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Homebuilder getting $320 million tax windfall

January 9, 2010 by root

January 7th, 2010, 3:25 pm· posted by Jeff Collins

Lennar Corp. expects to get a late Christmas present in the form of a $320 million tax refund.

But for that windfall, Lennar would have just reported its 11th consecutive quarter of red ink rather than its first profitable quarter in nearly three years.

The Miami builder — whose many Orange County projects include Anaheim’s Platinum Triangle, Irvine’s Central Park West and redevelopment of old EL Toro air base into the Great Park Neighborhoods — reported today that it will benefit from new tax legislation allowing it to apply recent losses against profits earned as far back as five years ago.

The “carry back” provision previously had been limited to two years. The extension allows the firm to recover previously paid income taxes from up to five years ago.

As a result, the tax refund is offsetting a $284.9 million operating loss, resulting in a profit of $35.6 million — “primarily due to the net operating loss carry back,” said Lennar Chief Operating Officer Bruce Gross.

“Otherwise,” JMP Securities analyst Jim Wilson said in an email, “no way (Lennar would) have made profit.”

Another O.C. homebuilder reported a similar windfall last month. Newport Beach-based William Lyon Homes reported that it expects to receive a tax refund of about $80 million to $95 million sometime in the first half of the year.

Still, Lennar President and CEO Stuart Miller was upbeat about the market during a conference call this morning. Miller told analysts he expects Lennar to lose money during the first quarter of 2010 but will be profitable for the year as a whole.

“The market and the overall economy appear to be in recovery,” Miller said. He added, however, that there won’t be a V-shaped return to better days. Instead, the market is skipping along “a rocky, stabilizing bottom with visibility obscured by more questions than clear answers.”

Citing reduced buyer discounts and improved profit margins, Miller said that “prices no longer are free-falling downward,” and are even stabilizing in some regions.

“I feel comfortable in saying this is a trend and not an anomaly,” he said.

source: http://lansner.freedomblogging.com/2010/01/07/homebuilder-getting-320-mi...