Nov 11 2009
Hovnanian Enterprises, Inc. (NYSE: HOV) and GoldenTree InSite Partners announced today that they have entered into a joint venture agreement to acquire a portfolio of homebuilding projects.
The venture intends to design, sell, and deliver homes on the properties, which are located across 11 communities in the greater Chicago market and Palm Beach County, Florida. Since this venture is purchasing lots that were previously owned by an unconsolidated Hovnanian joint venture, there will be no change in the reported number of lots owned by unconsolidated joint ventures in Hovnanian's SEC filings.
Hovnanian invested 20% of the equity capital in the new venture, with GoldenTree InSite providing the balance. Hovnanian will manage the day-to-day operations of the venture. If certain financial targets are met, Hovnanian will receive a promoted share of the cash returns from the venture. The venture was capitalized 100% with equity, but if in the future financing becomes available, the venture may obtain a modest amount of non-recourse debt on the properties. Additional details related to the joint venture are not being disclosed.
"We are extremely pleased to announce our partnership with GoldenTree InSite Partners," commented Ara Hovnanian, Chairman of the Board of Directors, President and Chief Executive Officer of Hovnanian Enterprises, Inc. "This joint venture combines the financial power and residential investment experience of GoldenTree InSite with the homebuilding and operating strength of Hovnanian, creating an exciting investment opportunity for both organizations. More importantly, the venture allows us to take advantage of attractive land opportunities with limited capital investment, thereby preserving our cash position, and, at the same time, afford the potential for enhanced returns. We look forward to closing additional joint ventures with GoldenTree InSite in the future."
Tom Shapiro, President of GoldenTree InSite Partners said, "We have avoided making any US real estate investments for over two years given our view of the markets and the lack of interesting opportunities. We looked to re-enter US real estate investments in the residential for-sale category and it was imperative to team up with a first-class partner. Hovnanian's integrity and 50-year track record of creating value through solid operations made it a natural choice. The transaction provides us with a unique platform to take advantage of an industry with tremendous long-term potential, and we look forward to closing on additional transactions and generating solid returns through our relationship with Hovnanian." Added Robert Vahradian, Managing Director of GoldenTree InSite, "This investment is highly indicative of the tremendous opportunities we see in the residential space, as many housing markets have sold off by as much as 50% and are showing strong signs of cyclically being at or very near the bottom."
Source: http://www.khov.com/Home/Brands/KHV/BrandHome.htm