NEWHALL LAND'S OWNER THRIVING.

Byline: Staff and Wire Services

Lennar Corp., the Miami-based home builder that owns half of Newhall Land, said Tuesday its first-quarter profit grew by 34 percent, topping Wall Street expectations, and the company reaffirmed its financial target for the year despite a recent downturn in new-home sales.

For the fiscal first quarter that ended on Feb. 28, net income grew to $258.1 million, or $1.58 per share, from $193.2 million, or $1.17 per share, in the previous first quarter.

Revenue rose by 35 percent to $3.24 billion from $2.41 billion, reflecting strength in Lennar's home building and land divisions.

Analysts surveyed by Thomson Financial had forecast, on average, a quarterly profit of $1.55 per share on revenue of $3.07 billion.

Lennar's success came despite a national decline in new home sales.

The Commerce Department had reported on Friday that sales of new single-family homes dropped by 10.5 percent in February to a seasonally adjusted annual sales pace of 1.08 million homes.

It was the second straight monthly decline, after a 5.3 percent fall in January, and marked the biggest one-month drop since April 1997.

Stuart Miller, Lennar's president and chief executive, acknowledged a slowdown in the sales pace in some major markets and a moderation in price appreciation compared to the past few years. But he referred to it more as a cooling period or soft correction in the market than any bursting of what some had feared would be a "housing bubble."

"Even the currently cooling housing conditions will give us an opportunity to perform well into 2007," Miller said in a conference call. "We've already seen some recovery in the traffic patterns in our major markets."

The company was dealing with market changes by employing a combination of sales incentives, price reductions and price maintenance in local markets, Miller said.

He added he expects other signs, such as a strong economy and interest rates that remain relatively low, to help the market.

Lennar and a partner in 2004 paid $990 million for The Newhall Land and Farming Company - Valencia's master developer.

One of the nation's largest home builders, Lennar built Stevenson Ranch and is developing communities in the Antelope Valley and on the former El Toro U.S. Marine Corps Air Station in Orange County.

Lennar spokesman Marshall Ames said Newhall Land won't have an impact on earnings until at least 2008.

The company, which said new orders rose 4 percent to 9,793 homes, reported that its backlog rose 18 percent to $7.1 billion, leading it to reaffirm its 2006 earnings-per-share target of $9.25.

Revenues were higher primarily because of an 18 percent increase in the number of homes delivered and a 12 percent increase in the average sales price of the delivered homes, the company reported.

The average selling price of the delivered homes increased to $326,000 in the first quarter of 2006 from $292,000 in 2005.

Among Lennar's stronger markets in the quarter were Florida, the Carolinas and New Jersey, while some sections of the West, such as the Tucson, Ariz., area, saw a fall in new orders, company officials said.

Lennar shares rose 71 cents, or 1.2 percent, to close at $61.03 on the New York Stock Exchange.

Meantime, Newhall Land has continued grading for two subdivisions in Saugus currently in litigation, company spokeswoman Marlee Lauffer said Tuesday.

In April, Los Angeles Superior Court is scheduled to hear a lawsuit filed by four environmental groups, including the Sierra Club, alleging that the city of Santa Clarita ignored key environmental concerns in approving the 1,089-home River Village subdivision.

The project, formerly called Riverpark, is proposed on 695 acres north of the Santa Clara River in Saugus.

A suit brought against West Creek, a 2,300-home development along San Francisquito, is under appeal. The Santa Clarita Organization for Planning the Environment, or SCOPE, sued in 1999, charging that Newhall Land's environmental impact report did not fully analyze the proposed water supply for the development.

A lower court ruled in favor of the developer, but an appellate court found fault with documentation of planned water supply. Newhall Land revised the report with Superior Court approval.

SCOPE in February petitioned the appellate court to review the changes. Still, Lauffer was confident the the report will stand.

"We have very strong confirmation from the lower court," she said.

Lauffer said the company hopes to resolve the River Village litigation and have model homes up in mid- to late-2007. West Creek models may be ready early next year.

Newhall Land also is preparing the massive 21,000-home Newhall Ranch project for county review. The county Board of Supervisiors granted overall approval in 2003 for the development proposed between Interstate 5 and the Los Angeles-Ventura counties border.

Lauffer dismissed the notion that the recent softening of new-home sales will impact development plans.

"When you're building a master-plan community, you're looking at the big picture," she said. "We know demand continues to be strong. In terms of pace, that will vary at times, but there will continue to be a desire to live in communities like Valencia and our Newhall Ranch."