DC's Caruso Charts a Custom Comeback

Source: BIG BUILDER News
Publication date: September 23, 2010

By Teresa Burney

Despite the continuing challenging home building market and strong competition from bigger builders in the Washington D.C. market, Caruso Homes president and owner Jeffrey Caruso is enjoying a lighter state of being these days.

“We have shed 3,000 lots that we owned or contracted for. We are reorganized and we are lean and mean and we are ready for the market turn around,” said Caruso. “We have local business investors and funds and we don’t have any debt.”

And that lightness is giving the Crofton, Md.-based builder the agility to compete against a market full of big builders. Caruso has sold about 40 homes since May by building in communities too small for bigger builders to bother with, providing options other production builders have abandoned, and offering services they can’t.

For instance, Caruso, which has two model sales centers in north and south Prince George’s County, Maryland, has started offering to build on homeowners’ lots. The company is offering its proven floor plans and architecture to buyers as an alternative to more expensive and time-consuming custom construction.

“We had nice success with this in the past,” Caruso said. “In the custom home community, it takes a long time to build a house. They (buyers) don’t realize that until they get into it. We can sometimes take a year off the process.”

The company has just begun to market the service. It is putting its signs up on lots that are for sale in a cross-marketing deal with the landowners. “It helps the lot owner. In addition, it gets our name on a lot of lots.”

Caruso is also having success finding lots to build on by picking up smaller-parcels lots from banks that are too small for any of the national builders to care about.

“We are talking with banks about a lot of nice small jobs that maybe other builders might not finish,” said Caruso.

Caruso is now building in six communities, two of them under Caruso’s control and four for which it has lot take-down agreements with developers.

While the builder’s target audience is first-time buyers, the same as many nationals, Caruso is differentiating itself by offering standard upgrades that have been pulled from many of the national builders’ homes.

“Builders are stripping houses to the bone, and we are keeping our position as the high-end of the affordable builders,” he said. The company works to keep all its offerings below the local FHA loan limit of $417,000.

“We have triple nine-foot ceilings (on every level, including in the basement), a better appliance package, we include more wooden floors and more closet space and windows,” he said.

But there is one place where Caruso has had to change its practices to compete–building spec homes.

“The D.C. market is not a spec-home market. Most builders are not building spec homes, the banks won’t let them,” Caruso said. Yet some of the nationals are, and it was hurting sales because buyers were waiting to sell their homes and then going shopping for something they could buy quickly.

So Caruso has been adding a couple of spec homes in each of its communities, financing the construction with cash on hand, both personal cash and some from local business investors who have worked with the 25-year-old company for years.

“We haven’t finished a home that wasn’t sold, fortunately” he said. “You do end up negotiating. People drive around with a check in hand.”

Caruso completed a reorganization a year ago under Chapter 11 of the bankruptcy code in a process that was such a model of civility that the judge complimented the attorneys involved. Part of the agreement was that Caruso will share some future profits with creditors.

The company’s staff shrunk from 160 to 18 people in the process.

“We are in a great position for a market turnaround,” Caruso said.

KB Home Narrows Q3 loss; generates income from home building ops

FROM BIG BUILDER:

KB Home Q3 earnings hit this a.m.

Here’s Wells Fargo home building sector analyst Carl Reichardt’s “takeaway:”

KBH’s orders were particularly weak in our opinion, although the company did have a tough comparison, with Q309 orders up 62% yr/yr. Margins and costs seem to have stabilized for KBH, but with a build-to-order business model, KBH cannot rely on spec homes in order to drive volume, so KBH’s weak backlog (down 32% sequentially and 42% yr/yr) indicates Q4 revenues and margins should be weaker than Q3 in our opinion, which is not consistent with historical, seasonal trends.

We’ll have more analysis on bigbuilderonline.com later.

Here’s the KB Home release:

Total Revenues of $501 Million, Up 9% Year over Year
Homebuilding Business Generates Operating Income for the First Time in Nearly Four Years
Net Loss Narrows to Near Break-Even Results

LOS ANGELES, Sep 24, 2010 (BUSINESS WIRE) — KB Home (NYSE: KBH), one of America’s premier homebuilders, today reported results for its third quarter ended August 31, 2010. Results and developments include:

■Total revenues increased to $501.0 million in the third quarter of 2010, up 9% from $458.5 million in the third quarter of 2009, marking the first time in nearly four years that the Company has generated year-over-year quarterly revenue growth. The increase reflected higher housing revenues, with the number of homes delivered up 4% from a year ago to 2,320 and the average selling price up 6% year over year to $214,200.
■The Company’s homebuilding business generated operating income of $8.4 million for the quarter ended August 31, 2010, compared to an operating loss of $42.1 million for the year-earlier quarter. The improvement in the current quarter results was driven by an increase in homes delivered, a higher housing gross margin, and lower selling, general and administrative expenses.
■The third quarter 2010 net loss totaled $1.4 million, or $.02 per diluted share, improving from a net loss of $66.0 million, or $.87 per diluted share, for the year-earlier quarter. The current quarter results included $3.3 million of inventory impairment and land option contract abandonment charges, compared to $47.7 million for inventory and joint venture impairments and land option contract abandonments recorded in the third quarter of 2009.
■The Company’s cash, cash equivalents and restricted cash at August 31, 2010 totaled $1.04 billion. The Company’s debt balance at August 31, 2010 was $1.80 billion, down $19.5 million from $1.82 billion at November 30, 2009.
■The Company added approximately 3,700 owned or controlled lots to its inventory in the third quarter of 2010, primarily in its West Coast and Central regions. As of August 31, 2010, the Company owned and controlled over 41,000 lots.
■Backlog at August 31, 2010 totaled 2,169 homes, representing potential future housing revenues of approximately $455.3 million. At August 31, 2009, the Company’s backlog totaled 3,722 homes, representing potential future housing revenues of approximately $734.1 million. Company-wide net orders decreased 39% to 1,314 in the third quarter of 2010 from 2,158 in the year-earlier quarter.

“Strong top-line growth in revenues, an expanded housing gross margin and lower selling, general and administrative expenses were the key drivers of our improved financial results in the third quarter of 2010,” said Jeffrey Mezger, president and chief executive officer. “We believe our results for the quarter demonstrate that with the disciplined execution of our business strategies we are generating greater operational efficiencies and are making solid progress toward our goal of achieving sustained profitability.”

Total revenues of $501.0 million for the quarter ended August 31, 2010 rose 9% from the year-earlier quarter, reflecting an increase in housing revenues. Housing revenues increased from the year-earlier period as a result of a 4% year-over-year increase in the number of homes delivered and a 6% year-over-year increase in the average selling price. The Company delivered 2,320 homes at an average selling price of $214,200 in the 2010 third quarter, compared to 2,240 homes delivered at an average selling price of $202,800 in the year-earlier quarter. Third-quarter land sale revenues totaled $1.9 million in 2010 and $2.1 million in 2009.

The Company’s homebuilding business generated operating income of $8.4 million in the third quarter of 2010, representing an improvement of $50.5 million from an operating loss of $42.1 million in the same quarter of 2009. This marked the first time in nearly four years that the Company’s homebuilding business has posted quarterly operating income, which reflected higher gross profits, resulting from an increase in homes delivered and a higher housing gross margin, as well as lower selling, general and administrative expenses. The Company had $3.3 million of inventory impairment and land option contract abandonment charges in the 2010 third quarter, compared to $24.5 million of such charges in the year-earlier quarter. The Company’s third-quarter housing gross margin was 17.5% in 2010, an increase of 6.4 percentage points from 11.1% in 2009. Excluding inventory impairment and land option contract abandonment charges, the housing gross margin rose by 3.6 percentage points to 18.2% in the current quarter from 14.6% in the year-earlier quarter. Land sales produced break-even results in the third quarter of 2010. This compared to a loss of $8.4 million in the third quarter of 2009, which included $8.5 million of impairment charges related to planned future land sales.

Selling, general and administrative expenses decreased by $5.3 million, or 6%, to $78.6 million in the third quarter of 2010, compared to $83.9 million in the year-earlier period. The decrease reflected, among other things, the impact of Company-wide cost-saving initiatives and income associated with long-term, cash-settled compensation tied to the Company’s stock price, partially offset by higher legal and advertising expenses. As a percentage of housing revenues, the Company’s selling, general and administrative expenses improved by 2.7 percentage points to 15.8% in the third quarter of 2010, compared to 18.5% in the year-earlier quarter, and was substantially lower than the ratios of 27.5% and 22.4% in the first and second quarters of 2010, respectively.

The Company’s share of losses from unconsolidated homebuilding joint ventures totaled $1.9 million in the third quarter of 2010. This compared to a share of losses totaling $26.3 million in the third quarter of 2009, which included $23.2 million of impairment charges.

Financial services operations, which include the Company’s equity interest in KBA Mortgage, LLC, an unconsolidated mortgage banking joint venture with Bank of America, N.A., generated pretax income of $2.4 million in the current quarter and $5.6 million in the year-earlier quarter.

The Company posted a net loss of $1.4 million, or $.02 per diluted share, in the third quarter of 2010, including pretax, noncash charges of $3.3 million for inventory impairments and land option contract abandonments and an after-tax charge of $3.0 million to record a valuation allowance against the net deferred tax assets generated from the quarter’s loss. These results improved from the third quarter of 2009, when the Company generated a net loss of $66.0 million, or $.87 per diluted share, including pretax, noncash charges of $47.7 million for inventory and joint venture impairments and land option contract abandonments, and an after-tax charge of $35.5 million to record a valuation allowance against the net deferred tax assets generated from the quarter’s loss.

Net orders in the third quarter of 2010 were 1,314, down 39% from 2,158 in the year-earlier period. As a percentage of beginning backlog, the Company’s cancellation rate was 21% in the current quarter, compared to 20% in the 2009 third quarter. The Company’s backlog at August 31, 2010 totaled 2,169 homes, a 42% decrease from 3,722 homes in backlog at August 31, 2009. Potential future housing revenues in backlog at August 31, 2010 decreased 38% to $455.3 million, from $734.1 million at the end of the 2009 third quarter, primarily due to the lower number of homes in backlog.

“Despite generally favorable conditions for homebuyers, including high affordability and record-low mortgage interest rates, we experienced a year-over-year decline in our third quarter net orders due to a reduction in housing demand following the April 30, 2010 expiration of the federal homebuyer tax credit, a challenging economic environment, a decrease in our overall community count and a tough comparison against the strong net orders we reported a year ago,” said Mezger.

“The housing market continues to face significant headwinds from high unemployment and foreclosures, which are impeding a broader recovery, and recent net order trends in the homebuilding industry have injected additional caution into our near-term outlook,” continued Mezger. “Nonetheless, building on our improved operating results for the third quarter, we intend to maintain our strategic initiatives to open new communities in select locations that are expected to offer attractive potential sales growth, and to carefully evaluate land investment opportunities that meet our standards so that we are well-positioned, financially and operationally, for the long term.”

The Company delivered 5,428 homes in the nine months ended August 31, 2010, nearly unchanged from the year-earlier period, while the average selling price decreased 1% year over year to $208,100. For the first nine months of fiscal 2010, Company-wide revenues totaled $1.14 billion, compared to $1.15 billion for the year-earlier period. The Company posted a net loss of $86.8 million, or $1.13 per diluted share, for the nine months ended August 31, 2010, including pretax, noncash charges of $16.7 million for inventory impairments and land option contract abandonments, and an after-tax charge of $37.0 million to record a valuation allowance against net deferred tax assets. In the nine months ended August 31, 2009, the Company generated a net loss of $202.5 million, or $2.64 per diluted share, including pretax, noncash charges of $129.5 million for inventory and joint venture impairments and land option contract abandonments, and an after-tax charge of $89.9 million to record a valuation allowance against net deferred tax assets.

Diversity and Community within Joseph Chris Partners

Joseph Chris Partners is a leading Real Estate Executive Search Firm, but what you may not have known about our company is that….

JCP is a part of Associations and has Certifications in which most of our connections do not even realize.  Being that our recruiting firm is minority owned by a Hispanic Woman, we are part of WBENC, the Women’s Business Enterprise National Council, USHCC, the United States Hispanic Chamber of Commerce, MBE, the Minority Business Enterprise, HMBC, the Houston Minority Business Council, NMSDC, the National Minority Supplier Development Council and MBDA, the Minority Business Development Agency.  We are also active members and serve on several boards which include: HESI, the Hispanic Executive Society International and HAAPC, the Houston Area Association of Personnel Consultants where we serve on the Legislative Committee.

JCP is involved in the community by supporting GHBA, the Greater Houston Builders Association with their Christmas Give in bringing to the less fortunate.  JCP supports the Family Time Crisis Counseling Center and the Humble Area Assistance Ministries during the holidays which support single mothers and families in need.  We are involved in HESI, monitoring at risk children in Elementary and High Schools in our local area and we have a child that we sponsor in Rwanda through World Vision.

As a recruiting firm we will continue to serve by living our principles of People, Process, Planet and Profit.

Lennar posts better than expected Q3 financial performance

Lennar posted Q3 earnings this morning that either met or beat analysts’ consensus on performance across key measures. In light of a broader context of malaise in the market, it would seem Lennar is outperforming the new-home business environment nationally. The question is, are other publics doing that as well?

Here’s what the company says about its most recent financial quarter.

Third quarter net earnings attributable to Lennar in 2010 were $30.0 million, or $0.16 per diluted share, compared to third quarter net loss attributable to Lennar of $171.6 million, or $0.97 per diluted share, in 2009.

Stuart Miller, President and Chief Executive Officer of Lennar Corporation, said, “During our third quarter, as expected, our sales pace declined as a result of the expiration of the Federal homebuyer tax credit at the end of April. Although high unemployment and foreclosures have continued to present challenges for the national housing market, our communities have been less impacted than the broader market.”

To continue reading this article from Big Builder Online click here: http://www.bigbuilderonline.com/post.asp?BlogId=mcmanusblog&postid=553465&sectionID=391&cid=NWBD100920002

Happy 10th Anniversary Erica Lockwood!

Please join us in wishing Erica a happy 10th Anniversary with Joseph Chris Partners!  Erica has established deep roots within the building industry over the past 10 years and is well known for strong repeat business.  Erica has been essential in the branding and marketing of JCP as well and we appreciate all of her hard work and dedication!

Thank you Erica for 10 great years and Happy Anniversary!!!

Happy 10th Anniversary Darrla Kelly!

Please join the JCP Team in wishing Darrla Kelly a Happy 1oth Anniversary with Joseph Chris Partners!  Through hard work and dedication to the residential real estate industry, Darrla has remained a shining star at Joseph Chris and we would like to say thank you Darrla and Happy Anniversary!!

Happy Anniversary Joe & Victoria Ramirez, Founders of Joseph Chris Partners!

Please join us in wishing Joe and Victoria Ramirez, Founders of Joseph Chris Partners a Happy 44 years of marriage! Since retirement, they continue as a team dedicated to the community and with a non-profit they created called Hispanic Executive Society International. They have developed a network of Executives committed to mentoring middle school children and raising college scholarships for our future leaders. A toast for Love, Life and Happiness!

Happy 4 Year Anniversary Mary Weir!

Please join me in wishing Mary Weir a Happy 4 year Anniversary with Energy Executive Search/JCR Executive Search International – both are Joseph Chris Partners companies’. Mary is exceptional at expansion of knowledge and able to communicate at a high level of professionalism in many sectors of our business. She has helped our company branch into sister sectors where the economy has not been as greatly affected. We thank her for her continuous grind and dedication to our company, clients and community!

Happy Birthday Erica Lockwood!

Please wish Erica Lockwood, Executive Partner of Joseph Chris a very Happy Birthday! Erica has been with JCP for 10 years! Enjoy your day Erica!!

Tanger building $60 million outlet center in Mebane during struggling economy

By Fran Daniel | Journal Reporter

Published: August 18, 2010

MEBANE

As many retailers across North Carolina try to recover from the recession, a sign of optimism is taking shape in Mebane.

Tanger Outlet Centers Inc. is building a $60 million, 317,572-square-foot outlet shopping center just off Interstate 40/85. The company said yesterday that the center will open Nov. 5, offering items at an average of 40 percent off retail prices. It will have 80 stores.

Click here to read more of this article:
http://www2.journalnow.com/content/2010/aug/18/discounting-tanger-building-60-million-outlet-cent/