Lennar has found a partner with cash and expertise in developing complex, multi-use infill projects to help it develop its huge former military bases in San Francisco and a piece of land in New Jersey that overlooks Manhattan.

Ross Perot Jr.'s Hillwood Development Co. and Scala Real Estate Partners, made up of two former Hillwood executives, together bought half of Lennar's interest in Hunters Point/Candlestick Point and the New Jersey project. They also bought half of Lennar's 50% interest in Treasure Island, a former naval barracks in the San Francisco Bay.

"We are 50-50, shoulder-to-shoulder partners," said Emile Haddad, Lennar's chief investment officer, who brokered the deal. "They come in taking over 50% of all responsibilities and costs and liability...More important, this is an entity that comes with a lot of understanding of these types of deals having done some of the largest urban development and mixed-used developments in the country."

Hillwood has developed arenas, high-rise condominiums, offices, single-family residential communities, distribution centers, regional malls, mixed-use urban development, call centers, hotels, golf courses, airports, intermodal rail yards, corporate campuses, and major air facilities. It developed the Fort Worth Alliance Airport and the American Airlines Center basketball arena in Dallas.

The stadium experience should come in handy since the Hunters Point/Candlestick project could include a new home for the San Francisco 49ers as well as thousands of homes and businesses.

"These are very savvy partners that we have," said Haddad. "We have always said, 'One plus one sometimes makes three.'"

Hillwood-Scala paid Lennar $145 million in cash in the deal, but the company did not realize that entire amount, said Haddad, because part of it was used to buy out LNR Property Group's interest in Hunters Point and Rosewood's share of the New Jersey property.

"This deal wasn't done for any cash or loss or profit purposes," said Haddad. "It wasn't discounted. There was no distress. Also, there was no bump up in value to capture profit."

Haddad said Lennar has always envisioned taking on a partner for the San Francisco mega projects and has been working on it in earnest in June. From the beginning, LNR said it was not interested in building the development, only in the land investment, he said.

The Hillside-Scala partnership was chosen from among several suitors, Haddad said, adding that he personally has known the principals of both entities since before he joined Lennar.

As the market for homes has dried up, causing builders to go searching for cash to survive, Lennar has distinguished itself in its ability to find new sources of liquidity.

In early 2007, just before land values began exponentially falling, the company sold off a majority interest in LandSource, a land development company it had formed primarily from thousands of acres of Newhall Ranch land in the Santa Clarita Valley near Los Angeles, pulling in more than $600 million in cash.

By the end of 2007, LandSource had lost half of its value, and it recently filed to reorganize under Chapter 11 bankruptcy court protection.

On the last day of its 2007 fiscal year, Lennar pulled another bundle of cash and tax benefits out of its hat when it sold off 11,000 lots around the country valued at $1.3 billion into a joint venture with Morgan Stanley Real Estate for $525 million, recouping $270 million in taxes because of the loss.

Learn more about markets featured in this article: San Francisco, CA.