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(This is the first in a series of articles on what builders need to know about restructuring their debt and planning for surviving financial adversity in today’s real estate market.)
By David McCain and Bill Albers, MPKA, LLC
Even as the promise of a housing recovery moves closer into sight, debt restructuring is the name of the game for many builders in their attempt to set themselves on a realistic course and survive the worst economic times since the Great Depression.
There is a natural progression of emotions that unfolds as we see our financial world disintegrate around us. Initial thoughts center on protecting the equity we have invested in our projects, and for many this can represent years of profits, time and personal guarantees rolled over from one community to the next.
As real estate entrepreneurs, we understand dirt, real estate and hard assets and tend to shy away from paper stocks and bonds. Unfortunately, in an effort to protect what we have, we continue to make payments against a loan and a project that will never pencil out under current conditions.
Embracing self denial, we can’t believe that our project will fail. With a Herculean effort, we know we can make it succeed. So we embark on the impossible task of seeking take-out capital at full origination value in a market that most likely doesn’t even support half of that value. ... Read More
| Framing Lumber Composite | $ 253 |  |
$ 2 |
| OSB Composite | $ 229 | |
$ 8 |
| Southern Pine Plywood Composite | $ 464 | |
$ 8 |
| With permission from: www.randomlengths.com |
NAHB’s typical single-family builder member last year rang up about $1.36 million in business, employed 7.5 people and started 19 housing units, according to a special study by Housing Economics based on annual census data of the association's membership.
The relatively small percentage of single-family builders who also engage in multifamily construction tended to have somewhat larger operations.
Reflecting difficult conditions in the housing market, the association’s ranks of single-family builders dropped from 45,198 to 31,630 between 2008 and 2009, a decline of 30%. Already down 56% in 2008 from their peak, single-family housing starts fell another 28% in 2009, slumping to their lowest level since the Census Bureau began tracking them in the 1950s.
Another 19,194 NAHB members reported that single-family building was a secondary operation for their company in 2009, down more than 50% of the 39,745 members who reported some sideline business in single-family construction the year before. ...... Read More
Online registration for the 2011 NAHB International Builders’ Show (IBS) in Orlando on Jan. 12-15 — the single, most important and largest industry event of the year — will open on Monday, Aug. 2.
Industry professionals who register for the show by Aug. 31 can take advantage of heavily discounted registration pricing (four days of exhibits and education), saving $100 on early-bird registration and $130 on regular registration.
Another option for NAHB members who register during August is a free four-day pass to the exhibit floor. ...... Read More
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