What changed in this filing

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Item 2. Management’s Discussion and Analysis

2021-07-02 compared with 2021-04-01 · 299 added, 146 removed, 284 unchanged (61% of the section changed)

14 unchanged sentences

reduced availability of mortgage financing or increased interest rates;

our inability to successfully execute our strategies, including our land lighter strategy and our strategy to monetize non-core assets;

our inability to successfully execute our strategies, including our land lighter strategy and our planned spin-off of certain businesses;

changes in general economic and financial conditions that reduce demand for our products and services, lower our profit margins or reduce our access to credit;

15 unchanged sentences

We undertake no obligation, other than those imposed by securities laws, to publicly revise any forward-looking statements to reflect events or circumstances after the date of those statements or to reflect the occurrence of anticipated or unanticipated events.

The housing market remains strong.

The underproduction of homes for the past 10 years has created a housing shortage that, combined with strong demand, has pushed home prices higher.

Even though interest rates have slightly increased, they are still lower than they were a year ago, and affordability remains strong, with many American families having fortified savings as vacations and recreational activities have been canceled or postponed, and stimulus money from the government continues to fill the remaining gaps.

The dream of homeownership is an essential aspiration of the American population, and the seemingly imminent resolution of the pandemic is not slowing the growing demand.

Our measured growth strategy in the current market is to focus on selling homes when we begin construction, while being patient with longer-term sales.

This enables price appreciation to offset future cost escalations to maximize margin.

We believe the virtue of this strategy has been borne out by our 25.0% first quarter gross margin versus 20.5% last year.

We are also focused on managing the supply chain and production.

In the first quarter, lumber costs increased about $2,300 per home both year over year and sequentially.

These cost increases were more than offset by other cost decreases year-over-year, but not sequentially, resulting in an overall year-over-year cost decline and sequential cost increase.

We expect to see additional increases in the cost of lumber throughout the year.

While community count at the end of the first quarter was down from the prior year, we are still on track to increase our active communities by about 10% in fiscal 2021.

We anticipate that we will replace our existing communities with larger, higher volume communities, which allows us to better leverage our overhead, improve our bottom line, and increase our returns and cash flow.

We expect to deliver between 62,000 and 64,000 homes in 2021 and with gross margin guidance of about 25.0% for the year.

We have remained focused on our optioned versus owned land strategy and believe we are in an excellent position to achieve our target of 50% owned land and 50% land controlled through options or similar agreements by the end of 2021.

At the end of the first quarter, the portion of land we controlled through options or similar agreements was 45%, up from 39% at the start of the fiscal year.

We ended the first quarter with a 3.4 years supply of land owned, compared to a 4.0 years supply of land owned at the same time last year.

Among other things, this has enabled us to reduce debt, such that our first quarter homebuilding debt-to-total capital ratio improved to 24.0%, down from 33.6% in the prior year.

Consistent with our land-light strategy, and a focus on increased profitability and returns, we expanded our business through the creation of a single-family rental platform that will facilitate a better time delivery of our homes with reduced cycle times.

Our Upward America Venture will make our homes available for rent, with a portion of the homes available with a rent to own option.

The venture will permit families and individuals across the country to live in brand-new homes at an attainable price point without putting up a down payment.

The venture will initially be capitalized with a total equity commitment of $1.25 billion, and will be positioned to acquire over $4.0 billion of new single family homes and townhomes.

Our technology initiatives, which are focused on building solutions to important challenges that are adjacent to our core Homebuilding and Financial Services businesses, have contributed meaningfully to our readiness for current economic and structural shifts while helping to improve our core business and drive our SG&A to a historic first quarter low of 8.4%.

Opendoor, one of our many technology investments, began trading as a public company in December 2020 and we recorded a $470 million unrealized gain as a result.

While this gain is extraordinary relative to our operating platform, it is not a one-time event for the Company.

We have invested in a number of high-quality technology businesses, including Doma, previously known as States Title, and Hippo Home Insurance, both of which have announced agreements to merge with publicly traded special purpose acquisition companies, and SunStreet solar power platform, which we have agreed to sell to Sunnova Energy International, Inc.

in exchange for Sunnova stock.

We are conservatively estimating an economic gain in excess of $1 billion from these three transactions.

We have continued to drive and grow our ancillary business divisions, and they continue to mature, but we think being simpler would enable us better to focus on our core business units.

We continue to work on strategies to better position our Multifamily platform, our new single-family home for rent platform, our land program, our commercial mortgage business and our growing technology investments platform.

We believe the best way to enhance corporate value is to have Lennar standalone as a pure-play homebuilder and financial services company, and to enable these blue-chip businesses to thrive and excel independently.

Therefore, we are working to construct a tax-free spin-off of all or parts of these businesses in a unified company.

With a solid balance sheet, leading positions in almost all of our homebuilding markets and continued execution of our core operating strategies, we believe that we have never been better positioned financially, organizationally, culturally, and technologically, to thrive and grow in this evolving and exciting housing market.

The housing market remains very strong.

Demand has continued to strengthen while the supply of new and existing homes has remained constrained.

New home construction cannot ramp up quickly enough to fill the void of the underproduction of homes for the past decade.

The bottom line is that supply of homes is short and while land, labor and supply chain are limiting factors in the drive to meet current demand, we believe that the housing shortage is likely to remain for some time to come.

Even though home prices have moved much higher and interest rates have ticked up slightly higher, overall affordability remains strong and interest rates are still lower than they were a year ago.

Personal savings for deposits are strong and wages seem to be rising faster than monthly payments.

Millennials are moving out of their parents’ homes and forming families, while apartment dwellers are finding a first-time home.

We believe we are uniquely positioned to capitalize and drive even greater growth in our bottom line on this demand given our focus on orderly, targeted growth, with our sales pace tightly matched with our pace of production, which enables price appreciation to offset future cost escalations to maximize margins.

We do not currently see the rising cost of homes reducing demand for the homes we build.

We believe we are making up for the years of underproduction of homes now, which should keep the housing market thriving for some time to come.

The housing market is not only very strong, but it is also going through some structural changes that will promote stability in the market, and extend housing benefits to the breadth of a diverse society.

The iBuyer and single-family for rent participants are providing additional liquidity to the marketplace to purchase and sell homes, as they evolve and provide ever more frictionless transactions.

They are also solving important industry problems that have needed solutions for a very long time.

The iBuyers, led by Opendoor, are becoming more than just a home sale option.

They are an ever more effective and instrumental convenience provider, as the coordination of a new home is being complicated by supply chain disruption.

Additionally, in the single-family for rent space, our Upward America Venture facilitates a better time delivery of our homes with reduced cycle times and makes the single-family lifestyle accessible to more families.

Professional ownership of homes enables renters to access a single-family lifestyle, while they build the resources to own, and while commercial and professional owners manage the risk profile, which enables better housing for more families, and more diverse families, without weakening the mortgage market.

Capitalized with $1.25 billion of equity from blue-chip institutional investors, the Upward America Venture had a pipeline of 2,534 homes with a total purchase price of $596 million at the end of the second quarter.

The combined effects of this strong housing market along with structural changes, which we are in position to capitalize on through our strategic investments, puts Lennar in position to continue to drive returns and should position us for consistent continued growth into fiscal 2022.

We are focused on cash flow, debt reduction, and stock buyback, land controlled versus owned, return on capital, and return on equity, and on innovative technologies.

In addition, we have been carefully managing a stressed supply chain by maintaining our delivery targets for the year rather than increasing them.

We still expect to deliver between 62,000 and 64,000 homes in 2021, but with a now higher expected gross margin of 26.5% to 27.0% and expected SG&A of 7.3% to 7.5% for the year.

Our return on equity stands now at 18.8%, which is a 550 basis point improvement over last year.

Our return on capital is now 15.0%, and a 500-basis point improvement.

We have remained focused on our optioned versus owned land strategy, and achieved 50% land controlled through options or similar agreements two quarters earlier than expected.

We ended the second quarter with a 3.3 years supply of land owned, compared to a 3.9 years supply of land owned at the same time last year.

Among other things, this has enabled us to reduce debt, such that our second quarter homebuilding debt-to-total capital ratio improved to 23.1%, from 31.2% in the prior year.

These points of improvement have enabled us to reconsider the size of our spin-off and aim for a larger asset base in order to further fortify the new company.

Accordingly, we are now targeting an asset base of $5 billion to $6 billion, which will leave the remaining pure-play homebuilding and financial services company with an appropriately liquid balance sheet and no material loss of reported earnings.

The new company will be an independent and active asset management business that raises third-party capital to support its ongoing business vertical.

Two of these verticals, the multifamily platform and LSFR, our single-family rental platform, have already raised third-party capital and are active asset managers.

Additionally, we have a dynamic and growing independent land development business, and we have a growing technology investment business, which is part of LEN X .

This separation of these businesses from the homebuilder will enable them to thrive in ways they cannot while they are part of Lennar.

As a company we are recasting the cost structure all the way from hard costs like labor and materials, to the softer costs around SG&A.

We are re-wiring the way that this business operates, including through the technologies that we are incorporating into our business, the efficiency of our land program, our just-in-time delivery of land and the emergent inventory management component of our single-family for rent program.

Additionally, as we bring debt down, we have less capital cost, and that is continuing to help our margin picture.

We believe that we have never been better positioned financially, organizationally and technologically to thrive and grow in an evolving and exciting housing market.

The market conditions remain strong for the foreseeable future, and we expect a strong second half of 2021, and continued strength in the market as we begin to look to 2022.

(1) Results of Operations

We historically have experienced, and expect to continue to experience, variability in quarterly results.

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

Our results 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.

Our homebuilding business is seasonal in nature and generally reflects higher levels of new home order activity in our second and third fiscal quarters and increased deliveries in the second half of our fiscal year.

However, a variety of factors can alter seasonal patterns.

Our net earnings attributable to Lennar were $1.0 billion, or $3.20 per diluted share ($3.20 per basic share), in the first quarter of 2021, compared to net earnings attributable to Lennar of $398.5 million, or $1.27 per diluted share ($1.27 per basic share), in the first quarter of 2020.

Our net earnings attributable to Lennar were $831.4 million, or $2.65 per diluted share ($2.66 per basic share), in the second quarter of 2021, compared to net earnings attributable to Lennar of $517.4 million, or $1.65 per diluted share ($1.66 per basic share), in the second quarter of 2020.

Our net earnings attributable to Lennar were $1.8 billion, or $5.85 per diluted share ($5.86 per basic share), in the six months ended May 31, 2021, compared to net earnings attributable to Lennar of $915.9 million, or $2.91 per diluted share ($2.92 per basic share), in the six months ended May 31, 2020.

Financial information relating to our operations was as follows:

Three Months Ended February 28, 2021

Three Months Ended May 31, 2021

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

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Equity in earnings (loss) from unconsolidated entities, Multifamily other gain and Lennar Other other income (expense), net (1,688) — 13,854 63,221 — 75,387

Other income, net 12,975 — — — — 12,975

Lennar Other unrealized gain — — — 469,745 — 469,745

Other expense, net (4,362) — — — — (4,362)

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

Operating earnings (loss) $ 1,112,475 121,320 22,397 (54,097) — 1,202,095

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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

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

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Total costs and expenses 4,313,331 110,355 123,473 (1,072) — 4,546,087

Equity in earnings (loss) from unconsolidated entities, Multifamily other gain and Lennar Other other income (expense), net (4,546) — 6,516 1,530 — 3,500

Other expense, net (9,366) — — — — (9,366)

Equity in loss from unconsolidated entities (9,100) — (282) (26,642) — (36,024)

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

Other income (expense), net 4,308 — — (10,960) — (6,652)

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

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

Three Months Ended February 28, 2021 versus Three Months Ended February 29, 2020

Revenues from home sales increased 18% in the first quarter of 2021 to $4.9 billion from $4.1 billion in the first quarter of 2020.

Six Months Ended May 31, 2021

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

Sales of homes $ 10,871,645 — — — — 10,871,645

Sales of land 86,428 — — — — 86,428

Other revenues 13,024 462,816 308,916 12,884 — 797,640

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

Costs and expenses:

Costs of homes sold 8,088,235 — — — — 8,088,235

Costs of land sold 74,167 — — — — 74,167

Selling, general and administrative expenses 865,400 — — — — 865,400

Other costs and expenses — 195,289 299,979 9,984 — 505,252

Total costs and expenses 9,027,802 195,289 299,979 9,984 — 9,533,054

Equity in earnings (loss) from unconsolidated entities and Multifamily other gain (6,253) — 12,586 62,174 — 68,507

Other income, net 8,613 — — — — 8,613

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

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

Six Months Ended May 31, 2020

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

Sales of homes $ 9,065,848 — — — — 9,065,848

Sales of land 46,700 — — — — 46,700

Other revenues 9,052 394,924 255,734 20,452 — 680,162

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

Costs and expenses:

Costs of homes sold 7,154,550 — — — — 7,154,550

Costs of land sold 70,504 — — — — 70,504

Selling, general and administrative 786,083 — — — — 786,083

Other costs and expenses — 261,699 260,821 1,502 524,022

Total costs and expenses 8,011,137 261,699 260,821 1,502 — 8,535,159

Equity in earnings (loss) from unconsolidated entities and Multifamily other gain

(13,646) — 6,234 (26,523) — (33,935)

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

Other expense, net (5,058) — — (9,549) — (14,607)

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

Three Months Ended May 31, 2021 versus Three Months Ended May 31, 2020

Revenues from home sales increased 21% in the second quarter of 2021 to $6.0 billion from $4.9 billion in the second quarter of 2020.

Revenues were higher primarily due to a 14% increase in the number of home deliveries, excluding unconsolidated entities, and a 6% increase in the average sales price.

New home deliveries, excluding unconsolidated entities, increased to 14,462 homes in the second quarter of 2021 from 12,653 homes in the second quarter of 2020.

The average sales price of homes delivered was $414,000 in the second quarter of 2021, compared to $389,000 in the second quarter of 2020.

Gross margin on home sales were $1.6 billion, or 26.1%, in the second quarter of 2021, compared to $1.1 billion, or 21.6%, in the second quarter of 2020.

The gross margin percentage on home sales increased primarily as a result of pricing power as the increase in revenue per square foot outpaced the increase in cost per square foot.

Additionally, we continued to focus on controlling construction costs.

Gross margin on land sales in the second quarter of 2021 was $5.8 million compared to a loss of $23.5 million in the second quarter of 2020.

The loss in the second quarter of 2020 was primarily due to a write-off of costs as a result of us not moving forward with a naval base development in Concord, California, northeast of San Francisco.

Selling, general and administrative expenses were $455.2 million in the second quarter of 2021, compared to $407.2 million in the second quarter of 2020.

As a percentage of revenues from home sales, selling, general and administrative expenses improved to 7.6% in the second quarter of 2021, from 8.3% in the second quarter of 2020.

This was the lowest percentage for a second quarter in our history primarily due to a decrease in broker commissions and benefits of our technology efforts.

Operating earnings for the Financial Services segment were $121.2 million in the second quarter of 2021, compared to $150.6 million in the second quarter of 2020 (which included $147.3 million of operating earnings and an add back of $3.3 million of net loss attributable to noncontrolling interests).

The second quarter of 2020 included a $61.4 million gain on the deconsolidation of a previously consolidated entity.

Excluding this gain, the improvement in operating earnings was primarily due to an increase in margin in the mortgage business and an increase in volume and margin in the title business.

Operating earnings for the Multifamily segment were $22.4 million in the second quarter of 2021, compared to an operating loss of $0.6 million in the second quarter of 2020.

Operating loss for the Lennar Other segment was $54.1 million in the second quarter of 2021, compared to $18.0 million in the second quarter of 2020.

In the second quarter of 2021, we recorded mark to market losses on our Opendoor Technologies, Inc ("Opendoor") and Sunnova Energy International Inc.

("Sunnova") investments of $234.3 million and $38.3 million, respectively.

This was partially offset by a gain of $151.5 million recognized during the quarter related to the sale of our solar business to Sunnova.

Six Months Ended May 31, 2021 versus Six Months Ended May 31, 2020

Revenues from home sales increased 20% in the six months ended May 31, 2021 to $10.9 billion from $9.1 billion in the six months ended May 31, 2020.

Revenues were higher primarily due to a 17% increase in the number of home deliveries, excluding unconsolidated entities.

New home deliveries, excluding unconsolidated entities, increased to 12,302 homes in the first quarter of 2021 from 10,313 homes in the first quarter of 2020.

The average sales price of homes delivered was $398,000 in the first quarter of 2021, compared to $402,000 in the first quarter of 2020.

Gross margin on home sales were $1.2 billion, or 25.0%, in the first quarter of 2021, compared to $849.0 million, or 20.5%, in the first quarter of 2020.

The gross margin percentage on home sales increased primarily driven by pricing power as we have been able to increase revenue per square foot, as well as lower interest expense per home delivered as result of

paydowns of senior notes in the past two years and lower field expense as a percentage of home sales revenue due to increased volume.

Selling, general and administrative expenses were $410.2 million in the first quarter of 2021, compared to $378.9 million in the first quarter of 2020.

As a percentage of revenues from home sales, selling, general and administrative expenses improved to 8.4% in the first quarter of 2021, from 9.2% in the first quarter of 2020.

This was the lowest percentage for a first quarter in our history primarily due to our focus on improving our operating leverage combined with the benefits of our technology efforts.

Operating earnings for our Financial Services segment were $146.2 million in the first quarter of 2021, compared to $58.2 million in the first quarter of 2020 (which included $47.3 million of operating earnings and an add back of $10.9 million of net loss attributable to noncontrolling interests).

Operating earnings increased primarily due to the improvement in our mortgage business as a result of an increase in volume and margin and improvement in our title business as a result of an increase in volume.

Operating loss for our Multifamily segment was $0.9 million in the first quarter of 2021, compared to operating earnings of $1.8 million in the first quarter of 2020.

Operating earnings for our Lennar Other segment were $471.3 million in the first quarter of 2021, compared to $0.9 million in the first quarter of 2020.

In the first quarter of 2021, we recognized a gain of $469.7 million related to a strategic investment in Opendoor, which began trading on the Nasdaq stock market in December 2020.

The gain relates to the mark to market of our share holdings in the public entity.

Two other technology driven companies in which we have investments have announced agreements to merge with publicly traded special purpose acquisition companies.

New home deliveries, excluding unconsolidated entities, increased to 26,764 homes in the six months ended May 31, 2021 from 22,966 homes in the six months ended May 31, 2020.

The average sales price of homes delivered was $406,000 in the six months ended May 31, 2021, compared to $395,000 in the six months ended May 31, 2020.

Gross margin on home sales were $2.8 billion, or 25.6%, in the six months ended May 31, 2021, compared to $1.9 billion or 21.1%, in the six months ended May 31, 2020.

The gross margin percentage on home sales increased primarily as a result of pricing power as the increase in revenue per square foot outpaced the increase in cost per square foot.

Additionally, we continued to focus on controlling construction costs.

Gross margin on land sales in the six months ended May 31, 2021 was $12.3 million, compared to a loss of $23.8 million in the six months ended May 31, 2020.

The loss in the six months ended May 31, 2020 was primarily due to a write-off of costs in the second quarter of 2020 as a result of us not moving forward with a naval base development in Concord, California, northeast of San Francisco.

Selling, general and administrative expenses were $865.4 million in the six months ended May 31, 2021, compared to $786.1 million in the six months ended May 31, 2020.

As a percentage of revenues from home sales, selling, general and administrative expenses improved to 8.0% in the six months ended May 31, 2021, from 8.7% in the six months ended May 31, 2020.

The improvement was primarily due to a decrease in broker commissions and benefits of our technology efforts.

Operating earnings for the Financial Services segment were $267.4 million in the six months ended May 31, 2021, compared to $208.8 million in the six months ended May 31, 2020 (which included $194.6 million in operating earnings and an add back of $14.1 million net loss attributable to noncontrolling interests).

The six months ended May 31, 2020 included a $61.4 million gain on the deconsolidation of a previously consolidated entity.

Excluding this gain, the improvement in operating earnings was primarily due to an increase in volume and margin in the mortgage and title businesses.

Operating earnings for the Multifamily segment were $21.5 million in the six months ended May 31, 2021, compared to operating earnings of $1.1 million in the six months ended May 31, 2020.

Operating earnings for the Lennar Other segment were $417.2 million in the six months ended May 31, 2021, compared to an operating loss of $17.1 million in the six months ended May 31, 2020.

The operating earnings for the six months ended May 31, 2021 were primarily due to the net gain related to the mark to market of our shareholdings in Opendoor, which began trading on the Nasdaq stock market in December 2020, and the gain on the sale of our solar business to Sunnova.

Homebuilding Segments

At February 28, 2021, our reportable Homebuilding segments and Homebuilding Other are outlined in Note 2 of the Notes to Condensed Consolidated Financial Statements.

At May 31, 2021, our reportable Homebuilding segments and Homebuilding Other are outlined in Note 2 of the Notes to Condensed Consolidated Financial Statements.

The following tables set forth selected financial and operational information related to our homebuilding operations for the periods indicated:

Selected Financial and Operational Data

Three Months Ended February 28, 2021

Three Months Ended May 31, 2021

Gross Margins Operating Earnings (Loss)

($ in thousands) Sales of Homes Revenue Costs of Sales of Homes Gross Margin % Net Margins on Sales of Homes (1) Gross Margins (Loss) on Sales of Land Other Revenue Equity in Earnings (Loss) from Unconsolidated Entities Other Income (Expense), net Operating Earnings (Loss)

($ in thousands) Sales of Homes Revenue Costs of Sales of Homes Gross Margin % Net Margins on Sales of Homes (1) Gross Margins on Sales of Land Other Revenue Equity in Earnings (Loss) from Unconsolidated Entities Other Income (Expense), net Operating Earnings (Loss)

East $ 1,551,030 1,115,010 28.1 % 307,978 1,335 1,768 (59) (1,195) 309,827

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$ 5,980,731 4,421,373 26.1 % 1,104,194 5,806 8,525 (1,688) (4,362) 1,112,475

Three Months Ended February 29, 2020

Three Months Ended May 31, 2020

Gross Margins Operating Earnings (Loss)

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$ 4,925,081 3,862,771 21.6 % 655,119 (23,536) 4,570 (9,100) 4,308 631,361

Six Months Ended May 31, 2021

Gross Margins Operating Earnings (Loss)

(In thousands) Sales of Homes Revenue Costs of Sales of Homes Gross Margin % Net Margins on Sales of Homes (1) Gross Margins on Sales of Land Other Revenue Equity in Earnings (Loss) from Unconsolidated Entities Other Income (Expense), net Operating Earnings (Loss)

East $ 2,898,641 2,103,873 27.4 % 549,512 6,411 3,186 (551) 13,352 571,910

Central 2,019,628 1,559,973 22.8 % 289,528 751 984 415 (607) 291,071

Texas 1,426,801 1,002,264 29.8 % 302,964 2,871 820 541 (1,496) 305,700

West 4,520,071 3,400,875 24.8 % 809,213 2,228 2,361 41 674 814,517

Other (2) 6,504 21,250 (226.7) % (33,207) — 5,673 (6,699) (3,310) (37,543)

$ 10,871,645 8,088,235 25.6 % 1,918,010 12,261 13,024 (6,253) 8,613 1,945,655

Six Months Ended May 31, 2020

Gross Margins Operating Earnings (Loss)

East $ 2,426,996 1,859,895 23.4 % 340,019 (1,577) 2,618 577 4 341,641

Central 1,770,945 1,458,018 17.7 % 157,277 (647) 1,525 572 900 159,627

Texas 1,157,907 890,278 23.1 % 151,693 3,197 767 204 (2,901) 152,960

West 3,688,948 2,912,803 21.0 % 498,016 (1,339) 3,728 3,900 696 505,001

Other (2) 21,052 33,556 (59.4) % (21,790) (23,438) 414 (18,899) (3,757) (67,470)

$ 9,065,848 7,154,550 21.1 % 1,125,215 (23,804) 9,052 (13,646) (5,058) 1,091,759

(1) Net margins on sales of homes include selling, general and administrative expenses.

(2) Negative gross and net margins were due to period costs in Urban divisions that impact costs of homes sold without sufficient sales of homes revenue to offset those costs.

(2) Negative gross and net margins were due to period costs and impairments in Urban divisions that impact costs of homes sold without sufficient sales of homes revenue to offset those costs.

Summary of Homebuilding Data

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Average Sales Price

February 28, February 29, February 28, February 29, February 28, February 29,

May 31, May 31, May 31,

2021 2020 2021 2020 2021 2020

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Total 14,493 12,672 $ 5,990,635 4,931,358 $ 413,000 389,000

Of the total homes delivered listed above, 12 homes with a dollar value of $3.7 million and an average sales price of $308,000 represent home deliveries from unconsolidated entities for the three months ended February 28, 2021, compared to eight home deliveries with a dollar value of $3.0 million and an average sales price of $374,000 for the three months ended February 29, 2020.

Of the total homes delivered listed above, 31 homes with a dollar value of $9.9 million and an average sales price of $319,000 represent home deliveries from unconsolidated entities for the three months ended May 31, 2021, compared to 19 home deliveries with a dollar value of $6.3 million and an average sales price of $330,000 for the three months ended May 31, 2020.

Six Months Ended

Homes Dollar Value (In thousands)

Average Sales Price

May 31, May 31, May 31,

2021 2020 2021 2020 2021 2020

East 8,400 7,202 $ 2,912,235 2,436,268 $ 347,000 338,000

Central 5,180 4,622 2,019,628 1,770,945 390,000 383,000

Texas 5,096 4,039 1,426,802 1,157,907 280,000 287,000

West 8,124 7,108 4,520,071 3,688,948 556,000 519,000

Other 7 22 6,504 21,052 929,000 957,000

Total 26,807 22,993 $ 10,885,240 9,075,120 $ 406,000 395,000

Of the total homes delivered listed above, 43 homes with a dollar value of $13.6 million and an average sales price of $316,000 represent home deliveries from unconsolidated entities for the six months ended May 31, 2021, compared to 27 home deliveries with a dollar value of $9.3 million and an average sales price of $343,000 for the six months ended May 31, 2020.

New Orders (1):

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Average Sales Price

February 28, February 29, February 28, February 29, February 28, February 29, February 28, February 29,

May 31, May 31, May 31, May 31,

2021 2020 2021 2020 2021 2020 2021 2020

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Total 1,225 1,245 17,157 13,015 $ 7,565,387 4,858,087 $ 441,000 373,000

Of the total new orders listed above, 35 homes with a dollar value of $11.6 million and an average sales price of $332,000 represent new orders in four active communities from unconsolidated entities for the three months ended February 28, 2021, compared to 26 new orders with a dollar value of $8.1 million and an average sales price of $310,000 in five active communities for the three months ended February 29, 2020.

(1) New orders represent the number of new sales contracts executed with homebuyers, net of cancellations, during the three months ended February 28, 2021 and February 29, 2020.

Of the total homes listed above, 32 homes with a dollar value of $9.9 million and an average sales price of $373,000 represent homes in four active communities from unconsolidated entities for the three months ended May 31, 2021, compared to 25 homes with a dollar value of $9.0 million and an average sales price of $361,000 in four active communities for the three months ended May 31, 2020.

(1) Homes represent the number of new sales contracts executed with homebuyers, net of cancellations, during the three and six months ended May 31, 2021 and May 31, 2020.

Six Months Ended

Homes Dollar Value (In thousands)

Average Sales Price

February 28, February 29, February 28, February 29, February 28, February 29,

May 31, May 31, May 31,

2021 2020 2021 2020 2021 2020

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Total 32,727 25,391 $ 14,106,664 9,863,175 $ 431,000 388,000

Of the total homes in backlog listed above, 61 homes with a backlog dollar value of $19.4 million and an average sales price of $318,000 represent the backlog from unconsolidated entities at February 28, 2021, compared to 49 homes with a backlog dollar value of $15.2 million and an average sales price of $311,000 at February 29, 2020.

Of the total homes listed above, 67 homes with a dollar value of $23.5 million and an average sales price of $351,000 represent homes from unconsolidated entities for the six months ended May 31, 2021, compared to 51 homes with a dollar value of $17.1 million and an average sales price of $335,000 for the six months ended May 31, 2020.

Homes Dollar Value (In thousands)

Average Sales Price

May 31, May 31, May 31,

2021 2020 2021 2020 2021 2020

East 7,778 6,345 $ 3,086,740 2,224,974 $ 397,000 351,000

Central 5,933 3,894 2,475,900 1,516,188 417,000 389,000

Texas 3,752 2,712 1,209,965 798,648 322,000 294,000

West 7,275 5,023 4,258,324 2,547,649 585,000 507,000

Other 3 1 3,465 1,138 1,155,000 1,138,000

Total 24,741 17,975 $ 11,034,394 7,088,597 $ 446,000 394,000

Of the total homes in backlog listed above, 62 homes with a backlog dollar value of $21.4 million and an average sales price of $345,000 represent the backlog from unconsolidated entities at May 31, 2021, compared to 55 homes with a backlog dollar value of $18.0 million and an average sales price of $327,000 at May 31, 2020.

Backlog represents the number of homes under sales contracts.

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We do not recognize revenue on homes under sales contracts until the sales are closed and title passes to the new homeowners.

Three Months Ended February 28, 2021 versus Three Months Ended February 29, 2020

Three Months Ended May 31, 2021 versus Three Months Ended May 31, 2020

Homebuilding East:

an increase in the average sales price of homes delivered in all the states of the segment except in Florida.

Revenues from home sales increased in the second quarter of 2021 compared to the second quarter of 2020, primarily due to an increase in the number of home deliveries in all the states of the segment except in Pennsylvania and an increase in the average sales price of homes delivered in all the states of the segment except in New Jersey.

The increase in the number of home deliveries was primarily due to higher demand as the number of deliveries per active community increased.

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The increase in the average sales price of homes delivered was primarily due to favorable market conditions.

The decrease in the average sales price of homes delivered in Florida was primarily driven by a change in product mix due to a higher percentage of deliveries in lower-priced communities.

Gross margin percentage on home deliveries in the first quarter of 2021 increased compared to the same period last year primarily due to an increase in the revenue per square foot of homes delivered.

The decrease in the average sales price of homes delivered in New Jersey was primarily driven by a change in product mix due to a higher percentage of deliveries in lower-priced communities.

Gross margin percentage on home deliveries in the second quarter of 2021 increased compared to the same period last year primarily due to an increase in the revenue per square foot of homes delivered, which outpaced increases in costs per square foot.

Homebuilding Central:

Revenues from home sales increased in the first quarter of 2021 compared to the first quarter of 2020, primarily due to an increase in the number of home deliveries in all the states in the segment except in Maryland and Virginia, partially offset by a decrease in the average sales price of homes delivered in all the states of the segment except in Georgia, Illinois, Maryland and Minnesota.

Revenues from home sales increased in the second quarter of 2021 compared to the second quarter of 2020, primarily due to an increase in the number of home deliveries in all the states of the segment except in Georgia, Tennessee and Virginia, and an increase in the average sales price of homes delivered in all the states of the segment.

The increase in the number of home deliveries was primarily due to higher demand as the number of deliveries per active community increased.

The decrease in the number of home deliveries in Maryland and Virginia was primarily due to a decrease in the number of communities due to the timing of opening and closing of communities.

The decrease in the average sales price of homes delivered was primarily driven by a change in product mix due to a higher percentage of deliveries in lower-priced communities.

The increase in the average sales price of homes delivered in Georgia, Illinois, Maryland and Minnesota was primarily due to favorable market conditions.

Gross margin percentage on home deliveries in the first quarter of 2021 increased compared to the same period last year primarily due to an increase in revenue per square foot of homes delivered as well as reducing interest and field expenses per home.

The decrease in the number of home deliveries in Georgia, Tennessee and Virginia was primarily due to a decrease in the number of communities due to the timing of opening and closing of communities.

The increase in the average sales price of homes delivered was primarily due to favorable market conditions.

Gross margin percentage on home deliveries in the second quarter of 2021 increased compared to the same period last year primarily due to an increase in revenue per square foot of homes delivered, which outpaced increases in cost per square foot.

Homebuilding Texas:

Revenues from home sales increased in the first quarter of 2021 compared to the first quarter of 2020, primarily due to an increase in the number of home deliveries, partially offset by a decrease in the average sales price of homes delivered.

Revenues from home sales increased in the second quarter of 2021 compared to the second quarter of 2020, primarily due to an increase in the number of home deliveries and an increase in the average sales price of homes delivered.

The increase in the number of deliveries was primarily due to higher demand as the number of deliveries per active community increased.

The increase in the average sales price of homes delivered was primarily due to favorable market conditions.

Homebuilding West:

Revenues from home sales increased in the second quarter of 2021 compared to the second quarter of 2020, primarily due to an increase in the number of home deliveries in all the states of the segment except in Oregon and an increase in the average sales price of homes delivered in all the states of the segment except in Colorado.

The increase in the number of home deliveries was primarily due to higher demand as the number of deliveries per active community increased during the quarter.

The decrease in the number of home deliveries in Oregon was primarily due to a decrease in the number of

deliveries per active community due to the timing of opening and closing of communities.

The increase in the average sales price of homes delivered was primarily due to favorable market conditions.

The decrease in the average sales price of homes delivered in Colorado was primarily driven by a change in product mix due to a higher percentage of deliveries in lower-priced communities.

Six Months Ended May 31, 2021 versus Six Months Ended May 31, 2020

Homebuilding East:

Revenues from home sales increased in the six months ended May 31, 2021 compared to the six months ended May 31, 2020, primarily due to an increase in the number of home deliveries in all the states of the segment except in Pennsylvania and an increase in the average sales price of homes delivered in all the states of the segment except in New Jersey.

The increase in the number of home deliveries was primarily due to higher demand as the number of deliveries per active community increased.

The decrease in the number of home deliveries in Pennsylvania was primarily due to a decrease in the number of communities due to the timing of opening and closing of communities.

The increase in the average sales price of homes delivered was primarily due to favorable market conditions.

The decrease in the average sales price of homes delivered in New Jersey was primarily driven by a change in product mix due to a higher percentage of deliveries in lower-priced communities.

Gross margin percentage on home deliveries in the six months ended May 31, 2021 increased compared to the same period last year primarily due to an increase in the revenue per square foot of homes delivered while cost per square foot were unchanged.

Homebuilding Central:

Revenues from home sales increased in the six months ended May 31, 2021 compared to the six months ended May 31, 2020, primarily due to an increase in the number of home deliveries in all the states of the segment except in Georgia, Maryland and Virginia, and an increase in the average sales price of homes delivered in all the states of the segment except in North Carolina and Indiana.

The increase in the number of home deliveries was primarily due to higher demand as the number of deliveries per active community increased.

The decrease in the number of home deliveries in Georgia, Maryland and Virginia was primarily due to a decrease in the number of communities due to the timing of opening and closing of communities.

The increase in the average sales price of homes delivered was primarily due to favorable market conditions.

The decrease in the average sales price of homes delivered in North Carolina and Indiana was primarily driven by a change in product mix due to a higher percentage of deliveries in lower-priced communities.

Gross margin percentage on home deliveries in the six months ended May 31, 2021 increased compared to the same period last year primarily due to an increase in revenue per square foot of homes delivered.

Homebuilding Texas:

Revenues from home sales increased in the six months ended May 31, 2021 compared to the six months ended May 31, 2020, primarily due to an increase in the number of home deliveries, partially offset by a decrease in the average sales price of homes delivered.

The increase in the number of deliveries was primarily due to higher demand as the number of deliveries per active community increased.

The decrease in average sales price of homes delivered was primarily due to closing out higher priced communities and shifting into lower priced communities.

Homebuilding West:

Revenues from home sales increased in the first quarter of 2021 compared to the first quarter of 2020, primarily due to an increase in the number of home deliveries in all states of the segment except in Nevada and an increase in the average sales price of homes delivered in all the states of the segment.

The increase in the number of home deliveries in all states of the segment except in Nevada was primarily due to higher demand as the number of deliveries per active community increased during the quarter.

The decrease in the number of home deliveries in Nevada was primarily due to a decrease in the number of deliveries per active community due to the timing of opening and closing of communities.

Revenues from home sales increased in the six months ended May 31, 2021 compared to the six months ended May 31, 2020, primarily due to an increase in the number of home deliveries in all states of the segment and an increase in the average sales price of homes delivered in all the states of the segment except in Colorado.

The increase in the number of home deliveries in all states of the segment was primarily due to higher demand as the number of deliveries per active community increased during the quarter.

The increase in the average sales price of homes delivered was primarily due to favorable market conditions.

Gross margin percentage on home deliveries in the first quarter of 2021 increased compared to the same period last year primarily due to an increase in revenue per square foot of homes delivered.

The decrease in average sales price of homes delivered in Colorado was primarily due to closing out higher priced communities and shifting into lower priced communities.

Financial Services Segment

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The following table sets forth selected financial and operational information related to the residential mortgage and title activities of our Financial Services segment:

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

Dollar value of mortgages originated $ 3,186,000 3,258,000 5,947,000 5,478,000

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Number of title and closing service transactions 17,100 14,400 32,100 25,500

At February 28, 2021 and November 30, 2020, the carrying value of Financial Services' commercial mortgage-backed securities ("CMBS") was $163.3 million and $164.2 million, respectively.

At May 31, 2021 and November 30, 2020, the carrying value of Financial Services' commercial mortgage-backed securities ("CMBS") was $162.9 million and $164.2 million, respectively.

Details of these securities and related debt are within Note 2 of the Notes to Condensed Consolidated Financial Statements.

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Balance Sheets

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

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

Multifamily investments in unconsolidated entities $ 691,330 724,647

Lennar's net investment in Multifamily 936,941 906,632

Statements of Operations Three Months Ended Six Months Ended

May 31, May 31,

(Dollars in thousands) 2021 2020 2021 2020

Number of operating properties/investments sold through joint ventures 1 — 1 2

Lennar's share of gains on the sale of operating properties/investments $ 14,784 — 14,784 3,000

Lennar Other Segment

At February 28, 2021 and November 30, 2020, we had $1.0 billion and $521.7 million, respectively, of assets in our Lennar Other segment, which included investments in unconsolidated entities of $315.6 million and $387.1 million, respectively.

The increase in assets during the quarter was due to an increase in the value of our strategic technology investments, primarily managed by our LEN X subsidiary.

This increase was largely related to our strategic investment in Opendoor, which began trading on the Nasdaq stock market in December 2020.

During the three months ended February 28, 2021, our Lennar Other segment recognized a gain of $469.7 million related to the mark to market of our share holdings in Opendoor.

In addition to Opendoor, two other of our strategic technology investments have announced agreements to merge with publicly traded special purpose acquisition companies.

At May 31, 2021 and November 30, 2020, we had $1.1 billion and $521.7 million, respectively, of assets in our Lennar Other segment, which included investments in unconsolidated entities of $379.2 million and $387.1 million, respectively.

The increase in assets during the six months ended May 31, 2021 was due to an increase in the value of our strategic technology investments, primarily managed by our LEN X subsidiary.

This increase was largely related to our strategic investments in Opendoor and Sunnova.

During the three months ended May 31, 2021, we completed the sale of our residential solar business to Sunnova for shares in the entity.

The following is a detail of Lennar Other realized and unrealized gain (loss):

Three Months Ended Six Months Ended

May 31, May 31,

(In thousands) 2021 2020 2021 2020

Opendoor (OPEN) mark to market $ (234,290) — 235,455 —

Sunnova (NOVA) mark to market (38,335) — (38,335) —

Gain on sale of solar business 151,475 — 151,475 —

Other realized gain 3,580 — 3,580 —

$ (117,570) — 352,175 —

(2) Financial Condition and Capital Resources

At February 28, 2021, we had cash and cash equivalents and restricted cash related to our homebuilding, financial services, multifamily and other operations of $2.6 billion, compared to $2.9 billion at November 30, 2020 and $1.1 billion at February 29, 2020.

At May 31, 2021, we had cash and cash equivalents and restricted cash related to our homebuilding, financial services, multifamily and other operations of $2.8 billion, compared to $2.9 billion at November 30, 2020 and $1.7 billion at May 31, 2020.

We finance all of our activities, including homebuilding, financial services, multifamily, other and general operating needs, primarily with cash generated from our operations, debt issuances and cash borrowed under our warehouse lines of credit and our unsecured revolving credit facility (the "Credit Facility").

Operating Cash Flow Activities

During the three months ended February 28, 2021 and February 29, 2020, cash provided by operating activities totaled $385.5 million and $383.0 million, respectively.

During the three months ended February 28, 2021, cash provided by operating activities was impacted primarily by our net earnings net of the unrealized gain of $469.7 million related to our Opendoor strategic investment, a decrease in loans held-for-sale of $360.6 million primarily related to the sale of loans originated by our Financial Services segment, partially offset by an increase in inventories due to strategic land purchases, and land development and construction costs of $862.1 million.

During the three months ended February 29, 2020, cash provided by operating activities was impacted primarily by our net earnings, a decrease in receivables of $245.7 million and a decrease in loans held-for-sale of $466.8 million primarily related to the sale of loans originated by our Financial Services segment, partially offset by an increase in inventories due to strategic land purchases, land development and construction costs of $777.0 million and increase in other assets of $121.5 million.

During the six months ended May 31, 2021 and May 31, 2020, cash provided by operating activities totaled $718.1 million and $1.3 billion, respectively.

During the six months ended May 31, 2021, cash provided by operating activities was impacted primarily by our net earnings, a decrease in loans held-for-sale of $444.4 million primarily related to the sale of loans originated by our Financial Services segment, an increase in accounts payable and other liabilities of $184.7 million, and a decrease in receivables of $117.9 million, partially offset by an increase in inventories due to strategic land purchases, and land development and construction costs of $1.6 billion.

During the six months ended May 31, 2020, cash provided by operating activities was impacted primarily by our net earnings and a decrease in loans held-for-sale of $479.4 million primarily related to the sale of loans originated by our Financial Services segment, partially offset by an increase in inventories due to strategic land purchases, land development and construction costs of $159.1 million and increase in other assets of $148.1 million.

Investing Cash Flow Activities

During the three months ended February 28, 2021 and February 29, 2020, cash (used in) provided by investing activities totaled ($93.4) million and $13.2 million, respectively.

During the three months ended February 28, 2021, our cash used in investing activities was primarily due to cash contributions of $224.1 million to unconsolidated entities, which included (1) $148.4 million to Homebuilding unconsolidated entities, (2) $37.5 million to Multifamily unconsolidated entities, and (3) $38.2 million to the strategic technology investments included in the Lennar Other segment.

This was partially offset by distributions of capital from unconsolidated entities of $83.2 million, which primarily included (1) $52.8 million from Multifamily unconsolidated entities, (2) $19.9 million from Homebuilding unconsolidated entities;

and (3) $10.6 million from the unconsolidated Rialto real estate funds included in our Lennar Other segment.

During the three months ended February 29, 2020, our cash provided by investing activities was primarily due to distributions of capital from unconsolidated entities of $86.3 million, which primarily included (1) $17.1 million from Multifamily unconsolidated entities, (2) $27.8 million from the unconsolidated Rialto real estate funds included in our Lennar

Other segment and (3) $41.4 million from Homebuilding unconsolidated entities.

This was partially offset by net additions to operating properties and equipment of $17.9 million and cash contributions of $78.6 million to unconsolidated entities, which included (1) $12.6 million to Homebuilding unconsolidated entities, (2) $35.8 million to Multifamily unconsolidated entities, and (3) $30.2 million to the strategic technology investments included in the Lennar Other segment.

During the six months ended May 31, 2021 and May 31, 2020, cash used in investing activities totaled $50.1 million and $174.0 million, respectively.

During the six months ended May 31, 2021, our cash used in investing activities was primarily due to cash contributions of $282.2 million to unconsolidated entities, which included (1) $178.6 million to Homebuilding unconsolidated entities, (2) $57.8 million to Multifamily unconsolidated entities, and (3) $45.8 million to the strategic technology investments included in the Lennar Other segment.

This was partially offset by distributions of capital from unconsolidated entities of $231.5 million, which primarily included (1) $134.2 million from Homebuilding unconsolidated entities, (2) $80.1 million from Multifamily unconsolidated entities, and (3) $17.2 million from the unconsolidated Rialto real estate funds included in our Lennar Other segment.

During the six months ended May 31, 2020, our cash used in investing activities was primarily due to $302.8 million of investments in and contributions to unconsolidated entities and deconsolidation of a previously consolidated entity, which included (1) $31.2 million to Homebuilding unconsolidated entities;

(2) $79.7 million to Multifamily unconsolidated entities;

(3) $39.3 million in strategic technology investments included in our Lennar Other segment;

and (4) derecognition of $152.5 million of cash as of the date of deconsolidation of a previously consolidated Financial Services entity.

This was partially offset by distributions of capital from unconsolidated entities of $115.1 million, which primarily included (1) $33.4 million from Multifamily unconsolidated entities, (2) $36.4 million from the unconsolidated Rialto real estate funds included in our Lennar Other segment and (3) $45.3 million from Homebuilding unconsolidated entities.

Financing Cash Flow Activities

During the three months ended February 28, 2021 and February 29, 2020, cash used in financing activities totaled $629.7 million and $789.8 million, respectively.

During the three months ended February 28, 2021, cash used in financing activities was primarily impacted by (1) $500.8 million of net repayments under our Financial Services' warehouse facilities, which included the LMF Commercial warehouse repurchase facilities;

During the six months ended May 31, 2021 and May 31, 2020, cash used in financing activities totaled $817.8 million and $948.6 million, respectively.

During the six months ended May 31, 2021, cash used in financing activities was primarily impacted by (1) $535.7 million of net repayments under our Financial Services' warehouse facilities, which included the LMF Commercial warehouse repurchase facilities;

(2) $156.3 million of dividend payments;

and (3) repurchases of our common stock for $173.6 million, which included $141.6 million of repurchases under our repurchase program and $32.1 million of repurchases related to our equity compensation plan.

These were partially offset by $67.4 million of proceeds from liabilities related to consolidated inventory not owned due to land sales to a land bank.

During the three months ended February 29, 2020, cash used in financing activities was primarily impacted by (1) $755.6 million of net repayments under our Financial Services' warehouse facilities, which included the LMF Commercial warehouse repurchase facilities;

(2) repurchases of our common stock for $296.0 million, which included $288.5 million of repurchases under our repurchase program and $7.4 million of repurchases related to our equity compensation plan and (3) $93.3 million of principal payments on notes payable and other borrowings.

These were partially offset by $300.0 million of net borrowings under our Credit Facility and $88.9 million of receipts related to noncontrolling interests.

These were partially offset by $301.9 million of proceeds from liabilities related to consolidated inventory not owned due to land sales to land banks.

During the six months ended May 31, 2020, cash used in financing activities was primarily impacted by (1) $310.2 million of net repayments under our Financial Services' warehouse facilities, which included the LMF Commercial warehouse repurchase facilities;

(2) the redemption of $300.0 million aggregate principal amount of our 6.625% senior notes due May 2020;

(3) repurchases of our common stock, which included $288.5 million of repurchases under our repurchase program and $7.5 million of repurchases related to our equity compensation plan;

and (4) $174.4 million of principal payments on notes payable and other borrowings.

These were partially offset by $169.1 million of receipts related to noncontrolling interests.

Debt to total capital ratios are financial measures commonly used in the homebuilding industry and are presented to assist in understanding the leverage of our homebuilding operations.

Homebuilding debt to total capital and net Homebuilding debt to total capital are calculated as follows:

(Dollars in thousands) February 28, 2021 November 30, 2020 February 29, 2020

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

Homebuilding debt $ 5,894,342 5,955,758 7,495,674

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Rather, this non-GAAP financial measure should be used to supplement our GAAP results.

At February 28, 2021, Homebuilding debt to total capital was lower compared to February 29, 2020, primarily as a result of a decrease in Homebuilding debt and an increase in stockholders' equity due to net earnings.

At February 28, 2021, Homebuilding debt to total capital was lower compared to November 30, 2020, primarily as a result of an increase in stockholders' equity due to net earnings.

At May 31, 2021, Homebuilding debt to total capital was lower compared to May 31, 2020, primarily as a result of a decrease in Homebuilding debt and an increase in stockholders' equity due to net earnings.

At May 31, 2021, Homebuilding debt to total capital was lower compared to November 30, 2020, primarily as a result of an increase in stockholders' equity due to net earnings.

We are continually exploring various types of transactions to manage our leverage and liquidity positions, take advantage of market opportunities and increase our revenues and earnings.

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Our Homebuilding average debt outstanding and the average rates of interest was as follows:

Three Months Ended

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

Six Months Ended

(Dollars in thousands) 2021 2020

Homebuilding average debt outstanding $ 5,981,490 $ 8,171,686

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Interest incurred $ 142,517 $ 184,198

During three months ended February 28, 2021, the maximum borrowings on our 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.

As of May 31, 2021, the maximum borrowings on our 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 .

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The maturity, details and debt covenants of the Credit Facility are unchanged from the disclosure in the Financial Condition and Capital Resources section of our Form 10-K for the year ended November 30, 2020.

The following summarizes our debt covenant requirements and our actual levels or ratios with respect to those covenants as calculated per the Credit Agreement as of February 28, 2021:

The following summarizes our debt covenant requirements and our actual levels or ratios with respect to those covenants as calculated per the Credit Agreement as of May 31, 2021:

(Dollars in thousands) Covenant Level Level Achieved as of

February 28, 2021

Minimum net worth test $ 9,290,371 13,075,167

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The repurchase authorization replaced a January 2019 authorization and has no expiration date.

The details of our Class A and Class B common stock under this program for the three months ended February 28, 2021 and February 29, 2020 are included in Note 4 of the Notes to Condensed Consolidated Financial Statements.

During the three months ended February 28, 2021, treasury stock increased due to our repurchase of 0.8 million shares of Class A and Class B common stock due primarily to our repurchase of 0.5 million shares of Class A and Class B common stock through our stock repurchase program.

During the three months ended February 29, 2020, treasury stock increased due to our repurchase of 4.4 million shares of Class A and Class B common stock through our stock repurchase program.

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

We 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 fourth quarter of 2020 on both our Class A and Class B common stock.

The details of our Class A and Class B common stock under this program for both the three and six months ended May 31, 2021 and 2020 are included in Note 4 of the Notes to Condensed Consolidated Financial Statements.

During the six months ended May 31, 2021, treasury stock increased due to our repurchase of 1.9 million shares of Class A and Class B common stock due primarily to our repurchase of 1.5 million shares of Class A and Class B common stock through our stock repurchase program.

During the six months ended May 31, 2020, treasury stock increased due to our repurchase of 4.4 million shares of Class A and Class B common stock through our stock repurchase program.

On June 18, 2021, our Board of Directors declared a quarterly cash dividend of $0.25 per share on both our 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, we paid cash dividends of $0.25 per share on both our Class A and Class B common stock to holders of record at the close of business on April 21, 2021, as declared by our Board of Directors on April 7, 2021.

We 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 fourth quarter of 2020 on both our Class A and Class B common stock and first two quarter of 2021 on both its Class A and Class B common stock.

Based on our current financial condition and credit relationships, we believe that our operations and borrowing resources will provide for our current and long-term capital requirements at our anticipated levels of activity.

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

Included in the following tables as part of “Obligors” together with Lennar Corporation are subsidiary entities that are not finance company subsidiaries or foreign subsidiaries and were guaranteeing the senior notes because at February 28, 2021 they were guaranteeing Lennar Corporation's letter of credit facilities and its Credit Facility, disclosed in

Note 7 of the Notes to Condensed Consolidated Financial Statements.

Included in the following tables as part of “Obligors” together with Lennar Corporation are subsidiary entities that are not finance company subsidiaries or foreign subsidiaries and were guaranteeing the senior notes because at May 31, 2021 they were guaranteeing Lennar Corporation's letter of credit facilities and its Credit Facility, disclosed in Note 7 of the Notes to 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 (other than senior notes), 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.

Supplemental information for the Obligors, which excludes non-guarantor subsidiaries and intercompany transactions, at February 28, 2021 is included in the following tables.

Supplemental information for the Obligors, which excludes non-guarantor subsidiaries and intercompany transactions, at May 31, 2021 is included in the following tables.

Intercompany balances and transactions within the Obligors have been eliminated and amounts attributable to the Obligor’s investment in consolidated subsidiaries that have not issued or guaranteed the senior notes have been excluded.

Amounts due from and transactions with nonobligor subsidiaries and related parties are separately disclosed:

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

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

Due from non-guarantor subsidiaries $ 3,501,212 2,655,503

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Total liabilities 9,824,021 9,599,718

Three Months Ended

(In thousands) February 28, 2021

Six Months Ended

(In thousands) May 31, 2021

Total revenues $ 11,065,793

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Investments in Unconsolidated Entities

As of February 28, 2021, we had equity investments in 40 active homebuilding and land unconsolidated entities (of which three had recourse debt, 10 had non-recourse debt and 27 had no debt) compared to 38 active homebuilding and land unconsolidated entities at November 30, 2020.

As of May 31, 2021, we had equity investments in 42 active homebuilding and land unconsolidated entities (of which three had recourse debt, 13 had non-recourse debt and 26 had no debt) compared to 38 active homebuilding and land unconsolidated entities at November 30, 2020.

Historically, we have invested in unconsolidated entities that acquired and developed land (1) for our homebuilding operations or for sale to third parties or (2) for the construction of homes for sale to third-party homebuyers.

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Details regarding these investments, balances and debt are included in Note 3 of the Notes to Condensed Consolidated Financial Statements.

The following table summarizes the principal maturities of our Homebuilding unconsolidated entities ("JVs") debt as per current debt arrangements as of February 28, 2021 and it does not represent estimates of future cash payments that will be made to reduce debt balances.

The following table summarizes the principal maturities of our Homebuilding unconsolidated entities ("JVs") debt as per current debt arrangements as of May 31, 2021 and it does not represent estimates of future cash payments that will be made to reduce debt balances.

Many JV loans have extension options in the loan agreements that would allow the loans to be extended into future years.

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Debt without recourse to Lennar $ 1,204,527 97,054 224,668 19,255 863,550 —

Land seller and CDD debt 7,147 — — — — 7,147

Land seller and CDD and other debt 11,208 — — — — 11,208

Maximum recourse debt exposure to Lennar 3,599 — 3,599 — — —

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Investments in Unconsolidated Entities

At February 28, 2021, Multifamily had equity investments in 17 unconsolidated entities that are engaged in multifamily residential developments (of which seven had non-recourse debt and 10 had no debt), compared to 22 unconsolidated entities at November 30, 2020.

At May 31, 2021, Multifamily had equity investments in 16 unconsolidated entities that are engaged in multifamily residential developments (of which 10 had non-recourse debt and six had no debt), compared to 22 unconsolidated entities at November 30, 2020.

We invest in unconsolidated entities that acquire and develop land to construct multifamily rental properties.

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The Multifamily segment includes LMV I and 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 in Note 3 of the Notes to Condensed Consolidated Financial Statements.

Details of each as of and during the six months ended May 31, 2021 are included in Note 3 of the Notes to Condensed Consolidated Financial Statements.

We regularly monitor the results of both our Homebuilding and Multifamily unconsolidated joint ventures and any trends that may affect their future liquidity or results of operations.

We also monitor the performance of joint ventures in which we have investments on a regular basis to assess compliance with debt covenants.

For those joint ventures not in compliance with the debt covenants, we evaluate and assess possible impairment of our investment.

We believe all of the joint ventures were in compliance with applicable debt covenants at February 28, 2021.

The following table summarizes the principal maturities of our Multifamily unconsolidated entities debt as per current debt arrangements as of February 28, 2021 and it does not represent estimates of future cash payments that will be made to reduce debt balances.

For those joint ventures not in compliance with

the debt covenants, we evaluate and assess possible impairment of our investment.

We believe all of the joint ventures were in compliance with applicable debt covenants at May 31, 2021.

The following table summarizes the principal maturities of our Multifamily unconsolidated entities debt as per current debt arrangements as of May 31, 2021 and it does not represent estimates of future cash payments that will be made to reduce debt balances.

Principal Maturities of Unconsolidated JVs by Period

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These distributions are not subject to clawbacks but will reduce future carried interest payments to which we become entitled from the applicable funds and have been recorded as revenues.

As of February 28, 2021 and November 30, 2020, we had strategic technology investments in unconsolidated entities of $131.9 million and $196.7 million, respectively.

As of May 31, 2021 and November 30, 2020, we had strategic technology investments in unconsolidated entities of $178.2 million and $196.7 million, respectively.

Option Contracts

We often obtain access to land through option contracts, which generally enable us to control portions of properties owned by third parties (including land funds) and unconsolidated entities until we have determined whether to exercise the options.

The table below indicates the number of homesites owned and homesites to which we had access through option contracts with third parties ("optioned") or unconsolidated JVs (i.e., controlled homesites) at February 28, 2021 and February 29, 2020:

Controlled Homesites Years of

February 28, 2021 Optioned JVs Total Owned Homesites Total Homesites Supply Owned (1)

May 31, 2021 Optioned JVs Total Owned Homesites Total Homesites Supply Owned (1)

East 55,537 5,750 61,287 55,218 116,505

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Controlled Homesites Years of

February 29, 2020 Optioned JVs Total Owned Homesites Total Homesites Supply Owned (1)

May 31, 2020 Optioned JVs Total Owned Homesites Total Homesites Supply Owned (1)

East 22,812 13,608 36,420 63,932 100,352

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Our contractual obligations and commercial commitments have not changed materially from those reported in Management’s Discussion and Analysis of Financial Condition and Results of Operations in our Annual Report on Form 10-K for the fiscal year ended November 30, 2020.

There were no outstanding borrowings under our Credit Facility as of February 28, 2021.

There were no outstanding borrowings under our Credit Facility as of May 31, 2021.

(3) New Accounting Pronouncements

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(4) Critical Accounting Policies

We believe that there have been no significant changes to our critical accounting policies during the three months ended February 28, 2021 as compared to those we disclosed in Management’s Discussion and Analysis of Financial Condition and Results of Operations included in our Annual Report on Form 10-K, for the year ended November 30, 2020.

We believe that there have been no significant changes to our critical accounting policies during the six months ended May 31, 2021 as compared to those we disclosed in Management’s Discussion and Analysis of Financial Condition and Results of Operations included in our Annual Report on Form 10-K, for the year ended November 30, 2020.

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 2. Management’s Discussion and Analysis