A Quick Overview of Homebuilder - Lennar Corporation

Lennar is one of the largest homebuilding companies in the United States. The company also offers financial services mainly to its home-buyers. Lennar is an established powerhouse in the US new home construction market. Strong presence would not only improve the brand image of the builder but also broaden its market position. However, challenging homebuilding industry with reduction in new home starts, unprecedented price declines etc, poses a threat for the company.

Lennar is a Fortune 500 company engaged in the homebuilding and financial services businesses in the US. The company has over 55 years of experience. The company is the third largest homebuilder in the nation as it closed 11,478 homes in 2009 as compared to D.R.Hoton which closed 18,164 homes and Pulte Homes closed 15,013 homes in 2009. Thus it is ranked number three on the “Builder 100 list” of America's largest home builders. Also, Lennar was ranked as the number eight homebuilder and ranked six in global competitiveness in Fortune magazine's 2009 list of America's Most Admired Companies. Thus the company’s strong presence in US has helped it over the years to enhance its brand image and strengthen its market position.

Lennar follows a diversified program of property acquisition. It acquires land directly from individual land owners/developers or homebuilders; local or regional homebuilders that own, or have options to purchase land in strategic markets. The company also acquires land through option contracts, which generally enables to control portions of properties owned by third parties (including land funds) and unconsolidated entities. In addition, it acquires parcels of land through joint ventures, primarily to reduce and share its risk, among other factors, by limiting the amount of its capital invested in land, while increasing its access to potential future homesites and allow participation in strategic ventures. In 2000, Lennar acquired U.S. Home Corporation, which expanded its operations into New Jersey, Maryland, Virginia, Minnesota and Colorado. From 2002 through 2005, the company acquired several regional homebuilders, which brought it into new markets and strengthened its position in several existing markets.In 2004, the company formed a joint venture with LandSource, which has now emerged from Chapter 11 free of its previous bank debt and reorganized itself, thus forming a great opportunity for Lennar at present.Thus with this kind of strategy, the company is able to access lands which it could not have done otherwise and reduce the initial outlay spend in acquiring land by the company and also mitigate the risks.

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