What changed in this filing

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Item 1. Financial Statements

2022-10-04 compared with 2022-07-01 · 172 added, 172 removed, 759 unchanged (31% of the section changed)

3 unchanged sentences

(Dollars in thousands)

May 31, November 30,

August 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 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 August 31, 2022, total assets include $ 1.4 billion related to consolidated VIEs of which $ 69.4 million is included in Homebuilding cash and cash equivalents, $ 0.2 million in Homebuilding receivables, net, $ 63.9 million in Homebuilding finished homes and construction in progress, $ 741.0 million in Homebuilding land and land under development, $ 420.9 million in Homebuilding consolidated inventory not owned, $ 1.0 million in Homebuilding investments in unconsolidated entities, $ 24.2 million in Homebuilding other assets, $ 29.4 million in Multifamily assets and $ 13.5 million in Lennar Other 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)

May 31, November 30,

August 31, November 30,

2022 (2) 2021 (2)

13 unchanged sentences

Class A common stock of $ 0.10 par value;

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

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

August 31, 2022 - 255,821,290 shares and November 30, 2021 - 300,500,075 shares

25,582 30,050

Class B common stock of $ 0.10 par value;

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

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

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

Additional paid-in capital 5,388,413 8,807,891

1 unchanged sentence

Treasury stock, at cost;

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

August 31, 2022 - 1,053,856 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 $ 35,339,877 33,207,778

(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.

(2) As of August 31, 2022, total liabilities include $ 489.1 million related to consolidated VIEs as to which there was no recourse against the Company, of which $ 26.7 million is included in Homebuilding accounts payable, $ 413.5 million in Homebuilding liabilities related to consolidated inventory not owned, $ 29.3 million in Homebuilding senior notes and other debts payable, $ 9.7 million in Homebuilding other liabilities, $ 3.5 million in Multifamily liabilities and $ 6.3 million in Lennar Other 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 Six Months Ended

May 31, May 31,

Three Months Ended Nine Months Ended

August 31, August 31,

2022 2021 2022 2021

34 unchanged sentences

(In thousands)

Six Months Ended

Nine Months Ended

Cash flows from operating activities:

10 unchanged sentences

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

2 unchanged sentences

Changes in assets and liabilities:

Decrease in receivables 126,247 117,910

(Increase) decrease in receivables ( 164,383 ) 131,282

Increase in inventories, excluding valuation adjustments and write-offs of option deposits and pre-acquisition costs ( 3,894,170 ) ( 2,252,820 )

5 unchanged sentences

Net additions of operating properties and equipment ( 27,534 ) ( 39,947 )

Proceeds from the sale of operating properties and equipment, other assets 18,247 32,002

Proceeds from the sale of operating properties and equipment and other assets 18,247 36,882

Investments in and contributions to unconsolidated entities ( 396,734 ) ( 354,588 )

3 unchanged sentences

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

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

Decrease in Financial Services loans held-for-investment, net 18,859 13,249

Purchases of investment securities ( 93,769 ) ( 121,675 )

5 unchanged sentences

(In thousands)

Six Months Ended

Nine Months Ended

Cash flows from financing activities:

Net repayments under warehouse facilities $ ( 238,113 ) ( 357,472 )

Redemption of senior notes ( 575,000 ) ( 299,999 )

Principal payments on notes payable and other borrowings ( 35,542 ) ( 165,403 )

2 unchanged sentences

Payments related to consolidated inventory not owned ( 517,654 ) ( 238,273 )

Payments related to other liabilities, net — ( 7,142 )

Receipts related to noncontrolling interests 30,060 18,575

19 unchanged sentences

Non-cash contributions to unconsolidated entities 204,911 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:

15 unchanged sentences

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

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.

The condensed consolidated statements of operations for both the three and nine months ended August 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 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 cash and cash equivalents as of August 31, 2022 and November 30, 2021 included $ 655.7 million and $ 940.4 million, respectively, of cash held in escrow.

On average for the three months ended August 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 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.

For the three months ended August 31, 2022 and 2021, sales incentives offered to homebuyers averaged $ 12,300 per home, or 2.5 % as a percentage of home sales revenues, and $ 7,300 per home, or 1.7 % as a percentage of home sales revenues, respectively.

For the nine months ended August 31, 2022 and 2021, sales incentives offered to homebuyers averaged $ 9,500 per home, or 1.9 % as a percentage of home sales revenues, and $ 9,300 per home, or 2.2 % as a percentage of home sales revenues, respectively.

Share-based Payments

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.

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

During both the nine months ended August 31, 2022 and 2021, the Company granted employees 1.4 million nonvested shares.

Recently Adopted Accounting Pronouncements

15 unchanged sentences

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

(In thousands) May 31, 2022

(In thousands) August 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 May 31, 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 August 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 $ 176.2 million and $ 100.1 million without readily available fair values as of May 31, 2022 and November 30, 2021, respectively.

(3) Investments in equity securities include investments of $ 178.0 million and $ 100.1 million without readily available fair values as of August 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 May 31, 2022

Three Months Ended August 31, 2022

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

5 unchanged sentences

Earnings (loss) before income taxes 1,963,224 63,348 48,487 ( 117,980 ) ( 132,805 ) 1,824,274

Three Months Ended May 31, 2021

Three Months Ended August 31, 2021

Revenues $ 6,558,509 206,973 167,921 8,000 — 6,941,403

3 unchanged sentences

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

(1) Financial Services operating earnings for the three months ended August 31, 2022, included a $ 35.5 million one-time charge due to an increase in a litigation accrual related to a court judgment.

Lennar Corporation and Subsidiaries

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

Six Months Ended May 31, 2022

Nine Months Ended August 31, 2022

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

6 unchanged sentences

Earnings (loss) before income taxes 4,953,485 258,074 54,582 ( 629,538 ) ( 380,760 ) 4,255,843

Six Months Ended May 31, 2021

Nine Months Ended August 31, 2021

$ 17,529,606 669,789 476,837 20,884 — 18,697,116

4 unchanged sentences

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

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

(1) Financial Services operating earnings for the nine months ended August 31, 2022, included a $ 35.5 million one-time charge due to an increase in a litigation accrual related to a court judgment.

Homebuilding Segments

11 unchanged sentences

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

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

August 31, 2022 $ 7,143,051 4,393,636 3,720,373 12,800,380 1,414,935 1,157,922 30,630,297

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 May 31, 2022

Three Months Ended August 31, 2022

(In thousands) East Central Texas West Other Total Homebuilding

1 unchanged sentence

Operating earnings (loss) 642,482 272,351 278,814 788,443 ( 18,866 ) 1,963,224

Three Months Ended May 31, 2021

Three Months Ended August 31, 2021

$ 1,678,851 1,268,817 827,229 2,775,556 8,056 6,558,509

2 unchanged sentences

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

Six Months Ended May 31, 2022

Nine Months Ended August 31, 2022

(In thousands) East Central Texas West Other Total Homebuilding

1 unchanged sentence

Operating earnings (loss) 1,548,296 631,224 722,983 2,077,740 ( 26,758 ) 4,953,485

Six Months Ended May 31, 2021

Nine Months Ended August 31, 2021

Revenues $ 4,602,560 3,294,842 2,270,566 7,338,906 22,732 17,529,606

5 unchanged sentences

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

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:

At August 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:

July 2022 $ 400,000

October 2022 $ 200,000

1 unchanged sentence

May 2023 200,000

August 2023 1,000,000

Total - Residential facilities

8 unchanged sentences

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

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

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

Borrowings under the residential facilities $ 1,289,260 1,482,258

15 unchanged sentences

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.

Loan origination liabilities are included in Financial Services’ liabilities in the Company's condensed consolidated balance sheets.

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

Three Months Ended Six Months Ended

May 31, May 31,

(In thousands) 2022 2021 2022 2021

Loan origination liabilities, beginning of period $ 12,471 8,433 11,670 7,569

Provision for losses — 1,114 966 2,080

Payments/settlements ( 187 ) ( 93 ) ( 352 ) ( 195 )

Loan origination liabilities, end of period $ 12,284 9,454 12,284 9,454

The provision for loan losses was immaterial for both the three and nine months ended August 31, 2022 and 2021.

Loan origination liabilities were $ 12.1 million and $ 11.7 million as of August 31, 2022 and November 30, 2021, respectively, and included in Financial Services’ liabilities in the Company's condensed consolidated balance sheets.

LMF Commercial - loans held-for-sale

LMF Commercial originated commercial loans as follows:

Three Months Ended Six Months Ended

May 31, May 31,

Three Months Ended Nine Months Ended

August 31, August 31,

(Dollars in thousands) 2022 2021 2022 2021

2 unchanged sentences

Securitizations 2 1 4 4

(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.

(1) During both the three and nine months ended August 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 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 or six months ended May 31, 2022 or 2021.

At August 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 the segment's 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 or nine months ended August 31, 2022 or 2021.

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

Details related to Financial Services' CMBS were as follows:

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

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

Carrying value $ 151,015 157,808

1 unchanged sentence

Incurred interest rate 3.4 % 3.4 %

August 31, 2022

Discount rates at purchase 6 % — 84 %

4 unchanged sentences

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

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.

2 unchanged sentences

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

Lennar Corporation and Subsidiaries

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

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.

1 unchanged sentence

The Company has investments in Blend Labs, Inc.

("Blend"), Hippo Holdings, Inc.

("Blend Labs"), Hippo Holdings, Inc.

("Hippo"), Opendoor, Inc.

5 unchanged sentences

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,

Three Months Ended Nine Months Ended

August 31, August 31,

(In thousands) 2022 2021 2022 2021

9 unchanged sentences

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.

As of August 31, 2022, the Company owned approximately 25 % of Doma and the carrying amount of the Company's investment was $ 17.1 million.

Lennar Corporation and Subsidiaries

3 unchanged sentences

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

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

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

Investments in unconsolidated entities (1) (2) $ 1,174,498 972,084

Underlying equity in unconsolidated entities' net assets (1) 1,527,359 1,301,719

(1) The basis difference was primarily as a result of the Company contributing its investment in three strategic joint ventures with a higher fair value than book value for an investment in the FivePoint entity and deferring equity in earnings on land sales to the Company.

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

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.

As of August 31, 2022 and November 30, 2021, the carrying amount of the Company's investment was $ 386.3 million and $ 381.6 million, respectively.

As of August 31, 2022 and November 30, 2021, the Homebuilding segment's unconsolidated entities had non-recourse debt with completion guarantees of $ 183.6 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 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.

As of both August 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 August 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).

3 unchanged sentences

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

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.

As of August 31, 2022 and November 30, 2021, the carrying amount of the Company's investment in Upward America was $ 28.5 million and $ 13.3 million, respectively.

Multifamily Unconsolidated Entities

2 unchanged sentences

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 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.

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

As of August 31, 2022 and November 30, 2021, Multifamily segment's unconsolidated entities had non-recourse debt with completion guarantees of $ 1.1 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.

The Multifamily segment also provides general contractor services for construction of some of the rental properties owned by unconsolidated entities in which the Company has investments.

The details of the activity was as follows:

Three Months Ended Six Months Ended

May 31, May 31,

The details of the activity were as follows:

Three Months Ended Nine Months Ended

August 31, August 31,

(In thousands) 2022 2021 2022 2021

7 unchanged sentences

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:

The Company currently has a $ 6.3 million investment in the Fund.

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

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

August 31, 2022

(In thousands) LMV I LMV II

5 unchanged sentences

Lennar's remaining commitments 4,292 16,199

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

Distributions to Lennar during the nine months ended August 31, 2022 25,576 12,555

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.

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.

The Company's investment in the Rialto funds and investment vehicles totaled $ 193.8 million and $ 200.6 million as of August 31, 2022 and November 30, 2021, respectively.

The Company also had strategic technology investments in unconsolidated entities of $ 148.9 million and $ 145.6 million, as of August 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 and six months ended May 31, 2022 and 2021:

Three Months Ended May 31, 2022

Three Months Ended August 31, 2022

(In thousands) Total

5 unchanged sentences

Earnings Noncontrolling

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

Net earnings (including net earnings attributable to noncontrolling interests) 1,472,694 — — — — — 1,467,344 5,350

1 unchanged sentence

( 13,106 ) — — 39 ( 13,145 ) — — —

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

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

Amortization of restricted stock

7 unchanged sentences

Total other comprehensive income, net of tax 342 — — — — 342 — —

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

Balance at August 31, 2022 $ 23,127,538 25,582 3,660 5,388,413 ( 89,760 ) 2,090 17,647,293 150,260

Lennar Corporation and Subsidiaries

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

Three Months Ended May 31, 2021

Three Months Ended August 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

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

Net earnings (including net earnings attributable to noncontrolling interests) 1,409,218 — — — — — 1,406,888 2,330

11 unchanged sentences

Total other comprehensive income, net of tax 131 — — — — 131 — —

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

Balance at August 31, 2021 $ 20,779,539 30,050 3,944 8,778,609 ( 1,731,741 ) ( 1,300 ) 13,570,626 129,351

Nine Months Ended August 31, 2022

(In thousands) Total

20 unchanged sentences

Total other comprehensive income, net of tax 3,431 — — — — 3,431 — —

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

Balance at August 31, 2022 $ 23,127,538 25,582 3,660 5,388,413 ( 89,760 ) 2,090 17,647,293 150,260

Nine Months Ended August 31, 2021

(In thousands) Total

19 unchanged sentences

Total other comprehensive loss, net of tax ( 495 ) — — — — ( 495 ) — —

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

Balance at August 31, 2021 $ 20,779,539 30,050 3,944 8,778,609 ( 1,731,741 ) ( 1,300 ) 13,570,626 129,351

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.

On September 28, 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 October 27, 2022 to holders of record at the close of business on October 13, 2022 .

On July 21, 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 July 7, 2022, as declared by its Board of Directors on June 22, 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.

During the nine months ended August 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.

2 unchanged sentences

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 and six months ended May 31, 2022 and 2021:

Three Months Ended Six Months Ended

May 31, May 31

The following table represents the repurchases of the Company's Class A and Class B common stocks under the authorized repurchase programs:

Three Months Ended Nine Months Ended

August 31, August 31

2022 2021 2022 2021

5 unchanged sentences

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

Three Months Ended Six Months Ended

May 31, May 31,

Three Months Ended Nine Months Ended

August 31, August 31,

(Dollars in thousands) 2022 2021 2022 2021

1 unchanged sentence

Effective tax rate (1) 19.3 % 22.4 % 22.4 % 23.1 %

(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.

(1) For both the three and nine months ended August 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.

The three and nine months ended August 31, 2022 included a $ 50.2 million benefit related to the resolution of an uncertain state tax position, as well as the impact of the retroactive extension of the new energy efficient home tax credit by the enactment of the Inflation Reduction Act.

(6) Earnings Per Share

7 unchanged sentences

Basic and diluted earnings per share were calculated as follows:

Three Months Ended Six Months Ended

May 31, May 31,

Three Months Ended Nine Months Ended

August 31, August 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 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.

For both the three and nine months ended August 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) May 31, 2022 November 30, 2021

4.75 % senior notes due 2022

$ 574,503 573,840

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

4.875 % senior notes due December 2023

12 unchanged sentences

896,071 895,510

4.75 % senior notes due 2022

Mortgage notes on land and other debt 423,187 441,513

$ 4,057,496 4,652,338

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 carrying amounts of the senior notes in the table above are net of debt issuance costs of $ 8.2 million and $ 11.0 million as of August 31, 2022 and November 30, 2021, respectively.

During the three months ended August 31, 2022, the Company redeemed early $ 575 million aggregate principal amount of its 4.75 % senior notes due November 2022.

The redemption price, which was paid in cash, was 100% of the principal amount plus accrued but unpaid interest.

In May 2022, the Company amended the credit agreement governing its unsecured revolving credit facility (the “Credit Facility") which increased 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.

4 unchanged sentences

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

The Company's processes for posting performance and financial letters of credit and surety bonds 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 Company's outstanding performance letters of credit and surety bonds are described below:

Lennar Corporation and Subsidiaries

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

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

The Company's outstanding performance letters of credit and surety bonds are disclosed below:

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

Performance letters of credit $ 1,148,595 924,584

9 unchanged sentences

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

Three Months Ended Six Months Ended

May 31, May 31,

Three Months Ended Nine Months Ended

August 31, August 31,

(In thousands) 2022 2021 2022 2021

4 unchanged sentences

Warranty reserve, end of period $ 394,593 374,975 394,593 374,975

(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.

(1) The adjustments to pre-existing warranties from changes in estimates during the three and nine months ended August 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 May 31, 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 August 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.

May 31, 2022 November 30, 2021

August 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 1,487,913 1,486,170 1,726,026 1,726,860

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

Multifamily notes payable, net Level 2 16,683 16,683 — —

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

2 unchanged sentences

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

Homebuilding —For senior notes and other debts payable, the fair value of fixed-rate borrowings is primarily based on quoted market prices and the fair value of variable-rate borrowings is based on expected future cash flows calculated using current market forward rates.

Lennar Corporation and Subsidiaries

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.

6 unchanged sentences

Fair Value Hierarchy Fair Value at

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

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

Financial Services Assets:

2 unchanged sentences

Mortgage servicing rights Level 3 3,356 2,492

Forward options Level 1 16,004 —

Lennar Other:

2 unchanged sentences

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

May 31, 2022 November 30, 2021

August 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 May 31, 2022 and November 30, 2021.

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

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

Mortgage prepayment rate 8 % 13 %

1 unchanged sentence

Delinquency rate 7 % 4 %

Lennar Other investments in equity securities - The fair value of investments in equity securities was calculated based on independent quoted market prices.

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 Corporation and Subsidiaries

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

Forward options - Fair value of forward options is based on independent quoted market prices for similar financial instruments.

The fair value of these are included in Financial Services' other assets and the Company recognizes the changes in the fair value of the premium paid as Financial Services' Revenue.

Lennar Other investments in equity securities - The fair value of investments in equity securities was calculated based on independent quoted market prices.

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.

2 unchanged sentences

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 Six Months Ended

May 31, May 31,

Three Months Ended Nine Months Ended

August 31, August 31,

(In thousands) 2022 2021 2022 2021

3 unchanged sentences

Forward contracts 42,781 1,649 34,291 11,934

Forward options ( 6 ) — ( 6 ) —

Changes in fair value included in Lennar Other unrealized gain (loss) from technology investments:

3 unchanged sentences

Interest on Financial Services loans held-for-sale and LMF Commercial loans held-for-sale measured at fair value is calculated based on the interest rate of the loans and recorded as revenues in the Financial Services’ statement of operations.

Lennar Corporation and Subsidiaries

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

The following table represents the reconciliation of the beginning and ending balance for the Level 3 recurring fair value measurements in the Company's Financial Services segment:

8 unchanged sentences

Ending balance $ 3,356 6,447 2,382 113,129

Six Months Ended

Nine Months Ended

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

8 unchanged sentences

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

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

5 unchanged sentences

Land and land under development Level 3 100,043 93,095 ( 6,948 ) 1,625 862 ( 763 )

Six Months Ended

Investments in unconsolidated entities Level 3 1,453 — ( 1,453 ) — — —

Nine Months Ended

(In thousands) Fair Value

3 unchanged sentences

Land and land under development Level 3 129,580 111,003 ( 18,577 ) 2,145 862 ( 1,283 )

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

Investments in unconsolidated entities Level 3 1,453 — ( 1,453 ) — — —

(1) Valuation adjustments for finished homes and construction in progress, and land and land under development were included in Homebuilding costs and expenses.

Valuation adjustments related to investments in unconsolidated entities were included in

Lennar Corporation and Subsidiaries

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

homebuilding equity in earnings (loss) from unconsolidated entities and/or Homebuilding other income (expense), net in the Company’s condensed consolidated statements of operations and comprehensive income.

Finished homes and construction in progress are included within inventories.

6 unchanged sentences

Communities with valuation adjustments

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

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

(in thousands)

1 unchanged sentence

(in thousands)

May 31, 2022 1,218 6 — $ — $ —

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

August 31, 2022 1,182 5 1 $ 8,815 $ 2,710

August 31, 2021 1,192 8 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

Nine Months Ended

Unobservable inputs

3 unchanged sentences

(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 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.

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 nine months ended August 31, 2022 and based on the Company's evaluation, there were six variable interest entities ("VIEs") that consolidated with total combined assets of $ 134.8 million and an immaterial amount of liabilities.

During the nine months ended August 31, 2022, there were two VIEs that deconsolidated that had total assets of $ 128.1 million and an immaterial amount of liabilities.

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

A VIE’s assets can only be used to settle obligations of that VIE.

4 unchanged sentences

While the Company has option contracts to purchase land from certain of its VIEs, the Company is not required to purchase the assets and could walk away from the contracts.

Lennar Corporation and Subsidiaries

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

Unconsolidated VIEs

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

May 31, 2022 November 30, 2021

August 31, 2022 November 30, 2021

(In thousands) Investments in

8 unchanged sentences

$ 1,332,772 1,541,575 857,199 1,084,044

(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 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.

(1) As of August 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 $ 92.3 million and $ 106.1 million, respectively, commitment to fund capital in Upward America, and $ 88.4 million and $ 87.9 million, respectively, of receivables relating to a short-term loan and management fee owed to the Company by Upward America.

(2) As of August 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 combined equity commitment of $ 20.5 million and $ 23.1 million as of August 31, 2022 and November 30, 2021, respectively, for future expenditures related to the construction and development of its projects.

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

The Company and its JV partners generally fund JVs as needed and in accordance with business plans to allow the entities to finance their activities.

Because such JVs are expected to make future capital calls in order to continue to finance their activities, the entities are determined to be VIEs as of August 31, 2022 in accordance with ASC 810 due to insufficient equity at risk.

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 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.

During the nine months ended August 31, 2022, consolidated inventory not owned increased by $ 788.7 million with a corresponding increase to liabilities related to consolidated inventory not owned in the accompanying condensed consolidated balance sheet as of August 31, 2022.

The increase was primarily due to additions in the nine months ended August 31, 2022 as the Company focused on increasing its controlled homesites, partially offset by takedowns.

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) May 31, 2022 November 30, 2021

Lennar Corporation and Subsidiaries

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

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

Non-refundable option deposits and pre-acquisition costs $ 1,884,386 1,228,057

13 unchanged sentences

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

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

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

Right-of-use assets $ 151,975 155,616

2 unchanged sentences

Weighted-average discount rate 3.0 % 2.8 %

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:

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

(In thousands) Lease Payments

2022 $ 17,586

2027 and thereafter 72,359

5 unchanged sentences

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 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.

As of August 31, 2022, the weighted average remaining lease term and weighted average discount rate used in calculating the lease liabilities were 8.1 years and 3.0 %, respectively.

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

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

Six Months Ended

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

Nine Months Ended

(In thousands) 2022 2021

Rental expense $ 78,244 63,232

1 unchanged sentence

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

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

For both the nine months ended August 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