What changed in this filing

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Item 1. Financial Statements

2023-09-29 compared with 2023-06-30 · 170 added, 166 removed, 806 unchanged (29% of the section changed)

3 unchanged sentences

(Dollars in thousands)

May 31, November 30,

August 31, 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 May 31, 2023, total assets include $ 1.6 billion related to consolidated VIEs of which $ 30.6 million is included in Homebuilding cash and cash equivalents, $ 0.3 million in Homebuilding receivables, net, $ 59.0 million in Homebuilding finished homes and construction in progress, $ 779.1 million in Homebuilding land and land under development, $ 622.4 million in Homebuilding consolidated inventory not owned, $ 0.5 million in Homebuilding investments in unconsolidated entities, $ 23.5 million in Homebuilding other assets, $ 34.4 million in Multifamily assets and $ 6.9 million in Lennar Other assets.

As of August 31, 2023, total assets include $ 1.9 billion related to consolidated VIEs of which $ 33.4 million is included in Homebuilding cash and cash equivalents, $ 2.3 million in Homebuilding receivables, net, $ 37.5 million in Homebuilding finished homes and construction in progress, $ 847.8 million in Homebuilding land and land under development, $ 921.4 million in Homebuilding consolidated inventory not owned, $ 0.5 million in Homebuilding investments in unconsolidated entities, $ 25.3 million in Homebuilding other assets and $ 31.9 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.

3 unchanged sentences

(In thousands, except share amounts)

May 31, November 30,

August 31, November 30,

2023 (2) 2022 (2)

13 unchanged sentences

Class A common stock of $ 0.10 par value;

May 31, 2023 and November 30, 2022 - 400,000,000 shares;

May 31, 2023 - 258,433,210 shares and November 30, 2022 - 256,084,147 shares

August 31, 2023 and November 30, 2022 - 400,000,000 shares;

August 31, 2023 - 258,444,467 shares and November 30, 2022 - 256,084,147 shares

25,844 25,608

Class B common stock of $ 0.10 par value;

May 31, 2023 and November 30, 2022 - 90,000,000 shares;

May 31, 2023 - 36,601,215 shares and November 30, 2022 - 36,601,215 shares

August 31, 2023 and November 30, 2022 - 90,000,000 shares;

August 31, 2023 - 36,601,215 shares and November 30, 2022 - 36,601,215 shares

Additional paid-in capital 5,561,793 5,417,796

1 unchanged sentence

Treasury stock, at cost;

May 31, 2023 - 5,907,705 shares of Class A common stock and 1,703,974 shares of Class B common stock;

August 31, 2023 - 8,292,109 shares of Class A common stock and 2,398,674 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

5 unchanged sentences

Total liabilities and equity $ 37,438,125 37,984,295

(2) As of May 31, 2023, total liabilities include $ 715.3 million related to consolidated VIEs as to which there was no recourse against the Company, of which $ 85.6 million is included in Homebuilding accounts payable, $ 597.9 million in Homebuilding liabilities related to consolidated inventory not owned, $ 25.9 million in Homebuilding senior notes and other debts payable, $ 3.9 million in Multifamily liabilities and $ 2.0 million in Lennar Other liabilities.

(2) As of August 31, 2023, total liabilities include $ 1.1 billion related to consolidated VIEs as to which there was no recourse against the Company, of which $ 147.8 million is included in Homebuilding accounts payable, $ 878.2 million in Homebuilding liabilities related to consolidated inventory not owned, $ 25.9 million in Homebuilding senior notes and other debts payable and $ 4.0 million in Multifamily 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.

3 unchanged sentences

(In thousands, except per share amounts)

Three Months Ended Six Months Ended

May 31, May 31,

Three Months Ended Nine Months Ended

August 31, August 31,

2023 2022 2023 2022

14 unchanged sentences

Other income (expense), net and other gains (losses) 44,151 ( 19,296 ) 57,511 ( 25,564 )

Lennar Other unrealized gains (losses) from technology investments 25,497 ( 77,965 ) 1,543 ( 473,135 )

Lennar Other unrealized losses from technology investments ( 15,713 ) ( 85,839 ) ( 14,170 ) ( 558,974 )

Earnings before income taxes 1,475,161 1,824,274 3,418,235 4,255,843

15 unchanged sentences

(In thousands)

Six Months Ended

Nine Months Ended

Cash flows from operating activities:

7 unchanged sentences

Deferred income tax benefit ( 102,322 ) ( 15,991 )

Gain on repurchases of senior notes ( 724 ) —

Gain on redemption/repurchases of senior notes ( 6,878 ) —

Loans held-for-sale unrealized loss 33,358 41,356

Lennar Other unrealized (gains) losses from technology investments and other (gains) losses 1,000 482,829

Gain on sale of other assets and operating properties and equipment ( 3,726 ) ( 7,572 )

Lennar Other unrealized losses from technology investments and other (gains) losses 14,131 578,674

Gain on sale of other assets ( 7,015 ) ( 7,572 )

Valuation adjustments and write-offs of option deposits, pre-acquisition costs and other assets 96,451 27,247

Changes in assets and liabilities:

Decrease in receivables 435,880 126,247

(Increase) decrease in inventories, excluding valuation adjustments and write-offs of option deposits and pre-acquisition costs 10,741 ( 3,114,358 )

(Increase) decrease in receivables 167,573 ( 164,383 )

Increase in inventories, excluding valuation adjustments and write-offs of option deposits and pre-acquisition costs ( 7,571 ) ( 3,894,170 )

Increase in other assets ( 100,843 ) ( 110,761 )

4 unchanged sentences

Net additions of operating properties and equipment ( 53,610 ) ( 27,534 )

Proceeds from the sale of operating properties and equipment and other assets 7,762 18,247

Proceeds from the sale of other assets 13,215 18,247

Investments in and contributions to unconsolidated entities ( 152,530 ) ( 396,734 )

9 unchanged sentences

(In thousands)

Six Months Ended

Nine Months Ended

Cash flows from financing activities:

Net repayments under warehouse facilities $ ( 980,929 ) ( 238,113 )

Repurchases of senior notes ( 157,764 ) —

Redemption/repurchases of senior notes ( 633,059 ) ( 575,000 )

Principal payments on notes payable and other borrowings ( 89,042 ) ( 35,542 )

40 unchanged sentences

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

The condensed consolidated statements of operations for the three and six months ended May 31, 2023 are not necessarily indicative of the results to be expected for the full year.

The condensed consolidated statements of operations for the three and nine months ended August 31, 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 May 31, 2023 and November 30, 2022 included $ 231.4 million and $ 1.0 billion, respectively, of cash held in escrow for approximately two days .

Homebuilding cash and cash equivalents as of August 31, 2023 and November 30, 2022 included $ 355.5 million and $ 1.0 billion, respectively, of cash held in escrow for approximately two days .

Share-based Payments

During both the three months ended May 31, 2023 and 2022, the Company granted employees an immaterial number of nonvested shares.

During the six months ended May 31, 2023 and 2022, the Company granted employees 2.0 million and 1.4 million of nonvested shares, respectively.

During both the three months ended August 31, 2023 and 2022, the Company granted employees an immaterial number of nonvested shares.

During the nine months ended August 31, 2023 and 2022, the Company granted employees 2.0 million and 1.4 million of nonvested shares, respectively.

Recently Adopted Accounting Pronouncements

20 unchanged sentences

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

(In thousands) May 31, 2023

(In thousands) August 31, 2023

Homebuilding Financial

35 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 May 31, 2023 and November 30, 2022, respectively.

(1) Receivables, net for Financial Services primarily related to loans sold to investors for which the Company had not yet been paid as of August 31, 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 $ 185.0 million and $ 178.0 million without readily available fair values as of both May 31, 2023 and November 30, 2022, respectively.

(3) Investments in equity securities include investments of $ 186.0 million and $ 178.0 million without readily available fair values as of August 31, 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 (loss) on the condensed consolidated balance sheet.

2 unchanged sentences

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

Three Months Ended Six Months Ended

May 31, May 31,

Three Months Ended Nine Months Ended

August 31, August 31,

(In thousands) 2023 2022 2023 2022

11 unchanged sentences

$ 1,475,161 1,824,274 3,418,235 4,255,843

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

(1) Revenues for Multifamily for the three and nine months ended August 31, 2022, included $ 62.2 million and $ 210.0 million, respectively, of land sales to unconsolidated entities.

(2) Financial Services operating earnings for the three and 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.

(3) Corporate and unallocated consists primarily of corporate general and administrative expenses and charitable foundation contributions.

5 unchanged sentences

Homebuilding Other also includes management of a fund that acquires single-family homes and holds them as rental properties.

Lennar Corporation and Subsidiaries

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

The Company’s reportable Homebuilding segments and all other homebuilding operations not required to be reported separately have homebuilding divisions located in:

4 unchanged sentences

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

May 31, November 30,

August 31, November 30,

(In thousands)

6 unchanged sentences

Total Homebuilding $ 32,975,348 32,684,162

Lennar Corporation and Subsidiaries

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

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

Three Months Ended Six Months Ended

May 31, May 31,

Three Months Ended Nine Months Ended

August 31, August 31,

(In thousands) 2023 2022 2023 2022

17 unchanged sentences

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

At May 31, 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:

Lennar Corporation and Subsidiaries

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

At August 31, 2023, the Financial Services segment had warehouse facilities which 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:

June 2023 (1) $ 200,000

December 2023 $ 500,000

1 unchanged sentence

May 2024 (2) 1,500,000

June 2024 200,000

Total residential facilities $ 2,700,000

LMF Commercial facilities maturing:

July 2023 $ 50,000

November 2023 $ 100,000

2 unchanged sentences

Total $ 3,200,000

(1) Subsequent to May 31, 2023, the maturity date was extended to June 2024.

(1) Maximum aggregate commitment includes an uncommitted amount of $ 250 million.

(2) Maximum aggregate commitment includes $ 900 million that is available from August 2023 to December 2023.

Subsequent to December 2023, the maximum aggregate commitment will be $ 600 million until maturity in May 2024.

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

1 unchanged sentence

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.

Lennar Corporation and Subsidiaries

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

Borrowings and collateral under the facilities were as follows:

(In thousands) May 31, 2023 November 30, 2022

(In thousands) August 31, 2023 November 30, 2022

Borrowings under the residential facilities $ 1,002,786 1,877,411

12 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.

The provision for loan losses was immaterial for both the three and six months ended May 31, 2023 and 2022.

Loan origination liabilities were $ 14.0 million and $ 11.8 million as of May 31, 2023 and November 30, 2022, respectively, and included in Financial Services’ liabilities in the Company's condensed consolidated balance sheets.

The provision for loan losses was immaterial for both the three and nine months ended August 31, 2023 and 2022.

Loan origination liabilities were $ 17.5 million and $ 11.8 million as of August 31, 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)

LMF Commercial - loans held-for-sale

LMF Commercial originated commercial loans as follows:

Three Months Ended Six Months Ended

May 31, May 31,

Three Months Ended Nine Months Ended

August 31, August 31,

(Dollars in thousands) 2023 2022 2023 2022

2 unchanged sentences

Securitizations 3 2 6 4

(1) During both the three and six months ended May 31, 2023 and 2022, the commercial loans originated were recorded as loans held-for-sale, which are held at fair value.

(1) During both the three and nine months ended August 31, 2023 and 2022, the commercial loans originated were recorded as loans held-for-sale, which are held at fair value.

Investments held-to-maturity

At May 31, 2023 and November 30, 2022, the Financial Services segment held commercial mortgage-backed securities ("CMBS").

At August 31, 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 six months ended May 31, 2023 or 2022.

Based on the segment’s assessment, no impairment charges were recorded during either the three or nine months ended August 31, 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) May 31, 2023 November 30, 2022

(Dollars in thousands) August 31, 2023 November 30, 2022

Carrying value $ 140,967 143,251

1 unchanged sentence

Incurred interest rate 3.4 % 3.4 %

Lennar Corporation and Subsidiaries

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

August 31, 2023

Discount rates at purchase 6 % — 84 %

10 unchanged sentences

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.

7 unchanged sentences

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

Three Months Ended Six Months Ended

May 31, May 31,

Three Months Ended Nine Months Ended

August 31, August 31,

(In thousands) 2023 2022 2023 2022

5 unchanged sentences

Sunnova (NOVA) ( 20,773 ) 25,289 ( 45,006 ) ( 49,646 )

Lennar Other unrealized gains (losses) from technology investments $ 25,497 ( 77,965 ) 1,543 ( 473,135 )

Lennar Other unrealized losses from technology investments $ ( 15,713 ) ( 85,839 ) ( 14,170 ) ( 558,974 )

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 May 31, 2023, the Company owned approximately 25 % of Doma .

("Doma"), which went public during the year ended November 30, 2021, is an investment that was accounted for under the equity method due to the Company's significant ownership interest of 25 % of Doma which allowed the Company to exercise significant influence.

As of August 31, 2023, the Company’s carrying value in Doma was zero as a result of allocated losses from Doma.

Lennar Corporation and Subsidiaries

3 unchanged sentences

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

(In thousands) May 31, 2023 November 30, 2022

(In thousands) August 31, 2023 November 30, 2022

Investments in unconsolidated entities (1) (2) $ 1,157,021 1,173,164

Underlying equity in unconsolidated entities' net assets (1) 1,512,908 1,504,315

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

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

As of May 31, 2023 and November 30, 2022, the carrying amount of the Company's investment was $ 391.4 million and $ 382.9 million, respectively.

As of May 31, 2023 and November 30, 2022, the Homebuilding segment's unconsolidated entities had non-recourse debt with completion guarantees of $ 312.8 million and $ 333.6 million, respectively.

As of August 31, 2023 and November 30, 2022, the carrying amount of the Company's investment was $ 416.6 million and $ 382.9 million, respectively.

As of August 31, 2023 and November 30, 2022, the Homebuilding segment's unconsolidated entities had non-recourse debt with completion guarantees of $ 334.8 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 May 31, 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 May 31, 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.

As of both August 31, 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 August 31, 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).

4 unchanged sentences

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

As of May 31, 2023 and November 30, 2022, the carrying amount of the Company's investment in Upward America was $ 22.6 million and $ 37.7 million, respectively.

As of August 31, 2023 and November 30, 2022, the carrying amount of the Company's investment in Upward America was $ 16.8 million and $ 37.7 million, respectively.

Multifamily Unconsolidated Entities

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

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

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

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

As of both May 31, 2023 and November 30, 2022, the fair value of the completion guarantees was immaterial.

As of May 31, 2023 and November 30, 2022, Multifamily segment's unconsolidated entities had non-recourse debt with completion guarantees of $ 1.3 billion and $ 1.0 billion, respectively.

As of both August 31, 2023 and November 30, 2022, the fair value of the completion guarantees was immaterial.

As of August 31, 2023 and November 30, 2022, Multifamily segment's unconsolidated entities had non-recourse debt with completion guarantees of $ 1.4 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.

2 unchanged sentences

The details of the activity were as follows:

Three Months Ended Six Months Ended

May 31, May 31,

Three Months Ended Nine Months Ended

August 31, August 31,

(In thousands) 2023 2022 2023 2022

6 unchanged sentences

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.

The Multifamily segment completed the initial closing of the Fund.

The Multifamily segment has completed the initial closing of the Fund.

The Multifamily segment expects the Fund to have almost $ 1.0 billion in equity and Lennar's ownership percentage in the Fund is 4 %.

As of May 31, 2023, the Company has a $ 28.2 million investment in the Fund.

As of August 31, 2023, the Company has a $ 30.6 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 six months ended May 31, 2023 are included below:

Details of LMV I and LMV II as of and during the nine months ended August 31, 2023 are included below:

August 31, 2023

(In thousands) LMV I LMV II

5 unchanged sentences

Lennar's remaining commitments (1) 3,635 12,830

Distributions to Lennar during the six months ended May 31, 2023 — —

Distributions to Lennar during the nine months ended August 31, 2023 — —

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

1 unchanged sentence

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 totaled $ 170.8 million and $ 185.1 million as of May 31, 2023 and November 30, 2022, respectively.

The Company's investment in the Rialto funds totaled $ 162.8 million and $ 185.1 million as of August 31, 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 $ 121.3 million and $ 131.5 million, as of May 31, 2023 and November 30, 2022, respectively.

The Company also had strategic technology investments in unconsolidated entities and investment funds of $ 125.8 million and $ 131.5 million, as of August 31, 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 six months ended May 31, 2023 and 2022:

Three Months Ended May 31, 2023

Three Months Ended August 31, 2023

(In thousands) Total

5 unchanged sentences

Earnings Noncontrolling

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

Balance at May 31, 2023 $ 25,161,119 25,843 3,660 5,546,128 ( 675,686 ) 3,832 20,111,368 145,974

Net earnings (including net earnings attributable to noncontrolling interests) 1,116,952 — — — — — 1,108,996 7,956

7 unchanged sentences

1,391 — — — — — — 1,391

Payments related to noncontrolling interests

( 22,795 ) — — — — — — ( 22,795 )

Non-cash purchase or activity of noncontrolling interests, net 2,797 — — 3,400 — — — ( 603 )

Total other comprehensive income, net of tax 208 — — — — 208 — —

Balance at May 31, 2023 $ 25,161,119 25,843 3,660 5,546,128 ( 675,686 ) 3,832 20,111,368 145,974

Balance at August 31, 2023 $ 25,788,542 25,844 3,660 5,561,793 ( 1,052,000 ) 4,040 21,113,282 131,923

Lennar Corporation and Subsidiaries

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

Three Months Ended May 31, 2022

Three Months Ended August 31, 2022

(In thousands) Total

5 unchanged sentences

Earnings Noncontrolling

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

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

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

1 unchanged sentence

( 13,106 ) — — 39 ( 13,145 ) — — —

Retirement of treasury stock

— ( 4,667 ) ( 284 ) ( 3,533,425 ) 3,538,376 — — —

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

Amortization of restricted stock

7 unchanged sentences

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

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

Six Months Ended May 31, 2023

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, 2023

(In thousands) Total

19 unchanged sentences

Total other comprehensive income, net of tax 1,632 — — — — 1,632 — —

Balance at May 31, 2023 $ 25,161,119 25,843 3,660 5,546,128 ( 675,686 ) 3,832 20,111,368 145,974

Balance at August 31, 2023 $ 25,788,542 25,844 3,660 5,561,793 ( 1,052,000 ) 4,040 21,113,282 131,923

Lennar Corporation and Subsidiaries

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

Six Months Ended May 31, 2022

Nine Months Ended August 31, 2022

(In thousands) Total

20 unchanged sentences

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

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

On June 22, 2023, the Company's Board of Directors declared a quarterly cash dividend of $ 0.375 per share of both its Class A and Class B common stock, payable on July 21, 2023 to holders of record at the close of business on July 7, 2023.

On May 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 April 26, 2023, as declared by its Board of Directors on April 12, 2023.

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

On September 27, 2023, 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 26, 2023 to holders of record at the close of business on October 12, 2023.

On July 21, 2023, the Company paid a cash dividend of $ 0.375 per share on both of its Class A and Class B common stock to holders of record at the close of business on July 7, 2023, as declared by its Board of Directors on June 22, 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.

3 unchanged sentences

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

Three Months Ended Six Months Ended

May 31, May 31

Three Months Ended Nine Months Ended

August 31, August 31

2023 2022 2023 2022

5 unchanged sentences

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

Three Months Ended Six Months Ended

May 31, May 31,

Three Months Ended Nine Months Ended

August 31, August 31,

(Dollars in thousands) 2023 2022 2023 2022

1 unchanged sentence

Effective tax rate (1) 24.4 % 19.3 % 24.2 % 22.4 %

(1) In the three and six months ended May 31, 2023, the Company's overall effective income tax rate was lower than during the three and six months ended May 31, 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 and six months ended May 31, 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.

(1) In the three and nine months ended August 31, 2023, the Company's overall effective income tax rate was higher than in the three and nine months ended August 31, 2022, primarily due to the resolution of an uncertain state tax position and the retroactive reinstatement of the new energy efficient home credit, both during the third quarter of 2022.

For both the three and nine months ended August 31, 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

7 unchanged sentences

Basic and diluted earnings per share were calculated as follows:

Three Months Ended Six Months Ended

May 31, May 31,

Three Months Ended Nine Months Ended

August 31, August 31,

(In thousands, except per share amounts) 2023 2022 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 six months ended May 31, 2023 and 2022, there were no options to purchase shares of common stock that were outstanding and anti-dilutive.

For both the three and nine months ended August 31, 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) May 31, 2023 November 30, 2022

(Dollars in thousands) August 31, 2023 November 30, 2022

4.875 % senior notes due December 2023 (1)

11 unchanged sentences

5.875 % senior notes due 2024

896,633 896,259

Mortgage notes on land and other debt 327,896 413,873

$ 3,320,119 4,047,294

(1) During the three and six months ended May 31, 2023, the Company repurchased $ 2.0 million and $ 155.8 million aggregate principal amount of 4.875 % senior notes and 4.50 % senior notes, respectively, through open market repurchases.

The carrying amounts of the senior notes in the table above are net of debt issuance costs of $ 6.0 million and $ 7.6 million as of May 31, 2023 and November 30, 2022, respectively.

(1) During the three months ended August 31, 2023, the Company repurchased $ 19.9 million and $ 30.4 million aggregate principal amount of 4.875 % senior notes and 4.50 % senior notes, respectively, through open market repurchases.

During the nine months ended August 31, 2023, the Company repurchased $ 21.8 million and $ 186.2 million aggregate principal amount of 4.875 % senior notes and 4.50 % senior notes, respectively, through open market repurchases.

The carrying amounts of the senior notes in the table above are net of debt issuance costs of $ 5.2 million and $ 7.6 million as of August 31, 2023 and November 30, 2022, respectively.

Lennar Corporation and Subsidiaries

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

During the three months ended August 31, 2023, the Company redeemed $ 425 million aggregate principal amount of its 5.875 % senior notes due November 2024 at an early redemption price of 100 % of the principal amount outstanding using cash on hand, resulting in a pre-tax gain of $ 6.0 million, included in Homebuilding other income (expense), net.

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

(In thousands) May 31, 2023

(In thousands) August 31, 2023

Commitments - maturing in April 2024 $ 350,000

Commitments - maturing in May 2027 2,225,000

Total commitment $ 2,575,000

Total commitments $ 2,575,000

Accordion feature 425,000

6 unchanged sentences

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

(In thousands) May 31, 2023 November 30, 2022

(In thousands) August 31, 2023 November 30, 2022

Performance letters of credit $ 1,423,643 1,259,033

6 unchanged sentences

(8) Financial Instruments and Fair Value Disclosures

The following table presents the carrying amounts and estimated fair values of financial instruments held or issued by the Company at May 31, 2023 and November 30, 2022, using available market information and what the Company believes to be appropriate valuation methodologies.

The following table presents the carrying amounts and estimated fair values of financial instruments held or issued by the Company at August 31, 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.

May 31, 2023 November 30, 2022

August 31, 2023 November 30, 2022

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

7 unchanged sentences

Financial Services - The fair values above are based on quoted market prices, if available.

The fair values for instruments that do not have quoted market prices are estimated by the Company on the basis of discounted cash flows or other financial information.

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

The fair values for instruments that do not have quoted market prices are estimated by the Company on the basis of discounted cash flows or other

Lennar Corporation and Subsidiaries

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

financial information.

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

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) May 31, 2023 November 30, 2022

(In thousands) August 31, 2023 November 30, 2022

Financial Services Assets:

7 unchanged sentences

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

May 31, 2023 November 30, 2022

August 31, 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 May 31, 2023 and November 30, 2022.

The fair value of these are included in Financial Services’ loans held-for-sale as of August 31, 2023 and November 30, 2022.

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

9 unchanged sentences

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

As of May 31, 2023 As of November 30, 2022

As of August 31, 2023 As of November 30, 2022

Unobservable inputs

5 unchanged sentences

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

The Company’s investments in equity securities were recorded at fair value with all changes in fair value recorded to Lennar Other unrealized gain (loss) from technology investments on the Company’s condensed consolidated statements of operations and comprehensive income.

The Company’s investments in equity securities were recorded at fair value with all changes in fair value recorded to Lennar Other unrealized gains (losses) from technology investments on the Company’s condensed consolidated statements of operations and comprehensive income.

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

2 unchanged sentences

The changes in fair values for Level 1 and Level 2 financial instruments measured on a recurring basis are shown below by financial instrument and financial statement line item:

Three Months Ended Six Months Ended

May 31, May 31,

Three Months Ended Nine Months Ended

August 31, August 31,

(In thousands) 2023 2022 2023 2022

4 unchanged sentences

Forward options ( 485 ) ( 6 ) ( 1,437 ) ( 6 )

Changes in fair value included in Lennar Other unrealized gains (losses) from technology investments:

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

Investments in equity securities $ ( 15,713 ) ( 85,839 ) ( 14,170 ) ( 558,974 )

14 unchanged sentences

Ending balance $ 3,416 37,295 3,356 6,447

Six Months Ended

Nine Months Ended

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

17 unchanged sentences

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

Six Months Ended

Nine Months Ended

(In thousands) Fair Value

8 unchanged sentences

(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 three and six months ended May 31, 2023, total losses, net, for land and land underdevelopment included $ 2.7 million and $ 17.1 million, respectively, 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 and six months ended May 31, 2023.

During the three and nine months ended August 31, 2023, total losses, net, for land and land under development included $ 1.6 million and $ 18.7 million, respectively, of deposit and pre-acquisition cost write-offs.

(3) Valuation adjustments related to investments in unconsolidated entities were primarily included in Homebuilding other income (expense), net in the Company's condensed consolidated statements of operations and comprehensive income for the three and nine months ended August 31, 2023.

Finished homes and construction in progress are included within inventories.

6 unchanged sentences

Communities with valuation adjustments

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

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

(in thousands)

1 unchanged sentence

(in thousands)

May 31, 2023 1,256 34 5 $ 42,408 $ 12,247

May 31, 2022 1,218 6 — — —

August 31, 2023 1,247 21 6 $ 53,211 $ 18,844

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

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

Six Months Ended

Nine Months Ended

Unobservable inputs Range

5 unchanged sentences

This evaluation includes certain critical assumptions made by management:

(1) projected future distributions from the unconsolidated entities, (2) discount rates applied to the future distributions and (3) various other factors, which include age of the venture, relationships with the other partners and banks, general economic market conditions, land status and liquidity needs of the unconsolidated entity.

The Company generally estimates the fair value of an investment in an unconsolidated entity by using a cash flow analysis for estimated future net distributions from an unconsolidated entity, subject to the perceived risks associated with the unconsolidated entity’s cash flow streams.

During the three and six months ended May 31, 2023, the Company estimated the fair value of an investment in an unconsolidated entity using a cash flow analysis with a 15 % discount rate and concluded that the investment had an other-than-temporary impairment of $ 36.8 million included in Homebuilding other income (expense), net in the Company's condensed consolidated statements of operations and comprehensive income.

(9) Variable Interest Entities

During the six months ended May 31, 2023, 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 six months ended May 31, 2023.

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

During the nine months ended August 31, 2023, the Company estimated the fair value of an investment in an unconsolidated entity using a cash flow analysis with a 15 % discount rate and concluded that the investment had an other-than-temporary impairment of $ 36.8 million included in Homebuilding other income (expense), net in the Company's condensed consolidated statements of operations and comprehensive income.

The Company estimates the fair value of investments in unconsolidated entities evaluated for impairment based on market conditions and assumptions made by management at the time the investment is evaluated, which may differ materially from actual results if market conditions or assumptions change.

Lennar Corporation and Subsidiaries

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

to the condensed consolidated balance sheets.

(9) Variable Interest Entities

During the nine months ended August 31, 2023, 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 nine months ended August 31, 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.

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

6 unchanged sentences

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

May 31, 2023 November 30, 2022

August 31, 2023 November 30, 2022

(In thousands) Investments in

8 unchanged sentences

$ 1,252,562 1,356,470 1,393,622 1,551,856

(1) As of May 31, 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 commitment to fund capital in Upward America of $ 70.3 million and $ 77.3 million, respectively.

In addition, as of May 31, 2023, there was recourse debt of a VIE of $ 9.8 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 May 31, 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 $ 12.8 million and $ 19.3 million as of May 31, 2023 and November 30, 2022, respectively, for future expenditures related to the construction and development of its projects.

Decrease in exposure for the six months ended May 31, 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 May 31, 2023.

(3) As of May 31, 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 May 31, 2023, the Company's maximum recourse exposure to loss of the Lennar Other segment was limited to its investments in the unconsolidated VIEs.

(1) As of August 31, 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 commitment to fund capital in Upward America of $ 70.3 million and $ 77.3 million, respectively.

In addition, as of August 31, 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 August 31, 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 $ 12.8 million and $ 19.3 million as of August 31, 2023 and November 30, 2022, respectively, for future expenditures related to the construction and development of its projects.

The decrease in exposure for the nine months ended August 31, 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 August 31, 2023.

(3) As of August 31, 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 August 31, 2023, the Company's 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 May 31, 2023 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 August 31, 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.

5 unchanged sentences

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

Lennar Corporation and Subsidiaries

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

Option Contracts

1 unchanged sentence

The Company evaluates option contracts with third party land holding companies 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, makes a significant deposit or pre-acquisition cost investment for optioned land, or is otherwise economically compelled to takedown the optioned

Lennar Corporation and Subsidiaries

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

land it may need to consolidate the land under option at the purchase price of the optioned land.

Land under option with third party holding companies included in consolidated inventory not owned which was consolidated as a result of VIE assessments was $ 628.4 million as of May 31, 2023.

Consolidated inventory not owned related to land financing transactions, which are 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, was $ 1.8 billion as of May 31, 2023.

During the six months ended May 31, 2023, consolidated inventory not owned increased by $ 51.3 million with a corresponding increase to liabilities related to consolidated inventory not owned in the accompanying condensed consolidated balance sheet as of May 31, 2023.

Land under option with third party holding companies that the Company is economically compelled to takedown was $ 925.0 million as of August 31, 2023 and is included in consolidated inventory not owned.

During the nine months ended August 31, 2023, consolidated inventory not owned increased by $ 356.1 million with a corresponding increase to liabilities related to consolidated inventory not owned in the accompanying condensed consolidated balance sheet as of August 31, 2023.

The increase was primarily due to land financing transactions and the consolidation of homesites under option that the Company is economically compelled to takedown.

These increases were partially offset by homesite 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 May 31, 2023.

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 was as follows:

(Dollars in thousands) May 31, 2023 November 30, 2022

(Dollars in thousands) August 31, 2023 November 30, 2022

Non-refundable option deposits and pre-acquisition costs $ 2,168,595 1,990,946

11 unchanged sentences

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

Three Months Ended Six Months Ended

May 31, May 31,

Three Months Ended Nine Months Ended

August 31, August 31,

(In thousands) 2023 2022 2023 2022

4 unchanged sentences

Warranty reserve, end of period $ 401,331 394,593 401,331 394,593

(1) The adjustments to pre-existing warranties from changes in estimates during the three and six months ended May 31, 2023 and 2022 primarily related to specific claims in certain of the Company's homebuilding communities and other adjustments.

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

The Company has entered into agreements to lease certain office facilities and equipment under operating leases.

3 unchanged sentences

The exercise of lease renewal options is at the Company's option and therefore renewal option payments have not been included in the ROU assets or lease liabilities.

The following table includes additional

Lennar Corporation and Subsidiaries

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

information about the Company's leases:

(Dollars in thousands) May 31, 2023 November 30, 2022

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

(Dollars in thousands) August 31, 2023 November 30, 2022

Right-of-use assets $ 137,822 149,966

2 unchanged sentences

Weighted-average discount rate 3.2 % 3.0 %

Future minimum payments under the noncancellable leases in effect at May 31, 2023 were as follows:

Future minimum payments under the noncancellable leases in effect at August 31, 2023 were as follows:

(In thousands) Lease Payments

2023 $ 17,412

Thereafter 60,367

7 unchanged sentences

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

Six Months Ended

Nine Months Ended

(In thousands) 2023 2022

1 unchanged sentence

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

For both the six months ended May 31, 2023 and 2022, the Company had an immaterial amount of sublease income.

For both the nine months ended August 31, 2023 and 2022, the Company had an immaterial amount of sublease income.

Forward-Looking Statements

36 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-Q

Item 1. Financial Statements