By Iris Richmond. Lennar's spate of mergers this year suggests that industry consolidation hasn't lost steam. The Miami-based builder made it clear during its second-quarter earnings report in June that it was evaluating several acquisition candidates, all private home builders. If all the deals were to transpire, the aggregate purchase price of the companies (including equity and the repayment of debt acquired) would approximate $350 million.
Three deals had already taken place as this issue went to press. In California, Lennar purchased Pacific Century Homes in the Inland Empire and Cambridge Homes in Fresno. It then bought B. Andrew & Co., of Bel Air, Md., which operates as Barry Andrews Homes in Baltimore. Though the amount of the cash transactions remains undisclosed, CFO Bruce Gross notes that of the projected $350 million earmarked for 2002 deals, roughly half has been spent, excluding the $27.7-million transaction with The Fortress Group in June.
"Our motivation is to look at opportunities," says COO Bob Strudler. "As we look around, there are many."
The Cambridge deal marks Lennar's entry into Central Valley California. The firm is expected to build roughly 300 homes this year at an average price of $190,000. Barry Andrews complements Lennar's growing presence in the Washington, D.C.-Baltimore area, says Strudler, and should deliver about 275 homes in 2002 at an average price of $250,000. Management teams will be left intact and brand names retained, except for Pacific Century, which will build under the Greystone Homes name.
Published in BIG BUILDER Magazine, September 2002