Description of the Proposed Transaction

Valencia is a Commission-regulated Class A water company and is a wholly owned subsidiary of Newhall. Valencia provides service in the Santa Clarita Valley area of Los Angeles County.

Newhall is a California limited partnership with its principal place of business in Valencia, California. Newhall owns substantial agricultural property in Madera and Ventura counties, but its primary activity is real estate development. Newhall founded Valencia to provide water service in certain of its developments.

LNR is a Delaware corporation, with its headquarters in Miami Beach, Florida. The application states that LNR invests in and manages various types of property, including industrial, retail, office, apartments, hospitality, and land. Subsidiaries of LNR currently manage over 3.4 million square feet and 4,400 acres of commercial property in California. LNR's net earnings for 2002 were $143,878,000.

Lennar is also a Delaware corporation, and its headquarters are in Miami, Florida. The application states that Lennar is one of the nation's leading builders of homes, having built about 6,500 new homes in California in 2002. Lennar has eleven home building divisions and four land divisions, and approximately 2,500 sales associates statewide. Lennar's net earnings for 2002 were $545,129,000.

Both LNR and Lennar are publicly traded corporations on the New York Stock Exchange. Stuart Miller, Lennar's President and Chief Executive Officer, is also the Chairman of LNR's Board of Directors. Through family owned entities, Miller controls sufficient stock in both corporations to make all decisions presented to shareholders.

Lennar and LNR propose, by a series of transactions through a series of transactions through their jointly owned subsidiary, NWHL Investment, to each acquire 50% ownership and control of a partnership that holds the assets of Newhall. See Attachment A. Valencia is one of Newhall's assets. Newhall estimates that the total value of the proposed transaction is approximately $1.15 billion.