In February 2007, our LandSource joint venture admitted MW Housing Partners as a new strategic partner. The transaction resulted in a cash distribution to us of $707.6 million. Our resulting ownership of LandSource was 16%. If LandSource reaches certain financial targets, we will have a disproportionate share of the entity's future positive net cash flow. As a result of the recapitalization, we recognized a pretax gain of $175.9 million in 2007 and could potentially recognize an additional $400 million in future years, in addition to profits from our continuing ownership interest.
and this one a few years old, but explains what LandSource is-
In November 2003, the Company and LNR Property Corporation ("LNR") each
contributed its 50% interests in certain of its jointly-owned unconsolidated
partnerships that had significant assets to a new limited liability company
named LandSource Communities Development LLC ("LandSource"), in exchange for 50%
interests in LandSource. In addition, in July 2003, the Company and LNR formed,
and obtained 50% interests in, NWHL Investment, LLC ("NWHL"), which agreed to
purchase, and in January 2004 completed the purchase of, The Newhall Land and
Farming Company ("Newhall") for a total of approximately $1 billion. Newhall's
primary business is developing two master-planned communities in Los Angeles
County, California.
LandSource was formed as a vehicle to obtain financing based on the value of the
combined assets of the joint venture entities that the Company and LNR
contributed to LandSource. The Company and LNR used LandSource's financing
capacity, together with the financing value of Newhall's assets, to obtain
improved financing for part of the purchase price of Newhall and for working
capital to be used by the LandSource subsidiaries and Newhall. The Company and
LNR may merge the joint venture entity that acquired Newhall with LandSource,
and the Company and LNR may use LandSource for future joint ventures.
The Company and LNR each contributed approximately $200 million to NWHL, and
LandSource and NWHL jointly obtained $600 million of bank financing, of which
$400 million was used in connection with the acquisition of Newhall (the
remainder of the acquisition price was paid with proceeds of a sale of
income-producing properties from Newhall to LNR for $217 million at the closing
of the transaction). The Company agreed to purchase 687 homesites and obtained
options to purchase 623 homesites from Newhall. The Company is not obligated
with regard to the borrowings by LandSource and NWHL, except that the Company
and LNR have made limited maintenance guarantees and have committed to complete
any property development commitments in the event LandSource and NWHL default.
The combined assets and liabilities of LandSource and NWHL at February 29, 2004
were $1.3 billion and $722.5 million, respectively. The Company's combined
investment in LandSource and NWHL was $285.2 million at February 29, 2004.
