Toll Brothers' Losses are Less than Expected and Mortgage Rates Drop to Two-year Low

Palm Coast, FL – Yesterday, Toll Brothers, one of the country’s largest builders of upscale homes, announced a loss of $81.8 million for the fourth quarter ended on October 31. This compares with a profit of $173.8 million, or $1.07 per share one year ago. Analysts had expected a loss of 79 cents per share. The loss was the company’s first in its 21 years as a public company.

The announcement included the following highlights:

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Toll has reduced the number of building lots under its control by 35% to 59,300 and the number of developments from 325 to 315. This number is expected to be lowered further to 300 by next October.
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The results included non cash pretax write-downs of $314.9 million for developments open for sale, land, and land options.
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Exclusive of write-downs, Toll posted a profit of 72 cents per share compared with $1.49 a year ago.
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The company has $900 million in cash and more than $1.2 billion under its bank credit facility.
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New home orders were 1,073, off 33% while the value of new contracts fell 38% to $693.7 million.

Toll Brothers' shares rose 5.8% on the news. Chief Executive, Robert Toll said, “By any measures, fiscal 2007 was the most challenging of the 40 years that Toll Brothers has been in business.”

In other news, the 30-year mortgage dropped sharply again this week to an average rate of 5.96%, the lowest rate in two years. Home-building shares rose 8%, according to the benchmark Dow Jones U.S. Home Construction Index.

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source: gotoby.com

Palm Harbor and Oak Branch Golf Courses - An Update on Public Golf in Flagler County, FL

Palm Coast, FL - A recent email from "Friends of Golf" provides an update on the two future public golf courses in Palm Coast and Flager County, FL. Thanks to Jim Jones and the Friends of Golf. Here is an excerpt from the email:

Palm Harbor Golf Course

By now you know that the City has completed the acquisition of the Palm Harbor Golf Course. All the documents have been signed. All i’s dotted and t’s crossed, including the lease agreement for the driving range property. All that awaits is the renovation and reopening of the course. Of course, the devil’s in the details.

Clifton, Ezell and Clifton (CEC) of Deland, FL have been hired to develop a renovation plan, convert it into construction plans, develop bid specifications, assist the City in analyzing the bid responses and selecting contractors and finally, supervise the construction project to Course opening.

CEC has significant experience in the golf course design area. Their portfolio of project is impressive. They have designed and built 440 holes in The Villages alone. Their website is http://www.cecgolfdesign.com/ .

The steering committee of the Friends of Golf (www.flaglerfriendsofgolf.org) met with Ken Ezell and George Clifton on Monday, December 3rd, their first day on the job. There was a free flow of ideas between the architects, FOG members as well as the City officials that were in attendance. Carl Cote has been appointed Project Manager for the City of Palm Coast.

Many of the issues discussed centered around the fact that most citizens like the Palm Harbor course and while it needs to be updated to 21st century standards there should not be a radical redesign. We discussed the use of drought tolerant plants as well as more maintenance-free course features. All designed to keep maintenance costs to a minimum. Strong consideration to becoming an Audubon Society Cooperative Sanctuary golf course will be given. The irrigation system will be designed to incorporate the use of recycled water when it becomes available.

The committee pointed out areas of concern to the architects. Items such as drainage in certain areas such and Holes 15 and 16 were pointed out. Shade problems on certain greens (e.g., Hole #8 and 13) were also discussed.

CEC has been on the course several times and now that they have a survey map of the property they will be able to better understand what alternatives are available to them. They will have a concept plan available after the first of the year. The City plans to hold an informational session for neighbors and other interested parties to announce the plan when it is available. CEC’s plan is to have the Course open for play in the 4th quarter of 2008.

Oak Branch Golf Course

Oak Branch Golf Course has been renamed Grand Reserve Golf Course. It is located at 235 Oak Branch Blvd, Bunnell, FL which is 1.7 miles north of State Road 100 (or 4.5 miles south of Palm Coast Parkway) on the east side of U.S.1. The phone number is 386-313-2966. The Course is owned by Capstone Golf, (www.capstonegolf.net) the same folks that own St. Augustine Shores.

The Course is scheduled to open on January 5th, 2008. Greens fees will be $39.95 with discounts for “Twilight” ($26.00) and “Dusk” ($20.00) play. Capstone has a customer loyalty program which allows for discounts of up to 30% depending on your annual level of spending. The discount for 0-$500 is 10% so you qualify for a 10% discount immediately. Sign up for the customer loyalty program at the pro shop when you play or on their website.

Jim Jones

Friends of Golf Steering Committee

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source: gotoby.com

Hammock Dunes Tower Condominium Developer, WCI, Facing Hard Times

Palm Coast, FL – Hammock Dunes condominium developer, WCI Communities, was named America’s Best Builder in 2004 by both the National Association of Home Builders and Builder Magazine. Heavily dependent on the tower condo market, WCI is at a critical juncture. WCI, which started building in 1946, is self-described as “a leading builder of traditional and tower residences in highly amenitized lifestyle communities.”

On December 7, 2007, WCI revealed it had initialed an extension to a limited waiver of performance to its three major credit vehicles:

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Senior Secured Revolving Credit Agreement (Credit Facility)
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Term Loan Agreement (Term loan)
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Revolving Tower Construction Agreement (Tower Facility)

The limited waiver was necessary because WCI was unable to comply with the Fixed Charge covenant of the Credit Facility and Term Loan. The extension, set to expire January 7, 2008, follows a previous waiver of performance dated August 17, 2007 that expired on December 7.

WCI states: “Until finalized it is not certain that we will reach agreement or obtain approval of the anticipated longer-term amendment. This amendment will be expensive and there can be no assurance that we will be able to comply with the amended covenants and other requirements. If WCI is unable to obtain the amendment or comply with its terms, the lenders would have the right to exercise remedies specified in the loan agreements, including foreclosing on certain collateral and accelerating the maturity of the loans, which could result in the acceleration of substantially all of our other outstanding indebtedness. In such a situation, there can be no assurance that we would be able to obtain alternative financing. In addition, if the Company is determined to be in default of these loan agreements, it may be prohibited from drawing additional funds under the Credit Facility and the Tower Loan, which could impair our ability to maintain sufficient working capital. Either situation could have a material adverse affect on the solvency of the Company.”

WCI released its third quarter 2007 results November 8. The entire press release covering the results can be view at WCI Quarterly Report. Highlights include:

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Net loss of $69.7 million vs. profit of $10.7 million for the same period last year
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Loss of $118.8 million for the 9-months ended September 30
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Tower homebuilding orders were negative with 89 defaults and 8 gross new orders

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Ginn has Submitted Plans for Upscale Development near Charleston, SC

Palm Coast, FL – The Ginn Company has submitted plans to the City of Charleston, SC for an upscale development on 975 pristine acres along the Stono River on James Island. The plan calls for 240 homes. The city had previously been unsupportive of an initial plan that included 600 single family homes and marsh front condominiums and a subsequent submittal for 310 homes.

The property, know as Grimball Farms, is mostly marshland. Only 343 acres can be developed. Several Civil War battle sites on the property will be preserved.

If the plans are approved, Ginn will sell the project to a group of investors who have hired a Greenville, SC based development group headed by golf legend Gary Player to build out the site. The group would build a public golf course designed by Player. Grimball Farms will not be gated. City council members who were interviewed indicated that they were leaning in favor of the new plans but the reaction of local residents is not yet known.

Ginn purchased the property for nearly $8 million in 2004. Investors have the property under contract for $28 million according to Bobby Masters, Ginn’s executive vice president. He said that the company wants to sell Grimball Farms so they could focus on two other Charleston area projects. “When we bought Grimball, we didn’t have either of those properties. They changed our focus,” he said. The two projects are Patriots Point in Mt. Pleasant and the Promenade resort off Morrison Drive on the Charleston peninsula.

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Door Opens for Refinancing as FHA Loan Expansion Heads for Senate Vote

Palm Coast, FL – The Senate yesterday agreed in committee to extend the FHA program that allows government insured, low down payment, low interest loans to minority and moderate-income home buyers. The move could affect hundreds of thousands of potential home buyers and those needing to refinance from ARMs that have adjusted upward from low “teaser” rates. A final Senate vote is expected Monday. The House passed a similar bill in September 348 to 72.

In the measure, the down payment requirement is reduced from 3 percent of the loan amount to 1.5 percent. The maximum amount of a loan will increase to $417,000. Loans will be fixed rate only. The FHA charges a fee to buyers to cover the cost of the program. This fee can be as high as 3 percent under the Senate proposal. The bill is expected to fill some of the gap left by the collapse of the subprime mortgage market.

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source: gotoby.com