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alstry (35.03)

Will the SPF offer ever close????

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June 11, 2008 – Comments (3)

Why would a sophisticated investment fund, who already owns a PRIVATE builder, commit to over $600 million investing in SPF's equity for simply majority ownership in a money losing and still very leveraged HB?

The fund could have purchased SPF's debt at a fraction of face value and owned the whole company practically free and clear following a reorganization.

This fund is a distressed specialist, it just doesn't make sense or cents to come in on the equity side of a money losing HB about to go bankrupt. 

Prior to the $600 million dollar commitment, SPF's market cap was about $150 million.....something seems a bit strange don't you think to be investing so much and allowing so much debt to survive in the current environment with a very negative outlook?????

 

 

3 Comments – Post Your Own

#1) On June 11, 2008 at 3:37 PM, jesusfreakinco (29.12) wrote:

Congrats on leap-frogging over Bellard in the CAPS score.  Impressive run the past couple of weeks for Alstry!

I can only hope your real portfolio is doing as well!

Amazing to me how many folks have closed out the HBs red thumbs.  I am with you, Al, I'll close them all out when they've filed Ch 11, most likely later this year. :)

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#2) On June 11, 2008 at 4:15 PM, alstry (35.03) wrote:

Most of these guys are lying through their teeth.  In many areas where these guys build, foreclosures are skyrocketing.  Absorbtion is slowing to a trickle.....and cancellation are likely to skyrocket as spec counts are at very low levels.

At this point, its all about price and prices are falling very very fast.  Builders are liquidating at over 40% off and I have heard situations where a couple hundred grand was taken off the asking price without too much negotiations.

As we move into the slower selling seasons, expect a lot of backlog to cancel as the buyers realize that they can get the homes a lot cheaper than the negotiated price just a few months ago.

Not only that, now that gas is over $4 per gallon, no one wants to live in the sticks, and that is where many of these guys build. 

Pretty soon, they will have to start paying people to take the houses off their hands so they won't have to pay maintenance and property taxes.

What are your thoughts if Obamarama picks Wesley Clark as a running mate?

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#3) On June 11, 2008 at 8:42 PM, alstry (35.03) wrote:

HOME SALES BOOMING IN SACRAMENTO!!!!!

 

The Sacramento Association of Realtors says that a whopping 65.5% of 1,654 homes sold by Realtors in May were bank-owned, foreclosed, homes. The median sales price in Sacramento County and the City of West Sacramento May was $230,250, down 34.2% from a year ago.
...
Sacramento may be leading the nation in the sheer percentage of lender sales, which are known in the business as “real estate owned,’’ or REOs.

 

Imagine how low prices are going to be this Fall going into winter and option arms start blowing up.  This is fricken nuts, maybe we should say bananas for those RE chimps.

Sure, let's initiate a mortgage bailout plan so everyone stops paying on their mortgage.  No I have a better idea, let's just keep letting homes get foreclosed until about half the homes in CA are REO and than everyone will be able to afford a home once prices get cheap enough.

Unfortunately for HBs, at that point prices will be so cheap that shutting down will be the only option.

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