Oh Freddie Mac, When Are You Comin Back?
Spring time begets lyricism.
Fraud begets journalists on a mission.
That’s what Bill Gloede is. He’s author of Big Builder Web site‘s Wall Street and Maine blog, which is fast becoming a must read for those of the new residential construction persuasion.
What Bill’s got stuck in his craw is what Washington, Wall Street, and Main Street are doubled-over in pain about right now–dealing with black hole financial entities from which there seems to be no escape from insane allocations of good money after bad… Specifically the Government Sponsored Entities.
Bill, who is conservative in his DNA but liberal in his personal need for compassion, has written this about the two GSEs, Fannie Mae and Freddie Mac.
Predictably, there are few voices on Capitol Hill, and none in the White House, speaking to this. What with corporate jets and bonuses and sales junkets in Vegas providing ample opportunity for unctuous moralizing, why would the polticos want to risk offending the worshippers of these sacred cows? Very lucrative sacred cows, I might add. Guess who’s #1 on the list of Senate recipients of Fannie and Freddie campaign contributions as of this past summer? How about Chris Dodd, chairman of the Senate Banking Committee. And #3? I’ll leave a hint: he is President now.
Both Fannie and Freddie were subpoenaed in September by a federal grand jury looking into fraud at both institutions. More recently, one Republican Congressman started asking questions of a loan deal obtained by former Fannie CEO Franklin Raines from good-old Countrywide. Looks like old Franklin might have been one of those “friends of Angelo.” Like Dodd was, though he claims not. (But he did refinance the special-rate loans he got from Countrywide, oddly.)
Way, way back in 2005, I wrote a story for Big Builder about the effort at the time to re-regulate Fannie and Freddie. Builders were against it, for the most part. In retrospect, I realize I should have dug a lot deeper. There were those who warned us of the black holes that Fannie and Freddie were, and remain, but I fell prey to the comforting words of the seers of the time that the mortgages Fannie and Freddie held were high-quality and sound. I should have looked into the mortgages that they did not hold but packaged. Those are the mortgages that are in the CDOs that brought the worldwide banking system down. I apologize and admit my mistake.
So, for my penance, I forced myself to fracture the following and reassemble it to fit the politics of this era as opposed to that of Henry VIII, when the original was composed. You may sing along if you wish; the ditty works well in three part, syncopated harmony.
Two large lice, two large lice,
See how they run, see how they run,
They both gave big to the Congressmen
Who gave them free Raines with the signing pen
Have you ever seen such a con-ta-gion
As two large lice?
Wolseley–After Lightning Quick Ramp Up–Wants Less Stock in Trade
From PROSALES, By Andy Carlo: Here’s the headline: Wolseley Seeks To Sell or Dump Stock by Aug. 1, No. 2 U.S. LBM operation looking for a joint venture partner.
Click on image for access to current Wolseley share information.
Wolseley Plc revealed today that it is in the process of identifying a joint venture partner for Stock Building Supply, the second-largest U.S. pro dealer, or else will exit the business by Aug. 1. “A number” of unnamed companies are interested in acquiring all or part of Stock, the U.K.-based company said in a statement issued by Stock.
In a report released this morning, Wolseley said the decline in housing starts, coupled with a continued decline in lumber prices, have expedited the company’s decision to pursue a sale or joint venture, or to dispose or exit Stock Building Supply, by Aug. 1. Wolseley also announced that it will try to raise 1 billion pounds ($1.42 billion) in a rights issue.
“We are working very closely with Wolseley to identify potential partners that can help Stock Building Supply grow when the market recovers,” Stock Building Supply President Joe Appelmann said in a separate statement. “Our business model has fundamental differences from the remainder of Wolseley’s portfolio, and in these economic times it makes sense to explore other options.” (more)
Here’s Wolseley’s take on its “outlook,” from its statement today:
Outlook
The Board is confident that the measures announced today represent a comprehensive package to strengthen the balance sheet and strongly position the Group for the future.
The Board believes that the downturn in the UK, Irish and Nordic economies is likely to be generally more severe than that experienced in the remainder of Continental Europe.
If markets deteriorate further than anticipated, the Board will ensure further actions will be taken to mitigate the resulting impact.
Whilst actions will continue in our core businesses to reduce costs and generate cash, there will be a clear focus on margin management, serving the customer base and developing market opportunities.
This is a player that seemed to announce the purchase of another point of United States distribution every week, through 2006 and into 2007. The headwinds to Wolseley finding a deal are huge, given the domancy of home building, and horizon for recovery in starts activity that slides farther way by the day.
Capacity at the level Stock provides is a question. For home builders, who might have considered the network a prime way to ensure capacity when volumes were humming along, that type of verticalization is unheard of these days unless it translates into immediate cuts to direct costs on per square footage that can be translated into move-off-the-sideline new home prices.
Wolseley has its work cut out for them on this challenge.
Update: ProSales editor Craig Webb has produced a map of Stock locations as they were listed by the company from Jan. 09, and posted it in his blog.
Multifamiliar? Woes Grow as Deal Flow Slows as Rent Trend Goes Who Knows How Low?
Atlanta Fed President Dennis Lockhart clocked in with a “we feel your pain” to multifamly players in his audience as he addressed the Greater Miami Chamber of Commerce yesterday . In the mess that is Miami’s multifamily market environment, Lockhart’s comments hit a nail on the head as he describes a softening business base as a result of massive dislocation in the supply of units, noting that vacancy rates had reached 7.5% by the end of 2008.
I should also comment on the weakening multifamily residential real estate picture. No two rental markets are exactly alike. But to generalize, those markets trending the worst probably share one or more characteristics. They had excessive condo construction or condo conversion activity. Such markets are seeing unsold units return as rentals. They had very high home price appreciation in the years 2004—07 with large amounts of speculative house construction activity. Today, in several markets, houses compete with apartments as rentals. And they have been experiencing high and rising foreclosure rates.2
Multifamily Executive senior editor Les Shaver reports on how demand destruction on the rent side is throwing apartment sale deal flow into nuclear winter. Just as in so many other industries, the fundamental asset building block through which valuations are done by buyers and sellers has been undermined by the fallout of the credit and consumer spending cliff-dive.
The problem: Sellers still aren’t adjusting their prices for the market. “Despite placing so much product on the market, sellers appear to be in denial as asking cap rates have increased only slightly since September to 6.4 percent,” the report said. “Deals have spiked by 50 basis points over the same period, reaching 7 percent in January. Clearly, with so few closed deals, the bid/ask gap remains wide, and it is sellers who must become more realistic.”
Until the gap between buyers and sellers closes, David Schwartz, managing member for Waterton Associates, an apartment firm based in Chicago, doesn’t see things improving. “It will be sellers dropping their prices and then you’ll start seeing transactions clear,” he says.
The deals that did clear in January were generally small. The largest was $67.4 million for a three-property deal sold by Home Properties, a REIT based in Rochester, N.Y. Only one other deal sold for more than $30 million.
The report also highlighted another trend. “Default and foreclosure filings involving significant apartment properties grew by almost $1.8 billion,” the report said. “At present, distressed apartment assets total $9.2 billion [906 properties], a figure that continues to grow rapidly. Troubled properties are now found in nearly every market.”
Glut, which is at the core of the for-sale new residential meltdown, is putting a hurt on multifamily players as well. Here’s Calculated Risk’s phrasing of the causes:
Although Lockhart mentioned that houses are competing with apartments as rentals, he doesn’t mention that this is happening for two reasons: 1) homeowners who can’t sell their homes (or are “waiting for a better market”) are renting their homes, and 2) many REOs are being purchased by cash flow investors as rentals helping to increase rental supply and push down rents.
Multifamily trade association leadership has been quick to pin the blame for this shadow inventory on the excesses of home builders. Simply, it’s a more complicated matter than that.
Distressed Out or In?
Public home building companies keep on impairing the owned land pipeline that is on their books; privates battle the slippery slope of owing lenders more on land they own than what it’s worth today. Talk about distressed assets! And the thing is, even the bargain hunters with cash and capital horded up right now as “dry powder” have been paralyzed by the swan dive in land values.
For a glimpse into where potential distressed asset opportunists–the vultures–may be looking to embed their talons, have a look at this video from The Deal.Com.
At the TMA/The Deal’s Distressed Investing Conference in January, Rothchild’s David Resnick, Cerberus Capital Management LP’s Kevin Cross and KPS Capital Partners LP’s David Shapiro discussed the opportunities and challenges for strategics investing in distressed assets. – Maria Woehr
Land Stand-offish: When Homes Don’t Sell, Less than Zero Sounds about Right
We’ve heard through the grapevine that Weyerhaeuser Real Estate Company’s portfolio of home builder companies in various parts of the country completed a series of land-sale deals just before the end of 2008.
Unlike deals done by Lennar, Centex, and D.R. Horton in 2007 and 2008, no single buyer emerged as a White Knight to help WRECO off-load the non-turning lot inventory off its balance sheet.
We’d heard the deals were offered for multiple markets, but the one we could learn about took place in Arizona, with the company’s Maracay Homes unit in the middle.
According to an unidentified source here are the details:
Robert Sarver
Maricopa County/Pinal County/Pima County – A venture formed by Southwest Value Partners in San Diego, Calif. (Robert Sarver, Mark Schlossberg, principals) and Scottsdale-based investor Elliott Pollack paid $24 million to acquire land in Maricopa, Pinal and Pima counties that is targeted for 3,439 single-family residences. The seller in multiple transactions were companies formed by Maracay Homes Corp. in Scottsdale. The deal was brokered through Nate Nathan, Dave Mullard and Casey Christensen of Nathan & Associates Inc. in Scottsdale. The property is comprised of five undeveloped parcels, four fully finished sites and three partially developed parcels.
Prior to a Q4 and full-year financial results call due to occur Friday, Feb. 6, company officials say they’re in a quiet period, and plan not to divulge details of year-end land transactions at least until then.
So the strategy playing out here is left to educated guessing as opposed to knowing what is going on.
What we’re certain of is that most of the scant deal flow in the residential land game over the past 15 months or so has been tax motivated. Occasional and minor exceptions to that rule have occurred, and will continue to occur. Big Builder senior editor Sarah Yaussi has set herself the task of getting to the bottom of the impasses and inertial forces at work that have croyogenically frozen the great land reset in time.
As it looks, a Democrat-weighted Congress has favorably disposed itself to extending the provision that allows money-losing companies to recover taxes paid on prior-year profits. This would allow home builders to tap into their IRS payments as far back as the latter half of 2003.
So, we’ll see several companies bone up and leverage their expertise in tax accounting to get access to those cash dollars, which might serve to help a builder from tripping a convenant that could make its debt more expensive or could actually keep some builders from flirting with negative cash flow during a new-order-lean 2009.
Weyerhaeuser’s case came along, though, when other themes in land portfolio management started to come to light. One is strategic, the other, more attached to the fact that capital’s spigot is still tightly shut.
Strategically, home builders want to preserve cash, and only have access to land conditionally. Many of them, like Lennar, are trying to set up joint venture structures that would move as much owned land into an off-balance sheet entity that would give them both an option and an out, whichever worked best.
Lennar is still working on its land portfolio structure. Ryland just announced a JV with Oaktree Capital whose structure might serve the same purpose. Big Builder’s Sarah Yaussi also blogged about this deal. In some cases, Ryland could call some of its own already-owned land “distressed,” and move it into the JV structure. In other cases, the Ryland-Oaktree could scarf up lots in markets where the home builder is already strong for a song, and keep its pipeline going at a profitable level.
The model for home builders being this: make land an on-demand commodity, where instead of paying a premium for retail, you pay a discount to get somebody out of trouble. But only do that where it makes absolute operational sense to do it.
Weyerhaeuser, then, has sought to collapse the gap between land strategy and tactics. It’s willing to bet that it can offload some land holdings it likes for the near-term and benefit from moving them out of the company’s asset base, and very possibly recapture some upside when transactions–houses sold in the submarket–actually set a price level for the value of those lots.
The other question around land has to do with a broader question of when capital will flow into any asset class, be it land or paper. The answer may be that for as long as there’s no floor beneath any asset’s value, capital remains in holding. Most institutions that would release it don’t have a clue as to what either their asset portfolios are worth or what their exposure to toxic assets totals to. So, no capital flow.
Hence few big land deals.
Auld Laing’s Sign–For Sale?
Is John Laing Homes for sale?
The question came this past week from a highly placed executive with specific knowledge of deals and distress in the debt-plagued universe that is production home builders.
Dubai-based Emaar Properties bought the blue-chip Newport Beach, Calif.-headquartered private home building operation for $1.05 billion in late-spring 2006, when the residential market was peaking like Emaar’s work-in-progress Burg itself. [add your crashing sound-effect here].
The company’s long-time CEO Larry Webb departed in Spring 2008, only two years through a five-year contract to stay on at the helm. He’s now on LandSource duty, trying to get dollars for land assets that logically will regain value once there’s a flicker of heat back in household growth in the Santa Clarita Valley.
Emaar’s plan with Laing was to secure a North American foothold, and then run like hell to grow three to five times John Laing’s original size within five years.
Plan B?
Not so long ago, it was rumored that Emaar and Lennar might go far in talks to co-star in a home building world drama, with Emaar the buyer.
The crazy way that things are now working, Lennar might no sooner divest of its LandSource Newhall Land & Farm gem, and emerge as a potential acquirer of what’s become of Emaar’s John Laing. Loonier scenarios have played out.
One thing is certain. A North American foothold could turn into a stranglehold that snuffs the life out of one of the world’s most powerful construction companies; it’s weathering it’s own storm at home.
- Here’s the Wall Street Journal on how much fun it is to be in Dubai these days.
Dubai’s economy is particularly sensitive to property prices. The real-estate, construction and finance sectors together account for close to 40% of the city-state’s gross domestic product, according to a recent Merrill Lynch & Co. estimate.
In a market dominated by residential real estate, average home prices fell 8% in the fourth quarter last year from the third quarter, according to a price index released Tuesday by property consultant Colliers International. That’s a dramatic turnaround in a year in which average prices finished 59% higher, even with the fourth-quarter drop.
The Dubai property market’s weakness threatens to seep into other critical sectors of the economy, including banking, which just a few months ago seemed relatively sound. Moody’s Investors Service on Tuesday warned of weakening fundamentals for banks across the United Arab Emirates, which is made up of seven semiautonomous emirates including Dubai.
Laing builds quality residential communities; and markets itself better than most other companies. It also plays where the stakes are as high as they get, and its dirt has shown a boundless appetitite for talent and other expense lines as the builder tries to slash its way to a tolerable margin.
Hello, hello… don’t know why you say Dubai, I say hello.
Carry Back Flash Back
Put it this way, home builders would take an extended look-back period for net operating loss tax payment recoupment if they can get it. There’s not much they wouldn’t do to put cash into the till these days as opposed to merely taking costs out of their company.
Like many developments these days, the implications of adding the tax break to Obama Stimulus 1 are probably more significant for removing headwinds than providing tailwinds. In the real world, the financial consequence of giving builders the opportunity to reach as far back as 2004 to get rebates from Uncle Sam, is well-mapped out in J.P. Morgan executive vp and senior home building analyst Michael Rehaut’s inimitable Numblish:
With the builders up 13% since Fri., Jan. 2 (S&P: +0.3%), spurred by the reporting that, as part of the Obama stimulus plan, the NOL lookback period would be extended from 2 years to 5 years, we believe the ultimate impact of this change would be relatively modest. Specifically, we note that, among our universe, builders’ balance sheets have already improved considerably over the last year with net debt down 42% on average. Moreover, we note that until now, the builders have utilized only 46% of the potential tax refunds under the current 2-year lookback, as large land sale transactions, the primary vehicle used to realize the refunds, are difficult to execute and also trigger large impairments and hits to book value. Finally, we note that prior efforts to extend the NOL lookback have failed, most recently in July’s Housing and Economic Recovery Act of 2008, and point out that the incoming administration’s primary goal behind the current package is to create jobs, as stated by transition team spokesperson Stephanie Cutter: “We’re working with Congress to develop a tax-cut package based on a simple principle: What will have the biggest and most immediate impact on creating private sector jobs and strengthening the middle class?”
Rehaut goes on to point out that public company “utilization” of their already extant opportunity to claw back to 2005 has been less than 50%. True, if they got to add 2004 and some of ’03 to the mix to look back, they’d have another $5 billion (collectively) to go after in Uncle Sam/IRS dollars.
We feel that as time drags on and the stalemate among would-be buyers and would-be sellers of land continues, home builders will be looking at the cash in Uncle Sam’s coffers and saying it looks better and better in comparison to lots they’ll sell who-knows-when?
Of course, Ivy Zelman, ceo of an eponymous research and analysis consultancy, begs to differ with Rehaut on almost every count. CNBC interviewed Ms. Zelman today about the bump builder stocks were getting as talk of the stimulus proposal gained steam.
So some of the issue for home builders as a sector is this. Will they use up much-needed brownie points lobbying and positioning for this benefit as what they really want and need is a stimulus that would make people buy homes–especially new ones?
The Wall Street Journal’s coverage of the business stimulus plan-in-progress from congressional Democrats and the administration doesn’t hesitate to print an idiotic soundbite from, Dean Baker, a clueless economist who claims that extending the carry back rule would reward the perpetrators of our current mess.
“I think it’s ridiculous,” said Dean Baker, an economist and co-director of the Center for Economic and Policy Research. “It’s rewarding the people who messed up.”
No, Mr. Baker, it’s actually about dealing with a “long recession,” which unfortunately won’t put enough irresponsible economists out of their current means of employment–which is actually rewarding the people who messed up.
You Heard it Here at Housing Crisis First
We’re opening a thread here, looking for your list of three to 10 housing predictions for 2009. Care to call the bottom? Now that private equity has put a value of about $14 billion on IndyMac, will there be takers for real estate related assets of other banks at asking prices that make the deals pencil? How many home building-related companies, trades, manufacturers, and distributors will need to close their doors as they run dry of resources to keep operating?
Prophets who got it wrong in the old days had something to lose when they messed up on the job. Like their lives. Today though, if you’re wrong about what you say will happen in the next 12 months, you’ll probably be right about it within the 12 months after that. The bears after all were dead wrong for two or three years before they were absolutely right, proving the bulls wrong for a year or three.
Reader-generated content is taking other business sectors by storm, and the flow of wit, witticism, insight, and cynicism has sparked new ideas and budding relationships galore. Imagine, you could start something in residential real estate and share in the pride of your authorship, which we’ll be glad either to publish or keep quiet, as you prefer.
Maybe the following list of 10 relatively playful predictions for 2009 will help prime your prognostigative pump. Remember, you heard these here first:
- Congress won’t fix housing first. Most of our elected officials would find it too daunting and difficult to switch out screens for storm windows, let alone understand the intricate weave of home building, jobs, spending, and confidence that advocates of a home purchasing stimulus propose.
- Former John Laing Homes CEO Larry Webb will finish the job disposing of LandSource, and will lead a vaunted team of experienced executives in a successful effort to buy a company for about $250 million. Maybe John Laing Homes.
- Builder will be hard-pressed to identify a Builder 100 for 2009 in 2010, and the “Next 100″ will be even harder to develop.
- Giants 28-Titans 24, Feb. 7, 2009. Hey, this is our list!
- MatlinPatterson will merge Standard Pacific, TOUSA, Levitt, and Beazer into a Southeast-based super-regional Top 10 public operator, exit the land ownership and development business, and finally sell its newly streamlined merchant home building organization to NVR.
- $1 in 2006 currency will be worth 18 pennies in June 2009.
- J. Crew will introduce a line of smart casual road-crew wear aimed at former Wall Street associates.
- AIG will have sold any and all of its non-toxic businesses, and the resulting cesspool of credit derivatives will ultimately be deemed too inconsequential to bail out again. The company’s executives will meet at the Aspen St. Regis for five days to dismantle operations.
- Quadrillion will be the new trillion [see post below].
- By Super Bowl XLV in Dallas, in February 2010, high-volume home building will once again refer to more than the loudness of boom boxes in the rafters of new construction. Barely perceptible, recovery will begin with three home sales per community per month. That’s high volume.
Your list goes in the “comments” area below.
‘Twas the Night before FY
‘Twas the Night Before FY
(Beware CFOs with open tabs… apologies to Clement Clarke Moore)
‘Twas the night before FY, we’re now at the bar.
Our guidance is dreadful; we’re no NVR.
And fresh off a WebEx with dame Ivy Z,
We’ve spun metrics, pro formas, even fibbed a degree.
First-time buyers are mirages, our banks are a mess,
And privates are all creaking with signs of distress.
The free-markets free-fall, the jobless claims mount,
FCF’s but a trickle, backlog’s down for the count.
We’ve right-sized and downsized and hammered our trades,
Zeroed out our revolver, still our gross margin fades.
We’ve taken out talent, cut our costs to the bone,
Still we can’t move the houses; there just aren’t the loans.
When Ben lowers Fed rates, it scarce makes an impression.
We seem headed straight for much worse than recession.
We’ve combed through our inputs, we’ve slashed costs and burned,
We’ve walked, and we’ve mothballed, and to impairments we’ve turned.
We’ve reset all our prices, again and again,
‘Til a dollar’s worth pennies in just a stroke of a pen.
We’re waiting for bottom, for signs of a trough,
We need the absorptions, we’ve had quite enough.
Now Dreier! Now, Mizel! Now Dugas! Now Miller!
Hovnanian! Hilton! Mezger and Eller!
On Tomnitz! On Toll, McCarthy, and Schar!
On chairman of StanPac, whoever you are!
For we are the publics, the world needs our good health,
We’ve sworn off our bonuses, toned down our wealth.
Our community counts are but half what they were,
We’re exiting markets so fast it’s a blur.
I’ve worked spreadsheet magic, I know my job well.
Just look at our leverage and the huge NOL.
We’ve got tons of dry powder, we’ve cut down our debt,
Not an analyst doubts, we can weather this yet.
We’ll miss old Ken Neumann, Dunmore, Legend and Trend,
Royce, Village and Barratt, and all our BK friends.
We’ll bet they’re not done; they’ll be back around,
From OldCo to NewCo, when fresh capital can be found.
Until then, you don’t have to guess where we’ll be!
Right here at the pub, I run t&e!
We’ll hope for good earnings, we’ll pray for the jobs,
We’ll pray people buy Fords, Chevys, Volvos, Hondas and Saabs.
We’ll raise our glass too, to the men of Wall Street.
So gracious in triumph, so gallant in defeat.
They’ll find new employment in less well-paid posts,
Then they’ll buy up our houses on East and West Coasts!
For Barack is coming, just wait ‘til you see,
A non-stop flight, Honolulu to DC.
He’ll head to the Oval, all rested and tan,
With a dream team Cabinet and a trillion dollar plan.
He’ll rebuild the bridges, he’ll repave the roads,
He’ll wire all the schools, even add wi-fi nodes.
He’ll start in on health-care, and insure one and all.
For New Deal Number Two, no order’s too tall!
With Geithner, and Volcker and Rahm at his side,
Obama won’t give in ‘til he’s turned the tide.
So let’s toast the new Prez. Let’s hope we’ve seen the worst,
He’s still got to learn, we’ve got to fix housing first!
TOUSA, Standard Pacific–Big Builder Called it
Here’s what Big Builder reported February 14, 2008.
The other home builders show, mostly offsite, is happening at a nearby high-end hotel. There are no booths, no demonstrations, no powerpoints, no little logo-ed promotional premiums to walk away with. Here’s what there are: Suits, drinks, hearty laughter, lots of slaps on the back, business card exchanges, and promises to reconnect, mostly in New York. Among the denizens there are David Matlin, a principal at MatlinPatterson Global Advisors and Art Falcone, who’s re-entered Florida’s home building arena with a company called Americrest, that looks in its near-term future footprint, uncannily similar to Transeastern, the company that brought TOUSA to its knees.
To quote a blogger we admire, “WHOCUDAKNOWED IT?” Fresh off installing MatlinPatterson’s Ken Campbell to replace Jeffrey Peterson as president and CEO of StandardPacific, we see the tie to TOUSA, even as Art Falcone’s Americrest Group fades out of the scene. Somehow, the land Falcone sold to TOUSA in 2005 as part of the Transeastern acquisition is still a sore spot. MatlinPatterson owns major shares of TOUSA, so the blend with StanPac makes spreadsheet sense if it can be rid of its legacy Transeastern poltergeists.
IRVINE, Calif., Dec. 19 /PRNewswire-FirstCall/ — While it is the policy of Standard Pacific Corp. (NYSE: SPF) not to comment on market rumors or speculation, the Company has decided to issue the following statement:
“Although the homebuilding industry is experiencing challenges at this time, we believe that there may be attractive land and corporate opportunities worth considering. We continuously review acquisition and other strategic opportunities which could enhance value for our stockholders. To this end, the Company is engaged in preliminary discussions and the exchange of information with TOUSA, Inc. regarding a possible transaction. There can be no assurances that any transaction will occur, or as to the timing, structure or terms of any transaction. That said, the Company does not anticipate having any further comment unless and until a definitive agreement for a transaction is reached.”
Standard Pacific Corp., one of the nation’s largest homebuilders, has built homes for more than 103,000 families during its 42-year history. The Company constructs homes within a wide range of price and size targeting a broad range of homebuyers. Standard Pacific operates in many of the largest housing markets in the country with operations in major metropolitan areas in California, Florida, Arizona, the Carolinas, Texas, Colorado and Nevada. The Company provides mortgage financing and title services to its homebuyers through its subsidiaries and joint ventures, Standard Pacific Mortgage, Inc., SPH Home Mortgage and SPH Title. For more information about the Company and its new home developments, please visit our website at: http://www.standardpacifichomes.com.
Consolidation is and will be a byproduct of this downturn. MatlinPatterson and companies like it pencil their deals with different math models than those of home builder/developers to make them make financial sense. Right now, they’re stewards of operations that can bring value to both homeowners and to communities in the environs of both TOUSA and Standard Pacific communities. By making the debt to both companies less expensive, and extracting overhead costs, this deal can make sense, especially as volume is so slow.
We’ll see more of this soon.