Lennar Multifamily Segment

12 Months Ended

Nov. 30, 2017

Segment Reporting [Abstract]

Operating And Reporting Segments

Operating and Reporting Segments

As of and for the year ended November 30, 2017, the Company’s operating segments are aggregated into reportable segments, based primarily upon similar economic characteristics, geography and product type. The Company’s reportable segments consist of:

(1) Homebuilding East

(2) Homebuilding Central

(3) Homebuilding West

(4) Lennar Financial Services

(5) Rialto

(6) Lennar Multifamily

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

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, equity in earnings (loss) from unconsolidated entities and other income (expense), net, less the cost of homes sold and land sold, selling, general and administrative expenses incurred by the segment and loss due to litigation.

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

East: Florida⁽¹⁾, Georgia, Maryland, New Jersey, North Carolina, South Carolina and Virginia

Central: Arizona, Colorado and Texas

West: California and Nevada

Other: Illinois, Minnesota, Oregon, Tennessee and Washington

⁽¹⁾ Florida includes information related to WCI from the date of acquisition (February 10, 2017) to November 30, 2017.

Operations of the Lennar Financial Services segment include primarily mortgage financing, title insurance and closing services for both buyers of the Company’s homes and others. It also includes a real estate brokerage business acquired as part of the WCI transaction. The Lennar Financial Services segment sells substantially all of the loans it originates within a short period in the secondary mortgage market, the majority of which are sold 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. Lennar Financial Services’ operating earnings consist of revenues generated primarily from mortgage financing, title insurance and closing services and commissions on realty estate brokerage, less the cost of such services and certain selling, general and administrative expenses incurred by the segment. The Lennar Financial Services segment operates generally in the same states as the Company’s homebuilding operations as well as in other states.

Operations of the Rialto segment include raising, investing and managing third-party capital, originating and securitizing commercial mortgage loans as well as investing its own capital in real estate related mortgage loans, properties and related securities. Rialto utilizes its vertically-integrated investment and operating platform to underwrite, perform diligence, acquire, manage, workout and add value to diverse portfolios of real estate loans, properties and real estate related securities as well as providing strategic real estate capital. Rialto’s operating earnings consist of revenues generated primarily from gains from securitization transactions and interest income from the RMF business, interest income associated with portfolios of real estate loans acquired and other portfolios of real estate loans and assets acquired, asset management, due diligence and underwriting fees derived from the real estate investment funds managed by the Rialto segment, fees for sub-advisory services, other income (expense), net, and equity in earnings from unconsolidated entities, less the costs incurred by the segment for managing portfolios, costs related to RMF and other general and administrative expenses.

Operations of the Lennar Multifamily segment include revenues generated from land sales, revenue from construction activities and management fees generated from joint ventures, and equity in earnings from unconsolidated entities, less the cost of land sold, expenses related to construction activities and general and administrative expenses.

Each reportable segment follows the same accounting policies described in Note 1—"Summary of Significant Accounting Policies" to the consolidated financial statements. Operational results of each segment are not necessarily indicative of the results that would have occurred had the segment been an independent, stand-alone entity during the periods presented.

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

	November 30,
(In thousands)	2017		2016	2015
Assets:
Homebuilding East (1)	$	4,754,581	3,512,990	3,140,604
Homebuilding Central	2,037,905		1,993,403	1,902,581
Homebuilding West	5,165,218		4,318,924	4,157,616
Homebuilding Other	960,541		907,523	858,000
Lennar Financial Services	1,689,508		1,754,672	1,425,837
Rialto	1,153,840		1,276,210	1,505,500
Lennar Multifamily	710,725		526,131	415,352
Corporate and unallocated	2,272,716		1,071,928	1,014,019
Total assets	$	18,745,034	15,361,781	14,419,509
Lennar Homebuilding investments in unconsolidated entities:
Homebuilding East	$	68,670	62,900	40,573
Homebuilding Central	25,220		36,031	35,925
Homebuilding West	791,995		696,471	649,170
Homebuilding Other	14,884		16,321	15,883
Total Lennar Homebuilding investments in unconsolidated entities	$	900,769	811,723	741,551
Rialto investments in unconsolidated entities	$	265,418	245,741	224,869
Lennar Multifamily investments in unconsolidated entities	$	407,544	318,559	250,876
Lennar Homebuilding goodwill (2)	$	136,566	—	—
Lennar Financial Services goodwill (2)	$	59,838	39,838	38,854
Rialto goodwill	$	5,396	5,396	5,396

(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 $136.6 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.

	Years Ended November 30,
(In thousands)	2017			2016		2015
Revenues:
Homebuilding East	$	4,612,565		3,941,336		3,563,678
Homebuilding Central	2,509,292			2,283,579		1,944,312
Homebuilding West	3,197,174			2,757,658		2,365,519
Homebuilding Other	881,211			758,764		593,436
Lennar Financial Services	770,109			687,255		620,527
Rialto	281,243			233,966		221,923
Lennar Multifamily	394,771			287,441		164,613
Total revenues (1)	$	12,646,365		10,949,999		9,474,008
Operating earnings (loss):
Homebuilding East (2)	$	483,684		617,175		580,863
Homebuilding Central	269,462			245,975		208,698
Homebuilding West (3)	403,935			396,346		435,818
Homebuilding Other	111,958			85,436		46,262
Lennar Financial Services	155,524			163,617		127,795
Rialto (4)	(22,495		)	(16,692	)	33,595
Lennar Multifamily (5)	73,432			71,174		(7,171	)
Total operating earnings	1,475,500			1,563,031		1,425,860
Corporate general and administrative expenses	285,889			232,562		216,244
Earnings before income taxes	$	1,189,611		1,330,469		1,209,616

(1) Total revenues were net of sales incentives of $665.7 million ($22,700 per home delivered) for the year ended November 30, 2017, $596.3 million ($22,500 per home delivered) for the year ended November 30, 2016 and $518.1 million ($21,400 per home delivered) for the year ended November 30, 2015.

(2) Homebuilding East operating earnings for the year ended November 30, 2017 included a $140 million loss due to litigation (see Note 17).

(3) For the years ended November 30, 2017 and 2016, Homebuilding West's operating earnings included an equity in loss from unconsolidated entities of $55.2 million and $49.7 million, respectively, refer to the following table for additional details.

(4) For the year ended November 30, 2017, Rialto's operating loss included $96.2 million of gross REO and loan impairments ($44.7 million net of noncontrolling interests) as Rialto liquidated most of the remaining assets of the FDIC portfolio. For the year ended November 30, 2016, Rialto's operating loss included a $16.0 million write-off of uncollectible receivables related to a hospital, which was acquired through the resolution of one of Rialto's loans from a 2010 portfolio.

(5) For the years ended November 30, 2017, 2016 and 2015, Lennar Multifamily's operating earnings included $85.7 million, $85.5 million and $19.5 million of equity in earnings from unconsolidated entities primarily as a result of $96.7 million, $91.0 million and $22.2 million, respectively, share of gains from the sale of seven, seven and two operating properties, respectively, by its unconsolidated entities.

	Years Ended November 30,
(In thousands)	2017			2016		2015
Lennar Homebuilding interest expense:
Homebuilding East	$	100,288		92,541		94,425
Homebuilding Central	55,212			48,879		41,280
Homebuilding West	103,100			87,293		70,397
Homebuilding Other	19,209			16,348		14,045
Total Lennar Homebuilding interest expense	$	277,809		245,061		220,147
Lennar Financial Services interest income, net	$	13,331		12,388		13,547
Rialto interest expense	$	42,004		40,303		43,127
Depreciation and amortization:
Homebuilding East	$	19,922		18,713		16,877
Homebuilding Central	11,007			10,328		9,881
Homebuilding West	22,741			19,437		17,683
Homebuilding Other	4,772			4,562		4,477
Lennar Financial Services	9,992			7,667		6,100
Rialto	5,194			7,590		7,758
Lennar Multifamily	2,910			2,472		1,110
Corporate and unallocated	51,142			34,966		23,522
Total depreciation and amortization	$	127,680		105,735		87,408
Net additions to (disposals of) operating properties and equipment:
Homebuilding East	$	2		(10,379	)	316
Homebuilding Central	(48		)	2,385		(18	)
Homebuilding West (1)	13,912			24,438		(11,482	)
Homebuilding Other (2)	29,927			26,727		(72,472	)
Lennar Financial Services	11,185			6,218		3,306
Rialto	4,115			1,908		9,382
Lennar Multifamily	12,657			1,666		2,147
Corporate and unallocated	40,023			12,645		27,466
Total net additions (disposals of) operating properties and equipment	$	111,773		65,608		(41,355	)
Lennar Homebuilding equity in earnings (loss) from unconsolidated entities:
Homebuilding East	$	1,413		(230	)	118
Homebuilding Central	(7,447		)	401		75
Homebuilding West (3)	(55,181		)	(49,731	)	62,960
Homebuilding Other	(493		)	285		220
Total Lennar Homebuilding equity in earnings (loss) from unconsolidated entities	$	(61,708	)	(49,275	)	63,373
Rialto equity in earnings from unconsolidated entities	$	25,447		18,961		22,293
Lennar Multifamily equity in earnings from unconsolidated entities	$	85,739		85,519		19,518

(1) For the year ended November 30, 2017, net disposals of operating properties and equipment included the sale of an operating property with a basis of$47.0 million. For the year ended November 30, 2015, net disposals of operating properties and equipment included the sale of an operating property with a basis of$59.4 million.

(2) For the year ended November 30, 2015, net disposals of operating properties and equipment included the sale of an operating property with a basis of $73.3 million.

(3) For the year ended November 30, 2017, equity in loss included the Company's share of operational net losses from unconsolidated entities driven by general and administrative expenses and valuation adjustments, partially offset by profits from land sales. For the year ended November 30, 2016, equity in loss included the Company's share of costs associated with the FivePoint combination (described in Note 5) and operational net losses from the new FivePoint unconsolidated entity, totaling $42.6 million, partially offset by $12.7 million of equity in earnings primarily due to sales of homesites to third parties by one of the Company's unconsolidated entities. For the year ended November 30, 2015, equity in earnings included $82.8 million of equity in earnings from one of the Company's unconsolidated entities.

Lennar Financial Services Segment

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

	November 30,
(In thousands)	2017		2016
Assets:
Cash and cash equivalents	$	117,410	123,964
Restricted cash	12,006		17,053
Receivables, net (1)	313,252		409,528
Loans held-for-sale (2)	937,516		939,405
Loans held-for-investment, net	44,193		30,004
Investments held-to-maturity	52,327		41,991
Investments available-for-sale (3)	57,439		53,570
Goodwill (4)	59,838		39,838
Other (5)	95,527		99,319
	$	1,689,508	1,754,672
Liabilities:
Notes and other debts payable	$	937,431	1,077,228
Other (6)	240,383		241,055
	$	1,177,814	1,318,283

(1) Receivables, net, primarily related to loans sold to investors for which the Company had not yet been paid as of November 30, 2017 and 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 November 30, 2017, goodwill included $20 million 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.

(5) As of November 30, 2017 and 2016, other assets included mortgage loan commitments carried at fair value of $9.9 million and $7.4 million, respectively, and mortgage servicing rights carried at fair value of $31.2 million and $23.9 million, respectively. In addition, other assets also included forward contracts carried at fair value of $1.7 million and $26.5 million as of November 30, 2017 and November 30, 2016, respectively.

(6) As of November 30, 2017 and 2016, other liabilities included $57.7 million and $57.4 million, respectively, of certain of the Company’s self-insurance reserves related to construction defects, general liability and workers’ compensation.

At November 30, 2017, the Lennar Financial Services segment warehouse facilities were as follows:

(In thousands)	Maximum Aggregate Commitment
364-day warehouse repurchase facility that matures December 2017 (1) (2)	$	400,000
364-day warehouse repurchase facility that matures March 2018 (3)	150,000
364-day warehouse repurchase facility that matures June 2018	600,000
364-day warehouse repurchase facility that matures September 2018	300,000
Total	$	1,450,000

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

(2) Subsequent to November 30, 2017, the warehouse repurchase facility maturity was extended to December 2018.

(3) Maximum aggregate commitment includes an uncommitted amount of $75 million.

The Lennar Financial Services segment uses these facilities to finance its 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. Borrowings under the facilities and their prior year predecessors were $937.2 million and $1.1 billion at November 30, 2017 and 2016, respectively, and were collateralized by mortgage loans and receivables on loans sold to investors but not yet paid for with outstanding principal balances of $974.1 million and $1.1 billion at November 30, 2017 and 2016, respectively. The combined effective interest rate on the facilities at November 30, 2017 was 3.6%. If the facilities are not renewed or replaced, the borrowings under the lines of credit will be paid off by selling the mortgage loans held-for-sale to investors and by collecting on receivables on loans sold but not yet paid. Without the facilities, the Lennar Financial Services segment would have to use cash from operations and other funding sources to finance its lending activities.

Rialto Segment

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

	November 30,
(In thousands)	2017		2016
Assets:
Cash and cash equivalents	$	241,861	148,827
Restricted cash	22,466		9,935
Receivables, net (1)	—		204,518
Loans held-for-sale (2)	236,018		126,947
Loans receivable, net	1,933		111,608
Real estate owned, net	86,047		243,703
Investments in unconsolidated entities	265,418		245,741
Investments held-to-maturity	179,659		71,260
Other	120,438		113,671
	$	1,153,840	1,276,210
Liabilities:
Notes and other debts payable (3)	$	625,081	622,335
Other	94,975		85,645
	$	720,056	707,980

(1) Receivables, net primarily related to loans sold but not settled as of November 30, 2016.

(2) Loans held-for-sale related to unsold loans originated by RMF carried at fair value and loans in the FDIC Portfolios carried at lower of cost or market.

(3) As of November 30, 2017 and 2016, notes and other debts payable primarily included $349.4 million and $348.7 million, respectively, related to Rialto's 7.00% senior notes due 2018 (the "7.00% Senior Notes"), and $162.1 million and $223.5 million, respectively, related to Rialto's warehouse repurchase facilities.

Rialto Mortgage Finance - loans held-for-sale

During the year ended November 30, 2017, RMF originated loans with a total principal balance of $1.7 billion of which $1.6 billion were recorded as loans held-for-sale and $98.4 million were recorded as accrual loans within loans receivable, net, and sold $1.5 billion of loans into 12 separate securitizations. During the year ended November 30, 2016, RMF originated loans with a principal balance of $1.8 billion of which $1.7 billion were recorded as loans held-for-sale and $81.2 million were recorded as accrual loans within loans receivable, net, and sold $1.9 billion of loans into 11 separate securitizations. As of November 30, 2017, there were no unsettled transactions. As of November 30, 2016, originated loans with an unpaid principal balance of $199.8 million were sold into a securitization trust but not settled and thus were included as receivables, net.

FDIC Portfolios

In 2010, the Rialto segment acquired indirectly 40% managing member equity interests in two limited liability companies ("LLCs") in partnership with the FDIC Portfolios. The LLCs met the accounting definition of VIEs and since the Company was determined to be the primary beneficiary, the Company consolidated the LLCs. The Company was determined to be the primary beneficiary because it has the power to direct the activities of the LLCs that most significantly impact the LLCs' performance through Rialto's management and servicer contracts.

In February 2017, the FDIC exercised its “clean-up call rights” under the Amended and Restated Limited Liability Company Agreement. As a result, Rialto had until July 10, 2017 to liquidate and sell the assets in the FDIC Portfolios. On July 10, 2017, Rialto and the FDIC entered into an agreement which extended the original agreement date to January 10, 2018. At November 30, 2017, the consolidated LLCs had total combined assets of $48.8 million, which primarily included $23.8 million in cash, $20.0 million of real estate owned, net and $1.6 million of loans held-for-sale. As of January 11, 2018, (1) the FDIC can, at its discretion, sell any remaining assets, or (2) Rialto has the option to purchase the FDIC's interest in the portfolios. As of January 19, 2018, there were only four assets with a carrying value totaling $0.3 million which were not under contract to sell.

At November 30, 2017, Rialto warehouse facilities were as follows:

(In thousands)	Maximum Aggregate Commitment
Warehouse repurchase facility that matures December 2017 (1)	$	200,000
364-day warehouse repurchase facility that matures January 2018 (2)	250,000
364-day warehouse repurchase facility that matures October 2018	400,000
364-day warehouse repurchase facility that matures November 2018 (one year extension)	200,000
Total - Loans origination and securitization business (RMF)	$	1,050,000
Warehouse repurchase facility that matures August 2018 (two - one year extensions) (3)	100,000
Totals	$	1,150,000

(1) Subsequent to November 30, 2017, the warehouse repurchase facility maturity date was extended to December 2019.

(2) Subsequent to November 30, 2017, the warehouse repurchase facility maturity date was extended to December 2018 and maximum aggregate commitment of the facility was reduced to $200 million.

(3) 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. There were no borrowings under this facility as of November 30, 2017. Borrowings under this facility were $43.3 million as of November 30, 2016.

Borrowings under the facilities that finance RMF's loan originations and securitization activities were $162.1 million and $180.2 million as of November 30, 2017 and 2016, respectively, and were secured by a 75% interest in the originated commercial loans financed. The facilities require immediate repayment of the 75% interest in the secured commercial loans when the loans are sold in a securitization and the proceeds are collected. These warehouse repurchase facilities are non-recourse to the Company and are expected to be renewed or replaced with other facilities when they mature. If the facilities are not renewed or replaced, the borrowings under the lines of credit will be paid off by selling the loans held-for-sale to investors. Without the facilities, the Rialto segment would have to use cash from operations and other funding sources to finance its lending activities.

Investments in Unconsolidated Entities

Generally, all of Rialto's investments in funds have the attributes of an investment company in accordance with ASC 946, Financial Services – Investment Companies, as amended by ASU 2013-08, Financial Services - Investment Companies (Topic 946): Amendments to the Scope, Measurement, and Disclosure Requirements, the attributes of which are different from the attributes that would cause a company to be an investment company for purposes of the Investment Company Act of 1940. As a result, the assets and liabilities of the funds in which Rialto has investments in are recorded at fair value with increases/decreases in fair value recorded in their respective statements of operations and the Company’s share is recorded in Rialto equity in earnings from unconsolidated entities in the Company's statement of operations.

The following table reflects Rialto's investments in funds that invest in and manage real estate related assets and other investments:

								November 30, 2017		November 30, 2017		November 30, 2016
(Dollars in thousands)	Inception Year	Equity Commitments		Equity Commitments Called		Commitment to Fund by the Company		Funds Contributed by the Company		Investment
Rialto Real Estate Fund, LP	2010	$	700,006	$	700,006	$	75,000	$	75,000	$	41,860	58,116
Rialto Real Estate Fund II, LP	2012	1,305,000		1,305,000		100,000		100,000		86,904		96,192
Rialto Mezzanine Partners Fund, LP	2013	300,000		300,000		33,799		33,799		19,189		23,643
Rialto Capital CMBS Funds	2014	119,174		119,174		52,474		52,474		54,018		50,519
Rialto Real Estate Fund III	2015	1,887,000		569,482		140,000		40,104		41,223		9,093
Rialto Credit Partnership, LP	2016	220,000		159,886		19,999		14,534		13,288		5,794
Other investments										8,936		2,384
										$	265,418	245,741

During the years ended November 30, 2017, 2016 and 2015, Rialto received $7.3 million, $10.1 million and $20.0 million, respectively, of advance distributions with regard to Rialto's carried interests in its real estate funds in order to cover income tax obligations resulting from allocations of taxable income to Rialto's carried interests in these funds. In addition, during the year ended November 30, 2017, Rialto received $36.8 million of distributions with regard to its carried interest in its real estate funds. Rialto Real Estate Fund, LP. These incentive income distributions are not subject to clawbacks and therefore are included in Rialto's revenues.

During 2015, Rialto adopted a Carried Interest Incentive Plan (the "Plan"), under which participating employees in the aggregate may receive up to 40% of the equity units of a limited liability company (a "Carried Interest Entity") that is entitled to carried interest distributions made by a fund or other investment vehicle (a "Fund") managed by a subsidiary of Rialto. As such, those employees receiving equity units in a Carried Interest Entity may benefit from distributions made by a Fund to the extent the Carried Interest Entity makes distributions to its equity holders. The units issued to employees are equity awards and are subject to vesting schedules and forfeiture or repurchase provisions in the case of a termination of employment.

Summarized condensed financial information on a combined 100% basis related to Rialto’s investments in unconsolidated entities that are accounted for by the equity method was as follows:

Balance Sheets
	November 30,
(In thousands)	2017		2016
Assets:
Cash and cash equivalents	$	95,552	230,229
Loans receivable	538,317		406,812
Real estate owned	348,601		439,191
Investment securities	1,849,795		1,379,155
Investments in partnerships	393,874		398,535
Other assets	42,949		29,036
	$	3,269,088	2,882,958
Liabilities and equity:
Accounts payable and other liabilities	$	48,374	36,131
Notes payable (1)	576,810		532,264
Equity	2,643,904		2,314,563
	$	3,269,088	2,882,958

(1) Notes payable are net of debt issuance costs of $3.1 million and $2.9 million, as of November 30, 2017 and 2016, respectively.

Statements of Operations
	Years Ended November 30,
(In thousands)	2017		2016	2015
Revenues	$	238,981	200,346	170,921
Costs and expenses	104,343		96,343	97,162
Other income, net (1)	109,927		49,342	144,941
Net earnings of unconsolidated entities	$	244,565	153,345	218,700
Rialto equity in earnings from unconsolidated entities	$	25,447	18,961	22,293

(1) Other income, net included realized and unrealized gains (losses) on investments.

Investments held-to-maturity

At November 30, 2017 and 2016, the carrying value of Rialto's commercial mortgage-backed securities ("CMBS") was $179.7 million and $71.3 million, respectively. These securities were purchased at discount rates ranging from 9% to 84% with coupon rates ranging from 1.3% to 5.0%, stated and assumed final distribution dates between November 2020 and October 2027, and stated maturity dates between November 2043 and March 2059. During 2017, Rialto purchased a 5% vertical strip in three separate CMBS transactions. A vertical interest is an equal interest in each class of securities issued in the securitization (e.g., 5.0% of each class) or a single vertical security entitling the holder to a specific percentage of the amounts paid on each class of those securities. As part of the Dodd-Frank Wall Street Reform and Protection Act that came into effect in December 2016, originators that contribute loans to a CMBS trust are required to satisfy risk retention rules. Some risk retention rules permit the retention of risk by third parties, and the risk may be held by purchasing vertical, horizontal or other combined strips in a securitization.

The Rialto segment reviews changes in estimated cash flows periodically to determine if an other-than-temporary impairment has occurred on its CMBS. Based on management’s assessment, no impairment charges were recorded during any of the years ended November 30, 2017, 2016 and 2015. The Rialto segment classified these securities as held-to-maturity based on its intent and ability to hold the securities until maturity.

Lennar Multifamily Segment

The Company is actively involved, primarily through unconsolidated entities, in the development, construction and property management of multifamily rental properties. The Lennar Multifamily segment focuses on developing a geographically diversified portfolio of institutional quality multifamily rental properties in select U.S. markets.

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

	November 30,
(In thousands)	2017		2016
Assets:
Cash and cash equivalents	$	8,676	6,600
Receivables (1)	69,678		58,929
Land under development	208,618		139,713
Investments in unconsolidated entities	407,544		318,559
Other assets	16,209		2,330
	$	710,725	526,131
Liabilities:
Accounts payable and other liabilities	$	149,715	117,973
	$	149,715	117,973

(1) Receivables primarily related to general contractor services, net of deferrals and management fee income receivables due from unconsolidated entities as of November 30, 2017 and 2016.

The unconsolidated entities in which the Lennar Multifamily segment has investments usually finance their activities with a combination of partner equity and debt financing. In connection with many of the loans to Lennar Multifamily unconsolidated entities, the Company (or entities related to them) has been required to give guarantees of completion and cost over-runs to the lenders and partners. Those completion guarantees may require that the guarantors complete the construction of the improvements for which the financing was obtained. Additionally, the Company guarantees the construction costs of the project as construction cost over-runs would be paid by the Company. Generally, these payments would be increases to the Company's investment in the entities and would increase its share of funds the entities distribute after the achievement of certain thresholds. As of both November 30, 2017 and 2016, the fair value of the completion guarantees was immaterial. Additionally, as of November 30, 2017 and 2016, the Lennar Multifamily segment had $4.7 million and $32.0 million, respectively, of letters of credit outstanding primarily for credit enhancements for the bank debt of certain of its unconsolidated entities and deposits on land purchase contracts. These letters of credit outstanding are included in the disclosure in Note 7 related to the Company's performance and financial letters of credit. As of November 30, 2017 and 2016, the Lennar Multifamily segment's unconsolidated entities had non-recourse debt with completion guarantees of $896.7 million and $589.4 million, respectively.

In many instances, the Lennar Multifamily segment is appointed as the construction, development and property manager of certain of its Lennar Multifamily unconsolidated entities and receives fees for performing this function. During the years ended November 30, 2017, 2016 and 2015, the Lennar Multifamily segment received fee income, net of deferrals, from its unconsolidated entities of $53.8 million, $38.5 million and $27.2 million, respectively.

The Lennar 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. During the years ended November 30, 2017, 2016 and 2015, the Lennar Multifamily segment provided general contractor services, net of deferrals, totaling $341.0 million, $237.1 million and $142.7 million, respectively, which were offset by costs related to those services of $330.4 million, $228.6 million and $138.6 million, respectively.

The Lennar Multifamily Venture (the "Venture") is a long-term multifamily development investment vehicle involved in the development, construction and property management of class-A multifamily assets with $2.2 billion in equity commitments, including a $504 million co-investment commitment by Lennar comprised of cash, undeveloped land and preacquisition costs. During the year ended November 30, 2017, $586.4 million in equity commitments were called, of which the Company contributed its portion of $134.9 million. During the year ended November 30, 2017, the Company received $26.8 million distributions as a return of capital from the Venture. As of November 30, 2017, $1.5 billion of the $2.2 billion in equity commitments had been called, of which the Company has contributed $350.7 million representing its pro-rata portion of the called equity, resulting in a remaining equity commitment for the Company of $153.3 million. As of November 30, 2017 and 2016, the carrying value of the Company's investment in the Venture was $323.8 million and $198.2 million, respectively.

Summarized condensed financial information on a combined 100% basis related to Lennar Multifamily's investments in unconsolidated entities that are accounted for by the equity method was as follows:

Balance Sheets
	November 30,
(In thousands)	2017		2016
Assets:
Cash and cash equivalents	$	37,073	43,658
Operating properties and equipment	2,952,070		2,210,627
Other assets	36,772		33,703
	$	3,025,915	2,287,988
Liabilities and equity:
Accounts payable and other liabilities	$	212,123	196,617
Notes payable (1)	879,047		577,085
Equity	1,934,745		1,514,286
	$	3,025,915	2,287,988

(1) Notes payable are net of debt issuance costs of $17.6 million and $12.3 million, as of November 30, 2017 and 2016, respectively.

Statements of Operations
	Years Ended November 30,
(In thousands)	2017		2016	2015
Revenues	$	67,578	45,287	16,309
Costs and expenses	108,610		68,976	27,190
Other income, net	207,793		191,385	43,340
Net earnings of unconsolidated entities	$	166,761	167,696	32,459
Lennar Multifamily equity in earnings from unconsolidated entities (1)	$	85,739	85,519	19,518

(1) During the year ended November 30, 2017, 2016 and 2015, the Lennar Multifamily segment sold seven, seven and two operating properties, respectively, through its unconsolidated entities resulting in the segment's $96.7 million, $91.0 million and $22.2 million share of gains, respectively.