Lennar Slashes Outlook, Cuts Stake in Venture
Lennar Corp., one of the nation's largest homebuilders, said Tuesday it expected a fourth-quarter loss as the company reevaluates how much its inventory is worth as the industry has been slowing.
The Miami-based company expects a loss within a range of 88 cents a share to $1.28 for its quarter ended November 30 after a pretax charge of up to $500 million for the inventory evaluation. Official earnings for the quarter will be released before the market opens on Jan. 17.
Prior to the valuation adjustments and write-offs, the company expects its fourth-quarter earnings to be within a range of 70 cents to 75 cents a share.
"Market conditions continued to weaken throughout the fourth quarter and we have not yet seen tangible evidence of a market recovery," Lennar President and CEO Stuart Miller said in a statement. "Given the steep decline in many of our markets, we are completing our asset-by-asset review and will adjust asset balances to reflect fair value in the current market environment."
New home orders for the quarter were down 6% compared to the same period last year.
Lennar also announced Tuesday it would sell a 62% stake in its partnership with LNR Property in their LandSource Communities Development venture. Lennar and LNR will receive about $660 million each in the sale.
MW Housing Partners will purchase the 62% stake but will have just 50% voting control of the venture, according to Lennar. Under the deal, Lennar and LNR will retain rights of first offer to purchase property owned by LandSource.
LandSource's primary investment was with The Newhall Land and Farming Company, which owns 15,000 acres in a rapidly growing region about 30 miles north of Los Angeles, prime development territory as urban sprawl pushes outward from downtown.