PulteGroup, Inc. (NYSE:PHM) said Monday it plans to “dispose of select non-core and underutilized assets,” including approximately 4,600 lots, and “work to monetize two small communities representing an additional 400 lots.” The planned action will result in a pre-tax impairment charge to earnings in the range of $95 million to $125 million in the second quarter ending June 30, 2017.
The company declined an email request to specify where the assets are located.
“Since being named CEO last September, I have talked about making adjustments to our land strategy that are consistent with our goal of delivering higher returns over the housing cycle,” said Ryan Marshall, president and CEO. “Based on an analysis of our entire land portfolio, company management, with the support of our board of directors, determined that by taking action on these specific land positions we can accelerate the realization of these long-term assets and related tax benefits. We will then seek to redeploy the resulting capital into higher returning projects consistent with our investment and land holding goals.”
The land positions identified for sale include: land requiring significant additional development spend that would not yield suitable returns; land in excess of near-term need; and land entitled for certain product types that are inconsistent with the company’s primary offerings.
“Selling these assets shortens the duration of our land pipeline and moves the Company toward its long-term goal of owning three years and optioning three years of lots,” added Marshall. “Having a shorter and more efficient land pipeline supports our efforts to generate better returns on invested capital over the housing cycle.”
