) announced that it intends to commence concurrent underwritten
public offering of $100 million of common stock and convertible
senior notes worth $150 million due 2019. The company intends to
use the proceeds from the offering for corporate expenditures,
including land acquisitions and development.
Of late, KB Home has been involved in aggressive investment in
land assets and communities. The rising demand for new homes has
led to a favorable situation in the housing market, where
inventory levels are dropping and prices are moving up.
This has necessitated the building of an adequate number of
new homes to maintain the required level of inventory to meet
growing demand. Acquiring lots and lands will help the company to
capitalize on the increasing housing demand.
KB Home intends to open more than 120 communities in 2013, with
more communities started to come up in the later half of the
year. As such, the community count is expected to increase by at
least 15% to 20% by the end of next year. The company expects
profitability for fiscal 2013. The proceeds from the offerings
will support the company in meeting its targets.
The company is also taking other initiatives to capitalize on the
rising housing demand. The company recently entered into an
agreement with its current preferred mortgage lender, National
Mortgage LLC to form a joint venture, Home Community Mortgage,
LLC that will offer loans to KB Home customers.
National Mortgage LLC is a subsidiary of
Nationstar Mortgage Holdings Inc.
), one of the largest non-bank mortgage providers in the U.S. By
providing easier access to finance, the new joint venture deal is
expected to further boost the company's order growth.
KB HOME (KBH): Free Stock Analysis Report
MDC HLDGS (MDC): Free Stock Analysis Report
NATIONSTAR MTGE (NSM): Free Stock Analysis
NVR INC (NVR): Free Stock Analysis Report
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However, we believe that the company may take time to achieve
sustainable profitability as the housing market recovery process
is erratic and uneven.
KB Home carries a Zacks Rank #3 (Hold). Homebuilding companies
that warrant a look include
MDC Holdings Inc.
), both of which carry a Zacks Rank #1 (Strong Buy).