Lennar Corp. completed the land deal today that will eventually net the company some $700 million in cash in return for selling a share in its LandSource Communities joint land venture to MW Housing Partners, a pension-fund backed entity managed by MacFarlane Partners.
The terms of the deal are a little different than were reported earlier and are included in a story in BIG BUILDER'S March issue dissecting the deal. MW Housing Partners contributed $970 million in land and cash to LandSource in return for 68 percent of LandSource. Earlier, MW's contributions were expected to be $900 million for 62 percent.
"MWHP put (in) more equity to buy a higher percentage interest, something that they had the right to do and we wanted to happen," wrote Lennar's Emile Haddad, Lennar's chief investment officer and a maker of the deal, in an e-mail to BIG BUILDER.
LandSource is a holding company that was jointly owned by Lennar, the home buider, and LNR Property Corp., a commercial property developer. By bringing in MW Housing Partners, which is funded by the mighty California Public Employees' Retirement System (CalPERS) as a third partner, both Lennar and LNR gained much needed cash infusions of $700 million each, while they maintained 25 percent voting rights each in LandSource and the rights to build on the land held by LandSource, including some 4,000 lots MW Housing contributed to the partnership.
MW Housing gained access to profits from LandSource, whose principal holding is one of the biggest remaining entitled piece of land in Los Angeles County. The Newhall Land and Farming Co. holds 15,000 acres in the Santa Clarita Valley 30 miles from LA which includes 700 acres of commercial land as well as 23,000 home sites.
LandSource financed the deal with a $1.55 billion bank loan. LandSource's book value was $1.3 billion, but it was appraised at $2.6 billion for the loan with a potential increase of $600 million.
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