What changed in this filing

/stocks — the workspaceLOADING

Item 8. Financial Statements and Supplementary Data

2023-01-26 compared with 2022-01-28 · 280 added, 271 removed, 1161 unchanged (32% of the section changed)

12 unchanged sentences

We conducted our audits in accordance with the standards of the PCAOB.

Those standards require that we plan and perform the audits to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud.

Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud.

Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks.

11 unchanged sentences

As of November 30, 2022, the carrying value of the Company’s consolidated VIE’s assets and non-recourse liabilities was $880.2 million and $107.3 million, respectively.

Additionally, as of November 30, 2021, the carrying value of the Company’s investments in VIEs that are unconsolidated was $686.7 million.

We identified the consolidation and primary beneficiary assessment upon formation and the occurrence of reconsideration events of certain of the Company’s VIEs as a critical audit matter given the significant judgment required by management.

Additionally, as of November 30, 2022, the carrying value of the Company’s investments in VIEs that are unconsolidated was $1.2 billion.

We identified the consolidation and primary beneficiary assessment upon formation and the occurrence of reconsideration events of some of the Company’s VIEs as a critical audit matter given the significant judgment required by management.

This required a high degree of auditor judgment and an increased extent of audit effort due to the complexity of the entity structures and agreements.

How the Critical Audit Matter Was Addressed in the Audit

Our audit procedures related to the accounting determination for unconsolidated joint ventures included the following, among others:

• We tested the effectiveness of the investment consolidation controls over the initial accounting assessment of joint ventures and the continuous reassessment for reconsideration events, as required by the accounting framework.

• We selected a sample of unconsolidated joint ventures and evaluated the appropriateness of the Company’s accounting conclusions upon formation and reconsideration events by:

◦ Reading the joint venture agreements and other related documents and evaluating the structure and terms of the agreement to determine if the joint venture should be classified as a VIE.

Our audit procedures related to the accounting determination for all joint ventures included the following, among others:

• We tested the design and operating effectiveness of the investment consolidation controls over the initial accounting assessment of joint ventures and the continuous reassessment for reconsideration events, as required by the accounting framework.

• We selected a sample of unconsolidated and consolidated joint ventures and evaluated the appropriateness of the Company’s accounting conclusions upon formation and reconsideration events by:

◦ Reading the joint venture agreements and other related documents and evaluating the structure and terms of the agreement as well as any reconsideration events which took place during the year to determine if the joint venture should be classified as a VIE.

◦ If an entity is determined to be a VIE, considering whether the Company appropriately determined the primary beneficiary by evaluating the contractual arrangements of the entity to determine if the Company has the power to direct activities, and if the Company has the obligation to absorb losses of the entity or the right to receive benefits from the entity that could be significant to the VIE.

◦ For those entities where the Company has determined it is the primary beneficiary, evaluating whether or not the Company consolidated the balances at the appropriate amounts.

◦ For all JVs, evaluated whether any reconsideration events during the year took place that would cause deconsolidation, and if so, verified that deconsolidation occurred properly.

◦ Evaluating the evidence obtained in other areas of the audit to determine if there were additional reconsideration events that had not been identified by the Company, including, among others, reading joint venture board minutes and agreeing the terms of certain joint venture agreements and side agreements, if any.

24 unchanged sentences

(1) Under certain provisions of Accounting Standards Codification ("ASC") Topic 810, Consolidations , ("ASC 810") the Company is required to separately disclose on its consolidated balance sheets the assets of consolidated variable interest entities ("VIEs") that are owned by the consolidated VIEs and liabilities of consolidated VIEs as to which there is no recourse against the Company.

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.

As of November 30, 2022, total assets include $ 1.4 billion related to consolidated VIEs of which $ 56.9 million is included in Homebuilding cash and cash equivalents, $ 0.3 million in Homebuilding receivables, net, $ 29.4 million in Homebuilding finished homes and construction in progress, $ 736.5 million in Homebuilding land and land under development, $ 533.8 million in Homebuilding consolidated inventory not owned, $ 1.0 million in Homebuilding investments in unconsolidated entities, $ 23.0 million in Homebuilding other assets, $ 33.2 million in Multifamily assets and $ 9.0 million in Lennar Other assets .

32 unchanged sentences

( 210,389 ) ( 2,709,448 )

Accumulated other comprehensive loss ( 1,341 ) ( 805 )

Accumulated other comprehensive income (loss) 2,408 ( 1,341 )

Total stockholders’ equity 24,100,500 20,816,425

2 unchanged sentences

Total liabilities and equity $ 37,984,295 33,207,778

(2) 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 debts payable, $ 12.3 million in Homebuilding other liabilities and $ 2.8 million in Multifamily liabilities.

(2) As of November 30, 2022, total liabilities include $ 620.4 million related to consolidated VIEs as to which there was no recourse against the Company, of which $ 66.9 million is included in Homebuilding accounts payable, $ 510.9 million in Homebuilding liabilities related to consolidated inventory not owned, $ 29.4 million in Homebuilding senior notes and other debts payable, $ 7.2 million in Homebuilding other liabilities, $ 3.8 million in Multifamily liabilities and $ 2.2 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 debts payable, $ 12.3 million in Homebuilding other liabilities and $ 2.8 million in Multifamily liabilities.

22 unchanged sentences

Multifamily equity in earnings from unconsolidated entities and other gain 52,821 9,031 21,934

Lennar Other equity in earnings (loss) from unconsolidated entities and other income (expense), net 61,957 ( 44,669 ) 6,428

Lennar Other realized and unrealized gains 680,576 — —

Lennar Other equity in earnings (loss) from unconsolidated entities, other income (expense), net, and other gain (loss) ( 91,689 ) 231,731 ( 44,669 )

Lennar Other unrealized gain (loss) from technology investments ( 655,094 ) 510,802 —

Earnings before income taxes 6,014,566 5,819,058 3,123,788

Provision for income taxes ( 1,366,065 ) ( 1,362,509 ) ( 656,235 )

Net earnings (including net earnings (loss) attributable to noncontrolling interests)

4,456,549 2,467,553 1,842,119

Net earnings (loss) attributable to noncontrolling interests 26,438 2,517 ( 6,933 )

Net earnings (including net earnings attributable to noncontrolling interests) 4,648,501 4,456,549 2,467,553

Net earnings attributable to noncontrolling interests 34,376 26,438 2,517

Net earnings attributable to Lennar $ 4,614,125 4,430,111 2,465,036

5 unchanged sentences

Total comprehensive income attributable to Lennar $ 4,617,874 4,429,575 2,463,733

Total comprehensive income (loss) attributable to noncontrolling

Total comprehensive income attributable to noncontrolling

interests $ 34,376 26,438 2,517

10 unchanged sentences

Employee stock and director plans 225 156 182

Retirement of treasury stock ( 4,667 ) — —

Balance at November 30, 25,608 30,050 29,894

1 unchanged sentence

Beginning balance 3,944 3,944 3,944

Retirement of treasury stock ( 284 ) — —

Balance at November 30, 3,660 3,944 3,944

2 unchanged sentences

Employee stock and director plans 904 1,207 576

Retirement of treasury stock ( 3,533,425 ) — —

Amortization of restricted stock 184,086 135,090 107,131

Premium paid for purchase of noncontrolling interests ( 37,342 ) — —

Equity adjustment related to noncontrolling interests ( 4,318 ) ( 4,462 ) ( 9,870 )

3 unchanged sentences

Net earnings attributable to Lennar 4,614,125 4,430,111 2,465,036

Cumulative-effect of accounting change

Cash dividends - Class A common stock ($ 1.50 per share for 2022, $ 1.00 per share for 2021 and $ 0.625 per share for 2020)

7 unchanged sentences

Purchases of treasury stock ( 967,622 ) ( 1,365,559 ) ( 288,515 )

Retirement of treasury stock 3,538,376 — —

Balance at November 30, ( 210,389 ) ( 2,709,448 ) ( 1,279,227 )

6 unchanged sentences

Beginning balance 179,857 104,545 84,313

Net earnings (loss) attributable to noncontrolling interests 26,438 2,517 ( 6,933 )

Net earnings attributable to noncontrolling interests 34,376 26,438 2,517

Receipts related to noncontrolling interests 41,816 69,675 176,617

11 unchanged sentences

Cash flows from operating activities:

Net earnings (including net earnings (loss) attributable to noncontrolling interests) $ 4,456,549 2,467,553 1,842,119

Net earnings (including net earnings attributable to noncontrolling interests) $ 4,648,501 4,456,549 2,467,553

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

6 unchanged sentences

Share-based compensation expense 184,086 134,621 107,131

Deferred income tax expense 191,627 92,082 235,493

Deferred income tax (benefit) expense ( 246,653 ) 191,627 92,082

Unrealized (gain) loss on loans held-for-sale 33,287 14,449 ( 21,765 )

Lennar Other unrealized/realized gains ( 680,576 ) — —

(Gain) loss on sale of other assets, operating properties and equipment, CMBS bonds, other liabilities and real estate owned ( 27,678 ) ( 8,626 ) ( 23,124 )

(Gain) loss on deconsolidation/consolidation of an entity — ( 56,594 ) 48,874

Lennar Other unrealized/realized (gains) losses 672,212 ( 680,576 ) —

Gain on sale of other assets, operating properties and equipment, CMBS bonds, other liabilities and real estate owned ( 7,617 ) ( 27,678 ) ( 8,626 )

Gain on deconsolidation of an entity — — ( 56,594 )

Gain on sale of interest in unconsolidated entity and other Multifamily gain — ( 1,167 ) ( 4,617 )

7 unchanged sentences

(Increase) decrease in loans held-for-sale ( 202,920 ) ( 160,785 ) 176,617

Increase (decrease) in accounts payable and other liabilities 881,309 266,488 ( 14,639 )

Increase in accounts payable and other liabilities 701,113 881,309 266,488

Net cash provided by operating activities $ 3,265,668 2,532,774 4,190,819

4 unchanged sentences

Proceeds from sale of Financial Services' portfolio/businesses — 3,327 14,978

Investments in and contributions to unconsolidated entities/deconsolidation of previously consolidated entity ( 408,183 ) ( 486,217 ) ( 436,325 )

Investments in and contributions to unconsolidated entities ( 447,401 ) ( 408,183 ) ( 486,217 )

Distributions of capital from unconsolidated and consolidated entities

1 unchanged sentence

Proceeds from sale of commercial mortgage-backed securities bonds 9,191 11,307 3,248

Receipts of principal payments on loans receivable and other — — 2,382

Decrease (increase) in Financial Services loans held-for-investment, net 19,491 29,397 ( 3,122 )

2 unchanged sentences

Other receipts, net 1,399 16 1,643

Net cash (used in) provided by investing activities $ ( 105,086 ) ( 280,205 ) 19,596

Net cash used in investing activities $ ( 128,302 ) ( 105,086 ) ( 280,205 )

LENNAR CORPORATION AND SUBSIDIARIES

9 unchanged sentences

Proceeds from liabilities related to consolidated inventory not owned 1,167,227 694,185 346,406

Payments related to consolidated inventory not owned ( 350,583 ) — —

Payments related to liabilities from consolidated inventory not owned ( 682,385 ) ( 350,583 ) —

(Payments) proceeds related to other liabilities, net ( 21,249 ) 25,564 ( 116,541 )

2 unchanged sentences

Common stock:

Issuances — — 493

Repurchases ( 1,039,309 ) ( 1,430,212 ) ( 321,524 )

1 unchanged sentence

Net cash used in financing activities $ ( 1,277,279 ) ( 2,404,735 ) ( 2,446,575 )

Net increase (decrease) in cash and cash equivalents and restricted cash 22,953 1,464,039 ( 127,285 )

Net increase in cash and cash equivalents and restricted cash 1,860,087 22,953 1,464,039

Cash and cash equivalents and restricted cash at beginning of year 2,955,683 2,932,730 1,468,691

7 unchanged sentences

Financial Services restricted cash 14,004 12,012 54,481

Lennar Other restricted cash — — 975

$ 4,815,770 2,955,683 2,932,730

4 unchanged sentences

Purchases of inventories, land under development and other assets financed by sellers $ 36,947 141,319 120,796

Net non-cash contributions (distributions) to unconsolidated entities 27,880 97,281 156,075

Non-cash sale of operating properties and equipment and other assets — — 48,671

Non-cash right of use assets recognized due to adoption of ASU 2016-02 — 150,702 —

Non-cash lease liabilities recognized due to adoption of ASU 2016-02 — 159,717 —

Net non-cash contributions to unconsolidated entities 232,616 27,880 97,281

Non-cash right of use assets due to adoption of ASU 2016-02 — — 150,702

Non-cash lease liabilities due to adoption of ASU 2016-02 — — 159,717

Consolidation/deconsolidation of unconsolidated/consolidated entities, net:

3 unchanged sentences

Inventories ( 101,946 ) — 95,476

Receivables — — 102,959

Operating properties and equipment and other assets 33,200 — 6,870

16 unchanged sentences

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 years ended November 30, 2022, 2021 and 2020, sales incentives offered to homebuyers averaged $ 17,300 per home, or 3.5 % as a percentage of home sales revenues, $ 9,000 per home, or 2.1 % as a percentage of home sales revenues and $ 19,800 per home, or 4.8 % as a percentage of home sales revenues, respectively.

The Company’s performance obligation, to deliver the agreed-upon home, is generally satisfied in less than one year from the original contract date.

Cash proceeds from home closings held in escrow for the Company’s benefit, typically for approximately three to four days, are included in Homebuilding cash and cash equivalents in the Company's consolidated balance sheets.

Contract liabilities include customer deposits liabilities related to sold but undelivered homes that are included in other liabilities in the Company's consolidated balance sheets.

Cash proceeds from home closings are included in Homebuilding cash and cash equivalents in the Company's consolidated balance sheets.

Contract liabilities include customer deposits liability related to sold but undelivered homes that are included in other liabilities in the Company's consolidated balance sheets.

The Company periodically elects to sell parcels of land to third parties.

14 unchanged sentences

Financial Services restricted cash consists of upfront deposits and application fees LMF Commercial receives before originating loans and is recognized as income once the loan has been originated, as well as cash held in escrow by the Company’s loan service provider on behalf of customers and lenders and is disbursed in accordance with agreements between the transacting parties.

Homebuilding cash and cash equivalents as of November 30, 2021 and 2020 included $ 940.4 million and $ 314.3 million, respectively, of cash held in escrow for approximately three days .

At November 30, 2021 and 2020, Homebuilding accounts receivable related primarily to other receivables and rebates.

The Company performs ongoing credit evaluations of its customers and generally does not require collateral for accounts receivable.

Mortgages and notes receivable arising from the sale of homes and land are generally collateralized by the property sold to the buyer.

Allowances are maintained for potential credit losses based on historical experience, present economic

Homebuilding cash and cash equivalents as of November 30, 2022 and 2021 included $ 1.0 billion and $ 940.4 million, respectively, of cash held in escrow for approximately two days .

LENNAR CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

conditions and other factors considered relevant by the Company.

At November 30, 2022 and 2021, Homebuilding accounts receivable primarily related to receivables from land banks for land development, rebates and joint ventures.

The Company performs ongoing credit evaluations of its customers and generally does not require collateral for accounts receivable.

Mortgages and notes receivable arising from the sale of homes and land are generally collateralized by the property sold to the buyer.

Allowances are maintained for potential credit losses based on historical experience, present economic conditions and other factors considered relevant by the Company.

Balances for the years ended November 30, 2022 and 2021 are noted below:

5 unchanged sentences

Receivables, net (1) $ 673,980 490,278

(1) At November 30, 2021, receivables, net included an $ 85 million short-term loan due from Upward America that was repaid subsequent to November 30, 2021.

(1) At November 30, 2022 and 2021, receivables, net included $ 50 million and $ 85 million, respectively, related to a short-term loan due from Upward America that was repaid subsequent to each year end.

Finished homes and construction in progress are included within inventories.

20 unchanged sentences

In order to arrive at the assumed absorption pace for home sales and the assumed sales prices included in the Company’s cash flow model, the Company analyzes its historical absorption pace and historical sales prices in the community and in other comparable communities in the geographical area.

In addition, the Company considers internal and external market studies and places greater emphasis on more current metrics and trends, which generally include, but are not limited to, statistics and forecasts on population demographics and on sales prices in neighboring communities, unemployment rates and availability and sales prices of competing product in the geographical area where the community is located as well as the absorption pace realized in its most recent quarters and the sales prices included in the Company's current backlog for such communities.

Generally, if the Company notices a variation from historical results over a span of two fiscal quarters, the Company considers such variation to be the establishment of a trend and adjusts its historical information accordingly in order to develop assumptions on the projected absorption pace and sales prices in the cash flow model for a community.

LENNAR CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

absorption pace realized in its most recent quarters and the sales prices included in the Company's current backlog for such communities.

In order to arrive at the Company’s assumed costs to build and deliver homes, the Company generally assumes a cost structure reflecting contracts currently in place with its vendors adjusted for any anticipated cost reduction initiatives or increases in cost structure.

5 unchanged sentences

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.

The Company's v aluation adjustments for finished homes and construction in progress were included in Homebuilding costs and expenses in the Company's consolidated statements of operations and comprehensive income (loss) for the years ended November 30, 2022 and 2021.

The table below summarizes communities reviewed for indicators of impairment and communities with valuation adjustments recorded:

1 unchanged sentence

for the years ended November 30,

# of communities with potential indicator of impairment # of communities Fair Value

# of communities with potential indicators of impairment # of communities Fair Value

(in thousands) Valuation Adjustments

2 unchanged sentences

2021 4 1 5,267 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 during the years ended November 30, 2021 and 2020:

Years Ended November 30,

3 unchanged sentences

Discount rate 20 % 20 %

(1) Represents the projected average selling price on future deliveries for communities in which the Company recorded impairments on during the years ended November 30, 2022 and 2021.

The Company also has access to land inventory through option contracts, which generally enables the Company to defer acquiring portions of properties owned by third parties (including land funds) and unconsolidated entities until it has determined whether to exercise its option.

The use of option contracts allows the Company to reduce the financial risks associated with long-term land holdings.

A majority of the Company’s option contracts require a non-refundable cash deposit or irrevocable letter of credit based on a percentage of the purchase price of the land.

As of November 30, 2022, the Company had $ 2.0 billion of nonrefundable option deposits and pre-acquisition costs related to certain of these homesites, which were included in inventories in the accompanying consolidated balance sheet.

The Company’s option contracts sometimes include price adjustment provisions, which adjust the purchase price of the land to its approximate fair value at the time of acquisition or are based on the fair value at the time of takedown.

In determining whether to walk away from an option contract, the Company evaluates the option primarily based upon its expected cash flows from the property under option.

If the Company intends to walk away from an option contract, it records a charge to earnings in the period such decision is made for the deposit amount and any related pre-acquisition costs associated with the option contract.

Some option contracts contain a predetermined take-down schedule for the optioned land parcels.

However, in almost all instances, the Company is not required to purchase land in accordance with those take-down schedules.

In substantially all instances, the Company has the right and ability to not exercise its option and forfeit its deposit without further penalty, other than termination of the option and loss of any unapplied portion of its deposit and pre-acquisition costs.

Therefore, in substantially all instances, the Company does not consider the take-down price to be a firm contractual obligation.

When the Company does not intend to exercise an option, it writes off any unapplied deposit and pre-acquisition costs associated with the option contract.

LENNAR CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

Some option contracts contain a predetermined take-down schedule for the optioned land parcels.

However, in substantially all instances, the Company is not required to purchase land in accordance with those take-down schedules.

Therefore, in substantially all instances, the Company does not consider the take-down price to be a firm contractual obligation.

In determining whether to walk away from an option contract, the Company evaluates the option primarily based upon its expected cash flows from the property under option.

If the Company intends to walk away from an option contract, it records a charge to earnings in the period such decision is made for the unapplied deposit amount and any related pre-acquisition costs and accrues any applicable termination fee associated with the option contract.

During the year ended November 30, 2022, the Company wrote-off $ 47.9 million of deposit and pre-acquisition costs.

To reflect the purchase price of homesite takedowns related to option contracts that the Company decided to exercise, the Company had a net reclass related to option deposits from consolidated inventory not owned to finished homes and construction in progress in the accompanying consolidated balance sheet as of November 30, 2022.

In the course of executing on the Company’s land light strategy, the Company may sell land to third parties (including land funds) and unconsolidated entities while maintaining an option to repurchase the land in the future.

Although, such transactions include cash consideration from the buyer and the transfer of title from the Company to the buyer, such transactions do not meet the criteria for revenue recognition under GAAP due to the Company’s option to repurchase the land from the buyer in the future.

As such, land related to such transactions remains on the Company’s accompanying consolidated balance sheet and is reclassified from land and land under development to consolidated inventory not owned.

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.

During the year ended November 30, 2022, consolidated inventory not owned increased by $ 1.2 billion with a corresponding increase to liabilities related to consolidated inventory not owned in the accompanying consolidated balance sheet as of November 30, 2022.

The increase was primarily due to reclassifications from land and land under development to consolidated inventory not owned during the year ended November 30, 2022 as the Company continued to focus on increasing its controlled homesites as compared to owned homesites.

The increase was partially offset by takedowns during the year ended November 30, 2022.

Investments in Unconsolidated Entities

2 unchanged sentences

The Company’s proportionate share of a valuation adjustment is reflected in the Company's Homebuilding, Multifamily or Lennar Other equity in earnings (loss) from unconsolidated entities with a corresponding decrease to its Homebuilding, Multifamily or Lennar Other investment in unconsolidated entities.

Additionally, the Company evaluates if a decrease in the value of an investment below its carrying value is other-than-temporary.

Additionally, the Company evaluates if a decrease in the fair value of an investment below its carrying value is other-than-temporary.

This evaluation includes certain critical assumptions made by management:

11 unchanged sentences

The Company examines specific criteria and uses its judgment when determining if it is the primary beneficiary of a VIE.

Factors considered in determining whether the Company is the primary beneficiary include risk and reward sharing, experience and financial condition of other partner(s), voting rights, involvement in day-to-day capital and operating decisions, representation on a VIE’s executive committee, existence of unilateral kick-out rights or voting rights, level of economic disproportionality, if any, between the Company and the other partner(s) and contracts to purchase assets from VIEs.

Factors considered in determining whether the Company is the primary beneficiary include risk and reward sharing, experience and financial condition of other

LENNAR CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

partner(s), voting rights, involvement in day-to-day capital and operating decisions, representation on a VIE’s executive committee, existence of unilateral kick-out rights or voting rights, level of economic disproportionality, if any, between the Company and the other partner(s) and contracts to purchase assets from VIEs.

The determination whether an entity is a VIE and, if so, whether the Company is the primary beneficiary may require it to exercise significant judgment.

3 unchanged sentences

Generally, the Company purchases less than a majority of the JV’s assets and the purchase prices under its option contracts are believed to be at market.

Generally, Homebuilding and Multifamily unconsolidated entities become VIEs and consolidate when the other partner(s) lack the intent and financial wherewithal to remain in the entity.

Generally, Homebuilding and Multifamily unconsolidated entities become VIEs due to insufficient equity at risk for

the JV entity as the partner(s) continue to provide subordinated financial support in the form of capital contributions.

Homebuilding and Multifamily unconsolidated entities become VIEs and consolidate if the other partner(s) lack the intent and financial wherewithal to remain in the entity.

As a result, the Company continues to fund operations and debt paydowns through partner loans or substituted capital contributions.

7 unchanged sentences

The annual goodwill impairment analysis was performed as of September 30, 2022, and no impairment was recorded.

LENNAR CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

Operating Properties and Equipment

13 unchanged sentences

(1) Operating properties primarily include solar systems, rental operations and commercial properties.

LENNAR CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

Investment Securities

9 unchanged sentences

For equity securities without a readily determinable fair value, the investment is recorded at cost, less any impairment, plus or minus adjustments related to observable transactions for the same or similar securities, with unrealized gains and losses included in earnings.

The Lennar Other segment had investments in equity securities of $ 1.0 billion and $ 68.8 million, as of November 30, 2021 and 2020, respectively.

The Lennar Other segment had investments in equity securities of $ 391.0 million and $ 1.0 billion that are recorded at fair value with unrealized gains and losses included in earnings, as of November 30, 2022 and 2021, respectively.

For equity method investments in the Lennar Other segment, the Company records the investment as Lennar Other investments in unconsolidated entities.

8 unchanged sentences

interest capitalized into inventories was $ 211.7 million, $ 254.9 million and $ 331.0 million, respectively.

LENNAR CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

Interest expense was included in costs of homes sold, costs of land sold and other interest expense as follows:

13 unchanged sentences

This assessment considers, among other matters, the nature, frequency and severity of current and cumulative losses, actual earnings, forecasts of future profitability, the duration of statutory carryforward periods, the Company’s experience with loss carryforwards not expiring unused and tax planning alternatives.

LENNAR CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

Based on the analysis of positive and negative evidence, the Company believed that there was enough positive evidence for the Company to conclude that it was more likely than not that the Company would realize the majority of its deferred tax assets.

As of November 30, 2021 and 2020, the Company's net deferred tax assets included a valuation allowance of $ 2.7 million and $ 4.4 million, respectively.

As of November 30, 2022 and 2021, the Company's net deferred tax assets of $ 242.4 million and liabilities of $ 4.2 million included a valuation allowance of $ 2.9 million and $ 2.7 million, respectively.

See Note 5 for additional information.

16 unchanged sentences

Self-Insurance

Certain insurable risks such as construction defects, general liability, medical and workers’ compensation are self-insured by the Company up to certain limits.

Undiscounted accruals for claims under the Company’s self-insurance program are based on claims filed and estimates for claims incurred but not yet reported.

The Company’s self-insurance reserve, net of

LENNAR CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

expected recoveries, as of November 30, 2021 and 2020 was $ 169.1 million and $ 125.4 million which is included in Homebuilding other liabilities.

Reserves for estimated losses for construction defects, general liability and workers’ compensation have been established using the assistance of a third-party actuary.

The third-party actuary uses the Company's historical warranty and construction defect data to assist management in estimating the unpaid claims, claim adjustment expenses and incurred but not reported claims reserves for the risks that the Company is assuming under the general liability and construction defect programs.

The estimates include provisions for inflation, claims handling and legal fees.

These estimates are subject to a high degree of variability due to uncertainties such as trends in construction defect claims relative to the markets and the types of products the Company builds, claim settlement patterns, insurance industry practices and legal interpretations.

Given the high degree of judgment required in determining these estimated liability amounts, actual future costs could differ significantly from the Company's currently estimated amounts.

The Company’s self-insurance reserve, net of expected recoveries, as of November 30, 2022 and 2021 was $ 210.1 million and $ 169.1 million and was included in Homebuilding other liabilities.

Amounts incurred in excess of the Company's self-insurance occurrence or aggregate retention limits are covered by insurance up to the Company's purchased coverage levels.

6 unchanged sentences

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

LENNAR CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

Preferred Stock

1 unchanged sentence

No shares of preferred stock or participating preferred stock have been issued as of November 30, 2022 and 2021.

During the year ended November 30, 2021, the Company’s Class A and Class B common stockholders received a per share annual dividend of $ 1.00 .

During the years ended 2020 and 2019, the Company’s Class A and Class B common stockholders received a per share annual dividend of $ 0.625 and $ 0.16 , respectively.

During the years ended November 30, 2022, 2021 and 2020 the Company’s Class A and Class B common stockholders received a per share annual dividend of $ 1.50 $ 1.00 and $ 0.625 , respectively.

The only significant difference between the Class A common stock and Class B common stock is that Class A common stock entitles holders to one vote per share and the Class B common stock entitles holders to ten votes per share.

As of November 30, 2022, Stuart Miller, the Company’s Executive Chairman, directly owned, or controlled through family-owned entities, shares of Class A and Class B common stock, which represented approximately 36 % voting power of the Company’s stock.

In January 2021, the Company's Board of Directors authorized a stock repurchase program, which replaced a January 2019 stock repurchase program, under which the Company was authorized to purchase up to the lesser of $ 1 billion in value, or 25 million in shares, of the Company’s outstanding Class A or Class B common stock.

The repurchase authority has no expiration date.

In October 2021, the Board of Directors authorized an increase to the 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 the Company's outstanding Class A or Class B common stock.

During the year ended November 30, 2022, treasury stock decreased due to the Company's retirement of 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 shares and additional paid-in capital within stockholders' equity.

During the year ended November 30, 2022, this decrease in treasury shares was partially offset by the Company's repurchase of 9.6 million and 1.3 million shares of Class A and Class B common stock, respectively, through the Company's stock repurchase program.

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 the Company’s 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 the Company's outstanding Class A or Class B common stock.

The repurchase authority has no expiration date.

Shortly after the new authorization, the January 2021 stock repurchase program was completed as the Company had purchased the $ 1 billion in value authorized under that stock repurchase program.

The following table provides information about the Company’s repurchases of Class A and Class B common stock for the years ended November 30, 2021 and 2020:

The following table provides information about the Company’s repurchases of Class A and Class B common stock:

November 30, 2022 November 30, 2021

1 unchanged sentence

Shares repurchased 9,628,203 1,339,797 13,910,000 100,000

Principal $ 1,357,081 $ 8,197 $ 282,274 $ 6,155

Total purchase price $ 868,788 $ 98,613 $ 1,357,081 $ 8,197

Average price per share $ 90.23 $ 73.60 $ 97.56 $ 81.97

1 unchanged sentence

There are no restrictions on the payment of dividends on common stock by the Company.

There are no agreements which restrict the payment of dividends by subsidiaries of the Company other than the need to maintain the financial ratios and net worth requirements under the Financial Services segment’s warehouse lines of credit, which restrict the payment of dividends from the Company’s mortgage subsidiaries following the occurrence and during the continuance of an event of default thereunder and limit dividends to 50 % of net income in the absence of an event of default.

LENNAR CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

Under the Company’s 401(k) Plan (the "Plan"), contributions made by associates can be invested in a variety of mutual funds or proprietary funds provided by the Plan trustee.

10 unchanged sentences

A summary of the Company’s nonvested shares activity for the year ended November 30, 2022 was as follows:

LENNAR CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

Shares Weighted Average Grant Date Fair Value

12 unchanged sentences

Escrow fees and loan origination revenues are recognized at the time the related real estate transactions are completed, usually upon the close of escrow.

Revenues from title policies issued by independent agents are recognized as revenue when notice of issuance is received from the agent, which is generally when cash payment is received by the Company.

Expected gains and losses from the sale of loans and their related servicing rights are included in the measurement of all written loan commitments that are accounted for at fair value through earnings at the time of commitment.

7 unchanged sentences

Fair value of the servicing rights is determined based on values in the Company’s servicing sales contracts.

LENNAR CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

Provision for Losses

6 unchanged sentences

Provision for losses 966 4,639

Payments/settlements ( 538 ) ( 13,719 )

Payments ( 849 ) ( 538 )

Loan origination liabilities, end of year $ 11,787 11,670

4 unchanged sentences

The provision recorded and the adequacy of the related allowance is determined by management’s continuing evaluation of the loan portfolio in light of past loan loss experience, credit worthiness and nature of underlying collateral, present economic conditions and other factors considered relevant by the Company’s management.

Anticipated changes in economic factors, which may influence the level of the allowance, are considered in the evaluation by the Company’s management when the likelihood of the changes can be reasonably determined.

Anticipated changes in economic factors, which may influence the level of the

LENNAR CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

allowance, are considered in the evaluation by the Company’s management when the likelihood of the changes can be reasonably determined.

While the Company’s management uses the best information available to make such evaluations, future adjustments to the allowance may be necessary as a result of future economic and other conditions that may be beyond management’s control.

17 unchanged sentences

Both management fees and general contractor revenue are recognized over the period in which the services are performed using an input method, which properly depicts the level of effort required to complete the management or construction services.

These customer contracts require the Company to provide management and general

LENNAR CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

contractor services which represents a performance obligation that the Company satisfies over time.

These customer contracts require the Company to provide management and general contractor services which represents a performance obligation that the Company satisfies over time.

Management fees and general contractor services in the Multifamily segment are included in Multifamily revenue.

Recently Adopted Accounting Pronouncements

In June 2016, the FASB issued ASU 2016-13, Financial Instruments - Credit Losses (Topic 326):

Measurement of Credit Losses on Financial Instruments ("ASU 2016-13") .

ASU 2016-13 significantly changes the impairment model for most financial assets and certain other instruments.

ASU 2016-13 requires immediate recognition of estimated credit losses expected to occur over the remaining life of many financial assets, which generally results in earlier recognition of allowances for credit losses on loans and other financial instruments.

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 consolidated financial statements.

In January 2017, the FASB issued ASU 2017-04, Intangibles - Goodwill and Other (Topic 350), Simplifying the Accounting for Goodwill Impairment ("ASU 2017-04").

ASU 2017-04 removes the requirement to perform a hypothetical purchase price allocation to measure goodwill impairment.

A goodwill impairment will now be the amount by which a reporting unit's carrying value exceeds its fair value, not to exceed the carrying amount of goodwill.

ASU 2017-04 was effective for the Company’s fiscal year beginning December 1, 2020.

In March 2020, the Financial Accounting Standards Board (FASB) issued ASU 2020-04, “Reference Rate Reform,” which provides optional expedients and exceptions for applying U.S.

GAAP to contracts, hedging relationships, and other transactions affected by the discontinuation of the London Interbank Offered Rate (LIBOR) or by another reference rate expected to be discontinued.

The guidance was effective beginning March 12, 2020 and can be applied prospectively through December 31, 2022.

In January 2021, the FASB issued ASU 2021-01, “Reference Rate Reform - Scope,” which clarified the scope and application of the original guidance.

The adoption of ASU 2020-04 did not have a material impact on the Company's consolidated financial statements.

New 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 will be effective for the Company’s fiscal year beginning December 1, 2022.

The Company believes, the adoption of ASU 2019-12 will not have a material impact on the Company's consolidated financial statements .

Reclassifications

Certain prior year amounts in the consolidated financial statements have been reclassified to conform with the 2022 presentation.

The Company reclassified the balance of its investment in Doma, formerly States Title, to which the Company sold the majority of the Financial Services segment's retail title agency business and title insurance underwriter in the first quarter of 2019, from the Financial Services segment to the Lennar Other segment in the consolidated balance sheets for all periods presented.

This was reclassified to be included in the Company's strategic technology investments as the entity had announced that it would merge with a publicly traded special purpose acquisition company and during the year ended November 30, 2021 completed the merger and became a publicly traded entity.

In addition, the Company reflected its contributions to its charitable foundation in a new line on its consolidated statements of operations for all periods presented.

This was previously reflected in the Corporate general and administrative line.

These reclassifications had no impact on the Company's total assets, total equity, revenues or net earnings in its consolidated financial statements.

LENNAR CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

Operating and Reporting Segments

Each reportable segment follows the same accounting policies described in Note 1—"Summary of Significant Accounting Policies" to the consolidated financial statements.

Operational results of each segment are not necessarily indicative of the results that would have occurred had the segment been an independent, stand-alone entity during the periods presented.

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.

7 unchanged sentences

(7) Lennar Other

LENNAR CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

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

18 unchanged sentences

$ 10,978,646 2,353,904 313,484 97,894 13,743,928

LENNAR CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

(In thousands) November 30, 2021

21 unchanged sentences

(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 consolidated balance sheets.

LENNAR CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

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

5 unchanged sentences

Revenues $ 31,951,335 809,680 865,603 44,392 — 33,671,010

Operating earnings 5,031,762 491,014 21,453 733,035 — 6,277,264

Operating earnings (loss) 6,777,317 383,302 69,493 ( 734,649 ) — 6,495,463

Corporate general and administrative expenses — — — — ( 414,498 ) ( 414,498 )

Charitable foundation contribution — — — — ( 66,399 ) ( 66,399 )

Earnings before income taxes 5,031,762 491,014 21,453 733,035 ( 458,206 ) 5,819,058

Earnings (loss) before income taxes 6,777,317 383,302 69,493 ( 734,649 ) ( 480,897 ) 6,014,566

Year ended November 30, 2021

4 unchanged sentences

Revenues $ 25,545,242 898,745 665,232 21,457 — 27,130,676

Operating earnings (loss) 2,988,907 480,952 22,681 ( 10,334 ) — 3,482,206

Operating earnings 5,031,762 491,014 21,453 733,035 — 6,277,264

Corporate general and administrative expenses — — — — ( 398,381 ) ( 398,381 )

Charitable foundation contribution — — — — ( 59,825 ) ( 59,825 )

Earnings (loss) before income taxes 2,988,907 480,952 22,681 ( 10,334 ) ( 358,418 ) 3,123,788

Earnings before income taxes 5,031,762 491,014 21,453 733,035 ( 458,206 ) 5,819,058

Year ended November 30, 2020

4 unchanged sentences

Revenues $ 20,981,136 890,311 576,328 41,079 — 22,488,854

Operating earnings 2,502,905 224,642 16,390 31,469 — 2,775,406

Operating earnings (loss) 2,988,907 480,952 22,681 ( 10,334 ) — 3,482,206

Corporate general and administrative expenses — — — — ( 333,446 ) ( 333,446 )

Charitable foundation contribution — — — — ( 24,972 ) ( 24,972 )

Earnings before income taxes 2,502,905 224,642 16,390 31,469 ( 341,114 ) 2,434,292

Earnings (loss) before income taxes 2,988,907 480,952 22,681 ( 10,334 ) ( 358,418 ) 3,123,788

LENNAR CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

(1) Financial Services operating earnings for the year ended November 30, 2022 included a $ 35.5 million one-time charge due to an increase in a litigation accrual related to a court judgment.

(2) Operating loss for Lennar Other for the year ended November 30, 2022 included a $ 655.1 million mark-to-market unrealized loss on the Company's publicly traded technology investments.

Operating earnings for Lennar Other for the year ended November 30, 2021 included a $ 510.8 million mark-to-market unrealized gain on the Company's publicly traded technology investments.

Operating loss for Lennar Other for the year ended November 30, 2020 included a $ 25.0 million write-down of assets held by Rialto legacy funds because of the disruption in the capital markets as a result of COVID-19 and the economic shutdown.

6 unchanged sentences

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

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

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:

Florida, New Jersey , Pennsylvania and South Carolina

Alabama, Florida, New Jersey , Pennsylvania and South Carolina

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

7 unchanged sentences

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

LENNAR CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

Year ended November 30, 2022

4 unchanged sentences

Depreciation and amortization 24,888 15,219 9,354 54,055 774 104,290

Net additions to (disposals of) operating properties and equipment 219 239 ( 9 ) 26,375 14,950 41,774

Net additions to operating properties and equipment 2,651 363 136 1,414 6,537 11,101

Year ended November 30, 2021

6 unchanged sentences

and equipment 219 239 ( 9 ) 26,375 14,950 41,774

LENNAR CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

Year ended November 30, 2020

11 unchanged sentences

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 as well as in other states.

At November 30, 2021, the Financial Services segment had warehouse facilities, all of which were 364 -day repurchase facilities and were used to fund residential mortgages or commercial mortgages for LMF Commercial as follows:

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

At November 30, 2022, the Financial Services warehouse facilities were 364 -day repurchase facilities and were used to fund residential mortgages or commercial mortgages for LMF Commercial as follows:

(In thousands) Maximum Aggregate Commitment

1 unchanged sentence

December 2022 (1) $ 800,000

April 2022 700,000

July 2022 600,000

October 2022 500,000

May 2023 500,000

August 2023 1,000,000

Total - Residential facilities $ 2,300,000

1 unchanged sentence

December 2022 (1) $ 400,000

November 2022 100,000

July 2023 50,000

November 2023 100,000

Total - LMF Commercial facilities $ 550,000

Total $ 2,850,000

LENNAR CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

(1) Subsequent to November 30, 2022, the maturity date was extended to December 2023.

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

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, which are guaranteed by Lennar Corporation, finance LMF Commercial loan originations and securitization activities and are secured by up to 80 % interests in the originated commercial loans financed.

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:

6 unchanged sentences

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.

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

LENNAR CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

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.

5 unchanged sentences

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

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

The provision for loan losses was immaterial for both the years ended November 30, 2022 and 2021.

As of November 30, 2022 and 2021, loan origination liabilities were $ 11.8 million and $ 11.7 million, respectively, and included in Financial Services’ liabilities in the Company's consolidated balance sheets.

LMF Commercial - loans held-for-sale

4 unchanged sentences

Securitizations 6 6

(1) During both the year ended November 30, 2021 and 2020 all the commercial loans originated were recorded as loans held-for-sale, which are held at fair value.

(1) During both years ended November 30, 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 November 30, 2022 and 2021, the Financial Services segment held commercial mortgage-backed securities ("CMBS").

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

Based on the segment’s assessment, no impairment charges were recorded during the years ended November 30, 2021 or 2020.

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 the years ended November 30, 2022 and 2021.

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

LENNAR CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

Details related to Financial Services' CMBS were as follows:

8 unchanged sentences

Stated maturity dates October 2050 — December 2051

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

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

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

Operations of the Multifamily segment include revenues generated from land sales, revenue from construction activities and management fees generated from joint ventures, and equity in earnings from unconsolidated entities, less the cost of land sold, expenses related to construction activities and general and administrative expenses.

Lennar Other primarily includes strategic investments in technology companies, primarily managed by the Company's LENX subsidiary, and fund interests the Company retained when it sold the Rialto asset and investment management platform.

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

During the year ended November 30, 2021, the Company completed the sale of the Company's residential solar business to Sunnova Energy International Inc.

("Sunnova") for shares in Sunnova.

The Company recorded a gain of $ 153.0 million upon the closing of the sale.

The calculation of the gain included the fair value of 3.1 million shares in initial consideration received at closing and the fair value of potential shares to be received upon achievement of earnouts.

The significant unobservable fair value assumptions used in the calculation were a terminal value multiple of 3 and a 15 % discount rate.

The fair value of the earnouts was also based on the probability of achieving full or partial earnouts.

The investments in Opendoor Technologies, Inc.

("Opendoor"), Sunnova, Hippo Holdings, Inc.

("Hippo"), SmartRent, Inc.

("SmartRent") and Blend Labs, Inc.

("Blend") 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.

For the years ended November 30, 2020 and 2019, there were no mark to market gains on our strategic investments in technology companies.

The following is a detail of Lennar Other realized and unrealized gains (losses):

LENNAR CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

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

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

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

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

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

Operations of the Lennar Other segment include operating earnings (loss) consisting of revenues generated primarily from the Company's share of carried interests in the Rialto fund investments, 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:

Years Ended November 30,

(In thousands) 2022 2021

Opendoor (OPEN) mark to market $ 239,312

Blend Labs (BLND) mark-to-market $ ( 25,630 ) ( 6,744 )

Hippo (HIPO) mark-to-market ( 222,447 ) 207,634

Opendoor (OPEN) mark-to-market ( 265,276 ) 239,312

SmartRent (SMRT) mark-to-market ( 78,177 ) 79,483

Sonder (SOND) mark-to-market ( 2,339 ) —

Sunnova (NOVA) mark-to-market ( 61,225 ) ( 8,883 )

Blend Labs (BLND) mark to market ( 6,744 )

Gain on sale of solar business 158,069

Other realized gains 11,705

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

The mark to market recognition was due to the entities in which the Company holds the investments going public and the loss of a contractual right to a board seat, where applicable, during the year ended November 30, 2021 and the investments now being accounted for as investments in equity securities which are held at fair value and the changes in fair value are recognized through earnings.

As of November 30, 2020,

LENNAR CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

the investments, other than SmartRent since the first investment was made in fiscal 2021, were included in the Company's investments in unconsolidated entities and were accounted for using the equity method.

In addition, as previously noted, Doma Holdings, Inc.

("Doma") went public during the third quarter of 2021.

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

As of November 30, 2021, the Company owns approximately 25.0 % of Doma and the carrying amount of the Company's investment is $ 53.7 million.

Each reportable segment follows the same accounting policies described in Note 1—"Summary of Significant Accounting Policies" to the consolidated financial statements.

Operational results of each segment are not necessarily indicative of the results that would have occurred had the segment been an independent, stand-alone entity during the periods presented.

Lennar Other unrealized gains (losses) from technology investments $ ( 655,094 ) 510,802

Doma Holdings, Inc.

("Doma"), which went public during the year ended November 30, 2021, is an investment that continues to be accounted for under the equity method due to the Company's significant ownership interest which allows the Company to exercise significant influence.

As of November 30, 2022, the Company owned approximately 25 % of Doma.

Investments in Unconsolidated Entities

Homebuilding Unconsolidated Entities

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

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

(In thousands) 2022 2021

1 unchanged sentence

Underlying equity in unconsolidated entities' net assets (1) 1,504,315 1,301,719

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

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

4 unchanged sentences

In many instances, the Company is appointed as the day-to-day manager under the direction of a management committee that has shared powers among the partners of the unconsolidated entities and the Company receives management fees and/or reimbursement of expenses for performing this function.

The Company and/or its partners sometimes obtain options or enter into other arrangements under which the Company can purchase portions of the land held by the unconsolidated entities.

The Company and/or its partners sometimes

LENNAR CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

obtain options or enter into other arrangements under which the Company can purchase portions of the land held by the unconsolidated entities.

Option prices are generally negotiated prices that approximate fair value when the Company receives the options.

10 unchanged sentences

In a repayment guarantee, the Company and its venture partners guarantee repayment of a portion or all of the debt in the event of default before the lender would have to exercise its rights against the collateral.

The maintenance guarantees only apply if the value of the collateral (generally land and improvements) is less than a specified percentage of the loan balance.

The Company would be required to make a payment under a maintenance guarantee to bring the value of the collateral above the specified percentage of the loan balance.

In a completion guarantee, the Company and its venture partners have been required to give guarantees of completion to the lenders.

2 unchanged sentences

If the Company is required to make a payment under any guarantee, the payment would generally constitute a capital contribution or loan to the Homebuilding unconsolidated entity and increase the Company's investment in the unconsolidated entity and its share of any funds the entity distributes.

As of both November 30, 2021 and 2020, the fair values of the repayment, maintenance guarantees and completion guarantees were not material.

The Company believes that as of November 30, 2021, 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 should be sufficient to repay at least a significant portion of the obligation or the Company and its

LENNAR CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

partners would contribute additional capital into the venture.

In certain instances, the Company has placed performance letters of credit and surety bonds with municipalities for its joint ventures (see Note 4).

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

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

The Company believes that as of November 30, 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 4 of the Notes to Consolidated Financial Statements).

In 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.

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.

During the year ended November 30, 2022, Lennar delivered 2,418 homes to Upward America.

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

As of November 30, 2022 and November 30, 2021, the carrying amount of the Company's investment in Upward America was $ 37.7 million and $ 13.3 million, respectively.

Multifamily Unconsolidated Entities

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

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

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

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

Those completion guarantees may require that the guarantors complete the construction of the improvements for which the financing was obtained.

2 unchanged sentences

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

As of November 30, 2021 and 2020, Multifamily segment's unconsolidated entities had non-recourse debt with completion guarantees of $ 855.2 million and $ 722.9 million, respectively.

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

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

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

The details of the activity was as follows:

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

LENNAR CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

Company has investments.

In some situations, the Multifamily segment sells land to various joint ventures and funds.

The details of the activity were as follows:

Years Ended November 30,

2 unchanged sentences

General contractor costs 478,620 533,398 383,649

Land sales to joint ventures 237,477 15,105 83,944

Management fee income 63,823 56,573 56,253

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

Details of each as of and during the year ended November 30, 2021 are included below:

November 30, 2021

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 $ 1.0 billion in equity and Lennar's stated ownership percentage in the Fund is 4 %.

The Company has a $ 26.0 million investment in the Fund as of November 30, 2022 .

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

Details of LMV I and LMV II as of and during the year ended November 30, 2022 are included below:

(In thousands) LMV I LMV II

Lennar's carrying value of investments $ 254,732 320,565

Lennar's carrying value of investment $ 217,099 293,831

Equity commitments 2,204,016 1,257,700

3 unchanged sentences

Lennar's remaining commitments 4,097 15,193

Distributions to Lennar during the year ended November 30, 2021

Lennar Other primarily includes fund investments the Company retained when it sold the Rialto asset and investment management platform, as well as strategic investments in technology companies.

Distributions to Lennar 25,576 12,555

Lennar 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 $ 185.1 million and $ 200.6 million as of November 30, 2022 and November 30, 2021, respectively.

The Company also had strategic technology investments in unconsolidated entities and investment funds of $ 131.5 million and $ 145.6 million, as of November 30, 2022 and November 30, 2021, respectively.

LENNAR CORPORATION AND SUBSIDIARIES

49 unchanged sentences

(Dollars in thousands) 2022 2021

4.750 % senior notes due 2022

$ 573,840 572,724

4.875 % senior notes due December 2023

12 unchanged sentences

896,259 895,510

6.25 % senior notes due December 2021

4.750 % senior notes due 2022

5.375 % senior notes due 2022

Mortgage notes on land and other debt 413,873 441,513

$ 4,047,294 4,652,338

The carrying amounts of the senior notes listed above are net of debt issuance costs of $ 11.0 million and $ 15.9 million, as of November 30, 2021 and 2020, respectively.

In June 2021, the Company retired $ 300 million aggregate principal amount of its 6.25 % senior notes due December 2021 at par.

In October 2021, the Company retired $ 600 million aggregate principal amount of its 4.125 % senior notes due January 2022 at par.

In November 2021, the Company retired early, at a premium, $ 250 million aggregate principal amount of its 5.375 % senior notes due October 2022.

The loss on early retirement of the $ 250 million senior notes was $ 7.4 million.

At November 30, 2021, the Company had an unsecured revolving credit facility (the "Credit Facility") with maximum borrowings of $ 2.5 billion maturing in 2024, that included a $ 300 million accordion feature, subject to additional commitments, thus the maximum borrowings could be $ 2.8 billion.

The carrying amounts of the senior notes in the table above are net of debt issuance costs of $ 7.6 million and $ 11.0 million, as of November 30, 2022 and 2021, respectively.

In August 2022, the Company redeemed early $ 575 million aggregate principal amount of its 4.750 % 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 $ 2.6 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.

9 unchanged sentences

The Company does not presently anticipate any draws upon these bonds or letters of credit, but if any such draws occur, the Company does not believe they would have a material effect on its financial position, results of operations or cash flows.

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

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

(In thousands) 2022 2021

6 unchanged sentences

The terms of each of the Company's senior notes outstanding at November 30, 2022 were as follows:

Senior Notes Outstanding (1) Principal Amount Net Proceeds (2) Price Dates Issued

Senior Notes Outstanding (1) Principal Amount Net Proceeds (2) Price Date Issued

(Dollars in thousands)

4.750 % senior notes due 2022

$ 575,000 $ 567,585 (4) October 2012, February 2013, April 2013

4.875 % senior notes due December 2023

17 unchanged sentences

As part of purchase accounting, the senior notes have been recorded at their fair value as of the date of acquisition (February 12, 2018).

(4) The Company issued $ 350 million aggregate principal amount at a price of 100 %, $ 175 million aggregate principal amount at a price of 98.073 % and $ 50 million aggregate principal amount at a price of 98.250 %.

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

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

Although the guarantees are full, unconditional and joint and several while they are in effect, (i) a subsidiary will have its guarantee suspended at any time when it is not directly or indirectly guaranteeing at least $ 75 million of debt of Lennar Corporation (the parent company) other than senior notes, and (ii) a subsidiary will be released from its guarantee and any other obligations it may have regarding the senior notes if all or substantially all its assets, or all of its capital stock, are sold or otherwise disposed of.

3 unchanged sentences

The minimum aggregate principal maturities of Homebuilding senior notes and other debts payable during the five years subsequent to November 30, 2022 and thereafter are as follows:

(In thousands) Debt

(In thousands) Debt Maturities

2023 $ 223,130

2024 1,537,367

2027 1,265,349

Thereafter 42,415

23 unchanged sentences

Effective rate 22.84 % 23.52 % 21.02 %

(1) During fiscal year 2022, Congress enacted the Inflation Reduction Act which included a retroactive extension of the new energy efficient

home tax credit through 2032.

(2) During fiscal year 2020, Congress extended the new energy efficient home tax credit for homes delivered from 2018 to 2021, with retroactive effect for 2018 and 2019.

(3) Includes a $ 50.2 million benefit related to the resolution of an uncertain tax position during fiscal year 2022.

LENNAR CORPORATION AND SUBSIDIARIES

49 unchanged sentences

Gross unrecognized tax benefits, end of year $ — 12,285 12,285

If the Company were to recognize its gross unrecognized tax benefits as of November 30, 2021, $ 9.7 million would affect the Company’s effective tax rate.

The Company believes it is reasonably possible that its gross unrecognized tax benefits could decrease by up to $ 12.3 million within the following twelve months.

The following summarizes the changes in interest and penalties accrued with respect to gross unrecognized tax benefits:

4 unchanged sentences

Accrued interest and penalties, end of the year $ — 59,937

The IRS is currently examining the Company's federal tax income tax returns for fiscal year 2020, and certain state taxing authorities are examining various fiscal years.

The IRS is currently examining the Company's federal income tax returns for fiscal year 2021, and certain state taxing authorities are examining various fiscal years.

The final outcome of these examinations is not yet determinable.

2 unchanged sentences

This program operates as a contemporaneous exam throughout the year in order to keep exam cycles current and achieve a higher level of compliance.

LENNAR CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

Earnings Per Share

14 unchanged sentences

Diluted earnings per share $ 15.72 14.27 7.85

(1) The amounts presented above relate to Rialto's Carried Interest Incentive Plan and represent the difference between the advanced tax distributions received by the Lennar Other segment and the amount Lennar, as the parent company, is assumed to own.

(1) The amounts above relate to Rialto's Carried Interest Incentive Plan and represent the difference between the advanced tax distributions received by the Lennar Other segment and the amount Lennar, as the parent company, is assumed to own.

For the years ended November 30, 2022, 2021 and 2020, there were no options to purchase shares of common stock that were outstanding and anti-dilutive.

LENNAR CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

Financial Instruments and Fair Value Disclosures

The following table presents the carrying amounts and estimated fair values of financial instruments held by the Company at November 30, 2021 and 2020, using available market information and what the Company believes to be appropriate valuation methodologies.

The following table presents the carrying amounts and estimated fair values of financial instruments held or issued by the Company at November 30, 2022 and 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.

8 unchanged sentences

Financial Services notes and other debts payable, net Level 2 2,135,093 2,135,797 1,726,026 1,726,860

Lennar Other notes and other debts payable, net Level 2 — — 1,906 1,906

Multifamily notes payable, net Level 2 16,749 16,749 — —

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

2 unchanged sentences

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

LENNAR CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(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.

Lennar Other —The fair value for notes payable approximate their carrying value due to variable interest pricing terms and the short-term nature of the borrowings.

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

12 unchanged sentences

Mortgage servicing rights Level 3 3,463 2,492

Forward options Level 1 9,473 —

Lennar Other:

1 unchanged sentence

Investments available-for-sale Level 3 35,482 41,654

LENNAR CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

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

19 unchanged sentences

Therefore, the estimates used could differ materially from the fair value determined when the loans are sold to a securitization trust.

LENNAR CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

Financial Services 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.

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.

5 unchanged sentences

Delinquency rate 7 %

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 of the Company’s consolidated statements of operations and comprehensive income (loss).

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 consolidated statements of operations and comprehensive income (loss).

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.

1 unchanged sentence

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.

LENNAR CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

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:

5 unchanged sentences

Forward contracts ( 48,790 ) 11,513 ( 9,805 )

Changes in fair value included in Lennar Other realized and unrealized gains:

Forward options ( 142 ) — —

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

Investments in equity securities $ ( 655,094 ) 510,802 —

1 unchanged sentence

Lennar Other investments available-for-sale $ 1,464 ( 536 ) ( 805 )

Financial Services investments available-for-sale — ( 46 ) 1,040

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.

The following table represents the reconciliation of the beginning and ending balance for the Level 3 recurring fair value measurements:

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:

Years Ended November 30,

9 unchanged sentences

(1) The year ended November 30, 2021 includes $ 28.5 million of loans sold/paid outside of LMF Commercial ’s six securitizations and $ 7.3 million of loans converted to loans held-for-investment.

The year ended November 30, 2020 includes $ 7.5 million related to the sale of a servicing portfolio.

LENNAR CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

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

15 unchanged sentences

Level 3 — — — 12,764 12,024 ( 740 ) — — —

(1) Represents losses due to valuation adjustments, write-offs, gains (losses) from transfers or acquisitions of real estate through foreclosure and REO impairments recorded during the year.

(2) Valuation adjustments for finished homes, construction in progress and land and land under development were included in Homebuilding costs and expenses and valuation adjustments for other assets were included in homebuilding other income (expense), net in the Company's consolidated statements of operations for the years ended November 30, 2021, 2020 and 2019.

Investments in unconsolidated entities (2) Level 3 1,454 — ( 1,454 ) — — — — — —

(1) Represents losses due to valuation adjustments and deposit and acore write-offs recorded during the year.

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

During the year ended November 30, 2022, total losses, net, for land and land underdevelopment

LENNAR CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

included $ 47.9 million of deposit and pre-acquisition cost write-offs.

Valuation adjustments related to investments in unconsolidated entities were included in equity in earnings (loss) from unconsolidated entities and/or Homebuilding other income (expense), net in the Company's consolidated statements of operations and comprehensive income for the years ended November 30, 2022, 2021 and 2020.

See Note 1 for a detailed description of the Company’s process for identifying and recording valuation adjustments related to Homebuilding inventory.

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 year ended November 30, 2021 and based on the Company's evaluation, during the year ended November 30, 2021, the Company consolidated seven entities that had a total combined assets and liabilities of $ 77.1 million and $ 3.2 million, respectively.

During the year ended November 30, 2021, there were no VIEs that were deconsolidated.

During the year ended November 30, 2020, the Company's Financial Services segment deconsolidated one entity that had total assets and liabilities of $ 291.2 million and $ 204.1 million, respectively.

In January 2019, this JV was formed by the sale of the Company’s retail title agency and its retail title insurance business to this JV entity.

In exchange for the sale of the retail agency and retail title insurance business, the Company received 20 % of the JV entity’s preferred stock, warrants exercisable to purchase additional shares of preferred stock in the JV entity and a note due from the JV to the Company.

The JV entity’s reconsideration event was due to a significant equity raise that was completed during the three months ended May 31, 2020.

The proceeds of the equity raise resulted in approximately a 43 % reduction of the principal amount of debt owed by the JV entity to the Company as well as an approximately 20 % reduction of the Company’s ownership interest in the JV.

The JV remained a VIE at November 30, 2020, however, the Company concluded that it is no longer the primary beneficiary as the Company no longer has the power to direct the VIE.

In aggregate, the resulting fair value of the equity investment and note receivable totaled $ 123.4 million, of which $ 70.8 million was included in Financial Services investments in unconsolidated entities at the time of deconsolidation.

Upon deconsolidation, the Company recorded a gain of $ 61.4 million during the year ended November 30, 2020.

In the current year, the investment in that entity has been reclassified to the Lennar Other Segment, as such, the investment as of November 30, 2020 has also been reclassed to the Lennar Other segment.

See Note 1 for additional discussion regarding the reclass.

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 year ended November 30, 2022 and based on the Company's evaluation, there were six entities that were consolidated and had a total combined assets of $ 134.8 million and an immaterial amount of liabilities.

During the year ended November 30, 2022, there were four VIEs that deconsolidated that had total assets of $ 244.3 million and liabilities of $ 74.2 million.

The carrying amount of the Company's consolidated VIE's assets and non-recourse liabilities are disclosed in the footnote to the 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 and other debts payable.

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 the VIE’s banks.

Other than debt guarantee agreements with a VIE’s banks, 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.

Other than debt guarantee agreements with the 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.

LENNAR CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

Unconsolidated VIEs

At November 30, 2021 and 2020, the Company’s recorded investments in VIEs that are unconsolidated and its estimated maximum exposure to loss were as follows:

T he Company’s recorded investments in VIEs that are unconsolidated and its estimated maximum exposure to loss were as follows:

(In thousands) Investments in Unconsolidated VIEs Lennar’s Maximum Exposure to Loss Investments in

6 unchanged sentences

$ 1,393,622 1,551,856 857,199 1,084,044

(1) As of November 30, 2021 and 2020, the maximum exposure to loss of Homebuilding's investments in unconsolidated VIEs was limited to its investments in unconsolidated VIEs, except as of November 30, 2021, with regard to the Company's remaining commitment to fund capital in the Upward America Venture, a single family for rent platform, and a short-term note provided by the Company to the Upward America Venture.

(2) As of November 30, 2021 and 2020, the maximum exposure to loss of Multifamily's investments in unconsolidated VIEs was primarily limited to its investments in the unconsolidated VIEs, except with regard to the remaining equity commitment of $ 23.1 million and $ 88.1 million, respectively, to fund LMV I and LMV II for futre expenditures related to the construction and development of its projects.

(3) As of both November 30, 2021 and 2020, the maximum exposure to loss of the Financial Services segment was limited to its investment in the unconsolidated entities VIEs and related to the Financial Services' CMBS investments held-to-maturity.

(4) At November 30, 2021, the decrease in investments in unconsolidated VIEs and maximum exposure to loss was related to an entity which had a reconsideration event due to the payoff of a note receivable which caused the entity to no longer be considered a VIE.

(1) As of November 30, 2022 and 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 $ 77.3 million and $ 106.1 million, respectively, commitment to fund capital in Upward America, and $ 52.7 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 November 30, 2022 and 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 I and LMV II in addition to the investment also included to the remaining combined equity commitment of $ 19.3 million and $ 23.1 million as of November 30, 2022 and 2021, respectively, for future expenditures related to the construction and development of its projects.

(3) As of both November 30, 2022 and 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) At November 30, 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 November 30, 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.

2 unchanged sentences

The Company does not have the unilateral ability to exercise participating voting rights without partner consent.

LENNAR CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

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.

5 unchanged sentences

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

During the year ended November 30, 2021, consolidated inventory not owned increased by $ 324.5 million with a corresponding increase to liabilities related to consolidated inventory not owned in the accompanying consolidated balance sheet as of November 30, 2021.The increase was primarily due to additions in the year ended November 30, 2021 as the Company focused on increasing its controlled homesites, partially offset by takedowns.

To reflect the purchase price of the homesite takedowns, the Company had a net reclass related to option deposits from consolidated inventory not owned to land under development in the accompanying consolidated balance sheet as of November 30, 2021.

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.

LENNAR CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

The Company’s exposure to loss related to its option contracts with third parties and unconsolidated entities were as follows:

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

(In thousands) 2022 2021

5 unchanged sentences

From time to time, the Company is also a party to various lawsuits involving purchases and sales of real property.

These lawsuits include claims regarding representations and warranties made in connection with the transfer of properties and disputes regarding the obligation to purchase or sell properties.

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.

6 unchanged sentences

The Company recognizes lease expense for these leases on a straight-line basis over the lease term.

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.

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.

16 unchanged sentences

Present value of lease liabilities (2) $ 158,832

(1) Future minimum lease payments exclude variable lease costs and short-term lease costs, which were $ 29.2 million and $ 1.9 million, respectively, for the year ended November 30, 2021.

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

As of November 30, 2021, the minimum lease payments for these leases that have not yet commenced were immaterial.

(1) Future minimum lease payments exclude variable lease costs and short-term lease costs, which were $ 23.0 million and $ 2.7 million, respectively.

(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.

The Company recognized the lease liabilities on its balance sheets within other liabilities of the respective segments.

As of November 30, 2022, the Company recognized the lease liabilities on its consolidated balance sheets within accounts payable and other liabilities of the respective segments.

The Company's rental expense was as follows:

Years Ended November 30,

(In thousands) 2022 2021 2020

1 unchanged sentence

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

For the year ended November 30, 2021, the Company had an immaterial amount of sublease income.

For the years ended November 30, 2022 and 2021, the Company had an immaterial amount of sublease income.

The Company is committed, under various letters of credit, to perform certain development and construction activities and provide certain guarantees in the normal course of business.

6 unchanged sentences

Over the last decade there has been an industry-wide effort by purchasers to defray their losses by purporting to have found inaccuracies related to sellers’ representations and warranties in particular loan sale agreements.

Since the 2008 housing downturn, there has been an industry-wide effort by purchasers to defray their losses by purporting to have found inaccuracies related to sellers’ representations and warranties in particular loan sale agreements.

Mortgage investors or others 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.

6 unchanged sentences

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 8. Financial Statements and Supplementary Data