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Variable Interest Entities (Tables)

3 Months Ended

Feb. 28, 2018

Organization, Consolidation and Presentation of Financial Statements [Abstract]

The total debt of the Lennar Homebuilding unconsolidated entities in which the Company has investments, including Lennar's maximum recourse exposure, were as follows:



(Dollars in thousands)	February 28, 2018			November 30, 2017
Non-recourse bank debt and other debt (partner’s share of several recourse)	$	62,720		64,197
Non-recourse land seller debt and other debt	1,997			1,997
Non-recourse debt with completion guarantees	251,235			255,903
Non-recourse debt without completion guarantees	355,844			351,800
Non-recourse debt to the Company	671,796			673,897
The Company’s maximum recourse exposure (1)	70,096			69,181
Debt issue costs	(5,296		)	(5,747	)
Total debt	$	736,596		737,331
The Company’s maximum recourse exposure as a % of total JV debt	10		%	9	%

(1)

As of both February 28, 2018 and November 30, 2017, the Company's maximum recourse exposure was primarily related to the Company providing repayment guarantees on three unconsolidated entities' debtBalance Sheets



(In thousands)	February 28, 2018		November 30, 2017
Assets:
Cash and cash equivalents	$	816,965	953,261
Inventories	4,155,615		3,751,525
Other assets	1,063,853		1,061,507
	$	6,036,433	5,766,293
Liabilities and equity:
Accounts payable and other liabilities	$	907,108	832,151
Debt (1)	736,596		737,331
Equity	4,392,729		4,196,811
	$	6,036,433	5,766,293

(1)

Debt presented above is net of debt issuance costs of $5.3 million and $5.7 million, as of February 28, 2018 and November 30, 2017, respectively. Summarized condensed financial information on a combined 100% basis related to Lennar Homebuilding’s unconsolidated entities that are accounted for by the equity method was as follows:Statements of Operations



	Three Months Ended
	February 28,
(In thousands)	2018			2017
Revenues	$	68,872		46,136
Costs and expenses	108,424			79,066
Net loss of unconsolidated entities	$	(39,552	)	(32,930	)
Lennar Homebuilding equity in loss from unconsolidated entities	$	(14,287	)	(11,534	)

Statements of Operations



	Three Months Ended
	February 28,
(In thousands)	2018		2017
Revenues	$	89,764	57,156
Costs and expenses	22,071		28,001
Other income, net (1)	49,187		327
Net earnings of unconsolidated entities	$	116,880	29,482
Rialto equity in earnings from unconsolidated entities	$	9,114	722

(1)

Other income, net, includes realized and unrealized gains (losses) on investments.The following table reflects Rialto's investments in funds that invest in and manage real estate related assets and other investments:



								February 28, 2018		February 28, 2018		November 30, 2017
(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	$	41,871	41,860
Rialto Real Estate Fund II, LP	2012	1,305,000		1,305,000		100,000		100,000		87,884		86,904
Rialto Mezzanine Partners Fund, LP	2013	300,000		300,000		33,799		33,799		14,917		19,189
Rialto Capital CMBS Funds	2014	119,174		119,177		52,474		52,474		54,409		54,018
Rialto Real Estate Fund III	2015	1,887,000		699,590		140,000		49,962		49,882		41,223
Rialto Credit Partnership, LP	2016	220,000		208,181		19,999		18,925		17,190		13,288
Other investments										9,697		8,936
										$	275,850	265,418

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



(In thousands)	February 28, 2018		November 30, 2017
Assets:
Cash and cash equivalents	$	44,270	95,552
Loans receivable	591,157		538,317
Real estate owned	346,320		348,601
Investment securities	1,942,045		1,849,795
Investments in partnerships	416,311		393,874
Other assets	58,014		42,949
	$	3,398,117	3,269,088
Liabilities and equity:
Accounts payable and other liabilities	$	42,177	48,374
Notes payable (1)	535,790		576,810
Equity	2,820,150		2,643,904
	$	3,398,117	3,269,088

(1)

Notes payable are net of debt issuance costs of $4.1 million and $3.1 million, as of February 28, 2018 and November 30, 2017, 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



(In thousands)	February 28, 2018		November 30, 2017
Assets:
Cash and cash equivalents	$	33,666	37,073
Operating properties and equipment	3,167,040		2,952,070
Other assets	31,431		36,772
	$	3,232,137	3,025,915
Liabilities and equity:
Accounts payable and other liabilities	$	211,429	212,123
Notes payable (1)	959,563		879,047
Equity	2,061,145		1,934,745
	$	3,232,137	3,025,915


(1)	Notes payable are net of debt issuance costs of $17.6 million as of both February 28, 2018 and November 30, 2017, respectively.

Statements of Operations



	Three Months Ended
	February 28,
(In thousands)	2018			2017
Revenues	$	23,952		11,617
Costs and expenses	31,795			22,346
Other income, net	7,307			50,539
Net earnings (loss) of unconsolidated entities	$	(536	)	39,810
Lennar Multifamily equity in earnings from unconsolidated entities (1)	$	2,742		23,147

(1)

During the three months ended February 28, 2018, the Lennar Multifamily segment sold one operating property through an unconsolidated entity resulting in the segment's $4.1 million share of gains. During the three months ended February 28, 2017, the Lennar Multifamily segment sold two operating properties through its unconsolidated entities resulting in the segment's $26.0 million share of gains.The Company’s recorded investments in unconsolidated entities were as follows:



(In thousands)	February 28, 2018		November 30, 2017
Lennar Homebuilding	$	990,723	900,769
Rialto	$	275,850	265,418
Lennar Multifamily	$	437,367	407,544

Estimated Maximum Exposure To Loss

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

As of February 28, 2018



(In thousands)	Investments in Unconsolidated VIEs		Lennar’s Maximum Exposure to Loss
Lennar Homebuilding (1)	$	48,792	117,516
Rialto (2)	210,882		210,882
Lennar Multifamily (3)	371,916		498,450
	$	631,590	826,848

As of November 30, 2017



(In thousands)	Investments in Unconsolidated VIEs		Lennar’s Maximum Exposure to Loss
Lennar Homebuilding (1)	$	181,804	248,909
Rialto (2)	179,659		179,659
Lennar Multifamily (3)	345,175		503,364
	$	706,638	931,932


(1)	As of both February 28, 2018 and November 30, 2017, the maximum exposure to loss of Lennar Homebuilding’s investments in unconsolidated VIEs was limited to its investments in the unconsolidated VIEs, except with regard to repayment guarantees of unconsolidated entities' debt of $62.5 million and $61.6 million, respectively.

(2)

As of both February 28, 2018 and November 30, 2017, the maximum recourse exposure to loss of Rialto’s investments in unconsolidated VIEs was limited to its investments in the unconsolidated VIEs. As of February 28, 2018 and November 30, 2017, investments in unconsolidated VIEs and Lennar’s maximum exposure to loss included $210.9 million and $179.7 million, respectively, related to Rialto’s investments held-to-maturity.

(3)

As of February 28, 2018 and November 30, 2017, the remaining equity commitment of $121.6 million and $153.3 million, respectively, to fund the Venture for future expenditures related to the construction and development of its projects is included in Lennar's maximum exposure to loss. In addition, as of February 28, 2018 and November 30, 2017, the maximum exposure to loss of Lennar Multifamily's investments in unconsolidated VIEs was limited to its investments in the unconsolidated VIEs, except with regard to $4.6 million and $4.6 million, respectively, of letters of credit outstanding for certain of the unconsolidated VIEs that could be drawn upon in the event of default under their debt agreements.

- Definition

Tabular disclosure of the significant judgments and assumptions made in determining whether a variable interest (as defined) held by the entity requires the variable interest entity (VIE) (as defined) to be consolidated and (or) disclose information about its involvement with the VIE, individually or in aggregate (as applicable); the nature of restrictions, if any, on the consolidated VIE's assets and on the settlement of its liabilities reported by an entity in its statement of financial position, including the carrying amounts of such assets and liabilities; the nature of, and changes in, the risks associated with involvement in the VIE; how involvement with the VIE affects the entity's financial position, financial performance, and cash flows; the lack of recourse if creditors (or beneficial interest holders) of the consolidated VIE have no recourse to the general credit of the primary beneficiary (if applicable); the terms of arrangements, giving consideration to both explicit arrangements and implicit variable interests, if any, that could require the entity to provide financial support to the VIE, including events or circumstances that could expose the entity to a loss; the methodology used by the entity for determining whether or not it is the primary beneficiary of the variable interest entity; the significant factors considered and judgments made in determining that the power to direct the activities of a VIE that most significantly impact the VIE's economic performance are shared (as defined); the carrying amounts and classification of assets and liabilities of the VIE included in the statement of financial position; the entity's maximum exposure to loss, if any, as a result of its involvement with the VIE, including how the maximum exposure is determined and significant sources of the entity's exposure to the VIE; a comparison of the carrying amounts of the assets and liabilities and the entity's maximum exposure to loss; information about any liquidity arrangements, guarantees, and (or) other commitments by third parties that may affect the fair value or risk of the entity's variable interest in the VIE; whether or not the entity has provided financial support or other support (explicitly or implicitly) to the VIE that it was not previously contractually required to provide or whether the entity intends to provide that support, including the type and amount of the support and the primary reasons for providing the support; and supplemental information the entity determines necessary to provide.

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