Lennar buys distressed assets

By Chris Sleight06 October 2010

US house builder Lennar has bought a package of non-performing loans and uncompleted properties from three unnamed institutional investors for US$ 740 million. Rialto, the company's investment arm, plans to put the loans back on track while its home building division will develop the plots of land and uncompleted buildings.

Lennar said the portfolio comprised some 397 loans with unpaid principal sums totalling US$ 529 million and 306 properties with an appraised value of US$ 211 million. The physical assets comprise single-family and multi-family residential schemes at various states of completion as well as undeveloped land. They are located in 17 states, primarily in the mid-Atlantic and southwest US. The loans meanwhile are against both residential and commercial properties, and include borrowings for development and construction work.

Lennar president & CEO Stuart Miller said, "We worked hand-in-hand with three large financial institutions to help maximise the value of their distressed assets while creating an excellent investment opportunity for our shareholders. Our unique ability to underwrite both non-performing loans and REO (real estate property) made Lennar the perfect buyer for these assets.

"Our Rialto subsidiary is extremely well positioned to manage, work through and add value to the loan portfolio and our core homebuilding operation is poised to benefit from many of the residential REO assets."

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