Published: 2022-10-04 00:00:00 ET

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As of August 31, 2022, total assets include $1.4 billion related to consolidated VIEs of which $69.4 million is included in Homebuilding cash and cash equivalents, $0.2 million in Homebuilding receivables, net, $63.9 million in Homebuilding finished homes and construction in progress, $741.0 million in Homebuilding land and land under development, $420.9 million in Homebuilding consolidated inventory not owned, $1.0 million in Homebuilding investments in unconsolidated entities, $24.2 million in Homebuilding other assets, $29.4 million in Multifamily assets and $13.5 million in Lennar Other assets.

As of November 30, 2021, total assets include $1.1 billion related to consolidated VIEs of which $60.9 million is included in Homebuilding cash and cash equivalents, $4.4 million in Homebuilding receivables, net, $14.3 million in Homebuilding finished homes and construction in progress, $697.1 million in Homebuilding land and land under development, $239.2 million in Homebuilding consolidated inventory not owned, $1.1 million in Homebuilding investments in unconsolidated entities, $17.4 million in Homebuilding other assets and $80.6 million in Multifamily assets.

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Basis of Consolidation

The condensed consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America ("GAAP") for interim financial information and pursuant to the rules and regulations of the Securities and Exchange Commission. Accordingly, they do not include all of the information and footnotes required by GAAP for complete financial statements. These condensed consolidated financial statements should be read in conjunction with the consolidated financial statements in the Company’s Annual Report on Form 10-K for the year ended November 30, 2021. The basis of consolidation is unchanged from the disclosure in the Company's Notes to Consolidated Financial Statements section in its Form 10-K for the year ended November 30, 2021. In the opinion of management, all adjustments (consisting of normal recurring adjustments) necessary for the fair presentation of the accompanying condensed consolidated financial statements have been made.

The Company has historically experienced, and expects to continue to experience, variability in quarterly results. The condensed consolidated statements of operations for both the three and nine months ended August 31, 2022 are not necessarily indicative of the results to be expected for the full year.

Use of Estimates

The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the amounts reported in the condensed consolidated financial statements and accompanying notes. Actual results could differ from those estimates.

Cash and Cash Equivalents

Homebuilding cash and cash equivalents as of August 31, 2022 and November 30, 2021 included $655.7 million and $940.4 million, respectively, of cash held in escrow. On average for the three months ended August 31, 2022, cash was held in escrow for approximately two days.

Homebuilding Revenue Recognition

Homebuilding revenues and related profits from sales of homes are recognized at the time of the closing of a sale, when title to and possession of the property are transferred to the homebuyer. In order to promote sales of the homes, the Company may offer sales incentives to homebuyers. The types of incentives vary on a community-by-community basis and home-by-home basis. They include primarily price discounts on individual homes and financing incentives, all of which are reflected as a reduction of home sales revenues. For the three months ended August 31, 2022 and 2021, sales incentives offered to homebuyers averaged $12,300 per home, or 2.5% as a percentage of home sales revenues, and $7,300 per home, or 1.7% as a percentage of home sales revenues, respectively. For the nine months ended August 31, 2022 and 2021, sales incentives offered to homebuyers averaged $9,500 per home, or 1.9% as a percentage of home sales revenues, and $9,300 per home, or 2.2% as a percentage of home sales revenues, respectively.

Share-based Payments

During both the three months ended August 31, 2022 and 2021, the Company granted employees an immaterial number of nonvested shares. During both the nine months ended August 31, 2022 and 2021, the Company granted employees 1.4 million nonvested shares.

Recently Adopted Accounting Pronouncements

In December 2019, the FASB issued ASU 2019-12, Income Taxes (Topic 740), Simplifying the Accounting for Income Taxes ("ASU 2019-12"). ASU 2019-12 was effective for the Company’s fiscal year beginning December 1, 2021. The adoption of ASU 2019-12 did not have a material impact on the Company's condensed consolidated financial statements.

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The Company's homebuilding operations construct and sell homes primarily for first-time, move-up and active adult homebuyers primarily under the Lennar brand name. In addition, the Company's homebuilding operations purchase, develop and sell land to third parties. The Company's chief operating decision makers manage and assess the Company’s performance at a regional level. Therefore, the Company performed an assessment of its operating segments in accordance with ASC 280, Segment Reporting, and determined that the following are its operating and reportable segments:

Homebuilding segments: (1) East (2) Central (3) Texas (4) West

(5) Financial Services

(6) Multifamily

(7) Lennar Other

The assets and liabilities related to the Company’s segments were as follows:

(In thousands)			August 31, 2022
Assets:			Homebuilding						Financial Services						Multifamily						Lennar Other						Total
Cash and cash equivalents			$	1,309,364					143,630						40,870						10,181						1,504,045
Restricted cash			32,575						14,710						—						—						47,285
Receivables, net (1)			665,472						606,672						108,313						—						1,380,457
Inventories			22,842,509						—						429,923						—						23,272,432
Loans held-for-sale (2)			—						1,260,122						—						—						1,260,122
Investments in equity securities (3)			—						—						—						487,082						487,082
Investments available-for-sale (4)			—						—						—						35,163						35,163
Loans held-for-investment, net			—						38,939						—						—						38,939
Investments held-to-maturity			—						151,015						—						—						151,015
Investments in unconsolidated entities			1,174,498						—						631,513						342,636						2,148,647
Goodwill			3,442,359						189,699						—						—						3,632,058
Other assets			1,163,519						119,183						57,289						42,641						1,382,632
			$	30,630,296					2,523,970						1,267,908						917,703						35,339,877
Liabilities:
Notes and other debts payable, net			$	4,057,496					1,487,913						16,683						—						5,562,092
Accounts payable and other liabilities			6,050,952						187,579						309,365						102,351						6,650,247
			$	10,108,448					1,675,492						326,048						102,351						12,212,339

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(In thousands)			November 30, 2021
Assets:			Homebuilding						Financial Services						Multifamily						Lennar Other						Total
Cash and cash equivalents			$	2,735,213					167,021						16,850						2,660						2,921,744
Restricted cash			21,927						12,012						—						—						33,939
Receivables, net (1)			490,278						708,165						98,405						—						1,296,848
Inventories			18,715,304						—						454,093						—						19,169,397
Loans held-for-sale (2)			—						1,636,351						—						—						1,636,351
Investments in equity securities (3)			—						—						—						1,006,599						1,006,599
Investments available-for-sale (4)			—						—						—						41,654						41,654
Loans held-for-investment, net			—						44,582						—						—						44,582
Investments held-to-maturity			—						157,808						—						—						157,808
Investments in unconsolidated entities			972,084						—						654,029						346,270						1,972,383
Goodwill			3,442,359						189,699						—						—						3,632,058
Other assets			1,090,654						48,729						88,370						66,662						1,294,415
			$	27,467,819					2,964,367						1,311,747						1,463,845						33,207,778
Liabilities:
Notes and other debts payable, net			$	4,652,338					1,726,026						—						—						6,378,364
Accounts payable and other liabilities			5,217,904						180,317						288,930						145,981						5,833,132
			$	9,870,242					1,906,343						288,930						145,981						12,211,496

(1)Receivables, net for Financial Services primarily related to loans sold to investors for which the Company had not yet been paid as of August 31, 2022 and November 30, 2021, respectively.

(2)Loans held-for-sale related to unsold residential and commercial loans carried at fair value.

(3)Investments in equity securities include investments of $178.0 million and $100.1 million without readily available fair values as of August 31, 2022 and November 30, 2021, respectively.

(4)Investments available-for-sale are carried at fair value with changes in fair value recorded as a component of accumulated other comprehensive income (loss) on the condensed consolidated balance sheet.

Financial information relating to the Company’s segments was as follows:

			Three Months Ended August 31, 2022
(In thousands)			Homebuilding						Financial Services						Multifamily						Lennar Other						Corporate and Unallocated						Total
Revenue			$	8,479,496					202,078						243,056						9,801						—						8,934,431
Operating earnings (loss) (1)			1,963,224						63,348						48,487						(117,980)						—						1,957,079
Corporate general and administrative expenses			—						—						—						—						115,557						115,557
Charitable foundation contribution			—						—						—						—						17,248						17,248
Earnings (loss) before income taxes			1,963,224						63,348						48,487						(117,980)						(132,805)						1,824,274
			Three Months Ended August 31, 2021
Revenues			$	6,558,509					206,973						167,921						8,000						—						6,941,403
Operating earnings (loss)			1,329,833						112,083						(9,393)						491,972						—						1,924,495
Corporate general and administrative expenses			—						—						—						—						94,942						94,942
Charitable foundation contribution			—						—						—						—						15,199						15,199
Earnings (loss) before income taxes			1,329,833						112,083						(9,393)						491,972						(110,141)						1,814,354

(1) Financial Services operating earnings for the three months ended August 31, 2022, included a $35.5 million one-time charge due to an increase in a litigation accrual related to a court judgment.

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			Nine Months Ended August 31, 2022
(In thousands)			Homebuilding						Financial Services						Multifamily						Lennar Other						Corporate and Unallocated						Total
Revenues			$	22,209,683					578,945						686,436						21,579						—						23,496,643
Operating earnings (loss) (1)			4,953,485						258,074						54,582						(629,538)						—						4,636,603
Corporate general and administrative expenses			—						—						—						—						334,425						334,425
Charitable foundation contribution			—						—						—						—						46,335						46,335
Earnings (loss) before income taxes			4,953,485						258,074						54,582						(629,538)						(380,760)						4,255,843
			Nine Months Ended August 31, 2021
Revenues			$	17,529,606					669,789						476,837						20,884						—						18,697,116
Operating earnings			3,275,488						379,610						12,130						909,221						—						4,576,449
Corporate general and administrative expenses			—						—						—						—						296,190						296,190
Charitable foundation contribution			—						—						—						—						42,006						42,006
Earnings (loss) before income taxes			3,275,488						379,610						12,130						909,221						(338,196)						4,238,253

(1)Financial Services operating earnings for the nine months ended August 31, 2022, included a $35.5 million one-time charge due to an increase in a litigation accrual related to a court judgment.

Homebuilding Segments

Information about homebuilding activities in states which are not economically similar to other states in the same geographic area is grouped under "Homebuilding Other," which is not considered a reportable segment.

Evaluation of segment performance is based primarily on operating earnings (loss) before income taxes. Operations of the Company’s Homebuilding segments primarily include the construction and sale of single-family attached and detached homes as well as the purchase, development and sale of residential land directly and through the Company’s unconsolidated entities. Operating earnings (loss) for the Homebuilding segments consist of revenues generated from the sales of homes and land, other revenues from management fees and forfeited deposits, equity in earnings (loss) from unconsolidated entities and other income (expense), net, less the cost of homes sold and land sold, and selling, general and administrative expenses incurred by the segment. Homebuilding Other also includes management of a fund that acquires single-family homes and holds them as rental properties.

The Company’s reportable Homebuilding segments and all other homebuilding operations not required to be reported separately have homebuilding divisions located in:

East: Alabama, Florida, New Jersey, Pennsylvania and South Carolina

Central: Georgia, Illinois, Indiana, Maryland, Minnesota, North Carolina, Tennessee and Virginia

Texas: Texas

West: Arizona, California, Colorado, Idaho, Nevada, Oregon, Utah and Washington

Other: Urban divisions and other homebuilding related investments primarily in California, including FivePoint Holdings, LLC ("FivePoint")

The assets related to the Company’s homebuilding segments were as follows:

(In thousands)			East						Central						Texas						West						Other						Corporate and Unallocated						Total Homebuilding
August 31, 2022			$	7,143,051					4,393,636						3,720,373						12,800,380						1,414,935						1,157,922						30,630,297
November 30, 2021			5,854,057						3,782,847						2,801,192						11,171,741						1,443,163						2,414,819						27,467,819

Financial information relating to the Company’s homebuilding segments was as follows:

			Three Months Ended August 31, 2022
(In thousands)			East						Central						Texas						West						Other						Total Homebuilding
Revenues			$	2,540,285					1,577,544						1,140,556						3,212,169						8,942						8,479,496
Operating earnings (loss)			642,482						272,351						278,814						788,443						(18,866)						1,963,224
			Three Months Ended August 31, 2021
Revenues			$	1,678,851					1,268,817						827,229						2,775,556						8,056						6,558,509
Operating earnings (loss)			356,895						197,229						186,008						608,815						(19,114)						1,329,833

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			Nine Months Ended August 31, 2022
(In thousands)			East						Central						Texas						West						Other						Total Homebuilding
Revenues			$	6,424,922					3,970,805						3,048,676						8,733,429						31,851						22,209,683
Operating earnings (loss)			1,548,296						631,224						722,983						2,077,740						(26,758)						4,953,485
			Nine Months Ended August 31, 2021
Revenues			$	4,602,560					3,294,842						2,270,566						7,338,906						22,732						17,529,606
Operating earnings (loss)			928,805						488,300						491,708						1,423,332						(56,657)						3,275,488

Financial Services

Operations of the Financial Services segment include primarily mortgage financing, title and closing services primarily for buyers of the Company’s homes. It also includes originating and selling into securitizations commercial mortgage loans through its LMF Commercial business. Financial Services’ operating earnings consist of revenues generated primarily from mortgage financing, title and closing services, and property and casualty insurance, less the cost of such services and certain selling, general and administrative expenses incurred by the segment. The Financial Services segment operates generally in the same states as the Company’s homebuilding operations.

At August 31, 2022, the Financial Services warehouse facilities were all 364-day repurchase facilities and were used to fund residential mortgages or commercial mortgages for LMF Commercial as follows:

(In thousands)			Maximum Aggregate Commitment
Residential facilities maturing:
October 2022			$	200,000
December 2022			500,000
May 2023			200,000
August 2023			1,000,000
Total - Residential facilities			$	1,900,000
LMF Commercial facilities maturing
November 2022			$	100,000
December 2022			400,000
July 2023			50,000
Total - LMF Commercial facilities			$	550,000
Total			$	2,450,000

The Financial Services segment uses the residential facilities to finance its residential lending activities until the mortgage loans are sold to investors and the proceeds are collected. The facilities are non-recourse to the Company and are expected to be renewed or replaced with other facilities when they mature. The LMF Commercial facilities finance LMF Commercial loan originations and securitization activities and were secured by up to an 80% interest in the originated commercial loans financed.

Borrowings and collateral under the facilities and their prior year predecessors were as follows:

(In thousands)			August 31, 2022						November 30, 2021
Borrowings under the residential facilities			$	1,289,260					1,482,258
Collateral under the residential facilities			1,343,967						1,539,641
Borrowings under the LMF Commercial facilities			57,740						96,294

If the facilities are not renewed or replaced, the borrowings under the lines of credit will be repaid by selling the mortgage loans held-for-sale to investors and by collecting receivables on loans sold but not yet paid for. Without the facilities, the Financial Services segment would have to use cash from operations and other funding sources to finance its lending activities.

Substantially all of the residential loans the Financial Services segment originates are sold within a short period in the secondary mortgage market on a servicing released, non-recourse basis. After the loans are sold, the Company retains potential liability for possible claims by purchasers that it breached certain limited industry-standard representations and warranties in the loan sale agreements. Purchasers sometimes try to defray losses by purporting to have found inaccuracies related to sellers’ representations and warranties in particular loan sale agreements. Mortgage investors could seek to have the Company buy back mortgage loans or compensate them for losses incurred on mortgage loans that the Company has sold based on claims that the Company breached its limited representations or warranties. The Company’s mortgage operations have established accruals for possible losses associated with mortgage loans previously originated and sold to investors. The Company establishes accruals

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for such possible losses based upon, among other things, an analysis of repurchase requests received, an estimate of potential repurchase claims not yet received and actual past repurchases and losses through the disposition of affected loans as well as previous settlements. While the Company believes that it has adequately reserved for known losses and projected repurchase requests, given the volatility in the residential mortgage industry and the uncertainty regarding the ultimate resolution of these claims, if either actual repurchases or the losses incurred resolving those repurchases exceed the Company’s expectations, additional recourse expense may be incurred. The provision for loan losses was immaterial for both the three and nine months ended August 31, 2022 and 2021. Loan origination liabilities were $12.1 million and $11.7 million as of August 31, 2022 and November 30, 2021, respectively, and included in Financial Services’ liabilities in the Company's condensed consolidated balance sheets.

LMF Commercial - loans held-for-sale

LMF Commercial originated commercial loans as follows:

			Three Months Ended												Nine Months Ended
			August 31,												August 31,
(Dollars in thousands)			2022						2021						2022						2021
Originations (1)			$	109,850					178,669						518,345						594,667
Sold			188,266						226,357						511,733						665,062
Securitizations			2						1						4						4

(1)During both the three and nine months ended August 31, 2022 and 2021, all the commercial loans originated were recorded as loans held-for-sale, which are held at fair value.

Investments held-to-maturity

At August 31, 2022 and November 30, 2021, the Financial Services segment held commercial mortgage-backed securities ("CMBS"). These securities are classified as held-to-maturity based on the segment's intent and ability to hold the securities until maturity and changes in estimated cash flows are reviewed periodically to determine if an other-than-temporary impairment has occurred. Based on the segment’s assessment, no impairment charges were recorded during either the three or nine months ended August 31, 2022 or 2021. The Company has financing agreements to finance CMBS that have been purchased as investments by the Financial Services segment.

Details related to Financial Services' CMBS were as follows:

(Dollars in thousands)			August 31, 2022						November 30, 2021
Carrying value			$	151,015					157,808
Outstanding debt, net of debt issuance costs			140,912						147,474
Incurred interest rate			3.4		%				3.4		%

			August 31, 2022
Discount rates at purchase			6%			—			84%
Coupon rates			2.0%			—			5.3%
Distribution dates			October 2027			—			December 2028
Stated maturity dates			October 2050			—			December 2051

Multifamily

The Company is actively involved, primarily through unconsolidated funds and joint ventures, in the development, construction and property management of multifamily rental properties. The Multifamily segment focuses on developing a geographically diversified portfolio of institutional quality multifamily rental properties in select U.S. markets.

The Multifamily Segment (i) manages, and owns interests in, funds that are engaged in the development of multifamily residential communities with the intention of holding the newly constructed and occupied properties as income and fee generating assets, and (ii) manages, and owns interests in, joint ventures that are engaged in the development of multifamily residential communities, in most instances with the intention of selling them when they are built and substantially occupied. Our multifamily business is a vertically integrated platform with capabilities spanning development, construction, property management, asset management, and capital markets. Revenues are generated from the sales of land, from construction activities, and management and promote fees generated from joint ventures and other gains (which includes sales of buildings), less the cost of sales of land sold, expenses related to construction activities and general and administrative expenses. Operations of the Multifamily Segment also include equity in earnings (loss) from unconsolidated entities.

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Lennar Other

Lennar Other primarily includes strategic investments in technology companies, primarily managed by the Company's LENX subsidiary, and fund interests the Company retained when it sold the Rialto Capital Management ("Rialto") asset and investment management platform. Operations of the Lennar Other segment include operating earnings (loss) consisting of revenues generated primarily from the Company's share of carried interests in the Rialto fund investments, along with equity in earnings (loss) from the Rialto fund investments and technology investments, realized and unrealized gains (losses) from investments in equity securities and other income (expense), net from the remaining assets related to the Company's former Rialto segment.

The Company has investments in Blend Labs, Inc. ("Blend Labs"), Hippo Holdings, Inc. ("Hippo"), Opendoor, Inc. ("Opendoor"), SmartRent, Inc. ("SmartRent"), Sonder Holdings, Inc. ("Sonder") and Sunnova Energy International, Inc. ("Sunnova"), which are held at market and will therefore change depending on the value of the Company's share holdings in those entities on the last day of each quarter. All the investments are accounted for as investments in equity securities which are held at fair value and the changes in fair values are recognized through earnings. The following is a detail of Lennar Other unrealized gains (losses) from the Company's technology investments:

			Three Months Ended												Nine Months Ended
			August 31,												August 31,
(In thousands)			2022						2021						2022						2021
Blend Labs (BLND) mark-to-market			$	(518)					6,852						(21,510)						6,852
Hippo (HIPO) mark-to-market			(32,933)						324,855						(195,336)						324,855
Opendoor (OPEN) mark-to-market			(54,391)						37,301						(218,751)						272,756
SmartRent (SMRT) mark-to-market			(23,118)						100,793						(71,431)						100,793
Sonder (SOND) mark-to-market			(168)						—						(2,300)						—
Sunnova (NOVA) mark-to-market			25,289						23,870						(49,646)						(14,465)
Lennar Other unrealized gains (losses) from technology investments			$	(85,839)					493,671						(558,974)						690,791

Doma Holdings, Inc. ("Doma") went public during the year ended November 30, 2021. However, Doma is a public company that is an investment accounted for under the equity method due to the Company's significant ownership interest which allows the Company to exercise significant influence. As of August 31, 2022, the Company owned approximately 25% of Doma and the carrying amount of the Company's investment was $17.1 million.

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Homebuilding Unconsolidated Entities

The investments in the Company's Homebuilding unconsolidated entities were as follows:

(In thousands)						August 31, 2022						November 30, 2021
Investments in unconsolidated entities (1) (2)						$	1,174,498					972,084
Underlying equity in unconsolidated entities' net assets (1)						1,527,359						1,301,719

(1)The basis difference was primarily as a result of the Company contributing its investment in three strategic joint ventures with a higher fair value than book value for an investment in the FivePoint entity.

(2)Included in the Company's recorded investments in Homebuilding unconsolidated entities is the Company's 40% ownership of FivePoint. As of August 31, 2022 and November 30, 2021, the carrying amount of the Company's investment was $386.3 million and $381.6 million, respectively.

As of August 31, 2022 and November 30, 2021, the Homebuilding segment's unconsolidated entities had non-recourse debt with completion guarantees of $183.6 million and $241.0 million, respectively.

The Company has an immaterial amount of recourse exposure to debt of the Homebuilding unconsolidated entities in which it has investments. While the Company sometimes guarantees debt of unconsolidated entities, in most instances the Company’s partners have also guaranteed that debt and are required to contribute their shares of any payments. In most instances, the amount of guaranteed debt of an unconsolidated entity is less than the value of the collateral securing it.

As of both August 31, 2022 and November 30, 2021, the fair values of the repayment guarantees, maintenance guarantees, and completion guarantees were not material. The Company believes that as of August 31, 2022, in the event it becomes legally obligated to perform under a guarantee of the obligation of a Homebuilding unconsolidated entity due to a triggering event under a guarantee, the collateral would be sufficient to repay at least a significant portion of the obligation or the Company and its partners would contribute additional capital into the venture. In certain instances, the Company has placed performance letters of credit and surety bonds with municipalities with regard to obligations of its joint ventures (see Note 7 of the Notes to Condensed Consolidated Financial Statements).

In 2021, the Company formed the Upward America Venture LP ("Upward America"), and is managing and participating in Upward America. Upward America is an investment fund that acquires new single-family homes in high growth markets across the United States and rents them to people who will live in them. Upward America has raised equity commitments totaling $1.6 billion, including $350 million of equity commitments raised during the first quarter of 2022. The commitments are primarily from institutional investors, including $125 million committed by Lennar. As of August 31, 2022 and November 30, 2021, the carrying amount of the Company's investment in Upward America was $28.5 million and $13.3 million, respectively.

Multifamily Unconsolidated Entities

The unconsolidated joint ventures in which the Multifamily segment has investments usually finance their activities with a combination of partner equity and debt financing. In connection with many of the bank loans to Multifamily unconsolidated joint ventures, the Company (or entities related to them) has been required to give guarantees of completion and cost over-runs to the lenders and partners. The details related to these are unchanged from the disclosure in the Company's Notes to the Financial Statements section in its Form 10-K for the year ended November 30, 2021. As of both August 31, 2022 and November 30, 2021, the fair value of the completion guarantees was immaterial. As of August 31, 2022 and November 30, 2021, Multifamily segment's unconsolidated entities had non-recourse debt with completion guarantees of $1.1 billion and $855.2 million, respectively.

In many instances, the Multifamily segment is appointed as the construction, development and property manager for its Multifamily unconsolidated entities and receives fees for performing this function. The Multifamily segment also provides general contractor services for construction of some of the rental properties owned by unconsolidated entities in which the Company has investments. The details of the activity were as follows:

			Three Months Ended												Nine Months Ended
			August 31,												August 31,
(In thousands)			2022						2021						2022						2021
General contractor services, net of deferrals			$	123,550					138,038						366,419						402,328
General contractor costs			118,738						137,860						350,773						391,096
Management fee income			17,514						13,822						46,968						42,881

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The Multifamily segment includes Multifamily Venture Fund I ("LMV I"), Multifamily Venture Fund II LP ("LMV II") and Canada Pension Plan Investments Fund (the "Fund"), which are long-term multifamily development investment vehicles involved in the development, construction and property management of class-A multifamily assets. During the first quarter of 2022, the Multifamily segment completed the initial closing of the Fund. The Multifamily segment expects the Fund to have almost $1 billion in equity and Lennar's ownership percentage in the Fund is expected to be 4%. The Company currently has a $6.3 million investment in the Fund. Additional dollars will be committed as opportunities are identified by the Fund

Details of LMV I and LMV II as of and during the nine months ended August 31, 2022 are included below:

			August 31, 2022
(In thousands)			LMV I						LMV II
Lennar's carrying value of investments			$	217,163					299,111
Equity commitments			2,204,016						1,257,700
Equity commitments called			2,151,474						1,207,610
Lennar's equity commitments			504,016						381,000
Lennar's equity commitments called			499,724						364,801
Lennar's remaining commitments			4,292						16,199
Distributions to Lennar during the nine months ended August 31, 2022			25,576						12,555

Other Unconsolidated Entities

Lennar Other's unconsolidated entities includes fund investments the Company retained when it sold the Rialto assets and investment management platform in 2018, as well as strategic investments in technology companies and investment funds. The Company's investment in the Rialto funds and investment vehicles totaled $193.8 million and $200.6 million as of August 31, 2022 and November 30, 2021, respectively. The Company also had strategic technology investments in unconsolidated entities of $148.9 million and $145.6 million, as of August 31, 2022 and November 30, 2021, respectively.

The following tables reflect the changes in equity attributable to both Lennar Corporation and the noncontrolling interests of its consolidated subsidiaries in which it has less than a 100% ownership interest for the three and nine months ended August 31, 2022 and 2021:

									Three Months Ended August 31, 2022
(In thousands)			Total Equity						Class A Common Stock						Class B Common Stock						Additional Paid - in Capital						Treasury Stock						Accumulated Other Comprehensive Income						Retained Earnings						Noncontrolling Interests
Balance at May 31, 2022			$	21,789,774					25,582						3,660						5,355,182						(76,615)						1,748						16,288,698						191,519
Net earnings (including net earnings attributable to noncontrolling interests)			1,472,694						—						—						—						—						—						1,467,344						5,350
Employee stock and directors plans			(13,106)						—						—						39						(13,145)						—						—						—
Amortization of restricted stock			38,200						—						—						38,200						—						—						—						—
Cash dividends			(108,749)						—						—						—						—						—						(108,749)						—
Receipts related to noncontrolling interests			11,965						—						—						—						—						—						—						11,965
Payments related to noncontrolling interests			(19,577)						—						—						—						—						—						—						(19,577)
Non-cash purchase or activity of noncontrolling interests, net			(44,005)						—						—						(5,008)						—						—						—						(38,997)
Total other comprehensive income, net of tax			342						—						—						—						—						342						—						—
Balance at August 31, 2022			$	23,127,538					25,582						3,660						5,388,413						(89,760)						2,090						17,647,293						150,260

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									Three Months Ended August 31, 2021
(In thousands)			Total Equity						Class A Common Stock						Class B Common Stock						Additional Paid - in Capital						Treasury Stock						Accumulated Other Comprehensive Income (Loss)						Retained Earnings						Noncontrolling Interests
Balance at May 31, 2021			$	19,702,098					30,049						3,944						8,755,020						(1,452,874)						(1,431)						12,241,400						125,990
Net earnings (including net earnings attributable to noncontrolling interests)			1,409,218						—						—						—						—						—						1,406,888						2,330
Employee stock and directors plans			(32,426)						1						—						55						(32,482)						—						—						—
Purchases of treasury stock			(246,385)						—						—						—						(246,385)						—						—						—
Amortization of restricted stock			24,752						—						—						24,752						—						—						—						—
Cash dividends			(77,662)						—						—						—						—						—						(77,662)						—
Receipts related to noncontrolling interests			4,670						—						—						—						—						—						—						4,670
Payments related to noncontrolling interests			(3,633)						—						—						—						—						—						—						(3,633)
Non-cash purchase or activity of noncontrolling interests, net			(1,224)						—						—						(1,218)						—						—						—						(6)
Total other comprehensive income, net of tax			131						—						—						—						—						131						—						—
Balance at August 31, 2021			$	20,779,539					30,050						3,944						8,778,609						(1,731,741)						(1,300)						13,570,626						129,351

									Nine Months Ended August 31, 2022
(In thousands)			Total Equity						Class A Common Stock						Class B Common Stock						Additional Paid - in Capital						Treasury Stock						Accumulated Other Comprehensive Income (Loss)						Retained Earnings						Noncontrolling Interests
Balance at November 30, 2021			$	20,996,282					30,050						3,944						8,807,891						(2,709,448)						(1,341)						14,685,329						179,857
Net earnings (including net earnings attributable to noncontrolling interests)			3,304,567						—						—						—						—						—						3,291,681						12,886
Employee stock and directors plans			(70,525)						199						—						893						(71,617)						—						—						—
Retirement of treasury stock			—						(4,667)						(284)						(3,533,425)						3,538,376						—						—						—
Purchases of treasury stock			(847,071)						—						—						—						(847,071)						—						—						—
Amortization of restricted stock			154,710						—						—						154,710						—						—						—						—
Cash dividends			(329,717)						—						—						—						—						—			—			(329,717)						—
Receipts related to noncontrolling interests			30,060						—						—						—						—						—						—						30,060
Payments related to noncontrolling interests			(85,098)						—						—						—						—						—						—						(85,098)
Non-cash purchase or activity of noncontrolling interests, net			(29,101)						—						—						(41,656)						—						—						—						12,555
Total other comprehensive income, net of tax			3,431						—						—						—						—						3,431						—						—
Balance at August 31, 2022			$	23,127,538					25,582						3,660						5,388,413						(89,760)						2,090						17,647,293						150,260

									Nine Months Ended August 31, 2021
(In thousands)			Total Equity						Class A Common Stock						Class B Common Stock						Additional Paid - in Capital						Treasury Stock						Accumulated Other Comprehensive Loss						Retained Earnings						Noncontrolling Interests
Balance at November 30, 2020			$	18,099,401					29,894						3,944						8,676,056						(1,279,227)						(805)						10,564,994						104,545
Net earnings (including net earnings attributable to noncontrolling interests)			3,262,899						—						—						—						—						—						3,239,620						23,279
Employee stock and directors plans			(63,242)						156						—						1,161						(64,559)						—						—						—
Purchases of treasury stock			(387,955)						—						—						—						(387,955)						—						—						—
Amortization of restricted stock			105,846						—						—						105,846						—						—						—						—
Cash dividends			(233,988)						—						—						—						—						—			—			(233,988)						—
Receipts related to noncontrolling interests			18,575						—						—						—						—						—						—						18,575
Payments related to noncontrolling interests			(20,859)						—						—						—						—						—						—						(20,859)
Non-cash purchase or activity of noncontrolling interests, net			(643)						—						—						(4,454)						—						—						—						3,811
Total other comprehensive loss, net of tax			(495)						—						—						—						—						(495)						—						—
Balance at August 31, 2021			$	20,779,539					30,050						3,944						8,778,609						(1,731,741)						(1,300)						13,570,626						129,351

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On September 28, 2022, the Company's Board of Directors declared a quarterly cash dividend of $0.375 per share on both its Class A and Class B common stock, payable on October 27, 2022 to holders of record at the close of business on October 13, 2022. On July 21, 2022, the Company paid cash dividends of $0.375 per share on both its Class A and Class B common stock to holders of record at the close of business on July 7, 2022, as declared by its Board of Directors on June 22, 2022. The Company approved and paid cash dividends of $0.250 per share for each of the four quarters of 2021 on both its Class A and Class B common stock.

During the nine months ended August 31, 2022, the Company retired 46.7 million and 2.8 million treasury shares of Class A and Class B common stock, respectively, as authorized by the Company's Board of Directors. The retirement of Class A and Class B common stock in treasury resulted in a reclass between treasury stock and additional paid-in capital within stockholders' equity.

In October 2021, the Company's Board of Directors authorized an increase to the Company's stock repurchase program to enable the Company to repurchase up to the lesser of an additional $1 billion in value or 25 million in shares, of its outstanding Class A or Class B common stock. As a result of prior authorizations being almost exhausted, in March 2022, the Company's Board of Directors approved an additional authorization for the Company to repurchase up to the lesser of $2 billion in value, or 30 million in shares, of its outstanding Class A or Class B common stock. The repurchase authorization has no expiration date. The following table represents the repurchases of the Company's Class A and Class B common stocks under the authorized repurchase programs:

			Three Months Ended																								Nine Months Ended
			August 31,																								August 31
			2022												2021												2022												2021
(Dollars in thousands, except price per share)			Class A						Class B						Class A						Class B						Class A						Class B						Class A						Class B
Shares repurchased			—						—						2,500,000						—						8,246,000						1,122,000						4,010,000						—
Total purchase price			$	—					$	—					$	246,335					$	—					$	762,282					$	84,601					$	387,875					$	—
Average price per share			$	—					$	—					$	98.53					$	—					$	92.44					$	75.40					$	96.73					$	—

The provision for income taxes and effective tax rate were as follows:

			Three Months Ended												Nine Months Ended
			August 31,												August 31,
(Dollars in thousands)			2022						2021						2022						2021
Provision for income taxes			$351,580						405,136						951,276						975,354
Effective tax rate (1)			19.3		%				22.4		%				22.4		%				23.1		%

(1)For both the three and nine months ended August 31, 2022 and 2021, the effective tax rate included state income tax expense and non-deductible executive compensation, partially offset by energy efficient home and solar tax credits. The three and nine months ended August 31, 2022 included a $50.2 million benefit related to the resolution of an uncertain state tax position, as well as the impact of the retroactive extension of the new energy efficient home tax credit by the enactment of the Inflation Reduction Act.

Basic earnings per share is computed by dividing net earnings attributable to common stockholders by the weighted average number of common shares outstanding for the period. Diluted earnings per share reflects the potential dilution that could occur if securities or other contracts to issue common stock were exercised or converted into common stock or resulted in the issuance of common stock that then shared in the earnings of the Company.

All outstanding nonvested shares that contain non-forfeitable rights to dividends or dividend equivalents that participate in undistributed earnings with common stock are considered participating securities and are included in computing earnings per share pursuant to the two-class method. The two-class method is an earnings allocation formula that determines earnings per share for each class of common stock and participating securities according to dividends or dividend equivalents and participation rights in undistributed earnings. The Company’s restricted common stock ("nonvested shares") is considered participating securities.

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Basic and diluted earnings per share were calculated as follows:

			Three Months Ended												Nine Months Ended
			August 31,												August 31,
(In thousands, except per share amounts)			2022						2021						2022						2021
Numerator:
Net earnings attributable to Lennar			$	1,467,344					1,406,888						3,291,681						3,239,620
Less: distributed earnings allocated to nonvested shares			655						776						3,830						2,182
Less: undistributed earnings allocated to nonvested shares			15,088						15,918						34,605						38,329
Numerator for basic earnings per share			1,451,601						1,390,194						3,253,246						3,199,109
Less: net amount attributable to Rialto's Carried Interest Incentive Plan (1)			1,038						785						3,881						2,907
Numerator for diluted earnings per share			$	1,450,563					1,389,409						3,249,365						3,196,202
Denominator:
Denominator for basic earnings per share - weighted average common shares outstanding			288,109						307,296						290,645						308,403
Denominator for diluted earnings per share - weighted average common shares outstanding			288,109						307,296						290,645						308,403
Basic earnings per share			$	5.04					4.52						11.19						10.37
Diluted earnings per share			$	5.03					4.52						11.18						10.36

(1)The amounts presented relate to Rialto's Carried Interest Incentive Plan and represent the difference between the advanced tax distributions received from the Rialto funds included in the Lennar Other segment and the amount Lennar is assumed to own.

For both the three and nine months ended August 31, 2022 and 2021, there were no options to purchase shares of common stock that were outstanding and anti-dilutive.

(Dollars in thousands)			August 31, 2022						November 30, 2021
4.875% senior notes due December 2023			$	398,969					398,345
4.50% senior notes due 2024			648,794						648,253
5.875% senior notes due 2024			435,296						438,810
4.75% senior notes due 2025			498,781						498,446
5.25% senior notes due 2026			404,561						405,497
5.00% senior notes due 2027			351,837						352,124
4.75% senior notes due 2027			896,071						895,510
4.75% senior notes due 2022			—						573,840
Mortgage notes on land and other debt			423,187						441,513
			$	4,057,496					4,652,338

The carrying amounts of the senior notes in the table above are net of debt issuance costs of $8.2 million and $11.0 million as of August 31, 2022 and November 30, 2021, respectively.

During the three months ended August 31, 2022, the Company redeemed early $575 million aggregate principal amount of its 4.75% senior notes due November 2022. The redemption price, which was paid in cash, was 100% of the principal amount plus accrued but unpaid interest.

In May 2022, the Company amended the credit agreement governing its unsecured revolving credit facility (the “Credit Facility") which increased the commitment from $2.5 billion to $2.575 billion and extended the maturity to May 2027, except for $350 million which matures in April 2024. The Credit Facility has a $425 million accordion feature, subject to additional commitments, thus the maximum borrowings are $3.0 billion. The proceeds available under the Credit Facility, which are subject to specified conditions for borrowing, may be used for working capital and general corporate purposes. The credit agreement also provides that up to $500 million in commitments may be used for letters of credit. Under the Credit Facility agreement, the Company is required to maintain a minimum consolidated tangible net worth, a maximum leverage ratio and either a liquidity or an interest coverage ratio. These ratios are calculated per the Credit Facility agreement, which involves adjustments to GAAP financial measures. In addition to the Credit Facility, the Company has other letter of credit facilities with different financial institutions.

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The Company's processes for posting performance and financial letters of credit and surety bonds are unchanged from the disclosure in the Company's Financial Condition and Capital Resources section in its Form 10-K for the year ended November 30, 2021. The Company's outstanding performance letters of credit and surety bonds are disclosed below:

(In thousands)						August 31, 2022						November 30, 2021
Performance letters of credit						$	1,148,595					924,584
Financial letters of credit						547,210						425,843
Surety bonds						3,894,416						3,553,047
Anticipated future costs primarily for site improvements related to performance surety bonds						2,023,081						1,690,861

Warranty and similar reserves for homes are established at an amount estimated to be adequate to cover potential costs for materials and labor with regard to warranty-type claims expected to be incurred subsequent to the delivery of a home. Reserves are determined based on historical data and trends with respect to similar product types and geographical areas. The activity in the Company’s warranty reserve, which is included in Homebuilding other liabilities, was as follows:

			Three Months Ended												Nine Months Ended
			August 31,												August 31,
(In thousands)			2022						2021						2022						2021
Warranty reserve, beginning of the period			$	377,990					361,741						377,021						341,765
Warranties issued			73,697						55,236						190,704						149,854
Adjustments to pre-existing warranties from changes in estimates (1)			10,301						8,288						16,023						27,048
Payments			(67,395)						(50,290)						(189,155)						(143,692)
Warranty reserve, end of period			$	394,593					374,975						394,593						374,975

(1)The adjustments to pre-existing warranties from changes in estimates during the three and nine months ended August 31, 2022 and 2021 primarily related to specific claims in certain of the Company's homebuilding communities and other adjustments.

The following table presents the carrying amounts and estimated fair values of financial instruments held or issued by the Company at August 31, 2022 and November 30, 2021, using available market information and what the Company believes to be appropriate valuation methodologies. Considerable judgment is required in interpreting market data to develop the estimates of fair value. The use of different market assumptions and/or estimation methodologies might have a material effect on the estimated fair value amounts. The table excludes cash and cash equivalents, restricted cash, receivables, net and accounts payable, all of which had fair values approximating their carrying amounts due to the short maturities and liquidity of these instruments.

									August 31, 2022												November 30, 2021
(In thousands)			Fair Value Hierarchy						Carrying Amount						Fair Value						Carrying Amount						Fair Value
ASSETS
Financial Services:
Loans held-for-investment, net			Level 3						$	38,939					38,950						44,582						44,594
Investments held-to-maturity			Level 3						151,015						155,830						157,808						184,495
LIABILITIES
Homebuilding senior notes and other debts payable, net			Level 2						$	4,057,496					4,042,848						4,652,338						5,046,721
Financial Services notes and other debts payable, net			Level 2						1,487,913						1,486,170						1,726,026						1,726,860
Multifamily notes payable, net			Level 2						16,683						16,683						—						—

The following methods and assumptions are used by the Company in estimating fair values:

Financial Services—The fair values above are based on quoted market prices, if available. The fair values for instruments that do not have quoted market prices are estimated by the Company on the basis of discounted cash flows or other financial information. For notes and other debts payable, the fair values approximate their carrying value due to variable interest pricing terms and the short-term nature of the majority of the borrowings.

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Homebuilding—For senior notes and other debts payable, the fair value of fixed-rate borrowings is primarily based on quoted market prices and the fair value of variable-rate borrowings is based on expected future cash flows calculated using current market forward rates.

Multifamily—For notes payable, the fair values approximate their carrying value due to variable interest pricing terms and the short-term nature of the borrowings.

Fair Value Measurements:

GAAP provides a framework for measuring fair value, expands disclosures about fair value measurements and establishes a fair value hierarchy which prioritizes the inputs used in measuring fair value summarized as follows:

Level 1: Fair value determined based on quoted prices in active markets for identical assets.

Level 2: Fair value determined using significant other observable inputs.

Level 3: Fair value determined using significant unobservable inputs.

The Company’s financial instruments measured at fair value on a recurring basis are summarized below:

			Fair Value Hierarchy						Fair Value at
(In thousands)									August 31, 2022						November 30, 2021
Financial Services Assets:
Residential loans held-for-sale			Level 2						$	1,253,675					1,636,283
LMF Commercial loans held-for-sale			Level 3						6,447						68
Mortgage servicing rights			Level 3						3,356						2,492
Forward options			Level 1						16,004						—
Lennar Other:
Investments in equity securities			Level 1						$	309,037					906,539
Investments available-for-sale			Level 3						35,163						41,654

Residential and LMF Commercial loans held-for-sale in the table above include:

			August 31, 2022												November 30, 2021
(In thousands)			Aggregate Principal Balance												Change in Fair Value						Aggregate Principal Balance												Change in Fair Value
Residential loans held-for-sale			$	1,245,511											8,164						1,586,764												49,519
LMF Commercial loans held-for-sale			6,200												247						—												68

Financial Services residential loans held-for-sale - Fair value is based on independent quoted market prices, where available, or the prices for other mortgage whole loans with similar characteristics. The Company recognizes the fair value of its rights to service a mortgage loan as revenue upon entering into an interest rate lock loan commitment with a borrower. The fair value of these are included in Financial Services’ loans held-for-sale as of August 31, 2022 and November 30, 2021. Fair value of servicing rights is determined based on actual sales of servicing rights on loans with similar characteristics.

LMF Commercial loans held-for-sale - The fair value of loans held-for-sale is calculated from model-based techniques that use discounted cash flow assumptions and the Company’s own estimates of CMBS spreads, market interest rate movements and the underlying loan credit quality. The details and methods of the calculation are unchanged from the fair value disclosure in the Company's Notes to the Financial Statements section in its Form 10-K for the year ended November 30, 2021. These methods use unobservable inputs in estimating a discount rate that is used to assign a value to each loan. While the cash payments on the loans are contractual, the discount rate used and assumptions regarding the relative size of each class in the CMBS capital structure can significantly impact the valuation. Therefore, the estimates used could differ materially from the fair value determined when the loans are sold to a securitization trust.

Mortgage servicing rights - Financial Services records mortgage servicing rights when it sells loans on a servicing-retained basis or through the acquisition or assumption of the right to service a financial asset. The fair value of the mortgage servicing rights is calculated using third-party valuations. The key assumptions, which are generally unobservable inputs, used in the valuation of the mortgage servicing rights include mortgage prepayment rates, discount rates and delinquency rates and are noted below:

Unobservable inputs			As of August 31, 2022						As of November 30, 2021
Mortgage prepayment rate			8%						13%
Discount rate			13%						13%
Delinquency rate			7%						4%

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Forward options - Fair value of forward options is based on independent quoted market prices for similar financial instruments. The fair value of these are included in Financial Services' other assets and the Company recognizes the changes in the fair value of the premium paid as Financial Services' Revenue.

Lennar Other investments in equity securities - The fair value of investments in equity securities was calculated based on independent quoted market prices. The Company’s investments in equity securities were recorded at fair value with all changes in fair value recorded to Lennar Other unrealized gain (loss) from technology investments on the Company’s condensed consolidated statements of operations and comprehensive income.

Lennar Other investments available-for-sale - The fair value of investments available-for-sale is calculated from model-based techniques that use discounted cash flow assumptions and the Company’s own estimates of CMBS spreads, market interest rate movements and the underlying loan credit quality. Loan values are calculated by allocating the change in value of an assumed CMBS capital structure to each loan. The value of an assumed CMBS capital structure is calculated, generally, by discounting the cash flows associated with each CMBS class at market interest rates and at the Company’s own estimate of CMBS spreads.

The changes in fair values for Level 1 and Level 2 financial instruments measured on a recurring basis are shown below by financial instrument and financial statement line item:

			Three Months Ended												Nine Months Ended
			August 31,												August 31,
(In thousands)			2022						2021						2022						2021
Changes in fair value included in Financial Services revenues:
Loans held-for-sale			$	(14,319)					4,196						(41,356)						(26,156)
Mortgage loan commitments			(7,958)						118						18,597						260
Forward contracts			42,781						1,649						34,291						11,934
Forward options			(6)						—						(6)						—
Changes in fair value included in Lennar Other unrealized gain (loss) from technology investments:
Investments in equity securities			$	(85,839)					493,671						(558,974)						690,791
Changes in fair value included in other comprehensive gain (loss), net of tax:
Lennar Other investments available-for-sale			$	342					131						1,146						(495)

Interest on Financial Services loans held-for-sale and LMF Commercial loans held-for-sale measured at fair value is calculated based on the interest rate of the loans and recorded as revenues in the Financial Services’ statement of operations.

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The following table represents the reconciliation of the beginning and ending balance for the Level 3 recurring fair value measurements in the Company's Financial Services segment:

			Three Months Ended
			August 31,
			2022												2021
(In thousands)			Mortgage servicing rights						LMF Commercial loans held-for-sale						Mortgage servicing rights						LMF Commercial loans held-for-sale
Beginning balance			$	3,221					84,205						2,602						163,920
Purchases/loan originations			93						109,850						56						178,669
Sales/loan originations sold, including those not settled			—						(188,266)						—						(226,357)
Disposals/settlements			(54)						—						(127)						(4,092)
Changes in fair value (1)			96						693						(149)						1,391
Interest and principal paydowns			—						(35)						—						(402)
Ending balance			$	3,356					6,447						2,382						113,129

			Nine Months Ended
			August 31,
			2022												2021
(In thousands)			Mortgage servicing rights						LMF Commercial loans held-for-sale						Mortgage servicing rights						LMF Commercial loans held-for-sale
Beginning balance			2,492						68						2,113						193,588
Purchases/loan originations			275						518,345						499						599,465
Sales/loan originations sold, including those not settled			—						(511,733)						—						(665,062)
Disposals/settlements			(320)						—						(1,222)						(11,392)
Changes in fair value (1)			909						247						992						(2,551)
Interest and principal paydowns			—						(480)						—						(919)
Ending balance			$	3,356					6,447						2,382						113,129

(1)Changes in fair value for LMF Commercial loans held-for-sale and Financial Services mortgage servicing rights are included in Financial Services' revenues.

The Company’s assets measured at fair value on a nonrecurring basis are those assets for which the Company has recorded valuation adjustments and write-offs. The fair values included in the table below represent only those assets whose carrying values were adjusted to fair value during the respective periods disclosed. The assets measured at fair value on a nonrecurring basis are summarized below:

									Three Months Ended
									August 31,
									2022																		2021
(In thousands)			Fair Value Hierarchy						Carrying Value						Fair Value						Total Losses, Net (1)						Carrying Value						Fair Value						Total Losses, Net (1)
Non-financial assets - Homebuilding:
Finished homes and construction in progress			Level 3						$	21,268					17,034						(4,234)						3,968						2,287						(1,681)
Land and land under development			Level 3						100,043						93,095						(6,948)						1,625						862						(763)
Investments in unconsolidated entities			Level 3						1,453						—						(1,453)						—						—						—

									Nine Months Ended
									August 31,
									2022																		2021
(In thousands)			Fair Value Hierarchy						Carrying Value						Fair Value						Total Losses, Net (1)						Carrying Value						Fair Value						Total Losses, Net (1)
Non-financial assets - Homebuilding:
Finished homes and construction in progress			Level 3						$	55,292					48,075						(7,217)						25,752						11,015						(14,737)
Land and land under development			Level 3						129,580						111,003						(18,577)						2,145						862						(1,283)
Investments in unconsolidated entities			Level 3						1,453						—						(1,453)						—						—						—

(1)Valuation adjustments for finished homes and construction in progress, and land and land under development were included in Homebuilding costs and expenses. Valuation adjustments related to investments in unconsolidated entities were included in

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homebuilding equity in earnings (loss) from unconsolidated entities and/or Homebuilding other income (expense), net in the Company’s condensed consolidated statements of operations and comprehensive income.

Finished homes and construction in progress are included within inventories. Inventories are stated at cost unless the inventory within a community is determined to be impaired, in which case the impaired inventory is written down to fair value. The Company disclosed its accounting policy related to inventories and its review for indicators of impairment in the Summary of Significant Accounting Policies in its Form 10-K for the year ended November 30, 2021.

The Company estimates the fair value of inventory evaluated for impairment based on market conditions and assumptions made by management at the time the inventory is evaluated, which may differ materially from actual results if market conditions or assumptions change. For example, changes in market conditions and other specific developments or changes in assumptions may cause the Company to re-evaluate its strategy regarding previously impaired inventory, as well as inventory not currently impaired but for which indicators of impairment may arise if market deterioration occurs, and certain other assets that could result in further valuation adjustments and/or additional write-offs of option deposits and pre-acquisition costs due to abandonment of those options contracts.

On a quarterly basis, the Company reviews its active communities for indicators of potential impairments. The table below summarizes communities reviewed for indicators of impairment and communities with valuation adjustments recorded:

																											Communities with valuation adjustments
At or for the Nine Months Ended			# of active communities						# of communities with potential indicator of impairment																		# of communities																		Fair Value (in thousands)						Valuation Adjustments (in thousands)
August 31, 2022			1,182						5																		1																		$	8,815					$	2,710
August 31, 2021			1,192						8																		1																		17,117						11,849

The table below summarizes the most significant unobservable inputs used in the Company's discounted cash flow model to determine the fair value of its communities for which the Company recorded valuation adjustments:

			Nine Months Ended
			August 31,
			2022						2021
Unobservable inputs
Average selling price			$750,000						$635,000
Absorption rate per quarter (homes)			2						11
Discount rate			20%						20%

The Company evaluated the joint venture ("JV") agreements of its JV's that were formed or that had reconsideration events, such as changes in the governing documents or to debt arrangements, during the nine months ended August 31, 2022 and based on the Company's evaluation, there were six variable interest entities ("VIEs") that consolidated with total combined assets of $134.8 million and an immaterial amount of liabilities. During the nine months ended August 31, 2022, there were two VIEs that deconsolidated that had total assets of $128.1 million and an immaterial amount of liabilities.

The carrying amount of the Company's consolidated VIEs' assets and non-recourse liabilities are disclosed in the footnote to the condensed consolidated balance sheets.

A VIE’s assets can only be used to settle obligations of that VIE. The VIEs are not guarantors of the Company’s senior notes or other debts payable. The assets held by a VIE usually are collateral for that VIE’s debt. The Company and other partners do not generally have an obligation to make capital contributions to a VIE unless the Company and/or the other partner(s) have entered into debt guarantees with a VIE’s lenders. Other than debt guarantee agreements with a VIE’s lenders, there are no liquidity arrangements or agreements to fund capital or purchase assets that could require the Company to provide financial support to a VIE. While the Company has option contracts to purchase land from certain of its VIEs, the Company is not required to purchase the assets and could walk away from the contracts.

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Unconsolidated VIEs

The Company’s recorded investments in VIEs that are unconsolidated and its estimated maximum exposure to loss were as follows:

			August 31, 2022												November 30, 2021
(In thousands)			Investments in Unconsolidated VIEs						Lennar’s Maximum Exposure to Loss						Investments in Unconsolidated VIEs						Lennar’s Maximum Exposure to Loss
Homebuilding (1)			$	552,942					734,483						107,323						301,619
Multifamily (2)			572,487						599,749						579,388						611,937
Financial Services (3)			151,015						151,015						157,808						157,808
Lennar Other (4)			56,328						56,328						12,680						12,680
			$	1,332,772					1,541,575						857,199						1,084,044

(1)As of August 31, 2022 and November 30, 2021, the maximum exposure to loss of Homebuilding's investments in unconsolidated VIEs was limited to its investments in unconsolidated VIEs, except with regard to the Company's remaining $92.3 million and $106.1 million, respectively, commitment to fund capital in Upward America, and $88.4 million and $87.9 million, respectively, of receivables relating to a short-term loan and management fee owed to the Company by Upward America.

(2)As of August 31, 2022 and November 30, 2021, the maximum exposure to loss of Multifamily's investments in unconsolidated VIEs was primarily limited to its investments in the unconsolidated VIEs. The maximum exposure for LMV 1 and LMV II in addition to the investment also included to the remaining combined equity commitment of $20.5 million and $23.1 million as of August 31, 2022 and November 30, 2021, respectively, for future expenditures related to the construction and development of its projects.

(3)As of August 31, 2022 and November 30, 2021, the maximum exposure to loss of the Financial Services segment was limited to its investment in the unconsolidated VIEs and related to the Financial Services' CMBS investments held-to-maturity.

(4)As of August 31, 2022, the maximum recourse exposure to loss of the Lennar Other segment was limited to its investments in the unconsolidated VIEs.

The Company and its JV partners generally fund JVs as needed and in accordance with business plans to allow the entities to finance their activities. Because such JVs are expected to make future capital calls in order to continue to finance their activities, the entities are determined to be VIEs as of August 31, 2022 in accordance with ASC 810 due to insufficient equity at risk. While these entities are VIEs, the Company has determined that the power to direct the activities of the VIEs that most significantly impact the VIEs’ economic performance is generally shared and the Company and its partners are not de-facto agents. While the Company generally manages the day-to-day operations of the VIEs, each of these VIEs has an executive committee made up of representatives from each partner. The members of the executive committee have equal votes and major decisions require unanimous consent and approval from all members. The Company does not have the unilateral ability to exercise participating voting rights without partner consent.

There are no liquidity arrangements or agreements to fund capital or purchase assets that could require the Company to provide financial support to the VIEs. Except for the unconsolidated VIEs discussed above, the Company and the other partners did not guarantee any debt of the other unconsolidated VIEs. While the Company has option contracts to purchase land from certain of its unconsolidated VIEs, the Company is not required to purchase the assets and could walk away from the contracts.

Option Contracts

The Company has access to land through option contracts, which generally enable it to control portions of properties owned by third parties (including land funds) and unconsolidated entities until the Company has determined whether to exercise the options.

The Company evaluates all option contracts for land to determine whether they are VIEs and, if so, whether the Company is the primary beneficiary of certain of these option contracts. Although the Company does not have legal title to the optioned land, if the Company is deemed to be the primary beneficiary or makes a significant deposit for optioned land, it may need to consolidate the land under option at the purchase price of the optioned land.

During the nine months ended August 31, 2022, consolidated inventory not owned increased by $788.7 million with a corresponding increase to liabilities related to consolidated inventory not owned in the accompanying condensed consolidated balance sheet as of August 31, 2022. The increase was primarily due to additions in the nine months ended August 31, 2022 as the Company focused on increasing its controlled homesites, partially offset by takedowns. To reflect the purchase price of the homesite takedowns, the Company had a net reclass related to option deposits from consolidated inventory not owned to finished homes and construction in progress in the accompanying condensed consolidated balance sheet as of August 31, 2022. The liabilities related to consolidated inventory not owned primarily represent the difference between the option exercise prices for the optioned land and the Company’s cash deposits.

The Company's exposure to losses on its option contracts with third parties and unconsolidated entities were as follows:

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The Company is party to various claims, legal actions and complaints arising in the ordinary course of business. In the opinion of management, the disposition of these matters will not have a material adverse effect on the Company’s consolidated financial statements. From time to time, the Company is also a party to various lawsuits involving purchases and sales of real property. These lawsuits often include claims regarding representations and warranties made in connection with the transfer of properties and disputes regarding the obligation to purchase or sell properties.

The Company does not believe that the ultimate resolution of these claims or lawsuits will have a material adverse effect on its business or financial position. However, the financial effect of litigation concerning purchases and sales of property may depend upon the value of the subject property, which may have changed from the time the agreement for purchase or sale was entered into.

Leases

The Company has entered into agreements to lease certain office facilities and equipment under operating leases. The Company recognizes lease expense for these leases on a straight-line basis over the lease term. Right-of-use ("ROU") assets and lease liabilities are recorded on the balance sheet for all leases, except leases with an initial term of 12 months or less. Many of the Company's leases include options to renew. The exercise of lease renewal options is at the Company's option and therefore renewal option payments have not been included in the ROU assets or lease liabilities. The following table includes additional information about the Company's leases:

(Dollars in thousands)			August 31, 2022						November 30, 2021
Right-of-use assets			$	151,975					155,616
Lease liabilities			160,607						163,513
Weighted-average remaining lease term (in years)			8.1						8.2
Weighted-average discount rate			3.0		%				2.8		%

Future minimum payments under the noncancellable leases in effect at August 31, 2022 were as follows:

(In thousands)			Lease Payments
2022			$	8,520
2023			32,581
2024			26,967
2025			22,752
2026			17,972
2027 and thereafter			72,359
Total future minimum lease payments (1)			$	181,151
Less: Interest (2)			20,544
Present value of lease liabilities (2)			$	160,607

(1)Total future minimum lease payments exclude variable lease costs of $26.4 million and short-term lease costs of $2.3 million.

(2)The Company's leases do not include a readily determinable implicit rate. As such, the Company has estimated the discount rate for these leases to determine the present value of lease payments at the lease commencement date or as of December 1, 2019, which was the effective date of ASU 2016-02. As of August 31, 2022, the weighted average remaining lease term and weighted average discount rate used in calculating the lease liabilities were 8.1 years and 3.0%, respectively. The Company recognized the lease liabilities on its condensed consolidated balance sheets within accounts payable and other liabilities of the respective segments.

The Company's rental expense and payments on lease liabilities were as follows:

			Nine Months Ended
			August 31,
(In thousands)			2022						2021
Rental expense			$	78,244					63,232
Payment on lease liabilities			23,170						22,174

On occasion, the Company may sublease rented space which is no longer used for the Company's operations. For both the nine months ended August 31, 2022 and 2021, the Company had an immaterial amount of sublease income.

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