KB Home (NYSE:KBH) yesterday said it has begun a pullout from the Washington D.C. market that is expected to be completed over the next 12 months, with the company continuing to build and deliver homes in the communities it currently has in the area.
The D.C. market comprises about 2% of the company's community count. At press time, it was advertising homes for sale in five communities in Maryland and one in Virginia, with two close to sellout. KB said it would build out or sell any land holdings it has in the area and that it will maintain a dedicated team to provide warranty services and related support to its home buyers in the area.
“Based on our evaluation of opportunities to drive long-term stockholder value, we are reallocating our resources to more productively deploy our assets to markets where we have a larger, established presence and believe we can generate stronger returns,” said Jeffrey Mezger, KB president and CEO. "“Company wide, one of our objectives is to build large businesses in our served markets, which provides us with competitive advantages, from acquiring and developing land, to selling and building homes. We entered the Metro D.C. region late in the previous housing cycle, and have not been able to establish the scale necessary to generate solid returns.”
The company said it would take a pretax, non-cash charge against second-quarter earnings of between $6 million and $8 million associated with the pullout. KB shares were trading mostly flat nearing mid-day Friday.