Item 2. 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 our unaudited condensed consolidated financial statements and accompanying notes included under Item 1 of this Report and our audited consolidated financial statements and accompanying notes included in our Annual Report on Form 10-K, for our fiscal year ended November 30, 2021.

Some of the statements in this Management’s Discussion and Analysis of Financial Condition and Results of Operations, and elsewhere in this Quarterly Report on Form 10-Q, are "forward-looking statements," within the meaning of the Private Securities Litigation Reform Act of 1995. These forward-looking statements typically include the words “anticipate,” “believe,” “consider,” “estimate,” “expect,” “forecast,” “intend,” “objective,” “plan,” “predict,” “projection,” “seek,” “strategy,” “target,” “will” or other words of similar meaning. Forward-looking statements contained herein may include opinions or beliefs regarding market conditions and similar matters. In many instances, those opinions and beliefs are based upon general observations by members of our management, anecdotal evidence and our experience in the conduct of our businesses, without specific investigation or analyses. Therefore, while they reflect our view of the industries and markets in which we are involved, they should not be viewed as reflecting verifiable views or views that are necessarily shared by all who are involved in those industries or markets. These statements concern expectations, beliefs, projections, plans and strategies, anticipated events or trends and similar expressions concerning matters that are not historical facts.

The forward-looking statements reflect our current views about future events and are subject to risks, uncertainties and assumptions. We wish to caution readers that certain important factors may have affected and could in the future affect our actual results and could cause actual results to differ significantly from what is anticipated by our forward-looking statements. The most important factors that could cause actual results to differ materially from those anticipated by our forward-looking statements include, but are not limited to: the potential negative impact to our business of the ongoing coronavirus (“COVID-19”) pandemic, the duration, impact and severity of which is highly uncertain; continuation of supply shortages and increased costs related to construction materials and labor; cost increases related to real estate taxes and insurance; reduced availability or increased cost of mortgage financing for homebuyers; increased interest rates or increased competition in the mortgage industry; reductions in the market value of our investments in public companies; an extended slowdown in the real estate markets across the nation, including a slowdown in either the market for single family homes or the multifamily rental market; our inability to successfully execute our strategies, including our land lighter strategy and our strategy to monetize non-core assets; changes in general economic and financial conditions that reduce demand for our products and services, lower our profit margins or reduce our access to credit; our inability to acquire land at anticipated prices; the possibility that we will incur nonrecurring costs that affect earnings in one or more reporting periods; decreased demand for our homes or Multifamily rental properties; increased competition for home sales from other sellers of new and resale homes; our inability to pay down debt; government actions or other factors that might force us to terminate our program of repurchasing our stock; a decline in the value of our land inventories and resulting write-downs of the carrying value of our real estate assets; the failure of the participants in various joint ventures to honor their commitments; difficulty obtaining land-use entitlements or construction financing; natural disasters and other unforeseen events for which our insurance does not provide adequate coverage; new laws or regulatory changes that adversely affect the profitability of our businesses; our inability to refinance our debt on terms that are as favorable as our current arrangements; and changes in accounting conventions that adversely affect our reported earnings.

Please see our Form 10-K for the fiscal year ended November 30, 2021 and our other filings with the SEC for a further discussion of these and other risks and uncertainties which could affect our future results. We undertake no obligation, other than those imposed by securities laws, to publicly revise any forward-looking statements to reflect events or circumstances after the date of those statements or to reflect the occurrence of anticipated or unanticipated events.

Outlook

The housing market remains strong in all of our major markets despite the geopolitical environment, rising interest rates and inflationary pressures. Buyers are seeking shelter and protection against escalating housing costs as rents increase. Owning a home with a fixed rate mortgage provides this protection. Additionally, the home is increasingly the control center or hub of our homebuyers' lives. While demand is strong, the supply of new and existing homes continues to be constrained. Our ability to deliver homes has been tested by supply chain challenges for both land and construction related to materials and labor. The time it takes us to build a home has increased by about eight weeks over the past year. Also, the cost of building homes has been increasing. To maintain our margins, we are not selling homes until we are ready to build them, so we can factor cost increases into the sale prices. Although deliveries have been constrained by the supply chain disruption, efficiency in our operations continues to drive strong bottom-line improvement and increased returns.

The lengthening of time it takes us to build homes requires that we have more of our cash invested in construction in process. We continue to strategically acquire land while increasing the homes we control through options. We continue to make progress with our land-light strategy as our percentage of homesites controlled increased to 58% from 45% in the prior year, while our years’ supply of land owned stayed flat from the prior year at 3.4 years. We are also continuing to pay down debt as it comes due with the next tranche maturing in November 2022. We have also continued to repurchase our stock. Our Board recently approved a $2 billion increase in our repurchase authorization.

In addition, we have made significant strategic investments through our LENX platform in new technology companies that are working on innovations that will reshape the way our company and our industry operates. They have led to changes in our core business that have reduced our SG&A expenses. These investments are also the tip of the spear in implementing our industry leading sustainability initiatives from solar on the rooftop to microgrid technology across communities, and from water conservation to sustainable cement. Our LENX strategy is setting the course for Lennar's sustainable future. Our income statement is impacted by unrealized mark-to-market gains and losses from LENX investments in companies that have gone public, but these are non-monetary, unrealized gains and losses, and they do not reflect the state of the housing market or our operating performance.

We have also continued to work on the structural components and organization of our proposed spin-off company as we focus on our strategy of becoming a pure-play homebuilding company. This SpinCo will be an asset light, asset management business that will have a limited balance sheet. Many of the assets targeted for SpinCo will be acquired by investor funds it manages and will be monetized in the form of assets under management. The three core verticals of SpinCo will be Multifamily, single family for rent and land strategies. Each of these verticals already have raised third-party capital and have active asset managers. The spin-off will enable us to generate higher returns on our assets and equity base.

We are extremely well-positioned financially, organizationally, and technologically to thrive and grow in this evolving housing market. We expect our deliveries for the second quarter of 2022 will be in the range of 16,000 to 16,300 homes. We expect to continue to produce strong gross margins for the second quarter of 2022 in the range of 28.0% to 28.25% and we expect our SG&A to be between 6.8% and 7.0% as we continue to focus on simplification, efficiencies and leveraging our overhead. We expect our community count to build throughout the year and are projecting to end 2022 with a low double-digit increase in community count year-over-year. We continue to see great land acquisition opportunities in our markets and are confident this pipeline will produce strong community count growth for the next several years. As we look to the remainder of 2022, we expect our results to continue to strengthen throughout the year as our recently increased start pace results in more deliveries and as we use our size and scale and our builder of choice relationships to help us navigate some of the supply chain challenges.

(1) Results of Operations

Overview

We historically have experienced, and expect to continue to experience, variability in quarterly results. Our results of operations for the three months ended February 28, 2022 are not necessarily indicative of the results to be expected for the full year. Our homebuilding business is seasonal in nature and generally reflects higher levels of new home order activity in our second and third fiscal quarters and increased deliveries in the second half of our fiscal year. However, a variety of factors can alter seasonal patterns.

Our net earnings attributable to Lennar were $503.6 million, or $1.69 per diluted share ($1.70 per basic share), in the first quarter of 2022, compared to net earnings attributable to Lennar of $1.0 billion, or $3.20 per diluted share ($3.20 per basic share), in the first quarter of 2021. Results included unrealized mark-to-market losses of $395.2 million in the first quarter of 2022 and unrealized mark-to-market gains of $469.7 million in the first quarter of 2021 on our publicly traded technology investments. Excluding unrealized mark-to-market gains and losses in both years, net earnings attributable to Lennar were $800.2 million or $2.70 per diluted share in the first quarter of 2022, compared to net earnings of $642.7 million, or $2.04 per diluted share, in the first quarter of 2021.

Financial information relating to our operations was as follows:

			Three Months Ended February 28, 2022
(In thousands)			Homebuilding						Financial Services						Multifamily						Lennar Other						Corporate						Total
Revenues:
Sales of homes			$	5,721,757					—						—						—						—						5,721,757
Sales of land			23,967						—						—						—						—						23,967
Other revenues (1)			6,481						176,701						267,359						7,251						—						457,792
Total revenues			5,752,205						176,701						267,359						7,251						—						6,203,516
Costs and expenses:
Costs of homes sold			4,184,864						—						—						—						—						4,184,864
Costs of land sold			28,556						—						—						—						—						28,556
Selling, general and administrative expenses			428,478						—						—						—						—						428,478
Other costs and expenses			—						85,910						263,737						5,407						—						355,054
Total costs and expenses			4,641,898						85,910						263,737						5,407						—						4,996,952
Equity in earnings (loss) from unconsolidated entities, Multifamily other gain and Lennar Other other income (expense), net, and other gain			(286)						—						1,805						(9,808)						—						(8,289)
Other expense, net			(171)						—						—						—						—						(171)
Lennar Other unrealized loss from technology investments			—						—						—						(395,170)						—						(395,170)
Operating earnings (loss)			$	1,109,850					90,791						5,427						(403,134)						—						802,934
Corporate general and administrative expenses			—						—						—						—						113,661						113,661
Charitable foundation contribution			—						—						—						—						12,538						12,538
Earnings (loss) before income taxes			$	1,109,850					90,791						5,427						(403,134)						(126,199)						676,735

(1)Other revenues in our Multifamily segment include land sales to unconsolidated entities of $131.6 million.

			Three Months Ended February 28, 2021
(In thousands)			Homebuilding						Financial Services						Multifamily						Lennar Other						Corporate						Total
Revenues:
Sales of homes			$	4,890,914					—						—						—						—						4,890,914
Sales of land			47,643						—						—						—						—						47,643
Other revenues			4,499						244,069						131,443						6,900						—						386,911
Total revenues			4,943,056						244,069						131,443						6,900						—						5,325,468
Costs and expenses:
Costs of homes sold			3,666,862						—						—						—						—						3,666,862
Costs of land sold			41,188						—						—						—						—						41,188
Selling, general and administrative expenses			410,236						—						—						—						—						410,236
Other costs and expenses			—						97,862						131,049						4,252						—						233,163
Total costs and expenses			4,118,286						97,862						131,049						4,252						—						4,351,449
Equity in loss from unconsolidated entities, Multifamily other gain and Lennar Other other expense, net			(4,565)						—						(1,268)						(1,047)						—						(6,880)
Other income, net			12,975						—						—						—						—						12,975
Lennar Other unrealized gain from technology investments			—						—						—						469,745						—						469,745
Operating earnings (loss)			$	833,180					146,207						(874)						471,346						—						1,449,859
Corporate general and administrative expenses			—						—						—						—						110,531						110,531
Charitable foundation contribution			—						—						—						—						12,314						12,314
Earnings (loss) before income taxes			$	833,180					146,207						(874)						471,346						(122,845)						1,327,014

Three Months Ended February 28, 2022 versus Three Months Ended February 28, 2021

Revenues from home sales increased 17% in the first quarter of 2022 to $5.7 billion from $4.9 billion in the first quarter of 2021. Revenues were higher primarily due to a 2% increase in the number of home deliveries to 12,538 homes from 12,314 homes and a 15% increase in the average sales price to $457,000 from $398,000.

Gross margin on home sales were $1.5 billion, or 26.9%, in the first quarter of 2022, compared to $1.2 billion, or 25.0%, in the first quarter of 2021. During the first quarter of 2022, an increase in revenues per square foot was offset by an increase in

costs per square foot primarily due to higher lumber costs. Overall, gross margins improved year over year as land costs remained relatively flat while interest expense decreased as a result of our focus on reducing debt.

Selling, general and administrative expenses were $428.5 million in the first quarter of 2022, compared to $410.2 million in the first quarter of 2021. As a percentage of revenues from home sales, selling, general and administrative expenses improved to 7.5% in the first quarter of 2022, from 8.4% in the first quarter of 2021. This improvement was primarily due to a decrease in broker commissions and benefits of our technology efforts.

Operating earnings for our Financial Services segment were $90.8 million in the first quarter of 2022, compared to $146.2 million in the first quarter of 2021. The decrease in operating earnings was primarily due to lower mortgage net margins driven by a more competitive mortgage market.

Operating earnings for our Multifamily segment were $5.4 million in the first quarter of 2022, compared to an operating loss of $0.9 million in the first quarter of 2021.

Operating loss for our Lennar Other segment was $403.1 million in the first quarter of 2022, compared to operating earnings of $471.3 million in the first quarter of 2021. Lennar Other operating loss in the first quarter of 2022 and Lennar Other operating earnings in the first quarter of 2021 was due to unrealized mark-to-market losses and gains, respectively, on our publicly traded technology investments.

Homebuilding Segments

At February 28, 2022, our reportable Homebuilding segments and Homebuilding Other are outlined in Note 2 of the Notes to Condensed Consolidated Financial Statements. The following tables set forth selected financial and operational information related to our homebuilding operations for the periods indicated:

Selected Financial and Operational Data

			Three Months Ended February 28, 2022
			Gross Margins																		Operating Earnings (Loss)
($ 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 Revenue						Equity in Earnings (Loss) from Unconsolidated Entities						Other Income (Expense), net						Operating Earnings (Loss)
East			$	1,662,991					1,176,553						29.3		%				351,554						(5,674)						797						(1,358)						6,676						351,995
Central			1,105,929						870,611						21.3		%				150,375						1,619						234						129						(279)						152,078
Texas			805,630						573,842						28.8		%				169,941						2,398						242						—						(1,269)						171,312
West			2,142,204						1,557,737						27.3		%				444,524						(839)						881						136						(3,254)						441,448
Other (2)			5,003						6,121						(22.3)		%				(7,979)						(2,093)						4,327						807						(2,045)						(6,983)
Totals			$	5,721,757					4,184,864						26.9		%				1,108,415						(4,589)						6,481						(286)						(171)						1,109,850

			Three Months Ended February 28, 2021
			Gross Margins																		Operating Earnings (Loss)
($ 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 Revenue						Equity in Earnings (Loss) from Unconsolidated Entities						Other Income (Expense), net						Operating Earnings (Loss)
East			$	1,347,610					988,862						26.6		%				241,534						5,076						1,418						(492)						14,547						262,083
Central			926,438						713,546						23.0		%				132,099						(23)						405						98						(556)						132,023
Texas			636,411						451,198						29.1		%				129,161						1,034						258						154						(964)						129,643
West			1,976,808						1,507,727						23.7		%				317,990						368						1,050						962						1,336						321,706
Other (2)			3,647						5,529						(51.6)		%				(6,968)						—						1,368						(5,287)						(1,388)						(12,275)
Totals			$	4,890,914					3,666,862						25.0		%				813,816						6,455						4,499						(4,565)						12,975						833,180

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

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

Summary of Homebuilding Data

Deliveries:

			Three Months Ended
			Homes												Dollar Value (In thousands)												Average Sales Price
			February 28,												February 28,												February 28,
			2022						2021						2022						2021						2022						2021
East			4,082						3,920						$	1,672,372					1,351,301						$	410,000					345,000
Central			2,521						2,419						1,105,929						926,438						439,000						383,000
Texas			2,537						2,349						805,630						636,411						318,000						271,000
West			3,392						3,622						2,142,204						1,976,808						632,000						546,000
Other			6						4						5,003						3,647						834,000						912,000
Total			12,538						12,314						$	5,731,138					4,894,605						$	457,000					398,000

Of the total homes delivered listed above, 25 homes with a dollar value of $9.4 million and an average sales price of $375,000 represent home deliveries from unconsolidated entities for the three months ended February 28, 2022, compared to 12 home deliveries with a dollar value of $3.7 million and an average sales price of $308,000 for the three months ended February 28, 2021.

New Orders (1):

			Three Months Ended
			Active Communities												Homes												Dollar Value (In thousands)												Average Sales Price
			February 28,												February 28,												February 28,												February 28,
			2022						2021						2022						2021						2022						2021						2022						2021
East			347						340						4,910						4,814						$	2,133,056					1,700,112						$	434,000					353,000
Central			298						274						3,112						3,326						1,402,138						1,333,626						451,000						401,000
Texas			216						218						2,766						2,775						921,785						812,169						333,000						293,000
West			340						327						4,954						4,652						3,335,932						2,692,395						673,000						579,000
Other			3						3						5						3						4,628						2,974						926,000						991,000
Total			1,204						1,162						15,747						15,570						$	7,797,539					6,541,276						$	495,000					420,000

Of the total homes listed above, 44 homes with a dollar value of $17.3 million and an average sales price of $393,000 represent homes in five active communities from unconsolidated entities for the three months ended February 28, 2022, compared to 35 homes with a dollar value of $11.6 million and an average sales price of $332,000 in four active communities for the three months ended February 28, 2021.

(1)Homes represent the number of new sales contracts executed with homebuyers, net of cancellations, during the three months ended February 28, 2022 and 2021.

Backlog:

			At
			Homes												Dollar Value (In thousands)												Average Sales Price
			February 28,												February 28,												February 28,
			2022						2021						2022						2021						2022						2021
East			9,115						6,907						$	4,041,347					2,659,746						$	443,000					385,000
Central			5,695						5,278						2,617,383						2,169,360						460,000						411,000
Texas			4,495						3,249						1,569,424						1,000,342						349,000						308,000
West			8,027						6,642						5,328,890						3,629,018						664,000						546,000
Other			3						1						3,567						1,175						1,189,000						1,175,000
Total			27,335						22,077						$	13,560,611					9,459,641						$	496,000					428,000

Of the total homes in backlog listed above, 98 homes with a backlog dollar value of $36.6 million and an average sales price of $373,000 represent the backlog from unconsolidated entities at February 28, 2022, compared to 61 homes with a backlog dollar value of $19.4 million and an average sales price of $318,000 at February 28, 2021. During the three months ended February 28, 2022, we acquired 355 homes in backlog in the East Homebuilding segment.

Backlog represents the number of homes under sales contracts. Homes are sold using sales contracts, which are generally accompanied by sales deposits. In some instances, purchasers are permitted to cancel sales if they fail to qualify for financing or under certain other circumstances. Various state and federal laws and regulations may sometimes give purchasers a right to cancel homes in backlog. We do not recognize revenue on homes under sales contracts until the sales are closed and title passes to the new homeowners.

Three Months Ended February 28, 2022 versus Three Months Ended February 28, 2021

Homebuilding East: Revenues from home sales increased in the first quarter of 2022 compared to the first quarter of 2021, primarily due to an increase in the number of home deliveries in all the states in the segment except in Florida and an increase in the average sales price of homes delivered in all the states of the segment. The increase in the number of home deliveries was primarily driven by an increase in the number of active communities. The decrease in the number of home deliveries in Florida was primarily due to a decrease in the number of active communities due to the timing of opening and closing of communities as a result of supply chain disruptions. The increase in the average sales price of homes delivered was primarily due to favorable market conditions. Gross margin percentage on home deliveries in the first quarter of 2022 increased compared to the same period last year primarily due to price appreciation as the increase in revenues per square foot of homes delivered outpaced the increase in costs per square foot.

Homebuilding Central: Revenues from home sales increased in the first quarter of 2022 compared to the first quarter of 2021, primarily due to an increase in the number of home deliveries in all the states in the segment except in North Carolina, and an increase in the average sales price of homes delivered in all the states of the segment. The increase in the number of home deliveries was primarily driven by an increase in active communities. The decrease in the number of home deliveries in North Carolina was primarily due to a decrease in the number of deliveries per active community due to the timing of opening and closing of communities as a result of supply chain disruptions. The increase in the average sales price of homes delivered was primarily due to favorable market conditions. Gross margin percentage on home deliveries in the first quarter of 2022 decreased compared to the same period last year primarily due to the increase in costs per square foot of homes delivered outpacing the increase in revenues per square foot driven by higher lumber costs.

Homebuilding Texas: Revenues from home sales increased in the first quarter of 2022 compared to the first quarter of 2021, primarily due to an increase in the number of home deliveries and an increase in the average sales price of homes delivered. The increase in the number of home deliveries was primarily driven by an increase in deliveries per active community over the same period last year. The increase in the average sales price of homes delivered was primarily due to favorable market conditions. Gross margin percentage on home deliveries in the first quarter of 2022 decreased compared to the same period last year primarily due to the increase in costs per square foot in homes delivered outpacing the increase in revenues per square foot driven by higher lumber costs and a change in product mix.

Homebuilding West: Revenues from home sales increased in the first quarter of 2022 compared to the first quarter of 2021, primarily due to an increase in the average sales price of homes delivered in all the states of the segment, partially offset by a decrease in the number of home deliveries in the segment, primarily in Arizona, Colorado and Nevada. The increase in the average sales price of homes delivered was primarily due to favorable market conditions. The decrease in the number of home deliveries in Arizona, Colorado, and Nevada was primarily due to a decrease in the number of deliveries per active community due to the timing of opening and closing of communities as a result of supply chain disruptions. Gross margin percentage on home deliveries in the first quarter of 2022 increased compared to the same period last year primarily due to price appreciation as the increase in revenues per square foot of homes delivered outpaced the increase in costs per square foot.Financial Services Segment

Our Financial Services reportable segment provides mortgage financing, title and closing services primarily for buyers of our homes. The segment also originates and sells into securitizations commercial mortgage loans through its LMF Commercial business. Our Financial Services segment sells substantially all of the residential loans it originates within a short period in the secondary mortgage market, the majority of which are sold on a servicing released, non-recourse basis. After the loans are sold, we retain potential liability for possible claims by purchasers that we breached certain limited industry-standard representations and warranties in the loan sale agreements.

The following table sets forth selected financial and operational information related to the residential mortgage and title activities of our Financial Services segment:

			Three Months Ended
			February 28,
(Dollars in thousands)			2022						2021
Dollar value of mortgages originated			$	2,760,000					2,761,000
Number of mortgages originated			7,400						8,400
Mortgage capture rate of Lennar homebuyers			74		%				76		%
Number of title and closing service transactions			13,700						15,000

At February 28, 2022 and November 30, 2021, the carrying value of Financial Services' commercial mortgage-backed securities ("CMBS") was $156.6 million and $157.8 million, respectively. Details of these securities and related debt are within Note 2 of the Notes to Condensed Consolidated Financial Statements.

Multifamily Segment

We have been actively involved, primarily through unconsolidated entities, in the development, construction and property management of multifamily rental properties. Our Multifamily segment focuses on developing a geographically diversified portfolio of institutional quality multifamily rental properties in select U.S. markets.

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

Balance Sheets
(In thousands)			February 28, 2022						November 30, 2021
Multifamily investments in unconsolidated entities			$	661,252					654,029
Lennar's net investment in Multifamily			897,683						976,676

Lennar Other Segment

Lennar Other primarily includes strategic investments in technology companies, primarily managed by our LENX subsidiary, and fund interests we retained when we sold the Rialto Capital Management ("Rialto") asset and investment management platform in 2018. At February 28, 2022 and November 30, 2021, we had $1.1 billion and $1.5 billion, respectively, of assets in our Lennar Other segment, which included investments in unconsolidated entities of $333.8 million and $346.3 million, respectively. The investments in equity securities of Opendoor Technologies, Inc. ("Opendoor"), Hippo Holdings, Inc. ("Hippo"), Sunnova ("NOVA"), SmartRent, Inc. ("SmartRent"), Blend Labs, Inc. ("Blend") and Sonder ("SOND") are held at market and will therefore change depending on the value of our share holdings in those entities on the last day of each quarter. The following is a detail of Lennar Other unrealized gain (loss):

			Three Months Ended
			February 28,
(In thousands)			2022						2021
Opendoor (OPEN) mark to market			$	(143,361)					469,745
Hippo (HIPO) mark to market			(124,457)						—
Sunnova (NOVA) mark to market			(75,041)						—
SmartRent (SMRT) mark to market			(44,363)						—
Blend Labs (BLND) mark to market			(7,442)						—
Sonder (SOND) mark to market			(506)						—
			$	(395,170)					469,745

(2) Financial Condition and Capital Resources

At February 28, 2022, we had cash and cash equivalents and restricted cash related to our homebuilding, financial services, multifamily and other operations of $1.6 billion, compared to $3.0 billion at November 30, 2021 and $2.6 billion at February 28, 2021.

We finance all of our activities, including homebuilding, financial services, multifamily, other and general operating needs, primarily with cash generated from our operations, debt issuances and cash borrowed under our warehouse lines of credit and our unsecured revolving credit facility (the "Credit Facility"). At February 28, 2022, we had $1.4 billion of homebuilding cash and cash equivalents and no outstanding borrowings under our $2.5 billion revolving credit facility, thereby providing $3.9 billion of available capacity.

Operating Cash Flow Activities

During the three months ended February 28, 2022 and 2021, cash (used in) provided by operating activities totaled ($72) million and $386 million, respectively. During the three months ended February 28, 2022, cash used in operating activities was impacted primarily by an increase in inventories due to strategic land purchases, land development and construction costs of $1.9 billion and increase in other assets of $50 million. This was partially offset by our net earnings, gross of Lennar Other unrealized mark-to-market loss of $395 million on strategic technology investments, a decrease in receivables of $381 million primarily related to a decrease in Financial Services' receivables, net, which are loans sold to investors for which we have not been paid. In addition, there was a decrease in loans held-for-sale of $409 million primarily related to the sale of loans originated by our Financial Services segment and an increase in accounts payable and other liabilities of $96 million.

During the three months ended February 28, 2021, cash provided by operating activities was impacted primarily by our net earnings net of the unrealized mark-to-market gain of $470 million related to our Opendoor strategic investment, a decrease in loans held-for-sale of $361 million primarily related to the sale of loans originated by our Financial Services segment, partially offset by an increase in inventories due to strategic land purchases, and land development and construction costs of $862 million.

Investing Cash Flow Activities

During the three months ended February 28, 2022 and 2021, cash used in investing activities totaled $20 million and $93 million, respectively. During the three months ended February 28, 2022, our cash used in investing activities was primarily due to cash contributions of $139 million to unconsolidated entities, which included (1) $98 million to Homebuilding unconsolidated entities (2) $37 million to Lennar Other unconsolidated entities and (3) $4 million to Multifamily unconsolidated entities. In addition, we also had $71 million of purchases of investment securities related to strategic technology investments included in the Lennar Other segment. This was partially offset by distributions of capital from unconsolidated entities of $174 million, which primarily included (1) $119 million from Multifamily unconsolidated entities, (2) $17 million from Homebuilding unconsolidated entities, and (3) $38 million from our Lennar Other unconsolidated entities.

During the three months ended February 28, 2021, our cash used in investing activities was primarily due to cash contributions of $224 million to unconsolidated entities, which included (1) $148 million to Homebuilding unconsolidated entities, (2) $38 million to Multifamily unconsolidated entities, and (3) $38 million to the strategic technology investments included in the Lennar Other segment. This was partially offset by distributions of capital from unconsolidated entities of $83 million, which primarily included (1) $53 million from Multifamily unconsolidated entities, (2) $20 million from Homebuilding unconsolidated entities; and (3) $11 million from the unconsolidated Rialto real estate funds included in our Lennar Other segment.

Financing Cash Flow Activities

During the three months ended February 28, 2022 and 2021, cash used in financing activities totaled $1.3 billion and $630 million, respectively. During the three months ended February 28, 2022, cash used in financing activities was primarily due to (1) $529 million of net repayments under our Financial Services' warehouse facilities, which included the LMF Commercial warehouse repurchase facilities; (2) $581 million of repurchases of our common stock, which included $526 million of repurchases under our repurchase program and $55 million of repurchases related to our equity compensation plan; and (3) $110 million of dividend payments. These were partially offset by $33 million of net proceeds from liabilities related to consolidated inventory not owned due to activity with land banks.

During the three months ended February 28, 2021, cash used in financing activities was primarily impacted by (1) $501 million of net repayments under our Financial Services' warehouse facilities, which included the LMF Commercial warehouse repurchase facilities; (2) $78 million of dividend payments; and (3) $69 million of repurchases of our common stock, which included $43 million of repurchases under our repurchase program and $26 million of repurchases related to our equity compensation plan. These were partially offset by $67 million of proceeds from liabilities related to consolidated inventory not owned due to land sales to a land bank.

Debt to total capital ratios are financial measures commonly used in the homebuilding industry and are presented to assist in understanding the leverage of our homebuilding operations. Homebuilding debt to total capital and net Homebuilding debt to total capital are calculated as follows:

(Dollars in thousands)			February 28, 2022						November 30, 2021						February 28, 2021
Homebuilding debt			$	4,639,222					4,652,338						5,976,168
Stockholders’ equity			20,679,064						20,816,425						18,896,246
Total capital			$	25,318,286					25,468,763						24,872,414
Homebuilding debt to total capital			18.3		%				18.3		%				24.0		%
Homebuilding debt			$	4,639,222					4,652,338						5,976,168
Less: Homebuilding cash and cash equivalents			1,366,597						2,735,213						2,421,411
Net Homebuilding debt			$	3,272,625					1,917,125						3,554,757
Net Homebuilding debt to total capital (1)			13.7		%				8.4		%				15.8		%

(1)Net homebuilding debt to total capital is a non-GAAP financial measure defined as net homebuilding debt (homebuilding debt less homebuilding cash and cash equivalents) divided by total capital (net homebuilding debt plus stockholders' equity). We believe the ratio of net homebuilding debt to total capital is a relevant and a useful financial measure to investors in understanding the leverage employed in homebuilding operations. However, because net homebuilding debt to total capital is not calculated in accordance with GAAP, this financial measure should not be considered in isolation or as an alternative to financial measures prescribed by GAAP. Rather, this non-GAAP financial measure should be used to supplement our GAAP results.

At February 28, 2022, Homebuilding debt to total capital was consistent compared to November 30, 2021. At February 28, 2022, Homebuilding debt to total capital was lower compared to February 28, 2021, primarily as a result of a decrease in Homebuilding debt due to debt pay downs and an increase in stockholders' equity due to net earnings, partially offset by share repurchases.

We are continually exploring various types of transactions to manage our leverage and liquidity positions, take advantage of market opportunities and increase our revenues and earnings. These transactions may include the issuance of additional indebtedness, the repurchase of our outstanding indebtedness, the repurchase of our common stock, the acquisition of homebuilders and other companies, the purchase or sale of assets or lines of business, the issuance of common stock or securities convertible into shares of common stock, and/or the pursuit of other financing alternatives. In connection with some of our non-homebuilding businesses, we are also considering other types of transactions such as sales, restructurings, joint ventures, spin-offs or initial public offerings as we continue to move back towards being a pure play homebuilding company.

Our Homebuilding senior notes and other debts payable as well as letters of credit and surety bonds are summarized within Note 7 of the Notes to Condensed Consolidated Financial Statements. Our Homebuilding average debt outstanding and the average rates of interest was as follows:

			Three Months Ended
			February 28,
(Dollars in thousands)			2022						2021
Homebuilding average debt outstanding			$	4,885,046					$	5,973,432
Average interest rate			4.7		%				4.9		%
Interest incurred			59,933						71,064

As of February 28, 2022, we had a Credit Facility with potential borrowings of $2.5 billion maturing in 2024, that included a $300 million accordion feature, subject to additional commitments, thus the maximum potential borrowings could be $2.8 billion maturing in 2024. The Credit Facility agreement (the "Credit Agreement") provides that up to $500 million in commitments may be used for letters of credit. Under the Credit Agreement, we are subject to debt covenants. The maturity, details and debt covenants of the Credit Facility are unchanged from the disclosure in the Financial Condition and Capital Resources section of our Form 10-K for the year ended November 30, 2021. The following summarizes our debt covenant requirements and our actual levels or ratios with respect to those covenants as calculated per the Credit Agreement as of February 28, 2022:

(Dollars in thousands)			Covenant Level						Level Achieved as of February 28, 2022
Minimum net worth test			$	10,795,613					14,108,931
Maximum leverage ratio			65.0		%				20.0		%
Liquidity test			1.00						5.09

Financial Services Warehouse Facilities

Our Financial Services segment uses the residential facilities to finance its residential lending activities until the mortgage loans are sold to investors and the proceeds are collected. The facilities are non-recourse to us and are expected to be renewed or replaced with other facilities when they mature. The LMF Commercial facilities finance LMF Commercial loan origination and securitization activities and were secured by up to an 80% interest in the originated commercial loans financed. These facilities and the related borrowings and collateral are detailed in Note 2 of the Notes to Condensed Consolidated Financial Statements.

Changes in Capital Structure

In October 2021, the Board of Directors authorized an increase to our stock repurchase program to enable us to repurchase up to the lesser of an additional $1 billion in value, or 25 million in shares, of our outstanding Class A or Class B common stock. As a result of prior authorizations being almost exhausted, in March 2022, our Board of Directors approved an additional authorization for us to repurchase up to the lesser of $2 billion in value, or 30 million in shares, of our outstanding Class A or Class B common stock. The repurchase authorization has no expiration date. The details of our Class A and Class B common stock repurchases under the authorized repurchase programs for the three months ended February 28, 2022 and 2021 are included in Note 4 of the Notes to Condensed Consolidated Financial Statements.

During the three months ended February 28, 2022, treasury stock increased due to our repurchase of 5.9 million shares of Class A and Class B common stock due primarily to our repurchase of 5.3 million shares of Class A and Class B common stock through our stock repurchase program. During the three months ended February 28, 2021, treasury stock increased due to our repurchase of 0.8 million shares of Class A and Class B common stock due primarily to our repurchase of 0.5 million shares of Class A and Class B common stock through our stock repurchase program.

On February 10, 2022, we paid cash dividends of $0.375 per share on both our Class A and Class B common stock to holders of record at the close of business on January 27, 2022, as declared by our Board of Directors on January 12, 2022. We approved and paid cash dividends of $0.250 per share for each of the four quarters of 2021 on both our Class A and Class B common stock.

Based on our current financial condition and credit relationships, we believe that our operations and borrowing resources will provide for our current and long-term capital requirements at our anticipated levels of activity.

Supplemental Financial Information

Currently, substantially all of our 100% owned homebuilding subsidiaries are guaranteeing all our senior notes. The guarantees are full and unconditional.

The indentures governing our senior notes require that, if any of our 100% owned subsidiaries, other than our finance company subsidiaries and foreign subsidiaries, directly or indirectly guarantee at least $75 million principal amount of debt of Lennar Corporation (other than senior notes), those subsidiaries must also guarantee Lennar Corporation’s obligations with regard to its senior notes. Included in the following tables as part of “Obligors” together with Lennar Corporation are subsidiary entities that are not finance company subsidiaries or foreign subsidiaries and were guaranteeing the senior notes because at February 28, 2022 they were guaranteeing Lennar Corporation's letter of credit facilities and its Credit Facility, disclosed in Note 7 of the Notes to Condensed Consolidated Financial Statements. The guarantees are full, unconditional and joint and several and the guarantor subsidiaries are 100% directly or indirectly owned by Lennar Corporation. A subsidiary's guarantee of Lennar senior notes will be suspended at any time when it is not directly or indirectly guaranteeing at least $75 million principal amount of debt of Lennar Corporation (other than senior notes), and a subsidiary will be released from its guarantee and any other obligations it may have regarding the senior notes if all or substantially all its assets, or all of its capital stock, are sold or otherwise disposed.

Supplemental information for the Obligors, which excludes non-guarantor subsidiaries and intercompany transactions, at February 28, 2022 is included in the following tables. Intercompany balances and transactions within the Obligors have been eliminated and amounts attributable to the Obligors' 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)			February 28, 2022						November 30, 2021
Due from non-guarantor subsidiaries			$	3,787,207					4,187,044
Equity method investments			1,020,844						937,920
Total assets			30,892,854						30,750,296
Total liabilities			9,771,178						9,631,796

			Three Months Ended
(In thousands)			February 28, 2022
Total revenues			$	5,780,929
Operating earnings			1,125,631
Earnings before income taxes			999,432
Net earnings attributable to Lennar			750,047

Off-Balance Sheet Arrangements

Homebuilding: Investments in Unconsolidated Entities

As of February 28, 2022, we had equity investments in 43 active homebuilding and land unconsolidated entities (of which three had recourse debt, 13 had non-recourse debt and 27 had no debt) compared to 41 active homebuilding and land unconsolidated entities at November 30, 2021. Historically, we have invested in unconsolidated entities that acquired and developed land (1) for our homebuilding operations or for sale to third parties or (2) for the construction of homes for sale to third-party homebuyers. Through these entities, we have primarily sought to reduce and share our risk by limiting the amount of our capital invested in land, while obtaining access to potential future homesites and allowing us to participate in strategic ventures. The use of these entities also, in some instances, has enabled us to acquire land to which we could not otherwise obtain access, or could not obtain access on as favorable terms, without the participation of a strategic partner. Participants in these joint ventures have been land owners/developers, other homebuilders and financial or strategic partners. Joint ventures with land owners/developers have given us access to homesites owned or controlled by our partners. Joint ventures with other homebuilders have provided us with the ability to bid jointly with our partners for large land parcels. Joint ventures with financial partners have allowed us to combine our homebuilding expertise with access to our partners’ capital. Joint ventures with strategic partners have allowed us to combine our homebuilding expertise with the specific expertise (e.g. commercial or infill experience) of our partners. Each joint venture is governed by an executive committee consisting of members from the

partners. Details regarding these investments, balances and debt are included in Note 3 of the Notes to Condensed Consolidated Financial Statements.

The following table summarizes the principal maturities of our Homebuilding unconsolidated entities ("JVs") debt as per current debt arrangements as of February 28, 2022. It does not represent estimates of future cash payments that will be made to reduce debt balances. Many JV loans have extension options in the loan agreements that would allow the loans to be extended into future years.

									Principal Maturities of Unconsolidated JVs by Period
(In thousands)									Total JV Debt						2022						2023						2024						Thereafter						Other
Debt without recourse to Lennar									$	1,243,980					94,040						89,756						405,030						655,154						—
Land seller and other debt									4,606						—						—						—						—						4,606
Maximum recourse debt exposure to Lennar									2,564						—						—						—						2,564						—
Debt issuance costs									(14,249)						—						—						—						—						(14,249)
Total									$	1,236,901					94,040						89,756						405,030						657,718						(9,643)

Multifamily: Investments in Unconsolidated Entities

At February 28, 2022, Multifamily had equity investments in 20 unconsolidated entities that are engaged in multifamily residential developments (of which 12 had non-recourse debt and eight had no debt), compared to 17 unconsolidated entities at November 30, 2021. We invest in unconsolidated entities that acquire and develop land to construct multifamily rental properties. Through these entities, we are focusing on developing a geographically diversified portfolio of institutional quality multifamily rental properties in select U.S. markets. Initially, we participated in building multifamily developments and selling them soon after they were completed. Recently, however, we have been focused on developing properties with the intention of retaining them. Participants in these joint ventures have been financial partners. Joint ventures with financial partners have allowed us to combine our development and construction expertise with access to our partners’ capital. Each joint venture is governed by an operating agreement that provides significant substantive participating voting rights on major decisions to our partners.

The Multifamily segment includes LMV I, LMV II and a new Multifamily Fund, 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 three months ended February 28, 2022 are included in Note 3 of the Notes to Condensed Consolidated Financial Statements.

We regularly monitor the results of both our Homebuilding and Multifamily unconsolidated joint ventures and any trends that may affect their future liquidity or results of operations. We also monitor the performance of joint ventures in which we have investments on a regular basis to assess compliance with debt covenants. For those joint ventures not in compliance with the debt covenants, we evaluate and assess possible impairment of our investment. We believe all of the joint ventures were in compliance with applicable debt covenants at February 28, 2022.

The following table summarizes the principal maturities of our Multifamily unconsolidated entities debt as per current debt arrangements as of February 28, 2022. It does not represent estimates of future cash payments that will be made to reduce debt balances.

									Principal Maturities of Unconsolidated JVs by Period
(In thousands)									Total JV Debt						2022						2023						2024						Thereafter						Other
Debt without recourse to Lennar									$	3,732,893					497,658						1,082,363						815,588						1,337,284						—
Debt issuance costs									(25,235)						—						—						—						—						(25,235)
Total									$	3,707,658					497,658						1,082,363						815,588						1,337,284						(25,235)

Lennar Other: Investments in Unconsolidated Entities

As part of the sale of the Rialto investment and asset management platform in 2018, 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 February 28, 2022 and November 30, 2021, we had strategic technology investments in unconsolidated entities of $140.2 million and $145.6 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.

The table below indicates the number of homesites owned and homesites to which we had access through option contracts with third parties ("optioned") or unconsolidated JVs (i.e., controlled homesites):

			Controlled Homesites																														Years of
February 28, 2022			Optioned						JVs						Total						Owned Homesites						Total Homesites						Supply Owned (1)
East			97,731						—						97,731						59,254						156,985
Central			34,465						—						34,465						41,388						75,853
Texas			78,031						—						78,031						46,193						124,224
West			62,889						—						62,889						53,356						116,245
Other			—						5,758						5,758						2,037						7,795
Total homesites			273,116						5,758						278,874						202,228						481,102						3.4
% of total homesites															58		%				42		%

			Controlled Homesites																														Years of
February 28, 2021			Optioned						JVs						Total						Owned Homesites						Total Homesites						Supply Owned (1)
East			42,722						3,931						46,653						57,526						104,179
Central			19,932						100						20,032						41,886						61,918
Texas			31,525						—						31,525						37,034						68,559
West			45,352						3,444						48,796						49,996						98,792
Other			41						7,318						7,359						2,238						9,597
Total homesites			139,572						14,793						154,365						188,680						343,045						3.4
% of total homesites															45		%				55		%

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

Details on option contracts and related consolidated inventory not owned and exposure are included in Note 10 of the Notes to Condensed Consolidated Financial Statements.

Contractual Obligations and Commercial Commitments

Our contractual obligations and commercial commitments have not changed materially from those reported in Management’s Discussion and Analysis of Financial Condition and Results of Operations in our Annual Report on Form 10-K for the fiscal year ended November 30, 2021. There were no outstanding borrowings under our Credit Facility as of February 28, 2022.

(3) Recently Adopted Accounting Pronouncements

See Note 1 of the Notes to Condensed Consolidated Financial Statements included under Item 1 of this Report for a discussion of recently adopted accounting pronouncements.

(4) Critical Accounting Policies

We believe that there have been no significant changes to our critical accounting policies during the three months ended February 28, 2022 as compared to those we disclosed in Management’s Discussion and Analysis of Financial Condition and Results of Operations included in our Annual Report on Form 10-K, for the year ended November 30, 2021. While our critical accounting policies have not changed in any significant way during the three months ended February 28, 2022, the following provides additional disclosures about our revenue recognition accounting policy.

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. We typically offer sales incentives to homebuyers that consist primarily of price discounts on individual homes, financing incentives and optional upgrades (such as upgraded appliances, cabinetry and flooring) without charge. These incentives are accounted for as a reduction in the sales price of the homes. The optional upgrades may be the only sales incentive offered for a particular home, or they may be offered collectively with a discount on the base price of the home. The cost we include for the optional upgrades is included in our cost of home sales. Because the upgrades are provided without additional charge, no revenue is recognized related to the upgrade(s). See Note 1 of the Notes to Condensed Consolidated Financial Statements.