December 04, 2007

Now THAT'S what I call a real estate crash! Lennar dumps $1.3 billion of land for $525 million (60% off)


Nah, real estate prices never fall.

Nah, there was no real estate bubble.

Meanwhile, the lesson for everyone from today's Lennar firesale should be:

GET OUT! GET OUT NOW! GET OUT AT ANY PRICE!

And for anyone interested in catching a falling knife (I know, it's just soooo tempting to buy things during 60% off sales), just remember, there's no rule that says it can't fall more. Look to the fundamentals. Look to the historic ratios. We're regressing to the mean. And the mean is still a long, long way down.

And just think, that's a 60% fall in a matter of months. Can you say panic?

Lennar sells homesites valued at US$1.3B for $525M as it becomes "near assetless"

MIAMI - Home builder Lennar Corp. formed a land investment venture with Morgan Stanley Real Estate to acquire, develop, manage and sell residential real estate, with Lennar selling properties valued at US$1.3 billion to the venture for $525 million.

The acquired properties include about 11,000 homesites in 32 communities throughout the United States, consisting of raw land as well as partially and fully developed homesites in California, Colorado, Florida, Illinois, Maryland, Massachusetts, Nevada and New Jersey.

As of Sept. 30, the acquired properties had a book value of about $1.3 billion for one of the country's largest home builders.

24 comments:

stuckinthecity said...

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Illinois
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Very nice

Anonymous said...

But but we're running out of land!

Anonymous said...

People who own land are turning green this morning

Anonymous said...

HA!

Just wait until banks have to deal with their off balance sheet SIV's.

The amount of deleveraging to come there will send shock waves for generations.

Anonymous said...

This is a joint venture deal with Morgan Stanley. Lennar is still part owner and is still involved.

Anonymous said...

Not sure how "arms-length" this transaction was. But 60% off for Miami real estate sounds about right.

Anonymous said...

Anonymous said...
HA!

Just wait until banks have to deal with their off balance sheet SIV's.

The amount of deleveraging to come there will send shock waves for generations.

December 04, 2007 10:42 AM

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And it's a good thing that you'll be watching all this carnage and destruction from your "box seats" on the planet Mars, right?

None of us gets out of this if it isnt handled properly.

Anonymous said...

60% off land
50% off labor
go to home depot and find at least 30% off materials

Do the math people, you can now build that same house for half price and anybody that bought in the last few years is fucked.

Anonymous said...

When I first saw this article last night I thought that it was a huge loss. Then I started thinking, was this just another marked to model inflated level 3 asset sitting on their books?

Unless we know the cost basis and have an honest appraisal, then I am not sure we know if it is a true loss.

Also note, Lennar set up a joint venture with Morgan Stanley. Next they valued the land and deposited this land into the joint venture.

This feels like a scam, but more details are needed to figure it all out.

The devil is in the details.

Mr Lizard said...

Just sold my house, ultimately took about a 7k hair cut. Although I'm not factoring in savings if I'd rented and earned interest on money used for closing/upgrades. No sense in dwelling on a bad decision which could have been much worse. Now I'm just waiting for boat prices to tank...or maybe an RV. Just nothing that can anchor me to a place that does or could suck.

6% ? "When Donkeys Fly" said...

Agree...Its Lennar trying to stay afloat by any means necessary (Book Cooking)

Happy Homeowner in the Stix said...

When I first saw this article last night I thought that it was a huge loss. Then I started thinking, was this just another marked to model inflated level 3 asset sitting on their books?

Unless we know the cost basis and have an honest appraisal, then I am not sure we know if it is a true loss.


Don't confuse 'em with facts here, buddy! :)

If it turns out to be something that Lennar actually really made some money on....the people on this site are gonna be pissed!

Look, one builder possibly going under doesn't mean that the whole industry is going under. I'd be more surprised if none of them tanked by the end of this slump.

Get some perspective, guys. Wake me up when KB, Toll Brothers, and some of the other huge players go under, if they ever do. 'Til then, it ain't no big thing for the market in general.

Anonymous said...

IMHO Lennar Corp. is preparing for a Chapter 11 and this is a way of stripping out any assets in a joint venture with an investment house.

Anonymous said...

"This is a joint venture deal with Morgan Stanley. Lennar is still part owner and is still involved."

Lennar Corp. as a home builder will be bankrupt while the segment of its business within this "joint venture" will go on as a much smaller concern and beholden to Morgan Stanley.

Anonymous said...

Not to question the esteemed appraisal community, but it looks like the 9/30 divine valuation of Lennar's land may have been a bit optimistic. Exactly where is that universial dirt/dollars currency converter? Maybe I'll ask JP...

Anonymous said...


If it turns out to be something that Lennar actually really made some money on....the people on this site are gonna be pissed!


Yeah, I'm sure that Morgan Stanley just decided to let Lennar rip them off. Keep drinking the kool aid

Anonymous said...


'Til then, it ain't no big thing for the market in general.


That's why they're cutting rates, destroying the dollar and calling for a massive bailout. ain't no big thing. guzzle guzzle

Happy Homeowner in the Stix said...

Kool Aid has nothing to do with it.

I'm surprised that there aren't more of the builders officially in trouble right now, if things are as catastrophic as you guys believe they are.

Maybe they're not?

Not that everything is peachy by a long shot. But just maybe we aren't heading for former million dollar McMansions selling for 150k? Maybe the rest of the country (ie. not California, Arizona and South Florida) aren't doing as badly? Ya think???

Andrew Hac said...

More laid-off at home builder empires coming in the near future. Yes, Hooooo Weeeee !!!!! This is good news. Scum bag Lenna build shitty-box of wood and charging $300K for the shitty-box. Heck, it probably cost total $50K for all materials plus the postage stamp size lot that they build the shitty-box on. I pray fervently to God-The-Almighty that more and more massive lay-offs, unemployments will happen to all people whom work for builder or construction business.

This Americano nation and its inhabitants needs a good hickory ass-whooping lesson to teach it about the nature of life.

Princess Mononoke said...

That is a GREAT photo Keith!!! and I might add a perfect analogy to the current situation.

Princess Mononoke said...

Wow... CNBC just showed a clip of Tangelo's recent interview. Damn I missed it! Anyhow, Tangelo has most definitely AGED quite a bit since the big August interview.

Anonymous said...

HAC- you are a know nothing DOUCHE BAG- $50k in materiels? yeah maybe for a 750 sq foot house dumb ass - even the big boys are at $60-$70 per foot HARD above ground- go do some research before you make assinine stements.

Anonymous said...

YEAH SOME CRASH!
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BIG DEAL, THE FOREIGNERS ARE BUYING IT UP.
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TOO BAD FOR BITTER RENTERS AGAIN!
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DOPES!

mayor mcmansion said...

They may not be making any more land, but it's been raining fools for years now!