What changed in this filing

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Item 1. Financial Statements

2023-04-04 compared with 2022-10-04 · 198 added, 320 removed, 611 unchanged (46% of the section changed)

3 unchanged sentences

(Dollars in thousands)

August 31, November 30,

February 28, November 30,

2023 (1) 2022 (1)

16 unchanged sentences

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

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

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

As of February 28, 2023, total assets include $ 1.4 billion related to consolidated VIEs of which $ 31.1 million is included in Homebuilding cash and cash equivalents, $ 0.7 million in Homebuilding receivables, net, $ 59.0 million in Homebuilding finished homes and construction in progress, $ 742.4 million in Homebuilding land and land under development, $ 502.0 million in Homebuilding consolidated inventory not owned, $ 0.7 million in Homebuilding investments in unconsolidated entities, $ 21.1 million in Homebuilding other assets, $ 31.0 million in Multifamily assets and $ 6.8 million in Lennar Other 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.

See accompanying notes to condensed consolidated financial statements.

2 unchanged sentences

(In thousands, except share amounts)

August 31, November 30,

February 28, November 30,

2023 (2) 2022 (2)

13 unchanged sentences

Class A common stock of $ 0.10 par value;

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

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

February 28, 2023 and November 30, 2022 - 400,000,000 shares;

February 28, 2023 - 258,339,930 shares and November 30, 2022 - 256,084,147 shares

25,834 25,608

Class B common stock of $ 0.10 par value;

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

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

February 28, 2023 and November 30, 2022 - 90,000,000 shares;

February 28, 2023 - 36,601,215 shares and November 30, 2022 - 36,601,215 shares

Additional paid-in capital 5,503,789 5,417,796

1 unchanged sentence

Treasury stock, at cost;

August 31, 2022 - 1,053,856 shares of Class A common stock and 202,063 shares of Class B common stock;

February 28, 2023 - 4,566,767 shares of Class A common stock and 973,655 shares of Class B common stock;

November 30, 2022 - 2,455,387 shares of Class A common stock and 419,860 shares of Class B common stock

( 468,347 ) ( 210,389 )

Accumulated other comprehensive income (loss) 2,090 ( 1,341 )

Accumulated other comprehensive income 3,259 2,408

Total stockholders’ equity 24,418,255 24,100,500

2 unchanged sentences

Total liabilities and equity $ 36,573,154 37,984,295

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

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

(2) As of February 28, 2023, total liabilities include $ 580.0 million related to consolidated VIEs as to which there was no recourse against the Company, of which $ 64.4 million is included in Homebuilding accounts payable, $ 477.6 million in Homebuilding liabilities related to consolidated inventory not owned, $ 30.1 million in Homebuilding senior notes and other debts payable, $ 2.1 million in Homebuilding other liabilities, $ 3.7 million in Multifamily liabilities and $ 2.1 million in Lennar Other liabilities.

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 debt payable, $ 7.2 million in Homebuilding other liabilities, $ 3.8 million in Multifamily liabilities and $ 2.2 million in Lennar Other liabilities.

See accompanying notes to condensed consolidated financial statements.

2 unchanged sentences

(In thousands, except per share amounts)

Three Months Ended Nine Months Ended

August 31, August 31,

2022 2021 2022 2021

Three Months Ended

Homebuilding $ 6,156,305 5,752,205

14 unchanged sentences

Multifamily equity in earnings (loss) from unconsolidated entities and other gain ( 16,168 ) 1,805

Lennar Other equity in earnings (loss) from unconsolidated entities, other income (expense), net, and other gain (loss) ( 31,935 ) ( 689 ) ( 68,493 ) 216,540

Lennar Other unrealized gains (losses) from technology investments ( 85,839 ) 493,671 ( 558,974 ) 690,791

Lennar Other equity in loss from unconsolidated entities, other expense, net, and other gain ( 16,947 ) ( 9,808 )

Lennar Other unrealized loss from technology investments ( 23,954 ) ( 395,170 )

Earnings before income taxes 784,453 676,735

3 unchanged sentences

Net earnings attributable to Lennar $ 596,534 503,581

Other comprehensive income (loss), net of tax:

Net unrealized gain (loss) on securities available-for-sale $ 342 131 1,146 ( 495 )

Other comprehensive income, net of tax:

Net unrealized gain on securities available-for-sale $ 851 742

Reclassification adjustments for gain included in earnings, net of tax — 2,285

Total other comprehensive income (loss), net of tax $ 342 131 3,431 ( 495 )

Total other comprehensive income, net of tax $ 851 3,027

Total comprehensive income attributable to Lennar $ 597,385 506,608

6 unchanged sentences

(In thousands)

Nine Months Ended

Three Months Ended

Cash flows from operating activities:

3 unchanged sentences

Amortization of discount/premium on debt, net ( 838 ) ( 490 )

Equity in earnings (loss) from unconsolidated entities 34,870 ( 64,571 )

Equity in loss from unconsolidated entities 31,187 9,752

Distributions of earnings from unconsolidated entities 4,623 4,822

Share-based compensation expense 86,558 81,457

Deferred income tax (benefit) expense ( 15,991 ) 288,259

Deferred income tax benefit ( 81,940 ) ( 54,032 )

Loans held-for-sale unrealized loss 31,462 27,387

Lennar Other unrealized (gains) losses from technology investments and other (gain) loss 578,674 ( 848,544 )

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

Gain on sale of Financial Services' portfolio/businesses

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

27,247 16,020

Lennar Other unrealized losses from technology investments 23,954 395,170

Valuation adjustments and write-offs of option deposits, pre-acquisition costs and other assets 25,846 11,509

Changes in assets and liabilities:

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

Decrease in receivables 602,757 380,502

Increase in inventories, excluding valuation adjustments and write-offs of option deposits and pre-acquisition costs ( 177,705 ) ( 1,913,634 )

1 unchanged sentence

Decrease in loans held-for-sale 511,807 409,435

Increase in accounts payable and other liabilities 180,946 514,007

Net cash provided by operating activities 551,452 1,312,347

(Decrease) increase in accounts payable and other liabilities ( 690,980 ) 96,455

Net cash provided by (used in) operating activities 978,205 ( 72,231 )

Cash flows from investing activities:

Net additions of operating properties and equipment ( 5,423 ) ( 5,780 )

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

Investments in and contributions to unconsolidated entities ( 57,281 ) ( 138,909 )

Distributions of capital from unconsolidated entities 23,993 173,561

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

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

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

Decrease in Financial Services loans held-for-investment, net 418 11,431

6 unchanged sentences

(In thousands)

Nine Months Ended

Three Months Ended

Cash flows from financing activities:

Net repayments under warehouse facilities $ ( 963,455 ) ( 528,667 )

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

Principal payments on notes payable and other borrowings ( 26,621 ) ( 18,776 )

Proceeds from other borrowings — 13,973

Proceeds from liabilities related to consolidated inventory not owned 70,369 199,483

22 unchanged sentences

Non-cash contributions to unconsolidated entities $ 120 124,864

Consolidation/deconsolidation of unconsolidated/consolidated entities, net:

Inventories $ ( 19,800 ) —

Other assets 41 —

Investments in unconsolidated entities ( 736 ) —

Other liabilities ( 271 ) —

Noncontrolling interests 20,766 —

See accompanying notes to condensed consolidated financial statements.

9 unchanged sentences

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

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

The condensed consolidated statements of operations for the three months ended February 28, 2023 are not necessarily indicative of the results to be expected for the full year.

Use of Estimates

2 unchanged sentences

Cash and Cash Equivalents

Homebuilding cash and cash equivalents as of August 31, 2022 and November 30, 2021 included $ 655.7 million and $ 940.4 million, respectively, of cash held in escrow.

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

Homebuilding Revenue Recognition

Homebuilding revenues and related profits from sales of homes are recognized at the time of the closing of a sale, when title to and possession of the property are transferred to the homebuyer.

In order to promote sales of the homes, the Company may offer sales incentives to homebuyers.

The types of incentives vary on a community-by-community basis and home-by-home basis.

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

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

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

Homebuilding cash and cash equivalents as of February 28, 2023 and November 30, 2022 included $ 488.0 million and $ 1.0 billion, respectively, of cash held in escrow for approximately two days .

Share-based Payments

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

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

During the three months ended February 28, 2023 and 2022, the Company granted employees 1.6 million and 1.4 million of nonvested shares, respectively.

Recently Adopted Accounting Pronouncements

In December 2019, the FASB issued ASU 2019-12, Income Taxes (Topic 740), Simplifying the Accounting for Income Taxes ("ASU 2019-12").

ASU 2019-12 was effective for the Company’s fiscal year beginning December 1, 2021.

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, 2024, with earlier adoption permitted.

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

In December 2022, the FASB issued ASU 2022-06, "Reference Rate Reform - Deferral of the Sunset Date of Topic 848," which defers the sunset date from December 31, 2022 to December 31, 2024.

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

Lennar Corporation and Subsidiaries

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

(2) Operating and Reporting Segments

8 unchanged sentences

(7) Lennar Other

Lennar Corporation and Subsidiaries

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

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

(In thousands) August 31, 2022

(In thousands) February 28, 2023

Homebuilding Financial

16 unchanged sentences

$ 10,328,988 1,317,775 283,380 87,724 12,017,867

Lennar Corporation and Subsidiaries

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

(In thousands) November 30, 2022

17 unchanged sentences

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

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

(1) Receivables, net for Financial Services primarily related to loans sold to investors for which the Company had not yet been paid as of February 28, 2023 and November 30, 2022, respectively.

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

(3) Investments in equity securities include investments of $ 178.0 million and $ 100.1 million without readily available fair values as of August 31, 2022 and November 30, 2021, respectively.

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

(3) Investments in equity securities include investments of $ 178.0 million without readily available fair values as of both February 28, 2023 and November 30, 2022, respectively.

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

Lennar Corporation and Subsidiaries

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

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

Three Months Ended August 31, 2022

Three Months Ended February 28, 2023

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

Unallocated Total

Revenue $ 8,479,496 202,078 243,056 9,801 — 8,934,431

Operating earnings (loss) (1) 1,963,224 63,348 48,487 ( 117,980 ) — 1,957,079

Corporate general and administrative expenses — — — — 115,557 115,557

Charitable foundation contribution — — — — 17,248 17,248

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

Three Months Ended August 31, 2021

Revenues $ 6,156,305 182,981 143,523 7,620 — 6,490,429

3 unchanged sentences

Earnings (loss) before income taxes 906,839 78,737 ( 21,601 ) ( 39,757 ) ( 139,765 ) 784,453

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

Lennar Corporation and Subsidiaries

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

Nine Months Ended August 31, 2022

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

Unallocated Total

Three Months Ended February 28, 2022

Revenues $ 5,752,205 176,701 267,359 7,251 — 6,203,516

1 unchanged sentence

Corporate general and administrative expenses — — — — 113,661 113,661

— — — — 334,425 334,425

Charitable foundation contribution — — — — 12,538 12,538

Earnings (loss) before income taxes 1,109,850 90,791 5,427 ( 403,134 ) ( 126,199 ) 676,735

Nine Months Ended August 31, 2021

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

Operating earnings 3,275,488 379,610 12,130 909,221 — 4,576,449

Corporate general and administrative expenses

— — — — 296,190 296,190

Charitable foundation contribution — — — — 42,006 42,006

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

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

Homebuilding Segments

11 unchanged sentences

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

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

February 28, 2023 $ 6,800,191 4,074,510 3,592,725 12,076,029 1,371,403 4,387,242 32,302,100

November 30, 2022 6,877,581 4,010,610 3,742,663 12,182,709 1,382,864 4,487,735 32,684,162

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

Three Months Ended August 31, 2022

Three Months Ended February 28, 2023

(In thousands) East Central Texas West Other Total Homebuilding

1 unchanged sentence

Operating earnings (loss) 424,196 130,522 125,319 230,500 ( 3,698 ) 906,839

Three Months Ended August 31, 2021

Three Months Ended February 28, 2022

$ 1,670,186 1,109,272 812,619 2,150,798 9,330 5,752,205

2 unchanged sentences

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

Nine Months Ended August 31, 2022

(In thousands) East Central Texas West Other Total Homebuilding

$ 6,424,922 3,970,805 3,048,676 8,733,429 31,851 22,209,683

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

Nine Months Ended August 31, 2021

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

Operating earnings (loss) 928,805 488,300 491,708 1,423,332 ( 56,657 ) 3,275,488

Financial Services

3 unchanged sentences

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

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

At February 28, 2023, the Financial Services warehouse facilities were all 364 -day repurchase facilities and were used to fund residential mortgages or commercial mortgages for LMF Commercial as follows:

(In thousands) Maximum Aggregate Commitment

Residential facilities maturing:

October 2022 $ 200,000

December 2022 500,000

May 2023 $ 200,000

August 2023 600,000

December 2023 500,000

Total - Residential facilities

LMF Commercial facilities maturing

July 2023 $ 50,000

November 2023 100,000

December 2023 400,000

July 2023 50,000

Total - LMF Commercial facilities

1 unchanged sentence

The facilities are non-recourse to the Company and are expected to be renewed or replaced with other facilities when they mature.

The LMF Commercial facilities finance LMF Commercial loan originations and securitization activities and were secured by up to an 80 % interest in the originated commercial loans financed.

The LMF Commercial facilities finance LMF Commercial loan originations and securitization activities and were secured by up to 80 % interests in the originated commercial loans financed.

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

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

(In thousands) February 28, 2023 November 30, 2022

Borrowings under the residential facilities $ 1,028,283 1,877,411

10 unchanged sentences

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

The Company establishes accruals

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

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

The provision for loan losses was immaterial for both the three months ended February 28, 2023 and 2022.

Loan origination liabilities were $ 12.1 million and $ 11.8 million as of February 28, 2023 and November 30, 2022, respectively, and included in Financial Services’ liabilities in the Company's condensed consolidated balance sheets.

Lennar Corporation and Subsidiaries

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

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

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

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

LMF Commercial - loans held-for-sale

LMF Commercial originated commercial loans as follows:

Three Months Ended Nine Months Ended

August 31, August 31,

Three Months Ended

(Dollars in thousands) 2023 2022

2 unchanged sentences

Securitizations 1 1

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

(1) During both the three months ended February 28, 2023 and 2022, all the commercial loans originated were recorded as loans held-for-sale, which are held at fair value.

Investments held-to-maturity

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

At February 28, 2023 and November 30, 2022, the Financial Services segment held commercial mortgage-backed securities ("CMBS").

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

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

Based on the segment’s assessment, no impairment charges were recorded during either the three months ended February 28, 2023 or 2022.

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

Details related to Financial Services' CMBS were as follows:

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

(Dollars in thousands) February 28, 2023 November 30, 2022

Carrying value $ 141,854 143,251

1 unchanged sentence

Incurred interest rate 3.4 % 3.4 %

August 31, 2022

February 28, 2023

Discount rates at purchase 6 % — 84 %

8 unchanged sentences

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

Lennar Corporation and Subsidiaries

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

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

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.

Lennar Corporation and Subsidiaries

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

The Company has investments in Blend Labs, Inc.

6 unchanged sentences

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

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

Three Months Ended Nine Months Ended

August 31, August 31,

The following is a detail of Lennar Other unrealized gains (loss) from mark-to-market adjustments on the Company's technology investments:

Three Months Ended

(In thousands) 2023 2022

Blend Labs (BLND) mark-to-market $ ( 518 ) 6,852 ( 21,510 ) 6,852

Hippo (HIPO) mark-to-market ( 32,933 ) 324,855 ( 195,336 ) 324,855

Opendoor (OPEN) mark-to-market ( 54,391 ) 37,301 ( 218,751 ) 272,756

SmartRent (SMRT) mark-to-market ( 23,118 ) 100,793 ( 71,431 ) 100,793

Sonder (SOND) mark-to-market ( 168 ) — ( 2,300 ) —

Sunnova (NOVA) mark-to-market 25,289 23,870 ( 49,646 ) ( 14,465 )

Lennar Other unrealized gains (losses) from technology investments $ ( 85,839 ) 493,671 ( 558,974 ) 690,791

Blend Labs (BLND) $ 586 ( 7,442 )

Hippo (HIPO) 6,632 ( 124,457 )

Opendoor (OPEN) ( 7,691 ) ( 143,361 )

SmartRent (SMRT) 1,305 ( 44,363 )

Sonder (SOND) ( 320 ) ( 506 )

Sunnova (NOVA) ( 24,466 ) ( 75,041 )

Lennar Other unrealized losses from technology investments $ ( 23,954 ) ( 395,170 )

Doma Holdings, Inc.

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

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

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

("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 February 28, 2023, the Company owned approximately 25 % of Doma .

Lennar Corporation and Subsidiaries

3 unchanged sentences

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

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

(In thousands) February 28, 2023 November 30, 2022

Investments in unconsolidated entities (1) (2) $ 1,178,802 1,173,164

2 unchanged sentences

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

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

As of August 31, 2022 and November 30, 2021, the Homebuilding segment's unconsolidated entities had non-recourse debt with completion guarantees of $ 183.6 million and $ 241.0 million, respectively.

As of February 28, 2023 and November 30, 2022, the carrying amount of the Company's investment was $ 395.3 million and $ 382.9 million, respectively.

As of February 28, 2023 and November 30, 2022, the Homebuilding segment's unconsolidated entities had non-recourse debt with completion guarantees of $ 340.2 million and $ 333.6 million, respectively.

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

1 unchanged sentence

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

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

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

As of both February 28, 2023 and November 30, 2022, the fair values of the repayment guarantees, maintenance guarantees, and completion guarantees were not material.

The Company believes that as of February 28, 2023, in the event it becomes legally obligated to perform under a guarantee of the obligation of a Homebuilding unconsolidated entity due to a triggering event under a guarantee, the collateral would be sufficient to repay at least a significant portion of the obligation or the Company and its partners would contribute additional capital into the venture.

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

The details related to these are unchanged from the disclosure in the Company's Notes to the Financial Statements section in its Form 10-K for the year ended November 30, 2022.

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

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

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

Upward America has raised equity commitments totaling $ 1.6 billion.

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

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

As of February 28, 2023 and November 30, 2022, the carrying amount of the Company's investment in Upward America was $ 34.3 million and $ 37.7 million, respectively.

Multifamily Unconsolidated Entities

2 unchanged sentences

The details related to these are unchanged from the disclosure in the Company's Notes to the Financial Statements section in its Form 10-K for the year ended November 30, 2022.

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

As of August 31, 2022 and November 30, 2021, Multifamily segment's unconsolidated entities had non-recourse debt with completion guarantees of $ 1.1 billion and $ 855.2 million, respectively.

As of both February 28, 2023 and November 30, 2022, the fair value of the completion guarantees was immaterial.

As of February 28, 2023 and November 30, 2022, Multifamily segment's unconsolidated entities had non-recourse debt with completion guarantees of $ 1.2 billion and $ 1.0 billion, respectively.

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

1 unchanged sentence

The details of the activity were as follows:

Three Months Ended Nine Months Ended

August 31, August 31,

Three Months Ended

(In thousands) 2023 2022

1 unchanged sentence

General contractor costs 120,733 113,233

Management fee income 17,514 13,822 46,968 42,881

Land sales to joint ventures — 131,553

Management fee income, net of deferrals 18,121 13,127

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

Lennar Corporation and Subsidiaries

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

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

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

involved in the development, construction and property management of class-A multifamily assets.

The Multifamily segment completed the initial closing of the Fund.

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

The Company currently has a $ 20.3 million investment in the Fund.

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

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

August 31, 2022

Details of LMV I and LMV II as of and during the three months ended February 28, 2023 are included below:

February 28, 2023

(In thousands) LMV I LMV II

5 unchanged sentences

Lennar's remaining commitments (1) 3,635 14,196

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

Distributions to Lennar during the three months ended February 28, 2023 — —

(1) While there are remaining commitments with LMV I, there are no plans for additional capital calls.

Other Unconsolidated Entities

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

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

The Company also had strategic technology investments in unconsolidated entities of $ 148.9 million and $ 145.6 million, as of August 31, 2022 and November 30, 2021, respectively.

The Company's investment in the Rialto funds and investment vehicles totaled $ 177.7 million and $ 185.1 million as of February 28, 2023 and November 30, 2022, respectively.

In addition, the Company is entitled to a portion of the carried interest distributions by those funds.

The Company also had strategic technology investments in unconsolidated entities and investment funds of $ 137.9 million and $ 131.5 million, as of February 28, 2023 and November 30, 2022, respectively.

(4) Stockholders' Equity

The following tables reflect the changes in equity attributable to both Lennar Corporation and the noncontrolling interests of its consolidated subsidiaries in which it has less than a 100% ownership interest for the three and nine months ended August 31, 2022 and 2021:

Three Months Ended August 31, 2022

Three Months Ended February 28, 2023

(In thousands) Total

5 unchanged sentences

Earnings Noncontrolling

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

Balance at November 30, 2022 $ 24,240,367 25,608 3,660 5,417,796 ( 210,389 ) 2,408 18,861,417 139,867

Net earnings (including net earnings attributable to noncontrolling interests) 599,308 — — — — — 596,534 2,774

1 unchanged sentence

( 66,990 ) 226 — ( 189 ) ( 67,027 ) — — —

Purchases of treasury stock ( 190,931 ) — — — ( 190,931 ) — — —

Amortization of restricted stock

7 unchanged sentences

Total other comprehensive income, net of tax 851 — — — — 851 — —

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

Balance at February 28, 2023 $ 24,555,287 25,834 3,660 5,503,789 ( 468,347 ) 3,259 19,350,060 137,032

Lennar Corporation and Subsidiaries

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

Three Months Ended August 31, 2021

(In thousands) Total

Equity Class A

Common Stock Class B

Common Stock Additional

Paid - in Capital Treasury

Stock Accumulated Other Comprehensive Income (Loss) Retained

Earnings Noncontrolling

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

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

Employee stock and directors plans

( 32,426 ) 1 — 55 ( 32,482 ) — — —

Purchases of treasury stock ( 246,385 ) — — — ( 246,385 ) — — —

Amortization of restricted stock

24,752 — — 24,752 — — — —

Cash dividends ( 77,662 ) — — — — — ( 77,662 ) —

Receipts related to noncontrolling interests

4,670 — — — — — — 4,670

Payments related to noncontrolling interests

( 3,633 ) — — — — — — ( 3,633 )

Non-cash purchase or activity of noncontrolling interests, net ( 1,224 ) — — ( 1,218 ) — — — ( 6 )

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

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

Nine Months Ended August 31, 2022

Three Months Ended February 28, 2022

(In thousands) Total

9 unchanged sentences

( 54,886 ) 193 — ( 140 ) ( 54,939 ) — — —

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

Purchases of treasury stock ( 526,361 ) — — — ( 526,361 ) — — —

8 unchanged sentences

Total other comprehensive income, net of tax 3,027 — — — — 3,027 — —

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

Nine Months Ended August 31, 2021

(In thousands) Total

Equity Class A

Common Stock Class B

Common Stock Additional

Paid - in Capital Treasury

Stock Accumulated Other Comprehensive Loss Retained

Earnings Noncontrolling

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

Net earnings (including net earnings attributable to noncontrolling interests) 3,262,899 — — — — — 3,239,620 23,279

Employee stock and directors plans

( 63,242 ) 156 — 1,161 ( 64,559 ) — — —

Purchases of treasury stock ( 387,955 ) — — — ( 387,955 ) — — —

Amortization of restricted stock

105,846 — — 105,846 — — — —

Cash dividends ( 233,988 ) — — — — — — ( 233,988 ) —

Receipts related to noncontrolling interests

18,575 — — — — — — 18,575

Payments related to noncontrolling interests

( 20,859 ) — — — — — — ( 20,859 )

Non-cash purchase or activity of noncontrolling interests, net ( 643 ) — — ( 4,454 ) — — — 3,811

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

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

Lennar Corporation and Subsidiaries

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

On September 28, 2022, the Company's Board of Directors declared a quarterly cash dividend of $ 0.375 per share on both its Class A and Class B common stock, payable on October 27, 2022 to holders of record at the close of business on October 13, 2022 .

On July 21, 2022, the Company paid cash dividends of $ 0.375 per share on both its Class A and Class B common stock to holders of record at the close of business on July 7, 2022, as declared by its Board of Directors on June 22, 2022.

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

On February 10, 2023, the Company paid cash dividends of $ 0.375 per share on both its Class A and Class B common stock to holders of record at the close of business on January 27, 2023, as declared by its Board of Directors on January 12, 2023.

The Company approved and paid cash dividends of $ 0.375 per share for each of the four quarters of 2022 on both its Class A and Class B common stock.

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

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

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

As a result of prior authorizations being almost exhausted, in March 2022, the Company's Board of Directors approved an additional authorization for the Company to repurchase up to the lesser of $ 2 billion in value, or 30 million in shares, of its outstanding Class A or Class B common stock.

In March 2022, the Company's Board of Directors approved an authorization for the Company to repurchase up to the lesser of $ 2 billion in value, or 30 million in shares, of its outstanding Class A or Class B common stock.

The repurchase authorization has no expiration date.

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

Three Months Ended Nine Months Ended

August 31, August 31

2022 2021 2022 2021

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

The authorization was in addition to what was remaining of the October 2021 stock repurchase program.

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

Three Months Ended

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

Shares repurchased 1,446,205 553,795 4,616,000 652,000

3 unchanged sentences

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

Three Months Ended Nine Months Ended

August 31, August 31,

Three Months Ended

(Dollars in thousands) 2023 2022

1 unchanged sentence

Effective tax rate (1) 23.7 % 25.0 %

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

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

(1) In the three months ended February 28, 2023, the Company's overall effective income tax rate was lower than in the three months ended February 28, 2022, primarily due to the reinstatement of the new energy efficient home credit as a result of the enactment of the Inflation Reduction Act during the third quarter of 2022.

For both the three months ended February 28, 2023 and 2022, the effective tax rate included state income tax expense and non-deductible executive compensation, partially offset by energy efficient home and solar tax credits.

Lennar Corporation and Subsidiaries

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

(6) Earnings Per Share

4 unchanged sentences

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

Lennar Corporation and Subsidiaries

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

Basic and diluted earnings per share were calculated as follows:

Three Months Ended Nine Months Ended

August 31, August 31,

Three Months Ended

(In thousands, except per share amounts) 2023 2022

10 unchanged sentences

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

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

For both the three months ended February 28, 2023 and 2022, there were no options to purchase shares of common stock that were outstanding and anti-dilutive.

(7) Homebuilding Senior Notes and Other Debts Payable

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

(Dollars in thousands) February 28, 2023 November 30, 2022

4.875 % senior notes due December 2023

12 unchanged sentences

896,446 896,259

4.75 % senior notes due 2022

Mortgage notes on land and other debt 400,802 413,873

$ 4,033,335 4,047,294

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

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

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

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

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

The carrying amounts of the senior notes in the table above are net of debt issuance costs of $ 6.9 million and $ 7.6 million as of February 28, 2023 and November 30, 2022, respectively.

Lennar Corporation and Subsidiaries

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

The maximum available borrowings on the Company's unsecured revolving credit facility (the "Credit Facility") were as follows:

(In thousands) February 28, 2023

Commitment - maturing in April 2024 $ 350,000

Commitment - maturing in May 2027 2,225,000

Total commitment $ 2,575,000

Accordion feature 425,000

Total maximum borrowings capacity $ 3,000,000

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

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

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

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

The maturity, debt covenants and details of the Credit Facility are unchanged from the disclosure in the Company's Financial Condition and Capital Resources section in its Form 10-K for the year ended November 30, 2022.

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

Lennar Corporation and Subsidiaries

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

The Company's processes for posting performance and financial letters of credit and surety bonds are unchanged from the disclosure in the Company's Financial Condition and Capital Resources section in its Form 10-K for the year ended November 30, 2022.

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

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

(In thousands) February 28, 2023 November 30, 2022

Performance letters of credit $ 1,236,516 1,259,033

9 unchanged sentences

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

Three Months Ended Nine Months Ended

August 31, August 31,

Three Months Ended

(In thousands) 2023 2022

4 unchanged sentences

Warranty reserve, end of period $ 403,334 374,146

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

(1) The adjustments to pre-existing warranties from changes in estimates during the three months ended February 28, 2023 and 2022 primarily related to specific claims in certain of the Company's homebuilding communities and other adjustments.

Lennar Corporation and Subsidiaries

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

(9) Financial Instruments and Fair Value Disclosures

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

The following table presents the carrying amounts and estimated fair values of financial instruments held or issued by the Company at February 28, 2023 and November 30, 2022, using available market information and what the Company believes to be appropriate valuation methodologies.

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

1 unchanged sentence

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

August 31, 2022 November 30, 2021

February 28, 2023 November 30, 2022

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

9 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 Condensed Consolidated Financial Statements (Unaudited) (Continued)

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

7 unchanged sentences

Fair Value Hierarchy Fair Value at

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

(In thousands) February 28, 2023 November 30, 2022

Financial Services Assets:

6 unchanged sentences

Investments available-for-sale Level 3 36,332 35,482

Lennar Corporation and Subsidiaries

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

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

August 31, 2022 November 30, 2021

February 28, 2023 November 30, 2022

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

4 unchanged sentences

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

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

The fair value of these are included in Financial Services’ loans held-for-sale as of February 28, 2023 and November 30, 2022.

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

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

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

The details and methods of the calculation are unchanged from the fair value disclosure in the Company's Notes to the Financial Statements section in its Form 10-K for the year ended November 30, 2022.

5 unchanged sentences

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

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

Unobservable inputs As of February 28, 2023 As of November 30, 2022

Mortgage prepayment rate 8 % 8 %

1 unchanged sentence

Delinquency rate 8 % 7 %

Lennar Corporation and Subsidiaries

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

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

5 unchanged sentences

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 Condensed Consolidated Financial Statements (Unaudited) (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:

Three Months Ended Nine Months Ended

August 31, August 31,

Three Months Ended

(In thousands) 2023 2022

4 unchanged sentences

Forward options ( 852 ) —

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

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

Investments in equity securities $ ( 23,954 ) ( 395,170 )

Changes in fair value included in other comprehensive gain (loss), net of tax:

Changes in fair value included in other comprehensive income, net of tax:

Lennar Other investments available-for-sale $ 851 742

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

Lennar Corporation and Subsidiaries

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

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

8 unchanged sentences

Ending balance $ 3,450 25,835 2,793 85,795

Nine Months Ended

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

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

Purchases/loan originations 275 518,345 499 599,465

Sales/loan originations sold, including those not settled — ( 511,733 ) — ( 665,062 )

Disposals/settlements ( 320 ) — ( 1,222 ) ( 11,392 )

Changes in fair value (1) 909 247 992 ( 2,551 )

Interest and principal paydowns — ( 480 ) — ( 919 )

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

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

8 unchanged sentences

Land and land under development (2) Level 3 39,616 23,142 ( 16,474 ) 20,752 10,760 ( 9,992 )

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

Nine Months Ended

(In thousands) Fair Value

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

Non-financial assets - Homebuilding:

Finished homes and construction in progress Level 3 $ 55,292 48,075 ( 7,217 ) 25,752 11,015 ( 14,737 )

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

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

Other assets (3) Level 3 3,065 — ( 3,065 ) — — —

(1) Represents losses due to valuation adjustments and deposit and pre-acquisition write-offs recorded during the respective periods.

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

Valuation adjustments related to investments in unconsolidated entities were included in

Lennar Corporation and Subsidiaries

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

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

During the three months ended February 28, 2023, total losses, net, for land and land underdevelopment included $ 14.5 million of deposit and pre-acquisition cost write-offs.

(3) Valuation adjustments related to investments in unconsolidated entities were included in Homebuilding other income (expense), net in the Company's condensed consolidated statements of operations and comprehensive income for the three months ended February 28, 2023.

Finished homes and construction in progress are included within inventories.

Inventories are stated at cost unless the inventory within a community is determined to be impaired, in which case the impaired inventory is written down to fair value.

Lennar Corporation and Subsidiaries

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

The Company disclosed its accounting policy related to inventories and its review for indicators of impairment in the Summary of Significant Accounting Policies in its Form 10-K for the year ended November 30, 2022.

4 unchanged sentences

Communities with valuation adjustments

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

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

(in thousands)

1 unchanged sentence

(in thousands)

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

August 31, 2021 1,192 8 1 17,117 11,849

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

Nine Months Ended

Unobservable inputs

Average selling price $ 750,000 $ 635,000

Absorption rate per quarter (homes) 2 11

Discount rate 20 % 20 %

February 28, 2023 1,210 27 — $ — $ —

February 28, 2022 1,199 5 — — —

(10) Variable Interest Entities

The Company evaluated the joint venture ("JV") agreements of its JV's that were formed or that had reconsideration events, such as changes in the governing documents or to debt arrangements, during the nine months ended August 31, 2022 and based on the Company's evaluation, there were six variable interest entities ("VIEs") that consolidated with total combined assets of $ 134.8 million and an immaterial amount of liabilities.

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

The 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.

Based on the Company's evaluation, there were no variable interest entities ("VIEs") that were consolidated or deconsolidated during the three months ended February 28, 2023.

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

1 unchanged sentence

The VIEs are not guarantors of the Company’s senior notes or other debts payable.

The assets held by a VIE usually are collateral for that VIE’s debt.

The Company and other partners do not generally have an obligation to make capital contributions to a VIE unless the Company and/or the other partner(s) have entered into debt guarantees with a VIE’s lenders.

Other than debt guarantee agreements with a VIE’s lenders, there are no liquidity arrangements or agreements to fund capital or purchase assets that could require the Company to provide financial support to a VIE.

The assets held by a VIE are usually a collateral for that VIE’s debt.

Other than debt guarantee agreements with 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 Condensed Consolidated Financial Statements (Unaudited) (Continued)

Unconsolidated VIEs

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

August 31, 2022 November 30, 2021

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

February 28, 2023 November 30, 2022

(In thousands) Investments in

8 unchanged sentences

$ 1,226,993 1,329,387 1,393,622 1,551,856

(1) As of August 31, 2022 and November 30, 2021, the maximum exposure to loss of Homebuilding's investments in unconsolidated VIEs was limited to its investments in unconsolidated VIEs, except with regard to the Company's remaining $ 92.3 million and $ 106.1 million, respectively, commitment to fund capital in Upward America, and $ 88.4 million and $ 87.9 million, respectively, of receivables relating to a short-term loan and management fee owed to the Company by Upward America.

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

The maximum exposure for LMV 1 and LMV II in addition to the investment also included to the remaining combined equity commitment of $ 20.5 million and $ 23.1 million as of August 31, 2022 and November 30, 2021, respectively, for future expenditures related to the construction and development of its projects.

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

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

(1) As of February 28, 2023 and November 30, 2022, the Company's 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 $ 68.6 million and $ 77.3 million, respectively, commitment to fund capital in Upward America.

In addition, as of February 28, 2023, there was recourse debt of a VIE of $ 10.5 million and as of November 30, 2022, there was $ 52.7 million of receivables relating to a short-term loan and management fee owed to the Company by Upward America.

(2) As of February 28, 2023 and November 30, 2022, the Company's maximum exposure to loss of Multifamily's investments in unconsolidated VIEs was primarily limited to its investments in the unconsolidated VIEs.

The maximum exposure for LMV 1 and LMV II in addition to the investment also included the remaining combined equity commitment of $ 14.2 million and $ 19.3 million as of February 28, 2023 and November 30, 2022, respectively, for future expenditures related to the construction and development of its projects.

Decrease in exposure for the three months ended February 28, 2023 is primarily due to the removal of LMV I as the Fund does not expect to call for equity in the future.

As a result, LMV I is not a VIE as of February 28, 2023.

(3) As of February 28, 2023 and November 30, 2022, the Company's maximum exposure to loss of the Financial Services segment was limited to its investment in the unconsolidated VIEs and related to the Financial Services' CMBS investments held-to-maturity.

(4) As of February 28, 2023, the Company's maximum recourse exposure to loss of the Lennar Other segment was limited to its investments in the unconsolidated VIEs.

Lennar Corporation and Subsidiaries

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

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

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

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 February 28, 2023 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.

7 unchanged sentences

The Company has access to land through option contracts, which generally enable it to control portions of properties owned by third parties (including land funds) and unconsolidated entities until the Company has determined whether to exercise the options.

The Company evaluates all option contracts for land to determine whether they are VIEs and, if so, whether the Company is the primary beneficiary of certain of these option contracts.

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

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

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

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

The Company evaluates third party land holding companies in which the Company holds option contracts for land to determine whether they are VIEs and, if so, whether the Company is the primary beneficiary of certain of these land holding companies.

Land under option included in consolidated inventory not owned which was consolidated as a result of the Company being deemed the primary beneficiary of land holding companies was immaterial as of February 28, 2023.

Therefore, consolidated inventory not owned as of February 28, 2023 primarily consists of land related to land sale transactions that did not meet the criteria for revenue recognition and derecognition of land by the Company as a result of the Company maintaining an option to repurchase the land in the future.

During the three months ended February 28, 2023, consolidated inventory not owned decreased by $ 107.8 million with a corresponding decrease to liabilities related to consolidated inventory not owned in the accompanying condensed consolidated balance sheet as of February 28, 2023.

The decrease was primarily due to an increase in homesite takedowns in the quarter.

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

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

Lennar Corporation and Subsidiaries

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

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

(Dollars in thousands) February 28, 2023 November 30, 2022

Non-refundable option deposits and pre-acquisition costs $ 1,992,028 1,990,946

1 unchanged sentence

(11) Commitments and Contingent Liabilities

The Company is party to various claims, legal actions and complaints arising in the ordinary course of business.

In the opinion of management, the disposition of these matters will not have a material adverse effect on the Company’s consolidated financial statements.

The Company is party to various claims, legal actions and complaints relating to homes sold by the Company arising in the ordinary course of business.

In the opinion of management, the disposition of these matters will not have a material adverse effect on the Company’s condensed consolidated financial statements.

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

4 unchanged sentences

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

Right-of-use ("ROU") assets and lease liabilities are recorded on the balance sheet for all leases, except leases with an initial term of 12 months or less.

Right-of-use ("ROU") assets and

Lennar Corporation and Subsidiaries

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

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.

1 unchanged sentence

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

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

(Dollars in thousands) February 28, 2023 November 30, 2022

Right-of-use assets $ 143,457 149,966

2 unchanged sentences

Weighted-average discount rate 3.1 % 3.0 %

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

Future minimum payments under the noncancellable leases in effect at February 28, 2023 were as follows:

(In thousands) Lease Payments

2023 $ 25,877

2027 and thereafter 56,957

5 unchanged sentences

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

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

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

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

Nine Months Ended

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

Three Months Ended

(In thousands) 2023 2022

Rental expense $ 26,904 25,641

Payment on lease liabilities 23,170 22,174

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

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

For both the three months ended February 28, 2023 and 2022, the Company had an immaterial amount of sublease income.

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

What changed 10-Q

Item 1. Financial Statements