What changed in this filing

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Item 1. Financial Statements

2022-07-01 compared with 2022-04-01 · 300 added, 162 removed, 631 unchanged (42% of the section changed)

3 unchanged sentences

(Dollars in thousands)

February 28, November 30,

May 31, November 30,

2022 (1) 2021 (1)

16 unchanged sentences

(1) Under certain provisions of Accounting Standards Codification ("ASC") Topic 810, Consolidations ("ASC 810"), the Company is required to separately disclose on its condensed consolidated balance sheets the assets owned by consolidated variable interest entities ("VIEs") and liabilities of consolidated VIEs as to which neither Lennar Corporation, nor any of its subsidiaries, has any obligations.

As of February 28, 2022, total assets include $ 1.1 billion related to consolidated VIEs of which $ 66.9 million is included in Homebuilding cash and cash equivalents, $ 0.3 million in Homebuilding receivables, net, $ 703.4 million in Homebuilding land and land under development, $ 218.3 million in Homebuilding consolidated inventory not owned, $ 1.1 million in Homebuilding investments in unconsolidated entities, $ 22.1 million in Homebuilding other assets and $ 59.4 million in Multifamily assets.

As of May 31, 2022, total assets include $ 1.6 billion related to consolidated VIEs of which $ 73.9 million is included in Homebuilding cash and cash equivalents, $ 0.6 million in Homebuilding receivables, net, $ 37.2 million in Homebuilding finished homes and construction in progress, $ 837.6 million in Homebuilding land and land under development, $ 591.2 million in Homebuilding consolidated inventory not owned, $ 1.0 million in Homebuilding investments in unconsolidated entities, $ 22.9 million in Homebuilding other assets and $ 34.7 million in Multifamily assets.

As of November 30, 2021, total assets include $ 1.1 billion related to consolidated VIEs of which $ 60.9 million is included in Homebuilding cash and cash equivalents, $ 4.4 million in Homebuilding receivables, net, $ 14.3 million in Homebuilding finished homes and construction in progress, $ 697.1 million in Homebuilding land and land under development, $ 239.2 million in Homebuilding consolidated inventory not owned, $ 1.1 million in Homebuilding investments in unconsolidated entities, $ 17.4 million in Homebuilding other assets and $ 80.6 million in Multifamily assets.

3 unchanged sentences

(In thousands, except share amounts)

February 28, November 30,

May 31, November 30,

2022 (2) 2021 (2)

13 unchanged sentences

Class A common stock of $ 0.10 par value;

February 28, 2022 and November 30, 2021 - 400,000,000 shares;

February 28, 2022 - 302,427,896 shares and November 30, 2021 - 300,500,075 shares

May 31, 2022 and November 30, 2021 - 400,000,000 shares;

May 31, 2022 - 255,820,840 shares and November 30, 2021 - 300,500,075 shares

25,582 30,050

Class B common stock of $ 0.10 par value;

February 28, 2022 and November 30, 2021 - 90,000,000 shares;

February 28, 2022 - 39,443,168 shares and November 30, 2021 - 39,443,168 shares

May 31, 2022 and November 30, 2021 - 90,000,000 shares;

May 31, 2022 - 36,601,215 shares and November 30, 2021 - 39,443,168 shares

Additional paid-in capital 5,355,182 8,807,891

1 unchanged sentence

Treasury stock, at cost;

February 28, 2022 - 43,806,845 shares of Class A common stock and 2,574,016 shares of Class B common stock;

May 31, 2022 - 833,604 shares of Class A common stock and 202,063 shares of Class B common stock;

November 30, 2021 - 38,586,961 shares of Class A common stock and 1,922,016 shares of Class B common stock

5 unchanged sentences

Total liabilities and equity $ 34,306,202 33,207,778

(2) As of February 28, 2022, total liabilities include $ 236.4 million related to consolidated VIEs as to which there was no recourse against the Company, of which $ 23.8 million is included in Homebuilding accounts payable, $ 182.7 million in Homebuilding liabilities related to consolidated inventory not owned, $ 18.4 million in Homebuilding senior notes and other debts payable, $ 7.8 million in Homebuilding other liabilities and $ 3.8 million in Multifamily liabilities.

(2) As of May 31, 2022, total liabilities include $ 571.2 million related to consolidated VIEs as to which there was no recourse against the Company, of which $ 24.2 million is included in Homebuilding accounts payable, $ 507.4 million in Homebuilding liabilities related to consolidated inventory not owned, $ 29.3 million in Homebuilding senior notes and other debts payable, $ 7.0 million in Homebuilding other liabilities and $ 3.4 million in Multifamily liabilities.

As of November 30, 2021, total liabilities include $ 258.5 million related to consolidated VIEs as to which there was no recourse against the Company, of which $ 26.6 million is included in Homebuilding accounts payable, $ 196.6 million in Homebuilding liabilities related to consolidated inventory not owned, $ 20.1 million in Homebuilding senior notes and other debt payable, $ 12.3 million in Homebuilding other liabilities and $ 2.8 million in Multifamily liabilities.

3 unchanged sentences

(In thousands, except per share amounts)

Three Months Ended

Three Months Ended Six Months Ended

May 31, May 31,

2022 2021 2022 2021

Homebuilding $ 7,977,982 6,028,041 13,730,187 10,971,097

11 unchanged sentences

Total costs and expenses 6,506,528 5,286,815 11,629,679 9,761,109

Homebuilding equity in loss from unconsolidated entities ( 286 ) ( 4,565 )

Homebuilding equity in earnings (loss) from unconsolidated entities 4,862 ( 1,688 ) 4,576 ( 6,253 )

Homebuilding other income (expense), net 2,720 ( 4,362 ) 2,549 8,613

Multifamily equity in earnings (loss) from unconsolidated entities and other gain ( 201 ) 13,854 1,604 12,586

Lennar Other unrealized gain (loss) from technology investments ( 395,170 ) 469,745

Lennar Other equity in loss from unconsolidated entities and other expense, net, and other gain ( 9,808 ) ( 1,047 )

Lennar Other equity in earnings (loss) from unconsolidated entities, other income (expense), net, and other gain (loss) ( 26,750 ) 218,276 ( 36,558 ) 217,229

Lennar Other unrealized gains (losses) from technology investments ( 77,965 ) ( 272,625 ) ( 473,135 ) 197,120

Earnings before income taxes 1,754,834 1,096,885 2,431,569 2,423,899

15 unchanged sentences

(In thousands)

Three Months Ended

Six Months Ended

Cash flows from operating activities:

Net earnings (including net earnings attributable to noncontrolling interests) $ 1,831,873 1,853,681

Adjustments to reconcile net earnings to net cash (used in) provided by operating activities:

Adjustments to reconcile net earnings to net cash provided by operating activities:

Depreciation and amortization 39,519 44,743

Amortization of discount/premium on debt, net ( 959 ) ( 4,718 )

Equity in loss from unconsolidated entities 9,752 7,897

Equity in earnings (loss) from unconsolidated entities 21,559 ( 67,618 )

Distributions of earnings from unconsolidated entities 11,050 15,594

2 unchanged sentences

Loans held-for-sale unrealized loss 27,037 30,352

Lennar Other unrealized (gain) loss from technology investments 395,170 ( 469,745 )

Lennar Other unrealized (gains) losses from technology investments and other gain (loss) 482,829 ( 352,175 )

Gain on sale of other assets and operating properties and equipment ( 7,572 ) ( 18,596 )

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

Gain on sale of Financial Services' portfolio/businesses

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

14,611 13,576

Changes in assets and liabilities:

4 unchanged sentences

Increase in accounts payable and other liabilities 276,695 184,716

Net cash (used in) provided by operating activities ( 72,231 ) 385,508

Net cash provided by operating activities 52,610 718,120

Cash flows from investing activities:

3 unchanged sentences

Distributions of capital from unconsolidated entities 239,123 231,545

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

Proceeds from sale of commercial mortgage-backed securities bonds 9,191 11,307

Decrease in Financial Services loans held-for-investment, net 11,431 3,777

Proceeds from sale of Financial Services portfolio/business — 3,327

Decrease (increase) in Financial Services loans held-for-investment, net 16,576 ( 3,864 )

Purchases of investment securities ( 78,769 ) ( 43,698 )

5 unchanged sentences

(In thousands)

Three Months Ended

Six Months Ended

Cash flows from financing activities:

25 unchanged sentences

Non-cash contributions to unconsolidated entities 141,297 20,423

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

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

Non-cash increase in receivables — 64,683

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

Consolidation/deconsolidation of unconsolidated/consolidated entities, net:

Inventories $ 82,514 —

Other assets 43 —

Investments in unconsolidated entities ( 69,056 ) —

Other liabilities ( 435 ) —

Noncontrolling interests ( 13,066 ) —

See accompanying notes to condensed consolidated financial statements.

9 unchanged sentences

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

The condensed consolidated statements of operations for the three months ended February 28, 2022 are not necessarily indicative of the results to be expected for the full year.

The condensed consolidated statements of operations for both the three and six months ended May 31, 2022 are not necessarily indicative of the results to be expected for the full year.

Use of Estimates

2 unchanged sentences

Cash and Cash Equivalents

Homebuilding cash and cash equivalents as of February 28, 2022 and November 30, 2021 included $ 894.6 million and $ 940.4 million, respectively, of cash held in escrow.

On average for the three months ended February 28, 2022, cash was held in escrow for approximately two days .

Homebuilding cash and cash equivalents as of May 31, 2022 and November 30, 2021 included $ 859.8 million and $ 940.4 million, respectively, of cash held in escrow.

On average for the three months ended May 31, 2022, cash was held in escrow for approximately two days .

Homebuilding Revenue Recognition

3 unchanged sentences

They include primarily price discounts on individual homes and financing incentives, all of which are reflected as a reduction of home sales revenues.

For the three months ended February 28, 2022 and 2021, sales incentives offered to homebuyers averaged $ 8,600 per home, or 1.9 % as a percentage of home sales revenues, and $ 12,300 per home, or 3.0 % as a percentage of home sales revenues, respectively.

For the three months ended May 31, 2022 and 2021, sales incentives offered to homebuyers averaged $ 7,200 per home, or 1.5 % as a percentage of home sales revenues, and $ 9,000 per home, or 2.1 % as a percentage of home sales revenues, respectively.

For the six months ended May 31, 2022 and 2021, sales incentives offered to homebuyers averaged $ 7,800 per home, or 1.6 % as a percentage of home sales revenues, and $ 10,500 per home, or 2.5 % as a percentage of home sales revenues, respectively.

Share-based Payments

During both the three months ended February 28, 2022 and 2021, the Company granted employees 1.4 million nonvested shares.

During both the three months ended May 31, 2022 and 2021, the Company granted employees an immaterial number of nonvested shares.

During both the six months ended May 31, 2022 and 2021, the Company granted employees 1.4 million nonvested shares, respectively.

Recently Adopted Accounting Pronouncements

15 unchanged sentences

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

(In thousands) February 28, 2022

(In thousands) May 31, 2022

Homebuilding Financial

37 unchanged sentences

$ 9,870,242 1,906,343 288,930 145,981 12,211,496

(1) Receivables, net for Financial Services primarily related to loans sold to investors for which the Company had not yet been paid as of February 28, 2022 and November 30, 2021, respectively.

(1) Receivables, net for Financial Services primarily related to loans sold to investors for which the Company had not yet been paid as of May 31, 2022 and November 30, 2021, respectively.

(2) Loans held-for-sale related to unsold residential and commercial loans carried at fair value.

(3) Investments in equity securities include investments of $ 168.2 million and $ 100.1 million without readily available fair values as of February 28, 2022 and November 30, 2021, respectively.

(3) Investments in equity securities include investments of $ 176.2 million and $ 100.1 million without readily available fair values as of May 31, 2022 and November 30, 2021, respectively.

(4) Investments available-for-sale are carried at fair value with changes in fair value recorded as a component of accumulated other comprehensive income (loss) on the condensed consolidated balance sheet.

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

Three Months Ended February 28, 2022

Three Months Ended May 31, 2022

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

Unallocated Total

Revenue $ 7,977,982 200,166 176,021 4,527 — 8,358,696

Operating earnings (loss) 1,880,411 103,935 668 ( 108,424 ) — 1,876,590

Corporate general and administrative expenses — — — — 105,207 105,207

Charitable foundation contribution — — — — 16,549 16,549

Earnings (loss) before income taxes 1,880,411 103,935 668 ( 108,424 ) ( 121,756 ) 1,754,834

Three Months Ended May 31, 2021

Revenues $ 6,028,041 218,747 177,473 5,984 — 6,430,245

3 unchanged sentences

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

Three Months Ended February 28, 2021

Lennar Corporation and Subsidiaries

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

Six Months Ended May 31, 2022

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

Unallocated Total

Revenues (1) $ 13,730,187 376,867 443,380 11,778 — 14,562,212

1 unchanged sentence

Corporate general and administrative expenses

— — — — 218,868 218,868

Charitable foundation contribution — — — — 29,087 29,087

Earnings (loss) before income taxes 2,990,261 194,726 6,095 ( 511,558 ) ( 247,955 ) 2,431,569

(1) Revenues for Multifamily for the three months ended February 28, 2022 includes $ 131.6 million of land sales to unconsolidated entities

Six Months Ended May 31, 2021

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

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

Corporate general and administrative expenses

— — — — 201,248 201,248

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

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

(1) Revenues for Multifamily for the six months ended May 31, 2022 includes $ 147.8 million of land sales to unconsolidated entities.

Homebuilding Segments

2 unchanged sentences

Operations of the Company’s Homebuilding segments primarily include the construction and sale of single-family attached and detached homes as well as the purchase, development and sale of residential land directly and through the Company’s unconsolidated entities.

Lennar Corporation and Subsidiaries

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

Operating earnings (loss) for the Homebuilding segments consist of revenues generated from the sales of homes and land, other revenues from management fees and forfeited deposits, equity in earnings (loss) from unconsolidated entities and other income (expense), net, less the cost of homes sold and land sold, and selling, general and administrative expenses incurred by the segment.

Homebuilding Other also includes management of a fund that acquires single-family homes and holds them as rental properties.

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

Alabama, Florida, New Jersey, Pennsylvania and South Carolina

Georgia, Illinois, Indiana, Maryland, Minnesota, North Carolina and Virginia

Georgia, Illinois, Indiana, Maryland, Minnesota, North Carolina, Tennessee and Virginia

Arizona, California, Colorado, Idaho, Nevada, Oregon, Utah and Washington

2 unchanged sentences

(In thousands) East Central Texas West Other Corporate and Unallocated Total Homebuilding

February 28, 2022 $ 6,552,930 3,939,627 3,240,006 11,854,213 1,414,532 1,091,178 28,092,486

May 31, 2022 $ 6,968,448 4,266,709 3,576,083 12,276,620 1,486,178 1,119,644 29,693,682

November 30, 2021 5,854,057 3,782,847 2,801,192 11,171,741 1,443,163 2,414,819 27,467,819

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

Three Months Ended February 28, 2022

Three Months Ended May 31, 2022

(In thousands) East Central Texas West Other Total Homebuilding

1 unchanged sentence

Operating earnings (loss) 553,819 206,795 272,857 847,849 ( 909 ) 1,880,411

Three Months Ended February 28, 2021

Three Months Ended May 31, 2021

$ 1,567,768 1,097,582 799,259 2,553,771 9,661 6,028,041

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

Lennar Corporation and Subsidiaries

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

Six Months Ended May 31, 2022

(In thousands) East Central Texas West Other Total Homebuilding

$ 3,884,637 2,393,262 1,908,119 5,521,260 22,909 13,730,187

Operating earnings (loss) 905,814 358,873 444,169 1,289,297 ( 7,892 ) 2,990,261

Six Months Ended May 31, 2021

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

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

Financial Services

3 unchanged sentences

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

At February 28, 2022, the Financial Services warehouse facilities were all 364 -day repurchase facilities and were used to fund residential mortgages or commercial mortgages for LMF Commercial as follows:

At May 31, 2022, the Financial Services warehouse facilities were all 364 -day repurchase facilities and were used to fund residential mortgages or commercial mortgages for LMF Commercial as follows:

(In thousands) Maximum Aggregate Commitment

Residential facilities maturing:

April 2022 $ 100,000

July 2022 $ 400,000

1 unchanged sentence

December 2022 700,000

May 2023 200,000

Total - Residential facilities

4 unchanged sentences

Total - LMF Commercial facilities

Lennar Corporation and Subsidiaries

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

The Financial Services segment uses the residential facilities to finance its residential lending activities until the mortgage loans are sold to investors and the proceeds are collected.

2 unchanged sentences

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

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

(In thousands) May 31, 2022 November 30, 2021

Borrowings under the residential facilities $ 1,112,431 1,482,258

10 unchanged sentences

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

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

The Company establishes accruals

Lennar Corporation and Subsidiaries

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

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

While the Company believes that it has adequately reserved for known losses and projected repurchase requests, given the volatility in the residential mortgage industry and the uncertainty regarding the ultimate resolution of these claims, if either actual repurchases or the losses incurred resolving those repurchases exceed the Company’s expectations, additional recourse expense may be incurred.

1 unchanged sentence

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

Three Months Ended

Three Months Ended Six Months Ended

May 31, May 31,

(In thousands) 2022 2021 2022 2021

5 unchanged sentences

LMF Commercial originated commercial loans as follows:

Three Months Ended

Three Months Ended Six Months Ended

May 31, May 31,

(Dollars in thousands) 2022 2021 2022 2021

2 unchanged sentences

Securitizations 1 1 2 3

(1) During both the three months ended February 28, 2022 and 2021 all the commercial loans originated were recorded as loans held-for-sale, which are held at fair value.

(1) During both the three and six months ended May 31, 2022 and 2021 all the commercial loans originated were recorded as loans held-for-sale, which are held at fair value.

Investments held-to-maturity

At February 28, 2022 and November 30, 2021, the Financial Services segment held commercial mortgage-backed securities ("CMBS").

At May 31, 2022 and November 30, 2021, the Financial Services segment held commercial mortgage-backed securities ("CMBS").

These securities are classified as held-to-maturity based on its intent and ability to hold the securities until maturity and changes in estimated cash flows are reviewed periodically to determine if an other-than-temporary impairment has occurred.

Based on the segment’s assessment, no impairment charges were recorded during either the three months ended February 28, 2022 or 2021.

Based on the segment’s assessment, no impairment charges were recorded during either the three or six months ended May 31, 2022 or 2021.

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

Lennar Corporation and Subsidiaries

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

Details related to Financial Services' CMBS were as follows:

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

(Dollars in thousands) May 31, 2022 November 30, 2021

Carrying value $ 155,820 157,808

1 unchanged sentence

Incurred interest rate 3.4 % 3.4 %

February 28, 2022

Discount rates at purchase 6 % — 84 %

2 unchanged sentences

Stated maturity dates October 2050 — December 2051

The Company is actively involved, primarily through unconsolidated entities, in the development, construction and property management of multifamily rental properties.

The Company is actively involved, primarily through unconsolidated funds and joint ventures, in the development, construction and property management of multifamily rental properties.

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

Operations of the Multifamily segment include revenues generated from the sales of land, revenue from construction activities, and management and promote fees generated from joint ventures and equity in earnings (loss) from unconsolidated entities and other gains (which includes sales of buildings), less the cost of sales of land sold, expenses related to construction activities and general and administrative expenses.

Lennar Corporation and Subsidiaries

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

The Multifamily Segment (i) manages, and owns interests in, funds that are engaged in the development of multifamily residential communities with the intention of holding the newly constructed and occupied properties as income and fee generating assets, and (ii) manages, and owns interests in, joint ventures that are engaged in the development of multifamily residential communities, in most instances with the intention of selling them when they are built and substantially occupied.

Our multifamily business is a vertically integrated platform with capabilities spanning development, construction, property management, asset management, and capital markets.

Revenues are generated from the sales of land, from construction activities, and management and promote fees generated from joint ventures and other gains (which includes sales of buildings), less the cost of sales of land sold, expenses related to construction activities and general and administrative expenses.

Operations of the Multifamily Segment also include equity in earnings (loss) from unconsolidated entities.

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

Operations of the Lennar Other segment include operating earnings (loss) consisting of revenues generated primarily from the Company's share of carried interests in the Rialto fund investments retained after the sale of Rialto's asset and investment management platform, along with equity in earnings (loss) from the Rialto fund investments and strategic technology investments, realized and unrealized gains (losses) from investments in equity securities and other income (expense), net from the remaining assets related to the Company's former Rialto segment.

The Company has investments in Opendoor Technologies, Inc.

("Opendoor"), Hippo Holdings, Inc.

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

("SmartRent"), Blend Labs, Inc.

("Blend") and Sonder ("SOND"), which are held at market and will therefore change depending on the value of the Company's 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

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

Operations of the Lennar Other segment include operating earnings (loss) consisting of revenues generated primarily from the Company's share of carried interests in the Rialto fund investments, along with equity in earnings (loss) from the Rialto fund investments and technology investments, realized and unrealized gains (losses) from investments in equity securities and other income (expense), net from the remaining assets related to the Company's former Rialto segment.

The Company has investments in Blend Labs, Inc.

("Blend"), Hippo Holdings, Inc.

("Hippo"), Opendoor, Inc.

("Opendoor"), SmartRent, Inc.

("SmartRent"), Sonder Holdings, Inc.

("Sonder") and Sunnova Energy International, Inc.

("Sunnova"), which are held at market and will therefore change depending on the value of the Company's share holdings in those entities on the last day of each quarter.

All the investments are accounted for as investments in equity securities which are held at fair value and the changes in fair values are recognized through earnings.

The following is a detail of Lennar Other unrealized gains (losses) from the Company's technology investments:

Three Months Ended Six Months Ended

May 31, May 31,

(In thousands) 2022 2021 2022 2021

Blend Labs (BLND) mark-to-market $ ( 13,550 ) — ( 20,992 ) —

Hippo (HIPO) mark-to-market ( 37,946 ) — ( 162,403 ) —

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

Opendoor (OPEN) mark-to-market ( 20,999 ) ( 234,290 ) ( 164,360 ) 235,455

SmartRent (SMRT) mark-to-market ( 3,950 ) — ( 48,313 ) —

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

Sonder (SOND) mark-to-market ( 1,626 ) — ( 2,132 ) —

$ ( 395,170 ) 469,745

During the year ended November 30, 2021, Opendoor, Hippo, Sunnova, SmartRent and Blend began trading in the public markets and the Company began to mark to market the Company's shares of share holdings in the public entities.

During the three months ended February 28, 2022, shares of Sonder began trading in the public markets and the Company began to mark to market its share holding in the public entity.

All the investments are accounted for as investments in equity securities which are held at fair value and the changes in fair values are recognized through earnings.

In addition, Doma Holdings, Inc.

Sunnova (NOVA) mark-to-market 106 ( 38,335 ) ( 74,935 ) ( 38,335 )

Lennar Other unrealized gains (losses) from technology investments $ ( 77,965 ) ( 272,625 ) ( 473,135 ) 197,120

Doma Holdings, Inc.

("Doma") went public during the year ended November 30, 2021.

However, Doma is an investment that continues to be accounted for under the equity method due to the Company's significant ownership interest which allows the Company to exercise significant influence.

As of February 28, 2022, the Company owns approximately 26 % of Doma and the carrying amount of the Company's investment is $ 43.9 million.

However, Doma is a public company that is an investment accounted for under the equity method due to the Company's significant ownership interest which allows the Company to exercise significant influence.

As of May 31, 2022, the Company owned approximately 25 % of Doma and the carrying amount of the Company's investment was $ 32.0 million.

Lennar Corporation and Subsidiaries

3 unchanged sentences

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

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

(In thousands) May 31, 2022 November 30, 2021

Investments in unconsolidated entities (1) (2) $ 1,083,813 972,084

2 unchanged sentences

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

As of February 28, 2022 and November 30, 2021, the carrying amount of the Company's investment was $ 376.6 million and $ 381.6 million, respectively.

As of February 28, 2022 and November 30, 2021, the Homebuilding segment's unconsolidated entities had non-recourse debt with completion guarantees of $ 205.0 million and $ 241.0 million, respectively.

As of May 31, 2022 and November 30, 2021, the carrying amount of the Company's investment was $ 389.8 million and $ 381.6 million, respectively.

As of May 31, 2022 and November 30, 2021, the Homebuilding segment's unconsolidated entities had non-recourse debt with completion guarantees of $ 184.1 million and $ 241.0 million, respectively.

The Company has an immaterial amount of recourse exposure to debt of the Homebuilding unconsolidated entities in which it has investments.

1 unchanged sentence

In most instances the amount of guaranteed debt of an unconsolidated entity is less than the value of the collateral securing it.

As of both February 28, 2022 and November 30, 2021, the fair values of the repayment guarantees, maintenance guarantees, and completion guarantees were not material.

The Company believes that as of February 28, 2022, in the event it becomes legally obligated to perform under a guarantee of the obligation of a Homebuilding unconsolidated entity due to a triggering event under a guarantee, the collateral would be sufficient to repay at least a significant portion of the obligation or the Company and its partners would contribute additional capital into the venture.

As of both May 31, 2022 and November 30, 2021, the fair values of the repayment guarantees, maintenance guarantees, and completion guarantees were not material.

The Company believes that as of May 31, 2022, in the event it becomes legally obligated to perform under a guarantee of the obligation of a Homebuilding unconsolidated entity due to a triggering event under a guarantee, the collateral would be sufficient to repay at least a significant portion of the obligation or the Company and its partners would contribute additional capital into the venture.

In certain instances, the Company has placed performance letters of credit and surety bonds with municipalities with regard to obligations of its joint ventures (see Note 7 of the Notes to Condensed Consolidated Financial Statements).

In the first quarter of 2021, the Company formed the Upward America Venture ("Upward America"), and is managing and participating in Upward America.

In 2021, the Company formed the Upward America Venture LP ("Upward America"), and is managing and participating in Upward America.

Upward America is an investment fund that acquires new single-family homes in high growth markets across the United States and rents them to people who will live in them.

Upward America has raised equity commitments totaling $ 1.6 billion, including $ 350 million of equity commitments raised during the quarter ended February 28, 2022.

Upward America has raised equity commitments totaling $ 1.6 billion, including $ 350 million of equity commitments raised during the first quarter of 2022.

The commitments are primarily from institutional investors, including $ 125 million committed by Lennar.

Including leverage, Upward America will be positioned to acquire over $ 4.0 billion of new single family homes and townhomes from Lennar and potentially other homebuilders.

As of May 31, 2022 and November 30, 2021, the carrying amount of the Company's investment in Upward America was $ 33.3 million and $ 13.3 million, respectively.

Multifamily Unconsolidated Entities

The unconsolidated entities in which the Multifamily segment has investments usually finance their activities with a combination of partner equity and debt financing.

In connection with many of the bank loans to Multifamily unconsolidated entities, the Company (or entities related to them) has been required to give guarantees of completion and cost over-runs to the lenders and partners.

The unconsolidated joint ventures in which the Multifamily segment has investments usually finance their activities with a combination of partner equity and debt financing.

In connection with many of the bank loans to Multifamily unconsolidated joint ventures, the Company (or entities related to them) has been required to give guarantees of completion and cost over-runs to the lenders and partners.

The details related to these are unchanged from the disclosure in the Company's Notes to the Financial Statements section in its Form 10-K for the year ended November 30, 2021.

As of both February 28, 2022 and November 30, 2021, the fair value of the completion guarantees was immaterial.

As of February 28, 2022 and November 30, 2021, Multifamily segment's unconsolidated entities had non-recourse debt with completion guarantees of $ 985.1 million and $ 855.2 million, respectively.

As of both May 31, 2022 and November 30, 2021, the fair value of the completion guarantees was immaterial.

As of May 31, 2022 and November 30, 2021, Multifamily segment's unconsolidated entities had non-recourse debt with completion guarantees of $ 1.0 billion and $ 855.2 million, respectively.

In many instances, the Multifamily segment is appointed as the construction, development and property manager for its Multifamily unconsolidated entities and receives fees for performing this function.

1 unchanged sentence

The details of the activity was as follows:

Three Months Ended

Three Months Ended Six Months Ended

May 31, May 31,

(In thousands) 2022 2021 2022 2021

4 unchanged sentences

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

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

Details of each as of and during the three months ended February 28, 2022 are included below:

February 28, 2022

The Multifamily segment includes Multifamily Venture Fund I ("LMV I"), Multifamily Venture Fund II LP ("LMV II") and Canada Pension Plan Investments Fund (the "Fund"), which are long-term multifamily development investment vehicles involved in the development, construction and property management of class-A multifamily assets.

During the first quarter of 2022, the Multifamily segment completed the initial closing of the Fund.

The Multifamily segment expects the Fund to have almost $ 1 billion in equity and Lennar's ownership percentage in the Fund is expected to be 4 %.

During the three months ended May 31, 2022, the Company received a return of capital of $ 11.4 million from the Fund.

This resulted in the negative investment balance of $ 0.6 million as of May 31, 2022.

Details of LMV I and LMV II as of and during the six months ended May 31, 2022 are included below:

(In thousands) LMV I LMV II

5 unchanged sentences

Lennar's remaining commitments 4,386 16,652

Distributions to Lennar during the three months ended February 28, 2022 8,732 3,735

During the first quarter of 2022, the Multifamily segment completed the initial closing of a new Lennar Multifamily Fund (the "Fund") for the development, construction and property management of Class A multifamily assets across high growth metropolitan areas in the United States.

The Multifamily segment expects the Fund to have almost $ 1 billion in equity and Lennar's ownership percentage in the Fund is expected to be 4 %.

The Company currently has a $ 10.3 million investment in the Fund.

Additional dollars will be committed as opportunities are identified by the Fund.

Distributions to Lennar during the six months ended May 31, 2022 18,934 6,279

Other Unconsolidated Entities

Lennar Other's unconsolidated entities includes fund investments the Company retained when it sold the Rialto assets and investment management platform in 2018, as well as strategic investments in technology companies, primarily managed by the Company's LEN X subsidiary.

The Company's investment in the Rialto funds and investment vehicles totaled $ 201.6 million and $ 200.6 million as of May 31, 2022 and November 30, 2021, respectively.

(4) Stockholders' Equity

The following tables reflect the changes in equity attributable to both Lennar Corporation and the noncontrolling interests of its consolidated subsidiaries in which it has less than a 100% ownership interest for the three months ended February 28, 2022 and 2021:

Three Months Ended February 28, 2022

Three Months Ended May 31, 2022

(In thousands) Total

3 unchanged sentences

Paid - in Capital Treasury

Stock Accumulated Other Comprehensive Income (loss) Retained

Stock Accumulated Other Comprehensive Income Retained

Earnings Noncontrolling

Balance at November 30, 2021 $ 20,996,282 30,050 3,944 8,807,891 ( 2,709,448 ) ( 1,341 ) 14,685,329 179,857

Balance at February 28, 2022 $ 20,847,432 30,243 3,944 8,855,151 ( 3,290,748 ) 1,686 15,078,788 168,368

Net earnings (including net earnings attributable to noncontrolling interests) 1,322,558 — — — — — 1,320,756 1,802

1 unchanged sentence

( 2,533 ) 6 — 994 ( 3,533 ) — — —

Retirement of treasury stock — ( 4,667 ) ( 284 ) ( 3,533,425 ) 3,538,376 — — —

Purchases of treasury stock ( 320,710 ) — — — ( 320,710 ) — — —

8 unchanged sentences

Total other comprehensive income, net of tax 62 — — — — 62 — —

Balance at February 28, 2022 $ 20,847,432 30,243 3,944 8,855,151 ( 3,290,748 ) 1,686 15,078,788 168,368

Balance at May 31, 2022 $ 21,789,774 25,582 3,660 5,355,182 ( 76,615 ) 1,748 16,288,698 191,519

Lennar Corporation and Subsidiaries

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

Three Months Ended February 28, 2021

Three Months Ended May 31, 2021

(In thousands) Total

5 unchanged sentences

Earnings Noncontrolling

Balance at February 28, 2021 $ 19,017,451 30,047 3,944 8,724,192 ( 1,348,710 ) ( 1,747 ) 11,488,520 121,205

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

Employee stock and directors plans

( 4,537 ) 2 — 1,165 ( 5,704 ) — — —

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

Amortization of restricted stock

32,276 — — 32,276 — — — —

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

Receipts related to noncontrolling interests

5,009 — — — — — — 5,009

Payments related to noncontrolling interests

( 5,829 ) — — — — — — ( 5,829 )

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

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

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

Six Months Ended May 31, 2022

(In thousands) Total

Equity Class A

Common Stock Class B

Common Stock Additional

Paid - in Capital Treasury

Stock Accumulated Other Comprehensive Income (Loss) Retained

Earnings Noncontrolling

Balance at November 30, 2021 $ 20,996,282 30,050 3,944 8,807,891 ( 2,709,448 ) ( 1,341 ) 14,685,329 179,857

2 unchanged sentences

( 57,419 ) 199 — 854 ( 58,472 ) — — —

Retirement of treasury stock — ( 4,667 ) ( 284 ) ( 3,533,425 ) 3,538,376 — — —

Purchases of treasury stock ( 847,071 ) — — — ( 847,071 ) — — —

7 unchanged sentences

Non-cash purchase or activity of noncontrolling interests, net 14,904 — — ( 36,648 ) — — — 51,552

Total other comprehensive income, net of tax 3,089 — — — — 3,089 — —

Balance at May 31, 2022 $ 21,789,774 25,582 3,660 5,355,182 ( 76,615 ) 1,748 16,288,698 191,519

Six Months Ended May 31, 2021

(In thousands) Total

Equity Class A

Common Stock Class B

Common Stock Additional

Paid - in Capital Treasury

Stock Accumulated Other Comprehensive Loss Retained

Earnings Noncontrolling

Balance at November 30, 2020 $ 18,099,401 29,894 3,944 8,676,056 ( 1,279,227 ) ( 805 ) 10,564,994 104,545

Net earnings (including net earnings attributable to noncontrolling interests) 1,853,681 — — — — — 1,832,732 20,949

Employee stock and directors plans

( 30,816 ) 155 — 1,106 ( 32,077 ) — — —

Purchases of treasury stock ( 141,570 ) — — — ( 141,570 ) — — —

Amortization of restricted stock

81,094 — — 81,094 — — — —

Cash dividends ( 156,326 ) — — — — — — ( 156,326 ) —

Receipts related to noncontrolling interests

13,905 — — — — — — 13,905

Payments related to noncontrolling interests

( 17,226 ) — — — — — — ( 17,226 )

Non-cash purchase or activity of noncontrolling interests, net 581 — — ( 3,236 ) — — — 3,817

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

Balance at February 28, 2021 $ 19,017,451 30,047 3,944 8,724,192 ( 1,348,710 ) ( 1,747 ) 11,488,520 121,205

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

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

Lennar Corporation and Subsidiaries

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

On June 22, 2022, the Company's Board of Directors declared a quarterly cash dividend of $ 0.375 per share on both its Class A and Class B common stock, payable on July 21, 2022 to holders of record at the close of business on July 7, 2022 .

On May 10, 2022, the Company paid cash dividends of $ 0.375 per share on both its Class A and Class B common stock to holders of record at the close of business on April 26, 2022, as declared by its Board of Directors on April 12, 2022.

The Company approved and paid cash dividends of $ 0.250 per share for each of the four quarters of 2021 on both its Class A and Class B common stock.

During the three months ended May 31, 2022, the Company retired 46.7 million and 2.8 million treasury shares of Class A and Class B common stock, respectively, as authorized by the Company's Board of Directors.

The retirement of Class A and Class B common stock in treasury resulted in a reclass between treasury stock and additional paid-in capital within stockholders' equity.

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

1 unchanged sentence

The repurchase authorization has no expiration date.

The following table represents the repurchases of the Company's Class A and Class B common stocks under the authorized repurchase programs for the three months ended February 28, 2022 and 2021:

Three Months Ended

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

The following table represents the repurchases of the Company's Class A and Class B common stocks under the authorized repurchase programs for the three and six months ended May 31, 2022 and 2021:

Three Months Ended Six Months Ended

May 31, May 31

2022 2021 2022 2021

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

Shares repurchased 3,630,000 470,000 1,000,000 — 8,246,000 1,122,000 1,510,000 —

3 unchanged sentences

The provision for income taxes and effective tax rate were as follows:

Three Months Ended

Three Months Ended Six Months Ended

May 31, May 31,

(Dollars in thousands) 2022 2021 2022 2021

1 unchanged sentence

Effective tax rate (1) 24.7 % 23.8 % 24.7 % 23.7 %

(1) For both the three months ended February 28, 2022 and 2021, the effective tax rate included state income tax expense and non-deductible executive compensation, partially offset by energy efficient home and solar tax credits.

(1) For both the three and six months ended May 31, 2022 and 2021, the effective tax rate included state income tax expense and non-deductible executive compensation, partially offset by energy efficient home and solar tax credits.

(6) Earnings Per Share

2 unchanged sentences

All outstanding nonvested shares that contain non-forfeitable rights to dividends or dividend equivalents that participate in undistributed earnings with common stock are considered participating securities and are included in computing earnings per share pursuant to the two-class method.

The two-class method is an earnings allocation formula that determines earnings per share for each class of common stock and participating securities according to dividends or dividend equivalents and

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

Lennar Corporation and Subsidiaries

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

participation rights in undistributed earnings.

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

Basic and diluted earnings per share were calculated as follows:

Three Months Ended

Three Months Ended Six Months Ended

May 31, May 31,

(In thousands, except per share amounts) 2022 2021 2022 2021

10 unchanged sentences

(1) The amounts presented relate to Rialto's Carried Interest Incentive Plan and represent the difference between the advanced tax distributions received from the Rialto funds included in the Lennar Other segment and the amount Lennar is assumed to own.

For both the three months ended February 28, 2022 and 2021, there were no options to purchase shares of common stock that were outstanding and anti-dilutive.

For both the three and six months ended May 31, 2022 and 2021, there were no options to purchase shares of common stock that were outstanding and anti-dilutive.

(7) Homebuilding Senior Notes and Other Debts Payable

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

(Dollars in thousands) May 31, 2022 November 30, 2021

4.75 % senior notes due 2022

16 unchanged sentences

$ 4,645,791 4,652,338

The carrying amounts of the senior notes in the table above are net of debt issuance costs of $ 10.1 million and $ 11.0 million as of February 28, 2022 and November 30, 2021, respectively.

As of February 28, 2022 the maximum available borrowings on the Company's unsecured revolving credit facility (the "Credit Facility") were $ 2.5 billion and included a $ 300 million accordion feature, subject to additional commitments, thus the maximum borrowings could be $ 2.8 billion maturing in 2024.

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

The maturity, debt covenants and details of the Credit Facility are unchanged from the disclosure in the Company's Financial Condition and Capital Resources section in its Form 10-K for the year ended November 30, 2021.

The carrying amounts of the senior notes in the table above are net of debt issuance costs of $ 9.2 million and $ 11.0 million as of May 31, 2022 and November 30, 2021, respectively.

In May 2022, the Company amended the credit agreement governing its unsecured revolving credit facility (the “Credit Facility") to increase the commitment from $ 2.5 billion to $ 2.575 billion and extended the maturity to May 2027, except for $ 350 million which matures in April 2024.

The Credit Facility has a $ 425 million accordion feature, subject to additional commitments, thus the maximum borrowings are $ 3.0 billion.

The proceeds available under the Credit Facility, which are subject to specified conditions for borrowing, may be used for working capital and general corporate purposes.

The credit agreement also provides that up to $ 500 million in commitments may be used for letters of credit.

Under the Credit Facility agreement, the Company is required to maintain a minimum consolidated tangible net worth, a maximum leverage ratio and either a liquidity or an interest coverage ratio.

These ratios are calculated per the Credit Facility agreement, which involves adjustments to GAAP financial measures.

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

3 unchanged sentences

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

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

(In thousands) May 31, 2022 November 30, 2021

Performance letters of credit $ 1,035,057 924,584

2 unchanged sentences

Anticipated future costs primarily for site improvements related to performance surety bonds 1,981,973 1,690,861

The Company's senior notes are guaranteed by substantially all of the Company's 100% owned homebuilding subsidiaries and some of the Company's other subsidiaries.

These guarantees are unchanged from the disclosure in the Company's Financial Condition and Capital Resources section in its Form 10-K for the year ended November 30, 2021.

All of the senior notes are guaranteed by certain of the Company's 100% owned subsidiaries, which are primarily homebuilding subsidiaries.

The guarantees are full and unconditional.

The terms of guarantees are unchanged from the disclosure in the Company's Financial Condition and Capital Resources section in its Form 10-K for the year ended November 30, 2021.

(8) Product Warranty

2 unchanged sentences

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

Three Months Ended

Three Months Ended Six Months Ended

May 31, May 31,

(In thousands) 2022 2021 2022 2021

4 unchanged sentences

Warranty reserve, end of period $ 377,990 361,741 377,990 361,741

(1) The adjustments to pre-existing warranties from changes in estimates during the three months ended February 28, 2022 and 2021 primarily related to specific claims in certain of the Company's homebuilding communities and other adjustments.

(1) The adjustments to pre-existing warranties from changes in estimates during the three or six months ended May 31, 2022 and 2021 primarily related to specific claims in certain of the Company's homebuilding communities and other adjustments.

(9) Financial Instruments and Fair Value Disclosures

The following table presents the carrying amounts and estimated fair values of financial instruments held or issued by the Company at February 28, 2022 and November 30, 2021, using available market information and what the Company believes to be appropriate valuation methodologies.

The following table presents the carrying amounts and estimated fair values of financial instruments held or issued by the Company at May 31, 2022 and November 30, 2021, using available market information and what the Company believes to be appropriate valuation methodologies.

Considerable judgment is required in interpreting market data to develop the estimates of fair value.

1 unchanged sentence

The table excludes cash and cash equivalents, restricted cash, receivables, net and accounts payable, all of which had fair values approximating their carrying amounts due to the short maturities and liquidity of these instruments.

February 28, 2022 November 30, 2021

May 31, 2022 November 30, 2021

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

4 unchanged sentences

Financial Services notes and other debts payable, net Level 2 1,321,965 1,321,429 1,726,026 1,726,860

Multifamily note payable, net Level 2 16,631 16,631 — —

The following methods and assumptions are used by the Company in estimating fair values:

5 unchanged sentences

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

Multifamily —For notes payable, the fair values approximate their carrying value due to variable interest pricing terms and the short-term nature of the borrowings.

Fair Value Measurements:

5 unchanged sentences

Fair Value Hierarchy Fair Value at

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

(In thousands) May 31, 2022 November 30, 2021

Financial Services Assets:

6 unchanged sentences

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

February 28, 2022 November 30, 2021

May 31, 2022 November 30, 2021

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

4 unchanged sentences

The Company recognizes the fair value of its rights to service a mortgage loan as revenue upon entering into an interest rate lock loan commitment with a borrower.

The fair value of these are included in Financial Services’ loans held-for-sale as of February 28, 2022 and November 30, 2021.

The fair value of these are included in Financial Services’ loans held-for-sale as of May 31, 2022 and November 30, 2021.

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

7 unchanged sentences

The key assumptions, which are generally unobservable inputs, used in the valuation of the mortgage servicing rights include mortgage prepayment rates, discount rates and delinquency rates and are noted below:

Unobservable inputs As of February 28, 2022 As of November 30, 2021

Unobservable inputs As of May 31, 2022 As of November 30, 2021

Mortgage prepayment rate 8 % 13 %

3 unchanged sentences

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

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

Loan values are calculated by allocating the change in

Lennar Corporation and Subsidiaries

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

value of an assumed CMBS capital structure to each loan.

Loan values are calculated by allocating the change in value of an assumed CMBS capital structure to each loan.

The value of an assumed CMBS capital structure is calculated, generally, by discounting the cash flows associated with each CMBS class at market interest rates and at the Company’s own estimate of CMBS spreads.

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

Three Months Ended

Three Months Ended Six Months Ended

May 31, May 31,

(In thousands) 2022 2021 2022 2021

18 unchanged sentences

Ending balance $ 3,221 84,205 2,602 163,920

Six Months Ended

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

Beginning balance 2,492 68 2,113 193,588

Purchases/loan originations 181 408,495 443 420,796

Sales/loan originations sold, including those not settled — ( 323,467 ) — ( 438,705 )

Disposals/settlements ( 265 ) — ( 1,095 ) ( 7,300 )

Changes in fair value (1) 813 ( 445 ) 1,141 ( 3,942 )

Interest and principal paydowns — ( 446 ) — ( 517 )

Ending balance $ 3,221 84,205 2,602 163,920

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

The Company’s assets measured at fair value on a nonrecurring basis are those assets for which the Company has recorded valuation adjustments and write-offs.

The fair values included in the table below represent only those assets whose carrying values were adjusted to fair value during the respective periods disclosed.

The fair values included in the table below represent only those assets whose

Lennar Corporation and Subsidiaries

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

carrying values were adjusted to fair value during the respective periods disclosed.

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

5 unchanged sentences

Land and land under development Level 3 8,785 7,149 ( 1,636 ) 78 — ( 78 )

Six Months Ended

(In thousands) Fair Value

Hierarchy Carrying Value Fair Value Total Losses, Net (1) Carrying Value Fair Value Total Losses, Net (1)

Non-financial assets - Homebuilding:

Finished homes and construction in progress Level 3 $ 34,023 31,041 ( 2,982 ) 21,784 8,728 ( 13,056 )

Land and land under development Level 3 29,538 17,909 ( 11,629 ) 520 — ( 520 )

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

2 unchanged sentences

The Company disclosed its accounting policy related to inventories and its review for indicators of impairment in the Summary of Significant Accounting Policies in its Form 10-K for the year ended November 30, 2021.

Lennar Corporation and Subsidiaries

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

The Company estimates the fair value of inventory evaluated for impairment based on market conditions and assumptions made by management at the time the inventory is evaluated, which may differ materially from actual results if market conditions or assumptions change.

For example, changes in market conditions and other specific developments or changes in assumptions may cause the Company to re-evaluate its strategy regarding previously impaired inventory, as well as inventory not currently impaired but for which indicators of impairment may arise if market deterioration occurs, and certain other assets that could result in further valuation adjustments and/or additional write-offs of option deposits and pre-acquisition costs due to abandonment of those options contracts.

On a quarterly basis, the Company reviews its active communities for indicators of potential impairments.

1 unchanged sentence

Communities with valuation adjustments

At or for the Three Months Ended # of active communities # of communities with potential indicator of impairment # of communities Fair Value

At or for the Six Months Ended # of active communities # of communities with potential indicator of impairment # of communities Fair Value

(in thousands)

1 unchanged sentence

(in thousands)

February 28, 2022 1,199 5 — $ — $ —

February 28, 2021 1,158 10 — — —

May 31, 2022 1,218 6 — $ — $ —

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

The table below summarizes the most significant unobservable inputs used in the Company's discounted cash flow model to determine the fair value of its communities for which the Company recorded valuation adjustments:

Six Months Ended

Unobservable inputs

Average selling price $ 635,000

Absorption rate per quarter (homes) 11

Discount rate 20 %

(10) Variable Interest Entities

The Company evaluated the joint venture ("JV") agreements of its JV's that were formed or that had reconsideration events, such as changes in the governing documents or to debt arrangements during the three months ended February 28, 2022 and based on the Company's evaluation, there were two entities that consolidated with total combined assets of $ 6.1 million and no outstanding liabilities.

During the three months ended February 28, 2022, there were no VIEs that were deconsolidated.

The Company evaluated the joint venture ("JV") agreements of its JV's that were formed or that had reconsideration events, such as changes in the governing documents or to debt arrangements during the six months ended May 31, 2022 and based on the Company's evaluation, there were three entities that consolidated with total combined assets of $ 111.4 million and an immaterial amount of liabilities.

During the six months ended May 31, 2022, there was a VIE that deconsolidated that had a total assets of $ 22.8 million and an immaterial amount of liabilities.

Lennar Corporation and Subsidiaries

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

The carrying amount of the Company's consolidated VIE's assets and non-recourse liabilities are disclosed in the footnote to the condensed consolidated balance sheets.

7 unchanged sentences

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

February 28, 2022 November 30, 2021

May 31, 2022 November 30, 2021

(In thousands) Investments in

8 unchanged sentences

$ 947,820 1,110,210 857,199 1,084,044

(1) As of February 28, 2022 and November 30, 2021, the maximum exposure to loss of Homebuilding's investments in unconsolidated VIEs was limited to its investments in unconsolidated VIEs, except with regard to the Company's remaining $ 102.7 million commitment to fund capital in Upward America, and a $ 26.8 million short-term loan provided by the Company to Upward America.

(2) As of February 28, 2022 and November 30, 2021, the maximum exposure to loss of Multifamily's investments in unconsolidated VIEs was primarily limited to its investments in the unconsolidated VIEs, except with regard to the remaining equity commitment of $ 22.1 million and $ 23.1 million, respectively, to fund LMV I and LMV II for future expenditures related to the construction and development of its projects.

(1) As of May 31, 2022 and November 30, 2021, the maximum exposure to loss of Homebuilding's investments in unconsolidated VIEs was limited to its investments in unconsolidated VIEs, except with regard to the Company's remaining $ 98.5 million commitment to fund capital in Upward America, and a $ 32.7 million of receivable relating to a short-term loan and management fee owed to the Company by Upward America.

(2) As of May 31, 2022 and November 30, 2021, the maximum exposure to loss of Multifamily's investments in unconsolidated VIEs was primarily limited to its investments in the unconsolidated VIEs.

The maximum exposure for LMV 1 and LMV II in addition to the investment also included to the remaining equity commitment of $ 21.0 million and $ 23.1 million as of May 31, 2022 and November 30, 2021, respectively, for future expenditures related to the construction and development of its projects.

The decrease was due to the funding of capital for LMV I and LMV II.

(3) As of February 28, 2022 and November 30, 2021, the maximum exposure to loss of the Financial Services segment was limited to its investment in the unconsolidated entities VIEs and related to the Financial Services' CMBS investments held-to-maturity.

(4) As of February 28, 2022, the maximum recourse exposure to loss of the Lennar Other segment was limited to its investments in the unconsolidated VIEs.

Lennar Corporation and Subsidiaries

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

(3) As of May 31, 2022 and November 30, 2021, the maximum exposure to loss of the Financial Services segment was limited to its investment in the unconsolidated VIEs and related to the Financial Services' CMBS investments held-to-maturity.

(4) As of May 31, 2022, the maximum recourse exposure to loss of the Lennar Other segment was limited to its investments in the unconsolidated VIEs.

While these entities are VIEs, the Company has determined that the power to direct the activities of the VIEs that most significantly impact the VIEs’ economic performance is generally shared and the Company and its partners are not de-facto agents.

9 unchanged sentences

Although the Company does not have legal title to the optioned land, if the Company is deemed to be the primary beneficiary or makes a significant deposit for optioned land, it may need to consolidate the land under option at the purchase price of the optioned land.

During the three months ended February 28, 2022, consolidated inventory not owned increased by $ 85.5 million with a corresponding increase to liabilities related to consolidated inventory not owned in the accompanying condensed consolidated balance sheet as of February 28, 2022.

The increase was primarily due to additions in the three months ended February 28, 2022 as the Company focused on increasing its controlled homesites, partially offset by takedowns.

To reflect the purchase price of the homesite takedowns, the Company had a net reclass related to option deposits from consolidated inventory not owned to land under development in the accompanying consolidated balance sheet as of February 28, 2022.

During the six months ended May 31, 2022, consolidated inventory not owned increased by $ 526.3 million with a corresponding increase to liabilities related to consolidated inventory not owned in the accompanying condensed consolidated balance sheet as of May 31, 2022.

The increase was primarily due to additions in the six months ended May 31, 2022 as the

Lennar Corporation and Subsidiaries

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

Company focused on increasing its controlled homesites, partially offset by takedowns.

To reflect the purchase price of the homesite takedowns, the Company had a net reclass related to option deposits from consolidated inventory not owned to finished homes and construction in progress in the accompanying consolidated balance sheet as of May 31, 2022.

The liabilities related to consolidated inventory not owned primarily represent the difference between the option exercise prices for the optioned land and the Company’s cash deposits.

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

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

(Dollars in thousands) May 31, 2022 November 30, 2021

Non-refundable option deposits and pre-acquisition costs $ 1,757,845 1,228,057

7 unchanged sentences

However, the financial effect of litigation concerning purchases and sales of property may depend upon the value of the subject property, which may have changed from the time the agreement for purchase or sale was entered into.

Lennar Corporation and Subsidiaries

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

The Company has entered into agreements to lease certain office facilities and equipment under operating leases.

4 unchanged sentences

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

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

(Dollars in thousands) May 31, 2022 November 30, 2021

Right-of-use assets $ 149,772 155,616

2 unchanged sentences

Weighted-average discount rate 2.9 % 2.8 %

Future minimum payments under the noncancellable leases in effect at February 28, 2022 were as follows:

Lennar Corporation and Subsidiaries

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

Future minimum payments under the noncancellable leases in effect at May 31, 2022 were as follows:

(In thousands) Lease Payments

5 unchanged sentences

(1) Total future minimum lease payments exclude variable lease costs of $ 17.0 million and short-term lease costs of $ 2.3 million.

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

As of February 28, 2022, the minimum lease payments for these leases that have not yet commenced were immaterial.

(2) The Company's leases do not include a readily determinable implicit rate.

As such, the Company has estimated the discount rate for these leases to determine the present value of lease payments at the lease commencement date or as of December 1, 2019, which was the effective date of ASU 2016-02.

As of February 28, 2022, the weighted average remaining lease term and weighted average discount rate used in calculating the lease liabilities were 8.1 years and 2.9 %, respectively.

As of May 31, 2022, the weighted average remaining lease term and weighted average discount rate used in calculating the lease liabilities were 8.2 years and 2.9 %, respectively.

The Company recognized the lease liabilities on its condensed consolidated balance sheets within accounts payable or other liabilities of the respective segments.

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

Three months ended

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

Six Months Ended

(In thousands) May 31, 2022 May 31, 2021

Rental expense $ 50,698 41,662

1 unchanged sentence

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

For both the three months ended February 28, 2022 and 2021, the Company had an immaterial amount of sublease income.

For both the six months ended May 31, 2022 and 2021, the Company had an immaterial amount of sublease income.

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-Q

Item 1. Financial Statements