Operating and Reporting Segments

9 Months Ended

Aug. 31, 2018

Segment Reporting [Abstract]

Operating and Reporting Segments

Operating and Reporting Segments

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, Georgia, Maryland, New Jersey, North Carolina, South Carolina and Virginia

Central: Arizona, Colorado and Texas

West: California and Nevada

Other: Illinois, Indiana, Minnesota, Oregon, Tennessee, Utah and Washington

Operations of the Lennar Financial Services segment include primarily mortgage financing, title insurance, closing services and property and casualty insurance 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, property and casualty insurance, closing services and real 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, due 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 (loss) consist of revenues generated primarily from gains from securitization transactions and interest income from the Rialto Mortgage Finance ("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 (loss) 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 the sales of land, revenue from construction activities, and management and promote fees generated from joint ventures and equity in earnings (loss) from unconsolidated entities, less the cost of sales 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 in the Company’s Form 10-K for the year ended November 30, 2017. 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:

(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.

Lennar Financial Services Segment

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. In addition, other liabilities also included forward contracts carried at fair value of $2.6 million as of August 31, 2018.

At August 31, 2018, the Lennar Financial Services segment warehouse facilities were as follows:

(In thousands)	Maximum Aggregate Commitment
364-day warehouse repurchase facility that matures September 2018 (1)	$	300,000
364-day warehouse repurchase facility that matures December 2018 (2)	400,000
364-day warehouse repurchase facility that matures March 2019 (3)	300,000
364-day warehouse repurchase facility that matures June 2019	700,000
Total	$	1,700,000

(1) Subsequent to August 31, 2018, the warehouse repurchase facility was extended to November 2018.

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

(3) Maximum aggregate commitment includes an uncommitted amount of $300 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 $966.5 million and $937.2 million at August 31, 2018 and November 30, 2017, respectively, and were collateralized by mortgage loans and receivables on loans sold to investors but not yet paid for with outstanding principal balances of $1.0 billion and $974.1 million at August 31, 2018 and November 30, 2017, respectively. 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 receivables on loans sold but not yet paid for. Without the facilities, the Lennar Financial Services segment would have to use cash from operations and other funding sources to finance its lending activities.

Substantially all of the loans the Lennar Financial Services segment originates are sold within a short period in the secondary mortgage market 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. Over the last several years there has been an industry-wide effort by purchasers to defray their losses by purporting to have found inaccuracies related to sellers’ representations and warranties in particular loan sale agreements. Mortgage investors could seek to have the Company buy back mortgage loans or compensate them for losses incurred on mortgage loans that the Company has sold based on claims that the Company breached its limited representations or warranties. The Company’s mortgage operations have established accruals for possible losses associated with mortgage loans previously originated and sold to investors. The Company establishes accruals for such possible losses based upon, among other things, an analysis of repurchase requests received, an estimate of potential repurchase claims not yet received and actual past repurchases and losses through the disposition of affected loans as well as previous settlements. While the Company believes that it has adequately reserved for known losses and projected repurchase requests, given the volatility in the mortgage industry and the uncertainty regarding the ultimate resolution of these claims, if either actual repurchases or the losses incurred resolving those repurchases exceed the Company’s expectations, additional recourse expense may be incurred. Loan origination liabilities are included in Lennar Financial Services’ liabilities in the Company's condensed consolidated balance sheets.

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

	Three Months Ended					Nine Months Ended
	August 31,					August 31,
(In thousands)	2018			2017		2018		2017
Loan origination liabilities, beginning of period	$	28,016		25,912		22,543		24,905
Provision for losses	1,059			1,056		2,696		3,000
Adjustments to pre-existing provision for losses from changes in estimates	—			(4,440	)	—		(4,440	)
Origination liabilities assumed related to CalAtlantic acquisition	20,500			—		24,459		—
Payments/settlements	(124		)	(651	)	(247	)	(1,588	)
Loan origination liabilities, end of period	$	49,451		21,877		49,451		21,877

Rialto Segment

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.

Rialto Mortgage Finance - loans held-for-sale

During the nine months ended August 31, 2018, RMF originated loans with a total principal balance of $997.5 million and sold $1.1 billion of loans into 12 separate securitizations. During the nine months ended August 31, 2017, RMF originated loans with a total principal balance of $1.3 billion of which $1.3 billion were recorded as loans held-for-sale and $57.4 million as accrual loans within loans receivable, net, and sold $1.1 billion of loans into eight separate securitizations. As of August 31, 2018 and November 30, 2017, there were no unsettled transactions.

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. Since January 11, 2018, (1) the FDIC has had the right, at its discretion, to sell any remaining assets, or (2) Rialto has had the option to purchase the FDIC's interest in the portfolios. At August 31, 2018, the consolidated LLCs had total combined assets of $12.0 million, which primarily included $7.2 million in cash, $3.4 million of real estate owned, net, and $0.6 million of loans held-for-sale. At August 31, 2018, all remaining assets with carrying values were under contract to be sold. 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.

Warehouse Facilities

At August 31, 2018, Rialto's warehouse facilities were as follows:

(In thousands)	Maximum Aggregate Commitment
364-day warehouse repurchase facility that matures November 2018	$	200,000
364-day warehouse repurchase facility that matures December 2018 (extended from October 2018)	250,000
364-day warehouse repurchase facility that matures December 2018	200,000
364-day warehouse repurchase facility that matures December 2019	200,000
Total - Loan origination and securitization business (RMF)	$	850,000
Warehouse repurchase facility that matures December 2018 (one year extensions) (1)	50,000
Total	$	900,000

(1) 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 both August 31, 2018 and November 30, 2017.

Borrowings under the facilities that finance RMF's loan originations and securitization activities were $94.5 million and $162.1 million as of August 31, 2018 and November 30, 2017, 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 held-to-maturity

At August 31, 2018 and November 30, 2017, the carrying value of Rialto's commercial mortgage-backed securities ("CMBS") was $211.1 million and $179.7 million, respectively. These securities were purchased at discounts 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 December 2027, and stated maturity dates between November 2043 and March 2059. 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 the Rialto segment’s assessment, no impairment charges were recorded during either the three or the nine months ended August 31, 2018 or 2017. The Rialto segment classifies these securities as held-to-maturity based on its intent and ability to hold the securities until maturity. The Company has financing agreements to finance CMBS that have been purchased as investments by

the Rialto segment. At August 31, 2018 and November 30, 2017, the carrying amount, net of debt issuance costs, of outstanding debt in these agreements was $122.6 million and $91.8 million, respectively, and the interest is incurred at a fixed rate of 3.2% to 3.3%.

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 was 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:

								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

During the three and nine months ended August 31, 2018, Rialto received $2.7 million and $10.1 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. During the three and nine months ended August 31, 2017, Rialto received $0.8 million and $3.9 million, respectively, of such advanced distributions. During the three and nine months ended August 31, 2018, Rialto received $3.7 million and $9.4 million, respectively, of distributions with regard to its carried interest in Rialto Real Estate Fund, LP, Rialto Real Estate Fund II, LP, and Rialto Capital CMBS Fund, LP. During the three and nine months ended August 31, 2017, Rialto received $10.6 million and $29.4 million, respectively, of such distributions with regard to its carried interest. 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

(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.

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.)

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:

(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.

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 it) 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 August 31, 2018 and November 30, 2017, the fair value of the completion guarantees was immaterial. Additionally, as of August 31, 2018 and November 30, 2017, the Lennar Multifamily segment had $4.6 million and $4.7 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 are included in the disclosure in Note 12 related to the Company's performance and financial letters of credit. As of August 31, 2018 and November 30, 2017, Lennar Multifamily segment's unconsolidated entities had non-recourse debt with completion guarantees of $1.1 billion and $896.7 million, respectively.

In many instances, the Lennar Multifamily segment is appointed as the construction, development and property manager for certain of its Lennar Multifamily unconsolidated entities and receives fees for performing this function. During the three and nine months ended August 31, 2018, the Lennar Multifamily segment recorded fee income, net of deferrals, from its unconsolidated entities of $12.2 million and $36.1 million, respectively. During the three and nine months ended August 31, 2017, the Lennar Multifamily segment recorded fee income, net of deferrals, from its unconsolidated entities of $13.1 million and $41.2 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 an investment. During the three and nine months ended August 31, 2018, the Lennar Multifamily segment provided general contractor services, net of deferrals, totaling $83.8 million and $262.6 million, respectively, which were partially offset by costs related to those services of $80.5 million and $252.7 million, respectively. During the three and nine months ended August 31, 2017, the Lennar Multifamily segment provided general contractor services, net of deferrals totaling $90.3 million and $250.7 million, respectively, which were partially offset by costs related to those services of $86.7 million and $243.7 million, respectively.

The Lennar Multifamily Venture Fund I (the "Venture Fund") 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 nine months ended August 31, 2018, $316.1 million in equity commitments were called, of which the Company contributed its portion of $73.4 million. During the nine months ended August 31, 2018, the Company received $11.8 million of distributions as a return of capital from the Venture Fund. As of August 31, 2018, $1.8 billion of the $2.2 billion in equity commitments had been called, of which the Company had contributed $424.1 million, representing its pro-rata portion of the called equity, resulting in a remaining equity commitment for the Company of $79.9 million. As of August 31, 2018 and November 30, 2017, the carrying value of the Company's investment in the Venture Fund was $378.2 million and $323.8 million, respectively.

In March 2018, the Lennar Multifamily segment completed the first closing of a second Lennar Multifamily Venture, Lennar Multifamily Venture II LP ("Venture Fund II"), for the development, construction and property management of class-A multifamily assets. As of August 31, 2018, Venture Fund II had approximately $655 million of equity commitments, including a $255 million co-investment commitment by Lennar comprised of cash, undeveloped land and preacquisition costs. As of and during the nine months ended August 31, 2018, $146.1 million in equity commitments were called, of which the Company contributed its portion of $55.4 million, which was made up of a $108.3 million inventory and cash contributions, offset by $52.9 million of distributions as a return of capital, resulting in a remaining equity commitment for the Company of $199.6 million. As of August 31, 2018, the carrying value of the Company's investment in Venture Fund II was $45.6 million. The difference between the Company's net contributions and the carrying value of the Company's investments was related to a basis difference. Venture Fund II was seeded initially with six undeveloped multifamily assets that were previously purchased by the Lennar Multifamily segment totaling approximately 2,200 apartments with projected project costs of approximately $900 million.

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.