Investments in Unconsolidated Entities

6 Months Ended

May 31, 2022

Equity Method Investments and Joint Ventures [Abstract]

Homebuilding Unconsolidated Entities

The investments in the Company's Homebuilding unconsolidated entities were as follows:



(In thousands)	May 31, 2022		November 30, 2021
Investments in unconsolidated entities (1) (2)	$	1,083,813	972,084
Underlying equity in unconsolidated entities' net assets (1)	1,424,322		1,301,719

(1)The basis difference was primarily as a result of the Company contributing its investment in three strategic joint ventures with a higher fair value than book value for an investment in the FivePoint entity and deferring equity in earnings on land sales to the Company.

(2)Included in the Company's recorded investments in Homebuilding unconsolidated entities is the Company's 40% ownership of FivePoint. As of May 31, 2022 and November 30, 2021, the carrying amount of the Company's investment was $389.8 million and $381.6 million, respectively.

As of May 31, 2022 and November 30, 2021, the Homebuilding segment's unconsolidated entities had non-recourse debt with completion guarantees of $184.1 million and $241.0 million, respectively.

The Company has an immaterial amount of recourse exposure to debt of the Homebuilding unconsolidated entities in which it has investments. While the Company sometimes guarantees debt of unconsolidated entities, in most instances the Company’s partners have also guaranteed that debt and are required to contribute their shares of any payments. In most instances the amount of guaranteed debt of an unconsolidated entity is less than the value of the collateral securing it.

As of both May 31, 2022 and November 30, 2021, the fair values of the repayment guarantees, maintenance guarantees, and completion guarantees were not material. The Company believes that as of May 31, 2022, in the event it becomes legally obligated to perform under a guarantee of the obligation of a Homebuilding unconsolidated entity due to a triggering event under a guarantee, the collateral would be sufficient to repay at least a significant portion of the obligation or the Company and its partners would contribute additional capital into the venture. In certain instances, the Company has placed performance letters of credit and surety bonds with municipalities with regard to obligations of its joint ventures (see Note 7 of the Notes to Condensed Consolidated Financial Statements).

In 2021, the Company formed the Upward America Venture LP ("Upward America"), and is managing and participating in Upward America. Upward America is an investment fund that acquires new single-family homes in high growth markets across the United States and rents them to people who will live in them. Upward America has raised equity commitments totaling $1.6 billion, including $350 million of equity commitments raised during the first quarter of 2022. The commitments are primarily from institutional investors, including $125 million committed by Lennar. As of May 31, 2022 and November 30, 2021, the carrying amount of the Company's investment in Upward America was $33.3 million and $13.3 million, respectively.

Multifamily Unconsolidated Entities

The unconsolidated joint ventures 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 bank loans to Multifamily unconsolidated joint ventures, the Company (or entities related to them) has been required to give guarantees of completion and cost over-runs to the lenders and partners. The details related to these are unchanged from the disclosure in the Company's Notes to the Financial Statements section in its Form 10-K for the year ended November 30, 2021. As of both May 31, 2022 and November 30, 2021, the fair value of the completion guarantees was immaterial. As of May 31, 2022 and November 30, 2021, Multifamily segment's unconsolidated entities had non-recourse debt with completion guarantees of $1.0 billion and $855.2 million, respectively.

In many instances, the Multifamily segment is appointed as the construction, development and property manager for its Multifamily unconsolidated entities and receives fees for performing this function. 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 investments. The details of the activity was as follows:


	Three Months Ended			Six Months Ended
	May 31,			May 31,
(In thousands)	2022		2021	2022	2021

General contractor services, net of deferrals	$	125,606	148,891	242,869	264,290
General contractor costs	118,802		142,783	232,035	253,236
Management fee income	16,327		14,188	29,454	29,059

The Multifamily segment includes Multifamily Venture Fund I ("LMV I"), Multifamily Venture Fund II LP ("LMV II") and Canada Pension Plan Investments Fund (the "Fund"), which are long-term multifamily development investment vehicles involved in the development, construction and property management of class-A multifamily assets. During the first quarter of 2022, the Multifamily segment completed the initial closing of the Fund. The Multifamily segment expects the Fund to have almost $1 billion in equity and Lennar's ownership percentage in the Fund is expected to be 4%. During the three months ended May 31, 2022, the Company received a return of capital of $11.4 million from the Fund. This resulted in the negative investment balance of $0.6 million as of May 31, 2022.

Details of LMV I and LMV II as of and during the six months ended May 31, 2022 are included below:


	May 31, 2022
(In thousands)	LMV I		LMV II
Lennar's carrying value of investments	$	230,599	308,540
Equity commitments	2,204,016		1,257,700
Equity commitments called	2,151,149		1,206,115
Lennar's equity commitments	504,016		381,000
Lennar's equity commitments called	499,630		364,348
Lennar's remaining commitments	4,386		16,652
Distributions to Lennar during the six months ended May 31, 2022	18,934		6,279

Other Unconsolidated Entities

Lennar Other's unconsolidated entities includes fund investments the Company retained when it sold the Rialto assets and investment management platform in 2018, as well as strategic investments in technology companies. The Company's investment in the Rialto funds and investment vehicles totaled $201.6 million and $200.6 million as of May 31, 2022 and November 30, 2021, respectively.