Lennar Corp. plans to install its own executives in the top spot in four of the five national homebuilding regions it will run after buying Irvine-based Cal-
Atlantic Homes, according to company documents provided to the Business Journal.
The new operating structure, which includes Lennar Regional President Jeff Roos running much of the combined company’s Western U.S. homebuilding operations, is the clearest sign yet that the Miami-based firm is in the power position at the homebuilding giant.
Lennar announced in October plans to buy CalAtlantic in a $9.3 billion stock, cash and debt deal that will create the largest U.S. homebuilder by annual sales—$17.2 billion—and market equity value—$18.5 billion.
The deal is scheduled to close by the end of the first quarter and will likely lead to job losses in Orange County, where the two firms are estimated to employ nearly 400.
At October’s announcement, only one Cal-Atlantic executive was specified as having a position with Lennar once the deal closed: Executive Chairman Scott Stowell, who’ll serve on the company’s board.
CalAtlantic, whose local operations were run as Standard Pacific Homes until 2015, was estimated to employ about 230 people in OC as of early this year.
Lennar maintains its West Coast base in Aliso Viejo, where much of its day-to-day operations are and where the Business Journal estimates it employs about 160. It will move to new offices in Irvine by next year.
Job cuts are planned after the deal closes. Lennar executives say they think they can shave off $85 million in annual sales, general and administrative expenses by streamlining corporate overhead and similar public company-related costs.
Roos Region
Overlapping regional and divisional operations were also being considered for cost-cutting, executives said when the acquisition was announced. According to a Nov. 21 memo sent to employees at both builders, a few decisions have been made regarding some of those changes, including having “five regional operating territories,” each with a regional president.
Lennar’s Roos, who’s now based in Aliso Viejo, will be in charge of the California Coastal area, a division that includes OC, where both Lennar and CalAtlantic have sizable homebuilding operations.
The two builders are estimated to have sold more than 500 homes in OC over the past year, with Lennar the largest builder at Irvine’s Great Park Neighborhoods development, where it’s also an investor. It’s also the largest investor in master developer Five Point Holdings Inc., which is overseeing building on the Irvine site.
In addition to the California Coastal division, Roos will also oversee divisions in Phoenix, Tucson, California’s Central Valley, San Diego, Sacramento and Las Vegas, according to the plan.
The seven divisions that make up the so-called Roos Region had 189 active communities earlier this year, and 7,329 home closings during the 12-month period ending in September, factoring in both companies’ area operations. The region had a little more than $3.5 billion in revenue during the period, the memo said.
If it were a stand-alone builder, the region would have ranked among the country’s 10 largest builders by sales last year, with roughly the same volume of sales as Los Angeles-based KB Home.
Roos currently serves as one of four regional presidents for Lennar’s homebuilding and land division, along with Fred Rothman, Rob Hutton and Greg McGuff. They’ll have similar roles post-acquisition, Rothman running Florida and other divisions in the Southeast and Northeast, McGuff heading the Pacific Northwest, Utah, Colorado and Northern Nevada divisions, and Hutton getting the Texas region.
The regional presidents have been reporting to Lennar President Rick Beckwitt and Chief Operating Officer Jon Jaffe, long its top OC-based executive.
Jim Parker is the lone CalAtlantic Homes regional president who’ll keep a similar position post-acquisition, heading divisions in some Midwestern and Southeastern markets.
The Parker Region had about $1.9 billion in combined revenue in the past year. It’s the smallest of the five new homebuilding regions by revenue, according to the company memo.
Safe Positions
The memo said Lennar and CalAtlantic have “many more important decisions to make regarding future staffing and integration plans.”
Both companies’ community sales, construction and customer care divisions appear to be safe from job cuts for now; the memo said associates in more than a dozen related positions in the divisions will be asked to keep their roles once the merger is complete.
