Lennar Corporation

Lennar Corporation
Public
Traded as
Industry Construction
Founded 1954 (1954)
Founder Leonard Miller
Headquarters Miami, Florida
Area served
 18 states across the United States
Key people
 Stuart A. Miller (President and CEO)
Increase US$ 329 million (2016 2Q)
Increase US$ 218 million (2016 2Q)
Total assets Increase US$ 14.8 billion (2016)
Total equity Increase US$ 6.1 billion (2016)
Website www.lennar.com
Lennar's branch office in San Ramon, California

Lennar Corporation (NYSE: LEN) is a Fortune 500 company based in Miami, Florida, United States, in the Fontainebleau area.[1][2] It was founded in 1954.[3]

Lennar started as a single-family homebuilder in Miami, Florida, in the early 1950s and it has grown by acquisition. It concentrates on single-family attached and detached homes and purchases land through unconsolidated entities. Rialto Capital Managements is part of Lennar’s financial arm. Rialto invests in real estate and manages funds that invest in real estate. It also provides mortgage financing, title insurance, and closing services. While Lennar is an originator, it sells its origination pipeline in the secondary market and doesn’t retain servicing.[4]

In 2008, Lennar was the United States' second largest homebuilder,[5] constructing homes in 18 states:[3] Arizona, California, Colorado, Delaware, Florida, Georgia, Illinois, Maryland, Massachusetts, Minnesota, Nevada, New Jersey, New York, North Carolina, Pennsylvania, South Carolina, Texas, and Virginia.[3]

Its commercial operations are handled by its spinoff LNR Property corporation, now owned by Cerberus Capital Management.[6]

History

The company was originally co-founded in 1954, under the name of F&R Builders, by Gene Fisher and Arnold Rosen. Fisher was replaced by Leonard Miller when Miller invested $10,000 into F&R Builders. In 1971, F&R Builders went public under the new name of Lennar, a combination of "Leonard" and "Arnold".[7] In 1992, following Hurricane Andrew, as the largest house builder in Florida, Lennar faced numerous lawsuits.[8] In 1995, Lennar acquired two homebuilders in Texas; in 1996, the company acquired two homebuilders in California. In 1998, Lennar acquired the North American Title Company, a title and escrow service company in Arizona, California, and Colorado.[9]

In 1997, Leonard Miller died and his son, Stuart Miller, replaced him as CEO and President of the company.[10]

In 1997 it spun off the LNR Property corporation, which handles the commercial operations,[10] under control of Stuart Miller. According to corporate disclosure, Miller is "the sole director and officer of a family-owned corporation which owns stock that gives it voting control of both companies", referring to Lennar Corporation and LNR Property Corp.[11][12]

In 2006 it was listed as a Fortune 200 company[13] and one of Forbe's "America's Best Managed" companies.[14]

In 2011, former businessman and convicted felon Barry Minkow engaged in a scheme to manipulate the company's stock, which caused the shares to lose 26% of their value in a day. Minkow was sentenced to five years in prison, and was ordered to pay $584 million in restitution for the crime.[15]

Housing slump

In 2007 and 2008, Lennar Corporation was affected by the crisis of the U.S. housing market. Its CEO indicated that the construction industry needs government help to stabilize and recover the housing market and [5] that 32% of people who signed contracts for new homes have backed out of them. [16] The housing slump also appeared to be causing delays on one of the company's largest project, the Orange County Great Park, due to slower sales of houses.[17]

In 2007, Lennar posted heavy quarter losses. In 2008, against Wall Street expectations, Lennar again posted losses, although smaller ones, and its total revenue slipped 61%.[18] Lennar's CEO Stuart Miller declared:

For the third quarter of 2008 Lennar reported losses for the sixth consecutive quarter, to a total loss of $2.4 billion since 2006.[19] Its CEO warned in an earning conference that house prices were still falling after a "false uptick" on August, and expressed a fear that they were "chasing the market downward".[19] On the press release he called to the Federal Government for meaningful actuations to stabilize home prices.[19][20] He also explained that the company was continuing to successfully reposition its product to meet current consumer demand and cutting construction costs.[19][20]

Notable projects

Coto de Caza, California

In 2003, Lennar's flagship community Coto de Caza, California in Orange County was completed. It is a census-designated place (CDP) and a guard-gated private community, and has around 4,000 homes and 5,000 acres (20 km2). It started out as an inexpensive community, but has blossomed into a sprawling affluent community that now ranks among the wealthiest communities in the United States. It is no longer owned or controlled by Lennar, although Lennar Home has development rights on the last 1,000 acres (4.0 km2) in Coto.[21]

Mountain Crest, North Metro Atlanta

Lennar Corp. is proposing a massive complex of houses and townhomes North of Atlanta in Forsyth County, Georgia. The Georgia division of the Miami–based home builder has proposed Mountain Crest, a project with 572 single family homes and 124 townhouses west of Cumming, Georgia along Chamblee Gap Road, according to a Development of Regional Impact filing posted with the state Department of Community Affairs. The proposed $280 million project, to take place over multiple phases through 2022, includes a trail network to the Big Creek Greenway.[22]

Closed military bases

In the words of the LA Times, "for Lennar, closed military bases have become a cottage industry".[23] Lennar has bought closed military bases to clean them up and build neighborhoods. All of them are extensions of contaminated land that hold potential for construction.

Mare Island Naval Shipyard

Mare Island Naval Shipyard is a 5,223-acre 152-year-old closed Navy base, owned by Lennar Mare Island, a subsidiary of Lennar Corp.[23] The company was chosen in 1997 as the master developer of this site. In 2002 the Navy transferred 650 acres (2.6 km2) to the city of Vallejo, and then to Lennar Mare Island.[24] Lennar stated that it would use those 650 acres (2.6 km2) to build homes, shops, restaurants and businesses. The company received the land for free in exchange for investing $260 million in streets and utilities, historic preservation and building renovation.[23] The Lennar Mare Island Reuse Plan includes 1,400 homes, roughly 7,000,000 square feet (650,000 m2) of commercial and industrial space, and many recreational amenities.[24]

On Mare Island, the Navy paid for the cleanup, and Lennar assumed the environmental cleanup of the site.[23][24] CH2M Hill, Lennar's environmental contractor, is removing contaminated soil and stripping lead paint from houses.[23] Several landowners are waiting for the cleanup to finish so they can use their property, Touro University among them.[23]

Marine Corps Air Station El Toro

Marine Corps Air Station El Toro in Orange County has 3,718 acres (15.05 km2) and was won in an auction in 2005 for $649.5 million.[23] It will include a 74-acre (300,000 m2) cemetery, 3,400 homes and 3,000,000 square feet (280,000 m2) of office, retail and industrial space, as well as a 248-acre (1.00 km2) exposition center and 45 holes of golf which didn't have a builder as of 2005.[25] The center of the base will be given to the city of Irvine, and will be the center of the Great Park, with 375 acres (1.52 km2) of parkland and 275 acres (1.11 km2) of wildlife and drainage corridors.[25] In 2008 this project had delays, probably due to the housing slump.[17] Great Park officials insisted that the project had enough money to be finished, although it would take longer to complete.[17][26]

Tustin Marine Air Base

Lennar Corporation is currently engaged in a project on the former site of Marine Corps Air Station Tustin within the Village of Columbus: Columbus Square over plans to change a condo project from ownership to rental units.[27]

March Air Reserve Base

March Joint Air Reserve Base is an airfield near Riverside in Riverside County, California. Lennar built 16,000,000 square feet (1,500,000 m2) of industrial and office space on portions of the base.[23]

Treasure Island in San Francisco

In 2005, Lennar Corporation proposed to build a self-sustaining city on Treasure Island. However, the proposed "Project Honeycomb" failed to meet the necessary financial backing. Efforts were since shifted to purchasing and acquiring land from low-income neighborhoods.

Hunters Point Naval Shipyard

Lennar Corp. is building 10,500 homes at this former military base. African-Americans testified that they were "being pushed out, so the city can gentrify the area that is the last black neighborhood."[28]

Munitions found on home sites

Lennar was the developer for a new subdivision of half-million-dollar homes built in Orlando, Florida on the site of a former U.S. Army WWII PineCastle Jeep bombing range. Over the course of a year, 126 rockets and bombs were found on the property. In response, Lennar said it relied on studies that "made no mention of... a military range," and claimed the military did not show up in property ownership records because "it had leased the land."[29]

References

  1. ↑ "Fountainbleau CDP, Florida." U.S. Census Bureau. Retrieved on January 7, 2010.
  2. ↑ "Legal Notices." Lennar Corporation. Retrieved on January 9, 2010.
  3. 1 2 3 "Lennar Corporation - About Lennar". Lennar Corporation. Retrieved 2008-07-24.
  4. ↑ Nyitray, Brent. "Background on Lennar". Market Realist. Market Realist, Inc.
  5. 1 2 "Lennar posts worse-than-expected loss; orders fall". Reuters. Thomson Reuters. 2008-06-26. Retrieved 2008-07-24.
  6. ↑ "LNR Property Corporation Agrees To Be Acquired For $63.10 Per Share In Cash". LNR Property.
  7. ↑ "Lennar Corporation - About Lennar". Lennar Corporation.
  8. ↑ Investor's Business Daily: "Lennar's Stuart Miller Humility And Focus Helped Him Build Up His Firm" BY ALISON YOUNG May 7, 2001
  9. ↑ Reference for Business: "Stuart A. Miller 1957– retrieved August 10, 2015
  10. 1 2 "Lennar's founder dies at 69". South Florida Business Journal. 2002-08-02. Retrieved 2008-08-04.
  11. ↑ Leon Worden (2003-01-28). "Newhall Land Sold to Lennar-LNR, Santa Clarita Valley's biggest developer now controlled by nation's No. 3 home builder.". The Signal. Retrieved 2008-08-04.
  12. ↑ "Lennar Corp/New · 10-K · For 11/30/02". U.S. Securities and Exchange Commission. Retrieved 2008-08-04.
  13. ↑ "Fortune 500 2006. Our annual ranking of America's largest corporations". Fortune 500. 2006. Retrieved 2008-07-24. Ranked 161 based on 2005 revenues.
  14. ↑ David Serchuk (2006-01-09). "America's Best Managed Companies, Lennar". Forbes. Retrieved 2008-07-30.
  15. ↑ Parloff, Roger (5 January 2012). "Barry Minkow: All-American con man". Fortune Magazine. Retrieved 5 December 2014.
  16. ↑ "Lennar Drags The Housing Slump Down Lower". PBS. 2007-09-25. Retrieved 2008-07-31.
  17. 1 2 3 Tony Barboza; Dave Mckibben (2007-09-07). "O.C. project delays may be tied to housing slump". Los Angeles Times. Retrieved 2008-07-30.
  18. 1 2 Triangle Business Journal (2008-06-26). "Housing slump keeps Lennar earnings in red". Silicon Valley / San Jose Business Journal. Retrieved 2008-07-31.
  19. 1 2 3 4 Jeff Collins (2008-09-23). "Lennar wants meaningful home aid". The Orange County Register.
  20. 1 2 "Lennar Reports Third Quarter Results". Lennar Corporation. 2008-09-23.
  21. ↑ Linn Groves; Liz Seymour; Tina Nguyen (1998-12-14). "Public School Plan Rattles Coto de Caza Residents". Los Angeles Times.
  22. ↑ http://www.ajc.com/news/business/lennar-plans-large-subdivision-in-forsyth-county/nfmFj/
  23. 1 2 3 4 5 6 7 8 Jean O. Pasco (2005-03-21). "In Vallejo, a Lesson in Converting El Toro". LA Times. Retrieved 2008-08-06.
  24. 1 2 3 "Military Base Revitalization, Success story: Lennar Mare Island Ready for Reuse" (PDF). California Department of Toxic Substances Control. July 2006. Retrieved 2008-08-06.
  25. 1 2 Jean O. Pasco (2005-02-10). "With El Toro Sold, What’s Next?". LA Times. Retrieved 2008-08-06.
  26. ↑ Jeff Collins (2008-05-22). "Lennar’s woes not seen as Great Park hurdle". The Orange County Register.
  27. ↑ James, Elysse "Tustin council postpones vote on changing condos to rentals", Orange County Register, February 13, 2013
  28. ↑ "Black population deserting S.F., study says", San Francisco Chronicle, 8/10/08
  29. ↑ Rich Phillips; John Zarrella (2008-07-01). "Live bombs haunt Orlando neighborhood". CNN.com. Retrieved 2008-07-23.
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