Lennar to Open in Pacific Northwest After Homebuilders Toll Brothers, MDC
Lennar Corp. (LEN), the third-largest U.S. homebuilder by revenue, bought more than 650 sites in the Portland, Oregon, and Seattle areas, following competitors Toll Brothers Inc. (TOL) and MDC Holdings Inc. (MDC) into the Pacific Northwest.
The Seattle-area purchases from closely held Premier Communities LLC and of sites in 11 Portland-area communities are expected to generate about 200 home deliveries in the second half of 2012 for Miami-based Lennar, according to a statement today. Terms weren’t disclosed. The move is the first entry by Lennar into a new market since early 2010, when it began operations in Atlanta.
“Both Seattle and Portland are currently benefiting from diversified economies and stabilizing home prices,” Jon Jaffe, Lennar’s chief operating officer, said in the statement.
Confidence for homebuilders rose in December, the third consecutive monthly increase and a sign of stabilization in the housing market, according to the National Association of Home Builders/Wells Fargo (WFC) index released today. The index climbed to 21 from 19 in November. Readings below 50 mean more respondents said conditions were poor.
New homes are expected to have sold in November at an annual rate of 315,000, the median of 67 estimates in a Bloomberg survey, when data is released Dec. 23. This year is on pace to be the slowest for new-home sales in Commerce Department records dating to 1963, following 2010’s record low of 323,000.
“We believe, given fierce competition among large, public homebuilders in many local markets, that attractive expansion opportunities into markets lacking public builders’ presence is difficult,” Adam Rudiger, an analyst with Wells Fargo & Co. in San Francisco, said in a note to investors today. “We find it symbolic that the only three acquisitions announced this year all occurred in the same market.”
Toll Brothers, based in Horsham, Pennsylvania, and the largest U.S. luxury-home builder, paid $143.7 million last month for CamWest Development LLC, a closely held company with 1,500 lots under ownership or option in the Seattle area.
MDC, the Denver-based builder of Richmond American Homes, in April purchased SDC Homes LLC, the third-largest builder in the Seattle area, with about 280 lots in 11 communities and options on 230 lots.
Lennar’s houses from Puyallup, Washington-based Premier are expected to sell from $150,000 to $460,000. Lennar separately bought sites in 11 communities in the Portland area, according to today’s statement. With the move, Lennar, which sold 10,559 houses since early last year, has homebuilding operations in 18 states and 44 markets across the U.S.
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