable place to live. But transactions are down," Staniford said. "We are going to see a decrease in housing values in New York City. We're going to see that even in Manhattan." (Reporting by Helen Chernikoff; Editing by Brian Moss)
------------------------------------------------------------------------
RE.ality Check:
It all comes back to that "lagging" indicator for Hoboken - the employment prospects for the financial services industry (Wall Street). On that front, the investment banks are still quietly purging personnel. If not you, you have a friend or neighbor in that situation already. Unlike Toll, buyers or resellers cannot sit on their hands - there is a costly cashflow component that damages pocket books quickly under such stagnant conditions.
CEO Robert Toll on Third Quarter Results
``We are now completing the third year of the worst housing market since we started in 1967. Weak consumer confidence has kept many potential buyers from taking advantage of the current buyers' market. Tightened mortgage lending standards have sidelined others. Single-family housing starts have decreased by approximately 65% from their peak in January 2006: Starts now stand at their lowest level since January 1991. We believe that most big public builders have sold off most of their spec inventory, which eventually should help stabilize home prices. However, we currently have to contend with foreclosures as the new low-priced competition.
``Once the supply of foreclosed inventory is exhausted, we believe that favorable demographics will kick in and the housing market in general will begin to recover; unfortunately, we can't predict when that will occur. These beneficial demographics include a projected continuing increase in household formations and in the number of affluent households, baby-boomer demographics that should provide a basis for greater demand for second homes, a maturing generation of echo boomers who will be positioned to seek the American Dream of home ownership, and a continuing growth in immigration, which should contribute to the demand for housing.
``With our land teams intact and significant capital available, we believe we are prepared, as in prior downturns, to take advantage of opportunities that will arise from the industry's distress. These resources, combined with our experienced management team, our diverse product lines, our brand name and the tremendous dedication of our associates, position us well as we plan for the future.''
Toll Brothers' financial highlights for the third-quarter and nine-month periods ended July 31, 2008 (unaudited):
* FY 2008's third-quarter net loss was $29.3 million, or $0.18 per
share diluted, compared to FY 2007's third-quarter net income of
$26.5 million, or $0.16 per share diluted. In FY 2008,
third-quarter net loss included pre-tax write-downs of $139.4
million, or $0.53 per share diluted. $96.3 million of the
write-downs was attributable to operating communities and owned
land, $9.7 million was attributable to optioned land and $33.4
million was attributable to joint ventures. In FY 2007,
third-quarter pre-tax write-downs totaled $147.3 million, or $0.54
diluted. $139.6 million of the write-downs was attributable to
operating communities and owned land and $7.7 million was
attributable to optioned land. FY 2008's third-quarter earnings,
excluding write-downs, were $55.0 million or $0.35 per share
diluted, down 52% and 50%, respectively, versus FY 2007.
* FY 2008's nine-month net loss was $219.0 million, or $1.38 per
share diluted, compared to FY 2007's nine-month net income of
$117.5 million, or $0.72 per share diluted. In FY 2008,
nine-month net income included pre-tax write-downs totaling
$673.0 million, or $2.56 per share diluted. $437.4 million of
the write-downs was attributable to operating communities and
owned land, $89.4 million was attributable to optioned land and
$146.3 million was attributable to joint ventures. FY 2008's
nine-month results included interest and other income of $100.2
million, $40.2 million of which was the net additional proceeds
received by the Company from a condemnation judgment. In FY 2007,
nine-month pre-tax write-downs plus a $9.0 million goodwill
impairment totaled $372.9 million, or $1.36 diluted. $338.7
million of the write-downs were attributable to operating
communities and owned land and $25.2 million was attributable to
optioned land. FY 2008's nine-month earnings, excluding write-downs,
were $193.6 million or $1.18 per share diluted, both down 43%
versus FY 2007.
* FY 2008's third-quarter total revenues of $797.7 million
decreased 34% from FY 2007's third-quarter total revenues of
$1.21 billion. FY 2008's third-quarter home building revenues
of $796.7 million decreased 34% from FY 2007's third-quarter
home building revenues of $1.21 billion. Revenues from land sales
totaled $1.0 million in FY 2008's third quarter, compared to $4.5
million in FY 2007's third quarter.
* FY 2008's nine-month total revenues of $2.46 billion decreased
29% from FY 2007's nine-month total revenues of $3.48 billion.
FY 2007's nine-month home building revenues of $2.46 billion
decreased 29% from FY 2007's nine-month home building revenues
of $3.47 billion. Revenues from land sales totaled $2.3 million
in FY 2008's first nine months, compared to $9.9 million in the
first nine months of FY 2007.
* In addition, in the Company's third quarter and first nine months
of FY 2008, unconsolidated entities in which the Company had an
interest delivered $39.9 million and $62.0 million of homes,
respectively, compared to $11.7 million and $47.1 million during
the third quarter and first nine months, respectively, of FY 2007.
The Company's share of profits from the delivery of these homes is
included in "Earnings from Unconsolidated Entities" on the Company's
Statement of Operations.
* In FY 2008, third-quarter-end backlog of approximately $1.75
billion decreased 52% from FY 2007's third-quarter-end backlog
of $3.67 billion. In addition, at July 31, 2008, unconsolidated
entities in which the Company had an interest had a backlog of
approximately $60.4 million.
* The Company signed 1,007 gross contracts totaling approximately
$588.1 million in FY 2008's third quarter, a decline of 31% and
40%, respectively, compared to the 1,457 gross contracts totaling
$972.2 million signed in FY 2007's third quarter.
* In FY 2008, third quarter cancellations totaled 195 compared to
308, 257, 417, 347, 384, 436, 585 and 317 in FY 2008's second
and first quarter, FY 2007's fourth, third, second and first
quarters and FY 2006's fourth and third quarters, respectively.
FY 2006's third quarter was the first period in which cancellations
reached elevated levels in the current housing downturn. FY 2008's
third quarter cancellation rate (current-quarter cancellations
divided by current-quarter signed contracts) was 19.4% versus
24.9%, 28.4%, 38.9%, 23.8%, 18.9% and 29.8%, respectively, in the
second and first quarter of 2008, and the fourth, third, second
and first quarters of 2007, and 36.7% and 18.0%, respectively,
in FY 2006's fourth and third quarters. As a percentage of
beginning-quarter backlog, FY 2008's third quarter cancellation
rate was 6.4% compared to 9.2% and 6.5% in FY 2008's second and
first quarters, respectively, 8.3%, 6.0%, 6.5% and 6.7% in the
fourth, third, second and first quarters, respectively, of FY
2007 and 7.3% and 3.6% in the fourth and third quarters,
respectively, of FY 2006.
* The Company's FY 2008 third-quarter net contracts of approximately
$469.9 million declined by 35% from FY 2007's third-quarter
contracts of $727.0 million. In addition, in FY 2008's third
quarter, unconsolidated entities in which the Company had an
interest signed contracts of approximately $15.2 million.
* FY 2008's nine-month net contracts of approximately $1.34 billion
declined by 49% from FY 2007's nine-month total of $2.64 billion.
In addition, in FY 2008's nine-month period, unconsolidated
entities in which the Company had an interest signed contracts of
approximately $43.2 million.
* The Company projects it will deliver between 850 and 1,050 homes
in FY 2008's fourth quarter with an average price of between
$640,000 and $650,000 per home. This will result in lower
revenues in the fourth quarter than in the third quarter. The
Company expects cost of sales (before write-downs) to be higher
as a percentage of revenues in FY 2008's fourth quarter than in
FY 2008's third quarter due to higher incentives and slower
delivery paces. Because, as described above, FY 2008's fourth
quarter revenues are expected to be lower than FY 2008's third
quarter revenues, the Company believes SG&A as a percentage of
revenues will be higher in the fourth quarter than in the third
quarter. Consistent with recent policy, the Company will not be
issuing earnings guidance at this time.
------------------------------------------
RE.ality check:
Buy the stock but don't touch the overvalued properties! Discounting is not their game in the Hoboken market since they are positioned to wait it out.
Wednesday, September 3, 2008
NY District Summary from today's Fed Beige Report
New York:
Economy showed signs of stabilizing. Manufacturers said activity steadied. Factories continued to report fairly widespread increases in input costs and selling prices. Housing markets mixed but softer generally. Bankers reported weakening demand for residential and commercial mortgages, tightening in credit standards, and increasing delinquency rates on home mortgages.
Economy showed signs of stabilizing. Manufacturers said activity steadied. Factories continued to report fairly widespread increases in input costs and selling prices. Housing markets mixed but softer generally. Bankers reported weakening demand for residential and commercial mortgages, tightening in credit standards, and increasing delinquency rates on home mortgages.
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