Fitch Comments on Potential Sale of KB Home's Interest in Kaufman & Broad SA

Business Wire, May 17, 2007

CHICAGO -- KB Home (NYSE:KBH) announced today that it has entered into an exclusivity period on an offer by PAI Partners to buy its stake in its French operations unit Kaufman & Broad SA for 55 euros per share or roughly $800 million. The transaction could close in the third quarter-2007. KB Home has a 49% equity interest in Kaufman & Broad SA and 68% of the voting rights associated with its stock. The French operation contributed 21.5% and 69.4% of KB Home's consolidated construction revenues and construction pretax income, respectively, for the first quarter ended Feb. 28, 2007.

Fitch currently has the following ratings for KB Home:

--Issuer Default Rating (IDR) 'BB ';

--Senior unsecured notes 'BB ';

--Senior unsecured revolving credit facility 'BB ';

--Senior Subordinated Notes 'BB-'.

KBH's Rating Outlook is Stable.

Going forward, potential ratings actions by Fitch will be influenced by the use of the deal proceeds and use of free cash flow in fiscal year 2007 and their impact on the capital structure of the company.

Fitch's rating definitions and the terms of use of such ratings are available on the agency's public site, www.fitchratings.com. Published ratings, criteria and methodologies are available from this site, at all times. Fitch's code of conduct, confidentiality, conflicts of interest, affiliate firewall, compliance and other relevant policies and procedures are also available from the 'Code of Conduct' section of this site.