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Lennar Steps Into Commercial Territory

MIAMI-The homebuilder's deal with the FDIC includes a small amount of commercial real estate loans.

By Carl Cronan | Updated on February 11, 2010

MIAMI-Locally based Lennar Corp. is crossing over from its traditional single-family home side to the realm of commercial real estate by way of its $243-million loan purchase deal with the Federal Deposit Insurance Corp. The company says it bought two loan portfolios with an unpaid balance of just over $3 billion.

Lennar subsidiary Rialto Capital Advisors will conduct day-to-day management and workout of the portfolios and contributed up to $5 million toward the loan purchase. Lennar indirectly acquired 40% managing member interests in the limited liability companies created to hold these loans.

The FDIC will retain the other 60% equity interest and provide $627 million of non-recourse financing at zero interest for seven years. The transactions include approximately 5,500 distressed residential and commercial real estate loans from 22 failed bank receiverships.

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