Brookfield Losses Narrow as Builder Looks to Rebound in 2010

Brookfield Homes reported a Q409 net loss of $17m, or $0.81 per share, in Q409, capping off an annual loss of $28m for all of 2009, the California-based homebuilder said. The quarterly loss compares to $69m, or $2.58 per share, in losses recorded in Q408 and a loss of $116m, or $4.33 per share for all of 2008. Total Q409 revenue was $145m, including $134m from Brookfield’s housing operation. That’s down from total revenue of $150m and housing revenue of $127m in Q408. Year-end total revenue was $376m in 2009 and $449m in 2008. Brookfield develops move-up and luxury home developments in markets across California and in Washington DC and Hawaii. The builder said its outlook for 2010 is optimistic but “tempered for the second half of the year by the impact of continued economic weakness, high unemployment, foreclosures and shadow inventory.” Noting that housing has relied on federal government stimulus, Brookfield said the market “presents opportunities to capitalize on mispriced longer-term replacement assets as in general the industry continues to focus its lot acquisition efforts on short-term finished lot positions to meet near-term closings.” Brookfield recorded $37m in impairments in 2009, compared with impairments of $153m in 2008. Impairments included housing and land inventory and write-offs of option deposits, and impairments on investments in unconsolidated entities. Net new orders for Q409 totaled 129 units, up 32% compared to Q408. Brookfield’s cancellation rate held steady at 19%, slightly above the company’s historical average of 15%. New home closings were up 17% in Q409, but the average selling price of homes declined to $505,000 in Q409 compared to $557,000 in Q408. At the end of 2009, Brookfield had an inventory of 187 homes, up from 134 homes at the end of 2008. Long-term Brookfield said it expects an undersupply of new housing units, particularly in California, because of the speed that distressed inventory is being absorbed and the low supply in the development pipeline. Brookfield Homes was the homebuilding subsidiary of Brookfield Properties (BPO), one of the biggest owners of commercial properties in the US, before it was spun off into its own publicly traded company in 2003. Write to Austin Kilgore. The author held no relevant investments.

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