Florida Home Builder Sees First Profit Loss in a Decade

Lennar Corp., one of the nation’s biggest home builders, said Tuesday it expects its first quarterly loss in at least a decade, more proof that the nation’s housing slump continues.

The Miami-based home builder is predicting a loss of 88 cents to $1.28 a share for the fourth quarter that ended Nov. 30, after a pretax charge of $400 million to $500 million to write off land the company had an option on but won’t buy. Earnings will be released Jan. 17.

Lennar also said it’s writing off deposits and preacquisition costs for land it has under contract. Its new home orders slipped 6 percent in the quarter to 9,606 and dropped 3 percent to 42,212 for fiscal 2006.

A Lennar spokesman could not be reached for comment Tuesday.

“Market conditions continued to weaken during the fourth quarter and we have not yet seen tangible evidence of a [Florida housing market] recovery,” Chief Executive Stuart Miller said in a statement.

Also Tuesday, Lennar said it’s selling a 62 percent stake in a massive real estate venture with LNR Property Corp. to MW Housing Partners. Both Lennar and LNR will get about $660 million from the deal. Lennar will report a profit of about $500 million on the investment; about $125 million will be recognized at closing next month.

The company’s predicament is not unlike those facing other builders. Toll Brothers Inc., for instance, said in November that its fiscal fourth-quarter home-building revenue fell 10 percent and orders dropped by more than half, due to a major slowdown in demand for Florida home loans.

Miller said in the statement he hopes Florida mortgage rates and a stable economy will help housing rebound in 2007, but analysts say the slowdown could last all year.

“Lennar’s news just reflects the poor situation a lot of public home builders are in,” said Mike Larson, an analyst for Weiss Research in Jupiter. “We haven’t seen the last of these writedowns.”

Larson has told investors that he expects Lennar’s stock to drop in the coming months. But other Florida real estate experts are more bullish on the company.

“There’s no cash loss here,” said Anthony Trella, a Deerfield Beach-based home-building consultant who has advised Lennar’s investment partners. “This is strictly bookkeeping. They made more profits in the last three, four, five years than they ever dreamed could be made. What you’re seeing here is they’re giving part of it back.”