Summary of HOMEFED CORP – Yahoo! Finance

Form 10-K for HOMEFED CORP


Annual Report

Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations.

The purpose of this section is to discuss and analyze the Company’s consolidated financial condition, liquidity and capital resources and results of operations. This analysis should be read in conjunction with the consolidated financial statements, related footnote disclosures and “Cautionary Statements for Forward-Looking Information,” which appear elsewhere in this Report.

Liquidity and Capital Resources

The Company used net cash for operating activities of $8,950,000, $27,850,000 and $27,950,000 for the years ended December 31, 2009, 2008 and 2007, respectively, principally for real estate improvement expenditures at the San Elijo Hills project and for the payment of general and administrative expenses and federal and state income tax payments. The Company’s ability to generate positive cash flows from operating activities is dependent upon the amount and timing of real estate sales, principally at the San Elijo Hills project. Sales at the San Elijo Hills project have declined significantly since 2005, principally due to the weak residential housing market, and there has been only one residential lot sale transaction since June 2006. Information about the remaining real estate to be sold at the San Elijo Hills project is provided below. Because of the nature of its real estate projects, the Company does not expect operating cash flows will be consistent from year to year.

Throughout most of the period that the Company has been developing the San Elijo Hills project, the Company’s sales efforts have greatly benefited from a strong regional and national residential housing market. However, residential property sales volume, prices and new building starts have declined significantly in many U.S. markets, including California and the greater San Diego region, which has negatively affected sales and profits. The slowdown in residential sales has been exacerbated during the past three years by the turmoil in the mortgage lending and credit markets, which has resulted in stricter lending standards and reduced liquidity for prospective home buyers. Sales of new homes and re-sales of existing homes have not kept pace with the early years of the project’s development; based on information obtained from homebuilders and other public sources, the Company estimates that total home sales (both new and re-sales) at the San Elijo Hills project were approximately 229 in 2009 as compared to 860 in 2004.

READ MORE via Summary of HOMEFED CORP – Yahoo! Finance.


  • Note the steep decline in expenses 2009, and then go read the details, as well as the Q4 10Q.

    When real estate was appreciating way ahead of inflation, it wasn’t in HomeFed’s interest to sell the downtown, so they dilly-dallied and applied for changes in the plans that would have added residential units in the center, in the hopes that they could get even MORE $. In their short term horizon, this was doing the right thing by their shareholders.

    The problem is, they delayed so long that they shot themselves in the foot. Had they delivered the downtown on schedule, in 2004-2005, they would have sold near the peak.

    Currently, they have no incentive to do anything but the bare minimum, so as to hang on until the market recovers, in any improvements in SEH.

    In short: when Real Estate was appreciating rapidly, their interests: holding out for a better price; and ours: having downtown built; were not in sync.

    Now that Real estate is flatlined, and they can get much better returns in a diversified portfolio of stocks and bonds, especially when you adjust for property tax consequences and liquidity risk; than the cost of improvements and the carrying cost of the land (which they refinanced at current interest rates); they have no incentive to invest ANYTHING above what would prevent them from being sued by SEH. So, once again, their interests and ours are not aligned.

    Only in a “normal” real estate market, where prices increase at about the going 30 year mortgage rate, are the developers interests; which are their fiduciary responsibility to their shareholders, btw; and ours align.

    Please go read the linked docs, and understand that HomeFed have an obligation to maximize the value for their shareholders, and only an obligation to us to the extent that any consequences of breaking promises to us would put their capital at risk.

    That they gave themselves raises and bonuses, well, I guess their shareholders can take that up with their compensation committee, but I don’t see much justification for it.

  • “Had they delivered the downtown on schedule, in 2004-2005, they would have sold near the peak.”

    You’re probably right, but we’d also now probably have a towncenter full of foreclosed condos and out-of-business storefronts. A no-win situation for us in either case, unfortunately.

    • Better that than a crater.

      I’d take down some commercial space for my company, and so would a lot of other people who work from home here, I’d hazard, if there was some available at reasonable terms.

      Right now, the only place that has what I need is Carlsbad.

      • Good point. The folks who drive by that crater, and the god-awful green fence that surrounds it, deserve better. Many of us moved here because of the promise of a walkabout towncenter, and it’s been sad to see communities like 4S get theirs, while we don’t heve ours. Do you know if anything resembling a complettion date is anywhere on the horizon?

      • “the only place that has what I need is in San Marcos.”

        Tom, you ought to consider driving over the hill into San Marcos. It has everything, and it’s much closer.

      • In terms of office space for lease, that simply isn’t true, especially when it comes to Internet connectivity.

  • Sorry, that was a “walkable” towncenter!

  • Come on Tom, you don’t work from home, you collect unemployment checks. You sure do post a lot for someone with a job, I’d hate to be your employer if you do have a job. You want the build-out, then you don’t. I haven’t seen so much waffling since I went to IHOP. The God awful fence is to protect the people/kids from going onto the jobsite. I saw on another post asking what you do for a living, I’m very curious too.

    Do you guys actually believe that you should build everything at once? Do you realize how much traffic congestion that would bring?

    • I’m not sure how the 7+ years it has taken to even get this far on the towncenter would qualify as “all at once.”

    • Stephan, I’ve been very consistent on 4 points:

      1: I wanted downtown done ages ago.

      2: I wanted the “non-denominational” church, as opposed to one for one denomination.

      3: I wanted the original landscaping we were promised, not something that looks like the Ardennes after the Battle of the Bulge.

      4: I am opposed to the recall because it was premature, done without homeowner input or review and behind closed doors, and the reasons offered, and anything the board has done, do not rise to the level that merits a recall.

      In my (I’m sure they’re right about the numbers, but for all my looking, I can’t find where you get the totals by poster here) hundreds of posts, I haven’t wavered on those items.

      As for my work, as I said, Google me. You may want to use my full name: Tomas L. Byrnes

  • They are currently putting in the road in the towncenter 🙂
    Hopefully the construction is next.

  • The city held back permits for the town center until the Twin Oaks Road was built. For those that don’t remember this, the city mandated San Elijo was to split the cost of the road with the city and the city retracted and made San Elijo pay for the whole thing and wouldn’t give them the permits. Also, San Marcos is notorious for dragging their feet on development.

  • We all share Town Center frustrations but we should be pleased and thankful for the status of our Town Center. I have seen 15-30 years of effort to develop the town center in Rancho Santa Fe. We need to show support for what we have and realize the complexity involved in development. Let’s not be irrational by constantly blasting our developer. The good news is HomeFed did not go bust pushing this too hard or fast. So far we have shown limited support for our local retail. We all call out for night life but 2 people show up for music night in the cafe? Can I suggest we stop complaining and start spending and promoting?

    Steps involved and completed:

    1.Total Household Count- had to be in place to support retail

    2. Gas Station Completion

    3. SE-Twin Oaks Road Completion

    4. Albertsons Open to Mixed Sales

    5. Sale of V lot to Church of Hills

    6. Sale of Visitor Center

    7. Opening of Marketwalk

    Editor-San Elijo Life
    Ed Philbrick

    • Ed, while I really appreciate what you do in putting this site up for us all, and maintaining it, it’s a bit much to list as accomplishments a laundry list of things that were all years late and several $ short.

      I spend as much of my $ as I can in SEH, which means basically Albertsons and Yogurtutopia, since the Postal Annex closes at 5, which is when I need to ship anything, and Peppertree isn’t the sort of fare my wife and I go for on our limited nights out (we have 2 young kids, so when we DO get out, we make an affair of it). I used to breakfast @ the bakery much more often.

      Of your list above, I take serious issue with items 5 and 6, which I don’t see as achievements. Those two were supposed to be community resources, to be developed and leased, especially in the case of the Church, for multi-tenant use; and instead HomeFed just sold them for short term cash.

      A big part of the reason for limited support for the retail, IMO, is that it hasn’t reached a critical mass of shops and services that can cross pollinate, and the crater in the center doesn’t invite passing traffic in.

      The town center should have been built center out, for reasons of simple logistics and minimizing disruption, as well as to have a heart, instead of a crater, in our downtown.

      • Tom, I have been here for 7 years and when we purchased our home, the pie shaped lot was designated a “house of worship.” I remember because we were joking with the rep in the visitor center and said wouldn’t it be funny if a mosque or Hari krishna (sp?) temple went in. They said it would be a non-dem type of church. It was never to be used as a multi use tenant as you have stated. I don’t know where you got that information, because it did not come from the developer. How would you expect multi use with a church or churches? Check in the early maps and other brochures, you will see you are wrong. Not that you will admit it. If your builder stated it, take the issue up with them, not the SEH developer. We we bought, we also were told that the visitor center would be built and also sold for office space. I would love to see your written information for your claims.

      • My understanding was, as a “non denominational” house of worship, it was to be open to multiple faiths. That isn’t what we’re going to have.

      • Well Tom, your understanding is wrong. It has always been designated as a church. There is no way you can have a building with multiple faiths. The Church of the Hills purchased the lot when it became for sale. It is a non-dem Christian church. Check it out sometime.

      • How is “Designated as a Church” and “Non-Denominational” mutually exclusive?

        There are many variations of faith here in SEH who all would like to worship where they live.

        Personally I know several Catholics (who have a church, in Carlsbad), Methodists, Buddhists, Hindu, Unitarians, and yes, lots of Christians (which tends to mean evangelical, since Catholics and many other denominations are also Christian in the dictionary definition thereof.)

        It’s that the pitch was that it would be an inclusive, open to the whole community, facility, and the reality is that it is a: not built, and b: will be for one congregation.

        Selling it to one congregation does not meet the sales pitch, which we got form the VISITOR CENTER (IE the developer reps) that it would be used by multiple faiths.

        I think that making the facility for one congregation is Balkanizing, which this recall has also done, and that is not good for our community.

      • Sorry Tom. You are wrong! It seems you are the only one who is under this impression. Again, let’s see your literature which states this. You may have heard what you wanted to.

      • Forgot to add – the builder never said they would build the church. It was always in the plan to sell the lot and they buyer would build the church. The Church of the Hills does intend to build in the near future.

  • You raise a good point, Ed. We all talk about how we want retail, but we’re on our third different coffeeshop in the Visitor’s Center, and I’m always shocked at how empty the Albertson’s is. That’s not the developer’s fault. As someone wrote above, if the towncenter had been built on the original timetable (and to the original mixed-use plan), we’d most likely be looking at foreclosured units and stores that had gone out of business. Now believe me, I was one of the biggest anti-developer voices back during the first towncenter delays, but in retrospect, a failed towncenter might have been something from which we may never have recovered. Even now, what retailer in their right mind is going to want to be part of something that’s simply not being supported by the community? I’m sure the upcoming pizza place will be embraced, but we either need to start walking the talk, or should stop complaining.

    • I hear people grumbling about how Bressi Ranch was able to build their center so quickly. They have a lot more traffice than we do and service a much larger area. They did not have housing connected with it, only retail, AND most of their spaces currently have not been leased. It’s pretty vacant over there. Ron, you are right, we are on the third cafe and even they are struggling. We can’t even rent the space we have. I am also frustrated . I’ve lived here for 7 years, but I would rather have a “crater” (may be they could plant wildflowers) instead of foreclosed buildings and vacant storefronts. I do remember the problem with San Marcos okaying permits. Tom, if you had ever gone to homeowner meetings, this was talk about alot! Tom, why do you not visit the cafe for breakfast anymore? Maybe if you make suggestions, they may make changes to their menu. You can always ask. I guess it is better just to complain.

      • Sue, since I opened my European offices, I am on con-calls from early in the morning, and so no longer get to take my “elevenses” walk, which is when I would stop off @ Isabelle Brien’s and have a coffee and Croissant.

        I lived in France for 3 years, and liked to go there and keep my French up by chatting with the staff.

      • That’s a good reason for not going. The food is actually pretty good.

  • The timelines the developer has worked through are probably only 50% of their doing. I’m sure they would have loved to have sold the entire project through the peak and moved on to other projects. They have held the course and bought back land and reinvested here. They will wait until the time is right to sell the land. Over time this will be a really great place to have owned, raised families and be a part of. There isn’t a community that even comes close to what we have. I hope we can all come together to do the right thing. My fear is that when we have board members that are saying and doing anything to get elected for their own interests, with false credentials is a huge red flag. We are an educated community that can ensure that the millions of dollars spent to create, design and develop SEH don’t get trashed by a few self-serving isolated homeowners taking advantage of the system. We really need to not overlook the facts that have presented themselves thus far. The disregard of legal advice, management guidance and developer input is not a good idea.

    • Stephan,

      I have no idea what the developer “would have loved to do”, and hindsight is 20/20 anyway. If they’d simply done their business, and done what they said they’d do, when they said they’d do it, instead of playing market timing games, they, and SEH would be better off.

      What is obvious, is that they (even by your numbers, and I’d put it much higher, since I’ve found the City of San Marcos a dream to deal with) bear half the blame for the failures to deliver.

      What I have seen with this developer is endless dodging and weaving, saying one thing and doing another (those permit delays were mostly caused by the developer not submitting them timely, and then constantly changing the residential/commercial mix, and eventually trying to get a third story on the building), and de minimis communication, if any, with the stakeholders in this community.

      What about their responsibility for the land they now own (since they bought it back), and that it looks like places I’ve been that I would prefer not to revisit?

      Regarding your issues with Jeff. The time to have had all this debate was in the proper campaign, not by launching a recall 2 days after the election results came out, and not based on nothing more than innuendo and character assassination.

      IF what you and the other Tuller-haters here allege is true, then all you had to do was wait for him to try to do something shady, and THEN launch a recall, with real evidence. I’d have been right there with you, as opposed to defending proper electoral process, and him against the character assassination that goes on here. Instead, you’ve shot your load early, and made it much harder to recall him later, since it’s pretty clear that, whether the recall succeeds or not, he’s still going to be on the board.

      Frankly, it’s so obviously personal, and the fact that the pro-recallers immediately go ad-hominem on anyone against the recall, that you all completely destroy your credibility.

      I realize I haven’t changed the opinions of anyone who was already a Tuller-hater here, but it’s also clear (and has been so posted) that the whole debate has led some to vote against the recall, who would otherwise have voted for it.

      As far as what I do for a living, go Google it. I, unlike you, have a massive Google footprint.

  • We try to support the local businesses as much as possible. I was very concerned about Dexter’s at first thinking it would be an overpriced gourmet pet store. I was wrong…….the prices are very reasonable and we love it! The ladies that work there are great and very knowledgeable. The yogurt shop and nail salon are great also. I get free dry cleaning through work, but the gal who does the alterations is wonderful and it’s very reasonably priced. Postal Annex, I’m sorry to say, does not work for us. I would rather go over the hill to the post office for cheaper. Regarding Albertson’s…………we go to Trader Joe’s and get almost twice the amount of groceries for the same price! I wish that wasn’t the case because we would rather shop in our own neighborhood, but we can’t afford it unless we need sundries or last minute items. The pizza place will be wonderful……we can’t wait!! I hope that they have some local entertainment. I hate to say it, but I think the music night at the cafe is not well attended because they don’t serve alcohol.

    • I think you hit the nail on the head: No alcohol = no nightlife.

      They do now have a beer and wine license, with some pretty strong restrictions AFAIK (probably due to the proximity to the school).

      Of course, Ron G. opposed Peppertree’s Beer and Wine license (search this site), so we’ll have to wait and see what he does if there Pizza place is successful, and therefore generates some noise in the evenings.

      • Well, not only did I NOT oppose the Peppertree beer and wine license as you once again incorrectly claim, but ironically, you and I made just about exactly the same point about restrictions due the proximity to the school. Here’s EXACTLY what I wrote:

        . . . hopefully they’ll make a restriction that no alcohol at all can be served until long after school lets out in the afternoon . . . ”


        “Just hoping that the city DOES look at the proximity to the school when determining the restrictions — if any — that might accompany a liquor license.”

        As a musician who performed regularly in both the original cafe and Isabelle Brien’s cafe — and who would want other musicians to have a local venue in which to perform — I would love for the place to be able to serve beer and wine in the evenings. I’m in no way opposed to it, just want to make sure that it’s done in a way that’s safe for the children in the community.

      • Ron, the statements you quoted above, to me, and probably lots of others, came off as being opposed.

        they certainly weren’t vehemently in favor.

      • Tom, this is another one of those times that you “assumed” something in error. When you are corrected you still try to blame the person, not yourself.

      • Sue, I ‘assumed” nothing. I read what ROo said as being a negative comment, which is what I think the vast majority would, especially in the greater context of his full message.

        Are you telling me you take his quotes above, or his full message from which they are quoted, as showing support of Peppertree’s license? At best they can be seen as ambivalent, IMNSHO.

      • Ron, unless I”m mistaken, you don’t have any children. and certainly none in this community.

        I do.

        What is it that makes you think you should be the arbiter of “For the children”?

        As any parent knows, a social life that is reasonably accessible for the parents, and builds ties to neighbors, is very good for family harmony and building a local support network, and therefore, good for the children.

        So, if a few parents want to have an afternoon wine or beer at the cafe before or after meeting their kids from school, as is commonplace in most of the world, what is the harm?

        It’s certainly better than, even if the parents do drink too much, making them get in their cars and drive.

      • Umm Ron….

        The Cafe closes at 4pm, so the only time to have a drink is before then, during the day.

        Who cares if kids are in school when I or others have a glass of wine with my meal at the cafe?….

        Its highly unlikely customers are going to share there food or drink with school kids.

      • I believe I may have traveled into another dimension. Concerned Local and I have agreed twice in one day.

        Welcome to the practical, let’s have a good life, world Mr;. Local! Can I guy you a beer?

      • Umm, Mr. Local . . . since the cafe started serving beer and wine, they’re now open untili 8pm on Fridays and Saturdays. But let’s not let the facts get in the way of a good argument.

        And Tom, I don’t have to have kids of my own in the community to care about safety in SEH. I have friends and neighbors who DO.

      • By the way, Tom, unless I”m mistaken, you don’t have any trees blocking your view.

        What is it that makes you think you’re entitled to have an opinion about our tree policy?

      • About our policy about trees blocking views, or about the landscaping in general, or are you equating having an opinion about trees to parenting?

        The one is something you can experience readily by standing behind trees, the only way to really understand what it is to be married with children is to do it.

        Since the landscaping in general, and the erosion and poor maintenance in Woodley’s is my primary issue with the HOA (as opposed to the downtown, which is my peeve with HomeFed), I have direct experience that tracks with the positions advanced by Tuller, to include, being on the fringe, being concerned with the flammability of pine trees versus the more native oak and sycamore.

        You’re entitled to have an opinion about anything you want, but when it’s about a subject as complex as “what is best for the children”, you’re not going to be taken as seriously as an actual parent.

        Besides, I am not the main protagonist in the push to change the tree policy, but, given the arguments made by those who are (Tuller at al), who clearly do have a horse in the race, I am supportive.

        You took the lead , at least in this forum, about what should
        be the policy regarding alcohol @ Peppertree, “for the children”.

        Frankly, I generally find arguments made “for the children” and “it’s all about the kids” to be noxious, and to infantilize all of society.

        As concerned local said, the odds of kids drinking alcohol in as wide open, and constantly visited by adults, a location as Peppertree are slim and none, no matter WHEN it is being served, and so the worry about “Straw man” purchases which is the genesis of the 600 ft rule (and was mostly meant for Liquor stores, not bars) doesn’t apply in this case.

      • Why should alcohol not be served during school hours? The kids won’t be drinking the beer!

      • Couldn’t miss a chance to make a swipe at Ron! Of course, the comment you made was false. But that never stopped you before, why start now.

      • Tom, Ron & the rest of the peanut gang on here,

        That’s Mrs. Local, mind you.

        Tom- I’ll pass on the beer, Thank you. My husband wouldn’t appreciate me meeting a stranger on the net for a drink.


  • It is “best for kids” when they see adults drinking alcohol responsibly, like in Europe. European schools can be right next to a bar and no one even notices. Why is it that we make such a fuss here? Because of puritanical religious freaks that rule this country!!!

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