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OFFON

LENNAR CORPORATION

(LEN)
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LENNAR : NEW/ Management's Discussion and Analysis of Financial Condition and Results of Operations (form 10-Q)

10/01/2021 | 04:19pm EST
The following discussion and analysis of our financial condition and results of
operations should be read in conjunction with our unaudited condensed
consolidated financial statements and accompanying notes included under Item 1
of this Report and our audited consolidated financial statements and
accompanying notes included in our Annual Report on Form 10-K, for our fiscal
year ended November 30, 2020.
Some of the statements in this Management's Discussion and Analysis of Financial
Condition and Results of Operations, and elsewhere in this Quarterly Report on
Form 10-Q, are "forward-looking statements," within the meaning of the Private
Securities Litigation Reform Act of 1995. These forward-looking statements
typically include the words "anticipate," "believe," "consider," "estimate,"
"expect," "forecast," "intend," "objective," "plan," "predict," "projection,"
"seek," "strategy," "target," "will" or other words of similar meaning.
Forward-looking statements contained herein may include opinions or beliefs
regarding market conditions and similar matters. In many instances, those
opinions and beliefs are based upon general observations by members of our
management, anecdotal evidence and our experience in the conduct of our
businesses, without specific investigation or analyses. Therefore, while they
reflect our view of the industries and markets in which we are involved, they
should not be viewed as reflecting verifiable views or views that are
necessarily shared by all who are involved in those industries or markets. These
statements concern expectations, beliefs, projections, plans and strategies,
anticipated events or trends and similar expressions concerning matters that are
not historical facts.
The forward-looking statements reflect our current views about future events and
are subject to risks, uncertainties and assumptions. We wish to caution readers
that certain important factors may have affected and could in the future affect
our actual results and could cause actual results to differ significantly from
what is anticipated by our forward-looking statements. The most important
factors that could cause actual results to differ materially from those
anticipated by our forward-looking statements include, but are not limited to:
the potential negative impact to our business of the ongoing coronavirus
("COVID-19") pandemic, the duration, impact and severity of which is highly
uncertain; continuation of supply shortages and increased costs related to
construction materials and labor; cost increases related to real estate taxes
and insurance; reduced availability of mortgage financing, increased interest
rates and increased competition in the mortgage industry; reductions in the
market value of our investments in public companies; an extended slowdown in the
real estate markets across the nation, including a slowdown in either the market
for single family homes or the multifamily rental market; our inability to
successfully execute our strategies, including our land lighter strategy and our
strategy to monetize non-core assets; changes in general economic and financial
conditions that reduce demand for our products and services, lower our profit
margins or reduce our access to credit; our inability to acquire land at
anticipated prices; the possibility that we will incur nonrecurring costs that
affect earnings in one or more reporting periods; decreased demand for our homes
or Multifamily rental properties; increased competition for home sales from
other sellers of new and resale homes; our inability to pay down debt;
government actions or other factors that might force us to terminate our program
of repurchasing our stock; a decline in the value of our land inventories and
resulting write-downs of the carrying value of our real estate assets; the
failure of the participants in various joint ventures to honor their
commitments; difficulty obtaining land-use entitlements or construction
financing; natural disasters and other unforeseen events for which our insurance
does not provide adequate coverage; new laws or regulatory changes that
adversely affect the profitability of our businesses; our inability to refinance
our debt on terms that are as favorable as our current arrangements; and changes
in accounting conventions that adversely affect our reported earnings.
Please see our Form 10-K for the fiscal year ended November 30, 2020 and our
other filings with the SEC for a further discussion of these and other risks and
uncertainties which could affect our future results. We undertake no obligation,
other than those imposed by securities laws, to publicly revise any
forward-looking statements to reflect events or circumstances after the date of
those statements or to reflect the occurrence of anticipated or unanticipated
events.
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Outlook

The housing market remains strong. Demand has been strong while the supply of
new and existing homes has remained constrained. New home construction cannot
ramp up quickly enough to fill the void of the underproduction of homes for the
past decade, and short supply is likely to remain for some time to come. The
supply chain for both land and construction is significantly stressed. Given
supply chain challenges, we believe the industry will not be able to quickly
remedy the supply shortage with increased production. Accordingly, we expect the
market to remain in its current imbalance for an extended period of time. We
remain focused on orderly, targeted growth, with our sales pace tightly matched
with our pace of production, which enables price appreciation to offset future
cost escalations to maximize margins. Even though home prices have moved much
higher, overall affordability remains strong as interest rates are still lower
than they were a year ago. Personal savings for deposits are strong and wages
seem to be rising faster than monthly payments. Millennials are moving out of
their parents' homes and forming families, while apartment dwellers are finding
a first-time single-family home.
The housing market is not only strong, but it is also going through some
structural changes that will promote stability in the market, and extend housing
benefits to the breadth of a diverse society. The iBuyer and single-family for
rent participants are providing additional liquidity to the marketplace to
purchase and sell homes, as they evolve and provide ever more frictionless
transactions. They are also solving important industry problems that have needed
solutions for a very long time. The iBuyers, led by Opendoor, are becoming more
than just a home sale option. They are an ever more effective and instrumental
convenience provider, as the coordination of a new home is being complicated by
supply chain disruption. Additionally, the single-family for rent participants,
including our Upward America Venture, are also providing more liquidity while
making a single-family home lifestyle accessible to more families. The solution
to higher home prices causing affordability issues is building more housing and
making a growing portion of that housing stock available to more families to
rent if they cannot yet meet the requirements for home ownership. Professional
ownership of homes enables renters to access a single-family lifestyle while
they build the credentials to own. Better housing for families produces better
outcomes for families and the industry is rewiring to provide those solutions.
The combined effects of this strong housing market along with structural
changes, which we are in position to capitalize on through our strategic
investments, puts Lennar in a position to continue to drive returns. We are
focused on cash flow, debt reduction, stock buyback, land controlled versus
owned, return on capital, and return on equity, and on innovative technologies.
While we have been carefully managing our supply chain, the supply chain for
both land and construction is significantly stressed. Accordingly, we expect our
community count at the end of the 2021 fiscal year will be up only approximately
7% versus the 10% we previously guided. In addition, we expect our deliveries
for the fourth quarter of 2021 will be approximately 18,000 versus the 19,000 to
21,000 we previously guided. We expect our gross margin to be about 28% and we
expect our SG&A to be about 6.7% for the fourth quarter, though these amounts
will move up or down a bit depending on the number of homes delivered. Our
return on equity stands now at 21.9%, which is an 800 basis point improvement
over last year. We have remained focused on our optioned versus owned land
strategy. We ended the third quarter with a 3.3 years supply of land owned,
compared to a 3.8 years supply of land owned at the same time last year, and our
homesites controlled percentage increased to 53% from 35% in the prior year.
Among other things, this has enabled us to reduce debt, such that our third
quarter homebuilding debt-to-total capital ratio improved to 21.2%, from 29.5%
in the prior year.
We have continued to work on the structural components and organization of our
spin company. The new company will be configured as an independent and active
asset management business that raises third-party capital to support ongoing
business verticals. As previously noted, two of these verticals have already
raised third-party capital, of which our subsidiaries are active asset managers.
Our multifamily platform has approximately $9 billion of gross capital under
management and is raising its third fund now. Our growing single family for rent
platform currently manages approximately $1.25 billion of equity already raised.
Both of these programs are neatly configured as independent, self-sustaining
operations. Additionally, we have a dynamic and growing independent land and
land management business that has been refined and we have a growing technology
investment business, LENX, that is performing exceptionally well. We are
considering including them, or at least portions of our investments in them, in
the spin-off.
In spite of the miss of deliveries and the supply chain disruption that is
affecting us and the industry, we believe we have never been better positioned
financially, organizationally and technologically to thrive and grow in this
evolving housing market demand. As we begin to look to 2022, we see continued
strength in the market and double-digit growth in sales, starts, deliveries and
community count for Lennar. The story remains that supply is short and demand is
strong. Some are concerned that demand is slowing as prices move higher and
interest rates move. It feels to us that sales are slowing because many sales
were made early and the industry is building through those sales slower than
expected. We believe that home production has been constrained for a decade and
we are making up the deficit now, which should keep the housing market thriving
for some time to come.

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(1) Results of Operations
Overview
We historically have experienced, and expect to continue to experience,
variability in quarterly results. Our results of operations for the three and
nine months ended August 31, 2021 are not necessarily indicative of the results
to be expected for the full year. Our homebuilding business is seasonal in
nature and generally reflects higher levels of new home order activity in our
second and third fiscal quarters and increased deliveries in the second half of
our fiscal year. However, a variety of factors can alter seasonal patterns.
Our net earnings attributable to Lennar were $1.4 billion, or $4.52 per diluted
share ($4.52 per basic share), in the third quarter of 2021, compared to net
earnings attributable to Lennar of $666.4 million, or $2.12 per diluted share
($2.13 per basic share), in the third quarter of 2020. Our net earnings
attributable to Lennar were $3.2 billion, or $10.36 per diluted share ($10.37
per basic share), in the nine months ended August 31, 2021, compared to net
earnings attributable to Lennar of $1.6 billion, or $5.03 per diluted share
($5.05 per basic share), in the nine months ended August 31, 2020.
Financial information relating to our operations was as follows:
                                                                                          Three Months Ended August 31, 2021

(In thousands)                              Homebuilding           Financial Services          Multifamily          Lennar Other            Corporate              Total
Revenues:
Sales of homes                            $    6,505,708                     -                       -                     -                      -             6,505,708
Sales of land                                     45,055                     -                       -                     -                      -                45,055
Other revenues                                     7,746               206,973                 167,921                 8,000                      -               390,640
Total revenues                                 6,558,509               206,973                 167,921                 8,000                      -             6,941,403
Costs and expenses:
Costs of homes sold                            4,732,403                     -                       -                     -                      -             4,732,403
Costs of land sold                                39,378                     -                       -                     -                      -                39,378
Selling, general and administrative
expenses                                         453,716                     -                       -                     -                      -     

453,716

Other costs and expenses                               -                94,890                 174,410                 9,010                      -               278,310
Total costs and expenses                       5,225,497                94,890                 174,410                 9,010                      -             5,503,807
Equity in earnings (loss) from
unconsolidated entities, Multifamily
other gain (loss) and Lennar Other other
income (expense), net                              2,391                     -                  (2,904)               (2,220)                     -                (2,733)
Other expense, net                                (5,570)                    -                       -                     -                      -                (5,570)
Lennar Other realized and unrealized gain              -                     -                       -               495,202                      -     

495,202

Operating earnings (loss)                 $    1,329,833               112,083                  (9,393)              491,972                      -             1,924,495
Corporate general and administrative
expenses                                               -                     -                       -                     -                 94,942                94,942
Charitable foundation contribution                     -                     -                       -                     -                 15,199                15,199
Earnings (loss) before income taxes       $    1,329,833               112,083                  (9,393)              491,972               (110,141)            1,814,354


                                       28
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                                                                                        Three Months Ended August 31, 2020

(In thousands)                             Homebuilding           Financial Services          Multifamily          Lennar Other          Corporate              Total
Revenues:
Sales of homes                           $    5,467,364                     -                       -                    -                     -             5,467,364
Sales of land                                    34,323                     -                       -                    -                     -                34,323
Other revenues                                    3,433               237,068                 115,170               12,896                     -               368,567
Total revenues                                5,505,120               237,068                 115,170               12,896                     -             5,870,254
Costs and expenses:
Costs of homes sold                           4,204,814                     -                       -                    -                     -             4,204,814
Costs of land sold                               32,395                     -                       -                    -                     -                32,395
Selling, general and administrative
expenses                                        435,949                     -                       -                    -                     -        

435,949

Other costs and expenses                              -               101,989                 118,786                2,062                     -               222,837
Total costs and expenses                      4,673,158               101,989                 118,786                2,062                     -             4,895,995
Equity in loss from unconsolidated
entities                                         (6,431)                    -                  (1,532)              (2,835)                    -               (10,798)
Other expense, net                              (11,787)                    -                       -                    -                     -               (11,787)
Operating earnings (loss)                $      813,744               135,079                  (5,148)               7,999                     -               951,674
Corporate general and administrative
expenses                                              -                     -                       -                    -                85,998        

85,998

Charitable foundation contribution                    -                     -                       -                    -                 6,663        

6,663

Earnings (loss) before income taxes      $      813,744               135,079                  (5,148)               7,999               (92,661)              859,013



                                                                                                  Nine Months Ended August 31, 2021
(In thousands)                             Homebuilding           Financial Services          Multifamily          Lennar Other           Corporate and unallocated              Total
Revenues:
Sales of homes                           $   17,377,353                     -                       -                     -                              -                    17,377,353
Sales of land                                   131,483                     -                       -                     -                              -                       131,483
Other revenues                                   20,770               669,789                 476,837                20,884                              -                     1,188,280
Total revenues                               17,529,606               669,789                 476,837                20,884                              -                    18,697,116
Costs and expenses:
Costs of homes sold                          12,820,638                     -                       -                     -                              -                    12,820,638
Costs of land sold                              113,545                     -                       -                     -                              -                       113,545
Selling, general and administrative
expenses                                      1,319,116                     -                       -                     -                              -                     1,319,116
Other costs and expenses                              -               290,179                 474,389                18,994                              -                       783,562
Total costs and expenses                     14,253,299               290,179                 474,389                18,994                              -                    15,036,861
Equity in earnings (loss) from
unconsolidated entities and Multifamily
other gain (loss) and Lennar Other other
income (expense), net                            (3,862)                    -                   9,682                59,954                              -                        65,774
Other income, net                                 3,043                     -                       -                     -                              -                         3,043
Lennar Other realized and unrealized
gain                                                  -                     -                       -               847,377                              -                       847,377
Operating earnings                       $    3,275,488               379,610                  12,130               909,221                              -                     4,576,449
Corporate general and administrative
expenses                                              -                     -                       -                     -                        296,190                       296,190
Charitable foundation contribution                    -                     -                       -                     -                         42,006                        42,006
Earnings (loss) before income taxes      $    3,275,488               379,610                  12,130               909,221                       (338,196)                    4,238,253


                                       29
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                                                                                                    Nine Months Ended August 31, 2020
(In thousands)                               Homebuilding           

Financial Services Multifamily Lennar Other Corporate and unallocated

              Total
Revenues:
Sales of homes                             $   14,533,212                     -                       -                     -                              -                    14,533,212
Sales of land                                      81,023                     -                       -                     -                              -                        81,023
Other revenues                                     12,485               631,992                 370,904                33,348                              -                     1,048,729
Total revenues                                 14,626,720               631,992                 370,904                33,348                              -                    15,662,964
Costs and expenses:
Costs of homes sold                            11,359,364                     -                       -                     -                              -                    11,359,364
Costs of land sold                                102,899                     -                       -                     -                              -                       102,899
Selling, general and administrative
expenses                                        1,222,032                     -                       -                     -                              -                     1,222,032
Other costs and expenses                                -               363,688                 379,607                 3,564                                                      746,859
Total costs and expenses                       12,684,295               363,688                 379,607                 3,564                              -                    13,431,154
Equity in earnings (loss) from
unconsolidated entities and Multifamily
other gain                                        (20,077)                    -                   4,702               (28,712)                             -                       (44,087)
Financial Services gain on deconsolidation              -                61,418                       -                     -                              -                        61,418
Other expense, net                                (16,845)                    -                       -               (10,195)                             -                       (27,040)
Operating earnings (loss)                  $    1,905,503               329,722                  (4,001)               (9,123)                             -                     2,222,101
Corporate general and administrative
expenses                                                -                     -                       -                     -                        246,815                       246,815
Charitable foundation contribution                      -                     -                       -                     -                         16,144                        16,144
Earnings (loss) before income taxes        $    1,905,503               329,722                  (4,001)               (9,123)                      (262,959)                    1,959,142


Three Months Ended August 31, 2021 versus Three Months Ended August 31, 2020
Revenues from home sales increased 19% in the third quarter of 2021 to $6.5
billion from $5.5 billion in the third quarter of 2020. Revenues were higher
primarily due to a 10% increase in the number of home deliveries and an 8%
increase in the average sales price. New home deliveries increased to 15,199
homes in the third quarter of 2021 from 13,842 homes in the third quarter of
2020. The average sales price of homes delivered was $428,000 in the third
quarter of 2021, compared to $396,000 in the third quarter of 2020.
Gross margin on home sales were $1.8 billion, or 27.3%, in the third quarter of
2021, compared to $1.3 billion, or 23.1%, in the third quarter of 2020. The
gross margin percentage on home sales increased primarily as a result of price
appreciation as the increase in revenue per square foot outpaced the increase in
cost per square foot.
Selling, general and administrative expenses were $453.7 million in the third
quarter of 2021, compared to $435.9 million in the third quarter of 2020. As a
percentage of revenues from home sales, selling, general and administrative
expenses improved to 7.0% in the third quarter of 2021, from 8.0% in the third
quarter of 2020. This was the lowest percentage for a quarter in our history
primarily due to a decrease in broker commissions and benefits of our technology
efforts.
Operating earnings for our Financial Services segment were $111.9 million in the
third quarter of 2021, compared to $135.1 million in the third quarter of 2020.
The decrease in operating earnings was primarily due to lower mortgage net
margins driven by an increase in competition. This was partially offset by an
increase in title operating earnings due to higher volume and an increase in
profit per transaction derived from technology initiatives.
Operating loss for our Multifamily segment was $9.4 million in the third quarter
of 2021, compared to $5.1 million in the third quarter of 2020. Operating
earnings for our Lennar Other segment was $492.0 million in the third quarter of
2021, compared to $8.0 million in the third quarter of 2020. In the third
quarter of 2021, we recorded mark to market gains on our investments in newly
public companies (Hippo, SmartRent and Blend) of $433 million and on our current
investments (Opendoor and Sunnova) of $61 million.
Nine Months Ended August 31, 2021 versus Nine Months Ended August 31, 2020
Revenues from home sales increased 20% in the nine months ended August 31, 2021
to $17.4 billion from $14.5 billion in the nine months ended August 31, 2020.
Revenues were higher primarily due to a 14% increase in the number of home
deliveries and a 5% increase in the average sales price. New home deliveries
increased to 42,006 homes in the nine months ended August 31, 2021 from 36,835
homes in the nine months ended August 31, 2020. The average sales price of homes
                                       30
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delivered was $414,000 in the nine months ended August 31, 2021, compared to
$395,000 in the nine months ended August 31, 2020.
Gross margin on home sales were $4.6 billion, or 26.2%, in the nine months ended
August 31, 2021, compared to $3.2 billion or 21.8%, in the nine months ended
August 31, 2020. The gross margin percentage on home sales increased primarily
as a result of price appreciation as the increase in revenue per square foot
outpaced the increase in cost per square foot. Gross margin on land sales in the
nine months ended August 31, 2021 was $17.9 million, compared to a loss of $21.9
million in the nine months ended August 31, 2020. The loss in the nine months
ended August 31, 2020 was primarily due to a write-off of costs in the second
quarter of 2020 as a result of Lennar not moving forward with a naval base
development in Concord, California, northeast of San Francisco.
Selling, general and administrative expenses were $1.3 billion in the nine
months ended August 31, 2021, compared to $1.2 billion in the nine months ended
August 31, 2020. As a percentage of revenues from home sales, selling, general
and administrative expenses improved to 7.6% in the nine months ended August 31,
2021, from 8.4% in the nine months ended August 31, 2020. The improvement was
primarily due to a decrease in broker commissions and benefits of our technology
efforts.
Operating earnings for our Financial Services segment were $379.3 million in the
nine months ended August 31, 2021, compared to $343.8 million in the nine months
ended August 31, 2020 (which included $329.7 million operating earnings and an
add back of $14.1 million net loss attributable to noncontrolling interests).
The nine months ended August 31, 2020 included a $61.4 million gain on the
deconsolidation of a previously consolidated entity. Excluding this gain, the
improvement in operating earnings was primarily due to an increase in volume and
margin in the mortgage and title businesses.
Operating earnings for our Multifamily segment were $12.1 million in the nine
months ended August 31, 2021, compared to an operating loss of $4.0 million in
the nine months ended August 31, 2020. Operating earnings for our Lennar Other
segment were $909.2 million in the nine months ended August 31, 2021, compared
to an operating loss of $9.1 million in the nine months ended August 31, 2020.
The operating earnings for the nine months ended August 31, 2021 was primarily
due to mark to market gains on strategic investments that went public during the
nine months ended August 31, 2021 (Opendoor, Hippo, SmartRent and Blend) and the
sale of our solar business to Sunnova.
Homebuilding Segments
At August 31, 2021, our reportable Homebuilding segments and Homebuilding Other
are outlined in Note 2 of the Notes to Condensed Consolidated Financial
Statements. The following tables set forth selected financial and operational
information related to our homebuilding operations for the periods indicated:
Selected Financial and Operational Data
                                                                                                                       Three Months Ended August 31, 2021
                                                  Gross Margins                                                                                                Operating Earnings (Loss)
                                                                                                                                                                            Equity in Earnings
                         Sales of Homes         Costs of Sales of                                 Net Margins on          Gross Margins on                                     (Loss) from                 Other Income            Operating Earnings
($ in thousands)            Revenue                   Homes               Gross Margin %        Sales of Homes (1)         Sales of Land           Other Revenue         Unconsolidated Entities          (Expense), net                 (Loss)
East                    $   1,655,301                 1,174,592                   29.0  %                350,305                  3,147               1,867                          3,493                    (1,917)                       356,895
Central                     1,262,540                   974,843                   22.8  %                196,103                     95                 589                            526                       (84)                       197,229
Texas                         818,869                   570,228                   30.4  %                184,267                  1,835                 365                              7                      (466)                       186,008
West                        2,764,857                 2,004,108                   27.5  %                603,721                    600               1,600                          4,263                    (1,369)                       608,815
Other (2)                       4,141                     8,632                 (108.5) %                (14,807)                     -               3,325                         (5,898)                   (1,734)                       (19,114)
Totals                  $   6,505,708                 4,732,403                   27.3  %              1,319,589                  5,677               7,746                          2,391                    (5,570)                     1,329,833


                                                                                                                   Three Months Ended August 31, 2020
                                                Gross Margins                                                                                              Operating Earnings (Loss)
                                                                                                                       Gross Margins                                 Equity in Earnings
                        Sales of Homes         Costs of Sales of                                Net Margins on           (Loss) on                                       (Loss) from                Other Income            Operating Earnings
($ in thousands)           Revenue                   Homes               Gross Margin %       Sales of Homes (1)       Sales of Land         Other Revenue         Unconsolidated Entities         (Expense), net                 (Loss)
East                   $   1,477,273                 1,112,035                  24.7  %               241,904                (103)                638                           897                       853                        244,189
Central                    1,062,799                   842,764                  20.7  %               134,395                 (57)              1,341                            70                    (3,071)                       132,678
Texas                        719,467                   538,480                  25.2  %               114,954               2,016                 203                           242                    (1,304)                       116,111
West                       2,205,235                 1,706,530                  22.6  %               343,353                  72               1,145                            48                    (1,784)                       342,834
Other (2)                      2,590                     5,005                 (93.2) %                (8,005)                  -                 106                        (7,688)                   (6,481)                       (22,068)
Totals                 $   5,467,364                 4,204,814                  23.1  %               826,601               1,928               3,433                        (6,431)                  (11,787)                       813,744


                                                                                                                      Nine Months Ended August 31, 2021
                                                Gross Margins                                                                                                  Operating Earnings (Loss)
                                                                                                                                                                            Equity in Earnings
                       Sales of Homes          Costs of Sales of                                 Net Margins on          Gross Margins on                                      (Loss) from                 Other Income            Operating Earnings
(In thousands)             Revenue                   Homes               

Gross Margin % Sales of Homes (1) Sales of Land Other Revenue Unconsolidated Entities (Expense), net

          (Loss)
East                  $    4,553,941                 3,278,463                   28.0  %                899,817                   9,558               5,053                          2,942                    11,435                        928,805
Central                    3,282,168                 2,534,816                   22.8  %                485,631                     846               1,573                            941                      (691)                       488,300
Texas                      2,245,671                 1,572,494                   30.0  %                487,231                   4,706               1,185                            548                    (1,962)                       491,708
West                       7,284,928                 5,404,983                   25.8  %              1,412,934                   2,828               3,961                          4,304                      (695)                     1,423,332
Other (2)                     10,645                    29,882                 (180.7) %                (48,014)                      -               8,998                        (12,597)                   (5,044)                       (56,657)
Totals                $   17,377,353                12,820,638                   26.2  %              3,237,599                  17,938              20,770                         (3,862)                    3,043                      3,275,488


                                                                                                                         Nine Months Ended August 31, 2020
                                                Gross Margins                                                                                                     Operating Earnings (Loss)
                                                                                                                                                                                  Equity in Earnings
                       Sales of Homes          Costs of Sales of                                 Net Margins on          Gross Margins on Sales                                      (Loss) from                 Other Income            Operating Earnings
(In thousands)             Revenue                   Homes               Gross Margin %        Sales of Homes (1)                of Land                 Other Revenue         Unconsolidated Entities          (Expense), net                 (Loss)
East                  $    3,904,268                 2,971,929                   23.9  %                581,923                        (1,681)              3,913                          1,474                       475                        586,104
Central                    2,833,745                 2,300,783                   18.8  %                291,672                          (703)              2,209                            642                    (1,789)                       292,031
Texas                      1,877,374                 1,428,758                   23.9  %                266,647                         5,213                 970                            446                    (4,205)                       269,071
West                       5,894,183                 4,619,334                   21.6  %                841,369                        (1,267)              4,873                          3,948                    (1,088)                       847,835
Other (2)                     23,642                    38,560                  (63.1) %                (29,795)                      (23,438)                520                        (26,587)                  (10,238)                       (89,538)
Totals                $   14,533,212                11,359,364                   21.8  %              1,951,816                       (21,876)             12,485                        (20,077)                  (16,845)                     1,905,503


(1)Net margins on sales of homes include selling, general and administrative
expenses.
(2)Negative gross and net margins were due to period costs and impairments in
Urban divisions that impact costs of homes sold without sufficient sales of
homes revenue to offset those costs.
Summary of Homebuilding Data
Deliveries:
                                                                            

Three Months Ended

                                            Homes                            Dollar Value (In thousands)                   Average Sales Price
                                         August 31,                                  August 31,                                 August 31,
                                 2021                   2020                  2021                  2020                 2021                2020
East                              4,568                  4,309          $   1,660,357            1,488,022          $   363,000             345,000
Central                           3,211                  2,767              1,262,540            1,062,799              393,000             384,000
Texas                             2,747                  2,598                818,869              719,467              298,000             277,000
West                              4,669                  4,165              2,764,856            2,205,235              592,000             529,000
Other                                 4                      3                  4,141                2,590            1,035,000             863,000
Total                            15,199                 13,842          $   6,510,763            5,478,113          $   428,000             396,000


Of the total homes delivered listed above, 15 homes with a dollar value of $5.1
million and an average sales price of $337,000 represent home deliveries from
unconsolidated entities for the three months ended August 31, 2021, compared to
33 home deliveries with a dollar value of $10.7 million and an average sales
price of $326,000 for the three months ended August 31, 2020.
                                                                                 Nine Months Ended
                                            Homes                             Dollar Value (In thousands)                    Average Sales Price
                                         August 31,                                   August 31,                                  August 31,
                                 2021                   2020                  2021                   2020                  2021                2020
East                             12,968                 11,511          $    4,572,592             3,924,289          $   353,000             341,000
Central                           8,391                  7,389               3,282,168             2,833,745              391,000             384,000
Texas                             7,843                  6,637               2,245,671             1,877,374              286,000             283,000
West                             12,793                 11,273               7,284,927             5,894,183              569,000             523,000
Other                                11                     25                  10,645                23,642              968,000             946,000
Total                            42,006                 36,835          $   17,396,003            14,553,233          $   414,000             395,000


Of the total homes delivered listed above, 58 homes with a dollar value of $18.7
million and an average sales price of $322,000 represent home deliveries from
unconsolidated entities for the nine months ended August 31, 2021, compared to
60 home deliveries with a dollar value of $20.0 million and an average sales
price of $334,000 for the nine months ended August 31, 2020.
                                       31
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New Orders (1):

                                                                                          Three Months Ended
                            Active Communities                              Homes                          Dollar Value (In thousands)                   Average Sales Price
                                August 31,                               August 31,                                 August 31,                               August 31,
                        2021                  2020                2021                  2020                 2021                 2020                 2021                2020
East                     329                   340                5,308                 4,655          $   2,100,466           1,631,349          $   396,000            350,000
Central                  281                   297                3,189                 3,375              1,352,814           1,298,792              424,000            385,000
Texas                    233                   217                3,203                 2,746                988,644             743,553              309,000            271,000
West                     350                   341                4,571                 4,786              3,006,501           2,580,328              658,000            539,000
Other                      3                     3                    6                     2                  5,974               1,452              996,000            726,000
Total                  1,196                 1,198               16,277                15,564          $   7,454,399           6,255,474          $   458,000            402,000


Of the total homes listed above, 35 homes with a dollar value of $13.1 million
and an average sales price of $375,000 represent homes in four active
communities from unconsolidated entities for the three months ended August 31,
2021, compared to 34 homes with a dollar value of $9.7 million and an average
sales price of $286,000 in four active communities for the three months ended
August 31, 2020.
(1)Homes represent the number of new sales contracts executed with homebuyers,
net of cancellations, during the three and nine months ended August 31, 2021 and
August 31, 2020.
                                                                                   Nine Months Ended
                                               Homes                           Dollar Value (In thousands)                    Average Sales Price
                                            August 31,                                  August 31,                                August 31,
                                     2021                  2020                 2021                   2020                 2021                2020
East                                15,473                12,512          $    5,788,506            4,266,221          $   374,000            341,000
Central                              9,931                 8,741               4,086,170            3,341,959              411,000            382,000
Texas                                9,228                 7,327               2,800,826            1,986,770              304,000            271,000
West                                14,358                12,359               8,871,465            6,508,509              618,000            527,000
Other                                   14                    16                  14,095               15,189            1,007,000            949,000
Total                               49,004                40,955          $   21,561,062           16,118,648          $   440,000            394,000


Of the total homes listed above, 102 homes with a dollar value of $36.7 million
and an average sales price of $359,000 represent homes from unconsolidated
entities for the nine months ended August 31, 2021, compared to 85 homes with a
dollar value of $26.8 million and an average sales price of $316,000 for the
nine months ended August 31, 2020.
Backlog:
                                                                                           At
                                                Homes                           Dollar Value (In thousands)                   Average Sales Price
                                             August 31,                                 August 31,                                August 31,
                                      2021                  2020                 2021                  2020                 2021                2020
East                                  8,518                 6,691          $    3,526,849           2,368,300          $   414,000            354,000
Central                               5,911                 4,502               2,566,174           1,752,180              434,000            389,000
Texas                                 4,208                 2,860               1,379,740             822,734              328,000            288,000
West                                  7,177                 5,644               4,499,969           2,922,743              627,000            518,000
Other                                     5                     -                   5,298                   -            1,060,000                  -
Total                                25,819                19,697          $   11,978,030           7,865,957          $   464,000            399,000


Of the total homes in backlog listed above, 82 homes with a backlog dollar value
of $29.5 million and an average sales price of $359,000 represent the backlog
from unconsolidated entities at August 31, 2021, compared to 56 homes with a
backlog dollar value of $17.0 million and an average sales price of $303,000 at
August 31, 2020.
Backlog represents the number of homes under sales contracts. Homes are sold
using sales contracts, which are generally accompanied by sales deposits. In
some instances, purchasers are permitted to cancel sales if they fail to qualify
for financing or under certain other circumstances. Various state and federal
laws and regulations may sometimes give purchasers a right to cancel homes in
backlog. We do not recognize revenue on homes under sales contracts until the
sales are closed and title passes to the new homeowners.
Three Months Ended August 31, 2021 versus Three Months Ended August 31, 2020
Homebuilding East: Revenues from home sales increased in the third quarter of
2021 compared to the third quarter of 2020, primarily due to an increase in the
number of home deliveries in all the states of the segment except in
Pennsylvania and an increase in the average sales price of homes delivered in
all the states of the segment except in New Jersey. The increase in the number
of home deliveries was primarily due to higher demand as the number of
deliveries per active community increased. The decrease in the number of home
deliveries in Pennsylvania was primarily due to a decrease in the number of
communities due to the timing of opening and closing of communities. The
increase in the average sales price of homes delivered was
                                       32
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primarily due to favorable market conditions. The decrease in the average sales
price of homes delivered in New Jersey was primarily driven by a change in
product mix due to a higher percentage of deliveries in lower-priced
communities. Gross margin percentage on home deliveries in the third quarter of
2021 increased compared to the same period last year primarily due to price
appreciation as the increase in revenue per square foot of homes delivered
outpaced the increase in cost per square foot.
Homebuilding Central: Revenues from home sales increased in the third quarter of
2021 compared to the third quarter of 2020, primarily due to an increase in the
number of home deliveries in all the states of the segment except in Minnesota,
and an increase in the average sales price of homes delivered in all the states
of the segment except in Virginia and Tennessee. The increase in the number of
home deliveries was primarily due to higher demand as the number of deliveries
per active community increased. The decrease in the number of home deliveries in
Minnesota was primarily due to a decrease in the number of communities due to
the timing of opening and closing of communities. The increase in the average
sales price of homes delivered was primarily due to favorable market conditions.
The decrease in the average sales price of homes delivered in Virginia and
Tennessee was primarily driven by a change in product mix due to a higher
percentage of deliveries in lower-priced communities. Gross margin percentage on
home deliveries in the third quarter of 2021 increased compared to the same
period last year primarily due to price appreciation as the increase in revenue
per square foot of homes delivered outpaced the increase in cost per square
foot.
Homebuilding Texas: Revenues from home sales increased in the third quarter of
2021 compared to the third quarter of 2020, primarily due to an increase in the
number of home deliveries and an increase in the average sales price of homes
delivered. The increase in the number of deliveries was primarily due to higher
demand as the number of deliveries per active community increased. The increase
in the average sales price of homes delivered was primarily due to favorable
market conditions. Gross margin percentage on home deliveries in the third
quarter of 2021 increased compared to the same period last year primarily due to
price appreciation as the increase in revenue per square foot of homes delivered
outpaced the increase in cost per square foot.
Homebuilding West: Revenues from home sales increased in the third quarter of
2021 compared to the third quarter of 2020, primarily due to an increase in the
number of home deliveries in all the states of the segment except in Colorado
and Oregon and an increase in the average sales price of homes delivered in all
the states of the segment. The increase in the number of home deliveries was
primarily due to higher demand as the number of deliveries per active community
increased during the quarter. The decrease in the number of home deliveries in
Colorado and Oregon was primarily due to a decrease in the number of deliveries
per active community due to the timing of opening and closing of communities.
The increase in the average sales price of homes delivered was primarily due to
favorable market conditions. Gross margin percentage on home deliveries in the
third quarter of 2021 increased compared to the same period last year primarily
due to price appreciation as the increase in revenue per square foot of homes
delivered outpaced the increase in cost per square foot.
Nine Months Ended August 31, 2021 versus Nine Months Ended August 31, 2020
Homebuilding East: Revenues from home sales increased in the nine months ended
August 31, 2021 compared to the nine months ended August 31, 2020, primarily due
to an increase in the number of home deliveries in all the states of the segment
except in Pennsylvania and an increase in the average sales price of homes
delivered in all the states of the segment except in New Jersey. The increase in
the number of home deliveries was primarily due to higher demand as the number
of deliveries per active community increased. The decrease in the number of home
deliveries in Pennsylvania was primarily due to a decrease in the number of
communities due to the timing of opening and closing of communities. The
increase in the average sales price of homes delivered was primarily due to
favorable market conditions. The decrease in the average sales price of homes
delivered in New Jersey was primarily driven by a change in product mix due to a
higher percentage of deliveries in lower-priced communities. Gross margin
percentage on home deliveries in the nine months ended August 31, 2021 increased
compared to the same period last year primarily due to price appreciation as the
increase in revenue per square foot of homes delivered outpaced the increase in
cost per square foot.
Homebuilding Central: Revenues from home sales increased in the nine months
ended August 31, 2021 compared to the nine months ended August 31, 2020,
primarily due to an increase in the number of home deliveries in all the states
of the segment except in Virginia, and an increase in the average sales price of
homes delivered in all the states of the segment except in Virginia and
Tennessee. The increase in the number of home deliveries was primarily due to
higher demand as the number of deliveries per active community increased. The
decrease in the number of home deliveries in Virginia was primarily due to a
decrease in the number of communities due to the timing of opening and closing
of communities. The increase in the average sales price of homes delivered was
primarily due to favorable market conditions. The decrease in the average sales
price of homes delivered in Virginia and Tennessee was primarily driven by a
change in product mix due to a higher percentage of deliveries in lower-priced
communities. Gross margin percentage on home deliveries in the nine months ended
August 31, 2021 increased compared to the same period last year primarily due to
price appreciation as the increase in revenue per square foot of homes delivered
outpaced the increase in cost per square foot.
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Homebuilding Texas: Revenues from home sales increased in the nine months ended
August 31, 2021 compared to the nine months ended August 31, 2020, primarily due
to an increase in the number of home deliveries and an increase in the average
sales price of homes delivered. The increase in the number of deliveries was
primarily due to higher demand as the number of deliveries per active community
increased. The increase in average sales price of homes delivered was primarily
due to favorable market conditions. Gross margin percentage on home deliveries
in the nine months ended August 31, 2021 increased compared to the same period
last year primarily due to price appreciation as the increase in revenue per
square foot of homes delivered outpaced the increase in cost per square foot.
Homebuilding West: Revenues from home sales increased in the nine months ended
August 31, 2021 compared to the nine months ended August 31, 2020, primarily due
to an increase in the number of home deliveries in all states of the segment
except in Colorado and an increase in the average sales price of homes delivered
in all the states of the segment. The increase in the number of home deliveries
in all states of the segment was primarily due to higher demand as the number of
deliveries per active community increased during the quarter. The increase in
the average sales price of homes delivered was primarily due to favorable market
conditions. Gross margin percentage on home deliveries in the nine months ended
August 31, 2021 increased compared to the same period last year primarily due to
price appreciation as the increase in revenue per square foot of homes delivered
outpaced the increase in cost per square foot.
Financial Services Segment
Our Financial Services reportable segment provides mortgage financing, title and
closing services primarily for buyers of our homes. The segment also originates
and sells into securitizations commercial mortgage loans through its LMF
Commercial business. Our Financial Services segment sells substantially all of
the residential loans it originates within a short period in the secondary
mortgage market, the majority of which are sold on a servicing released,
non-recourse basis. After the loans are sold, we retain potential liability for
possible claims by purchasers that we breached certain limited industry-standard
representations and warranties in the loan sale agreements.
The following table sets forth selected financial and operational information
related to the residential mortgage and title activities of our Financial
Services segment:
                                                             Three Months Ended                                     Nine Months Ended
                                                                 August 31,                                             August 31,
(Dollars in thousands)                                2021                       2020                         2021                        2020
Dollar value of mortgages originated           $      3,281,000                  3,529,000                      9,228,000                 9,007,000
Number of mortgages originated                            9,400                     10,800                         27,300                    27,800
Mortgage capture rate of Lennar homebuyers                   73  %                      82  %                          75  %                     80  %
Number of title and closing service
transactions                                             16,900                     16,400                         49,000                    42,000


At August 31, 2021 and November 30, 2020, the carrying value of Financial
Services' commercial mortgage-backed securities ("CMBS") was $161.5 million and
$164.2 million, respectively. Details of these securities and related debt are
within Note 2 of the Notes to Condensed Consolidated Financial Statements.
Multifamily Segment
We have been actively involved, primarily through unconsolidated entities, in
the development, construction and property management of multifamily rental
properties. Our Multifamily segment focuses on developing a geographically
diversified portfolio of institutional quality multifamily rental properties in
select U.S. markets.
Originally, our Multifamily segment focused on building multifamily properties
and selling them shortly after they were completed. However, more recently we
have focused on creating and participating in ventures that build multifamily
properties with the intention of retaining them after they are completed.
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The following tables provide information related to our investment in the Multifamily segment: Balance Sheets

                                                                    August 31,           November 30, 2020
(In thousands)                                                         2021

Multifamily investments in unconsolidated entities                 $  682,819                 724,647
Lennar's net investment in Multifamily                                950,636                 906,632


Statements of Operations                                            Three Months Ended                       Nine Months Ended
                                                                        August 31,                              August 31,
(Dollars in thousands)                                             2021               2020              2021                   2020

Number of operating properties/investments sold through joint ventures

                                                                -                -                  1                     2
Lennar's share of gains on the sale of operating
properties/investments                                        $         -                -             14,784                 3,001


Lennar Other Segment
At August 31, 2021 and November 30, 2020, we had $1.7 billion and
$521.7 million, respectively, of assets in our Lennar Other segment, which
included investments in unconsolidated entities of $387.5 million and
$387.1 million, respectively. The increase in assets during the nine months
ended August 31, 2021 was due to an increase in the value of our strategic
technology investments, primarily managed by our LENX subsidiary. This increase
was largely related to our strategic investments in Hippo, SmartRent, Opendoor
and Sunnova. During the nine months ended August 31, 2021, we completed the sale
of our residential solar business to Sunnova for shares in the entity. The
following is a detail of Lennar Other realized and unrealized gain (loss):
                                         Three Months Ended                Nine Months Ended
                                             August 31,                        August 31,
(In thousands)                             2021             2020         2021                2020
Hippo (HIPO) mark to market        $          324,855         -       324,855                 -
SmartRent (SMRT) mark to market               100,793         -       100,793                 -
Opendoor (OPEN) mark to market                 37,301         -       272,756                 -
Sunnova (NOVA) mark to market                  23,870         -       (14,465)                -
Blend Labs (BLND) mark to market                6,852         -         6,852                 -
Gain on sale of solar business                  1,531         -       153,006                 -
Other realized gain                                 -         -         3,580                 -
                                   $          495,202         -       847,377                 -


(2) Financial Condition and Capital Resources
At August 31, 2021, we had cash and cash equivalents and restricted cash related
to our homebuilding, financial services, multifamily and other operations of
$2.8 billion, compared to $2.9 billion at November 30, 2020 and $2.2 billion at
August 31, 2020.
We finance all of our activities, including homebuilding, financial services,
multifamily, other and general operating needs, primarily with cash generated
from our operations, debt issuances and cash borrowed under our warehouse lines
of credit and our unsecured revolving credit facility (the "Credit Facility").
Operating Cash Flow Activities
During the nine months ended August 31, 2021 and 2020, cash provided by
operating activities totaled $1.3 billion and $2.9 billion, respectively. During
the nine months ended August 31, 2021, cash provided by operating activities was
impacted primarily by our net earnings, net of Lennar Other unrealized/realized
gain of $847.4 million primarily due to mark to market gains on strategic
investments that went public during the nine months ended August 31, 2021,
(Opendoor, Sunnova, Hippo, SmartRent and Blend) and the sale of our solar
business to Sunnova. In addition there was a decrease in loans held-for-sale of
$209.3 million primarily related to the sale of loans originated by our
Financial Services segment, an increase in accounts payable and other
liabilities of $514.0 million, and a decrease in receivables of $131.3 million,
partially offset by an increase in inventories due to strategic land purchases,
land development and construction costs of $2.3 billion.
During the nine months ended August 31, 2020, cash provided by operating
activities was impacted primarily by our net earnings, a decrease in loans
held-for-sale of $557.8 million primarily related to the sale of loans
originated by Financial Services, a decrease in receivables of $264.6 million
and an increase in accounts payable and other liabilities of $165.6 million,
partially offset by an increase in other assets of $124.6 million.
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Investing Cash Flow Activities
During the nine months ended August 31, 2021 and 2020, cash used in investing
activities totaled $131.2 million and $267.5 million, respectively. During the
nine months ended August 31, 2021, our cash used in investing activities was
primarily due to cash contributions of $354.6 million to unconsolidated
entities, which included (1) $164.0 million to Homebuilding unconsolidated
entities, (2) $66.8 million to Multifamily unconsolidated entities, and (3)
$123.8 million to the strategic technology investments included in the Lennar
Other segment. This was partially offset by distributions of capital from
unconsolidated entities of $292.5 million, which primarily included (1) $159.3
million from Homebuilding unconsolidated entities, (2) $107.2 million from
Multifamily unconsolidated entities, and (3) $26.0 million from the
unconsolidated Rialto real estate funds included in our Lennar Other segment.
During the nine months ended August 31, 2020, our cash used in investing
activities was primarily due to cash contributions of $412.5 million to
unconsolidated entities and deconsolidation of a previously consolidated entity,
which included (1) $86.9 million to Homebuilding unconsolidated entities, (2)
$122.7 million to Multifamily unconsolidated entities, (3) $50.3 million to the
strategic technology investments included in the Lennar Other segment; and (4)
the derecognition of $152.5 million of cash as of the date of deconsolidation of
a previously consolidated Financial Services entity. This was partially offset
by distributions of capital from unconsolidated entities of $135.7 million,
which primarily included (1) $58.3 million from Homebuilding unconsolidated
entities, (2) $39.1 million from the unconsolidated Rialto real estate funds
included in our Lennar Other segment; and (3) $38.3 million from Multifamily
unconsolidated entities.
Financing Cash Flow Activities
During the nine months ended August 31, 2021 and 2020, cash used in financing
activities totaled $1.3 billion and $1.9 billion, respectively. During the nine
months ended August 31, 2021, cash used in financing activities was primarily
impacted by (1) $357.5 million of net repayments under our Financial Services'
warehouse facilities, which included the LMF Commercial warehouse repurchase
facilities; (2) the redemption of $300.0 million aggregate principal amount of
our senior notes; (3) $234.0 million of dividend payments; and (4) repurchases
of our common stock for $452.5 million, which included $388.0 million of
repurchases under our repurchase program and $64.6 million of repurchases
related to our equity compensation plan. These were partially offset by $441.2
million of proceeds from liabilities related to consolidated inventory not owned
due to land sales to land banks.
During the nine months ended August 31, 2020, cash used in financing activities
was primarily impacted by (1) $789.3 million of net repayments under our
Financial Services' warehouse facilities, which included the LMF Commercial
warehouse repurchase facilities; (2) $550.3 million of principal payments on
notes payable and other borrowings; (3) the redemption of $313.0 million
aggregate principal amount of our senior notes; and (4) repurchases of our
common stock for $319.0 million, which included $288.5 million of repurchases
under our repurchase program and $30.3 million of repurchases related to our
equity compensation plan. These were partially offset by $175.6 million of
receipts related to noncontrolling interests.
Debt to total capital ratios are financial measures commonly used in the
homebuilding industry and are presented to assist in understanding the leverage
of our homebuilding operations. Homebuilding debt to total capital and net
Homebuilding debt to total capital are calculated as follows:
(Dollars in thousands)                                 August 31, 2021              November 30, 2020                 August 31, 2020
Homebuilding debt                                     $     5,542,513                         5,955,758                       7,180,274
Stockholders' equity                                       20,650,188                        17,994,856                      17,172,103
Total capital                                         $    26,192,701                        23,950,614                      24,352,377
Homebuilding debt to total capital                               21.2  %                           24.9  %                         29.5  %
Homebuilding debt                                     $     5,542,513                         5,955,758                       7,180,274
Less: Homebuilding cash and cash equivalents                2,623,320                         2,703,986                       1,966,796
Net Homebuilding debt                                 $     2,919,193                         3,251,772                       5,213,478
Net Homebuilding debt to total capital (1)                       12.4  %                           15.3  %                         23.3  %


(1)Net homebuilding debt to total capital is a non-GAAP financial measure
defined as net homebuilding debt (homebuilding debt less homebuilding cash and
cash equivalents) divided by total capital (net homebuilding debt plus
stockholders' equity). We believe the ratio of net homebuilding debt to total
capital is a relevant and a useful financial measure to investors in
understanding the leverage employed in homebuilding operations. However, because
net homebuilding debt to total capital is not calculated in accordance with
GAAP, this financial measure should not be considered in isolation or as an
alternative to financial measures prescribed by GAAP. Rather, this non-GAAP
financial measure should be used to supplement our GAAP results.
At August 31, 2021, Homebuilding debt to total capital was lower compared to
November 30, 2020 and August 31, 2020, primarily as a result of a decrease in
Homebuilding debt and an increase in stockholders' equity due to net earnings.
                                       36
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We are continually exploring various types of transactions to manage our
leverage and liquidity positions, take advantage of market opportunities and
increase our revenues and earnings. These transactions may include the issuance
of additional indebtedness, the repurchase of our outstanding indebtedness, the
repurchase of our common stock, the acquisition of homebuilders and other
companies, the purchase or sale of assets or lines of business, the issuance of
common stock or securities convertible into shares of common stock, and/or the
pursuit of other financing alternatives. In connection with some of our
non-homebuilding businesses, we are also considering other types of transactions
such as sales, restructurings, joint ventures, spin-offs or initial public
offerings as we continue to move back towards being a pure play homebuilding
company.
Our Homebuilding senior notes and other debts payable as well as letters of
credit and surety bonds are summarized within Note 7 of the Notes to Condensed
Consolidated Financial Statements. Our Homebuilding average debt outstanding and
the average rates of interest was as follows:
                                                         Nine Months Ended
                                                             August 31,
        (Dollars in thousands)                         2021              2020

Homebuilding average debt outstanding $ 5,848,865 $ 7,896,372

        Average interest rate                             4.9  %            4.9  %
        Interest incurred                         $   210,575       $   272,347


Subsequent to August 31, 2021, we provided notice that we would redeem on
October 15, 2021 our $600 million 4.125% senior unsecured notes, which have a
scheduled maturity of January 15, 2022.
As of August 31, 2021, the maximum borrowings on our Credit Facility were $2.5
billion and included a $300 million accordion feature, subject to additional
commitments, thus the maximum borrowings could be $2.8 billion maturing in 2024.
The Credit Facility agreement (the "Credit Agreement") provides that up to $500
million in commitments may be used for letters of credit. Under the Credit
Agreement, we are subject to debt covenants. The maturity, details and debt
covenants of the Credit Facility are unchanged from the disclosure in the
Financial Condition and Capital Resources section of our Form 10-K for the year
ended November 30, 2020. The following summarizes our debt covenant requirements
and our actual levels or ratios with respect to those covenants as calculated
per the Credit Agreement as of August 31, 2021:
                                                 Level Achieved as of
(Dollars in thousands)      Covenant Level         August 31, 2021
Minimum net worth test     $    9,781,069                13,563,839
Maximum leverage ratio               65.0  %                   17.0  %
Liquidity test                       1.00                      9.78


Financial Services Warehouse Facilities
Our 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 us and are
expected to be renewed or replaced with other facilities when they mature. The
LMF Commercial facilities finance LMF Commercial loan origination and
securitization activities and were secured by up to an 80% interest in the
originated commercial loans financed. These facilities and the related
borrowings and collateral are detailed in Note 2 of the Notes to Condensed
Consolidated Financial Statements.
Changes in Capital Structure
In January 2021, our Board of Directors authorized the repurchase of up to the
lesser of $1.0 billion in value, or 25 million in shares, of our outstanding
Class A and Class B common stock. The repurchase authorization replaced a
January 2019 authorization and has no expiration date. The details of our Class
A and Class B common stock under this program for both the three and nine months
ended August 31, 2021 and 2020 are included in Note 4 of the Notes to Condensed
Consolidated Financial Statements.
During the nine months ended August 31, 2021, treasury stock increased due to
our repurchase of 4.8 million shares of Class A and Class B common stock due
primarily to our repurchase of 4.0 million shares of Class A and Class B common
stock through our stock repurchase program. During the nine months ended August
31, 2020, treasury stock increased due to our repurchase of 4.4 million shares
of Class A and Class B common stock through our stock repurchase program.
On September 29, 2021, our Board of Directors declared a quarterly cash dividend
of $0.25 per share on both our Class A and Class B common stock, payable on
October 28, 2021 to holders of record at the close of business on October 14,
2021. On July 19, 2021, we paid cash dividends of $0.25 per share on both our
Class A and Class B common stock to holders of record at the close of business
on July 2, 2021, as declared by our Board of Directors on June 18, 2021. We
approved and paid cash dividends of $0.125 per share for each of the first three
quarters of 2020 and $0.25 per share in the fourth quarter of 2020 and each of
the first three quarters of 2021 on both our Class A and Class B common stock.
                                       37
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Based on our current financial condition and credit relationships, we believe
that our operations and borrowing resources will provide for our current and
long-term capital requirements at our anticipated levels of activity.
Supplemental Financial Information
Currently, substantially all of our 100% owned homebuilding subsidiaries are
guaranteeing all our senior notes. The guarantees are full and unconditional.
The indentures governing our senior notes require that, if any of our 100% owned
subsidiaries, other than our finance company subsidiaries and foreign
subsidiaries, directly or indirectly guarantee at least $75 million principal
amount of debt of Lennar Corporation (other than senior notes), those
subsidiaries must also guarantee Lennar Corporation's obligations with regard to
its senior notes. Included in the following tables as part of "Obligors"
together with Lennar Corporation are subsidiary entities that are not finance
company subsidiaries or foreign subsidiaries and were guaranteeing the senior
notes because at August 31, 2021 they were guaranteeing Lennar Corporation's
letter of credit facilities and its Credit Facility, disclosed in Note 7 of the
Notes to Condensed Consolidated Financial Statements. The guarantees are full,
unconditional and joint and several and the guarantor subsidiaries are 100%
directly or indirectly owned by Lennar Corporation. A subsidiary's guarantee of
Lennar senior notes will be suspended at any time when it is not directly or
indirectly guaranteeing at least $75 million principal amount of debt of Lennar
Corporation (other than senior notes), and a subsidiary will be released from
its guarantee and any other obligations it may have regarding the senior notes
if all or substantially all its assets, or all of its capital stock, are sold or
otherwise disposed.
Supplemental information for the Obligors, which excludes non-guarantor
subsidiaries and intercompany transactions, at August 31, 2021 is included in
the following tables. Intercompany balances and transactions within the Obligors
have been eliminated and amounts attributable to the Obligor's investment in
consolidated subsidiaries that have not issued or guaranteed the senior notes
have been excluded. Amounts due from and transactions with nonobligor
subsidiaries and related parties are separately disclosed:
(In thousands)                          August 31, 2021       November 30, 

2020

Due from non-guarantor subsidiaries    $      4,154,085         2,655,503
Equity method investments                       963,859           951,579
Total assets                                 31,009,452        27,695,067
Total liabilities                            10,079,001         9,599,718


                                        Nine Months Ended
(In thousands)                           August 31, 2021
Total revenues                         $       17,650,640
Operating earnings                              3,366,200
Earnings before income taxes                    3,031,800
Net earnings attributable to Lennar             2,335,695


Off-Balance Sheet Arrangements
Homebuilding: Investments in Unconsolidated Entities
As of August 31, 2021, we had equity investments in 40 active homebuilding and
land unconsolidated entities (of which three had recourse debt, 11 had
non-recourse debt and 26 had no debt) compared to 38 active homebuilding and
land unconsolidated entities at November 30, 2020. Historically, we have
invested in unconsolidated entities that acquired and developed land (1) for our
homebuilding operations or for sale to third parties or (2) for the construction
of homes for sale to third-party homebuyers. Through these entities, we have
primarily sought to reduce and share our risk by limiting the amount of our
capital invested in land, while obtaining access to potential future homesites
and allowing us to participate in strategic ventures. The use of these entities
also, in some instances, has enabled us to acquire land to which we could not
otherwise obtain access, or could not obtain access on as favorable terms,
without the participation of a strategic partner. Participants in these joint
ventures have been land owners/developers, other homebuilders and financial or
strategic partners. Joint ventures with land owners/developers have given us
access to homesites owned or controlled by our partners. Joint ventures with
other homebuilders have provided us with the ability to bid jointly with our
partners for large land parcels. Joint ventures with financial partners have
allowed us to combine our homebuilding expertise with access to our partners'
capital. Joint ventures with strategic partners have allowed us to combine our
homebuilding expertise with the specific expertise (e.g. commercial or infill
experience) of our partners. Each joint venture is governed by an executive
committee consisting of members from the partners. Details regarding these
investments, balances and debt are included in Note 3 of the Notes to Condensed
Consolidated Financial Statements.
                                       38
--------------------------------------------------------------------------------

The following table summarizes the principal maturities of our Homebuilding
unconsolidated entities ("JVs") debt as per current debt arrangements as of
August 31, 2021 and it does not represent estimates of future cash payments that
will be made to reduce debt balances. Many JV loans have extension options in
the loan agreements that would allow the loans to be extended into future years.
                                                                          

Principal Maturities of Unconsolidated JVs by Period (In thousands)

                               Total JV Debt              2021              2022               2023             Thereafter            

Other


Debt without recourse to Lennar          $        1,199,582                -            256,958             65,591            877,033                  

-

Land seller and CDD and other debt                    5,837                -                  -                  -                  -                 

5,837

Maximum recourse debt exposure to
Lennar                                                3,599                -              3,599                  -                  -                     -
Debt issuance costs                                 (13,089)               -                  -                  -                  -               (13,089)
Total                                    $        1,195,929                -            260,557             65,591            877,033                (7,252)


Multifamily: Investments in Unconsolidated Entities
At August 31, 2021, Multifamily had equity investments in 18 unconsolidated
entities that are engaged in multifamily residential developments (of which 11
had non-recourse debt and seven had no debt), compared to 22 unconsolidated
entities at November 30, 2020. We invest in unconsolidated entities that acquire
and develop land to construct multifamily rental properties. Through these
entities, we are focusing on developing a geographically diversified portfolio
of institutional quality multifamily rental properties in select U.S. markets.
Initially, we participated in building multifamily developments and selling them
soon after they were completed. Recently, however, we have been focused on
developing properties with the intention of retaining them. Participants in
these joint ventures have been financial partners. Joint ventures with financial
partners have allowed us to combine our development and construction expertise
with access to our partners' capital. Each joint venture is governed by an
operating agreement that provides significant substantive participating voting
rights on major decisions to our partners.
The Multifamily segment includes LMV I and LMV II, which are long-term
multifamily development investment vehicles involved in the development,
construction and property management of class-A multifamily assets. Details of
each as of and during the nine months ended August 31, 2021 are included in Note
3 of the Notes to Condensed Consolidated Financial Statements.
We regularly monitor the results of both our Homebuilding and Multifamily
unconsolidated joint ventures and any trends that may affect their future
liquidity or results of operations. We also monitor the performance of joint
ventures in which we have investments on a regular basis to assess compliance
with debt covenants. For those joint ventures not in compliance with the debt
covenants, we evaluate and assess possible impairment of our investment. We
believe all of the joint ventures were in compliance with applicable debt
covenants at August 31, 2021.
The following table summarizes the principal maturities of our Multifamily
unconsolidated entities debt as per current debt arrangements as of August 31,
2021 and it does not represent estimates of future cash payments that will be
made to reduce debt balances.
                                                                       Principal Maturities of Unconsolidated JVs by Period
(In thousands)                       Total JV Debt               2021                2022                 2023                Thereafter                Other

Debt without recourse to
Lennar                           $        3,167,395             234,288             494,173              896,485             1,542,449                       -
Debt issuance costs                         (24,839)                  -                   -                    -                     -                 (24,839)
Total                            $        3,142,556             234,288             494,173              896,485             1,542,449                 (24,839)


Lennar Other: Investments in Unconsolidated Entities
As part of the sale of the Rialto investment and asset management platform, we
retained our ability to receive a portion of payments with regard to carried
interests if funds meet specified performance thresholds. We periodically
receive advance distributions related to the carried interests in order to cover
income tax obligations resulting from allocations of taxable income to the
carried interests. These distributions are not subject to clawbacks but will
reduce future carried interest payments to which we become entitled from the
applicable funds and have been recorded as revenues.
As of August 31, 2021 and November 30, 2020, we had strategic technology
investments in unconsolidated entities of $187.6 million and $196.7 million,
respectively.
Option Contracts
We often obtain access to land through option contracts, which generally enable
us to control portions of properties owned by third parties (including land
funds) and unconsolidated entities until we have determined whether to exercise
the options.
                                       39
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The table below indicates the number of homesites owned and homesites to which we had access through option contracts with third parties ("optioned") or unconsolidated JVs (i.e., controlled homesites):

                                                       Controlled Homesites                                                                                     Years of
August 31, 2021                         Optioned                JVs                  Total              Owned Homesites           Total Homesites           Supply Owned (1)
East                                        74,056                  -                  74,056                   54,069               128,125
Central                                     27,772                  -                  27,772                   42,407                70,179
Texas                                       53,434                  -                  53,434                   40,274                93,708
West                                        50,867                  -                  50,867                   51,587               102,454
Other                                        3,657              6,594                  10,251                    2,056                12,307
Total homesites                            209,786              6,594                 216,380                  190,393               406,773                        3.3
% of total homesites                                                                       53  %                    47  %


                                                        Controlled Homesites                                                                                     Years of
August 31, 2020                         Optioned                 JVs                  Total              Owned Homesites           Total Homesites           Supply Owned (1)
East                                        30,683              12,718                  43,401                   62,256               105,657
Central                                     14,504                 122                  14,626                   42,785                57,411
Texas                                       25,556                   -                  25,556                   35,560                61,116
West                                        14,911               2,854                  17,765                   59,475                77,240
Other                                        1,137               7,544                   8,681                    2,068                10,749
Total homesites                             86,791              23,238                 110,029                  202,144               312,173                        3.8
% of total homesites                                                                        35  %                    65  %


(1)Based on trailing twelve months of home deliveries.
Details on option contracts and related consolidated inventory not owned and
exposure are included in Note 10 of the Notes to Condensed Consolidated
Financial Statements.
Contractual Obligations and Commercial Commitments
Our contractual obligations and commercial commitments have not changed
materially from those reported in Management's Discussion and Analysis of
Financial Condition and Results of Operations in our Annual Report on Form 10-K
for the fiscal year ended November 30, 2020. There were no outstanding
borrowings under our Credit Facility as of August 31, 2021.
(3) New Accounting Pronouncements
See Note 1 of the Notes to Condensed Consolidated Financial Statements included
under Item 1 of this Report for a discussion of new accounting pronouncements
applicable to our company.
(4) Critical Accounting Policies
We believe that there have been no significant changes to our critical
accounting policies during the nine months ended August 31, 2021 as compared to
those we disclosed in Management's Discussion and Analysis of Financial
Condition and Results of Operations included in our Annual Report on Form 10-K,
for the year ended November 30, 2020.
Item 3. Quantitative and Qualitative Disclosures About Market Risk
We are exposed to market risks related to fluctuations in interest rates on our
investments, debt obligations, loans held-for-sale and loans
held-for-investment. We utilize forward commitments and option contracts to
mitigate the risks associated with our mortgage loan portfolio.
As of August 31, 2021, we had no outstanding borrowings under our Credit
Facility.
As of August 31, 2021, our borrowings under Financial Services' warehouse
repurchase facilities totaled $900.3 million under residential facilities and
$55.0 million under LMF Commercial facilities.
                                       40
--------------------------------------------------------------------------------

                Information Regarding Interest Rate Sensitivity
                         Principal (Notional) Amount by
                  Expected Maturity and Average Interest Rate
                                August 31, 2021
                                 Three Months
                               Ending November
                                     30,                                                  Years Ending November 30,                                                                                         Fair Value at Aug 31,
(Dollars in millions)                2021                  2022                 2023                2024                 2025                 2026               Thereafter               Total                     2021
LIABILITIES:
Homebuilding:
Senior Notes and
other debts payable:
Fixed rate                     $     19.9                  1,559.0               99.5               1,560.5               591.8                402.9                1,294.6               5,528.2                 6,040.7
Average interest rate                 4.2     %                4.5  %             4.2  %                5.0  %              4.8  %               5.2  %                 4.9  %                4.8  %                    -

Financial Services:
Notes and other
debts payable:
Fixed rate                     $        -                        -                  -                     -                   -                    -                  151.1                 151.1                   152.0
Average interest rate                   -                        -                  -                     -                   -                    -                    3.4  %                3.4  %                    -
Variable rate                  $    939.5                     11.4                4.4                     -                   -                    -                      -                 955.3                   955.3
Average interest rate                 2.1     %                2.2  %             2.3  %                  -                   -                    -                      -                   2.1  %                    -

Lennar Other:
Notes and other
debts payable:
Fixed rate                     $      1.9                        -                  -                     -                   -                    -                      -                   1.9                     1.9
Average interest rate                 3.0     %                  -                  -                     -                   -                    -                      -                   3.0  %                    -


For additional information regarding our market risk refer to Item 7A.
Quantitative and Qualitative Disclosures About Market Risk in our Annual Report
on Form 10-K for the year ended November 30, 2020.
Item 4. Controls and Procedures
Each of our Co-Chief Executive Officers and Co-Presidents ("Co-CEOs") and Chief
Financial Officer participated in an evaluation by our management of the
effectiveness of our disclosure controls and procedures as of the end of the
period covered by this report. Based on their participation in that evaluation,
our Co-CEOs and CFO concluded that our disclosure controls and procedures were
effective as of August 31, 2021 to ensure that information required to be
disclosed in our reports filed or submitted under the Securities Exchange Act of
1934, as amended, is recorded, processed, summarized and reported within the
time periods specified in the Securities and Exchange Commission's rules and
forms, and to ensure that information required to be disclosed in our reports
filed or furnished under the Securities Exchange Act of 1934, as amended, is
accumulated and communicated to our management, including both of our Co-CEOs
and CFO, as appropriate, to allow timely decisions regarding required
disclosures.
Both of our Co-CEOs and CFO also participated in an evaluation by our management
of any changes in our internal control over financial reporting that occurred
during the quarter ended August 31, 2021. That evaluation did not identify any
changes that have materially affected, or are reasonably likely to materially
affect, our internal control over financial reporting.
Part II. Other Information

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