(Read more on the multifamily market.)
BENSALEM, PA-Revenues for Orleans Homebuilders Inc. dropped to $214.3 million during the company's fiscal fourth quarter ended June 30, down 48% from nearly $388.8 million for the same quarter a year ago. The average selling price for its homes, townhouses and condos fell to $459,000, versus an average of $466,000 in fiscal fourth quarter 2006.
However, new orders rose 18% in the most recent quarter to $159.3 million for 328 units, up from $135.4 million for 252 units in the same quarter of 2006. During a conference call, Jeffrey Orleans, chairman and CEO of the locally based firm, attributed that positive performance to Orleans' majority of holdings in the North and South, "which are more stable locations," he said.
In response to a Wall Street analyst's query about profitability in specific locations, Orleans said, "Florida stinks; the Midwest is problematic; the Northern region very much depends on the mix but is not requiring many incentives. The Carolinas are fairly stable; Richmond [VA] is probably the weakest of the Southern markets, and Charlotte [NC] is the strongest of the Southern markets. Raleigh [NC] is strong." He also noted that just 7% of the company's properties are in Florida.
The stronger Northern and Southern regions now contain nearly 85% of all Orleans' properties, up from about 75% a year ago. "We remain very cautious," Orleans said. "These are difficult times for both the economy and the homebuilding industry," he added, and anticipates continued "challenging times."
To cope, the company initiated cost-savings measures this July, cutting its work force by 15%. The measures will result in $9 million in savings over the next two years, Orleans said. In addition, the company reached an amendment agreement for $75 million in its trust preferred securities that cannot default before fall 2010. It also obtained a one-year extension of its bank facility, taking it through December 2009. "This will give us the capital we need for the next couple of years," Orleans said, noting that in its 80-year history, the company "has faced challenging times before."
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