Lennar 4Q loss balloons to $1.25 billion on land write-downs

MIAMI -- Lennar Corp. reported a $1.25 billion fourth-quarter loss Thursday -- the biggest in its history -- as the prolonged housing slump drove prices lower and the builder took hefty charges to write down land values.

Lennar, one of the nation's largest homebuilders, said quarterly losses ballooned to $7.92 per share, from $195.6 million, or $1.24 per share, a year ago. Lennar's 2007 third-quarter loss of $513.9 million had been largest in the Miami-based company's 53-year history.

Excluding a charge of $7.50 per share to write down the value of land options, the company would have lost 42 cents per share in the latest period.

Revenue tumbled 49 percent to $2.18 billion from $4.27 billion in the 2006 period, as home deliveries fell 50 percent to 7,044 homes, and new orders slid 50 percent to 4,761 homes with a cancellation rate of 33 percent.

The results beat average expectations of analysts surveyed by Thomson Financial, who had forecast a loss of $1.65 per share on revenue of $2.06 billion. Those estimates typically exclude one-time charges such as land write-downs.

Company shares edged up 6 cents to $15 in premarket trading.

For the year ended Nov. 30, Lennar reported a loss of $1.9 billion, or $12.31 per share, compared with profits of $593.9 million, or $3.69 per share, in 2006.

The company cut its work force by 35 percent in 2007 and in November, Standard & Poor's cut Lennar's credit ratings to junk status.

Lennar said things could get worse.

"As we look ahead to 2008, we are not expecting market conditions to improve, and perhaps might continue to decline in the near term," said Stuart Miller, president and chief executive.

In the fourth quarter, revenues from home sales were halved to $2 billion, from $4 billion during the same time period in 2006.

The average sales price of homes delivered decreased to $291,000 in the fourth quarter from $302,000 a year earlier, primarily due to big incentives. Incentives were valued at $58,800 per home delivered in the fourth quarter of 2007, compared with $47,300 in the same period last year.

Lennar said it lost $1.2 billion on land sales in the fourth quarter, including $740.4 million valuation adjustments on inventory sold in a deal with Morgan Stanley Real Estate.

Lennar sold 11,000 home sites in 32 communities to Morgan Stanley for $525 million, in return for 20 percent ownership and 50 percent voting rights on the investment venture. The properties Lennar sold had a value of about $1.3 billion.

For the whole year, revenues from home sales decreased 36 percent to $9.5 billion from $14.9 billion in 2006. New home deliveries, excluding unconsolidated entities, decreased to 31,582 homes, compared to 47,032 homes last year.

The average sales price of homes delivered in 2007 was $297,000, compared to $315,000 the year before.