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NEW YORK CITY-"Since 2002, we've had the wind at our backs in almost everything we did," said Tarragon Corp. chairman and CEO William S. Friedman during the firm's year-end results conference call. The firm saw its net income increase 231% last year to $146 million and had consolidated revenue rise up 102%.
Tarragon will have an annual dividend of 10 cents per share payable on May 1 to shareholders of record as of the close of business on April 10 as well as a one million share increase in share repurchase authorization. "As long as the stock is severely undervalued--as we see it today--we will continue to buy," Friedman said
Consolidated revenue for the full year 2005 was $571.9 million, up 102% from $282.9 million in 2004. Substantially all of the revenue increase was due to very strong homebuilding sales, which for the year totaled $504.7 million, up 129% from $220.5 million in 2004. The company expects that trend to continue. "We'll mine the rental portfolio for condo conversions," Friedman said. The company anticipates completing its capital redeployment program this year.
Going forward, the firm will focus on "high-demand, multi-year projects," according to Friedman. "They will be the basis of our growth over the next decade." That pipeline includes long-term projects in Fort Lauderdale, FL; Lauderdale Lakes, FL; Montvale, CT; and Hoboken, NJ. "We believe that the long-term industry fundamentals remain very strong, especially in our urban markets. We see no need to expand markets, just to go deeper in the markets we know about."
Friedman noted that while overall buyer traffic at the developments remains robust, some markets are returning to historically normal levels of activity. "We've seen a significant slowdown on the west coast of Florida from Naples to Bradenton, but that was mostly investor driven sales. The level of activity is disappointing only compared to last summer's activity." Tarragon is opening sales offices for three Northeast communities in the next month. "We are not anticipating a comparable slowdown in sales levels."
Tarragon's active projects, including backlog, totaled more than 8,000 homes in 46 communities representing more than $2.3 billion as of Dec. 31, 2005. That's up from 4,352 homes in 28 communities representing $1.4 billion in projected revenue at Dec. 31, 2004.
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