May 8, 2026 – Lennar Corp.’s strategy of paying high option fees on land it wants to develop rather than owning it, and counting those costs as assets until it owns and builds, masks a perilous financial condition by delaying a massive margin hit until later when counted as expense, according to investigative publication Hunterbrook Media.
That recent report – which estimated Lennar’s annual land-option costs at $2 billion, roughly its stated net income figure – triggered a single-day 6% decline in the company’s stock, which already had dropped nearly 60% since a late-2024 high, and the company repeatedly has missed Wall Street’s earnings projections.
Lennar’s “land-light” strategy, which continues to draw scrutiny, also might explain why Bexar County deed records still don’t indicate it has purchased Guajolote Ranch, its proposed 1,160-acre development in northwest Bexar County that would include 2,900 homes.
Those records still show 1,097 acres owned by for-profit Guajolote Ranch Inc. of Terrell Hills, controlled by treasurer Richard H. “Rick” LePere, and the remaining 63 acres by retired Valero Energy Corp. executive Sidney E. “Gene” Edwards Jr. and wife Marcie, now of Palm Beach Gardens, Florida.
Guajolote Ranch continues to face headwinds of its own: a district court challenge of its wastewater permit, the inactive status of its would-be wastewater plant operator, San Antonio City Council’s 11-0 rejection of a municipal utility district (MUD) for the development, questions surrounding access and federal consideration of new regulations of microplastics, pharmaceuticals and other contaminants in wastewater.
And now, to add to that: possible financial pressures on the project’s developer.
“The numbers are bad: Margins have cratered, cash flow has dwindled, and the stock has crashed,” the Hunterbrook report begins. “But it isn’t just that the numbers are bad – it’s that they are surprisingly bad. For 10 straight quarters, Lennar’s stock fell the day after reporting earnings. Wall Street keeps modeling the company’s financials, and keeps getting it wrong.”
See the full Hunterbrook report, titled, “What Lennar Owes,” here: https://hntrbrk.com/lennar-accounting/.
‘Delaying the inevitable’
As recently as 2019, Lennar owned 75% of the land it sought to build on, but now that’s down to less than 2% since it spun off its land holdings into a land-banking company called Millrose Properties, paying it annual fees reported at 8.5% of the land’s value. Additional property is held by large institutional investment-backed land banks, which might be charging well more, according to Hunterbrook.
For its analysis, Hunterbrook said it analyzed “proprietary national real estate data, hidden variables across SEC filings, and obscure documents from Lennar counterparties,” as well as interviews “with multiple independent accounting experts, investment analysts, a land banker and investors who have combed through Lennar’s financials.”
It reported that Lennar appears to be classifying land-option fees on its balance sheet under assets as “deposits and pre-acquisition costs” instead of those costs immediately flowing through the income statement, potentially delaying a full hit on profit margins later. And the growth of that line-item appears disproportionate to the amount of land it controls, it notes.
“It’s delaying the inevitable,” JP Krahel, chair of Loyola University Maryland’s accounting department, told Hunterbrook. “Seems a little nuts.”
As it is, Lennar’s earnings already appear under pressure, as first-quarter net income once again fell short of Wall Street projections, representing a nearly 60% decline from the prior year, as the company offered sales incentives exceeding 14% of home prices, well more than typical, in an effort to prop up sales volume in a soft market.
Analysts, including those beyond Hunterbrook, don’t necessarily fault the land-light strategy, but rather its scale. Hunterbrook itself acknowledges that the accounting treatment “may be perfectly legal!” And they note that key details of the land-bank agreements “are largely kept private.”
Still, as scrutiny of the strategy mounted, Lennar itself felt compelled to issue a statement on March 30, as “a response to several analysts and investors,” defending its land-light operating model and expressing confidence in its financial disclosures. “If you’re explaining, you’re losing,” wrote an analyst at Evercore, a leading global independent investment bank, in a research note related by Hunterbrook.
Hunterbrook believes that cash outlays for land-bank fees are partially obscured in the bottom line by Lennar’s cost-cutting, and that financial consequences are the same no matter how the fees are classified on the balance sheet.
“Whether Lennar records them as an asset today or an expense today, the cash has already left the building,” it says. “And when the lots are finally taken down, the accumulated cost should hits (sic) the income statement either way. The accounting treatment determines when investors see the damage – not whether the damage exists.
“In the meantime,” it concludes, “reported earnings look relatively intact, the balance sheet line keeps growing and investors are left evaluating a company that appears to earn $2.1 billion a year but is quietly spending what appears to be a comparable amount to maintain its land pipeline.”
Back at the ranch
Lennar’s options with LePere and the Edwardses for Guajolote Ranch might not be the same land-bank arrangement described by Hunterbrook as Lennar never owned the land to begin with, though it’s not publicly known how the options are structured.
An open question is whether those landowners essentially are staying on as co-developers until Lennar takes “just-in-time” ownership to pour the first slab – if it gets that far – possibly keeping them on the hook for potential environmental damages or other claims, even if that’s not Lennar’s intention.
LePere and the Edwardses appear as recently as Feb. 3 in a public filing identifying them as participants in an agreement for the Southern Edwards Plateau Habitat Conservation Plan for the development, and filed applications for both the MUD and a Public Improvement District for the project before that.
Meanwhile, these pressures remain on the development itself:
- A district court in Austin by now was expected to have in possession evidentiary material from TCEQ for the judicial review of the wastewater permit for Guajolote Ranch. The review and possible appeal proceedings could take another two years to resolve.
- Municipal Operations, LLC, the holder of the wastewater permit, is inactive, according to Texas Secretary of State records, raising questions about the validity of the permit. Its registration shows “franchise tax involuntarily ended,” which typically means that a business entity’s franchise tax status has been terminated by the state for failure to file required tax reports or pay taxes owed, and it may lose its legal right to operate in Texas as a result.
- Lennar continues to face formidable opposition to the proposed development in northwest Bexar County for its plans to release up to 4 million gallons a day of treated sewage – 1 million gallons average, daily – into the Helotes Creek watershed and the state’s most sensitive aquifer zones, including the Edwards and Trinity aquifers, which provide drinking water for 2.5 million people.
- San Antonio City Council unanimously rejected Lennar’s request for a MUD for Guajolote Ranch, which would saddle future homeowners in the development with up to $150 million in infrastructure costs, including for the wastewater plant. Under possible financial pressure, would Lennar be able to afford those costs on its own?
- As it stands, there would be only one way in and one way out of Guajolote Ranch, funneling an additional 30,000 vehicle trips a day onto two-lane Scenic Loop Road and creating a massive wildfire evacuation and emergency response hazard. Despite evidence to the contrary, Lennar has continued to represent that there would be multiple access points.
- The U.S. Environmental Protection Agency announced a new push to target microplastics, pharmaceuticals and other contaminants that pose emerging threats to drinking water – and which Lennar’s proposed wastewater treatment plant likely would be unable to remove.
The Scenic Loop-Helotes Creek Alliance is a nonpartisan, nonprofit 501(c)(3) group representing the largest neighborhood by square mile recognized by the San Antonio Neighborhood & Housing Services Department, a wide corridor along Scenic Loop Road from Bandera Road to north of Babcock Road.
CONTACTS:
Steve Lee, 210-415-2402, text; media@scenicloop.org
Austin Browning, SL-HCA board member; 309-826-7556; abrowninghoa@gmail.com
Emory Bluhm, SL-HCA president; 210-913-4272; emory@scenicloop.org