Monday, December 3, 2007

Lennar sells some lots

Lennar blew out $525 million worth of land to Morgan Stanley. It was on the books for $1.3 billion. So look for reports that land is selling at 40 cents on the dollar. But is it? It's not.

Lennar will get about $250-300 million back from the Feds from taxes. So split the difference and add $275 million to the $525 million and you are up to $800 million. Lennar participates in the upside, and receives a property management fee. And they have a 20% interest in the venture. Even at the discounted sale rate of $525 million, that equates to $105 million. Now Lennar is up to $905 million, or .70 cents on the dollar. The shorts won't like the math, but Wall Street will. They've bought themselves time, cleaned up the balance sheet, and they have a partner with deep pockets.

I'd expect another deal from Middle Eastern money next. We've already heard that Abu Dabai is looking at a homebuilder in the US. For whom does that bell toll? Toll Brothers (TOL 20.67) which was up a buck and a half Friday, is my choice, and I expect a deal announcement regarding them this week.

Now on November 21, I had this to say about Lennar:

Lennar (LEN 15.23) is being accumulated at these levels. I know NASDAQ stocks are way more exciting, but I wouldn't be surprised that someone would be floating rumors that this may possibly be in play. I know it sounds outrageous, but I just report what the blocks of stock seem to be saying. And they are saying you can buy LEN here.

So Lennar gets money from Morgan Stanley. And I expect Toll to get Abu Dabai's money next. And the shorts? They must cover now.

Unles they believe Goldman's Dr. Hatzius. But here is the script, given to you before it happens.

Chose your sides. The highest paid and richest Investment Bank in the world, or this blog.

My money is on Moses!

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