Movers and Shakers: Lennar Corp.

Bigger, Better Lennar
Lennar Corp. of Miami ranks first in the Giant 400 this year, reporting 22,560 closings in 2000 for housing revenues of $4.9 billion. Those staggering numbers have a lot to do with Lennar’s acquisition of U.S. Home Corp., which was finalized last May. According to Lennar president and CEO Stuart Miller, “We’ve been growing steadily over the years, and it’s a combination of internal growth together with our acquisition strategy.”

Miller declares that there was no “arrogance or conquest” in Lennar’s decision to combine with Houston-based U.S. Home. It was a question of becoming a better company, he says: “Internally, we’re emphasizing quality, customer service and bottom-line earnings.”

So far, the union of the two Giants has been a win-win situation. Lennar is more geographically diverse than before, with a reinforced presence in Florida, Texas, California and Arizona, and access to such new markets as Colorado, New Jersey, Minnesota, Maryland and Virginia. This minimizes the risk associated with being too tied to any one market, Miller says.

Lennar’s “Everything’s Included” program is turning out to be a good complement to U.S. Home’s Custom Design Studios. In Lennar’s program, popular features such as brand-name appliances, upgraded flooring and security systems are included in the sales price of the home. U.S. Home, on the other hand, operates design centers in California, Arizona, Nevada, Colorado, Texas, Minnesota, Ohio, Maryland, New Jersey and Florida. Design consultants who help home buyers make all their product selections in a single location staff them. “The two marketing strategies, operating side by side, work extremely well. It’s helping our return on assets because we’re absorbing land quicker.”

Due to the name recognition attached to each company, Lennar and U.S. Home continue to be marketed as separate brands.

Additionally, says Miller, “We’re recognizing the benefits of looking at each other’s cost structures and national purchasing programs, and taking the best of each. This has had a significant and positive impact on the cost of delivered homes, and that is reflected in our margins.” Blending corporate cultures is always a concern when companies merge, but for Lennar and U.S. Home, the process has been a smooth one, Miller says. “The management styles and the people’s personalities mesh very well, and that’s why this combination made so much sense.”

Lennar hopes to step up its involvement in the active adult market, where U.S. Home has a history of successful communities. “We’ve been in it, as Lennar, for a number of years, but the acquisition has greatly expanded our presence in that market and diversified it over a lot of geographic areas.”

Talk of a downturn in the housing market hasn’t been reflected in Lennar’s sales figures, but Miller says they’re prepared for anything. “De-leveraging the company—generating cash and paying off debt—is a good strategy regardless of the economy. Over the next 12 months, we’ll continue to do the same thing we’ve done since the combination—prune assets and realize cash wherever we can in order to fortify and reposition our balance sheet.”

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