Operating and Reporting Segments

6 Months Ended

May 31, 2022

Segment Reporting [Abstract]

Operating and Reporting Segments

Operating and Reporting Segments

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. The Company's chief operating decision makers manage and assess the Company’s performance at a regional level. Therefore, the Company performed an assessment of its operating segments in accordance with ASC 280, Segment Reporting, and determined that the following are its operating and reportable segments:

Homebuilding segments: (1) East (2) Central (3) Texas (4) West

(5) Financial Services

(6) Multifamily

(7) Lennar Other

The assets and liabilities related to the Company’s segments were as follows:

(In thousands)	May 31, 2022
Assets:	Homebuilding		Financial Services	Multifamily	Lennar Other	Total
Cash and cash equivalents	$	1,314,741	138,662	61,190	2,151	1,516,744
Restricted cash	28,440		8,225	—	—	36,665
Receivables, net (1)	508,638		492,268	111,109	—	1,112,015
Inventories	22,089,499		—	400,422	—	22,489,921
Loans held-for-sale (2)	—		1,272,111	—	—	1,272,111
Investments in equity securities (3)	—		—	—	576,649	576,649
Investments available-for-sale (4)	—		—	—	34,822	34,822
Loans held-for-investment, net	—		28,231	—	—	28,231
Investments held-to-maturity	—		155,820	—	—	155,820
Investments in unconsolidated entities	1,083,813		—	638,559	325,310	2,047,682
Goodwill	3,442,359		189,699	—	—	3,632,058
Other assets	1,226,192		74,659	66,327	36,306	1,403,484
	$	29,693,682	2,359,675	1,277,607	975,238	34,306,202
Liabilities:
Notes and other debts payable, net	$	4,645,791	1,321,965	16,631	—	5,984,387
Accounts payable and other liabilities	5,967,421		148,723	307,168	108,729	6,532,041
	$	10,613,212	1,470,688	323,799	108,729	12,516,428

(In thousands)	November 30, 2021
Assets:	Homebuilding		Financial Services	Multifamily	Lennar Other	Total
Cash and cash equivalents	$	2,735,213	167,021	16,850	2,660	2,921,744
Restricted cash	21,927		12,012	—	—	33,939
Receivables, net (1)	490,278		708,165	98,405	—	1,296,848
Inventories	18,715,304		—	454,093	—	19,169,397
Loans held-for-sale (2)	—		1,636,351	—	—	1,636,351
Investments in equity securities (3)	—		—	—	1,006,599	1,006,599
Investments available-for-sale (4)	—		—	—	41,654	41,654
Loans held-for-investment, net	—		44,582	—	—	44,582
Investments held-to-maturity	—		157,808	—	—	157,808
Investments in unconsolidated entities	972,084		—	654,029	346,270	1,972,383
Goodwill	3,442,359		189,699	—	—	3,632,058
Other assets	1,090,654		48,729	88,370	66,662	1,294,415
	$	27,467,819	2,964,367	1,311,747	1,463,845	33,207,778
Liabilities:
Notes and other debts payable, net	$	4,652,338	1,726,026	—	—	6,378,364
Accounts payable and other liabilities	5,217,904		180,317	288,930	145,981	5,833,132
	$	9,870,242	1,906,343	288,930	145,981	12,211,496

(1)Receivables, net for Financial Services primarily related to loans sold to investors for which the Company had not yet been paid as of May 31, 2022 and November 30, 2021, respectively.

(2)Loans held-for-sale related to unsold residential and commercial loans carried at fair value.

(3)Investments in equity securities include investments of $176.2 million and $100.1 million without readily available fair values as of May 31, 2022 and November 30, 2021, respectively.

(4)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.

Financial information relating to the Company’s segments was as follows:

	Three Months Ended May 31, 2022
(In thousands)	Homebuilding		Financial Services	Multifamily	Lennar Other	Corporate and Unallocated	Total
Revenue	$	7,977,982	200,166	176,021	4,527	—	8,358,696
Operating earnings (loss)	1,880,411		103,935	668	(108,424)	—	1,876,590
Corporate general and administrative expenses	—		—	—	—	105,207	105,207
Charitable foundation contribution	—		—	—	—	16,549	16,549
Earnings (loss) before income taxes	1,880,411		103,935	668	(108,424)	(121,756)	1,754,834
	Three Months Ended May 31, 2021
Revenues	$	6,028,041	218,747	177,473	5,984	—	6,430,245
Operating earnings (loss)	1,112,475		121,320	22,397	(54,097)	—	1,202,095
Corporate general and administrative expenses	—		—	—	—	90,717	90,717
Charitable foundation contribution	—		—	—	—	14,493	14,493
Earnings (loss) before income taxes	1,112,475		121,320	22,397	(54,097)	(105,210)	1,096,885

	Six Months Ended May 31, 2022
(In thousands)	Homebuilding		Financial Services	Multifamily	Lennar Other	Corporate and Unallocated	Total
Revenues (1)	$	13,730,187	376,867	443,380	11,778	—	14,562,212
Operating earnings (loss)	2,990,261		194,726	6,095	(511,558)	—	2,679,524
Corporate general and administrative expenses	—		—	—	—	218,868	218,868
Charitable foundation contribution	—		—	—	—	29,087	29,087
Earnings (loss) before income taxes	2,990,261		194,726	6,095	(511,558)	(247,955)	2,431,569
	Six Months Ended May 31, 2021
Revenues	$	10,971,097	462,816	308,916	12,884	—	11,755,713
Operating earnings	1,945,655		267,527	21,523	417,249	—	2,651,954
Corporate general and administrative expenses	—		—	—	—	201,248	201,248
Charitable foundation contribution	—		—	—	—	26,807	26,807
Earnings (loss) before income taxes	1,945,655		267,527	21,523	417,249	(228,055)	2,423,899

(1)Revenues for Multifamily for the six months ended May 31, 2022 includes $147.8 million of land sales to unconsolidated entities.

Homebuilding Segments

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. Homebuilding Other also includes management of a fund that acquires single-family homes and holds them as rental properties.

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

East: Alabama, Florida, New Jersey, Pennsylvania and South Carolina

Central: Georgia, Illinois, Indiana, Maryland, Minnesota, North Carolina, Tennessee and Virginia

Texas: Texas

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

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

The assets related to the Company’s homebuilding segments were as follows:

(In thousands)	East		Central	Texas	West	Other	Corporate and Unallocated	Total Homebuilding
May 31, 2022	$	6,968,448	4,266,709	3,576,083	12,276,620	1,486,178	1,119,644	29,693,682
November 30, 2021	5,854,057		3,782,847	2,801,192	11,171,741	1,443,163	2,414,819	27,467,819

Financial information relating to the Company’s homebuilding segments was as follows:

	Three Months Ended May 31, 2022
(In thousands)	East		Central	Texas	West	Other	Total Homebuilding
Revenues	$	2,214,451	1,283,990	1,095,500	3,370,462	13,579	7,977,982
Operating earnings (loss)	553,819		206,795	272,857	847,849	(909)	1,880,411
	Three Months Ended May 31, 2021
Revenues	$	1,567,768	1,097,582	799,259	2,553,771	9,661	6,028,041
Operating earnings (loss)	309,827		159,048	176,057	492,811	(25,268)	1,112,475

	Six Months Ended May 31, 2022
(In thousands)	East		Central	Texas	West	Other	Total Homebuilding
Revenues	$	3,884,637	2,393,262	1,908,119	5,521,260	22,909	13,730,187
Operating earnings (loss)	905,814		358,873	444,169	1,289,297	(7,892)	2,990,261
	Six Months Ended May 31, 2021
Revenues	$	2,923,710	2,026,024	1,443,337	4,563,350	14,676	10,971,097
Operating earnings (loss)	571,910		291,071	305,700	814,517	(37,543)	1,945,655

Financial Services

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 LMF Commercial business. 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.

At May 31, 2022, the Financial Services warehouse facilities were all 364-day repurchase facilities and were used to fund residential mortgages or commercial mortgages for LMF Commercial as follows:

(In thousands)	Maximum Aggregate Commitment
Residential facilities maturing:
July 2022	$	400,000
October 2022	200,000
December 2022	700,000
May 2023	200,000
Total - Residential facilities	$	1,500,000
LMF Commercial facilities maturing
November 2022	$	100,000
December 2022	400,000
July 2023	50,000
Total - LMF Commercial facilities	$	550,000
Total	$	2,050,000

The Financial Services segment uses the residential 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. The LMF Commercial facilities finance LMF Commercial loan originations and securitization activities and were secured by up to an 80% interest in the originated commercial loans financed.

Borrowings and collateral under the facilities and their prior year predecessors were as follows:

(In thousands)	May 31, 2022		November 30, 2021
Borrowings under the residential facilities	$	1,112,431	1,482,258
Collateral under the residential facilities	1,161,654		1,539,641
Borrowings under the LMF Commercial facilities	63,902		96,294

If the facilities are not renewed or replaced, the borrowings under the lines of credit will be repaid 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			Six Months Ended
	May 31,			May 31,
(In thousands)	2022		2021	2022	2021
Loan origination liabilities, beginning of period	$	12,471	8,433	11,670	7,569
Provision for losses	—		1,114	966	2,080
Payments/settlements	(187)		(93)	(352)	(195)
Loan origination liabilities, end of period	$	12,284	9,454	12,284	9,454

LMF Commercial - loans held-for-sale

LMF Commercial originated commercial loans as follows:

	Three Months Ended			Six Months Ended
	May 31,			May 31,
(Dollars in thousands)	2022		2021	2022	2021
Originations (1)	$	143,650	196,498	408,495	415,998
Sold	145,385		155,740	323,467	438,705
Securitizations	1		1	2	3

(1)During both the three and six months ended May 31, 2022 and 2021 all the commercial loans originated were recorded as loans held-for-sale, which are held at fair value.

Investments held-to-maturity

At May 31, 2022 and November 30, 2021, the Financial Services segment held commercial mortgage-backed securities ("CMBS"). These securities are classified as held-to-maturity based on its intent and ability to hold the securities until maturity and changes in estimated cash flows are reviewed periodically to determine if an other-than-temporary impairment has occurred. Based on the segment’s assessment, no impairment charges were recorded during either the three or six months ended May 31, 2022 or 2021. The Company has financing agreements to finance CMBS that have been purchased as investments by the Financial Services segment.

Details related to Financial Services' CMBS were as follows:

(Dollars in thousands)	May 31, 2022			November 30, 2021
Carrying value	$	155,820		157,808
Outstanding debt, net of debt issuance costs	145,633			147,474
Incurred interest rate	3.4		%	3.4	%

	May 31, 2022
Discount rates at purchase	6%	—	84%
Coupon rates	2.0%	—	5.3%
Distribution dates	October 2027	—	December 2028
Stated maturity dates	October 2050	—	December 2051

Multifamily

The Company is actively involved, primarily through unconsolidated funds and joint ventures, 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 Multifamily Segment (i) manages, and owns interests in, funds that are engaged in the development of multifamily residential communities with the intention of holding the newly constructed and occupied properties as income and fee generating assets, and (ii) manages, and owns interests in, joint ventures that are engaged in the development of multifamily residential communities, in most instances with the intention of selling them when they are built and substantially occupied. Our multifamily business is a vertically integrated platform with capabilities spanning development, construction, property management, asset management, and capital markets. Revenues are generated from the sales of land, from construction activities, and management and promote fees generated from joint ventures and other gains (which includes sales of buildings), less the cost of sales of land sold, expenses related to construction activities and general and administrative expenses. Operations of the Multifamily Segment also include equity in earnings (loss) from unconsolidated entities.

Lennar Other

Lennar Other primarily includes strategic investments in technology companies, primarily managed by the Company's LENX subsidiary, and fund interests the Company retained when it sold the Rialto Capital Management ("Rialto") asset and investment management platform. 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, along with equity in earnings (loss) from the Rialto fund investments and technology investments, realized and unrealized gains (losses) from investments in equity securities and other income (expense), net from the remaining assets related to the Company's former Rialto segment.

The Company has investments in Blend Labs, Inc. ("Blend"), Hippo Holdings, Inc. ("Hippo"), Opendoor, Inc. ("Opendoor"), SmartRent, Inc. ("SmartRent"), Sonder Holdings, Inc. ("Sonder") and Sunnova Energy International, Inc. ("Sunnova"), which are held at market and will therefore change depending on the value of the Company's share holdings in those entities on the last day of each quarter. All the investments are accounted for as investments in equity securities which are held at fair value and the changes in fair values are recognized through earnings. The following is a detail of Lennar Other unrealized gains (losses) from the Company's technology investments:

	Three Months Ended			Six Months Ended
	May 31,			May 31,
(In thousands)	2022		2021	2022	2021
Blend Labs (BLND) mark-to-market	$	(13,550)	—	(20,992)	—
Hippo (HIPO) mark-to-market	(37,946)		—	(162,403)	—
Opendoor (OPEN) mark-to-market	(20,999)		(234,290)	(164,360)	235,455
SmartRent (SMRT) mark-to-market	(3,950)		—	(48,313)	—
Sonder (SOND) mark-to-market	(1,626)		—	(2,132)	—
Sunnova (NOVA) mark-to-market	106		(38,335)	(74,935)	(38,335)
Lennar Other unrealized gains (losses) from technology investments	$	(77,965)	(272,625)	(473,135)	197,120

Doma Holdings, Inc. ("Doma") went public during the year ended November 30, 2021. However, Doma is a public company that is an investment accounted for under the equity method due to the Company's significant ownership interest which allows the Company to exercise significant influence. As of May 31, 2022, the Company owned approximately 25% of Doma and the carrying amount of the Company's investment was $32.0 million.