Lennar Corporation

Lennar Corporation is a home construction and real estate company based in Miami, Florida. In 2017 the company was the largest home construction company in the United States after its purchase of CalAtlantic Homes.[2] The company is ranked 154th on the Fortune 500 as of 2019.[3] The company operates in 21 states[4] and owns Rialto Capital Management, the sponsor of six private equity funds that invest in real estate and an originator commercial mortgage loans for securitization.[1] The company also developed and retains ownership interests in 53 apartment communities.[1] The name Lennar is a portmanteau of the first names of two of the company's founders, Leonard Miller and Arnold Rosen.[5]

Lennar Corporation
Public
Traded as
  • NYSE: LEN (Class A)
  • NYSE: LEN.B (Class B)
  • S&P 500 component (LEN)
  • Russell 1000 component
  • (LEN and LEN.B)
IndustryHome construction
Founded1954 (1954)
FoundersLeonard Miller
Arnold Rosen
HeadquartersMiami, Florida, U.S.
Key people
  • Stuart Miller (executive​ chairman)
  • Rick Beckwitt (CEO)
  • Jon Jaffe (president and​ COO)
Production output
 29,394 new home deliveries (2017)
Revenue US$12.646 billion (2017)
US$1.476 billion (2017)
US$0.810 billion (2017)
Total assets US$18.745 billion (2017)
Total equity US$7.986 billion (2017)
Number of employees
 9,111 (2017)
Websitelennar.com
Footnotes / references
[1]
Lennar's branch office in San Ramon, California

History

Early history

The company dates back to F&R Builders, a company founded in 1954 by Gene Fisher and real estate developer Arnold P. Rosen.[6] In 1956, Leonard Miller (who would later become the namesake of the University of Miami Miller School of Medicine), a 23-year-old entrepreneur that owned 42 lots in Miami-Dade County, Florida, invested $10,000 and partnered with the company.[7][8] In 1969 the company reached an equity base of $1 million, and by 1971 Miller and Rosen changed the name to Lennar Corporation.[7] That year the firm became a public company via an initial public offering[1] of $8.7 million. It became listed on the New York Stock Exchange in 1972.[7]

In 1977, the company acquired Mastercraft Homes, based in Phoenix, Arizona, for approximately $2 million, as well as the Womack Development Company. That year Rosen also retired, staying on with the company as a director. In 1989, Lennar originated its “Everything’s Included” program, which placed extra options on built homes as a part of the lump sum charged for the property in its entirety.[7] In 1992, following Hurricane Andrew, the company faced several lawsuits from homeowners alleging careless building quality.[9][10][11] In 1997, Stuart Miller, the son of co-founder Leonard Miller, also took over the company. Leonard Miller died in 2002.[12][13] In 2005 the company was added to the S&P 500.[7]

2000s

In November 2006, chairman Robert J. Strudler, who previously led U.S. Home Corp until it was acquired by Lennar in 2000, died.[14][15] In December 2007, during the subprime mortgage crisis, the company sold an 80% interest in 11,000 properties for 40% of their previously stated book value to Morgan Stanley.[16] In early 2008, the company reported a 60% year-over-year drop in new home deliveries as it suffered from the financial crisis of 2007-2008.[17][18] In 2007 Lennar also founded Rialto Capital Management, which was originated to acquire distressed real estate and mortgage debt.[19] In 2011, former businessman and convicted felon Barry Minkow engaged in an extortion scheme to manipulate the company's stock, which caused the shares to lose 26% of their value in one day. Minkow was sentenced to 5 years in prison, and was ordered to pay $584 million in restitution. San Diego real estate developer Nicolas Marsch III hired Minkow to back his claims that Lennar cheated Marsch out of millions of dollars on a private golf community.[20][21][22][23]

In 2012 the company's home orders returned to its pre-2008 levels.[24] That year the company began a new program called “Lennar Next Gen”, which focused on building homes for multi-generation households.[25] The following year, in 2013, Lennar Commercial Investors was founded in order for Lennar to enter the commercial real estate market.[26] In 2015, the average Lennar house was estimated to cost $358,000.[27] In February 2018, the company acquired CalAtlantic Homes.[28] The $9.3 billion merger made the company become the largest home builder in the US.[29] Through the acquisition, Lennar Corporation will be controlling over 250,000 homesites nationwide.[30]

In May 2018, Lennar announced that Amazon's Alexa will be included into all of the 35,000 new homes built this year.[31]

Acquisitions

1980s and 1990s

Soon afterward its founding, the company acquired both Bert L. Smokler & Company and Dreyfus Interstate Development Corp., entering the house building industry directly in the Midwestern US.[32] In 1984, the company acquired H. Miller & Sons for $24 million.[33] In 1989, the company acquired Richmond American Homes of Florida for $18 million.[34] In 1992 they also acquired Amerifirst's $1 billion real estate portfolio in a joint venture with Morgan Stanley. Then in 1993, they acquired the $2 billion Westinghouse loan portfolio in a joint venture with Lehman Brothers.[7] In 1995, the company acquired Friendswood Development Company from Exxon,[35] and acquired California company Bramalea.[7]

In 1996, the company acquired Winncrest Homes. The company also acquired 2,200 acres (8.9 km2) acres in and took over management of Coto de Caza, California, a census-designated place and a gated community, from Chevron Corporation.[36] In 1997, the company acquired West Venture Homes.[37] In 2002 the company merged with Pacific Greystone, and acquired Theyst Venture Homes, 2700 homes in the North Natomas Community, and 800 San Diego homesites. In 1998, the company acquired North American Title Company, Winncrest Homes, Polygon, and ColRich Communities.[7] The company also acquired 3 closely held home construction companies operating in California for $370 million.[38] The following year the company acquired Eagle Home Mortgage and Souththeyst Land Title.[7]

2000s

In 2000, the company acquired U.S. Home Corporation for $476 million in cash and stock,[39][40][41] which resulted in the company doubling in size.[7] In 2001, the company acquired home building operations from Fortress Investment Group.[42] In 2002, the company acquired Patriot Homes based in Columbia, Maryland,[43] Barry Andrews Homes in Baltimore, Maryland, as well as Don Galloway Homes, The Genesee Company, Cambridge Homes, and Sunstar Communities.[7] It also acquired Concord Homes and Summit Homes, both based in Chicago.[44] The company then acquired 650 acres (2.6 km2) on Mare Island, in a closed Navy base, for redevelopment.[45] In 2003 Lennar then acquired Coleman Homes.[7]

In 2004, the company acquired Newhall Land and Farming Company for $990 million.[46][47] The company also acquired the assets of Queens Properties for $33.8 million,[48] in addition to Connel-Barron Homes and Classic American Homes.[7] In 2005, Lennar acquired Barker Coleman Homes,[7] and the company acquired the 3,718-acre Marine Corps Air Station El Toro for redevelopment.[49][50] In 2006 twenty of the company's prior acquisitions changed their name to Lennar,[7] a year in which Lennar also acquired 13 acres in Anaheim, California, for $56 million. It also spun off its commercial servicing division, LNR Property Corporation, which was acquired by Starwood Capital Group in 2012.[37]

In March 2013, the company acquired 20.6 acres in Norcross, Georgia, for $7.59 million. In April 2014, the company proposed building 572 single family homes and 124 townhouses in Forsyth County, Georgia.[51] In June 2014, the company began selling houses at the former navy shipyard at Bayview-Hunters Point, San Francisco.[52][53][54] In February 2016, the company acquired 143 acres in Miami Lakes for $74.4 million and announced plans to build 267 single-family homes and 238 townhouses on the site.[55] The company also sold a new 167-unit apartment complex in Chicago.[56] In November 2016, the company sold a 252-unit apartment complex in Orlando, Florida, for $42.83 million.[57]

In January 2017, the company acquired a parcel in Charlotte, North Carolina, for $23 million an announced plans to construct a mixed-use property on the site.[58] In February 2017, the company acquired WCI Communities, which operated in Florida, for $643 million.[59] In March 2017, the company acquired Westchester Pavilion in White Plains, New York, for $56.6 million and announced plans to redevelop the site into 700 apartments and 90,000 square feet of retail space.[60] In April 2017, the company acquired a 225-acre farm in Wake County, North Carolina, for $25.7 million.[61] In October 2017, the company acquired land in Plantation, Florida, and announced plans to build a 271-unit luxury apartment complex on the site.[62]

Rialto Capital settlement

In June 2019, Rialto Capital paid a $3.6 million fine with the U.S. Department of Justice to settle criminal allegations of false claims and illegal financial arrangements in violation of the Anti-Kickback Statute, the Stark Law, and the federal False Claims Act. The case stemmed from an investigation alleging that two doctors had financial arrangements referring patients to a hospital Rialto owned (which subsequently closed to due poor financial performance), and the government had alleged that Rialto directed the Kentuckiana Medical Center, which it owned, to provide personal loans to two referring doctors and then forgave the loans, in violation of federal criminal law. According to the Department of Justice, "The claims resolved by the settlement are allegations only, and there has been no determination of liability. The case is captioned United States ex rel. Buridi v. Kentuckiana Medical Center LLC, et al., Case No. 4:15-cv-014 (S.D. Ind.)."[63][64][65]

Shareholders

As of 2014, 7.27% of Lennar was owned by the Vanguard Group (with Vanguard Windsor Inv also owning 2.53% and Vanguard Mid Cap Index owning 1.51%), and 7.14% was owned by the Wellington Management Group. 2.25% was owned by ETFs iShares US Home Construction.[66]

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References
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  2. "The Top 100: 2017". builderonline.com.
  3. "Fortune 500: Lennar". Fortune.
  4. Lennar. "Lennar Corporation – About Lennar". www.lennar.com.
  5. "About Lennar". Lennar Corporation. Retrieved 24 August 2018. 1971 Leonard and Arnold combine their names to rename the company Lennar. That same year, Lennar Corporation becomes a public company.
  6. "LEN – Lennar Corp Company Profile – CNNMoney.com". money.cnn.com.
  7. Alan L. Carsrud, Malin Brännback (2011). Understanding Family Firms: Case Studies on the Management of Crises, Uncertainty and Change. Springer Science & Business. pp. 93–94.
  8. "Former home of Miami philanthropists hits market for $49 million".
  9. "Florida Builders Gird for Lawsuits Over Homes Damaged in Storm". The New York Times. October 4, 1992.
  10. Myerson, Allen R. (September 3, 1992). "Investing Into the Wind: An Odd, Volatile Game". The New York Times.
  11. Belsie, Laurent (October 4, 1992). "Home-Construction Industry in Florida Examined in Wake of Hurricane Andrew". The Christian Science Monitor.
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  13. "Leonard Miller, 69; Led Expansion of the Lennar Corp". Los Angeles Times. July 29, 2002.
  14. "Robert J. Strudler, 64, Chairman of Lennar". The New York Times. November 13, 2006.(subscription required)
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  62. Rabines, Amanda (October 4, 2017). "Lennar plans luxury rentals in Plantation's Midtown District". The Real Deal.
  63. Press, Associated (2019-06-06). "Hospital managers agree to $3.6M settlement in kickback suit". Daily Herald. Retrieved 2020-05-22.
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