What changed in this filing

/stocks — the workspaceLOADING

Item 1. Financial Statements

2021-04-01 compared with 2020-10-01 · 371 added, 680 removed, 444 unchanged (70% of the section changed)

3 unchanged sentences

(Dollars in thousands)

February 28, November 30,

2021 (1) 2020 (1)

Homebuilding:

7 unchanged sentences

Investments in unconsolidated entities 1,077,353 953,177

Goodwill 3,442,359 3,442,359

Other assets 1,162,564 1,190,793

26,114,641 25,529,425

Financial Services 2,217,551 2,708,118

Multifamily 1,183,720 1,175,908

Lennar Other 1,036,068 521,726

Total assets $ 30,551,980 29,935,177

(1) Under certain provisions of Accounting Standards Codification ("ASC") Topic 810, Consolidations ("ASC 810"), the Company is required to separately disclose on its condensed consolidated balance sheets the assets owned by consolidated variable interest entities ("VIEs") and liabilities of consolidated VIEs as to which neither Lennar Corporation, nor any of its subsidiaries, has any obligations.

As of August 31, 2020 , total assets include $ 960.5 million related to consolidated VIEs of which $ 21.3 million is included in Homebuilding cash and cash equivalents, $ 0.1 million in Homebuilding receivables, net, $ 15.8 million in Homebuilding finished homes and construction in progress, $ 481.0 million in Homebuilding land and land under development, $ 386.6 million in Homebuilding consolidated inventory not owned, $ 2.1 million in Homebuilding investments in unconsolidated entities, $ 8.9 million in Homebuilding other assets and $ 44.7 million in Multifamily assets.

As of November 30, 2019 , total assets include $ 980.2 million related to consolidated VIEs of which $ 15.5 million is included in Homebuilding cash and cash equivalents, $ 0.2 million in Homebuilding receivables, net, $ 97.5 million in Homebuilding finished homes and construction in progress, $ 283.2 million in Homebuilding land and land under development, $ 301.0 million in Homebuilding consolidated inventory not owned, $ 2.5 million in Homebuilding investments in unconsolidated entities, $ 10.0 million in Homebuilding other assets, $ 221.2 million in Financial Services assets and $ 49.1 million in Multifamily assets.

As of February 28, 2021, total assets include $ 1.0 billion related to consolidated VIEs of which $ 39.8 million is included in Homebuilding cash and cash equivalents, $ 14.2 million in Homebuilding finished homes and construction in progress, $ 516.9 million in Homebuilding land and land under development, $ 288.6 million in Homebuilding consolidated inventory not owned, $ 1.7 million in Homebuilding investments in unconsolidated entities, $ 145.8 million in Homebuilding other assets and $ 17.8 million in Multifamily assets.

As of November 30, 2020, total assets include $ 1.1 billion related to consolidated VIEs of which $ 32.1 million is included in Homebuilding cash and cash equivalents, $ 0.1 million in Homebuilding receivables, net, $ 14.2 million in Homebuilding finished homes and construction in progress, $ 486.8 million in Homebuilding land and land under development, $ 426.3 million in Homebuilding consolidated inventory not owned, $ 1.6 million in Homebuilding investments in unconsolidated entities, $ 120.6 million in Homebuilding other assets and $ 39.9 million in Multifamily assets.

See accompanying notes to condensed consolidated financial statements.

2 unchanged sentences

(In thousands, except share amounts)

February 28, November 30,

2021 (2) 2020 (2)

LIABILITIES AND EQUITY

4 unchanged sentences

Other liabilities 2,459,332 2,225,864

10,144,001 9,925,651

Financial Services 1,113,083 1,644,248

Multifamily 235,651 252,911

Lennar Other 41,794 12,966

Total liabilities 11,534,529 11,835,776

2 unchanged sentences

Class A common stock of $ 0.10 par value;

August 31, 2020 and November 30, 2019 - 400,000,000 shares;

August 31, 2020 - 298,935,646 shares and November 30, 2019 - 297,119,153 shares

February 28, 2021 and November 30, 2020 - 400,000,000 shares;

February 28, 2021 - 300,471,893 shares and November 30, 2020 - 298,942,836 shares

30,047 29,894

Class B common stock of $ 0.10 par value;

August 31, 2020 and November 30, 2019 - 90,000,000 shares;

August 31, 2020 - 39,443,130 shares and November 30, 2019 - 39,443,064 shares

February 28, 2021 and November 30, 2020 - 90,000,000 shares;

February 28, 2021 - 39,443,168 shares and November 30, 2020 - 39,443,168 shares

Additional paid-in capital 8,724,192 8,676,056

1 unchanged sentence

Treasury stock, at cost;

August 31, 2020 - 23,819,899 shares of Class A common stock and 1,821,964 shares of Class B common stock;

February 28, 2021 - 24,711,432 shares of Class A common stock and 1,822,016 shares of Class B common stock;

November 30, 2020 - 23,864,589 shares of Class A common stock and 1,822,016 shares of Class B common stock

Accumulated other comprehensive income (loss)

( 1,348,710 ) ( 1,279,227 )

Accumulated other comprehensive loss ( 1,747 ) ( 805 )

Total stockholders’ equity 18,896,246 17,994,856

Noncontrolling interests 121,205 104,545

Total equity 19,017,451 18,099,401

Total liabilities and equity $ 30,551,980 29,935,177

(2) Under certain provisions of ASC 810, the Company is required to separately disclose on its condensed consolidated balance sheets the assets owned by consolidated VIEs and liabilities of consolidated VIEs as to which neither Lennar Corporation, nor any of its subsidiaries, has any obligations.

As of August 31, 2020 , total liabilities include $ 473.8 million related to consolidated VIEs as to which there was no recourse against the Company, of which $ 20.0 million is included in Homebuilding accounts payable, $ 315.4 million in Homebuilding liabilities related to consolidated inventory not owned, $ 118.4 million in Homebuilding senior notes and other debts payable, $ 9.3 million in Homebuilding other liabilities and $ 10.7 million in Multifamily liabilities.

As of November 30, 2019 , total liabilities include $ 549.7 million related to consolidated VIEs as to which there was no recourse against the Company, of which $ 13.7 million is included in Homebuilding accounts payable, $ 247.5 million in Homebuilding liabilities related to consolidated inventory not owned, $ 47.1 million in Homebuilding senior notes and other debt payable, $ 8.9 million in Homebuilding other liabilities, $ 231.1 million in Financial Services liabilities and $ 1.4 million in Multifamily liabilities.

As of February 28, 2021, total liabilities include $ 417.3 million related to consolidated VIEs as to which there was no recourse against the Company, of which $ 33.4 million is included in Homebuilding accounts payable, $ 227.2 million in Homebuilding liabilities related to consolidated inventory not owned, $ 146.6 million in Homebuilding senior notes and other debts payable, $ 9.9 million in Homebuilding other liabilities and $ 0.2 million in Multifamily liabilities.

As of November 30, 2020, total liabilities include $ 528.5 million related to consolidated VIEs as to which there was no recourse against the Company, of which $ 28.4 million is included in Homebuilding accounts payable, $ 351.4 million in Homebuilding liabilities related to consolidated inventory not owned, $ 129.1 million in Homebuilding senior notes and other debt payable, $ 9.9 million in Homebuilding other liabilities and $ 9.8 million in Multifamily liabilities.

See accompanying notes to condensed consolidated financial statements.

3 unchanged sentences

Three Months Ended

Nine Months Ended

February 28, February 29,

Homebuilding $ 4,943,056 4,172,116

Financial Services 244,069 198,661

Multifamily 131,443 132,617

Lennar Other 6,900 1,943

Total revenues 5,325,468 4,505,337

Costs and expenses:

Homebuilding 4,118,286 3,697,806

Financial Services 97,862 151,344

Multifamily 131,049 137,348

Lennar Other 4,252 2,574

Corporate general and administrative 110,531 82,634

Charitable foundation contribution 12,314 4,213

Total costs and expenses 4,474,294 4,075,919

1 unchanged sentence

Homebuilding other income (expense), net 12,975 ( 9,366 )

Financial Services gain on deconsolidation

Multifamily equity in earnings (loss) from unconsolidated entities and other gain ( 1,268 ) 6,516

Lennar Other equity in earnings (loss) from unconsolidated entities

Lennar Other income (expense), net

Lennar Other unrealized gain 469,745 —

Lennar Other equity in earnings (loss) from unconsolidated entities and other income (expense), net ( 1,047 ) 1,530

Earnings before income taxes 1,327,014 423,552

1 unchanged sentence

Net earnings (including net earnings (loss) attributable to noncontrolling interests)

1,016,909 391,223

Net earnings (loss) attributable to noncontrolling interests 15,540 ( 7,229 )

Net earnings attributable to Lennar $ 1,001,369 398,452

Other comprehensive income (loss), net of tax:

Net unrealized gain (loss) on securities available-for-sale

Reclassification adjustments for loss included in earnings, net of tax

Total other comprehensive income (loss), net of tax

Other comprehensive loss, net of tax:

Net unrealized loss on securities available-for-sale $ ( 942 ) ( 46 )

Total other comprehensive loss, net of tax $ ( 942 ) ( 46 )

Total comprehensive income attributable to Lennar $ 1,000,427 398,406

4 unchanged sentences

Lennar Corporation and Subsidiaries

Condensed Consolidated Statements of Cash Flows (Continued)

Condensed Consolidated Statements of Cash Flows

(In thousands)

Nine Months Ended

Three Months Ended

February 28, February 29,

Cash flows from operating activities:

Net earnings (including net loss attributable to noncontrolling interests)

Net earnings (including net earnings (loss) attributable to noncontrolling interests) $ 1,016,909 391,223

Adjustments to reconcile net earnings to net cash provided by operating activities:

1 unchanged sentence

Amortization of discount/premium and accretion on debt, net ( 2,361 ) ( 6,943 )

Equity in loss (earnings) from unconsolidated entities

Equity in loss from unconsolidated entities 7,897 2,572

Distributions of earnings from unconsolidated entities 4,234 36,922

1 unchanged sentence

Deferred income tax expense 114,917 57,006

Lennar Other unrealized gain ( 469,745 ) —

Loans held-for-sale unrealized loss 35,021 7,493

Gain on sale of other assets, operating properties and equipment and real estate owned ( 1,167 ) ( 2,910 )

Loss on consolidation

Gain on deconsolidation of previously consolidated entity

Gain on sale of interest in unconsolidated entity and other Multifamily gain ( 19,184 ) ( 4,661 )

Gain on sale of Financial Services' portfolio/businesses

Valuation adjustments and write-offs of option deposits and pre-acquisition costs

1 unchanged sentence

Decrease in receivables 45,649 245,694

Decrease (increase) in inventories, excluding valuation adjustments and write-offs of option deposits and pre-acquisition costs

(Increase) decrease in other assets

Decrease (increase) in loans held-for-sale

Increase (decrease) in accounts payable and other liabilities

Increase in inventories, excluding valuation adjustments and write-offs of option deposits and pre-acquisition costs ( 862,120 ) ( 777,012 )

Increase in other assets ( 100,486 ) ( 121,506 )

Decrease in loans held-for-sale 360,582 466,750

Increase in accounts payable and other liabilities 183,584 11,564

Net cash provided by operating activities 385,508 382,976

1 unchanged sentence

Net additions of operating properties and equipment ( 9,245 ) ( 17,909 )

Proceeds from the sale of operating properties and equipment, other assets and real estate owned

Proceeds from sale of investment in unconsolidated entity

Proceeds from sale of Financial Services' portfolio/businesses

Investments in and contributions to unconsolidated entities/deconsolidation of previously consolidated entity

Proceeds from the sale of operating properties and equipment, other assets 32,002 13,067

Investments in and contributions to unconsolidated entities ( 224,112 ) ( 78,607 )

Distributions of capital from unconsolidated entities 83,241 86,324

Receipts of principal payments on loans receivable and other

Proceeds from sale of commercial mortgage-backed securities bonds 11,307 3,248

Decrease (increase) in Financial Services loans held-for-investment, net

Decrease in Financial Services loans held-for-investment, net 3,777 2,733

Purchases of investment securities — ( 8,107 )

Proceeds from maturities/sales of investments securities

Proceeds from maturities/sales of investment securities 8,994 10,753

Other receipts, net 684 1,677

Net cash used in investing activities

Net cash (used in) provided by investing activities $ ( 93,352 ) 13,179

See accompanying notes to condensed consolidated financial statements.

2 unchanged sentences

(In thousands)

Nine Months Ended

Three Months Ended

February 28, February 29,

Cash flows from financing activities:

1 unchanged sentence

Net repayments under warehouse facilities ( 500,849 ) ( 755,602 )

Redemption of senior notes

Principal payments on notes payable and other borrowings ( 55,350 ) ( 93,250 )

Proceeds from liabilities related to consolidated inventory not owned 67,432 —

Proceeds from other borrowings 8,903 27,577

Net proceeds related to other liabilities

Conversions, exchanges and redemption of convertible senior notes

Payments related to other liabilities — ( 5,480 )

Receipts related to noncontrolling interests 8,896 88,913

1 unchanged sentence

Common stock:

Repurchases ( 69,480 ) ( 295,988 )

Dividends ( 77,843 ) ( 39,240 )

Net cash used in financing activities $ ( 629,688 ) ( 789,804 )

Net increase (decrease) in cash and cash equivalents and restricted cash

Net decrease in cash and cash equivalents and restricted cash ( 337,532 ) ( 393,649 )

Cash and cash equivalents and restricted cash at beginning of period 2,932,730 1,468,691

1 unchanged sentence

Summary of cash and cash equivalents and restricted cash:

Homebuilding $ 2,421,411 784,950

Financial Services 117,856 246,712

Multifamily 25,644 15,790

Lennar Other 3,888 5,030

Homebuilding restricted cash 17,878 8,666

Financial Services restricted cash 8,521 13,894

$ 2,595,198 1,075,042

Supplemental disclosures of non-cash investing and financing activities:

2 unchanged sentences

Non-cash contributions to unconsolidated entities — 13,859

Consolidation/deconsolidation of unconsolidated/consolidated entities, net:

Financial Services assets

Financial Services liabilities

Financial Services noncontrolling interests

Operating properties and equipment and other assets

Investments in unconsolidated entities

Notes payable

Other liabilities

Noncontrolling interests

See accompanying notes to condensed consolidated financial statements.

3 unchanged sentences

Basis of Consolidation

The accompanying condensed consolidated financial statements include the accounts of Lennar Corporation and all subsidiaries, partnerships and other entities in which Lennar Corporation has a controlling interest and variable interest entities ("VIEs") (see Note 10 of the Notes to the Condensed Consolidated Financial Statements) in which Lennar Corporation is deemed to be the primary beneficiary (the "Company").

The Company’s investments in both unconsolidated entities in which a significant, but less than controlling, interest is held and in VIEs in which the Company is not deemed to be the primary beneficiary, are accounted for by the equity method.

All intercompany transactions and balances have been eliminated in 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, the instructions to Form 10-Q and Article 10 of Regulation S-X.

1 unchanged sentence

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, 2020.

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, 2020.

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 the three and nine months ended August 31, 2020 are not necessarily indicative of the results to be expected for the full year.

The condensed consolidated statements of operations for the three months ended February 28, 2021 are not necessarily indicative of the results to be expected for the full year.

Use of Estimates

2 unchanged sentences

Cash and Cash Equivalents

Homebuilding cash and cash equivalents as of August 31, 2020 and November 30, 2019 included $ 396.9 million and $ 565.8 million , respectively, of cash held in escrow for approximately three days .

Homebuilding cash and cash equivalents as of February 28, 2021 and November 30, 2020 included $ 752.5 million and $ 314.3 million , respectively, of cash held in escrow for approximately three days .

Share-based Payments

During the three and nine months ended August 31, 2020 , the Company granted employees 0.9 million and 1.8 million nonvested shares, respectively.

During both the three and nine months ended August 31, 2019 , the Company granted employees 2.1 million nonvested shares.

During the three months ended February 28, 2021 and February 29, 2020, the Company granted employees 1.4 million and 0.9 million nonvested shares, respectively.

Recently Adopted Accounting Pronouncements

In March 2016, the Financial Accounting Standards Board ("FASB") issued ASU 2016-02, Leases ("ASU 2016-02"), which provides guidance for accounting for leases.

ASU 2016-02 requires lessees to classify leases as either finance or operating leases and to record a right-of-use (“ROU”) asset and a lease liability for all leases with a term greater than 12 months regardless of the lease classification.

The lease classification determined whether the lease expense was recognized based on an effective interest rate method or on a straight line basis over the term of the lease.

Accounting for lessors remains largely unchanged from current GAAP.

ASU 2016-02 was effective for the Company beginning December 1, 2019.

The Company elected the available practical expedients on adoption.

Additionally, in preparation for adoption of the standard, the Company implemented internal controls and key system functionality to enable the preparation of financial information.

The standard did not have a material impact on our condensed consolidated statements of operations and comprehensive income (loss) or our condensed consolidated statements of cash flows.

As a result of the adoption, as of December 1, 2019, the Company has recorded $ 150.7 million of ROU assets and $ 159.7 million of lease liabilities on its condensed consolidated balance sheets within other assets and accounts payable or other liabilities of the respective segments.

In June 2016, the Financial Accounting Standards Board ("FASB") issued Accounting Standard Update ("ASU") 2016-13, Financial Instruments - Credit Losses (Topic 326):

Measurement of Credit Losses on Financial Instruments ("ASU 2016-13").

ASU 2016-13 significantly changes the impairment model for most financial assets and certain other instruments.

ASU 2016-13 requires immediate recognition of estimated credit losses expected to occur over the remaining life of many financial assets, which generally results in earlier recognition of allowances for credit losses on loans and other financial instruments.

ASU 2016-13 was effective for the Company's fiscal year beginning December 1, 2020.

The adoption of ASU 2016-13 did not have a material impact on the Company's condensed consolidated financial statements.

In January 2017, the FASB issued ASU 2017-04, Intangibles - Goodwill and Other (Topic 350), Simplifying the Accounting for Goodwill Impairment ("ASU 2017-04").

ASU 2017-04 removes the requirement to perform a hypothetical purchase price allocation to measure goodwill impairment.

A goodwill impairment will now be the amount by which a reporting unit's carrying value exceeds its fair value, not to exceed the carrying amount of goodwill.

ASU 2017-04 was effective for the Company’s fiscal year beginning December 1, 2020.

The impact of the adoption of ASU 2017-04 did not have a material impact on the Company's consolidated financial statements.

New 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 will be effective for the Company’s fiscal year beginning December 1, 2022.

The Company is currently evaluating the impact the adoption of ASU 2019-12 will have on the Company's condensed consolidated financial statements.

Reclassifications

Certain prior year amounts in the condensed consolidated financial statements have been reclassified to conform with the 2021 presentation.

The Company's segments were adjusted, effective December 1, 2019, to reflect the North Carolina divisions within the Central segment, which were previously part of the East segment.

This was due to a change in operations.

This reclassification was between segments and had no impact on the Company's total assets, total equity, revenue or net income in the condensed consolidated financial statements.

The Company reclassed the balance of its investment in Doma, formerly States Title, to which the Company sold the majority of the Financial Services segment's retail title agency business and title insurance underwriter in the first

Lennar Corporation and Subsidiaries

Notes to Condensed Consolidated Financial Statements (unaudited) (Continued)

quarter of 2019, from the Financial Services segment to the Lennar Other segment in the Condensed Consolidated Balance Sheets for all periods presented.

This was reclassed to be included in our strategic technology investments as the entity has announced that it will merge with a publicly traded special purpose acquisition company.

In addition, the Company reflected its contributions to its charitable foundation in a new line on its Condensed Consolidated Statements of Operations for all periods presented.

This was previously reflected in the Corporate general and administrative line.

These reclassifications had no impact on the Company's total assets, total equity, revenues or net earnings in its condensed consolidated financial statements.

(2) Operating and Reporting Segments

3 unchanged sentences

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:

(1) Homebuilding East

(2) Homebuilding Central

(3) Homebuilding Texas

(4) Homebuilding West

Homebuilding segments:

(1) East (2) Central (3) Texas (4) West

(5) Financial Services

2 unchanged sentences

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

(In thousands)

August 31, 2020

(In thousands) February 28, 2021

Homebuilding Financial

Services Multifamily Lennar

Cash and cash equivalents $ 2,421,411 117,856 25,644 3,888 2,568,799

1 unchanged sentence

Receivables, net (1) 300,134 495,484 96,842 — 892,460

Inventories 17,692,942 — 289,531 — 17,982,473

Loans held-for-sale (2) — 1,094,600 — — 1,094,600

Investments in equity securities (3) — — — 666,956 666,956

Investments available-for-sale (4) — — — 41,247 41,247

Loans held-for-investment, net — 69,973 — — 69,973

Investments held-to-maturity — 163,290 — — 163,290

Investments available-for-sale (3)

Investments in unconsolidated entities 1,077,353 — 704,964 315,617 2,097,934

Goodwill 3,442,359 189,699 — — 3,632,058

Other assets 1,162,564 78,128 66,739 8,360 1,315,791

$ 26,114,641 2,217,551 1,183,720 1,036,068 30,551,980

Notes and other debts payable, net $ 5,976,168 963,070 — 1,906 6,941,144

Other liabilities 4,167,833 150,013 235,651 39,888 4,593,385

$ 10,144,001 1,113,083 235,651 41,794 11,534,529

Lennar Corporation and Subsidiaries

Notes to Condensed Consolidated Financial Statements (unaudited) (Continued)

(In thousands)

November 30, 2019

(In thousands) November 30, 2020

Homebuilding Financial

Services Multifamily Lennar

Cash and cash equivalents $ 2,703,986 116,171 38,963 3,918 2,863,038

1 unchanged sentence

Receivables, net (1) 298,671 552,779 86,629 — 938,079

Inventories 16,925,228 — 249,920 — 17,175,148

Loans held-for-sale (2) — 1,490,105 — — 1,490,105

Investments in equity securities (3) — — — 68,771 68,771

Investments available-for-sale (4) — — — 53,497 53,497

Loans held-for-investment, net — 72,626 — — 72,626

Investments held-to-maturity — 164,230 — — 164,230

Investments available-for-sale (3)

Investments in unconsolidated entities 953,177 — 724,647 387,097 2,064,921

Goodwill 3,442,359 189,699 — — 3,632,058

Other assets 1,190,793 68,027 75,749 8,443 1,343,012

$ 25,529,425 2,708,118 1,175,908 521,726 29,935,177

Notes and other debts payable, net $ 5,955,758 1,463,919 — 1,906 7,421,583

Other liabilities 3,969,893 180,329 252,911 11,060 4,414,193

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, 2020 and November 30, 2019 , respectively.

$ 9,925,651 1,644,248 252,911 12,966 11,835,776

(1) Receivables, net for Financial Services primarily related to loans sold to investors for which the Company had not yet been paid as of February 28, 2021 and November 30, 2020, 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 $ 85.1 million and $ 61.6 million without readily available fair values as of February 28, 2021 and November 30, 2020, 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.

Lennar Other investments in unconsolidated entities decreased primarily due to a $ 25.0 million write-down of assets held by Rialto legacy funds because of the disruption in the capital markets as a result of the coronavirus pandemic ("COVID-19") and the economic shutdown.

As of August 31, 2020 and November 30, 2019 , Financial Services other assets included mortgage loan commitments carried at fair value of $ 40.5 million and $ 16.3 million , respectively, and mortgage servicing rights carried at fair value of $ 1.4 million and $ 24.7 million , respectively.

As of August 31, 2020 and November 30, 2019 , Financial Services other liabilities included $ 67.3 million and $ 60.7 million , respectively, of certain of the Company’s self-insurance reserves related to construction defects, general liability and workers’ compensation.

In addition, as of August 31, 2020 and November 30, 2019 , Financial Services other liabilities also included forward contracts carried at fair value of $ 4.9 million and $ 3.9 million , respectively.

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

Three Months Ended August 31, 2020

(In thousands)

Financial Services

Corporate and

Operating earnings (loss)

Corporate general and administrative expenses

Earnings (loss) before income taxes

Three Months Ended August 31, 2019

Operating earnings

Corporate general and administrative expenses

Earnings before income taxes

Lennar Corporation and Subsidiaries

Notes to Condensed Consolidated Financial Statements (unaudited) (Continued)

Nine Months Ended August 31, 2020

(In thousands)

Financial Services

Corporate and

Three Months Ended February 28, 2021

(In thousands) Homebuilding Financial Services Multifamily Lennar Other Corporate and

unallocated Total

Revenues $ 4,943,056 244,069 131,443 6,900 — 5,325,468

Operating earnings (loss) 833,180 146,207 ( 874 ) 471,346 — 1,449,859

Corporate general and administrative expenses — — — — 110,531 110,531

Charitable foundation contribution — — — — 12,314 12,314

Earnings (loss) before income taxes 833,180 146,207 ( 874 ) 471,346 ( 122,845 ) 1,327,014

Nine Months Ended August 31, 2019

Three Months Ended February 29, 2020

Revenues $ 4,172,116 198,661 132,617 1,943 — 4,505,337

Operating earnings 460,398 47,317 1,785 899 — 510,399

Corporate general and administrative expenses — — — — 82,634 82,634

Charitable foundation contribution — — — — 4,213 4,213

Earnings before income taxes 460,398 47,317 1,785 899 ( 86,847 ) 423,552

Operating loss for Lennar Other for the nine months ended August 31, 2020 included a $ 25.0 million write-down of assets held by Rialto legacy funds because of the disruption in the capital markets as a result of COVID-19 and the economic shutdown.

Homebuilding Segments

2 unchanged sentences

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.

Lennar Corporation and Subsidiaries

Notes to Condensed Consolidated Financial Statements (unaudited) (Continued)

(expense), net, less the cost of homes sold and land sold, and selling, general and administrative expenses incurred by the segment.

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

1 unchanged sentence

Georgia, Illinois, Indiana, Maryland, Minnesota, North Carolina and Virginia

Arizona, California, Colorado, Nevada, Oregon, Utah and Washington

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

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)

Corporate and Unallocated

Total Homebuilding

Balance at August 31, 2020

Balance at November 30, 2019

Lennar Corporation and Subsidiaries

Notes to Condensed Consolidated Financial Statements (unaudited) (Continued)

(In thousands) East Central Texas West Other Corporate and Unallocated Total Homebuilding

February 28, 2021 $ 5,540,055 3,561,065 2,353,652 11,101,983 1,314,990 2,242,896 26,114,641

November 30, 2020 5,308,114 3,438,600 2,150,916 10,504,374 1,301,618 2,825,803 25,529,425

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

Three Months Ended August 31, 2020

(In thousands)

Total Homebuilding

Operating earnings (loss)

Three Months Ended August 31, 2019

Operating earnings (loss)

Nine Months Ended August 31, 2020

(In thousands)

Total Homebuilding

Three Months Ended February 28, 2021

(In thousands) East Central Texas West Other Total Homebuilding

$ 1,355,942 928,442 644,078 2,009,579 5,015 4,943,056

Operating earnings (loss)

Nine Months Ended August 31, 2019

262,083 132,023 129,643 321,706 ( 12,275 ) 833,180

Three Months Ended February 29, 2020

$ 1,152,332 789,510 473,228 1,748,769 8,277 4,172,116

Operating earnings (loss)

148,754 55,723 53,073 224,907 ( 22,059 ) 460,398

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, formerly Rialto Mortgage Finance.

The Financial Services segment sells substantially all of the residential loans it originates within a short period of time in the secondary mortgage market.

The segment applies residential mortgage financing underwriting standards it believes are in-line with industry standards.

The majority of the residential loans are sold 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.

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, 2020 , 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

At February 28, 2021, 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:

March 2021(1) $ 100,000

June 2021 600,000

July 2021 200,000

December 2021 500,000

Total - Residential facilities

3 unchanged sentences

Total - LMF Commercial facilities

Includes $ 50.0 million LMF Commercial warehouse repurchase facility used to finance the origination of floating rate accrual loans, which are reported as accrual loans within loans held-for-investment, net.

There were borrowings under this facility of $ 11.4 million as of August 31, 2020 .

(1) Subsequent to February 28, 2021, the maturity due date was extended to May 2021.

(2) Includes $11.4 million warehouse repurchase facility used by LMF Commercial to finance the origination of floating rate accrual loans, which are reported as accrual loans within loans held-for-investment, net.

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.

3 unchanged sentences

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 a 75% interest in the originated commercial loans financed.

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, 2020

November 30, 2019

(In thousands) February 28, 2021 November 30, 2020

Borrowings under the residential facilities $ 631,784 1,185,797

Collateral under the residential facilities

653,698 1,231,619

Borrowings under the LMF Commercial facilities

178,627 124,617

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.

10 unchanged sentences

Three Months Ended

Nine Months Ended

(In thousands)

(In thousands) February 28, 2021 February 29, 2020

Loan origination liabilities, beginning of period $ 7,569 9,364

3 unchanged sentences

LMF Commercial - loans held-for-sale

During the nine months ended August 31, 2020 , LMF Commercial originated commercial loans with a total principal balance of $ 582.0 million , all of which were recorded as loans held-for-sale and sold $ 622.3 million of commercial loans into four separate securitizations.

As of August 31, 2020 , there were no unsettled transactions.

During the nine months ended August 31, 2019 , LMF Commercial originated commercial loans with a total principal balance of $ 984.5 million , of which $ 969.2 million were recorded as loans held-for-sale, $ 15.3 million were recorded as loans held-for-investments, and sold $ 848.3 million of commercial loans into seven separate securitizations.

LMF Commercial originated commercial loans as follows:

Three Months Ended

(Dollars in thousands) February 28, 2021 February 29, 2020

Originations (1) $ 219,500 412,250

Sold 282,965 314,439

Securitizations 2 2

(1) During both the three months ended February 28, 2021 and February 29, 2020 all the commercial loans originated were recorded as loans held-for-sale.

Investments held-to-maturity

At August 31, 2020 and November 30, 2019 , the carrying value of Financial Services' commercial mortgage-backed securities ("CMBS") was $ 164.6 million and $ 166.0 million , respectively.

These securities were purchased at discounts ranging from 6 % to 84 % with coupon rates ranging from 2.0 % to 5.3 % , stated and assumed final distribution dates between October 2027 and December 2028, and stated maturity dates between October 2050 and December 2051.

The Financial Services segment reviews changes in estimated cash flows periodically to determine if an other-than-temporary impairment has occurred on its CMBS.

Based on the segment’s assessment, no impairment charges were recorded during either the three or nine months ended August 31, 2020 or 2019 .

The Financial Services segment classifies these securities as held-to-maturity based on its intent and ability to hold the securities until maturity.

At February 28, 2021 and November 30, 2020, the Financial Services' held commercial mortgage-backed securities ("CMBS").

These securities are classified as held-to-maturity based on its 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 months ended February 28, 2021 or February 29, 2020.

The Company has financing agreements to finance CMBS that have been purchased as investments by the Financial Services segment.

At August 31, 2020 and November 30, 2019 , the carrying amount,

Details related to Financial Services' CMBS were as follows:

(Dollars in thousands) February 28, 2021 November 30, 2020

Carrying value $ 163,290 164,230

Outstanding debt, net of debt issuance costs 152,659 153,505

Incurred interest rate 3.4 % 3.4 %

Lennar Corporation and Subsidiaries

Notes to Condensed Consolidated Financial Statements (unaudited) (Continued)

net of debt issuance costs, of outstanding debt in these agreements was $ 153.7 million and $ 154.7 million , respectively, and interest is incurred at a rate of 3.4 % .

February 28, 2021

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

The Company is actively involved, primarily through unconsolidated entities, in the development, construction and property management of multifamily rental properties.

1 unchanged sentence

Operations of the Multifamily segment include revenues generated from the sales of land, revenue from construction activities, and management and promote fees generated from joint ventures and equity in earnings (loss) from unconsolidated entities 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.

Lennar Other primarily includes fund interests the Company retained when it sold the Rialto asset and investment management platform, as well as strategic investments in technology companies.

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 retained after the sale of Rialto's asset and investment management platform, along with equity in earnings (loss) from the Rialto fund investments and strategic technology investments, and other income (expense), net from the remaining assets related to the Company's former Rialto segment.

Lennar Other primarily includes strategic investments in technology companies, primarily managed by the Company's LEN X subsidiary, and fund interests the Company retained when it sold the 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 retained after the sale of Rialto's asset and investment management platform, along with equity in earnings (loss) from the Rialto fund investments and strategic technology investments, gains (losses) from investments in equity securities and other income (expense), net from the remaining assets related to the Company's former Rialto segment.

During the three months ended February 28, 2021, the Company recognized a gain of $ 469.7 million related to a strategic investment, Opendoor, which began trading on the Nasdaq stock market in December 2020.

The gain relates to the mark to market of the Company's share holdings in the public entity net of carried interest.

The gain was recognized due to the investment now being accounted for as an investment in equity securities which is held at fair value and the change in fair value is recognized through earnings.

In addition to Opendoor, two other of the Company's strategic technology investments, Hippo Home Insurance and Doma, formerly States Title, have announced agreements to merge with publicly traded special purpose acquisition companies.

During the three months ended February 28, 2021, the Company entered into a definitive agreement with Sunnova Energy International Inc.

("Sunnova") under which Sunnova will acquire the Company's residential solar platform, Sunstreet.

Under the agreement, the Company would receive up to 7.22 million shares of Sunnova common stock, with 3.33 million shares in initial consideration payable at closing.

The remaining shares would be payable upon achievement of two earnouts.

The Company expects to record a significant gain upon the closing of the sale, which is anticipated to be in the second quarter of 2021.

(3) Investments in Unconsolidated Entities

Homebuilding Unconsolidated Entities

As of August 31, 2020 and November 30, 2019 , the Company’s recorded investments in Homebuilding unconsolidated entities were $ 940.7 million and $ 1.0 billion , respectively, while the underlying equity in Homebuilding unconsolidated entities partners’ net assets as of August 31, 2020 and November 30, 2019 was $ 1.2 billion and $ 1.3 billion , respectively.

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

(In thousands) February 28, 2021 November 30, 2020

Investments in unconsolidated entities (1) (2) $ 1,077,353 953,177

Underlying equity in unconsolidated entities' net assets (1) 1,395,393 1,269,701

(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 and deferring equity in earnings on land sales to the Company.

(2) Included in the Company's recorded investments in Homebuilding unconsolidated entities is the Company's 40 % ownership of FivePoint.

As of August 31, 2020 and November 30, 2019 , the carrying amounts of the Company's FivePoint investment were $ 376.4 million and $ 374.0 million , respectively.

The total debt of the Homebuilding unconsolidated entities in which the Company has investments was $ 1.1 billion as of both August 31, 2020 and November 30, 2019 , of which the Company's maximum recourse exposure was $ 4.9 million and $ 10.8 million as of August 31, 2020 and November 30, 2019 , respectively.

In most instances in which the Company has guaranteed debt of an unconsolidated entity, the Company’s partners have also guaranteed that debt and are required to contribute their share of the guarantee payments.

In a repayment guarantee, the Company and its venture partners guarantee repayment of a portion or all of the debt in the event of default before the lender would have to exercise its rights against the collateral.

If the Company is required to make a payment under any guarantee, the payment would constitute a capital contribution or loan to the Homebuilding unconsolidated entity and increase the Company’s investment in the unconsolidated entity and its share of any funds the unconsolidated entity distributes.

As of both August 31, 2020 and November 30, 2019 , the fair values of the repayment guarantees, maintenance guarantees, and completion guarantees were not material.

The Company believes that as of August 31, 2020 , 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 the Condensed Consolidated Financial Statements).

As of February 28, 2021 and November 30, 2020, the carrying amount of the Company's investment was $ 390.3 million and $ 392.1 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.

During the three months ended February 28, 2021, the Company formed the Upward America Venture ("the Venture").

The Venture will acquire single family homes for rent in high growth markets across the United States.

Subsequent to

Lennar Corporation and Subsidiaries

Notes to Condensed Consolidated Financial Statements (unaudited) (Continued)

February 28, 2021, the Venture raised equity to get to a total commitment of $ 1.25 billion led by institutional investors.

Including leverage, the Venture will be positioned to acquire over $ 4.0 billion of new single family homes and townhomes from Lennar and potentially other homebuilders.

Multifamily Unconsolidated Entities

The unconsolidated entities 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 loans to Multifamily unconsolidated entities, the Company (or entities related to them) has been required to give guarantees of completion and cost over-runs to the lenders and partners.

In connection with many of the bank loans to Multifamily unconsolidated entities, the Company (or entities related to them) has been required to give guarantees of completion and cost over-runs to the lenders and partners.

Those completion guarantees may require that the guarantors complete the construction of the improvements for which the financing was obtained.

1 unchanged sentence

Generally, these payments would increase the Company's investment in the entities and would increase its share of funds the entities distribute after the achievement of certain thresholds.

As of both August 31, 2020 and November 30, 2019 , the fair value of the completion guarantees was immaterial.

As of August 31, 2020 and November 30, 2019 , Multifamily segment's unconsolidated entities had non-recourse debt with completion guarantees of $ 933.2 million and $ 867.3 million , respectively.

As of both February 28, 2021 and November 30, 2020, the fair value of the completion guarantees was immaterial.

As of February 28, 2021 and November 30, 2020, Multifamily segment's unconsolidated entities had non-recourse debt with completion guarantees of $ 660.0 million and $ 722.9 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.

During the three and nine months ended August 31, 2020 , the Multifamily segment recorded fee income, net of deferrals, from its unconsolidated entities of $ 14.1 million and $ 42.5 million , respectively.

During the three and nine months ended August 31, 2019 , the Multifamily segment recorded fee income, net of deferrals, from its unconsolidated entities of $ 14.3 million and $ 40.7 million , respectively.

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 an investment.

During the three and nine months ended August 31, 2020 , the Multifamily segment provided general contractor services, net of deferrals, totaling $ 101.1 million and $ 299.5 million , respectively, which were partially offset by costs related to those services of $ 97.2 million and $ 287.6 million , respectively.

During the three and nine months ended August 31, 2019 , the Multifamily segment provided general contractor services, net of deferrals, totaling $ 83.2 million and $ 264.8 million , respectively, which were partially offset by costs related to those services of $ 79.9 million and $ 254.5 million , respectively.

The Multifamily segment includes Multifamily Venture Fund I (the "LMV I") and Multifamily Venture Fund II LP (the "LMV II"), which are long-term multifamily development investment vehicles involved in the development, construction and property management of class-A multifamily assets.

Details of each as of and during the nine months ended August 31, 2020 are included below:

August 31, 2020

(In thousands)

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 was as follows:

Three Months Ended

(In thousands) February 28, 2021 February 29, 2020

General contractor services, net of deferrals $ 115,399 93,894

General contractor costs 110,453 90,181

Management fee income 14,871 13,823

The Multifamily segment includes Multifamily Venture Fund I ("LMV I") and Multifamily Venture Fund II LP ("LMV II"), which are long-term multifamily development investment vehicles involved in the development, construction and property management of class-A multifamily assets.

Details of each as of and during the three months ended February 28, 2021 are included below:

February 28, 2021

(In thousands) LMV I LMV II

Lennar's carrying value of investments $ 321,262 318,578

4 unchanged sentences

Lennar's remaining commitments 7,212 47,294

Distributions to Lennar during the nine months ended August 31, 2020

Stockholders' Equity

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, 2020 and 2019 :

Lennar Corporation and Subsidiaries

Notes to Condensed Consolidated Financial Statements (unaudited) (Continued)

Three Months Ended August 31, 2020

(In thousands)

Paid - in Capital

Accumulated Other Comprehensive Income (Loss)

Noncontrolling

Balance at May 31, 2020

Net earnings (including net earnings attributable to noncontrolling interests)

Employee stock and directors plans

Amortization of restricted stock

Cash dividends

Receipts related to noncontrolling interests

Payments related to noncontrolling interests

Non-cash purchase or activity of noncontrolling interests, net

Non-cash consolidations/deconsolidations, net

Total other comprehensive income, net of tax

Balance at August 31, 2020

Three Months Ended August 31, 2019

(In thousands)

Paid - in Capital

Accumulated Other Comprehensive Income)

Noncontrolling

Balance at May 31, 2019

Net earnings (including net loss attributable to noncontrolling interests)

Employee stock and directors plans

Purchases of treasury stock

Amortization of restricted stock

Cash dividends

Receipts related to noncontrolling interests

Payments related to noncontrolling interests

Non-cash activity related to noncontrolling interests

Total other comprehensive income, net of tax

Balance at August 31, 2019

Distributions to Lennar during the three months ended February 28, 2021

Lennar Other Unconsolidated Entities

Lennar Other's unconsolidated entities includes fund investments the Company retained when it sold the Rialto assets and investment management platform, as well as strategic investments in technology companies, primarily managed by the Company's LEN X subsidiary.

These strategic investments include the Company's investment in Doma, formerly known as States Title, which was reclassified from the Financial Services segment.

Lennar Corporation and Subsidiaries

Notes to Condensed Consolidated Financial Statements (unaudited) (Continued)

Nine Months Ended August 31, 2020

(In thousands)

Paid - in Capital

Accumulated Other Comprehensive Income (Loss)

Noncontrolling

(4) Stockholders' Equity

Three Months Ended February 28, 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

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 loss attributable to noncontrolling interests)

Net earnings (including net earnings attributable to noncontrolling interests)

1,016,909 — — — — — 1,001,369 15,540

Employee stock and directors plans

( 26,279 ) 153 — ( 59 ) ( 26,373 ) — — —

Purchases of treasury stock

( 43,110 ) — — — ( 43,110 ) — — —

Amortization of restricted stock

48,818 — — 48,818 — — — —

Cash dividends ( 77,843 ) — — — — — ( 77,843 ) —

Receipts related to noncontrolling interests

8,896 — — — — — — 8,896

Payments related to noncontrolling interests

( 11,397 ) — — — — — — ( 11,397 )

Non-cash purchase or activity of noncontrolling interests, net 2,998 — — ( 623 ) — — — 3,621

Non-cash consolidations/deconsolidations, net

Total other comprehensive loss, net of tax ( 942 ) — — — — ( 942 ) — —

Balance at August 31, 2020

Nine Months Ended August 31, 2019

(In thousands)

Paid - in Capital

Accumulated Other Comprehensive Income (Loss)

Noncontrolling

Balance at February 28, 2021 $ 19,017,451 30,047 3,944 8,724,192 ( 1,348,710 ) ( 1,747 ) 11,488,520 121,205

Three Months Ended February 29, 2020

(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

Balance at November 30, 2019 $ 16,033,830 29,712 3,944 8,578,219 ( 957,857 ) 498 8,295,001 84,313

Net earnings (including net loss attributable to noncontrolling interests)

391,223 — — — — — 398,452 ( 7,229 )

Employee stock and directors plans

( 7,424 ) 90 — ( 130 ) ( 7,384 ) — — —

Purchases of treasury stock ( 288,515 ) — — — ( 288,515 ) — — —

Amortization of restricted stock

31,855 — — 31,855 — — — —

Cash dividends ( 39,240 ) — — — — — — ( 39,240 ) —

Receipts related to noncontrolling interests

88,913 — — — — — — 88,913

Payments related to noncontrolling interests

( 16,734 ) — — — — — — ( 16,734 )

Non-cash consolidations, net ( 485 ) — — — — — — ( 485 )

Cumulative-effect of accounting change

Non cash activity related to noncontrolling interests

Total other comprehensive income, net of tax

Balance at August 31, 2019

On October 1, 2020, the Company's Board of Directors increased its annual dividend to $1.00 per share from $0.50 per share resulting in a quarterly cash dividend of $ 0.25 per share on both its Class A and Class B common stock, payable on October 30, 2020 to holders of record at the close of business on October 16, 2020.

On July 24, 2020, the Company paid cash dividends of $ 0.125 per share on both its Class A and Class B common stock to holders of record at the close of business on July 10, 2020, as declared by its Board of Directors on June 25, 2020.

The Company approved and paid cash dividends of $ 0.04 per share on both its Class A and Class B common stock in each quarter for the year ended November 30, 2019.

Total other comprehensive loss, net of tax ( 46 ) — — — — ( 46 ) — —

Balance at February 29, 2020 $ 16,193,377 29,802 3,944 8,609,944 ( 1,253,756 ) 452 8,654,213 148,778

On February 12, 2021, the Company paid cash dividends of $ 0.25 per share on both its Class A and Class B common stock to holders of record at the close of business on January 29, 2021, as declared by its Board of Directors on January 14, 2021.

The Company approved and paid cash dividends of $ 0.125 per share for each of the first three quarters of 2020 and $ 0.25 per share in the fourth quarter of 2020 on both its Class A and Class B common stock.

In January 2021, the Company's Board of Directors authorized the repurchase of up to the lesser of $ 1 billion in value, excluding commissions, or 25 million in shares, of the Company's outstanding Class A and Class B common stock.

The repurchase has no expiration date.

The following table represents the repurchase of the Company's Class A and Class B common stocks, under this program, for the three and nine months ended August 31, 2020 and 2019 :

Lennar Corporation and Subsidiaries

Notes to Condensed Consolidated Financial Statements (unaudited) (Continued)

The following table represents the repurchase of the Company's Class A and Class B common stocks under this program and its predecessor for the three months ended February 28, 2021 and February 29, 2020:

Three Months Ended

Nine Months Ended

August 31, 2020

August 31, 2019

August 31, 2020

August 31, 2019

(Dollars in thousands, except price per share)

February 28, 2021 February 29, 2020

(Dollars in thousands, except price per share) Class A Class B Class A Class B

Shares repurchased 510,000 — 4,250,000 115,000

Principal $ 43,100 $ — $ 282,274 $ 6,155

Average price per share $ 84.51 $ — $ 66.42 $ 53.52

Lennar Corporation and Subsidiaries

Notes to Condensed Consolidated Financial Statements (unaudited) (Continued)

(5) Income Taxes

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

Three Months Ended

Nine Months Ended

(Dollars in thousands)

(Dollars in thousands) February 28, 2021 February 29, 2020

Provision for income taxes $ 310,105 32,329

Effective tax rate (1) 23.6 % 7.5 %

For both the three and nine months ended August 31, 2020 , the effective tax rate included state income tax expense and non-deductible executive compensation, partially offset by new energy efficient home and solar tax credits, as well as a benefit related to years ended November 30, 2018 and 2019, due to Congress retroactively extending the new energy efficient home tax credit in December 2019.

(1) For the three months ended February 28, 2021 and February 29, 2020, the effective tax rate included state income tax expense and non-deductible executive compensation, partially offset by new energy efficient home and solar tax credits.

The three months ended February 29, 2020 also included benefits related to the years ended November 30, 2018, 2019 and 2020, due to Congress retroactively extending the new energy efficient home tax credit in December 2019.

(6) Earnings Per Share

6 unchanged sentences

Three Months Ended

Nine Months Ended

(In thousands, except per share amounts)

(In thousands, except per share amounts) February 28, 2021 February 29, 2020

Net earnings attributable to Lennar $ 1,001,369 398,452

11 unchanged sentences

(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, 2020 and August 31, 2019 , there were no options to purchase shares of common stock that were outstanding and anti-dilutive.

For both the three months ended February 28, 2021 and February 29, 2020, there were no options to purchase shares of common stock that were outstanding and anti-dilutive.

Lennar Corporation and Subsidiaries

1 unchanged sentence

(7) Homebuilding Senior Notes and Other Debts Payable

(Dollars in thousands)

2.95% senior notes due 2020

8.375% senior notes due 2021

4.750% senior notes due 2021

(Dollars in thousands) February 28, 2021 November 30, 2020

6.25 % senior notes due December 2021

$ 303,963 305,221

4.125 % senior notes due 2022

599,123 598,876

5.375 % senior notes due 2022

254,628 255,342

4.750 % senior notes due 2022

573,030 572,724

4.875 % senior notes due December 2023

4.500% senior notes due 2024

397,749 397,347

4.500 % senior notes due 2024

647,709 647,528

5.875 % senior notes due 2024

442,315 443,484

4.750 % senior notes due 2025

498,113 498,002

5.25 % senior notes due 2026

406,406 406,709

5.00 % senior notes due 2027

352,412 352,508

4.75 % senior notes due 2027

894,948 894,760

Mortgage notes on land and other debt 605,772 583,257

The carrying amounts of the senior notes in the table above are net of debt issuance costs of $ 17.9 million and $ 22.9 million as of August 31, 2020 and November 30, 2019 , respectively.

At August 31, 2020 , the Company had an unsecured revolving credit facility (the "Credit Facility") with maximum borrowings of $ 2.4 billion maturing in 2024.

$ 5,976,168 5,955,758

The carrying amounts of the senior notes in the table above are net of debt issuance costs of $ 14.8 million and $ 15.9 million as of February 28, 2021 and November 30, 2020, respectively.

During three months ended February 28, 2021, the maximum borrowings on the Company's unsecured revolving credit facility (the "Credit Facility") were increased by $ 100 million from $ 2.4 billion to $ 2.5 billion and included a $ 300 million accordion feature, subject to additional commitments, thus the maximum borrowings could be $ 2.8 billion maturing in 2024.

The Credit Facility agreement (the "Credit Agreement") provides that up to $ 500 million in commitments may be used for letters of credit .

The maturity and details of the Credit Facility 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, 2019 .

Under the Credit 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 Agreement, which involves adjustments to GAAP financial measures.

The Company believes it was in compliance with its debt covenants at August 31, 2020 .

The maturity, debt covenants and details of the Credit Facility 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, 2020.

In addition to the Credit Facility, the Company has other letter of credit facilities with different financial institutions.

Performance letters of credit are generally posted with regulatory bodies to guarantee the Company’s performance of certain development and construction activities.

Financial letters of credit are generally posted in lieu of cash deposits on option contracts, for insurance risks, credit enhancements and as other collateral.

Additionally, at August 31, 2020 , the Company had outstanding surety bonds including performance surety bonds related to site improvements at various projects (including certain projects in the Company’s joint ventures) and financial surety bonds.

Although significant development and construction activities have been completed related to these site improvements, these bonds are generally not released until all development and construction activities are completed.

The Company does not presently anticipate any draws upon these bonds or letters of credit, but if any such draws occur, the Company does not believe they would have a material effect on its financial position, results of operations or cash flows.

Procedures related to performance letters of credit, 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, 2020.

The Company's outstanding letters of credit and surety bonds are described below:

(In thousands)

(In thousands) February 28, 2021 November 30, 2020

Performance letters of credit $ 803,950 752,096

Financial letters of credit

Surety bonds 3,114,002 3,087,711

Anticipated future costs primarily for site improvements related to performance surety bonds 1,675,503 1,584,642

The Company's senior notes are guaranteed by substantially all of the Company's 100% owned homebuilding subsidiaries and some of the Company's other subsidiaries.

Although the guarantees are full, unconditional and joint and several while they are in effect, (i) a subsidiary will cease to be a guarantor at any time when it is not directly or indirectly guaranteeing at least

Lennar Corporation and Subsidiaries

Notes to Condensed Consolidated Financial Statements (unaudited) (Continued)

$ 75 million of debt of Lennar Corporation (the parent company), and (ii) a subsidiary will be released from its guarantee and any other obligations it may have regarding the senior notes if all or substantially all its assets, or all of its capital stock, are sold or otherwise disposed of.

These guarantees 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, 2020.

(8) Product Warranty

3 unchanged sentences

Three Months Ended

Nine Months Ended

(In thousands)

(In thousands) February 28, 2021 February 29, 2020

Warranty reserve, beginning of the period $ 341,765 294,138

1 unchanged sentence

Adjustments to pre-existing warranties from changes in estimates (1) 5,641 5,904

Payments ( 42,234 ) ( 50,900 )

Warranty reserve, end of period $ 348,100 287,413

The adjustments to pre-existing warranties from changes in estimates during the three and nine months ended August 31, 2020 and 2019 primarily related to specific claims in certain of the Company's homebuilding communities and other adjustments.

(1) The adjustments to pre-existing warranties from changes in estimates during the three months ended February 28, 2021 and February 29, 2020 primarily related to specific claims in certain of the Company's homebuilding communities and other adjustments.

Lennar Corporation and Subsidiaries

Notes to Condensed Consolidated Financial Statements (unaudited) (Continued)

(9) Financial Instruments and Fair Value Disclosures

The following table presents the carrying amounts and estimated fair values of financial instruments held by the Company at August 31, 2020 and November 30, 2019 , using available market information and what the Company believes to be appropriate valuation methodologies.

The following table presents the carrying amounts and estimated fair values of financial instruments held by the Company at February 28, 2021 and November 30, 2020, 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.

1 unchanged sentence

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, 2020

November 30, 2019

(In thousands)

Fair Value Hierarchy

Carrying Amount

February 28, 2021 November 30, 2020

(In thousands) Fair Value Hierarchy Carrying Amount Fair Value Carrying Amount Fair Value

Financial Services:

Loans held-for-investment, net

Investments held-to-maturity

Lennar Other:

Investments held-to-maturity

Homebuilding senior notes and other debts payable, net

Financial Services notes and other debts payable, net

Multifamily note payable, net

Lennar Other notes and other debts payable, net

Loans held-for-investment, net Level 3 $ 69,973 70,112 72,626 70,808

Investments held-to-maturity Level 3 163,290 194,485 164,230 196,047

Homebuilding senior notes and other debts payable, net Level 2 $ 5,976,168 6,529,969 5,955,758 6,581,798

Financial Services notes and other debts payable, net Level 2 963,070 963,960 1,463,919 1,464,850

Lennar Other notes and other debts payable, net Level 2 1,906 1,906 1,906 1,906

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

3 unchanged sentences

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.

Lennar Corporation and Subsidiaries

Notes to Condensed Consolidated Financial Statements (unaudited) (Continued)

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.

Lennar Other —The fair value for investments held-to-maturity is based on discounted cash flow.

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

Lennar Other —The fair value for notes payable approximate their carrying value due to variable interest pricing terms and the short-term nature of the borrowings.

Fair Value Measurements:

4 unchanged sentences

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

(In thousands)

Fair Value Hierarchy

Fair Value at

Fair Value Hierarchy Fair Value at

(In thousands) February 28, 2021 November 30, 2020

Financial Services Assets:

Residential loans held-for-sale Level 2 $ 971,452 1,296,517

LMF Commercial loans held-for-sale Level 3 123,148 193,588

Mortgage servicing rights Level 3 1,499 2,113

Lennar Other:

Investments available-for-sale Level 3 $ 41,247 53,497

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

February 28, 2021 November 30, 2020

(In thousands) Aggregate Principal Balance Change in Fair Value Aggregate Principal Balance Change in Fair Value

Residential loans held-for-sale $ 942,504 28,948 1,232,548 63,969

LMF Commercial loans held-for-sale

Mortgage servicing rights

Lennar Other:

Investments available-for-sale

The aggregate fair value of residential loans held-for-sale of $ 930.2 million at August 31, 2020 exceeded their aggregate principal balance of $ 887.9 million by $ 42.2 million .

The aggregate fair value of residential loans held-for-sale of $ 1.4 billion at November 30, 2019 exceeded their aggregate principal balance of $ 1.4 billion by $ 42.2 million .

The aggregate fair value of LMF Commercial loans held-for-sale of $ 157.0 million at August 31, 2020 exceeded their aggregate principal balance of $ 155.5 million by $ 1.6 million .

The aggregate fair value of LMF Commercial loans held-for-sale of $ 197.2 million at November 30, 2019 exceeded their aggregate principal balance of $ 196.3 million by $ 0.9 million .

129,810 ( 6,662 ) 194,362 ( 774 )

Lennar Corporation and Subsidiaries

Notes to Condensed Consolidated Financial Statements (unaudited) (Continued)

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.

Management believes carrying loans held-for-sale at fair value improves financial reporting by mitigating volatility in reported earnings caused by measuring the fair value of the loans and the derivative instruments used to economically hedge them without having to apply complex hedge accounting provisions.

In addition, 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 servicing rights is included in Financial Services’ loans held-for-sale as of August 31, 2020 and November 30, 2019 .

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 February 28, 2021 and November 30, 2020.

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.

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 Company estimates CMBS spreads by observing the pricing of recent CMBS offerings, secondary CMBS markets, changes in the CMBX index, and general capital and commercial real estate market conditions.

Considerations in estimating CMBS spreads include comparing the Company’s current loan portfolio with comparable CMBS offerings containing loans with similar duration, credit quality and collateral composition.

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, 2020.

These methods use unobservable inputs in estimating a discount rate that is used to assign a value to each loan.

4 unchanged sentences

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:

Lennar Corporation and Subsidiaries

Notes to Condensed Consolidated Financial Statements (unaudited) (Continued)

As of August 31, 2020

Unobservable inputs

Unobservable inputs As of February 28, 2021

Mortgage prepayment rate 12 %

6 unchanged sentences

Three Months Ended

Nine Months Ended

(In thousands)

(In thousands) February 28, 2021 February 29, 2020

Changes in fair value included in Financial Services revenues:

2 unchanged sentences

Forward contracts 34,238 ( 9,361 )

Changes in fair value included in other comprehensive income (loss), net of tax:

Changes in fair value included in Lennar Other unrealized gain:

Investments in equity securities $ 469,745 —

Changes in fair value included in other comprehensive loss, net of tax:

Lennar Other investments available-for-sale $ ( 942 ) —

5 unchanged sentences

Three Months Ended

August 31, 2020

August 31, 2019

(In thousands)

Mortgage servicing rights

LMF Commercial loans held-for-sale

Mortgage servicing rights

LMF Commercial loans held-for-sale

Beginning balance

Purchases/loan originations

Sales/loan originations sold, including those not settled

Disposals/settlements

Changes in fair value (1)

Interest and principal paydowns

Ending balance

Nine Months Ended

August 31, 2020

August 31, 2019

(In thousands)

Mortgage servicing rights

LMF Commercial loans held-for-sale

Mortgage servicing rights

LMF Commercial loans held-for-sale

February 28, 2021 February 29, 2020

(In thousands) Mortgage servicing rights LMF Commercial loans held-for-sale Mortgage servicing rights LMF Commercial loans held-for-sale

Beginning balance $ 2,113 193,588 24,679 197,224

1 unchanged sentence

Sales/loan originations sold, including those not settled

— ( 282,965 ) — ( 314,439 )

Disposals/settlements ( 1,038 ) — ( 1,289 ) —

3 unchanged sentences

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

Includes $7.5 million related to the sale of a servicing portfolio.

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.

2 unchanged sentences

Three Months Ended

August 31, 2020

August 31, 2019

(In thousands)

Carrying Value

Total Losses, Net (1)

Carrying Value

Total Losses, Net (1)

Non-financial assets

Homebuilding:

Finished homes and construction in progress (1)

Land and land under development (1)

Nine Months Ended

August 31, 2020

August 31, 2019

(In thousands)

Carrying Value

Total Losses, Net (1)

Carrying Value

Total Losses, Net (1)

Non-financial assets

Homebuilding:

Finished homes and construction in progress (1)

Land and land under development (1)

February 28, 2021 February 29, 2020

(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 (1) Level 3 $ 442 — ( 442 ) 73,006 59,284 ( 13,722 )

Land and land under development (1) Level 3 2,543 2,350 ( 193 ) 22,453 11,660 ( 10,793 )

(1) Valuation adjustments were included in Homebuilding costs and expenses in the Company's condensed consolidated statements of operations and comprehensive income (loss).

Lennar Corporation and Subsidiaries

Notes to Condensed Consolidated Financial Statements (unaudited) (Continued)

Finished homes and construction in progress are included within inventories.

2 unchanged sentences

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.

This was particularly the case with regard to inventory owned at August 31, 2020 , because of the need to consider the effect of the COVID-19 pandemic and related government actions in determining whether there was a need for valuation adjustments and write-offs.

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.

1 unchanged sentence

On a quarterly basis, the Company reviews its active communities for indicators of potential impairments.

As of August 31, 2020 and August 31, 2019 , there were 1,194 and 1,295 active communities, excluding unconsolidated entities, respectively.

The table below summarizes communities reviewed for indicators of impairment and communities with valuation adjustments recorded:

Communities with valuation adjustments

# of communities with potential indicator of impairment

# of communities

# of active communities # of communities with potential indicator of impairment # of communities Fair Value

(in thousands)

1 unchanged sentence

(in thousands)

At or for the Nine Months Ended

August 31, 2020

August 31, 2019

At or for the Three Months Ended

February 28, 2021 1,158 10 — $ — $ —

February 29, 2020 1,253 33 6 45,123 19,944

Lennar Corporation and Subsidiaries

Notes to Condensed Consolidated Financial Statements (unaudited) (Continued)

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, 2020

August 31, 2019

Unobservable inputs

Three Months Ended

February 29, 2020

Unobservable inputs Range

Average selling price $ 201,000 - 970,000

2 unchanged sentences

(10) Variable Interest Entities

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, 2020 .

Based on the Company's evaluation, the Company consolidated one Homebuilding entity and one Multifamily entity that had a total assets and liabilities of $ 140.0 million and $ 51.2 million and $ 49.4 million and $ 0.9 million , respectively.

The Company deconsolidated two Multifamily entities that had total assets of $ 37.2 million and an immaterial amount of liabilities.

In addition, the Company's Financial Services segment deconsolidated one entity that had total assets and liabilities of $ 291.2 million and $ 204.1 million , respectively.

In January 2019, this JV was formed by the sale of the Company’s retail title agency and its retail title insurance business to this JV entity.

In exchange for the sale of the retail agency and retail title insurance business, the Company received 20 % of the JV entity’s preferred stock, warrants exercisable to purchase additional shares of preferred stock in the JV entity and a note due from the JV to the Company.

The JV entity’s reconsideration event was due to a significant equity raise that was completed during the three months ended May 31, 2020.

The proceeds of the equity raise resulted in approximately a 43 % reduction of the principal amount of debt owed by the JV entity to the Company as well as an approximately 20 % reduction of the Company’s ownership interest in the JV.

The JV remains a VIE;

however, the Company has concluded that it is no longer the primary beneficiary as the Company no longer has the power to direct the VIE.

In particular, the additional infusion of equity from third party investors provides evidence that the JV entity is no longer financially dependent on the Company.

The Company does not have the voting or economic power to direct the activities of the JV entity.

As a result, the Company concluded that the JV entity should be deconsolidated which required fair value accounting for its equity investment and note receivable.

The valuation assumptions used in determining fair value of the equity investment began by utilizing the capital raise discounted by public company comparable transactions that took into account the impact of

Lennar Corporation and Subsidiaries

Notes to Condensed Consolidated Financial Statements (unaudited) (Continued)

COVID-19 and the economic shutdown and the lack of marketability of the Company’s investment.

The valuation of the note receivable utilized the underlying cash flows and applied a discount, which was determined by using market comparables.

The Company used discount rates ranging from 16 % to 30 % for the fair value calculations.

In aggregate, the resulting fair value of the equity investment and note receivable totaled $ 123.4 million , of which $ 70.8 million was included in Financial Services investments in unconsolidated entities at the time of deconsolidation.

Upon deconsolidation, the Company recorded a gain of $ 61.4 million .

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

The carrying amount of the Company's consolidated VIE's 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.

5 unchanged sentences

Unconsolidated VIEs

At August 31, 2020 and November 30, 2019 , the Company’s recorded investments in VIEs that are unconsolidated and its estimated maximum exposure to loss were as follows:

August 31, 2020

November 30, 2019

(In thousands)

Investments in

Unconsolidated VIEs

Lennar’s Maximum

Exposure to Loss (1)

Investments in

Unconsolidated VIEs

Lennar’s Maximum

T he Company’s recorded investments in VIEs that are unconsolidated and its estimated maximum exposure to loss were as follows:

February 28, 2021 November 30, 2020

(In thousands) Investments in

Unconsolidated VIEs Lennar’s Maximum

Exposure to Loss Investments in

Unconsolidated VIEs Lennar’s Maximum

Exposure to Loss

Homebuilding (1) $ 104,527 306,117 89,654 89,828

Multifamily (2) 642,792 706,442 619,540 717,271

Financial Services 163,290 163,290 164,230 164,230

Limited to investments in unconsolidated VIEs, except as noted below.

As of August 31, 2020 and November 30, 2019 , the maximum exposure to loss of Multifamily's investments in unconsolidated VIEs was primarily limited to its investments in the unconsolidated VIEs, except with regard to the remaining equity commitment of $ 129.0 million and $ 224.2 million , respectively, to fund LMV I and LMV II for future expenditures related to the construction and development of its projects.

As of August 31, 2020 , the maximum exposure to loss of Financial Services' investments in unconsolidated entities included a note receivable.

Lennar Other (3) 7,154 7,154 76,023 130,177

$ 917,763 1,183,003 949,447 1,101,506

(1) As of February 28, 2021, the increase in the maximum exposure to loss was related the Company's commitment to fund capital in the Upward America Venture, a single family for rent platform.

(2) As of February 28, 2021 and November 30, 2020, the maximum exposure to loss of Multifamily's investments in unconsolidated VIEs was primarily limited to its investments in the unconsolidated VIEs, except with regard to the remaining equity commitment of $ 54.5 million and $ 88.1 million, respectively, to fund LMV I and LMV II for future expenditures related to the construction and development of its projects.

(3) As of February 28, 2021, the decrease in investments in unconsolidated VIEs and maximum exposure to loss was related to an entity which had a reconsideration event due to the payoff of a note receivable which caused the entity to no longer be considered a VIE.

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.

5 unchanged sentences

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.

Lennar Corporation and Subsidiaries

Notes to Condensed Consolidated Financial Statements (unaudited) (Continued)

Option Contracts

2 unchanged sentences

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, 2020 , consolidated inventory not owned increased by $ 82.4 million with a corresponding increase to liabilities related to consolidated inventory not owned in the accompanying condensed consolidated

Lennar Corporation and Subsidiaries

Notes to Condensed Consolidated Financial Statements (unaudited) (Continued)

balance sheet as of August 31, 2020 .

The increase was primarily related to the Company entering into option contracts, which required consolidation during the period, partially offset by the Company exercising its options to acquire land under previously consolidated contracts.

To reflect the purchase price of the inventory consolidated, the Company had a net reclass related to option deposits from consolidated inventory not owned to land under development in the accompanying condensed consolidated balance sheet as of August 31, 2020 .

During the three months ended February 28, 2021, consolidated inventory not owned decreased by $ 28.8 million with a corresponding decrease to liabilities related to consolidated inventory not owned in the accompanying condensed consolidated balance sheet as of February 28, 2021.

The decrease was primarily due to increases in homesite takedowns in the quarter.

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 land under development in the accompanying condensed consolidated balance sheet as of February 28, 2021.

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 related to its option contracts with third parties and unconsolidated entities consisted of its non-refundable option deposits and pre-acquisition costs totaling $ 325.4 million and $ 320.5 million at August 31, 2020 and November 30, 2019 , respectively.

Additionally, the Company had posted $ 76.8 million and $ 75.0 million of letters of credit in lieu of cash deposits under certain land and option contracts as of August 31, 2020 and November 30, 2019 , respectively.

As a result of the COVID-19 pandemic, the Company reviewed its option contracts as of August 31, 2020 and had no write-offs of costs related to option contracts because of the COVID-19 pandemic during the nine months ended August 31, 2020 .

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

(Dollars in thousands) February 28, 2021 November 30, 2020

Non-refundable option deposits and pre-acquisition costs $ 711,218 414,154

Letters of credit in lieu of cash deposits under certain land and option contracts 117,974 87,537

(11) Commitments and Contingent Liabilities

The Company is a party to various claims, legal actions and complaints arising in the ordinary course of business.

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.

9 unchanged sentences

The following table includes additional information about the Company's leases:

(Dollars in thousands)

August 31, 2020

(Dollars in thousands) February 28, 2021 November 30, 2020

Right-of-use assets $ 164,604 113,390

4 unchanged sentences

Notes to Condensed Consolidated Financial Statements (unaudited) (Continued)

The Company has entered into agreements to lease certain office facilities and equipment under operating leases.

Future minimum payments under the noncancellable leases in effect at August 31, 2020 were as follows:

(Dollars in thousands)

Lease Payments

Future minimum payments under the noncancellable leases in effect at February 28, 2021 were as follows:

(Dollars in thousands) Lease Payments

2021 $ 27,789

2026 and thereafter 71,131

Total future minimum lease payments (1) $ 196,976

Interest (2) 23,248

Present value of lease liabilities (2) $ 173,728

1 unchanged sentence

This also does not include minimum lease payments for executed and legally enforceable leases that have not yet commenced.

As of August 31, 2020 , the minimum lease payments for these leases that have not yet commenced were immaterial.

As of February 28, 2021, the minimum lease payments for these leases that have not yet commenced were immaterial.

(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, 2020 , the weighted average remaining lease term and weighted average discount rate used in calculating the lease liabilities were 2.7 years and 3.1 % , respectively.

As of February 28, 2021, the weighted average remaining lease term and weighted average discount rate used in calculating the lease liabilities were 2.5 years and 3.0 %, respectively.

The Company recognized the lease liabilities on its condensed consolidated balance sheets within accounts payable or other liabilities of the respective segments.

Rental expense for the nine months ended August 31, 2020 , was $ 62.6 million .

Payments on lease liabilities during the nine months ended August 31, 2020 totaled $ 40.4 million .

Rental expense includes costs for all leases.

During the three months ended February 28, 2021 and February 29, 2020, the Company's rental expense and payments on lease liabilities were as follows:

(Dollars in thousands) February 28, 2021 February 29, 2020

Rental expense $ 20,707 20,706

Payment on lease liabilities 9,906 17,426

On occasion, the Company may sublease rented space which is no longer used for the Company's operations.

For the nine months ended August 31, 2020 , the Company had an immaterial amount of sublease income.

Lennar Corporation and Subsidiaries

Notes to Condensed Consolidated Financial Statements (unaudited) (Continued)

New Accounting Pronouncements

In June 2016, the FASB issued ASU 2016-13, Financial Instruments - Credit Losses (Topic 326):

Measurement of Credit Losses on Financial Instruments ("ASU 2016-13").

ASU 2016-13 significantly changes the impairment model for most financial assets and certain other instruments.

ASU 2016-13 will require immediate recognition of estimated credit losses expected to occur over the remaining life of many financial assets, which will generally result in earlier recognition of allowances for credit losses on loans and other financial instruments.

ASU 2016-13 is effective for the Company's fiscal year beginning December 1, 2020 and subsequent interim periods.

While the Company is continuing to evaluate the impact of the adoption of ASU 2016-13, the Company does not expect the adoption to have a material impact on its condensed consolidated financial statements.

Subsequent to the issuance of ASU 2016-13, the FASB issued ASU 2018-19, Codification Improvements to Topic 326, Financial Instruments —Credit Losses and ASU 2019-05, Financial Instruments —Credit Losses (Topic 326) Targeted Transition Relief .

These ASUs do not change the core principle of the guidance in ASU 2016-13.

Instead these amendments are intended to clarify and improve operability of certain topics included within the credit losses standard.

These ASUs will have the same effective date and transition requirements as ASU 2016-13.

In January 2017, the FASB issued ASU 2017-04, Intangibles - Goodwill and Other (Topic 350), Simplifying the Accounting for Goodwill Impairment ("ASU 2017-04").

ASU 2017-04 removes the requirement to perform a hypothetical purchase price allocation to measure goodwill impairment.

A goodwill impairment will now be the amount by which a reporting unit's carrying value exceeds its fair value, not to exceed the carrying amount of goodwill.

ASU 2017-04 will be effective for the Company’s fiscal year beginning December 1, 2020.

Early adoption is permitted for interim or annual goodwill impairment tests performed on testing dates after January 1, 2017.

The Company is currently evaluating the impact the adoption of ASU 2017-04 will have on the Company's condensed consolidated financial statements.

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 will be effective for the Company’s fiscal year beginning December 1, 2022.

The Company is currently evaluating the impact the adoption of ASU 2019-12 will have on the Company's condensed consolidated financial statements.

Supplemental Financial Information

The indentures governing the Company’s senior notes require that, if any of the Company’s 100% owned subsidiaries, other than its finance company subsidiaries and foreign subsidiaries, directly or indirectly guarantee at least $ 75 million principal amount of debt of Lennar Corporation, those subsidiaries must also guarantee Lennar Corporation’s obligations with regard to its senior notes.

The entities referred to as "guarantors" in the following tables are subsidiaries that are not finance company subsidiaries or foreign subsidiaries and were guaranteeing the senior notes because at August 31, 2020 they were guaranteeing Lennar Corporation's letter of credit facilities and its Credit Facility, disclosed in Note 7 of the Notes to the Condensed Consolidated Financial Statements.

The guarantees are full, unconditional and joint and several and the guarantor subsidiaries are 100% directly or indirectly owned by Lennar Corporation.

A subsidiary's guarantee of Lennar senior notes will be suspended at any time when it is not directly or indirectly guaranteeing at least $ 75 million principal amount of debt of Lennar Corporation, and a subsidiary will be released from its guarantee and any other obligations it may have regarding the senior notes if all or substantially all its assets, or all of its capital stock, are sold or otherwise disposed of.

For purposes of the condensed consolidating statement of cash flows included in the following supplemental financial information, the Company's accounting policy is to treat cash received by Lennar Corporation (the "Parent") from its subsidiaries, to the extent of net earnings from such subsidiaries as a dividend and accordingly a return on investment within cash flows from operating activities.

Distributions of capital received by the Parent from its subsidiaries are reflected as cash flows from investing activities.

The cash outflows associated with the return on investment dividends and distributions of capital received by the Parent are reflected by the Guarantor and Non-Guarantor subsidiaries in the Dividends line item within cash flows from financing activities.

All other cash flows between the Parent and its subsidiaries represent the settlement of receivables and payables between such entities in conjunction with the Parent's centralized cash management arrangement with its subsidiaries, which operates with the characteristics of a revolving credit facility, and are accordingly reflected net in the Intercompany line item within cash flows from investing activities for the Parent and net in the Intercompany line item within cash flows from financing activities for the Guarantor and Non-Guarantor subsidiaries.

Supplemental information for the subsidiaries that were guarantor subsidiaries at August 31, 2020 was as follows:

Lennar Corporation and Subsidiaries

Notes to Condensed Consolidated Financial Statements (unaudited) (Continued)

Condensed Consolidating Balance Sheet

August 31, 2020

(In thousands)

Non-Guarantor

Consolidating Adjustments

Homebuilding:

Cash and cash equivalents, restricted cash and receivables, net

Investments in unconsolidated entities

Investments in subsidiaries

Financial Services

LIABILITIES AND EQUITY

Homebuilding:

Accounts payable and other liabilities

Liabilities related to consolidated inventory not owned

Senior notes and other debts payable

Financial Services

Total liabilities

Total stockholders’ equity

Noncontrolling interests

Total liabilities and equity

Lennar Corporation and Subsidiaries

Notes to Condensed Consolidated Financial Statements (unaudited) (Continued)

Condensed Consolidating Balance Sheet

November 30, 2019

(In thousands)

Non-Guarantor

Consolidating Adjustments

Homebuilding:

Cash and cash equivalents, restricted cash and receivables, net

Investments in unconsolidated entities

Investments in subsidiaries

Financial Services

LIABILITIES AND EQUITY

Homebuilding:

Accounts payable and other liabilities

Liabilities related to consolidated inventory not owned

Senior notes and other debts payable

Financial Services

Total liabilities

Total stockholders’ equity

Noncontrolling interests

Total liabilities and equity

Lennar Corporation and Subsidiaries

Notes to Condensed Consolidated Financial Statements (unaudited) (Continued)

Condensed Consolidating Statement of Operations and Comprehensive Income (Loss)

Three Months Ended August 31, 2020

(In thousands)

Non-Guarantor

Consolidating Adjustments

Financial Services

Total revenues

Cost and expenses:

Financial Services

Corporate general and administrative

Total costs and expenses

Homebuilding equity in earnings (loss) from unconsolidated entities

Homebuilding other income (expense), net

Multifamily equity in loss from unconsolidated entities and other gain

Lennar Other equity in earnings (loss) from unconsolidated entities

Lennar Other income (expense), net

Earnings (loss) before income taxes

Benefit (provision) for income taxes

Equity in earnings from subsidiaries

Net earnings (including net earnings attributable to noncontrolling interests)

Net earnings attributable to noncontrolling interests

Net earnings attributable to Lennar

Other comprehensive income, net of tax:

Net unrealized gain on securities available-for-sale

Total other comprehensive income, net of tax

Total comprehensive income attributable to Lennar

Total comprehensive income attributable to noncontrolling interests

Lennar Corporation and Subsidiaries

Notes to Condensed Consolidated Financial Statements (unaudited) (Continued)

Condensed Consolidating Statement of Operations and Comprehensive Income (Loss)

Three Months Ended August 31, 2019

(In thousands)

Non-Guarantor

Consolidating Adjustments

Financial Services

Total revenues

Cost and expenses:

Financial Services

Corporate general and administrative

Total costs and expenses

Homebuilding equity in loss from unconsolidated entities

Homebuilding other income (expense), net

Multifamily equity in earnings from unconsolidated entities and other gain

Lennar Other equity in earnings from unconsolidated entities

Lennar Other income, net

Earnings (loss) before income taxes

Benefit (provision) for income taxes

Equity in earnings from subsidiaries

Net earnings (including net loss attributable to noncontrolling interests)

Net loss attributable to noncontrolling interests

Net earnings attributable to Lennar

Other comprehensive income, net of tax:

Net unrealized gain on securities available-for-sale

Total other comprehensive income, net of tax

Total comprehensive income attributable to Lennar

Total comprehensive loss attributable to noncontrolling interests

Lennar Corporation and Subsidiaries

Notes to Condensed Consolidated Financial Statements (unaudited) (Continued)

Condensed Consolidating Statement of Operations and Comprehensive Income (Loss)

Nine Months Ended August 31, 2020

(In thousands)

Non-Guarantor

Consolidating Adjustments

Financial Services

Total revenues

Cost and expenses:

Financial Services

Corporate general and administrative

Total costs and expenses

Homebuilding equity in earnings (loss) from unconsolidated entities

Homebuilding other income (expense), net

Financial Services gain on deconsolidation

Multifamily equity in earnings from unconsolidated entities and other gain

Lennar Other equity in loss from unconsolidated entities

Lennar Other income (expense), net

Earnings (loss) before income taxes

Benefit (provision) for income taxes

Equity in earnings from subsidiaries

Net earnings (including net earnings (loss) attributable to noncontrolling interests)

Net earnings (loss) attributable to noncontrolling interests

Net earnings attributable to Lennar

Other comprehensive loss, net of tax:

Net unrealized loss on securities available-for-sale

Reclassification adjustments for gain included in earnings, net of tax

Total other comprehensive loss, net of tax

Total comprehensive income attributable to Lennar

Total comprehensive loss attributable to noncontrolling interests

Lennar Corporation and Subsidiaries

Notes to Condensed Consolidated Financial Statements (unaudited) (Continued)

Condensed Consolidating Statement of Operations and Comprehensive Income (Loss)

Nine Months Ended August 31, 2019

(In thousands)

Non-Guarantor

Consolidating Adjustments

Financial Services

Total revenues

Cost and expenses:

Financial Services

Corporate general and administrative

Total costs and expenses

Homebuilding equity in earnings (loss) from unconsolidated entities

Homebuilding other income (expense), net

Multifamily equity in earnings from unconsolidated entities and other gain

Lennar Other equity in earnings (loss) from unconsolidated entities

Lennar Other expense, net

Earnings (loss) before income taxes

Benefit (provision) for income taxes

Equity in earnings from subsidiaries

Net earnings (including net loss attributable to noncontrolling interests)

Net loss attributable to noncontrolling interests

Net earnings attributable to Lennar

Other comprehensive income, net of tax:

Net unrealized gain on securities available-for-sale

Reclassification adjustments for loss included in earnings, net of tax

Total other comprehensive income, net of tax

Total comprehensive income attributable to Lennar

Total comprehensive loss attributable to noncontrolling interests

Lennar Corporation and Subsidiaries

Notes to Condensed Consolidated Financial Statements (unaudited) (Continued)

Condensed Consolidating Statement of Cash Flows

Nine Months Ended August 31, 2020

(In thousands)

Non-Guarantor

Consolidating Adjustments

Cash flows from operating activities:

Net earnings (including net loss attributable to noncontrolling interests)

Distributions of earnings from guarantor and non-guarantor subsidiaries

Other adjustments to reconcile net earnings (including net loss attributable to noncontrolling interests) to net cash provided by operating activities

Net cash provided by operating activities

Cash flows from investing activities:

Investments in and contributions to unconsolidated entities/deconsolidation of a previously consolidated entity, net of distributions of capital

Proceeds from the sales of operating properties and equipment and other assets

Distributions of capital from guarantor and non-guarantor subsidiaries

Net cash provided by (used in) investing activities

Cash flows from financing activities:

Net borrowings (repayments) under unsecured revolving credit facilities

Net borrowings (repayments) on senior notes, other borrowings, other liabilities, and other notes payable

Common stock:

Net cash used in financing activities

Net increase (decrease) in cash and cash equivalents and restricted cash

Cash and cash equivalents and restricted cash at beginning of period

Cash and cash equivalents and restricted cash at end of period

Lennar Corporation and Subsidiaries

Notes to Condensed Consolidated Financial Statements (unaudited) (Continued)

Condensed Consolidating Statement of Cash Flows

Nine Months Ended August 31, 2019

(In thousands)

Non-Guarantor

Consolidating Adjustments

Cash flows from operating activities:

Net earnings (including net loss attributable to noncontrolling interests)

Distributions of earnings from guarantor and non-guarantor subsidiaries

Other adjustments to reconcile net earnings (including net loss attributable to noncontrolling interests) to net cash provided by operating activities

Net cash provided by operating activities

Cash flows from investing activities:

Investments in and contributions to unconsolidated entities and consolidated entities, net of distributions of capital

Proceeds from sales of real estate owned

Proceeds from sale of investment in unconsolidated entities

Proceeds from sales of Financial Services' business

Net cash provided by (used in) investing activities

Cash flows from financing activities:

Net borrowings under unsecured revolving credit facilities

Net repayments under warehouse facilities

Net borrowings (repayments) on convertible senior notes, other borrowings, other liabilities, and other notes payable

Net repayments related to noncontrolling interests

Common stock:

Net cash used in financing activities

Net increase (decrease) in cash and cash equivalents and restricted cash

Cash and cash equivalents and restricted cash at beginning of period

Cash and cash equivalents and restricted cash at end of period

For both the three months ended February 28, 2021 and February 29, 2020, the Company had an immaterial amount of sublease income.

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-Q

Item 1. Financial Statements