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Multifamily Segment (Tables)
6 Months Ended
May 31, 2019
Segment Reporting [Abstract]  
Schedule of Assets and Liabilities
Financial information relating to the Company’s operations was as follows:
(In thousands)
May 31,
2019
 
November 30,
2018
Assets:
 
 
 
Homebuilding East
$
6,987,845

 
7,183,758

Homebuilding Central
2,782,430

 
2,522,799

Homebuilding Texas
2,449,590

 
2,311,760

Homebuilding West
10,954,282

 
10,291,385

Homebuilding Other
1,238,115

 
1,013,367

Financial Services
2,468,263

 
2,778,910

Multifamily
1,046,196

 
874,219

Lennar Other
549,150

 
588,959

Corporate and unallocated
1,107,193

 
1,001,024

Total assets
$
29,583,064

 
28,566,181

Homebuilding goodwill
$
3,442,359

 
3,442,359

Financial Services goodwill (1)
$
215,516

 
237,688


(1)
Decrease in goodwill related to the Financial Services' segment sale of substantially all of its retail mortgage and its real estate brokerage business.
 
Three Months Ended
 
Six Months Ended
 
May 31,
 
May 31,
(In thousands)
2019
 
2018
 
2019
 
2018
Revenues:
 
 
 
 
 
 
 
Homebuilding East
$
1,737,342

 
1,566,743

 
2,964,155

 
2,479,706

Homebuilding Central
613,785

 
636,523

 
1,048,852

 
891,092

Homebuilding Texas
693,212

 
700,767

 
1,111,729

 
1,056,865

Homebuilding West
2,143,023

 
2,144,613

 
3,683,920

 
3,272,569

Homebuilding Other
8,237

 
15,351

 
10,664

 
25,858

Financial Services (1)
204,216

 
249,709

 
347,527

 
445,796

Multifamily
147,412

 
117,693

 
244,806

 
210,949

Lennar Other
15,663

 
27,662

 
19,319

 
57,017

Total revenues (2)
$
5,562,890

 
5,459,061

 
9,430,972

 
8,439,852

Operating earnings (loss) (3):
 
 
 
 
 
 
 
Homebuilding East
$
210,464

 
153,893

 
345,847

 
255,222

Homebuilding Central
55,344

 
25,138

 
86,270

 
34,174

Homebuilding Texas
75,374

 
37,652

 
107,652

 
51,665

Homebuilding West
272,904

 
224,595

 
463,565

 
364,024

Homebuilding Other (4)
(32,297
)
 
(16,135
)
 
(51,950
)
 
133,985

Total Homebuilding operating earnings
581,789

 
425,143

 
951,384

 
839,070

Financial Services
56,217

 
55,774

 
75,189

 
81,636

Multifamily
(4,322
)
 
14,788

 
2,475

 
13,587

Lennar Other
1,828

 
3,895

 
4,931

 
6,740

Corporate and unallocated (5)
(76,113
)
 
(108,790
)
 
(155,456
)
 
(280,795
)
Earnings before income taxes
$
559,399

 
390,810

 
878,523

 
660,238

(1)
Financial Services revenues are lower period over period primarily due to the loss of revenues as a result of the sales of substantially all of the segment's retail mortgage business and the segment's real estate brokerage business.
(2)
Total revenues were net of sales incentives of $338.1 million ($26,600 per home delivered) and $560.4 million ($26,100 per home delivered) for the three and six months ended May 31, 2019, respectively, compared to $278.1 million ($23,000 per home delivered) and $428.0 million ($22,800 per home delivered) for the three and six months ended May 31, 2018, respectively.
(3)
All Homebuilding segments were impacted by purchase accounting adjustments that totaled $236.8 million and $291.9 million for the three and six months ended May 31, 2018, respectively.
(4)
Homebuilding Other operating earnings during the three and six months ended May 31, 2019 included a one-time loss of $48.9 million from the consolidation of a previously unconsolidated entity, partially offset by equity in earnings from one Homebuilding unconsolidated entity. Homebuilding Other operating earnings during the six months ended May 31, 2018 included $164.9 million related to a gain on the sale of an 80% interest in one of Homebuilding's strategic joint ventures, Treasure Island Holdings.
(5)
Corporate and unallocated includes corporate, general and administrative expenses, and for the three and six months ended May 31, 2018, $23.9 million and $128.1 million, respectively, of acquisition and integration costs related to the CalAtlantic acquisition.
The assets and liabilities related to the Financial Services segment were as follows:
(In thousands)
May 31,
2019
 
November 30,
2018
Assets:
 
 
 
Cash and cash equivalents
$
171,892

 
188,485

Restricted cash
14,868

 
17,944

Receivables, net (1)
230,452

 
731,169

Loans held-for-sale (2)
1,420,275

 
1,213,889

Loans held-for-investment, net
76,248

 
70,216

Investments held-to-maturity
199,412

 
189,472

Investments available-for-sale (3)
3,356

 
4,161

Goodwill
215,516

 
237,688

Other assets (4)
136,244

 
125,886

 
$
2,468,263

 
2,778,910

Liabilities:
 
 
 
Notes and other debts payable
$
1,214,017

 
1,558,702

Other liabilities (5)
266,989

 
309,500

 
$
1,481,006

 
1,868,202

(1)
Receivables, net primarily related to loans sold to investors for which the Company had not yet been paid as of May 31, 2019 and November 30, 2018, respectively.
(2)
Loans held-for-sale related to unsold residential and commercial 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 May 31, 2019 and November 30, 2018, other assets included mortgage loan commitments carried at fair value of $25.2 million and $16.4 million, respectively, and mortgage servicing rights carried at fair value of $29.4 million and $37.2 million, respectively.
(5)
As of May 31, 2019 and November 30, 2018, other liabilities included $61.0 million and $60.3 million, respectively, of certain of the Company’s self-insurance reserves related to construction defects, general liability and workers’ compensation. In addition, as of May 31, 2019 and November 30, 2018, other liabilities also included forward contracts carried at fair value of $11.3 million and $10.4 million, respectively.
The assets and liabilities related to the Multifamily segment were as follows:
(In thousands)
May 31,
2019
 
November 30,
2018
Assets:
 
 
 
Cash and cash equivalents
$
5,203

 
7,832

Receivables (1)
80,270

 
73,829

Land under development
347,989

 
277,894

Investments in unconsolidated entities
510,223

 
481,129

Other assets
102,511

 
33,535

 
$
1,046,196

 
874,219

Liabilities:
 
 
 
Accounts payable and other liabilities
$
175,654

 
170,616

Notes payable (2)
39,662

 

 
$
215,316

 
170,616

(1)
Receivables primarily related to general contractor services, net of deferrals and management fee income receivables due from unconsolidated entities.
(2)
Notes payable are net of debt issuance costs.
e assets and liabilities related to Lennar Other were as follows:
(In thousands)
May 31,
2019
 
November 30,
2018
Assets:
 
 
 
Cash and cash equivalents
$
15,768

 
24,334

Restricted cash
975

 
7,175

Real estate owned, net
6,758

 
25,632

Investments in unconsolidated entities
429,943

 
424,104

Investments held-to-maturity
60,449

 
59,974

Other assets
35,257

 
47,740

 
$
549,150

 
588,959

Liabilities:
 
 
 
Notes and other debts payable
$
15,178

 
14,488

Other liabilities
14,861

 
53,020

 
$
30,039

 
67,508

I
Equity Method Investments
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.