MIAMI, July 15, 2015 /PRNewswire/ -- Lennar
Corporation (NYSE: LEN and LEN.B), one of the nation's largest
homebuilders, today announced the formation of Lennar Multifamily
Venture ("LMV" or the "Venture"), an equity fund between Lennar
Multifamily Communities ("LMC") and global sovereign and
institutional investors targeting investments in class-A
multifamily development assets in 25 top metropolitan markets in
the United States.
The new Venture will aim to provide superior risk-adjusted
returns through a "develop-to-core" strategy - developing
multifamily communities and then holding those communities in a
portfolio long term for cash flow. LMV will focus on the top growth
and gateway markets in the United
States, which are characterized by strong long-term demand
fundamentals and constrained supply, and will capitalize on
Lennar's deep construction expertise to build multifamily
communities at an attractive cost basis. The Venture is expected to
build a combination of garden, mid-rise and high-rise properties.
The Venture will benefit from LMC's fully integrated development
management, construction management, property management, and asset
management platforms.
With this first close, LMV will have approximately $1.1 billion in equity commitments, including a
$504 million co-investment commitment
by Lennar. The Venture is targeting 50% leverage and will have a
three-year investment period and an eight-year term. It will be
seeded with 19 undeveloped multifamily assets that were previously
purchased or under contract by LMC, totaling 6,120 apartments with
a total projected development cost of approximately $2.1 billion. The Venture represents the next
stage of LMC's strategy, having previously structured 28 single
asset joint ventures with 18 different institutional partners
utilizing a merchant-build approach. The assets from these existing
ventures are not part of the new fund and will be sold over the
next three years as the communities are leased and stabilized.
Stuart Miller, Chief Executive
Officer of Lennar Corporation, said, "In 2011, we drafted a
blueprint to become one of the leading developers of class-A
multifamily communities in the United
States. We identified a multiyear shortfall in apartment
development and targeted this housing category to complement
Lennar's focus on the entry-level buyer. Over the past four years,
fueled by the strength of our senior management team, we quietly
built this business into the nation's fifth largest apartment
developer."
Mr. Miller continued, "Today's announcement marks a significant
milestone in the evolution of our multifamily business. To date, we
have been building our apartment communities in individual
ventures, which were structured to sell the assets once they were
leased and stabilized. In addition to receiving a consistent fee
stream, our new 'development-to-core' Venture allows us to earn the
development promote when the community is stabilized and maintain
an ownership interest in the income producing community going
forward. Having the ability to recognize current development
earnings and to continue to own a portfolio of income producing
properties is a game changer for LMC."
Rick Beckwitt, President of
Lennar Corporation, added, "In prior earnings calls, we daylighted
our strategic focus to shift away from a merchant build model in
order to capture the long-term benefits of income producing assets.
This new fund will transition LMC into a cash flow producer,
benefiting from the combination of recurring rental income and
management fees throughout the life of the portfolio. The portfolio
will be truly unique, given that it will include only recently
completed class-A developments. Having a portfolio of new vintage
communities should create excellent upside for our shareholders
over the long-term. We appreciate the support of our new equity
partners and are working with other partners for additional
commitments to the Venture to build out our development
pipeline."
Mr. Miller concluded, "While our core homebuilding machine
continues to be the primary driver of our earnings, our
complementary ancillary businesses are really starting to define
themselves. Last week we announced that we signed a contribution
agreement to position Five Point for a potential IPO. This week LMC
takes a major step forward with the first close of the
'develop-to-core' Venture fund. Our Rialto operation continues to
emerge as a best in class asset manager while Lennar Commercial
continues to establish itself as an innovative and solutions
oriented commercial developer. We look forward to bringing greater
clarity to all of our operating platforms as they continue to
mature and create increased shareholder value."
Lennar Multifamily Communities, LLC ("LMC"), an indirect
wholly-owned subsidiary of Lennar Corporation, is a multifamily
real estate investment company focused on assembling a diverse
portfolio of institutional quality multifamily rental communities
using both development and value-add acquisition strategies in
selected US markets. In 2014, LMC was ranked the fifth largest
developer in the United States. As
of May 31, 2015, LMC had two
completed and operating communities and 24 communities under
construction, totaling approximately 7,100 apartments with a total
development cost of $1.7 billion.
This press release shall not constitute an offer to sell or the
solicitation of an offer to buy securities.
Note Regarding Forward-Looking Statements: 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, including statements regarding the
possible profitability of the Venture and its ability to receive a
consistent fee stream, Lennar Corporation's or Lennar Multifamily's
expected contribution of cash and assets to the Venture, and the
expected benefit of the Venture to stockholders of Lennar
Corporation. These statements may include opinions formed based
upon general observations and industry experience, but that are not
supported by specific investigation or analysis. These
forward-looking statements are subject to risks, uncertainties and
assumptions that could cause actual results and events to differ
materially from those contemplated by the forward-looking
statements, including the possibility of decreased demand for
multifamily rental properties; the possible inability of the
Venture to successfully sell its rental properties once rents and
occupancies have stabilized; increases in operating costs,
including costs related to construction materials, labor, insurance
and real estate taxes, and their effects on the Venture's ability
to manage its cost structure; possible difficulty obtaining debt
financing to supplement the Venture participants' equity
investments; the willingness of the participants in the Venture to
honor their commitments; and other risks detailed in Lennar
Corporation's filings with the SEC, including the "Risk Factors"
section of Lennar Corporation's Annual Report on Form 10-K for the
fiscal year ended November 30, 2014.
It is not possible for management to predict all possible risks or
to assess the impact of such risks on us or on the Venture.
We undertake no obligation to publicly update or revise any
forward-looking statements, whether as a result of new information,
future events, or otherwise.
About Lennar
Lennar Corporation, founded in 1954, is
one of the nation's largest 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 mortgage financing, title insurance and
closing services for both buyers of the Company's homes and others.
Lennar's Rialto segment is a vertically integrated asset management
platform focused on investing throughout the commercial real estate
capital structure. Lennar's Multifamily segment is a nationwide
developer of high-quality multifamily rental properties. Previous
press releases and further information about the Company may be
obtained at the "Investor Relations" section of the Company's
website, www.lennar.com.
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SOURCE Lennar Corporation