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April 30, 2008 - Cheerleader v. Reality
The Cheerleader - Yesterday we heard from self-proclaimed housing economist Hank Fishkind, principal of Orlando-based Fishkind & Associates. He has now official put on David Lereah’s cheerleader skirt. Hank declared that “Martin and St. Lucie County have already bottomed out.” I’ve got news for Hank. He couldn’t be more wrong. As the economy continues to slow, St. Lucie County in particular will become the poster county for one of the hardest, hit areas in the country. St. Lucie has a massive backlog of properties moving through the default, foreclosure and auction process. Much more on Florida’s housing future for clients. Hank’s been notoriously wrong throughout this cycle, but there was a period where he was right on the money. Well, let’s say he was regurgitating media clips based on his rear-view analysis of reality. I realize this is Quick Notes, but one more note. St. Lucie County foreclosures are up 300% from a year ago and several thousand percent from two years ago . . . with NO sign of slowing down.
Reality – David Blitzer, chairman of the index committee at S&P, could not have said it better, when he said, “The slope is on direction. There is NO sign of a bottom. (emphasis added)” What I see and hear is a crumbling of the American family. I get phone calls and emails all the time from honest American’s that were not involved in the flipping houses. These folks continue to experience hardships that are difficult to describe from not being able to afford food to having to give up the family pet to an animal shelter. There is not bottom in sight, and we cannot predict how bad this gets. I believe we are at a point where the word Depression is appropriate for discussions. Jim Gaines, a research economist at Real Estate Center at Texas A&M University, had this to say, “Once the market starts a given direction, the momentum will carry it down, even below the (historic) trend line, until something happens to change the overall psychology.” Unfortunately, the change right now is skyrocketing food and energy prices, job losses and a flood of housing inventory.
April 30, 2008 - A+ to New Biotech and Research Park - Job well done goes out to the Martin County Commissioners for approving a zoning change to create a new Biotech and Research Park. Acorn Development is ahead of the game when it comes to this hot investment opportunity. Acorn requested a change to a 35 acre parcel they own in Martin County that sits smack in the middle of the two key Biotech and Research Hubs . . . Scripps in Jupiter and Torrey Pines in Port St. Lucie.
I am still encouraging clients to consider these opportunities. With all of the recent attention on these areas, investing in this direction requires more than a dart board. The dart board days are over. The guys that bought land over the last two years are not that anxious to sell, and when they do, prices are often unrealistic. Now the investment opportunity is transitioning to development of a true business plan for the park. If you are interested in Biotech and Research Park opportunities, call me, Mike Morgan at 772-260-5448 or email me at Mike@MorganFlorida.org
April 29, 2008 - $100M Research Park Sale - HDG Mansur, a real estate asset manager with offices in New York, London and Dubai, paid almost $100M for Florida Atlantic University's research parks, on behalf of HDG clients. Biotech and Research facilities in this market are viable investments. These have been at the top of my list for more than two years. This transaction was closed as an entity sale this month, in order to avoid real estate closing fees.
I still believe Biotech and Research are two of the best markets in Florida. I really can't understand some of the clients that come to me interested in gambling on the scraps of land the builders are trying to dump, when Biotech and Research has a bright, stable and secure future.
April 25, 2008 - Kondo Kings (?) - My stomach rolls every time I read something about Mark Zilbert or Peter Zalewski, self-proclaimed Miami Kondo Kings. That's not a typo. Kondo like King Kong. And you can analogize the size of the Miami condo problem to a comparison of a chimpanzee to King Kong, with a normal market being the chimp. So when you read the media quotes from Mark and Peter, think of King Kong, and just how much poop King Kong poops. And that's how much you'll have to wade through before you get to the truth.
Sizzling Condo Market - NOT - Mark and Peter will tell you the market is "sizzling" to use one of Mark's adjectives of the market. They will tell you the foreign buyers are lined up and fighting over units. NOT true. They will tell you Miami is the next Manhattan. NOT true. And they will tell you just about anything they might think you want to hear. The bottom line is Economics 101 . . . Supply and Demand, combined with the fact that there never, ever, ever, ever was a market for even 10% of the condos pre-sold. I guess that is where the supply and demand thesis was derailed. The demand was not "real" and the supply was not "real" because the supply was fed by highly leveraged markets. In fact, even during the Great Depression, we did not see the level of leverage that we saw in the first eight years of this century.
Opportunities? - Back to the Miami market. There are a few properties that are worth looking at. Continuum and One Bal Harbour are two of them. Each of these properties have excellent views and privacy. But how do you compare these jewels to the majority of the crap that was built and is being built in areas of Miami and Miami Beach, that you can't even walk your dog safely? Well, there is no comparison. Palm Beach, Naples, Fort Myers, Tampa, Orlando, Singer Island??? All have different twists, high points and low points, but there are some tremendous opportunities.
Since this is a Quick Notes Blog, I need to keep it short. If you want a broader view, call me. But let me close by saying, even Continuum and One Bal Harbour have problems. And the fundamental problem is . . . the original buyers overpaid and most are unwilling to come down to realistic prices. I tell my clients interested in Miami condos to wait. Just sit back and wait. Patience is a virtue that will be handsomely rewarded in this market.
Buyers and Sellers - If you would like additional information of a tour of the South Florida market, call me, Mike Morgan at 772-260-5448 or email me at Mike@MorganFlorida.com
April 24, 2008 - Pent Up Sellers - We have heard a lot about "pent up demand" from builders like Bob Toll talking to Wall Street execs and from all the market prophets on TV. But here's what you're not hearing about. As I attend Open Houses, the number of "sellers" that show up is more than 50%. Now I am hearing more and more sellers telling me how they "must" sell, but they don't want to take a loss, so they are not on the market or have not lowered their price. At some point, they truly must sell, and the hard reality will be a far larger loss than if they had sold today. There are the exceptions. If these people can hang on for 2-3 years, we might see prices start to rise, but they are not going to get back to the levels we saw at the peak. We are 20-40% off peak prices, depending upon your market. Even if we bottom out this year, which I doubt, prices moving forward will rise at traditional levels of 2-5%. We are not going to see the bubble rises of 20-40% that we saw in 2002-2005. You can do the math. If you are down 20% and prices start to rise at 2% a year, you've got a long time to wait to break even. I believe we will see this "pent up sellers" issue come in to haunt us just as the lenders start to blindly dump properties on the market.
April 23, 2008 - Condo Fees Lawsuit - The latest problem to hit the condo market is unpaid condo association fees. Well . . . not the latest, since I've been writing about this issue for two years. But now we are seeing lawsuits over the fees. Unfortunately, there's a Catch 22 here. Most of the associations with unsold units are still controlled by the developer. Normally, a lien would be attached to the unit for unpaid fees, and the unit could be foreclosed to recoup the fees. But when the developer controls the association, they're not about to allow a lien to be slapped on their units. Marina Grande owners in Riviera Beach have just filed a lawsuit against Boca Developers for almost a half a million in unpaid fees. It will be interesting to see how this lawsuit turns out. If the owners win, we will see more developers throwing in the towel on projects. But . . . then the problem becomes the lenders' problem if the developer can't find a buyer. My question for Mr. Glickman with Corus is: Did you figure in the association fees, taxes, insurance, etc. when you boasted about how comfortable you were with the cushion you were sitting on for the thousands and thousands of units you financed? Or maybe now your're starting to feel the fire ants crawling out of that cushion.
Opportunity: Yes, but it is not as easy as it appears. Some developers are prepared to jump off the roof, but only if they can hit the pool. Prices are still too high on what we have seen, and the lenders like Corus still have their heads up their butts. Patience. Have patience. Then again you can dig along with the vulture boys like Zalewski and Zilbert, but I guarantee a belly ache when you realize just how foul some of what they are pushing really is.
April 22, 2008 - Class A Ooooops - Since January we have been hearing about deals on the $100M plus Class A office tower Esperante in West Palm Beach. ING paid $104.5M less than three years ago and was asking $115M in January. Unfortunately, despite all the experts talking about how the housing/financial bubble did not effect office and commercial, this deal has yet to close. In fact, with Esperante less than 70% leased at this point in time, it is unlikely ING will get anything near $100M. Sources report offers in the $75M range. Ouch. But that's what you get when you sit back, do nothing, and expect someone to do the work for you. As with all office towers in trouble now, the owners need to start thinking outside the box. If they think they can sit back and suck in the rents, they are on crack. With all of the new space going up . . . full of super amenities and deals, the old-timers need to come up with a better slice of cheese. I've long talked about specialty office towers with super amenities. I've yet to see anyone refurbish to meet the demand.
Opportunity: Yes, there are opportunities when a group like ING is ready to suck up the loss and dump a property. Esperante could be a nice catch for someone willing to think outside the box.
April 21, 2008 - Confirmed - CondoHotels a Bust - A little more than a year ago I received a call from a group of 18 professional sports players. They were buying "investment" in WCI's Resort at Singer Island. My advice was . . . walk away. But their real estate agent was telling them how much money they were going to make because Starwood was running the hotel side, and Starwood would pay them for their condos. I worked for Starwood. I told these knuckleheads that they only one going to make money from this deal was Starwood. I tried to explain the management fees, house cleaning, condo fees, taxes, etc. I think these idiots were hit in the head with balls to many times. They all closed on their units.
This week the Palm Beach Post reported on CondoHotel lawsuits, and two of those lawsuits was about WCI's Resort at Singer Island. One expert said about CondoHotels, "I'm not saying every one doesn't work, but the vast majority are failures." There is so much more to the CondoHotel story for my clients interested in purchasing an entire project. And for anyone thinking of purchasing a unit as an investment, I have one question. Who are you going to sell it to? And remember, CondoHotel units are almost impossible to finance, so you need a sucker with cash.
Opportunity - If you can buy out the entire project at the right price. It requires the approval of all of the owners, but in many of these projects, that is not going to be difficult to obtain from the owners . . . or the lenders stuck with these units.
April 18, 2008 - Confirmed - Apartment Rents Down - I've been advising clients to be wary of the claims that the housing crisis is a helping the multi-family housing market. The logic has been; as homeowners lose their homes they move to apartments. Unfortunately, the cheerleaders forgot to discuss the flood of homes on the rental market from flippers that are underwater. In any event, a survey by California based RealFacts just confirmed what I have been telling clients . . . rents are down. In some markets by as much as 15%. So before stepping up to the plate on multi-family housing, make sure you do your research on the single family home market you will be competing with.
April 17, 2008 - Foreclosure Fallout - There's a lot of it, but one you don't hear much about is how this effects Homeowners Associations. The Palm Beach Post reported one community had to assess owners $60,000 to cover dues their neighbors aren't paying. In most cases, the HOA puts a lien on the property. When it is sold, they may collect the back dues . . . or not. As of now, more than half of HOAs surveyed are facing financial shortfalls because of defaults. But the worst is yet to come on this front. The massive condo failures in Miami, Orlando, Naples, etc., will come back to haunt the initial lenders when they step into the shoes of the developer . . . after the developer says Ta Ta with millions of buck from a non-recourse loan. It will be interesting to see how lenders like Corus Banks handles this. They still feel they are sitting pretty in all of their Florida projects. And my four year old neice still believes in the Tooth Fairy.
April 16, 2008 - Boca Developers Unraveling - A few weeks back Boca Developers stopped construction at its Marina Grande condo project in North Miami Beach. Now they are in trouble in Fort Lauderdale at their Las Olas Riverfront project. Wachovia has moved to foreclose on the property and the developer is in default on a $275M loan intended to help finance this project and a few other projects. A receiver was recently appointed to protect Wachovia's interests.
Opportunity? - It depends. Those are the two most important words I learned in law school. This could be a huge opportunity for the right developer or it could be an awful trap for an overly aggressive portfolio manager that just needs to "make deals." If you are interested in this project or any of the other Boca Developers projects, call me. We can discuss what is going on, who the players are and what opportunities there are . . . as well as the traps.
April 15, 2008 - Bobby Ginn Does it Agin' - Over the last few years I have met with several clients interested in purchasing second homes, investment homes and stakes in Bobby Ginn properties. No matter what I said, the golden tongue staff at Ginn Resorts usually prevailed.
I will never forget one client that purchased a $400,000 lot from Ginn, even after I warned him and never dreamed he would go through with it. A few months after the purchase he called me to put the lot on the market. When I told him the only lot that had sold was in the $160,000 range, I thought he passed out on the other end of the line. Since then, the lots have dropped below $100,000.
But somehow Bobby Ginn continues to woo big money from big banks, hedge funds and investment portfolios. Truly, either these managers are in bed with Ginn for huge payoffs, or they are just plain old fashioned stupid. Recently, I am receiving calls about Ginn properties from large players interested in backing him or buying out some of his portfolio here and in the islands. I've told my clients the same things . . . run the other way. Since this is a Quick Notes forum, I will close with this quote:
A Cox News Service story published in 1989 included this quote from a former business associate, “Here’s a fellow who has given bankers blood baths. They’ll walk in the door and see Bobby standing there and turn around. He’ll stop them at the door and two hours later they will go for his deal. He can literally talk you out of your (shirt) and sell it back to you.”
April 11, 2008 - Orlando in Trouble - I am in the Orlando market for two days. What I see and hear is darker than what you are seeing and hearing. The parks are not doing as well as they should be. Yes, there is a big spike in foreign visitors, but there is a major problem across the board. And that is affordability and the American consumer. Where this gets uglier is the residential real estate market here. These folks cannot afford the mortgages they are in, when they earn $10-15 an hour. Give it another 6-8 months. When a big chunk of the mortgage resets start to hit, we will see a trigger that will run another 8-12 months, as the folks here in Orlando . . . and cities near you, start to lose their homes. It takes longer for the banks to move through this process, because they are simply overwhelmed. I did see a few opportunities in Orlando, but nothing I could recommend to clients. In fact, I put it sixth or seventh on my list of Florida opportunities.
April 11, 2008 - What To Buy? - I have more than a three dozen clients and potential clients that want to buy real estate. If I had something to sell them all, I could retire in luxury on my own private island. Or, I could sell them junk with a good story. One client has $250M to spend and he emails and calls me two to three times a week. He wants to buy "deep discount" land . . . just like a dozen other guys. He thinks because the builders are selling land for 17-40 cents on the dollar, that he is going to a fortune. WRONG. The builders are not stupid. What they're selling you at 17-40 cents on the dollar is probably worth 10-30 cents on the dollar. The good stuff they are holding in their portfolio. But this is a limited note, so if you want details, call me. The point I want to make is "What To Buy." And that is very simple. You want to buy value. You want to buy like Buffet. Not like a crazed, 20-something, portfolio manager that has no clue what he's doing. In Florida, there are some value deals to strike with the builders, but you better know what you are doing. I don't care who you are, but if you think you know Florida land better than the boys at Lennar or Avatar, you're too full of yourself. So either strike a deal with these guys as partners, or move on. If you are like thinking like Buffet, you'll be looking at the best of the best . . . biotech hubs, port/rail properties, and my favorite . . . deep water land.
April 9, 2008 - Follow Up to "Pennies on the Dollar" - I received several emails and phone calls, in response to yesterday’s Quick Note – “Pennies on the Dollar” - about buying land for 10-30 cents on the dollar. The callers and emailers wanted to buy land like that. Well, I don’t think they understood the message, so I am going to expand a bit on this issue.
Buying land at 30 cents on the dollar, or 17 cents on the dollar, as we saw in the recent Centex deal, is not what it appears. First of all, what “dollar” are we talking about? Are we talking about an inflated price that builders paid for land in a tulip-like bubble? Yes. Yes, that’s exactly what we are talking about. I’ve been saying this for almost two years. Many of the builders will be out of business within the next 12-24 months. Moreover, we are going to see huge bank write-downs and bank failures. NO, we have not seen the end. We have not even seen the middle. But back to the land for a moment.
Guys that contact me want to buy land at a deep discount. Okay, but the problem is knowing what deep discount means, and what the future of that land is. For example, if you buy the land discussed yesterday, you are going to be leasing it to a cattle farmer for the next 15-20 years. It might sound like a great deal at 10 cents on the dollar, but it is not. Here’s the problem. Much of the land we are offered, is out in the middle of nowhere. Bigshots like Morgan Stanley are buying it. They have no clue what they are buying, but the portfolio managers don’t get bonuses unless they buy. So they buy. They can buy all they want at 30 cents on the dollar. The builders and the builders’ land bankers are happy to sell it to them at 30 cents on the “peak” dollar. It was never worth the “peak” dollar to begin with.
Here’s how best to sum it up. I have a ten million shares of Bear Stearns to sell you at 10 cents on the dollar. How many do you want? You can have as many as you want at 10 cents on the dollar . . . $18 a share. It is no different with most of the crap the builders and the land bankers are trying to sell. Sure . . . there are great deals out there. But the ka ka to deal 100:1.
With that said, if you are interested in land, condo towers, office buildings, shopping centers, etc., I provide a level research and consulting for clients, that allows them to make an intelligent decision. You need to look at more than what is on the paper. You need to look at reality. And you need to do it in person, not from a fancy office in Manhattan. I also sift through the ka ka for the gems. It’s a dirty, frustrating job that requires steel nuts and a robotically objective review.
April 8, 2008 - Builders Dumping Inventory - I thought we had seen the last of builders dumping standing inventory, but we haven't. This is far more troubling than builders dumping land. When they dump inventory at 30% discounts to bulk buyers (sucker), they kill the market for future sales because appraisers are going to look at the dumped inventory for comps. I just got off the phone with a guy that bought all of the standing inventory from a builder at a 31% discount to the least expensive sale the builder has made in this community. The buyer purchased all of the standing inventory, but the builder still has more than 50 homes to build out. This shows you the level of desperation . . . and the absolute lack of a thought process in transactions like this. There are other - more creative - ways to move property. Not only has the builder killed market values, but this builder can't even think of selling another home in this area until the buyer gets rid of the homes he just bought. And this will trigger another round of dumping by competitors. Who is the builder? Let me just say it is one of the Top 5. Top 5 in size and Top 5 in Stupidity. Strike that, as they are Numero Uno when it comes to stupidity.
April 8, 2008 - Pennies on the Dollar - Yesterday I was presented with yet another project abandoned by a national, publicly traded builder. The land was formerly the home of grazing cattle in the middle of nowhere. But with a little finesse and a lot of pushing, pulling and pocket money, it was transformed into an entitled project for single family homes and town homes. With the sticky part finished, the investors marketed the property to the big builders . . . and sure enough one bit. As was the practice during this peak period, they bit hard. They paid ten times more than the value of the property prior to the use change. That was two years ago. And now . . .
Well, yesterday I was asked what I thought the property was worth today. I had no idea about the current zoning. I was only told where the property was. When I told them it was worth $2.0M to $2.5M, I heard the chilled chuckle on the other end of the phone. "Are you kidding, Mike," the exec asked. "We paid $27M for that property," he slowly muttered.
I wasn't kidding, and I hadn't finished my comments. I added, "I think that's all it's worth, but finding a buyer is not going to be easy. If you need to sell it within the next 30 days, I can probably move it for $1.5M within a few days. Other than that, we're going to need to find a farmer, because I don't think you're going to see residential out there for another 15-20 years."
This is just one of three examples I could share with you from conversations in just the past two weeks. The Lennar deal at 40 cents on the dollar from peak was a great deal for Lennar and a totally stupid move for Morgan Stanley. Obviously, they didn't do their homework or there was some side deal with Lennar. We were approached with a KB Homes deal at 30 cents on the dollar. I wanted to laugh, but the caller was so serious that I had to ease him into it. The Centex deal at 17 cents on the dollar is a more realistic level from peak. Although we just saw one deal fall apart that was 11 cents on the peak dollar.
For many of these properties, it is more like 10-15 cents on the dollar from peak values. There is a lot more to this story than I can share in Quick Notes. I will be holding a conference call next week for clients. We are going to discuss why builders paid what they did and why values have fallen by as much as 90% from peak. The value of what the builders own is going to shock many of the longs. It will be a pleasant surprise for the shorts. And for those of you that think the tax loss carry back is going to pull these guys out of BK . . . it's sweet that you still believe in miracles.
April 7, 2008 - REO Properties = KKDP - When it comes to REO properties controlled by lenders, it's like Ka Ka de Poop. And here's why. There is absolutely no reason for a lender to let it get to this point. By the time the lender forecloses, the property has lost value for 3-14 months during the foreclosure process, and the home is most likely racking up maintenance bills and issues. Do you really think the banks are taking care of these properties? Of course not. So it is a triple whammy.
1 - Very costly foreclosure process to fatten up the attorney's bank accounts.
2 - Falling prices as the process lingers on, and on, and on, and on.
3 - Huge expenses for maintenance and addressing issues when maintenance is not done (which is most of the time).
Personally, I have four clients with contracts on pre-foreclosure properties. These are all cash buyers, and the contracts are at or slightly above market. But we can't even get the lender to respond with a counter. Okay, so maybe they don't want to sell at the price we offered. But why not counter with a price the lender wants?
I can't possibly write enough about this or warn enough. Lenders are going to be crushed by their inability to address the issues. Their solution is to wait until the properties have fallen into total disrepair . . . and then bundle them off and put them on the auction block. That's the worst thing they could do for a gazillion reasons.
1 - If they were attentive during pre-foreclosure, they would realize a much higher price at sale. In fact, from what we see, the pre-foreclosure price would be 50-100% higher than what banks are going to to net out with at auction. If you think that number sounds wrong, call me.
2 - Auction properties are NOT primarily being bought by end users. The bulk of the auction properties are going to investors, which does not address the underlying problem. The solution is to provide financing to end users. But the lenders are either afraid to lend new money or they just don't have it.
3 - Auctions bring down the value of the remaining properties in the area. We saw a dump from one of the big lenders, where they sold a group of homes for $70,000. The market for these homes was $90,000 to $120,000. The lender just killed the market and killed the appraisals of future sales.
If you are a client, there is much more in our detailed report. If you are not a client, please feel free to visit my blog, but remember this blog is just for Quick Notes. The details and the meat of what you are reading here is reserved for clients.
April 5, 2008 - Biotech Incubator - Alexandria Real Estate Equities is the nation's largest landlord of laboratory space. They are also ahead of the curve here in Florida. Alexandria built a 40,000 square foot, state of the art incubator facility in Jupiter, complete with a wet-lab. Their Jupiter facility is modeled after their highly successful Seattle center. It's clear Alexandria is taking this market seriously, and with everyone else sitting on the sidelines watching, Alexandria is set to guide this market.
Cytonics Inc. is Alexanrdia's first tenant. Cytonics just moved into about 5% of the space at the Jupiter facility. For reference, the Jupiter facility is just a couple of miles from the Scripps Florida super-site at the Florida Atlantic University Campus, and less than an hour from Torrey Pines' Port St. Lucie biotech campus.
April 3, 2008 - Rents UP? Occupancy UP? - NOT - You're seeing and hearing statistics about how strong the rental markets are. As with other statistics in the housing industry, they are manipulated to fit the spin of the story. If you look at things without the rose colored glasses, you will see that despite more people moving away from ownership into rental units, there is still a massive oversupply of rentals and multifamily housing. The story you hear from the media sounds good . . . rental units in short supply as homeowners lose their homes and buyers find out they can't qualify for a mortgage. But you're not hearing the other side of the story . . . developers of multifamily housing overdid it. AND . . . millions of flippers stuck with units they can't sell, are not flooding the market with rentals. Folks, there is not shortage of rental units, and rents are not rising. A perfect example is a marketing piece I received yesterday from one of the country's largest multifamily housing owners. They were offering real estate brokers a $1,000 bonus for rental referrals, and they were offering the renter 2.5 months of free rent. Do the math.
April 2, 2008 - Builders' Tax Gift - From what we hear, the builders' lobbyists have prevailed and Washington is going to provide the builders with a tax bonus allowing tax losses to be carry back five years. I would have thought this would be the last group to receive a bail out, but it just goes to show how powerful their lobby group is. These are the guys that pushed for cheap money, and then created a frenzy comparable to the dot.com bust. It's sad that Washington has chosen to ignore free market economics, opting to bail out banks and builders. You and I, the taxpayers are paying for it. Fat cat's at the top are grinning as they squeeze a few more dollars out of a broken system. By the way, do you think the top cats will have to give back any of those huge bonuses when they recalculate prior year profits to losses? Nope
April 1, 2008 - Centex v. Lennar - A client brought up something interesting this morning during a discussion about the Centex land sale announcement. Overall the deal is less than the 40 cents on the dollar Lennar picked off from Morgan Stanley. But after hearing Stuart Miller brag about how great the Morgan Stanley deal was at 40 cents on the dollar and looking at the Centex deal, that must mean the rest of Lennar's land is worth less 40 cents on the dollar. Or, they sold Morgan Stanley the least valuable land in Lennar's portfolio. As many of you know, I must be careful about what I say about Lennar because of a settlement agreement. But yes, the Morgan Stanley and LandSource deals were tremendous for Lennar and pretty sucky for the buyers. It is not a fair comparison to look at what Centex got . . . or is it? As for what the balance of Lennar's portfolio is worth, I can't say, but Stuart's conference call comments did. Back to Centex for a moment. I've heard rumors from reputable folks about Centex trying to sell land for as low as 15 cents on the dollar, and not being able to close the deal. With their fiscal ending Monday, it seems like they failed at selling the land they were trying to move off their books. That's not a good sign. And it is not surprising to me. Do the math. Take a look at what Centex has on the books. Assign a value of 30 cents on the dollar, 50 cents and 70 cents. Then remove all the debt. Are they still in business? So when I tell you it is going to get worse . . . read between the lines . . . Much Worse. We will be saying Ta Ta to several of the Top 10 over the next 18 months.
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