Monday, June 25, 2018
Business

Major home builder Hovnanian Enterprises pulling out of Tampa Bay area

Faced with financial losses and a sinking stock price, Hovnanian Enterprises, longtime home builder and one of the Tampa Bay area's top 10 builders in recent years, is exiting this regional market.

"Rather than focusing on additional revenue growth beyond 2016, we now plan to focus on deleveraging our balance sheet and maximizing our profitability," CEO Ara K. Hovnanian said Wednesday. The executive outlined company plans to wind down its operations in Tampa, as well as in the San Francisco Bay area, by delivering the remaining homes in existing Hovnanian communities. The home builder also is exiting the Minneapolis and Raleigh, N.C., markets.

"We are confident these decisions will lead to continued efficiencies and ultimately improved financial performance," the CEO said.

From a market point of view, the timing of Hovnanian's departure feels odd. The recession is over. Unemployment is well under 5 percent in the Tampa Bay market. Mortgage rates remain historically low. Millennials are starting to feel more confident and rich enough to consider buying rather than renting. And the housing supply in this area is extremely tight.

It all suggests great opportunity for home builders in a state that is growing in population again.

Assuming the home builder is healthy.

The New Jersey home builder, one of the nation's largest, closed on more than 200 homes in Tampa Bay as recently as 2014. On Wednesday, the company reported a $16.2 million loss, compared with a $14.4 million loss a year ago. Revenues climbed 29 percent to $575.6 million.

But Hovnanian shares have long been in trouble. Topping $70 in the summer of 2005, shares have trickled south ever since. The stock fell sharply Wednesday after the weak quarterly performance, closing at $1.48, down 15.9 percent.

Hovnanian homes dot the bay area. They can be found at the Grand Cypress on Lake Tarpon development in Palm Harbor, the Reserve at Lake Leclare in Tampa, Terra Bella homes in Land O'Lakes, Riverside Bluffs in Riverview and Union Park in Wesley Chapel. Prices range as high as the $700,000s and as low as the $200,000s. The builder's average price in Florida is in the low $400,000s.

In an SEC filing Wednesday, Hovnanian Enterprises cited debts coming due that, while payable, were motivating the company to improve its liquidity position. Higher costs and thinner profit margins also influenced the company's decision to exit certain geographic markets.

"Looking forward, because we may not be able to refinance our near-term debt maturities, we are shifting our focus from growing our community count and revenues to increasing operating efficiency and profitability while generating positive cash flow from operations to pay debt maturities as they come due," says the company SEC filing.

Translation? It seems the company is overextended and needs to retrench.

Contact Robert Trigaux at [email protected] Follow @ venturetampabay.

Comments
Bayfront Health to acquire Seven Rivers Medical Center in Crystal River

Bayfront Health to acquire Seven Rivers Medical Center in Crystal River

Bayfront Health is acquiring the Seven Rivers Regional Medical Center in Crystal River. Community Health Systems, which owns six Bayfront Health hospitals along Floridaís Gulf Coast from Brooksville to Venice, is one of the nationís largest owners an...
Updated: 1 hour ago
Burgeoning trade war takes a toll from Tampa to Turkey

Burgeoning trade war takes a toll from Tampa to Turkey

Associated Press WASHINGTON ó A Tampa boat builder absorbs $4 million in lost business and expects more pain. An Ohio pork producer is losing access to a vital export market and fears the damage will last years. A motorcycle shop near Cologne, German...
Updated: 1 hour ago
Harley-Davidson moving some production from U.S. because of EU tariffs

Harley-Davidson moving some production from U.S. because of EU tariffs

Harley-Davidson, the U.S. motorcycle manufacturer, said Monday that it was shifting some of the production of its bikes outside the United States to avoid European Union tariffs imposed as part of a widening trade dispute.The announcement, made in a ...
Updated: 2 hours ago
Falling gas prices in Tampa Bay might level out soon

Falling gas prices in Tampa Bay might level out soon

Gas prices in Florida have been declining for the past 30 days straight, but analysts say that trend might not last due to higher oil prices.Tampa Bay gas prices fell another seven cents a gallon over the past week to an average of $2.58 a gallon fo...
Updated: 3 hours ago
Visit St. Pete-Clearwater partners with HSN to turn shoppers into tourists

Visit St. Pete-Clearwater partners with HSN to turn shoppers into tourists

Valerie Stupís toes are in the sand at Clearwater Beach. Guy Yovan is spotting dolphins near Johnís Pass. Sarah Anderson is touring the Dali Museum.Usually HSNís shoppers only see their favorite network hosts inside the studio selling handbags, cookw...
Published: 06/25/18
Norwegian Airlines offers direct flights from Tampa to London-Gatwick

Norwegian Airlines offers direct flights from Tampa to London-Gatwick

TAMPA ó Norwegian Airlines announced Monday it will start direct flights twice a week between Tampa International Airport and Londonís Gatwick Airport effective Oct. 31, giving TIA another highly prized international flight.Bookings are available onl...
Updated: 6 hours ago
Office building demolition at Midtown Tampa site proves tougher than expected

Office building demolition at Midtown Tampa site proves tougher than expected

TAMPA ó Stripped to the girders, the old Bromley office building looked about as substantial as fish bones on a dinner plate.But the 5-story structure proved Sunday it still had a surprising amount of fight left in it.A demolition team had planned to...
Updated: 7 hours ago
President Trumpís trade war threatens the US newspaper industry

President Trumpís trade war threatens the US newspaper industry

STERLING, Ill. - As a longtime editor of small-town newspapers, Jeff Rogers has seen his industry face the collapse of print advertising, the rise of the internet and more. Today, his 18 employees work in a newsroom here that puts out two daily newsp...
Published: 06/24/18
Making the case for more drones

Making the case for more drones

BLACKSBURG, Va. - They considered how well everyone slept the night before. They considered the chances a military jet might scream by on a training mission. They considered the farmer in the field.Then they considered some more.After making it throu...
Published: 06/24/18
Coal and gas hold onto their share of electricity production, despite massive push for renewables

Coal and gas hold onto their share of electricity production, despite massive push for renewables

Hereís an intriguing set of facts: Coal produces the same percentage of the worldís electricity as 20 years ago. Oil and gas remain about level, too.Same for nonfossil fuel sources. In other words, the massive push towards renewables over the past co...
Updated: 4 hours ago