Operating and Reporting Segments

6 Months Ended

May 31, 2024

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, 2024
Assets:	Homebuilding		Financial Services	Multifamily	Lennar Other	Total
Cash and cash equivalents	$	3,597,493	245,784	11,555	17,184	3,872,016
Restricted cash	11,572		37,796	—	—	49,368
Receivables, net (1)	898,301		567,748	86,293	—	1,552,342
Inventory owned and consolidated inventory not owned	19,901,500		—	608,214	—	20,509,714
Deposits and pre-acquisition costs on real estate	2,754,819		—	29,802	—	2,784,621
Investments in unconsolidated entities	1,263,905		—	561,892	350,574	2,176,371
Loans held-for-sale (2)	—		1,721,911	—	—	1,721,911
Investments in equity securities (3)	—		—	—	297,948	297,948
Investments available-for-sale (4)	—		—	—	39,669	39,669
Loans held-for-investment, net	—		54,355	—	—	54,355
Investments held-to-maturity	—		138,425	—	—	138,425
Goodwill	3,442,359		189,699	—	—	3,632,058
Other assets	1,540,507		88,223	79,487	130,655	1,838,872
Total assets	$	33,410,456	3,043,941	1,377,243	836,030	38,667,670
Liabilities:
Notes and other debt payable, net	$	2,241,507	1,410,102	—	—	3,651,609
Accounts payable, liabilities related to consolidated inventory not owned and other liabilities	7,468,009		173,261	246,776	112,262	8,000,308
Total liabilities	$	9,709,516	1,583,363	246,776	112,262	11,651,917

(In thousands)	November 30, 2023
Assets:	Homebuilding		Financial Services	Multifamily	Lennar Other	Total
Cash and cash equivalents	$	6,273,724	159,491	39,334	1,948	6,474,497
Restricted cash	13,481		82,960	—	—	96,441
Receivables, net (1)	887,992		716,071	92,142	—	1,696,205
Inventory owned and consolidated inventory not owned	18,352,735		—	544,935	—	18,897,670
Deposits and pre-acquisition costs on real estate	2,002,154		—	32,063	—	2,034,217
Investments in unconsolidated entities	1,143,909		—	599,852	276,244	2,020,005
Loans held-for-sale (2)	—		2,086,809	—	—	2,086,809
Investments in equity securities (3)	—		—	—	297,243	297,243
Investments available-for-sale (4)	—		—	—	37,953	37,953
Loans held-for-investment, net	—		55,463	—	—	55,463
Investments held-to-maturity	—		140,676	—	—	140,676
Goodwill	3,442,359		189,699	—	—	3,632,058
Other assets	1,512,038		135,377	73,187	44,464	1,765,066
Total assets	$	33,628,392	3,566,546	1,381,513	657,852	39,234,303
Liabilities:
Notes and other debt payable, net	$	2,816,482	2,163,805	3,741	—	4,984,028
Accounts payable, liabilities related to consolidated inventory not owned and other liabilities	6,911,512		283,234	274,436	79,127	7,548,309
Total liabilities	$	9,727,994	2,447,039	278,177	79,127	12,532,337

(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, 2024 and November 30, 2023, 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 $145.0 million and $121.0 million without readily available fair values as of May 31, 2024 and November 30, 2023, 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			Six Months Ended
	May 31,			May 31,
(In thousands)	2024		2023	2024	2023
Revenues:
Homebuilding	$	8,381,059	7,670,017	15,312,050	13,826,322
Financial Services	281,723		222,979	531,443	405,960
Multifamily	99,500		151,744	229,177	295,267
Lennar Other	3,310		411	5,852	8,031
	$	8,765,592	8,045,151	16,078,522	14,535,580
Earnings (loss) before income taxes:
Homebuilding	$	1,340,155	1,214,409	2,368,951	2,121,248
Financial Services	147,012		112,599	278,308	191,336
Multifamily	(20,474)		(8,162)	(36,113)	(29,763)
Lennar Other	(28,964)		(18,399)	(68,512)	(58,156)
Corporate and Unallocated (1)	(176,672)		(141,826)	(350,791)	(281,591)
	$	1,261,057	1,158,621	2,191,843	1,943,074

(1)Corporate and unallocated consists primarily of corporate general and administrative expenses and charitable foundation contributions.

Homebuilding Segments

Information about homebuilding activities in states which are not economically similar to other states in the same geographic areas 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 and Pennsylvania

Central: Georgia, Illinois, Indiana, Maryland, Minnesota, North Carolina, South 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:

	May 31,		November 30,
	2024		2023
(In thousands)
East	$	6,934,559	6,563,568
Central	5,205,747		4,511,496
Texas	3,842,898		3,337,280
West	11,970,399		11,298,812
Other	1,543,449		1,511,541
Corporate and Unallocated	3,913,404		6,405,695
Total Homebuilding	$	33,410,456	33,628,392

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

	Three Months Ended			Six Months Ended
	May 31,			May 31,
(In thousands)	2024		2023	2024	2023
Revenues
East	$	2,202,245	2,119,297	4,125,041	3,817,140
Central	1,707,444		1,616,392	3,103,899	2,842,533
Texas	1,196,425		1,141,612	2,268,211	2,163,664
West	3,265,467		2,781,097	5,795,529	4,986,158
Other	9,478		11,619	19,370	16,827
	$	8,381,059	7,670,017	15,312,050	13,826,322
Operating earnings (loss)
East	$	425,650	473,467	802,531	871,899
Central	237,870		247,550	399,486	403,836
Texas	184,644		183,061	353,157	308,380
West	478,937		355,472	787,724	585,972
Other	13,054		(45,141)	26,053	(48,839)
	$	1,340,155	1,214,409	2,368,951	2,121,248

Financial Services

Operations of the Financial Services segment include mortgage financing, title and closing services primarily for buyers of the Company’s homes. They also include 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 sales of 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, 2024, the Financial Services segment had warehouse facilities which were all 364-day repurchase facilities and were used to fund residential mortgages or commercial mortgages for LMF Commercial as follows:

	Maximum Aggregate Commitment
(In thousands)	Committed Amount		Uncommitted Amount	Total
Residential facilities maturing:
June 2024 (1)	$	500,000	—	500,000
June 2024 (2)	100,000		100,000	200,000
July 2024	505,000		—	505,000
September 2024	100,000		100,000	200,000
April 2025	250,000		250,000	500,000
Total residential facilities	$	1,455,000	450,000	1,905,000
LMF commercial facilities maturing:
December 2024	200,000		—	200,000
January 2025	100,000		—	100,000
Total LMF commercial facilities	$	300,000	—	300,000
Total				$	2,205,000

(1)Subsequent to May 31, 2024, the maturity date was extended to July 2024.

(2)Subsequent to May 31, 2024, the maximum aggregate committed and uncommitted commitment was reduced to $75 million each until maturity in August 2024.

The Financial Services segment uses residential mortgage loan warehouse 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 80% interests in the originated commercial loans financed.

Borrowings and collateral under the facilities were as follows:

(In thousands)	May 31, 2024		November 30, 2023
Borrowings under the residential facilities	$	1,233,015	2,020,187
Collateral under the residential facilities	1,280,929		2,097,020
Borrowings under the LMF Commercial facilities	48,057		12,525

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. The provision for loan losses was immaterial for both the three and six months ended May 31, 2024 and 2023. Loan origination liabilities were $18.3 million and $17.6 million as of May 31, 2024 and November 30, 2023, respectively, and included in Financial Services’ liabilities in the Company's condensed consolidated balance sheets.

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)	2024		2023	2024	2023
Originations (1)	$	71,510	84,590	212,335	164,070
Sold	129,335		88,102	156,285	165,302
Securitizations	3		2	5	3

(1)During both the three and six months ended May 31, 2024 and 2023, the commercial loans originated were recorded as loans held-for-sale, which are held at fair value.

Investments held-to-maturity

At May 31, 2024 and November 30, 2023, the Financial Services segment held commercial mortgage-backed securities (“CMBS”). These securities are classified as held-to-maturity based on the segment's 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 the three or six months ended May 31, 2024 and 2023. 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, 2024		November 30, 2023
Carrying value	$	138,425	140,676
Outstanding debt, net of debt issuance costs	129,029		131,093
Incurred interest rate	3.4%		3.4%

	May 31, 2024
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. The 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 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 other gains (which includes sales of buildings and investments).

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 Labs”), Hippo Holdings, Inc. (“Hippo”), Opendoor Technologies, Inc. (“Opendoor”), SmartRent, Inc. (“SmartRent”), Sonder Holdings, Inc. (“Sonder”) and Sunnova Energy International, Inc. (“Sunnova”), which are held at market and the carrying value of which will therefore change depending on the value of the Company's shareholdings 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 mark-to-market adjustments on the Company's technology investments:

	Three Months Ended			Six Months Ended
	May 31,			May 31,
(In thousands)	2024		2023	2024	2023
Blend Labs (BLND)	$	715	(1,332)	3,651	(746)
Hippo (HIPO)	10,737		(4,399)	27,186	2,233
Opendoor (OPEN)	(16,907)		22,512	(15,592)	14,821
SmartRent (SMRT)	(4,609)		8,621	(6,572)	9,926
Sonder (SOND)	(40)		(138)	11	(458)
Sunnova (NOVA)	(11,410)		233	(35,335)	(24,233)
Lennar Other unrealized gains (losses) from technology investments	$	(21,514)	25,497	(26,651)	1,543

Doma Holdings, Inc. (“Doma”), which went public during the year ended November 30, 2021, is an investment that was accounted for under the equity method due to the Company's significant ownership interest of 25% of Doma which allowed the Company to exercise significant influence. As of May 31, 2024, the Company’s carrying value in Doma was zero as a result of allocated losses from Doma.