Economy Watch: Homebuilders Still Sing the Blues

Single-family builder confidence remains in the doldrums; Fairholme sells its stake in GGP; and Yum looks to dump fast-food chains that can't be marketed overseas.

By Dees Stribling, Contributing Editor

Builder confidence in the single-family housing market stayed unchanged at a subbasement level of 16 for a third consecutive month in January, according to the latest National Association of Home Builders/Wells Fargo Housing Market Index, which was released on Tuesday. An index of 50 or more means builder optimism. Sixteen means something else all together.

Homebuilding is now a waiting game, waiting until–later this year? 2012? Later?

Till the jobs come back. “The HMI and its subcomponent indexes are holding steady following a below-expectations finish in 2010,” NAHB Chief Economist David Crowe says in a statement. “At this point, housing remains on the sidelines of a weak economic recovery as consumers and builders wait for clear and consistent indications that jobs and economic output are reviving.”

Fairholme sells GGP stake

The investment fund Fairholme Capital Management L.L.C. has sold its stake in General Growth Properties to a group led by Brookfield Asset Management for $894 million in cash and $907 million in shares in Brookfield, or about 4.5 percent of the company. The Brookfield group, which also includes the likes of China’s sovereign wealth fund, will now have a 38 percent interest in GGP.

Lately Fairholme was partnered with Brookfield and Pershing Square Capital Management L.P. to bring GGP out of bankruptcy, after winning a takeover battle with Simon Property Group Inc. GGP emerged from bankruptcy last November after part of its mall portfolio had been spilt off into an entity called the Howard Hughes Corp.

In an unrelated move earlier this month, major Florida landowner St. Joe Co. ended an agreement ahead of schedule that barred Fairholme, the company’s largest shareholder, from acquiring more than 30 percent of St. Joe. The boss man at Fairholme, Bruce R. Berkowitz, had joined St. Joe’s board of directors not long before the move.

Yum to sell Long John Silver, A&W

Yum Brands (officially Yum! Brands Inc.) said on Tuesday that it will part ways with Long John Silver’s and A&W All-American Food Restaurants, as soon as suitable buyers for the brands are found. According to Yum, the two don’t fit into the company’s international expansion plans, which include mainly making a killing from emerging middle classes such as China’s.

These days, Yum receives about 65 percent of its profits from places that aren’t the United States, meaning that Taco Bell, Pizza Hut and KFC, the company’s powerhouse fast-food brands, have been successfully exported to the rest of the world. When Yum was spun off from PepsiCo in the late 1990s, international business represented only 22 percent of company profits.

Wall Street managed to score an up day on Tuesday, despite Steve Jobs’ unspecified illness. The Dow Jones Industrial Average was up 50.55 points, or 0.43 percent, while the S&P 500 gained 0.14 percent and the Nasdaq advanced 0.38 percent.

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