What struck me about the article, however, is the opportunity some multifamily investors would have in similar situations. The subject property, the Three Sixty Residences in San Jose, CA—part of an overall effort to revitalize the area—was a 23-story condo project that went over budget and was undersold. A year after delivery, the tower sat empty.

But according to the WSJ, a Beverly Hills-based Kennedy Wilson has agreed to take over the $119-million construction loan on the asset at a discount from the lender, US Bank. Upon closing, the firm will foreclose on the property and convert it to a rental. Though not what the original developers intended to attract, it’s believed that renters would bring life to building that would have otherwise sat vacant in the middle of Downtown San Jose.

The same scenario, apparently, is playing out in downtowns across the country, the report states. This is indeed a great opportunity for investors, especially as loans backed by condo projects increasingly go into default and there continues to be a lack of product available for sale, particularly in the multifamily sector.

Broken or failed condo projects would be perfect acquisition targets for multifamily investors. Most are located in top-tier locations, are relatively new or recently renovated and can be gotten at decent discounts for those who are willing to go through the whole loan-to-own/foreclosure process.

Do you see this as a major, viable opportunity for apartment investors next year? Or do you think it will be attract only a limited number of players?

What seems to be happening is many people are not sufficiently considering that rates will be rising during the hold period for most assets. At some point the Fed will end its bond buying program, and will start to need to sop up the excess liquidity in order to prevent another bubble. The economy will recover and the combination of Fed tightening and reductions in money supply, will join with rising rates to present a possibly different borrowing market.  In three or four years, when investors might be considering selling or refinancing, the debt market could look very different. Underwriting is likely to continue to be conservative, and LTV is likely to remain in the 65%-75% range and be based mainly on cash flow. If rates have moved up by say 250-300 basis points on the 10 year, then proceeds to a new buyer at that time will probably constrain what price he can justify. Rents will have stabilized and hopefully be rising again, but new long term leases for office and retail will have been signed in the interim at today’s lower rates. In short, it is hard to properly project what debt will be for a buyer in three to four years, and where inflation will be, so it is very hard to accurately figure out terminal values at that time in any model done today. It is likely best to use a range of values and determine if being in that range still provides a justifiable return. Making an assumption that there will be large value increases and plenty of cheap capital is not likely to provide an accurate estimation of the validity of the investment under consideration.

Core returns seem to be settling in around 7.5%-8.5%. Returns on other assets are sloping upward from there. Most serious investors are taking the approach that there are so many unknowns right now, that it is not a time to be going way out on the risk curve. What will happen in the next Congress, will Greece default again (likely), what will Dodd Frank and Elizabeth Warren do to bank earnings and ability to make loans, will there be another terror incident, will the Fed overdo bond buying, what effect will the restructuring of the rating agencies have on CMBS issuance, will Israel attack Iran, will the decline of the dollar cause major inflows of foreign capital, will inflation spike in three years, will Obamacare be revised or declared unconstitutional, what will happen to the refi of the $1.5 trillion of CRE loans maturing in the next few years, how long before the residential mortgage mess if clarified. Clearly there are many black swans circling and any of them could cause major disruption. As a result, the smart investors are seeking solid buys even if they are buying distressed paper. They are shooting for a 15% all in return and no longer are looking at trying to achieve 20%+. They are keeping leverage at manageable levels and not betting on big jumps in projected cash flows to make the loans work.

It remains a time to be careful and stick to fundamentals, and to remain keenly aware of the world outside and events which will shape capital markets and values. The administration is not business friendly nor capital markets attuned, and that is not going to bode well for values.

With sales volume falling and home buyers retreating, home builders are re-examining land contracts, asking land sellers for lower prices or abandoning deals entirely. Land brokers said several of the nation’s builders, including D.R. Horton Inc. and M.D.C. Holdings Inc., have walked away from deals. In some cases, they forfeited the deposit: KB Home walked away from the option to purchase 90 lots, and a $500,000 deposit, in Roseville, Calif.

D.R. Horton and M.D.C. didn’t respond to requests for comment.

This summer, builder Standard Pacific Corp. signed a letter of intent to buy an option on 451 ready-to-build lots in the Inland Empire, a Southern California market where builders have ramped up construction in recent months. But in August, Standard Pacific decided to pass on the deal.

“The market is definitely doing worse now than at the beginning of the year,” said Standard Pacific Chief Executive Ken Campbell. “It’s a weaker home-sale environment than people had expected, which means land is less valuable.”

This marks a shift from earlier this year, when builders competed to boost their land supplies to have inventory ready for an improved market. Finished-lot prices in Phoenix and California’s Riverside-San Bernardino area, two of the markets hardest hit by the housing crisis, soared more than 40% above the bottom hit in the first quarter of 2009. Prices in other hard-hit markets such as Las Vegas and Tampa, Fla., rose between 21% and 40%, according to housing-research firm Zelman & Associates.

“They obviously got pretty aggressive in terms of their assumptions in the first half of the year,” said Alan Ratner, a Zelman vice president. “They were bidding up deals at prices that current home prices could not support.”

But builders are trying not to overpay for land, which got them into trouble when the market slumped and land values plunged. These days, builders buy options rather than purchasing the land outright whenever possible. Options give builders the right to buy land at a later date at a set price.

Land speculators had been buoyed by improving home sales in the first half. But since the federal home-buyer tax credit expired April 30, sales volume has deteriorated. The Commerce Department said July’s new-home sales level was the lowest since it began keeping track in 1963.

Some builders even have halted land acquisitions until the downturn’s extent is more clear. Just three-fourths of builders were actively looking to buy or option finished lots in July, the latest month available, well below January’s 94% peak, according to Zelman.

“The builders are looking at sales in the last three months and they’re saying, ‘Holy cow! Our sales are down,’ ” said Richard Gollis, co-founder of the Concord Group, a real-estate consulting firm. “They’re slowing down on their lot buys coming into the fall season.”

According to Zelman’s latest report, nearly 40% of industry executives surveyed reported builders walking away from deals under contract. Also, fewer builders are participating in bidding wars: Just 8% of land buyers in July increased bid prices, down from April’s 54%. Such weakness is expected to continue when the firm releases its latest land survey this month, said Zelman’s Mr. Ratner.

To be sure, land transactions still are happening. Builders remain interested in large parcels, which are hard to come by, and raw or partially developed sites that will be ready for development down the road. Standard Pacific remains committed to the 468 acres of undeveloped land that it recently optioned in northern San Diego County.

But in many markets, the run-up in prices has stopped, and there even is a risk that prices will begin to slide, industry watchers said. Builder confidence remains low while high unemployment, poor consumer confidence, competition from foreclosed homes and other headwinds dog the sector. Industry watchers don’t expect improvement this year, and some have low expectations for 2011.

Some builders are walking away from construction-ready finished lots, or land with improvements such as sewers and roads in place, left over from the housing boom.

“A lot of them got nervous that maybe they pulled the trigger a little early or got too aggressive,” Mr. Ratner said.

Not every builder blames the economy for the slowdown. PulteGroup Inc., one of the nation’s largest builders, remains interested in buying, but the best lots have been picked over, said Jim Zeumer, vice president of investor and corporate communications. “It’s getting more and more difficult to find deals that make sense,” he said.

The likelihood of owning a home increases according to age. Accordingly, three-quarters of households under the age of 25 choose to rent, whereas 83% of households ages 70-74 and 80% of households aged 60-64 own their residences—around the same level as middle-aged households. The homeownership rate has been on a steady incline since the early 1980s; in fact, more households over the age of 60 own homes today than they did 20 years ago, even after the implosion of the housing market.

While demographics do play a role in this increase, other factors, such as the fluctuations in the credit markets, tax codes, inflation expectations and investment strategies, also impact one’s propensity toward homeownership, points out Nechayev. So in all probability, the accelerating foreclosure rate and tighter lending conditions will help push the homeownership level a bit lower, at least in the near term.

But that will be countered by the growing population of baby boomers. Citing projections from the 2009 State of the Nation’s Housing reports, published by Harvard University’s Center for Housing Studies, Nechayev notes that households aged 65 and over will be the fastest-growing group, expanding by more than 910,000 annually between 2010 and 2020. Those aged 55-64 will grow by 380,000 to 400,000 per year over the same period. Overall annual household formation over the decade will be between 1.25 million and 1.48 million, depending on immigration trends. As a result, says the economist, a larger share of the household formation over the next 10 years will consist of older Americans.

“Even under the assumption that their age-specific homeownership rates will remain where they are for the entire period, the sheer increase in the number of older households would push the overall homeownership rate by as much as a full percentage point,” he says. “Baby boomers remain the major demographic force supporting the nation’s homeownership rate,” continuing a 30-year trend.

That’s not to say the younger households, particularly those between ages 25 and 34, will have a minimal impact. Positive growth in that cohort will certainly favor the rental multifamily market; it’s just that their parents will have a greater impact on the overall housing market, in terms of both ownership and rentals.

“Seniors will be the largest consumer of housing for years to come,” says Nechayev. “With the affordability of homeownership still near record highs, the substantial homeownership rate declines that some expect would only make sense in the context of a truly negative economic scenario.”

Unless we get hit by another major crisis, the national rate of homeownership will fall a bit before stabilizing and then will ultimately rise again—a trend that will benefit the apartment sector. “Older people seeking homes with lower maintenance and taxes and better commutes will support owner demand, which in turn would help to lift home prices, and subsequently rents, from the low levels of today,” says Nechayev.

Thus, those in the multifamily sector would do well to cater to both ends of the demographic spectrum when planning, building and marketing their properties.

The bottom line is, if a class A office building cannot prove its own interests in energy efficiency or environmental consciousness, it may have a more difficult time backfilling vacant floors. Worse yet, it may also stand to lose some corporate tenants it has kept in place for years or even decades.

Hence the importance of traditional office towers stepping up to seek LEED-EB status from the US Green Building Council. The Leadership in Energy and Environmental Design certification program was expanded to existing buildings in recent years after owners discovered practical methods of modifying facilities to use less power and water, generate less garbage and reduce their all-important carbon footprint.

Wachovia Financial Center, the tallest office tower in Downtown Miami and Florida’s biggest vertical building with 1.2 million square feet in 55 stories, made a pretty big deal of its LEED Gold certification earlier this year. Although the building is 98% occupied, its management remains conscious of which prospective tenants demand green, as well as current occupants that have come under new corporate mandates since their last renewal, says Don Cartwright, the building’s leasing director with Cushman & Wakefield.

“How important that stacks up remains to be seen, but if you can answer to the affirmative that your building is certified green, it’s an important box for them to check,” Cartwright tells GlobeSt.com. “We are absolutely in the heat of battle when it comes to new leases and renewals.”

Getting LEED certification now certainly gives Wachovia Financial Center a jump on the competition among several nearby buildings looking to strike sweet leasing deals on space that is either freshly built or about to become empty once other tenants move to the new buildings. The new gold status puts the 26-year-old tower “ahead of everything the city has built over two decades,” says Tim Keable, the building’s general manager.

In nearby Coral Gables, 355 Alhambra achieved LEED-EB Gold certification earlier this month. The 16-story, 224,000-square-foot building, which opened in 2001, earned its approval based on initiatives aimed at energy and water conservation, waste reduction, and green cleaning and pest control.

Brian Gale, managing director of the Miami office of Taylor & Mathis of Florida, the leasing agency for 355 Alhambra, says earning LEED status is necessary to compete with newer offices, even those built in the past decade. “Any new building is going to be built to LEED standards,” he says, “so it is important to be able to compete with those buildings.”

It may also become mandatory from a government standpoint, says Rich Bezold, chairman of the real estate department at Miami-based law firm Akerman Senterfitt. State and federal legislation may eventually mandate retrofitting of existing buildings to green standards, with upfront costs eventually being recovered through energy and other savings, he says.

“The owners gain a competitive edge if they can lower their operating costs, and that savings can be passed along to their tenants,” Bezold says. He points out that there are more green products on the market now than just a few years ago, and at more favorable pricing.

Renting space in LEED-certified office buildings is apparently no more costly than those that aren’t. Asking rents at 355 Alhambra and Wachovia Financial Center are within range of the averages for their respective submarkets—$40 per square foot in Coral Gables, $52 per square foot in Downtown Miami, according to Cushman & Wakefield.

An even clearer example of the magnification phenomenon can be found in Palm Beach County’s Delray Beach submarket, which has only 1.4 million square feet and a 58.9% vacancy rate, which is due to the loss, nearly a year and a half ago, of Office Depot, a huge tenant. But the office supply retailer, which now resides in a 625,000-square-foot space in Boca Raton, moved only two and a half miles away, says Erickson. In a place like Delray Beach, “even a 10,000 square foot lease can move the dial,” he says.

The Palm Beach County office market, and the Boca Raton submarket in particular, are stabilizing, says Erickson, but it is hard to characterize them as doing well. The Boca Raton market, in first quarter 2010, according to the CB Richard Ellis MarketView report, had a total vacancy rate of 29.5%. Corporate cut-backs,as well as the financial meltdown, have taken their toll, says Erickson. When Washington Mutual moved out of its 170,000-square-foot-space a little over a year ago, that really hurt, he says.

The West Palm Beach submarket, the second largest in Palm Beach County with 5.7 million square feet, has fewer swings, says Erickson. “That’s because it is the county seat and law firms and estate planners are entrenched there.”

According to the MarketView report, the Palm Beach County office market will continue to experience modest demand until the broader economy starts to rebound. As of first quarter 2010, office employment, mostly related to financial or other services, stood at 119,200 workers, according to CBRE Econometric Advisors. Over the last five years in Palm Beach County, office employment has declined 2.2%, but over the past 12 months, it has declined 4.5%. These declines deeply affect the office market. Office employment is projected to grow by 9,100 jobs during the 2010-2011 period, according to Econometric Advisors.

To cope with the financial uncertainty, says Erickson, some tenants are taking short-term leases of only three to five years. “You are talking about well-entrenched financial firms, for which three to five years is not a long time,” he says. For smaller, entrepreneurial businesses, “We are seeing short-term extensions for only one or two years,” says Erickson.

The good news for tenants in Palm Beach County is that office rents are down about 25% since the onset of the financial crisis. “In mid 2006, there were some businesses which wouldn’t look at Boca Raton, because it was too expensive,” says Erickson. “Now, they can, because office space and housing are more reasonably priced.”

And while Palm Beach County tenants are getting better deals from their landlords because of the recession, owners of existing properties are getting a boost from the fact that office construction has come to a halt and many of the planned projects which were expected to start in 2009, have been placed on hold for the foreseeable future.

Management has high expectations for improved sales growth as the economy recovers. Starbucks also declared its first dividend at its annual meeting of shareholders yesterday.

CEO Howard Schultz says that Starbucks will now “grow in a different way.” Do you think the company is ready to start opening locations again, or is the market still over saturated with its cafes?

And while LNR has yet to make a formal announcement of its plans, industry observers believe any decision may have far reaching implications for commercial real estate. After all, the company’s special servicing arm, LNR Partners, manages a quarter of all loans in special servicing.

LNR’s booming special servicing business, which according to Fitch Ratings has more than doubled in the past year, may indeed be contributing to its current woes.

“They may be attempting to get out from underneath their obligations to advance interest payments to the unsubordinated senior tranches,” says Greg E. Schecher, managing member of Lexington Capital Advisors LLC in Boca Raton, FL.

LNR’s land and residential holdings may also be sinking the company. “They are, unfortunately, involved in one of the most volatile property niches in the market, land,” says Dan Fasulo, managing director of Real Capital Analytics. “Given the property value decline in that sector, it’s not surprising at this point that they are looking at bankruptcy protection as a way to move forward.”

In January, Bloomberg reported that LNR enlisted Lazard Ltd. and law firm Dewey LeBoeuf LLP to help restructure nearly $1 billion of debt and prepare for a possible bankruptcy filing. Calls placed to Dewey LeBoeuf were not returned, while representatives from Lazard and LNR declined to comment.

According to Bloomberg, Oaktree Capital Management, LNR’s largest creditor, is also seeking advice on restructuring the firm’s debt. Oaktree Capital and a handful of LNR’s other bondholders are considering a takeover, sources tell GlobeSt.com. Those same sources, who wish to remain anonymous, say LNR’s majority stakeholder, Cerberus Capital Management LP, is now running its operations. Calls to Cerberus were not returned.

Some observers suspect an investor will snap up LNR’s special servicing branch much like Warren Buffett’s Berkshire Hathaway Inc. and Leucadia National Corp. did with Capmark’s servicing business, back in December. Since September 2009, Centerline Holding Co. has been in discussions with Island Capital Group LLC to recapitalize its special servicing arm, Centerline Capital Group.

LNR’s troubles came to light last November, when Moody’s Investors Service downgraded the firm’s credit rating to Ca from B3 because of the “rapid deterioration in LNR’s liquidity profile.” This affected some $900 million of the firm’s debt. LNR, the ratings agency said, is under mounting pressure from declines in cash interest income from its devalued CMBS investments. What’s more, the protracted credit crunch in the commercial real estate market has delayed collection of its special servicing resolution fees.

“Every time a property comes back to the special servicer it creates a liquidity issue because the servicer doesn’t have any real method to create liquidity, except through the disposition of assets,” Schecher says. A series of asset sales may seem like the obvious solution, but with a fiduciary duty to protect bondholders in the capital stack, it’s not that simple.

“Special servicers are hired just like an independent contractor and they have to work in the best interest of the trust,” says William Campbell, a partner at Strook & Strook & Lavan LLP in New York City. “Many investors feel, however, that because specials are conflicted they’ll seek to just take action to prevent their affiliates from taking losses. So they’ll extend loans rather than foreclose them. However, this concern may be exaggerated.”

Indeed, some wary observers of this practice question whether there is an inherent conflict of interest in having a B-piece buyer service its own loan. “There have been allegations toward some special servicers that they’ve been over zealous in their servicing of mortgages,” says Anthony Sanders, professor of finance in the School of Management at George Mason University in Virginia.

But Campbell observes, “The value of special servicing has risen as their affiliates’ investments have fallen, and to avoid lawsuits and rating agency downgrades, specials may be more vigilant in upholding their duties to the trust then some predict.”

Still, Sanders points out that special servicers have been accused of unduly calling performing loans or collecting fraudulent fees. Senior bondholders have also been known to sue special servicers if they are unhappy with the servicer’s course of action.

Appaloosa Management, for example, filed a motion on Tuesday alleging CWCapital Management, the special servicer for Stuyvesant Town/Peter Cooper Village, violated its fiduciary duty by seeking to foreclose on the property—exposing the trust to “wholly avoidable losses, risks and injuries,” like double transfer taxes.

Like many of its competitors, LNR Partners has been brought to court for breech of contract, though there are no recorded judgments against the special servicer. With LNR’s current crisis, some question how a bankruptcy filing may affect the trusts to which the company must answer.

Stephanie Petosa, a senior analyst at Fitch, says bankruptcy courts generally protect the interests of the filing entity with regard to its special servicing business. Including the special servicing arm in bankruptcy could jeopardize its agency ratings.

A reorganization of LNR may result in a surge of distressed commercial assets sales. “If LNR files for bankruptcy, it is going to need cash and liquidity. So it sounds to me that it would probably want to be auctioning some of loans in the portfolio,” says John Garth, partner and managing director of originations for the East Coast for the Pembrook Group.

Recovery rates for resolved CMBS loans are lower than the historical average, according to Fitch. But the agency’s most recent data show that LNR had a 90.7% recovery rate as of the end of Q3 2009. That number, however, may be a bit deceiving since LNR has the largest portfolio of loans in special servicing, and at the time had resolved just 119 of its 1,000-plus loans.

Loan extensions may be too costly an endeavor for LNR to continue in earnest. A torrent of asset transfers, like LNR has experienced, can be a crushing expense if monthly base fees or resolution fees are only trickling in. Special servicers may handle appraisal costs, legal fees and other expenses, with the hopes of reimbursement.

To cover operating expenses, Schecher points out special servicers typically borrow money from line lenders, which require haircut equity. But he says, “The amount of foreclosed properties that are coming into the CMBS default arena creates a liquidity crisis for the special servicer.”

He continues, “You can’t continue bringing in bad assets and not sell them and continue to borrow to pay the advances on real estate taxes, insurance and interest payments; this is a losing proposition.”

LNR’s $1-billion senior credit facility is set to mature in 2011. Moody’s suspects the company, likely unable to refinance, will default on its credit obligations. Schecher suggests this line lender turmoil may create problems for other special servicers, if LNR defaults.

“You are going to see line lenders getting nervous about their position with lesser servicers,” he says. “The uncertainty of this could cast a pall on the industry for some time, and that means the velocity of transactions will remain static.”

A month after Moody’s took action, Fitch Ratings downgraded the special servicing entity, LNR Partners, because of its parent company’s financial trials. With 1,107 loans valued at $18.6 billion as of January, LNR has been named special servicer for the largest amount of CMBS debt, according to Trepp.

Were LNR Property to file for bankruptcy, those loans would continue to be serviced, says Sanders. “Even if the worst happens and they start moving toward a process of liquidation, the servicing rights will just be sold to other servicers out there. And there are still plenty of players out there,” he says.

What’s more concerning, he adds, is how this situation reflects on the state of commercial real estate. “It’s sending a signal out that there are some serious structural issues going on in the commercial market.” Sanders stresses that the skyrocketing level of defaults and delinquencies in the commercial real estate space continues to be largely ignored by the public.

Petosa says, “All servicers are stressed and most of them are under financial pressure. The whole special servicing landscape is going to change this year, whether that’s through consolidation or the purchase of existing servicers.”

“We have no comment other than to confirm we have satisfied The Related Group’s lender obligations, and we have sold the two projects (Trump II and Trump III at Sunny Isles) to former partners in these developments,” Betsy McCoy, Related’s vice president and associate general counsel, said in an e-mail.

This comes after Related and its lenders—likely to take title soon to the Icon Brickell towers—slashed prices on the nearly vacant Miami project. And Related no longer owns a site in Downtown Miami where Perez planned another condo tower.

“In an economy like this, when developers like Related became so big, they actually contract,” says Michael Cannon, executive director of Integra Realty Resources in Miami. “What [Perez] is going through is a contraction rather than an expansion, and this is what a lot of developers are doing.”

Related was one of the most prominent condo developers in South Florida over the past decade. The company built Murano at Portofino, Icon South Beach and Apogee in Miami Beach, plus 50 Biscayne, 900 Brickell and Loft Downtown in Miami.

But when the housing market and economy collapsed in 2007, Related and its joint venture partners were left owning thousands of new luxury condos.

Perez’s personal net worth has also declined. He was ranked at No. 197 on the Forbes 400 list of the wealthiest people in 2006, when his net worth was estimated at $1.8 billion. Last year, he fell off the list when his net worth dipped below $900 million, according to Forbes.

One of Related’s partners was the Dezer family. Related and the Dezers co-developed the Trump Towers, but the relationship ended Dec. 31, according to four people familiar with the project who declined to be identified.

“It wouldn’t surprise me, unless he had a major stake in the [Trump Tower] project, that he would terminate the agreement and move on,” says Cannon, who has no direct knowledge of the deal.

Related had a 50% share in TRG Sunny Isles VII, the company behind the oceanfront project, until Jan. 13 when the Dezers took full control, according to the Florida Division of Corporations. Related and the Dezers joined forces more than five years ago to build the three-tower oceanfront Trump project on Collins Avenue and 160th Street. Each 45-story tower has 271 condos.

In 2007, TRG Sunny Isles obtained a $345.7-million construction loan from Wachovia Bank, now owned by Wells Fargo. On Dec. 31, Wachovia modified the loan and extended its maturity date. A mortgage filed with Miami-Dade County did not disclose the due date.

One tower is sold out, another has a few units sold, and the third is vacant. The unit prices have dropped nearly 40% since pre-sales started five years ago.

Trump Towers condos are selling from $350 to $400 per square foot, down from about $550 to $650 per square foot a few years ago, said Craig Studnicky, president of the International Sales Group in Aventura, whose company represents buyers of Trump Towers units. “At $350 a foot,” he says, “there is not going to be any profit realized by the developer.”

Related also took a big loss on the sale of a Downtown Miami parcel where the company planned to build condos. It sold a 28,500-square-foot lot at Northeast Third Street and Second Avenue for $4.4 million on Dec. 29 to Miami investor Rafael Kapustin, who had sold the land to Related for $12 million in 2007, as the condo market was beginning to deteriorate.

After reacquiring the site, Kapustin sold it to Miami-Dade College for $5.5 million. Related paid off a $5 million mortgage with HSBC Realty Credit Corp. at the time of the sale.

Now Related is working to resolve its problems at Icon Brickell. The company has nearly 1,500 condos to sell and is delinquent on construction loans totaling nearly $700 million.

Related’s McCoy says the developer was negotiating to hand over Icon’s three towers to the lenders with the condition that the company continues to run the project. “We are in a workout process so we would continue to manage [Icon],” she says.

The Miami builder’s shares surged nearly 9% on Thursday after it announced late Wednesday winning an auction for a portfolio of about 5,500 residential and commercial real estate loans from 22 failed banks. Lennar agreed to pay $243 million for a 40% stake in the portfolio. The rest will be held by the Federal Deposit Insurance Corp.