Lennar pays $1.1 billion of debt; excess cash expected at year end

By Devika Patel

Knoxville, Tenn., June 26 – Lennar Corp. has been paying down debt at “an accelerated rate,” having reduced debt by $1.1 billion since the beginning of the first quarter.

The company expects to have excess cash at the end of the year to keep up this trend.

“We have used strong cash flow to start paying down debt and rightsizing our balance sheet,” executive chairman Stuart Miller said on the company’s first quarter ended March 31 earnings conference call on Tuesday.

“We paid down $825 million of higher-interest-rate notes plus the remaining $250 million of Rialto [Capital Management LLC] notes and we did it out of strong cash flow and without refinance,” Miller said.

The company paid down $1.1 billion of debt.

“During the quarter, we repaid $575 million of 8 3/8% CalAtlantic [Group, Inc.] senior notes using homebuilding cash,” vice president and chief financial officer Diane J. Bessette said on the call.

“As a result, our net debt to total cap was 40%.

“During the quarter, we also paid off the remaining $250 million of Rialto’s 7% senior notes and, on June 1, we repaid $250 million of 6.9% Lennar senior notes also using homebuilding cash, thus a total reduction of $1.1 billion,” Bessette said.

The company expects “a well-crafted balance sheet” since it is now repaying debt faster.

“We are paying down debt at an accelerated rate,” chief executive officer Rick Beckwitt said on the call.

“We’re really pleased that we got through this quarter with the ability to pay down as much as we did without refinance and it sets up the rest of the year, which is even more cash generative.

“As we go into next year, I think we will have excess cash.

“We leave our options open but we’re going to have a very well-crafted balance sheet,” Beckwitt said.

Lennar is focused on debt reduction.

“We will remain focused on the reduction of debt and will continue to drive strong cash flow as we look to the future,” Miller said.

The company ended the quarter with $932 million of cash.

Lennar is a Miami-based homebuilder.

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