Orleans sells building lots at a loss to cut inventory

Orleans Homebuilders Inc. today said it recorded a $55 million pretax charge on the sale of about 1,400 building lots, mostly in Florida, Illinois and Arizona, in nine separate deals for $32 million.

The Bensalem company said the sale, which reduced the number of lots it owns and controls by 10 percent, would help it weather the severe downturn in the residential real-estate industry.

The U.S. Commerce Department reported last week that new-home sales were at a 12-year low in November. Existing-home sales climbed slightly from October to November, but were still 20 percent below November 2006, according to the National Association of Realtors.

"We generally sold lots and land in weaker-performing communities," Jeffrey P. Orleans, the company's chairman and chief executive said in a news release.

Most of the land sold in the nine deals was raw or partially developed, with the exception of the property in Arizona, which involved work-in-progress houses. During the housing boom of the early 2000s, Arizona experienced rampant building, leaving the state beset with excess inventory.

Proceeds of $32 million will be used to pay down bank debt. The company also said it expected to receive $20 million to $25 million in federal income tax refunds by September.

The properties in the nine deals had an aggregate net book value of $86 million, the company said.

Orleans shares were up 4 cents, or 1.1 percent, to $3.61 in morning trading on the American Stock Exchange.