PHILADELPHIA - Luxury-home builder Toll Brothers Inc. on Tuesday posted a second-quarter loss that was smaller than Wall Street expected, as a hefty write-down driven by joint ventures was offset by other income.
Shares of Toll Brothers rose 64 cents, or 3.1 percent, to $21.60.
Chief Executive Robert Toll said demand continues to be weak in most markets as buyers stay skittish in the face of continued home price declines.
In a conference call with analysts, Toll also noted that investment funds have been showing interest in buying distressed properties. They’re willing to partner with people in the housing industry in these purchases, providing even 80 to 90 percent of the capital.
But Toll said if their investment doesn’t perform, then they might try to dump the homes — and in so doing prolong the housing downturn.
“We’ve been outbid by the players that have raised the funds for this specific purpose. I hope everything works out for them,” Toll said. “But if it doesn’t, you may see this (investment) prolongs for quite a bit of time the problems that we’ve got.”
Toll Brothers itself will continue to offer incentives to get people to buy homes — a concession uncharacteristic of the builder that speaks to the severity of the housing market.
But Deutsche Bank analyst Nishu Sood said the builder should more aggressively discount because “by holding prices the company is just delaying the inevitable as prices are unlikely to revisit boom time levels for a prolonged period.”
The company hasn’t written off as much as other builders, and as such has a higher share of these charges to come…
