Hovnanian Enterprises Acquires Town & Country Homes
RED BANK, NJ, March 2, 2005 – Hovnanian Enterprises, Inc. (NYSE: HOV) announced today that it has acquired the operations of Town & Country Homes, a privately held homebuilder and land developer headquartered in Lombard, Illinois, for an undisclosed purchase price, paid in cash. Hovnanian believes that this is the largest private homebuilder acquisition ever consummated. Concurrently, Hovnanian entered into a joint venture agreement with affiliates of Blackstone Real Estate Advisors in New York to own and develop Town & Country’s existing residential communities.
The acquisition provides Hovnanian with a strong initial position in the greater Chicago market, which is the 6th largest housing market in the U.S., based on 2003 new home starts. The acquisition of Town & Country also expands Hovnanian’s operations into the high-growth Florida markets of West Palm Beach, Boca Raton and Fort Lauderdale and bolsters Hovnanian’s current presence in Minneapolis/St. Paul, which is the 10th largest housing market in the U.S. Town & Country designs, markets and sells a diversified product portfolio in each of its markets, including single family homes and attached townhomes, as well as mid-rise condominiums in Florida. Town & Country serves a broad customer base including first-time, move-up and luxury homebuyers.
Town & Country was ranked the 52nd largest builder nationally in 2004 by Builder Magazine and expects to deliver approximately 2,000 homes in calendar year 2005, with total revenues of approximately $640 million. As of 12/31/04, Town & Country owned or controlled approximately 9,600 lots throughout its three markets for future growth, and had 1,153 homes in contract backlog with a sales value of $400 million.
“We are extremely pleased to welcome Tom and Mike Ryan and their team to the Hovnanian organization,” commented Ara Hovnanian, President and Chief Executive Officer of Hovnanian Enterprises, Inc. “Town & Country has developed an excellent reputation as a builder of high-quality, well-designed homes, while maintaining a focus on profitability at the community level. Town & Country is a great fit for our company as it provides a complementary geographic presence and product diversity to our current markets,” he added.
“Town & Country controls significant land positions in three of the top 50 homebuilding markets in the United States. These markets exhibit solid long-term fundamentals with respect to population growth, household formation and job creation,” said Mr. Hovnanian. “Our financial strength, powers of scale and experience in highly regulated markets combined with Town & Country’s long track record and solid relationships in Chicago will present excellent opportunities for profitable growth. We will also leverage the operating strengths of Town & Country to broaden our presence in Florida into the fast growing markets of West Palm Beach, Boca Raton and Ft. Lauderdale. Finally, with the addition of Town & Country’s operation in the Minneapolis market, we expect to more quickly strengthen our market position to a top tier participant in this thriving market. We plan to keep our two Minnesota operations separate, as we have done in other markets with similar circumstances. We are extremely excited about the future growth of our newly combined companies,” Mr. Hovnanian said.
Thomas Ryan, Co-Chief Executive Officer of Town & Country Homes, stated, “As we continue to extend our reach and reputation in our current markets, our combination with Hovnanian provides us with a tremendous platform for growth. Our associates will benefit from the cultural fit between the two companies, with greater opportunities for professional growth and development. With Hovnanian’s strong balance sheet, diverse product expertise, and track record of successfully integrating local and regional homebuilding companies, we are confident that we will be in an improved position to compete more effectively and achieve superior operational performance.” Mr. Ryan and his brother, Michael Ryan, Co-Chief Executive Officer of Town & Country Homes, are second generation homebuilders and will remain with Hovnanian following the acquisition. The Ryans’ father, William Ryan, founded Town & Country in 1958. Town & Country was represented by JMP Securities LLC in the transaction.
“We will account for the venture under the equity method and expect the addition of Town & Country to be approximately $0.05 accretive to earnings per fully diluted share in fiscal 2005, which ends October 31st,” Mr. Hovnanian said. “All of Town and Country’s employees will become Hovnanian Enterprises associates and we will provide management, sales and property development services to the joint venture,” Mr. Hovnanian concluded. Hovnanian does not anticipate booking any goodwill in conjunction with the transaction.
About Hovnanian Enterprises, Inc.
Hovnanian Enterprises, Inc., founded in 1959 by Kevork S. Hovnanian, Chairman, is headquartered in Red Bank, New Jersey. The Company is one of the nation’s largest homebuilders with operations in Arizona, California, Delaware, Florida, Maryland, New Jersey, New York, Michigan, Minnesota, North Carolina, Ohio, Pennsylvania, South Carolina, Texas, Virginia and West Virginia. The Company’s homes are marketed and sold under the trade names K. Hovnanian Homes, Goodman Homes, Matzel & Mumford, Diamond Homes, Westminster Homes, Forecast Homes, Parkside Homes, Brighton Homes, Parkwood Builders, Great Western Homes, Windward Homes and Cambridge Homes. As the developer of K. Hovnanian’s Four Seasons communities, the Company is also one of the nation’s largest builders of active adult homes.
About The Blackstone Group
Founded in 1985, The Blackstone Group is a global investment and advisory group with headquarters in New York and offices in London, Hamburg and Paris. Blackstone’s real estate group has raised five real estate funds with total committed capital of around $6 billion. The group has completed over 130 separate investments, representing more than 1,400 individual assets, in hotels, offices and other commercial properties, with a total transaction value of approximately $22 billion. Blackstone’s other businesses include private equity investing, for which it has raised over $14 billion including Blackstone Capital Partners IV, the largest private equity fund ever raised at $6.45 billion, corporate debt investing, marketable alternative asset investing, corporate advisory services, and restructuring and reorganization advisory.
Additional information on Hovnanian Enterprises, Inc., including a summary investment profile and the Company’s 2004 annual report, can be accessed through the Investor Relations page of the Hovnanian website at http://www.khov.com. To be added to Hovnanian’s investor e-mail or fax lists, please send an e-mail to [email protected] or sign up at http://www.khov.com.
Note: All statements in this Press Release that are not historical facts should be considered as “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995. Such statements involve known and unknown risks, uncertainties and other factors that may cause actual results, performance or achievements of the Company to be materially different from any future results, performance or achievements expressed or implied by the forward-looking statements. Such risks, uncertainties and other factors include, but are not limited to, (1) changes in general and local economic and business conditions, (2) weather conditions, (3) changes in market conditions, (4) changes in home prices and sales activity in the markets where the Company builds homes, (5) government regulation, including regulations concerning development of land, the homebuilding process and the environment, (6) fluctuations in interest rates and the availability of mortgage financing, (7) shortages in and price fluctuations of raw materials and labor, (8) the availability and cost of suitable land and improved lots, (9) levels of competition, (10) availability of financing to the Company, (11) utility shortages and outages or rate fluctuations, (12) geopolitical risks, terrorist acts and other acts of war and (13) other factors described in detail in the Company’s Form 10-K for the year ended October 31, 2004.