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Press release from GlobeNewswire (a Nasdaq OMX company)

Hovnanian Enterprises and GSO Capital Partners Announce $125 Million Land Banking Arrangement

Friday, July 13, 2012

Hovnanian Enterprises and GSO Capital Partners Announce $125 Million Land Banking Arrangement03:00 EDT Friday, July 13, 2012RED BANK, N.J. and NEW YORK, N.Y., July 13, 2012 (GLOBE NEWSWIRE) -- Hovnanian Enterprises, Inc. (NYSE:HOV), a leading national homebuilder, and GSO Capital Partners LP ("GSO"), the credit arm of The Blackstone Group (NYSE:BX), announced today a land banking arrangement for up to $125 million. Funds managed by GSO will acquire a portfolio of land parcels from Hovnanian and option finished lots on a quarterly takedown basis back to Hovnanian. As of July 12, 2012, GSO has closed on six land parcels totaling 620 lots with total acquisition and committed future development costs of $65 million. In addition to the properties subject to the land banking agreement, during the next six months, GSO and Hovnanian anticipate identifying other land parcels totaling up to an additional $60 million in acquisition and development costs to complete the initial land banking portfolio. In addition to the land banking arrangement, GSO agreed to increase their equity stake in Hovnanian by exchanging $15 million of Hovnanian's 2016 and 2017 Senior Unsecured Notes for 3,862,671 shares of Hovnanian's Class A common stock. "We are extremely pleased to announce our partnership with GSO," commented Ara Hovnanian, Chairman of the Board of Directors, President and Chief Executive Officer of Hovnanian Enterprises, Inc. "By combining the financial power and investment experience of GSO with the homebuilding and operating strength of Hovnanian, this partnership creates an exciting investment opportunity for both organizations. More importantly, the GSO partnership allows us to take advantage of attractive land opportunities using outside capital, thereby preserving our cash position, and, at the same time, affording us the potential for enhanced returns. We look forward to locating additional land parcels to complete the remaining $60 million anticipated in our first land banking portfolio with GSO and to working with GSO in the future." Doug Ostrover, Founding Member and Partner of GSO, said, "We firmly believe that the US residential real estate market has bottomed and that Hovnanian is uniquely positioned to capitalize on the recovery. We are excited to team up with a first class homebuilding partner and look forward to leveraging off of Hovnanian's 50 year track record of success. We are very pleased Hovnanian agreed to partner with us on this land banking agreement, and we view this as the first step in what we hope to be many successful ventures with Hovnanian."ABOUT HOVNANIAN ENTERPRISES®, INC.: Hovnanian Enterprises, Inc., founded in 1959 by Kevork S. Hovnanian, is headquartered in Red Bank, New Jersey. The Company is one of the nation's largest homebuilders with operations in Arizona, California, Delaware, Florida, Georgia, Illinois, Maryland, Minnesota, New Jersey, North Carolina, Ohio, Pennsylvania, South Carolina, Texas, Virginia, Washington, D.C. and West Virginia. The Company's homes are marketed and sold under the trade names K. Hovnanian® Homes®,Matzel & Mumford, Brighton Homes, Parkwood Builders, Town & Country Homes and Oster Homes. As the developer of K. Hovnanian's® Four Seasons communities, the Company is also one of the nation's largest builders of active adult homes. Additional information on Hovnanian Enterprises, Inc., including a summary investment profile and the Company's 2011 annual report, can be accessed through the "Investor Relations" section of the Hovnanian Enterprises' website at http://www.khov.com. To be added to Hovnanian's investor e-mail or fax lists, please send an e-mail to IR@khov.com or sign up at http://www.khov.com. The Hovnanian Enterprises, Inc. logo is available at http://www.globenewswire.com/newsroom/prs/?pkgid=7499ABOUT GSO CAPITAL PARTNERS LP: GSO Capital Partners LP is the global credit platform of The Blackstone Group L.P. (NYSE:BX). GSO, together with its affiliates, has approximately $51 billion of assets currently under management and is one of the largest credit-oriented alternative managers in the world and a major participant in the leveraged finance marketplace. GSO seeks to generate superior risk-adjusted returns in its credit business by investing in a broad array of strategies including mezzanine, distressed investing leveraged loans and other special situation strategies.FORWARD-LOOKING STATEMENTSAll statements in this press release that are not historical facts should be considered as "forward-looking statements." Such statements involve known and unknown risks, uncertainties and other factors that may cause actual results, performance or achievements of Hovnanian to be materially different from any future results, performance or achievements expressed or implied by the forward-looking statements. Although Hovnanian believes that its plans, intentions and expectations reflected in, or suggested by, such forward looking statements are reasonable, Hovnanian can give no assurance that such plans, intentions, or expectations will be achieved. Such risks, uncertainties and other factors include, but are not limited to, (1) changes in general and local economic and industry and business conditions and impacts of the sustained homebuilding downturn, (2) adverse weather and other environmental conditions and natural disasters, (3) changes in market conditions and seasonality of the Hovnanian's business, (4) changes in home prices and sales activity in the markets where Hovnanian builds homes, (5) government regulation, including regulations concerning development of land, the home building, sales and customer financing processes, tax laws, and the environment, (6) fluctuations in interest rates and the availability of mortgage financing, (7) shortages in, and price fluctuations of, raw materials and labor, (8) the availability and cost of suitable land and improved lots, (9) levels of competition, (10) availability of financing to Hovnanian, (11) utility shortages and outages or rate fluctuations, (12) levels of indebtedness and restrictions on Hovnanian's operations and activities imposed by the agreements governing Hovnanian's outstanding indebtedness, (13) Hovnanian's sources of liquidity, (14) changes in credit ratings, (15) availability of net operating loss carryforwards, (16) operations through joint ventures with third parties, (17) product liability litigation, warranty claims and claims by mortgage investors, (18) successful identification and integration of acquisitions, (19) significant influence of Hovnanian's controlling stockholders, (20) changes in tax laws affecting the after-tax costs of owning a home, (21) geopolitical risks, terrorist acts and other acts of war, and (22) other factors described in detail in Hovnanian's Annual Report on Form 10-K for the year ended October 31, 2011. Hovnanian undertakes no obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events, changed circumstances or any other reason.CONTACT: J. Larry Sorsby Hovnanian Enterprises, Inc. Executive Vice President & CFO Jeffrey T. O'Keefe Hovnanian Enterprises, Inc. Vice President, Investor Relations 732-747-7800 Peter Rose Blackstone Senior Managing Director, Global Public Affairs 212-583-5871