Lennar Financial Services Segment (Tables)

3 Months Ended

Feb. 28, 2017

Segment Reporting [Abstract]

Schedule of Assets and Liabilities

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

(In thousands)	February 28, 2017		November 30, 2016
Assets:
Homebuilding East (1)	$	4,791,376	3,512,990
Homebuilding Central	2,070,652		1,993,403
Homebuilding West	4,606,982		4,318,924
Homebuilding Other	900,876		907,523
Rialto	1,228,874		1,276,210
Lennar Financial Services	1,231,708		1,754,672
Lennar Multifamily	610,161		526,131
Corporate and unallocated	789,484		1,071,928
Total assets	$	16,230,113	15,361,781
Lennar Homebuilding goodwill (2)	$	143,298	—
Rialto goodwill	$	5,396	5,396
Lennar Financial Services goodwill (2)	$	59,838	39,838

(1) Homebuilding East segment includes the provisional fair values of homebuilding assets acquired as part of the WCI acquisition.

(2) In connection with the WCI acquisition, the Company allocated $143.3 million of goodwill to the Lennar Homebuilding East reportable segment and $20.0 million to the Lennar Financial Services segment. These amounts are provisional pending completion of the fair value analysis of acquired assets and liabilities.

	Three Months Ended
	February 28,			February 29,
(In thousands)	2017			2016
Revenues:
Homebuilding East	$	767,726		659,054
Homebuilding Central	516,181			413,840
Homebuilding West	552,798			551,339
Homebuilding Other	181,989			162,248
Lennar Financial Services	148,043			123,956
Rialto	82,006			43,711
Lennar Multifamily	88,685			39,516
Total revenues (1)	$	2,337,428		1,993,664
Operating earnings (loss):
Homebuilding East (2)		($55,709	)	84,706
Homebuilding Central	52,858			33,195
Homebuilding West	53,360			88,834
Homebuilding Other	20,829			13,903
Lennar Financial Services	20,664			14,931
Rialto	(843		)	1,610
Lennar Multifamily	19,183			12,182
Total operating earnings	110,342			249,361
Corporate general and administrative expenses	60,699			47,668
Earnings before income taxes	$	49,643		201,693

(1) Total revenues were net of sales incentives of $123.5 million ($22,700 per home delivered) for the three months ended February 28, 2017, compared to $103.7 million ($21,600 per home delivered) for the three months ended February 29, 2016.

(2)

Homebuilding East operating loss for the three months ended February 28, 2017 included a $140 million loss on litigation accrual (see Note 17).The assets and liabilities related to the Lennar Financial Services segment were as follows:

(In thousands)	February 28, 2017		November 30, 2016
Assets:
Cash and cash equivalents	$	119,308	123,964
Restricted cash	10,380		17,053
Receivables, net (1)	141,941		409,528
Loans held-for-sale (2)	682,029		939,405
Loans held-for-investment, net	32,180		30,004
Investments held-to-maturity	48,104		41,991
Investments available-for-sale (3)	55,841		53,570
Goodwill (4)	59,838		39,838
Other (5)	82,087		99,319
	$	1,231,708	1,754,672
Liabilities:
Notes and other debts payable	$	560,275	1,077,228
Other (6)	228,064		241,055
	$	788,339	1,318,283

(1) Receivables, net primarily related to loans sold to investors for which the Company had not yet been paid as of February 28, 2017 and November 30, 2016, 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 (loss).

(4) As of February 28, 2017, goodwill included $20.0 million of goodwill related to the WCI acquisition. The amount provided herein is provisional, pending completion of the fair value analysis of WCI's acquired assets and liabilities assumed. See Note 2.

(5) As of February 28, 2017 and November 30, 2016, other assets included mortgage loan commitments carried at fair value of $13.7 million and $7.4 million, respectively, and mortgage servicing rights carried at fair value of $26.5 million and $23.9 million, respectively. In addition, other assets also included forward contracts carried at fair value of $26.5 million as of November 30, 2016.

(6)

As of February 28, 2017 and November 30, 2016, other liabilities included $57.5 million and $57.4 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 $1.7 million as of February 28, 2017.The assets and liabilities related to the Rialto segment were as follows:

(In thousands)	February 28, 2017		November 30, 2016
Assets:
Cash and cash equivalents	$	162,513	148,827
Restricted cash (1)	5,630		9,935
Receivables, net (2)	209,025		204,518
Loans held-for-sale (3)	44,939		126,947
Loans receivable, net	106,476		111,608
Real estate owned, net	208,793		243,703
Investments in unconsolidated entities	235,066		245,741
Investments held-to-maturity	112,216		71,260
Other	144,216		113,671
	$	1,228,874	1,276,210
Liabilities:
Notes and other debts payable (4)	$	626,042	622,335
Other	54,078		85,645
	$	680,120	707,980

(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 related to loans sold but not settled as of February 28, 2017 and November 30, 2016.

(3) Loans held-for-sale related to unsold loans originated by RMF carried at fair value.

(4)

As of February 28, 2017 and November 30, 2016, notes and other debts payable primarily included $348.9 million and $348.7 million, respectively, related to Rialto's 7.00% senior notes due 2018, and $197.1 million and 223.5 million, respectively, related to Rialto's warehouse repurchase facilities.

The assets and liabilities related to the Lennar Multifamily segment were as follows:

(In thousands)	February 28, 2017		November 30, 2016
Assets:
Cash and cash equivalents	$	6,423	6,600
Receivables (1)	64,388		58,929
Land under development	161,317		139,713
Investments in unconsolidated entities	346,767		318,559
Other assets	31,266		2,330
	$	610,161	526,131
Liabilities:
Accounts payable and other liabilities	$	105,560	117,973

(1)

Receivables primarily related to general contractor services and management fee income receivables due from unconsolidated entities as of February 28, 2017 and November 30, 2016, respectively.

Schedule of Line of Credit Facilities

At February 28, 2017, the Lennar Financial Services segment warehouse facilities were as follows:

(In thousands)	Maximum Aggregate Commitment
364-day warehouse repurchase facility that matures June 2017	$	400,000
364-day warehouse repurchase facility that matures September 2017	300,000
364-day warehouse repurchase facility that matures December 2017 (1)	400,000
Total	$	1,100,000

(1)

Maximum aggregate commitment includes an uncommitted amount of $250 million.At February 28, 2017, Rialto warehouse facilities were as follows:

(In thousands)	Maximum Aggregate Commitment
364-day warehouse repurchase facility that matures April 2017 (1)	$	500,000
Warehouse repurchase facility that matures December 2017	200,000
364-day warehouse repurchase facility that matures January 2018	250,000
Total - Loan origination and securitization business (RMF)	$	950,000
Warehouse repurchase facility that matures August 2018 (two - one year extensions) (2)	100,000
Total	$	1,050,000

(1) Rialto has the option of a six month extension of the warehouse repurchase facility.

(2)

Rialto uses this warehouse repurchase facility to finance the origination of floating rate accrual loans, which are reported as accrual loans within loans receivable, net. Borrowings under this facility were $43.3 million as of both February 28, 2017 and November 30, 2016.

Schedule of Loan Origination Liabilities

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

	Three Months Ended
	February 28,			February 29,
(In thousands)	2017			2016
Loan origination liabilities, beginning of period	$	24,905		19,492
Provision for losses	878			788
Payments/settlements	(780		)	(172	)
Loan origination liabilities, end of period	$	25,003		20,108