Lennar Completes Transactions With the FDIC to Acquire Approximately $3.05 Billion of Real Estate Loans

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Feb 10, 2010, 05:00 ET

MIAMI, Feb. 10 /PRNewswire-FirstCall/ -- Lennar Corporation (NYSE: LEN and LEN.B), one of the nation's largest homebuilders, today announced the closing of two structured transactions with the Federal Deposit Insurance Corporation ("FDIC").

The transactions represent the purchase of two portfolios of loans with a combined unpaid balance of $3.05 billion. A subsidiary of Lennar, Rialto Capital Advisors, will conduct the day-to-day management and workout of the portfolios. Lennar acquired indirectly 40% managing member interests in the limited liability companies created to hold the loans for approximately $243 million (net of working capital and transaction costs), including up to $5 million to be contributed by the Rialto management team. The FDIC is retaining the remaining 60% equity interest and is providing $627 million of non-recourse financing at 0% interest for 7 years. The transactions include approximately 5,500 distressed residential and commercial real estate loans from 22 failed bank receiverships.

Stuart Miller, President and Chief Executive Officer of Lennar Corporation, said, "Acquiring and working out distressed real estate loans was a large and extremely profitable part of our business during the last major real estate down cycle in the early 1990s. We are pleased to return to this business and honored to partner with the FDIC to manage, work through and add value to these portfolios of real estate loans. We take great pride in understanding market cycles and identifying the opportune point of entry. As we have noted on our quarterly conference calls, we have been carefully preparing to invest in this space for the last two years. Our strong cash position and proven track record in this area enables us to capitalize on this market cycle and create long-term value for our shareholders. We expect these transactions will be accretive to 2010 earnings."

Jeffrey Krasnoff, Chief Executive Officer of Rialto, added, "We have been assembling and incubating the Rialto management team within Lennar since late 2007. Many on our team have worked together and with Lennar for several decades. Our track record of successfully managing the resolution of distressed real estate loan portfolios puts us in a unique position at this point in the cycle. We are very pleased to be partnering with the FDIC and look forward to the opportunity to build on our business relationship."

Lennar Corporation, founded in 1954, is one of the nation's leading builders of quality homes for all generations. The Company builds affordable, move-up and retirement homes primarily under the Lennar brand name. Lennar's Financial Services segment provides primarily mortgage financing, title insurance and closing services for both buyers of the Company's homes and others. Previous press releases and further information about the Company may be obtained at the "Investor Relations" section of the Company's website, www.lennar.com

Rialto Capital is a real estate investment management company focused on distressed real estate asset investment, management and workouts. Rialto's senior management team brings, on average, over 20 years of broad experience in residential and commercial real estate investment, finance, development and management. A Rialto related entity is also a sub-advisor to Alliance Bernstein in one of eight Public Private Investment Partnerships sponsored by the US Treasury to purchase residential and commercial mortgage backed securities.

Some of the statements in this press release are "forward-looking statements," as that term is defined in the Private Securities Litigation Reform Act of 1995. These forward-looking statements include statements regarding our business, financial condition, results of operations, cash flows, strategies and prospects. You can identify forward-looking statements by the fact that these statements do not relate strictly to historical or current matters. Rather, forward-looking statements relate to anticipated or expected events, activities, trends or results. Because forward-looking statements relate to matters that have not yet occurred, these statements are inherently subject to risks and uncertainties. Many factors could cause our actual activities or results to differ materially from the activities and results anticipated in forward-looking statements. These factors include those described under the caption "Risk Factors" in Item 1A of our Annual Report on Form 10-K for our fiscal year ended November 30, 2009. We do not undertake any obligation to update forward-looking statements, except as required by Federal securities laws.

SOURCE Lennar Corporation