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OC CalAtlantic Homes Get Lennar Upgrades

The results of Lennar Corp.’s February acquisition of Irvine-based homebuilder Cal-Atlantic Group Inc. are starting to surface at some of the combined company’s area developments and in Orange County’s office market.

This month Miami-based Lennar has been taking the wraps off its first few area Cal-

Atlantic housing projects to be converted to the Lennar brand since the purchase of the largest homebuilder based in OC.

The first new community to get the switch, Travata, is part of Irvine Co.’s Cypress Village community in North Irvine near Orange County Great Park. Its three home types are for residents at least 55 years old and offer single-level living spaces with a second-story bonus room.

Homes range from about 1,281 square feet to more than 2,500. Prices start at about $650,000, larger homes topping $1 million.

The 243-unit project is the largest age-restricted new-home community in Irvine in several years.

CalAtlantic opened Travata in November, but Lennar held its own grand opening on April 7 after reworking homes to include its “Everything’s Included” design features.

‘Production-Oriented’

The design features and upgrades come standard. The builder said it’s able to cut costs and accelerate construction through a more standardized building process that leads to better profit margins.

When more buyer options are added in the approach more typical in the industry, “you have to sell much earlier to deal with the timing for the option selections,” said Lennar’s Jon Jaffe, who works in the company’s Aliso Viejo office as its top local executive.

Last week Jaffe was promoted to the president’s role at Lennar, where he’s also chief operating officer.

“In a very production-oriented Everything’s Included approach, the timing of the sales happens later in the process,” Jaffe told analysts this month on the company’s latest earnings call.

A similar redo of a CalAtlantic project was revealed last weekend in the Rancho Mission Viejo community of Esencia when Lennar held a “reopening” of models at Iris, a project of single-family and active-adult homes that range from about 1,700 square feet to nearly 2,300.

Homes there start at about $700,000 and are now built using the Everything’s Included upgrades, Lennar said.

CalAtlantic opened Iris in late 2016.

Top Priority

The changes at Travata and Iris will be a common occurrence across CalAtlantic’s portfolio of about 575 communities, Lennar officials said.

Lennar had another 771 active communities at the end of last quarter; the combined company is the largest homebuilder in the U.S. by sales.

“Transitioning from the CalAtlantic design center program to a more efficient production builder within the Everything’s Included operating program has been our top priority,” said Lennar’s Richard Beckwitt, who last week was named chief executive. He previously was president.

The approximately 200 CalAtlantic communities that will be built this year will largely remain branded as CalAtlantic, but those that come next year and beyond will include Lennar’s Everything’s Included platform, Beckwitt said.

Moving to Lennar’s more standardized homebuilding process is just one way the company, whose market value is nearly $19 billion, plans to cut costs following the $9.3 billion stock, debt and cash merger, which closed on Feb. 12.

Jaffe said during the analyst call that Cal-Atlantic’s headcount is down about 15% since the close of the acquisition.

“By the end of the fiscal year, it will be down 21% as a result of transitional associates completing their terms,” Jaffe said.

Office Sublease

In addition, “all of our operations will be combined so that by the end of the fiscal year there will be no duplicate offices,” he continued.

CalAtlantic’s former headquarters in the Irvine Spectrum area has about 39,000 square feet. The Irvine Co. building is being listed for sublease and should be available for a new tenant by December, according to CoStar Group Inc. records.

Brokers with the Newport Beach office of tenant brokerage Savills Studley have the listing for the sublease space, whose master lease runs until the summer of 2022, according to marketing materials.

Lennar plans to move its West Coast operations hub this year from Aliso Viejo to 90,000 square feet at the newly built Five Point Gateway campus in Irvine.

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Mark Mueller
Mark Mueller
Mark is the Editor-in-Chief of the Orange County Business Journal, one of the premier regional business newspapers in the country. He’s the fifth person to hold the editor’s position in the paper’s long history. He oversees a staff of about 15 people. The OCBJ is considered a must-read for area business executives. The print edition of the paper is the primary source of local news for most of the Business Journal’s subscribers, which includes most of OC’s major corporate and community players. Mark’s been with the paper since 2005, and long served as the real estate reporter for the paper, breaking hundreds of commercial and residential real estate stories. He took on the editor’s position in 2018.
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