HOV STOCK, RECENTLY IN DUMPS, SOARING

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This time three weeks ago, shares of Hovnanian Enterprises were at a seven-year low, trading below $5 apiece.

Four dollars and eighty cents, actually, as of the close on Jan. 9. No doubt investors who’d bought the stock as it peaked above $72 in mid-2005 weren’t too pleased. Even a year ago today, the price was about $36.

The giant homebuilder, headquartered on West Front Street, has been suffering through the prolonged, multi-symptom flu that’s devastated the real estate and lending industries nationally and fueled fears of a U.S. recession around the world.

So when Standard & Poors downgraded Hov’s preferred shares and put the company’s debt on watch with “negative implications” one week after that low, one might have expected the common stock to fall farther. But it didn’t. Instead, it rose.

And it’s kept rising.

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S&P CUTS HOV RATINGS, BUT SHARES RISE

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Ailing national homebuilding giant Hovnanian Enterprises saw its stock and debt downgraded by a major ratings agency yesterday, but investors bid the company’s stock up neatly anyway.

The price of a share rose 70 cents, or almost 12 percent, to $6.63 today, continuing a recent climb out of a basement. For the first time in seven years, Hovnanian shares were trading below $5 last week.

Earlier in the day, Standard & Poor’s put the Red Bank-based company’s debt on credit watch with “negative implications” and downgraded it’s preferred shares after the company failed, as expected, to make a dividend payment to shareholders Tuesday.

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TIFFANY FEELS DOMESTIC ECONOMY PINCH

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Tiffany & Co., which opened much-anticipated new store on Broad Street in November, saw sales in its American stores that had been open a year or more dip 2 percent in the November-December period, the jeweler announced late last week.

The New York Times called it “a sign that a pullback in consumer spending that started at the low end of American retailing is percolating up to high-end merchants.”

From the Times account:

The slowdown was unexpected, and it sent jitters through the world of luxury-goods makers, who had seemed invulnerable over the last five years, even as energy prices surged and the housing market began to sputter.

The Tiffany results were among the clearest evidence yet that wealthy consumers — and middle-class shoppers who sometimes splurge on luxury items — are starting to tighten their purse strings.

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FOR DOWNTOWN SELLER, TOO-EASY MONEY

25broadSold, for more than the seller ever dreamed: 25 Broad Street.

Stuart Paer’s request to the Red Bank Planning Board on Monday night went through like lightning.

He was asking for a change of use for the second-floor space in a building he owns at 25 Broad Street. Long utilized as an office, it at one time served as an art gallery owned by Lloyd Garrison, and is now used as an office again. The board granted the request. The whole thing took about five minutes.

And just like that, Paer cleared the last hurdle that will enable him to sell the building, and another one he owns at 19 West Front Street, to a Brooklyn-based buyer for $3.2 milion.

What does it mean for downtown? We’re not sure. But when a seller boasts, before a closing, that he’s getting more for a building than it’s worth, it just might be a sign of an overheating market.

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HOVNANIAN: NOT YET THAT SUNK

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Today’s Star-Ledger takes a look at the “dismal” year that Red Bank-based Hovnanian Enterprises has had. And the coming year doesn’t look at lot brighter.

But to make that point, the page-one story kicks off with an an anecdote that appears to confuse, or perhaps conflate, members of the Hovnanian family:

The Hovnanians have been building homes in New Jersey for almost a half-century, but the measure of their success was never more indelibly stamped than in a 1992 mishap, when the family’s 123-foot yacht sank off Cape May.

Outfitted with teak paneling, gold-plated fixtures and other luxuries, the $10 million sport-fishing boat seemed more worthy of an oil sheik than crafters of humble condos.

In the years since, Hovnanian Enterprises has grown into the nation’s sixth-largest homebuilder, snapping up smaller businesses and expanding into a total of 19 states. Riding the great housing boom of the past decade, the company built developments as fast as it could, with homebuyers queuing up overnight to sign sales contracts like groupies camping out for Hannah Montana tickets.

The credit crunch and a glut of unsold homes has put an end to those glory days, however. And this time, it’s the Red Bank company itself that’s taking on water.

But the yacht belonged to Hirair Hovnanian, a brother of the man who founded and controlled Hovnanian Enterprises.

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HOVNANIAN: LOSS QUADRUPLED IN 4Q

Hov_hq_81206File photo of Hovnanian’s Red Bank HQ, as seen from the foot of Maple Avenue.

Amid a widespread credit shutdown, Hovnanian Enterprises said its fourth-quarter net loss quadrupled over year-ago results.

The Red Bank-based homebuilding company yesterday reported a net loss of $469 million in the quarter, compared to $118 million in the fourth quarter of 2006. Contract cancellations rose to 40 percent, from 35 percent in the third quarter. Revenue for the year was down more than 22 percent, to $4.58 billion, from $5.9 billion in fiscal 2006.

As a result, the company said it won’t pay a dividend this year on a class of preferred shares.

Still, the company saw a glimmer of better days to come after the fiscal quarter ended.

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LOOSE CHANGE: LINCROFT FIRM MOVES $30M

A Lincroft rare-coin dealer has brokered the sale of a collection of prototype coins, some hundreds of years old, for $30 million, the Associated Press reported over the weekend.

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Inclued in the private transaction were about 1,000 coins made between 1792 and 1942 that the U.S. Mint rejected for mass-production and circulation, the wire service reported.

From the story:

“This collection is an incredible collection. … These were some of the first coins ever, ever struck by the United States government,” said Laura Sperber, a partner in Legend Numismatics of Lincroft, N.J., which brokered the deal.

The seller wanted to remain anonymous, and the buyer, concerned about security, agreed to be identified only as “Mr. Simpson, a Western states collector,” Sperber said.

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INSIDERS TO BUY RESTORATION HARDWARE

Restoration Hardware Inc., owner of Red Bank’s most prominent national-chain store, is being taken private by company executives in a deal valued at $267 million, according to the news agency Reuters and other reports.

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The buyout group, which includes private equity firm Catterton Partners, is offering shareholders $6.70 per share, a 150-percent premium over yesterday’s closing price. According to Reuters, that incentive is “much larger than the 20 percent to 25 percent premium typical of takeovers.”

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HOV CONTRACTS FALL OFF ANOTHER CLIFF

Hov_hq_81206Hovnanian’s Red Bank HQ, as seen from the foot of Maple Avenue in sunnier days.

Red Bank-based Hovnanian Enterprises, one of America’s largest publicly traded homebuilders, got walloped again in its latest fiscal quarter.

Continuing a slide that company official haven’t been able to foresee the end of, Hovnanian reported that sales results “significantly deteriorated” in October from recent months, with new orders down and contract cancellations up steeply.

As reported by Reuters:

Hovnanian said preliminary results for the fiscal fourth-quarter ended October 31, showed that excluding unconsolidated joint ventures, net contracts fell 10 percent to 2,781 homes, while sales slid 19 percent to 3,969 homes.

Would-be buyers canceled contracts at a rate of 40 percent, as many found themselves unable to qualify for mortgages. The cancellation rate rose from 35 percent in the prior quarter as well as the year-earlier quarter.

In early September, the company reported stronger-than-expected sales activity as a result of steep markdowns and heavy promotions that in some cases cut hundreds of thousands of dollars from asking prices for new homes.

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CONDO BUILDER BUYS 26 BROAD FOR $3M

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The owner of the Metropolitan condo complex now under construction on Wallace Street has acquired the Broad Street home of Murphy Style Grill, redbankgreen has learned.

Onyx Equities, a real estate investment firm based in Woodbridge, completed the $3 million purchase of 26 Broad Street last month, according to Monmouth County property records. The deal was financed by a $2.25 million loan from Commerce Bank.

Michael Nevins, vice president of asset management at Onyx, said Onyx did not acquire the restaurant itself, which he said has a long-term lease for the space. Mario Medici, owner of Murphy Style Grill, declined comment on the sale.

The transaction comes at a frothy time for the central business district.

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A CRIME AFOOT IN RED BANK?

A Pennsylvania couple who owned a purported Red Bank investment firm that offered specialized financial services for podiatrists have been indicted on state charges of bilking their clients out of more than $500,000, the Star-Ledger is reporting.

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From the article:

Jeffrey Lafferty, 39, and Vincella Ross, 38, were charged in a five-count indictment handed up in Trenton yesterday by a state grand jury, Attorney General Anne Milgram said. They are charged with conspiracy, money laundering, securities fraud and other counts.

The couple ran Lafferty & Partners LLC, which specialized in providing wealth management for podiatrists and was affiliated with a member organization for podiatrists, authorities said. Lafferty and Ross allegedly spent the money investors gave them on a home in Green Lane, Pa., and for expenses including airline tickets, hotel rooms and mortgage payments, authorities said.

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HOV: WEEKEND PRICE CUTS MOVED UNITS

Slashing sticker prices and throwing in extra amenities, Hovnanian Enterprises reports that its weekend sales push on new housing units nationwide exceeded expectations.

Wall Street cheered the report, boosting the battered homebuilder’s stock price yesterday.

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From a report on Bloomberg.com:

The company had gross sales of 2,100 homes. More than 1,700 potential buyers signed contracts and 400 gave deposits, Red Bank, New Jersey-based Hovnanian said today in a statement. The sale began on Sept. 14 and ended yesterday. It has boosted the company’s shares almost 13 percent in the past two trading days.

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IT JUST KEEPS GETTING WORSE FOR HOV

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Already struggling against a tide of falling real estate values, Red Bank-based homebuilding giant Hovnanian Enterprises is now, like others in its industry, fighting a rip current brought on by the collapse of the subprime mortgage market.

The company reported a sharp drop in revenue and a larger-than-expected net loss yesterday.

According to TheStreet.com, Hovnanian:

reported a loss of $80.5 million, or $1.27 a share, for the quarter ended July 31. That compared with earnings of $74.4 million, or $1.15 a share, a year earlier.

Analysts expected a loss of 99 cents a share for the recent quarter, according to Thomson Financial.

Revenue fell 27% to $1.1 billion, matching analyst estimates. New contracts dropped 24%, excluding those from joint ventures.

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LESSONS LEARNED, HE’S BACK IN THE GAME

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Andrew Gennusa was just 21 years old when he and his brother, Jason, founded Manhattan Bagel Co. with a single store in in a Middlesex County strip mall.

It turned out to be a the start of a heady ride. The company went public and saw its stock soar as the business grew to a chain of nearly 400 stores, most of them franchises.

The flame-out was nearly as spectacular. A decade into its run came millions of dollars in losses, a called bank loan, bankruptcy and a sale to new owners.

Two years later, the Gennusas were out, and the company they founded sailed on to become part of a food company that last year did $390 million in sales.

But Andew Gennusa has come back, too, only much more quietly. In 2001, he and his brother became partners with Basil T Leaf’s Victor Rallo Sr. (now deceased) and Victor Rallo Jr. in a tiny shop on Bridge Avenue called Zebu Coffee, named for a hump-backed ox.

Today, the business is called Zebu Forno, and it’s no longer just a coffee shop. And having bought out his partners, 41-year-old Andrew Gennusa is ready for a return to the… well, not exactly the big time, but something bigger than what he’s got, and yet smaller than what he once had.

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TAKING THE ‘KARAGJOZI’ OUT OF KARA

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Rumson resident Zuhdi Karagjozi, founder of Kara Homes, has been bounced from the company as part of a reorganization plan, the Asbury Park Press reports today.

The name of the company has also been de-Kara-ed. It will now be called Maplewood Homebuilders LLC.

Stepping into the lead role at the attered homebuilder is Glen Fishman of Lakewood, who with his brother, Larry, is up to his rafters in overseeing the redevelopment of the ocean district in Asbury Park, the Press reports, citing documents filed in federal bankruptcy court.

Also involved with an ownership stake is Plainfield Specialty Holdings II, a Greenwich, Conn.-based hedge fund, the Press says.

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RUMSON FATCATS STRAIN JUDGE’S PATIENCE

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The pissing match between Wall Street millionaires Pete Dawkins and Mickey Gooch gobbled up another three hours of valuable Monmouth County court time yesterday, according to today’s Asbury Park Press.

And if the judge was amused, it was largely because of the way lawyers for the two Rumsonites “strained credulity” with their arguments, the Press reports.

Dawkins, vice chairman of a unit of Citigroup, former Heisman trophy winner (1958) and onetime U.S. Senate candidate, wants to build a 2,750-square-foot caretaker’s cottage on his Navesink River estate.

Next-door to Dawkins is Gooch, majority owner of an inscrutable Wall Street firm and author of a charmingly inane column in the weekly Two River Times, which he owns with his wife, Diane. (This week’s clunker is about the “tremendous success” of a fundaiser for the Count Basie Theatre at which the main honoree was none other than Diane Gooch.)

Gooch objects to the Dawkins plan because it would increase the size of an existing cottage by fifty percent, and would result in a “monstrosity” of a stucture (the Press’ word) a mere 205 feet from the property line dividing the two River Road fiefdoms.

The dispute, almost two years old, is now in the hands of Monmouth County Superior Court Judge Alexander Lehrer. Yesterday, according to the Press, Lehrer could barely contain his sense of the ridiculousness of some of the arguments.

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CHUMP CHANGE? HARDLY.

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This one is so astonishing we had to wonder about its veracity. But the background certainly makes it sound plausible.

A press release we came across late Wednesday from News-Antique.com claims that a Lincroft coin dealer has sold a rare nickel for $5 million.

From the release, datelined Santa Barbara, CA.:

“It’s a 1913 Liberty Head nickel, the finest surviving example of only five known specimens that were made under mysterious circumstances at the Philadelphia Mint nearly a century ago,” said Santa Barbara, California coin and jewelry merchant, Ronald J. Gillio, who negotiated the sale to the unnamed collector.

The sellers are Legend Numismatics of Lincroft, New Jersey and Washington state business executive, Bruce Morelan. In May 2005 they jointly purchased the coin for a then-record price of $4,150,000.

That’s a 20 percent gain in two years.

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HOVNANIAN ABANDONS MONEY PIT

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Red Bank-based K. Hovnanian Homes has pulled the plug on a controversial plan to build up to 4,500 homes in Ocean County’s Berkeley Township after an adverse court ruling.

“We are not going to pursue this,” company spokesman Douglas Fenichel told the Asbury Park Press.

“I don’t have to tell you the market has changed,” Fenichel said. “It was as much a market decision as anything.”

The decision comes two months after a state Superior Court in Ocean county rejected Hovnanian’s claim in a lawsuit that Berkeley wasn’t providing its fair share of affordable housing. The company wanted to force the town to rezone more than 800 acres at the New Jersey Pulverizing gravel pits to allow for development.

“It’s a tremendous boost to the township’s efforts to control sprawl,” Berkeley Mayor Jason J. Varano said of the company’s decision, according to the Press.

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FLORIDA STINKING UP HOV RESULTS

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Contract cancellations like crazy in a particular Florida market are dragging down earnings at Hovnanian Enterprises, officials of the Red Bank-based homebuilding company say.

The builder said it expects to take a $90 million hit from writing down the value of inventoried land and cancelled contracts in the Fort Myers-Cape Coral region, according to a report at TheStreet.com.

Before factoring in those charges, the company is forecasting earnings per share of 20 cents, up from the 5- to 10-cents forecast in the company’s earlier “guidance.” The impact of the Florida writedowns on net earnings per share was not included in TheStreet’s report, but MarketWatch says it will result in a loss.

An analyst quoted by MarketWatch said the $90 million charge represents “nearly the entire purchase price” Hovnanian paid to acquire a homebuilder in the Fort Myers market in August, 2005.

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HOV’S STORM-RELATED SHRINKAGE

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Having “hit kind of a wall” in 2006, Red Bank-based Hovnanian Enterprises is being cautious about 2007, a company executive says in an interview in today’s Star-Ledger.

J. Larry Sorsby, HOV’s chief financial officer, tells the Ledger’s Judy DeHaven that the company is “not trying to grow through a downturn.

“We’re making the right steps to shrink in a downturn, in terms of our balance sheet, making sure we have the right capital structure in place and the balance sheet to weather the storm.”

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HOVNANIAN SLASHES SPACE BUDGET

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Hovnanian Enterprises, the publicly-traded homebuilder that last year moved its corporate headquarters to the heart of Red Bank from Middletown, is scaling back its ambitions in the borough, according to a published report.

GlobeSt.com, a real estate industry publication, says Hovnanian is now planning on subleasing 66,000 square-feet of the 88,000 SF it had committed to use for itself in the PRC Corporate Plaza. That building, shown above, is under construction on West Front Street, just across the street for Hovnanian’s new 65,000 SF HQ.

Instead of taking all four floors for itself, the company will be using just one floor, according to GlobeSt.

What is Hov saying about this self-haircut? From the report:

“We are very excited with the expansion of our presence in Red Bank,” says president/CEO Ara Hovnanian in a prepared statement. A spokesman declined further comment on the reduced occupancy.

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LOOSE ENDS 3: FLIP OR FLOP?

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Remember that attempt to flip a house on Madison Avenue we told you about in June?

Well, the house remains unsold 18 months after an investor bought it, at the top of the market, for $475,000 $450,000. Sara Swanson, the New York woman who oversaw its renovation—and lived amid the disarray of construction—is moving on. And the investor who bankrolled the project has decided to keep the house for himself, we’re told.

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HOVNANIAN CAUGHT OFF GUARD

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Red Bank-based Hovnanian Enterprises was blindsided by the swift drop in values on its inventoried land, the company acknowledged yesterday in reporting a $115 million fourth-quarter loss.

“We did not anticipate the suddenness or magnitude of the fall in pricing that occurred this year in many of our communities,” the company said in a statement on Monday. “Our profitability, and the pace of new home sales, in our markets continues to be adversely impacted by high contract cancellation rates, increases in the number of resale listings, and increases in the number of new homes available for sale.”

The downturn occurred just as the company began moving into its gleaming new digs overlooking the Navesink River.

Yet the homebuilding giant forecast a profitable 2007. Chief Executive Ara Hovnanian said he’s “started to see a glimmer of hopeful indicators that the markets may be stabilizing,” according to MarketWatch.

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BROKERAGE FIRM SMACKED FOR FRAUD

First Montauk Securities, based on Newman Springs Road in Lincroft, has been hit with a $475,000 fine, and the firm’s top two officials have resigned, as part of a settlement of fraud charges brought by the New Jersey Bureau of Securities.

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The settlement resolves allegations that First Montauk failed to supervise an employee, made misrepresentations to investors and participated in market manipulation in the resale of Nextel junk bonds. Those actions caused “substantial” investor losses, according to a news release on the matter posted in the Division of Community Affairs website.

Without admitting or denying the allegations, Chairman Herbert Kurinsky and Vice Chairman William Kurinsky each agreed to resign from those positions and the Board of Directors of First Montauk’s parent company, First Montauk Financial Corp. According to the Asbury Park Press, William Kurinsky is Herbert Kurinsky’s nephew, and the two men are the firm’s founders.

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