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News & Moves: September 10, 2008
The latest news and events that shape our industry.
When Bonita Springs, Fla.-based WCI Communities filed for bankruptcy protection last month — listing $2.18 billion in assets and $1.92 billion in debts — it reinforced Florida's position at the vortex of the housing market crash that now engulfs most of the nation. Publicly held WCI is the third Florida-based giant of epic proportions to fall into bankruptcy in less than a year.
The first was Fort Lauderdale, Fla.-based Levitt & Sons, the venerable pioneer of production building, which filed in November 2007 but still showed up this year in Professional Builder's Giant 400 at No. 69, with $359.7 million in 2007 housing revenues on 1,116 closings. Next came Hollywood, Fla.-based Technical Olympic USA, which filed in January, listing assets of $2.3 billion and debts of $1.8 billion. Publicly traded TOUSA ranked No. 17 in this year's Giant 400, with $1.84 billion in 2007 housing revenues on 5,850 closings. Public giant WCI ranked No. 32 this year, with $716.1 million in revenues, on 1,657 closings last year.
The common thread for all three is a heavy concentration of operations in Florida, where markets began crashing hard in November 2005 and have yet to recover. We asked Brad Hunter, director of Metrostudy's South Florida research operations if his market is the worst in the country: “I think it is,” he said. “Both Southeast and Southwest Florida are massively oversupplied with both homes and lots. More Florida builders will go down. We've still got too many projects and too many builders. The weak will fall.” — Bill Lurz
Taylor Morrison has moved its corporate headquarters westward to Scottsdale, Ariz. The plan is to have the home base closer to its stronger markets, which are in Arizona, California, Colorado, Nevada and Texas.
Indianapolis-based Davis Homes stopped operations in late July, the company said in a press release on its Web site. The firm also noted it secured warranty insurance and arranged for regular maintenance. The company is currently looking for other home builders to complete its neighborhoods.
M/I Homes representatives said they filed a mixed-shelf registration statement with the SEC. This will give the company the right to sell up to $250 million in securities. This includes any debt or stocks. The company said any proceeds will go to general corporate purposes, which may include refinancing debt, capital expenditures and other strategic investments.
Wachovia Corporation said in a statement in early August that another top executive is leaving the company. Chief Risk Officer Donald K. Truslow is planning to retire once a successor has been found. This follows on top of a previous announcement that CFO Thomas Wurtz is leaving the bank.
Hovnanian Enterprises announced it has adopted a shareholder rights plan. Under the new rights plan, the company will distribute one right for each Class A and Class B common share. The plan would be triggered if any person or group acquires 4.9 percent or more of the outstanding shares of Class A common stock without approval of the board. The move comes after a year of substantial losses. Under U.S. tax rules, the losses may be used to offset future earnings and reduce federal income tax. If certain shareholders increase their ownership, it could be seen as an ownership change under the tax code and limit its ability to use the tax benefit. K. Hovnanian shares two years ago closed at $69.54. On Aug. 4, they closed at $6.61, losing more than 90 percent of their value.
Weyerhaeuser Co. plans to cut about 1,500 employees, or 6.3 percent of its work force. This comes after the report of a $96 million net loss compared with a net income of $32 million earlier in the year.
We've heard a lot of negative news about Fannie Mae and Freddie Mac, but they actually made more money than they have in a decade. So what's the deal? It's more complicated than it seems. Bloomberg TV investigates.