LENNAR CORP /NEW/ 10-Q

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations The following discussion and analysis of our financial condition and results of operations should be read in conjunction with our unaudited condensed consolidated financial statements and accompanying notes included under Item 1 of this Report and our audited consolidated financial statements and accompanying notes included in our Annual Report on Form 10-K, for our fiscal year ended November 30, 2020. Some of the statements in this Management’s Discussion and Analysis of Financial Condition and Results of Operations, and elsewhere in this Quarterly Report on Form 10-Q, are "forward-looking statements," within the meaning of the Private Securities Litigation Reform Act of 1995. These forward-looking statements typically include the words “anticipate,” “believe,” “consider,” “estimate,” “expect,” “forecast,” “intend,” “objective,” “plan,” “predict,” “projection,” “seek,” “strategy,” “target,” “will” or other words of similar meaning. Forward-looking statements contained herein may include opinions or beliefs regarding market conditions and similar matters. In many instances, those opinions and beliefs are based upon general observations by members of our management, anecdotal evidence and our experience in the conduct of our businesses, without specific investigation or analyses. Therefore, while they reflect our view of the industries and markets in which we are involved, they should not be viewed as reflecting verifiable views or views that are necessarily shared by all who are involved in those industries or markets. These statements concern expectations, beliefs, projections, plans and strategies, anticipated events or trends and similar expressions concerning matters that are not historical facts. The forward-looking statements reflect our current views about future events and are subject to risks, uncertainties and assumptions. We wish to caution readers that certain important factors may have affected and could in the future affect our actual results and could cause actual results to differ significantly from what is anticipated by our forward-looking statements. The most important factors that could cause actual results to differ materially from those anticipated by our forward-looking statements include, but are not limited to: the potential negative impact to our business of the ongoing coronavirus (“COVID-19”) pandemic, the duration, impact and severity of which is highly uncertain; 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; our inability to acquire land at anticipated prices; the possibility that we will incur nonrecurring costs that affect earnings in one or more reporting periods; decreased demand for our homes or Multifamily rental properties; increased competition for home sales from other sellers of new and resale homes; our inability to pay down debt; 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; the failure of the participants in various joint ventures to honor their commitments; difficulty obtaining land-use entitlements or construction financing; natural disasters and other unforeseen events for which our insurance does not provide adequate coverage; new laws or regulatory changes that adversely affect the profitability of our businesses; 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. Please see our Form 10-K for the fiscal year ended November 30, 2020 and our other filings with the SEC for a further discussion of these and other risks and uncertainties which could affect our future results. 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. 26 Outlook 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 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. 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, 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. 27 (1) Results of Operations Overview We historically have experienced, and expect to continue to experience, variability in quarterly results. 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 $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 August 31, 2021 (In thousands) Homebuilding Financial Services Multifamily Lennar Other Corporate Total Revenues: Sales of homes $ 6,505,708 — — — — 6,505,708 Sales of land 45,055 — — — — 45,055 Other revenues 7,746 206,973 167,921 8,000 — 390,640 Total revenues 6,558,509 206,973 167,921 8,000 — 6,941,403 Costs and expenses: Costs of homes sold 4,732,403 — — — — 4,732,403 Costs of land sold 39,378 — — — — 39,378 Selling, general and administrative expenses 453,716 — — — — 453,716 Other costs and expenses — 94,890 174,410 9,010 — 278,310 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 (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 — — — 495,202 — 495,202 Operating earnings (loss) $ 1,329,833 112,083 (9,393) 491,972 — 1,924,495 Corporate general and administrative expenses — — — — 94,942 94,942 Charitable foundation contribution — — — — 15,199 15,199 Earnings (loss) before income taxes $ 1,329,833 112,083 (9,393) 491,972 (110,141) 1,814,354 28 Three Months Ended August 31, 2020 (In thousands) Homebuilding Financial Services Multifamily Lennar Other Corporate Total Revenues: Sales of homes $ 5,467,364 — — — — 5,467,364 Sales of land 34,323 — — — — 34,323 Other revenues 3,433 237,068 115,170 12,896 — 368,567 Total revenues 5,505,120 237,068 115,170 12,896 — 5,870,254 Costs and expenses: Costs of homes sold 4,204,814 — — — — 4,204,814 Costs of land sold 32,395 — — — — 32,395 Selling, general and administrative expenses 435,949 — — — — 435,949 Other costs and expenses — 101,989 118,786 2,062 — 222,837 Total costs and expenses 4,673,158 101,989 118,786 2,062 — 4,895,995 Equity in loss from unconsolidated entities (6,431) — (1,532) (2,835) — (10,798) 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 Charitable foundation contribution — — — — 6,663 6,663 Earnings (loss) before income taxes $ 813,744 135,079 (5,148) 7,999 (92,661) 859,013 Nine Months Ended August 31, 2021 (In thousands) Homebuilding Financial Services Multifamily Lennar Other Corporate and unallocated Total Revenues: Sales of homes $ 17,377,353 — — — — 17,377,353 Sales of land 131,483 — — — — 131,483 Other revenues 20,770 669,789 476,837 20,884 — 1,188,280 Total revenues 17,529,606 669,789 476,837 20,884 — 18,697,116 Costs and expenses: Costs of homes sold 12,820,638 — — — — 12,820,638 Costs of land sold 113,545 — — — — 113,545 Selling, general and administrative expenses 1,319,116 — — — — 1,319,116 Other costs and expenses — 290,179 474,389 18,994 — 783,562 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 (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 — — — 847,377 — 847,377 Operating earnings $ 3,275,488 379,610 12,130 909,221 — 4,576,449 Corporate general and administrative expenses — — — — 296,190 296,190 Charitable foundation contribution — — — — 42,006 42,006 Earnings (loss) before income taxes $ 3,275,488 379,610 12,130 909,221 (338,196) 4,238,253 29 Nine Months Ended August 31, 2020 (In thousands) Homebuilding Financial Services Multifamily Lennar Other Corporate and unallocated Total Revenues: Sales of homes $ 14,533,212 — — — — 14,533,212 Sales of land 81,023 — — — — 81,023 Other revenues 12,485 631,992 370,904 33,348 — 1,048,729 Total revenues 14,626,720 631,992 370,904 33,348 — 15,662,964 Costs and expenses: Costs of homes sold 11,359,364 — — — — 11,359,364 Costs of land sold 102,899 — — — — 102,899 Selling, general and administrative expenses 1,222,032 — — — — 1,222,032 Other costs and expenses — 363,688 379,607 3,564 746,859 Total costs and expenses 12,684,295 363,688 379,607 3,564 — 13,431,154 Equity in earnings (loss) from unconsolidated entities and Multifamily other gain (20,077) — 4,702 (28,712) — (44,087) Financial Services gain on deconsolidation — 61,418 — — — 61,418 Other expense, net (16,845) — — (10,195) — (27,040) Operating earnings (loss) $ 1,905,503 329,722 (4,001) (9,123) — 2,222,101 Corporate general and administrative expenses — — — — 246,815 246,815 Charitable foundation contribution — — — — 16,144 16,144 Earnings (loss) before income taxes $ 1,905,503 329,722 (4,001) (9,123) (262,959) 1,959,142 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 30 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 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 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 $9.1 million in the nine months ended August 31, 2020. The operating earnings for the nine months ended August 31, 2021 was primarily due to mark to market gains on strategic investments that went public during the nine months ended August 31, 2021 (Opendoor, Hippo, SmartRent and Blend) and the sale of our solar business to Sunnova. Homebuilding Segments At August 31, 2021, our reportable Homebuilding segments and Homebuilding Other are outlined in Note 2 of the Notes to Condensed Consolidated Financial Statements. The following tables set forth selected financial and operational information related to our homebuilding operations for the periods indicated: Selected Financial and Operational Data Three Months Ended August 31, 2021 Gross Margins Operating Earnings (Loss) ($ 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 $ 1,655,301 1,174,592 29.0 % 350,305 3,147 1,867 3,493 (1,917) 356,895 Central 1,262,540 974,843 22.8 % 196,103 95 589 526 (84) 197,229 Texas 818,869 570,228 30.4 % 184,267 1,835 365 7 (466) 186,008 West 2,764,857 2,004,108 27.5 % 603,721 600 1,600 4,263 (1,369) 608,815 Other (2) 4,141 8,632 (108.5) % (14,807) — 3,325 (5,898) (1,734) (19,114) Totals $ 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 August 31, 2020 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) East $ 1,477,273 1,112,035 24.7 % 241,904 (103) 638 897 853 244,189 Central 1,062,799 842,764 20.7 % 134,395 (57) 1,341 70 (3,071) 132,678 Texas 719,467 538,480 25.2 % 114,954 2,016 203 242 (1,304) 116,111 West 2,205,235 1,706,530 22.6 % 343,353 72 1,145 48 (1,784) 342,834 Other (2) 2,590 5,005 (93.2) % (8,005) — 106 (7,688) (6,481) (22,068) Totals $ 5,467,364 4,204,814 23.1 % 826,601 1,928 3,433 (6,431) (11,787) 813,744 Nine Months Ended August 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 $ 4,553,941 3,278,463 28.0 % 899,817 9,558 5,053 2,942 11,435 928,805 Central 3,282,168 2,534,816 22.8 % 485,631 846 1,573 941 (691) 488,300 Texas 2,245,671 1,572,494 30.0 % 487,231 4,706 1,185 548 (1,962) 491,708 West 7,284,928 5,404,983 25.8 % 1,412,934 2,828 3,961 4,304 (695) 1,423,332 Other (2) 10,645 29,882 (180.7) % (48,014) — 8,998 (12,597) (5,044) (56,657) Totals $ 17,377,353 12,820,638 26.2 % 3,237,599 17,938 20,770 (3,862) 3,043 3,275,488 Nine Months Ended August 31, 2020 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 $ 3,904,268 2,971,929 23.9 % 581,923 (1,681) 3,913 1,474 475 586,104 Central 2,833,745 2,300,783 18.8 % 291,672 (703) 2,209 642 (1,789) 292,031 Texas 1,877,374 1,428,758 23.9 % 266,647 5,213 970 446 (4,205) 269,071 West 5,894,183 4,619,334 21.6 % 841,369 (1,267) 4,873 3,948 (1,088) 847,835 Other (2) 23,642 38,560 (63.1) % (29,795) (23,438) 520 (26,587) (10,238) (89,538) Totals $ 14,533,212 11,359,364 21.8 % 1,951,816 (21,876) 12,485 (20,077) (16,845) 1,905,503 (1) Net margins on sales of homes include selling, general and administrative expenses. (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 Deliveries: Three Months Ended Homes Dollar Value (In thousands) Average Sales Price August 31, August 31, August 31, 2021 2020 2021 2020 2021 2020 East 4,568 4,309 $ 1,660,357 1,488,022 $ 363,000 345,000 Central 3,211 2,767 1,262,540 1,062,799 393,000 384,000 Texas 2,747 2,598 818,869 719,467 298,000 277,000 West 4,669 4,165 2,764,856 2,205,235 592,000 529,000 Other 4 3 4,141 2,590 1,035,000 863,000 Total 15,199 13,842 $ 6,510,763 5,478,113 $ 428,000 396,000 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 August 31, August 31, August 31, 2021 2020 2021 2020 2021 2020 East 12,968 11,511 $ 4,572,592 3,924,289 $ 353,000 341,000 Central 8,391 7,389 3,282,168 2,833,745 391,000 384,000 Texas 7,843 6,637 2,245,671 1,877,374 286,000 283,000 West 12,793 11,273 7,284,927 5,894,183 569,000 523,000 Other 11 25 10,645 23,642 968,000 946,000 Total 42,006 36,835 $ 17,396,003 14,553,233 $ 414,000 395,000 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. 31 New Orders (1): Three Months Ended Active Communities Homes Dollar Value (In thousands) Average Sales Price August 31, August 31, August 31, August 31, 2021 2020 2021 2020 2021 2020 2021 2020 East 329 340 5,308 4,655 $ 2,100,466 1,631,349 $ 396,000 350,000 Central 281 297 3,189 3,375 1,352,814 1,298,792 424,000 385,000 Texas 233 217 3,203 2,746 988,644 743,553 309,000 271,000 West 350 341 4,571 4,786 3,006,501 2,580,328 658,000 539,000 Other 3 3 6 2 5,974 1,452 996,000 726,000 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, 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 August 31, August 31, August 31, 2021 2020 2021 2020 2021 2020 East 15,473 12,512 $ 5,788,506 4,266,221 $ 374,000 341,000 Central 9,931 8,741 4,086,170 3,341,959 411,000 382,000 Texas 9,228 7,327 2,800,826 1,986,770 304,000 271,000 West 14,358 12,359 8,871,465 6,508,509 618,000 527,000 Other 14 16 14,095 15,189 1,007,000 949,000 Total 49,004 40,955 $ 21,561,062 16,118,648 $ 440,000 394,000 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. Backlog: At Homes Dollar Value (In thousands) Average Sales Price August 31, August 31, August 31, 2021 2020 2021 2020 2021 2020 East 8,518 6,691 $ 3,526,849 2,368,300 $ 414,000 354,000 Central 5,911 4,502 2,566,174 1,752,180 434,000 389,000 Texas 4,208 2,860 1,379,740 822,734 328,000 288,000 West 7,177 5,644 4,499,969 2,922,743 627,000 518,000 Other 5 — 5,298 — 1,060,000 — Total 25,819 19,697 $ 11,978,030 7,865,957 $ 464,000 399,000 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. Homes are sold using sales contracts, which are generally accompanied by sales deposits. In some instances, purchasers are permitted to cancel sales if they fail to qualify for financing or under certain other circumstances. Various state and federal laws and regulations may sometimes give purchasers a right to cancel homes in backlog. 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 August 31, 2021 versus Three Months Ended August 31, 2020 Homebuilding East: 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 32 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 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 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 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. 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. 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 Texas: 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. 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 West: 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 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. 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. Nine Months Ended August 31, 2021 versus Nine Months Ended August 31, 2020 Homebuilding East: 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. 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 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 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 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 Virginia and Tennessee 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 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. 33 Homebuilding Texas: 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 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 average sales price of homes delivered was primarily due to favorable market conditions. 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 West: 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. 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. Financial Services Segment Our Financial Services reportable segment provides mortgage financing, title and closing services primarily for buyers of our homes. The segment also originates and sells into securitizations commercial mortgage loans through its LMF Commercial business. Our Financial Services segment sells substantially all of the residential loans it originates within a short period in the secondary mortgage market, the majority of which are sold on a servicing released, non-recourse basis. After the loans are sold, we retain potential liability for possible claims by purchasers that we breached certain limited industry-standard representations and warranties in the loan sale agreements. 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 Nine Months Ended August 31, August 31, (Dollars in thousands) 2021 2020 2021 2020 Dollar value of mortgages originated $ 3,281,000 3,529,000 9,228,000 9,007,000 Number of mortgages originated 9,400 10,800 27,300 27,800 Mortgage capture rate of Lennar homebuyers 73 % 82 % 75 % 80 % Number of title and closing service transactions 16,900 16,400 49,000 42,000 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. Multifamily Segment We have been actively involved, primarily through unconsolidated entities, in the development, construction and property management of multifamily rental properties. Our Multifamily segment focuses on developing a geographically diversified portfolio of institutional quality multifamily rental properties in select U.S. markets. Originally, our Multifamily segment focused on building multifamily properties and selling them shortly after they were completed. However, more recently we have focused on creating and participating in ventures that build multifamily properties with the intention of retaining them after they are completed. 34 The following tables provide information related to our investment in the Multifamily segment: Balance Sheets (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 Nine Months Ended August 31, August 31, (Dollars in thousands) 2021 2020 2021 2020 Number of operating properties/investments sold through joint ventures — — 1 2 Lennar's share of gains on the sale of operating properties/investments $ — — 14,784 3,001 Lennar Other Segment 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 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 — Other realized gain — — 3,580 — $ 495,202 — 847,377 — (2) Financial Condition and Capital Resources 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 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. 35 Investing Cash Flow Activities 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 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 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; and (4) repurchases of our common stock for $452.5 million, which included $388.0 million of repurchases under our repurchase program and $64.6 million of repurchases related to our equity compensation plan. 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 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. 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) August 31, 2021 November 30, 2020 August 31, 2020 Homebuilding debt $ 5,542,513 5,955,758 7,180,274 Stockholders’ equity 20,650,188 17,994,856 17,172,103 Total capital $ 26,192,701 23,950,614 24,352,377 Homebuilding debt to total capital 21.2 % 24.9 % 29.5 % Homebuilding debt $ 5,542,513 5,955,758 7,180,274 Less: Homebuilding cash and cash equivalents 2,623,320 2,703,986 1,966,796 Net Homebuilding debt $ 2,919,193 3,251,772 5,213,478 Net Homebuilding debt to total capital (1) 12.4 % 15.3 % 23.3 % (1) Net homebuilding debt to total capital is a non-GAAP financial measure defined as net homebuilding debt (homebuilding debt less homebuilding cash and cash equivalents) divided by total capital (net homebuilding debt plus stockholders' equity). We believe the ratio of net homebuilding debt to total capital is a relevant and a useful financial measure to investors in understanding the leverage employed in homebuilding operations. However, because net homebuilding debt to total capital is not calculated in accordance with GAAP, this financial measure should not be considered in isolation or as an alternative to financial measures prescribed by GAAP. Rather, this non-GAAP financial measure should be used to supplement our GAAP results. 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. 36 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. These transactions may include the issuance of additional indebtedness, the repurchase of our outstanding indebtedness, the repurchase of our common stock, the acquisition of homebuilders and other companies, the purchase or sale of assets or lines of business, the issuance of common stock or securities convertible into shares of common stock, and/or the pursuit of other financing alternatives. In connection with some of our non-homebuilding businesses, we are also considering other types of transactions such as sales, restructurings, joint ventures, spin-offs or initial public offerings as we continue to move back towards being a pure play homebuilding company. Our Homebuilding senior notes and other debts payable as well as letters of credit and surety bonds are summarized within Note 7 of the Notes to Condensed Consolidated Financial Statements. Our Homebuilding average debt outstanding and the average rates of interest was as follows: Nine Months Ended August 31, (Dollars in thousands) 2021 2020 Homebuilding average debt outstanding $ 5,848,865 $ 7,896,372 Average interest rate 4.9 % 4.9 % Interest incurred $ 210,575 $ 272,347 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 . Under the Credit Agreement, we are subject to debt covenants. 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 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 Maximum leverage ratio 65.0 % 17.0 % Liquidity test 1.00 9.78 Financial Services Warehouse Facilities Our Financial Services segment uses the residential facilities to finance its residential lending activities until the mortgage loans are sold to investors and the proceeds are collected. The facilities are non-recourse to us and are expected to be renewed or replaced with other facilities when they mature. The LMF Commercial facilities finance LMF Commercial loan origination and securitization activities and were secured by up to an 80% interest in the originated commercial loans financed. These facilities and the related borrowings and collateral are detailed in Note 2 of the Notes to Condensed Consolidated Financial Statements. Changes in Capital Structure In January 2021, our Board of Directors authorized the repurchase of up to the lesser of $1.0 billion in value, or 25 million in shares, of our outstanding Class A and Class B common stock. 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 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. 37 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. Supplemental Financial Information Currently, substantially all of our 100% owned homebuilding subsidiaries are guaranteeing all our senior notes. The guarantees are full and unconditional. 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 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 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) August 31, 2021 November 30, 2020 Due from non-guarantor subsidiaries $ 4,154,085 2,655,503 Equity method investments 963,859 951,579 Total assets 31,009,452 27,695,067 Total liabilities 10,079,001 9,599,718 Nine Months Ended (In thousands) August 31, 2021 Total revenues $ 17,650,640 Operating earnings 3,366,200 Earnings before income taxes 3,031,800 Net earnings attributable to Lennar 2,335,695 Off-Balance Sheet Arrangements Homebuilding: Investments in Unconsolidated Entities 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. Through these entities, we have primarily sought to reduce and share our risk by limiting the amount of our capital invested in land, while obtaining access to potential future homesites and allowing us to participate in strategic ventures. The use of these entities also, in some instances, has enabled us to acquire land to which we could not otherwise obtain access, or could not obtain access on as favorable terms, without the participation of a strategic partner. Participants in these joint ventures have been land owners/developers, other homebuilders and financial or strategic partners. Joint ventures with land owners/developers have given us access to homesites owned or controlled by our partners. Joint ventures with other homebuilders have provided us with the ability to bid jointly with our partners for large land parcels. Joint ventures with financial partners have allowed us to combine our homebuilding expertise with access to our partners’ capital. Joint ventures with strategic partners have allowed us to combine our homebuilding expertise with the specific expertise (e.g. commercial or infill experience) of our partners. Each joint venture is governed by an executive committee consisting of members from the partners. Details regarding these investments, balances and debt are included in Note 3 of the Notes to Condensed Consolidated Financial Statements. 38 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. Principal Maturities of Unconsolidated JVs by Period (In thousands) Total JV Debt 2021 2022 2023 Thereafter Other Debt without recourse to Lennar $ 1,199,582 — 256,958 65,591 877,033 — Land seller and CDD and other debt 5,837 — — — — 5,837 Maximum recourse debt exposure to Lennar 3,599 — 3,599 — — — Debt issuance costs (13,089) — — — — (13,089) Total $ 1,195,929 — 260,557 65,591 877,033 (7,252) Multifamily: Investments in Unconsolidated Entities 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. Through these entities, we are focusing on developing a geographically diversified portfolio of institutional quality multifamily rental properties in select U.S. markets. Initially, we participated in building multifamily developments and selling them soon after they were completed. Recently, however, we have been focused on developing properties with the intention of retaining them. Participants in these joint ventures have been financial partners. Joint ventures with financial partners have allowed us to combine our development and construction expertise with access to our partners’ capital. Each joint venture is governed by an operating agreement that provides significant substantive participating voting rights on major decisions to our partners. 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 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 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 (In thousands) Total JV Debt 2021 2022 2023 Thereafter Other Debt without recourse to Lennar $ 3,167,395 234,288 494,173 896,485 1,542,449 — Debt issuance costs (24,839) — — — — (24,839) Total $ 3,142,556 234,288 494,173 896,485 1,542,449 (24,839) Lennar Other: Investments in Unconsolidated Entities As part of the sale of the Rialto investment and asset management platform, we retained our ability to receive a portion of payments with regard to carried interests if funds meet specified performance thresholds. We periodically receive advance distributions related to the carried interests in order to cover income tax obligations resulting from allocations of taxable income to the carried interests. 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 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 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. 39 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): Controlled Homesites Years of August 31, 2021 Optioned JVs Total Owned Homesites Total Homesites Supply Owned (1) East 74,056 — 74,056 54,069 128,125 Central 27,772 — 27,772 42,407 70,179 Texas 53,434 — 53,434 40,274 93,708 West 50,867 — 50,867 51,587 102,454 Other 3,657 6,594 10,251 2,056 12,307 Total homesites 209,786 6,594 216,380 190,393 406,773 3.3 % of total homesites 53 % 47 % Controlled Homesites Years of August 31, 2020 Optioned JVs Total Owned Homesites Total Homesites Supply Owned (1) East 30,683 12,718 43,401 62,256 105,657 Central 14,504 122 14,626 42,785 57,411 Texas 25,556 — 25,556 35,560 61,116 West 14,911 2,854 17,765 59,475 77,240 Other 1,137 7,544 8,681 2,068 10,749 Total homesites 86,791 23,238 110,029 202,144 312,173 3.8 % of total homesites 35 % 65 % (1) Based on trailing twelve months of home deliveries. Details on option contracts and related consolidated inventory not owned and exposure are included in Note 10 of the Notes to Condensed Consolidated Financial Statements. Contractual Obligations and Commercial Commitments 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 August 31, 2021. (3) New Accounting Pronouncements See Note 1 of the Notes to Condensed Consolidated Financial Statements included under Item 1 of this Report for a discussion of new accounting pronouncements applicable to our company. (4) Critical Accounting Policies 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.