LEN filing — read by section

Item 1. Financial Statements

Item 1. Financial Statements 
 
 
 
 Lennar Corporation and Subsidiaries 
 Condensed Consolidated Balance Sheets 
 (Dollars in thousands) 
 (Unaudited) 
 
 August 31, November 30, 
 2022 (1) 2021 (1) 
 
 ASSETS 
 Homebuilding: 
 Cash and cash equivalents $ 1,309,364 2,735,213 
 Restricted cash 32,575 21,927 
 Receivables, net 665,472 490,278 
 Inventories: 
 Finished homes and construction in progress 13,043,631 10,446,139 
 Land and land under development 7,849,160 7,108,142 
 Consolidated inventory not owned 1,949,718 1,161,023 
 Total inventories 22,842,509 18,715,304 
 Investments in unconsolidated entities 1,174,498 972,084 
 Goodwill 3,442,359 3,442,359 
 Other assets 1,163,519 1,090,654 
 30,630,296 27,467,819 
 Financial Services 2,523,970 2,964,367 
 Multifamily 1,267,908 1,311,747 
 Lennar Other 917,703 1,463,845 
 Total assets $ 35,339,877 33,207,778 

 (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 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. 
 See accompanying notes to condensed consolidated financial statements. 
 3 

 
 Lennar Corporation and Subsidiaries 
 Condensed Consolidated Balance Sheets (Continued) 
 (In thousands, except share amounts) 
 (Unaudited) 

 
 August 31, November 30, 
 2022 (2) 2021 (2) 
 
 LIABILITIES AND EQUITY 
 Homebuilding: 
 Accounts payable $ 1,552,583 1,321,247 
 Liabilities related to consolidated inventory not owned 1,661,927 976,602 
 Senior notes and other debts payable, net 4,057,496 4,652,338 
 Other liabilities 2,836,442 2,920,055 
 10,108,448 9,870,242 
 Financial Services 1,675,492 1,906,343 
 Multifamily 326,048 288,930 
 Lennar Other 102,351 145,981 
 Total liabilities 12,212,339 12,211,496 
 Stockholders’ equity: 
 Preferred stock — — 
 Class A common stock of $ 0.10 par value; Authorized: August 31, 2022 and November 30, 2021 - 400,000,000 shares; Issued: 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; Authorized: August 31, 2022 and November 30, 2021 - 90,000,000 shares; Issued: August 31, 2022 - 36,601,215 shares and November 30, 2021 - 39,443,168 shares 
 3,660 3,944 
 Additional paid-in capital 5,388,413 8,807,891 
 Retained earnings 17,647,293 14,685,329 
 Treasury stock, at cost; 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 
 ( 89,760 ) ( 2,709,448 ) 
 Accumulated other comprehensive income (loss) 2,090 ( 1,341 ) 
 Total stockholders’ equity 22,977,278 20,816,425 
 Noncontrolling interests 150,260 179,857 
 Total equity 23,127,538 20,996,282 
 Total liabilities and equity $ 35,339,877 33,207,778 

 (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. 
 See accompanying notes to condensed consolidated financial statements. 
 4 

 
 Lennar Corporation and Subsidiaries 
 Condensed Consolidated Statements of Operations and Comprehensive Income 
 (In thousands, except per share amounts) 
 (Unaudited) 
 
 

 
 Three Months Ended Nine Months Ended 
 August 31, August 31, 
 2022 2021 2022 2021 
 Revenues: 
 Homebuilding $ 8,479,496 6,558,509 22,209,683 17,529,606 
 Financial Services 202,078 206,973 578,945 669,789 
 Multifamily 243,056 167,921 686,436 476,837 
 Lennar Other 9,801 8,000 21,579 20,884 
 Total revenues 8,934,431 6,941,403 23,496,643 18,697,116 
 Costs and expenses: 
 Homebuilding 6,494,737 5,225,497 17,241,788 14,253,299 
 Financial Services 138,730 94,890 320,871 290,179 
 Multifamily 215,433 174,410 654,322 474,389 
 Lennar Other 10,007 9,010 23,650 18,994 
 Corporate general and administrative 115,557 94,942 334,425 296,190 
 Charitable foundation contribution 17,248 15,199 46,335 42,006 
 Total costs and expenses 6,991,712 5,613,948 18,621,391 15,375,057 
 Homebuilding equity in earnings (loss) from unconsolidated entities ( 14,652 ) 2,391 ( 10,076 ) ( 3,862 ) 
 Homebuilding other income (expense), net ( 6,883 ) ( 5,570 ) ( 4,334 ) 3,043 
 
 Multifamily equity in earnings (loss) from unconsolidated entities and other gain 20,864 ( 2,904 ) 22,468 9,682 
 Lennar Other equity in earnings (loss) from unconsolidated entities, other income (expense), net, and other gain (loss) ( 31,935 ) ( 689 ) ( 68,493 ) 216,540 
 Lennar Other unrealized gains (losses) from technology investments ( 85,839 ) 493,671 ( 558,974 ) 690,791 
 Earnings before income taxes 1,824,274 1,814,354 4,255,843 4,238,253 
 Provision for income taxes ( 351,580 ) ( 405,136 ) ( 951,276 ) ( 975,354 ) 
 Net earnings (including net earnings attributable to noncontrolling interests) 1,472,694 1,409,218 3,304,567 3,262,899 
 Less: Net earnings attributable to noncontrolling interests 5,350 2,330 12,886 23,279 
 Net earnings attributable to Lennar $ 1,467,344 1,406,888 3,291,681 3,239,620 
 Other comprehensive income (loss), net of tax: 
 Net unrealized gain (loss) on securities available-for-sale $ 342 131 1,146 ( 495 ) 
 Reclassification adjustments for gain included in earnings, net of tax — — 2,285 — 
 Total other comprehensive income (loss), net of tax $ 342 131 3,431 ( 495 ) 
 Total comprehensive income attributable to Lennar $ 1,467,686 1,407,019 3,295,112 3,239,125 
 Total comprehensive income attributable to noncontrolling interests $ 5,350 2,330 12,886 23,279 
 Basic earnings per share $ 5.04 4.52 11.19 10.37 
 Diluted earnings per share $ 5.03 4.52 11.18 10.36 
 

 
 
 
 
 
 
 
 
 See accompanying notes to condensed consolidated financial statements. 
 5 

 
 Lennar Corporation and Subsidiaries 
 Condensed Consolidated Statements of Cash Flows 
 (In thousands) 
 (Unaudited) 

 
 Nine Months Ended 
 August 31, 
 2022 2021 
 Cash flows from operating activities: 
 Net earnings (including net earnings attributable to noncontrolling interests) $ 3,304,567 3,262,899 
 Adjustments to reconcile net earnings to net cash provided by operating activities: 
 Depreciation and amortization 57,921 65,845 
 Amortization of discount/premium on debt, net ( 1,312 ) ( 6,257 ) 
 Equity in earnings (loss) from unconsolidated entities 34,870 ( 64,571 ) 
 Distributions of earnings from unconsolidated entities 46,376 40,552 
 Share-based compensation expense 154,710 105,386 
 
 Deferred income tax (benefit) expense ( 15,991 ) 288,259 
 
 Loans held-for-sale unrealized loss 41,356 26,156 
 Lennar Other unrealized (gains) losses from technology investments and other (gain) loss 578,674 ( 848,544 ) 
 Gain on sale of other assets and operating properties and equipment ( 7,572 ) ( 18,596 ) 
 
 
 
 
 Gain on sale of Financial Services' portfolio/businesses 
 — ( 2,528 ) 
 
 
 Valuation adjustments and write-offs of option deposits and pre-acquisition costs 
 27,247 16,020 
 Changes in assets and liabilities: 
 
 (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 ) 
 Increase in other assets ( 110,761 ) ( 154,005 ) 
 Decrease in loans held-for-sale 318,974 209,262 
 Increase in accounts payable and other liabilities 180,946 514,007 
 Net cash provided by operating activities 551,452 1,312,347 
 Cash flows from investing activities: 
 
 Net additions of operating properties and equipment ( 27,534 ) ( 39,947 ) 
 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 ) 
 Distributions of capital from unconsolidated entities 331,801 292,466 
 
 
 
 
 
 
 
 Proceeds from sale of investment in consolidated joint venture — 15,950 
 
 
 
 
 Proceeds from sale of commercial mortgage-backed securities bonds 9,191 11,307 
 Proceeds from sale of Financial Services portfolio/business — 3,327 
 Decrease in Financial Services loans held-for-investment, net 18,859 13,249 
 Purchases of investment securities ( 93,769 ) ( 121,675 ) 
 
 Proceeds from maturities/sales of investment securities 8,472 11,861 
 
 
 Net cash used in investing activities $ ( 131,467 ) ( 131,168 ) 

 
 
 
 
 
 
 
 
 
 
 
 See accompanying notes to condensed consolidated financial statements. 
 6 

 Lennar Corporation and Subsidiaries 
 Condensed Consolidated Statements of Cash Flows (Continued) 
 (In thousands) 
 (Unaudited) 
 
 

 
 Nine Months Ended 
 August 31, 
 2022 2021 
 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 ) 
 Proceeds from other borrowings — 13,973 
 Proceeds from liabilities related to consolidated inventory not owned 845,408 441,177 
 
 
 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 
 Payments related to noncontrolling interests ( 85,098 ) ( 20,859 ) 
 
 
 Common stock: 
 
 Repurchases ( 918,682 ) ( 452,508 ) 
 Dividends ( 329,717 ) ( 233,988 ) 
 Net cash used in financing activities $ ( 1,824,338 ) ( 1,301,919 ) 
 Net decrease in cash and cash equivalents and restricted cash ( 1,404,353 ) ( 120,740 ) 
 Cash and cash equivalents and restricted cash at beginning of period 2,955,683 2,932,730 
 Cash and cash equivalents and restricted cash at end of period $ 1,551,330 2,811,990 
 Summary of cash and cash equivalents and restricted cash: 
 Homebuilding $ 1,309,364 2,623,320 
 Financial Services 143,630 137,021 
 Multifamily 40,870 15,302 
 Lennar Other 10,181 3,498 
 Homebuilding restricted cash 32,575 21,519 
 Financial Services restricted cash 14,710 11,330 
 $ 1,551,330 2,811,990 
 Supplemental disclosures of non-cash investing and financing activities: 
 Homebuilding and Multifamily: 
 Purchases of inventories and other assets financed by sellers $ 33,695 139,111 
 Non-cash contributions to unconsolidated entities 204,911 20,423 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 Consolidation/deconsolidation of unconsolidated/consolidated entities, net: 
 
 
 
 Inventories $ ( 19,800 ) — 
 
 
 Other assets 41 — 
 Investments in unconsolidated entities ( 736 ) — 
 
 
 Other liabilities ( 271 ) — 
 Noncontrolling interests 20,766 — 

 
 
 See accompanying notes to condensed consolidated financial statements. 
 7 

 
 
 

 Lennar Corporation and Subsidiaries 
 Notes to Condensed Consolidated Financial Statements (Unaudited) 
 
 (1) Basis of Presentation 
 Basis of Consolidation 
 The condensed consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America ("GAAP") for interim financial information and pursuant to the rules and regulations of the Securities and Exchange Commission. Accordingly, they do not include all of the information and footnotes required by GAAP for complete financial statements. These condensed consolidated financial statements should be read in conjunction with the consolidated financial statements in the Company’s Annual Report on Form 10-K for the year ended November 30, 2021. The basis of consolidation is unchanged from the disclosure in the Company's Notes to Consolidated Financial Statements section in its Form 10-K for the year ended November 30, 2021. In the opinion of management, all adjustments (consisting of normal recurring adjustments) necessary for the fair presentation of the accompanying condensed consolidated financial statements have been made. 
 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 nine months ended August 31, 2022 are not necessarily indicative of the results to be expected for the full year. 
 Use of Estimates 
 The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the amounts reported in the condensed consolidated financial statements and accompanying notes. Actual results could differ from those estimates. 
 Cash and Cash Equivalents 
 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 
 Homebuilding revenues and related profits from sales of homes are recognized at the time of the closing of a sale, when title to and possession of the property are transferred to the homebuyer. In order to promote sales of the homes, the Company may offer sales incentives to homebuyers. The types of incentives vary on a community-by-community basis and home-by-home basis. 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 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 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 
 In December 2019, the FASB issued ASU 2019-12, Income Taxes (Topic 740), Simplifying the Accounting for Income Taxes ("ASU 2019-12"). ASU 2019-12 was effective for the Company’s fiscal year beginning December 1, 2021. The adoption of ASU 2019-12 did not have a material impact on the Company's condensed consolidated financial statements. 
 
 
 
 
 
 
 
 
 
 
 8 

 
 Lennar Corporation and Subsidiaries 
 Notes to Condensed Consolidated Financial Statements (Unaudited) (Continued) 

 (2) Operating and Reporting Segments 
 The Company's homebuilding operations construct and sell homes primarily for first-time, move-up and active adult homebuyers primarily under the Lennar brand name. In addition, the Company's homebuilding operations purchase, develop and sell land to third parties. The Company's chief operating decision makers manage and assess the Company’s performance at a regional level. Therefore, the Company performed an assessment of its operating segments in accordance with ASC 280, Segment Reporting , and determined that the following are its operating and reportable segments: 
 Homebuilding segments: (1) East (2) Central (3) Texas (4) West 
 (5) Financial Services 
 (6) Multifamily 
 (7) Lennar Other 
 The assets and liabilities related to the Company’s segments were as follows: 
 
 
 
 (In thousands) August 31, 2022 
 Assets: Homebuilding Financial
Services Multifamily Lennar 
Other Total 
 Cash and cash equivalents $ 1,309,364 143,630 40,870 10,181 1,504,045 
 Restricted cash 32,575 14,710 — — 47,285 
 Receivables, net (1) 665,472 606,672 108,313 — 1,380,457 
 Inventories 22,842,509 — 429,923 — 23,272,432 
 Loans held-for-sale (2) — 1,260,122 — — 1,260,122 
 
 Investments in equity securities (3) — — — 487,082 487,082 
 Investments available-for-sale (4) — — — 35,163 35,163 
 Loans held-for-investment, net — 38,939 — — 38,939 
 Investments held-to-maturity — 151,015 — — 151,015 
 Investments in unconsolidated entities 1,174,498 — 631,513 342,636 2,148,647 
 Goodwill 3,442,359 189,699 — — 3,632,058 
 Other assets 1,163,519 119,183 57,289 42,641 1,382,632 
 $ 30,630,296 2,523,970 1,267,908 917,703 35,339,877 
 Liabilities: 
 Notes and other debts payable, net $ 4,057,496 1,487,913 16,683 — 5,562,092 
 Accounts payable and other liabilities 6,050,952 187,579 309,365 102,351 6,650,247 
 $ 10,108,448 1,675,492 326,048 102,351 12,212,339 

 9 

 Lennar Corporation and Subsidiaries 
 Notes to Condensed Consolidated Financial Statements (Unaudited) (Continued) 

 
 (In thousands) November 30, 2021 
 Assets: Homebuilding Financial
Services Multifamily Lennar 
Other Total 
 Cash and cash equivalents $ 2,735,213 167,021 16,850 2,660 2,921,744 
 Restricted cash 21,927 12,012 — — 33,939 
 Receivables, net (1) 490,278 708,165 98,405 — 1,296,848 
 Inventories 18,715,304 — 454,093 — 19,169,397 
 Loans held-for-sale (2) — 1,636,351 — — 1,636,351 
 
 Investments in equity securities (3) — — — 1,006,599 1,006,599 
 Investments available-for-sale (4) — — — 41,654 41,654 
 Loans held-for-investment, net — 44,582 — — 44,582 
 Investments held-to-maturity — 157,808 — — 157,808 
 Investments in unconsolidated entities 972,084 — 654,029 346,270 1,972,383 
 Goodwill 3,442,359 189,699 — — 3,632,058 
 Other assets 1,090,654 48,729 88,370 66,662 1,294,415 
 $ 27,467,819 2,964,367 1,311,747 1,463,845 33,207,778 
 Liabilities: 
 Notes and other debts payable, net $ 4,652,338 1,726,026 — — 6,378,364 
 Accounts payable and other liabilities 5,217,904 180,317 288,930 145,981 5,833,132 
 $ 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 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 $ 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 August 31, 2022 
 (In thousands) Homebuilding Financial Services Multifamily Lennar Other Corporate and
Unallocated Total 
 Revenue $ 8,479,496 202,078 243,056 9,801 — 8,934,431 
 Operating earnings (loss) (1) 1,963,224 63,348 48,487 ( 117,980 ) — 1,957,079 
 Corporate general and administrative expenses — — — — 115,557 115,557 
 Charitable foundation contribution — — — — 17,248 17,248 
 Earnings (loss) before income taxes 1,963,224 63,348 48,487 ( 117,980 ) ( 132,805 ) 1,824,274 
 
 Three Months Ended August 31, 2021 
 Revenues $ 6,558,509 206,973 167,921 8,000 — 6,941,403 
 Operating earnings (loss) 1,329,833 112,083 ( 9,393 ) 491,972 — 1,924,495 
 Corporate general and administrative expenses — — — — 94,942 94,942 
 Charitable foundation contribution — — — — 15,199 15,199 
 Earnings (loss) before income taxes 1,329,833 112,083 ( 9,393 ) 491,972 ( 110,141 ) 1,814,354 

 (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. 
 10 

 Lennar Corporation and Subsidiaries 
 Notes to Condensed Consolidated Financial Statements (Unaudited) (Continued) 

 
 Nine Months Ended August 31, 2022 
 (In thousands) Homebuilding Financial Services Multifamily Lennar Other Corporate and
Unallocated Total 
 Revenues $ 22,209,683 578,945 686,436 21,579 — 23,496,643 
 Operating earnings (loss) (1) 4,953,485 258,074 54,582 ( 629,538 ) — 4,636,603 
 Corporate general and administrative expenses 
 — — — — 334,425 334,425 
 Charitable foundation contribution — — — — 46,335 46,335 
 Earnings (loss) before income taxes 4,953,485 258,074 54,582 ( 629,538 ) ( 380,760 ) 4,255,843 
 
 Nine Months Ended August 31, 2021 
 Revenues 
 $ 17,529,606 669,789 476,837 20,884 — 18,697,116 
 Operating earnings 3,275,488 379,610 12,130 909,221 — 4,576,449 
 Corporate general and administrative expenses 
 — — — — 296,190 296,190 
 Charitable foundation contribution — — — — 42,006 42,006 
 Earnings (loss) before income taxes 3,275,488 379,610 12,130 909,221 ( 338,196 ) 4,238,253 

 (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 
 Information about homebuilding activities in states which are not economically similar to other states in the same geographic area is grouped under "Homebuilding Other," which is not considered a reportable segment. 
 Evaluation of segment performance is based primarily on operating earnings (loss) before income taxes. 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. 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: 
 East: Alabama, Florida, New Jersey, Pennsylvania and South Carolina 
 Central: Georgia, Illinois, Indiana, Maryland, Minnesota, North Carolina, Tennessee and Virginia 
 Texas: Texas 
 West: Arizona, California, Colorado, Idaho, Nevada, Oregon, Utah and Washington 
 Other: Urban divisions and other homebuilding related investments primarily in California, including FivePoint Holdings, LLC ("FivePoint") 
 The assets related to the Company’s homebuilding segments were as follows: 
 
 
 (In thousands) East Central Texas West Other Corporate and Unallocated Total Homebuilding 
 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 August 31, 2022 
 (In thousands) East Central Texas West Other Total Homebuilding 
 Revenues 
 $ 2,540,285 1,577,544 1,140,556 3,212,169 8,942 8,479,496 
 Operating earnings (loss) 642,482 272,351 278,814 788,443 ( 18,866 ) 1,963,224 
 
 Three Months Ended August 31, 2021 
 Revenues 
 $ 1,678,851 1,268,817 827,229 2,775,556 8,056 6,558,509 
 Operating earnings (loss) 356,895 197,229 186,008 608,815 ( 19,114 ) 1,329,833 

 11 

 Lennar Corporation and Subsidiaries 
 Notes to Condensed Consolidated Financial Statements (Unaudited) (Continued) 

 
 Nine Months Ended August 31, 2022 
 (In thousands) East Central Texas West Other Total Homebuilding 
 Revenues 
 $ 6,424,922 3,970,805 3,048,676 8,733,429 31,851 22,209,683 
 Operating earnings (loss) 1,548,296 631,224 722,983 2,077,740 ( 26,758 ) 4,953,485 
 
 Nine Months Ended August 31, 2021 
 Revenues $ 4,602,560 3,294,842 2,270,566 7,338,906 22,732 17,529,606 
 Operating earnings (loss) 928,805 488,300 491,708 1,423,332 ( 56,657 ) 3,275,488 

 
 Financial Services 
 Operations of the Financial Services segment include primarily mortgage financing, title and closing services primarily for buyers of the Company’s homes. It also includes originating and selling into securitizations commercial mortgage loans through its LMF Commercial business. Financial Services’ operating earnings consist of revenues generated primarily from mortgage financing, title and closing services, and property and casualty insurance, less the cost of such services and certain selling, general and administrative expenses incurred by the segment. The Financial Services segment operates generally in the same states as the Company’s homebuilding operations. 
 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: 
 October 2022 $ 200,000 
 December 2022 500,000 
 May 2023 200,000 
 August 2023 1,000,000 
 Total - Residential facilities 
 $ 1,900,000 
 LMF Commercial facilities maturing 
 November 2022 $ 100,000 
 December 2022 400,000 
 July 2023 50,000 
 
 Total - LMF Commercial facilities 
 $ 550,000 
 Total 
 $ 2,450,000 

 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. The facilities are non-recourse to the Company and are expected to be renewed or replaced with other facilities when they mature. The LMF Commercial facilities finance LMF Commercial loan originations and securitization activities and were secured by up to an 80 % interest in the originated commercial loans financed. 
 Borrowings and collateral under the facilities and their prior year predecessors were as follows: 
 
 (In thousands) August 31, 2022 November 30, 2021 
 Borrowings under the residential facilities $ 1,289,260 1,482,258 
 Collateral under the residential facilities 
 1,343,967 1,539,641 
 Borrowings under the LMF Commercial facilities 
 57,740 96,294 

 If the facilities are not renewed or replaced, the borrowings under the lines of credit will be repaid by selling the mortgage loans held-for-sale to investors and by collecting receivables on loans sold but not yet paid for. Without the facilities, the Financial Services segment would have to use cash from operations and other funding sources to finance its lending activities. 
 Substantially all of the residential loans the Financial Services segment originates are sold within a short period in the secondary mortgage market on a servicing released, non-recourse basis. After the loans are sold, the Company retains potential liability for possible claims by purchasers that it breached certain limited industry-standard representations and warranties in the loan sale agreements. Purchasers sometimes try to defray losses by purporting to have found inaccuracies related to sellers’ representations and warranties in particular loan sale agreements. Mortgage investors could seek to have the Company buy back mortgage loans or compensate them for losses incurred on mortgage loans that the Company has sold based on claims that the Company breached its limited representations or warranties. 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 
 12 

 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. 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 Nine Months Ended 
 August 31, August 31, 
 (Dollars in thousands) 2022 2021 2022 2021 
 Originations (1) $ 109,850 178,669 518,345 594,667 
 
 
 Sold 188,266 226,357 511,733 665,062 
 Securitizations 2 1 4 4 
 

 (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 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) August 31, 2022 November 30, 2021 
 Carrying value $ 151,015 157,808 
 Outstanding debt, net of debt issuance costs 140,912 147,474 
 Incurred interest rate 3.4 % 3.4 % 

 
 August 31, 2022 
 Discount rates at purchase 6 % — 84 % 
 Coupon rates 2.0 % — 5.3 % 
 Distribution dates October 2027 — December 2028 
 Stated maturity dates October 2050 — December 2051 

 
 Multifamily 
 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. markets. 
 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. 
 13 

 Lennar Corporation and Subsidiaries 
 Notes to Condensed Consolidated Financial Statements (Unaudited) (Continued) 

 Lennar Other 
 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, 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 Labs"), 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 Nine Months Ended 
 August 31, August 31, 
 (In thousands) 2022 2021 2022 2021 
 Blend Labs (BLND) mark-to-market $ ( 518 ) 6,852 ( 21,510 ) 6,852 
 Hippo (HIPO) mark-to-market ( 32,933 ) 324,855 ( 195,336 ) 324,855 
 Opendoor (OPEN) mark-to-market ( 54,391 ) 37,301 ( 218,751 ) 272,756 
 SmartRent (SMRT) mark-to-market ( 23,118 ) 100,793 ( 71,431 ) 100,793 
 Sonder (SOND) mark-to-market ( 168 ) — ( 2,300 ) — 
 Sunnova (NOVA) mark-to-market 25,289 23,870 ( 49,646 ) ( 14,465 ) 
 Lennar Other unrealized gains (losses) from technology investments $ ( 85,839 ) 493,671 ( 558,974 ) 690,791 

 
 Doma Holdings, Inc. ("Doma") went public during the year ended November 30, 2021. 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 August 31, 2022, the Company owned approximately 25 % of Doma and the carrying amount of the Company's investment was $ 17.1 million. 
 
 
 14 

 
 Lennar Corporation and Subsidiaries 
 Notes to Condensed Consolidated Financial Statements (Unaudited) (Continued) 

 (3) Investments in Unconsolidated Entities 
 Homebuilding Unconsolidated Entities 
 The investments in the Company's Homebuilding unconsolidated entities were as follows: 
 
 
 (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. 
 (2) Included in the Company's recorded investments in Homebuilding unconsolidated entities is the Company's 40 % ownership of FivePoint. 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. While the Company sometimes guarantees debt of unconsolidated entities, in most instances the Company’s partners have also guaranteed that debt and are required to contribute their shares of any payments. 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 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). 
 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 first quarter of 2022. The commitments are primarily from institutional investors, including $ 125 million committed by Lennar. 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 
 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 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 were as follows: 
 
 Three Months Ended Nine Months Ended 
 August 31, August 31, 
 (In thousands) 2022 2021 2022 2021 
 
 General contractor services, net of deferrals $ 123,550 138,038 366,419 402,328 
 General contractor costs 118,738 137,860 350,773 391,096 
 Management fee income 17,514 13,822 46,968 42,881 

 
 
 
 
 15 

 Lennar Corporation and Subsidiaries 
 Notes to Condensed Consolidated Financial Statements (Unaudited) (Continued) 

 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 %. 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 
 Lennar's carrying value of investments $ 217,163 299,111 
 Equity commitments 2,204,016 1,257,700 
 Equity commitments called 2,151,474 1,207,610 
 Lennar's equity commitments 504,016 381,000 
 Lennar's equity commitments called 499,724 364,801 
 Lennar's remaining commitments 4,292 16,199 
 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 and investment funds. 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 nine months ended August 31, 2022 and 2021: 
 
 Three Months Ended August 31, 2022 
 (In thousands) Total
Equity Class A
Common Stock Class B
Common Stock Additional
Paid - in Capital Treasury
Stock Accumulated Other Comprehensive Income Retained
Earnings Noncontrolling
Interests 
 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 
 Employee stock and directors plans 
 ( 13,106 ) — — 39 ( 13,145 ) — — — 
 
 
 
 
 
 
 Amortization of restricted stock 
 38,200 — — 38,200 — — — — 
 Cash dividends ( 108,749 ) — — — — — ( 108,749 ) — 
 
 Receipts related to noncontrolling interests 
 11,965 — — — — — — 11,965 
 Payments related to noncontrolling interests 
 ( 19,577 ) — — — — — — ( 19,577 ) 
 Non-cash purchase or activity of noncontrolling interests, net ( 44,005 ) — — ( 5,008 ) — — — ( 38,997 ) 
 
 
 
 Total other comprehensive income, net of tax 342 — — — — 342 — — 
 Balance at August 31, 2022 $ 23,127,538 25,582 3,660 5,388,413 ( 89,760 ) 2,090 17,647,293 150,260 

 
 
 16 

 Lennar Corporation and Subsidiaries 
 Notes to Condensed Consolidated Financial Statements (Unaudited) (Continued) 

 
 Three Months Ended August 31, 2021 
 (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
Interests 
 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 
 Employee stock and directors plans 
 ( 32,426 ) 1 — 55 ( 32,482 ) — — — 
 Purchases of treasury stock ( 246,385 ) — — — ( 246,385 ) — — — 
 
 
 
 
 Amortization of restricted stock 
 24,752 — — 24,752 — — — — 
 Cash dividends ( 77,662 ) — — — — — ( 77,662 ) — 
 
 Receipts related to noncontrolling interests 
 4,670 — — — — — — 4,670 
 Payments related to noncontrolling interests 
 ( 3,633 ) — — — — — — ( 3,633 ) 
 
 Non-cash purchase or activity of noncontrolling interests, net ( 1,224 ) — — ( 1,218 ) — — — ( 6 ) 
 
 
 Total other comprehensive income, net of tax 131 — — — — 131 — — 
 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
Equity Class A
Common Stock Class B
Common Stock Additional
Paid - in Capital Treasury
Stock Accumulated Other Comprehensive Income (Loss) Retained
Earnings Noncontrolling
Interests 
 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 
 Net earnings (including net earnings attributable to noncontrolling interests) 3,304,567 — — — — — 3,291,681 12,886 
 Employee stock and directors plans 
 ( 70,525 ) 199 — 893 ( 71,617 ) — — — 
 Retirement of treasury stock — ( 4,667 ) ( 284 ) ( 3,533,425 ) 3,538,376 — — — 
 Purchases of treasury stock ( 847,071 ) — — — ( 847,071 ) — — — 
 
 
 
 
 Amortization of restricted stock 
 154,710 — — 154,710 — — — — 
 Cash dividends ( 329,717 ) — — — — — — ( 329,717 ) — 
 
 Receipts related to noncontrolling interests 
 30,060 — — — — — — 30,060 
 Payments related to noncontrolling interests 
 ( 85,098 ) — — — — — — ( 85,098 ) 
 Non-cash purchase or activity of noncontrolling interests, net ( 29,101 ) — — ( 41,656 ) — — — 12,555 
 
 
 
 Total other comprehensive income, net of tax 3,431 — — — — 3,431 — — 
 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
Equity Class A
Common Stock Class B
Common Stock Additional
Paid - in Capital Treasury
Stock Accumulated Other Comprehensive Loss Retained
Earnings Noncontrolling
Interests 
 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) 3,262,899 — — — — — 3,239,620 23,279 
 Employee stock and directors plans 
 ( 63,242 ) 156 — 1,161 ( 64,559 ) — — — 
 Purchases of treasury stock ( 387,955 ) — — — ( 387,955 ) — — — 
 
 
 
 
 Amortization of restricted stock 
 105,846 — — 105,846 — — — — 
 Cash dividends ( 233,988 ) — — — — — — ( 233,988 ) — 
 
 Receipts related to noncontrolling interests 
 18,575 — — — — — — 18,575 
 Payments related to noncontrolling interests 
 ( 20,859 ) — — — — — — ( 20,859 ) 
 Non-cash purchase or activity of noncontrolling interests, net ( 643 ) — — ( 4,454 ) — — — 3,811 
 
 
 
 Total other comprehensive loss, net of tax ( 495 ) — — — — ( 495 ) — — 
 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 

 17 

 Lennar Corporation and Subsidiaries 
 Notes to Condensed Consolidated Financial Statements (Unaudited) (Continued) 

 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 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. 
 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. As a result of prior authorizations being almost exhausted, in March 2022, the Company's Board of Directors approved an additional authorization for the Company to repurchase up to the lesser of $ 2 billion in value, or 30 million in shares, of its outstanding Class A or Class B common stock. 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: 
 
 Three Months Ended Nine Months Ended 
 August 31, August 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 — — 2,500,000 — 8,246,000 1,122,000 4,010,000 — 
 Total purchase price $ — $ — $ 246,335 $ — $ 762,282 $ 84,601 $ 387,875 $ — 
 Average price per share $ — $ — $ 98.53 $ — $ 92.44 $ 75.40 $ 96.73 $ — 

 
 
 (5) Income Taxes 
 The provision for income taxes and effective tax rate were as follows: 
 Three Months Ended Nine Months Ended 
 August 31, August 31, 
 (Dollars in thousands) 2022 2021 2022 2021 
 Provision for income taxes $ 351,580 405,136 951,276 975,354 
 Effective tax rate (1) 19.3 % 22.4 % 22.4 % 23.1 % 

 (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 
 Basic earnings per share is computed by dividing net earnings attributable to common stockholders by the weighted average number of common shares outstanding for the period. Diluted earnings per share reflects the potential dilution that could occur if securities or other contracts to issue common stock were exercised or converted into common stock or resulted in the issuance of common stock that then shared in the earnings of the Company. 
 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 participation rights in undistributed earnings. The Company’s restricted common stock ("nonvested shares") is considered participating securities. 
 18 

 Lennar Corporation and Subsidiaries 
 Notes to Condensed Consolidated Financial Statements (Unaudited) (Continued) 

 Basic and diluted earnings per share were calculated as follows: 
 Three Months Ended Nine Months Ended 
 August 31, August 31, 
 (In thousands, except per share amounts) 2022 2021 2022 2021 
 Numerator: 
 Net earnings attributable to Lennar $ 1,467,344 1,406,888 3,291,681 3,239,620 
 Less: distributed earnings allocated to nonvested shares 655 776 3,830 2,182 
 Less: undistributed earnings allocated to nonvested shares 15,088 15,918 34,605 38,329 
 Numerator for basic earnings per share 1,451,601 1,390,194 3,253,246 3,199,109 
 Less: net amount attributable to Rialto's Carried Interest Incentive Plan (1) 1,038 785 3,881 2,907 
 
 
 
 Numerator for diluted earnings per share $ 1,450,563 1,389,409 3,249,365 3,196,202 
 Denominator: 
 Denominator for basic earnings per share - weighted average common shares outstanding 288,109 307,296 290,645 308,403 
 
 
 
 Denominator for diluted earnings per share - weighted average common shares outstanding 288,109 307,296 290,645 308,403 
 Basic earnings per share $ 5.04 4.52 11.19 10.37 
 Diluted earnings per share $ 5.03 4.52 11.18 10.36 

 (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 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) August 31, 2022 November 30, 2021 
 
 
 4.875 % senior notes due December 2023 
 $ 398,969 398,345 
 4.50 % senior notes due 2024 
 648,794 648,253 
 5.875 % senior notes due 2024 
 435,296 438,810 
 4.75 % senior notes due 2025 
 498,781 498,446 
 5.25 % senior notes due 2026 
 404,561 405,497 
 5.00 % senior notes due 2027 
 351,837 352,124 
 4.75 % senior notes due 2027 
 896,071 895,510 
 4.75 % senior notes due 2022 
 — 573,840 
 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 $ 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. 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. 
 19 

 Lennar Corporation and Subsidiaries 
 Notes to Condensed Consolidated Financial Statements (Unaudited) (Continued) 

 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 disclosed below: 
 
 (In thousands) August 31, 2022 November 30, 2021 
 Performance letters of credit $ 1,148,595 924,584 
 Financial letters of credit 547,210 425,843 
 Surety bonds 3,894,416 3,553,047 
 Anticipated future costs primarily for site improvements related to performance surety bonds 2,023,081 1,690,861 

 
 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 
 Warranty and similar reserves for homes are established at an amount estimated to be adequate to cover potential costs for materials and labor with regard to warranty-type claims expected to be incurred subsequent to the delivery of a home. Reserves are determined based on historical data and trends with respect to similar product types and geographical areas. The activity in the Company’s warranty reserve, which is included in Homebuilding other liabilities, was as follows: 
 Three Months Ended Nine Months Ended 
 August 31, August 31, 
 (In thousands) 2022 2021 2022 2021 
 Warranty reserve, beginning of the period $ 377,990 361,741 377,021 341,765 
 Warranties issued 73,697 55,236 190,704 149,854 
 Adjustments to pre-existing warranties from changes in estimates (1) 10,301 8,288 16,023 27,048 
 
 Payments ( 67,395 ) ( 50,290 ) ( 189,155 ) ( 143,692 ) 
 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 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 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. The use of different market assumptions and/or estimation methodologies might have a material effect on the estimated fair value amounts. 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. 
 August 31, 2022 November 30, 2021 
 (In thousands) Fair Value Hierarchy Carrying Amount Fair Value Carrying Amount Fair Value 
 ASSETS 
 Financial Services: 
 Loans held-for-investment, net Level 3 $ 38,939 38,950 44,582 44,594 
 Investments held-to-maturity Level 3 151,015 155,830 157,808 184,495 
 
 
 
 LIABILITIES 
 Homebuilding senior notes and other debts payable, net Level 2 $ 4,057,496 4,042,848 4,652,338 5,046,721 
 Financial Services notes and other debts payable, net Level 2 1,487,913 1,486,170 1,726,026 1,726,860 
 Multifamily notes payable, net Level 2 16,683 16,683 — — 
 

 
 The following methods and assumptions are used by the Company in estimating fair values: 
 Financial Services —The fair values above are based on quoted market prices, if available. The fair values for instruments that do not have quoted market prices are estimated by the Company on the basis of discounted cash flows or other financial information. 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. 
 20 

 Lennar Corporation and Subsidiaries 
 Notes to Condensed Consolidated Financial Statements (Unaudited) (Continued) 

 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. 
 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: 
 GAAP provides a framework for measuring fair value, expands disclosures about fair value measurements and establishes a fair value hierarchy which prioritizes the inputs used in measuring fair value summarized as follows: 
 Level 1: Fair value determined based on quoted prices in active markets for identical assets. 
 Level 2: Fair value determined using significant other observable inputs. 
 Level 3: Fair value determined using significant unobservable inputs. 
 The Company’s financial instruments measured at fair value on a recurring basis are summarized below: 
 Fair Value Hierarchy Fair Value at 
 (In thousands) August 31, 2022 November 30, 2021 
 Financial Services Assets: 
 Residential loans held-for-sale Level 2 $ 1,253,675 1,636,283 
 LMF Commercial loans held-for-sale Level 3 6,447 68 
 
 
 
 Mortgage servicing rights Level 3 3,356 2,492 
 Forward options Level 1 16,004 — 
 Lennar Other: 
 Investments in equity securities Level 1 $ 309,037 906,539 
 Investments available-for-sale Level 3 35,163 41,654 

 Residential and LMF Commercial loans held-for-sale in the table above include: 
 
 August 31, 2022 November 30, 2021 
 
 (In thousands) Aggregate Principal Balance Change in Fair Value Aggregate Principal Balance Change in Fair Value 
 
 
 
 
 
 Residential loans held-for-sale $ 1,245,511 8,164 1,586,764 49,519 
 LMF Commercial loans held-for-sale 
 6,200 247 — 68 

 Financial Services residential loans held-for-sale - Fair value is based on independent quoted market prices, where available, or the prices for other mortgage whole loans with similar characteristics. 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 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. 
 LMF Commercial loans held-for-sale - The fair value of loans held-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. The details and methods of the calculation are unchanged from the fair value disclosure in the Company's Notes to the Financial Statements section in its Form 10-K for the year ended November 30, 2021. These methods use unobservable inputs in estimating a discount rate that is used to assign a value to each loan. While the cash payments on the loans are contractual, the discount rate used and assumptions regarding the relative size of each class in the CMBS capital structure can significantly impact the valuation. Therefore, the estimates used could differ materially from the fair value determined when the loans are sold to a securitization trust. 
 Mortgage servicing rights - Financial Services records mortgage servicing rights when it sells loans on a servicing-retained basis or through the acquisition or assumption of the right to service a financial asset. The fair value of the mortgage servicing rights is calculated using third-party valuations. 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 August 31, 2022 As of November 30, 2021 
 
 Mortgage prepayment rate 8 % 13 % 
 Discount rate 13 % 13 % 
 Delinquency rate 7 % 4 % 

 
 21 

 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. 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 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 Nine Months Ended 
 August 31, August 31, 
 (In thousands) 2022 2021 2022 2021 
 Changes in fair value included in Financial Services revenues: 
 Loans held-for-sale $ ( 14,319 ) 4,196 ( 41,356 ) ( 26,156 ) 
 Mortgage loan commitments ( 7,958 ) 118 18,597 260 
 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: 
 Investments in equity securities $ ( 85,839 ) 493,671 ( 558,974 ) 690,791 
 Changes in fair value included in other comprehensive gain (loss), net of tax: 
 Lennar Other investments available-for-sale $ 342 131 1,146 ( 495 ) 
 

 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. 
 22 

 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: 
 
 Three Months Ended 
 August 31, 
 2022 2021 
 (In thousands) Mortgage servicing rights LMF Commercial loans held-for-sale Mortgage servicing rights LMF Commercial loans held-for-sale 
 Beginning balance $ 3,221 84,205 2,602 163,920 
 Purchases/loan originations 93 109,850 56 178,669 
 Sales/loan originations sold, including those not settled — ( 188,266 ) — ( 226,357 ) 
 Disposals/settlements ( 54 ) — ( 127 ) ( 4,092 ) 
 Changes in fair value (1) 96 693 ( 149 ) 1,391 
 Interest and principal paydowns — ( 35 ) — ( 402 ) 
 Ending balance $ 3,356 6,447 2,382 113,129 

 
 Nine Months Ended 
 August 31, 
 2022 2021 
 (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 275 518,345 499 599,465 
 Sales/loan originations sold, including those not settled — ( 511,733 ) — ( 665,062 ) 
 Disposals/settlements ( 320 ) — ( 1,222 ) ( 11,392 ) 
 Changes in fair value (1) 909 247 992 ( 2,551 ) 
 Interest and principal paydowns — ( 480 ) — ( 919 ) 
 Ending balance $ 3,356 6,447 2,382 113,129 

 (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 assets measured at fair value on a nonrecurring basis are summarized below: 
 
 Three Months Ended 
 August 31, 
 2022 2021 
 (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 $ 21,268 17,034 ( 4,234 ) 3,968 2,287 ( 1,681 ) 
 Land and land under development Level 3 100,043 93,095 ( 6,948 ) 1,625 862 ( 763 ) 
 Investments in unconsolidated entities Level 3 1,453 — ( 1,453 ) — — — 
 
 
 
 
 
 
 
 

 
 Nine Months Ended 
 August 31, 
 2022 2021 
 (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 $ 55,292 48,075 ( 7,217 ) 25,752 11,015 ( 14,737 ) 
 Land and land under development Level 3 129,580 111,003 ( 18,577 ) 2,145 862 ( 1,283 ) 
 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 
 23 

 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. Inventories are stated at cost unless the inventory within a community is determined to be impaired, in which case the impaired inventory is written down to fair value. 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. 
 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. The table below summarizes communities reviewed for indicators of impairment and communities with valuation adjustments recorded: 
 
 Communities with valuation adjustments 
 At or for the Nine Months Ended # of active communities # of communities with potential indicator of impairment # of communities Fair Value 
 (in thousands) 
 Valuation Adjustments 
 (in thousands) 
 
 
 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: 
 
 Nine Months Ended 
 August 31, 
 
 2022 2021 
 Unobservable inputs 
 Average selling price $ 750,000 $ 635,000 
 Absorption rate per quarter (homes) 2 11 
 Discount rate 20 % 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 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. The VIEs are not guarantors of the Company’s senior notes or other debts payable. The assets held by a VIE usually are collateral for that VIE’s debt. The Company and other partners do not generally have an obligation to make capital contributions to a VIE unless the Company and/or the other partner(s) have entered into debt guarantees with a VIE’s lenders. Other than debt guarantee agreements with a VIE’s lenders, there are no liquidity arrangements or agreements to fund capital or purchase assets that could require the Company to provide financial support to a VIE. 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. 
 24 

 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: 
 August 31, 2022 November 30, 2021 
 (In thousands) Investments in
Unconsolidated VIEs Lennar’s Maximum
Exposure to Loss Investments in
Unconsolidated VIEs Lennar’s Maximum
Exposure to Loss 
 Homebuilding (1) $ 552,942 734,483 107,323 301,619 
 Multifamily (2) 572,487 599,749 579,388 611,937 
 Financial Services (3) 151,015 151,015 157,808 157,808 
 Lennar Other (4) 56,328 56,328 12,680 12,680 
 $ 1,332,772 1,541,575 857,199 1,084,044 

 (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. While the Company generally manages the day-to-day operations of the VIEs, each of these VIEs has an executive committee made up of representatives from each partner. The members of the executive committee have equal votes and major decisions require unanimous consent and approval from all members. The Company does not have the unilateral ability to exercise participating voting rights without partner consent. 
 There are no liquidity arrangements or agreements to fund capital or purchase assets that could require the Company to provide financial support to the VIEs. Except for the unconsolidated VIEs discussed above, the Company and the other partners did not guarantee any debt of the other unconsolidated VIEs. While the Company has option contracts to purchase land from certain of its unconsolidated VIEs, the Company is not required to purchase the assets and could walk away from the contracts. 
 Option Contracts 
 The Company has access to land through option contracts, which generally enable it to control portions of properties owned by third parties (including land funds) and unconsolidated entities until the Company has determined whether to exercise the options. 
 The Company evaluates all option contracts for land to determine whether they are VIEs and, if so, whether the Company is the primary beneficiary of certain of these option contracts. 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 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. 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 condensed consolidated balance sheet as of August 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: 
 25 

 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 
 Letters of credit in lieu of cash deposits under certain land and option contracts 195,827 175,937 

 
 
 (11) Commitments and Contingent Liabilities 
 The Company is party to various claims, legal actions and complaints arising in the ordinary course of business. In the opinion of management, the disposition of these matters will not have a material adverse effect on the Company’s consolidated financial statements. From time to time, the Company is also a party to various lawsuits involving purchases and sales of real property. These lawsuits often include claims regarding representations and warranties made in connection with the transfer of properties and disputes regarding the obligation to purchase or sell properties. 
 The Company does not believe that the ultimate resolution of these claims or lawsuits will have a material adverse effect on its business or financial position. 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. 
 Leases 
 The Company has entered into agreements to lease certain office facilities and equipment under operating leases. The Company recognizes lease expense for these leases on a straight-line basis over the lease term. Right-of-use ("ROU") assets and lease liabilities are recorded on the balance sheet for all leases, except leases with an initial term of 12 months or less. Many of the Company's leases include options to renew. The exercise of lease renewal options is at the Company's option and therefore renewal option payments have not been included in the ROU assets or lease liabilities. The following table includes additional information about the Company's leases: 
 (Dollars in thousands) August 31, 2022 November 30, 2021 
 Right-of-use assets $ 151,975 155,616 
 Lease liabilities 160,607 163,513 
 Weighted-average remaining lease term (in years) 8.1 8.2 
 Weighted-average discount rate 3.0 % 2.8 % 

 
 Future minimum payments under the noncancellable leases in effect at August 31, 2022 were as follows: 
 
 (In thousands) Lease Payments 
 2022 $ 8,520 
 2023 32,581 
 2024 26,967 
 2025 22,752 
 2026 17,972 
 2027 and thereafter 72,359 
 Total future minimum lease payments (1) $ 181,151 
 Less: Interest (2) 20,544 
 Present value of lease liabilities (2) $ 160,607 

 (1) Total future minimum lease payments exclude variable lease costs of $ 26.4 million and short-term lease costs of $ 2.3 million. 
 (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 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: 
 
 Nine Months Ended 
 August 31, 
 (In thousands) 2022 2021 
 Rental expense $ 78,244 63,232 
 Payment on lease liabilities 23,170 22,174 

 On occasion, the Company may sublease rented space which is no longer used for the Company's operations. For both the nine months ended August 31, 2022 and 2021, the Company had an immaterial amount of sublease income. 
 26
Text extracted from the filing as submitted to EDGAR. Formatting, tables and exhibits are simplified for reading; the original document is authoritative for anything you rely on.
LENNAR CORP /NEW/ 10-Q

Item 1. Financial Statements
