Lennar Corp (LEN) - Get Report is expanding its real estate footprint into single-family rentals as it targets a new set of customers amid a changing home ownership landscape, according to a report Thursday.
The Miami-based homebuilder is looking to develop thousands of rental houses, sources told Bloomberg, and is looking to raise $2 billion to lay the groundwork for the initiative.
Lennar is hiring staff for a unit called Lennar Single Family Rental (SFR) as consumer demand for suburban living has spiked amid pandemic concerns and lockdowns in most major American cities.
The move also comes as historically low interest rates have led to declining inventory, inflating the home buying market and making it harder for Americans to own a home.
This has resulted in a boom in rental-home constructions as builders began work on about 14,000 rental houses in the third quarter, according to a National Association of Home Builders report based on U.S. Census data.
That's up 27% from 11,000 homes in the third quarter of 2019.
In December, Lennar reported fourth quarter earnings of $2.82 a share on revenue of $6.4 billion. In the same period a year ago, the company posted earnings of $2.13 a share on sales of $7 billion.
It had been expected to earn $2.32 a share on sales of $6.5 billion, based on a FactSet survey of 18 analysts.
Lennar said in a statement that revenue fell because of a 2% decline in home deliveries driven by “production lost to COVID-19 in the second quarter.”
Gross margins on home sales rose to $1.6 billion, or 25.0%, from $1.4 billion, or 21.5%, in the same quarter a year ago, helped by reduced construction costs and favorable market conditions.