Lennar Financial Services Segment (Tables)

9 Months Ended

Aug. 31, 2016

Segment Reporting [Abstract]

Schedule of Assets and Liabilities

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

(In thousands)	August 31, 2016		November 30, 2015
Assets:
Homebuilding East	$	3,621,564	3,140,604
Homebuilding Central	1,494,703		1,421,195
Homebuilding West	4,527,360		4,157,616
Homebuilding Houston	495,216		481,386
Homebuilding Other	825,798		858,000
Rialto	1,196,653		1,505,500
Lennar Financial Services	1,527,556		1,425,837
Lennar Multifamily	532,574		415,352
Corporate and unallocated	777,296		1,014,019
Total assets	$	14,998,720	14,419,509

	Three Months Ended					Nine Months Ended
	August 31,					August 31,
(In thousands)	2016			2015		2016		2015
Revenues:
Homebuilding East	$	1,002,584		913,184		2,615,936		2,362,102
Homebuilding Central	422,504			322,242		1,117,034		835,259
Homebuilding West	671,122			639,593		1,940,520		1,649,727
Homebuilding Houston	199,800			204,948		528,097		525,852
Homebuilding Other	200,959			152,351		532,748		416,848
Lennar Financial Services	191,444			168,748		491,340		463,460
Rialto	63,885			51,554		152,434		160,682
Lennar Multifamily	81,596			39,078		195,264		114,511
Total revenues (1)	$	2,833,894		2,491,698		7,573,373		6,528,441
Operating earnings (loss):
Homebuilding East (2)	$	161,789		147,055		389,433		365,154
Homebuilding Central	44,627			32,152		110,629		77,919
Homebuilding West (3)	92,308			114,499		294,949		299,324
Homebuilding Houston	23,132			26,665		59,087		66,418
Homebuilding Other	23,026			13,341		54,118		25,330
Lennar Financial Services	53,248			39,437		112,267		94,017
Rialto	(57		)	6,993		(16,533	)	16,682
Lennar Multifamily	2,649			(2,990	)	29,774		(17,378	)
Total operating earnings	400,722			377,152		1,033,724		927,466
Corporate general and administrative expenses	61,164			56,494		164,634		150,355
Earnings before income taxes	$	339,558		320,658		869,090		777,111

(1) Total revenues were net of sales incentives of $152.3 million ($22,500 per home delivered) and $402.2 million ($22,000 per home delivered) for the three and nine months ended August 31, 2016, respectively, compared to $130.6 million ($20,700 per home delivered) and $353.1 million ($21,300 per home delivered) for the three and nine months ended August 31, 2015, respectively.

(2) For both the three and nine months ended August 31, 2016, operating earnings included a gain of $8.7 million on the sale of a clubhouse.

(3)

For the three and nine months ended August 31, 2016, operating earnings included the Company's share of costs associated with the FivePoint combination and the Company's share of net operating losses associated with the new FivePoint unconsolidated entity, partially offset by $17.4 million of management fee income related to a Lennar Homebuilding strategic joint venture for the three months ended August 31, 2016 and $30.1 million of management fee income and a profit participation related to Lennar Homebuilding's strategic joint ventures for the nine months ended August 31, 2016. For the three and nine months ended August 31, 2015, operating earnings included $21.5 million and $64.5 million, respectively, of equity in earnings from one of the Company's unconsolidated entities. For additional details refer to Note 3. The assets and liabilities related to the Lennar Financial Services segment were as follows:

(In thousands)	August 31, 2016		November 30, 2015
Assets:
Cash and cash equivalents	$	110,164	106,777
Restricted cash	13,910		13,961
Receivables, net (1)	374,769		242,808
Loans held-for-sale (2)	800,139		843,252
Loans held-for-investment, net	29,704		30,998
Investments held-to-maturity	34,746		40,174
Investments available-for-sale (3)	51,535		42,827
Goodwill	39,838		38,854
Other (4)	72,751		66,186
	$	1,527,556	1,425,837
Liabilities:
Notes and other debts payable	$	913,040	858,300
Other (5)	227,175		225,678
	$	1,140,215	1,083,978

(1) Receivables, net primarily related to loans sold to investors for which the Company had not yet been paid as of August 31, 2016 and November 30, 2015, respectively.

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

(3) Investments available-for-sale are carried at fair value with changes in fair value recorded as a component of accumulated other comprehensive income.

(4) As of August 31, 2016 and November 30, 2015, other assets included mortgage loan commitments carried at fair value of $20.7 million and $13.1 million, respectively, and mortgage servicing rights carried at fair value of $18.4 million and $16.8 million, respectively. In addition, other assets also included forward contracts carried at fair value of $0.5 million as of November 30, 2015.

(5)

As of August 31, 2016 and November 30, 2015, other liabilities included $58.4 million and $65.0 million, respectively, of certain of the Company’s self-insurance reserves related to construction defects, general liability and workers’ compensation. Other liabilities also included forward contracts carried at fair value of $2.0 million as of August 31, 2016.The assets and liabilities related to the Rialto segment were as follows:

(In thousands)	August 31, 2016		November 30, 2015
Assets:
Cash and cash equivalents	$	133,103	150,219
Restricted cash (1)	6,499		15,061
Receivables, net (2)	—		154,948
Loans held-for-sale (3)	228,931		316,275
Loans receivable, net	145,813		164,826
Real estate owned - held-for-sale	170,524		183,052
Real estate owned - held-and-used, net	111,619		153,717
Investments in unconsolidated entities	241,680		224,869
Investments held-to-maturity	60,928		25,625
Other	97,556		116,908
	$	1,196,653	1,505,500
Liabilities:
Notes and other debts payable	$	576,448	771,728
Other	56,114		94,496
	$	632,562	866,224

(1) Restricted cash primarily consists of upfront deposits and application fees RMF receives before originating loans and is recognized as income once the loan has been originated as well as cash held in escrow by the Company’s loan servicer provider on behalf of customers and lenders and is disbursed in accordance with agreements between the transacting parties.

(2) Receivables, net primarily relate to loans sold but not settled as of November 30, 2015.

(3)

Loans held-for-sale relate to unsold loans originated by RMF carried at fair value.The assets and liabilities related to the Lennar Multifamily segment were as follows:

(In thousands)	August 31, 2016		November 30, 2015
Assets:
Cash and cash equivalents	$	5,120	8,041
Land under development	148,241		115,982
Consolidated inventory not owned	18,500		5,508
Investments in unconsolidated entities	304,032		250,876
Other assets	56,681		34,945
	$	532,574	415,352
Liabilities:
Accounts payable and other liabilities	$	95,346	62,943
Liabilities related to consolidated inventory not owned	11,850		4,007
	$	107,196	66,950

Schedule of Line of Credit Facilities

At August 31, 2016, the Lennar Financial Services segment warehouse facilities were as follows:

(In thousands)	Maximum Aggregate Commitment
364-day warehouse repurchase facility that matures October 2016 (1)	$	300,000
364-day warehouse repurchase facility that matures October 2016 (2)	450,000
364-day warehouse repurchase facility that matures June 2017	600,000
Total	$	1,350,000

(1) Subsequent to August 31, 2016, the warehouse repurchase facility maturity date was extended to September 2017.

(2)

Maximum aggregate commitment includes an uncommitted amount of $250 million.nants at August 31, 2016.

At August 31, 2016, Rialto warehouse facilities were as follows:

(In thousands)	Maximum Aggregate Commitment
364-day warehouse repurchase facility that matures October 2016 (one year extension) (1) (2)	$	400,000
364-day warehouse repurchase facility that matures January 2017 (1)	250,000
Warehouse repurchase facility that matures December 2017 (1) (3)	100,000
Warehouse repurchase facility that matures August 2018 (two - one year extensions) (4)	100,000
Total	$	850,000

(1) RMF uses these facilities to finance its loan origination and securitization activities.

(2) Subsequent to August 31, 2016, the warehouse repurchase facility maturity date was extended to April 2017, with the option for an additional six month extension, and the maximum aggregate commitment was increased to $500 million.

(3) Subsequent to August 31, 2016, the warehouse repurchase facility was amended and the maximum aggregate commitment was increased to $200 million.

(4)

In 2015, Rialto entered into a separate repurchase facility to finance the origination of floating rate accrual loans. Loans financed under this facility are held as accrual loans within loans receivable, net. As of both August 31, 2016 and November 30, 2015, borrowings under this facility were $36.3 million

Schedule Of Loan Origination Liabilities

The activity in the Company’s loan origination liabilities was as follows:

	Three Months Ended				Nine Months Ended
	August 31,				August 31,
(In thousands)	2016			2015	2016		2015
Loan origination liabilities, beginning of period	$	20,994		13,660	19,492		11,818
Provision for losses	1,288			1,147	3,186		3,174
Adjustments to pre-existing provisions for losses from changes in estimates	1,224			—	1,224		—
Payments/settlements	(17		)	—	(413	)	(185	)
Loan origination liabilities, end of period	$	23,489		14,807	23,489		14,807