April 01, 2008

LOOK OUT BELOW!!! CENTEX DUMPS LAND FOR 82% OFF. THAT'S RIGHT, THEY GOT 18 CENTS ON THE DOLLAR!!



Nah, real estate never goes down.

It's always a great time to buy.

Land is your safest investment - they're not makin' more of it ya know.

And oh, anyone who thought 10% off was a great deal - so sorry. 20% off? Like catching those knives, eh? 50% off - too good to pass up right? NOT! 82% off? HELL YEAH! NOW WE'RE TALKING!! And damn, say goodbye to the comps for a generation.

Ya know what, someone offers me some land or a house at 80% off, I'm taking a look at it. Now we're getting where we need to get. NOTE TO REALTORS WHO WANT TO EARN SOME RAMEN - BRING US DEALS AT 80% OFF - NOW WE'RE TALKING.

Here's Diana with the good news:

Centex Land Deal: And I Thought Worst Was Almost Over

Every time I want to say that the bleeding is over, I’m proven wrong. Centex just announced that they sold about 10 percent of their land holdings to a joint venture for what analysts compute is about 18 cents on the dollar.

The joint venture that is led by Dallas-based RSF partners paid $161 million for 8,500 lots in 11 states. The book value, according to Centex, was $528 million at the time of sale, but analysts say that was already after significant write-downs. They say the land was worth $900 million originally.

23 comments:

Anonymous said...

April Fools!!!

BWAHAHAHAHAHA!!

DOPES!!

DOPES said...

WOW, THAT'S WORSE THAN THE .28 CENTS I GET BACK ON MY TAXES FOR EVERY MORTGAGE DOLLAR I SPEND...

SOMEBODY HELP ME...

I'M IN DEBT UP TO MY EYEBALLS...

DOPES!!!

Anonymous said...

I doubt that the sale of these grouped lots will even show up as a "comp" because the plots were not purchased individually.

Anonymous said...

I'm sure Centex got more in tax write off than in proceeds from this sale to make it palatable for them to go through with it, plus they eliminated significant carrying costs thus enhancing cash flow

Anonymous said...

Good one Keith, we all know is
April Fools, you dope!

Huggy Bear said...

Now we're talking!

SShabang Shabang!

The Bruiser said...

Too bad the lots are not available for sale on an individual basis. It is one thing for a large holding company to buy thousands of lots from a f*cked homebuilder for pennies on the dollar. It is totally a different story if the land is subdivided and sold to individual owners/investors on a lot-by-lot basis for pennies on the dollar. In other words, unless you have $120 million to throw around, you aren't getting land on the cheap.

Ed said...

And yet Centex along with all HBs were up huge today. Go figure.

Anonymous said...

HP Quote Of The Day:

Suburbia is where the developer bulldozes out the trees, then names the streets after them.
Bill Vaughan

Anonymous said...

Thank you sir may I have another.

Buzz Saw said...

They say the land was worth $900 million originally.

Apparently not.

Anonymous said...

IN THE HEADLINE NEWS:

"Wall Street Shows Optimism That Crisis Is Fading"

*************

CRISIS???? WHAT CRISIS????

George? Have you been hiding the truth?

George???

Hello???

Dick???

Anybody?

Happy Homedebtor said...

Comps for the majority of people are houses, not solely land.

Steve Case bought half of Kauai for around $1000/acre..but he bought around 1,000,000 acres or something absurd. Did this drive down the price of land? Hardly.

Give it up.

Stuck in So Pa said...

How was all that dirt worth "900 million originally?"

Who said, Centrex?

What analysts, and how did they arrive at that number?

Was someone waiting in the wings with a 900-mil check, sometime in the past, and Centrex, in a fit of insanity, turned them down!

Or was it a case of:

"And Centrex did look out upon the land and spake these words: LET THIS LAND BE WORTH 900 MILLION, and 900 million became the value of the land, and the value of the land became 900million."

After a (short) while all of those big phony numbers become meaningless.
Dimwits who bought at 18 cts on the dollar probably still paid too much!

"Wishing will not make it so!"

satan said...

Read and weep.

http://tinyurl.com/2kvnlu

Mortgage Securities Back Fed Loan to Bear Stearns

By Greg Ip and Greg Hitt

The securities backing a $29 billion Federal Reserve loan to Bear Stearns Cos. consist primarily of "mortgage-backed securities and related hedge investments," the Treasury Department said.

The disclosure, in a letter to the Senate Finance Committee staff, is the first official comment on the securities behind the controversial loan, made March 16 to facilitate J.P. Morgan Chase & Co.'s takeover of Bear.

area 51 said...

Finally she says something intelligent, such as, "How the F do they come up with their "book values". I know, they pull them out of their asses......

Come to think of it, can anyone rely on book values for all the investment firms, banks with RE, Freddie & Fannie, their paper and collateral?

Nope.

Maybe we just shave 80% off it and bid on that "book value".....HA HA

And as soon as you short 'em, the companies vomit, then the stock goes up 15%.....

Wonky said...

Is this another April Fool's gag? It's already April 2 in my time zone BTW...

tangelo Mozilo said...

I must say, I don't understand these numbers at all. They'd make more sense if the article told us how many acres we're talking about as opposed to how many "lots." Just how big are these lots?

If these lots averaged a FULL ACRE a piece, this land would be "worth" about $106,000 per acre, which would mean that every acre must be bursting with Leprechuans, golden tulips, and various magical powers.

However, when was the last time you saw full-acre suburban lots? It's more likely that these mysterious "lots" are closer to 1/2acre a piece, and are therefore "worth" north of $210,000per acre, which is about the same amount you'd pay for an acre of land in Manhattan.

I wonder how Centex will explain its valuation methods to the IRS when audit time rolls around.

mairca izda debol said...


How was all that dirt worth "900 million originally?"


That is the price Centex paid for the land. Under GAAP, land can never increase or be depreciated in the balance sheet. They can only be written off as a loss. So yes, the homebuilders were drinking too much of the REIC kool-aid.

Anonymous said...

That's around 20k per lot (raw I assume). So after average improvements of say 30k your into it for 50k not counting carrying costs.

Now build a dingbat house on it for say 200,000 and you're at $250,000 plus soft costs. Depends on the neighborhood as to whether it pencils in today's markets.

Anonymous said...

well they paid ten times what it was worth using shareholders money just to collect the commisions enough to privatize and double the holding once for the board of directors

Anonymous said...

they used shareholders money to pay 900 for 90 value and split the 90 in commissions and fees to get 90 for the ceo......and other highly paid "help"

Anonymous said...

I'm sure Centex got more in tax write off than in proceeds from this sale to make it palatable for them to go through with it, plus they eliminated significant carrying costs thus enhancing cash flow
-------------------------------------

ha, they probably get to book the (original_value - what_they_sold_it_for) as non-cash earnings!