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 ("Brookfield Homes") (NYSE: BHS)
today announced net new orders and financial results for the
quarter and year ended December 31, 2010:
Three Months Ended Dec. 31 Years Ended Dec. 31
--------------------------- -------------------------
Unit Activity 2010 2009 2010 2009
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Home closings 186 268 575 703
Net new home orders 101 129 473 756
Active selling
communities (end of
period) 19 25 19 25
Backlog of homes
(units at end of
period) 85 187 85 187
Average home selling
price $ 499,000 $ 505,000 $ 511,000 $ 488,000
Lot sales to
homebuilders 155 235 370 469
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(i) Unit information includes unconsolidated entities
-- The overall average selling price remained stable for the fourth quarter
ended December 31, 2010, compared to the same period in 2009, while home
closings decreased by 31% over the same period. In addition, the overall
cancellation rate was 21% for the year ended December 31, 2010, compared
to 19% in 2009.
-- Net new orders for the fourth quarter ended December 31, 2010 were 101
units from 19 selling communities, compared to 129 units from 25 selling
communities for the same quarter in 2009.
Results of Operations Three Months Ended Dec. 31 Years Ended Dec. 31
--------------------------- -------------------------
(Millions, except per
share amounts) 2010 2009 2010 2009
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Housing revenue $ 92 $ 134 $ 292 $ 340
Total revenue 123 145 339 376
Impairments and write-
offs - 6 37
Gross margin 18 (12) 55 (2)
Net income/(loss)
attributable to
Brookfield Homes
Corporation 5 (17) 4 (28)
Loss per common share
- diluted(i) $ - $ (0.81) $ (0.54) $ (1.54)
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(i) Diluted loss per share is after preferred dividends
-- Revenue for the year ended December 31, 2010 totaled $339 million,
compared to $376 million for the year ended December 31, 2009. The
decrease in revenue is a result of fewer homes closed in 2010. Land
sales to other homebuilders contributed $47 million to revenues in 2010.
-- The company did not record any impairments for the year ended December
31, 2010, compared to $37 million during the year ended December 31,
2009. The 2009 impairments related to housing and land inventory and
write-offs of option deposits, and impairments on investments in
unconsolidated entities.
-- Net income attributable to Brookfield Homes Corporation for the year
ended December 31, 2010 was $4 million or a diluted loss of $0.54 per
share after preferred share dividends, compared to a net loss of $28
million or a diluted loss of $1.54 per share for the year ended December
31, 2009.
-- Cash flow from operating activities was $89 million for the year ended
December 31, 2010, compared to $137 million for the year ended December
31, 2009. A portion of this cash flow was utilized to reduce the
company's debt, and as a result debt to total capitalization at December
31, 2010 was 39%, an improvement from 42% at December 31, 2009, and 71%
at December 31, 2008.
Operating Highlights and Recent Developments
-- The company has exceeded its goal to entitle a total of 1,500 lots
during the two year period ended December 31, 2010 -1,061 lots were
entitled in 2009, and 671 lots were entitled during 2010.
-- Brookfield Homes currently sells from 19 active communities compared to
25 at December 31, 2009.
-- At December 31, 2010, the company owned or controlled 26,817 lots, an
increase of 2,572 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
----------------- ----------------
(Lots) Owned(i) Options Owned Options 12/31/2010 12/31/2009
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Northern
California 3,273 4,950 - - 8,223 6,951
Southland/Los
Angeles 880 320 775 2,759 4,734 3,262
San
Diego/Riverside 8,709 - 52 - 8,761 8,853
Washington D.C.
Area 2,497 1,165 1,184 - 4,846 4,916
Corporate and
Other 196 - 57 - 253 263
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Total December
31, 2010 15,555 6,435 2,068 2,759 26,817
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Entitled Lots 11,308 1,165 2,014 1,395 15,882 14,454
Unentitled Lots 4,247 5,270 54 1,364 10,935 9,791
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15,555 6,435 2,068 2,759 26,817 24,245
--------------------------------- ----------------------------------------
Total December
31, 2009 14,233 6,279 1,746 1,987 24,245
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(i) Includes consolidated options
Outlook
The outlook for the California and Washington, DC area markets
in 2011, while cautiously optimistic heading into the traditional
spring selling season, is tempered by the impact of continued
economic weakness, high unemployment and foreclosures. The company
anticipates that the majority of foreclosures or distress
inventories in our market areas will be absorbed by the end of
2011, which in turn will result in higher demand for new homes. In
addition, there is a very limited supply of finished lots, and
Brookfield is strategically well positioned to benefit from
increased demand.
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 Homes' stockholders
of record on February 21, 2011 will be entitled to vote at the
Brookfield Homes' stockholders meeting scheduled for March 25,
2011. 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.
Brookfield Residential has filed a registration statement on
Form F-4 with the U.S. Securities and Exchange Commission ("SEC"),
which was most recently amended on February 10, 2011 and 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, are included in the
proxy statement/prospectus and other relevant materials filed with
the SEC in connection with the transaction.
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 California 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 2011 outlook,
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 Years Ended
December 31 December 31
--------------------------- -------------------------
(thousands, except per
share amounts)
(unaudited) 2010 2009 2010 2009
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Revenue
Housing $ 92,346 $ 133,811 $ 292,095 $ 339,625
Land 30,591 11,346 46,771 36,355
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Total revenue 122,937 145,157 338,866 375,980
Direct cost of sales
Housing (77,284) (111,836) (243,301) (294,493)
Land (28,032) (38,507) (40,686) (59,308)
Impairment of
housing and land
inventory and
write-off of option
deposits - (6,225) - (23,963)
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17,621 (11,411) 54,879 (1,784)
Selling, general and
administrative
expense (16,893) (15,561) (55,585) (52,339)
Equity / (loss) in
earnings from
unconsolidated
entities 93 (262) (192) 1,331
Impairment of
investments in
unconsolidated
entities - (109) - (12,995)
Other income 7,286 3,276 8,055 13,191
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Income / (loss) before
income taxes 8,107 (24,067) 7,157 (52,596)
Income tax (expense) /
recovery (3,450) 7,761 (3,706) 20,134
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Net income / (loss) $ 4,657 $ (16,306) $ 3,451 $ (32,462)
Net (loss) / income
attributable to non-
controlling
interest & other
interests in
consolidated
subsidiaries (198) 371 (976) (4,753)
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Net income / (loss)
attributable to
Brookfield Homes
Corporation $ 4,855 $ (16,677) $ 4,427 $ (27,709)
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Loss per common share
Basic and diluted $ - $ (0.81) $ (0.54) $ (1.54)
Weighted average
common shares
outstanding
Basic and diluted 29,665 27,039 29,087 26,838
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Brookfield Homes Corporation
Condensed Consolidated Balance Sheets
As at
----------------------------------------
(thousands, except per share
amounts) (unaudited) December 31, 2010 December 31, 2009
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Assets
Housing and land inventory $ 801,409 $ 835,263
Investments in unconsolidated
entities 124,369 92,477
Receivables and other assets 24,826 61,744
Restricted cash 7,366 7,485
Deferred income taxes 32,631 40,112
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$ 990,601 $ 1,037,081
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Liabilities and Equity
Project specific and other
financings $ 331,794 $ 381,567
Accounts payable and other
liabilities 135,264 122,190
----------------------------------------
Total liabilities 467,058 503,757
Other interests in consolidated
subsidiaries 42,461 47,011
Total equity 481,082 486,313
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$ 990,601 $ 1,037,081
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Debt to equity capitalization 39% 42%
Book value per share, as
converted and diluted $ 7.36 $ 7.58
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Brookfield Homes Corporation
Consolidated Statements of Cash Flows
Three Months Ended Years Ended
December 31 December 31
--------------------------- -------------------------
(thousands)
(unaudited) 2010 2009 2010 2009
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Cash flows from /
(used in) operating
activities
Net income / (loss) $ 4,657 $ (16,306) $ 3,451 $ (32,462)
Adjustments to
reconcile net income
/ (loss) to net cash
from operating
activities:
(Undistributed) /
distributed income
from
unconsolidated
entities (102) 271 204 (1,091)
Deferred income
taxes 6,444 28,882 7,481 19,326
Impairment of
housing and land
inventory and
write-off of option
deposits - 6,225 - 23,963
Impairment of
investments in
unconsolidated
entities - 109 - 12,995
Stock option
compensation costs 363 207 1,105 675
Other changes in
operating assets and
liabilities:
(Increase) /
decrease in
receivables and
other assets (5,812) (31,330) 36,918 27,439
Decrease in housing
and land inventory 52,603 73,381 31,915 90,648
(Decrease) /
increase in
accounts payable
and other
liabilities (3,506) 7,181 7,473 (4,303)
-----------------------------------------------------
Net cash provided by
operating activities 54,647 68,620 88,547 137,190
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Cash flows from /
(used in) investing
activities
Net investments in
unconsolidated
entities 4,992 1,985 (35,421) (1,863)
Restricted cash (15) (2) 119 (7,485)
-----------------------------------------------------
Net cash provided by /
(used in) investing
activities 4,977 1,983 (35,302) (9,348)
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Cash flows from /
(used in) financing
activities
Net repayments under
project specific and
other financings (60,266) (71,737) (49,773) (376,233)
Net contributions /
(distributions) from
non-controlling
interest 715 1,134 (3,492) 2,137
Preferred stock
issuance, net of
issuance costs - - - 249,688
Preferred stock
dividends paid in
cash (73) - (73) (3,500)
Exercise of stock
options - - 93 66
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Net cash used in
financing activities (59,624) (70,603) (53,245) (127,842)
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Decrease in cash and
cash equivalents - - - -
Cash and cash
equivalents at
beginning of period - - - -
-----------------------------------------------------
Cash and cash
equivalents at end of
period $ - $ - $ - $ -
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Supplemental cash flow
information
Interest paid $ 8,117 $ 8,777 $ 31,042 $ 36,484
Income taxes recovered $ - $ 2,263 $ 42,766 $ 63,286
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Contacts: Brookfield Homes Corporation Linda Northwood Director,
Investor Relations 858-481-2567 lnorthwood@brookfieldhomes.com
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