What changed in this filing

/stocks — the workspaceLOADING

Item 2. Management’s Discussion and Analysis

2022-04-01 compared with 2021-10-01 · 175 added, 305 removed, 280 unchanged (63% of the section changed)

13 unchanged sentences

cost increases related to real estate taxes and insurance;

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

reduced availability or increased cost of mortgage financing for homebuyers;

increased interest rates or increased competition in the mortgage industry;

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

17 unchanged sentences

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

The housing market remains strong.

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.

The housing market remains strong in all of our major markets despite the geopolitical environment, rising interest rates and inflationary pressures.

Buyers are seeking shelter and protection against escalating housing costs as rents increase.

Owning a home with a fixed rate mortgage provides this protection.

Additionally, the home is increasingly the control center or hub of our homebuyers' lives.

While demand is strong, the supply of new and existing homes continues to be constrained.

Our ability to deliver homes has been tested by supply chain challenges for both land and construction related to materials and labor.

The time it takes us to build a home has increased by about eight weeks over the past year.

Also, the cost of building homes has been increasing.

To maintain our margins, we are not selling homes until we are ready to build them, so we can factor cost increases into the sale prices.

Although deliveries have been constrained by the supply chain disruption, efficiency in our operations continues to drive strong bottom-line improvement and increased returns.

The lengthening of time it takes us to build homes requires that we have more of our cash invested in construction in process.

We continue to strategically acquire land while increasing the homes we control through options.

We continue to make progress with our land-light strategy as our percentage of homesites controlled increased to 58% from 45% in the prior year, while our years’ supply of land owned stayed flat from the prior year at 3.4 years.

We are also continuing to pay down debt as it comes due with the next tranche maturing in November 2022.

We have also continued to repurchase our stock.

Our Board recently approved a $2 billion increase in our repurchase authorization.

In addition, we have made significant strategic investments through our LEN X platform in new technology companies that are working on innovations that will reshape the way our company and our industry operates.

They have led to changes in our core business that have reduced our SG&A expenses.

These investments are also the tip of the spear in implementing our industry leading sustainability initiatives from solar on the rooftop to microgrid technology across communities, and from water conservation to sustainable cement.

Our LEN X strategy is setting the course for Lennar's sustainable future.

Our income statement is impacted by unrealized mark-to-market gains and losses from LEN X investments in companies that have gone public, but these are non-monetary, unrealized gains and losses, and they do not reflect the state of the housing market or our operating performance.

We have also continued to work on the structural components and organization of our proposed spin-off company as we focus on our strategy of becoming a pure-play homebuilding company.

This SpinCo will be an asset light, asset management business that will have a limited balance sheet.

Many of the assets targeted for SpinCo will be acquired by investor funds it manages and will be monetized in the form of assets under management.

The three core verticals of SpinCo will be Multifamily, single family for rent and land strategies.

Each of these verticals already have raised third-party capital and have active asset managers.

The spin-off will enable us to generate higher returns on our assets and equity base.

We are extremely well-positioned financially, organizationally, and technologically to thrive and grow in this evolving housing market.

We expect our deliveries for the second quarter of 2022 will be in the range of 16,000 to 16,300 homes.

We expect to continue to produce strong gross margins for the second quarter of 2022 in the range of 28.0% to 28.25% and we expect our SG&A to be between 6.8% and 7.0% as we continue to focus on simplification, efficiencies and leveraging our overhead.

We expect our community count to build throughout the year and are projecting to end 2022 with a low double-digit increase in community count year-over-year.

We continue to see great land acquisition opportunities in our markets and are confident this pipeline will produce strong community count growth for the next several years.

As we look to the remainder of 2022, we expect our results to continue to strengthen throughout the year as our recently increased start pace results in more deliveries and as we use our size and scale and our builder of choice relationships to help us navigate some of the supply chain challenges.

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

Our results of operations for the three months ended February 28, 2022 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.

Our net earnings attributable to Lennar were $503.6 million, or $1.69 per diluted share ($1.70 per basic share), in the first quarter of 2022, compared to net earnings attributable to Lennar of $1.0 billion, or $3.20 per diluted share ($3.20 per basic share), in the first quarter of 2021.

Results included unrealized mark-to-market losses of $395.2 million in the first quarter of 2022 and unrealized mark-to-market gains of $469.7 million in the first quarter of 2021 on our publicly traded technology investments.

Excluding unrealized mark-to-market gains and losses in both years, net earnings attributable to Lennar were $800.2 million or $2.70 per diluted share in the first quarter of 2022, compared to net earnings of $642.7 million, or $2.04 per diluted share, in the first quarter of 2021.

Financial information relating to our operations was as follows:

Three Months Ended August 31, 2021

Three Months Ended February 28, 2022

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

9 unchanged sentences

Total costs and expenses 4,641,898 85,910 263,737 5,407 — 4,996,952

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)

Equity in earnings (loss) from unconsolidated entities, Multifamily other gain and Lennar Other other income (expense), net, and other gain (286) — 1,805 (9,808) — (8,289)

Other expense, net (171) — — — — (171)

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

Lennar Other unrealized loss from technology investments — — — (395,170) — (395,170)

Operating earnings (loss) $ 1,109,850 90,791 5,427 (403,134) — 802,934

2 unchanged sentences

Earnings (loss) before income taxes $ 1,109,850 90,791 5,427 (403,134) (126,199) 676,735

Three Months Ended August 31, 2020

(1) Other revenues in our Multifamily segment include land sales to unconsolidated entities of $131.6 million.

Three Months Ended February 28, 2021

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

9 unchanged sentences

Total costs and expenses 4,118,286 97,862 131,049 4,252 — 4,351,449

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

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

Equity in loss from unconsolidated entities, Multifamily other gain and Lennar Other other expense, net (4,565) — (1,268) (1,047) — (6,880)

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

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

Nine Months Ended August 31, 2020

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

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)

Lennar Other unrealized gain from technology investments — — — 469,745 — 469,745

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

2 unchanged sentences

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

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 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.

Three Months Ended February 28, 2022 versus Three Months Ended February 28, 2021

Revenues from home sales increased 17% in the first quarter of 2022 to $5.7 billion from $4.9 billion in the first quarter of 2021.

Revenues were higher primarily due to a 2% increase in the number of home deliveries to 12,538 homes from 12,314 homes and a 15% increase in the average sales price to $457,000 from $398,000.

Gross margin on home sales were $1.5 billion, or 26.9%, in the first quarter of 2022, compared to $1.2 billion, or 25.0%, in the first quarter of 2021.

During the first quarter of 2022, an increase in revenues per square foot was offset by an increase in

costs per square foot primarily due to higher lumber costs.

Overall, gross margins improved year over year as land costs remained relatively flat while interest expense decreased as a result of our focus on reducing debt.

Selling, general and administrative expenses were $428.5 million in the first quarter of 2022, compared to $410.2 million in the first quarter of 2021.

As a percentage of revenues from home sales, selling, general and administrative expenses improved to 7.5% in the first quarter of 2022, from 8.4% in the first quarter of 2021.

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

Operating earnings for our Financial Services segment were $90.8 million in the first quarter of 2022, compared to $146.2 million in the first quarter of 2021.

The decrease in operating earnings was primarily due to lower mortgage net margins driven by a more competitive mortgage market.

Operating earnings for our Multifamily segment were $5.4 million in the first quarter of 2022, compared to an operating loss of $0.9 million in the first quarter of 2021.

Operating loss for our Lennar Other segment was $403.1 million in the first quarter of 2022, compared to operating earnings of $471.3 million in the first quarter of 2021.

Lennar Other operating loss in the first quarter of 2022 and Lennar Other operating earnings in the first quarter of 2021 was due to unrealized mark-to-market losses and gains, respectively, on our publicly traded technology investments.

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.

At February 28, 2022, 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)

$ 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

Three Months Ended February 28, 2022

Gross Margins Operating Earnings (Loss)

6 unchanged sentences

$ 5,721,757 4,184,864 26.9 % 1,108,415 (4,589) 6,481 (286) (171) 1,109,850

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)

$ 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

Three Months Ended February 28, 2021

Gross Margins Operating Earnings (Loss)

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

East $ 1,347,610 988,862 26.6 % 241,534 5,076 1,418 (492) 14,547 262,083

10 unchanged sentences

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,

February 28, February 28, February 28,

2022 2021 2022 2021 2022 2021

5 unchanged sentences

Total 12,538 12,314 $ 5,731,138 4,894,605 $ 457,000 398,000

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.

Of the total homes delivered listed above, 25 homes with a dollar value of $9.4 million and an average sales price of $375,000 represent home deliveries from unconsolidated entities for the three months ended February 28, 2022, compared to 12 home deliveries with a dollar value of $3.7 million and an average sales price of $308,000 for the three months ended February 28, 2021.

New Orders (1):

2 unchanged sentences

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,

February 28, February 28, February 28, February 28,

2022 2021 2022 2021 2022 2021 2022 2021

5 unchanged sentences

Total 1,204 1,162 15,747 15,570 $ 7,797,539 6,541,276 $ 495,000 420,000

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.

Of the total homes listed above, 44 homes with a dollar value of $17.3 million and an average sales price of $393,000 represent homes in five active communities from unconsolidated entities for the three months ended February 28, 2022, compared to 35 homes with a dollar value of $11.6 million and an average sales price of $332,000 in four active communities for the three months ended February 28, 2021.

(1) Homes represent the number of new sales contracts executed with homebuyers, net of cancellations, during the three months ended February 28, 2022 and 2021.

Homes Dollar Value (In thousands)

Average Sales Price

August 31, August 31, August 31,

February 28, February 28, February 28,

2022 2021 2022 2021 2022 2021

5 unchanged sentences

Total 27,335 22,077 $ 13,560,611 9,459,641 $ 496,000 428,000

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.

Of the total homes in backlog listed above, 98 homes with a backlog dollar value of $36.6 million and an average sales price of $373,000 represent the backlog from unconsolidated entities at February 28, 2022, compared to 61 homes with a backlog dollar value of $19.4 million and an average sales price of $318,000 at February 28, 2021.

During the three months ended February 28, 2022, we acquired 355 homes in backlog in the East Homebuilding segment.

Backlog represents the number of homes under sales contracts.

3 unchanged sentences

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

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.

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.

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.

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

Three Months Ended February 28, 2022 versus Three Months Ended February 28, 2021

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.

Revenues from home sales increased in the first quarter of 2022 compared to the first quarter of 2021, primarily due to an increase in the number of home deliveries in all the states in the segment except in Florida 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 driven by an increase in the number of active communities.

The decrease in the number of home deliveries in Florida was primarily due to a decrease in the number of active communities due to the timing of opening and closing of communities as a result of supply chain disruptions.

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.

Gross margin percentage on home deliveries in the first quarter of 2022 increased compared to the same period last year primarily due to price appreciation as the increase in revenues per square foot of homes delivered outpaced the increase in costs 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.

Revenues from home sales increased in the first quarter of 2022 compared to the first quarter of 2021, primarily due to an increase in the number of home deliveries in all the states in the segment except in North Carolina, 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 driven by an increase in active communities.

The decrease in the number of home deliveries in North Carolina was primarily due to a decrease in the number of deliveries per active community due to the timing of opening and closing of communities as a result of supply chain disruptions.

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

Gross margin percentage on home deliveries in the first quarter of 2022 decreased compared to the same period last year primarily due to the increase in costs per square foot of homes delivered outpacing the increase in revenues per square foot driven by higher lumber costs.

Homebuilding Texas:

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.

Revenues from home sales increased in the first quarter of 2022 compared to the first quarter of 2021, 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 home deliveries was primarily driven by an increase in deliveries per active community over the same period last year.

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

Gross margin percentage on home deliveries in the first quarter of 2022 decreased compared to the same period last year primarily due to the increase in costs per square foot in homes delivered outpacing the increase in revenues per square foot driven by higher lumber costs and a change in product mix .

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.

Revenues from home sales increased in the first quarter of 2022 compared to the first quarter of 2021, primarily due to an increase in the average sales price of homes delivered in all the states of the segment, partially offset by a decrease in the number of home deliveries in the segment, primarily in Arizona, Colorado and Nevada.

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

The decrease in the number of home deliveries in Arizona, Colorado, and Nevada was primarily due to a decrease in the number of deliveries per active community due to the timing of opening and closing of communities as a result of supply chain disruptions.

Financial Services Segment

4 unchanged sentences

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,

Three Months Ended

(Dollars in thousands) 2022 2021

3 unchanged sentences

Number of title and closing service transactions 13,700 15,000

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.

At February 28, 2022 and November 30, 2021, the carrying value of Financial Services' commercial mortgage-backed securities ("CMBS") was $156.6 million and $157.8 million, respectively.

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

2 unchanged sentences

Our Multifamily segment focuses on developing a geographically diversified portfolio of institutional quality multifamily rental properties in select U.S.

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.

The following tables provide information related to our investment in the Multifamily segment:

Balance Sheets

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

(In thousands) February 28, 2022 November 30, 2021

Multifamily investments in unconsolidated entities $ 661,252 654,029

Lennar's net investment in Multifamily 897,683 976,676

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,

Lennar Other primarily includes strategic investments in technology companies, primarily managed by our LEN X subsidiary, and fund interests we retained when we sold the Rialto Capital Management ( "Rialto") asset and investment management platform in 2018.

At February 28, 2022 and November 30, 2021, we had $1.1 billion and $1.5 billion, respectively, of assets in our Lennar Other segment, which included investments in unconsolidated entities of $333.8 million and $346.3 million, respectively.

The investments in equity securities of Opendoor Technologies, Inc.

("Opendoor"), Hippo Holdings, Inc.

("Hippo"), Sunnova ("NOVA"), SmartRent, Inc.

("SmartRent"), Blend Labs, Inc.

("Blend") and Sonder ("SOND") are held at market and will therefore change depending on the value of our share holdings in those entities on the last day of each quarter.

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

Three Months Ended

(In thousands) 2022 2021

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

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

Opendoor (OPEN) mark to market $ (143,361) 469,745

Hippo (HIPO) mark to market (124,457) —

Sunnova (NOVA) mark to market (75,041) —

SmartRent (SMRT) mark to market (44,363) —

Blend Labs (BLND) mark to market (7,442) —

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

Other realized gain — — 3,580 —

Sonder (SOND) mark to market (506) —

$ (395,170) 469,745

(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.

At February 28, 2022, we had cash and cash equivalents and restricted cash related to our homebuilding, financial services, multifamily and other operations of $1.6 billion, compared to $3.0 billion at November 30, 2021 and $2.6 billion at February 28, 2021.

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").

At February 28, 2022, we had $1.4 billion of homebuilding cash and cash equivalents and no outstanding borrowings under our $2.5 billion revolving credit facility, thereby providing $3.9 billion of available capacity.

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.

During the three months ended February 28, 2022 and 2021, cash (used in) provided by operating activities totaled ($72) million and $386 million, respectively.

During the three months ended February 28, 2022, cash used in operating activities was impacted primarily by an increase in inventories due to strategic land purchases, land development and construction costs of $1.9 billion and increase in other assets of $50 million.

This was partially offset by our net earnings, gross of Lennar Other unrealized mark-to-market loss of $395 million on strategic technology investments, a decrease in receivables of $381 million primarily related to a decrease in Financial Services' receivables, net, which are loans sold to investors for which we have not been paid.

In addition, there was a decrease in loans held-for-sale of $409 million primarily related to the sale of loans originated by our Financial Services segment and an increase in accounts payable and other liabilities of $96 million.

During the three months ended February 28, 2021, cash provided by operating activities was impacted primarily by our net earnings net of the unrealized mark-to-market gain of $470 million related to our Opendoor strategic investment, a decrease in loans held-for-sale of $361 million primarily related to the sale of loans originated by our Financial Services segment, partially offset by an increase in inventories due to strategic land purchases, and land development and construction costs of $862 million.

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.

During the three months ended February 28, 2022 and 2021, cash used in investing activities totaled $20 million and $93 million, respectively.

During the three months ended February 28, 2022, our cash used in investing activities was primarily due to cash contributions of $139 million to unconsolidated entities, which included (1) $98 million to Homebuilding unconsolidated entities (2) $37 million to Lennar Other unconsolidated entities and (3) $4 million to Multifamily unconsolidated entities.

In addition, we also had $71 million of purchases of investment securities related to strategic technology investments included in the Lennar Other segment.

This was partially offset by distributions of capital from unconsolidated entities of $174 million, which primarily included (1) $119 million from Multifamily unconsolidated entities, (2) $17 million from Homebuilding unconsolidated entities, and (3) $38 million from our Lennar Other unconsolidated entities.

During the three months ended February 28, 2021, our cash used in investing activities was primarily due to cash contributions of $224 million to unconsolidated entities, which included (1) $148 million to Homebuilding unconsolidated entities, (2) $38 million to Multifamily unconsolidated entities, and (3) $38 million to the strategic technology investments included in the Lennar Other segment.

This was partially offset by distributions of capital from unconsolidated entities of $83 million, which primarily included (1) $53 million from Multifamily unconsolidated entities, (2) $20 million from Homebuilding unconsolidated entities;

and (3) $11 million from the unconsolidated Rialto real estate funds included in our Lennar Other segment.

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;

During the three months ended February 28, 2022 and 2021, cash used in financing activities totaled $1.3 billion and $630 million, respectively.

During the three months ended February 28, 2022, cash used in financing activities was primarily due to (1) $529 million of net repayments under our Financial Services' warehouse facilities, which included the LMF Commercial warehouse repurchase facilities;

(2) $581 million of repurchases of our common stock, which included $526 million of repurchases under our repurchase program and $55 million of repurchases related to our equity compensation plan;

and (3) $110 million of dividend payments.

These were partially offset by $33 million of net proceeds from liabilities related to consolidated inventory not owned due to activity with land banks.

During the three months ended February 28, 2021, cash used in financing activities was primarily impacted by (1) $501 million of net repayments under our Financial Services' warehouse facilities, which included the LMF Commercial warehouse repurchase facilities;

(2) $78 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.

and (3) $69 million of repurchases of our common stock, which included $43 million of repurchases under our repurchase program and $26 million of repurchases related to our equity compensation plan.

These were partially offset by $67 million of proceeds from liabilities related to consolidated inventory not owned due to land sales to a land bank.

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

(Dollars in thousands) February 28, 2022 November 30, 2021 February 28, 2021

Homebuilding debt $ 4,639,222 4,652,338 5,976,168

10 unchanged sentences

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.

At February 28, 2022, Homebuilding debt to total capital was consistent compared to November 30, 2021.

At February 28, 2022, Homebuilding debt to total capital was lower compared to February 28, 2021, primarily as a result of a decrease in Homebuilding debt due to debt pay downs and an increase in stockholders' equity due to net earnings, partially offset by share repurchases.

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.

3 unchanged sentences

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

Nine Months Ended

Three Months Ended

(Dollars in thousands) 2022 2021

2 unchanged sentences

Interest incurred 59,933 71,064

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.

As of February 28, 2022, we had a Credit Facility with potential borrowings of $2.5 billion maturing in 2024, that included a $300 million accordion feature, subject to additional commitments, thus the maximum potential borrowings could be $2.8 billion maturing in 2024.

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

1 unchanged sentence

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, 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:

The following summarizes our debt covenant requirements and our actual levels or ratios with respect to those covenants as calculated per the Credit Agreement as of February 28, 2022:

(Dollars in thousands) Covenant Level Level Achieved as of

August 31, 2021

February 28, 2022

Minimum net worth test $ 10,795,613 14,108,931

7 unchanged sentences

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.

In October 2021, the Board of Directors authorized an increase to our stock repurchase program to enable us to repurchase up to the lesser of an additional $1 billion in value, or 25 million in shares, of our outstanding Class A or Class B common stock.

As a result of prior authorizations being almost exhausted, in March 2022, our Board of Directors approved an additional authorization for us to repurchase up to the lesser of $2 billion in value, or 30 million in shares, of our outstanding Class A or Class B common stock.

The repurchase authorization has no expiration date.

The details of our Class A and Class B common stock repurchases under the authorized repurchase programs for the three months ended February 28, 2022 and 2021 are included in Note 4 of the Notes to Condensed Consolidated Financial Statements.

During the three months ended February 28, 2022, treasury stock increased due to our repurchase of 5.9 million shares of Class A and Class B common stock due primarily to our repurchase of 5.3 million shares of Class A and Class B common stock through our stock repurchase program.

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

On February 10, 2022, we paid cash dividends of $0.375 per share on both our Class A and Class B common stock to holders of record at the close of business on January 27, 2022, as declared by our Board of Directors on January 12, 2022.

We approved and paid cash dividends of $0.250 per share for each of the four 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.

3 unchanged sentences

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.

Included in the following tables as part of “Obligors” together with Lennar Corporation are subsidiary entities that are not finance company subsidiaries or foreign subsidiaries and were guaranteeing the senior notes because at February 28, 2022 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.

Supplemental information for the Obligors, which excludes non-guarantor subsidiaries and intercompany transactions, at February 28, 2022 is included in the following tables.

Intercompany balances and transactions within the Obligors have been eliminated and amounts attributable to the Obligors' 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

(In thousands) February 28, 2022 November 30, 2021

Due from non-guarantor subsidiaries $ 3,787,207 4,187,044

2 unchanged sentences

Total liabilities 9,771,178 9,631,796

Nine Months Ended

(In thousands) August 31, 2021

Three Months Ended

(In thousands) February 28, 2022

Total revenues $ 5,780,929

5 unchanged sentences

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.

As of February 28, 2022, we had equity investments in 43 active homebuilding and land unconsolidated entities (of which three had recourse debt, 13 had non-recourse debt and 27 had no debt) compared to 41 active homebuilding and land unconsolidated entities at November 30, 2021.

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.

7 unchanged sentences

commercial or infill experience) of our partners.

Each joint venture is governed by an executive committee consisting of members from the partners.

Each joint venture is governed by an executive committee consisting of members from the

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 August 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 February 28, 2022.

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.

2 unchanged sentences

Debt without recourse to Lennar $ 1,243,980 94,040 89,756 405,030 655,154 —

Land seller and CDD and other debt 5,837 — — — — 5,837

Land seller and other debt 4,606 — — — — 4,606

Maximum recourse debt exposure to Lennar 2,564 — — — 2,564 —

2 unchanged sentences

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.

At February 28, 2022, Multifamily had equity investments in 20 unconsolidated entities that are engaged in multifamily residential developments (of which 12 had non-recourse debt and eight had no debt), compared to 17 unconsolidated entities at November 30, 2021.

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

5 unchanged sentences

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.

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

Details of each as of and during the three months ended February 28, 2022 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.

1 unchanged sentence

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.

We believe all of the joint ventures were in compliance with applicable debt covenants at February 28, 2022.

The following table summarizes the principal maturities of our Multifamily unconsolidated entities debt as per current debt arrangements as of February 28, 2022.

It does not represent estimates of future cash payments that will be made to reduce debt balances.

Principal Maturities of Unconsolidated JVs by Period

5 unchanged sentences

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.

As part of the sale of the Rialto investment and asset management platform in 2018, 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.

As of February 28, 2022 and November 30, 2021, we had strategic technology investments in unconsolidated entities of $140.2 million and $145.6 million, respectively.

Option Contracts

2 unchanged sentences

Controlled Homesites Years of

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

February 28, 2022 Optioned JVs Total Owned Homesites Total Homesites Supply Owned (1)

East 97,731 — 97,731 59,254 156,985

6 unchanged sentences

Controlled Homesites Years of

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

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

East 42,722 3,931 46,653 57,526 104,179

9 unchanged sentences

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, 2021.

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.

There were no outstanding borrowings under our Credit Facility as of February 28, 2022.

(3) Recently Adopted Accounting Pronouncements

See Note 1 of the Notes to Condensed Consolidated Financial Statements included under Item 1 of this Report for a discussion of recently adopted accounting pronouncements.

(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.

We believe that there have been no significant changes to our critical accounting policies during the three months ended February 28, 2022 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, 2021.

While our critical accounting policies have not changed in any significant way during the three months ended February 28, 2022, the following provides additional disclosures about our revenue recognition accounting policy.

Revenue Recognition

Homebuilding revenues and related profits from sales of homes are recognized at the time of the closing of a sale, when title to and possession of the property are transferred to the homebuyer.

We typically offer sales incentives to homebuyers that consist primarily of price discounts on individual homes, financing incentives and optional upgrades (such as upgraded appliances, cabinetry and flooring) without charge.

These incentives are accounted for as a reduction in the sales price of the homes.

The optional upgrades may be the only sales incentive offered for a particular home, or they may be offered collectively with a discount on the base price of the home.

The cost we include for the optional upgrades is included in our cost of home sales.

Because the upgrades are provided without additional charge, no revenue is recognized related to the upgrade(s).

See Note 1 of the Notes to Condensed Consolidated Financial Statements.

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