What changed in this filing

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Item 1. Financial Statements

2024-03-29 compared with 2023-09-29 · 250 added, 319 removed, 657 unchanged (46% of the section changed)

3 unchanged sentences

(Dollars in thousands)

August 31, November 30,

February 29, November 30,

2024 (1) 2023 (1)

5 unchanged sentences

Land and land under development 4,734,113 4,904,541

Inventory owned 15,826,149 15,360,207

Consolidated inventory not owned 3,547,921 2,992,528

Total inventories 22,049,516 21,432,011

Inventory owned and consolidated inventory not owned 19,374,070 18,352,735

Deposits and pre-acquisition costs on real estate 2,408,877 2,002,154

Investments in unconsolidated entities 1,206,564 1,143,909

7 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, 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.

As of February 29, 2024, total assets include $ 2.7 billion related to consolidated VIEs of which $ 40.8 million is included in Homebuilding cash and cash equivalents, $ 2.0 million in Homebuilding receivables, net, $ 9.8 million in Homebuilding finished homes and construction in progress, $ 633.4 million in Homebuilding land and land under development, $ 67.1 million in Homebuilding deposits and pre-acquisition costs on real estate, $ 1.9 billion in Homebuilding consolidated inventory not owned, $ 0.3 million in Homebuilding investments in unconsolidated entities, $ 26.7 million in Homebuilding other assets and $ 33.1 million in Multifamily assets.

As of November 30, 2023, total assets include $ 1.9 billion related to consolidated VIEs of which $ 22.8 million is included in Homebuilding cash and cash equivalents, $ 1.8 million in Homebuilding receivables, net, $ 18.3 million in Homebuilding finished homes and construction in progress, $ 628.0 million in Homebuilding land and land under development, $ 55.0 million in Homebuilding deposits and pre-acquisition costs on real estate, $ 1.2 billion in Homebuilding consolidated inventory not owned, $ 0.3 million in Homebuilding investments in unconsolidated entities, $ 23.0 million in Homebuilding other assets and $ 32.6 million in Multifamily assets.

See accompanying notes to condensed consolidated financial statements.

2 unchanged sentences

(In thousands, except share amounts)

August 31, November 30,

February 29, November 30,

2024 (2) 2023 (2)

13 unchanged sentences

Class A common stock of $ 0.10 par value;

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

February 29, 2024 and November 30, 2023 - 400,000,000 shares;

February 29, 2024 - 259,834,181 shares and November 30, 2023 - 258,475,012 shares

25,983 25,848

Class B common stock of $ 0.10 par value;

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

February 29, 2024 and November 30, 2023 - 90,000,000 shares;

February 29, 2024 - 36,601,215 shares and November 30, 2023 - 36,601,215 shares

Additional paid-in capital 5,651,836 5,570,009

1 unchanged sentence

Treasury stock, at cost;

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

February 29, 2024 - 14,797,751 shares of Class A common stock and 3,294,072 shares of Class B common stock;

November 30, 2023 - 11,207,889 shares of Class A common stock and 2,920,200 shares of Class B common stock

5 unchanged sentences

Total liabilities and equity $ 38,951,199 39,234,303

(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.

(2) As of February 29, 2024, total liabilities include $ 1.8 billion related to consolidated VIEs as to which there was no recourse against the Company, of which $ 17.7 million is included in Homebuilding accounts payable, $ 1.7 billion in Homebuilding liabilities related to consolidated inventory not owned, $ 6.0 million in Homebuilding senior notes and other debts payable, $ 88.5 million in Homebuilding other liabilities, and $ 0.9 million in Multifamily liabilities.

As of November 30, 2023, total liabilities include $ 1.2 billion related to consolidated VIEs as to which there was no recourse against the Company, of which $ 53.7 million is included in Homebuilding accounts payable, $ 1.1 billion in Homebuilding liabilities related to consolidated inventory not owned, $ 38.1 million in Homebuilding other liabilities, and $ 4.1 million in Multifamily 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,

2023 2022 2023 2022

Three Months Ended

February 29, 2024 February 28, 2023

Homebuilding $ 6,930,991 6,156,305

11 unchanged sentences

Total costs and expenses 6,411,834 5,674,155

Equity in loss from unconsolidated entities ( 23,989 ) ( 13,310 ) ( 104,931 ) ( 34,871 )

Equity in losses from unconsolidated entities ( 30,545 ) ( 31,187 )

Other income (expense), net and other gains (losses) 65,372 23,320

7 unchanged sentences

Net unrealized gain on securities available-for-sale $ 362 851

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

Total other comprehensive income, net of tax $ 362 851

7 unchanged sentences

(In thousands)

Nine Months Ended

Three Months Ended

February 29, 2024 February 28, 2023

Cash flows from operating activities:

2 unchanged sentences

Depreciation and amortization 27,139 20,305

Amortization of discount/premium on debt, net ( 2,194 ) ( 1,312 )

Amortization of discount/premium and accretion on debt, net 39 ( 838 )

Equity in loss from unconsolidated entities 30,545 31,187

1 unchanged sentence

Share-based compensation expense 87,680 86,558

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

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

Deferred income tax (benefit) expense 11,979 ( 81,940 )

Loans held-for-sale unrealized loss 46,052 31,462

1 unchanged sentence

Gain on sale of other assets ( 2,671 ) —

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

Valuation adjustments and write-offs of option deposits and pre-acquisition costs on real estate, and other assets 6,609 25,846

Changes in assets and liabilities:

(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 )

Decrease in receivables 379,102 602,757

Increase in inventories, excluding valuation adjustments ( 285,023 ) ( 156,229 )

Increase in deposits and pre-acquisition costs on real estate ( 410,936 ) ( 21,476 )

Decrease (increase) in other assets 19,061 ( 5,557 )

Decrease in loans held-for-sale 53,797 511,807

(Decrease) increase in accounts payable and other liabilities ( 881,890 ) 180,946

Decrease in accounts payable and other liabilities ( 326,404 ) ( 690,980 )

Net cash provided by operating activities 367,867 978,205

4 unchanged sentences

Distributions of capital from unconsolidated entities 35,330 23,993

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

Decrease in Financial Services loans held-for-investment 2,749 418

6 unchanged sentences

(In thousands)

Nine Months Ended

Three Months Ended

February 29, 2024 February 28, 2023

Cash flows from financing activities:

Net repayments under warehouse facilities $ ( 599,514 ) ( 963,455 )

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

Principal payments on notes payable and other borrowings ( 3,750 ) ( 26,621 )

Proceeds from other borrowings 6,230 —

Proceeds from liabilities related to consolidated inventory not owned 67,650 70,369

Payments related to consolidated inventory not owned ( 597,477 ) ( 517,654 )

Payments related to liabilities related to consolidated inventory not owned ( 252,446 ) ( 177,891 )

Payments related to other liabilities, net ( 16,922 ) ( 1,257 )

18 unchanged sentences

Homebuilding and Multifamily:

Purchases of inventories financed by sellers $ 13,500 33,965

Non-cash contributions to unconsolidated entities 120 204,911

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

Purchases of inventories, land under development and other assets financed by sellers $ 23,081 13,500

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 the three and nine months ended August 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 months ended February 29, 2024 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, 2023 and November 30, 2022 included $ 355.5 million and $ 1.0 billion, respectively, of cash held in escrow for approximately two days .

Homebuilding cash and cash equivalents as of February 29, 2024 and November 30, 2023 included $ 512.0 million and $ 594.8 million, respectively, of cash held in escrow for approximately two days .

Share-based Payments

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.

During the three months ended February 29, 2024 and February 28, 2023, the Company granted employees 1.2 million and 1.6 million of nonvested shares, respectively.

Recently Adopted Accounting Pronouncements

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.

In December 2023, the FASB issued ASU 2023-09 (“ASU 2023-09”) Income Taxes (Topic 740):

Improvements to Income Tax Disclosures .

ASU 2023-09 requires public companies to annually (1) disclose specific categories in the rate reconciliation and (2) provide additional information for reconciling items that meet a quantitative threshold (if the effect of those reconciling items is equal to or greater than 5 percent of the amount computed by multiplying pretax income or loss by the applicable statutory income tax rate).

ASU 2023-09 will be effective for the annual reporting periods in fiscal years beginning after December 15, 2024.

The Company is currently evaluating ASU 2023-09 and does not expect it to have a material effect on the Company’s condensed consolidated financial statements.

In November 2023, the FASB issued ASU 2023-07, “ Improvements to Reportable Segment Disclosures ” (“ASU 2023-07”).

ASU 2023-07 requires disclosure of significant segment expenses that are regularly provided to the chief operating decision maker (“CODM”) and included within the segment measure of profit or loss, an amount and description of its composition for other segment items to reconcile to segment profit or loss, and the title and position of the entity’s CODM.

ASU 2023-07 will be applied retrospectively and is effective for annual reporting periods in fiscal years beginning after December 15, 2023, and interim reporting periods in fiscal years beginning after December 31, 2024.

The Company is currently reviewing the impact that the adoption of ASU 2023-07 may have on its condensed consolidated financial statements and disclosures.

Reclassifications

Certain amounts in the Company's condensed consolidated statement of operations of prior year have been reclassified to conform to the fiscal 2024 presentation.

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

Lennar Corporation and Subsidiaries

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

(2) Operating and Reporting Segments

6 unchanged sentences

(5) Financial Services

Lennar Corporation and Subsidiaries

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

(6) Multifamily

1 unchanged sentence

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

(In thousands) August 31, 2023

(In thousands) February 29, 2024

Homebuilding Financial

3 unchanged sentences

Receivables, net (1) 897,371 304,716 82,605 — 1,284,692

Inventories 22,049,516 — 529,467 — 22,578,983

Inventory owned and consolidated inventory not owned 19,374,070 — 568,689 — 19,942,759

Loans held-for-sale (2) — 1,986,715 — — 1,986,715

3 unchanged sentences

Investments held-to-maturity — 139,706 — — 139,706

Deposits and pre-acquisition costs on real estate 2,408,877 — 31,785 — 2,440,662

Investments in unconsolidated entities 1,206,564 — 586,438 289,691 2,082,693

1 unchanged sentence

Other assets 1,473,563 109,847 82,671 124,959 1,791,040

$ 32,975,348 2,334,594 1,354,587 773,596 37,438,125

Total assets $ 33,765,567 3,056,442 1,379,279 749,911 38,951,199

Notes and other debts payable, net $ 2,830,332 1,564,290 — — 4,394,622

Accounts payable and other liabilities 6,623,023 179,322 286,789 82,690 7,171,824

$ 9,943,142 1,333,485 290,266 82,690 11,649,583

Accounts payable, liabilities related to consolidated inventory not owned and other liabilities 7,298,615 157,043 249,625 73,364 7,778,647

Total liabilities $ 10,128,947 1,721,333 249,625 73,364 12,173,269

Lennar Corporation and Subsidiaries

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

(In thousands) November 30, 2023

4 unchanged sentences

Receivables, net (1) 887,992 716,071 92,142 — 1,696,205

Inventories 21,432,011 — 430,442 — 21,862,453

Inventory owned and consolidated inventory not owned 18,352,735 — 544,935 — 18,897,670

Loans held-for-sale (2) — 2,086,809 — — 2,086,809

3 unchanged sentences

Investments held-to-maturity — 140,676 — — 140,676

Deposits and pre-acquisition costs on real estate 2,002,154 — 32,063 — 2,034,217

Investments in unconsolidated entities 1,143,909 — 599,852 276,244 2,020,005

1 unchanged sentence

Other assets 1,512,038 135,377 73,187 44,464 1,765,066

$ 32,684,162 3,254,257 1,257,337 788,539 37,984,295

Total assets $ 33,628,392 3,566,546 1,381,513 657,852 39,234,303

Notes and other debts payable, net $ 2,816,482 2,163,805 3,741 — 4,984,028

Accounts payable and other liabilities 6,931,352 218,811 296,735 97,894 7,544,792

$ 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, 2023 and November 30, 2022, respectively.

Accounts payable, liabilities related to consolidated inventory not owned and other liabilities 6,911,512 283,234 274,436 79,127 7,548,309

Total liabilities $ 9,727,994 2,447,039 278,177 79,127 12,532,337

(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 29, 2024 and November 30, 2023, 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 $ 186.0 million and $ 178.0 million without readily available fair values as of August 31, 2023 and November 30, 2022, respectively.

(3) Investments in equity securities include investments of $ 123.1 million and $ 121.0 million without readily available fair values as of February 29, 2024 and November 30, 2023, 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.

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 Nine Months Ended

August 31, August 31,

(In thousands) 2023 2022 2023 2022

Three Months Ended

(In thousands) February 29, 2024 February 28, 2023

Homebuilding $ 6,930,991 6,156,305

10 unchanged sentences

$ 930,786 784,453

(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.

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

Lennar Corporation and Subsidiaries

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

Homebuilding Segments

Information about homebuilding activities in states which are not economically similar to other states in the same geographic area is grouped under "Homebuilding Other," which is not considered a reportable segment.

Information about homebuilding activities in states which are not economically similar to other states in the same geographic areas is grouped under “Homebuilding Other,” which is not considered a reportable segment.

Evaluation of segment performance is based primarily on operating earnings (loss) before income taxes.

2 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:

Alabama, Florida, New Jersey, Pennsylvania and South Carolina

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

Alabama, Florida, New Jersey and Pennsylvania

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

Arizona, California, Colorado, Idaho, Nevada, Oregon, Utah and Washington

1 unchanged sentence

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

August 31, November 30,

February 29, 2024 November 30, 2023

(In thousands)

7 unchanged sentences

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

Three Months Ended Nine Months Ended

August 31, August 31,

(In thousands) 2023 2022 2023 2022

Three Months Ended

(In thousands) February 29, 2024 February 28, 2023

East $ 1,922,797 1,697,843

11 unchanged sentences

$ 1,028,796 906,839

Lennar Corporation and Subsidiaries

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

Financial Services

1 unchanged sentence

They also include originating and selling into securitizations commercial mortgage loans through its LMF Commercial business.

Financial Services’ operating earnings consist of revenues generated primarily from mortgage financing, title and closing services, and property and casualty insurance, less the cost of such services and certain selling, general and administrative expenses incurred by the segment.

Financial Services’ operating earnings consist of revenues generated primarily from mortgage financing, title and closing services, and sales of property and casualty insurance, less the cost of such services and certain selling, general and administrative expenses incurred by the segment.

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

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

At February 29, 2024, 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:

Maximum Aggregate Commitment

(In thousands) Committed Amount Uncommitted Amount Total

Residential facilities maturing:

December 2023 $ 500,000

March 2024 (1) $ 500,000 — 500,000

April 2024 250,000 250,000 500,000

1 unchanged sentence

June 2024 100,000 100,000 200,000

September 2024 100,000 100,000 200,000

Total residential facilities $ 1,550,000 450,000 2,000,000

LMF commercial facilities maturing:

November 2023 $ 100,000

December 2024 200,000 — 200,000

January 2025 100,000 — 100,000

Total LMF commercial facilities $ 300,000 — 300,000

Total $ 2,300,000

(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.

(1) Subsequent to February 29, 2024, the maturity date was extended to June 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.

2 unchanged sentences

Borrowings and collateral under the facilities were as follows:

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

(In thousands) February 29, 2024 November 30, 2023

Borrowings under the residential facilities $ 1,344,468 2,020,187

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 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.

The provision for loan losses was immaterial for both the three months ended

Lennar Corporation and Subsidiaries

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

February 29, 2024 and February 28, 2023.

Loan origination liabilities were $ 17.7 million and $ 17.6 million as of February 29, 2024 and November 30, 2023, respectively, and included in Financial Services’ liabilities in the Company's condensed consolidated balance sheets.

LMF Commercial - loans held-for-sale

LMF Commercial originated commercial loans as follows:

Three Months Ended Nine Months Ended

August 31, August 31,

(Dollars in thousands) 2023 2022 2023 2022

Three Months Ended

(Dollars in thousands) February 29, 2024 February 28, 2023

Originations (1) $ 140,825 79,480

1 unchanged sentence

Securitizations 2 1

(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.

(1) During both the three months ended February 29, 2024 and February 28, 2023, the commercial loans originated were recorded as loans held-for-sale, which are held at fair value.

Investments held-to-maturity

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

At February 29, 2024 and November 30, 2023, 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, 2023 or 2022.

Based on the segment’s assessment, no impairment charges were recorded during the three months ended February 29, 2024 and February 28, 2023.

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, 2023 November 30, 2022

(Dollars in thousands) February 29, 2024 November 30, 2023

Carrying value $ 139,706 140,676

1 unchanged sentence

Incurred interest rate 3.4 % 3.4 %

August 31, 2023

February 29, 2024

Discount rates at purchase 6 % — 84 %

14 unchanged sentences

(“Blend Labs”), Hippo Holdings, Inc.

("Hippo"), Opendoor, Inc.

(“Hippo”), Opendoor Technologies, Inc.

(“Opendoor”), SmartRent, Inc.

4 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 Nine Months Ended

August 31, August 31,

(In thousands) 2023 2022 2023 2022

Three Months Ended

(In thousands) February 29, 2024 February 28, 2023

Blend Labs (BLND) $ 2,936 586

7 unchanged sentences

(“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

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

As of February 29, 2024, the Company’s carrying value in Doma was zero as a result of allocated losses from Doma.

(3) Investments in Unconsolidated Entities

1 unchanged sentence

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

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

(In thousands) February 29, 2024 November 30, 2023

Investments in unconsolidated entities (1) (2) $ 1,206,564 1,143,909

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, 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.

As of February 29, 2024 and November 30, 2023, the carrying amount of the Company's investment was $ 444.5 million and $ 422.2 million, respectively.

As of February 29, 2024 and November 30, 2023, the Homebuilding segment's unconsolidated entities had non-recourse debt with completion guarantees of $ 279.6 million and $ 316.5 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, 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.

As of both February 29, 2024 and November 30, 2023, the fair values of the repayment guarantees, maintenance guarantees, and completion guarantees were not material.

The Company believes that as of February 29, 2024, 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).

1 unchanged sentence

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

Upward America has raised equity commitments totaling $ 1.6 billion.

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

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.

As of February 29, 2024 and November 30, 2023, the carrying amount of the Company's investment in Upward America was $ 11.2 million and $ 14.8 million, respectively.

Lennar Corporation and Subsidiaries

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

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 it) have 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 them) 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, 2023.

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.

As of both February 29, 2024 and November 30, 2023, the fair value of the completion guarantees was immaterial.

As of February 29, 2024 and November 30, 2023, Multifamily segment's unconsolidated entities had non-recourse debt with completion guarantees of $ 1.1 billion and $ 1.4 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.

Each Multifamily real estate investment trust has unilateral decision making rights related to development activities through its board of directors.

Each Multifamily real estate investment trust, JV and fund has unilateral decision making rights related to development and other sales activity through its executive committee or asset management committee.

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

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

The details of the activity were as follows:

Three Months Ended Nine Months Ended

August 31, August 31,

(In thousands) 2023 2022 2023 2022

Three Months Ended

(In thousands) February 29, 2024 February 28, 2023

General contractor services, net of deferrals $ 101,635 125,402

General contractor costs 95,688 120,733

Land sales to joint ventures — 62,218 — 209,979

Management fee income, net of deferrals 16,042 18,121

Lennar Corporation and Subsidiaries

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

The Multifamily segment includes Multifamily Venture Fund I ("LMV I"), Multifamily Venture Fund II LP ("LMV II") and Canada Pension Plan Investments Fund (the "Fund"), which are long-term multifamily development investment vehicles involved in the development, construction and property management of class-A multifamily assets.

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 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 nine months ended August 31, 2023 are included below:

August 31, 2023

The Multifamily segment includes managing and investing in Multifamily Venture Fund I (“LMV I”), Multifamily Venture Fund II LP (“LMV II”) and Canada Pension Plan Investments Fund (the “CPPIB 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 CPPIB Fund.

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

As of February 29, 2024, the Company had a $ 23.1 million investment in the CPPIB Fund.

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

Details of LMV I and LMV II as of and during the three months ended February 29, 2024 are included below:

February 29, 2024

(In thousands) LMV I LMV II

5 unchanged sentences

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

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.

Distributions to Lennar during the three months ended February 29, 2024 — 208

(1) While there are remaining commitments with LMV I and LMV II, 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 totaled $ 162.8 million and $ 185.1 million as of August 31, 2023 and November 30, 2022, respectively.

Lennar Other's unconsolidated entities include 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 $ 142.2 million and $ 148.7 million as of February 29, 2024 and November 30, 2023, 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 $ 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 nine months ended August 31, 2023 and 2022:

Three Months Ended August 31, 2023

(In thousands) Total

Equity Class A

Common Stock Class B

Common Stock Additional

Paid - in Capital Treasury

Stock Accumulated Other Comprehensive Income Retained

Earnings Noncontrolling

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

Employee stock and directors plans

( 8,552 ) 1 — ( 620 ) ( 7,933 ) — — —

Purchases of treasury stock ( 368,381 ) — — — ( 368,381 ) — — —

Amortization of restricted stock

12,885 — — 12,885 — — — —

Cash dividends ( 107,082 ) — — — — — ( 107,082 ) —

Receipts related to noncontrolling interests

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

The Company also had strategic technology investments in unconsolidated entities and investment funds with a carrying value of $ 147.5 million and $ 127.5 million, as of February 29, 2024 and November 30, 2023, respectively.

Lennar Corporation and Subsidiaries

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

Three Months Ended August 31, 2022

(4) Stockholders' Equity

Three Months Ended February 29, 2024

(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, 2023 $ 26,701,966 25,848 3,660 5,570,009 ( 1,393,100 ) 4,879 22,369,368 121,302

Net earnings (including net earnings attributable to noncontrolling interests) 719,921 — — — — — 719,334 587

1 unchanged sentence

( 83,473 ) 135 — ( 65 ) ( 83,543 ) — — —

Purchases of treasury stock ( 511,557 ) — — — ( 511,557 ) — — —

Amortization of restricted stock

7 unchanged sentences

Total other comprehensive income, net of tax 362 — — — — 362 — —

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

Balance at February 29, 2024 $ 26,777,930 25,983 3,660 5,651,836 ( 1,988,200 ) 5,241 22,949,315 130,095

Three Months Ended February 28, 2023

(In thousands) Total

19 unchanged sentences

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

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

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

On February 7, 2024, the Company paid a quarterly cash dividend of $ 0.50 per share for both of its Class A and Class B common stock to holders of record at the close of business on January 24, 2024, as declared by its Board of Directors on January 9, 2024.

The Company approved and paid cash dividends of $ 0.375 per share for each of the four quarters of 2023 on both its Class A and Class B common stock.

Lennar Corporation and Subsidiaries

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

Nine Months Ended August 31, 2022

(In thousands) Total

Equity Class A

Common Stock Class B

Common Stock Additional

Paid - in Capital Treasury

Stock Accumulated Other Comprehensive Income (loss) Retained

Earnings Noncontrolling

Balance at November 30, 2021 $ 20,996,282 30,050 3,944 8,807,891 ( 2,709,448 ) ( 1,341 ) 14,685,329 179,857

Net earnings (including net earnings attributable to noncontrolling interests) 3,304,567 — — — — — 3,291,681 12,886

Employee stock and directors plans

( 70,525 ) 199 — 893 ( 71,617 ) — — —

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

Purchases of treasury stock ( 847,071 ) — — — ( 847,071 ) — — —

Amortization of restricted stock

154,710 — — 154,710 — — — —

Cash dividends ( 329,717 ) — — — — — — ( 329,717 ) —

Receipts related to noncontrolling interests

30,060 — — — — — — 30,060

Payments related to noncontrolling interests

( 85,098 ) — — — — — — ( 85,098 )

Non-cash purchase or activity of noncontrolling interests, net ( 29,101 ) — — ( 41,656 ) — — — 12,555

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

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

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.

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.

1 unchanged sentence

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

In January 2024, the Company's Board of Directors authorized an increase to its stock repurchase program to enable it to repurchase up to an additional $ 5 billion in value of its outstanding Class A or Class B common stock.

Repurchases are authorized to be made in open-market or private transactions.

The repurchase authorization has no expiration date.

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 Nine Months Ended

August 31, August 31

2023 2022 2023 2022

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

Three Months Ended

February 29, 2024 February 28, 2023

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

Shares repurchased 3,026,128 373,872 1,446,205 553,795

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,

(Dollars in thousands) 2023 2022 2023 2022

Three Months Ended

(Dollars in thousands) February 29, 2024 February 28, 2023

Provision for income taxes $ 210,865 185,145

Effective tax rate (1) 22.7 % 23.7 %

(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

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

(1) In the three months ended February 29, 2024, the Company's overall effective income tax rate was lower than in the three months ended February 28, 2023, primarily due to excess tax benefits from share-based compensation.

For both the three months ended February 29, 2024 and February 28, 2023, the effective tax rate included state income tax expense and non-deductible executive compensation, partially offset by energy efficient home and solar tax credits.

(6) Earnings Per Share

5 unchanged sentences

Basic and diluted earnings per share were calculated as follows:

Three Months Ended Nine Months Ended

August 31, August 31,

(In thousands, except per share amounts) 2023 2022 2023 2022

Three Months Ended

(In thousands, except per share amounts) February 29, 2024 February 28, 2023

Net earnings attributable to Lennar $ 719,334 596,534

8 unchanged sentences

Diluted earnings per share $ 2.57 2.06

(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, 2023 and 2022, there were no options to purchase shares of common stock that were outstanding and anti-dilutive.

(1) The amount presented relate to Rialto's Carried Interest Incentive Plan and represents 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.

Lennar Corporation and Subsidiaries

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

For both the three months ended February 29, 2024 and February 28, 2023, 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, 2023 November 30, 2022

4.875 % senior notes due December 2023 (1)

$ 377,973 399,169

(Dollars in thousands) February 29, 2024 November 30, 2023

4.50 % senior notes due 2024

8 unchanged sentences

797,513 797,347

5.875 % senior notes due 2024

Mortgage notes on land and other debt 325,582 311,720

$ 2,830,332 2,816,482

(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 carrying amounts of the senior notes in the table above are net of debt issuance costs of $ 3.8 million and $ 4.2 million as of February 29, 2024 and November 30, 2023, respectively.

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

(In thousands) August 31, 2023

(In thousands) February 29, 2024

Commitments - maturing in April 2024 $ 350,000

9 unchanged sentences

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

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

(In thousands) February 29, 2024 November 30, 2023

Performance letters of credit $ 1,526,220 1,404,541

5 unchanged sentences

The terms of guarantees are unchanged from the disclosure in the Company's Financial Condition and Capital Resources section in its Annual Report on Form 10-K for the year ended November 30, 2023.

Lennar Corporation and Subsidiaries

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

(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 August 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 February 29, 2024 and November 30, 2023, 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, 2023 November 30, 2022

February 29, 2024 November 30, 2023

(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

Lennar Corporation and Subsidiaries

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

financial information.

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.

8 unchanged sentences

Fair Value Hierarchy Fair Value at

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

(In thousands) February 29, 2024 November 30, 2023

Financial Services Assets:

6 unchanged sentences

Investments available-for-sale Level 3 38,315 37,953

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, 2023 November 30, 2022

February 29, 2024 November 30, 2023

(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, 2023 and November 30, 2022.

The fair value of these are included in Financial Services’ loans held-for-sale as of February 29, 2024 and November 30, 2023.

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

7 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:

Lennar Corporation and Subsidiaries

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

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

As of February 29, 2024 As of November 30, 2023

Unobservable inputs

9 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,

(In thousands) 2023 2022 2023 2022

Three Months Ended

(In thousands) February 29, 2024 February 28, 2023

Changes in fair value included in Financial Services revenues:

8 unchanged sentences

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 sets forth the reconciliation of the beginning and ending balance for the Level 3 recurring fair value measurements in the Company's Financial Services segment:

Three Months Ended

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

Beginning balance $ 3,398 22,754 3,221 84,205

Purchases/loan originations 34 161,308 93 109,850

Sales/loan originations sold, including those not settled — ( 100,562 ) — ( 188,266 )

Disposals/settlements ( 94 ) ( 45,667 ) ( 54 ) —

Changes in fair value (1) 78 ( 535 ) 96 693

Interest and principal paydowns — ( 3 ) — ( 35 )

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

Nine Months Ended

February 29, 2024 February 28, 2023

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

11 unchanged sentences

Three 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 (2) Level 3 $ 67,006 57,801 ( 9,205 ) 21,268 17,034 ( 4,234 )

Land and land under development (2) Level 3 26,740 24,612 ( 2,128 ) 100,043 93,095 ( 6,948 )

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

Nine Months Ended

February 29, 2024 February 28, 2023

(In thousands) Fair Value

5 unchanged sentences

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

Lennar Corporation and Subsidiaries

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

(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 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.

During the three months ended February 29, 2024 and February 28, 2023, total losses, net, for land and land under development included $ 2.9 million and $ 14.5 million, respectively, of deposit and pre-acquisition cost write-offs.

Finished homes and construction in progress are included within inventories.

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

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

The Company disclosed its accounting policy related to inventories and its review for indicators of impairment in the Summary

Lennar Corporation and Subsidiaries

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

of Significant Accounting Policies in its Annual Report on Form 10-K for the year ended November 30, 2023.

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

3 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, 2023 1,247 21 6 $ 53,211 $ 18,844

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

February 29, 2024 1,227 31 2 $ 4,863 $ ( 1,521 )

February 28, 2023 1,210 27 — — —

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

Three Months Ended

February 29, 2024

Unobservable inputs Range

2 unchanged sentences

Discount rate 20 %

(1) Represents the projected average selling price on future deliveries for communities in which the Company recorded valuation adjustments during the quarter ended February 29, 2024.

The Company disclosed its accounting policy related to investments in unconsolidated entities and its review for indicators of impairment for the long-lived assets of an unconsolidated entity and the decline in the fair value of an investment below the carrying value in the Summary of Significant Accounting Policies in its Annual Report on Form 10-K for the year ended November 30, 2023.

1 unchanged sentence

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, length of the time and the extent to which the market value has been below the carrying value, and liquidity needs of the unconsolidated entity.

(1) projected future distributions from the unconsolidated entities, (2) discount rates applied to the future distributions, (3) the length of the time and the extent to which the market value has been less than cost and (4) various other factors, which include age of the venture, relationships with the other partners and banks, general economic market conditions, land status, length of the time and the extent to which the market value has been below the carrying value, 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 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.

During the three months ended February 29, 2024, the Company evaluated the fair value of its investments in unconsolidated entities using a cash flow analysis and concluded that the investments had no other-than-temporary impairment.

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)

(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.

During the three months ended February 29, 2024, 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 29, 2024.

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.

Lennar Corporation and Subsidiaries

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

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

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

August 31, 2023 November 30, 2022

February 29, 2024 November 30, 2023

(In thousands) Investments in

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$ 1,308,208 1,446,473 1,240,627 1,386,646

(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.

(1) As of February 29, 2024 and November 30, 2023, 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 $ 68.8 million and $ 69.8 million, respectively.

In addition, as of February 29, 2024 and November 30, 2023, there was recourse debt of a VIE of $ 42.0 million and $ 42.1 million, respectively.

(2) As of February 29, 2024 and November 30, 2023, 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 II, in addition to the investment, also included the remaining combined equity commitment of $ 12.8 million as of both February 29, 2024 and November 30, 2023 for future expenditures related to the construction and development of its projects.

(3) As of both February 29, 2024 and November 30, 2023, 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) At February 29, 2024, 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 August 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 February 29, 2024 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.

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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

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) until the Company has determined whether to exercise the options.

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

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 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 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.

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 August 31, 2023.

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.

Although the Company does not have legal title to the optioned land, if the Company is deemed to be the primary beneficiary, and makes a significant deposit or pre-acquisition cost investment for optioned land, or is otherwise economically compelled to takedown the optioned 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 that the Company was economically compelled to takedown was $ 1.9 billion as of February 29, 2024 and is included in consolidated inventory not owned.

Consolidated inventory not owned related to land financing transactions,

Lennar Corporation and Subsidiaries

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

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 $ 1.7 billion as of February 29, 2024.

During the three months ended February 29, 2024, consolidated inventory not owned increased by $ 555.4 million with a corresponding increase to liabilities related to consolidated inventory not owned in the accompanying condensed consolidated balance sheet as of February 29, 2024.

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 August 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) August 31, 2023 November 30, 2022

(Dollars in thousands) February 29, 2024 November 30, 2023

Non-refundable option deposits and pre-acquisition costs $ 2,325,346 1,949,219

Non-refundable option deposits included in consolidated inventory not owned 504,033 451,632

Letters of credit in lieu of cash deposits under certain land and option contracts 226,816 198,920

For the three months ended February 29, 2024, the Company purchased a significant portion of land from one land bank (the “Land Bank”).

There were no amounts due to the Land Bank as of February 29, 2024, resulting from land purchases as the full purchase price of the land is typically paid to the Land Bank at closing when land is purchased by the Company.

As of February 29, 2024, the total deposits and pre-acquisition costs on real estate relating to contracts with the Land Bank were $ 669.9 million.

As of February 29, 2024, total consolidated inventory not owned and liabilities related to consolidated inventory not owned relating to contracts with the Land Bank were $ 886.2 million and $ 749.2 million, respectively.

The Company believes there are other land banks that could be substituted should the Land Bank become unavailable or non-competitive with respect to land banking of future land.

Thus, the Company does not believe that the loss of the Company’s relationship with this Land Bank would have a material adverse effect on the Company’s business, financial condition or cash flows.

(10) Commitments and Contingent Liabilities

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

Three Months Ended Nine Months Ended

August 31, August 31,

(In thousands) 2023 2022 2023 2022

Three Months Ended

(In thousands) February 29, 2024 February 28, 2023

Warranty reserve, beginning of the period $ 414,796 418,017

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Warranty reserve, end of period $ 405,558 403,334

(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.

(1) The adjustments to pre-existing warranties from changes in estimates during the three months ended February 29, 2024 and February 28, 2023 primarily related to specific claims in certain of the Company's homebuilding communities and other adjustments.

Lennar Corporation and Subsidiaries

6 unchanged sentences

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

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

(Dollars in thousands) February 29, 2024 November 30, 2023

Right-of-use assets $ 104,784 145,812

2 unchanged sentences

Weighted-average discount rate 3.8 % 3.4 %

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

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

Future minimum payments under the noncancellable leases in effect at February 29, 2024 were as follows:

(In thousands) Lease Payments

Thereafter 60,367

2024 $ 22,939

2028 and thereafter 34,262

Total future minimum lease payments (1) $ 124,501

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

Nine Months Ended

(In thousands) 2023 2022

Three Months Ended

(In thousands) February 29, 2024 February 28, 2023

Rental expense $ 26,217 26,904

In December 2023, the Company purchased its corporate headquarters building in which the Company had previously leased office space.

This building contains approximately 213,200 square feet of office space, of which the Company leases approximately 53,000 square feet of unused office space to other tenants.

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, 2023 and 2022, the Company had an immaterial amount of sublease income.

For both the three months ended February 29, 2024 and February 28, 2023, the Company had an immaterial amount of sublease income.

Forward-Looking Statements

Some of the statements in this Quarterly Report on Form 10-Q are forward-looking statements.

These statements are intended to qualify for the "safe harbor" from liability established by the Private Securities Litigation Reform Act of 1995.

These forward-looking statements typically include the words "anticipate," "believe," "consider," "estimate," "expect," "forecast," "intend," "objective," "plan," "predict," "projection," "seek," "strategy," "target," "outlook," "will," "should," "could" or other words of similar meaning, as well as statements written in the future tense.

Forward-looking statements contained herein may include opinions or beliefs regarding market conditions and similar matters.

In many instances, those opinions and beliefs are based upon general observations by members of our management, anecdotal evidence and our experience in the conduct of our businesses, without specific investigations or analyses.

Therefore, while they reflect our view of the industries and markets in which we are involved, they should not be viewed as reflecting verifiable views or views that are necessarily shared by all who are involved in those industries or markets.

This Quarterly Report on Form 10-Q contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995.

These statements concern expectations, beliefs, projections, plans and strategies, anticipated events or trends and similar expressions concerning matters that are not historical facts.

The forward-looking statements reflect our current views about future events and are subject to risks, uncertainties and assumptions.

These forward-looking statements typically include the words “anticipate,” “believe,” “consider,” “estimate,” “expect,” “forecast,” “intend,” “objective,” “plan,” “predict,” “projection,” “seek,” “strategy,” “target,” “will,” “may” or other words of similar meaning.

Some of them are opinions formed based upon general observations, anecdotal evidence and industry experience, but that are not supported by specific investigation or analysis.

These forward-looking statements reflect our current views about future events and are subject to risks, uncertainties and assumptions.

We wish to caution readers that certain important factors may have affected and could in the future affect our actual results and could cause actual results to differ significantly from what is anticipated by our forward-looking statements.

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

an extended slowdown in some or all of the real estate markets in which we have significant homebuilding activity, including a slowdown in either the market for single family homes or the multifamily rental market;

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

decreased demand for our homes or Multifamily rental properties;

the impact of inflation or a higher interest rate environment;

the effect of increased interest rates with regard to borrowings by the funds we manage on the willingness of those funds to invest in new projects;

the effects of public health issues such as a major epidemic or pandemic that could have a negative impact on the economy and on our businesses;

the duration, impact and severity of which is highly uncertain;

slowdowns in real estate markets in regions where we have significant Homebuilding or Multifamily development activities or own a substantial number of single-family homes for rent;

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

the potential impact of inflation;

the impact of increased cost of mortgage financing for homebuyers, increased interest rates or increased competition in the mortgage industry;

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

cost increases related to real estate taxes and insurance;

reduced availability or increased cost of mortgage financing for homebuyers;

increased interest rates or increased competition in the mortgage industry;

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

our inability to successfully execute our strategies, including our land lighter strategy and our strategy to monetize noncore assets;

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

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

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

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

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

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

the potential negative impact to our business of public health issues, including the coronavirus (COVID-19) pandemic;

possible unfavorable outcomes in legal proceedings;

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

our inability to acquire land at anticipated prices;

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

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

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

our inability to pay down debt;

becoming unable to pay down debt;

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

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

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

difficulty obtaining land-use entitlements or construction financing;

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

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

and our inability to refinance our debt on terms that are as favorable as our current arrangements.

new laws or regulatory changes that adversely affect the profitability of our businesses (including changes in tax laws or liabilities);

our inability to refinance our debt on terms that are as favorable as our current arrangements;

and changes in accounting conventions that adversely affect our reported earnings.

Please see our Annual Report on Form 10-K for the fiscal year ended November 30, 2023 and our other filings with the SEC for a further discussion of these and other risks and uncertainties which could affect our future results.

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What changed 10-Q

Item 1. Financial Statements