LENNAR CORP /NEW/ 10-Q

Item 1. Financial Statements Lennar Corporation and Subsidiaries Condensed Consolidated Balance Sheets (Dollars in thousands) (Unaudited) August 31, November 30, 2024 (1) 2023 (1) ASSETS Homebuilding: Cash and cash equivalents $ 4,037,405 6,273,724 Restricted cash 12,600 13,481 Receivables, net 995,417 887,992 Inventories: Finished homes and construction in progress 11,373,606 10,455,666 Land and land under development 4,872,341 4,904,541 Inventory owned 16,245,947 15,360,207 Consolidated inventory not owned 3,842,592 2,992,528 Inventory owned and consolidated inventory not owned 20,088,539 18,352,735 Deposits and pre-acquisition costs on real estate 2,980,035 2,002,154 Investments in unconsolidated entities 1,309,622 1,143,909 Goodwill 3,442,359 3,442,359 Other assets 1,616,314 1,512,038 34,482,291 33,628,392 Financial Services 3,093,873 3,566,546 Multifamily 1,310,555 1,381,513 Lennar Other 854,263 657,852 Total assets $ 39,740,982 39,234,303 (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, 2024, total assets include $ 3.3 billion related to consolidated VIEs of which $ 68.8 million is included in Homebuilding cash and cash equivalents, $ 7.0 million in Homebuilding receivables, net, $ 6.7 million in Homebuilding finished homes and construction in progress, $ 625.1 million in Homebuilding land and land under development, $ 2.5 billion in Homebuilding consolidated inventory not owned, $ 67.3 million in Homebuilding deposits and pre-acquisition costs on real estate, $ 0.3 million in Homebuilding investments in unconsolidated entities, $ 41.0 million in Homebuilding other assets and $ 34.0 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, $ 1.2 billion in Homebuilding consolidated inventory not owned, $ 55.0 million in Homebuilding deposits and pre-acquisition costs on real estate, $ 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. 3 Lennar Corporation and Subsidiaries Condensed Consolidated Balance Sheets (Continued) (In thousands, except share amounts) (Unaudited) August 31, November 30, 2024 (2) 2023 (2) LIABILITIES AND EQUITY Homebuilding: Accounts payable $ 1,788,117 1,631,401 Liabilities related to consolidated inventory not owned 3,343,871 2,540,894 Senior notes and other debt payable, net 2,263,256 2,816,482 Other liabilities 2,727,342 2,739,217 10,122,586 9,727,994 Financial Services 1,759,821 2,447,039 Multifamily 195,327 278,177 Lennar Other 105,540 79,127 Total liabilities 12,183,274 12,532,337 Commitments and contingent liabilities (See Note 10) Stockholders’ equity: Preferred stock — — Class A common stock of $ 0.10 par value; Authorized: August 31, 2024 and November 30, 2023 - 400,000,000 shares; Issued: August 31, 2024 - 259,978,383 shares and November 30, 2023 - 258,475,012 shares 25,998 25,848 Class B common stock of $ 0.10 par value; Authorized: August 31, 2024 and November 30, 2023 - 90,000,000 shares; Issued: August 31, 2024 - 36,601,215 shares and November 30, 2023 - 36,601,215 shares 3,660 3,660 Additional paid-in capital 5,706,711 5,570,009 Retained earnings 24,791,519 22,369,368 Treasury stock, at cost; August 31, 2024 - 21,171,248 shares of Class A common stock and 4,163,503 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 ( 3,122,408 ) ( 1,393,100 ) Accumulated other comprehensive income 7,040 4,879 Total stockholders’ equity 27,412,520 26,580,664 Noncontrolling interests 145,188 121,302 Total equity 27,557,708 26,701,966 Total liabilities and equity $ 39,740,982 39,234,303 (2) As of August 31, 2024, total liabilities include $ 2.4 billion related to consolidated VIEs as to which there was no recourse against the Company, of which $ 80.0 million is included in Homebuilding accounts payable, $ 2.3 billion in Homebuilding liabilities related to consolidated inventory not owned, $ 6.0 million in Homebuilding senior notes and other debt payable, $ 46.5 million in Homebuilding other liabilities, and $ 1.0 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. 4 Lennar Corporation and Subsidiaries Condensed Consolidated Statements of Operations and Comprehensive Income (In thousands, except per share amounts) (Unaudited) Three Months Ended Nine Months Ended August 31, August 31, 2024 2023 2024 2023 Revenues: Homebuilding $ 9,045,692 8,318,615 24,357,742 22,144,937 Financial Services 273,270 266,206 804,713 672,166 Multifamily 93,443 137,394 322,620 432,661 Lennar Other 3,637 7,388 9,489 15,419 Total revenues 9,416,042 8,729,603 25,494,564 23,265,183 Costs and expenses: Homebuilding 7,613,042 6,863,063 20,697,033 18,576,734 Financial Services 128,870 117,211 382,005 331,835 Multifamily 184,708 139,759 419,580 443,069 Lennar Other 17,176 6,155 53,105 19,426 Corporate general and administrative 164,672 114,144 478,975 365,002 Charitable foundation contribution 21,516 18,559 58,004 49,292 Total costs and expenses 8,129,984 7,258,891 22,088,702 19,785,358 Equity in earnings (losses) from unconsolidated entities 186,621 ( 23,989 ) 151,767 ( 104,931 ) Other income, net and other gains 23,331 44,151 156,875 57,511 Lennar Other unrealized gains (losses) from technology investments 39,123 ( 15,713 ) 12,472 ( 14,170 ) Earnings before income taxes 1,535,133 1,475,161 3,726,976 3,418,235 Provision for income taxes ( 347,859 ) ( 358,209 ) ( 859,195 ) ( 824,233 ) Net earnings (including net earnings attributable to noncontrolling interests) 1,187,274 1,116,952 2,867,781 2,594,002 Less: Net earnings attributable to noncontrolling interests 24,600 7,956 31,462 16,778 Net earnings attributable to Lennar $ 1,162,674 1,108,996 2,836,319 2,577,224 Other comprehensive income, net of tax: Net unrealized gains on securities available-for-sale $ 444 208 2,161 1,632 Total other comprehensive income, net of tax $ 444 208 2,161 1,632 Total comprehensive income attributable to Lennar $ 1,163,118 1,109,204 2,838,480 2,578,856 Total comprehensive income attributable to noncontrolling interests $ 24,600 7,956 31,462 16,778 Basic and diluted earnings per share $ 4.26 3.87 10.26 8.94 See accompanying notes to condensed consolidated financial statements. 5 Lennar Corporation and Subsidiaries Condensed Consolidated Statements of Cash Flows (In thousands) (Unaudited) Nine Months Ended August 31, 2024 2023 Cash flows from operating activities: Net earnings (including net earnings attributable to noncontrolling interests) $ 2,867,781 2,594,002 Adjustments to reconcile net earnings to net cash provided by operating activities: Depreciation and amortization 85,119 81,146 Amortization of discount/premium and accretion on debt, net 407 ( 2,194 ) Equity in (earnings) loss from unconsolidated entities ( 151,767 ) 104,931 Distributions of earnings from unconsolidated entities 34,108 33,714 Share-based compensation expense 154,094 139,616 Deferred income tax expense (benefit) 99,368 ( 102,322 ) Gains on redemption/repurchases of senior notes ( 825 ) ( 6,878 ) Loans held-for-sale unrealized (gains) losses ( 1,617 ) 33,358 Lennar Other unrealized (gains) losses from technology investments and other (gains) losses ( 35,189 ) 14,131 Gains on sale of operating properties and equipment and other assets ( 15,428 ) ( 3,064 ) Valuation adjustments and write-offs of option deposits and pre-acquisition costs on real estate, and other assets 125,777 96,451 Changes in assets and liabilities: (Increase) decrease in receivables ( 24,170 ) 167,573 (Increase) decrease in inventories, excluding valuation adjustments ( 707,702 ) 127,312 Increase in deposits and pre-acquisition costs on real estate ( 984,843 ) ( 134,883 ) Increase in other assets ( 84,751 ) ( 104,794 ) Decrease in loans held-for-sale 245,004 434,332 Decrease in accounts payable and other liabilities ( 176,492 ) ( 881,890 ) Net cash provided by operating activities 1,428,874 2,590,541 Cash flows from investing activities: Net additions of operating properties and equipment ( 130,138 ) ( 53,610 ) Proceeds from the sale of operating properties and equipment and other assets 31,435 13,215 Investments in and contributions to unconsolidated entities ( 311,904 ) ( 152,530 ) Distributions of capital from unconsolidated entities 236,527 69,960 (Increase) decrease in Financial Services loans held-for-investment ( 2,479 ) 12,222 Purchases of investment securities ( 4,519 ) ( 8,000 ) Proceeds from maturities/sales of investment securities 4,254 3,778 Net cash used in investing activities $ ( 176,824 ) ( 114,965 ) See accompanying notes to condensed consolidated financial statements. 6 Lennar Corporation and Subsidiaries Condensed Consolidated Statements of Cash Flows (Continued) (In thousands) (Unaudited) Nine Months Ended August 31, 2024 2023 Cash flows from financing activities: Net repayments under warehouse facilities $ ( 618,388 ) ( 980,929 ) Redemption/repurchases of senior notes ( 553,865 ) ( 633,059 ) Principal payments on notes payable and other borrowings ( 43,995 ) ( 89,042 ) Proceeds from liabilities related to consolidated inventory not owned 130,440 341,288 Proceeds from other borrowings 6,231 — Payments related to liabilities related to consolidated inventory not owned ( 255,753 ) ( 597,477 ) Payments related to other liabilities, net ( 4,263 ) ( 4,016 ) Receipts related to noncontrolling interests 17,044 6,309 Payments related to noncontrolling interests ( 45,819 ) ( 43,418 ) Common stock: Repurchases ( 1,729,308 ) ( 841,611 ) Dividends ( 414,168 ) ( 325,359 ) Net cash used in financing activities ( 3,511,844 ) ( 3,167,314 ) Net decrease in cash and cash equivalents and restricted cash ( 2,259,794 ) ( 691,738 ) Cash and cash equivalents and restricted cash at beginning of period 6,570,938 4,815,770 Cash and cash equivalents and restricted cash at end of period $ 4,311,144 4,124,032 Summary of cash and cash equivalents and restricted cash: Homebuilding $ 4,037,405 3,887,809 Financial Services 156,840 167,216 Multifamily 24,755 28,712 Lennar Other 33,662 5,344 Homebuilding restricted cash 12,600 16,201 Financial Services restricted cash 45,882 18,750 $ 4,311,144 4,124,032 Supplemental disclosures of non-cash investing and financing activities: Homebuilding: Purchases of inventories financed by sellers $ 34,245 13,500 Net non-cash contributions to unconsolidated entities 14,453 120 See accompanying notes to condensed consolidated financial statements. 7 Lennar Corporation and Subsidiaries Notes to Condensed Consolidated Financial Statements (Unaudited) (1) Basis of Presentation Basis of Consolidation The condensed consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”) for interim financial information and pursuant to the rules and regulations of the Securities and Exchange Commission (“SEC”). Accordingly, they do not include all of the information and footnotes required by GAAP for complete financial statements. These condensed consolidated financial statements should be read in conjunction with the consolidated financial statements in the Company’s Annual Report on Form 10-K for the year ended November 30, 2023, as amended ("Form 10-K"). The basis of consolidation is unchanged from the disclosure in the Company's Notes to Consolidated Financial Statements section in its Annual Report on Form 10-K for the year ended November 30, 2023. In the opinion of management, all adjustments (consisting of normal recurring adjustments) necessary for the fair presentation of the accompanying condensed consolidated financial statements have been made. Seasonality 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, 2024 are not necessarily indicative of the results to be expected for the full year. Use of Estimates The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the amounts reported in the condensed consolidated financial statements and accompanying notes. Actual results could differ from those estimates. Cash and Cash Equivalents Homebuilding cash and cash equivalents as of August 31, 2024 and November 30, 2023 included $ 878.8 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, 2024 and 2023, the Company granted employees an immaterial number of nonvested shares. During the nine months ended August 31, 2024 and 2023, the Company granted employees 1.3 million and 2.0 million of nonvested shares, respectively. Recently Adopted Accounting Pronouncements 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 its 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 prior year segment information in the condensed consolidated financial statements has been reclassified to conform with the 2024 presentation. This reclassification was for operational purposes and between segments and had no impact on the Company's total assets, total equity, revenue or net income in the condensed consolidated financial statements. 8 Lennar Corporation and Subsidiaries Notes to Condensed Consolidated Financial Statements (Unaudited) (Continued) (2) Operating and Reporting Segments The Company's homebuilding operations construct and sell homes primarily for first-time, move-up and active adult homebuyers primarily under the Lennar brand name. In addition, the Company's homebuilding operations purchase, develop and sell land to third parties. The Company's chief operating decision makers manage and assess the Company’s performance at a regional level. Therefore, the Company performed an assessment of its operating segments in accordance with ASC 280, Segment Reporting , and determined that the following are its operating and reportable segments: Homebuilding segments: (1) East (2) Central (3) Texas (4) West (5) Financial Services (6) Multifamily (7) Lennar Other The assets and liabilities related to the Company’s segments were as follows: (In thousands) August 31, 2024 Assets: Homebuilding Financial Services Multifamily Lennar Other Total Cash and cash equivalents $ 4,037,405 156,840 24,755 33,662 4,252,662 Restricted cash 12,600 45,882 — — 58,482 Receivables, net (1) 995,417 546,868 65,136 — 1,607,421 Inventory owned and consolidated inventory not owned 20,088,539 — 551,970 — 20,640,509 Deposits and pre-acquisition costs on real estate 2,980,035 — 32,946 — 3,012,981 Investments in unconsolidated entities 1,309,622 — 544,635 351,174 2,205,431 Loans held-for-sale (2) — 1,841,211 — — 1,841,211 Investments in equity securities (3) — — — 339,527 339,527 Investments available-for-sale (4) — — — 40,090 40,090 Loans held-for-investment, net — 63,995 — — 63,995 Investments held-to-maturity — 138,045 — — 138,045 Goodwill 3,442,359 189,699 — — 3,632,058 Other assets 1,616,314 111,333 91,113 89,810 1,908,570 Total assets $ 34,482,291 3,093,873 1,310,555 854,263 39,740,982 Liabilities: Notes and other debt payable, net $ 2,263,256 1,545,416 — — 3,808,672 Accounts payable, liabilities related to consolidated inventory not owned and other liabilities 7,859,330 214,405 195,327 105,540 8,374,602 Total liabilities $ 10,122,586 1,759,821 195,327 105,540 12,183,274 9 Lennar Corporation and Subsidiaries Notes to Condensed Consolidated Financial Statements (Unaudited) (Continued) (In thousands) November 30, 2023 Assets: Homebuilding Financial Services Multifamily Lennar Other Total Cash and cash equivalents $ 6,273,724 159,491 39,334 1,948 6,474,497 Restricted cash 13,481 82,960 — — 96,441 Receivables, net (1) 887,992 716,071 92,142 — 1,696,205 Inventory owned and consolidated inventory not owned 18,352,735 — 544,935 — 18,897,670 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 Loans held-for-sale (2) — 2,086,809 — — 2,086,809 Investments in equity securities (3) — — — 297,243 297,243 Investments available-for-sale (4) — — — 37,953 37,953 Loans held-for-investment, net — 55,463 — — 55,463 Investments held-to-maturity — 140,676 — — 140,676 Goodwill 3,442,359 189,699 — — 3,632,058 Other assets 1,512,038 135,377 73,187 44,464 1,765,066 Total assets $ 33,628,392 3,566,546 1,381,513 657,852 39,234,303 Liabilities: Notes and other debt payable, net $ 2,816,482 2,163,805 3,741 — 4,984,028 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 August 31, 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 $ 147.5 million and $ 121.0 million without readily available fair values as of August 31, 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. Financial information relating to the Company’s segments was as follows: Three Months Ended Nine Months Ended August 31, August 31, (In thousands) 2024 2023 2024 2023 Revenues: Homebuilding $ 9,045,692 8,318,615 24,357,742 22,144,937 Financial Services 273,270 266,206 804,713 672,166 Multifamily 93,443 137,394 322,620 432,661 Lennar Other 3,637 7,388 9,489 15,419 $ 9,416,042 8,729,603 25,494,564 23,265,183 Earnings (loss) before income taxes: Homebuilding $ 1,477,918 1,493,820 3,846,869 3,615,068 Financial Services 144,400 148,995 422,708 340,331 Multifamily 78,908 ( 8,733 ) 42,795 ( 38,496 ) Lennar Other 20,095 ( 26,218 ) ( 48,417 ) ( 84,374 ) Corporate and Unallocated (1) ( 186,188 ) ( 132,703 ) ( 536,979 ) ( 414,294 ) $ 1,535,133 1,475,161 3,726,976 3,418,235 (1) Corporate and unallocated consists primarily of corporate general and administrative expenses and charitable foundation contributions. 10 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 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. Operations of the Company’s Homebuilding segments primarily include the construction and sale of single-family attached and detached homes as well as the purchase, development and sale of residential land directly and through the Company’s unconsolidated entities. Operating earnings (loss) for the Homebuilding segments consist of revenues generated from the sales of homes and land, other revenues from management fees and forfeited deposits, equity in earnings (loss) from unconsolidated entities and other income (expense), net, less the cost of homes sold and land sold, and selling, general and administrative expenses incurred by the segment. Homebuilding Other also includes management of a fund that acquires single-family homes and holds them as rental properties. The Company’s reportable Homebuilding segments and all other homebuilding operations not required to be reported separately have homebuilding divisions located in: East: Alabama, Florida, New Jersey and Pennsylvania Central: Georgia, Illinois, Indiana, Maryland, Minnesota, North Carolina, South Carolina, Tennessee, and Virginia Texas: Texas West: Arizona, California, Colorado, Idaho, Nevada, Oregon, Utah and Washington Other: Urban divisions and other homebuilding related investments primarily in California, including FivePoint Holdings, LLC (“FivePoint”) The assets related to the Company’s homebuilding segments were as follows: August 31, November 30, 2024 2023 (In thousands) East $ 7,235,644 6,563,568 Central 5,393,664 4,511,496 Texas 4,052,427 3,337,280 West 12,046,350 11,298,812 Other 1,573,735 1,511,541 Corporate and Unallocated 4,180,471 6,405,695 Total Homebuilding $ 34,482,291 33,628,392 Financial information relating to the Company’s homebuilding segments was as follows: Three Months Ended Nine Months Ended August 31, August 31, (In thousands) 2024 2023 2024 2023 Revenues East $ 2,138,235 2,195,413 6,263,276 6,012,553 Central 2,142,857 1,818,744 5,246,756 4,661,277 Texas 1,286,625 1,176,875 3,554,836 3,340,539 West 3,471,591 3,117,265 9,267,120 8,103,423 Other 6,384 10,318 25,754 27,145 $ 9,045,692 8,318,615 24,357,742 22,144,937 Operating earnings (loss) East $ 402,182 514,309 1,204,713 1,386,208 Central 343,216 300,942 742,702 704,778 Texas 197,767 219,881 550,924 528,261 West 514,448 479,968 1,302,172 1,065,940 Other 20,305 ( 21,280 ) 46,358 ( 70,119 ) $ 1,477,918 1,493,820 3,846,869 3,615,068 11 Lennar Corporation and Subsidiaries Notes to Condensed Consolidated Financial Statements (Unaudited) (Continued) Financial Services Operations of the Financial Services segment include mortgage financing, title and closing services primarily for buyers of the Company’s homes. 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 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. At August 31, 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: September 2024 (1) $ 100,000 100,000 200,000 April 2025 250,000 250,000 500,000 June 2025 1,400,000 — 1,400,000 August 2025 75,000 75,000 150,000 August 2025 250,000 250,000 500,000 Total residential facilities $ 2,075,000 675,000 2,750,000 LMF commercial facilities maturing: December 2024 200,000 — 200,000 January 2025 100,000 — 100,000 Total LMF commercial facilities $ 300,000 — 300,000 Total $ 3,050,000 (1) Subsequent to August 31, 2024, the maturity date was extended to October 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. The facilities are non-recourse to the Company and are expected to be renewed or replaced with other facilities when they mature. The LMF Commercial facilities finance LMF Commercial loan originations and securitization activities and were secured by up to 80 % interests in the originated commercial loans financed. Borrowings and collateral under the facilities were as follows: (In thousands) August 31, 2024 November 30, 2023 Borrowings under the residential facilities $ 1,332,897 2,020,187 Collateral under the residential facilities 1,374,251 2,097,020 Borrowings under the LMF Commercial facilities 83,884 12,525 If the facilities are not renewed or replaced, the borrowings under the lines of credit will be repaid by selling the mortgage loans held-for-sale to investors and by collecting receivables on loans sold but not yet paid for. Without the facilities, the Financial Services segment would have to use cash from operations and other funding sources to finance its lending activities. Substantially all of the residential loans the Financial Services segment originates are sold within a short period in the secondary mortgage market on a servicing released, non-recourse basis. After the loans are sold, the Company retains potential liability for possible claims by purchasers that it breached certain limited industry-standard representations and warranties in the loan sale agreements. Purchasers sometimes try to defray losses by purporting to have found inaccuracies related to sellers’ representations and warranties in particular loan sale agreements. Mortgage investors could seek to have the Company buy back mortgage loans or compensate them for losses incurred on mortgage loans that the Company has sold based on claims that the Company breached its limited representations or warranties. The Company’s mortgage operations have established accruals for possible losses associated with mortgage loans previously originated and sold to investors. The Company establishes accruals for such possible losses based upon, among other things, an analysis of repurchase requests received, an estimate of potential repurchase claims not yet received and actual past repurchases and losses through the disposition of affected loans, as well as previous settlements. While the Company believes that it has adequately reserved for known losses and projected repurchase requests, given the volatility in the residential mortgage industry and the uncertainty regarding the ultimate resolution of these claims, if either actual repurchases or the losses incurred resolving those repurchases exceed the Company’s expectations, additional recourse expense may be incurred. The provision for loan losses was immaterial for both the three and nine months 12 Lennar Corporation and Subsidiaries Notes to Condensed Consolidated Financial Statements (Unaudited) (Continued) ended August 31, 2024 and 2023. Loan origination liabilities were $ 18.9 million and $ 17.6 million as of August 31, 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) 2024 2023 2024 2023 Originations (1) $ 236,665 161,308 449,000 325,378 Sold 145,325 100,562 301,610 265,864 Securitizations 4 3 9 6 (1) During both the three and nine months ended August 31, 2024 and 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, 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 the three or nine months ended August 31, 2024 and 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, 2024 November 30, 2023 Carrying value $ 138,045 140,676 Outstanding debt, net of debt issuance costs 128,635 131,093 Incurred interest rate 3.4 % 3.4 % August 31, 2024 Discount rates at purchase 6 % — 84 % Coupon rates 2.0 % — 5.3 % Distribution dates October 2027 — December 2028 Stated maturity dates October 2050 — December 2051 Multifamily The Company is actively involved, primarily through unconsolidated funds and joint ventures, in the development, construction and property management of multifamily rental properties. The Multifamily segment focuses on developing a geographically diversified portfolio of institutional quality multifamily rental properties in select U.S. markets. The Multifamily Segment (i) manages, and owns interests in, funds that are engaged in the development of multifamily residential communities with the intention of holding the newly constructed and occupied properties as income and fee generating assets, and (ii) manages, and owns interests in, joint ventures that are engaged in the development of multifamily residential communities, in most instances with the intention of selling them when they are built and substantially occupied. The multifamily business is a vertically integrated platform with capabilities spanning development, construction, property management, asset management, and capital markets. Revenues are generated from the sales of land, from construction activities, and management and promote fees generated from joint ventures less the cost of sales of land sold, expenses related to construction activities and general and administrative expenses. Operations of the Multifamily Segment also include equity in earnings (loss) from unconsolidated entities and other gains, which includes sales of buildings and investments. 13 Lennar Corporation and Subsidiaries Notes to Condensed Consolidated Financial Statements (Unaudited) (Continued) Lennar Other Lennar Other primarily includes strategic investments in technology companies, primarily managed by the Company's LEN X subsidiary, and fund interests the Company retained when it sold the Rialto Capital Management ( “Rialto”) asset and investment management platform. Operations of the Lennar Other segment include operating earnings (loss) consisting of revenues generated primarily from the Company's share of carried interests in the Rialto fund investments, along with equity in earnings (loss) from the Rialto fund investments and technology investments, realized and unrealized gains (losses) from investments in equity securities and other income (expense), net from the remaining assets related to the Company's former Rialto segment. The Company has investments in Blend Labs, Inc. (“Blend Labs”), Hippo Holdings, Inc. (“Hippo”), Opendoor Technologies, Inc. (“Opendoor”), SmartRent, Inc. (“SmartRent”), Sonder Holdings, Inc. (“Sonder”) and Sunnova Energy International, Inc. (“Sunnova”), which are held at market and the carrying value of which will therefore change depending on the value of the Company's shareholdings in those entities on the last day of each quarter. All the investments are accounted for as investments in equity securities which are held at fair value and the changes in fair values are recognized through earnings. The following is a detail of Lennar Other unrealized gains (losses) from mark-to-market adjustments on the Company's technology investments: Three Months Ended Nine Months Ended August 31, August 31, (In thousands) 2024 2023 2024 2023 Blend Labs (BLND) $ 2,270 386 5,921 ( 360 ) Hippo (HIPO) 6,609 ( 17,166 ) 33,795 ( 14,933 ) Opendoor (OPEN) ( 564 ) 23,638 ( 16,156 ) 38,459 SmartRent (SMRT) ( 5,634 ) ( 1,707 ) ( 12,206 ) 8,219 Sonder (SOND) 71 ( 91 ) 82 ( 549 ) Sunnova (NOVA) 36,371 ( 20,773 ) 1,036 ( 45,006 ) Lennar Other unrealized gains (losses) from technology investments $ 39,123 ( 15,713 ) 12,472 ( 14,170 ) Doma Holdings, Inc. (“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, 2024, the Company’s carrying value in Doma was zero as a result of allocated losses from Doma. (3) Investments in Unconsolidated Entities Homebuilding Unconsolidated Entities The investments in the Company's Homebuilding unconsolidated entities were as follows: (In thousands) August 31, 2024 November 30, 2023 Investments in unconsolidated entities (1) (2) $ 1,309,622 1,143,909 Underlying equity in unconsolidated entities' net assets (1) 1,604,403 1,436,239 (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 FivePoint. (2) Included in the Company's recorded investments in Homebuilding unconsolidated entities is the Company's 40 % ownership of FivePoint. As of August 31, 2024 and November 30, 2023, the carrying amount of the Company's investment was $ 466.1 million and $ 422.2 million, respectively. As of August 31, 2024 and November 30, 2023, the Homebuilding segment's unconsolidated entities had non-recourse debt with completion guarantees of $ 292.3 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. While the Company sometimes guarantees debt of unconsolidated entities, in most instances the Company’s partners have also guaranteed that debt and are required to contribute their shares of any payments. 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, 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 August 31, 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). The details related to these are unchanged from the disclosure in 14 Lennar Corporation and Subsidiaries Notes to Condensed Consolidated Financial Statements (Unaudited) (Continued) the Company's Notes to the Financial Statements section in its Annual Report on Form 10-K for the year ended November 30, 2023. 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 the people who will live in them. Upward America could raise equity commitments totaling $ 1.0 billion. The commitments are primarily from institutional investors, including $ 78.1 million committed by Lennar. As of August 31, 2024 and November 30, 2023, the carrying amount of the Company's investment in Upward America was $ 20.5 million and $ 14.8 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 the 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, 2024 and November 30, 2023, the fair value of the completion guarantees was immaterial. As of August 31, 2024 and November 30, 2023, the Multifamily segment's unconsolidated entities had non-recourse debt with completion guarantees of $ 904.2 million 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, 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 (In thousands) August 31, 2024 August 31, 2023 August 31, 2024 August 31, 2023 General contractor services, net of deferrals $ 67,190 120,510 253,260 374,283 General contractor costs 63,774 114,371 239,458 357,168 Management fee income, net of deferrals 10,917 16,884 40,627 52,499 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 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 August 31, 2024, the Company had a $ 25.7 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 nine months ended August 31, 2024 are included below: August 31, 2024 (In thousands) LMV I LMV II Lennar's carrying value of investments $ 160,339 239,166 Equity commitments 2,204,016 1,257,700 Equity commitments called 2,154,328 1,218,619 Lennar's equity commitments 504,016 381,000 Lennar's equity commitments called 500,381 368,170 Lennar's remaining commitments (1) 3,635 12,830 Distributions to Lennar 147,305 11,206 (1) While there are remaining commitments with LMV I and LMV II, there are no plans for additional capital calls. As of November 30, 2023, there were 38 rental operation projects in LMV I. During the second half of fiscal 2024, the LMV I partners decided to liquidate and sell all of the individual rental operation projects of LMV I as the fund has come to the end of its contractual life. During the three months ended August 31, 2024, 27 LMV I rental operation projects were sold to various third-party buyers. The Company recognized a net gain of $ 179.0 million on the sale of these rental operation projects which was recorded as equity in earnings (losses) in the condensed consolidated statement of operations. As a result, the Company received net cash distributions of $ 147.3 million during the three months ended August 31, 2024. 15 Lennar Corporation and Subsidiaries Notes to Condensed Consolidated Financial Statements (Unaudited) (Continued) Other Unconsolidated Entities 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 $ 145.7 million and $ 148.7 million as of August 31, 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 with a carrying value of $ 205.5 million and $ 127.5 million, as of August 31, 2024 and November 30, 2023, respectively. In addition, during the nine months ended August 31, 2024, there was a $ 46.5 million one-time realized gain in Lennar Other on the sale of a technology investment that was included in other income (expense), net and other gains (losses) on the Company’s condensed consolidated statements of operations and comprehensive income. (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, 2024 and 2023: Three Months Ended August 31, 2024 (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 Interests Balance at May 31, 2024 $ 27,015,753 25,996 3,660 5,674,733 ( 2,597,806 ) 6,596 23,764,695 137,879 Net earnings (including net earnings attributable to noncontrolling interests) 1,187,274 — — — — — 1,162,674 24,600 Employee stock and directors plans 10 2 — 70 ( 62 ) — — — Purchases of treasury stock ( 524,540 ) — — — ( 524,540 ) — — — Amortization of restricted stock 31,908 — — 31,908 — — — — Cash dividends ( 135,850 ) — — — — — ( 135,850 ) — Receipts related to noncontrolling interests 2,322 — — — — — — 2,322 Payments related to noncontrolling interests ( 19,173 ) — — — — — — ( 19,173 ) Non-cash purchase or activity of noncontrolling interests, net ( 440 ) — — — — — — ( 440 ) Total other comprehensive income, net of tax 444 — — — — 444 — — Balance at August 31, 2024 $ 27,557,708 25,998 3,660 5,706,711 ( 3,122,408 ) 7,040 24,791,519 145,188 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 Interests 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 16 Lennar Corporation and Subsidiaries Notes to Condensed Consolidated Financial Statements (Unaudited) (Continued) Nine Months Ended August 31, 2024 (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 Interests 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) 2,867,781 — — — — — 2,836,319 31,462 Employee stock and directors plans ( 84,509 ) 150 — 1,282 ( 85,941 ) — — — Purchases of treasury stock ( 1,643,367 ) — — — ( 1,643,367 ) — — — Amortization of restricted stock 154,094 — — 154,094 — — — — Cash dividends ( 414,168 ) — — — — — — ( 414,168 ) — Receipts related to noncontrolling interests 17,044 — — — — — — 17,044 Payments related to noncontrolling interests ( 45,819 ) — — — — — — ( 45,819 ) Non-cash purchase or activity of noncontrolling interests, net 2,525 — — ( 18,674 ) — — — 21,199 Total other comprehensive income, net of tax 2,161 — — — — 2,161 — — Balance at August 31, 2024 $ 27,557,708 25,998 3,660 5,706,711 ( 3,122,408 ) 7,040 24,791,519 145,188 Nine 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 Interests Balance at November 30, 2022 $ 24,240,367 25,608 3,660 5,417,796 ( 210,389 ) 2,408 18,861,417 139,867 Net earnings (including net earnings attributable to noncontrolling interests) 2,594,002 — — — — — 2,577,224 16,778 Employee stock and directors plans ( 71,313 ) 236 — 822 ( 72,371 ) — — — Purchases of treasury stock ( 769,240 ) — — — ( 769,240 ) — — — Amortization of restricted stock 139,616 — — 139,616 — — — — Cash dividends ( 325,359 ) — — — — — — ( 325,359 ) — Receipts related to noncontrolling interests 6,309 — — — — — — 6,309 Payments related to noncontrolling interests ( 43,418 ) — — — — — — ( 43,418 ) Non-cash purchase or activity of noncontrolling interests, net 15,946 — — 3,559 — — — 12,387 Total other comprehensive income, net of tax 1,632 — — — — 1,632 — — 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 On September 25, 2024, the Company's Board of Directors declared a quarterly cash dividend of $ 0.50 per share on both its Class A and Class B common stock, payable on October 24, 2024 to holders of record at the close of business on October 9, 2024. On July 19, 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 July 5, 2024, as declared by its Board of Directors on June 20, 2024. The Company approved and paid cash dividends of $ 0.375 per share for each of the four quarters of 2023 for both its Class A and Class B common stock. 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. At August 31, 2024, we have a remaining authorization to repurchase $ 3.9 billion in value of our Class A or B common stock. 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 August 31, Nine Months Ended August 31, 2024 2023 2024 2023 (Dollars in thousands, except price per share amounts) Class A Class B Class A Class B Class A Class B Class A Class B Shares repurchased 2,892,320 462,906 2,305,300 694,700 9,311,923 1,243,303 5,021,186 1,978,814 Total purchase price $ 447,845 $ 71,434 $ 287,024 $ 78,855 $ 1,445,909 $ 182,641 $ 568,892 $ 193,970 Average price per share $ 154.84 $ 154.32 $ 124.51 $ 113.51 $ 155.27 $ 146.90 $ 113.30 $ 98.02 17 Lennar Corporation and Subsidiaries Notes to Condensed Consolidated Financial Statements (Unaudited) (Continued) (5) Income Taxes 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) 2024 2023 2024 2023 Provision for income taxes $ 347,859 358,209 859,195 824,233 Effective tax rate (1) 23.0 % 24.4 % 23.2 % 24.2 % (1) For both the three and nine months ended August 31, 2024 and 2023, the effective tax rate included state income tax expense and non-deductible executive compensation, partially offset by tax credits. The reduction in the effective tax rate from prior year for both the three and nine months ended August 31, 2024 is primarily due to additional tax credits recognized during the three months ended August 31, 2024. (6) Earnings Per Share Basic earnings per share is computed by dividing net earnings attributable to common stockholders by the weighted average number of common shares outstanding for the period. Diluted earnings per share reflects the potential dilution that could occur if securities or other contracts to issue common stock were exercised or converted into common stock or resulted in the issuance of common stock that then shared in the earnings of the Company. All outstanding nonvested shares that contain non-forfeitable rights to dividends or dividend equivalents that participate in undistributed earnings with common stock are considered participating securities and are included in computing earnings per share pursuant to the two-class method. The two-class method is an earnings allocation formula that determines earnings per share for each class of common stock and participating securities according to dividends or dividend equivalents and participation rights in undistributed earnings. The Company’s restricted common stock (“nonvested shares”) is considered participating securities. 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) 2024 2023 2024 2023 Numerator: Net earnings attributable to Lennar $ 1,162,674 1,108,996 2,836,319 2,577,224 Less: distributed earnings allocated to nonvested shares 635 672 4,351 4,968 Less: undistributed earnings allocated to nonvested shares 10,257 12,549 24,177 28,252 Numerator for basic and diluted earnings per share 1,151,782 1,095,775 2,807,791 2,544,004 Denominator: Denominator for basic and diluted earnings per share - weighted average common shares outstanding 270,164 282,854 273,604 284,612 Basic and diluted earnings per share $ 4.26 3.87 10.26 8.94 For both the three and nine months ended August 31, 2024 and August 31, 2023, there were no options to purchase shares of common stock that were outstanding and anti-dilutive. (7) Homebuilding Senior Notes and Other Debt Payable (Dollars in thousands) August 31, 2024 November 30, 2023 4.75 % senior notes due 2025 $ 499,668 499,336 5.25 % senior notes due 2026 402,128 403,040 5.00 % senior notes due 2027 351,070 351,357 4.75 % senior notes due 2027 (1) 698,287 797,347 4.50 % senior notes due 2024 — 453,682 Mortgage notes on land and other debt 312,103 311,720 $ 2,263,256 2,816,482 (1) During the nine months ended August 31, 2024, the Company repurchased $ 100 million aggregate principal amount of senior notes due November 2027, through open market repurchases. The carrying amounts of the senior notes in the table above are net of debt issuance costs of $ 2.6 million and $ 4.2 million as of August 31, 2024 and November 30, 2023, respectively. 18 Lennar Corporation and Subsidiaries Notes to Condensed Consolidated Financial Statements (Unaudited) (Continued) During the nine months ended August 31, 2024, the Company redeemed $ 454 million aggregate principal amount of its 4.50 % senior notes due April 2024. The redemption price, which was paid in cash, was 100 % of the principal amount outstanding. In April 2024, $ 350 million of the Company's unsecured revolving credit facility matured. The maximum available borrowings on the Company's unsecured revolving credit facility (the “Credit Facility”) were as follows: (In thousands) August 31, 2024 Commitments - maturing in May 2027 $ 2,225,000 Accordion feature 425,000 Total maximum borrowings capacity $ 2,650,000 The proceeds available under the Credit Facility, which are subject to specified conditions for borrowing, may be used for working capital and general corporate purposes. The Credit Facility also provides that up to $ 500 million in commitments may be used for letters of credit. The maturity, debt covenants and details of the Credit Facility are unchanged from the disclosure in the Company's Financial Condition and Capital Resources section in its Annual Report on Form 10-K for the year ended November 30, 2023. In addition to the Credit Facility, the Company has other letter of credit facilities with different financial institutions. The Company's processes for posting performance and financial letters of credit and surety bonds are unchanged from the disclosure in the Company's Financial Condition and Capital Resources section in its Annual Report on Form 10-K for the year ended November 30, 2023. The Company's outstanding letters of credit and surety bonds are disclosed below: (In thousands) August 31, 2024 November 30, 2023 Performance letters of credit $ 1,606,070 1,404,541 Financial letters of credit 566,598 417,976 Surety bonds 4,989,709 4,508,428 Anticipated future costs primarily for site improvements related to performance surety bonds 2,782,727 2,499,680 All of the senior notes are guaranteed by certain of the Company's 100% owned subsidiaries, which are primarily homebuilding subsidiaries. The guarantees are full and unconditional. 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. (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, 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. The use of different market assumptions and/or estimation methodologies might have a material effect on the estimated fair value amounts. 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, 2024 November 30, 2023 (In thousands) Fair Value Hierarchy Carrying Amount Fair Value Carrying Amount Fair Value ASSETS Financial Services: Loans held-for-investment, net Level 3 $ 63,995 64,172 55,463 55,463 Investments held-to-maturity Level 3 138,045 141,500 140,676 139,396 LIABILITIES Homebuilding senior notes and other debt payable, net Level 2 $ 2,263,256 2,272,515 2,816,482 2,785,712 Financial Services notes and other debt payable, net Level 2 1,545,416 1,545,806 2,163,805 2,164,441 Multifamily notes payable, net Level 2 — — 3,741 3,741 The following methods and assumptions are used by the Company in estimating fair values: 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 19 Lennar Corporation and Subsidiaries Notes to Condensed Consolidated Financial Statements (Unaudited) (Continued) financial information. For notes and other debt 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. Multifamily - For notes payable, the fair values approximate their carrying value due to variable interest pricing terms and the short-term nature of the borrowings. Fair Value Measurements: GAAP provides a framework for measuring fair value, expands disclosures about fair value measurements and establishes a fair value hierarchy which prioritizes the inputs used in measuring fair value summarized as follows: Level 1: Fair value determined based on quoted prices in active markets for identical assets. Level 2: Fair value determined using significant other observable inputs. Level 3: Fair value determined using significant unobservable inputs. The Company’s financial instruments measured at fair value on a recurring basis are summarized below: Fair Value Hierarchy Fair Value at (In thousands) August 31, 2024 November 30, 2023 Financial Services Assets: Residential loans held-for-sale Level 2 $ 1,690,344 2,073,350 LMF Commercial loans held-for-sale Level 3 150,867 13,459 Mortgage servicing rights Level 3 3,366 3,440 Forward options Level 1 6,058 5,937 Lennar Other Assets: Investments in equity securities Level 1 $ 192,069 176,198 Investments available-for-sale Level 3 40,090 37,953 Residential and LMF Commercial loans held-for-sale in the table above include: August 31, 2024 November 30, 2023 (In thousands) Aggregate Principal Balance Change in Fair Value Aggregate Principal Balance Change in Fair Value Residential loans held-for-sale $ 1,699,152 ( 8,808 ) 2,083,776 ( 10,426 ) LMF Commercial loans held-for-sale 151,540 ( 673 ) 13,650 ( 191 ) Financial Services residential loans held-for-sale - Fair value is based on independent quoted market prices, where available, or the prices for other mortgage whole loans with similar characteristics. 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, 2024 and November 30, 2023. Fair value of servicing rights is determined based on actual sales of servicing rights on loans with similar characteristics. LMF Commercial loans held-for-sale - The fair value of commercial loans held-for-sale is calculated from model-based techniques that use discounted cash flow assumptions and the Company’s own estimates of CMBS spreads, market interest rate movements and the underlying loan credit quality. The details and methods of the calculation are unchanged from the fair value disclosure in the Company's Notes to the Financial Statements section in its Annual Report on Form 10-K for the year ended November 30, 2023. These methods use unobservable inputs in estimating a discount rate that is used to assign a value to each loan. While the cash payments on the loans are contractual, the discount rate used and assumptions regarding the relative size of each class in the CMBS capital structure can significantly impact the valuation. Therefore, the estimates used could differ materially from the fair value determined when the loans are sold to a securitization trust. Mortgage servicing rights - Financial Services records mortgage servicing rights when it sells loans on a servicing-retained basis or through the acquisition or assumption of the right to service a financial asset. The fair value of the mortgage servicing rights is calculated using third-party valuations. 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: 20 Lennar Corporation and Subsidiaries Notes to Condensed Consolidated Financial Statements (Unaudited) (Continued) As of August 31, 2024 As of November 30, 2023 Unobservable inputs: Mortgage prepayment rate 9 % 8 % Discount rate 13 % 13 % Delinquency rate 11 % 9 % Forward options - Fair value of forward options is based on independent quoted market prices for similar financial instruments. The fair value of these are included in Financial Services' other assets and the Company recognizes the changes in the fair value of the premium paid as Financial Services' Revenue. Lennar Other investments in equity securities - The fair value of investments in equity securities was calculated based on independent quoted market prices. The Company’s investments in equity securities were recorded at fair value with all changes in fair value recorded to Lennar Other unrealized 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. Loan values are calculated by allocating the change in value of an assumed CMBS capital structure to each loan. 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. 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) 2024 2023 2024 2023 Changes in fair value included in Financial Services revenues: Loans held-for-sale $ 30,482 ( 9,795 ) 1,617 ( 33,358 ) Mortgage loan commitments 22,400 18,139 ( 9,702 ) ( 16,922 ) Forward contracts ( 31,664 ) ( 9,379 ) 41,209 63,323 Forward options 2,687 ( 485 ) 1,633 ( 1,437 ) Changes in fair value included in Lennar Other unrealized gains (losses) from technology investments: Investments in equity securities $ 39,123 ( 15,713 ) 12,472 ( 14,170 ) Changes in fair value included in other comprehensive income, net of tax: Lennar Other investments available-for-sale $ 444 208 2,161 1,632 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. 21 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 August 31, 2024 2023 (In thousands) Mortgage servicing rights LMF Commercial loans held-for-sale Mortgage servicing rights LMF Commercial loans held-for-sale Beginning balance $ 3,652 66,715 3,398 22,754 Purchases/loan originations 174 236,665 34 161,308 Sales/loan originations sold, including those not settled — ( 145,325 ) — ( 100,562 ) Disposals/settlements ( 122 ) ( 9,500 ) ( 94 ) ( 45,667 ) Changes in fair value (1) ( 338 ) 2,312 78 ( 535 ) Interest and principal paydowns — — — ( 3 ) Ending balance $ 3,366 150,867 3,416 37,295 Nine Months Ended August 31, 2024 2023 (In thousands) Mortgage servicing rights LMF Commercial loans held-for-sale Mortgage servicing rights LMF Commercial loans held-for-sale Beginning balance $ 3,440 13,459 3,463 25,599 Purchases/loan originations 406 449,000 155 325,378 Sales/loan originations sold, including those not settled — ( 301,610 ) — ( 265,864 ) Disposals/settlements ( 193 ) ( 9,500 ) ( 237 ) ( 45,667 ) Changes in fair value (1) ( 287 ) ( 673 ) 35 ( 547 ) Interest and principal paydowns — 191 — ( 1,604 ) Ending balance $ 3,366 150,867 3,416 37,295 (1) Changes in fair value for LMF Commercial loans held-for-sale and Financial Services mortgage servicing rights are included in Financial Services' revenues. The Company’s assets measured at fair value on a nonrecurring basis are those assets for which the Company has recorded valuation adjustments and write-offs. The fair values included in the table below represent only those assets whose carrying values were adjusted to fair value during the respective periods disclosed. The assets measured at fair value on a nonrecurring basis are summarized below: Three Months Ended August 31, 2024 2023 (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 $ 120,811 111,776 ( 9,035 ) 67,006 57,801 ( 9,205 ) Land and land under development (2) Level 3 — — — 25,160 24,612 ( 548 ) Deposits and pre-acquisition costs on real estate (3) Level 3 206 — ( 206 ) 1,580 — ( 1,580 ) Non-financial assets - Multifamily: Land and land under development (4) Level 3 $ 139,980 49,970 ( 90,010 ) — — — Nine Months Ended August 31, 2024 2023 (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 $ 313,120 280,761 ( 32,359 ) 250,822 216,703 ( 34,119 ) Land and land under development (2) Level 3 — — — 50,895 48,315 ( 2,580 ) Deposits and pre-acquisition costs on real estate (3) Level 3 3,408 — ( 3,408 ) 18,710 — ( 18,710 ) Investments in unconsolidated entities (5) Level 3 — — — 78,834 37,792 ( 41,042 ) Non-financial assets - Multifamily: Land and land under development (4) Level 3 $ 139,980 49,970 ( 90,010 ) — — — 22 Lennar Corporation and Subsidiaries Notes to Condensed Consolidated Financial Statements (Unaudited) (Continued) (1) Represents losses due to valuation adjustments and deposit and pre-acquisition write-offs recorded during the respective periods. (2) Valuation adjustments for finished homes and construction in progress, and land and land under development were included in Homebuilding costs and expenses. (3) Forfeited deposits and write-off of pre-acquisition costs on real estate were included in Homebuilding costs and expenses in the Company's condensed consolidated statements of operations and comprehensive income. (4) Valuation adjustments for land and land under development were included in Multifamily costs and expenses. (5) 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. 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, 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. For example, changes in market conditions and other specific developments or changes in assumptions may cause the Company to re-evaluate its strategy regarding previously impaired inventory, as well as inventory not currently impaired but for which indicators of impairment may arise if market deterioration occurs, and certain other assets that could result in further valuation adjustments and/or additional write-offs of option deposits and pre-acquisition costs due to abandonment of those options contracts. On a quarterly basis, the Company reviews its active communities for indicators of potential impairments. The table below summarizes communities reviewed for indicators of impairment and communities with valuation adjustments recorded: 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 (in thousands) Valuation Adjustments (in thousands) August 31, 2024 1,283 24 4 $ 25,769 $ 15,263 August 31, 2023 1,247 21 6 53,211 18,844 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 August 31, 2024 2023 Unobservable inputs Range Range Average selling price (1) $ 178,000 — 282,000 371,000 — 850,000 Absorption rate per quarter (homes) 10 — 15 3 — 26 Discount rate 20 % 20 % (1) Represents the projected average selling price on future deliveries for communities in which the Company recorded valuation adjustments during both the nine months ended August 31, 2024 and 2023. 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. The Company evaluates if a decrease in the fair value of an investment below the carrying value is other-than-temporary. 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, (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 three and nine months ended August 31, 2024, the Company evaluated the fair value of its investments in unconsolidated entities using a cash flow analysis and concluded that the investments had an immaterial amount of other-than-temporary impairment. 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 operation and comprehensive income. 23 Lennar Corporation and Subsidiaries Notes to Condensed Consolidated Financial Statements (Unaudited) (Continued) 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. (9) Variable Interest Entities During the nine months ended August 31, 2024, the Company evaluated the joint venture (“JV”) agreements of its JVs 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, 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. A VIE’s assets can only be used to settle obligations of that VIE. The VIEs are not guarantors of the Company’s senior notes or other debt payable. The assets held by a VIE are usually collateral for that VIE’s debt. The Company and other partners do not generally have an obligation to make capital contributions to a VIE unless the Company and/or the other partner(s) have entered into debt guarantees with VIE’s lenders. Other than debt guarantee agreements with VIE’s lenders, there are no liquidity arrangements or agreements to fund capital or purchase assets that could require the Company to provide financial support to a VIE. While the Company has option contracts to purchase land from certain of its VIEs, the Company is not required to purchase the assets and could walk away from the contracts, but that would require forfeiture of deposits and pre-acquisition costs. Unconsolidated VIEs The Company’s recorded investments in VIEs that are unconsolidated and related estimated maximum exposure to loss were as follows: August 31, 2024 November 30, 2023 (In thousands) Investments in Unconsolidated VIEs Lennar’s Maximum Exposure to Loss Investments in Unconsolidated VIEs Lennar’s Maximum Exposure to Loss Homebuilding (1) $ 782,772 854,782 659,224 787,226 Multifamily (2) 132,897 136,702 384,718 402,735 Financial Services (3) 138,045 138,045 140,676 140,676 Lennar Other (4) 125,232 125,232 56,009 56,009 $ 1,178,946 1,254,761 1,240,627 1,386,646 (1) As of August 31, 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 $ 20.7 million and $ 69.8 million, respectively. In addition, as of August 31, 2024 and November 30, 2023, there was recourse debt of VIEs of $ 44.2 million and $ 42.1 million, respectively. (2) As of August 31, 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 November 30, 2023, for expenditures related to the construction and development of its projects. The decrease in exposure as of August 31, 2024 is primarily due to the removal of LMV II as the Fund does not expect to call for equity in the future. As a result, LMV II is not a VIE as of August 31, 2024. (3) As of both August 31, 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) As of both August 31, 2024 and November 30, 2023, the Company's maximum recourse exposure to loss of the Lennar Other segment was limited to its investments in the unconsolidated VIEs. The increase in exposure was due to the Company entering into a new JV which is a VIE and its continued contributions to 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, 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. While the Company generally manages the day-to-day operations of the VIEs, each of these VIEs has an executive committee made up of representatives from each partner. The members of the executive committee have equal votes and major decisions require unanimous consent and approval from all members. The Company does not have the unilateral ability to exercise participating voting rights without partner consent. There are no liquidity arrangements or agreements to fund capital or purchase assets that could require the Company to provide financial support to the VIEs. Except for the unconsolidated VIEs discussed above, the Company and the other partners 24 Lennar Corporation and Subsidiaries Notes to Condensed Consolidated Financial Statements (Unaudited) (Continued) did not guarantee any debt of the other unconsolidated VIEs. 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. 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 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 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 $ 2.5 billion as of August 31, 2024 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 $ 1.4 billion as of August 31, 2024. During the nine months ended August 31, 2024, consolidated inventory not owned increased by $ 850.1 million with a corresponding increase to liabilities related to consolidated inventory not owned in the accompanying condensed consolidated balance sheet as of August 31, 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, 2024. 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, 2024 November 30, 2023 Non-refundable option deposits and pre-acquisition costs $ 2,890,534 1,949,219 Non-refundable option deposits included in consolidated inventory not owned 498,721 451,632 Letters of credit in lieu of cash deposits under certain land and option contracts 307,678 198,920 For the nine months ended August 31, 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 August 31, 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 August 31, 2024, the total deposits and pre-acquisition costs on real estate relating to contracts with the Land Bank were $ 820.7 million. As of August 31, 2024, total consolidated inventory not owned and liabilities related to consolidated inventory not owned relating to contracts with the Land Bank were $ 768.1 million and $ 644.9 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 The Company is party to various claims, legal actions and complaints relating to homes sold by the Company arising in the ordinary course of business. In the opinion of management, the disposition of these matters will not have a material adverse effect on the Company’s condensed consolidated financial statements. From time to time, the Company is also a party to various lawsuits involving purchases and sales of real property. These lawsuits often include claims regarding representations and warranties made in connection with the transfer of properties and disputes regarding the obligation to purchase or sell properties. The Company does not believe that the ultimate resolution of these claims or lawsuits will have a material adverse effect on its business or financial position. However, the financial effect of litigation concerning purchases and sales of property may depend upon the value of the subject property, which may have changed from the time the agreement for purchase or sale was entered into. Product Warranty Warranty and similar reserves for homes are established at an amount estimated to be adequate to cover potential costs for materials and labor with regard to warranty-type claims expected to be incurred subsequent to the delivery of a home. Reserves 25 Lennar Corporation and Subsidiaries Notes to Condensed Consolidated Financial Statements (Unaudited) (Continued) are determined based on historical data and trends with respect to similar product types and geographical areas. 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) 2024 2023 2024 2023 Warranty reserve, beginning of the period $ 403,448 415,154 414,796 418,017 Warranties issued 76,653 75,024 211,001 195,924 Adjustments to pre-existing warranties from changes in estimates 18,768 ( 8,568 ) 15,483 1,620 Payments ( 76,589 ) ( 80,279 ) ( 219,000 ) ( 214,230 ) Warranty reserve, end of period $ 422,280 401,331 422,280 401,331 (1) The adjustments to pre-existing warranties from changes in estimates during the three and nine months ended August 31, 2024 and 2023 primarily related to specific claims in certain of the Company's homebuilding communities and other adjustments. Leases The Company has entered into agreements to lease certain office facilities and equipment under operating leases. The Company recognizes lease expense for these leases on a straight-line basis over the lease term. Right-of-use (“ROU”) assets and lease liabilities are recorded on the balance sheet for all leases, except leases with an initial term of 12 months or less. Many of the Company's leases include options to renew. 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 information about the Company's leases: (Dollars in thousands) August 31, 2024 November 30, 2023 Right-of-use assets $ 223,614 145,812 Lease liabilities 232,694 154,271 Weighted-average remaining lease term (in years) 4.2 7.5 Weighted-average discount rate 5.0 % 3.4 % 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 August 31, 2024 were as follows: (In thousands) Lease Payments 2024 $ 24,059 2025 80,057 2026 49,630 2027 32,833 2028 and thereafter 72,043 Total future minimum lease payments (1) $ 258,622 Less: Interest (2) 25,928 Present value of lease liabilities (2) $ 232,694 (1) Total future minimum lease payments exclude variable lease costs of $ 25.6 million and short-term lease costs of $ 1.9 million. (2) The Company's leases do not include a readily determinable implicit rate. As such, the Company has estimated the discount rate for these leases to determine the present value of lease payments at the lease commencement date or as of December 1, 2019, which was the effective date of ASU 2016-02. The Company recognized the lease liabilities on its condensed consolidated balance sheets within accounts payable and other liabilities of the respective segments. The Company's rental expense on lease liabilities were as follows: Nine Months Ended August 31, (In thousands) 2024 2023 Rental expense $ 82,512 78,053 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 other rented space which is no longer used for the Company's operations. For both the nine months ended August 31, 2024 and 2023, the Company had an immaterial amount of sublease income. 26 Forward-Looking Statements 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. 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: 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; 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 light strategy and our planned spin-off; 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 such as a major epidemic or pandemic that could have a negative impact on the economy and on our businesses; 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; becoming unable to pay down debt; government actions or other factors that might force us to terminate our program of repurchasing our stock; the failure of the participants in various joint ventures to honor their commitments; difficulty obtaining land-use entitlements or construction financing; 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, filed with the Securities and Exchange Commission (the “SEC”) on January 26, 2024, as amended by our Annual Report on Form 10-K/A filed with the SEC on April 25, 2024, and our other filings with the SEC for a further discussion of these and other risks and uncertainties which could affect our future results. We undertake no obligation, other than those imposed by securities laws, to publicly revise any forward-looking statements to reflect events or circumstances after the date of those statements or to reflect the occurrence of anticipated or unanticipated events. 27