Hovnanian (NYSE: HOV) Partners with Blackstone in $125mil Land-Banking Deal

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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Hovnanian (NYSE: HOV) Reports Unexpected Profit As Home Orders Surge

Shawshank, VA 6/6/12 (StreetBeat) -- Hovnanian Enterprises Inc. (NYSE:HOV), the largest homebuilder in New Jersey, reported an unexpected profit for its fiscal second quarter as orders increased 52 percent amid rising U.S. demand for new houses. The shares surged.

Net income for the three months ended April 30 was $1.8 million, or 2 cents a share, compared with a loss of $72.7 million, or 69 cents, a year earlier, the Red Bank-based company said today in a statement. The average estimate of nine analysts surveyed by Bloomberg was for a loss of 32 cents a share.

Hovnanian, which reversed eight straight quarters of losses, has been buying land at distressed prices to boost margins as the housing market recovers. Purchases of new homes in the U.S. rose 3.3 percent in April from the previous month to an annual pace of 343,000, the Commerce Department said May 23.

“We still have fundamental concerns with the company, given its performance over the past several years,” Vincent Foley and Cedric Morris, analysts with Barclays Plc in New York, said in a June 4 note to clients. “However, its operations should benefit from the recent increase in homebuyer demand during the 2012 spring selling season.”

Hovnanian’s net contracts for the period jumped to 1,775 homes from 1,166 a year earlier, the company said.

The stock gained 19 percent to $2.02 at 9:40 a.m. in New York. It advanced 17 percent this year through yesterday, compared with a 21 percent gain for Bloomberg’s 13-member homebuilder index.

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