Orlando, FL 7/13/12 (StreetBeat) –Hovnanian Enterprises Inc. (NYSE: HOV) will partner with Blackstone Group LP’s credit arm in a land-banking deal for up to $125 million. In the deal, Blackstone will purchase housing development sites from HOV and then option them back to the homebuilder, allowing HOV to take advantage of the recovering housing market.
Blackstone’s GSO Capital Partners LP has already acquired six parcels totaling 620 lots at $65 million, which includes both acquisition and future development expenses. Hovnanian will be able to buy the lots back on a quarterly basis.
“We firmly believe that the U.S. residential real estate market has bottomed and that Hovnanian is uniquely positioned to capitalize on the recovery,” Doug Ostrover, GSO founding member and partner, said in the statement.
The demand for new U.S. homes has rapidly increased after sales fell to a record low in 2011. According to the Commerce Department, purchases reached a two-year high in May.. putting Hovananian in an andvantageous position. In its secord quarter alone, Hovnanian, based in Red Bank, New Jersey, reported an unexpected profit as orders jumped 52%.
The companies plan to identify new land parcels totaling as much as $60 mil to add to their portfolios. Blackstone intends to raise its equity stake by exchanging $15mil of HOV’s notes for about 3.9 million shares.
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