Homebuilding Investments in Unconsolidated Entities (Tables)

6 Months Ended

May 31, 2019

Equity Method Investments and Joint Ventures [Abstract]

Balance Sheets



(In thousands)	May 31, 2019		November 30, 2018
Assets:
Cash and cash equivalents	$	651,681	781,833
Inventories	4,177,728		4,291,470
Other assets	988,714		1,045,274
	$	5,818,123	6,118,577
Liabilities and equity:
Accounts payable and other liabilities	$	757,410	874,355
Debt (1)	825,275		1,202,556
Equity	4,235,438		4,041,666
	$	5,818,123	6,118,577
Homebuilding investments in unconsolidated entities (2)	$	983,683	870,201


(1)	Debt presented above is net of debt issuance costs of $9.9 million and $12.4 million, as of May 31, 2019 and November 30, 2018, respectively. The decrease in debt was primarily related to the Company's consolidation of a previously unconsolidated entity as of May 31, 2019.

(2)

Homebuilding investments in unconsolidated entities as of November 30, 2018, does not include $62.0 million of the negative investment balance for one unconsolidated entity as it was reclassed to other liabilities.

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



(Dollars in thousands)	May 31, 2019			November 30, 2018
Non-recourse bank debt and other debt (partner’s share of several recourse)	$	46,816		48,313
Non-recourse debt with completion guarantees	144,588			239,568
Non-recourse debt without completion guarantees	634,086			861,371
Non-recourse debt to the Company	825,490			1,149,252
The Company’s maximum recourse exposure (1)	9,653			65,707
Debt issuance costs	(9,868		)	(12,403	)
Total debt (1)	$	825,275		1,202,556
The Company’s maximum recourse exposure as a % of total JV debt	1		%	5	%

(1)

As of May 31, 2019 and November 30, 2018, the Company's maximum recourse exposure was primarily related to the Company providing repayment guarantees on two and four unconsolidated entities' debt, respectively. The decrease in maximum recourse exposure and total debt was primarily related to the Company's consolidation of a previously unconsolidated entity as of May 31, 2019.

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

Statements of Operations



	Three Months Ended				Six Months Ended
	May 31,				May 31,
(In thousands)	2019		2018		2019	2018
Revenues	$	65,686	100,952		156,330	169,141
Costs and expenses	90,363		148,678		214,114	256,102
Other income (1)	75,868		105,192		76,065	105,192
Net earnings of unconsolidated entities	$	51,191	57,466		18,281	18,231
Homebuilding equity in earnings (loss) from unconsolidated entities	$	19,614	(12,670	)	5,858	(26,798	)

(1)

During the three and six months ended May 31, 2019, other income was primarily attributable to a $64.9 million gain on the settlement of contingent consideration recorded by one Homebuilding unconsolidated entity, of which the Company's pro-rata share was $25.9 million. During the three and six months ended May 31, 2018, other income was primarily due to FivePoint recording income resulting from the Tax Cuts and Jobs Act of 2017’s reduction in its corporate tax rate to reduce its liability pursuant to its tax receivable agreement (“TRA Liability”) with its non-controlling interests. However, the Company has a 70% interest in the FivePoint TRA Liability. Therefore, the Company did not include in Homebuilding’s equity in earnings (loss) from unconsolidated entities its pro-rata share of earnings related to the Company’s portion of the TRA Liability. As a result, the Company’s unconsolidated entities have net earnings, but the Company has an equity in loss from unconsolidated entities.

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

Balance Sheets



(Dollars in thousands)	May 31, 2019		November 30, 2018
Assets:
Cash and cash equivalents	$	28,217	61,571
Operating properties and equipment	4,063,560		3,708,613
Other assets	50,227		40,899
	$	4,142,004	3,811,083
Liabilities and equity:
Accounts payable and other liabilities	$	190,785	199,119
Notes payable (1)	1,596,850		1,381,656
Equity	2,354,369		2,230,308
	$	4,142,004	3,811,083
Multifamily investments in unconsolidated entities	$	510,223	481,129


(1)	Notes payable are net of debt issuance costs of $21.0 million and $15.7 million, as of May 31, 2019 and November 30, 2018,

respectively.

Statements of Operations



	Three Months Ended				Six Months Ended
	May 31,				May 31,
(Dollars in thousands)	2019			2018	2019		2018
Revenues	$	38,609		27,121	73,980		51,073
Costs and expenses	55,085			43,482	111,213		75,277
Other income, net	—			31,562	21,400		38,869
Net earnings (loss) of unconsolidated entities	$	(16,476	)	15,201	(15,833	)	14,665
Multifamily equity in earnings (loss) from unconsolidated entities and other gain (1)	$	(3,018	)	14,281	7,563		17,023

(1)

During the six months ended May 31, 2019, the Multifamily segment sold, through its unconsolidated entities, one operating property and an investment in an operating property resulting in the segment's $15.5 million share of gains. The gain of $11.9 million recognized on the sale of the investment in an operating property and recognition of the Company's share of deferred development fees that were capitalized at the joint venture level are included in Multifamily equity in earnings (loss) from unconsolidated entities and other gain, and are not included in net earnings (loss) of unconsolidated entities. During the three and six months ended May 31, 2018, the Multifamily segment sold two and three operating properties, respectively, through its unconsolidated entities resulting in the segment's $17.4 million and $21.5 million share of gains, respectively.