Hovnanian dogged by debt to fund past acquisitions

Miami /
Nov.November 15, 2015 02:00 PM

Hovnanian Enterprises Inc., the nation’s eighth-ranked home builder, is carrying a heavy debt burden despite a recovery in the U.S. housing market now in its fourth year.

New Jersey-based Hovnanian has to repay $467 million in debt coming due through 2017 but the publicly traded company has no easy option for repaying.

Hovnanian’s stock price fell 44 percent in the 12 months ended in October, and the company’s market value is a fraction of its 2005 peak of $4.5 billion. The company reported a net loss of $7.7 million in the quarter ended July 31, its 13th net loss in 20 quarters.

Hovnanian CEO Ara Hovnanian told the Wall Street Journal the company will be profitable in the fiscal third quarter ended October 31.

Analysts and investors are anticipating Hovnanian’s next scheduled debt repayment, $173 million of bonds maturing January 15, and wondering whether the company will be able to refinance or use cash or sell land to raise cash.

Much of Hovnanian’s $2.1 billion in debt was used to finance multiple acquisitions of other home builders, many at premium prices, from 1999 to 2006, when the housing market crash began.

Vicki Bryan, a senior analyst with Gimme Credit LLC, a bond research firm, told the Wall Street Journal that bankruptcy may loom for Hovnanian: “The threat of bankruptcy is increasing for Hovnania, given its threadbare liquidity and severe cash consumption and significant debt maturities in coming months.” [Wall Street Journal] — Mike Seemuth


Related Articles

arrow_forward_ios
D.R. Horton's David Auld with an aerial of the development site (D.R. Horton, WGI)
D.R. Horton wins rezoning for 59 single-family homes in Pompano Beach
D.R. Horton wins rezoning for 59 single-family homes in Pompano Beach
PulteGroup's Andrew Maxey and renderings of the project online (PulteGroup, LinkedIn, Getty)
Pulte buys Plantation site for 86-townhome development
Pulte buys Plantation site for 86-townhome development
A map highlighting both the entire Arden home community and the portion that GL Homes bought with GL Homes President Misha Ezratti (GL Homes, Google Maps)
GL Homes pays $28M for homesites at Arden near Wellington
GL Homes pays $28M for homesites at Arden near Wellington
Lennar’s Stuart Miller (Lennar, iStock)
Lennar proposes 1,335 homes and revamped golf course in Homestead’s Keys Gate
Lennar proposes 1,335 homes and revamped golf course in Homestead’s Keys Gate
 Lennar's Stuart Miller with the Southern Boulevard (Google Maps)
Lennar pays $190M for remainder of Arden homesites near Wellington
Lennar pays $190M for remainder of Arden homesites near Wellington
Land gobbler: Lennar pays $25M for dev site near Pinecrest
Land gobbler: Lennar pays $25M for dev site near Pinecrest
Land gobbler: Lennar pays $25M for dev site near Pinecrest
Lennar's Stuart Miller (Lennar, Gogle Maps, iStock)
Lennar sells Landmark at Doral clubhouse to homeowners association for $16M
Lennar sells Landmark at Doral clubhouse to homeowners association for $16M
Stuart Miller, executive chairman, Lennar (Lennar, Dorthy Jacks, CFA, AAS)
Lennar buys 188 acres for homesites at Arden near Wellington
Lennar buys 188 acres for homesites at Arden near Wellington
arrow_forward_ios

The Deal's newsletters give you the latest scoops, fresh headlines, marketing data, and things to know within the industry.

Loading...