HORTON SHEDS MORE LOTS Developer Ted Mischaikov, owner of M-KOV Inc. in Bellingham, Wash., purchased 554 residential lots from D.R. Horton through two separate land deals, according the Puget Sound Business Journal. In one, Horton shed 429 lots at a price of $5 million—71 percent less than the $17.3 million it paid for the land in 2005. In the other, Horton sold 125 lots for $6.5 million. Mischaikov told the local paper 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.
Horton took in about $200 million during its fiscal fourth quarter ended Sept. 30 from the sale of roughly 32,000 lots at $0.20 on the dollar in aggregate, according to estimates by JPMorgan analyst Michael Rehaut. The company, which owned 99,000 lots as of Sept. 30, has been aggressively reducing its land holdings to recapture income taxes paid in 2006. The company expected to record a tax benefit of approximately $350 million.
TAYLOR WIMPEY RACES TO RESTRUCTURE DEBT Taylor Wimpey, parent company of U.S.-based Taylor Morrison, continues its race to restructure debt before Feb. 9, when it will probably be in default on loan agreements without some forbearance from lenders.
Already affected by the still-slowing U.S. market, the U.K.-based company is now taking hits on its home turf, where 2008 home sales have fallen even faster than in the U.S. The company has been in talks with leading holders of its bank debt for months with the hope of getting the covenants changed by year's end. But recently, it extended that discussion to the holders of its privately placed Eurobond debt as well to reset covenants and give it some breathing room. The Eurobonds account for £450 million of its total £1.7 billion of debt.
Exceptional Leadership
BIG BUILDER announces its 2008 APEX Award recipients and first annual Leadership Legend winner.
BIG BUILDER took time out of its annual conference in early November to honor five home building executives for their successes during a volatile year. The 2008 APEX Awards winners included:
BIG BUILDER editorial director John McManus told the crowd, “These heroes have navigated the financial markets while doing more with less.”
Jim Ryan, founder of Ryland Homes, took top honors, receiving BIG BUILDER's first annual Leadership Legend award. Ryan humbly accepted his award and spoke of the need to return to conservative ways.
Ryan gave nearly all the credit of his success to his mother, who was widowed when he was a young child. Of her, he said, “This scared woman set the way we do business. We managed our resources. We don't take chances. We had optioned lots and signed mortgage commitments with a down payment before we would break ground.”
Getting to know his employees on a personal level was something Ryan took to heart. As he explained, “If you worked for me, I wanted to know everything about you and your family.”
Ryan added, “I would have a three-hour interview [for an applicant] to be a salesman. Just a salesman, you may ask, but who meets our customers?”
Ryan also imparted the wisdom of asking employees about their family, noting his belief that individuals take after their parental figure of the opposing gender. “If you're interviewing a guy, find out about his mother on a deep level. If a gal, find out about her father,” he said.
He also told the crowd to avoid yes-men and respect those who say no. “The ‘nos' make your ‘yeses' valuable.” –Lisa Brown and Lynn Norusis
