PPS » Topics » Unfavorable changes in for-sale (condominium) housing in the Companys markets and general economic conditions could adversely affect the profitability of the Companys condominium conversion and newly developed for-sale housing business.

This excerpt taken from the PPS 10-K filed Mar 2, 2009.

Unfavorable changes in for-sale (condominium) housing in the Company’s markets and general economic conditions could adversely affect the profitability of the Company’s condominium conversion and newly developed for-sale housing business.

In total, the Company has converted five apartment communities since 2005, initially consisting of 731 units (including one held in a joint venture), into for-sale condominium homes. As of the end of 2008, three of these condominium conversion projects were sold out. The other two projects, consisting of a 206-unit project in Tampa, FL and a 143-unit project in Houston, TX, had, on average, closed the sales of approximately 77.9% of their total units as of February 2, 2009. Beginning in the second quarter of 2007, the Company also began closing condominium homes at its two newly developed for-sale condominium projects, containing 230 homes. As of the end of 2008, one of these condominium projects containing 145 homes had sold out. The remaining condominium project containing 85 homes had one condominium home under contract and had closed 54 homes as of February 2, 2009.

 

    Post Properties, Inc.   13
  Post Apartment Homes, L.P.  


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Beginning in 2007 and continuing presently, there has been a substantial decline in the condominium and single family housing markets due to increasing supplies of such assets, weak consumer confidence, tighter credit standards for home purchases, which the Company believes has negatively impacted the ability of prospective condominium buyers to qualify for mortgage financing, and a significant slow down in the residential housing market in the U.S. Further, the turmoil in the global capital markets and a significant decline in economic growth in the U.S. economy in the second half of 2008 and continuing into 2009 has resulted in a further decline in demand in the for-sale housing markets. Continuing decline in demand, exacerbated by tighter credit standards for home buyers, has led to an oversupply of new for-sale housing that affects the price at which the Company is able to sell condominium homes and the number of condominium communities that the Company is able to develop in the future. In an effort to reduce its unsold inventory, the Company implemented reduced pricing programs which have also resulted in lower condominium profits for 2008.

As a result of these factors, the pace of condominium closings began to slow in the second half of 2006 and has continued to slow through 2007 and 2008. Additionally, a significant portion of the condominium closings at the Company’s remaining newly developed for-sale condominium project resulted from contracts entered into during the second half of 2007 when credit standards tightened and markets increased in volatility resulting in a further slowing of the demand for for-sale housing. The Company cannot predict how long demand and other factors in the real estate market will remain unfavorable, but if the markets continue to be weak or deteriorate further, the pace of condominium sales and closings will be slow during 2009. There can be no assurance of the amount or pace of future for-sale condominium sales and closings. To the extent that condominium pricing pressure continues or worsens or we are required to hold unsold units longer than anticipated (requiring us to continue to pay debt service), the profitability of these projects may be materially adversely affected and it could cause the Company to realize impairment losses in future periods.

These excerpts taken from the PPS 10-K filed Feb 29, 2008.
Unfavorable changes in for-sale (condominium) housing in the Company’s markets and general economic conditions could adversely affect the profitability of the Company’s condominium conversion and newly developed for-sale housing business.
 
In total, the Company has converted five apartment communities since 2005, initially consisting of 731 units (including one held in a joint venture), into for-sale condominium homes. As of the end of 2007, three of these condominium conversion projects were sold out. The other two projects, consisting of a 206-unit project in Tampa, FL and a 143-unit project in Houston, TX, had, on average, closed the sales of approximately 64% of their total units as of the end of 2007. Beginning in the second quarter of 2007, the Company also began closing condominium homes at two of its newly developed for-sale condominium projects, containing 230 homes. As of January 28, 2008, the Company had seven condominium homes under contract and had closed 132 homes at these communities. In late 2006 and continuing into 2007, there was a softening in the condominium and single family housing markets due to increasing mortgage financing rates, increasing supplies of such assets, tighter credit standards and a significant slow down in the residential housing market in the U.S. Further, in the second half of 2007, the turbulence in weakening credit markets accelerated, resulting in a further decline in for-sale housing markets. As a result, the pace of condominium closings began to slow in the second half of 2006 with a further slowing in the second half of 2007. It is likely that closings will continue to be slow at these communities into 2008. Additionally, a significant portion of the condominium closings at the Company’s two newly developed for-sale condominium projects resulted from contracts entered into prior to the third quarter of 2007 when credit standards tightened and markets increased in volatility resulting in a further slowing of the demand for for-sale housing. There can be no assurance of the amount or pace of future for-sale condominium sales and closings. To the extent that condominium pricing pressure continues or worsens or we are required to hold unsold units longer than anticipated (requiring us to continue to pay debt service), the profitability of these projects may be materially adversely affected.
 
Unfavorable
changes in for-sale (condominium) housing in the Company’s
markets and general economic conditions could adversely affect
the profitability of the Company’s condominium conversion
and newly developed for-sale housing business.



 



In total, the Company has converted five apartment communities
since 2005, initially consisting of 731 units (including
one held in a joint venture), into for-sale condominium homes.
As of the end of 2007, three of these condominium conversion
projects were sold out. The other two projects, consisting of a
206-unit
project in Tampa, FL and a
143-unit
project in Houston, TX, had, on average, closed the sales of
approximately 64% of their total units as of the end of 2007.
Beginning in the second quarter of 2007, the Company also began
closing condominium homes at two of its newly developed for-sale
condominium projects, containing 230 homes. As of
January 28, 2008, the Company had seven condominium homes
under contract and had closed 132 homes at these communities. In
late 2006 and continuing into 2007, there was a softening in the
condominium and single family housing markets due to increasing
mortgage financing rates, increasing supplies of such assets,
tighter credit standards and a significant slow down in the
residential housing market in the U.S. Further, in the
second half of 2007, the turbulence in weakening credit markets
accelerated, resulting in a further decline in for-sale housing
markets. As a result, the pace of condominium closings began to
slow in the second half of 2006 with a further slowing in the
second half of 2007. It is likely that closings will continue to
be slow at these communities into 2008. Additionally, a
significant portion of the condominium closings at the
Company’s two newly developed for-sale condominium projects
resulted from contracts entered into prior to the third quarter
of 2007 when credit standards tightened and markets increased in
volatility resulting in a further slowing of the demand for
for-sale housing. There can be no assurance of the amount or
pace of future for-sale condominium sales and closings. To the
extent that condominium pricing pressure continues or worsens or
we are required to hold unsold units longer than anticipated
(requiring us to continue to pay debt service), the
profitability of these projects may be materially adversely
affected.


 




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