Developer Ted Mischaikov, owner of M-KOV Inc. in Bellingham, Wash., recently purchased 554 residential lots from D.R. Horton through two separate land deals in September, the Puget Sound Business Journal reported Nov. 7.
In one deal, Horton shed 429 lots at a price of $5 million--71% less than the amount it paid for the land in 2005 ($17.3 million). In the other, Horton sold 125 lots for $6.5 million. Mischaikov told the Puget Sound Business Journal that Horton got its original investment back on the second deal but that the company walked away from all its land development costs, including road and sewer work.
Neither D.R. Horton representatives nor Mischaikov could be reached immediately for comment.
Horton disclosed last week that it took in roughly $200 million during its fiscal fourth quarter ended Sept. 30 from the sale of approximately 32,000 lots at 20 cents on the dollar in aggregate, according to estimates provided in a research note to investors issued by J.P. Morgan analyst Michael Rehaut. The company, which still owned 99,000 lots at Sept. 30, has been agressively moving to reduce its land holdings and to recapute income taxes paid in 2006 by writing losses on land sales this year against them. The company will report on the sales in more detail when it releases its earnings Nov. 25. The company said it expects to record a tax benefit of approximately $350 million and a loss of between $800 million and $900 million for the quarter at that time.