What changed in this filing

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Item 2. Management’s Discussion and Analysis

2021-10-01 compared with 2021-07-02 · 200 added, 198 removed, 385 unchanged (51% of the section changed)

11 unchanged sentences

the potential negative impact to our business of the ongoing coronavirus (“COVID-19”) pandemic, the duration, impact and severity of which is highly uncertain;

increases in operating costs, including costs related to construction materials, labor, real estate taxes and insurance, and our inability to manage our cost structure, both in our Homebuilding and Multifamily businesses;

an extended slowdown in the real estate markets across the nation, including a slowdown in the market for single family homes or the multifamily rental market;

reduced availability of mortgage financing or increased interest rates;

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

continuation of supply shortages and increased costs related to construction materials and labor;

cost increases related to real estate taxes and insurance;

reduced availability of mortgage financing, increased interest rates and increased competition in the mortgage industry;

reductions in the market value of our investments in public companies;

an extended slowdown in the real estate markets across the nation, including a slowdown in either the market for single family homes or the multifamily rental market;

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

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;

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decreased demand for our homes or Multifamily rental properties;

the possibility that the benefit from our increasing use of technology will not justify its cost;

increased competition for home sales from other sellers of new and resale homes;

our inability to pay down debt;

whether government actions or other factors force us to terminate our program of repurchasing our stock;

government actions or other factors that might force us to terminate our program of repurchasing our stock;

a decline in the value of our land inventories and resulting write-downs of the carrying value of our real estate assets;

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new laws or regulatory changes that adversely affect the profitability of our businesses;

our inability to refinance our debt on terms that are acceptable to us;

our inability to refinance our debt on terms that are as favorable as our current arrangements;

and changes in accounting conventions that adversely affect our reported earnings.

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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 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.

The housing market remains strong.

Demand has been strong 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, and short supply is likely to remain for some time to come.

The supply chain for both land and construction is significantly stressed.

Given supply chain challenges, we believe the industry will not be able to quickly remedy the supply shortage with increased production.

Accordingly, we expect the market to remain in its current imbalance for an extended period of time.

We remain focused 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.

Even though home prices have moved much higher, overall affordability remains strong as 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.

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

The housing market is not only 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.

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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.

Additionally, the single-family for rent participants, including our Upward America Venture, are also providing more liquidity while making a single-family home lifestyle accessible to more families.

The solution to higher home prices causing affordability issues is building more housing and making a growing portion of that housing stock available to more families to rent if they cannot yet meet the requirements for home ownership.

Professional ownership of homes enables renters to access a single-family lifestyle while they build the credentials to own.

Better housing for families produces better outcomes for families and the industry is rewiring to provide those solutions.

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 a position to continue to drive returns.

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

While we have been carefully managing our supply chain, the supply chain for both land and construction is significantly stressed.

Accordingly, we expect our community count at the end of the 2021 fiscal year will be up only approximately 7% versus the 10% we previously guided.

In addition, we expect our deliveries for the fourth quarter of 2021 will be approximately 18,000 versus the 19,000 to 21,000 we previously guided.

We expect our gross margin to be about 28% and we expect our SG&A to be about 6.7% for the fourth quarter, though these amounts will move up or down a bit depending on the number of homes delivered.

Our return on equity stands now at 21.9%, which is an 800 basis point improvement over last year.

We have remained focused on our optioned versus owned land strategy.

We ended the third quarter with a 3.3 years supply of land owned, compared to a 3.8 years supply of land owned at the same time last year, and our homesites controlled percentage increased to 53% from 35% in the prior year.

Among other things, this has enabled us to reduce debt, such that our third quarter homebuilding debt-to-total capital ratio improved to 21.2%, from 29.5% in the prior year.

We have continued to work on the structural components and organization of our spin company.

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

As previously noted, two of these verticals have already raised third-party capital, of which our subsidiaries are active asset managers.

Our multifamily platform has approximately $9 billion of gross capital under management and is raising its third fund now.

Our growing single family for rent platform currently manages approximately $1.25 billion of equity already raised.

Both of these programs are neatly configured as independent, self-sustaining operations.

Additionally, we have a dynamic and growing independent land and land management business that has been refined and we have a growing technology investment business, LEN X , that is performing exceptionally well.

We are considering including them, or at least portions of our investments in them, in the spin-off.

In spite of the miss of deliveries and the supply chain disruption that is affecting us and the industry, we believe we have never been better positioned financially, organizationally and technologically to thrive and grow in this evolving housing market demand.

As we begin to look to 2022, we see continued strength in the market and double-digit growth in sales, starts, deliveries and community count for Lennar.

The story remains that supply is short and demand is strong.

Some are concerned that demand is slowing as prices move higher and interest rates move.

It feels to us that sales are slowing because many sales were made early and the industry is building through those sales slower than expected.

We believe that home production has been constrained for a decade and we are making up the deficit now, which should keep the housing market thriving for some time to come.

(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 and six months ended May 31, 2021 are not necessarily indicative of the results to be expected for the full year.

Our results of operations for the three and nine months ended August 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 $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.

Our net earnings attributable to Lennar were $1.4 billion, or $4.52 per diluted share ($4.52 per basic share), in the third quarter of 2021, compared to net earnings attributable to Lennar of $666.4 million, or $2.12 per diluted share ($2.13 per basic share), in the third quarter of 2020.

Our net earnings attributable to Lennar were $3.2 billion, or $10.36 per diluted share ($10.37 per basic share), in the nine months ended August 31, 2021, compared to net earnings attributable to Lennar of $1.6 billion, or $5.03 per diluted share ($5.05 per basic share), in the nine months ended August 31, 2020.

Financial information relating to our operations was as follows:

Three Months Ended May 31, 2021

Three Months Ended August 31, 2021

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

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Total costs and expenses 5,225,497 94,890 174,410 9,010 — 5,503,807

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

Equity in earnings (loss) from unconsolidated entities, Multifamily other gain (loss) and Lennar Other other income (expense), net 2,391 — (2,904) (2,220) — (2,733)

Other expense, net (5,570) — — — — (5,570)

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

Lennar Other realized and unrealized gain — — — 495,202 — 495,202

Operating earnings (loss) $ 1,329,833 112,083 (9,393) 491,972 — 1,924,495

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Earnings (loss) before income taxes $ 1,329,833 112,083 (9,393) 491,972 (110,141) 1,814,354

Three Months Ended May 31, 2020

Three Months Ended August 31, 2020

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

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Equity in loss from unconsolidated entities (6,431) — (1,532) (2,835) — (10,798)

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

Other expense, net (11,787) — — — — (11,787)

Operating earnings (loss) $ 813,744 135,079 (5,148) 7,999 — 951,674

Corporate general and administrative expenses — — — — 85,998 85,998

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Earnings (loss) before income taxes $ 813,744 135,079 (5,148) 7,999 (92,661) 859,013

Six Months Ended May 31, 2021

Nine Months Ended August 31, 2021

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

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Total costs and expenses 14,253,299 290,179 474,389 18,994 — 15,036,861

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

Equity in earnings (loss) from unconsolidated entities and Multifamily other gain (loss) and Lennar Other other income (expense), net (3,862) — 9,682 59,954 — 65,774

Other income, net 3,043 — — — — 3,043

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

Lennar Other realized and unrealized gain — — — 847,377 — 847,377

Operating earnings $ 3,275,488 379,610 12,130 909,221 — 4,576,449

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Earnings (loss) before income taxes $ 3,275,488 379,610 12,130 909,221 (338,196) 4,238,253

Six Months Ended May 31, 2020

Nine Months Ended August 31, 2020

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

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Costs of land sold 102,899 — — — — 102,899

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

Selling, general and administrative expenses 1,222,032 — — — — 1,222,032

Other costs and expenses — 363,688 379,607 3,564 746,859

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Equity in earnings (loss) from unconsolidated entities and Multifamily other gain (20,077) — 4,702 (28,712) — (44,087)

(13,646) — 6,234 (26,523) — (33,935)

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

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Earnings (loss) before income taxes $ 1,905,503 329,722 (4,001) (9,123) (262,959) 1,959,142

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 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.

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

Revenues from home sales increased 19% in the third quarter of 2021 to $6.5 billion from $5.5 billion in the third quarter of 2020.

Revenues were higher primarily due to a 10% increase in the number of home deliveries and an 8% increase in the average sales price.

New home deliveries increased to 15,199 homes in the third quarter of 2021 from 13,842 homes in the third quarter of 2020.

The average sales price of homes delivered was $428,000 in the third quarter of 2021, compared to $396,000 in the third quarter of 2020.

Gross margin on home sales were $1.8 billion, or 27.3%, in the third quarter of 2021, compared to $1.3 billion, or 23.1%, in the third quarter of 2020.

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

Selling, general and administrative expenses were $453.7 million in the third quarter of 2021, compared to $435.9 million in the third quarter of 2020.

As a percentage of revenues from home sales, selling, general and administrative expenses improved to 7.0% in the third quarter of 2021, from 8.0% in the third quarter of 2020.

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

Operating earnings for our Financial Services segment were $111.9 million in the third quarter of 2021, compared to $135.1 million in the third quarter of 2020.

The decrease in operating earnings was primarily due to lower mortgage net margins driven by an increase in competition.

This was partially offset by an increase in title operating earnings due to higher volume and an increase in profit per transaction derived from technology initiatives.

Operating loss for our Multifamily segment was $9.4 million in the third quarter of 2021, compared to $5.1 million in the third quarter of 2020.

Operating earnings for our Lennar Other segment was $492.0 million in the third quarter of 2021, compared to $8.0 million in the third quarter of 2020.

In the third quarter of 2021, we recorded mark to market gains on our investments in newly public companies (Hippo, SmartRent and Blend) of $433 million and on our current investments (Opendoor and Sunnova) of $61 million.

Nine Months Ended August 31, 2021 versus Nine Months Ended August 31, 2020

Revenues from home sales increased 20% in the nine months ended August 31, 2021 to $17.4 billion from $14.5 billion in the nine months ended August 31, 2020.

Revenues were higher primarily due to a 14% increase in the number of home deliveries and a 5% increase in the average sales price.

New home deliveries increased to 42,006 homes in the nine months ended August 31, 2021 from 36,835 homes in the nine months ended August 31, 2020.

The average sales price of homes

delivered was $414,000 in the nine months ended August 31, 2021, compared to $395,000 in the nine months ended August 31, 2020.

Gross margin on home sales were $4.6 billion, or 26.2%, in the nine months ended August 31, 2021, compared to $3.2 billion or 21.8%, in the nine months ended August 31, 2020.

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

Gross margin on land sales in the nine months ended August 31, 2021 was $17.9 million, compared to a loss of $21.9 million in the nine months ended August 31, 2020.

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

Selling, general and administrative expenses were $1.3 billion in the nine months ended August 31, 2021, compared to $1.2 billion in the nine months ended August 31, 2020.

As a percentage of revenues from home sales, selling, general and administrative expenses improved to 7.6% in the nine months ended August 31, 2021, from 8.4% in the nine months ended August 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.

Operating earnings for our Financial Services segment were $379.3 million in the nine months ended August 31, 2021, compared to $343.8 million in the nine months ended August 31, 2020 (which included $329.7 million operating earnings and an add back of $14.1 million net loss attributable to noncontrolling interests).

The nine months ended August 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.

Operating earnings for our Multifamily segment were $12.1 million in the nine months ended August 31, 2021, compared to an operating loss of $4.0 million in the nine months ended August 31, 2020.

Operating earnings for our Lennar Other segment were $909.2 million in the nine months ended August 31, 2021, compared to an operating loss of $9.1 million in the nine months ended August 31, 2020.

The operating earnings for the nine months ended August 31, 2021 was primarily due to mark to market gains on strategic investments that went public during the nine months ended August 31, 2021 (Opendoor, Hippo, SmartRent and Blend) and the sale of our solar business to Sunnova.

Homebuilding Segments

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

At August 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 May 31, 2021

Three Months Ended August 31, 2021

Gross Margins Operating Earnings (Loss)

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$ 6,505,708 4,732,403 27.3 % 1,319,589 5,677 7,746 2,391 (5,570) 1,329,833

Three Months Ended May 31, 2020

Three Months Ended August 31, 2020

Gross Margins Operating Earnings (Loss)

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$ 5,467,364 4,204,814 23.1 % 826,601 1,928 3,433 (6,431) (11,787) 813,744

Six Months Ended May 31, 2021

Nine Months Ended August 31, 2021

Gross Margins Operating Earnings (Loss)

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$ 17,377,353 12,820,638 26.2 % 3,237,599 17,938 20,770 (3,862) 3,043 3,275,488

Six Months Ended May 31, 2020

Nine Months Ended August 31, 2020

Gross Margins Operating Earnings (Loss)

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Average Sales Price

May 31, May 31, May 31,

August 31, August 31, August 31,

2021 2020 2021 2020 2021 2020

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Total 15,199 13,842 $ 6,510,763 5,478,113 $ 428,000 396,000

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

Of the total homes delivered listed above, 15 homes with a dollar value of $5.1 million and an average sales price of $337,000 represent home deliveries from unconsolidated entities for the three months ended August 31, 2021, compared to 33 home deliveries with a dollar value of $10.7 million and an average sales price of $326,000 for the three months ended August 31, 2020.

Nine Months Ended

Homes Dollar Value (In thousands)

Average Sales Price

May 31, May 31, May 31,

August 31, August 31, August 31,

2021 2020 2021 2020 2021 2020

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Total 42,006 36,835 $ 17,396,003 14,553,233 $ 414,000 395,000

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.

Of the total homes delivered listed above, 58 homes with a dollar value of $18.7 million and an average sales price of $322,000 represent home deliveries from unconsolidated entities for the nine months ended August 31, 2021, compared to 60 home deliveries with a dollar value of $20.0 million and an average sales price of $334,000 for the nine months ended August 31, 2020.

New Orders (1):

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Average Sales Price

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

August 31, August 31, August 31, August 31,

2021 2020 2021 2020 2021 2020 2021 2020

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Total 1,196 1,198 16,277 15,564 $ 7,454,399 6,255,474 $ 458,000 402,000

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

Of the total homes listed above, 35 homes with a dollar value of $13.1 million and an average sales price of $375,000 represent homes in four active communities from unconsolidated entities for the three months ended August 31, 2021, compared to 34 homes with a dollar value of $9.7 million and an average sales price of $286,000 in four active communities for the three months ended August 31, 2020.

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

Nine Months Ended

Homes Dollar Value (In thousands)

Average Sales Price

May 31, May 31, May 31,

August 31, August 31, August 31,

2021 2020 2021 2020 2021 2020

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Total 49,004 40,955 $ 21,561,062 16,118,648 $ 440,000 394,000

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.

Of the total homes listed above, 102 homes with a dollar value of $36.7 million and an average sales price of $359,000 represent homes from unconsolidated entities for the nine months ended August 31, 2021, compared to 85 homes with a dollar value of $26.8 million and an average sales price of $316,000 for the nine months ended August 31, 2020.

Homes Dollar Value (In thousands)

Average Sales Price

May 31, May 31, May 31,

August 31, August 31, August 31,

2021 2020 2021 2020 2021 2020

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Total 25,819 19,697 $ 11,978,030 7,865,957 $ 464,000 399,000

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.

Of the total homes in backlog listed above, 82 homes with a backlog dollar value of $29.5 million and an average sales price of $359,000 represent the backlog from unconsolidated entities at August 31, 2021, compared to 56 homes with a backlog dollar value of $17.0 million and an average sales price of $303,000 at August 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 May 31, 2021 versus Three Months Ended May 31, 2020

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

Homebuilding East:

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.

Revenues from home sales increased in the third quarter of 2021 compared to the third 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.

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 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 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.

Gross margin percentage on home deliveries in the third quarter of 2021 increased compared to the same period last year primarily due to price appreciation as the increase in revenue per square foot of homes delivered outpaced the increase in cost per square foot.

Homebuilding Central:

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.

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

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, 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 decrease in the number of home deliveries in Minnesota 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.

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

Homebuilding Texas:

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.

Revenues from home sales increased in the third quarter of 2021 compared to the third 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.

Revenues from home sales increased in the third quarter of 2021 compared to the third quarter of 2020, primarily due to an increase in the number of home deliveries in all the states of the segment except in Colorado and Oregon 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 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 decrease in the number of home deliveries in Colorado and 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

Nine Months Ended August 31, 2021 versus Nine Months Ended August 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.

Revenues from home sales increased in the nine months ended August 31, 2021 compared to the nine months ended August 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.

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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.

Gross margin percentage on home deliveries in the nine months ended August 31, 2021 increased compared to the same period last year primarily due to price appreciation as the increase in revenue per square foot of homes delivered outpaced the increase in cost per square foot.

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.

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

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 decrease in the number of home deliveries in 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.

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

Homebuilding West:

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.

Revenues from home sales increased in the nine months ended August 31, 2021 compared to the nine months ended August 31, 2020, primarily due to an increase in the number of home deliveries in all states of the segment except in Colorado 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 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.

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 Six Months Ended

May 31, May 31,

Three Months Ended Nine Months Ended

August 31, August 31,

(Dollars in thousands) 2021 2020 2021 2020

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Number of title and closing service transactions 16,900 16,400 49,000 42,000

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.

At August 31, 2021 and November 30, 2020, the carrying value of Financial Services' commercial mortgage-backed securities ("CMBS") was $161.5 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

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

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

Multifamily investments in unconsolidated entities $ 682,819 724,647

Lennar's net investment in Multifamily 950,636 906,632

Statements of Operations Three Months Ended Six Months Ended

May 31, May 31,

Statements of Operations Three Months Ended Nine Months Ended

August 31, August 31,

(Dollars in thousands) 2021 2020 2021 2020

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Lennar Other Segment

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.

At August 31, 2021 and November 30, 2020, we had $1.7 billion and $521.7 million, respectively, of assets in our Lennar Other segment, which included investments in unconsolidated entities of $387.5 million and $387.1 million, respectively.

The increase in assets during the nine months ended August 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 Hippo, SmartRent, Opendoor and Sunnova.

During the nine months ended August 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,

Three Months Ended Nine Months Ended

August 31, August 31,

(In thousands) 2021 2020 2021 2020

Hippo (HIPO) mark to market $ 324,855 — 324,855 —

SmartRent (SMRT) mark to market 100,793 — 100,793 —

Opendoor (OPEN) mark to market 37,301 — 272,756 —

Sunnova (NOVA) mark to market 23,870 — (14,465) —

Blend Labs (BLND) mark to market 6,852 — 6,852 —

Gain on sale of solar business 1,531 — 153,006 —

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(2) Financial Condition and Capital Resources

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.

At August 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 $2.2 billion at August 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 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.

During the nine months ended August 31, 2021 and 2020, cash provided by operating activities totaled $1.3 billion and $2.9 billion, respectively.

During the nine months ended August 31, 2021, cash provided by operating activities was impacted primarily by our net earnings, net of Lennar Other unrealized/realized gain of $847.4 million primarily due to mark to market gains on strategic investments that went public during the nine months ended August 31, 2021, (Opendoor, Sunnova, Hippo, SmartRent and Blend) and the sale of our solar business to Sunnova.

In addition there was a decrease in loans held-for-sale of $209.3 million primarily related to the sale of loans originated by our Financial Services segment, an increase in accounts payable and other liabilities of $514.0 million, and a decrease in receivables of $131.3 million, partially offset by an increase in inventories due to strategic land purchases, land development and construction costs of $2.3 billion.

During the nine months ended August 31, 2020, cash provided by operating activities was impacted primarily by our net earnings, a decrease in loans held-for-sale of $557.8 million primarily related to the sale of loans originated by Financial Services, a decrease in receivables of $264.6 million and an increase in accounts payable and other liabilities of $165.6 million, partially offset by an increase in other assets of $124.6 million.

Investing Cash Flow Activities

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.

During the nine months ended August 31, 2021 and 2020, cash used in investing activities totaled $131.2 million and $267.5 million, respectively.

During the nine months ended August 31, 2021, our cash used in investing activities was primarily due to cash contributions of $354.6 million to unconsolidated entities, which included (1) $164.0 million to Homebuilding unconsolidated entities, (2) $66.8 million to Multifamily unconsolidated entities, and (3) $123.8 million to the strategic technology investments included in the Lennar Other segment.

This was partially offset by distributions of capital from unconsolidated entities of $292.5 million, which primarily included (1) $159.3 million from Homebuilding unconsolidated entities, (2) $107.2 million from Multifamily unconsolidated entities, and (3) $26.0 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.

During the nine months ended August 31, 2020, our cash used in investing activities was primarily due to cash contributions of $412.5 million to unconsolidated entities and deconsolidation of a previously consolidated entity, which included (1) $86.9 million to Homebuilding unconsolidated entities, (2) $122.7 million to Multifamily unconsolidated entities, (3) $50.3 million to the strategic technology investments included in the Lennar Other segment;

and (4) the 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 $135.7 million, which primarily included (1) $58.3 million from Homebuilding unconsolidated entities, (2) $39.1 million from the unconsolidated Rialto real estate funds included in our Lennar Other segment;

and (3) $38.3 million from Multifamily unconsolidated entities.

Financing Cash Flow Activities

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;

During the nine months ended August 31, 2021 and 2020, cash used in financing activities totaled $1.3 billion and $1.9 billion, respectively.

During the nine months ended August 31, 2021, cash used in financing activities was primarily impacted by (1) $357.5 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 senior notes;

(3) $234.0 million of dividend payments;

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These were partially offset by $441.2 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.

During the nine months ended August 31, 2020, cash used in financing activities was primarily impacted by (1) $789.3 million of net repayments under our Financial Services' warehouse facilities, which included the LMF Commercial warehouse repurchase facilities;

(2) $550.3 million of principal payments on notes payable and other borrowings;

(3) the redemption of $313.0 million aggregate principal amount of our senior notes;

and (4) repurchases of our common stock for $319.0 million, which included $288.5 million of repurchases under our repurchase program and $30.3 million of repurchases related to our equity compensation plan.

These were partially offset by $175.6 million of receipts related to noncontrolling interests.

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

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

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

Homebuilding debt $ 5,542,513 5,955,758 7,180,274

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

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.

At August 31, 2021, Homebuilding debt to total capital was lower compared to November 30, 2020 and August 31, 2020, primarily as a result of a decrease in Homebuilding debt and 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:

Six Months Ended

Nine Months Ended

(Dollars in thousands) 2021 2020

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Interest incurred $ 210,575 $ 272,347

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.

Subsequent to August 31, 2021, we provided notice that we would redeem on October 15, 2021 our $600 million 4.125% senior unsecured notes, which have a scheduled maturity of January 15, 2022.

As of August 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 May 31, 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 August 31, 2021:

(Dollars in thousands) Covenant Level Level Achieved as of

August 31, 2021

Minimum net worth test $ 9,781,069 13,563,839

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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 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.

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

During the nine months ended August 31, 2021, treasury stock increased due to our repurchase of 4.8 million shares of Class A and Class B common stock due primarily to our repurchase of 4.0 million shares of Class A and Class B common stock through our stock repurchase program.

During the nine months ended August 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 September 29, 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 October 28, 2021 to holders of record at the close of business on October 14, 2021.

On July 19, 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 July 2, 2021, as declared by our Board of Directors on June 18, 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 the fourth quarter of 2020 and each of the first three quarters of 2021 on both our 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 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.

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 August 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 May 31, 2021 is included in the following tables.

Supplemental information for the Obligors, which excludes non-guarantor subsidiaries and intercompany transactions, at August 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) May 31, 2021 November 30, 2020

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

Due from non-guarantor subsidiaries $ 4,154,085 2,655,503

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Total liabilities 10,079,001 9,599,718

Six Months Ended

(In thousands) May 31, 2021

Nine Months Ended

(In thousands) August 31, 2021

Total revenues $ 17,650,640

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Investments in Unconsolidated Entities

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.

As of August 31, 2021, we had equity investments in 40 active homebuilding and land unconsolidated entities (of which three had recourse debt, 11 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 May 31, 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 August 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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Investments in Unconsolidated Entities

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.

At August 31, 2021, Multifamily had equity investments in 18 unconsolidated entities that are engaged in multifamily residential developments (of which 11 had non-recourse debt and seven 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 six months ended May 31, 2021 are included in Note 3 of the Notes to Condensed Consolidated Financial Statements.

Details of each as of and during the nine months ended August 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 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.

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 August 31, 2021.

The following table summarizes the principal maturities of our Multifamily unconsolidated entities debt as per current debt arrangements as of August 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 May 31, 2021 and November 30, 2020, we had strategic technology investments in unconsolidated entities of $178.2 million and $196.7 million, respectively.

As of August 31, 2021 and November 30, 2020, we had strategic technology investments in unconsolidated entities of $187.6 million and $196.7 million, respectively.

Option Contracts

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Controlled Homesites Years of

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

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

East 74,056 — 74,056 54,069 128,125

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Controlled Homesites Years of

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

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

East 30,683 12,718 43,401 62,256 105,657

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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 May 31, 2021.

There were no outstanding borrowings under our Credit Facility as of August 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 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.

We believe that there have been no significant changes to our critical accounting policies during the nine months ended August 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