Morgan Stanley, Lennar Form $525M Joint Venture

MIAMI-Lennar Corp. and Morgan Stanley Real Estate have formed what is described in a statement from Lennar as “a strategic land investment venture.” Simultaneous with its formation, the venture has acquired a diversified portfolio from the locally based national homebuilder for $525 million.

The portfolio encompasses approximately 11,000 homesites in 32 Lennar communities located throughout the US, plus a mix of raw land and partially and fully developed homesites in active and future communities in California, Colorado, Florida, Illinois, Maryland, Massachusetts, Nevada and New Jersey. As of Sept. 30, the company says the properties had a net book value of $1.3 billion. Citigroup Global Markets Realty Corp. was sole lead arranger for non-recourse acquisition funding of the venture.

Lennar acquired a 20% ownership interest and 50% voting rights in the JV, which was formed to acquire, develop, manage and sell residential real estate. It will manage the venture’s operations and receive fees for its services. Under the agreement, Lennar will also receive disproportionate distributions should the venture exceed financial targets. In addition, Lennar obtained option agreements and rights of first offer that provide it with the opportunity to purchase certain unspecified homesites from the venture at market prices at the time it exercises the options.