Lennar and LNR Place Winning $650 Million Bid for All Four Parcels of El Toro Marine Base, California

Business Wire, Feb 17, 2005

ALISO VIEJO, Calif. -- With a combined winning bid of approximately $650 million, Heritage Fields, LLC announced today that it had obtained all four parcels of the 3,718-acre El Toro Marine Corps base in Irvine, California.

Heritage Fields, LLC is a limited liability company formed by Lennar Homes of California, Inc. and LNR Property Corporation, in partnership with capital investment firms Rockpoint Group, L.L.C., Blackacre Institutional Capital Management, LLC, and MSD Capital, L.P.

The former Marine Corps base, known as Heritage Fields, was offered for sale in four different parcels through an on-line auction conducted by the U.S. Department of the Navy. The auction formally commenced on January 5, 2005. The Lennar-LNR partnership secured parcels one and four on February 9, 2005 with winning bids of $125 million and $60 million, respectively. Yesterday, February 16, 2005, at 3:00 p.m. (pacific time) the Lennar-LNR partnership announced that it placed the winning bids for parcels two ($310.5 million) and three ($154 million).

"We're proud to play a role in yet another milestone in the conversion of this historic property to reflect the vision of the community," said Emile Haddad, California Regional President of Lennar Homes, one of the nation's largest homebuilding and community development companies. "This is yet another step in an ongoing process, providing a legacy for generations to come."

Heritage Fields is planned to encompass a total of 3,400 homes, 2.6 million square feet of R&D, two retail commercial centers, a college campus, the City's first cemetery, a golf course complex, and 1,375 acres of public land including the Great Park.

According to Haddad, Lennar and LNR had been closely following the El Toro reuse process for several years; and had spent the last year conducting extensive due diligence in preparation for the auction. A multi-disciplinary team had been meeting weekly and over $2 million in research was expended to date.

Heritage Fields now provides Lennar and its family of homebuilders with access to over 3,000 homesites in land constrained-Southern California.

"We anticipate a true public/private partnership approach to making the Great Park vision a reality," said David Team, president of LNR Commercial Property Group. "By acquiring all four of the parcels that comprise Heritage Fields, we hope to be able to perform in a master developer capacity, as we have in other base reuse programs. We feel that our extensive base reuse experiences will greatly assist us in implementing the Heritage Fields vision, including working hand in hand with the City of Irvine on the Great Park."

Despite the extensive research, Lennar's Emile Haddad added that Heritage Fields is one of the most complex reuse efforts the Lennar-LNR team had yet pursued.

"The complexity of the base and the related auction process was made easier to understand through the efforts of the Navy and the General Services Administration's San Francisco office, which acted as the Navy's real estate sales agent," said Haddad. "Colliers-Seeley, the GSA's marketing agent, also was instrumental in providing the information we needed to get comfortable enough to aggressively bid for the property."

Added David Team: "All of us at LNR are excited to win the auction for El Toro. It was the culmination of a highly competitive process that started two years ago. Although many complicated issues remain to be resolved, the south Orange County location holds huge promise for office, industrial and retail development."

Lennar Homes, a national real estate company listed on the New York Stock Exchange, is one of the largest public community development and home building entities in the United States. Lennar Homes of California, Inc. is one of the largest homebuilders in California and is a wholly owned subsidiary of Lennar Homes. The western headquarters of Lennar Homes of California, Inc. is situated in Aliso Viejo, California.

LNR Property Corporation (LNR) has been engaged in the development, ownership and management of commercial land, office, industrial, retail and multi-family properties nationwide since 1969. Through October of 1997, LNR operated as the commercial development and investment division of Lennar Corporation (NYSE:LEN), one of the largest homebuilders in the United States. In 1997, LNR spun off from Lennar Corporation to become a separate public company (NYSE:LNR) focused on commercial real estate investment and development. In 2005, LNR was acquired by LNR Property Holdings Ltd., which is owned by Cerberus Capital Management, L.P., its real estate affiliate Blackacre Capital Management, LLC, Stuart Miller, the former Chairman of the Board of LNR, and senior members of LNR's management team. Although LNR is a distinct company from Lennar Corporation, both entities continue to work together and complement each other's interests in mixed-use communities.

Rockpoint Group, L.L.C. is a global real estate investment and management firm with offices in Boston, Dallas, San Francisco and Tokyo. The Rockpoint Managing Members formed Rockpoint in 2003. Since 1994, the Rockpoint Managing Members have been involved in, through two Rockpoint funds and four prior funds, investing $4.4 billion of equity in 171 transactions with a peak capitalization of approximately $17.3 billion.