Lennar Corp., the fourth-largest U S home builder, had its first quarterly loss in at least a decade after it wrote down property investments and relinquished part of its stake in a firm that controls 15,000 acres in southern California.
The loss in the fiscal fourth quarter was 88 cents to $1.28 a share after a pretax charge of as much as $500 million, Miami-based Lennar said yesterday in a statement. Quarterly profit was $3.54 a share a year earlier.
Home construction companies have been left with more land than they need and more homes than they can sell as the housing market deteriorated last year. Sales of new homes tumbled 15 percent in November from the same month last year and the number of homes completed and waiting to be sold rose 51 percent to a record 169,000, according to the Commerce Department.
"Market conditions continued to weaken during the fourth quarter, and we have not yet seen tangible evidence of a market recovery," chief executive Stuart Miller said in the statement.
Lennar said it's taking the charge to write down land it doesn't intend to purchase. It's also writing off deposits and pre acquisition costs for land it has under option.
Lennar will report fourth-quarter earnings on Jan. 17. In preliminary results released yesterday, Lennar said new home orders slid 6 percent in the quarter ended Nov. 30 to 9,606 and declined 3 percent to 42,212 for fiscal 2006. The backlog of orders at Nov. 30 was valued at $4 billion, down from $6.9 billion a year earlier.
Fourth-quarter profit before the charges will be 70 cents to 75 cents a share and gross margins on home sales will be "materially lower" for the quarter and the fiscal year, Lennar said.
In a separate statement, Lennar said the company and LNR Property Corp. will receive $1.3 billion for relinquishing a portion of their stakes in their LandSource Communities Development LLC joint venture to MW Housing Partners.
Lennar will report a profit of $500 million on its investment in the venture. About $125 million will be recognized at closing and the remainder will be deferred over future years, said Lennar. The transaction is expected to close next month.
LandSource's main asset is the Newhall Land and Farming Co., which owns 15,000 acres of land with 23,000 home sites in the Santa Clarita Valley, 30 miles north of Los Angeles, the largest residential development in Los Angeles County. It also owns 700 acres of commercial land and other property.