Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations.

The following discussion and analysis of our financial condition and results of operations should be read in conjunction with "Selected Financial Data" and our audited consolidated financial statements and accompanying notes included elsewhere in this Report.

Special Note Regarding Forward-Looking Statements

This annual report on Form 10-K contains "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995. These statements concern expectations, beliefs, projections, plans and strategies, anticipated events or trends and similar expressions concerning matters that are not historical facts. 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. Some of them are opinions formed based upon general observations, anecdotal evidence and industry experience, but that are not supported by specific investigation or analysis.

These 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; increases in operating costs, including costs related to construction materials, labor, real estate taxes and insurance, and our inability to manage our cost structure, both in our Homebuilding and Multifamily businesses; slowdowns in the residential real estate markets across the nation or in regions where we have significant homebuilding or multifamily development activities; reduced availability of mortgage financing or increased interest rates; our inability to successfully execute our strategies, including our land lighter strategy, our even flow production strategy and our strategy to better position our 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; the possibility that the benefit from our increasing use of technology will not justify its cost; increased competition for home sales from other sellers of new and resale homes; our inability to pay down debt; whether government actions or other factors related to COVID-19 force us to further delay or 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 acceptable to us; and changes in accounting conventions that adversely affect our reported earnings.

Please see "Item 1A-Risk Factors" of this Annual Report for a further discussion of these and other risks and uncertainties which could affect our future results. We undertake no obligation to 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, except to the extent we are legally required to disclose certain matters in SEC filings or otherwise.

Outlook

With the exception of a relatively brief period in March and April, the single family housing market was strong during 2020, and we expect it to continue to be strong during 2021. The underproduction of homes for the past 10 years has created a housing shortage that, combined with strong demand, has pushed home prices higher. Demand is growing as the millennial generation has begun moving towards traditional family formation trends. Concurrently, the proposition of home as more of an essential part of the way we live, not just a place to live, is becoming a way of life rather than a COVID-driven reaction.

Our measured growth strategy in the current market is to focus on selling homes when we begin construction which improves our inventory turn, while being patient with longer-term sales. This enables price appreciation to offset future cost escalations to maximize margin. Our deliveries are expected to grow faster in 2021 than they did in 2020. We expect continued price appreciation and leverage from field expenses throughout the year, somewhat offset by higher lumber prices and other anticipated cost increases. We anticipate that our community count will be growing through 2021, and that our new communities will be larger than the communities that sold out during 2020. We are expecting strong margins for the foreseeable future and throughout 2021, and we expect our bottom line to grow faster than our top line. We expect to deliver between 62,000 and 64,000 homes in 2021 with between a 23.75% and 24% gross margin as compared to the 22.8% full year gross margin in 2020. Our technology initiatives have contributed meaningfully to our readiness for current economic and structural shifts while helping to improve our core business and drive our SG&A to a historic low of 8.1% for 2020. Our results and our expectations for next year are solid in all respects, and they reflect our focused strategy to balance growth, margin, cash flow and returns.

We have remained focused on our optioned versus owned land strategy and believe we are in an excellent position to achieve our target of 50% owned land and 50% land controlled through options or similar agreements by the end of 2021. At the end of fiscal 2020, the portion of land we controlled through options or similar agreements was 39%, up from 33% at the start of the year. We ended fiscal 2020 with a 3.5 year supply of land owned, compared to a 4.1 year supply of land owned at the start of fiscal 2020, which put us well on the way to our goal of a 3.0 year supply by the end of 2021. Among other things, this has increased our cash flow, which enabled us to reduce debt, including prepaying all of our senior debt that was scheduled to become due in fiscal 2021, such that our year-end homebuilding debt-to-total capital ratio improved to 24.9%, the lowest in our history. We expect to be in a strong cash and liquidity position in 2021, and plan to continue with our strategies of reducing our debt balances and leverage ratio, and focusing on total shareholder return.

While we continue to refine and grow our ancillary business divisions, they are becoming a decidedly smaller part of the overall company picture. We continue to work on strategies to better position our Multifamily platform, our emerging single-family home for rent platform, our strategic investment in FivePoint Holdings entities and our growing technology investments platform.

With a solid balance sheet, leading positions in almost all of our homebuilding markets and continued execution of our core operating strategies, we believe that we are well positioned to meet demand, drive strong margins and cash flow and continue to grow with the market.

Results of Operations

Overview

Our net earnings attributable to Lennar were $2.5 billion, or $7.85 per diluted share ($7.88 per basic share) in 2020 and $1.8 billion, or $5.74 per diluted share ($5.76 per basic share) in 2019.

Financial information relating to our operations was as follows:

			Year ended November 30, 2020
(In thousands)			Homebuilding						Financial Services						Multifamily						Lennar Other						Corporate						Total
Revenues:
Sales of homes			$	20,840,159					—						—						—						—						20,840,159
Sales of land			123,365						—						—						—						—						123,365
Other revenues			17,612						890,311						576,328						41,079						—						1,525,330
Total revenues			20,981,136						890,311						576,328						41,079						—						22,488,854
Costs and expenses:
Costs of homes sold			16,092,069						—						—						—						—						16,092,069
Costs of land sold			172,480						—						—						—						—						172,480
Selling, general and administrative			1,697,095						—						—						—						—						1,697,095
Other costs and expenses			—						470,777						575,581						6,744												1,053,102
Total costs and expenses			17,961,644						470,777						575,581						6,744						—						19,014,746
Equity in earnings (loss) from unconsolidated entities and Multifamily other gain			(836)						—						21,934						(35,037)						—						(13,939)
Financial Services gain on deconsolidation			—						61,418						—						—						—						61,418
Other expense, net			(29,749)						—						—						(9,632)						—						(39,381)
Operating earnings (loss)			2,988,907						480,952						22,681						(10,334)						—						3,482,206
Corporate general and administrative expenses			—						—						—						—						358,418						358,418
Earnings (loss) before income taxes			$	2,988,907					480,952						22,681						(10,334)						(358,418)						3,123,788

			Year ended November 30, 2019
(In thousands)			Homebuilding						Financial Services						Multifamily						Lennar Other						Corporate						Total
Revenues:
Sales of homes			$	20,560,147					—						—						—						—						20,560,147
Sales of land			203,567						—						—						—						—						203,567
Other revenues			29,502						824,810						604,700						36,835						—						1,495,847
Total revenues			20,793,216						824,810						604,700						36,835						—						22,259,561
Costs and expenses:
Costs of homes sold			16,323,989						—						—						—						—						16,323,989
Costs of land sold			206,526						—						—						—						—						206,526
Selling, general and administrative			1,715,185						—						—						—						—						1,715,185
Other costs and expenses			—						600,168						599,604						11,794												1,211,566
Total costs and expenses			18,245,700						600,168						599,604						11,794						—						19,457,266
Equity in earnings (loss) from unconsolidated entities and Multifamily other gain			(13,273)						—						11,294						15,372												13,393
Other expense, net			(31,338)						—						—						(8,944)												(40,282)
Operating earnings			2,502,905						224,642						16,390						31,469						—						2,775,406
Corporate general and administrative expenses			—						—						—						—						341,114						341,114
Earnings before income taxes			$	2,502,905					224,642						16,390						31,469						(341,114)						2,434,292

2020 versus 2019

Revenues from home sales increased 1% in the year ended November 30, 2020 to $20.8 billion from $20.6 billion in the year ended November 30, 2019. Revenues were higher primarily due to a 3% increase in the number of home deliveries, excluding unconsolidated entities, partially offset by a 1% decrease in the average sales price of homes delivered. New home deliveries, excluding unconsolidated entities, increased to 52,813 homes in the year ended November 30, 2020 from 51,412 homes in the year ended November 30, 2019, as a result of an increase in home deliveries in the Texas and West segments. The average sales price of homes delivered, excluding unconsolidated entities, decreased to $395,000 in the year ended November 30, 2020 from $400,000 in the year ended November 30, 2019. The decrease in average sales price primarily resulted from continuing to shift to lower-priced communities and regional product mix.

Gross margins on home sales were $4.7 billion, or 22.8%, in the year ended November 30, 2020, compared to $4.2 billion, or 20.6%, in the year ended November 30, 2019. The gross margin percentage on home sales increased primarily due to our continued focus on reducing construction costs combined with favorable market conditions. Loss on land sales in the year ended November 30, 2020 was $49.1 million, primarily due to a write-off of costs in the second quarter as a result of us not moving forward with a naval base development in Concord, California, northeast of San Francisco and a change in strategy with three land assets that resulted in impairments in the fourth quarter.

Selling, general and administrative expenses were $1.7 billion in both years ended November 30, 2020 and 2019. As a percentage of revenues from home sales, selling, general and administrative expenses improved to 8.1% in the year ended November 30, 2020, from 8.3% in the year ended November 30, 2019, due to improved operating leverage as a result of an increase in home deliveries combined with the benefits of our technology initiatives.

Operating earnings for the Financial Services segment were $481.0 million ($495.0 million net of noncontrolling interests) in the year ended November 30, 2020, compared to $224.6 million ($244.3 million net of noncontrolling interests) in the year ended November 30, 2019. Operating earnings increased due to an improvement in the mortgage and title businesses as a result of an increase in volume and margin, as well as reductions in loan origination costs. Additionally, in the second quarter of 2020, the Financial Services segment recorded a $61.4 million gain on the deconsolidation of a previously consolidated entity.

Operating earnings for the Multifamily segment were $22.7 million in the year ended November 30, 2020, compared to operating earnings of $16.4 million ($18.1 million net of noncontrolling interests) in the year ended November 30, 2019. Operating loss for the Lennar Other segment was $10.3 million in the year ended November 30, 2020, compared to operating earnings of $31.5 million ($32.0 million net of noncontrolling interests) in the year ended November 30, 2019.

In the fourth quarter of 2020, we retired $1.2 billion of senior notes which included the redemption of $300 million aggregate principal amount of our 2.95% senior notes due November 2020, and early retirement of $400 million aggregate principal amount of our 8.375% senior notes due January 2021 and $500 million aggregate principal amount of our 4.75% senior notes due April 2021.

During the year ended November 30, 2020, we retired $1.5 billion of senior notes which included the redemptions and retirements described above and the redemption of $300 million aggregate principal amount of our 6.625% senior notes due May 2020. The redemption price for each issue of senior notes, which was paid in cash, was 100% of the principal amount plus accrued but unpaid interest and prepayment premiums.

For the years ended November 30, 2020 and 2019, we had a tax provision of $656.2 million and $592.2 million, respectively, which resulted in an overall effective income tax rate of 21.0% and 24.3%, respectively. The reduction in the overall effective income tax rate was primarily due to the extension of the new energy efficient home tax credit during the first quarter of 2020.

At November 30, 2020, we had $2.7 billion of Homebuilding cash and cash equivalents and no outstanding borrowings under our $2.4 billion revolving credit facility, thereby providing $5.1 billion of available capacity.

Homebuilding Segments

At November 30, 2020, our homebuilding operating segments and Homebuilding Other consisted of homebuilding divisions located in:

East: Florida, New Jersey, Pennsylvania and South Carolina

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

Texas: Texas

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

Other: Urban divisions and other homebuilding related investments primarily in California, including FivePoint

The following tables set forth selected financial and operational information related to our homebuilding operations for the years indicated:

Selected Financial and Operational Data

			Year Ended November 30, 2020
			Gross Margins																		Operating Earnings (Loss)
(Dollars in thousands)			Sales of Homes Revenue						Costs of Sales of Homes						Gross Margin %						Net Margins on Sales of Homes (1)						Gross Margins (Loss) on Sales of Land						Other Revenues						Equity in Earnings (Loss) from Unconsolidated Entities						Other Income (Expenses), net						Operating Earnings (Loss)
East			$	5,689,419					4,269,452						25.0		%				$	929,181					2,587						6,404						4,189						(9,064)						933,297
Central			4,084,514						3,265,086						20.1		%				481,697						(544)						2,787						792						(1,803)						482,929
Texas			2,640,762						1,974,375						25.2		%				416,520						6,994						1,292						782						(3,994)						421,594
West			8,400,942						6,535,718						22.2		%				1,268,716						(34,713)						6,083						4,635						(3,227)						1,241,494
Other (2)			24,522						47,438						(93.5)		%				(45,119)						(23,439)						1,046						(11,234)						(11,661)						(90,407)

			Year Ended November 30, 2019
			Gross Margins																		Operating Earnings (Loss)
(Dollars in thousands)			Sales of Homes Revenue						Costs of Sales of Homes						Gross Margin %						Net Margins on Sales of Homes (1)						Gross Margins (Loss) on Sales of Land						Other Revenues						Equity in Earnings (Loss) from Unconsolidated Entities						Other Income (Expenses), net						Operating Earnings (Loss)
East			$	5,688,262					4,406,966						22.5		%				$	792,144					5,170						18,553						(793)						15,545						830,619
Central			4,089,841						3,335,324						18.4		%				416,910						6,266						1,946						178						6,072						431,372
Texas			2,526,364						2,003,650						20.7		%				278,121						9,378						2,256						569						(4,450)						285,874
West			8,203,790						6,520,975						20.5		%				1,062,701						(23,900)						4,495						1,263						6,291						1,050,850
Other (2)			51,890						57,074						(10.0)		%				(28,903)						127						2,252						(14,490)						(54,796)						(95,810)

(1)Net margins on sales of homes include selling, general and administrative expenses.

(2)Negative gross and net margins were due to period costs in Urban divisions that impact costs of homes sold without sufficient sales of homes revenue to offset those costs.

Summary of Homebuilding Data

Deliveries:

			Years Ended November 30,
			Homes												Dollar Value (In thousands)												Average Sales Price
			2020						2019												2020						2019												2020						2019
East			16,976						17,251												$	5,725,481					5,708,859												$	337,000					331,000
Central			10,684						10,799												4,084,514						4,089,840												382,000						379,000
Texas			9,425						8,193												2,640,762						2,526,364												280,000						308,000
West			15,814						15,178												8,400,943						8,203,790												531,000						541,000
Other			26						70												24,522						67,439												943,000						963,000
Total			52,925						51,491												$	20,876,222					20,596,292												$	394,000					400,000

Of the total homes delivered listed above, 112 homes with a dollar value of $36.1 million and an average sales price of $322,000 represent home deliveries from unconsolidated entities for the year ended November 30, 2020 and 79 home deliveries with a dollar value of $36.1 million and an average sales price of $458,000 for the year ended November 30, 2019.

New Orders (1):

			At November 30,												Years Ended November 30,
			Active Communities												Homes												Dollar Value (In thousands)												Average Sales Price
			2020						2019						2020						2019												2020						2019												2020						2019
East			323						346						17,299						17,196												$	6,010,047					5,720,017												$	347,000					333,000
Central			285						337						11,905						10,620												4,602,720						4,032,899												387,000						380,000
Texas			213						238						10,078						8,215												2,752,008						2,478,981												273,000						302,000
West			353						359						16,868						15,335												9,005,958						8,024,755												534,000						523,000
Other			3						3						19						73												17,917						66,903												943,000						916,000
Total			1,177						1,283						56,169						51,439												$	22,388,650					20,323,555												$	399,000					395,000

Of the total new orders listed above, 119 represent the dollar value of new orders from unconsolidated entities with a dollar value of $37.3 million and an average sales price of $314,000 for the year ended November 30, 2020 and 103 new orders with a dollar value of $43.7 million and an average sales price of $424,000 for the year ended November 30, 2019.

(1)New orders represent the number of new sales contracts executed with homebuyers, net of cancellations, during the years ended November 30, 2020 and 2019.

Backlog:

			November 30,
			Homes																		Dollar Value (In thousands)																		Average Sales Price
			2020						2019												2020						2019												2020						2019
East (1)			6,013						5,690												$	2,310,935					2,026,369												$	384,000					356,000
Central			4,371						3,150												1,762,172						1,243,966												403,000						395,000
Texas			2,823						2,170												824,584						713,337												292,000						329,000
West			5,612						4,558												2,913,432						2,308,417												519,000						506,000
Other			2						9												1,848						8,453												924,000						939,000
Total			18,821						15,577												$	7,812,971					6,300,542												$	415,000					404,000

Of the total homes in backlog listed above, 38 homes with a backlog dollar value of $11.5 million and an average sales price of $302,000 represent homes in backlog from unconsolidated entities at November 30, 2020 and 31 homes with a dollar value of $10.2 million and an average sales price of $328,000 represent homes in backlog from unconsolidated entities at November 30, 2019.

(1)During the year ended November 30, 2019, we acquired 13 homes in backlog.

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. We do not recognize revenue on homes under sales contracts until the sales are closed and title passes to the new homeowners.

Homebuilding East: Revenues from home sales increased in 2020 compared to 2019, primarily due to an increase in the average sales price in all the states of the segment, except in Pennsylvania and South Carolina, partially offset by a decrease in the number of home deliveries in Florida and Pennsylvania. The decrease in the number of home deliveries in Florida and Pennsylvania was primarily due to the effects of COVID-19 and the economic shutdown. The increase in the average sales price of homes delivered in Florida and New Jersey was primarily due to favorable market conditions. The decrease in the average sales price of homes delivered in South Carolina and Pennsylvania 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 sales for the year ended November 30, 2020 increased compared to the same period last year primarily due to reducing our construction costs and an increase in the average sales price of homes delivered.

Homebuilding Central: Revenues from home sales decreased in 2020 compared to 2019, primarily due to a decrease in the number of home deliveries in Minnesota, North Carolina and Virginia, partially offset by an increase in the average sales price in all the states of the segment, except in Indiana, North Carolina and Tennessee. The decrease in the number of deliveries was primarily due to the effects of COVID-19 and the economic shutdown. 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 Indiana, North Carolina 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 sales for the year ended November 30, 2020 increased compared to the same period last year primarily due to reducing our construction costs, partially offset by valuation adjustments taken in a few communities.

Homebuilding Texas: Revenues from home sales increased in 2020 compared to 2019, primarily due to an increase in the number of home deliveries, partially offset by a decrease in the average sales price. The increase in the number of deliveries was primarily due to higher demand as the number of deliveries per active community increased. The decrease in the average sales price of homes delivered was primarily due to closing out higher priced communities and shifting into lower priced communities. Gross margin percentage on home sales for the year ended November 30, 2020 increased compared to the same period last year primarily due to reducing our construction costs.

Homebuilding West: Revenues from home sales increased in 2020 compared to 2019, primarily due to an increase in the number of home deliveries in Arizona, California and Utah. The increase in revenues was partially offset by a decrease in the average sales price in all the states of the segment, except in Arizona, Oregon and Utah. The increase in the number of deliveries in Arizona, California and Utah was primarily due to higher demand as the number of deliveries per active community increased. The decrease in the number of home deliveries in Colorado, Nevada, Oregon and Washington was primarily due to the effects of COVID-19 and the economic shutdown and a decrease in active communities due to timing of opening and closing of communities. The decrease in the average sales price of homes delivered in Nevada, California, Colorado and Washington was primarily driven by a change in product mix due to a higher percentage of deliveries in lower-

priced communities. The increase in the average sales price of homes delivered in Arizona, Oregon and Utah was primarily due to favorable market conditions. Gross margin percentage on home sales for the year ended November 30, 2020 increased compared to the same period last year primarily due to reducing our construction costs.

Financial Services Segment

Our Financial Services reportable segment primarily provides mortgage financing, title and closing services primarily for buyers of our homes, as well as property and casualty insurance. 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:

			Years Ended November 30,
(Dollars in thousands)			2020						2019
Dollar value of mortgages originated			$	12,939,200					10,930,900
Number of mortgages originated			40,000						34,800
Mortgage capture rate of Lennar homebuyers			80%						76%
Number of title and closing service transactions			61,100						59,700

At November 30, 2020 and 2019, the carrying value of Financial Services' commercial mortgage-backed securities ("CMBS") was $164.2 million and $166.0 million, respectively. These securities were purchased at discounts ranging from 6% to 84% with coupon rates ranging from 2.0% to 5.3%, stated and assumed final distribution dates between October 2027 and December 2028, and stated maturity dates between October 2050 and December 2051. Our Financial Services segment classifies these securities as held-to-maturity based on its intent and ability to hold the securities until maturity.

LMF Commercial

LMF Commercial originates and sells into securitizations five, seven and ten year commercial first mortgage loans, which are secured by income producing properties.

During the year ended November 30, 2020, LMF Commercial originated loans with a total principal balance of $703.8 million, all of which were recorded as loans held-for-sale, and sold $705.1 million of loans into 5 separate securitizations. As of November 30, 2020 there were no unsettled transactions.

During the year ended November 30, 2019, LMF Commercial originated loans with a principal balance of $1.6 billion nearly all of which were recorded as loans held-for-sale, except $15.3 million which were recorded as accrual loans within loans receivables, net, and sold $1.4 billion of loans into 11 separate securitizations. As of November 30, 2019, originated loans with an unpaid balance of $158.4 million which were sold into a securitization trust but not settled and thus were included as receivables, net.

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.

The following tables provide information related to our investment in the Multifamily segment:

Balance Sheet			November 30,
(Dollars in thousands)			2020						2019
Multifamily investments in unconsolidated entities			$	724,647					561,190
Lennar's net investment in Multifamily			906,632						829,537

Statement of Operations			November 30,
(Dollars in thousands)			2020						2019
Number of operating properties/investments sold through joint ventures			5						3
Lennar's share of gains on the sale of operating properties/investments			$	21,114					28,128

The Multifamily segment includes Multifamily Venture Fund I (the "LMV I") and Multifamily Venture Fund II LP (the "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 year ended November 30, 2020 are included below:

			November 30, 2020
(In thousands)			LMV I						LMV II
Lennar's carrying value of investments			$	328,365					288,476
Equity commitments			2,204,016						1,257,700
Equity commitments called			2,139,322						995,206
Lennar's equity commitments			504,016						381,000
Lennar's equity commitments called			496,483						300,393
Lennar's remaining commitments			7,533						80,607
Distributions to Lennar during the year ended November 30, 2020			39,988						—

Our Multifamily segment had equity investments in unconsolidated entities. The details of the Multifamily segment's equity investments in unconsolidated entities and the development activities as of November 30, 2020 were as follows:

(Dollars in thousands)			November 30, 2020
Under construction/owned			24
Partially completed and leasing			7
Completed and operating			34
Total unconsolidated joint ventures			65
Total development costs			$	7,839,358

As of November 30, 2020, our Multifamily segment also had a pipeline of potential future projects, which were under contract or had letters of intent, totaling approximately $4.7 billion in anticipated development costs across a number of states that will be developed primarily by unconsolidated entities.

Despite widespread reductions in economic activity due to the COVID-19 pandemic, the properties in which the Multifamily segment has investments did not, overall, experience significant increases in vacancies or in delinquent rent payments to date.

Lennar Other Segment

Our Lennar Other segment includes fund investments we retained subsequent to the sale of the Rialto investment and asset management platform as well as strategic investments in technology companies that are looking to improve the homebuilding and financial services industries to better serve our customers and increase efficiencies. As of November 30, 2020 and 2019, our balance sheet had $452.9 million and $495.4 million, respectively, of assets in the Lennar Other segment, which included investments in unconsolidated entities of $387.0 million and $403.7 million, respectively.

At November 30, 2020 and 2019, the carrying value of Lennar Other's commercial mortgage-backed securities ("CMBS") was $53.5 million and $54.1 million, respectively. These securities were purchased at discount rates ranging from 28% to 55% with coupon rates ranging from 2.8% to 4.0%, stated and assumed final distribution dates between November 2020 and October 2026, and stated maturity dates between November 2049 and March 2059. We review changes in estimated cash flows periodically to determine if an other-than-temporary impairment has occurred on our CMBS. Based on management’s assessment, no impairment charges were recorded during the years ended November 30, 2020 and 2019. We classify these securities as held-for-sale at November 30, 2020 and held-to-maturity at November 30, 2019. We have financing agreements to finance CMBS that have been purchased as investments by the segment. At November 30, 2020 and 2019, the carrying amount, net of debt issuance costs, of outstanding debt in these agreements was $1.9 million and $13.3 million, respectively, and the interest is incurred at a rate of 3.0% and 3.9%, respectively.

Financial Condition and Capital Resources

At November 30, 2020, we had cash and cash equivalents and restricted cash related to our homebuilding, financial services, multifamily and other operations of $2.9 billion, compared to $1.5 billion at November 30, 2019.

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 investor funds as well as cash borrowed under our warehouse lines of credit and our unsecured revolving credit facility (the "Credit Facility").

Operating Cash Flow Activities

During 2020 and 2019, cash provided by operating activities totaled $4.2 billion and $1.5 billion, respectively. During

2020, cash provided by operating activities was positively impacted by our net earnings, a decrease in inventories of $781.4 million, an increase in accounts payable and other liabilities of $266.5 million and a decrease in loans held-for-sale of $154.9 million primarily related to the sale of loans originated by Financial Services.

During 2019, cash provided by operating activities was positively impacted by our net earnings and a decrease in receivables of $312.3 million, partially offset by an increase in inventories due to strategic land purchases, land development and construction costs of $623.6 million and an increase in Financial Services loans held-for-sale of $431.3 million.

Investing Cash Flow Activities

During 2020 and 2019, cash (used in) provided by investing activities totaled ($280.2) million and $19.6 million, respectively. During 2020, our cash used in investing activities was primarily due to cash contributions of $486.2 million to unconsolidated entities and the deconsolidation of a previously consolidated entity, which included (1) $166.6 million to Multifamily unconsolidated entities, (2) $104.4 million to Homebuilding unconsolidated entities, (3) $62.7 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 $220.7 million, which primarily included (1) $93.4 million from Multifamily unconsolidated entities, (2) $74.7 million from Homebuilding unconsolidated entities, (3) $0.7 million from strategic technology ventures and (4) $43.7 million from the unconsolidated Rialto real estate funds included in our Lennar Other segment.

During 2019, our cash provided by investing activities was primarily due to $52.6 million of proceeds from sales of securities, $70.4 million of proceeds from the sale of two Homebuilding operating properties and other assets, and distributions of capital from unconsolidated entities of $405.7 million. This was partially offset by net additions to operating properties and equipment of $86.5 million and cash contributions of $436.2 million to unconsolidated entities.

Financing Cash Flow Activities

During 2020 and 2019, our cash used in financing activities totaled $2.4 billion and $1.6 billion, respectively. During 2020, our cash used in financing activities was primarily impacted by (1) redemption of $300 million aggregate principal amount of our 2.95% senior notes due November 2020, (2) redemption of $400 million aggregate principal amount of our 8.375% senior notes due January 2021, (3) redemption of $500 million aggregate principal amount redemption of our 4.75% senior notes due April 2021, (4) redemption of $300 million aggregate principal amount of our 6.625% senior notes due May 2020, (5) $605.0 million principal payments on notes payable and other borrowings, (6) repurchase of our common stock for $321.5 million, which included $288.5 million of repurchases of our stock under our repurchase program and $32.9 million of repurchases related to our equity compensation plan and (7) $281.8 million of net repayments under our Financial Services warehouse facilities. This was partially offset by (1) proceeds from other liabilities of $346.4 million, (2) receipts related to noncontrolling interests of $176.6 million, and (3) $92.7 million of proceeds from other borrowings.

During 2019, our cash used in financing activities was primarily impacted by (1) $600 million aggregate principal amount redemption of our 4.50% senior notes due November 2019, (2) $500 million aggregate principal amount redemption of our 4.500% senior notes due June 2019, (3) $189.5 million principal payments on other borrowings, and (4) repurchase of our common stock for $523.1 million, which included $492.9 million of repurchases of our stock under our repurchase program and $29.0 million of repurchases related to our equity compensation plan. This was partially offset by $166.6 million of net borrowings under our Financial Services warehouse facilities and $88.8 million of proceeds from other borrowings.

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 were calculated as follows:

			November 30,
(Dollars in thousands)			2020						2019
Homebuilding debt			$	5,955,758					7,776,638
Stockholders’ equity			17,994,856						15,949,517
Total capital			$	23,950,614					23,726,155
Homebuilding debt to total capital			24.9%						32.8%
Homebuilding debt			$	5,955,758					7,776,638
Less: Homebuilding cash and cash equivalents			2,703,986						1,200,832
Net Homebuilding debt			$	3,251,772					6,575,806
Net Homebuilding debt to total capital (1)			15.3%						29.2%

(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). Our management believes 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 our 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 November 30, 2020, Homebuilding debt to total capital was lower compared to November 30, 2019, primarily as a result of a decrease in Homebuilding debt and an increase in stockholders' equity due to net earnings.

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 are summarized within Note 4 of the Notes to the Consolidated Financial Statements.

At November 30, 2020, we had an unsecured revolving credit facility (the "Credit Facility") with maximum borrowings of $2.4 billion maturing in 2024. The credit agreement provides that up to $500 million in commitments may be used for letters of credit. Subsequent to November 30, 2020, our Credit Facility maximum borrowings were increased by $100 million to $2.5 billion and included a $300 million accordion feature, subject to additional commitments, thus the maximum borrowings could be $2.8 billion. As of both November 30, 2020 and 2019, we had no outstanding borrowings under the Credit Facility. Under the Credit Facility agreement, we are required to maintain a minimum consolidated tangible net worth, a maximum leverage ratio and either a liquidity or an interest coverage ratio. These ratios are calculated per the Credit Facility agreement, which involves adjustments to GAAP financial measures. We believe we were in compliance with our debt covenants at November 30, 2020. In addition to the Credit Facility, we have other letter of credit facilities with different financial institutions.

Our outstanding letters of credit and surety bonds are described below:

			November 30,
(In thousands)			2020						2019
Performance letters of credit			$	752,096					715,793
Surety bonds			3,087,711						2,946,167
Anticipated future costs primarily for site improvements related to performance surety bonds			1,584,642						1,427,145

Currently, substantially all of our 100% owned homebuilding subsidiaries are guaranteeing all our senior notes (the "Guaranteed Notes"). The guarantees are full and unconditional. However, they will be suspended as to a subsidiary any time it is not directly or indirectly guaranteeing at least $75 million of Lennar Corporation debt (other than senior notes) and be released when the subsidiary is sold. These guarantees are outlined in the Supplemental Financial Information below.

Our Homebuilding average debt outstanding and the average rates of interest were as follows:

			November 30,
(Dollars in thousands)			2020						2019
Homebuilding average debt outstanding			$	7,594,961					$	9,072,286
Average interest rate			4.9%						4.8%
Interest incurred			$	353,403					$	422,710

Under our Credit Facility agreement (the "Credit Agreement"), we are required to maintain a minimum consolidated tangible net worth, a maximum leverage ratio and either a liquidity or an interest coverage ratio. These ratios are calculated per the Credit Agreement, which involves adjustments to GAAP financial measures. As of the end of each fiscal quarter, we are required to maintain minimum consolidated tangible net worth of approximately $7.1 billion plus the sum of 50% of the cumulative consolidated net income for each completed fiscal quarter subsequent to February 28, 2019, if positive, and 50% of the net cash proceeds from any equity offerings from and after February 28, 2019, minus the lesser of 50% of the amount paid after April 11, 2019 to repurchase common stock and $375 million. We are required to maintain a leverage ratio that shall not exceed 65% and may be reduced by 2.5% per quarter if our interest coverage ratio is less than 2.25:1.00 for two consecutive fiscal calendar quarters. The leverage ratio will have a floor of 60%. If our interest coverage ratio subsequently exceeds 2.25:1.00 for two consecutive fiscal calendar quarters, the leverage ratio we will be required to maintain will be increased by 2.5% per quarter to a maximum of 65%. As of the end of each fiscal quarter, we are also required to maintain either (1) liquidity in an amount equal to or greater than 1.00x consolidated interest incurred for the last twelve months then ended or (2) an interest coverage ratio equal to or greater than 1.50:1.00 for the last twelve months then ended. We believe that we were in compliance with our debt covenants at November 30, 2020.

The following summarizes our required debt covenants and our actual levels or ratios with respect to those covenants as calculated per the Credit Agreement as of November 30, 2020:

(Dollars in thousands)			Covenant Level						Level Achieved as of November 30, 2020
Minimum net worth test			$	8,614,526					12,284,420
Maximum leverage ratio			65.0%						18.5%
Liquidity test (1)			1.00						7.97

(1)We are only required to maintain either (1) liquidity in an amount equal to or greater than 1.00x consolidated interest incurred for the last twelve months then ended or (2) an interest coverage ratio of equal to or greater than 1.50:1.00 for the last twelve months then ended. Although we are in compliance with our debt covenants for both calculations, we have only disclosed our liquidity test.

At November 30, 2020, the Financial Services warehouse facilities were all 364-day repurchase facilities and were used to fund residential mortgages or commercial mortgages for LMF Commercial as follows:

(In thousands)			Maximum Aggregate Commitment
Residential facilities maturing:
January 2021 (1)			$	500,000
March 2021			500,000
June 2021			600,000
July 2021			200,000
Total - Residential facilities			$	1,800,000
LMF Commercial facilities maturing:
December 2020 (2)			$	500,000
November 2021			100,000
December 2021			200,000
Total - LMF Commercial facilities			$	800,000
Total			$	2,600,000

(1)Subsequent to November 30, 2020, the maturity date was extended to December 2021.

(2)Includes $50 million LMF Commercial warehouse repurchase facility used to finance the origination of floating rate accrual loans, which are reported as accrual loans within loans held-for-investment, net. There were borrowings under this facility of $11.4 million as of November 30, 2020.

The Financial Services segment uses the residential facilities to finance its residential lending activities until the mortgage loans are sold to investors and the proceeds are collected. The facilities are non-recourse to us and are expected to be renewed or replaced with other facilities when they mature. The LMF Commercial facilities finance LMF Commercial loan originations and securitization activities and were secured by an up to 80% interest in the originated commercial loans financed.

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

			November 30,
(In thousands)			2020						2019
Borrowings under the residential facilities			$	1,185,797					$1,374,063
Collateral under the residential facilities			1,231,619						1,423,650
Borrowings under the LMF Commercial facilities			124,617						216,870

If the facilities are not renewed or replaced, the borrowings under the lines of credit will be repaid by selling the mortgage loans held-for-sale to investors and by collecting receivables on loans sold but not yet paid for. Without the facilities, the Financial Services segment would have to use cash from operations and other funding sources to finance its lending activities.

LMF Commercial - loans held-for-sale

During the year ended November 30, 2020, LMF Commercial originated commercial loans with a total principal balance of $703.8 million, all of which were recorded as loans held-for-sale and sold $705.1 million of commercial loans into five separate securitizations. As of November 30, 2020, there were no unsettled transactions.

During the year ended November 30, 2019, LMF Commercial originated commercial loans with a total principal balance of $1.6 billion, nearly all of which were recorded as loans held-for-sale except $15.3 million which were recorded as accrual loans receivables, net, and sold $1.4 billion of loans into 11 separate securitizations. As of November 30, 2019,

originated loans with an unpaid balance of $158.4 million which were sold into a securitization trust but not settled and thus were included as receivables, net.

Changes in Capital Structure

In January 2019, our Board of Directors authorized a stock repurchase program, under which we are authorized to purchase up to the lesser of $1 billion in value, or 25 million in shares, of our outstanding Class A or Class B common stock. The repurchase authorization has no expiration date. The following table shows the repurchase of our Class A and Class B common stock, under this program, for the years ended November 30, 2020 and 2019:

			November 30,
			2020												2019
(Dollars in thousands, except price per share)			Class A						Class B						Class A						Class B
Shares repurchased			4,250,000						115,000						9,774,729						0
Principal			$	282,274					$	6,155					$	492,938					$0
Average price per share			$	66.42					$	53.52					$	50.41					$0

During the year ended November 30, 2020, treasury stock increased by 4.5 million shares of Class A common stock due primarily to 4.4 million shares of common stock repurchased during the year through our stock repurchase program. During the year ended November 30, 2019, treasury stock increased by 10.5 million shares of Class A common stock primarily due to 9.8 million shares of common stock repurchased during the year through our stock repurchase program.

During the years ended November 30, 2020 and 2019, our Class A and Class B common stockholders received an aggregate per share annual dividend of $0.625 and $0.16, respectively. On January 14, 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 February 12, 2021 to holders of record at the close of business on January 29, 2021.

Based on our current financial condition and credit relationships, we believe that, assuming the effects of the COVID-19 pandemic and resulting governmental actions on our operations do not significantly worsen for a protracted period, 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 November 30, 2020 they were guaranteeing Lennar Corporation's letter of credit facilities and its Credit Facility, disclosed in Note 4 of the Notes to the 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 November 30, 2020 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)			November 30, 2020
Due from non-guarantor subsidiaries			$	2,655,503
Equity method investments			951,579
Total assets			27,695,067
Total liabilities			9,599,718

			Year Ended
(In thousands)			November 30, 2020
Total revenues			$	21,087,434
Operating earnings			3,100,491
Earnings before income taxes			2,747,134
Net earnings attributable to Lennar			2,185,585

Off-Balance Sheet Arrangements

Homebuilding - Investments in Unconsolidated Entities

At November 30, 2020, we had equity investments in 38 active homebuilding and land unconsolidated entities (of which 3 had recourse debt, 9 had non-recourse debt and 26 had no debt), compared to 36 active homebuilding and land unconsolidated entities at November 30, 2019. 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 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 partner. Each joint venture is governed by an executive committee consisting of members from the partners.

As of November 30, 2020 and 2019, our recorded investments in Homebuilding unconsolidated entities were $953.2 million and $1.0 billion, respectively, while the underlying equity in Homebuilding unconsolidated entities partners’ net assets as of both November 30, 2020 and 2019 was $1.3 billion. The basis difference was primarily as a result of us contributing our investment in three strategic joint ventures with a higher fair value than book value for an investment in the FivePoint entity and deferring equity in earnings on land sales to us. Included in our recorded investments in Homebuilding unconsolidated entities is our 40% ownership of FivePoint. As of November 30, 2020 and 2019, the carrying amount of our investment was $392.1 million and $374.0 million, respectively.

The total debt of the Homebuilding unconsolidated entities in which we have investments was $1.1 billion as of both November 30, 2020 and 2019, of which our maximum recourse exposure was $4.9 million and $10.8 million as of November 30, 2020 and 2019, respectively. In most instances in which we have guaranteed debt of an unconsolidated entity, our partners have also guaranteed that debt and are required to contribute their share of the guarantee payment. In a repayment guarantee, we and our venture partners guarantee repayment of a portion or all of the debt in the event of a default before the lender would have to exercise its rights against the collateral.

In connection with many of the loans to Homebuilding unconsolidated entities, we and our joint venture partners (or entities related to them) have been required to give guarantees of completion to the lenders. Those completion guarantees may require that the guarantors complete the construction of the improvements for which the financing was obtained. If the construction is to be done in phases, the guarantee generally is limited to completing only the phases as to which construction has already commenced and for which loan proceeds were used. If we are required to make a payment under any guarantee, the payment would generally constitute a capital contribution or loan to the Homebuilding unconsolidated entity and increase our share of any funds the unconsolidated entity distributes.

As of both November 30, 2020 and 2019, the fair values of our repayment, maintenance and completion guarantees were not material. We believe that as of November 30, 2020, in the event we become legally obligated to perform under a guarantee of an obligation of a Homebuilding unconsolidated entity due to a triggering event under a guarantee, the collateral should to be sufficient to repay at least a significant portion of the obligation or we and our partners would contribute additional capital into the venture. In certain instances, we have placed performance letters of credit and surety bonds with municipalities for our joint ventures (see Note 4 of the notes to our Consolidated Financial Statements).

The following table summarizes the principal maturities of our Homebuilding unconsolidated entities ("JVs") debt as per current debt arrangements as of November 30, 2020 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 Homebuilding Unconsolidated JVs Debt by Period
(In thousands)									Total JV Debt						2021						2022						2023						Thereafter						Other
Debt without recourse to Lennar									$	1,085,071					252,593						164,396						—						668,082						—
Land seller and CDD debt									7,470						—						—						—						—						7,470
Maximum recourse debt exposure to Lennar									4,932						—						4,932						—						—						—
Debt issuance costs									(11,834)						—						—						—						—						(11,834)
Total									$	1,085,639					252,593						169,328						—						668,082						(4,364)

Financial Services - Investment in an Unconsolidated Entity

In connection with the sale of the majority of its retail title agency business and title insurance underwriter in the first quarter of 2019, we provided seller financing and received a substantial minority equity ownership stake in the buyer. The combination of both the equity and debt components of this transaction caused the transaction not to meet the accounting requirements for sale treatment and, therefore, we were required to consolidate the buyer’s results at that time. During the year ended November 30, 2020, there was a significant equity raise that was completed, which resulted in the entity’s deconsolidation. Upon deconsolidation, we recorded a gain of $61.4 million. As of November 30, 2020, our recorded investment in the Financial Services unconsolidated entity was $68.9 million.

Multifamily - Investments in Unconsolidated Entities

At November 30, 2020, Multifamily had equity investments in 22 unconsolidated entities that are engaged in multifamily residential developments (of which 7 had non-recourse debt and 15 had no debt), compared to 19 unconsolidated entities at November 30, 2019. 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. 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 year ended November 30, 2020 are included below:

			November 30, 2020
(In thousands)			LMV I						LMV II
Lennar's carrying value of investments			$	328,365					288,476
Equity commitments			2,204,016						1,257,700
Equity commitments called			2,139,322						995,206
Lennar's equity commitments			504,016						381,000
Lennar's equity commitments called			496,483						300,393
Lennar's remaining commitments			7,533						80,607
Distributions to Lennar during the year ended November 30, 2020			39,988						—

We regularly monitor the results of our 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 their debt covenants at November 30, 2020.

The following table summarizes the principal maturities of our Multifamily unconsolidated entities debt as per current debt arrangements as of November 30, 2020 and does not represent estimates of future cash payments that will be made to reduce debt balances.

						Principal Maturities of Multifamily Unconsolidated JVs Debt by Period
(In thousands)						Total JV Debt						2021						2022						2023						Thereafter						Other
Debt without recourse to Lennar						$	2,550,714					383,104						495,279						554,764						1,117,567						—
Debt issuance costs						(31,147)						—						—						—						—						(31,147)
Total						$	2,519,567					383,104						495,279						554,764						1,117,567						(31,147)

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 November 30, 2020 and 2019, we had strategic technology investments in unconsolidated entities of $196.6 million and $167.0 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. In fiscal year 2020 and beyond, we anticipate increasing the percentage of our total homesites that we control through options rather than own.

As a continuation of our focus on strategic partnerships to further enhance our land lighter strategy, we have entered into arrangements with a land bank investor group and a joint venture in which we are a 20% participant. These arrangements have specified time periods (12 to 18 months in one instance and three years in the other). Under these arrangements, in most instances when we want to acquire a property for use in our for-sale single family home business, we will offer the investor group or the joint venture the opportunity to acquire the property and give us an option to purchase all or a portion of it in the future back, if it is mutually beneficial to both parties. The maximum amount the investor group and the joint venture are committed to spend is $2.5 billion, but that may be increased. To the extent the investor group or the joint venture does not elect to purchase properties we identify, we can purchase them directly. The arrangement with the investor group and the joint venture, together with existing and other strategic partnerships we are discussing, are significant steps in our strategy to migrate to a higher percentage of our homesites which we control but do not own, which we expect will result in greater cash flow and higher returns on assets and equity.

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) at November 30, 2020 and 2019:

			Controlled Homesites
November 30, 2020			Optioned						JVs						Total						Owned Homesites						Total Homesites						Years of Supply Owned (1)
East			33,877						8,397						42,274						58,561						100,835
Central			17,525						110						17,635						41,950						59,585
Texas			23,156						—						23,156						34,497						57,653
West			24,714						2,848						27,562						49,357						76,919
Other			1,137						7,519						8,656						2,242						10,898
Total homesites			100,409						18,874						119,283						186,607						305,890						3.5
% of total homesites															39		%				61		%

			Controlled Homesites
November 30, 2019			Optioned						JVs						Total						Owned Homesites						Total Homesites						Years of Supply Owned (1)
East			32,971						16,613						49,584						65,181						114,765
Central			13,267						132						13,399						42,891						56,290
Texas			21,766						—						21,766						36,443						58,209
West			8,144						3,267						11,411						62,424						73,835
Other			5,739						2,311						8,050						2,093						10,143
Total homesites			81,887						22,323						104,210						209,032						313,242						4.1
% of total homesites															33		%				67		%

(1)Based on trailing twelve months of home deliveries.

We evaluate all option contracts for land to determine whether they are variable interest entities ("VIEs") and, if so, whether we are the primary beneficiary of certain of these option contracts. Although we do not have legal title to the optioned land, if we are deemed to be the primary beneficiary or make a significant deposit for optioned land, we may need to consolidate the land under option at the purchase price of the optioned land.

During the year ended November 30, 2020, consolidated inventory not owned increased by $523.4 million with a corresponding increase to liabilities related to consolidated inventory not owned in the accompanying consolidated balance sheet. The increase was primarily due to homesites sold to the investor group. This strategic relationship is a continuation of our land light strategy and allows us to offer the investor group the opportunity to acquire the property and give us an option to purchase all or a portion of it in the future. The liabilities related to consolidated inventory not owned primarily represent the difference between the option exercise prices for the optioned land and our cash deposits.

Our exposure to loss related to our option contracts with third parties and unconsolidated entities consisted of our non-refundable option deposits and pre-acquisition costs totaling $414.2 million and $320.5 million at November 30, 2020 and 2019, respectively. Additionally, we had posted $87.5 million and $75.0 million of letters of credit in lieu of cash deposits under certain land and option contracts as of November 30, 2020 and 2019, respectively.

Contractual Obligations and Commercial Commitments

The following table summarizes certain of our contractual obligations at November 30, 2020:

									Payments Due by Period
(In thousands)			Total						Less than 1 year						1 to 3 years						3 to 5 years						More than 5 years
Homebuilding - Senior notes and other debts payable (1)			$	5,933,262					293,177						1,864,698						2,102,548						1,672,839
Financial Services - Notes and other debts payable			1,463,919						1,310,414						—						—						153,505
Lennar Other - Notes and other debts payable			1,906						1,906						—						—						—
Interest commitments under interest bearing debt (2)			1,144,118						296,404						448,383						260,116						139,215
Operating leases obligations			133,499						33,616						49,126						28,048						22,709
Other contractual obligations (3)			88,141						66,268						21,873						—						—
Total contractual obligations (4)			$	8,764,845					2,001,785						2,384,080						2,390,712						1,988,268

(1)The amounts presented in the table above exclude debt issuance costs and any discounts/premiums and purchase accounting adjustments.

(2)Interest commitments on variable interest-bearing debt are determined based on the interest rate as of November 30, 2020.

(3)Amounts include $7.5 million and $80.6 million remaining equity commitment to fund the LMV I and LMV II, respectively, for future expenditures related to the construction and development of the projects.

(4)Total contractual obligations exclude our gross unrecognized tax benefits and accrued interest and penalties totaling $70.0 million as of November 30, 2020, because we are unable to make reasonable estimates as to the period of cash settlement with the respective taxing authorities.

We are subject to the usual obligations associated with entering into contracts (including option contracts) for the purchase, development and sale of real estate in the routine conduct of our business. Option contracts for the purchase of land generally reduces our financial risk and costs of capital associated with land holdings. At November 30, 2020, we had access to 119,283 homesites through option contracts with third parties and unconsolidated entities in which we have investments. At November 30, 2020, we had $414.2 million of non-refundable option deposits and pre-acquisition costs related to certain of these homesites and had posted $87.5 million of letters of credit in lieu of cash deposits under certain land and option contracts.

At November 30, 2020, we had letters of credit outstanding in the amount of $1.0 billion (which included the $87.5 million of letters of credit discussed above). These letters of credit are generally posted either with regulatory bodies to guarantee our performance of certain development and construction activities, or in lieu of cash deposits on option contracts, for insurance risks, credit enhancements and as other collateral. Additionally, at November 30, 2020, we had outstanding surety bonds of $3.1 billion including performance surety bonds related to site improvements at various projects (including certain projects of our joint ventures) and financial surety bonds. Although significant development and construction activities have been completed related to these site improvements, these bonds are generally not released until all of the development and construction activities are completed. As of November 30, 2020, there were approximately $1.6 billion, or 51%, of anticipated future costs to complete related to these site improvements. We do not presently anticipate any draws upon these bonds or letters of credit, but if any such draws occur, we do not believe they would have a material adverse effect on our financial position, results of operations or cash flows.

Our Financial Services segment had a pipeline of loan applications in process of $4.7 billion at November 30, 2020. Loans in process for which interest rates were committed to the borrowers totaled approximately $798.8 million as of November 30, 2020. Substantially all of these commitments were for periods of 60 days or less. Since a portion of these commitments is expected to expire without being exercised by the borrowers or borrowers may not meet certain criteria at the time of closing, the total commitments do not necessarily represent future cash requirements.

Our Financial Services segment uses mandatory mortgage-backed securities ("MBS") forward commitments, option contracts, futures contracts and investor commitments to hedge our mortgage-related interest rate exposure. These instruments involve, to varying degrees, elements of credit and interest rate risk. Credit risk associated with MBS forward commitments,

option contracts, futures contracts and loan sales transactions is managed by limiting our counterparties to investment banks, federally regulated bank affiliates and other investors meeting our credit standards. Our risk, in the event of default by the purchaser, is the difference between the contract price and fair value of the MBS forward commitments and the option contracts. At November 30, 2020, we had open commitments amounting to $1.8 billion to sell MBS with varying settlement dates through February 2021 and there were no open futures contracts.

The following sections discuss market and financing risk, seasonality and interest rates and changing prices that may have an impact on our business:

Market and Financing Risk

We finance our contributions to JVs, land acquisition and development activities, construction activities, financial services activities, Multifamily activities and general operating needs primarily with cash generated from operations, debt and equity issuances, as well as borrowings under our Credit Facility and warehouse repurchase facilities. We also purchase land under option agreements, which enables us to control homesites until we have determined whether to exercise the options. We try to manage the financial risks of adverse market conditions associated with land holdings by what we believe to be prudent underwriting of land purchases in areas we view as desirable growth markets, careful management of the land development process and limitation of risks by using partners to share the costs of purchasing and developing land as well as obtaining access to land through option contracts. Although we believed our land underwriting standards were conservative, we did not anticipate the severe decline in land values and the sharply reduced demand for new homes encountered in the prior economic downturn.

Seasonality

We historically have experienced, and expect to continue to experience, variability in quarterly results. 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. In 2020, the shutdown of large portions of our national economy in March and April due to the COVID-19 pandemic temporarily reduced our home sales, and therefore altered our normal seasonal pattern.

Interest Rates and Changing Prices

Inflation can have a long-term impact on us because increasing costs of land, materials and labor result in a need to increase the sales prices of homes. In addition, inflation is often accompanied by higher interest rates, which can have a negative impact on housing demand and increase the costs of financing land development activities and housing construction. Rising interest rates as well as increased material and labor costs, may reduce gross margins. An increase in materials and labor costs is particularly a problem during a period of declining home prices. Conversely, deflation can impact the value of real estate and make it difficult for us to recover our land costs. Therefore, either inflation or deflation could adversely impact our future results of operations.

New Accounting Pronouncements

See Note 1 of the notes to our consolidated financial statements for a comprehensive list of new accounting pronouncements.

Critical Accounting Policies and Estimates

Our accounting policies are more fully described in Note 1 of the notes to our consolidated financial statements included in Item 8 of this document. As discussed in Note 1, the preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions about future events that affect the amounts reported in our consolidated financial statements and accompanying notes. Future events and their effects cannot be determined with absolute certainty. Therefore, the determination of estimates requires the exercise of judgment. Actual results could differ from those estimates, and such differences may be material to our consolidated financial statements. Listed below are those policies and estimates that we believe are critical and require the use of significant judgment in their application.

Goodwill

We have recorded a significant amount of goodwill in connection with the recent acquisition of CalAtlantic. We record goodwill associated with acquisitions of businesses when the purchase price of the business exceeds the fair value of the net tangible and identifiable assets acquired. In accordance with ASC Topic 350, Intangibles-Goodwill and Other ("ASC 350"), we evaluate goodwill for potential impairment on at least an annual basis. We evaluate potential impairment by comparing the carrying value of each of our reporting units to their estimated fair values. We believe that the accounting estimate for goodwill is a critical accounting estimate because of the judgment required in assessing the fair value of each of our reporting units. We estimate fair value through various valuation methods, including the use of discounted expected future cash flows of each

reporting unit. The expected future cash flows for each segment are significantly impacted by current market conditions. If these market conditions and resulting expected future cash flows for each reporting unit decline significantly, the actual results for each segment could differ from our estimate, which would cause goodwill to be impaired. Our accounting for goodwill represents our best estimate of future events.

Homebuilding Revenue Recognition

Homebuilding revenues and related profits from sales of homes are recognized at the time of the closing of a sale, when title to and possession of the property are transferred to the homebuyer. Our performance obligation, to deliver the agreed-upon home, is generally satisfied in less than one year from the original contract date. Cash proceeds from home closings held in escrow for our benefit, typically for approximately three days, are included in Homebuilding cash and cash equivalents in the Consolidated Balance Sheets and disclosed in the notes to consolidated balance sheets. Contract liabilities include customer deposits liabilities related to sold but undelivered homes that are included in other liabilities in the Consolidated Balance Sheets. We periodically elect to sell parcels of land to third parties. Cash consideration from land sales is typically due on the closing date, which is generally when performance obligations are satisfied and revenue is recognized as title to and possession of the property are transferred to the buyer.

Multifamily Revenue Recognition

Our Multifamily segment provides management services with respect to the development, construction and property management of rental projects in joint ventures in which we have investments. As a result, our Multifamily segment earns and receives fees, which are generally based upon a stated percentage of development and construction costs and a percentage of gross rental collections. These fees are recorded over the period in which the services are performed using an input method, which properly depicts the level of effort required to complete the management services. In addition, our Multifamily segment provides general contractor services for the construction of some of its rental projects and recognizes the revenue over the period in which the services are performed using an input method, which properly depicts the level of effort required to complete the construction services. These customer contracts require us to provide management and general contractor services which represents a performance obligation that we satisfy over time. Management fees and general contractor services in the Multifamily segment are included in Multifamily revenue.

Inventories

Inventories are stated at cost unless the inventory within a community is determined to be impaired, in which case the impaired inventory is written down to fair value. Inventory costs include land, land development and home construction costs, real estate taxes, deposits on land purchase contracts and interest related to development and construction. We review our inventory for indicators of impairment by evaluating each community during each reporting period. If the undiscounted cash flows expected to be generated by a community are less than its carrying amount, an impairment charge is recorded to write down the carrying amount of such community to its estimated fair value.

In conducting our review for indicators of impairment on a community level, we evaluate, among other things, the margins on homes that have been delivered, margins on homes under sales contracts in backlog, projected margins with regard to future home sales over the life of the community, projected margins with regard to future land sales, and the estimated fair value of the land itself.

We estimate the fair value of our communities using a discounted cash flow model. The projected cash flows for each community are significantly impacted by estimates related to market supply and demand, product type by community, homesite sizes, sales pace, sales prices, sales incentives, construction costs, sales and marketing expenses, the local economy, competitive conditions, labor costs, costs of materials and other factors for that particular community. Every division evaluates the historical performance of each of its communities as well as current trends in the market and economy impacting the community and its surrounding areas. These trends are analyzed for each of the estimates listed above.

Since the estimates and assumptions included in our cash flow models are based upon historical results and projected trends, they do not anticipate unexpected changes in market conditions or strategies that may lead to us incurring additional impairment charges in the future.

Using all the available information, we calculate our best estimate of projected cash flows for each community. While many of the estimates are calculated based on historical and projected trends, all estimates are subjective and change from market to market and community to community as market and economic conditions change. The determination of fair value also requires discounting the estimated cash flows at a rate we believe a market participant would determine to be commensurate with the inherent risks associated with the assets and related estimated cash flow streams. The discount rate used in determining each asset’s fair value depends on the community’s projected life and development stage.

We estimate the fair value of inventory evaluated for impairment based on market conditions and assumptions made by management at the time the inventory is evaluated, which may differ materially from actual results if market conditions or our assumptions change.

We believe that the accounting related to inventory valuation and impairment is a critical accounting policy because: (1) assumptions inherent in the valuation of our inventory are highly subjective and susceptible to change and (2) the impact of recognizing impairments on our inventory has been and could continue to be material to our consolidated financial statements.

Product Warranty

Although we subcontract virtually all aspects of construction to others and our contracts call for the subcontractors to repair or replace any deficient items related to their trades, we are primarily responsible to homebuyers to correct any deficiencies. Additionally, in some instances, we may be held responsible for the actions of or losses incurred by subcontractors. Warranty and similar reserves for homes are established at an amount estimated to be adequate to cover potential costs for materials and labor with regard to warranty-type claims expected to be incurred subsequent to the delivery of a home. Reserves are determined based upon historical data and trends with respect to similar product types and geographical areas. We believe the accounting estimate related to the reserve for warranty costs is a critical accounting estimate because the estimate requires a large degree of judgment. While we believe that the reserve for warranty costs is adequate, there can be no assurances that historical data and trends will accurately predict our actual warranty costs. Additionally, there can be no assurances that future economic or financial developments might not lead to a significant change in the reserve.

Investments in Unconsolidated Entities

We strategically invest in unconsolidated entities that acquire and develop land (1) for our homebuilding operations or for sale to third parties, (2) for construction of homes for sale to third-party homebuyers or (3) for the construction and sale of multifamily rental properties. Our Homebuilding partners generally are unrelated homebuilders, land owners/developers and financial or other strategic partners. Additionally, in recent years, we have invested in technology companies that are looking to improve the homebuilding and financial services industry in order to better serve our customers and increase efficiencies. Our Multifamily partners are all financial partners.

Most of the unconsolidated entities through which we acquire and develop land are accounted for by the equity method of accounting because we are not the primary beneficiary or a de-facto agent, and we have a significant, but less than controlling, interest in the entities. We record our investments in these entities in our consolidated balance sheets as Investments in Unconsolidated Entities and our pro-rata share of the entities’ earnings or losses in our consolidated statements of operations as Equity in Earnings (Loss) from Unconsolidated Entities within each of the respective segments. For most unconsolidated entities, we generally have the right to share in earnings and distributions on a pro-rata basis based upon ownership percentages. However, certain Homebuilding unconsolidated entities and all of our Multifamily unconsolidated entities provide for a different allocation of profit and cash distributions if and when cumulative results of the joint venture exceed specified targets (such as a specified internal rate of return). Advances to these entities are included in the investment balance.

Management looks at specific criteria and uses its judgment when determining if we are the primary beneficiary of, or have a controlling interest in, an unconsolidated entity. Factors considered in determining whether we have significant influence or we have control include risk and reward sharing, experience and financial condition of the other partners, voting rights, involvement in day-to-day capital and operating decisions and continuing involvement. The accounting policy relating to the use of the equity method of accounting is a critical accounting policy due to the judgment required in determining whether the entity is a VIE or a voting interest entity and then whether we are the primary beneficiary or have control or significant influence. We believe that the equity method of accounting is appropriate for our investments in unconsolidated entities where we are not the primary beneficiary and we do not have a controlling interest, but rather share control with our partners.

We evaluate the long-lived assets in unconsolidated entities for indicators of impairment during each reporting period. A series of operating losses of an investee or other factors may indicate that a decrease in the fair value of our investment in the unconsolidated entity below its carrying amount has occurred which is other-than-temporary. The amount of impairment recognized is the excess of the investment’s carrying amount over its estimated fair value.

The evaluation of our investment in unconsolidated entities for other-than-temporary impairment includes certain critical assumptions: (1) projected future distributions from the unconsolidated entities, (2) discount rates applied to the future distributions and (3) various other factors. Our assumptions on the projected future distributions from unconsolidated entities are dependent on market conditions.

We believe our assumptions on discount rates are critical accounting policies because the selection of the discount rates affects the estimated fair value of our investments in unconsolidated entities. A higher discount rate reduces the estimated fair value of our investments in unconsolidated entities, while a lower discount rate increases the estimated fair value of our investments in unconsolidated entities. Because of changes in economic conditions, actual results could differ materially from

management’s assumptions and may require material valuation adjustments to our investments in unconsolidated entities to be recorded in the future.

Consolidation of Variable Interest Entities

GAAP requires the assessment of whether an entity is a VIE and, if so, if we are the primary beneficiary at the inception of the entity or at a reconsideration event. Additionally, GAAP requires the consolidation of VIEs in which we have a controlling financial interest. A controlling financial interest will have both of the following characteristics: (a) the power to direct the activities of a VIE that most significantly impact the VIE’s economic performance and (b) the obligation to absorb losses of the VIE that could potentially be significant to the VIE or the right to receive benefits from the VIE that could potentially be significant to the VIE.

Our variable interest in VIEs may be in the form of (1) equity ownership, (2) contracts to purchase assets, (3) management services and development agreements between us and a VIE, (4) loans provided by us to a VIE or other partner and/or (5) guarantees provided by members to banks and other third parties. We examine specific criteria and use our judgment when determining if we are the primary beneficiary of a VIE. Factors considered in determining whether we are the primary beneficiary include risk and reward sharing, experience and financial condition of other partner(s), voting rights, involvement in day-to-day capital and operating decisions, representation on a VIE’s executive committee, existence of unilateral kick-out rights or voting rights, level of economic disproportionality between us and the other partner(s) and contracts to purchase assets from VIEs.

Generally, all major decision making in our joint ventures is shared among all partners. In particular, business plans and budgets are generally required to be unanimously approved by all partners. Usually, management and other fees earned by us are nominal and believed to be at market and there is no significant economic disproportionality between us and other partners. Generally, we purchase less than a majority of the JV’s assets and the purchase prices under our option contracts are believed to be at market.

Generally, our unconsolidated entities become VIEs and consolidate when the other partner(s) lack the intent and financial wherewithal to remain in the entity. As a result, we continue to fund operations and debt paydowns through partner loans or substituted capital contributions. The accounting policy relating to variable interest entities is a critical accounting policy because the determination of whether an entity is a VIE and, if so, whether we are primary beneficiary may require us to exercise significant judgment.