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KB Home, the fifth-largest U.S. homebuilder by stock market value, and Shaw Group Inc., the largest contractor in Louisiana, formed a joint venture to build houses in Gulf Coast areas devastated by hurricanes.
The venture will develop the first new residential sites in the state since it was hit by Hurricane Katrina in August and Hurricane Rita in September, the companies said today in a statement. Financial terms weren't disclosed.
KB Home, based in Los Angeles, will be the first of the nation's 10 largest builders to do business in the state, which is dominated by smaller homebuilding companies. Louisiana ranked No. 38 among U.S. states for growth in home prices in the third quarter, with a gain of 6.6 percent, according to the Office of Federal Housing Enterprise Oversight in Washington. The national average was 12 percent.
``Out of this tragedy we believe there's a great business opportunity,'' Bruce Karatz, KB Home's chairman and chief executive, said in an interview. Chris Sammons, a spokesman for Baton Rouge, Louisiana-based Shaw, didn't return calls seeking comment.
The joint venture has an option to purchase 3,000 acres of land near Avondale in Jefferson Parish, near the west bank of the Mississippi River, Karatz said. The site is 12 miles (19 kilometers) from downtown New Orleans, about a 20-minute drive via the Huey P. Long Bridge.
The houses likely will sell for $150,000 to $250,000, compared with KB Home's average price of $277,000, Katz, 60, said. He declined to cite the number of homes planned for the development.
The joint venture also is looking for land in the Baton Rouge area, 80 miles north of New Orleans, Karatz said. Eventually KB Home may build along Mississippi's coast, also ravaged by hurricanes, he said.
``We're certainly active in our search for building opportunities, but we don't have anything else to announce,'' Karatz said.
Steve Davis, a New Orleans native and a KB Home general manager, will lead the venture.
Shares of KB Home fell 22 cents to $70.85 as of 2:16 p.m. in composite trading on the New York Stock Exchange. Shaw shares rose 85 cents to $31.48.
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