By JOHN T. WARD[This post has been updated with comments from Mayor Pasquale Menna.]
Eleven years after moving in, dramatically shrunken homebuilder Hovnanian Enterprises is selling its gleaming Red Bank headquarters and moving to Matawan, redbankgreen has learned.
Ara Hovnanian’s message to colleagues about the sale and relocation of corporate operations. Below, the company’s headquarters as seen from West Front Street. (Photo by John T. Ward. Click to enlarge.)
Chairman and chief executive Ara Hovnanian told employees in a video message distributed by email Wednesday afternoon that the company had accepted an unsolicited offer on its home office, at the northwest corner of West Front Street and Maple Avenue.
Hovnanian did not reveal the identity of the buyer or the sale price, which he said would generate “several million dollars of profit.” The deal will also give the company more than $25 million to invest in its national homebuilding operations, he said.
The company plans to move to smaller, rented office space at exit 120 of the Garden State Parkway, which will save it some $4 million in annual occupancy costs, Hovnanian said.
“Financially, there’s just no question that this is a rational move for our company,” he said, noting that the company moved into the newly built structure in 2006, a year in which it delivered 20,000 new homes. Since then, its output has fallen to about a third that amount, Hovnanian said in the video.
“The reality is that the Red Bank building is just a little too expensive for us today,” he said. “Our performance has been lagging, and we need to consider every avenue we can to improve our results.”
For many employees, “the good news is you won’t have to deal with the traffic coming in an out of downtown Red Bank,” he said.
The move is expected to occur “around New Year’s,” Hovnanian said. Further information was not immediately available early Thursday.
Mayor Pasquale Menna told redbankgreen he was not informed in advance about the sale and corporate relocation.
The 65,200-square-foot building, with parking underneath, sits on a sloping 1.56-acre parcel that extends from West Front Street to the edge of the Navesink River at the northern terminus of Maple Avenue. A portion of the property is used by the Navesink River Rowing club for river access and vessel storage.
Assessed at $16.5 million, it’s slated to generate nearly $364,000 in property tax revenue this year, according to the borough’s online tax records.
The departure marks a stark turnaround in expectations. As it was building its headquarters, company officials were anticipating growth, and leased three-quarters of the 88,00-square-foot Red Bank Corporate Plaza, at West Front Street and Pearl Street, a block away from its headquarters. But when construction on that building was completed in 2007, the market for new homes had soured, and it subleased all of its space there. Information about the current status of the lease was not immediately available.
Hovnanian also owns property on the northeast corner of West Front and Maple. In 2015, the company’s KHov unit filed a concept plan for two buildings of four townhouses each, but no formal application was ever submitted.
Menna said a prospective buyer has informed him of its intention to acquire the site, which abuts the borough library property. “I look forward to reuse and finally upgrading that site in a plan which fits into our Master Plan,” he said via text.
The company is scheduled to release its earnings and other results for its third fiscal quarter Thursday morning.
The late Kevork Hovnanian, Ara’s father, founded the company in Toms River in 1959. [Correction: the original version of this post incorrectly stated that the company was founded in Red Bank.]