Weyerhaeuser Still Looking to Buy Homebuilders

Federal Way, WA, September 25, 2006--Weyerhaeuser says it's interested in buying private, regional homebuilders, despite a string of recent data showing the housing market has entered a sharp downturn. "We are still looking for homebuilders," in markets that have "strong, steady growth potential," said Weyerhaeuser spokesman Bruce Admundson on Friday. The company, the world's largest producer of softwood lumber like two-by-fours, already owns California homebuilder Pardee Homes, Northwestern builder Quadrant Homes, and builders in Texas, Arizona and the Washington, D.C. area. Weyerhaeuser's interest in real estate expansion contrasts with remarks from some of the nation's biggest public homebuilders. They've been warning that slowing demand for new homes will hit profits and, in some cases, cause them to scale back. KB Home said last week it had "shut down land buying" in March to free up cash. Earlier this month, it lowered its earnings estimates for the year, contributing and Beazer Homes USA Inc. New home construction dove 6% in August to a seasonally adjusted annual rate of 1.665 million, the lowest since April 2003, the Commerce Department said earlier this week. Economists also expect new and existing home sales for August, out next week, to drop. Weyerhaeuser also has seen a slowdown in some of its once hot real estate markets like Phoenix, Southern California and Las Vegas market. It expects third quarter earnings from the division to be about flat with the second quarter's, said Patricia Bedient, senior vice president for finance and strategic planning, earlier this week. But the company expects immigration, changing baby boomer lifestyles, and demand from their boomer's children for start-up homes to continue to drive demand over the long term. "Our long-range optimism is based on attractive demographic trends in markets where we operate," Bedient told investors at a UBS investment conference on Tuesday. The company isn't looking to acquire a big, publicly traded homebuilder. "We would be much more interested in strong, regional players that have developed an approach and that are successful," said Amundson Friday.