There's talk again that Taylor Wimpey is considering selling its North American home builders, including Taylor Morrison in the United States.
The Daily Telegraph in London reported that the U.K.-based builder has hired J.P.Morgan Cazenove to advise it on a $1 billion sale of the Taylor Morrison brand in the United States and Monarch in Canada.
On Monday, Taylor Wimpey CEO Peter Redfern confirmed during a regularly scheduled trading update that the company has had interest in its North American division.
"We get inquiries on a regular basis, as you can imagine, most weeks," he said, but added, "It's still a bit early."
In October, Big Builder reported that the company was considering a sale, quoting the Times of London that it might complete a deal by year's end. Now pundits are saying February.
Sheryl Palmer, chief executive of Taylor Wimpey's Phoenix-based North American division, could not be immediately reached for comment Thursday morning.
In some ways, selling off its assets across the pond could make sense now for Taylor Wimpey. The Canadian and U.S. operations showed more of a market improvement than was expected in North America last year. Average sales rates were .60 per community per week in 2009 compared with .40 the year before. Cancellation rates were down as well.
Also, proceeds from the sale could bring the company some debt relief. While it restructured its debt down from $1.5 billion to approximately $750 million last year, the level is still high, and the restructuring saddled the company with covenant restrictions that limit how much it can spend on land in 2010.
Redfern said during Monday's call with analysts that the covenants' land buying caps allow Taylor Wimpey enough head room to replace land that it might sell through during the year. But, if the company were to successfully sell off its North American assets, it could retire its debt, lifting the restrictions and giving it the flexibility to buy any larger deals that might arise.
In Great Britain, where land is scarcer and development rules stricter, land is a precious commodity for builders. Redfern has said he worries more about finding land to fuel the company's growth than its debt.
"The biggest concern is the planning system and the availability of a number of sites," Redfern said during the conference call.
Making sure that the company has the ability to buy the land it needs in Britain may be worth sacrificing the North American division, where the recovery seems to be beginning, but still far from certain or clear how swift and strong it will be.