MIAMI—When Lennar bought WCI in a cash-and-stock deal valued at $643 million in September, commercial real estate industry watchers sat and wait to see if a better offer would emerge. But with the 35-day “go shop” period winding down it seems almost a done deal.

Since both homebuilders are based in Florida, the merger will have an impact in our housing market—or will it? Arnstein & Lehr attorney Charles Brecker, a member of the firm's Commercial & Real Estate Finance Transactions and Real Estate Practice Groups, tells GlobeSt.com what he sees happening next in part one of this exclusive interview.

GlobeSt.com: What's the significance of this deal?

Brecker: WCI has been one of the finest and most successful high-rise residential developers in the country, until the real estate melt-down a few years ago, which forced the company to seek bankruptcy protection. Like many developers caught by financing constraints, WCI was land rich and cash poor.

Yet, it managed to workout its debt and resurface as a new viable company, and one with hidden value that Lennar was astute enough to recognize. WCI still owns some very valuable parcels, on both coasts of Florida, suitable for development. This acquisition unquestionably affords Lennar with that viable opportunity over the next 10 years or more.

GlobeSt.com: What impact will the merger have on residential developers in Florida?

Brecker: It further separates the men from the boys, a somewhat unfortunate trend where there has been tremendous consolidation in fewer residential developers having survived, with the recent elimination of dozens of builders and developers that either suffered insolvency, closed their businesses, or like WCI, were acquired by a national home builder. It is becoming ever more challenging for the remaining mom-and-pop homebuilders to compete with companies like Lennar, Related Group, GL Homes, et cetera.

GlobeSt.com: What impact will the merger have on the South Florida housing market?

Brecker: Probably not a great impact in Miami-Dade or Broward counties, given the absence of WCI projects or land holdings between Miami and Fort Lauderdale. However, there will be fabulous opportunities for development of whatever inventory of land is owned by WCI, thanks to Lennar's enormous size and ability to capitalize the cost of building new projects and having the talent to get those projects built.

For its part, Lennar just made a $46-million exit from the Orlando multifamily market. Get all the details.

Steady gains in the US economy have resulted in net positives for the multifamily sector—will this wave continue for the foreseeable future? What's driving development and capital flows? Join us at RealShare Apartments on October 19 & 20 for impactful information from the leaders in the National multifamily space. Learn more.

GlobeSt.com: What's the significance of this deal?

GlobeSt.com: What impact will the merger have on residential developers in Florida?

GlobeSt.com: What impact will the merger have on the South Florida housing market?

For its part, Lennar just made a $46-million exit from the Orlando multifamily market. Get all the details.

Instant Insights /

How Lennar's WCI Grab Impacts South Florida Market

Related Stories

Recommended For You