What changed in this filing

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Item 1. Financial Statements

2021-07-02 compared with 2021-04-01 · 303 added, 179 removed, 636 unchanged (43% of the section changed)

3 unchanged sentences

(Dollars in thousands)

February 28, November 30,

May 31, November 30,

2021 (1) 2020 (1)

16 unchanged sentences

(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 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 May 31, 2021, total assets include $ 940.6 million related to consolidated VIEs of which $ 39.0 million is included in Homebuilding cash and cash equivalents, $ 15.3 million in Homebuilding restricted cash, $ 14.3 million in Homebuilding finished homes and construction in progress, $ 564.7 million in Homebuilding land and land under development, $ 260.6 million in Homebuilding consolidated inventory not owned, $ 1.3 million in Homebuilding investments in unconsolidated entities, $ 27.2 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.

3 unchanged sentences

(In thousands, except share amounts)

February 28, November 30,

May 31, November 30,

2021 (2) 2020 (2)

13 unchanged sentences

Class A common stock of $ 0.10 par value;

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

May 31, 2021 and November 30, 2020 - 400,000,000 shares;

May 31, 2021 - 300,486,193 shares and November 30, 2020 - 298,942,836 shares

30,049 29,894

Class B common stock of $ 0.10 par value;

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

May 31, 2021 and November 30, 2020 - 90,000,000 shares;

May 31, 2021 - 39,443,168 shares and November 30, 2020 - 39,443,168 shares

Additional paid-in capital 8,755,020 8,676,056

1 unchanged sentence

Treasury stock, at cost;

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

May 31, 2021 - 25,791,364 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

6 unchanged sentences

(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 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 May 31, 2021, total liabilities include $ 340.1 million related to consolidated VIEs as to which there was no recourse against the Company, of which $ 24.4 million is included in Homebuilding accounts payable, $ 218.9 million in Homebuilding liabilities related to consolidated inventory not owned, $ 85.7 million in Homebuilding senior notes and other debts payable and $ 11.1 million in Homebuilding other 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.

2 unchanged sentences

Condensed Consolidated Statements of Operations and Comprehensive Income (Loss)

(Dollars in thousands, except per share amounts)

Three Months Ended

February 28, February 29,

(In thousands, except per share amounts)

Three Months Ended Six Months Ended

May 31, May 31,

2021 2020 2021 2020

Homebuilding $ 6,028,041 4,949,484 10,971,097 9,121,600

13 unchanged sentences

Homebuilding other income (expense), net ( 4,362 ) 4,308 8,613 ( 5,058 )

Financial Services gain on deconsolidation — 61,418 — 61,418

Multifamily equity in earnings (loss) from unconsolidated entities and other gain 13,854 ( 282 ) 12,586 6,234

Lennar Other unrealized gain 469,745 —

Lennar Other realized and unrealized gain (loss) ( 117,570 ) — 352,175 —

Lennar Other equity in earnings (loss) from unconsolidated entities and other income (expense), net 63,221 ( 37,602 ) 62,174 ( 36,072 )

2 unchanged sentences

Net earnings (including net earnings (loss) attributable to noncontrolling interests) 836,772 516,098 1,853,681 907,321

1,016,909 391,223

Net earnings (loss) attributable to noncontrolling interests 5,409 ( 1,308 ) 20,949 ( 8,537 )

Net earnings attributable to Lennar $ 831,363 517,406 1,832,732 915,858

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 )

Other comprehensive income (loss), net of tax:

Net unrealized gain (loss) on securities available-for-sale $ 316 ( 338 ) ( 626 ) ( 384 )

Reclassification adjustments for loss included in earnings, net of tax — ( 452 ) — ( 452 )

Total other comprehensive income (loss), net of tax $ 316 ( 790 ) ( 626 ) ( 836 )

Total comprehensive income attributable to Lennar $ 831,679 516,616 1,832,106 915,022

6 unchanged sentences

(In thousands)

Three Months Ended

February 28, February 29,

Six Months Ended

Cash flows from operating activities:

3 unchanged sentences

Amortization of discount/premium and accretion on debt, net ( 4,718 ) ( 13,839 )

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

Equity in (earnings) loss from unconsolidated entities ( 67,618 ) 40,355

Distributions of earnings from unconsolidated entities 15,594 38,000

1 unchanged sentence

Deferred income tax expense 136,636 79,738

Lennar Other unrealized gain ( 469,745 ) —

Loans held-for-sale unrealized loss 30,352 2,223

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

Lennar Other unrealized/realized gain ( 352,175 ) —

Gain on sale of other assets and operating properties and equipment ( 18,596 ) ( 13,126 )

Gain on deconsolidation of previously consolidated entity — ( 61,418 )

Gain on sale of interest in unconsolidated entity and other Multifamily gain ( 1,167 ) ( 4,661 )

Gain on sale of Financial Services' portfolio/businesses

( 2,528 ) ( 5,014 )

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

13,576 65,098

Changes in assets and liabilities:

Decrease in receivables 45,649 245,694

Decrease (increase) in receivables 117,910 ( 7,758 )

Increase in inventories, excluding valuation adjustments and write-offs of option deposits and pre-acquisition costs ( 1,576,420 ) ( 159,138 )

8 unchanged sentences

Distributions of capital from unconsolidated entities 231,545 115,093

Proceeds from sale of investment in consolidated joint venture 15,950 —

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

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

Proceeds from sale of Financial Services' portfolio/business 3,327 9,096

(Increase) decrease in Financial Services loans held-for-investment, net ( 3,864 ) 143

Purchases of investment securities ( 43,698 ) ( 29,642 )

1 unchanged sentence

Other receipts, net 8 1,670

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

Net cash used in investing activities $ ( 50,072 ) ( 174,042 )

See accompanying notes to condensed consolidated financial statements.

2 unchanged sentences

(In thousands)

Three Months Ended

February 28, February 29,

Six Months Ended

Cash flows from financing activities:

Net borrowings under revolving line of credit $ — 300,000

Net repayments under warehouse facilities $ ( 535,734 ) ( 310,216 )

Redemption of senior notes — ( 300,000 )

Principal payments on notes payable and other borrowings ( 114,964 ) ( 174,382 )

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

Proceeds from other borrowings 13,973 59,139

Payments related to other liabilities — ( 5,480 )

Proceeds from liabilities related to consolidated inventory not owned 301,869 —

Payments related to consolidated inventory not owned ( 149,686 ) —

Proceeds related to other liabilities, net — 3,567

Receipts related to noncontrolling interests 13,905 169,061

4 unchanged sentences

Net cash used in financing activities $ ( 817,833 ) ( 948,570 )

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

Net (decrease) increase in cash and cash equivalents and restricted cash ( 149,785 ) 188,191

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

12 unchanged sentences

Non-cash contributions to unconsolidated entities 20,423 13,859

Lennar Other (non-cash impacts from sale of solar platform):

Non-cash increase in investment in equity securities $ 127,094 —

Non-cash increase in receivables 64,683 —

Non-cash increase in other liabilities ( 40,302 ) —

Consolidation/deconsolidation of unconsolidated/consolidated entities, net:

Financial Services assets $ — 217,565

Financial Services liabilities — ( 115,175 )

Financial Services noncontrolling interests — ( 102,390 )

Inventories — ( 35,959 )

Operating properties and equipment and other assets — 6,375

Other liabilities — 182

Noncontrolling interests — 29,402

See accompanying notes to condensed consolidated financial statements.

9 unchanged sentences

The Company has historically experienced, and expects to continue to experience, variability in quarterly results.

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.

The condensed consolidated statements of operations for the three and six months ended May 31, 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 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 .

Homebuilding cash and cash equivalents as of May 31, 2021 and November 30, 2020 included $ 678.8 million and $ 314.3 million , respectively, of cash held in escrow.

On average for the three months ended May 31, 2021, cash was held in escrow for approximately four days .

Share-based Payments

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.

During both the three months ended May 31, 2021 and 2020, the Company granted employees an immaterial number of nonvested shares.

During the six months ended May 31, 2021 and 2020, the Company granted employees 1.4 million and 0.9 million nonvested shares, respectively.

Recently Adopted Accounting Pronouncements

9 unchanged sentences

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.

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

New Accounting Pronouncements

2 unchanged sentences

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.

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.

Reclassifications

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

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 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.

13 unchanged sentences

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

(In thousands) February 28, 2021

(In thousands) May 31, 2021

Homebuilding Financial

37 unchanged sentences

$ 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.

(1) Receivables, net for Financial Services primarily related to loans sold to investors for which the Company had not yet been paid.

(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.

(3) Investments in equity securities include investments of $ 83.8 million and $ 61.6 million without readily available fair values as of May 31, 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.

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

Three Months Ended February 28, 2021

Three Months Ended May 31, 2021

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

5 unchanged sentences

Earnings (loss) before income taxes 1,112,475 121,320 22,397 ( 54,097 ) ( 105,210 ) 1,096,885

Three Months Ended February 29, 2020

Three Months Ended May 31, 2020

Revenues $ 4,949,484 196,263 123,117 18,509 — 5,287,373

Operating earnings (loss) 631,361 147,326 ( 638 ) ( 18,021 ) — 760,028

Corporate general and administrative expenses — — — — 78,183 78,183

Charitable foundation contribution — — — — 5,268 5,268

Earnings (loss) before income taxes 631,361 147,326 ( 638 ) ( 18,021 ) ( 83,451 ) 676,577

Lennar Corporation and Subsidiaries

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

Six Months Ended May 31, 2021

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

unallocated Total

$ 10,971,097 462,816 308,916 12,884 — 11,755,713

Operating earnings 1,945,655 267,527 21,523 417,249 — 2,651,954

Corporate general and administrative expenses

— — — — 201,248 201,248

Charitable foundation contribution — — — — 26,807 26,807

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

Earnings (loss) before income taxes 1,945,655 267,527 21,523 417,249 ( 228,055 ) 2,423,899

Six Months Ended May 31, 2020

$ 9,121,600 394,924 255,734 20,452 — 9,792,710

Operating earnings (loss) 1,091,759 194,643 1,147 ( 17,122 ) — 1,270,427

Corporate general and administrative expenses

— — — — 160,817 160,817

Charitable foundation contribution — — — — 9,481 9,481

Earnings (loss) before income taxes 1,091,759 194,643 1,147 ( 17,122 ) ( 170,298 ) 1,100,129

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.

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.

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.

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

5 unchanged sentences

(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

May 31, 2021 $ 5,749,998 3,713,952 2,510,950 11,131,940 1,326,516 2,440,069 26,873,425

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 February 28, 2021

Three Months Ended May 31, 2021

(In thousands) East Central Texas West Other Total Homebuilding

2 unchanged sentences

309,827 159,048 176,057 492,811 ( 25,268 ) 1,112,475

Three Months Ended February 29, 2020

Three Months Ended May 31, 2020

$ 1,277,431 986,284 712,756 1,959,823 13,190 4,949,484

1 unchanged sentence

192,887 103,904 99,887 280,094 ( 45,411 ) 631,361

Lennar Corporation and Subsidiaries

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

Six Months Ended May 31, 2021

(In thousands) East Central Texas West Other Total Homebuilding

$ 2,923,710 2,026,024 1,443,337 4,563,350 14,676 10,971,097

Operating earnings (loss)

571,910 291,071 305,700 814,517 ( 37,543 ) 1,945,655

Six Months Ended May 31, 2020

Revenues $ 2,429,763 1,775,794 1,185,984 3,708,592 21,467 9,121,600

Operating earnings (loss) 341,641 159,627 152,960 505,001 ( 67,470 ) 1,091,759

Financial Services

3 unchanged sentences

The Financial Services segment operates generally in the same states as the Company’s homebuilding operations.

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:

At May 31, 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 (1) $ 600,000

1 unchanged sentence

December 2021 500,000

April 2022 100,000

Total - Residential facilities

3 unchanged sentences

Total - LMF Commercial facilities

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

(1) Subsequent to May 31, 2021, the maturity due date was extended to July 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.

The facilities are non-recourse to the Company and are expected to be

Lennar Corporation and Subsidiaries

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

renewed or replaced with other facilities when they mature.

The facilities are non-recourse to the Company and are expected to be renewed or replaced with other facilities when they mature.

The LMF Commercial facilities finance LMF Commercial loan originations and securitization activities and were secured by up to an 80 % interest in the originated commercial loans financed.

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

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

(In thousands) May 31, 2021 November 30, 2020

Borrowings under the residential facilities $ 671,541 1,185,797

9 unchanged sentences

Mortgage investors could seek to have the Company buy back mortgage loans or compensate them for losses incurred on mortgage loans that the Company has sold based on claims that the Company breached its limited representations or warranties.

The Company’s mortgage operations have established accruals for possible losses associated with mortgage loans previously originated and sold to investors.

The Company’s mortgage operations have established accruals for

Lennar Corporation and Subsidiaries

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

possible losses associated with mortgage loans previously originated and sold to investors.

The Company establishes accruals for such possible losses based upon, among other things, an analysis of repurchase requests received, an estimate of potential repurchase claims not yet received and actual past repurchases and losses through the disposition of affected loans as well as previous settlements.

2 unchanged sentences

The activity in the Company’s loan origination liabilities was as follows:

Three Months Ended

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

Three Months Ended Six Months Ended

May 31, May 31,

(In thousands) 2021 2020 2021 2020

Loan origination liabilities, beginning of period $ 8,433 9,996 7,569 9,364

4 unchanged sentences

LMF Commercial originated commercial loans as follows:

Three Months Ended

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

Three Months Ended Six Months Ended

May 31, May 31,

(Dollars in thousands) 2021 2020 2021 2020

Originations (1) $ 196,498 5,400 415,998 417,650

1 unchanged sentence

Securitizations 1 1 3 3

(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.

(1) During both the three and six months ended May 31, 2021 and 2020 all the commercial loans originated were recorded as loans held-for-sale, which are held at fair value.

Investments held-to-maturity

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

At May 31, 2021 and November 30, 2020, the Financial Services segment 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.

Based on the segment’s assessment, no impairment charges were recorded during either the three or six months ended May 31, 2021 or 2020.

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

Details related to Financial Services' CMBS were as follows:

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

(Dollars in thousands) May 31, 2021 November 30, 2020

Carrying value $ 162,919 164,230

1 unchanged sentence

Incurred interest rate 3.4 % 3.4 %

Lennar Corporation and Subsidiaries

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

February 28, 2021

Discount rates at purchase 6 % — 84 %

5 unchanged sentences

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 Corporation and Subsidiaries

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

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.

During the three months ended May 31, 2021, the Company completed the sale of the Company's residential solar business to Sunnova Energy International Inc.

("Sunnova") for shares in Sunnova.

The Company recorded a gain of $ 151.5 million upon the closing of the sale.

The calculation of the gain included the fair value of the 3.1 million shares in initial consideration received at closing and the fair value of potential shares to be received upon achievement of earnouts.

The significant unobservable fair value assumptions used in the calculation were a terminal value multiple of 3 and a 15 % discount rate.

The fair value of the earnouts was also based on the probability of achieving full or partial earnouts.

The investments in Opendoor Technologies, Inc ("Opendoor") and Sunnova are held at market and will therefore change depending on the value of the Company's share holdings on the last day of each quarter.

During the three months ended May 31, 2021, the Company's Lennar Other segment recorded a loss of $ 234.3 million and $ 38.3 million related to the mark to market of the Company's share holdings in Opendoor and Sunnova, respectively.

During the six months ended May 31, 2021 , Opendoor began trading on the Nasdaq stock market and the Company began to mark to market the Company's share holdings in the public entity.

The mark to market recognition was 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.

As of November 30, 2020, the investment in Opendoor was included in the Company's investments in unconsolidated entities and was accounted for using the equity method.

In addition, as previously noted, several of the Company's other strategic technology investments have announced plans to go public either through an initial public offering or by merging with a publicly traded special purpose acquisition company.

(3) Investments in Unconsolidated Entities

Homebuilding Unconsolidated Entities

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

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

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

(In thousands) May 31, 2021 November 30, 2020

Investments in unconsolidated entities (1) (2) $ 1,010,256 953,177

2 unchanged sentences

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

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.

As of May 31, 2021 and November 30, 2020, the carrying amount of the Company's investment was $ 387.0 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.

1 unchanged sentence

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").

In the first quarter of 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.

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.

2 unchanged sentences

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.

Additionally, the Company guarantees the construction costs of the project as construction cost over-runs would be paid by the Company.

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 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.

The details related to these are unchanged from the disclosure in the Company's Notes to the Financial Statements section in its Form 10-K for the year ended November 30, 2020.

As of both May 31, 2021 and November 30, 2020, the fair value of the completion guarantees was immaterial.

As of May 31, 2021 and November 30, 2020, Multifamily segment's unconsolidated entities had non-recourse debt with completion guarantees of $ 748.4 million and $ 722.9 million, respectively.

Lennar Corporation and Subsidiaries

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

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.

1 unchanged sentence

The details of the activity was as follows:

Three Months Ended

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

Three Months Ended Six Months Ended

May 31, May 31,

(In thousands) 2021 2020 2021 2020

General contractor services, net of deferrals $ 148,891 104,471 264,290 198,365

2 unchanged sentences

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

Details of each as of and during the six months ended May 31, 2021 are included below:

(In thousands) LMV I LMV II

5 unchanged sentences

Lennar's remaining commitments 6,603 28,066

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

Distributions to Lennar during the six months ended May 31, 2021 40,581 1,165

Lennar Other Unconsolidated Entities

1 unchanged sentence

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

(4) 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 six months ended May 31, 2021 and 2020:

Three Months Ended May 31, 2021

(In thousands) Total

Equity Class A

Common Stock Class B

Common Stock Additional

Paid - in Capital Treasury

Stock Accumulated Other Comprehensive Income (loss) Retained

Earnings Noncontrolling

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

Net earnings (including net earnings attributable to noncontrolling interests) 836,772 — — — — — 831,363 5,409

Employee stock and directors plans

( 4,537 ) 2 — 1,165 ( 5,704 ) — — —

Purchases of treasury stock ( 98,460 ) — — — ( 98,460 ) — — —

Amortization of restricted stock

32,276 — — 32,276 — — — —

Cash dividends ( 78,483 ) — — — — — — ( 78,483 ) —

Receipts related to noncontrolling interests

5,009 — — — — — — 5,009

Payments related to noncontrolling interests

( 5,829 ) — — — — — — ( 5,829 )

Non-cash purchase or activity of noncontrolling interests, net ( 2,417 ) — — ( 2,613 ) — — — 196

Total other comprehensive income, net of tax 316 — — — — 316 — —

Balance at May 31, 2021 $ 19,702,098 30,049 3,944 8,755,020 ( 1,452,874 ) ( 1,431 ) 12,241,400 125,990

Lennar Corporation and Subsidiaries

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

(4) Stockholders' Equity

Three Months Ended February 28, 2021

Three Months Ended May 31, 2020

(In thousands) Total

3 unchanged sentences

Paid - in Capital Treasury

Stock Accumulated Other Comprehensive Income (loss) Retained

Earnings Noncontrolling

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

Net earnings (including net loss attributable to noncontrolling interests)

516,098 — — — — — 517,406 ( 1,308 )

Employee stock and directors plans

651 2 — 756 ( 107 ) — — —

Amortization of restricted stock

23,286 — — 23,286 — — — —

Cash dividends ( 38,905 ) — — — — — — ( 38,905 ) —

Receipts related to noncontrolling interests

80,148 — — — — — — 80,148

Payments related to noncontrolling interests

( 4,767 ) — — — — — — ( 4,767 )

Non-cash consolidations/deconsolidations, net ( 131,306 ) — — — — — — ( 131,306 )

Non-cash purchase or activity of noncontrolling interests, net ( 5,168 ) — — ( 3,544 ) — — — ( 1,624 )

Total other comprehensive loss, net of tax ( 790 ) — — — — ( 790 ) — —

Balance at May 31, 2020 $ 16,632,624 29,804 3,944 8,630,442 ( 1,253,863 ) ( 338 ) 9,132,714 89,921

Six Months Ended May 31, 2021

(In thousands) Total

Equity Class A

Common Stock Class B

Common Stock Additional

Paid - in Capital Treasury

Stock Accumulated Other Comprehensive Loss Retained

16 unchanged sentences

Total other comprehensive loss, net of tax ( 626 ) — — — — ( 626 ) — —

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

Balance at May 31, 2021 $ 19,702,098 30,049 3,944 8,755,020 ( 1,452,874 ) ( 1,431 ) 12,241,400 125,990

Six Months Ended May 31, 2020

(In thousands) Total

18 unchanged sentences

( 21,501 ) — — — — — — ( 21,501 )

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

Non-cash consolidations/deconsolidations, net ( 131,791 ) — — — — — — ( 131,791 )

Non-cash purchase or activity of noncontrolling interests, net ( 5,168 ) — — ( 3,544 ) — — — ( 1,624 )

Total other comprehensive loss, net of tax ( 836 ) — — — — ( 836 ) — —

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.

Balance at May 31, 2020 $ 16,632,624 29,804 3,944 8,630,442 ( 1,253,863 ) ( 338 ) 9,132,714 89,921

Lennar Corporation and Subsidiaries

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

On June 18, 2021, the Company's Board of Directors declared a quarterly cash dividend of $ 0.25 per share on both its Class A and Class B common stock, payable on July 19, 2021 to holders of record at the close of business on July 2, 2021.

On May 5, 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 April 21, 2021, as declared by its Board of Directors on April 7, 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 and first two quarter of 2021 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 and its predecessor for the three months ended February 28, 2021 and February 29, 2020:

Three Months Ended

February 28, 2021 February 29, 2020

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

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 and six months ended May 31, 2021 and 2020:

Three Months Ended Six Months Ended

May 31, 2021 May 31, 2020 May 31, 2021 May 31, 2020

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

Shares repurchased 1,000,000 — — — 1,510,000 — 4,250,000 115,000

1 unchanged sentence

Average price per share $ 98.44 $ — $ — $ — $ 93.73 $ — $ 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

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

Three Months Ended Six Months Ended

May 31, May 31,

(Dollars in thousands) 2021 2020 2021 2020

Provision for income taxes $ 260,113 160,479 570,218 192,808

Effective tax rate (1) 23.8 % 23.7 % 23.7 % 17.4 %

(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.

(1) For the three and six months ended May 31, 2021 and 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 six months ended May 31, 2020 also included benefits related to the years ended November 30, 2018 and 2019, due to Congress retroactively extending the new energy efficient home tax credit in December 2019.

(6) Earnings Per Share

4 unchanged sentences

The Company’s restricted common stock ("nonvested shares") is considered participating securities.

Lennar Corporation and Subsidiaries

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

Basic and diluted earnings per share were calculated as follows:

Three Months Ended

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

Three Months Ended Six Months Ended

May 31, May 31,

(In thousands, except per share amounts) 2021 2020 2021 2020

Net earnings attributable to Lennar $ 831,363 517,406 1,832,732 915,858

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 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

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

For both the three and six months ended May 31, 2021 and May 31, 2020, there were no options to purchase shares of common stock that were outstanding and anti-dilutive.

(7) Homebuilding Senior Notes and Other Debts Payable

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

(Dollars in thousands) May 31, 2021 November 30, 2020

6.25 % senior notes due December 2021 (1)

22 unchanged sentences

$ 5,894,342 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.

(1) Subsequent to May 31, 2021, the Company retired these notes.

The redemption price, which was paid in cash, was par plus accrued but unpaid interest.

The carrying amounts of the senior notes in the table above are net of debt issuance costs of $ 13.6 million and $ 15.9 million as of May 31, 2021 and November 30, 2020, respectively.

As of May 31, 2021 the maximum available borrowings on the Company's unsecured revolving credit facility (the "Credit Facility") were $ 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 .

1 unchanged sentence

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

Lennar Corporation and Subsidiaries

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

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) February 28, 2021 November 30, 2020

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

(In thousands) May 31, 2021 November 30, 2020

Performance letters of credit $ 817,831 752,096

7 unchanged sentences

The activity in the Company’s warranty reserve, which are included in Homebuilding other liabilities, was as follows:

Three Months Ended

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

Three Months Ended Six Months Ended

May 31, May 31,

(In thousands) 2021 2020 2021 2020

Warranty reserve, beginning of the period $ 348,100 287,413 341,765 294,138

3 unchanged sentences

Warranty reserve, end of period $ 361,741 301,462 361,741 301,462

(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)

(1) The adjustments to pre-existing warranties from changes in estimates during the three and six months ended May 31, 2021 and May 31, 2020 primarily related to specific claims in certain of the Company's homebuilding communities and other adjustments.

(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 February 28, 2021 and November 30, 2020, 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 or issued by the Company at May 31, 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.

February 28, 2021 November 30, 2020

May 31, 2021 November 30, 2020

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

10 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)

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.

6 unchanged sentences

Fair Value Hierarchy Fair Value at

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

(In thousands) May 31, 2021 November 30, 2020

Financial Services Assets:

3 unchanged sentences

Lennar Other:

Investments in equity securities Level 1 $ 461,238 —

Investments available-for-sale Level 3 41,563 53,497

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

February 28, 2021 November 30, 2020

May 31, 2021 November 30, 2020

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

2 unchanged sentences

167,948 ( 4,028 ) 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.

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.

The fair value of these are included in Financial Services’ loans held-for-sale as of May 31, 2021 and November 30, 2020.

Fair value of servicing rights is determined based on actual sales of servicing rights on loans with similar characteristics.

7 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:

Unobservable inputs As of February 28, 2021

Unobservable inputs As of May 31, 2021 As of November 30, 2020

Mortgage prepayment rate 13 % 18 %

1 unchanged sentence

Delinquency rate 3 % 4 %

Lennar Other investments in equity securities - The fair value of investments in equity securities was calculated based on independent quoted market prices.

The Company’s investments in equity securities were recorded at fair value with all changes in fair value recorded to Lennar Other unrealized gain of the Company’s condensed consolidated statements of operations and comprehensive income (loss).

Lennar Corporation and Subsidiaries

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

Lennar Other investments available-for-sale - The fair value of investments available-for-sale is calculated from model-based techniques that use discounted cash flow assumptions and the Company’s own estimates of CMBS spreads, market interest rate movements and the underlying loan credit quality.

2 unchanged sentences

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

Three Months Ended

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

Three Months Ended Six Months Ended

May 31, May 31,

(In thousands) 2021 2020 2021 2020

Changes in fair value included in Financial Services revenues:

2 unchanged sentences

Forward contracts ( 23,953 ) 8,478 10,285 ( 883 )

Changes in fair value included in Lennar Other unrealized gain:

Changes in fair value included in Lennar Other realized and unrealized gain (loss):

Investments in equity securities $ ( 272,625 ) — 197,120 —

1 unchanged sentence

Lennar Other investments available-for-sale $ 316 ( 338 ) ( 626 ) ( 384 )

Financial Services investments available-for-sale — ( 46 )

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

Lennar Corporation and Subsidiaries

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

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

Three Months Ended

February 28, 2021 February 29, 2020

May 31, 2021 May 31, 2020

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

2 unchanged sentences

Sales/loan originations sold, including those not settled — ( 155,740 ) — ( 143,285 )

Disposals/settlements (1) ( 58 ) ( 7,300 ) ( 8,908 ) —

Changes in fair value (2) 1,141 2,825 ( 3,037 ) ( 2,334 )

Interest and principal paydowns — ( 309 ) — ( 298 )

Ending balance $ 2,602 163,920 1,238 159,885

Six Months Ended

May 31, 2021 May 31, 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

Purchases/loan originations 443 420,796 1,354 417,650

Sales/loan originations sold, including those not settled

— ( 438,705 ) — ( 457,724 )

3 unchanged sentences

Ending balance $ 2,602 163,920 1,238 159,885

(1) The three and six months ended May 31, 2020 include $ 7.5 million related to the sale of a servicing portfolio.

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

2 unchanged sentences

The assets measured at fair value on a nonrecurring basis are summarized below:

Lennar Corporation and Subsidiaries

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

Three Months Ended

February 28, 2021 February 29, 2020

May 31, 2021 May 31, 2020

(In thousands) Fair Value

3 unchanged sentences

Land and land under development (1) Level 3 78 — ( 78 ) 42,609 9,709 ( 32,900 )

Six Months Ended

May 31, 2021 May 31, 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 $ 21,784 8,728 ( 13,056 ) 141,809 120,404 ( 21,405 )

Land and land under development (1) Level 3 520 — ( 520 ) 65,062 21,369 ( 43,693 )

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

12 unchanged sentences

(in thousands)

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)

At or for the Six Months Ended

May 31, 2021 1,221 10 1 $ 17,117 $ 11,849

May 31, 2020 1,241 41 9 69,137 32,072

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:

Three Months Ended

February 29, 2020

Six Months Ended

Unobservable inputs Range

3 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 three months ended February 28, 2021 and based on the Company's evaluation, there were no VIEs that were consolidated or deconsolidated.

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 six months ended May 31, 2021 and based on the Company's evaluation, there were no VIEs that were consolidated or deconsolidated.

Lennar Corporation and Subsidiaries

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

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.

6 unchanged sentences

Unconsolidated VIEs

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

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

May 31, 2021 November 30, 2020

(In thousands) Investments in

8 unchanged sentences

$ 927,846 1,105,148 949,447 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.

(1) As of May 31, 2021 and November 30, 2020, the maximum exposure to loss of Homebuilding's investments in unconsolidated VIEs was limited to its investments in unconsolidated VIEs, except as of May 31, 2021, with regard to the Company's remaining commitment to fund capital in the Upward America Venture, a single family for rent platform.

(2) As of May 31, 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 $ 34.7 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 May 31, 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 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.

During the six months ended May 31, 2021, consolidated inventory not owned increased by $ 73.4 million with a corresponding increase to liabilities related to consolidated inventory not owned in the accompanying condensed consolidated balance sheet as of May 31, 2021.

The increase was primarily due to additions in the six months ended May 31, 2021 as the Company focused on increasing its controlled homesites.

The liabilities related to consolidated inventory not

Lennar Corporation and Subsidiaries

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

owned primarily represent the difference between the option exercise prices for the optioned land and the Company’s cash deposits.

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

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

(Dollars in thousands) May 31, 2021 November 30, 2020

Non-refundable option deposits and pre-acquisition costs $ 891,910 414,154

13 unchanged sentences

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

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

(Dollars in thousands) May 31, 2021 November 30, 2020

Right-of-use assets $ 157,444 113,390

2 unchanged sentences

Weighted-average discount rate 3.0 % 3.1 %

Lennar Corporation and Subsidiaries

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

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

(Dollars in thousands) Lease Payments

Future minimum payments under the noncancellable leases in effect at May 31, 2021 were as follows:

(In thousands) Lease Payments

2021 $ 17,932

5 unchanged sentences

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

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

As of May 31, 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 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.

As of May 31, 2021, the weighted average remaining lease term and weighted average discount rate used in calculating the lease liabilities were 8.4 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.

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

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

Six months ended

(In thousands) May 31, 2021 May 31, 2020

Rental expense $ 41,662 41,131

Payment on lease liabilities 18,122 28,958

Lennar Corporation and Subsidiaries

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

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

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

For both the six months ended May 31, 2021 and 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