Homebuilding Investments in Unconsolidated Entities (Tables)

9 Months Ended

Aug. 31, 2019

Equity Method Investments and Joint Ventures [Abstract]

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)	August 31, 2019			November 30, 2018
Non-recourse bank debt and other debt (partner’s share of several recourse)	$	49,995		48,313
Non-recourse debt with completion guarantees	154,774			239,568
Non-recourse debt without completion guarantees	647,010			861,371
Non-recourse debt to the Company	851,779			1,149,252
The Company’s maximum recourse exposure (1)	10,036			65,707
Debt issuance costs	(9,725		)	(12,403	)
Total debt (1)	$	852,090		1,202,556
The Company’s maximum recourse exposure as a % of total JV debt	1		%	5	%

(1)

As of August 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 in the second quarter of 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					Nine Months Ended
	August 31,					August 31,
(In thousands)	2019			2018		2019		2018
Revenues	$	74,939		153,136		231,269		322,277
Costs and expenses	99,611			195,525		313,725		451,627
Other income (1)	513			13,903		76,578		119,095
Net loss of unconsolidated entities	$	(24,159	)	(28,486	)	(5,878	)	(10,255	)
Homebuilding equity in loss from unconsolidated entities	$	(10,459	)	(16,739	)	(4,601	)	(43,537	)

(1)

During the nine months ended August 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 nine months ended August 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.

Balance Sheets



(In thousands)	August 31, 2019		November 30, 2018
Assets:
Cash and cash equivalents	$	536,251	781,833
Inventories	4,262,446		4,291,470
Other assets	1,012,391		1,045,274
	$	5,811,088	6,118,577
Liabilities and equity:
Accounts payable and other liabilities	$	800,962	874,355
Debt (1)	852,090		1,202,556
Equity	4,158,036		4,041,666
	$	5,811,088	6,118,577
Homebuilding investments in unconsolidated entities (2)	$	1,002,936	870,201


(1)	Debt presented above is net of debt issuance costs of $9.7 million and $12.4 million, as of August 31, 2019 and November 30, 2018, respectively. The decrease in debt was primarily related to the Company's consolidation of a previously unconsolidated entity in the second quarter of 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.

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)	August 31, 2019		November 30, 2018
Assets:
Cash and cash equivalents	$	28,260	61,571
Operating properties and equipment/construction in progress	4,188,948		3,708,613
Other assets	57,298		40,899
	$	4,274,506	3,811,083
Liabilities and equity:
Accounts payable and other liabilities	$	200,850	199,119
Notes payable (1)	1,731,702		1,381,656
Equity	2,341,954		2,230,308
	$	4,274,506	3,811,083
Multifamily investments in unconsolidated entities	$	539,697	481,129


(1)	Notes payable are net of debt issuance costs of $21.5 million and $15.7 million, as of August 31, 2019 and November 30, 2018, respectively.

Statements of Operations



	Three Months Ended				Nine Months Ended
	August 31,				August 31,
(Dollars in thousands)	2019		2018		2019		2018
Revenues	$	44,338	31,907		118,318		82,980
Costs and expenses	64,423		47,235		175,636		122,512
Other income, net	33,178		13,588		54,578		52,457
Net earnings (loss) of unconsolidated entities	$	13,093	(1,740	)	(2,740	)	12,925
Multifamily equity in earnings (loss) from unconsolidated entities and other gain (1)	$	7,883	(1,730	)	15,446		15,293

(1)

During the three months ended August 31, 2019, the Multifamily segment sold, through its unconsolidated entities, one operating property resulting in the segment's $12.6 million share of gain. During the nine months ended August 31, 2019, the Multifamily segment sold, through its unconsolidated entities, two operating properties and an investment in an operating property resulting in the segment's $28.1 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 nine months ended August 31, 2018, the 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.