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Operating and Reporting Segments

9 Months Ended

Aug. 31, 2019

The Company's homebuilding operations construct and sell homes primarily for first-time, move-up and active adult homebuyers primarily under the Lennar brand name. In addition, the Company's homebuilding operations purchase, develop and sell land to third parties. In connection with the CalAtlantic acquisition, the Company experienced significant growth in its operations. As a result, in 2018, the Company's chief operating decision makers ("CODM") reassessed how they evaluate the business and allocate resources. The CODM manage and assess the Company’s performance at a regional level. Therefore, in 2018 the Company performed an assessment of its operating segments in accordance with ASC 280, Segment Reporting, (“ASC 280”) and determined that each of its four homebuilding regions, financial services operations, multifamily operations and Rialto operations are its operating segments. Prior to this change, in accordance with the aggregation criteria defined in ASC 280, the Company’s operating segments were aggregated into reportable segments, based primarily upon similar economic characteristics, geography and product type. In addition, in the first quarter of 2019, as a result of the reclassification of RMF and certain other Rialto assets from the Rialto segment to the Financial Services segment effective December 1, 2018, the Company has renamed the Rialto segment as "Lennar Other" and included in this segment certain strategic technology investments, which were reclassified from Homebuilding to Lennar Other. Prior periods have been reclassified to conform with the 2019 presentation. The Company’s reportable segments consist of:

(1) Homebuilding East

(2) Homebuilding Central

(3) Homebuilding Texas

(4) Homebuilding West

(5) Financial Services

(6) Multifamily

(7) Lennar Other

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, other revenues from management fees and forfeited deposits, equity in earnings (loss) from unconsolidated entities and other income (expense), net, less the cost of homes sold and land sold, and selling, general and administrative expenses incurred by the segment.

The Company’s reportable Homebuilding segments and all other homebuilding operations not required to be reported separately have homebuilding divisions located in:

East: Florida, New Jersey, North Carolina and South Carolina

Central: Georgia, Illinois, Indiana, Maryland, Minnesota and Virginia

Texas: Texas

West: Arizona, California, Colorado, Nevada, Oregon, Utah and Washington

Other: Urban divisions and other homebuilding related investments primarily in California, including FivePoint Holdings, LLC ("FivePoint")

Operations of the Financial Services segment include primarily mortgage financing, title and closing services primarily for buyers of the Company’s homes. It also includes originating and selling into securitizations commercial mortgage loans through its RMF business. The Financial Services segment sells substantially all of the loans it originates within a short period of time 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. Financial Services’ operating earnings consist of revenues generated primarily from mortgage financing, title and closing services, and property and casualty insurance, less the cost of such services and certain selling, general and administrative expenses incurred by the segment. The Financial Services segment operates generally in the same states as the Company’s homebuilding operations as well as in other states.

Operations of the 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 and other gains (which includes sales of investments), less the cost of sales of land sold, expenses related to construction activities and general and administrative expenses.

Operations of the Lennar Other segment include operating earnings (loss) consisting of revenues generated primarily from the Company's share of carried interests in the Rialto fund investments retained after the sale of Rialto's asset and investment management platform, along with equity in earnings (loss) from the Rialto fund investments and strategic technology investments, and other income (expense), net from the remaining assets related to the Company's former Rialto segment.

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, 2018, except that as a result of the adoption of ASC 606 as of December 1, 2018, the Company updated its revenue recognition policies as noted in Note 1 of the Notes to the Condensed Consolidated Financial Statements. The Company's 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, 2019		November 30, 2018
Assets:
Homebuilding East	$	6,996,012	7,183,758
Homebuilding Central	2,866,868		2,522,799
Homebuilding Texas	2,428,952		2,311,760
Homebuilding West	11,003,703		10,291,385
Homebuilding Other	1,202,051		1,013,367
Financial Services	2,329,786		2,778,910
Multifamily	1,020,842		874,219
Lennar Other	552,968		588,959
Corporate and unallocated	1,058,265		1,001,024
Total assets	$	29,459,447	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					Nine Months Ended
	August 31,					August 31,
(In thousands)	2019			2018		2019		2018
Revenues:
Homebuilding East	$	1,843,670		1,701,622		4,807,825		4,181,328
Homebuilding Central	724,753			670,908		1,773,605		1,562,000
Homebuilding Texas	713,376			729,150		1,825,105		1,786,015
Homebuilding West	2,063,323			2,174,564		5,747,243		5,447,133
Homebuilding Other	93,876			9,498		104,540		35,356
Financial Services (1)	224,502			258,208		572,029		704,004
Multifamily	183,958			101,064		428,764		312,013
Lennar Other	9,600			27,555		28,919		84,572
Total revenues (2)	$	5,857,058		5,672,569		15,288,030		14,112,421
Operating earnings (loss) (3):
Homebuilding East	$	256,715		199,205		602,562		454,427
Homebuilding Central	79,209			69,018		165,479		103,192
Homebuilding Texas	78,298			70,742		185,950		122,407
Homebuilding West	259,424			292,050		722,989		656,074
Homebuilding Other (4)	(14,664		)	(22,261	)	(66,614	)	111,724
Total Homebuilding operating earnings	658,982			608,754		1,610,366		1,447,824
Financial Services	74,698			60,515		149,887		142,151
Multifamily	10,225			(3,853	)	12,700		9,734
Lennar Other	15,793			8,840		20,724		15,580
Corporate and unallocated (5)	(92,615		)	(108,338	)	(248,071	)	(389,133	)
Earnings before income taxes	$	667,083		565,918		1,545,606		1,226,156


(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 retail agency business and title insurance underwriter.


(2)	Total revenues were net of sales incentives of $330.2 million ($24,400 per home delivered) and $890.7 million ($25,400 per home delivered) for the three and nine months ended August 31, 2019, respectively, compared to $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.


(3)	All Homebuilding segments were impacted by purchase accounting adjustments that totaled $84.2 million and $376.0 million for the three and nine months ended August 31, 2018, respectively.

(4)

Homebuilding Other operating loss during the nine months ended August 31, 2019 included a one-time loss of $48.9 million from the consolidation of a previously unconsolidated entity. Homebuilding Other operating earnings during the nine months ended August 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 nine months ended August 31, 2018, $12.0 million and $140.1 million, respectively, of acquisition and integration costs related to the CalAtlantic acquisition.

Financial Services Segment

The assets and liabilities related to the Financial Services segment were as follows:



(In thousands)	August 31, 2019		November 30, 2018
Assets:
Cash and cash equivalents	$	228,217	188,485
Restricted cash	10,189		17,944
Receivables, net (1)	255,083		731,169
Loans held-for-sale (2)	1,228,592		1,213,889
Loans held-for-investment, net	73,366		70,216
Investments held-to-maturity	193,268		189,472
Investments available-for-sale (3)	3,597		4,161
Goodwill	215,516		237,688
Other assets (4)	121,958		125,886
	$	2,329,786	2,778,910
Liabilities:
Notes and other debts payable	$	1,156,078	1,558,702
Other liabilities (5)	299,378		309,500
	$	1,455,456	1,868,202


(1)	Receivables, net primarily related to loans sold to investors for which the Company had not yet been paid as of August 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 August 31, 2019 and November 30, 2018, other assets included mortgage loan commitments carried at fair value of $25.9 million and $16.4 million, respectively, and mortgage servicing rights carried at fair value of $23.1 million and $37.2 million, respectively.

(5)

As of August 31, 2019 and November 30, 2018, other liabilities included $63.4 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 August 31, 2019 and November 30, 2018, other liabilities also included forward contracts carried at fair value of $9.6 million and $10.4 million, respectively.

In connection with the sale of the majority of its retail title agency business and title insurance underwriter in the first quarter of 2019, the Company provided seller financing and received a substantial minority equity ownership stake in the buyer. The combination of both the equity and debt components of this transaction caused the transaction not to meet the accounting requirements for sale treatment and, therefore, the Company is required to consolidate the buyer’s results at this time.

At August 31, 2019, the Financial Services warehouse facilities used to fund residential mortgages were as follows:



(In thousands)	Maximum Aggregate Commitment
364-day warehouse repurchase facility that matures October 2019 (1)	$	500,000
364-day warehouse repurchase facility that matures November 2019 (2)	300,000
364-day warehouse repurchase facility that matures March 2020 (3)	300,000
364-day warehouse repurchase facility that matures June 2020	500,000
Total	$	1,600,000


(1)	Maximum aggregate commitment includes an uncommitted amount of $400 million.


(2)	Maximum aggregate commitment includes an uncommitted amount of $300 million.


(3)	Maximum aggregate commitment includes an uncommitted amount of $300 million.

The Financial Services segment uses these facilities to finance its residential 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 $887.8 million and $1.3 billion at August 31, 2019 and November 30, 2018, respectively, and were collateralized by residential mortgage loans and receivables on loans sold to investors but not yet paid for with outstanding principal balances of $913.9 million and $1.3 billion at August 31, 2019 and November 30, 2018, 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 Financial Services segment would have to use cash from operations and other funding sources to finance its lending activities.

Substantially all of the residential loans the 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. Purchasers sometimes try to defray 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 residential 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 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)	2019			2018		2019		2018
Loan origination liabilities, beginning of period	$	7,424		28,016		48,584		22,543
Provision for losses	1,006			1,059		2,593		2,696
Origination liabilities assumed related to CalAtlantic acquisition	—			20,500		—		24,459
Payments/settlements	(109		)	(124	)	(42,856	)	(247	)
Loan origination liabilities, end of period	$	8,321		49,451		8,321		49,451

RMF - loans held-for-sale

During the nine months ended August 31, 2019, RMF originated commercial loans with a total principal balance of $984.5 million, of which $969.2 million were recorded as loans held-for-sale, $15.3 million were recorded as loans held-for-investments, and sold $848.3 million of commercial loans into seven separate securitizations. As of August 31, 2019 and November 30, 2018, there were no unsettled transactions.

During the nine months ended August 31, 2018, RMF originated commercial loans with a total principal balance of $997.5 million, all of which were recorded as loans held-for-sale, and sold $1.1 billion of commercial loans into 12 separate securitizations.

At August 31, 2019, the RMF warehouse facilities were as follows:



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


(1)	RMF uses this warehouse repurchase facility to finance the origination of floating rate accrual loans, which are reported as accrual loans within loans held-for-investment, net. There were borrowings under this facility of $11.4 million as of August 31, 2019. There were no borrowings under this facility as of November 30, 2018.

Borrowings under the facilities that finance RMF's commercial loan originations and securitization activities were $113.0 million and $178.8 million as of August 31, 2019 and November 30, 2018, 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 Financial Services segment would have to use cash from operations and other funding sources to finance its lending activities.

Investments held-to-maturity

At August 31, 2019 and November 30, 2018, the carrying value of Financial Services' commercial mortgage-backed securities ("CMBS") was $166.7 million and $137.0 million, respectively. These securities were purchased at discounts ranging from 6% to 84% with coupon rates ranging from 2.0% to 5.3%, stated and assumed final distribution dates between October 2027 and December 2028, and stated maturity dates between October 2050 and December 2051. The Financial Services segment reviews changes in estimated cash flows periodically to determine if an other-than-temporary impairment has occurred on its CMBS. Based on the segment’s assessment, no impairment charges were recorded during either the three or nine months ended August 31, 2019 or 2018. The Financial Services 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 Financial Services segment. At August 31, 2019 and November 30, 2018, the carrying amount, net of debt issuance costs, of outstanding debt in these agreements was $155.2 million and $123.7 million, respectively, and the interest is incurred at a fixed rate of 3.2% to 4.1%.

Multifamily Segment

The Company is actively involved, primarily through unconsolidated entities, in the development, construction and property management of multifamily rental properties. The 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 Multifamily segment were as follows:



(In thousands)	August 31, 2019		November 30, 2018
Assets:
Cash and cash equivalents	$	16,478	7,832
Receivables (1)	78,016		73,829
Land under development	284,595		277,894
Investments in unconsolidated entities	539,697		481,129
Other assets	102,056		33,535
	$	1,020,842	874,219
Liabilities:
Accounts payable and other liabilities	$	176,914	170,616
Notes payable (2)	36,140		—
	$	213,054	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.

The unconsolidated entities in which the 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 Multifamily unconsolidated entities, the Company (or entities related to them) 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 increase 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, 2019 and November 30, 2018, the fair value of the completion guarantees was immaterial. Additionally, as of August 31, 2019 and November 30, 2018, the Multifamily segment had $1.2 million and $4.6 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, 2019 and November 30, 2018, Multifamily segment's unconsolidated entities had non-recourse debt with completion guarantees of $1.1 billion and $1.0 billion, respectively.

In many instances, the Multifamily segment is appointed as the construction, development and property manager for certain of its Multifamily unconsolidated entities and receives fees for performing this function. During the three and nine months ended August 31, 2019, the Multifamily segment recorded fee income, net of deferrals, from its unconsolidated entities

of $14.3 million and $40.7 million, respectively. During the three and nine months ended August 31, 2018, the Multifamily segment recorded fee income, net of deferrals, from its unconsolidated entities of $12.2 million and $36.1 million, respectively.

The 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, 2019, the Multifamily segment provided general contractor services, net of deferrals, totaling $83.2 million and $264.8 million, respectively, which were partially offset by costs related to those services of $79.9 million and $254.5 million, respectively. During the three and nine months ended August 31, 2018, the 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.

Lennar Multifamily Venture I ("LMV I") 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, 2019, $162.4 million in equity commitments were called, of which the Company contributed its portion of $39.6 million. During the nine months ended August 31, 2019, the Company received $12.3 million of distributions as a return of capital from LMV I. As of August 31, 2019, $2.1 billion of the $2.2 billion in equity commitments had been called, of which the Company had contributed $480.4 million, representing its pro-rata portion of the called equity, resulting in a remaining equity commitment for the Company of $23.6 million. As of August 31, 2019 and November 30, 2018, the carrying value of the Company's investment in LMV I was $397.9 million and $383.4 million, respectively.

In March 2018, the Multifamily segment completed the first closing of a second Multifamily Venture, Lennar Multifamily Venture II LP ("LMV II"), for the development, construction and property management of class-A multifamily assets. In June 2019, the Multifamily segment completed the final closing of LMV II which has approximately $1.3 billion of equity commitments, including a $381 million co-investment commitment by Lennar comprised of cash, undeveloped land and preacquisition costs. During the nine months ended August 31, 2019, $200.8 million in equity commitments were called, of which the Company contributed $54.9 million, which was made up of $132.2 million of inventory and cash contributions, offset by $77.3 million of distributions as a return of capital resulting in a remaining commitment for the Company of $244.9 million. As of August 31, 2019, $452.8 million of the $1.3 billion in equity commitments had been called. As of August 31, 2019 and November 30, 2018, the carrying value of the Company's investment in LMV II was $115.1 million and $63.0 million, respectively. The difference between the Company's net contributions and the carrying value of the Company's investments was related to a basis difference. As of August 31, 2019, LMV II included 13 undeveloped multifamily assets totaling approximately 4,700 apartments with projected project costs of approximately $2.0 billion.

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.

Lennar Other

Lennar Other primarily includes fund investments the Company retained when it sold the Rialto asset and investment management platform, as well as strategic investments in technology companies.

The assets and liabilities related to Lennar Other were as follows:



(In thousands)	August 31, 2019		November 30, 2018
Assets:
Cash and cash equivalents	$	5,362	24,334
Restricted cash	975		7,175
Real estate owned, net	2,943		25,632
Investments in unconsolidated entities	447,734		424,104
Investments held-to-maturity	60,803		59,974
Other assets	35,151		47,740
	$	552,968	588,959
Liabilities:
Notes and other debts payable	$	15,131	14,488
Other liabilities	9,496		53,020
	$	24,627	67,508

Investments held-to-maturity

At August 31, 2019 and November 30, 2018, the carrying value of Lennar Other's CMBS was $60.8 million and $60.0 million, respectively. These securities were purchased at discounts ranging from 6.5% to 86.1% with coupon rates ranging from 1.3% to 4.0%, stated and assumed final distribution dates between November 2020 and October 2026, and stated maturity dates between November 2049 and March 2059. The Company reviews changes in estimated cash flows periodically to determine if an other-than-temporary impairment has occurred on its CMBS. Based on the Company’s assessment, no impairment charges were recorded during either the three or nine months ended August 31, 2019 or 2018. The Company 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 segment. At August 31, 2019 and November 30, 2018, the carrying amount, net of debt issuance costs, of outstanding debt in these agreements was $13.2 million and $12.6 million, respectively, and the interest is incurred at a rate of 4.2%.