MIAMI, Feb. 28 /PRNewswire-FirstCall/ -- Lennar Corporation (NYSE: LEN
and LEN.B), one of the nation's largest homebuilders, announced today the
addition of a new strategic partner, MW Housing Partners ("MWHP"), into its
LandSource joint venture. MWHP adds significant financial resources and
unique land positions to a venture already recognized as a premier land and
development company. The completion of the financing and transaction
resulted in a cash distribution to Lennar of approximately $700 million.
The resulting ownership of LandSource is 68% MWHP, 16% Lennar and 16% LNR
Property Corporation. Lennar will retain a promote opportunity allowing it
to have a disproportionate share of the entity's future positive net cash
flow. In the first quarter of fiscal-year 2007, Lennar will recognize
approximately $170 million of earnings and, potentially, $400 million in
future years.
As of January 31, 2007, LandSource had assets with a book value of
approximately $1.3 billion. In the transaction announced today, the
LandSource assets were appraised at a value of approximately $2.6 billion,
with a potential increase of over $600 million. As part of today's
transaction, MWHP contributed cash and approximately 4,000 homesites
totaling nearly $970 million to LandSource. The homesites were part of an
existing land bank relationship between MWHP and Lennar, and were re-priced
downward to reflect current market values. Lennar also retained option
contracts and rights of first offer to purchase land from The Newhall Land
& Farming Company, LandSource's primary investment. These
below-market-value option contracts should enhance margins for Lennar
during a period of industry-wide margin compression. Lennar now controls
approximately 19,000 homesites within LandSource. In addition, Lennar will
receive management fees in connection with its management of LandSource.
As part of today's transaction, LandSource successfully completed a new
$1.55 billion bank debt financing. The financing consisted of a $200
million undrawn five-year Revolving Credit Facility initially priced at a
rate of LIBOR plus 3%, a $1.106 billion six-year Term Loan B Facility
initially priced at LIBOR plus 2.75% and a $244 million seven-year Second
Lien Term Facility priced at LIBOR plus 4.5%. The pricing on the Revolving
Credit Facility and Term Loan B Facility may be reduced based on certain
events. The financing is non-recourse to the equity partners. The
post-closing debt-to-appraised value of the assets in LandSource is 51.7%.
Barclays Capital served as the sole lead arranger and sole bookrunner
for each of the facilities, with Barclays Bank PLC acting as administrative
agent for the credit facilities.
Stuart Miller, President and Chief Executive Officer of Lennar
Corporation, said, "Lennar welcomes MacFarlane Partners to the LandSource
team. This transaction is another strategic stepping stone in building one
of the nation's premier land companies. As a result of the
recapitalization, LandSource is uniquely positioned to take advantage of
attractive land pricing in today's sluggish market with substantial capital
and sponsorship."
Mr. Miller continued, "This transaction validates our approach to
utilizing joint ventures in our business. Our LandSource joint venture
allowed us to mitigate the risk of investing in long-term real estate while
capturing significant financial upside. The liquidity achieved through this
transaction reflects an intense focus on our 'balance sheet first'
operating strategy. Lennar has always used the cycle as an ally, not an
adversary, and the cash distribution to Lennar resulting from this
transaction enhances our liquidity for long-term strategic opportunities."
MWHP is co-managed by MacFarlane Partners, one of the leading real
estate investment management firms in the United States and an experienced
investor in single-family residential land and housing developments in
markets nationwide. Headquartered in San Francisco, MacFarlane Partners
manages $11.7 billion in real estate assets and has invested in residential
land and housing developments since 1995.
Lennar Corporation, founded in 1954, is one of the nation's leading
builders of quality homes for all generations. The Company builds
affordable, move-up and retirement homes primarily under the Lennar brand
name. Lennar's Financial Services segment provides primarily mortgage
financing, title insurance and closing services for both buyers of the
Company's homes and others. Previous press releases and further information
about the Company may be obtained at the "Investor Relations" section of
the Company's website, http://www.lennar.com.
Some of the statements in this press release are "forward-looking
statements," as that term is defined in the Private Securities Litigation
Reform Act of 1995. You can identify forward-looking statements by the fact
that these statements do not relate strictly to historical or current
matters. Rather, forward-looking statements relate to anticipated or
expected events, activities, trends or results. Because forward-looking
statements relate to matters that have not yet occurred, these statements
are inherently subject to risks and uncertainties. Many factors could cause
Lennar's actual activities or results to differ materially from the
activities and results anticipated in forward-looking statements. These
factors include those described under the caption "Risk Factors" in Item 1A
of Lennar's Annual Report on Form 10-K for its fiscal year ended November
30, 2006. Lennar does not undertake any obligation to update
forward-looking statements.
SOURCE Lennar Corporation
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CONTACT:
Scott Shipley, Investor Relations, Lennar
Corporation, +1-305-485-2054
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