Newhall Land Sold to Lennar-LNR
• Santa Clarita Valley's biggest developer now controlled by nation's No. 3 home builder.

By Leon Worden
Signal City Editor

Wednesday, January 28, 2003

T

he date: Tuesday, Jan. 27, 2004. The time: 4 p.m. PST. The price: approximately $1 billion.
    After 121 years, The Newhall Land and Farming Co. ceased to exist as an independent, locally controlled entity.
    Regulatory and investor approvals in place, the company that built Valencia was acquired by a limited partnership called NWHL Inc., a 50-50 joint venture of Florida-based Lennar Corp. and a spinoff, LNR Property Corp.
    Officials at Newhall Land headquarters on Valencia Boulevard said little will change except for the ownership.
    "We are pleased to be joining forces with Lennar and LNR to carry out the vision for Valencia and Newhall Ranch," said Newhall Land President Gary Cusumano, who is in line to receive a $2 million bonus to guide that vision for at least three years.
    "While this transaction brings to an end our 34-year history as a publicly-traded entity, it is the start of a new chapter in the long, proud and continuing history of Newhall Land," he said in a statement.
    Newhall Land investors big and small — from the environmental group SCOPE, which claimed to own one partnership unit, to a division of State Farm Insurance, which owned nearly 15 percent — will receive $40.50 per unit over the next few days to a few weeks, company spokeswoman Marlee Lauffer said.
    The company's partnership units were listed on the New York Stock Exchange like shares of stock. Now they won't be.
    The buyers, Lennar and LNR, are technically separate, publicly traded entities with different purposes — Lennar is the nation's No. 3 home builder, while LNR invests in commercial property. But both are controlled by one man: Stuart Miller, the son of Lennar's founder. Miller serves as president and CEO of Lennar and chairman of the board of LNR.
    According to corporate disclosure statements, Miller "is the sole director and officer of a family-owned corporation which owns stock that gives it voting control of both companies."
    Newhall Land isn't their first joint acquisition, and it won't be the first time they've retained the senior management.
    "It's safe to say that's how they operate," Bob Curran of the independent market research group Fitch Ratings said in an interview last year. "(Lennar-LNR) is known to embrace the management and people of the company they acquire. They view themselves as a growth company within a cyclical business."
    Lennar was enticed by the entitlements Newhall Land has won from the county, including the approvals for the future 20,885-home Newhall Ranch development west of Interstate 5.
    "The attraction to us is that they've gone through the entitlement process," Lennar Vice President Jon Jaffe said when the sale was announced in July. "It's the strategic value of the entitled land in a constrained market, in a fast-growing market area."
    For Newhall Land, the deal was an opportunity to maximize the return for investors whose units had been all but ignored during both the dot-com boom and bust. When the buyout was announced at $40.50, Newhall Land units were trading at only $33.40. Typical to acquisitions, they quickly met the buyout price.
    "It has been a challenge to get Wall Street to recognize our value," Cusumano said last year. "From Newhall Land's point of view it's a real plus because we are able to provide value to the unitholders."
    Also key to the decision, Cusumano said, was Lennar's commitment "to carry out the vision for Valencia (and) Newhall Ranch."
    Lauffer said Tuesday's finalization of the deal was "akin to buying property," with title recordings and escrow payments.
    "Once all of that was recorded and the signatures were in place, the closing took place," she said.
    Officials said all the pieces were in place before year's end except the transfer of Valencia Water Co., one of the Santa Clarita Valley's four water retailers. A wholly owned subsidiary of Newhall Land, it is now a wholly owned subsidiary of NWHL Inc.
    It is the only water company owned by a Lennar entity and will also be retaining its management staff, officials said.

---

©2004, THE SIGNAL · USED BY PERMISSION · ALL RIGHTS RESERVED.

---