Leading Builders Here on the Hill in Energy Push
The Leading Builders of America charter group of 16 large public and private home builders has joined the 33-year-old Alliance to Save Energy to strengthen its more direct line of contact with Capitol Hill.
Today [Wednesday, March 10], Meritage Homes Chairman and CEO Steve Hilton addressed the Alliance’s Great Energy Efficiency Day (GEED), in the Capital’s Dirksen Senate Office Building, as part of a daylong agenda that put building and communities in the spotlight:
Building for the Future: EE Technologies Today and Tomorrow
- Moderator: Robert Dixon, Senior Vice President & Global Head, Efficiency & Sustainability, Siemens Industry, Inc.
- Steven J. Hilton, Chairman and Chief Executive Officer, Meritage Homes Corporation; Chairman, Energy Committee, Leading Builders of America
- Faren Dancer, Principal, Paradigm Development Partners
- Steve Hochhauser, President, Residential Systems, Ingersoll Rand
- Michael Lawrence, Vice President & General Manager, Johns Manville
“The key for us is getting appraisals to properly value the increased value of more efficient homes and recognizing the value of energy efficiency in the mortgage process so highly efficient homes are affordable,” says LBA executive director Ken Gear. ”We have created a unique partnership with the Alliance to Save Energy to help make new homes as efficient as possible without pricing them out of the market.”
Here’s the transcript of Hilton’s remarks, which gives good background on the Leading Builders of America and its policy initiatives, which we wrote about earlier.
[Bob Dixon will introduce Steve as Chairman & CEO of Meritage, and welcome LBA to the Alliance as part of the introduction]
Thank you for the kind introduction, Bob.I want to thank the Alliance for the opportunity to speak here today, representing the Leading Builders of America.
Leading Builders of America is a new trade group that includes sixteen of the largest home builders in the country. Combined, we delivered about 129,000 new homes in 2008, representing approximately 25% of all homes built in the U.S. that year, so we bring to the table a broad and deep understanding of home buyers across the country. We also account for more than 367,000 jobs nationally through our employees and sub-contractors.
LBA members are driving energy efficient practices and materials into the mainstream of homebuilding. We have been instrumental in helping ENERGY STAR reach 1 million qualified homes in the U.S., and our members are active partners in many other energy efficiency initiatives, including the DOE’s Building America Program. Through our collective efforts with trade partners and other organizations represented here, the homes we build today consume one-third less energy than homes built just 10 years ago.
Meritage Homes has been a member of LBA since its beginning, and I head the organization’s energy bill working group. As CEO of Meritage Homes, I am proud to say that Meritage is committed to energy efficiency and sustainability. This year, every home we build will exceed the EPA’s ENERGY STAR requirements, providing lower costs of ownership and healthier living environments to our home buyers, while reducing their energy consumption. Meritage’s commitment to sustainability is underscored by the fact that we are incorporating energy efficient features standard in every home we build, rather than making them optional at an added cost to the home buyer.
We are here today because we are all convinced that building energy efficient features into homes is the right thing to do, and we want to play an active role in formulating strategies to reduce energy consumption while also preserving and creating jobs to help strengthen the economy. Most importantly, consistent with LBA’s mission “to preserve home affordability for American families,” we want to ensure that homeowners realize a net benefit from the added costs of building more energy efficient homes.
Energy efficiency should be a win-win situation for everyone involved.
So why aren’t home buyers embracing energy efficient homes more than they are today?
There are several reasons.
It’s no surprise that energy efficient features cost more, but most buyers today aren’t willing to pay more for a new energy efficient home, given the choice of a lower-priced but less efficient home, unless they can clearly see the value and afford the higher price.
We are working with our trade partners to reduce the costs of building in more energy efficient features, in order to keep prices down. In addition, we see several opportunities to encourage buyers to opt for more energy efficient homes when buying.
Energy efficiency must be easier to quantify and compare, affordable, and provide a net positive benefit to a homeowner, in order for them to purchase a more energy efficient home.
LBA believes there are three key opportunities that we support in that regard:
(1) The first is to adopt a uniform standard for measuring and labeling the energy efficiency of homes.
So much of what we do to make a home consume less energy isn’t seen as you walk through a prospective home, and there is a great deal of confusion in the marketplace about how to quantify the benefits of an energy efficient new home.
Use of a standard efficiency measurement such as the DOE’s EnergySmart Home Scale is an essential first step to provide a basis for comparing the energy efficiency of homes.
(2) The second opportunity we see is to translate the additional energy efficiency into dollars, to be used commonly by buyers, appraisers and lenders. Energy Efficiency should make homes more affordable, not less.
In order to substantiate the increased costs associated with higher efficiency construction and components, the additional value of an energy efficient home should be reflected in its appraisal. That is not the case in today’s appraisal process.
Additionally, underwriting guidelines should allow for lenders to give a buyer credit for lower projected monthly energy costs when qualifying them for a mortgage.
This is an area where federal leadership is absolutely essential. If FHA and the other GSE’s address energy efficiency in their underwriting and appraisal standards, they will move the entire market.
(3) Third, we must use a cost/benefit analysis in setting energy efficiency targets and standards, to ensure that additional costs can be fully offset by reduced operating expenses.
LBA has studied this carefully and done extensive cost/benefit analysis, and we believe significant improvements can be justified in the near term. These improvements are achievable by carefully coordinating federal goals with the code development cycle, in order to ensure that builders and local governments have sufficient time to comply with and enforce any new requirements.
To summarize, if we want consumers to buy more energy efficient homes, we must address three issues:
First, give home buyers the tools they need to understand and compare new energy efficiency.
Second, ensure that energy efficient homes are affordable, by reflecting their higher value in the appraisal process and by incorporating energy savings into mortgage qualification standards.
Finally, ensure coordination between the federal government, code bodies, state governments and builders, working together to develop a realistic timetable for increasing energy efficiency in new homes.
I have additional handouts that provide a much more thorough discussion of these points, which I would be glad to share with you.
In closing, I want to let you know that LBA member companies are committed to energy efficiency. And we are committed to working with groups like the Alliance to help advance this very important national priority.
Thank you for your time.
Looks like the LBA is looking to buy time to comply with what it foresees becoming energy efficiency mandates sooner than later. In its phrasing, it seeks to coordinate “federal goals with the code development cycle,” and wants to tie energy efficiency to a tangible “net value” gain for a home buyer, which can involve tricky cost and savings over time analysis to get at. And, as Gear points out, if the government gives credit (in terms of appraised value) to home buyers with energy efficient home solutions, the finance-ability of homes becomes more achievable.
All in all, a strong positive message from a group whose stakes may differ on this issue from the short list of priorities the bigger NAHB builder group is pursuing in its lobbying efforts.
Phoenix’s Joseph Carl Homes Gets a Strong Starts
We’re staying focused on a very positive story in home building right now. It’s not a big story. On the contrary, it’s rather a small one. Ten new-home sales small.
Still, those 10 homes sales are in four weeks. Multiply by 12 months–if the housing gods smile–and we’ve got ourselves another big builder. That’s the way it’s going to add up, if it does all add up.
Make no mistake, we’re not predicting a rising tide here that will lift all boats. We’re probably more in the camp of those who think like Meritage Homes CEO Steve Hilton, who believes that 2005 to 2015 may go down as new-home building’s “Lost Decade.” We’ll accentuate the positive even knowing there’s plenty of negatives.
The next couple of years may feel like a Red Queen period. You run as fast as you can to stay where you are. All the ingenuity, resilience, and know-how you can muster barely neutralize the headwinds.
But if a start-up builder can record 10 new-home sales in the first four weeks of opening up a brand new-normal community in the Estrella master plan in Phoenix it says something.
Ask Carl Mulac, who’s running the start-up Joseph Carl Homes with a big arm-around-the-shoulder deal with JEN Partners, what it says about the market, and he’ll tell you.
“When Steve Jobs was introducing the iPad, he said there are three things that had to be in place for any product he’s ever brought out: innovation, value, and demand. I figure we’ve had to have those three characteristics to get anything done in this environment,” says Mulac.
Mulac opened the CantaMia neighborhood the week after Super Bowl, and is still doing 490 or so traffic units a weekend. He says that each of his 10 sales associates in CantaMia, selling against 14 models and a lot of pressure, have four or five strong active adult prospects on the line, and they’ve had their first closing.
“We had the perfect combination this past weekend,” says Mulac. “A beautiful Saturday followed by a rainy Sunday. Those are the ones that set you up for great traffic.”
Mulac’s secrets? Well, as we’ve noted, the land-base came out of the wreckage of TOUSA’s Engle division, so the price out of the banks was cents-on-the-dollar for the 643 lots on 215 acres, plus 14 completed sales models.
So, the land-cost base gives him an opportunity to price a solar-and-thermal standard product in a fully “amenitized” community at a price that gives great value vs. a Pulte Del Webb and Shea Trilogy offering.
Still, even with the great jumpstart and the JEN Partners backing, nothing’s a cake-walk. A $2 million vertical construction line from National Bank of Arizona is a start, but not enough to ramp up and become a formidable player in the marketplace. So Mulac’s out shaking the regional and community bank bushes for more, and he’s finding that even with JEN’s guarantee, a sales backlog, and all the terms in the world about pre-sales, it’s not easy to come up with more lending.
Which may or may not account for one of the ingredients of Mulac’s “secret sauce” right now. Practically no overhead. Apart from the sales center at CantaMia, there’s exactly zero office expense for Joseph Carl Homes right now. The whole shebang happens out of his own home, and those of his controller and CFO, who work “mobile.”
“It helps that everybody on the team has worked together in the past, and we know each other through the years,” says Mulac. “So with technology, we can stay in touch on every detail we need to address.”
Even with Phoenix commercial office space offering historically attractive deals for potential tenants, Mulac says that saving $10,000 to $15,000 a month on corporate offices is no small potatoes, given his budget right now.
Still, you don’t pull off virtual overhead by doing everything virtually.
“One day a week, we have ‘no-email day,’” says Mulac. “That means anything you’re going to communicate that day, it has to be with a phone call. Emails sometimes have that unintended emotional tone to them that can distort their meaning. We have to be able to talk straight to one another on some issues.”
We’ll give you that secret for free.
Why the Leading Builders of America are Doing their Own Thing
Almost nothing in Washington is easy to explain these days. So, why should the housing industry’s “great divorce”–the split-off last November of 16 mega-regional and national home building company executives from their role as a committee of the NAHB to form their own association called Leading Builders of America–be any different?
Housing itself, last we looked at the title of this blog platform, is in crisis. Policy, which may or may not have a past, present, and future role in the depth and duration of the crisis, seems to be intent on continuing its intervention in housing as it seeks faster progress on the broader economic front.
So why shouldn’t powers in housing–large and small–find ways to unify when it comes to the issues that affect the housing economy?
Good question.
Industry observers frequently trace last year’s break-up to a clash of big egos all around, after several near-splits dating back two years or more. Reports of the formation of the new organization followed the ups and downs and ins and outs of large home building companies’ disenchantment with NAHB leadership’s handling of Capitol Hill matters, particularly around the extension of corporate tax benefits on net operating losses.
The NOL carryback extension, which carried the day in last November’s legislation that also extended and expanded tax credits for home buyers, remains a bright line of controversy that sharply delineates the interests of publicly traded home builders from private ones.
Public companies collectively retrieved more than $2 billion in cash thanks to the NOL extension measure, the consequence being a mini-frenzy of finished lot pursuits that very likely drove land prices up above where they should have been for the past year.
What happens when a few players can write checks that drive up land prices? A bunch of smaller players who can’t write those checks have to go somewhere else or apply for jobs at Lowes and the Home Depot is what.
That’s Darwinian reality. The biggest grow in a downturn, at the expense of the smaller.
What’s also reality is that egos and brush-ups between large home builders and the NAHB don’t matter in the end of the day. What matters really is that the more government policy infiltrates the day-to-day of the housing business, the more inevitable it would be that large home builders need their own “direct connect” to Capitol Hill, which is what they say is at the root of their reason for being.
KB Home CEO Jeff Mezger, a year ago, might have thought he was going to succeed former Centex CEO Tim Eller as chair of the NAHB’s High Production Builders’ Council. That was the plan.
But instead, the HPBC has been disbanded under the NAHB, and Jeff is chairing the new Leading Builders group. As has been reported, the group’s member companies retain their local, regional, and state building industry association affiliations with the NAHB.
“On 99.9% of the issues, we agree,” says Joe Robson, immediate outgoing chairman of the NAHB, who founded and runs Tulsa, Okla.-based Robson Companies. “We’re still talking with the big builders at a staff to staff level on a regular basis, and I talk to Jeff [Mezger].”
Robson acknowledges that in “just about any industry you look at,” large corporate players tend to team up themselves when it comes to lobbying on issues. “Where we [the NAHB and the Leading Builders] diverge is probably more on corporate taxation, on publicly traded company issues vs. private company ones,” Robson says.
Mezger, and some of the other Leading Builder executives who’ve spoken off the record, doesn’t disagree that critical issues as they regard consumer home buyer demand will continue to unite the interests of both the NAHB and the Leading Builders of America.
“If it’s a topic that brings us together with a common interest we’ll go for it,” said Mezger, who chaired the group’s first in-person meeting in Scottsdale, Az. last week. “We’re still in our formative stage, but the intention of the group is to focus on key issues that are specific to the larger builders’ interests. There’s always two or three things at any given time where the sensitivities and needs of the larger companies may be different from an agenda that encompasses commercial multifamily apartment builders, contractors, etc.”
Right now, he says, three hot-buttons–apart from the overriding need to continue to work on ways to jumpstart the housing economy–separate the Leading Builders from the priority list of the NAHB, according to Mezger.
- Energy legislation–”The House passed its energy bill, which has tremendous implications on the cost to build over time, and we’re working with Congress to make sure the standards it’s looking to meet match up in a cost benefit analysis,” Mezger says.
- Protecting the water supply–”Storm water run off is another area where the EPA has new standards, and we’ve been working with education around the need to comply with them, because we do a pretty good job at that.”
- The Florida Home Town Democracy amendment–”Most of our initiatives will be at the federal level, but all but two of our companies have operations in Florida, and we felt that this one was important enough for all of us to make it part of our priority list,” Mezger says.
The question, then, might be how would the big builders’ interests differ on these issues from those of the broader NAHB constituency.
The answer might come down to two simple factors. One is that size matters. So whereas energy legislation and its new mandates bear significance for all home builders, however large, when you start to scale upward, the implications on cost to build vs. the need for affordability become potential stress points.
The other factor is “nimbleness,” a notion the Leading Builders of America group brings up frequently in discussing its mission and structure. The “direct link” to Capitol Hill proved it worked when it came to home buyer tax credit policy and tax carryback policy, according to Ken Gear, the association’s executive director.
“We need to be able to act decisively and fast on some of these issues, and there are times we couldn’t do that within the voting and approval structure of the NAHB,” he said.
The way we see it, the two groups will tend to work as one with respect to the demand side of the housing equation, and separately when it comes to some of the supply or cost-factor issues.
That makes sense, although it’s not easily explainable.
Orleans Homebuilders Files Voluntary Chapter 11
This came over PR Newswire yesterday evening.
Orleans Homebuilders, Inc. Files Voluntary Chapter 11 Petitions; Obtains Up to $40 Million in Anticipated New DIP Financing; All Homebuilding and Management Services to Continue Operations
BENSALEM, Pa., March 1 /PRNewswire-FirstCall/ — Orleans Homebuilders, Inc. (the “Company”, or “Orleans”) (Amex: OHB), which develops, builds and markets high-quality single-family homes and townhouses and whose operations in Pennsylvania and New Jersey date back more than 90 years, announced today that it filed voluntary petitions under Chapter 11 of the U.S. Bankruptcy Code for itself and most of its operating subsidiaries in the U.S. Bankruptcy Court for the District of Delaware in Wilmington (the “Filing”). Certain of the Company’s subsidiaries are excluded from these voluntary petitions, including its mortgage services subsidiary, Alambry Funding, Inc., which provides mortgage brokerage services for customers and financial institutions but which does not underwrite any customer mortgages.
The voluntary petitions result from the final maturity of the Company’s $350 million senior secured Second Amended Restated Revolving Credit Loan Agreement (as amended, the “Credit Facility”) on February 12, 2010, and the inability to reach agreement on an extension of the Credit Facility with 100% of the approximately 17-member bank group, or obtain a replacement of the Credit Facility. There is currently approximately $311 million of cash borrowings outstanding under the Credit Facility, excluding any letters of credit.
It’s no small irony that Big Builder listed Orleans among five publicly traded home building companies on the brink of disaster in its August 2007 cover story “A Year of Living Dangerously.” Four out of five of those companies succumbed to bankruptcy. Comstock seems to survive as home building’s medical miracle, and WCI has reemerged from BK, primarily as a land seller.
Here’s a snippet from that analysis about Orleans:
THE SITUATION: Compared with larger peers, the financial risk profile of Orleans Homebuilders is scary on paper. It’s hardly time to bear a 70-plus percent debt-to-total capital ratio, on almost $600 million in long-term debt, amid gut-wrenching challenges to convert its shrinking backlog to cash. What’s more, as its fiscal year 2007 drew to a close on June 30, Orleans worked feverishly to renegotiate terms on a $75 million trust preferred security issue whose covenants call for an interest coverage ratio of 1.75 to 1.00. Unlikely to meet the demand of that indenture, Orleans hopes to reset terms to avoid triggering an interest rate increase from 8.61 percent to 11-plus percent on the security. Obviously, continued stresses on its cash position and balance sheet machinations take much-needed focus away from operating flawlessly.
HOW IT HAPPENED: A growth plan–both financial and operational–was set in motion in 2003 through 2005 that based itself on a trajectory to reach the mythic $1 billion threshold in sales volume and assumptions that included an unfortunate and unintentional dollop of investor buyers in Orleans’ Florida, Northeast, and Phoenix markets. In its 2004 acquisition of Realen Homes in Pennsylvania and [per clarification comment below, the Charlotte, N.C. division of] Peachtree Residential Properties in Georgia, and its acquisition of land position in Phoenix in 2006, Orleans paid top of the market prices. In 3Q2007, Orleans impaired 20 percent of its 11,800 lots, as it took $47 million in charges against land and model home inventory and another $27 million related to abandoned projects and goodwill charges. The hit to book value amid these asset impairments combines with slower, less profitable conversion of sales to deliveries, to exert intense pressure on covenants keyed to interest coverage.
Orleans’ press release details its plan to continue operations as it restructures under Chapter 11.
The Company also announced that it has reached agreement with certain of its lenders for up to $40 million of debtor-in-possession (DIP) financing, pending Court approval and syndication. The new financing consists of up to $25 million in cash revolving borrowing availability and up to $15 million of availability for replacement letters of credit under the Credit Facility (the “DIP Revolving Facility”).
All of the Company’s 11 operating divisions in eight states will continue business in the ordinary course and without interruption. The Company has filed motions requesting immediate Court approval for the continuation of all home warranty and mortgage incentive programs and to preserve all pre-petition escrowed customer deposits on contracted homes. The Company believes all existing customer deposits are protected in segregated escrow accounts and are not affected by today’s filing. Building will now continue on homes under construction in all communities, as well as the closing of certain home deliveries temporarily postponed in the past two weeks.
According to Jeffrey P. Orleans, chairman, president and chief executive officer, “We have done everything we could to generate cash flow and to reduce operating expenses in light of falling home prices and reduced housing demand, yet still provide a high level of service to our many customers. We reduced our bank debt by approximately 40%, from $513 million at January 1, 2007 to approximately $311 million today.
“During this protracted downturn, most of our lenders, junior creditors and vendors had been supportive of the Company. In early December 2009, we approved a non-binding term sheet for a maturity extension of the Credit Facility; in mid-December 2009, the Company and 100% of the bank group extended the maturity of the Credit Facility to February 12, 2010. During this period of time, we executed a non-binding letter of intent relating to the sale of the Company. However, the lenders could not achieve 100% lender approval of the documentation for a maturity extension or any other modification beyond February 12, 2010. The Credit Facility then matured, and we could not complete the sale. We intend to continue to pursue a sale of the Company through a negotiated sale, a plan of reorganization or other auction under Chapter 11. We want to reassure our many current and future homebuyers that we will seek to continue to service their needs during this period. We appreciate the support of our many loyal vendors, customers and employees.”
The Company has filed first-day motions asking the Court to approve, among other things, payment of employee wage and benefit charges that were incurred before the petitions were filed, future employee wages and benefits, incurred commissions, the continuation of certain customer sales incentive programs, and the continued use of cash collateral and existing cash management systems.
Although Chapter 11 law prohibits payments for any invoices that were outstanding at the time of the filing without prior Court approval, it does provide greater protection to those providers of goods and services who conduct business with the Company from this point forward. The Company has also filed a motion to honor prepetition claims for certain critical vendors whose goods and services are deemed essential to operations.
“We regret the hardship that this filing will have on many of our trade suppliers. We are arranging new financing that should be available almost immediately, pending Court approval and syndication,” stated Mr. Orleans. “We expect these new funds will be sufficient to support our operations while we are under Court jurisdiction.”
The Company is providing information about the reorganization at http://www.orleanshomesreorg.com. For the next few days, a call center will be open from 8:00 am to 6:00 pm, Eastern Standard Time, at (888) 215-9315. Messages may also be left on that number during other times.
Mr. Orleans went on to describe the challenges of the past three years: “Since the latter part of fiscal 2006, we and the entire housing and financial services industries have faced unprecedented challenges. The U.S. economy is in the worst recession since the Great Depression, consumer confidence remains weak, and national housing starts are at or near all-time lows. From the fiscal year 2006 to fiscal year 2009, our residential revenue decreased by two-thirds, from just under $1 billion to approximately $322 million. Now, the housing market appears to have either stabilized or slightly improved, albeit at historically low levels. Our net new orders have increased by more than 40% in each of the last two quarters on a year-over-year basis, and our backlog has now been relatively stable between June 30, 2009 and December 31, 2009.”
Mr. Orleans added: “We achieved good progress on our key objectives for liquidity/cash flow, capital structure, balance sheet/portfolio review and cost structure. Since January 1, 2007, we reduced our total net debt by approximately 30%, and since June 30, 2006 we reduced our spec homes by approximately 75%; total lots by 66% and staff headcount by approximately 70%. We have creatively refocused our land portfolio in December 2007, and also exited certain markets. Despite the Company’s high debt leverage, we were cash flow positive in eight of the past 12 fiscal quarters, and cash flow neutral in two others. Since January 1, 2007, we also repaid more than $200 million under the bank facility, or approximately 40% of the total outstanding loan balance, including cash bank repayment of over $21 million in approximately the last six months.”
In light of the negotiations with the banks during the fall of 2009 on the Credit Facility maturity extension, the Company did not pay approximately $1.5 million of subordinated note interest for the quarterly coupons scheduled between September 30, 2009 and January 30, 2010 on its two subordinated notes indentures, which amounts were intended to be paid by the Company upon the completion of the non-binding maturity extension term sheet the Company agreed to with certain lenders on December 3, 2009. Prior to the final maturity of the credit facility, the Company did not miss any interest payment on its bank debt.
According to Garry P. Herdler, executive vice president and chief financial officer, “We believe our banks and trust preferred holders had shown support to the Company in the past, as evidenced by the completion of two syndicated bank maturity extensions in September 2007 and September 2008, plus numerous other bank amendments, including the temporary maturity extension from December 18, 2009 through February 12, 2010. Two and a half years ago, we completed a trust preferred security amendment, and in August 2009, we completed a debt exchange agreement for 100% of the $75 million of subordinated notes which included a reduced 1% interest coupon for five years ( $39 million of future interest savings), and a unique significantly below par redemption option at approximately 30% of par.”
The Company has also significantly reduced its lot count, spec homes, overhead and headcount during this extended downturn. As of June 30, 2009, the Company owned or controlled approximately 5,673 building lots, which included approximately 1,003 building lots controlled through option contracts, which represents a 66% decrease in total owned and controlled lots and a 43% decrease in owned lots since fiscal 2006. Approximately 90% of the Company’s lot inventory is in the Company’s Northern and Southern regions. From September 30, 2006 to December 31, 2009, the Company decreased its speculative home inventory by over three quarters. From June 30, 2006 to June 30, 2009, the Company reduced its general and administrative expenses by more than 50%. From June 30, 2006 to today, the Company has decreased its total employee headcount by 69%, from approximately 990 employees to approximately 300 employees.
As previously indicated, in early December 2009, the Company approved a non-binding term sheet for a maturity extension of the Credit Facility; in mid-December 2009, the Company and 100% of the bank group extended the maturity of the Credit Facility to February 12, 2010. However, the lenders could not achieve 100% lender approval of the documentation for a maturity extension or any other modification beyond that date, and the Credit Facility then matured.
On February 1, 2010, Orleans also announced that in addition to its efforts to extend the Credit Facility or obtain alternative financing, it was continuing to pursue other strategic alternatives including the sale or recapitalization of the Company, and that it had presented potential transaction alternatives to its lending group. Recently, the Company executed a non-binding letter of intent relating to the sale of the Company; however, the Company was unable to complete the sale prior to the Chapter 11 filing. The Company intends to continue to pursue a sale of the Company through a negotiated sale, plan of reorganization or other auction under the Chapter 11 code.
Orleans Homebuilders is being advised by its restructuring financial advisor on the Credit Facility and now on the bankruptcy, FTI Consulting, Inc., and by its legal counsel, Cahill Gordon & Reindel LLP. For its ongoing strategic alternatives, including the sale or recapitalization of the Company, Orleans has previously engaged its mergers and acquisitions investment banker, BMO Capital Markets Corp. and its homebuilding mergers and acquisitions consultant, Lieutenant Island Partners LLC, who are each anticipated to continue with the ongoing sale of the Company and other strategic alternatives during the Chapter 11 period.
As of December 31, 2009, the Company had total assets of approximately $440.0 million and total liabilities of approximately $498.8 million. Orleans had total debt of approximately $419.1 million (table attached), net debt of approximately $407.4 million, accounts payables (consisting mostly of trade debt) of approximately $40.2 million, and other accrued liabilities of $19.3 million. Accounts payables (consisting mostly of trade debt) at the time of the filing were approximately $40.1 million. As the attention of the Company’s senior management has been focused on matters relating to its Credit Facility and other strategic alternatives, the Company has not yet been able to adequately review the inventory impairment charges to be recorded for either the fiscal quarter ending on September 30, 2009 or on December 31, 2009.
About Orleans Homebuilders, Inc.
Orleans Homebuilders, Inc. develops, builds and markets high-quality single-family homes, townhouses and condominiums. From its headquarters in suburban Philadelphia, the Company serves a broad customer base including first-time, move-up, luxury, empty-nester and active adult homebuyers. The Company currently operates in the following 11 distinct markets: Southeastern Pennsylvania; Central and Southern New Jersey; Orange County, New York; Charlotte, Raleigh and Greensboro, North Carolina; Richmond and Tidewater, Virginia; Chicago, Illinois; and Orlando, Florida. The Company’s Charlotte, North Carolina operations also include adjacent counties in South Carolina. Orleans Homebuilders employs approximately 300 people.
Orleans’ fate is that of scores of other home builders and developers who followed the Pied Piper of false demand into the middle part of the decade past. The company’s best hope now is that the weeks and months ahead push the needle of value on its land holdings from south of nothing to north of something.
But hope is not a strategy. And for the 300 people whose livelihoods draw from Orleans’ payroll, we can hope there is a strategy.
Private Home Builders’ Moment of Truth Approaches with 2nd Half of 2010
Arguably the most important story of the year for the big home builder community is where are many private home builders going to get money to keep their lights on.
First an explanation of what we mean, then a take on why we’re saying it now.
If private home builders don’t get that money, many, many more of them will go dark. They need that money for two reasons. One is to build through houses they’ve either sold already or can sell if they’re ready. The other is to buy some of the lots with new price tags like the national, public builders are doing.
These two reasons are precisely the reasons banks are averse to handing it over right now. They’re averse doing anything that puts more exposure on their books. It’s the last thing many of these banks can tolerate.
Big banks are now profitable, but give it five minutes and the jig will show up as a jag. Small banks–many of them anyway–have so much exposure to the X factor that is real estate valuations that one can still only guess how widespread the damage is. One running count is that 644 banks are on the “Unofficial Problem Bank” list.
Private home builders are in a fix because most of them depend heavily on banks, and banks are in a fix. The recent increase in the Fed discount rate doesn’t mean a lot to most of us, but it certainly doesn’t bode well for businesses that draw on bank capital with the intensity that home builders do. If it’s more expensive for banks to borrow, it’s going to be more expensive for their commercial customers to do so, one way or another, and it will be in shorter supply.
Private home builders are already seeing reason to clump 2009 and this year, 2010, as the two worst years of the downturn. They’re already seeing the cost of the money they draw on go into the stratosphere. They’re already seeing that the hard-won ability they had to borrow money for their home building company without personal guarantees is rapidly going by the wayside. They’re already seeing capital sources developing virtually usurious interest rate tiers as reminders of what risk the banks are going to do any business at all with home builders.
This is short-sighted, no? The health of a bank lender ultimately will depend on its community of customers, including home builders, which pay back the money owed at interest, and hire people to build, who in turn stock the foodchain of consumer demand through the economy.
We see what has happened to construction spending. It’s down 61.4% since its peak this time in 2006. We know ourselves that home builder business units are a 30% shadow of what they were this time in 2006. We know that many good, smart people are out of work. Some of them saved their personal pennies for rainy days. Many of them have been out so long they’ve just lost their unemployment benefits.
Fact is, as soon as you name one way that private home builders are superior to public home builders, you’ll get an argument–a valid one, too–from a public builder that contests that. Still, private home builders are better at some parts of this business. Why else would public companies have paid so highly for them in bygone years?
We feel that private home builders are where home building culture, home building design innovation, and home building real time supply-and-demand knowledge occur at a superior level. Private home builders, in fact, are the reason some of the public home builders are as good at what they do as they are.
Here’s what Tom Lewis, founder and owner of 20-something year-old regional home building power in Phoenix, T.W. Lewis, told us about losing his No. 2 man, Kevin Egan, this month:
“It got so that there were too many chiefs and not enough braves. Kevin created an incredible, cohesive, collaborative organization focused on excellance here. That’s what we will miss.”
The industry can ill afford to see private home builders fall into a state of credit-lock paralysis for the next year to 18 months. Just as public home builders meet a need for housing at an affordable level, using highly iterative manufacturing techniques, scaled purchase of products and labor, and negotiating muscle on land prices, private home builders meet that need on a more zeroed in basis, in smaller tracts, in trickier circumstances.
The way it’s going, though, we’re not going to see very many private home builders around to meet that need very much longer unless there’s a break in the impasse on lending to home builders.
The nation’s most afflicted local economies need jobs to jam the negative feedback loop that has jobs, home defaults, declining asset values, lower earnings, and more layoffs locked in a vicious cycle. If banks become part of the solution of loosening credit to small businesses, the negative loop will begin to flow the opposite way.
It’s an industry problem–for both public and private home builders–if private home builders play through this year with two arms tied behind their back. We’re not saying they’re not willing to try.
But smarter people might see that collaborative competition might be a notion that will speed an improved outlook for everybody.
Behind the Dire New-Home Sales Headlines: The Stimulus Factor
Yesterday’s new-home sales headlines, complete with their indication that they’d hit a half-century lowpoint, cry for perspective. So let’s take a look, clear up a few issues, and move on to focus on an operational/financial matter of interest.
Here’s a key data point, thoroughly lost in the noise and negativity from yesterday’s reports about new home sales. Absolute new-home inventory rose by 1,000 homes to 234,000 new homes, a .4% nudge upward. JP Morgan home building equity analyst Michael Rehaut notes that, on an absolute basis, 234,000 new homes of inventory is down 31% from the year-ago level, and down virtually 60% from its peak.
So, yes, with all the volatility and noise in the month to month, self-reported, small sample data, the 309,000 new-home sales number for January 2010 does extend the months’ supply number beyond where it was in December. We’re back up over 9 months’ supply, up from 8 months in the month earlier, thanks to the fall-off in pace.
Remember, seasonally, we’re talking about January, and we’re talking about a month where at least in some places like the Northeast, the weather was pretty inhospitable.
So yesterday we have everyone’s asking “how can this be?” Many of the public home builder CEOs just paraded through weeks of earnings seasons calls, reporting that they’re seeing better sales in January. Now these data points come in, and we’re seeing that they dove off an 11.2% cliff from December 2009, down 6% from January 2009, amounting to a 13% miss from what Wall Street analysts were expecting.
Were the CEOS incorrect in their sunnier reports from their business units, or perhaps gilding the lily for the benefit of their Wall Street investors? If they said things had picked up momentum in January 2010, how is it that the Census Bureau number could so sharply belie that encouragement?
Let’s think about this.
First off, who was it that was saying things were better in January? Public home building company executives, right?
The first point of insight is this. We look at the national or public home builders as a group that should mirror or stand for new-home building at large, but it doesn’t. The dozen-plus public players represent a variation on the 80-20 rule, where a few players produce the most output.
Clearly, shrinkage in the national new-home sales number can occur at the same time expansion in the new-home sales number of the public home builder players. The universe can be getting smaller, and at the same time this dozen-plus companies’ share of it can be getting larger faster.
So, one of the important take-aways from the January new-home sales figure by itself is an acceleration of the market share shift to the 15 to 20 largest, best-capitalized players.
For other important take-aways in the numbers, let’s trail back in to 2009 a bit to get our insight. If the expected sunset of the $8,000 home buyer tax credit was initially Nov. 30, 2009, let’s ask what would have happened to spec building right around Sept. 1. If you could start and finish a spec after Sept. 1 and deliver it to a home buyer before Nov. 30, then you might have done that, but how many home builders have a less than 90-day construction cycle-time?
So, we’re guessing this–from Sept. 1 through the first week in November, a lot less specs were started, which means there were fewer specs ready for January 2010, which accounts for some of the reason new-home sales were lower. There were fewer ready-to-deliver homes at that more affordable, more-readily finance-able level in January, so sales shrunk.
Also, what else occurred as Congress and the President enacted legislation that extended and expanded the home buyer tax credits to April 30, 2010, for sales, and June 30, for closings?
You got it, the extension of the NOL tax carry back period up to five years. Now, how might that figure into the new-home sales data? Well, if you had a sell-at-any-price push, particularly among public home builders, which would clear inventory out as long as it occurred by the new deadlines set up by the five-year carry back period, then you might have generated quite a few sales right at the end of 2009. This is what happened.
This is why there’s such a contrast between the December number and the January 2010 number.
So, to review:
The situation: 15 national home builder powers report solid order data for January 2010, while the Census Bureau reports record low new home sales on a national basis for the same period.
- Reason 1: the nationals are picking up market share
- Reason 3: specs virtually stopped getting built between September and early November 2009, the period it was unclear as to whether Congress would extend the home buyer tax credit
- Reason 3: Public home builders “cleared” hard to move new-home inventory by dropping prices and planning to recoup NOL refunds, which artificially added to the December new home sales number.
So what happens next? Well, we think February may suffer a bit from the same issue, since, again, in October 2009, many companies may have been very reluctant to start a lot of specs until they got assurance that the home buyer tax credit extension was a go.
But once the credit extension and expansion got passed, spec building got back underway in a big way, so that may show up in February sales, and certainly, will be in full force by March.
The big question (enough mentions of 800-lb. gorillas, already) is what happens when home buyer tax credit and highly supportive interest rate policy support goes by the boards.
With stimulus out of the picture, do the markets begin to clear and correct on both a homeowner and a commercial real estate level?
Even as 15 home builders accelerate their gains in market share, leveraging their ability to access construction capital to meet what need continues in the market, less well-heeled private home builders need a plan.
We think that product value engineering and redesigning to make homes more affordable and finance-able has gotten the lion’s share of the attention. But there’s another approach to value engineering, which is to focus on where the waste and dislocations are in the development layout.
For instance, if you’ve got to build a street and infrastructure into a project that involves upfront costs, you’ve got to figure out how to move revenue generation–going vertical–into the equation much sooner, so that you’re not left holding the bag with all the pre-vertical costs.
In terms of cost management on the project, and better management of the timing of your return on capital invested, we believe that land value engineering could be as important an opportunity area as stripping costs out of the home that customers today just don’t want to pay for.
Where does land value engineering (or re-engineering) fit into your plans to better manage your capital and risk exposure over the next six to nine months?
For Woodside’s New CEO, Joel Shine, the Job is Simple to Say, Hard to Do
As he puts it, Joel Shine has two jobs. One is to generate as much net cash return as possible for newco Woodside Homes’ justifiably high-maintenance, anxiety-prone creditor-owners as possible–starting yesterday.
The other is to instill his recently sucker-punched operational team of business unit leaders and associates as well as Woodside’s puzzled base of customers with pride, motivation, confidence and trust.
“It’s simple,” Shine says. In that easier-said-than-done way, it is simple. It’s the same two jobs home building company CEOs and presidents have everywhere, irrespective of their capital structure or submarket network. The difference between simple and easy is glaring. Simple to say, hard to do.
Collectively, several insurance companies and a 15-memeber lender syndicate had lost patience with Woodside in late 2008, and pressed to recover $800 million in monies they regarded as their stake. Shine worked with them toward one end: take stock of what you’ve got, put it to work, and get back as much of your money as you can.
Getting dozens of creditors to agree to take a haircut is no mean feat, but it may have been the easy part. Now comes dealing with an obstinate, inhospitable home buying and selling marketplace, with more pain to come.
This is what Joel Shine signed up for. “I like a good challenge. I bore quickly. Probably, like many of my more successful friends, if they had such a diagnosis back in my day, I’d have been diagnosed as A-D-D.”
Associative disorders and compulsive attention to detail do not apparently, however, rule one another out. What associative disorders likely do help is the ability to multi-task like there’s no get out, and to see problems and solutions from a prism of perspectives. Which describes Shine’s chameleon capacity to tune in, focus, address, and move on amid converging urgencies.
This is interesting because Shine, the son of a home builder who’s the son of a home builder, is fascinated with convergence and time. So much so that, although he’s a voracious reader, one of his memorable favorites is Robert Grudin’s “Time and the Art of Living.”
Here’s a quote from that:
“The future is like a friendly stranger, polite and patient, forever trying to get acquainted with us, forever being rebuffed.”
Time and timelines go with risk and reward. One of Shine’s life’s passions–apart from his family and winning in business–is skiing. One year at the end of January he dared the daunting Streif downhill course at Kitzbuhel (Austria), where the course was iced up nicely for the annual Hahnenkamm race takes place each year.
“That was the scariest ride ever,” says Shine. “I dug my edges in to try to slow my speed, but I couldn’t cut into it, it was so icy.” In contrast, he’s helicopter-skiied in Canada in waist-high dry powder so preternaturally pure that after the third turn, it felt like floating. “It’s the closest I’ve ever felt, not only to weightlessness, but timelessness.”
Home building, Shine says, “is the battle of the timeline.” As a kid on a job site, his father would give him something to do and give him time to figure it out. “I liked learning that way,” and evidently, he still does.
Home building’s timelines are full of risk. “You get all excited about a piece of dirt and you go after it because you have the right product for it, but if it takes any time at all to entitle and develop, you might be into a different market by the time you’re ready to open there.”
Any home builder must recognize who it is and what it does based on its capacity to thrive with two distinct timelines, Shine asserts.
“If you’re in the land business, your timelines are going to run you in to no-trade cycles, and you need a different, much more accommodating capital stack and hold most of the equity and no debt,” Shine says. “If you’re a merchant builder, you’re managing short-term debt and short-term return expectations, and shorter horizons.”
So simple.
Colorado’s Village Homes Resurfaces from Bankrupty with New Ownership
Another one doesn’t bite the dust. Another one does the opposite. Village Homes, a 25-year stalwart in home building in Colorado’s Denver and Front Range markets, has emerged from bankruptcy as a NewCo.–with new owners but the same name.
Amid the financial and credit crisis of late 2008, Village Homes filed for bankruptcy in Denver in December, with assets of $103.9 million and debt of $138.4 million. After almost a year of negotiations, primarily with Guaranty Bank, the biggest secured creditor and agent for a four-member lending syndicate–and eventually with BBVA Compass which assumed the Austin, Tx.-based parent Guaranty Financial’s deposits after the FDIC shut it down in July 2009–the new ownership venture got sign-off from the creditors to buy most of Village Homes assets out of bankruptcy.
“We got word that we could breathe easy on the plan on December 23, two days before Christmas,” said Matt Osborn, president of Village Homes (NVH), and son of founder John Osborn.
The new ownership is a venture between Homebuilder Capital Solutions (an affiliate of Colorado & Santa Fe Real Estate) and Lowe Enterprises. Rather than take the old company through a re-org and recapitalization, the new entity purchased most of the assets of the “old” Village Homes–57 completed or partially completed homes, 506 finished lots, 444 unfinished lots, and 3.7 acres of undeveloped land out of the bankruptcy estate.
“With the already-vertical homes to finish and sell, we’re a start up, but we have revenue coming in from day one,” said Osborn, who expects to move the 57 homes in various stages of completion and do another 15 to 20 deliveries on new construction in 2010. “We’ll have an operating platform with capacity for about a hundred homes a year in the next couple of years.”
He adds that the assets were purchased well below the basis and loan value, which allows the company a much more competitive pricing for its homes, from the mid-$200s to the mid-$300s, down from prices in 2007 of low $500s to the $400s.
Osborn notes that’s not what Village Homes was–it did 210 homes in 2008, and just over 400 in each of ‘06 and ‘07. It is, however, heartening.
“We’ve been seeing a few of the other stories about home builders emerging out of the ashes of bankruptcy or new companies starting up, and we understood how nice it was to get that breakthrough, so we wanted to get the word out,” Osborn said.
The management team consists of key players from the “old” Village Homes operation. In addition to Matt Osborn, the brain trust includes Terry Kyger as senior vice president and CFO, Peter Benson as senior vice president of community development, Mark Osborn as vice president of asset management, Ron Hettinger as vice president of land development, Scott Sinelli as vice president of construction, and Jennifer Pingrey as vice president of sales and marketing, and the elder Osborn as a consultant.
According to company press materials, “Lowe will serve as the managing operating partner with Homebuilder Capital Solutions as the primary capital source and a strategic partner.
“The NVH team will be responsible for operating the new Village Homes venture, completing and selling the inventory of 57 homes and consolidating home building operations to the five most desirable and best located village communities, including Castle Pines North (Douglas County), Granby Ranch (Granby), Observatory Village (Ft. Collins), Idyllwilde (Parker), and Heathstead (Parker).
Asked whether the business plan and capital investment structure allows the management team to build back equity ownership in the company, Osborn said, “We’ve talked about that, but the focus now is on making this work the way it is.”
Lennar F.D.I.C. and Pulte Centex Game-Changer Plays: Opposite Routes to the Same Goal?
Recently, Housing Crisis got wind that there were as many as four large “entity acquisition deals” in the home building landscape in various stages on a path to lift-off. Whether we get news of them soon that any of them makes it to fruition is not guaranteed.
However, M&A or no, we feel that consolidation of home building capacity — Simply it is this: greater share of a smaller market for fewer players — is one of the lightning rod issues of 2010. It will underscore who gets to be in or near the black and who must malinger in the red, or worse, fail to make it beyond the doorway of this new decade.
Whether Lennar’s deal for an FDIC $3.05 billion real estate portfolio was one of the ones we’d been hearing about has not been confirmed. We did hear that at least two other public home building companies were in the running for the FDIC portfolio, but that Lennar-Rialto’s legacy strength in land work-outs clearly won the day.
Carl Reichardt, Wells Fargo managing director and senior research analyst for the home building sector, provides perspective on the magnitude and significance of the deal by saying it’s a “skeleton key,” a template for more transactions that look and act like this one. This particular plunge, he says, is less important in itself than the “philosophical notics that an historically successful and well-known distressed ‘player’ is back in the market.”
Lennar’s dead of winter coup highlights a fact sometimes forgotten or at least under-appreciated among observers of the housing market on a macro basis–not all public home builders are created equal in skill sets, profit models, even core businesses.
Fact is, we see a “fearful symmetry” when you look from a high-level at what Pulte Homes did last year in acquiring Centex Homes vs. what Lennar is doing with its distressed real estate portfolio play this year.
Both deals are “talk of the town” transactions, costing in the billions, ranking as “game-changers.”
They’re so different on the surface from one another, but we see the two as almost diametrically opposite routes to the identical place, the most important place for any new-home builder that expects to have its doors remain open into and beyond 2011: business unit profitability. For Pulte, adding Centex could provide faster and more scaled entree into the price-value sensitive entry-level and first-time buyer market.
For Lennar, it has decided that making more money amid the limbo of wide-scale deleveraging and marking assets down in price is the way to keep both its senior management talent and its construction operations infrastructure preoccupied as more of the dust settles on what anything of value is worth in dollars or cents right now.
One company’s master plan affirms a strategic combination with an operator whose geographical footprint and construction system add up to huge cost-out opportunities, the elimination of a key competitor in many of the same sub-markets, and a turn-key entry-level new-home brand platform.
The other company embraces a balance-sheet management play that suggests by its nature and scope that Lennar’s bandwidth and strategic ballast had best focus less on opportunistic home building operations and more on the margins of land asset re-pricing expected to flow through the financial system over the next two to three years.
That’s not entirely the case, of course. Lennar, like every builder, public, private, national, regional, or local, is working on managing it’s assets, shooting for first-time and value buyer opportunities, re-negotiating trade deals and materials contracts, and trying to remove non-value added steps from both SG&A and construction operations at every turn.
The making-money-by-losing-money days are done.
As one trusted divisional president from a top-10 public home building company told us, the fire-sale, sell at any cost period of the downturn cycle largely has run its course. “I told a customer who was in one of our new communities that I’d practically had to give away houses for three years, but I’m not doing that any more. There are real buyers at our price levels, so we’re going to keep at them. So he paid our full price.”
This division president went on to say that sales absorption rate projections for his communities come from the most conservative, reality based demand analyses imaginable, and that pro formas factor in zero price appreciation for the whole life-span of each community, whether it’s one year or four. “They’re penciled in as profitable no matter what comes next. If recovery is interrupted for any reason, we take a hit on margins, but our unit profitability is solid. We just have to get all our operating and business units there.”
Another insight from this division president flashes back to the question of similarities and differences in the Pulte-Centex merger vs. the Lennar echo-RTC asset work-out deal.
He says that today’s buyers are gravitating to communities they know have surfaced out of broken and repriced deals, now offering an altogether new package of values in this wary, toe-in consumer environment.
“You have to feel for those communities that got started toward a goal of 350 homes in 2005, and got 100 homes or more in before hitting a wall in late 2006,” he says. “Those communities are hanging out there with very little appeal because nothing’s been happening at them for more than two years. Whereas if you open a new community now at a newly reset land cost-base, then you can have the fresh appeal to buyers and the product and pricing they’re looking for now.”
What this means is that, for all the underwater homeowners there are out there, there’s at least proportionately as many underwater new-home communities that are going to need to re-price their way toward eventual sell-out.
So maybe Lennar’s FDIC portfolio acquisition is the company’s sequal to Net Operating Loss claw-backs of 2007, ‘08, and ‘09. The strategy may say: we can’t count on getting to business unit profitability on home building operations alone, because it’s still too full of uncertainties and possible set backs. But we can get to balance sheet improvement and a greater cash position if we jump into the Big Two-Thousand Teens Work-Out game and figure out how to play the margins well there.
Pulte, meanwhile, means to get to its corporate next step by continuing to flash its operational plan forward–driving down costs, rationalizing every land holding for its three- to four-tier brand platforms, and pulling home buyers–we know they’re there if we can get them “financeable” new home opportunities–from off the fences.
Questions for you:
- Are your 2010 opportunity areas more in the distressed land buying, marketing, and selling businesses, or do they focus more on your home building operations’ redesigned and reprice home offerings?
- Does purchasing packages of distressed or foreclosed homes or projects represent a viable bridge opportunity for your operation?
- Without the magnitude of NOL tax carry-back opportunity in 2010 that existed this past year, will the focus be on home building operations or non home building operations to generate cash and profitability at a corporate level?
- Does the Lennar plan to put value on and share profit in distressed properties reflect a smart plan in anticipation of the coming “Withdrawal of Federal Policy” moment housing faces after April 30?
Grand Opening Green Shoots for New Phoenix Home Builder
So far so good on the up-from-the-ashes story unfolding in Phoenix. For a first-blush report on what the home building industry community can only hope is a real thing Spring selling season, we tapped into the trenches in Sun City, where Carl Mulac’s Joseph Carl Homes went live this past week with a grand opening for its CantaMia active adult community in Newland’s Estrella master plan.
Mulac hopes to sell about 643 homes in phase one of the CantaMia program, which boasts 14 already-completed model homes along CantaMia Parkway.
Filled with if-you-build-it, will-they-come dread after two “soft-opening” receptions for Realtors and city and other VIP officials on Wednesday and Thursday evenings last week, Mulac spent Friday, Feb. 12, like most home builders, down on his knees, weeding the garden beds of his fledgling community.
Since the land prices were written down after TOUSA/Engle Homes’ bankruptcy, the new land base will allow Mulac to compete to an advantage on price, a solar-thermal standard energy package, and community amenities with both Pulte’s Del Webb and Shea’s Trilogy.
Saturday morning, Feb. 13 arrived, and amid the blare and pageantry of live bands and giveaways, Carl Mulac and his small sales staff welcomed prospective buyers, window shoppers, and those simply drawn into the hooplah.
“We had 700 people on Saturday and 600 on Sunday,” says Mulac. “It was almost fortunate we didn’t have more than that, because we could touch everybody, and get their registration information, which we’ve been loading into our customer relationship management data base, and now we can follow with each one effectively. I’m very excited about the turnout.”
Home builders (minus, possibly the mid-Atlantic ones still digging out of the recent spate of snow storms): what was your Spring selling opening weekend like? Traffic? Qualified buyers?