HAVERTOWN, PA — AMREP Corporation’s (NYSE: AXR) first-quarter profit fell 94% as land and home sales contracted sharply, while the New Mexico real estate developer warned that developed residential land revenue will remain significantly reduced in fiscal 2027 as it scales back projects and shifts its focus toward homebuilding.
AMREP reported net income of $276,000, or 5 cents per diluted share, for the three months ended July 31, down from $4.7 million, or 87 cents per diluted share, a year earlier. Revenue fell 66% to $6.1 million from $17.9 million.
The decline was concentrated in AMREP’s core real estate operations. Land sale revenue plunged 98% to $173,000 from $7.5 million, while home sale revenue dropped 49% to $4.9 million from $9.6 million. Other revenue increased 27% to $997,000.
AMREP sold no developed residential or commercial acreage during the quarter, compared with 5.6 residential acres and 3.3 commercial acres a year earlier. Undeveloped land sales fell to 27.9 acres from 486.1 acres.
The company expects developed residential land revenue to remain significantly reduced during fiscal 2027 after reducing the number and scope of active land-development projects and delaying some new projects. AMREP attributed the shift to market headwinds and uncertainty, a greater emphasis on growing its homebuilding operation, and entitlement, contractor, and infrastructure delays.
Home closings also slowed. AMREP sold 12 homes during the quarter, down from 22 a year earlier, while the average selling price declined to $407,000 from $434,000.
The company nevertheless entered the remainder of the fiscal year with more homes under construction. It had 83 homes in production as of July 31, compared with 62 a year earlier. Twenty-three were under contract, representing about $12.5 million of expected home-sale revenue when closed, subject to cancellations, change orders and sales incentives.
That increased construction activity was also visible on AMREP’s balance sheet. Homebuilding construction in process jumped 79% from April 30 to $5.4 million, while model and completed-home inventory declined 28% to $6.3 million. Total real estate inventory rose 4% to $68.9 million.
Profitability in homebuilding narrowed during the quarter. Home-sale gross margin declined to 23% from 25%, reflecting the location, size, and mix of homes sold, partly offset by higher sales incentives and increased building-material and skilled-labor costs.
General and administrative expenses rose 30% to $2.4 million from $1.8 million. Land-development administrative expenses increased 43%, homebuilding expenses rose 15% and corporate expenses climbed 18%.
Part of the land-development expense increase stemmed from AMREP’s termination of two infrastructure-reimbursement agreements with TV Investments LLC. The company paid TV Investments $201,000 to terminate a 2021 agreement and $114,000 to terminate a 2024 agreement.
TV Investments is 50% owned by an entity wholly owned by Timothy S. McNaney, who joined AMREP’s board in January. McNaney’s interests in the two termination payments were $100,500 and $57,000, respectively. AMREP stated that McNaney did not participate in negotiating the terminations and that its Nominating and Corporate Governance Committee reviewed and approved the agreements.
AMREP used $3.6 million of cash in operating activities during the quarter, compared with $9.5 million generated from operations a year earlier. Cash, U.S. government securities and restricted cash totaled about $49.1 million at July 31, down 7% from $52.7 million at April 30.
The company had just $17,000 of notes payable at quarter-end and remained in compliance with the financial covenants governing its outstanding debt.
AMREP also exited its landscaping business after the quarter ended, ceasing landscaping services in August. The operation generated $711,000 of first-quarter revenue, up from $541,000 a year earlier.
AMREP operates through land-development and homebuilding segments, with its real estate operations concentrated in New Mexico. The company cautioned that the timing and nature of individual land and home transactions can cause revenue, selling prices, and margins to vary significantly between periods.
Support the local news that supports Chester County. MyChesCo delivers reliable, fact-based reporting and essential community resources—free for everyone. If you value that, click here to become a patron today.