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Housing Boom Ends for Lennar
Monday, 03 September 2007

More cutbacks for Lennar
Lennar Corp., the big Miami home builder that reported a $255 million loss in the most recent quarter, has trimmed more than 60 additional positions from its Southwest Florida division, bringing it to its pre-housing-boom levels, an executive said. The cuts this week included Rob Allegra, the division president of Lennar Sarasota/Manatee, who has been the face of the home builder locally for more than a decade.

Herald Tribune
More cutbacks for Lennar
Builder cuts its Sarasota/Manatee president and 60-plus positions

By TOM BAYLES and MICHAEL BRAGA
STAFF WRITERS
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August 31. 2007
SNN News 6 Video Report: Housing boom ends for Lennar

Lennar Corp., the big Miami home builder that reported a $255 million loss in the most recent quarter, has trimmed more than 60 additional positions from its Southwest Florida division, bringing it to its pre-housing-boom levels, an executive said.

The cuts this week included Rob Allegra, the division president of Lennar Sarasota/Manatee, who has been the face of the home builder locally for more than a decade.

Another 20 or so employees were told this week that their jobs had been eliminated in the company's Sarasota-Manatee division while 45 in the home builder's Fort Myers and Naples region were cut.

Added to the roughly 90 workers that Lennar -- Southwest Florida's largest home builder -- has trimmed since the beginning of the year, the most recent layoffs bring the total to more than 150.

"This has been a difficult time for us," said Darin McMurray, Lennar's regional vice president, on Thursday. "Any time you have this weakness in the market it does affect employment."

With the most recent cuts, there are about 300 people still on Lennar's payroll from Naples to Manatee County -- about the same figure as before the recent housing boom, McMurray said.

The company has no plans to stop doing business in the region, where it has built homes since the early 1960s, he added.

"The Sarasota-Manatee division is still intact. Southwest Florida is our home, and we remain committed to it. This is just a little hiccup," McMurray said, adding that he is looking forward to the upcoming tourist season, which will bring more buyers into the marketplace.

"I hope the light is at the end of the tunnel, and we can go back to a time of stronger growth," McMurray said. "We're committed to the market, and if we worry about today, tomorrow will take care of itself."

Allegra, who had been with Lennar and US Home Corp. for 21 years, could not be reached for comment. With its April layoffs, Lennar reorganized its divisions, putting Allegra as a direct report to McMurray in Fort Myers.

Lennar salesman Bob Rovnak said he had not heard about the layoffs, except that the company was planning to consolidate its US Homes and Lennar offices in Naples and Fort Myers.

Rovnak said he attended a party at a miniature golf course Tuesday night where both Allegra and Scott Mairn, a vice president of sales and marketing, were present.

When the Herald-Tribune called Lennar's headquarters Thurday afternoon, a company worker said that Allegra and Mairn were no longer with the company.

Reached on his cell phone, Mairn declined to comment.

Other employees said that the company's Tampa office was taking control of the Sarasota-Manatee division. They said that cuts were made in the company's management ranks, reducing staff to a skeleton crew, but that sales people were left alone.

Lennar sold 1,200 homes in the Sarasota-Manatee region last year. Allegra told the Herald-Tribune in May that the company had sold about 500 homes during the first five months of 2007.

In June, Lennar reported a second-quarter loss of $1.55 per share as inventories of unsold homes rose and it cut prices and offered more incentives to attract buyers. The company warned that it would likely post a loss through at least the third quarter.

The most recent loss compared with a profit of $324.7 million, or $2 per share, during the second quarter of 2006. Gross margins on home sales were 13.6 percent, compared with 23.7 percent in second quarter 2006.

Quarterly revenue slid 37 percent to $2.88 billion from $4.58 billion in the prior-year period.

The problems at Lennar reflect the general housing market malaise. Other big builders in Southwest Florida have been cutting staffs, but experts said that companies with national exposure have been hit harder.

"The home building inventory readjustment is mostly at the lower end because of all the extra sub-prime homes and all the speculative homes sold in the $250,000 to $400,000 price range, and I think it will affect the national builders more than the local builders," said Pat Neal, president of Lakewood Ranch-based Neal Communities.

This week the National Association of Realtors reported that existing home sales in July fell to the slowest pace in five years. Sales in Sarasota-Bradenton fell 4 percent, while dropping 35 percent in the Charlotte County-North Port area.

Lennar is focused on correcting expenses, reducing construction costs and pushing sales to convert land and new home inventory into cash, Chief Executive Stuart Miller said in June, when announcing the company's second-quarter losses.

The home builder has cut back on housing starts by more than 50 percent year over year as it unloads inventory.

"Market conditions have eroded so much over the past six months that we are now focused on limiting the loss for the year," Miller said, adding later that uncertain conditions made him "suspect that we will not know that a recovery is coming until it is upon us."

http://www.heraldtribune.com/article/20070831/REALESTATE/708310632/1201/REALESTATE

 
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