Homebuilder Lennar Corp. may be based in Miami but its day-to-day operations are headed by one man in Aliso Viejo: Jonathan Jaffe.
As chief operating officer, 45-year-old Jaffe is the only company officer on the West Coast, which sounds like a logistical headache.
“It actually gives us excellent coverage of the whole country,” he said, noting the time difference between coasts. Jaffe, who lives in Laguna Beach’s Emerald Bay, has no plans to move to Miami.
It’s not surprising that Jaffe feels a strong bond to the West Coast.
Ten years ago Lennar gave him an assignment: go West to see if California was a viable market.
Finding it was, Jaffe used aggressive land grabs and acquisitions of other homebuilders to fashion Lennar into a major player here.
Under Jaffe, Lennar has expanded into Orange, Los Angeles, San Diego, San Francisco, Riverside, San Bernardino and Sacramento counties. Lennar also now builds in Nevada, Arizona and Colorado.
“He’s one of the smartest executives in the industry,” Richard Douglass, president of Centex Corp.’s local division said of Jaffe.
Centex has competed and worked with Lennar through the years, Douglas said.
“They have a very comprehensive understanding of all the elements of the industry,” he said of Lennar.
Jaffe, a New York native, has spent his entire career at Lennar.
Uninspired by his graduate architectural studies at Georgia Institute of Technology in Atlanta, he quit them in 1983 and got his first job as an assistant superintendent with Lennar in Tampa, Fla.
He embodies Lennar’s quirky corporate culture that promotes equality, or at least a sense of it, and injects levity into the workplace.
He shuns a master-and-commander style of leading. Jaffe refers to employees as associates and wears a nametag that reads simply “Jon”,no title, no last name. In fact, all Lennar associates sport first-name badges. Jaffe said they personalize meetings and promote camaraderie.
Lennar typically keeps existing managers in place when it buys another company,since they don’t need to be trained, Lennar can move on quickly to the next deal, he said.
One of the conference rooms next to Jaffe’s fourth floor corner office at 25 Enterprise in Aliso Viejo is dubbed “the Zen room.” Lennar promotes some Zen principles.
In summer, Jaffe was promoted to chief operating officer from his previous title as Western region president. His promotion amounts to a nationwide expansion of his influence.
Before, local presidents in the West reported to him. Now all nine regional presidents plus 11,000 workers in nearly 20 states do.
His promotion was part of some reshuffling at the top. It was two years in the making.
Jaffe replaced former chief operating officer Robert Strudler, who leaped up to chairman. Chief Executive Stuart Miller controls the company via his family’s stock holdings. He is the son of cofounder and former chairman Leonard Miller, who died of cancer two years ago.
Along with his promotion, Jaffe resigned his seat on the board. His resignation is part of an effort to give the board more independence, he said.
Jaffe is a rising star at Lennar. But it’s probably premature to say he’s being groomed for chief executive. Miller is in his 40s.
Among homebuilders, Jaffe has become known as a cool-headed dealmaker. Other builders also described him as professional and honest.
“He’s able to maintain his composure,” said Les Thomas, who heads Brea’s Shea Homes, a unit of Walnut-based J.F. Shea Co. “Lennar is one of our prime contenders. We are constantly butting heads with them on a lot of different deals.”
Indeed, when the city of Tustin set out to find developers to transform the former Tustin Marine base into homes, shops and businesses, both Lennar and Shea wooed city officials. Lennar, in partnership with Newport Beach-based Will-iam Lyon Homes Inc., got a piece of the base. But Shea and partner Centex got the biggest portion.
Earlier this year Jaffe, his top lieutenant Emile Haddad, who heads Lennar’s land planning arm, and partner LNR Property Corp. wrapped up a $1 billion acquisition of Valencia-based Newhall Land & Farming Co.
The buy gives them control of 34,000 acres in the San Fernando Valley. The land includes Valencia, which is nearing completion, and Newhall Ranch, where plans call for some 20,000 homes.
By any measure, Jaffe has done well on Lennar’s behalf. But some critics contend Lennar, like other builders, may be overextended.
So far, Jaffe has benefited from timing. In the mid 1990s he was charged with identifying California’s potential as a market for Lennar and to head the company’s expansion there, if he thought it wise.
Lennar bought homebuilders Bramalea California Inc. in the Los Angeles area and Renaissance Homes in Sacramento.
In 1996, Lennar bought Huntington Beach and Coto de Caza land from what is now ChevronTexaco Corp.
The following year the housing market began an eight-year bull run.
The fortuitous timing is a credit to Jaffe’s judgment. But it also suggests his most trying challenge may lay before him. Troublesome signs, though incidental, have emerged.
Last month Lennar made headlines with the announcement it likely would push back the completion of 600 homes set to be finished this year to 2005. The builder cited hurricanes in Florida as a culprit but also noted softer demand in Las Vegas and Southern California.
In October, rival builder Pulte Homes Inc. cut prices at some Las Vegas developments by $70,000 on average.
In Southern California, OC appears to be leading a trend of slower home sales that began this summer. October sales here dropped 24.6% to 3,508 houses and condominiums, versus a year earlier, according to La Jolla-based market tracker DataQuick Information Systems. So far, prices are holding steady.
Despite recent market hiccups, Jaffe said there are no “clouds on the horizon” for homebuilding. He said it’s impossible to identify the impact of anticipated higher mortgage rates next year, unless one knows why they are rising.
If interest rates in general are rising to counteract an expanding economy and robust job growth, then housing is OK, he said. If rates are rising but the economy isn’t expanding, there is a problem, he said.
Chapman University’s 2005 forecast calls for 1.4% job growth, or 21,000 new workers. That’s slightly lower than Chapman’s estimate of 1.8% growth this year.
Jaffe said his goal for next year is to “harness more efficiency out of the larger company we have become.”
Locally, Lennar should do more housing in busy urban areas, he said, such as its planned redevelopment of the former Parker Hannifin Corp. campus in Irvine. Lennar and partner Highgate Holdings, an Irving, Texas-based real estate investor, plan some 1,300 condos, including one tower.
Jaffe said Lennar is eyeing the area around Angel Stadium of Anaheim and next year’s scheduled auction of 3,700 acres at the former El Toro Marine base by the Navy.
When asked whether Lennar would go after one El Toro parcel or all four up for sale, Jaffe, exercising his perfect coolness, said, “It’s logical to control the whole base.”
Having Lennar in charge would be an opportunity to provide a better masterplanned community, he said.
