Miami-based Developer Sells Land For $525

MLennar has sold land in eight states to Morgan Stanley Real Estate at about 40 cents on the dollar, giving the home builder a $525 million influx in cash as it continues to pare down inventory in the face of the housing crisis.

While analysts noted the deal would result in future charges for the Miami-based builder, investors were heartened by the sale, sending Lennar’s stock up more than 5 percent to $16.74 Monday.

Lennar said late Friday it formed a land investment venture with Morgan Stanley Real Estate to acquire, develop, manage and sell residential real estate, with Lennar selling properties valued at $1.3 billion to the venture for $525 million.

The acquired properties include about 11,000 homesites in 32 communities nationally, consisting of raw land and both partially and fully developed homesites in California, Colorado, Florida, Illinois, Maryland, Massachusetts, Nevada and New Jersey.

As of Sept. 30, the acquired properties had a book value of about $1.3 billion for Lennar, one of the nation’s largest home builders. Lennar has said it was working to convert land and new home inventory into cash.

The deal generates immediate cash for Lennar and is a continuation of the company’s growing and ambitious strategy of becoming a ”near asset-less home builder” that builds homes and controls land, but does not own it, Wachovia Capital Markets analyst Carl Reichardt wrote in a Monday report.

”Such¬†business models tend to post higher returns on capital, inventory turns and free cash flow relative to peers,” the report said.

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