Lennar CEO Stuart Miller popped back onto the investor relations circuit at the UBS Housing Building and Building Products conference Tuesday explaining he's been busy focusing on the fundamentals of navigating the company through the downturn rather than on the company's stock performance.
"Many of you have seen that we have been invisible from the investor circuit," Miller said, adding that company officials are still available to answer questions to anybody stopped by. "We are happy to open the kimono and tell them what is going on at Lennar."
What Miller announced as new at the Miami-based company is actually quite old.
The Lennar of the future will be a builder of homes, not a developer of land. Joint ventures are passé. Relying on alliances with "funds" with the cash to buy and develop distressed land into finished lots for builders will be de rigueur.
It's not dissimilar to the strategy the company announced when it parked a lot of its land in Land Source a few years back. Land Source was to be the provider of land off Lennar's balance sheet. Then Lennar sold of most of its interest in LandSource, extracting the cash more than a year and a half ago.
But that was a joint venture. This new fund entity that Lennar has been "incubating" for a year and a half would be entirely independent, Miller emphasized. He did not say where the funds would be coming from for the fund or give any more specifics.
"We're not still developing this plan," he said. "This is very clearly laid out and we are executing on the plan now. ... We are actively pursuing it today."
"This will be a pure asset management business focused on the opportunities in the markets from distress," he said. "Our view of housing going forward is that a home builder does not need a land supply locked and loaded."
Analysts asked Miller if this new entity would be able to provide land in places and when Lennar needed it. He said, again, that it would be an independent entity and that there will be an ample supply of finished lots available on the other side of the downturn.
In preparation, Lennar is disassembling its joint ventures which "no longer serve their purpose" in "an orderly way." And Lennar will build through its written-down "legacy" land. None of that land will go into the new fund entity, he said.
"This will be a clean sheet of paper, new capital," he said.
In the meantime, Miller said he supports government intervention to help the home building market rebound.
"At the end of the day, my thesis continues to be that the way out to the other side of this is through government intervention," he said. "I think that is the brighter light at the end of the tunnel."
Miller said he doubted staving off foreclosures would solve the whole problem. "It seems to me that smart people are going to have to come to the conclusion that something is going to have to stimulate purchases and drive the asset values."