Homebuilder Lennar Corp. plans to spin off its LENx investment division later this year in order to become a “pure-play homebuilding company,” citing volatility in the valuations of the publicly-traded companies it holds a stake in, including real estate tech startups Opendoor, Blend Labs and Sonder.
In its latest quarterly earnings report, Lennar on Wednesday recognized $395 million in paper losses during the quarter ending Feb. 28 from its investments in six publicly traded tech companies.
In addition to reigning iBuyer champion Opendoor and cloud banking software developer Blend Labs, LENx reported unrealized losses on its investments in short-term rental manager Sonder, home insurance startup Hippo, solar and energy service provider Sunnova, and self-guided tour provider SmartRent. Although LENx is also a major stakeholder in Doma, a publicly traded digital title, escrow and closing provider, it uses a different accounting method to estimate its value.
Lennar Corp. unrealized losses from technology investments
Source: Lennar Corp. earnings report for quarter ending Feb. 28, 2022.
Through LENx, Lennar has invested in a portfolio of two dozen companies, focusing on three “core verticals” — multifamily, single-family for rent, and land strategies. Most of the companies LENx has a stake in, including Divvy Homes and Notarize, have yet to go public.
On a call with investment analysts, Lennar Executive Chairman Stuart Miller said the homebuilder still likes the companies LENx has invested in, which “are working to reshape various parts of our company and our industry,” and helping Lennar cut costs.
“We have made significant strategic investments in various new technology companies that are working to reshape various parts of our company and our industry,” Miller said. “Some are disruptors and some are enhancers. All of them are core to the future of, as well as the presence of our core operating platform.”
But Miller said Lennar is working…