Lennar in talks to sell Rialto Capital to StonePoint Capital

Lennar Corp. is in talks to sell its real estate lending arm Rialto Capital to private-equity firm StonePoint Capital for an undisclosed price, according to The Wall Street Journal, citing people with knowledge of the sale.

The sale is part of Lennar Corp.’s effort to focus on home building and sell or spin off noncore subsidiaries due to uncertainty in the U.S. housing market; however, sales of newly built, single-family homes rose 3.5 percent to a seasonally adjusted annual rate of 629,000 in August, marginal percentage, following two months of decline, according to Census Bureau and Department of Housing and Urban Development. The August gain was driven by advances in the Northeast and West, while the South, the biggest region, showed a decline. 318,000 new houses were on market at end of August, most since February 2009.

Economists surveyed by The Wall Street Journal had expected a smaller 0.5 percent gain.

“Housing affordability is becoming a challenge, as builders face overly burdensome regulations and rising material costs exacerbated by an escalating trade skirmish,” said Robert Dietz, National Association of Home Builders chief economist, in a statement. “Interest rates are also forecast to keep rising.”

Rialto was founded as part of Lennar in 2007.

StonePoint is a diversified firm currently investing out of Trident VII, a $5.5 billion fund raised in 2017.