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Strategies & Market Trends : Mish's Global Economic Trend Analysis -- Ignore unavailable to you. Want to Upgrade?

To: Elroy Jetson who wrote (23411)	2/11/2005 10:04:48 PM
From: benwood	Respond to of 116555

Obviously he's one person who doesn't fight the trend. Probably has low blood pressure, too. "One mortgage broker I know ..."

To: Elroy Jetson who wrote (23411)	2/11/2005 10:41:51 PM
From: John Vosilla	Read Replies (2) \| Respond to of 116555

LA Times Article from May 1999 The Presley Cos. said Tuesday that its board of directors has given preliminary approval to a sweetened offer from builder William Lyon to buy controlling interest for slightly more than $11 million. The agreement calls for Presley to then purchase the assets of Lyon's company, William Lyon Homes Inc., for about $48 million. Lyon, a longtime Southern California developer, would wind up in control of both Newport Beach-based home-building companies and several pieces of prime California real estate. His new offer for the Presley stock is worth 65 1/2 cents per share, up from a previous bid of 62 cents. The complex deal is part of an ongoing consolidation trend in the Southern California home-building industry. It could allow the two firms to better compete in a regional residential development industry that has increasingly become dominated by large, publicly traded builders such as Kaufman & Broad Home Corp. in Los Angeles and Centex Corp. of Dallas. "It's becoming harder and harder to stay in the marketplace without the deeper financial resources that larger companies have," said Gary Wescombe, a partner at E&Y Kenneth Leventhal Real Estate Group, an Orange County consulting firm to the home-building industry. He added: "By having larger entities with greater equity and better access to capital, they're able to more effectively compete." Clear-cut advantages exist for both companies, analysts said. Presley would acquire land and homes in various stages of completion in at least 15 sites throughout California, most of them in the highest-priced housing markets in the country. With home prices at near-record highs, analysts said, Presley's revenue could be improved at a time when the company has few homes completed and ready to sell. Lyon, meanwhile, as chairman, would be head of a publicly held company that has the ability to attract capital at lower rates, analysts said. "Bill Lyon would like to be a bigger player in an expanding market," said Russ Valone, president of Market Profile/Residential Trends, a San Diego-based firm that tracks new-home development in Southern California. "This allows him to step up and play with the big boys," he said. In new-home sales last year, Lyon Homes ranked 21st in Orange County with 117 sales. Presley placed 31st with 70 sales. Combined, the firms would rank 14th with 187 sales, according to the Meyers Group, an Irvine-based company that tracks new-home sales. Struggling to recover from a prolonged slump that has lasted for much of the decade, Presley said in March it incurred about $1.3 million in costs last year associated with its effort to find an investment partner to aid its recovery. The company posted a $9.8-million profit for 1998, versus a loss of $89.9 million in 1997. Revenue grew to $368.3 million, up 12% from $329.9 million. Lyon, who owns Lyon Homes, is Presley's largest shareholder, with a 16.4% stake, according to proxy statements filed with federal regulators. Under terms of the deal, Lyon would raise his ownership stake in Presley to between 49% and 49.9%, securing his control of that company. Then, Presley would acquire the assets of his Lyon Homes for $48 million. The new bid is Lyon's latest effort to consolidate his home-building operations. The companies have been negotiating since last summer, when Lyon offered to buy a bigger piece of the company for $18 million cash, or 40 cents a share. That was less than half of what Presley's stock was trading for at the time, and the offer was rejected by Presley's board. Lyon has since proposed acquiring smaller interests in Presley at higher per-share prices, culminating in the present 65 1/2-cents-per-share offer. The companies can continue negotiating a final agreement until mid-July, Presley said.

To: Elroy Jetson who wrote (23411)	2/12/2005 2:27:10 PM
From: ild	Read Replies (1) \| Respond to of 116555

How's that: $125 million for 80 acres (800 homes)? Lennar Corp. — one of the nation's largest homebuilders, with projects in Orange County — announced Wednesday that it was bidding on all four parcels. The company won after placing minimum bids of $125 million and $60 million on two of the parcels totaling 1,100 acres. ..... Parcel 1 has 80 acres dedicated for 800 homes latimes.com

To: Elroy Jetson who wrote (23411)	2/12/2005 3:38:15 PM
From: Chispas	Respond to of 116555

GSEs- Government Sponsored Excesses ... ... ... ... ... ... ... by Arthur Radley, Friday February 11 2005 The fraternal Fubar twins, Fannie (FNM) and Freddie (FRE), got clocked today. Fannie Fubar hit a fresh 12-month low. What we have here is a secular problem. If Fannie and Freddie had been floated in the early 1950s, probably they would have been required to maintain 25% capital to back a mortgage portfolio limited to 50% loan-to-value. Real estate prices had collapsed in the 1930s, so mortgage lending was viewed as speculative and risky. Even today, commercial banks need to maintain 8% capital. Fannie and Freddie, by comparison, are down in the 3% range, with a far riskier MBS portfolios of indeterminate duration and negative convexity. It makes no sense. OFHEO's directive for Fannie to increase its capital by 30% is only the first step on a long road toward regulatory conservatism in the coming post-Credit Bubble age. A transition from wild 20% annual growth with 3% capital to actual asset shrinkage with 10% or 15% capital probably is impossible. If it could be done, it would imply drastically lower return on equity, and stock prices perhaps 10% or 20% of what they are today. Relentless repetition of Fannie's '$9 billion capital shortfall' story is designed to convince everyone that this is a one-shot problem, in the process of being fixed. If only it were that simple. The aftermath of the largest Credit Bubble in history is likely to prove crippling, if not fatal, for the overleveraged Fubar twins. posted Friday February 11, 07 59 AM ET Copyright 2005 The Wall Street Examiner, all rights reserved. wallstreetexaminer.com