Brookfield Homes Corporation (NYSE: BHS) -
Investors, analysts and other interested parties can access
Brookfield Homes Corporation's Supplemental Information Package on
the company's website under the Investor Relations/Financial
Reports section at www.brookfieldhomes.com. Brookfield Homes
Corporation's third quarter investor conference call can be
accessed by teleconference on Friday, October 29, 2010 at 3:30 pm
(Eastern Time) at 1-800-319-4610, toll free in North America or
1-604-638-5340. The archived teleconference may be accessed by
dialing 1-800-319-6413 (Pincode: 2818), toll free in North America
through November 29, 2010. Alternatively, the conference call can
be accessed by Webcast on the company's website at
www.brookfieldhomes.com.
Brookfield Homes Corporation ("Brookfield Homes") (NYSE: BHS)
today announced net new orders and financial results for the
quarter ended September 30, 2010:
Three Months Ended Nine Months Ended
Sept. 30 Sept. 30
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Unit Activity 2010 2009 2010 2009
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Home closings 98 192 389 435
Net new home orders 87 208 372 627
Active selling communities (end of
period) 20 29 20 29
Backlog of homes (units at end of
period) 170 326 170 326
Average home selling price $ 651,000 $ 468,000 $ 516,000 $ 477,000
Lot sales to homebuilders 127 55 215 234
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(i) Unit information includes unconsolidated entities
-- The overall average selling price increased by 8% for the nine months
ended September 30, 2010, compared to the same period in 2009, primarily
due to the change in product mix in California and the Washington D.C.
area, while home closings decreased by 11% over the same period.
Three Months Ended Nine Months Ended
Results of Operations Sept. 30 Sept. 30
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(Millions, except per share amounts) 2010 2009 2010 2009
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Housing revenue $ 64 $ 89 $ 200 $ 206
Total revenue 75 99 216 231
Impairments and write-offs - 10 - 18
Gross margin 13 5 37 10
Net loss attributable to Brookfield
Homes Corporation (0.5) (0.9) (0.4) (11.0)
Loss per share - diluted(i) $ (0.19) $ (0.22) $ (0.53) $ (0.73)
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(i) Diluted loss per share is after preferred dividends
-- Housing revenue for the nine months ended September 30, 2010 was $200
million, compared to $206 million for the nine months ended September
30, 2009.
-- The company did not record any impairments during the nine months ended
September 30, 2010, compared to $18 million for the same period in 2009.
-- Net loss attributable to Brookfield Homes for the three months ended
September 30, 2010 was $0.5 million or a diluted loss of $0.19 per share
after preferred dividends, compared to a net loss of $0.9 million or
$0.22 per share for the three months ended September 30, 2009.
-- Net loss attributable to Brookfield Homes for the nine months ended
September 30, 2010 was $0.4 million or a diluted loss of $0.53 per share
after preferred dividends, compared to a net loss of $11.0 million or
$0.73 per share for the nine months ended September 30, 2009.
Operating Highlights and Recent Developments
-- The company has exceeded its goal to entitle a total of 1,500 lots
during the two year period ending in 2010 -1,061 lots were entitled in
2009, and 671 lots have been entitled during the nine months ended
September 30, 2010.
-- Brookfield Homes currently sells from 20 active communities compared to
29 at September 30, 2009.
-- At September 30, 2010, the company owned or controlled 26,510 lots, an
increase of 2,265 lots from December 31, 2009.
-- A summary of lots owned or controlled under option, by region, follows:
Unconsolidated
Housing & Land Entities Total Lots Total Lots
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(Lots) Owned(i) Options Owned Options 9/30/2010 12/31/2009
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Northern
California 3,298 4,950 - - 8,248 6,951
Southland/Los
Angeles 938 582 590 1,987 4,097 3,262
San
Diego/Riverside 8,680 200 52 - 8,932 8,853
Washington D.C.
Area 2,627 1,165 1,187 - 4,979 4,916
Corporate and
Other 196 - 58 - 254 263
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Total September
30, 2010 15,739 6,897 1,887 1,987 26,510
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Entitled Lots 11,492 1,365 1,833 623 15,313 14,454
Unentitled Lots 4,247 5,532 54 1,364 11,197 9,791
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15,739 6,897 1,887 1,987 26,510 24,245
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Total December 31,
2009 14,233 6,279 1,746 1,987 24,245
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(i) Includes consolidated options
Combination with BPO Residential
On October 5, 2010, Brookfield Properties Corporation
("Brookfield Office Properties") and Brookfield Homes announced
that they had entered into a definitive agreement to combine
Brookfield Homes and the North American residential land and
housing division of Brookfield Office Properties ("BPO
Residential") into Brookfield Residential Properties Inc.
("Brookfield Residential").
Completion of the transaction is subject to regulatory approval
in the United States and Canada, the approval of the holders of a
majority of the outstanding Brookfield Homes' common stock and
other customary closing conditions. Brookfield Asset Management
Inc. beneficially owns, through Brookfield Residential, sufficient
shares to approve the transaction and has agreed to vote in favor
of the transaction at the Brookfield Homes' stockholders
meeting.
On October 12, 2010, Brookfield Residential filed a registration
statement with the U.S. Securities and Exchange Commission ("SEC"),
which includes a proxy statement/prospectus and other relevant
documents concerning the proposed transaction. Shareholders of
Brookfield Homes are urged to read the proxy statement/prospectus
and any amendments thereto, and any other relevant documents filed
with the SEC because they will contain important information
relating to Brookfield Homes, BPO Residential and the proposed
transaction. The document can be obtained free of charge at the
website maintained by the SEC at www.sec.gov. In addition, you may
obtain documents filed with the SEC by Brookfield Homes, including
periodic reports and current reports, free of charge by requesting
them in writing from Brookfield Homes, 8500 Executive Park Avenue,
Suite 300, Fairfax, Virginia 22031, Attention: Linda Northwood, or
by telephone at (858) 481-2567; e-mail:
investorrelations@brookfieldhomes.com.
The respective directors and executive officers of Brookfield
Homes, Brookfield Office Properties and Brookfield Residential and
other persons may be deemed to be participants in the solicitation
of proxies in connection with the proposed transaction. Information
regarding Brookfield Homes' directors and executive officers is
available in its proxy statement filed with the SEC on February 26,
2010. Other information regarding the participants in the proxy
solicitation and a description of their direct and indirect
interests, by security holdings or otherwise, will be included in
the proxy statement/prospectus and other relevant materials to be
filed with the SEC when they become available.
Outlook
The increase in closings during the first half of 2010 were
partly a result of homebuyers taking advantage of the short-term
government stimulus programs. Since then, the sales pace has
declined. In the long term, we expect demographics, improved
consumer confidence and increased employment will result in higher
housing starts as the markets slowly recover.
Owning entitled and/or developed lots in supply-constrained
markets places Brookfield Homes in a strong position as the markets
improve. The company's goals for 2010 remain:
-- Continue to monetize the company's inventory, targeting $90 million of
net cash from operating activities. Net cash flow from operating
activities for the nine months ended September 30, 2010, excluding the
purchase of new projects for $24 million, was $58 million.
-- Increase lots controlled in certain strategic market areas. During the
nine months ended September 30, 2010, the company increased the lots
controlled by 2,265 lots, principally in Northern California and the
Southland/Los Angeles area.
-- Continue to meet the challenges presented in the market and position
Brookfield Homes to return to profitability, with higher overall gross
margins as capital is invested in new homebuilding communities. Housing
gross margins for the nine months ended September 30, 2010 were 17%,
compared to 11% (before impairments) for the nine months ended September
30, 2009.
Brookfield Homes Corporation
Brookfield Homes Corporation is a land developer and
homebuilder. We entitle and develop land for our own communities
and sell lots to third parties. We also design, construct and
market single-family and multi-family homes primarily to move-up
homebuyers. Our portfolio includes over 26,000 lots owned and
controlled in the Northern California; Southland / Los Angeles; San
Diego / Riverside; and Washington D.C. Area markets.
This news release shall not constitute an offer to sell or the
solicitation of an offer to buy any securities in any jurisdiction
in which such offer, solicitation or sale would be unlawful. The
securities referenced herein have not been registered under the
United States Securities Act of 1933, as amended, or any state
securities laws, and may not be offered or sold within the United
States absent registration or an applicable exemption from the
registration requirements of such Act or laws.
Note: Certain statements in this press release that are not
historical facts, including, without limitation, information
concerning the potential combination with BPO Residential, and the
benefits thereof, information concerning possible or assumed future
results of operations of the company, the company's 2010 outlook,
the company's 2010 goals, targeted 2010 operating cash flow, the
entitlement and monetization of lots (and the timing thereof), the
company's future outlook and growth plans including gross margins,
profitability, acquisitions and lots controlled, and those
statements preceded by, followed by, or that include the words
"believe," "planned," "anticipate," "should," "goals," "expected,"
"potential," "estimate," "targeted," "scheduled" or similar
expressions, constitute "forward-looking statements" within the
meaning of the Private Securities Litigation Reform Act of 1995.
Undue reliance should not be placed on forward-looking statements
because they involve known and unknown risks, uncertainties and
other factors, which may cause the actual results to differ
materially from the anticipated future results expressed or implied
by such forward-looking statements. There can be no assurance that
the proposed transaction will be consummated or that the
anticipated benefits will be realized. The proposed transaction is
subject to various regulatory approvals and the fulfillment of
certain conditions, and there can be no assurance that such
approvals will be obtained and/or such conditions will be met.
Factors that could cause actual results to differ materially from
those set forward in the forward-looking statements include, but
are not limited to: failure to obtain required regulatory and
shareholder approvals; failure to realize anticipated benefits of
the merger; changes in general economic, real estate and other
conditions; mortgage rate changes; availability of suitable
undeveloped land at acceptable prices; adverse legislation or
regulation; ability to obtain necessary permits and approvals for
the development of our land; availability of labor or materials or
increases in their costs; ability to develop and market our
master-planned communities successfully; confidence levels of
consumers; ability to raise capital on favorable terms; adverse
weather conditions and natural disasters; relations with the
residents of our communities; risks associated with increased
insurance costs or unavailability of adequate coverage and ability
to obtain surety bonds; competitive conditions in the homebuilding
industry, including product and pricing pressures; and additional
risks and uncertainties referred to in our Form 10-K and other SEC
filings, many of which are beyond our control. We undertake no
obligation to publicly update any forward-looking statements,
whether as a result of new information, future events or
otherwise.
Brookfield Homes Corporation
Consolidated Statements of Operations
Three Months Ended Nine Months Ended
September 30 September 30
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(thousands, except per share
amounts) (unaudited) 2010 2009 2010 2009
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Revenue
Housing $ 63,753 $ 88,402 $ 199,749 $ 205,814
Land 10,834 10,141 16,180 25,009
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Total revenue 74,587 98,543 215,929 230,823
Direct cost of sales
Housing (52,994) (75,767) (166,017) (182,657)
Land (8,500) (8,579) (12,654) (20,801)
Impairment of housing and
land inventory and write-
off of option deposits - (9,580) - (17,738)
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13,093 4,617 37,258 9,627
Selling, general and
administrative expense (12,559) (11,504) (38,692) (36,778)
(Loss) / equity in earnings
from unconsolidated
entities (228) (535) (285) 1,593
Impairment of investments in
unconsolidated entities - (1,268) - (12,886)
Other (expense) / income (799) (1,035) 769 9,915
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Loss before income taxes (493) (9,725) (950) (28,529)
Income tax (expense) /
recovery (179) 6,169 (256) 12,373
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Net loss $ (672) $ (3,556) $ (1,206) $ (16,156)
Less net loss attributable
to non-controlling interest
& other interests in
consolidated subsidiaries 120 2,646 778 5,124
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Net loss attributable to
Brookfield Homes
Corporation $ (552) $ (910) $ (428) $ (11,032)
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Loss per share
Basic and diluted $ (0.19) $ (0.22) $ (0.53) $ (0.73)
Weighted average common
shares outstanding
Basic and diluted 29,655 26,777 28,894 26,770
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Brookfield Homes Corporation
Condensed Consolidated Balance Sheets
As at
--------------------------------
(thousands, except per share amounts) September 30, December 31,
(unaudited) 2010 2009
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Assets
Housing and land inventory $ 854,012 $ 835,263
Investments in unconsolidated entities 129,318 92,477
Receivables and other assets 19,014 61,744
Restricted cash 7,351 7,485
Deferred income taxes 39,075 40,112
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$ 1,048,770 $ 1,037,081
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Liabilities and Equity
Project specific and other financings $ 392,060 $ 381,567
Accounts payable and other liabilities 126,950 122,190
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Total liabilities 519,010 503,757
Other interests in consolidated subsidiaries 43,873 47,011
Total equity 485,887 486,313
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$ 1,048,770 $ 1,037,081
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Debt to equity capitalization 43% 42%
Book value per share, as converted and
diluted $ 7.43 $ 7.58
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Brookfield Homes Corporation
Consolidated Statements of Cash Flow
Three Months Ended Nine Months Ended
September 30 September 30
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(thousands) (unaudited) 2010 2009 2010 2009
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Cash flows from / (used in)
operating activities
Net loss $ (672) $ (3,556) $ (1,206) $ (16,156)
Adjustments to reconcile net
loss to net cash from
operating activities:
Distributed /
(undistributed) income
from unconsolidated
entities 254 859 306 (1,362)
Deferred income taxes (1,843) (3,160) 1,037 (9,556)
Impairment of housing and
land inventory and write-
off of option deposits - 9,580 - 17,738
Impairment of investments
in unconsolidated
entities - 1,268 - 12,886
Stock option compensation
costs 314 76 742 468
Other changes in operating
assets and liabilities:
Decrease / (increase) in
receivables and other
assets (436) (4,529) 42,730 58,769
Decrease / (increase) in
housing and land
inventory (8,925) 17,235 (20,688) 17,267
Increase / (decrease) in
accounts payable and
other liabilities 2,678 10,136 10,979 (11,484)
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Net cash provided by / (used
in) operating activities (8,630) 27,909 33,900 68,570
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Cash flows from / (used in)
investing activities
Net investments in
unconsolidated entities (27,839) (2,693) (40,413) (3,848)
Restricted cash 134 (7,483) 134 (7,483)
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Net cash used in investing
activities (27,705) (10,176) (40,279) (11,331)
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Cash flows (used in) / from
financing activities
Net borrowings /
(repayments) under project
specific and other
financings 38,778 (18,588) 10,493 (304,496)
Net contributions /
(distributions) from non-
controlling interest (2,443) 325 (4,207) 1,003
Preferred stock issuance,
net of issuance costs - - - 249,688
Preferred stock dividends
paid in cash - - - (3,500)
Exercise of stock options - 66 93 66
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Net cash provided by / (used
in) financing activities 36,335 (18,197) 6,379 (57,239)
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Decrease in cash and cash
equivalents - (464) - -
Cash and cash equivalents at
beginning of period - 464 - -
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Cash and cash equivalents at
end of period $ - $ - $ - $ -
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Supplemental cash flow
information
Interest paid $ 7,185 $ 8,723 $ 22,925 $ 27,707
Income taxes recovered $ - $ 323 $ 42,766 $ 61,023
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Contacts: Brookfield Homes Corporation Linda Northwood Director,
Investor Relations 858-481-2567 lnorthwood@brookfieldhomes.com
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