Major home builder warns of joint venture losses
Toll Brothers, one of the nation’s largest home builders, has warned of what could be “significant losses” due to ailing joint venture agreements that have suffered in the housing downturn.
The home builder said that if some of its joint venture partners — businesses that are now in financial trouble — don’t honor their financial obligations to Toll Brothers, high charges could ensue.
In a filing with the Securities and Exchange Commission, the company said, “As a result of the continued downturn in the home-building industry, some of these joint ventures or their participants have or may become unable or unwilling to fulfill their respective obligations. In addition, we may not have a controlling interest in these joint ventures and, as a result, we may not be able to require these joint ventures or their participants to honor their obligations or renegotiate them on acceptable terms.”
The Wall Street Journal estimates that Toll Brothers could be on the hook for as much as $352 million if some of its joint venture partners fail, but the newspaper noted, “Toll has fewer joint ventures than many other builders.”
In the first quarter, the builder announced losses of about $96 million, swinging from $54 million in earnings in the previous year.
KB Home to pull out of certain U.S. markets
Los Angeles-based home builder KB Home will be pulling out of Albuquerque, Chicago and the mid-Atlantic markets, according to a report by the Associated Press.
The company said that current conditions in the housing market are too difficult and has decided not to build any homes in those areas for now.
AKB Home spokesperson told the AP that the pullout would be gradual, as the company plans to complete its current projects and will still honor warranties on homes it has already built.
The company reported a net loss of $929 million for 2007 with revenues of $6.4 billion, down 31.6 percent from 2006.
Candleholders recalled at Pier 1
Pier 1 Imports has announced a voluntary recall of some candleholders that have been said to cause a fire hazard, according to the Consumer Product Safety Commission.
According to the Commission, the candleholders can heat up and cause the tealights to burn unexpectedly fast and with a higher flame height than normal, posing a fire hazard. The items were manufactured in China.
Fort Worth, Texas-based Pier 1 Imports has received seven reports of high flames. No injuries have been reported.
About 18,000 units were sold at Pier 1 Imports stores nationwide from June 2007 through December 2007 for $6 to $25.