Fitch downgrades Lennar

Fitch Ratings said it downgraded Lennar Corp.'s issuer default rating to BBB- from BBB, senior unsecured rating to BBB- from BBB, unsecured bank credit facility to BBB- from BBB, short-term issuer default rating to F3 from F2 and commercial paper to F3 from F2.

The outlook remains negative.

The downgrade reflects the difficult housing environment, Fitch said. The downgrades also reflect operating margins, further deterioration in credit metrics and erosion in tangible net worth from non-cash real estate charges.

Lennar's liquidity provides a buffer and supports the new ratings, the agency noted.

Ratings reflect Lennar's strong track record over the past 30 years and through many past homebuilding cycles, management's sound operating and financial policies, the company's well-positioned, low-basis land holdings in attractive growth markets and its capacity to withstand a meaningful housing downturn, Fitch said.

The rating also considers the off balance sheet financing of its longer-dated land supply and the concentration of deliveries in Florida, Texas and California, according to the agency.

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