Miami-based home builder Lennar Corp. paid $243 million for a 40 percent stake in a portfolio of 5,500 residential and commercial real estate loans from 22 failed banks at auction Thursday.
Ivy Zelman, CEO of real estate research firm Zelman & Associates, called the buy a smart move, saying that the return on the investment should be at least 20 percent, far more than Lennar is likely to make on other kinds of investments.
Lennar competed against private-equity firms to acquire the loans. Analysts at Citigroup Inc. said they expect the purchase to add $15 million to the home builder's earnings in 2010.
Source: The Wall Street Journal, Dawn Wotapka and James R. Hagerty