Strategies & Market TrendsThe Residential Real Estate Crash Index

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To: jimmg who wrote (71898)2/10/2007 11:52:27 PM
From: TobagoJack
of 306829
wrong picture

try this one or that one

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To: Don Green who wrote (71902)2/11/2007 12:12:05 AM
From: Jim McMannis
of 306829
Typically those areas are desirable and often where the first settlers settled. In FL, On or near the water.
I think it becomes feasible when the price of the dirt goes way up.
When the bubble bursts all bets are off.

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To: Jim McMannis who wrote (71876)2/11/2007 12:15:17 AM
From: Jim McMannis
of 306829
For anyone intersted here's a "legit" list of symbols for sub-prime lenders. A lot of them have already talen a hit. A few are just starting to breakdance.


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To: Jim McMannis who wrote (71844)2/11/2007 9:14:42 AM
From: Pogeu Mahone
of 306829
What do you mean?
People move to FL for the spring & summer?

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From: Travis_Bickle2/11/2007 9:58:46 AM
of 306829
'Feeding frenzy' ahead for large home builders

Jerry W. Jackson | Sentinel Staff Writer
Posted February 10, 2007

Consolidation within the home-building business has slowed dramatically, but the pace should pick up again in about a year, and some markets -- including Florida -- could see a "feeding frenzy," industry experts said Friday at the International Builders' Show in Orlando.

The competitive forces that drove consolidation in the 1990s and earlier this decade still exist and will continue to spark mergers and acquisitions, though for now the slowdown in home sales has stunted the trend, said Gopal Ahluwalia, vice president of research for the National Association of Home Builders.

"Land is an issue," he said, as many builders have been canceling options on property or selling off tracts as demand for new homes has slackened. Large builders had been acquiring smaller builders in part to gain access to more developable land, but as demand has softened, the pace of such acquisitions slowed.

Many large builders are willing to walk away from undeveloped property now because they are betting they will be able to purchase "better land at better prices" a year or so from now, said Michael P. Kahn, president of a Ponte Vedra Beach brokerage and consulting firm.

Publicly traded builders are accumulating "lots of cash" and at some point Wall Street will pressure them to grow again through consolidation, said Jody Kahn Kline, an industry consultant with Michael P. Kahn and Associates, the firm founded and run by her father.

Within about 12 months, "mergers and acquisitions will be back on the radar screen," she predicted. In the meantime, builders that might be buyout candidates have time to "polish themselves" and "get ready for the feeding frenzy."

The combined market share of the 10 largest residential builders in the U.S. rose from 8.8 percent in 1989 to 22.6 percent in 2005, and Ahluwalia said he expects that trend to continue long term.

The International Builders' Show, which is open only to industry professionals, wraps up a four-day conference and trade show today at the Orange County Convention Center.

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To: Dan3 who wrote (71900)2/11/2007 11:08:44 AM
From: John Chen
of 306829
Dan3,re:"Then shrub blew all the results of years of hard work and savings like a crack whore stumbling from her john to her pusher.". You ain't see nothing yet. The damage is at least
couple of decades, if not generations.

With luck, this is not as bad as the last emporor of Ming's
dynastry, 'taxed into the future(4th?) generations to make
sure the militray was happy'.

But don't blame Bush, it's more than one persons to do this
much of damage. And don't blame those person's either, they
just come on the stage of life cycle of 'gov/politics':
born, grow up, mature, rotten and disappear.

Where the 'money', 'gun', 'power' and 'goodlife' on the
tables, those involved could never get out. Good thing is
they won't get blame for the damage until years/years later
where the controlling power faded.

Hopefully USA is not at the state with 'Marshall law' (like
Taiwan for 30-40 years). Historic tragic events can be
suppressed under those condition.

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From: Travis_Bickle2/11/2007 11:44:07 AM
of 306829
HSBC U.S. business to target migrant workers: Telegraph
HSBC sees less risk in immigrants as customers: Telegraph

Out of the frying pan into the fire.

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To: Travis_Bickle who wrote (71909)2/11/2007 11:57:17 AM
From: jimmg
of 306829
<HSBC sees less risk in immigrants as customers>

Migrant workers are experts in document and identity fraud. This is great. HSBC will be writing off 80% of the loans in my opinion.

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To: Ramsey Su who wrote (71123)2/11/2007 12:44:44 PM
From: orkrious
of 306829
Ramsey, re LEND's purchase of AAMES, there's not a whole lot of information available to aid in determining what kind of problems the acquisition will cause.

Of course, AAMES had a retail presence that LEND didn't have prior to the acquisition, and a retail network is just an added layer of expense in a contracting market.

Last summer LEND said the acquisition will be accretive this year. With volumes plummeting, I doubt that prediction will happen.

LEND spent $77 mil in cash on the acquisition (plus stock) when it was completed in October. They had $200 mil in cash on their balance sheet as of the end of September.

My guess is that the AAMES acquisition was untimely and it certainly will hurt LEND's bottom line. But I doubt it will be a determining factor in whether or not LEND survives. That issue is more likely to be determined by subprime market liquidity, which I suspect may prove to be an oxymoron.

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From: Smiling Bob2/11/2007 1:00:28 PM
of 306829
Sorry if this was already posted.
Brings KB's practices to light
How KB Home CEO's pay went through the roof
With other corporate chiefs on his board, Bruce Karatz made $232.6 million in 3 years, far more than his peers.
By Kathy M. Kristof and Annette Haddad, Times Staff Writers
December 17, 2006

KB Home may be the fifth-largest U.S. home builder, but it was No. 1 when it came to pay for its chief executive.

Over the last three years, former CEO Bruce Karatz made $232.6 million in compensation. That's nearly three times what the chief executives earned at Pulte Homes Inc. and Centex Corp., which are bigger and more profitable.

Among the nation's 12 largest builders, Karatz's closest competition came from Robert Toll, the CEO of Toll Bros. Inc. He pulled in $138.7 million over three years — a sum that Karatz outdid by nearly 70%.

Karatz, 61, retired under pressure last month after an internal investigation found that he picked stock option grant dates that inflated the value to himself and other executives.

Under his employment agreement, he could walk away with as much as $175 million in severance pay, pension benefits and stock options, a package that has prompted fresh criticism from large shareholder groups, who say Karatz has been overpaid for years.

To put Karatz's compensation in context, the Los Angeles Times reviewed pay packages for chief executives at the 12 largest home building companies for 2003 through 2005.

Karatz emerged as the clear leader, despite the fact that his Westwood-based company's 2005 results — $9.4 billion in revenue and $842.4 million in profit — put it in the middle of the pack.

So how did Karatz come out on top?

Compensation experts point to two features in his contract that helped guarantee outsized earnings.

The first, and most significant, was a clause that promised Karatz a bonus between 1% and 2% of KB's earnings before taxes, said David Leach, managing director of Strategic Apex Group, a compensation consulting firm in Los Angeles. Other large publicly traded builders also reward their CEOs with bonuses based on a percentage of pretax earnings, but usually only after the company meets profit thresholds. Only Lennar Corp. CEO Stuart A. Miller has a pay plan similar to Karatz's, but it's not nearly as lucrative. He can earn 0.5% to 1% of pretax profit.

Tying compensation to pretax profit without other restrictions all but guarantees massive payouts at a company of KB's size, Leach said.

"You might see something like this in a start-up company, but not at a major corporation," he said. "The numbers just get way too large."

Secondly, Karatz's pay formula also stipulated that his percentage would be based on how much the company earned before paying executive salaries and bonuses, which were substantial at KB Home, said Paul Hodgson, senior research associate at the Corporate Library, a research firm based in Maine.

"Any bonus formula that has to calculate income before you've paid all your bonuses is obviously paying too much out in bonuses," Hodgson said.

Karatz may also have benefited from a friendly board of directors, in particular the five-man compensation committee, which is led by Occidental Petroleum Chairman and Chief Executive Ray Irani.

Irani is no stranger to high pay. Oxy paid him $49 million in cash and stock and gave him options with a potential value of $97 million in 2005. Also on the committee are two other chief executives: Leslie Moonves of CBS Corp., who earned $22.8 million in 2005, and J. Terrence Lanni, chairman and CEO of casino company MGM Mirage, who earned $9.6 million and was granted options with a potential value of $35.5 million.

"We are always leery when you have another company's CEO on a compensation committee," said Ed Durkin, director of corporate affairs at the United Brotherhood of Carpenters, which has a $40-billion pension fund. "They don't want people to say no to them, so they are particularly generous."

A fourth member of the committee is James A. Johnson, who has been dubbed a "problem director" by the AFL-CIO for serving on the board of UnitedHealth Group Inc. That company's CEO, William W. McGuire, retired this year in the wake of a stock-option scandal. The fifth member of KB's compensation panel is Luis Nogales, managing partner of Los Angeles private equity firm Nogales Investors.

The members declined to be interviewed about how they determined Karatz's pay formula. Karatz and KB Home executives also declined to comment.

Named CEO in 1986, Karatz has been lauded by Wall Street and industry peers for rebuilding the company's image after it was hit with a series of lawsuits alleging shoddy construction in the early 1990s, when it was known as Kaufman & Broad.

"Bruce was among the best CEOs," said Greg Gieber, an analyst at A.G. Edwards & Sons. "He was candid and had a good understanding of what builders are facing."

Karatz has defended his pay, saying it was tied to performance. From 2003 to 2005, KB Home's profit more than doubled and its revenue rose 60%. And from the end of 2000 and to the end of 2005, the company's stock price rose fourfold.

But those results were hardly unique during the recent home construction boom. The two biggest builders, Pulte and Centex, posted similar profit growth and stock gains. Several other builders fared even better. In the same period, Hovnanian Enterprises' stock rose tenfold and Ryland Group's grew sevenfold.

"A trained monkey could have run a publicly traded home builder over the past three years and done pretty well," said Durkin of the carpenters union.

Amy Borrus, deputy director at the Council of Institutional Investors, faulted KB Home's board for not ensuring that Karatz's pay was more in line with what other home builder CEOs received.

"This suggests a board that was asleep at the switch," she said. "If your CEO is earning that much more than all of his peers, you might want to take a look at why that is, and whether it's justified."

To many directors' way of thinking, however, paying an executive too much is better than risking the loss of a prominent leader.

"In business, good people are hard to find, and if you've got one that's really doing a good job, you want to make sure that there isn't another board picking your guy off — because that will really cost you and your shareholders money," said Roger Mertz, a partner at San Francisco-based law firm Allen Matkins who advises directors and companies.

KB Home executives declined to say how much Karatz's successor, Jeffrey T. Mezger, would be paid as CEO. Those figures will be disclosed when the company files its annual report and proxy statement in the spring, spokeswoman Caroline Shaw said.

As KB's executive vice president and chief operating officer, Mezger earned $28.3 million in cash and stock-based pay over the last three years. He also received stock options with a potential value of $55.4 million, assuming that the company's stock price rises an average of 10% a year, according to KB's public filings.

In the aftermath of Karatz's resignation, some of KB's biggest stakeholders say they intend to look closely at the company's compensation plan as soon as it's available.

"Karatz's executive compensation package has created more than a blip on our radar screen," said Pat Macht, spokeswoman for the California Public Employees Retirement System. "It would appear that this is another example of compensation that desperately needs addressing."


Compensation comparison

2003-05 2003-05 2003-05
'05 revenue salary* value of stock total pay
CEO Company (In bill.) (In mill.) options (In mill.)
Richard J. Dugas Jr. Pulte Homes $14.7 $30.7 $57.6 $88.3
Timothy R. Eller Centex 14.4 51.6 34.7 86.3
Donald J. Tomnitz D.R. Horton 14.2 27.6 4.6 32.2
Stuart A. Miller Lennar 13.9 58.1 24.8 82.9
Bruce Karatz KB Home 9.4 80.6 152.0 232.6
Ara K. Hovnanian 5.9 44.1 93.5 137.6
Hovnanian Enterprises
Robert I. Toll Toll Bros. 5.8 88.4 50.3 138.7
Dwight Schar NVR 5.3 40.0 29.4 69.4
Ian J. McCarthy Beazer Homes 5.2 22.6 5.9 28.5
Larry A. Mizel MDC Holdings 4.9 54.7 59.3 114.0
R. Chad Dreier Ryland Group 4.8 72.4 na 72.4
Stephen J. Standard 4.2 47.8 4.7 52.5
Scarborough Pacific

*Includes salary, bonus, stock awards and other compensation, excluding options.

**Realizable value, assuming that the company's stock climbs an average of 10% a year over the life of the options. In millions.


Source: Times research

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