Speculation about Lennar lifts builders

The depressed shares of U.S. home builders rose sharply Tuesday on speculation that a group from the United Arab Emirates had offered to buy Lennar Corp.

Also Tuesday, Lennar, the No. 2 U.S. home builder, said in a Securities and Exchange Commission filing that its top three executives were forced to forfeit $20 million in stock compensation last year because the company wasn’t profitable.

The rally in builder stocks came the same day that Standard & Poor’s reported that the S&P;/Case-Shiller index of home prices plunged 8.9% last year from 2006.

Lennar’s stock shot up $1.63, or 8.7%, to $20.41. Beazer Homes USA Inc. surged 59 cents, or 7.6%, to $8.36 and Hovnanian Enterprises Inc. rose 92 cents, or 9.3%, to $10.82.

The Dow Jones U.S. Home Construction index rose 6.4%.

A Lennar spokesman couldn’t be reached to comment on the speculation.

An acquisition of a U.S. builder by United Arab Emirates investors wouldn’t be unprecedented. In 2006, Dubai’s Emaar Properties bought Newport Beach-based John Laing Homes for $1.05 billion.

The stock grants to Lennar Chief Executive Stuart A. Miller, Chief Operating Officer Jonathan M. Jaffe and finance chief Bruce E. Gross were subject to certain conditions, one of which required that the company earn a profit in the year that ended Nov. 30.

But Miami-based Lennar lost $1.94 billion in the fiscal year as the housing downturn intensified, and its stock price plunged 70% in that period.

Miller forfeited $10 million in stock awards. Jaffe and Gross each forfeited $5 million in grants.

Salary and other fiscal 2007 pay totaled $1.1 million for Miller, $873,000 for Jaffe and $706,000 for Gross.