Hovnanian Exits Red Bank

September 18, 2017
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K. Hovnanian’s former headquarters at 110 West Front St, Red Bank.

By John Burton |

RED BANK — An opportunity to sell a riverfront piece of Red Bank real estate offers some help to the struggling K. Hovnanian homebuilding company, while providing an opportunity for a growing banking operation.

K. Hovnanian Enterprises, one of the nation’s largest homebuilders, announced last week it was accepting an unsolicited offer for the company’s world headquarters, 110 West Front St. While company representatives did not reveal the purchaser in the Sept. 7 press release, OceanFirst Bank, headquartered on Hooper Avenue in Toms River, has announced it is under contract to buy the site and will use the West Front Street location for additional offices for administrative uses.

“We’ve had significant expansion over the past two years,” said Jill Apito Hewitt, OceanFirst’s director of investor relations and corporate communications. With OceanFirst’s recent acquisitions and with another currently pending, the banking operation needed the additional location, she said.

K. Hovnanian plans on relocating to office space off Garden State Parkway Exit 120, in the Matawan/Old Bridge area. And while K. Hovnanian “remains committed to its roots in New Jersey” and will keep its official headquarters in Monmouth County, the company’s press statement acknowledged New Jersey represents about only five percent of its national homebuilding business. For the last 15 years Ara Hovnanian, the company’s chairman, president and chief executive officer, has maintained his offices in New York City, where he and his family live. “Mr. Hovnanian spends a significant amount of his time travelling across the country to the various divisions across 14 states,” the press release indicated.

K. Hovnanian, a publicly traded company, has had a difficult time in the marketplace over the last few years. Following the 2008 economic crisis the company experienced downsizing, forsaking a plan to use the additional office space as the sole occupant in the PRC Group Corporate Center at the corner of West Front Street and Wall Street, almost directly across from the Hovnanian headquarters.

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Numerous media outlets reported last week Hovnanian announced a $337.2 million net loss for the third quarter for Fiscal Year 2017, ending on July 31.

“The company will invest the proceeds from the sale into further growth across the country,” the company said.

OceanFirst is expected to pay $42.5 million for the site. Hovnanian completed construction on the approximately 65,200-square-foot structure overlooking the Navesink River in 2006. Red Bank was the fifth headquarters for the nearly 60-year-old company founded by Ara Hovnanian’s father, Kevork Hovnanian, who died in September 2009 at the age of 86.

Jeffrey T. O’Keefe, Hovnanian’s senior vice president of investor relations, declined an interview request this week.

OceanFirst Bank currently has 51 branches in central and southern New Jersey. The bank’s plan is to consolidate administrative offices in Red Bank, to include “some of our executive level and many of our corporate offices, as well as central regional management team,” said Hewitt.

“Primarily we’re focusing on making sure we can put as many employees under the same roof as possible,” she added. About 100 employees will initially be working from the Red Bank location, a number that is likely to increase over time, according to Hewitt.

The company will continue to house its operations division at its Toms River location, Hewitt said.

“Our need is pretty immediate,” Hewitt explained, which was what attracted OceanFirst to the Red Bank location. “We need to do this as quickly as possible,” she said and the Hovnanian offices are really “move-in ready” for the bank’s needs.

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Red Bank as a transportation hub factored into the decision, as well as the building having available parking onsite, on top of the offerings of the overall community which would provide OceanFirst employees with “a high-quality work environment,” Hewitt noted.

The only additional amenity being planned at this point is for an employee gym onsite, something that is widely used and popular at the Toms River location, she said.

“I think it’s great that OceanFirst seized the opportunity that’s here, willing to take advantage of that,” said James Scavone, executive director of Red Bank RiverCenter, the management and advocacy organization for the borough commercial Special Improvement District. Scavone sees it as a benefit for the incoming corporate entity and for the entire business district, contributing the area’s vibrancy. “I think the most significant thing in the move,” he explained, “is that there isn’t going to be any vacancy in that building, which is really important.”

“I think it’s big news,” observed Geoff Brothers, a commercial real estate broker. “It represents a major commitment on behalf of a major lending institution.”

Brothers wasn’t involved in this sale, but as a longtime participant and observer of local real estate activity, he suspects there could be residual benefits. “I think the effect of this is a lot of people who hadn’t thought about Red Bank will be aware of it,” he noted. “It’s a win-win.”

OceanFirst expects to finalize the sale in the year’s fourth quarter and will begin having its employees move in around April at the earliest, according to Hewitt.

This article was first published in the Sept. 14-21, 2017 print edition of The Two River Times.

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