Toll Brothers- Very Significant

linky?

Just came across CNBC. About 30 mins ago.

http://www.reuters.com/article/rbssFinancialServicesAndRealEstateNews/idUSN0440695620080904

1 minute ago
ignore this person
report abuse "Toll, which said on Thursday that revenue for the current quarter would decline from the previous period, also sounded a note of cautious optimism, saying that cancellations were the lowest in more than two years.

"We believe that there is pent-up demand," said Chief Executive Robert Toll. "When we have held promotions, many more buyers than usual have come out and put down deposits."

UBS analyst David Goldberg, who rates Toll a "buy," said positive signs at the company did not indicate a broader trend."

http://www.cnbc.com/id/26544776/for/cnbc/

JuiceMan- Look above, that's the NYC RE market, that's about to collapse.

Its news that new condo-glut developers are in trouble?

tech_guy- It's news to a lot of people. Just wait and you will see who.

"Demand in New York is more price sensitive today, although demand is still strong, Toll said.

It is the financial industry that tends to spend on condos, Toll said.

"If we sense any slowdown, we'll take the money and run, instead of hanging around and waiting," Toll said.

Nearby Hoboken and Jersey City, New Jersey, are still "doing well" for Toll, he said."

Demand is still strong yet they see signs of weakness (price sensitivity) and,they plan to take the money and run. Potential price decreases on new devs? Sounds good to me, very much needed. Where do you see collapse? I must have missed it in the article. Do you have a different version?

JuiceMan- And you are wondering why, I think your credibility is in question. If that's what you get from this article, then my opinion of you, is much to high.

Just keep in mind, that this is a major builder and the last thing they will ever admit, is a softening market, let alone using the work "Scared".

They should be scared, I remember saying this several months ago. I guess I'm not the only one scared about the NYC RE and the Economy.

From the Reuters Article

1. Demand in New York is more price sensitive today, although demand is still strong, Toll said.
2. It is the financial industry that tends to spend on condos, Toll said.
3. "If we sense any slowdown, we'll take the money and run, instead of hanging around and waiting," Toll said.

1. Now demand is price sensitive. That sounds like a normal market, not a bull market.
2. Layoffs and bonus cuts don't occur until Nov-Dec
3. Do you think Toll Brothers will finish both building of "The Edge" before they cut and run?

I'm glad you have a high opinion of me dco. Don't let a little realism and objectivity get in the way of that.

NEW YORK, Sept 4 (Reuters) - Toll Brothers Inc (TOL.N: Quote, Profile, Research, Stock Buzz) said on Thursday the condo market in New York City is not as strong as it was, and the company is "scared" about the market's future amid deterioration in the financial industry.

"Scared" about the future. Not the past, the future. Read between the lines people. He also said that NJ was doing well. That's great. Again people look a step further. Where do those people work? Only a matter of time. I agree with his assessment, he should cut and run ASAP.

It reminds me of when, John Thain, sold off all that trash paper for 22 cents on the dollar. (Actually it was more like 3 cents, not the point.). Everyone thought that this was the END. Did anyone stop and ask WHY? I'll say it again, because he knew, the market was in far worse shape, then most people realize. That same paper would be virtually worthless today. Now there is talk, that ALL paper is toxic, and no one will touch it.

READ BETWEEN the LINES.

Toll Brothers is saying that they'll dump their inventory at factory closeout prices if they have to (our condo prices are so low you'll think we're insane!). This is a good strategy. Plenty of people out there ready to buy who can get a $400K mortgage but not a $700K mortgage. Of course this "dumping" would screw over all of the other unsold condo projects who would have to cut prices or watch the "price sensitive demand" flock to Toll Brothers buildings.

Sometimes people on blogs and boards suggest that big condo developers will ride out a real estate crisis, hold inventory, rent, until the market comes back. Toll seems to be saying that the better strategy is to get out with whatever they can while they still can.

"3. Do you think Toll Brothers will finish both building of "The Edge" before they cut and run?"

It's actually Northside Piers (1 tower built, the 2nd started, the third not yet begun), and they've already had the rat brought out to the second tower for using non-union construction after going union on the first.

Toll Brothers appears to be saying that there is no more money in NYC real estate. They also seem to be saying that to maximize shareholder value they need to sell everything, even if at a loss, so they can focus on more profitable ventures (building private islands off the coast of Florida, who knows?)

There are three new listings for Toll Brothers' 5th Street Lofts Condos. It just showed up yesterday.

2 flips -
Unit #3M, 3 bed, 2 bath, asking $1,250,000
http://www.streeteasy.com/nyc/sale/346074-condo-509-48th-avenue-long-island-city-long-island-city

Unit #4M, 3 bed, 2 bath, asking $1,265,000
http://www.streeteasy.com/nyc/sale/346062-condo-509-48th-avenue-long-island-city-long-island-city

and 1 from sponsor -
Unit #5M, 3 bed, 2 bath, asking $1,071,990
http://www.streeteasy.com/nyc/sale/79755-condo-509-48th-avenue-long-island-city-long-island-city

It doesn't look good for the flippers or Toll Brothers. For the same $$, you can find similar apts in Manhattan. And I've seen letters where Halstead is practically begging buyers to return to the sales office. They said they're willing to negotiate the price down finally.

I do think a number of the new condos may be hit the worst, but I wanted to make one point about the developers. Many of these condo buildings have commercial real estate businesses in the ground floor (delis, retail stores, etc). The developers sell the apartments and still own the leases on the retail spaces at well-below market-rates. They then turn around rent these spaces out to businesses at market-rate rents. It gives them the cash flow to hold out longer than you would think on the unsold apartments. It doesn't mean they can hold out forever, just for a time until they NEED to sell the apartments.

I hadn't seen this point brought up anywhere here, so I thought that I would just throw that piece out there.

That's a very good general point.

In the case of 5SL, that building has no retail spaces. So, that revenue stream won't be available. In fact, I do believe that many of Toll Bros. residential condo projects around the NYC metro area do not contain retail spaces. Therefore, this may help explain why Toll Brothers is sweating bullets this fall.

I don't think any of the retail spaces in new dev on Kent ave in Brooklyn have been rented out yet. You can't get a revenue stream without tenants. New construction 2007+ in Brooklyn may be first to fall. If LIC doesn't beat it to the punch.

Northern Yorkville is starting to feel it and the limited new construction in northern Yorkville might get pinched. Some buildings just got out ahead of the tidal wave.

Retail tenants in neighborhoods created out of whole cloth (LIC, downtown Brooklyn, Kent ave, etc...) count on condo sales to provide customers. Nobody is going to travel to LIC just to shop. So if condos don't sell why would a retail store open? Or how much would they pay? And if the condo buyers are eating tuna out of a can to save money to pay the mortgage and condo fees how much will they shop? Expect to see a lot of Duane Reade and Supermarkets. I wouldn't hold my breath waiting for the Apple Store in the up and coming parts of town.

How will tolls other projects fair going forward. If they start to reduce prices in Brooklyn will affect the rest of the city. You know my answer, like to hear others opinion.

Manhattan is going to start experiencing even more appreciable decreases in pricing, starting now and continuing for at least the next two years, and perhaps much longer if the new mayor is poor and/or the national economy stays soft for a longer period of time. The financial markets, i.e. Wall Street, are not even through the credit crisis, and they will be weak for the next several years. Bonuses will start to evaporate this year and will stay low for the next several years. Mortgage rates are not going to get any cheaper, and they will only become more difficult to get with more equity required to purchase. As Europe and Asia begin to get pummeled by credit issues, foreign demand, which in my mind is mostly hype in the under 3 million dollar range, will dry up.
Basically, all of the factors that led to the appreciation we enjoyed from 2002-2007 have eroded considerably, and they will continue to do so for quite some time. If quality of life deteriorates on top of this poor economic climate, Manhattan real estate will be in for a prolonged and steep reduction in value, perhaps as much as 30 to 35% over the next four to five years.

Mh23- I think this is very well put, if a bit gloomy. Certainly the flood of unprecedented appreciation is receding and the areas at the fringes are going to dry up first. I think that the decline will vary neighborhood by neighborhood, maybe drastic declines (30-35%) in some while seeing less decline with prolonged stagnation in others.

Manhattan will experience 6-10% normal historical appreciation for the next 1-2 years before the sideliners jump in and combine that with the fed liquidity injection and it's off to the races....I luv owning Manhattan property! it's like buying a great stock without all the gut wrenching ups and downs.....

Has anyone taken a look see a Toll Brothers stock price. Although down today it was only a few days ago it hit a 52 week hight. Toll Brothers hitting a 52 week high. What's that all about?

spunky, maybe it's because Toll Brothers has admitted there is a problem in the new development market, that they're willing to cut back and let go of unprofitable investments. Better if they take a loss now and free up their capital, make better decisions going forward than remain tied to properties with little chance of making money and even if they do it'll be years away. I'd say Toll Brothers is making an attempt to increase shareholder value. We'll see if they can do it.

which brokerage do you work for, SteveF?

;-)

nyc what'd you get punched in the eye??.....Sorry not a broker but an owner....