Lennar Acquires WCI Communities for $643M

The purchase includes a portfolio of land totaling 13,700 home sites located in large, high-growth coastal Florida markets.
Stuart Miller, CEO, Lennar Corp.

Stuart Miller, CEO, Lennar Corp.

Miami—Lennar Corp. announced the acquisition of WCI Communities Inc., a lifestyle community developer and luxury home builder of single and multifamily homes, for $643 million.

“Prior to closing, we elected to pay the purchase price in all cash as opposed to using 50 percent stock. We view this decision as equivalent to a $321 million stock repurchase and chose this structure for various strategic reasons. First, while the use of cash slightly increases our current leverage, the combination of our carefully managed seven to 10 percent target growth rate, soft pivot land strategy and strong profitability and operating cash flow will continue to fortify our balance sheet and position us to end fiscal 2017 with similar leverage to our fiscal 2016 year end,” said Stuart Miller, CEO of Lennar. “Second, using cash versus stock for the purchase of existing, open for business, established high-margin communities with proven sales, offsets the need to purchase new raw land at retail prices for future growth in these markets. Third, we continue to believe that the housing market remains strong and will continue to gradually improve for the foreseeable future. Finally, we believe our stock is undervalued given our strong core business and the maturity of our ancillary businesses.”

The purchase includes a portfolio of land totaling 13,700 home sites located in large, high-growth coastal Florida markets, as well as WCI’s complementary real estate brokerage and title services business.

“Through our extensive due diligence process, we have identified many areas where we believe significant synergies will be realized and we anticipate a very smooth transition for current WCI homebuyers,” said Richard Beckwitt, president of Lennar. “We are looking forward to working with the talented associates from WCI to enhance our home building operations and ancillary businesses to maximize the opportunities from our combined leading market position in Florida.”

Image courtesy of Lennar Corp.