The completion of the financing and transaction resulted in a cash distribution to Lennar of approximately $700 million. In the first quarter of fiscal year 2007, Lennar will recognize approximately $170 million of earnings and potentially $400 million in future years.

As of Jan. 31, LandSource had assets with a book value of approximately $1.3 billion. In the transaction, LandSource assets were appraised at a value of approximately $2.6 billion, with a potential increase of more than $600 million. In entering the partnership, MW Housing Partners contributed cash and approximately 4,000 homesites totaling nearly $970 million to LandSource.

As part of the transaction, LandSource completed a new $1.55-billion debt financing. The financing consisted of a $200-million undrawn five-year revolving credit facility priced as rate of Libor plus 3%, a $1.106-billion six-year term loan B facility initially priced at Libor plus 2.75% and a $244-million seven-year second lien term facility priced at Libor plus 4.5%. Barclays Capital served as the sole lead arranger and the sole bookrunner for each of the facilities, with Barclays Bank PLC acting as administrative agent for the credit facilities.

"Our LandSource joint venture allowed us to mitigate the risk of investing in long-term real estate while capturing significant financial upside," says Lennar president and CEO Stuart Miller. "The liquidity achieved through this transaction reflects an intense focus on our 'balance sheet first' operating strategy."