NVR's Land-Light Model Is Here to Stay
Past raw land purchases and joint venture agreements were opportunistic, not indicative of a shift to a more capital-intensive land procurement strategy.
We met with CEO Paul Saville, CFO Daniel Malzahn, and VP of Business Planning and Investor Relations Curt McKay in late August at NVR's (NVR) Reston, Va., headquarters get a better idea of the company's commitment to its land-light model and gauge the supply/demand environment for finished homesites for NVR to option.
We came away with increased conviction that the homebuilder will continue to use capital-efficient options on finished lots with developers for the vast majority of land needs, and that more capital-intensive land acquisitions and joint venture agreements that have entered the balance sheet over the past three years will be implemented only sparingly going forward. Management acknowledged that the competition for finished lots is intense, as is currently the case for all desirable land at various stages of development, but mentioned PulteGroup (PHM) as the lone homebuilder remaining that has a stated desire to pursue a more land-light model.
James Krapfel does not own (actual or beneficial) shares in any of the securities mentioned above. Find out about Morningstar’s editorial policies.