Troubled home builder Standard Pacific made headlines last month with its push to sell 200 homes in 10 days in Southern California. To lure buyers, it dangled free plasma TVs and cut-rate mortgages.
Standard Pacific may not have advertised its "Mission: Possible" promotion in Palm Beach County, but it did unload a chunk of vacant land here last week for 20 percent less than it paid at the height of the housing boom. And instead of bait in the form of a TV, it offered the buyer a mortgage.
In September 2005, Standard Pacific division Westbrooke Homes paid $18 million for 54 acres just south of Belvedere Road along Florida's Turnpike. Two years later, the builder has sold the property for $14.25 million, a loss of $3.75 million.
The price cut provides another indication of how far the housing market has fallen since its 2005 peak. Then, speculators were lining up to buy every house that builders put on the market. Now, sales volumes have plummeted, and Palm Beach County builders have laid off hundreds of workers.
Standard Pacific hoped to build 266 homes on the property along the turnpike. The new owner, West Palm Beach developer Steve McCraney, has much different plans. He wants to build 600,000 square feet of industrial space.
Irvine, Calif.-based Standard Pacific (NYSE: SPF, $5.83) was so eager to sell by the Sept. 30 end of quarter that the deal took only a week to negotiate, McCraney said. Standard Pacific even gave McCraney a $10.25 million mortgage on the property, according to property records.
"The market is drastically moving down," McCraney said.
While the housing market is in a deep slump, Palm Beach County's industrial market remains strong, with low vacancy rates and soaring land prices.
That represents a significant shift in the local real estate market. Two years ago, home builders were snapping up industrial land to build homes, leading observers to wonder where the county's warehouses would be built.
This summer, McCraney lost a bidding war for 100 acres of industrial land on the other side of the turnpike. In that deal, Duke Realty paid $10 a square foot for vacant land; McCraney paid Standard Pacific $6 a square foot.
Standard Pacific executives couldn't be reached for comment, but the builder's shares have been in free fall in the past two years. After peaking at $49 in 2005, the builder's shares traded as low as $5.49 last week.
Robert Curran, who analyzes the housing industry for Fitch Ratings, wasn't surprised to hear that Standard Pacific sold the land at a loss.
"The company is focused on generating cash flow," Curran said. "Standard Pacific's exposure is heavily concentrated in California and Florida, and both of those markets are pretty depressed."
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