Lennar Corp., the second-largest homebuilder in the United States, has sold its majority stake in its multifamily development division to TPG, an asset management firm based in San Francisco.
Following the transaction, Lennar will retain a minority interest in Quarterra, the multifamily developer. TPG Real Estate has committed to investing $1 billion into Quarterra and may seek additional capital for future expansion, according to a report from the South Florida Business Journal. The financial terms of the deal were not disclosed by either company.
The sale comes at a time when homebuilders are experiencing reduced demand due to high interest rates and affordability challenges. The multifamily housing market is also facing difficulties across much of the country.
Lennar reported $44 million in operating losses from its multifamily segment during the fourth quarter. Quarterra recorded $50 million in operating losses for 2023. Contributing factors include oversupplied markets, particularly in the Sun Belt region, declining rents, and heightened competition.
Quarterra has responded by divesting some assets. In October, it abandoned plans for a 25-story apartment building with 344 units in Chicago’s South Loop and listed the site for sale. A year ago, it sold a 224-unit apartment complex near Downtown Oakland for $61 million.
Lennar CEO Stuart Miller stated that Lennar will continue to be involved with Quarterra following the deal. Brad Grewie will remain as CEO of Quarterra.
Since its founding in 2011 as LMC, Quarterra has developed over 43,000 apartments nationwide and has another 13,000 units planned. The company recently finished work on Hawkins, a 178-unit apartment community on Treasure Island in San Francisco.
TPG expanded its commercial real estate operations by acquiring Angelo Gordon for $2.7 billion in 2023. As of April, TPG Real Estate managed $18 billion in assets and has made investments in student housing through partnerships with firms like Cardinal Group to acquire properties in Oklahoma, North Carolina, and Texas.
