Housing Giants - June 23, 2008 - (Page 26)

a tax refund, which the company said is “an anticipated $294 million.” The IRS allows businesses to offset taxes paid over the previous two years if they have a loss in the current year. This is a strong motivator for some to sell now at a considerable loss. “The tax lookback could be the difference between bankruptcy and non-bankruptcy for a lot of builders,” says John Burns, an HG columnist and president of John Burns Real Estate Consulting, based in Irvine, Calif. Centex’s move reflects a major strategic recalibration that other builders may look to emulate. “This transaction is consistent with our near-term goals of reducing our land supply and generating cash,” said Centex CEO Timothy Eller in a prepared statement. “This land sale learn More Watch Video See cNBc-TV’s coverage of Centex’s land deal. Read what The Dallas morning News had to say. accelerates our move to a more assetlight operating model.” Eller said in conference call with financial analysts on May 1 that Centex has reduced its lot holdings by 70 percent from its peak supply two years ago, and that the company is reducing the number of homes built on spec and will transition to building only pre-sold homes. The challenge of obTaining capiTal Although most builders likely want to reduce their land holdings, the task is complicated by a very tight capital market with few willing to lend at favorable rates. The Centex deal was capitalized without debt, the company said. In the capital markets, the huge volume of foreclosures and falling property values has overwhelmed many lenders. “Banks are reacting pretty slowly to this,” Burns says. “Information flow to the banks about how difficult this market is has been pretty slow. Appraisals have been far more than the asset was really worth. Builders have been slow to take builders who want to prepare for the upswing should get moving on the entitlement process, says David clinger. 26 HOUSING GIANTS.6.23.08 www.HOUSINGGIANTS.cOm http://www.cnbc.com/id/23279110 http://www.housingzone.com/articleXml/LN776051253.html http://library.corporate-ir.net/library/11/112/112195/items/291655/Q408_Transcript.pdf http://www.realestateconsulting.com/home.aspx http://www.realestateconsulting.com/home.aspx http://phx.corporate-ir.net/phoenix.zhtml?c=112195&p=irol-newsArticle&ID=1123922&highlight http://www.housinggiants.com

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Housing Giants - June 23, 2008 Contents Viewpoint News and Moves Sell Workforce The Land Dilemma

Housing Giants - June 23, 2008

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