Home Builders Association of Chester and Delaware Counties

HBA Newswatch

May 13, 2008

TOUGH TIME IN REAL ESTATE MARKET
The current state of the economy is affecting businesses everywhere, but few are taking it on the chin quite the way developers and landlords seem to be.Case in point: Last week, representatives from Chetty Builders sat down with Coatesville officials to inform them of changes in their plans to construct a seven-story tower in the city.
The building is scheduled to be constructed at Third Avenue and East Lincoln Highway and was initially planned to house 60 condominiums, each with a price of $176,000. Now the plan is to expand the number of residences to 72 and rent them at market rate prices for several years.
Eventually, once the real estate market improves, the developer will revisit its plans to sell the residences as condominiums.
So why the change? Mostly because the lender financing the project got cold feet due to the slow real estate market. As part of the original loan agreement, Chetty needed to obtain signed agreements of sale for at least 10 of the residences. But according to company officials, the lender increased that to 50 percent and eventually to 90 percent, forcing the developer to consider other options.
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HOUSING'S RIVER OF RED INK
By Linda Loyd
Inquirer Staff Writer
Orleans Homebuilders Inc. yesterday reported a hefty loss for its third quarter, with orders for new homes down 40 percent and contract cancellations at a rate of 31 percent.
The Bensalem company said it lost $55.7 million, or $3.01 a share, for the three months ended March 31 compared with a loss of $51.9 million, or $2.81 in the year-ago period.
Revenue in this year's quarter was $113.3 million compared with $146 million in the same quarter last year. However, the average selling price was higher for the latest quarter, $449,000, compared with $424,000 in the year-ago period.
"We do have a game plan for our future," chairman and chief executive Jeffrey P. Orleans said on a conference call with investors. "We have significantly improved our balance sheet. In the last few quarters, we have increased our liquidity and improved our capital structure and reduced our inventory levels."
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TOLL BROTHERS PRELIMINARY 2Q SALES FALL 30 PERCENT
HORSHAM, Pa. (AP) — Luxury home builder Toll Brothers says preliminary results show homebuilding revenue fell 30 percent in its fiscal second quarter amid a weak spring selling season.
Horsham, Pa.-based Toll Brothers Inc. also says it expects to continue to face “challenging times” ahead, given soft conditions in most markets.
Second-quarter homebuilding revenue slid to $817.9 million from $1.17 billion a year ago. The company expects to report quarterly pretax charges of $225 million to $375 million to write down land values.
Backlog dropped by half to $2.08 billion from $4.15 billion at the end of the 2007 quarter. But, the cancellation rate improved to 24.9 percent from 28.4 percent in the fourth quarter, and 29.8 percent a year ago.
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