(Read more on the multifamily market.)

HORSHAM, PA-Toll Brothers Inc. has suffered another dismal quarter with an 85% drop in profits for the three months ended July 31. Net income fell to $26.5 million, compared with $174.6 million for the same fiscal quarter a year ago.

The results reflected $88.5 million in write-downs, that is downward adjustments in the value of assets, for the quarter, compared with just $14.6 million in write-downs for the same quarter of fiscal 2006. A majority of the write-downs in the most recent quarter were in Florida, Nevada and California, Robert Toll, CEO, said during a conference call.

Of Las Vegas in particular, which Toll had rated F minus during a preliminary report two weeks ago, he said, “you might add another minus.” Conceding, “there’s not much you can do,” but wait, he said, “in the last eight weeks, we’ve taken seven agreements (in that market). That’s what we consider real bad.”

Regarding mortgage lenders, Toll said, “we talk to mortgage suppliers every day. Mortgage-market liquidity issues and higher borrowing rates may impede some customers from closing, while others may find it more difficult to sell their existing homes.” Nevertheless, he listed numerous banks, including Citizens Bank, from which the company has received major commitments that will include jumbo loans, which are loans of $417,000 or more.

Toll Brothers obtained net contracts of $727 million during the fiscal third quarter, down 31% from the same quarter a year ago. The company continues to renegotiate or reduce its optioned land positions. By the end of the quarter, it owned approximately 63,000 lots, compared with about 91,200 lots at its peak at the end of the same prior-year quarter. It ended the 2007 third quarter with 315 selling communities, versus 325 in this year’s second fiscal quarter, and expects to be selling from 305 communities by year-end.

Shares of TOL on the NYSE shot up 5% on August 22, following the conference call, to close at $22.15 a share. This compares with a 52-week low of $18.85 a share on Aug. 1 and a 52-week high of $35.64 per share on Feb. 2 this year.

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