Lennar to acquire FL homebuilding giant WCI Communities in $643M deal

Dive Brief:

Miami-based Lennar Corp. has struck a merger-acquisition deal with WCI Communities, headquartered in Bonita Springs, FL, for stock and cash worth $643 million, Lennar announced Thursday.
As part of the transaction, WCI will merge with a new Lennar subsidiary. Lennar will also receive 14,200 home sites, located in what the company calls some of the "highest growth and largest coastal Florida markets." A stockholder vote on the deal is expected in December or January.
Lennar CEO Stuart Miller said in a release that WCI's experience in developing upscale active adult and second-home communities "dovetails perfectly with our own Florida footprint and expands our Florida offering." Lennar and WCI are two of the largest homebuilders in Florida.

Dive Insight:

The Lennar-WCI team is positioned to take advantage of the Florida housing recovery underway. The Associated Press reported that construction in the state has increased this year, leading to builder optimism around sales growth. Steady U.S. job growth has also contributed to a nationwide increase in home purchases, as well as rental activity. This week, Lennar reported that their overall deliveries rose 7% (6,779 homes), and new orders increased 8% (7,018 homes), while average sales price increased 3%, according to the AP.

In a Trulia report earlier this week, the site found that although U.S. housing inventory fell 6.7% year over year, Florida and California markets were adding stock, including pricey metro areas like West Palm Beach, FL, and Miami. Zillow also reported earlier this month that Florida is still a go-to market for those considering relocating from the Northeast for their retirement.

During an earnings call in June, Miller said Lennar still expects "a steady positive homebuilding market," resulting in slow and steady — even erratic — growth. He said although there is pent-up demand for homes, the industry will still see issues associated with tight inventory, a lack of skilled labor and land shortage continuing into the near future. The resulting high prices for homes and rental units, he said, are "the new normal."