PulteGroup announced this week that it will sell roughly 4,600 inactive and underutilized lots that it says aren’t worth the expense to develop, are beyond its current needs or otherwise not aligned with the company’s offerings.
The move follows an internal review of the company’s land portfolio with the goal of achieving higher returns on invested capital. The capital raised from the land sale will be reinvested in higher-return projects.
- President and CEO Ryan Marshall said the move will create a shorter, more efficient land pipeline, contributing to improved returns. The change will bring a pre-tax impairment charge of $95 million to $125 million this quarter.
Last year saw PulteGroup undergo a series of leadership changes, after stock performance led company founder William J. “Bill” Pulte to call for the replacement of CEO Richard J. Dugas Jr. In September, PulteGroup named Marshall CEO while also appointing Pulte’s namesake grandson to the board of directors.
The shifts in leadership didn’t stop the company from protecting its status as the country’s No. 3 homebuilder by closings volume on Builder magazine’s annual Builder 100 ranking. Pulte reported 2,824 more home closings in 2016 than it did in 2015.
The builder started 2017 strong, reporting higher-than-estimated profits in Q1, a revenue increase of 13.7% (which fell short of analyst expectations), a net-income increase of 28 cents per share, and an 8.4% rise in orders. Marshall was optimistic during the company’s first-quarter earnings call, citing positive market indicators and indicating that the builder is seeking to expand offerings to first-time and active-adult buyers.
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