Hovnanian Enterprises, Inc. (NYSE:HOV) and GSO Capital Partners LP (“GSO”) announced today a land banking arrangement for up to $125 million.
GSO, the credit arm of The Blackstone Group (NYSE:BX), will manage funds and acquire a portfolio of land parcels from Hovnanian and option finished lots on a quarterly takedown basis back to Hovnanian.
As of today, 620 lots on six land parcels have been closed with the commitment of the future development costs of $65 million. GSO and Hovnanian are planning to anticipate in an identifying an additional land parsel acquisitions up to $60 million.
Ara Hovnanian, Chairman of the Board of Directors, President and Chief Executive Officer of Hovnanian Enterprises, Inc., commented:
We are extremely pleased to announce our partnership with GSO. By combining the financial power and investment experience of GSO with the homebuilding and operating strength of Hovnanian, this partnership creates an exciting investment opportunity for both organizations. More importantly, the GSO partnership allows us to take advantage of attractive land opportunities using outside capital, thereby preserving our cash position, and, at the same time, affording us the potential for enhanced returns. We look forward to locating additional land parcels to complete the remaining $60 million anticipated in our first land banking portfolio with GSO and to working with GSO in the future.
Hovnanian Enterprises Inc.
110 West Front Street
PO Box 500
Red Bank, NJ 07701
K. Hovnanian® Homes® is a nationally recognized homebuilder that has been committed to excellence since 1959. To succeed for 50 years as a company, it helps to have a clear vision of what you stand for. Kevork S. Hovnanian had that vision when he created his homebuilding company. Today, K. Hovnanian® Homes® is still going strong by adhering to the principles set in place by its founder. He envisioned a homebuilding company whose homes would provide lasting advantages for years to come.
GSO Capital Partners LP is the global credit platform of The Blackstone Group L.P. (NYSE:BX). GSO, together with its affiliates, has approximately $51 billion of assets currently under management and is one of the largest credit-oriented alternative managers in the world and a major participant in the leveraged finance marketplace.