Lennar finds value in cozying up to its partners.
By Iris Richmond
To Bob Santos, Southern California division president for Lennar Communities, joint ventures with landowners frequently imply little ongoing contact. With Greer Ranch, a 550-acre, hilltop planned community opening this July in Murietta, Calif., Lennar and the Greer family found that an active partnership achieves better results.
Lennar and the Greers discovered each other in August of 1998 when the land held by the family since the 1960s was in financial trouble. ?The first developer didn?t have very deep pockets and overextended its initial borrowings,? explains the family?s representative Richard Greer, who is also vice president of Murietta Oaks Nursery, which used to occupy Greer Ranch. ?Even though the land wasn?t at risk, because the family decided against putting it up as collateral for any development costs, if someone really went at it hard I?m sure there could have been lawsuits filed. It was a very scary time for the family.?
The Greers and Lennar hit it off and struck a deal, entering into a 50-50 partnership. Lennar agreed to take on the existing $3.3 million debt, a remnant from the Greers? relationship with the previous developer. The Miami-based builder also agreed to finance the $49 million in development costs. In exchange, Lennar receives an undisclosed management fee after the cash outflow is paid back, along with full rights to the land. ?We always take a big gulp whenever we put up a lot of equity upfront, but that?s the nature of the beast,? says Santos.
From the outset, Lennar was focused on making good on the spirit of the partnership. Beyond keeping the Greers involved through invites to the Monday development meeting, twice-weekly phone calls, regular e-mail updates, and quarterly reports, Lennar made the family?s desires for the land its own.
?Our vision was to reflect and keep intact the Greer legacy of the land,? says Steve Lloyd, Lennar?s project manager. ?The Greers are one of the region?s earliest agricultural families in their nursery operations. Their history represents the caring stewardship of people who truly understood the preciousness of the land. We have maintained that legacy by taking a different approach, one that honors the land.?
To accomplish this, Lennar revised the original site plans. ?The previous plans for the property didn?t take advantage of the family?s contribution,? Santos says. ?They were engineered plans without a marketing perspective.? Rather than grade the hills and fill the canyons, as the original plans called for, Lennar?s plans work with the natural hillside forms. Single-family detached homes, ranging in price from $250,000 to $350,000, will be built on gently terraced, curvilinear lots to maximize the number of homes with views. Two-thirds of the 674 lots have views overlooking the Temecula Valley, more than three times the original number, and at no substantial extra costs, says Santos.
Details of the family history gleaned through the close relationship with the Greers also inspired touches large and small elsewhere. Adele?s Oak Grove, a grove of trees sequestered in the heart of the community, honors the memory of the family matriarch Adele Greer, who passed away in 1998. Likewise, hummingbird feeders dot the residential area because Everett Greer, the 91-year-old patriarch, always liked them.
?Lennar treats us like a real partner, which is highly unusual for a corporation to do,? Greer feels. ?Our first developer didn?t include us on anything. And if so, it was only when the family name was needed, at city hall meetings, for example.?
?It?s just good business to go above and beyond,? says Santos. ?So often people think of Lennar as this big, publicly held company ? a giant. Unfortunately this conjures up the idea that we are a big institution, but we?re just a bunch of people with a desire to have rewarding relationships. The Greers serve to remind us that we do joint ventures with people.?
More to come
The Lennar-Greer partnership won?t end with their current project. Discussions began eight months ago on the prospect of a second joint venture, this time in the wholesale nursery business. The Greers would bring their landscaping expertise to future Southern California communities, and Lennar would provide the capital, according to Santos. A feasibility study awaits completion, though both parties agree to take on one project at a time.
?We don?t want to diffuse focus on Greer Ranch,? says Santos, ?but we do see the potential to control our landscaping costs in the near future by forming a second partnership with the Greers.?
Lennar?s preferred method of working with a landowner resists a formula-driven philosophy. ?If you start with ?Here?s how we do it,?? Santos says, ?and have the other party try to fit in somehow, it?s like trying to fit a round peg into a square hole. Even if you sign an agreement and get started, we?ve learned that those are the deals where things tend to fester over time and issues materialize because interests and visions aren?t totally in alignment from the start, and maybe somebody feels like he or she is not quite the same class of citizen. It?s all about being a good listener.?
Published in BIG BUILDER Magazine, June 2002