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Lennar Multifamily Segment (Tables)
 9 Months Ended
Aug. 31, 2018
Segment Reporting [Abstract]  
Schedule of Assets and Liabilities Financial information relating to the Company’s operations was as follows:
(In thousands)
August 31,
2018
 
November 30,
2017
Assets:
 
 
 
Homebuilding East
$
7,455,782

 
4,754,581

Homebuilding Central
3,414,907

 
2,037,905

Homebuilding West
7,812,183

 
5,165,218

Homebuilding Other
1,726,472

 
960,541

Lennar Financial Services
2,042,024

 
1,689,508

Rialto
834,882

 
1,153,840

Lennar Multifamily
890,057

 
710,725

Corporate and unallocated (1)
4,113,088

 
2,272,716

Total assets
$
28,289,395

 
18,745,034

Lennar Homebuilding goodwill (1)
$
3,457,999

 
136,566

Lennar Financial Services goodwill (1)
$
231,245

 
59,838

Rialto goodwill
$
5,396

 
5,396


(1)
In connection with the CalAtlantic acquisition, the Company recorded a provisional amount of homebuilding goodwill of $3.3 billion. The allocation of goodwill by homebuilding reporting segment has not yet been finalized. A provisional amount of goodwill related to
the CalAtlantic acquisition of $169 million was allocated to Lennar Financial Services. In connection with the WCI acquisition in 2017, the Company allocated $136.6 million of goodwill to the Lennar Homebuilding East reportable segment and $20 million to the Lennar Financial Services segment.
 
Three Months Ended
 
Nine Months Ended
 
August 31,
 
August 31,
(In thousands)
2018
 
2017
 
2018
 
2017
Revenues:
 
 
 
 
 
 
 
Homebuilding East
$
2,028,989

 
1,255,797

 
5,000,182

 
3,218,413

Homebuilding Central
1,231,170

 
602,901

 
3,041,003

 
1,801,424

Homebuilding West
1,505,858

 
823,500

 
3,775,488

 
2,146,492

Homebuilding Other
519,725

 
202,997

 
1,195,159

 
623,301

Lennar Financial Services
236,268

 
215,056

 
639,543

 
571,462

Rialto
49,495

 
57,810

 
149,033

 
207,804

Lennar Multifamily
101,064

 
103,415

 
312,013

 
291,900

Total revenues (1)
$
5,672,569

 
3,261,476

 
14,112,421

 
8,860,796

Operating earnings (loss) (2):
 
 
 
 
 
 
 
Homebuilding East (3)
$
228,657

 
179,908

 
504,019

 
277,906

Homebuilding Central
135,978

 
66,184

 
264,463

 
194,986

Homebuilding West (4)
186,847

 
112,749

 
581,461

 
237,333

Homebuilding Other
60,555

 
27,435

 
101,349

 
79,969

Lennar Financial Services
56,628

 
49,057

 
128,705

 
113,448

Rialto
9,444

 
(3,192
)
 
25,558

 
(10,497
)
Lennar Multifamily
(3,853
)
 
9,104

 
9,734

 
34,816

Total operating earnings
674,256

 
441,245

 
1,615,289

 
927,961

Acquisition and integration costs related to CalAtlantic
11,992

 
—

 
140,062

 
—

Corporate general and administrative expenses
96,346

 
72,860

 
249,071

 
200,333

Earnings before income taxes
$
565,918

 
368,385

 
1,226,156

 
727,628

(1)
Total revenues were net of sales incentives of $289.0 million ($22,900 per home delivered) and $717.0 million ($22,800 per home delivered) for the three and nine months ended August 31, 2018, respectively, compared to $165.4 million ($21,800 per home delivered) and $463.4 million ($22,400 per home delivered) for the three and nine months ended August 31, 2017, respectively.
(2)
All homebuilding segments and Homebuilding Other were impacted by purchase accounting adjustments for the three and nine months ended August 31, 2018.
(3)
Homebuilding East operating earnings for the nine months ended August 31, 2017 included a $140 million loss due to litigation (see Note 17).
(4)
Homebuilding West operating earnings includes $164.9 million related to a gain on the sale of an 80% interest in one of Lennar Homebuilding's strategic joint ventures, Treasure Island Holdings, during the nine months ended August 31, 2018.The assets and liabilities related to the Lennar Financial Services segment were as follows:
(In thousands)
August 31,
2018
 
November 30,
2017
Assets:
 
 
 
Cash and cash equivalents
$
165,051

 
117,410

Restricted cash
12,111

 
12,006

Receivables, net (1)
386,448

 
313,252

Loans held-for-sale (2)
945,387

 
937,516

Loans held-for-investment, net
74,669

 
44,193

Investments held-to-maturity
64,203

 
52,327

Investments available-for-sale (3)
47,034

 
57,439

Goodwill (4)
231,245

 
59,838

Other assets (5)
115,876

 
95,527

 
$
2,042,024

 
1,689,508

Liabilities:
 
 
 
Notes and other debts payable
$
966,626

 
937,431

Other liabilities (6)
274,482

 
240,383

 
$
1,241,108

 
1,177,814

(1)
Receivables, net primarily related to loans sold to investors for which the Company had not yet been paid as of August 31, 2018 and November 30, 2017, 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) on the condensed consolidated balance sheet.
(4)
As of August 31, 2018, goodwill included $20.0 million of goodwill related to the WCI acquisition. The assignment of goodwill to the Company's reporting segments related to the CalAtlantic acquisition has not been completed, however, a provisional amount of goodwill of approximately $169 million was allocated to Lennar Financial Services (see Note 2).
(5)
As of August 31, 2018 and November 30, 2017, other assets included mortgage loan commitments carried at fair value of $19.3 million and $9.9 million, respectively, and mortgage servicing rights carried at fair value of $35.1 million and $31.2 million, respectively. In addition, other assets also included forward contracts carried at fair value of $1.7 million as of November 30, 2017.
(6)
As of August 31, 2018 and November 30, 2017, other liabilities included $60.4 million and $57.7 million, respectively, of certain of the Company’s self-insurance reserves related to construction defects, general liability and workers’ compensation.The assets and liabilities related to the Rialto segment were as follows:
(In thousands)
August 31,
2018
 
November 30,
2017
Assets:
 
 
 
Cash and cash equivalents
$
36,343

 
241,861

Restricted cash (1)
11,274

 
22,466

Loans held-for-sale (2)
141,333

 
236,018

Real estate owned, net
52,644

 
86,047

Investments in unconsolidated entities
294,465

 
265,418

Investments held-to-maturity
211,097

 
179,659

Other assets
87,726

 
122,371

 
$
834,882

 
1,153,840

Liabilities:
 
 
 
Notes and other debts payable (3)
$
239,392

 
625,081

Other liabilities
57,737

 
94,975

 
$
297,129

 
720,056


(1)
As of August 31, 2018 and November 30, 2017, restricted cash primarily consisted 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)
Loans held-for-sale primarily related to unsold loans originated by RMF carried at fair value.
(3)
In March 2018, Rialto had paid off the remaining principal balance of its 7.00% senior notes due December 2018. As of November 30, 2017, notes and other debts payable primarily included $349.4 million related to Rialto's 7.00% senior notes due December 2018. In addition, as of August 31, 2018 and November 30, 2017, notes and other debt payable included $94.5 million and $162.1 million, respectively, related to Rialto's warehouse repurchase facilities.
The assets and liabilities related to the Lennar Multifamily segment were as follows:
(In thousands)
August 31,
2018
 
November 30,
2017
Assets:
 
 
 
Cash and cash equivalents
$
13,748

 
8,676

Receivables (1)
66,265

 
69,678

Land under development
294,104

 
208,618

Investments in unconsolidated entities
482,241

 
407,544

Other assets
33,699

 
16,209

 
$
890,057

 
710,725

Liabilities:
 
 
 
Accounts payable and other liabilities
$
152,566

 
149,715

(1)
Receivables primarily related to general contractor services, net of deferrals and management fee income receivables due from unconsolidated entities as of August 31, 2018 and November 30, 2017, respectively.
Equity Method Investments 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)
August 31,
2018
 
November 30,
2017
Non-recourse bank debt and other debt (partner’s share of several recourse)
$
51,364

 
64,197

Non-recourse land seller debt and other debt
1,497

 
1,997

Non-recourse debt with completion guarantees
234,310

 
255,903

Non-recourse debt without completion guarantees (1)
869,486

 
351,800

Non-recourse debt to the Company
1,156,657

 
673,897

The Company’s maximum recourse exposure (2)
69,005

 
69,181

Debt issuance costs
(13,192
)
 
(5,747
)
Total debt
$
1,212,470

 
737,331

The Company’s maximum recourse exposure as a % of total JV debt
6
%
 
9
%

(1)
The increase in non-recourse debt without completion guarantees was primarily related to $500 million of senior notes issued by FivePoint.
(2)
As of both August 31, 2018 and November 30, 2017, the Company's maximum recourse exposure was primarily related to the Company providing repayment guarantees on three unconsolidated entities' debt.Balance Sheets
(In thousands)
August 31,
2018
 
November 30,
2017
Assets:
 
 
 
Cash and cash equivalents
$
912,250

 
953,261

Inventories
4,251,673

 
3,751,525

Other assets
1,200,761

 
1,061,507

 
$
6,364,684

 
5,766,293

Liabilities and equity:
 
 
 
Accounts payable and other liabilities
$
839,694

 
832,151

Debt (1)
1,212,470

 
737,331

Equity
4,312,520

 
4,196,811

 
$
6,364,684

 
5,766,293

(1)
Debt presented above is net of debt issuance costs of $13.2 million and $5.7 million, as of August 31, 2018 and November 30, 2017, respectively. The increase in debt was primarily related to $500 million of senior notes issued by FivePoint.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
 
Nine Months Ended
 
August 31,
 
August 31,
(In thousands)
2018
 
2017
 
2018
 
2017
Revenues
$
153,968

 
144,966

 
324,584

 
323,689

Costs and expenses
199,337

 
151,643

 
458,660

 
421,554

Other income (1)
66,690

 
12,578

 
180,231

 
18,695

Net earnings (loss) of unconsolidated entities
$
21,321

 
5,901

 
46,155

 
(79,170
)
Lennar Homebuilding equity in loss from unconsolidated entities
$
(15,391
)
 
(9,651
)
 
(41,904
)
 
(42,691
)
The following table reflects Rialto's investments in funds that invest in and manage real estate related assets and other investments:
 
 
 
 
 
 
 
 
 
August 31,
2018
 
August 31,
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

 
$
39,608

 
41,860

Rialto Real Estate Fund II, LP
2012
 
1,305,000

 
1,305,000

 
100,000

 
100,000

 
84,606

 
86,904

Rialto Mezzanine Partners Fund, LP
2013
 
300,000

 
300,000

 
33,799

 
33,799

 
13,314

 
19,189

Rialto Capital CMBS Funds
2014
 
119,174

 
119,174

 
52,474

 
52,474

 
52,916

 
54,018

Rialto Real Estate Fund III
2015
 
1,887,000

 
1,074,561

 
140,000

 
75,917

 
71,293

 
41,223

Rialto Credit Partnership, LP
2016
 
220,000

 
217,556

 
19,999

 
19,777

 
12,257

 
13,288

Other investments
 
 
 
 
 
 
 
 
 
 
20,471

 
8,936

 
 
 
 
 
 
 
 
 
 
 
$
294,465

 
265,418

Statements of Operations
 
Three Months Ended
 
Nine Months Ended
 
August 31,
 
August 31,
(In thousands)
2018
 
2017
 
2018
 
2017
Revenues
$
97,973

 
64,267

 
283,510

 
182,453

Costs and expenses
23,299

 
26,752

 
66,735

 
83,753

Other income (expense), net (1)
(22,644
)
 
245

 
(1,166
)
 
9,893

Net earnings of unconsolidated entities
$
52,030

 
37,760

 
215,609

 
108,593

Rialto equity in earnings from unconsolidated entities
$
5,266

 
4,858

 
18,496

 
11,310

(1)
Other income (expense), net, includes realized and unrealized gains (losses) on investments.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)
August 31,
2018
 
November 30,
2017
Assets:
 
 
 
Cash and cash equivalents
$
36,406

 
95,552

Loans receivable
697,262

 
538,317

Real estate owned
266,406

 
348,601

Investment securities
2,219,660

 
1,849,795

Investments in partnerships
406,600

 
393,874

Other assets
43,046

 
42,949

 
$
3,669,380

 
3,269,088

Liabilities and equity:
 
 
 
Accounts payable and other liabilities
$
32,081

 
48,374

Notes payable (1)
591,329

 
576,810

Equity
3,045,970

 
2,643,904

 
$
3,669,380

 
3,269,088

(1)
Notes payable are net of debt issuance costs of $2.9 million and $3.1 million, as of August 31, 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)
August 31,
2018
 
November 30,
2017
Assets:
 
 
 
Cash and cash equivalents
$
30,472

 
37,073

Operating properties and equipment
3,623,800

 
2,952,070

Other assets
38,309

 
36,772

 
$
3,692,581

 
3,025,915

Liabilities and equity:
 
 
 
Accounts payable and other liabilities
$
201,301

 
212,123

Notes payable (1)
1,287,488

 
879,047

Equity
2,203,792

 
1,934,745

 
$
3,692,581

 
3,025,915

(1)
Notes payable are net of debt issuance costs of $17.4 million and $17.6 million, as of both August 31, 2018 and November 30, 2017, respectively.
Statements of Operations
 
Three Months Ended
 
Nine Months Ended
 
August 31,
 
August 31,
(In thousands)
2018
 
2017
 
2018
 
2017
Revenues
$
31,907

 
18,822

 
82,980

 
44,414

Costs and expenses
47,235

 
28,904

 
122,512

 
75,727

Other income, net
13,588

 
47,210

 
52,457

 
125,939

Net earnings (loss) of unconsolidated entities
$
(1,740
)
 
37,128

 
12,925

 
94,626

Lennar Multifamily equity in earnings (loss) from unconsolidated entities (1)
$
(1,730
)
 
11,645

 
15,293

 
44,219

(1)
During the three and nine months ended August 31, 2018, the Lennar Multifamily segment sold one and four operating properties, respectively, through its unconsolidated entities resulting in the segment's $1.7 million and $23.3 million share of gains, respectively. During the three and nine months ended August 31, 2017, the Lennar Multifamily segment sold two and five operating properties, respectively, through its unconsolidated entities resulting in the segment's $15.4 million and $52.9 million share of gains, respectively.The Company’s recorded investments in unconsolidated entities were as follows:
(In thousands)
August 31,
2018
 
November 30,
2017
Lennar Homebuilding
$
997,488

 
900,769

Rialto
$
294,465

 
265,418

Lennar Multifamily
$
482,241

 
407,544