Lennar Closes Multifamily Venture at $2.2B

MIAMI—Lennar Corp.'s wholly owned subsidiary LMC has received an additional $250-million commitment to its Lennar Multifamily Venture, capping fundraising for the long-term multifamily development investment vehicle at $2.2 billion. Launched in July 2015, the venture is developing class A apartment communities in 25 target markets across the US

While best known for single-family residential, Lennar has been among the nation's most active apartment developers since launching LMC five years ago. LMC currently has approximately 13,300 apartment homes in 45 communities operating or under construction, with a total development pipeline that exceeds $7 billion and over 23,000 apartments. The LMC operation builds high-rise, mid-rise, and garden apartment communities.

LMV's ownership includes six prominent institutional investors, comprised of foreign pensions, sovereign wealth funds and insurance companies. Lennar also has a $504-million commitment to the venture.

“In 2011, we drafted a blueprint to become one of the leading developers of class-A multifamily communities in the United States,” Stuart Miller, Lennar CEO, said when LMV was launched last year with a first close of $1.1 billion. “We identified a multiyear shortfall in apartment development and targeted this housing category to complement Lennar's focus on the entry-level buyer. Over the past four years, fueled by the strength of our senior management team, we quietly built this business into the nation's fifth largest apartment developer.”

At that time, Lennar said that LMV would represent the next stage of LMC's strategy, having previously structured 28 single asset joint ventures with 18 different institutional partners utilizing a merchant-build approach. The assets from these existing ventures were not part of the new fund, and Lennar said these assets would be sold over the next three years as the communities are 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 going forward,” Miller said in July '15. “Having the ability to recognize current development earnings and to continue to own a portfolio of income producing properties is a game changer for LMC.”

With fundraising for now LMV now complete, Lennar president Rick Beckwitt says, “The success of the LMV capital raise demonstrates the confidence venture investors have placed in LMC and our new build to core strategy that will allow us to maintain an ownership interest in a portfolio of income producing communities going forward. We continue to see growing demand in housing, both in our core homebuilding business as well as our multifamily platform. This venture is a key building block for one of our growing ancillary businesses.”

Todd Farrell, president of LMC, adds that as the multifamily development cycle has begun to mature, “we feel this is the right time to pivot to a strategy that is less reliant on merchant building, or 'build to sell' and focuses on 'build to own.' We have assembled a strong partnership with like-minded, patient capital investors and look forward to building out a geographically diversified, conservatively leveraged portfolio of class A multifamily communities.”

The LMV equity fund “positions us to move quickly on development opportunities, which gives us a significant competitive advantage,” says John Gray, head of investments for LMC. “We are extremely appreciative of the world-class investors who have committed capital to this venture and believe the vehicle gives LMC a best-in-class ability to execute in the multifamily space.”

Currently, the venture has approximately 9,100 apartment homes under development in 31 communities for a total development cost of $3.1 billion. With the combined equity commitments and 50% leverage, LMV has approximately $1.3 billion in dry powder to invest in future opportunities. On the fundraising for LMV, Macquarie Capital acted as a financial advisor and placement agent for LMC.

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.

MIAMI—Lennar Corp.'s wholly owned subsidiary LMC has received an additional $250-million commitment to its Lennar Multifamily Venture, capping fundraising for the long-term multifamily development investment vehicle at $2.2 billion. Launched in July 2015, the venture is developing class A apartment communities in 25 target markets across the US

While best known for single-family residential, Lennar has been among the nation's most active apartment developers since launching LMC five years ago. LMC currently has approximately 13,300 apartment homes in 45 communities operating or under construction, with a total development pipeline that exceeds $7 billion and over 23,000 apartments. The LMC operation builds high-rise, mid-rise, and garden apartment communities.

LMV's ownership includes six prominent institutional investors, comprised of foreign pensions, sovereign wealth funds and insurance companies. Lennar also has a $504-million commitment to the venture.

“In 2011, we drafted a blueprint to become one of the leading developers of class-A multifamily communities in the United States,” Stuart Miller, Lennar CEO, said when LMV was launched last year with a first close of $1.1 billion. “We identified a multiyear shortfall in apartment development and targeted this housing category to complement Lennar's focus on the entry-level buyer. Over the past four years, fueled by the strength of our senior management team, we quietly built this business into the nation's fifth largest apartment developer.”

At that time, Lennar said that LMV would represent the next stage of LMC's strategy, having previously structured 28 single asset joint ventures with 18 different institutional partners utilizing a merchant-build approach. The assets from these existing ventures were not part of the new fund, and Lennar said these assets would be sold over the next three years as the communities are 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 going forward,” Miller said in July '15. “Having the ability to recognize current development earnings and to continue to own a portfolio of income producing properties is a game changer for LMC.”

With fundraising for now LMV now complete, Lennar president Rick Beckwitt says, “The success of the LMV capital raise demonstrates the confidence venture investors have placed in LMC and our new build to core strategy that will allow us to maintain an ownership interest in a portfolio of income producing communities going forward. We continue to see growing demand in housing, both in our core homebuilding business as well as our multifamily platform. This venture is a key building block for one of our growing ancillary businesses.”

Todd Farrell, president of LMC, adds that as the multifamily development cycle has begun to mature, “we feel this is the right time to pivot to a strategy that is less reliant on merchant building, or 'build to sell' and focuses on 'build to own.' We have assembled a strong partnership with like-minded, patient capital investors and look forward to building out a geographically diversified, conservatively leveraged portfolio of class A multifamily communities.”

The LMV equity fund “positions us to move quickly on development opportunities, which gives us a significant competitive advantage,” says John Gray, head of investments for LMC. “We are extremely appreciative of the world-class investors who have committed capital to this venture and believe the vehicle gives LMC a best-in-class ability to execute in the multifamily space.”

Currently, the venture has approximately 9,100 apartment homes under development in 31 communities for a total development cost of $3.1 billion. With the combined equity commitments and 50% leverage, LMV has approximately $1.3 billion in dry powder to invest in future opportunities. On the fundraising for LMV, Macquarie Capital acted as a financial advisor and placement agent for LMC.

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.