Hovnanian Enterprises Acquires Oster Homes
August 3, 2005
Hovnanian Enterprises, Inc. announced today that it acquired substantially all of the homebuilding assets of Oster Homes, a privately held Ohio homebuilder, headquartered in Lorain, Ohio, for an undisclosed purchase price paid in cash.
The acquisition provides Hovnanian with a complementary presence to its Ohio "build-on-your-own-lot" homebuilding operations. Oster Homes builds in Lorain County in Northeast Ohio, just west of Cleveland. Lorain is part of the greater Cleveland MSA, which is the 50th largest housing market in the U.S., based on 2004 new home starts.
In its 2004 fiscal year, Oster Homes delivered 247 homes with revenue of $56 million. Oster Homes currently has approximately 105 homes in contract backlog, with a sales value of $25 million, and owns or controls approximately 3,000 lots throughout the greater Cleveland area. Oster Homes ranked as the 4th largest builder in the Cleveland MSA in 2004 by Builder Magazine.
Oster Homes designs, markets and sells single family homes, with a focus on first-time and move up homebuyers. Additionally, Oster Homes utilizes a design center to market extensive pre-priced options and upgrades.
"We are pleased to welcome Tom and Evelyn Oster and their talented team to our existing Ohio operations," commented Ara Hovnanian, President and Chief Executive Officer of Hovnanian Enterprises, Inc. "Prior to this acquisition, we were the largest homebuilder in the Cleveland marketplace through our on-your-lot operations, and Oster Homes presents the opportunity to expand our presence in this important market with a high quality production homebuilding operation. We plan to leverage our existing distribution facilities with the addition of Oster Homes' operations. The added volume through our Canton facility should benefit both our existing operations, as well as our newly added Oster Homes operations."
Mr. Tom Oster, founder and president of Oster Homes, stated, "Our combination with Hovnanian provides Oster Homes with an opportunity to expand our expertise in developing and building high-quality communities throughout the greater Cleveland area. Our strong cultural fit provides us with confidence that we will continue to deliver the best possible homes to our customers." Tom and Evelyn Oster founded Oster Homes in 1995 and have more than 35 years of combined real estate experience. Both will remain with Hovnanian following the acquisition. Tom and Evelyn Oster recently received the 2005 Entrepreneur of the Year award from Ernst & Young in the hospitality/real estate category. Oster Homes was represented by Michael P. Kahn and Associates in the transaction.
Hovnanian expects the addition of Oster Homes will be slightly accretive in fiscal 2006. Hovnanian will not be booking any goodwill in conjunction with the transaction. Further, after taking into account the effects of the acquisition, the Company expects to be within its targeted ratio of 50% net debt to capitalization at fiscal year end.
Hovnanian Enterprises, Inc., founded in 1959 by Kevork S. Hovnanian, Chairman, is headquartered in Red Bank, New Jersey. The Company is one of the nation's largest homebuilders with operations in Arizona, California, Delaware, Florida, Illinois, Maryland, Michigan, Minnesota, New Jersey, New York, North Carolina, Ohio, Pennsylvania, South Carolina, Texas, Virginia and West Virginia. The Company's homes are marketed and sold under the trade names K. Hovnanian Homes, Goodman Homes, Matzel & Mumford, Diamond Homes, Westminster Homes, Forecast Homes, Parkside Homes, Brighton Homes, Parkwood Builders, Great Western Homes, Windward Homes, Cambridge Homes and Town & Country Homes. As the developer of K. Hovnanian's Four Seasons communities, the Company is also one of the nation's largest builders of active adult homes.
Additional information on Hovnanian Enterprises, Inc., including a summary investment profile and the Company's 2004 annual report, can be accessed through the Investor Relations page of the Hovnanian website at http://www.khov.com. To be added to Hovnanian's investor e-mail or fax lists, please send an e-mail to IR@khov.com or sign up at http://www.khov.com.
Note: All statements in this Press Release that are not historical facts should be considered as "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995. Such statements involve known and unknown risks, uncertainties and other factors that may cause actual results, performance or achievements of the Company to be materially different from any future results, performance or achievements expressed or implied by the forward-looking statements. Such risks, uncertainties and other factors include, but are not limited to, (1) changes in general and local economic and business conditions, (2) weather conditions, (3) changes in market conditions, (4) changes in home prices and sales activity in the markets where the Company builds homes, (5) government regulation, including regulations concerning development of land, the homebuilding process and the environment, (6) fluctuations in interest rates and the availability of mortgage financing, (7) shortages in and price fluctuations of raw materials and labor, (8) the availability and cost of suitable land and improved lots, (9) levels of competition, (10) availability of financing to the Company, (11) utility shortages and outages or rate fluctuations, (12) geopolitical risks, terrorist acts and other acts of war and (13) other factors described in detail in the Company's Form 10-K for the year ended October 31, 2004.