MIAMI—Lennar Corp. said Wednesday it had formed Lennar Multifamily Venture, an equity fund between Lennar Multifamily Communities and institutional and sovereign investors from across the globe. With a first close giving it about $1.1 billion in equity commitments, LMV will target investments in class-A multifamily development assets in the 25 top metropolitan markets across the US.

“Today's announcement marks a significant milestone in the evolution of our multifamily business,” which was launched in 2011, says Lennar CEO Stuart Miller. Up until now, he says, “we have been building our apartment communities in individual ventures, which were structured to sell the assets once they were leased and stabilized. In addition to receiving a consistent fee stream, our new 'development-to-core' venture allows us to earn the development promote when the community is stabilized and maintain an ownership interest in the income-producing community.”

The “develop-to-core” strategy entails developing the properties and then holding them long term. LMC previously had structured 28 single-asset joint ventures with 18 different institutional partners via a merchant-build approach. The assets from these existing ventures are not part of the new fund, and Lennar plans to sell them over the next three years as the communities are leased and stabilized.

The new fund includes a $504-million equity commitment from the parent company. It's targeting 50% leverage on each project, and will have a three-year investment period and an eight-year term. It will be seeded with 19 undeveloped multifamily assets that were previously purchased or under contract by LMC, with a total projected development cost of approximately $2.1 billion for 6,120 apartment units.

Although the 61-year-old Lennar is known mainly as a builder of single-family homes, Miller points out that over the past four years, “we quietly built this business into the nation's fifth largest apartment developer.” He says that his company's ancillary businesses, which also include Lennar Commercial, FivePoint Communities, North American Title and Rialto Capital Management, “are really starting to define themselves.”