What changed in this filing

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Item 1. Business

2023-01-26 compared with 2022-01-28 · 119 added, 96 removed, 214 unchanged (50% of the section changed)

Overview of Lennar Corporation

We are the largest homebuilder in the United States by net earnings, an originator of residential and commercial mortgage loans, a provider of title insurance and closing services and a developer of multifamily rental properties.

In addition, we are a sponsor and manager of funds engaged in development and ownership of multifamily rental properties and a sponsor and manager of a fund engaged in ownership of single family rental properties.

We are the second largest homebuilder in the United States by deliveries, revenues and net earnings, an originator of residential and commercial mortgage loans, a provider of title insurance and closing services and a developer of multifamily rental properties.

In addition, we are a sponsor and manager of funds and joint ventures engaged in development and ownership of multifamily rental properties and a sponsor and manager of a fund engaged in ownership of single family rental properties.

We also have investments in companies that are engaged in applying technology to improve the homebuilding industry and real estate related aspects of the financial services industry.

Our homebuilding operations are the most substantial part of our business, generating $32 billion in revenues, or approximately 95% of consolidated revenues, in fiscal 2022.

As of November 30, 2021, our reportable homebuilding segments and Homebuilding Other had divisions located in:

Florida, New Jersey, Pennsylvania and South Carolina

As of November 30, 2022, our reportable Homebuilding segments and all Other Homebuilding operations not required to be reported separately have divisions located in:

Alabama, Florida, New Jersey, Pennsylvania and South Carolina

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

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("CalAtlantic"), a major homebuilder which was building homes across the homebuilding spectrum, from entry level to luxury, in 43 metropolitan statistical areas spanning 19 states, and providing mortgage, title and escrow services.

In fiscal 2020, as the coronavirus ("COVID-19") pandemic caused the shutdown of large portions of our national economy, we accelerated the use of various technology initiatives that made our home sale process safer, including selling homes virtually or through self-guided tours and digital closings.

As a robust housing market took shape in the second half of 2020 and throughout 2021, technology initiatives helped us meet strong housing demand and reduce our marketing and other selling costs.

We are focused on increasing efficiencies in our building process and reducing selling, general and administrative expenses by using technology, deferring home sale price commitments until construction costs are finalized to protect against cost escalations and using innovative strategies to reduce customer acquisition costs.

We also continue to focus on divesting non-core assets through a planned spin-off to our stockholders of our Multifamily and single-family home rental platforms and some investment assets.

This will continue our migration toward being more of a pure homebuilding and financial services company.

In addition, we are continuing our pivot to a land light operating model by increasing the percentage of land controlled through options or agreements versus owned land and controlling the timing of land purchases, which reduce our years supply of owned homesites.

We are focused on increasing efficiencies in our building process and reducing selling, general and administrative expenses by using technology and innovative strategies to reduce customer acquisition costs.

Our construction playbook has three primary areas of focus:

lowering construction costs, reducing cycle time and achieving even flow production.

We have aimed to maintain strong operating margins by deferring home sale price commitments until construction costs are finalized to protect against cost escalations.

In addition, we are continuing our transition to a land light operating model by increasing the percentage of land we control through options or agreements but do not own, which reduces our years’ supply of owned homesites.

Subject to market conditions, we intend to spin off our Multifamily and single family home for rent asset management businesses, together with some investment assets, by transferring them to a newly formed subsidiary, Quarterra Group, Inc.

("Quarterra"), and distributing the stock of that subsidiary to our stockholders.

That will make us more of a pure homebuilding and financial services company.

Homebuilding Operations

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Key elements of our strategy include:

• Strong Operating Margins - We believe our purchasing leverage combined with our focus on reducing selling, general and administrative costs by using technology and innovative strategies and reducing interest expense through paydowns of debt position us for strong operating margins.

• Strong Operating Margins - Our purchasing leverage combined with our focus on reducing selling, general and administrative costs by using technology and innovative strategies and reducing interest expense through paydowns of debt has enabled us to achieve historically high gross profit and operating margins.

• Everything’s Included ® Approach - We are focused on distinguishing our products, including through our Everything’s Included ® approach, which maximizes our purchasing power, enables us to include luxury features as standard items in our homes and simplifies our homebuilding operations.

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• Digital Marketing - We are increasingly advertising homes through digital channels, which is significantly increasing the cost effectiveness of our marketing efforts.

• Technology Focused - We partner with and/or invest in technology companies that are looking to improve the homebuilding and financial services industries to increase efficiencies and create a better customer experience.

• Land light strategy - We are focused on reducing our years supply of owned homesites and increasing the percentage of land we control through options or agreements, including agreements with strategic land funds, versus owned land.

• Land light strategy - We are focused on reducing our years' supply of owned homesites and increasing the percentage of land we control through options or agreements, including agreements with strategic land funds and joint ventures, rather than ownership.

Diversified Program of Property Acquisition

We generally acquire land for development and for the construction of homes that we sell to homebuyers.

We generally acquire, or obtain options to acquire, land for development and for the construction of homes that we sell to homebuyers.

Land purchases are subject to specified underwriting criteria and are made through our diversified program of property acquisition, which may consist of:

• Acquiring land through option contracts, which generally enables us to control portions of properties owned by third parties (including strategic land funds) or entities in which we have investments until we have determined whether to exercise the options;

• Acquiring land directly from individual land owners/developers, or other homebuilders;

• Acquiring local or regional homebuilders that own, or have options to purchase, land in strategic markets;

• Acquiring access to land through joint ventures or partnerships, which among other benefits, limits the amount of our capital invested in land while helping to ensure our access to potential future homesites and allowing us to participate in strategic ventures;

• Investing in regional developers in exchange for preferential land purchase opportunities;

• Acquiring land in conjunction with Multifamily.

We are in the process of further reducing our reliance on land we own and increasing our access to land through options and joint ventures.

• Acquiring land in conjunction with our Multifamily business.

For the last several years, we have been reducing our reliance on land we own and increasing our access to land through options and joint ventures.

At November 30, 2022, 63% of our total homesites were controlled through options and joint ventures compared to 59% at November 30, 2021.

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We use independent subcontractors for most aspects of home construction.

At November 30, 2021, we were actively building and marketing homes in 1,263 communities, including four communities being constructed by unconsolidated entities.

This was an increase from the 1,177 communities, including four communities being constructed by unconsolidated entities, in which we were actively building and marketing homes at November 30, 2020.

Even though our community count increased in 2021, the number of homes we built was limited by shortages of both construction materials and skilled labor.

At November 30, 2022, we were actively building and marketing homes in 1,208 c ommunities, including eight communities being constructed by unconsolidated entities.

This was a decrease from the 1,263 communities, including four communities being constructed by unconsolidated entities, in which we were actively building and marketing homes at November 30, 2021.

The number of homes we built in 2022 was limited by shortages of both construction materials and skilled labor.

Also, weaknesses in some markets in the second half of 2022 led us to decrease starts to match sales pace so that we would not have a build up of inventory.

We ended the year with about 900 completed unsold homes.

We generally supervise and control the development of land and the design and building of our residential communities with a relatively small labor force.

We hire subcontractors for site improvements and virtually all of the work involved in the construction of homes.

Arrangements with our subcontractors generally provide that our subcontractors will complete specified work in accordance with price and time schedules and in compliance with applicable building codes and

The price schedules may be subject to change to meet changes in labor and material costs or for other reasons.

Although we, like homebuilders throughout the country, have encountered shortages of materials and skilled labor during 2021, we believe that because of our size and our builder of choice program, where we work with our trade partners to drive efficiencies, we believe we have been less affected by these shortages than many of our competitors.

Although we, like homebuilders throughout the country, have encountered shortages of materials and skilled labor during 2022, we believe that because of our size and our builder of choice program, where we work with our trade partners to drive efficiencies for them, we have been less affected by these shortages than many of our competitors.

We generally do not own heavy construction equipment.

We finance construction and land development activities primarily with cash generated from operations and historically from proceeds of corporate debt.

We finance construction and land development activities primarily with cash generated from operations and historically from proceeds of unsecured corporate debt.

We offer a diversified line of homes for first-time, move-up, active adult, luxury and multi-generational homebuyers in a variety of locations ranging from urban infill communities to suburban golf course communities.

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This has allowed us to attract more qualified and knowledgeable homebuyers and has helped us reduce our selling, general and administrative expenses as a percentage of home sales revenues.

However, we also continue to advertise through more traditional media on a limited basis, including newspapers, radio advertisements and other local and regional publications and on billboards where appropriate.

However, we also continue to advertise through more traditional media on a limited basis, including newspapers, other local and regional publications, radio and on billboards where appropriate.

We tailor our marketing strategy and message based on the community being advertised and the customers being targeted, such as advertising our active adult communities in areas where prospective active adult homebuyers live or will potentially want to purchase.

During the second half of fiscal 2022, significant increases in interest rates made our homes less affordable to many prospective buyers and led us to reduce prices or increase sales incentives in a number of our communities.

Quality Service

We continually strive to improve homeowner customer satisfaction throughout the pre-sale, sale, construction, closing and post-closing periods.

We strive to create a quality home buying experience for our customers through the participation of sales associates, on-site construction supervisors and customer care associates, all working in a team effort, as well as use of technology to simplify the homebuying and financing process.

We strive to create a quality homebuying experience for our customers through the participation of sales associates, on-site construction supervisors and customer care associates, all working in a team effort, as well as use of technology to simplify the homebuying and financing process.

We believe this leads to enhanced customer retention and referrals.

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In some instances, purchasers are permitted to cancel sales contracts if they fail to qualify for financing or under certain other circumstances.

We experienced a cancellation rate of 10% in 2021 and 15% in 2020.

We experienced a cancellation rate of 17% in 2022 and 10% in 2021, but in the third and fourth quarters of fiscal 2022, our cancellation rate increased to 21% and 26% respectively.

We do not recognize revenue on homes that are the subject of sales contracts until the sales are closed and title passes to the new homeowners.

The backlog dollar value including unconsolidated entities at November 30, 2022 was $8.7 billion, compared to $11.4 billion at November 30, 2021.

We expect that a substantial portion of all homes currently in backlog will be delivered in fiscal year 2022.

During fiscal year 2021, because of the concern about increasing labor and material costs, we, in many instances, deferred entering into contracts to sell homes and committing to the sales price until the costs of the homes were determined, which usually was shortly before construction began.

We expect that a significant portion of all homes currently in backlog will be delivered in fiscal year 2023.

During fiscal years 2022 and 2021, because of the concern about increasing labor and material costs and shortages, we, in many instances, deferred entering into contracts to sell homes and committing to the sales price until the costs of the homes were determined, which usually was shortly before construction began.

This had the effect of reducing the number of homes subject to sales contracts at any particular time.

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This is discussed in greater detail in Management’s Discussion and Analysis of Financial Condition and Results of Operations in Item 7 of this Report.

Single Family Rental Operations

In the first quarter of 2021, the Company formed the Upward America Venture (“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 the people who will live in them.

Upward America has raised equity commitments totaling $1.25 billion primarily from institutional investors, including $125 million committed by Lennar.

By leveraging these equity investments, Upward America will be positioned to acquire over $4.0 billion of new single-family homes and townhomes from Lennar and potentially other homebuilders.

During the year ended November 30, 2021, Lennar delivered 1,457 homes to Upward America.

Subsequent to November 30, 2021, the equity commitments were increased to $1.6 billion.

FivePoint Holdings LLC

We own an indirect approximately 40% interest in FivePoint Holdings LLC, which is a publicly traded developer of three large master planned mixed-use developments in California (Newhall Ranch, Great Park Neighborhoods, and San Francisco Shipyard/Candlestick Point).

We sometimes purchase properties from FivePoint for use in our homebuilding operations.

Until recently, we had no role in the management of FivePoint, except that our Executive Chairman was a member of its Board.

However, in August 2021, our Executive Chairman became the non-employee Executive Chairman of the Board of Directors (but not the chief executive officer) of FivePoint.

As of November 30, 2021, the carrying amount of our investment in FivePoint was $381.6 million.

Financial Services Operations

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We do not believe that the ultimate resolution of these claims will have a material adverse effect on our business or financial position.

We finance our mortgage loan activities with borrowings under our financial services warehouse facilities or from our operating funds.

At November 30, 2021, Financial Services had four warehouse residential facilities maturing at various dates through fiscal 2022 with a total maximum borrowing capacity of $2.3 billion including an uncommitted amount of $1.1 billion.

During fiscal year 2022, we also locked interest rates on approximately 41,100 residential mortgage loans totaling $15.7 billion, compared to 37,900 residential mortgage loans totaling $13.3 billion during fiscal year 2021.

We finance our mortgage loan activities with borrowings under our financial services warehouse facilities or funds from our operating activities.

At November 30, 2022, Financial Services had four warehouse residential facilities maturing at

various dates through fiscal 2023 with a total maximum borrowing capacity of $2.3 billion including an uncommitted amount of $600 million.

We expect the facilities to be renewed or replaced with other facilities when they mature.

If they are not renewed or replaced, we would have to find other sources of funding our mortgage originations, which might include our own funds.

If they are not renewed or replaced, we would have to find other sources of funding for our mortgage originations, which might include our own funds.

We have a corporate risk management policy under which we hedge our interest rate risk on rate-locked loan commitments and loans held-for-sale to mitigate exposure to interest rate fluctuations.

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This new technology has made the mortgage financing process easier for homebuyers and improved the customer experience.

This new technology has also enabled us to increase the number of digital closings, with digital document signing and where possible digital notarization.

This new technology has also enabled us to increase the number of digital closings, with digital document signing and, where legally permitted, digital notarization.

Title, Insurance and Closing Services

We are licensed to provide title insurance, and closing services for residential and/or commercial transactions in 40 states to our homebuyers and others.

During 2021 and 2020, we closed approximately 67,500 and 61,100 real estate transactions, respectively, in 18 states.

During fiscal 2022 and 2021, we closed approximately 68,800 and 67,500 real estate transactions, respectively, in 20 states.

Commercial Mortgage Origination

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LMF Commercial also originates floating rate loans secured by commercial real estate properties, many of which are in transition, undergoing lease-up, sell-out, renovation or repositioning.

In order to finance LMF Commercial lending activities, as of November 30, 2021, LMF Commercial had four warehouse repurchase financing agreements maturing between December 2021 and July 2023 with commitments totaling $550 million.

Multifamily Operations

We have been actively involved, primarily through unconsolidated entities, in the development, construction and property management of multifamily rental properties.

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

Our Multifamily segment is one of the largest developers of apartment communities across the country.

At November 30, 2021, it had interests in 66 communities with development costs of approximately $7.9 billion, of which 43 communities were completed and operating, six communities were partially completed and leasing and 17 communities were under construction.

As of November 30, 2021, our Multifamily segment also had a pipeline of potential future projects, which were under contract or had letters of intent, totaling approximately $8.5 billion in anticipated development costs across a number of states that will be developed primarily by unconsolidated entities.

Our Multifamily segment had equity investments in 17 and 22 unconsolidated entities (including the Multifamily Ventures, described below) as of November 30, 2021 and 2020, respectively.

Originally, our Multifamily segment focused on building multifamily properties and selling them shortly after they were completed.

However, more recently we have focused on creating, participating in and managing ventures that build multifamily properties with the intention of retaining them after they are completed.

Our current ventures, Lennar Multifamily Venture Fund I LP ("LMV I") and Lennar Multifamily Venture Fund II LP ("LMV II"), are both long-term multifamily development investment vehicles involved in the development, construction and property management of class-A multifamily rental properties.

For additional information about our investments in and relationships with unconsolidated entities, see Management’s Discussion and Analysis of Financial Condition and Results of Operations in Item 7 of this Report.

In order to finance LMF Commercial lending activities, as of November 30, 2022, LMF Commercial had four warehouse repurchase financing agreements maturing at various dates through fiscal 2023 with commitments totaling $550 million.

This is discussed in greater detail in Management’s Discussion and Analysis of Financial Condition and Results of Operations in Item 7 of this Report.

Strategic Technology Investments

We strategically invest in companies involved in technology initiatives that, among other things, help us enhance the homebuying or home ownership experience, reduce our SG&A expenses and help us stay at the forefront of homebuilding innovation.

Six of the companies in which we have strategic investments are publicly traded.

Seven of the companies in which we have strategic investments are publicly traded.

• Blend, a company that is a digital lending platform developer simplifying and fast tracking the consumer finance process;

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• Opendoor, a company that uses technology to significantly streamline the homebuying and selling process;

• Sonder, a company that manages short-term rentals, such as rental hotels;

• SmartRent, an enterprise smart home automation company;

• Sunnova, a leading national residential solar company, to which during 2021 we sold our solar business in return for equity.

Each of the investments listed above, except Doma, is reflected in our financial statements at fair value, with changes to the fair values of those investments generating gains or losses on our quarterly financial statements.

• Sunnova, a leading national residential solar company, to which during 2021, we sold our solar power business in return for equity.

Each of the investments listed above, except Doma, is reflected in our financial statements at market value, with changes to the fair values of those investments generating gains or losses on our quarterly financial statements.

Doma is accounted for using the equity method.

At November 30, 2021, the book value (including those recorded at fair value) of our investment in strategic technology investments was $1.2 billion and is included in our Lennar Other segment,

At November 30, 2022, the book value (including those recorded at fair value) of our investment in strategic technology investments was $522.5 million and is included in our Lennar Other segment.

For additional information about our investments in strategic technology investments, see Management's Discussion and Analysis of Financial Condition and Results of Operations in Item 7 of this Report.

Multifamily Operations

Our Multifamily business has been engaged in the development of multifamily communities since 2011.

Initially, the Multifamily business almost exclusively participated in shorter-duration joint ventures that built multifamily communities with the intention of selling them soon after they were built, and in most cases after they were substantially occupied.

However, the Multifamily business now manages, and owns interests in, longer-duration funds that build multifamily communities with the intention of retaining them as rental income-generating assets.

At November 30, 2022, Multifamily had interests in, and was managing, four funds and 19 joint ventures.

From inception through November 30, 2022, the Multifamily business has capitalized and developed 116 multifamily residential communities with approximately 34,900 rental units across 20 states throughout the United States.

The communities

developed by the Multifamily business include a diversified mix of conventional garden, mid-rise and high-rise multifamily properties in urban and suburban locations near major employment centers.

Most communities offer residents a mix of studio, one, two, and three-bedroom homes.

As of November 30, 2022, funds and ventures managed by Multifamily had a pipeline of 64 potential future developments, which were owned, under contract or subject to letters of intent, totaling approximately $9.1 billion in anticipated development costs across several states.

Multifamily has co-investments in all the funds and ventures it manages, and receives returns on these investments.

In addition, it has carried interests in the funds or ventures it manages, and receives distributions with regard to those carried interests.

Multifamily is expected to be one of the businesses included in our proposed spin-off.

Single Family Home Rentals

In December 2020, Lennar formed the Upward America Venture, LLC (“Upward America”), which (a) acquires communities of single family rental properties (including townhomes, duplexes and condominium buildings developed or acquired for rental purposes), and (b) leases and manages homes in those communities.

Lennar subsidiaries are the manager and the general partner of Upward America.

As of November 30, 2022, institutional investors had committed $1.6 billion to Upward America, part of which was used to reduce an initial commitment Lennar had made from $225 million to $125 million.

Proceeds of commitments by other investors may be used to redeem more of Lennar’s ownership, but Lennar has agreed not to reduce its ownership below $50 million.

As owner of the general partner of Upward America, Lennar has the right to receive, in addition to distributions regarding its own commitments, distributions based on the amounts by which returns to limited partners exceed specified amounts (i.e., carried interests).

As the manager of Upward America, we receive management and acquisition fees.

Lennar subsidiaries may also receive fees for property management, leasing, construction management and other services that they render through subcontractors.

At November 30, 2022, Upward America had purchased 4,129 homes in 103 communities across 19 metropolitan statistical areas for a total purchase price of $1.1 billion (an average price of $259,000 per home), of which 2,352 of the homes owned by Upward America had been leased to occupants.

The Limited Partnership Agreement of Upward America gives Upward America the right to purchase from Lennar for their appraised value all homes or communities that are purpose built for single family home rental.

Upward America also is free to purchase homes from homebuilders other than Lennar or to purchase previously occupied homes.

Initially all the homes purchased by Upward America were purchased from Lennar, but subsequently, Upward America began purchasing homes from multiple homebuilders.

At November 30, 2022, approximately 6% of the homes owned by Upward America were built by homebuilders other than Lennar.

The single family rental business is expected to be one of the businesses included in our proposed spin-off.

Five Point Holdings, LLC

We own an indirect approximately 40% interest in Five Point Holdings, LLC, which is a publicly traded developer of three large master planned mixed-use developments in California (Newhall Ranch, Great Park Neighborhoods, and San Francisco Shipyard/Candlestick Point).

We sometimes purchase properties from FivePoint for use in our homebuilding operations.

We have no active role in the management of FivePoint, except that since August 2021 our Executive Chairman has been the non-employee Executive Chairman of the Board of Directors (but not the chief executive officer) of FivePoint.

As of November 30, 2022, the carrying amount of our investment in FivePoint was $382.9 million.

Rialto Fund Investments

Until November 30, 2018, we had a group of subsidiaries, including Rialto Capital Management, LLC, that primarily managed real estate related investment funds and other real estate related investment vehicles.

Until November 30, 2018, we had a group of subsidiaries, including Rialto Capital Management, LLC ("Rialto"), that primarily managed real estate related investment funds and other real estate related investment vehicles.

We sold the Rialto Management Group on November 30, 2018.

However, we retained the right to receive carried interest distributions from some of the funds and other investment vehicles Rialto manages.

We also retained limited partner investments in Rialto funds and investment vehicles that totaled $200.6 million as of November 30, 2021, and we are committed to invest as much as an additional $1.2 million in Rialto funds.

However, we retained the right to share in carried interest distributions from some of the funds and other investment vehicles Rialto manages.

We also retained limited partner investments in several Rialto funds and investment vehicles that totaled $185.1 million as of November 30, 2022.

We historically have experienced, and expect to continue to experience, variability in quarterly results.

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However, a variety of factors can alter seasonal patterns.

For example, in 2020, the shutdown of large portions of our national economy in March and April due to the COVID-19 pandemic temporarily reduced our home sales, and therefore altered our normal seasonal pattern.

For example, in 2020, the shutdown of large portions of our national economy in March and April due to the COVID-19 pandemic temporarily reduced our home sales in those months, and therefore altered our normal seasonal pattern.

The residential homebuilding industry is highly competitive.

In each of the market regions where we operate, we compete for homebuyers with numerous national, regional and local homebuilders, as well as with resales of existing homes and with the rental housing market.

We compete for homebuyers on the basis of a number of interrelated factors including location, price, reputation, amenities, design, quality and financing.

We compete for homebuyers on the basis of a number of interrelated factors including location, price, reputation for customer satisfaction, amenities, design, quality and financing.

In addition to competition for homebuyers, we also compete with other homebuilders for desirable properties, raw materials and access to reliable, skilled labor.

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We believe we are competitive in the market regions where we operate primarily due to our:

• Everything’s Included ® marketing program, which simplifies the home buying experience by including the most desirable features as standard items;

• Everything’s Included ® marketing program, which simplifies the homebuying experience by including the most desirable features as standard items;

• Innovative home designs, such as our Next Gen ® homes that provide both privacy and togetherness for multi-generational families or a home office to accommodate working from home;

• Inclusion of built-in Wi-Fi, solar power systems and advanced technology in many of our homes;

• Our consumer insight capabilities allows us to continually stay tapped into consumer preferences and feedback so we can continuously evolve and fine-tune our offerings, processes and communications for our Customers;

• Financial position as a result of our ability to finance land purchases and development activities with operating revenues and corporate level borrowing;

• Consumer insight capabilities, which allow us to continually stay tapped into consumer preferences and feedback so we can continuously evolve and fine-tune our offerings, processes and communications for our customers;

• Financial position as a result of our ability to finance land purchases and development activities with operating revenues and corporate level unsecured borrowing;

• Access to land, particularly in land-constrained markets;

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• Size and scale in leading markets;

• Strategic investments in technology initiatives through our LEN X business that help us enhance the homebuying and home ownership experience, and helps us stay at the forefront of homebuilding innovation.

• Strategic investments in technology initiatives through our LEN X investments in companies that help us enhance the homebuying and home ownership experience, and help us stay at the forefront of homebuilding innovation.

Our residential financial services operations compete with other residential mortgage lenders, including national, regional and local mortgage bankers and brokers, banks, savings and loan associations, non-bank mortgage lenders and other financial institutions, in the origination and sale of residential mortgage loans.

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Our LMF Commercial subsidiary's commercial mortgage origination and sale business competes with a wide variety of banks and other lenders that offer small and mid-sized mortgage loans to commercial enterprises.

Competition is based

primarily on service, price and relationships with mortgage brokers and other referral sources.

LMF Commercial is run by highly seasoned managers who have been originating and securitizing loans for over 29 years and can benefit from long-standing relationships with referral sources, as well as being able to leverage Lennar's infrastructure facilities for rapid market entrances and analysis.

Competition is based primarily on service, price and relationships with mortgage brokers and other referral sources.

LMF Commercial is run by highly seasoned managers who have been originating and securitizing loans for over 30 years and benefit from long-standing relationships with referral sources, as well as being able to leverage Lennar's infrastructure facilities for rapid market entrances and analysis.

We believe these factors give LMF Commercial an advantage over many of the lenders with which it competes.

Additionally, we believe access to Lennar's local homebuilding teams provides LMF Commercial with a distinct advantage in its evaluation of real estate assets.

Our multifamily operations and the funds they manage compete with other multifamily apartment developers and operators, including REITs, across the United States.

In addition, our multifamily operations compete with a variety of investment vehicles in securing capital, partners and equity, and compete in securing tenants with the large supply of already existing rental apartments, as well as with sellers of homes.

Principal competitive factors include location, rental price and quality, and management of the apartment buildings.

Our single family home rental fund competes with other single family home rental developers and operators, including REITs, across the United States.

In addition, our single family home rental operations compete with a variety of investment vehicles in securing capital, partners and equity, and compete in securing tenants with the large supply of already existing single family rental homes as well as with sellers of homes.

Principal competitive factors include location, rental price and quality, and management of the homes.

In each region where we develop and operate multifamily properties, there is competition for residents with other owners of residential real estate (whether for-rent or for-sale).

In addition, when capital raising, we compete with a wide variety of other investment opportunities that are being marketed by other firms, related both to real estate and to a variety of other investment products.

We also compete for developable land with other developers of real estate for a variety of uses.

In each region where our funds offer single family homes for rent, there will be competition for residents with other owners of residential real estate (whether for-rent or for-sale).

In addition, in seeking investors to acquire interests in funds we form, we will be competing with a wide variety of investment opportunities, related both to real estate and to a variety of other investment products.

Also, in seeking to acquire single family homes that our funds can hold as rental properties, our funds will be competing with other persons who plan to hold them as rental properties as well as persons who might want to purchase those homes to live in them.

The residential communities and multifamily apartment developments that we build are subject to a large variety of local, state and federal statutes, ordinances, rules and regulations relating to, among other things, zoning, construction permits or entitlements, construction materials, density, building design and property elevation, building codes and handling of waste.

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These laws and regulations are subject to frequent change and often increase construction costs.

For example, the California Energy Commission recently adopted a requirement that most newly built homes in California must have rooftop solar panels.

For example, the California Energy Commission has adopted a requirement that most newly built homes in California must have rooftop solar panels.

In some instances, we must comply with laws that require commitments from us to provide roads and other offsite infrastructure, and may require them to be in place prior to the commencement of new home construction.

These laws and regulations are usually administered by counties and municipalities and may result in fees and assessments or building moratoriums.

In addition, certain new development projects are subject to assessments for schools, parks, streets and highways and other public improvements, the costs of which can be substantial.

In addition, many new development projects are subject to assessments for schools, parks, streets and highways and other public improvements, the costs of which can be substantial.

Also, some states are attempting to make homebuilders responsible for violations of wage and other labor laws by their subcontractors.

The COVID-19 pandemic has slowed down the approval process in many government offices, which has in many instances delayed our being able to begin constructing homes in particular communities.

In 2020 and 2021, the COVID-19 pandemic slowed down the approval process in many government offices, which in many instances delayed our being able to begin constructing homes in particular communities.

Residential homebuilding and apartment development are also subject to a variety of local, state and federal statutes, ordinances, rules and regulations concerning the protection of health and the environment.

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In 2021, we sold our SunStreet solar operations to Sunnova Energy International, a leading national residential solar company, in exchange for stock in the company.

We believe Sunnova will be better able than us at maximizing the potential of the SunStreet solar operations.

We believe Sunnova will be better able than us at maximizing

the potential of the SunStreet solar operations.

We are also partnering with Sunnova for it to be our exclusive solar and battery storage provider, and we are working with Sunnova on the development of community solar microgrids.

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We are also committed to worker safety and regulatory compliance.

Our worker safety metrics are measured and reviewed by our Board of Directors so we can ensure that we are successfully managing and improving our safety program.

Our Board of Directors and its Audit Committee reviews the results of OSHA visits and other safety related information.

Although we subcontract the land development and construction aspects of our homebuilding activities, we are highly dependent on our skilled employees for critical aspects of what we do.

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However, we subcontract many phases of our homebuilding operations and some of the subcontractors we use have employees who are represented by labor unions.

We have policies that prohibit us from discriminating in employment opportunities on the basis of race or gender, and we take active steps to afford employment opportunities to under-represented ethnic groups.

We have policies that prohibit us from discriminating in employment opportunities on the basis of race or gender, and we take active steps to offer employment opportunities to under-represented ethnic groups.

NYSE Certification

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The most important factors that could cause actual results to differ materially from those anticipated by our forward-looking statements include, but are not limited to:

the potential negative impact to our business of the ongoing coronavirus (“COVID-19”) pandemic, the duration, impact and severity of which is highly uncertain;

continuation of supply shortages and increased costs related to construction materials and labor;

slowdowns in real estate markets in regions where we have significant Homebuilding or Multifamily development activities;

decreased demand for our homes, either for sale or for rent, or Multifamily rental apartments;

the potential impact of inflation;

the impact of increased cost of mortgage financing for homebuyers, increased

interest rates or increased competition in the mortgage industry;

supply shortages and increased costs related to construction materials and labor;

cost increases related to real estate taxes and insurance;

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

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

an extended slowdown in the real estate markets across the nation, including a slowdown in either the market for single family homes or the multifamily rental market;

our inability to successfully execute our strategies, including our land lighter strategy and our strategy to monetize non-core assets;

the effect of increased interest rates with regard to our funds' borrowings on the willingness of the funds to invest in new projects;

reductions in the market value of the Company's investments in public companies;

natural disasters or catastrophic events for which our insurance may not provide adequate coverage;

our inability to successfully execute our strategies, including our land lighter strategy and our planned spin-off of certain businesses;

a decline in the value of the land and home inventories we maintain and resulting possible future writedowns of the carrying value of our real estate assets;

the forfeiture of deposits related to land purchase options we decide not to exercise;

the potential negative impact to our business of the coronavirus (COVID-19) pandemic;

possible unfavorable losses in legal proceedings;

changes in general economic and financial conditions that reduce demand for our products and services, lower our profit margins or reduce our access to credit;

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the possibility that we will incur nonrecurring costs that affect earnings in one or more reporting periods;

decreased demand for our homes or Multifamily rental properties;

the possibility that the benefit from our increasing use of technology will not justify its cost;

increased competition for home sales from other sellers of new and resale homes;

our inability to pay down debt;

becoming unable to pay down debt;

government actions or other factors that might force us to terminate our program of repurchasing our stock;

a decline in the value of our land inventories and resulting write-downs of the carrying value of our real estate assets;

the failure of the participants in various joint ventures to honor their commitments;

difficulty obtaining land-use entitlements or construction financing;

natural disasters and other unforeseen events for which our insurance does not provide adequate coverage;

new laws or regulatory changes that adversely affect the profitability of our businesses;

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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-K

Item 1. Business