Item 1. Financial Statements

Lennar Corporation and Subsidiaries

Condensed Consolidated Balance Sheets

(Dollars in thousands)

(Unaudited)

			August 31,						November 30,
			2023 (1)						2022 (1)
ASSETS
Homebuilding:
Cash and cash equivalents			$	3,887,809					4,616,124
Restricted cash			16,201						23,046
Receivables, net			843,750						673,980
Inventories:
Finished homes and construction in progress			12,368,338						11,718,507
Land and land under development			6,993,835						7,382,273
Consolidated inventory not owned			2,687,343						2,331,231
Total inventories			22,049,516						21,432,011
Investments in unconsolidated entities			1,157,021						1,173,164
Goodwill			3,442,359						3,442,359
Other assets			1,578,692						1,323,478
			32,975,348						32,684,162
Financial Services			2,334,594						3,254,257
Multifamily			1,354,587						1,257,337
Lennar Other			773,596						788,539
Total assets			$	37,438,125					37,984,295

(1)Under certain provisions of Accounting Standards Codification ("ASC") Topic 810, Consolidations ("ASC 810"), the Company is required to separately disclose on its condensed consolidated balance sheets the assets owned by consolidated variable interest entities ("VIEs") and liabilities of consolidated VIEs as to which neither Lennar Corporation, nor any of its subsidiaries, has any obligations.

As of August 31, 2023, total assets include $1.9 billion related to consolidated VIEs of which $33.4 million is included in Homebuilding cash and cash equivalents, $2.3 million in Homebuilding receivables, net, $37.5 million in Homebuilding finished homes and construction in progress, $847.8 million in Homebuilding land and land under development, $921.4 million in Homebuilding consolidated inventory not owned, $0.5 million in Homebuilding investments in unconsolidated entities, $25.3 million in Homebuilding other assets and $31.9 million in Multifamily assets.

As of November 30, 2022, total assets include $1.4 billion related to consolidated VIEs of which $56.9 million is included in Homebuilding cash and cash equivalents, $0.3 million in Homebuilding receivables, net, $29.4 million in Homebuilding finished homes and construction in progress, $736.5 million in Homebuilding land and land under development, $533.8 million in Homebuilding consolidated inventory not owned, $1.0 million in Homebuilding investments in unconsolidated entities, $23.0 million in Homebuilding other assets, $33.2 million in Multifamily assets and $9.0 million in Lennar Other assets.

See accompanying notes to condensed consolidated financial statements.

Lennar Corporation and Subsidiaries

Condensed Consolidated Balance Sheets (Continued)

(In thousands, except share amounts)

(Unaudited)

			August 31,						November 30,
			2023 (2)						2022 (2)
LIABILITIES AND EQUITY
Homebuilding:
Accounts payable			$	1,721,530					1,616,128
Liabilities related to consolidated inventory not owned			2,300,686						1,967,551
Senior notes and other debts payable, net			3,320,119						4,047,294
Other liabilities			2,600,807						3,347,673
			9,943,142						10,978,646
Financial Services			1,333,485						2,353,904
Multifamily			290,266						313,484
Lennar Other			82,690						97,894
Total liabilities			11,649,583						13,743,928
Stockholders’ equity:
Preferred stock			—						—
Class A common stock of $0.10 par value; Authorized: August 31, 2023 and November 30, 2022 - 400,000,000 shares; Issued: August 31, 2023 - 258,444,467 shares and November 30, 2022 - 256,084,147 shares			25,844						25,608
Class B common stock of $0.10 par value; Authorized: August 31, 2023 and November 30, 2022 - 90,000,000 shares; Issued: August 31, 2023 - 36,601,215 shares and November 30, 2022 - 36,601,215 shares			3,660						3,660
Additional paid-in capital			5,561,793						5,417,796
Retained earnings			21,113,282						18,861,417
Treasury stock, at cost; August 31, 2023 - 8,292,109 shares of Class A common stock and 2,398,674 shares of Class B common stock; November 30, 2022 - 2,455,387 shares of Class A common stock and 419,860 shares of Class B common stock			(1,052,000)						(210,389)
Accumulated other comprehensive income			4,040						2,408
Total stockholders’ equity			25,656,619						24,100,500
Noncontrolling interests			131,923						139,867
Total equity			25,788,542						24,240,367
Total liabilities and equity			$	37,438,125					37,984,295

(2)As of August 31, 2023, total liabilities include $1.1 billion related to consolidated VIEs as to which there was no recourse against the Company, of which $147.8 million is included in Homebuilding accounts payable, $878.2 million in Homebuilding liabilities related to consolidated inventory not owned, $25.9 million in Homebuilding senior notes and other debts payable and $4.0 million in Multifamily liabilities.

As of November 30, 2022, total liabilities include $620.4 million related to consolidated VIEs as to which there was no recourse against the Company, of which $66.9 million is included in Homebuilding accounts payable, $510.9 million in Homebuilding liabilities related to consolidated inventory not owned, $29.4 million in Homebuilding senior notes and other debt payable, $7.2 million in Homebuilding other liabilities, $3.8 million in Multifamily liabilities and $2.2 million in Lennar Other liabilities.

See accompanying notes to condensed consolidated financial statements.

Lennar Corporation and Subsidiaries

Condensed Consolidated Statements of Operations and Comprehensive Income

(In thousands, except per share amounts)

(Unaudited)

			Three Months Ended												Nine Months Ended
			August 31,												August 31,
			2023						2022						2023						2022
Revenues:
Homebuilding			$	8,318,615					8,479,496						22,144,937						22,209,683
Financial Services			266,206						202,078						672,166						578,945
Multifamily			137,394						243,056						432,661						686,436
Lennar Other			7,388						9,801						15,419						21,579
Total revenues			8,729,603						8,934,431						23,265,183						23,496,643
Costs and expenses:
Homebuilding			6,863,063						6,494,737						18,576,734						17,241,788
Financial Services			117,211						138,730						331,835						320,871
Multifamily			139,759						215,433						443,069						654,322
Lennar Other			6,155						10,007						19,426						23,650
Corporate general and administrative			114,144						115,557						365,002						334,425
Charitable foundation contribution			18,559						17,248						49,292						46,335
Total costs and expenses			7,258,891						6,991,712						19,785,358						18,621,391
Equity in loss from unconsolidated entities			(23,989)						(13,310)						(104,931)						(34,871)
Other income (expense), net and other gains (losses)			44,151						(19,296)						57,511						(25,564)
Lennar Other unrealized losses from technology investments			(15,713)						(85,839)						(14,170)						(558,974)
Earnings before income taxes			1,475,161						1,824,274						3,418,235						4,255,843
Provision for income taxes			(358,209)						(351,580)						(824,233)						(951,276)
Net earnings (including net earnings attributable to noncontrolling interests)			1,116,952						1,472,694						2,594,002						3,304,567
Less: Net earnings attributable to noncontrolling interests			7,956						5,350						16,778						12,886
Net earnings attributable to Lennar			$	1,108,996					1,467,344						2,577,224						3,291,681
Other comprehensive income, net of tax:
Net unrealized gain on securities available-for-sale			$	208					342						1,632						1,146
Reclassification adjustments for gain included in earnings, net of tax			—						—						—						2,285
Total other comprehensive income, net of tax			$	208					342						1,632						3,431
Total comprehensive income attributable to Lennar			$	1,109,204					1,467,686						2,578,856						3,295,112
Total comprehensive income attributable to noncontrolling interests			$	7,956					5,350						16,778						12,886
Basic earnings per share			$	3.87					5.04						8.94						11.19
Diluted earnings per share			$	3.87					5.03						8.94						11.18

See accompanying notes to condensed consolidated financial statements.

Lennar Corporation and Subsidiaries

Condensed Consolidated Statements of Cash Flows

(In thousands)

(Unaudited)

			Nine Months Ended
			August 31,
			2023						2022
Cash flows from operating activities:
Net earnings (including net earnings attributable to noncontrolling interests)			$	2,594,002					3,304,567
Adjustments to reconcile net earnings to net cash provided by operating activities:
Depreciation and amortization			81,146						57,921
Amortization of discount/premium on debt, net			(2,194)						(1,312)
Equity in loss from unconsolidated entities			104,931						34,870
Distributions of earnings from unconsolidated entities			33,714						46,376
Share-based compensation expense			139,616						154,710
Deferred income tax benefit			(102,322)						(15,991)
Gain on redemption/repurchases of senior notes			(6,878)						—
Loans held-for-sale unrealized loss			33,358						41,356
Lennar Other unrealized losses from technology investments and other (gains) losses			14,131						578,674
Gain on sale of other assets			(7,015)						(7,572)
Valuation adjustments and write-offs of option deposits, pre-acquisition costs and other assets			96,451						27,247
Changes in assets and liabilities:
(Increase) decrease in receivables			167,573						(164,383)
Increase in inventories, excluding valuation adjustments and write-offs of option deposits and pre-acquisition costs			(7,571)						(3,894,170)
Increase in other assets			(100,843)						(110,761)
Decrease in loans held-for-sale			434,332						318,974
(Decrease) increase in accounts payable and other liabilities			(881,890)						180,946
Net cash provided by operating activities			2,590,541						551,452
Cash flows from investing activities:
Net additions of operating properties and equipment			(53,610)						(27,534)
Proceeds from the sale of other assets			13,215						18,247
Investments in and contributions to unconsolidated entities			(152,530)						(396,734)
Distributions of capital from unconsolidated entities			69,960						331,801
Proceeds from sale of commercial mortgage-backed securities bonds			—						9,191
Decrease in Financial Services loans held-for-investment			12,222						18,859
Purchases of investment securities			(8,000)						(93,769)
Proceeds from maturities/sales of investment securities			3,778						8,472
Net cash used in investing activities			$	(114,965)					(131,467)

See accompanying notes to condensed consolidated financial statements.

Lennar Corporation and Subsidiaries

Condensed Consolidated Statements of Cash Flows (Continued)

(In thousands)

(Unaudited)

			Nine Months Ended
			August 31,
			2023						2022
Cash flows from financing activities:
Net repayments under warehouse facilities			$	(980,929)					(238,113)
Redemption/repurchases of senior notes			(633,059)						(575,000)
Principal payments on notes payable and other borrowings			(89,042)						(35,542)
Proceeds from liabilities related to consolidated inventory not owned			341,288						845,408
Payments related to consolidated inventory not owned			(597,477)						(517,654)
Payments related to other liabilities, net			(4,016)						—
Receipts related to noncontrolling interests			6,309						30,060
Payments related to noncontrolling interests			(43,418)						(85,098)
Common stock:
Repurchases			(841,611)						(918,682)
Dividends			(325,359)						(329,717)
Net cash used in financing activities			(3,167,314)						(1,824,338)
Net decrease in cash and cash equivalents and restricted cash			(691,738)						(1,404,353)
Cash and cash equivalents and restricted cash at beginning of period			4,815,770						2,955,683
Cash and cash equivalents and restricted cash at end of period			$	4,124,032					1,551,330
Summary of cash and cash equivalents and restricted cash:
Homebuilding			$	3,887,809					1,309,364
Financial Services			167,216						143,630
Multifamily			28,712						40,870
Lennar Other			5,344						10,181
Homebuilding restricted cash			16,201						32,575
Financial Services restricted cash			18,750						14,710
			$	4,124,032					1,551,330
Supplemental disclosures of non-cash investing and financing activities:
Homebuilding and Multifamily:
Purchases of inventories financed by sellers			$	13,500					33,965
Non-cash contributions to unconsolidated entities			120						204,911
Consolidation/deconsolidation of unconsolidated/consolidated entities, net:
Inventories			$	—					(19,800)
Other assets			—						41
Investments in unconsolidated entities			—						(736)
Other liabilities			—						(271)
Noncontrolling interests			—						20,766

See accompanying notes to condensed consolidated financial statements.

Lennar Corporation and Subsidiaries

Notes to Condensed Consolidated Financial Statements (Unaudited)

**(1)**Basis of Presentation

Basis of Consolidation

The condensed consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America ("GAAP") for interim financial information and pursuant to the rules and regulations of the Securities and Exchange Commission ("SEC"). Accordingly, they do not include all of the information and footnotes required by GAAP for complete financial statements. These condensed consolidated financial statements should be read in conjunction with the consolidated financial statements in the Company’s Annual Report on Form 10-K for the year ended November 30, 2022. The basis of consolidation is unchanged from the disclosure in the Company's Notes to Consolidated Financial Statements section in its Annual Report on Form 10-K for the year ended November 30, 2022. In the opinion of management, all adjustments (consisting of normal recurring adjustments) necessary for the fair presentation of the accompanying condensed consolidated financial statements have been made.

Seasonality

The Company has historically experienced, and expects to continue to experience, variability in quarterly results. The condensed consolidated statements of operations for the three and nine months ended August 31, 2023 are not necessarily indicative of the results to be expected for the full year.

Use of Estimates

The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the amounts reported in the condensed consolidated financial statements and accompanying notes. Actual results could differ from those estimates.

Cash and Cash Equivalents

Homebuilding cash and cash equivalents as of August 31, 2023 and November 30, 2022 included $355.5 million and $1.0 billion, respectively, of cash held in escrow for approximately two days.

Share-based Payments

During both the three months ended August 31, 2023 and 2022, the Company granted employees an immaterial number of nonvested shares. During the nine months ended August 31, 2023 and 2022, the Company granted employees 2.0 million and 1.4 million of nonvested shares, respectively.

Recently Adopted Accounting Pronouncements

In March 2020, the Financial Accounting Standards Board ("FASB") issued ASU 2020-04, "Reference Rate Reform," which provides optional expedients and exceptions for applying U.S. GAAP to contracts, hedging relationships, and other transactions affected by the discontinuation of the London Interbank Offered Rate (LIBOR) or by another reference rate expected to be discontinued. The guidance was effective beginning March 12, 2020 and can be applied prospectively through December 31, 2024, with earlier adoption permitted. In January 2021, the FASB issued ASU 2021-01, "Reference Rate Reform - Scope," which clarified the scope and application of the original guidance. In December 2022, the FASB issued ASU 2022-06, "Reference Rate Reform - Deferral of the Sunset Date of Topic 848," which defers the sunset date from December 31, 2022 to December 31, 2024. The adoption of ASU 2020-04 did not have a material impact on the Company's condensed consolidated financial statements.

Reclassifications

Certain amounts in the Company's condensed consolidated statement of operations of prior year have been reclassified to conform to the fiscal 2023 presentation.

(2) Operating and Reporting Segments

The Company's homebuilding operations construct and sell homes primarily for first-time, move-up and active adult homebuyers primarily under the Lennar brand name. In addition, the Company's homebuilding operations purchase, develop and sell land to third parties. The Company's chief operating decision makers manage and assess the Company’s performance at a regional level. Therefore, the Company performed an assessment of its operating segments in accordance with ASC 280, Segment Reporting, and determined that the following are its operating and reportable segments:

Homebuilding segments: (1) East (2) Central (3) Texas (4) West

(5) Financial Services

Lennar Corporation and Subsidiaries

Notes to Condensed Consolidated Financial Statements (Unaudited) (Continued)

(6) Multifamily

(7) Lennar Other

The assets and liabilities related to the Company’s segments were as follows:

(In thousands)			August 31, 2023
Assets:			Homebuilding						Financial Services						Multifamily						Lennar Other						Total
Cash and cash equivalents			$	3,887,809					167,216						28,712						5,344						4,089,081
Restricted cash			16,201						18,750						—						—						34,951
Receivables, net (1)			843,750						372,265						104,611						—						1,320,626
Inventories			22,049,516						—						529,467						—						22,578,983
Loans held-for-sale (2)			—						1,287,773						—						—						1,287,773
Investments in equity securities (3)			—						—						—						397,943						397,943
Investments available-for-sale (4)			—						—						—						37,114						37,114
Loans held-for-investment, net			—						51,330						—						—						51,330
Investments held-to-maturity			—						140,967						—						—						140,967
Investments in unconsolidated entities			1,157,021						—						623,269						288,534						2,068,824
Goodwill			3,442,359						189,699						—						—						3,632,058
Other assets			1,578,692						106,594						68,528						44,661						1,798,475
			$	32,975,348					2,334,594						1,354,587						773,596						37,438,125
Liabilities:
Notes and other debts payable, net			$	3,320,119					1,154,163						3,477						—						4,477,759
Accounts payable and other liabilities			6,623,023						179,322						286,789						82,690						7,171,824
			$	9,943,142					1,333,485						290,266						82,690						11,649,583

(In thousands)			November 30, 2022
Assets:			Homebuilding						Financial Services						Multifamily						Lennar Other						Total
Cash and cash equivalents			$	4,616,124					139,378						17,827						5,391						4,778,720
Restricted cash			23,046						14,004						—						—						37,050
Receivables, net (1)			673,980						826,163						114,134						—						1,614,277
Inventories			21,432,011						—						430,442						—						21,862,453
Loans held-for-sale (2)			—						1,776,311						—						—						1,776,311
Investments in equity securities (3)			—						—						—						391,026						391,026
Investments available-for-sale (4)			—						—						—						35,482						35,482
Loans held-for-investment, net			—						45,636						—						—						45,636
Investments held-to-maturity			—						143,251						—						—						143,251
Investments in unconsolidated entities			1,173,164						—						648,126						316,523						2,137,813
Goodwill			3,442,359						189,699						—						—						3,632,058
Other assets			1,323,478						119,815						46,808						40,117						1,530,218
			$	32,684,162					3,254,257						1,257,337						788,539						37,984,295
Liabilities:
Notes and other debts payable, net			$	4,047,294					2,135,093						16,749						—						6,199,136
Accounts payable and other liabilities			6,931,352						218,811						296,735						97,894						7,544,792
			$	10,978,646					2,353,904						313,484						97,894						13,743,928

(1)Receivables, net for Financial Services primarily related to loans sold to investors for which the Company had not yet been paid as of August 31, 2023 and November 30, 2022, respectively.

(2)Loans held-for-sale related to unsold residential and commercial loans carried at fair value.

(3)Investments in equity securities include investments of $186.0 million and $178.0 million without readily available fair values as of August 31, 2023 and November 30, 2022, respectively.

(4)Investments available-for-sale are carried at fair value with changes in fair value recorded as a component of accumulated other comprehensive income (loss) on the condensed consolidated balance sheet.

Lennar Corporation and Subsidiaries

Notes to Condensed Consolidated Financial Statements (Unaudited) (Continued)

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

			Three Months Ended												Nine Months Ended
			August 31,												August 31,
(In thousands)			2023						2022						2023						2022
Revenues:
Homebuilding			$	8,318,615					8,479,496						22,144,937						22,209,683
Financial Services			266,206						202,078						672,166						578,945
Multifamily (1)			137,394						243,056						432,661						686,436
Lennar Other			7,388						9,801						15,419						21,579
			$	8,729,603					8,934,431						23,265,183						23,496,643
Earnings (loss) before income taxes:
Homebuilding			$	1,493,820					1,963,224						3,615,068						4,953,485
Financial Services (2)			148,995						63,348						340,331						258,074
Multifamily			(8,733)						48,487						(38,496)						54,582
Lennar Other			(26,218)						(117,980)						(84,374)						(629,538)
Corporate and Unallocated (3)			(132,703)						(132,805)						(414,294)						(380,760)
			$	1,475,161					1,824,274						3,418,235						4,255,843

(1)Revenues for Multifamily for the three and nine months ended August 31, 2022, included $62.2 million and $210.0 million, respectively, of land sales to unconsolidated entities.

(2)Financial Services operating earnings for the three and nine months ended August 31, 2022, included a $35.5 million one-time charge due to an increase in a litigation accrual related to a court judgment.

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

Homebuilding Segments

Information about homebuilding activities in states which are not economically similar to other states in the same geographic area is grouped under "Homebuilding Other," which is not considered a reportable segment.

Evaluation of segment performance is based primarily on operating earnings (loss) before income taxes. Operations of the Company’s Homebuilding segments primarily include the construction and sale of single-family attached and detached homes as well as the purchase, development and sale of residential land directly and through the Company’s unconsolidated entities. Operating earnings (loss) for the Homebuilding segments consist of revenues generated from the sales of homes and land, other revenues from management fees and forfeited deposits, equity in earnings (loss) from unconsolidated entities and other income (expense), net, less the cost of homes sold and land sold, and selling, general and administrative expenses incurred by the segment. Homebuilding Other also includes management of a fund that acquires single-family homes and holds them as rental properties.

Lennar Corporation and Subsidiaries

Notes to Condensed Consolidated Financial Statements (Unaudited) (Continued)

The Company’s reportable Homebuilding segments and all other homebuilding operations not required to be reported separately have homebuilding divisions located in:

East: Alabama, Florida, New Jersey, Pennsylvania and South Carolina

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

Texas: Texas

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

Other: Urban divisions and other homebuilding related investments primarily in California, including FivePoint Holdings, LLC ("FivePoint")

The assets related to the Company’s homebuilding segments were as follows:

			August 31,						November 30,
			2023						2022
(In thousands)
East			$	7,390,919					6,877,581
Central			4,262,363						4,010,610
Texas			3,604,254						3,742,663
West			11,872,484						12,182,709
Other			1,524,150						1,382,864
Corporate and Unallocated			4,321,178						4,487,735
Total Homebuilding			$	32,975,348					32,684,162

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

			Three Months Ended												Nine Months Ended
			August 31,												August 31,
(In thousands)			2023						2022						2023						2022
Revenues
East			$	2,414,026					2,540,285						6,613,284						6,424,922
Central			1,600,131						1,577,544						4,060,546						3,970,805
Texas			1,176,875						1,140,556						3,340,539						3,048,676
West			3,117,265						3,212,169						8,103,423						8,733,429
Other			10,318						8,942						27,145						31,851
			$	8,318,615					8,479,496						22,144,937						22,209,683
Operating earnings (loss)
East			$	553,700					642,482						1,483,819						1,548,296
Central			261,542						272,351						607,140						631,224
Texas			219,871						278,814						528,231						722,983
West			479,968						788,443						1,065,940						2,077,740
Other			(21,261)						(18,866)						(70,062)						(26,758)
			$	1,493,820					1,963,224						3,615,068						4,953,485

Financial Services

Operations of the Financial Services segment include mortgage financing, title and closing services primarily for buyers of the Company’s homes. They also include originating and selling into securitizations commercial mortgage loans through its LMF Commercial business. Financial Services’ operating earnings consist of revenues generated primarily from mortgage financing, title and closing services, and property and casualty insurance, less the cost of such services and certain selling, general and administrative expenses incurred by the segment. The Financial Services segment operates generally in the same states as the Company’s homebuilding operations.

Lennar Corporation and Subsidiaries

Notes to Condensed Consolidated Financial Statements (Unaudited) (Continued)

At August 31, 2023, the Financial Services segment had warehouse facilities which were all 364-day repurchase facilities and were used to fund residential mortgages or commercial mortgages for LMF Commercial as follows:

(In thousands)			Maximum Aggregate Commitment
Residential facilities maturing:
December 2023			$	500,000
April 2024 (1)			500,000
May 2024 (2)			1,500,000
June 2024			200,000
Total residential facilities			$	2,700,000
LMF Commercial facilities maturing:
November 2023			$	100,000
December 2023			400,000
Total LMF commercial facilities			$	500,000
Total			$	3,200,000

(1)Maximum aggregate commitment includes an uncommitted amount of $250 million.

(2)Maximum aggregate commitment includes $900 million that is available from August 2023 to December 2023. Subsequent to December 2023, the maximum aggregate commitment will be $600 million until maturity in May 2024.

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

Borrowings and collateral under the facilities were as follows:

(In thousands)			August 31, 2023						November 30, 2022
Borrowings under the residential facilities			$	1,002,786					1,877,411
Collateral under the residential facilities			1,039,977						1,950,155
Borrowings under the LMF Commercial facilities			20,000						124,399

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

Substantially all of the residential loans the Financial Services segment originates are sold within a short period in the secondary mortgage market on a servicing released, non-recourse basis. After the loans are sold, the Company retains potential liability for possible claims by purchasers that it breached certain limited industry-standard representations and warranties in the loan sale agreements. Purchasers sometimes try to defray losses by purporting to have found inaccuracies related to sellers’ representations and warranties in particular loan sale agreements. Mortgage investors could seek to have the Company buy back mortgage loans or compensate them for losses incurred on mortgage loans that the Company has sold based on claims that the Company breached its limited representations or warranties. The Company’s mortgage operations have established accruals for possible losses associated with mortgage loans previously originated and sold to investors. The Company establishes accruals for such possible losses based upon, among other things, an analysis of repurchase requests received, an estimate of potential repurchase claims not yet received and actual past repurchases and losses through the disposition of affected loans, as well as previous settlements. While the Company believes that it has adequately reserved for known losses and projected repurchase requests, given the volatility in the residential mortgage industry and the uncertainty regarding the ultimate resolution of these claims, if either actual repurchases or the losses incurred resolving those repurchases exceed the Company’s expectations, additional recourse expense may be incurred. The provision for loan losses was immaterial for both the three and nine months ended August 31, 2023 and 2022. Loan origination liabilities were $17.5 million and $11.8 million as of August 31, 2023 and November 30, 2022, respectively, and included in Financial Services’ liabilities in the Company's condensed consolidated balance sheets.

Lennar Corporation and Subsidiaries

Notes to Condensed Consolidated Financial Statements (Unaudited) (Continued)

LMF Commercial - loans held-for-sale

LMF Commercial originated commercial loans as follows:

			Three Months Ended												Nine Months Ended
			August 31,												August 31,
(Dollars in thousands)			2023						2022						2023						2022
Originations (1)			$	161,308					109,850						325,378						518,345
Sold			100,562						188,266						265,864						511,733
Securitizations			3						2						6						4

(1)During both the three and nine months ended August 31, 2023 and 2022, the commercial loans originated were recorded as loans held-for-sale, which are held at fair value.

Investments held-to-maturity

At August 31, 2023 and November 30, 2022, the Financial Services segment held commercial mortgage-backed securities ("CMBS"). These securities are classified as held-to-maturity based on the segment's intent and ability to hold the securities until maturity and changes in estimated cash flows are reviewed periodically to determine if an other-than-temporary impairment has occurred. Based on the segment’s assessment, no impairment charges were recorded during either the three or nine months ended August 31, 2023 or 2022. The Company has financing agreements to finance CMBS that have been purchased as investments by the Financial Services segment.

Details related to Financial Services' CMBS were as follows:

(Dollars in thousands)			August 31, 2023						November 30, 2022
Carrying value			$	140,967					143,251
Outstanding debt, net of debt issuance costs			131,377						133,283
Incurred interest rate			3.4%						3.4%

			August 31, 2023
Discount rates at purchase			6%			—			84%
Coupon rates			2.0%			—			5.3%
Distribution dates			October 2027			—			December 2028
Stated maturity dates			October 2050			—			December 2051

Multifamily

The Company is actively involved, primarily through unconsolidated funds and joint ventures, in the development, construction and property management of multifamily rental properties. The Multifamily segment focuses on developing a geographically diversified portfolio of institutional quality multifamily rental properties in select U.S. markets.

The Multifamily Segment (i) manages, and owns interests in, funds that are engaged in the development of multifamily residential communities with the intention of holding the newly constructed and occupied properties as income and fee generating assets, and (ii) manages, and owns interests in, joint ventures that are engaged in the development of multifamily residential communities, in most instances with the intention of selling them when they are built and substantially occupied. The multifamily business is a vertically integrated platform with capabilities spanning development, construction, property management, asset management, and capital markets. Revenues are generated from the sales of land, from construction activities, and management and promote fees generated from joint ventures and other gains (which includes sales of buildings), less the cost of sales of land sold, expenses related to construction activities and general and administrative expenses. Operations of the Multifamily Segment also include equity in earnings (loss) from unconsolidated entities.

Lennar Other

Lennar Other primarily includes strategic investments in technology companies, primarily managed by the Company's LENX subsidiary, and fund interests the Company retained when it sold the Rialto Capital Management ("Rialto") asset and investment management platform. Operations of the Lennar Other segment include operating earnings (loss) consisting of revenues generated primarily from the Company's share of carried interests in the Rialto fund investments, along with equity in earnings (loss) from the Rialto fund investments and technology investments, realized and unrealized gains (losses) from investments in equity securities and other income (expense), net from the remaining assets related to the Company's former Rialto segment.

Lennar Corporation and Subsidiaries

Notes to Condensed Consolidated Financial Statements (Unaudited) (Continued)

The Company has investments in Blend Labs, Inc. ("Blend Labs"), Hippo Holdings, Inc. ("Hippo"), Opendoor, Inc. ("Opendoor"), SmartRent, Inc. ("SmartRent"), Sonder Holdings, Inc. ("Sonder") and Sunnova Energy International, Inc. ("Sunnova"), which are held at market and will therefore change depending on the value of the Company's shareholdings in those entities on the last day of each quarter. All the investments are accounted for as investments in equity securities which are held at fair value and the changes in fair values are recognized through earnings. The following is a detail of Lennar Other unrealized gains (losses) from mark-to-market adjustments on the Company's technology investments:

			Three Months Ended												Nine Months Ended
			August 31,												August 31,
(In thousands)			2023						2022						2023						2022
Blend Labs (BLND)			$	386					(518)						(360)						(21,510)
Hippo (HIPO)			(17,166)						(32,933)						(14,933)						(195,336)
Opendoor (OPEN)			23,638						(54,391)						38,459						(218,751)
SmartRent (SMRT)			(1,707)						(23,118)						8,219						(71,431)
Sonder (SOND)			(91)						(168)						(549)						(2,300)
Sunnova (NOVA)			(20,773)						25,289						(45,006)						(49,646)
Lennar Other unrealized losses from technology investments			$	(15,713)					(85,839)						(14,170)						(558,974)

Doma Holdings, Inc. ("Doma"), which went public during the year ended November 30, 2021, is an investment that was accounted for under the equity method due to the Company's significant ownership interest of 25% of Doma which allowed the Company to exercise significant influence. As of August 31, 2023, the Company’s carrying value in Doma was zero as a result of allocated losses from Doma.

Lennar Corporation and Subsidiaries

Notes to Condensed Consolidated Financial Statements (Unaudited) (Continued)

**(3)**Investments in Unconsolidated Entities

Homebuilding Unconsolidated Entities

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

(In thousands)						August 31, 2023						November 30, 2022
Investments in unconsolidated entities (1) (2)						$	1,157,021					1,173,164
Underlying equity in unconsolidated entities' net assets (1)						1,512,908						1,504,315

(1)The basis difference was primarily as a result of the Company contributing its investment in three strategic joint ventures with a higher fair value than book value for an investment in FivePoint.

(2)Included in the Company's recorded investments in Homebuilding unconsolidated entities is the Company's 40% ownership of FivePoint. As of August 31, 2023 and November 30, 2022, the carrying amount of the Company's investment was $416.6 million and $382.9 million, respectively.

As of August 31, 2023 and November 30, 2022, the Homebuilding segment's unconsolidated entities had non-recourse debt with completion guarantees of $334.8 million and $333.6 million, respectively.

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

As of both August 31, 2023 and November 30, 2022, the fair values of the repayment guarantees, maintenance guarantees, and completion guarantees were not material. The Company believes that as of August 31, 2023, in the event it becomes legally obligated to perform under a guarantee of the obligation of a Homebuilding unconsolidated entity due to a triggering event under a guarantee, the collateral would be sufficient to repay at least a significant portion of the obligation or the Company and its partners would contribute additional capital into the venture. In certain instances, the Company has placed performance letters of credit and surety bonds with municipalities with regard to obligations of its joint ventures (see Note 7 of the Notes to Condensed Consolidated Financial Statements). The details related to these are unchanged from the disclosure in the Company's Notes to the Financial Statements section in its Annual Report on Form 10-K for the year ended November 30, 2022.

In 2021, the Company formed the Upward America Venture LP ("Upward America"), and is managing and participating in Upward America. Upward America is an investment fund that acquires new single-family homes in high growth markets across the United States and rents them to people who will live in them. Upward America has raised equity commitments totaling $1.6 billion. The commitments are primarily from institutional investors, including $125 million committed by Lennar. As of August 31, 2023 and November 30, 2022, the carrying amount of the Company's investment in Upward America was $16.8 million and $37.7 million, respectively.

Multifamily Unconsolidated Entities

The unconsolidated joint ventures in which the Multifamily segment has investments usually finance their activities with a combination of partner equity and debt financing. In connection with many of the bank loans to Multifamily unconsolidated joint ventures, the Company (or entities related to it) have been required to give guarantees of completion and cost over-runs to the lenders and partners. The details related to these are unchanged from the disclosure in the Company's Notes to the Financial Statements section in its Annual Report on Form 10-K for the year ended November 30, 2022. As of both August 31, 2023 and November 30, 2022, the fair value of the completion guarantees was immaterial. As of August 31, 2023 and November 30, 2022, Multifamily segment's unconsolidated entities had non-recourse debt with completion guarantees of $1.4 billion and $1.0 billion, respectively.

In many instances, the Multifamily segment is appointed as the construction, development and property manager for its Multifamily unconsolidated entities and receives fees for performing this function. Each Multifamily real estate investment trust has unilateral decision making rights related to development activities through its board of directors. The Multifamily segment also provides general contractor services for construction of some of the rental properties owned by unconsolidated entities in which the Company has investments. The details of the activity were as follows:

			Three Months Ended												Nine Months Ended
			August 31,												August 31,
(In thousands)			2023						2022						2023						2022
General contractor services, net of deferrals			$	120,510					123,550						374,283						366,419
General contractor costs			114,371						118,738						357,168						350,773
Land sales to joint ventures			—						62,218						—						209,979
Management fee income, net of deferrals			16,884						17,514						52,499						46,968

Lennar Corporation and Subsidiaries

Notes to Condensed Consolidated Financial Statements (Unaudited) (Continued)

The Multifamily segment includes Multifamily Venture Fund I ("LMV I"), Multifamily Venture Fund II LP ("LMV II") and Canada Pension Plan Investments Fund (the "Fund"), which are long-term multifamily development investment vehicles involved in the development, construction and property management of class-A multifamily assets. The Multifamily segment has completed the initial closing of the Fund. The Multifamily segment expects the Fund to have almost $1.0 billion in equity and Lennar's ownership percentage in the Fund is 4%. As of August 31, 2023, the Company has a $30.6 million investment in the Fund. Additional dollars will be committed as opportunities are identified by the Fund.

Details of LMV I and LMV II as of and during the nine months ended August 31, 2023 are included below:

			August 31, 2023
(In thousands)			LMV I						LMV II
Lennar's carrying value of investments			$	200,707					277,265
Equity commitments			2,204,016						1,257,700
Equity commitments called			2,154,328						1,218,619
Lennar's equity commitments			504,016						381,000
Lennar's equity commitments called			500,381						368,170
Lennar's remaining commitments (1)			3,635						12,830
Distributions to Lennar during the nine months ended August 31, 2023			—						—

(1)While there are remaining commitments with LMV I, there are no plans for additional capital calls.

Other Unconsolidated Entities

Lennar Other's unconsolidated entities includes fund investments the Company retained when it sold the Rialto assets and investment management platform in 2018, as well as strategic investments in technology companies and investment funds. The Company's investment in the Rialto funds totaled $162.8 million and $185.1 million as of August 31, 2023 and November 30, 2022, respectively. In addition, the Company is entitled to a portion of the carried interest distributions by those funds. The Company also had strategic technology investments in unconsolidated entities and investment funds of $125.8 million and $131.5 million, as of August 31, 2023 and November 30, 2022, respectively.

**(4)**Stockholders' Equity

The following tables reflect the changes in equity attributable to both Lennar Corporation and the noncontrolling interests of its consolidated subsidiaries in which it has less than a 100% ownership interest for the three and nine months ended August 31, 2023 and 2022:

			Three Months Ended August 31, 2023
(In thousands)			Total Equity						Class A Common Stock						Class B Common Stock						Additional Paid - in Capital						Treasury Stock						Accumulated Other Comprehensive Income						Retained Earnings						Noncontrolling Interests
Balance at May 31, 2023			$	25,161,119					25,843						3,660						5,546,128						(675,686)						3,832						20,111,368						145,974
Net earnings (including net earnings attributable to noncontrolling interests)			1,116,952						—						—						—						—						—						1,108,996						7,956
Employee stock and directors plans			(8,552)						1						—						(620)						(7,933)						—						—						—
Purchases of treasury stock			(368,381)						—						—						—						(368,381)						—						—						—
Amortization of restricted stock			12,885						—						—						12,885						—						—						—						—
Cash dividends			(107,082)						—						—						—						—						—						(107,082)						—
Receipts related to noncontrolling interests			1,391						—						—						—						—						—						—						1,391
Payments related to noncontrolling interests			(22,795)						—						—						—						—						—						—						(22,795)
Non-cash purchase or activity of noncontrolling interests, net			2,797						—						—						3,400						—						—						—						(603)
Total other comprehensive income, net of tax			208						—						—						—						—						208						—						—
Balance at August 31, 2023			$	25,788,542					25,844						3,660						5,561,793						(1,052,000)						4,040						21,113,282						131,923

Lennar Corporation and Subsidiaries

Notes to Condensed Consolidated Financial Statements (Unaudited) (Continued)

			Three Months Ended August 31, 2022
(In thousands)			Total Equity						Class A Common Stock						Class B Common Stock						Additional Paid - in Capital						Treasury Stock						Accumulated Other Comprehensive Income						Retained Earnings						Noncontrolling Interests
Balance at May 31, 2022			$	21,789,774					25,582						3,660						5,355,182						(76,615)						1,748						16,288,698						191,519
Net earnings (including net earnings attributable to noncontrolling interests)			1,472,694						—						—						—						—						—						1,467,344						5,350
Employee stock and directors plans			(13,106)						—						—						39						(13,145)						—						—						—
Amortization of restricted stock			38,200						—						—						38,200						—						—						—						—
Cash dividends			(108,749)						—						—						—						—						—						(108,749)						—
Receipts related to noncontrolling interests			11,965						—						—						—						—						—						—						11,965
Payments related to noncontrolling interests			(19,577)						—						—						—						—						—						—						(19,577)
Non-cash purchase or activity of noncontrolling interests, net			(44,005)						—						—						(5,008)						—						—						—						(38,997)
Total other comprehensive income, net of tax			342						—						—						—						—						342						—						—
Balance at August 31, 2022			$	23,127,538					25,582						3,660						5,388,413						(89,760)						2,090						17,647,293						150,260

			Nine Months Ended August 31, 2023
(In thousands)			Total Equity						Class A Common Stock						Class B Common Stock						Additional Paid - in Capital						Treasury Stock						Accumulated Other Comprehensive Income						Retained Earnings						Noncontrolling Interests
Balance at November 30, 2022			$	24,240,367					25,608						3,660						5,417,796						(210,389)						2,408						18,861,417						139,867
Net earnings (including net earnings attributable to noncontrolling interests)			2,594,002						—						—						—						—						—						2,577,224						16,778
Employee stock and directors plans			(71,313)						236						—						822						(72,371)						—						—						—
Purchases of treasury stock			(769,240)						—						—						—						(769,240)						—						—						—
Amortization of restricted stock			139,616						—						—						139,616						—						—						—						—
Cash dividends			(325,359)						—						—						—						—						—			—			(325,359)						—
Receipts related to noncontrolling interests			6,309						—						—						—						—						—						—						6,309
Payments related to noncontrolling interests			(43,418)						—						—						—						—						—						—						(43,418)
Non-cash purchase or activity of noncontrolling interests, net			15,946						—						—						3,559						—						—						—						12,387
Total other comprehensive income, net of tax			1,632						—						—						—						—						1,632						—						—
Balance at August 31, 2023			$	25,788,542					25,844						3,660						5,561,793						(1,052,000)						4,040						21,113,282						131,923

Lennar Corporation and Subsidiaries

Notes to Condensed Consolidated Financial Statements (Unaudited) (Continued)

			Nine Months Ended August 31, 2022
(In thousands)			Total Equity						Class A Common Stock						Class B Common Stock						Additional Paid - in Capital						Treasury Stock						Accumulated Other Comprehensive Income (loss)						Retained Earnings						Noncontrolling Interests
Balance at November 30, 2021			$	20,996,282					30,050						3,944						8,807,891						(2,709,448)						(1,341)						14,685,329						179,857
Net earnings (including net earnings attributable to noncontrolling interests)			3,304,567						—						—						—						—						—						3,291,681						12,886
Employee stock and directors plans			(70,525)						199						—						893						(71,617)						—						—						—
Retirement of treasury stock			—						(4,667)						(284)						(3,533,425)						3,538,376						—						—						—
Purchases of treasury stock			(847,071)						—						—						—						(847,071)						—						—						—
Amortization of restricted stock			154,710						—						—						154,710						—						—						—						—
Cash dividends			(329,717)						—						—						—						—						—			—			(329,717)						—
Receipts related to noncontrolling interests			30,060						—						—						—						—						—						—						30,060
Payments related to noncontrolling interests			(85,098)						—						—						—						—						—						—						(85,098)
Non-cash purchase or activity of noncontrolling interests, net			(29,101)						—						—						(41,656)						—						—						—						12,555
Total other comprehensive loss, net of tax			3,431						—						—						—						—						3,431						—						—
Balance at August 31, 2022			$	23,127,538					25,582						3,660						5,388,413						(89,760)						2,090						17,647,293						150,260

On September 27, 2023, the Company's Board of Directors declared a quarterly cash dividend of $0.375 per share on both its Class A and Class B common stock, payable on October 26, 2023 to holders of record at the close of business on October 12, 2023. On July 21, 2023, the Company paid a cash dividend of $0.375 per share on both of its Class A and Class B common stock to holders of record at the close of business on July 7, 2023, as declared by its Board of Directors on June 22, 2023. The Company approved and paid cash dividends of $0.375 per share for each of the four quarters of 2022 on both its Class A and Class B common stock.

In March 2022, the Company's Board of Directors approved an authorization for the Company to repurchase up to the lesser of $2 billion in value, or 30 million in shares, of its outstanding Class A or Class B common stock. The repurchase authorization has no expiration date. The authorization was in addition to what was remaining of the October 2021 stock repurchase program. The following table sets forth the repurchases of the Company's Class A and Class B common stock under the authorized repurchase programs:

			Three Months Ended																								Nine Months Ended
			August 31,																								August 31
			2023												2022												2023												2022
(Dollars in thousands, except price per share)			Class A						Class B						Class A						Class B						Class A						Class B						Class A						Class B
Shares repurchased			2,305,300						694,700						—						—						5,021,186						1,978,814						8,246,000						1,122,000
Total purchase price			$	287,024					$	78,855					$	—					$	—					$	568,892					$	193,970					$	762,282					$	84,601
Average price per share			$	124.51					$	113.51					$	—					$	—					$	113.30					$	98.02					$	92.44					$	75.40

**(5)**Income Taxes

The provision for income taxes and effective tax rate were as follows:

			Three Months Ended												Nine Months Ended
			August 31,												August 31,
(Dollars in thousands)			2023						2022						2023						2022
Provision for income taxes			$358,209						351,580						824,233						951,276
Effective tax rate (1)			24.4%						19.3%						24.2		%				22.4		%

(1)In the three and nine months ended August 31, 2023, the Company's overall effective income tax rate was higher than in the three and nine months ended August 31, 2022, primarily due to the resolution of an uncertain state tax position and the retroactive reinstatement of the new energy efficient home credit, both during the third quarter of 2022. For both the three and nine months ended August 31, 2023 and 2022, the effective tax rate included state income tax expense and non-deductible executive compensation, partially offset by energy efficient home and solar tax credits.

Lennar Corporation and Subsidiaries

Notes to Condensed Consolidated Financial Statements (Unaudited) (Continued)

**(6)**Earnings Per Share

Basic earnings per share is computed by dividing net earnings attributable to common stockholders by the weighted average number of common shares outstanding for the period. Diluted earnings per share reflects the potential dilution that could occur if securities or other contracts to issue common stock were exercised or converted into common stock or resulted in the issuance of common stock that then shared in the earnings of the Company.

All outstanding nonvested shares that contain non-forfeitable rights to dividends or dividend equivalents that participate in undistributed earnings with common stock are considered participating securities and are included in computing earnings per share pursuant to the two-class method. The two-class method is an earnings allocation formula that determines earnings per share for each class of common stock and participating securities according to dividends or dividend equivalents and participation rights in undistributed earnings. The Company’s restricted common stock ("nonvested shares") is considered participating securities.

Basic and diluted earnings per share were calculated as follows:

			Three Months Ended												Nine Months Ended
			August 31,												August 31,
(In thousands, except per share amounts)			2023						2022						2023						2022
Numerator:
Net earnings attributable to Lennar			$	1,108,996					1,467,344						2,577,224						3,291,681
Less: distributed earnings allocated to nonvested shares			672						655						4,968						3,830
Less: undistributed earnings allocated to nonvested shares			12,549						15,088						28,252						34,605
Numerator for basic earnings per share			1,095,775						1,451,601						2,544,004						3,253,246
Less: net amount attributable to Rialto's Carried Interest Incentive Plan (1)			—						1,038						—						3,881
Numerator for diluted earnings per share			$	1,095,775					1,450,563						2,544,004						3,249,365
Denominator:
Denominator for basic earnings per share - weighted average common shares outstanding			282,854						288,109						284,612						290,645
Denominator for diluted earnings per share - weighted average common shares outstanding			282,854						288,109						284,612						290,645
Basic earnings per share			$	3.87					5.04						8.94						11.19
Diluted earnings per share			$	3.87					5.03						8.94						11.18

(1)The amounts presented relate to Rialto's Carried Interest Incentive Plan and represent the difference between the advanced tax distributions received from the Rialto funds included in the Lennar Other segment and the amount Lennar is assumed to own.

For both the three and nine months ended August 31, 2023 and 2022, there were no options to purchase shares of common stock that were outstanding and anti-dilutive.

**(7)**Homebuilding Senior Notes and Other Debts Payable

(Dollars in thousands)			August 31, 2023						November 30, 2022
4.875% senior notes due December 2023 (1)			$	377,973					399,169
4.50% senior notes due 2024 (1)			463,407						648,975
4.75% senior notes due 2025			499,225						498,892
5.25% senior notes due 2026			403,345						404,257
5.00% senior notes due 2027			351,453						351,741
4.75% senior notes due 2027			896,820						896,259
5.875% senior notes due 2024			—						434,128
Mortgage notes on land and other debt			327,896						413,873
			$	3,320,119					4,047,294

(1)During the three months ended August 31, 2023, the Company repurchased $19.9 million and $30.4 million aggregate principal amount of 4.875% senior notes and 4.50% senior notes, respectively, through open market repurchases. During the nine months ended August 31, 2023, the Company repurchased $21.8 million and $186.2 million aggregate principal amount of 4.875% senior notes and 4.50% senior notes, respectively, through open market repurchases.

The carrying amounts of the senior notes in the table above are net of debt issuance costs of $5.2 million and $7.6 million as of August 31, 2023 and November 30, 2022, respectively.

Lennar Corporation and Subsidiaries

Notes to Condensed Consolidated Financial Statements (Unaudited) (Continued)

During the three months ended August 31, 2023, the Company redeemed $425 million aggregate principal amount of its 5.875% senior notes due November 2024 at an early redemption price of 100% of the principal amount outstanding using cash on hand, resulting in a pre-tax gain of $6.0 million, included in Homebuilding other income (expense), net.

The maximum available borrowings on the Company's unsecured revolving credit facility (the "Credit Facility") were as follows:

(In thousands)						August 31, 2023
Commitments - maturing in April 2024						$	350,000
Commitments - maturing in May 2027						2,225,000
Total commitments						$	2,575,000
Accordion feature						425,000
Total maximum borrowings capacity						$	3,000,000

The proceeds available under the Credit Facility, which are subject to specified conditions for borrowing, may be used for working capital and general corporate purposes. The Credit Facility also provides that up to $500 million in commitments may be used for letters of credit. The maturity, debt covenants and details of the Credit Facility are unchanged from the disclosure in the Company's Financial Condition and Capital Resources section in its Annual Report on Form 10-K for the year ended November 30, 2022. In addition to the Credit Facility, the Company has other letter of credit facilities with different financial institutions.

The Company's processes for posting performance and financial letters of credit and surety bonds are unchanged from the disclosure in the Company's Financial Condition and Capital Resources section in its Annual Report on Form 10-K for the year ended November 30, 2022. The Company's outstanding letters of credit and surety bonds are disclosed below:

(In thousands)						August 31, 2023						November 30, 2022
Performance letters of credit						$	1,423,643					1,259,033
Financial letters of credit						399,866						503,659
Surety bonds						4,367,124						4,136,715
Anticipated future costs primarily for site improvements related to performance surety bonds						2,425,037						2,273,694

All of the senior notes are guaranteed by certain of the Company's 100% owned subsidiaries, which are primarily homebuilding subsidiaries. The guarantees are full and unconditional. The terms of guarantees are unchanged from the disclosure in the Company's Financial Condition and Capital Resources section in its Annual Report on Form 10-K for the year ended November 30, 2022.

**(8)**Financial Instruments and Fair Value Disclosures

The following table presents the carrying amounts and estimated fair values of financial instruments held or issued by the Company at August 31, 2023 and November 30, 2022, using available market information and what the Company believes to be appropriate valuation methodologies. Considerable judgment is required in interpreting market data to develop the estimates of fair value. The use of different market assumptions and/or estimation methodologies might have a material effect on the estimated fair value amounts. The table excludes cash and cash equivalents, restricted cash, receivables, net and accounts payable, all of which had fair values approximating their carrying amounts due to the short maturities and liquidity of these instruments.

									August 31, 2023												November 30, 2022
(In thousands)			Fair Value Hierarchy						Carrying Amount						Fair Value						Carrying Amount						Fair Value
ASSETS
Financial Services:
Loans held-for-investment, net			Level 3						$	51,330					51,330						45,636						45,647
Investments held-to-maturity			Level 3						140,967						139,993						143,251						143,208
LIABILITIES
Homebuilding senior notes and other debts payable, net			Level 2						$	3,320,119					3,271,836						4,047,294						3,993,242
Financial Services notes and other debts payable, net			Level 2						1,154,163						1,154,797						2,135,093						2,135,797
Multifamily notes payable, net			Level 2						3,477						3,477						16,749						16,749

The following methods and assumptions are used by the Company in estimating fair values:

Financial Services - The fair values above are based on quoted market prices, if available. The fair values for instruments that do not have quoted market prices are estimated by the Company on the basis of discounted cash flows or other

Lennar Corporation and Subsidiaries

Notes to Condensed Consolidated Financial Statements (Unaudited) (Continued)

financial information. For notes and other debts payable, the fair values approximate their carrying value due to variable interest pricing terms and the short-term nature of the majority of the borrowings.

Homebuilding - For senior notes and other debts payable, the fair value of fixed-rate borrowings is primarily based on quoted market prices and the fair value of variable-rate borrowings is based on expected future cash flows calculated using current market forward rates.

Multifamily - For notes payable, the fair values approximate their carrying value due to variable interest pricing terms and the short-term nature of the borrowings.

Fair Value Measurements:

GAAP provides a framework for measuring fair value, expands disclosures about fair value measurements and establishes a fair value hierarchy which prioritizes the inputs used in measuring fair value summarized as follows:

Level 1: Fair value determined based on quoted prices in active markets for identical assets.

Level 2: Fair value determined using significant other observable inputs.

Level 3: Fair value determined using significant unobservable inputs.

The Company’s financial instruments measured at fair value on a recurring basis are summarized below:

			Fair Value Hierarchy						Fair Value at
(In thousands)						August 31, 2023						November 30, 2022
Financial Services Assets:
Residential loans held-for-sale			Level 2						$	1,250,478					1,750,712
LMF Commercial loans held-for-sale			Level 3						37,295						25,599
Mortgage servicing rights			Level 3						3,416						3,463
Forward options			Level 1						5,714						9,473
Lennar Other Assets:
Investments in equity securities			Level 1						$	211,898					212,981
Investments available-for-sale			Level 3						37,114						35,482

Residential and LMF Commercial loans held-for-sale in the table above include:

			August 31, 2023												November 30, 2022
(In thousands)			Aggregate Principal Balance												Change in Fair Value						Aggregate Principal Balance												Change in Fair Value
Residential loans held-for-sale			$	1,267,604											(17,126)						1,734,480												16,233
LMF Commercial loans held-for-sale			37,842												(547)						24,000												1,599

Financial Services residential loans held-for-sale - Fair value is based on independent quoted market prices, where available, or the prices for other mortgage whole loans with similar characteristics. The Company recognizes the fair value of its rights to service a mortgage loan as revenue upon entering into an interest rate lock loan commitment with a borrower. The fair value of these are included in Financial Services’ loans held-for-sale as of August 31, 2023 and November 30, 2022. Fair value of servicing rights is determined based on actual sales of servicing rights on loans with similar characteristics.

LMF Commercial loans held-for-sale - The fair value of commercial loans held-for-sale is calculated from model-based techniques that use discounted cash flow assumptions and the Company’s own estimates of CMBS spreads, market interest rate movements and the underlying loan credit quality. The details and methods of the calculation are unchanged from the fair value disclosure in the Company's Notes to the Financial Statements section in its Annual Report on Form 10-K for the year ended November 30, 2022. These methods use unobservable inputs in estimating a discount rate that is used to assign a value to each loan. While the cash payments on the loans are contractual, the discount rate used and assumptions regarding the relative size of each class in the CMBS capital structure can significantly impact the valuation. Therefore, the estimates used could differ materially from the fair value determined when the loans are sold to a securitization trust.

Mortgage servicing rights - Financial Services records mortgage servicing rights when it sells loans on a servicing-retained basis or through the acquisition or assumption of the right to service a financial asset. The fair value of the mortgage servicing rights is calculated using third-party valuations. The key assumptions, which are generally unobservable inputs, used in the valuation of the mortgage servicing rights include mortgage prepayment rates, discount rates and delinquency rates and are noted below:

Lennar Corporation and Subsidiaries

Notes to Condensed Consolidated Financial Statements (Unaudited) (Continued)

			As of August 31, 2023						As of November 30, 2022
Unobservable inputs
Mortgage prepayment rate			8%						8%
Discount rate			13%						13%
Delinquency rate			10%						7%

Forward options - Fair value of forward options is based on independent quoted market prices for similar financial instruments. The fair value of these are included in Financial Services' other assets and the Company recognizes the changes in the fair value of the premium paid as Financial Services' Revenue.

Lennar Other investments in equity securities - The fair value of investments in equity securities was calculated based on independent quoted market prices. The Company’s investments in equity securities were recorded at fair value with all changes in fair value recorded to Lennar Other unrealized gains (losses) from technology investments on the Company’s condensed consolidated statements of operations and comprehensive income.

Lennar Other investments available-for-sale - The fair value of investments available-for-sale is calculated from model-based techniques that use discounted cash flow assumptions and the Company’s own estimates of CMBS spreads, market interest rate movements and the underlying loan credit quality. Loan values are calculated by allocating the change in value of an assumed CMBS capital structure to each loan. The value of an assumed CMBS capital structure is calculated, generally, by discounting the cash flows associated with each CMBS class at market interest rates and at the Company’s own estimate of CMBS spreads.

The changes in fair values for Level 1 and Level 2 financial instruments measured on a recurring basis are shown below by financial instrument and financial statement line item:

			Three Months Ended												Nine Months Ended
			August 31,												August 31,
(In thousands)			2023						2022						2023						2022
Changes in fair value included in Financial Services revenues:
Loans held-for-sale			$	(9,795)					(14,319)						(33,358)						(41,356)
Mortgage loan commitments			18,139						(7,958)						(16,922)						18,597
Forward contracts			(9,379)						42,781						63,323						34,291
Forward options			(485)						(6)						(1,437)						(6)
Changes in fair value included in Lennar Other unrealized losses from technology investments:
Investments in equity securities			$	(15,713)					(85,839)						(14,170)						(558,974)
Changes in fair value included in other comprehensive income, net of tax:
Lennar Other investments available-for-sale			$	208					342						1,632						1,146

Interest on Financial Services loans held-for-sale and LMF Commercial loans held-for-sale measured at fair value is calculated based on the interest rate of the loans and recorded as revenues in the Financial Services’ statement of operations.

Lennar Corporation and Subsidiaries

Notes to Condensed Consolidated Financial Statements (Unaudited) (Continued)

The following table sets forth the reconciliation of the beginning and ending balance for the Level 3 recurring fair value measurements in the Company's Financial Services segment:

			Three Months Ended
			August 31,
			2023												2022
(In thousands)			Mortgage servicing rights						LMF Commercial loans held-for-sale						Mortgage servicing rights						LMF Commercial loans held-for-sale
Beginning balance			$	3,398					22,754						3,221						84,205
Purchases/loan originations			34						161,308						93						109,850
Sales/loan originations sold, including those not settled			—						(100,562)						—						(188,266)
Disposals/settlements			(94)						(45,667)						(54)						—
Changes in fair value (1)			78						(535)						96						693
Interest and principal paydowns			—						(3)						—						(35)
Ending balance			$	3,416					37,295						3,356						6,447

			Nine Months Ended
			August 31,
			2023												2022
(In thousands)			Mortgage servicing rights						LMF Commercial loans held-for-sale						Mortgage servicing rights						LMF Commercial loans held-for-sale
Beginning balance			$	3,463					25,599						2,492						68
Purchases/loan originations			155						325,378						275						518,345
Sales/loan originations sold, including those not settled			—						(265,864)						—						(511,733)
Disposals/settlements			(237)						(45,667)						(320)						—
Changes in fair value (1)			35						(547)						909						247
Interest and principal paydowns			—						(1,604)						—						(480)
Ending balance			$	3,416					37,295						3,356						6,447

(1)Changes in fair value for LMF Commercial loans held-for-sale and Financial Services mortgage servicing rights are included in Financial Services' revenues.

The Company’s assets measured at fair value on a nonrecurring basis are those assets for which the Company has recorded valuation adjustments and write-offs. The fair values included in the table below represent only those assets whose carrying values were adjusted to fair value during the respective periods disclosed. The assets measured at fair value on a nonrecurring basis are summarized below:

									Three Months Ended
									August 31,
									2023																		2022
(In thousands)			Fair Value Hierarchy						Carrying Value						Fair Value						Total Losses, Net (1)						Carrying Value						Fair Value						Total Losses, Net (1)
Non-financial assets - Homebuilding:
Finished homes and construction in progress (2)			Level 3						$	67,006					57,801						(9,205)						21,268						17,034						(4,234)
Land and land under development (2)			Level 3						26,740						24,612						(2,128)						100,043						93,095						(6,948)
Investments in unconsolidated entities (3)			Level 3						—						—						—						1,453						—						(1,453)

									Nine Months Ended
									August 31,
									2023																		2022
(In thousands)			Fair Value Hierarchy						Carrying Value						Fair Value						Total Losses, Net (1)						Carrying Value						Fair Value						Total Losses, Net (1)
Non-financial assets - Homebuilding:
Finished homes and construction in progress (2)			Level 3						$	250,822					216,703						(34,119)						55,292						48,075						(7,217)
Land and land under development (2)			Level 3						69,605						48,315						(21,290)						129,580						111,003						(18,577)
Investments in unconsolidated entities (3)			Level 3						78,834						37,792						(41,042)						1,453						—						(1,453)

(1)Represents losses due to valuation adjustments and deposit and pre-acquisition write-offs recorded during the respective periods.

Lennar Corporation and Subsidiaries

Notes to Condensed Consolidated Financial Statements (Unaudited) (Continued)

(2)Valuation adjustments for finished homes and construction in progress, and land and land under development were included in Homebuilding costs and expenses. During the three and nine months ended August 31, 2023, total losses, net, for land and land under development included $1.6 million and $18.7 million, respectively, of deposit and pre-acquisition cost write-offs.

(3)Valuation adjustments related to investments in unconsolidated entities were primarily included in Homebuilding other income (expense), net in the Company's condensed consolidated statements of operations and comprehensive income for the three and nine months ended August 31, 2023.

Finished homes and construction in progress are included within 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. The Company disclosed its accounting policy related to inventories and its review for indicators of impairment in the Summary of Significant Accounting Policies in its Annual Report on Form 10-K for the year ended November 30, 2022.

The Company estimates 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 assumptions change. For example, changes in market conditions and other specific developments or changes in assumptions may cause the Company to re-evaluate its strategy regarding previously impaired inventory, as well as inventory not currently impaired but for which indicators of impairment may arise if market deterioration occurs, and certain other assets that could result in further valuation adjustments and/or additional write-offs of option deposits and pre-acquisition costs due to abandonment of those options contracts.

On a quarterly basis, the Company reviews its active communities for indicators of potential impairments. The table below summarizes communities reviewed for indicators of impairment and communities with valuation adjustments recorded:

																											Communities with valuation adjustments
At or for the Nine Months Ended			# of active communities						# of communities with potential indicator of impairment																		# of communities																		Fair Value (in thousands)						Valuation Adjustments (in thousands)
August 31, 2023			1,247						21																		6																		$	53,211					$	18,844
August 31, 2022			1,182						5																		1																		8,815						2,710

The table below summarizes the most significant unobservable inputs used in the Company's discounted cash flow model to determine the fair value of its communities for which the Company recorded valuation adjustments:

			Nine Months Ended
			August 31,
			2023												2022
Unobservable inputs			Range
Average selling price			$371,000			—			850,000						750,000
Absorption rate per quarter (homes)			3			—			26						2
Discount rate			20%												20%

The Company disclosed its accounting policy related to investments in unconsolidated entities and its review for indicators of impairment for the long-lived assets of an unconsolidated entity and the decline in the fair value of an investment below the carrying value in the Summary of Significant Accounting Policies in its Annual Report on Form 10-K for the year ended November 30, 2022.

The Company evaluates if a decrease in the fair value of an investment below the carrying value is other-than-temporary. This evaluation includes certain critical assumptions made by management: (1) projected future distributions from the unconsolidated entities, (2) discount rates applied to the future distributions and (3) various other factors, which include age of the venture, relationships with the other partners and banks, general economic market conditions, land status, length of the time and the extent to which the market value has been below the carrying value, and liquidity needs of the unconsolidated entity. The Company generally estimates the fair value of an investment in an unconsolidated entity by using a cash flow analysis for estimated future net distributions from an unconsolidated entity, subject to the perceived risks associated with the unconsolidated entity’s cash flow streams. During the nine months ended August 31, 2023, the Company estimated the fair value of an investment in an unconsolidated entity using a cash flow analysis with a 15% discount rate and concluded that the investment had an other-than-temporary impairment of $36.8 million included in Homebuilding other income (expense), net in the Company's condensed consolidated statements of operations and comprehensive income.

The Company estimates the fair value of investments in unconsolidated entities evaluated for impairment based on market conditions and assumptions made by management at the time the investment is evaluated, which may differ materially from actual results if market conditions or assumptions change.

Lennar Corporation and Subsidiaries

Notes to Condensed Consolidated Financial Statements (Unaudited) (Continued)

**(9)**Variable Interest Entities

During the nine months ended August 31, 2023, the Company evaluated the joint venture ("JV") agreements of its JV's that were formed or that had reconsideration events, such as changes in the governing documents or to debt arrangements. Based on the Company's evaluation, there were no variable interest entities ("VIEs") that were consolidated or deconsolidated during the nine months ended August 31, 2023.

The carrying amount of the Company's consolidated VIEs' assets and non-recourse liabilities are disclosed in the footnote to the condensed consolidated balance sheets.

A VIE’s assets can only be used to settle obligations of that VIE. The VIEs are not guarantors of the Company’s senior notes or other debts payable. The assets held by a VIE are usually collateral for that VIE’s debt. The Company and other partners do not generally have an obligation to make capital contributions to a VIE unless the Company and/or the other partner(s) have entered into debt guarantees with VIE’s lenders. Other than debt guarantee agreements with VIE’s lenders, there are no liquidity arrangements or agreements to fund capital or purchase assets that could require the Company to provide financial support to a VIE. While the Company has option contracts to purchase land from certain of its VIEs, the Company is not required to purchase the assets and could walk away from the contracts, but that would require forfeiture of deposits and pre-acquisition costs.

Unconsolidated VIEs

The Company’s recorded investments in VIEs that are unconsolidated and related estimated maximum exposure to loss were as follows:

			August 31, 2023												November 30, 2022
(In thousands)			Investments in Unconsolidated VIEs						Lennar’s Maximum Exposure to Loss						Investments in Unconsolidated VIEs						Lennar’s Maximum Exposure to Loss
Homebuilding (1)			$	663,528					749,232						586,935						718,719
Multifamily (2)			392,900						411,104						607,484						633,934
Financial Services (3)			140,967						140,967						143,251						143,251
Lennar Other (4)			55,167						55,167						55,952						55,952
			$	1,252,562					1,356,470						1,393,622						1,551,856

(1)As of August 31, 2023 and November 30, 2022, the Company's maximum exposure to loss of Homebuilding's investments in unconsolidated VIEs was limited to its investments in unconsolidated VIEs, except with regard to the Company's remaining commitment to fund capital in Upward America of $70.3 million and $77.3 million, respectively. In addition, as of August 31, 2023, there was recourse debt of a VIE of $10.5 million and as of November 30, 2022, there was $52.7 million of receivables relating to a short-term loan and management fee owed to the Company by Upward America.

(2)As of August 31, 2023 and November 30, 2022, the Company's maximum exposure to loss of Multifamily's investments in unconsolidated VIEs was primarily limited to its investments in the unconsolidated VIEs. The maximum exposure for LMV 1 and LMV II, in addition to the investment, also included the remaining combined equity commitment of $12.8 million and $19.3 million as of August 31, 2023 and November 30, 2022, respectively, for future expenditures related to the construction and development of its projects. The decrease in exposure for the nine months ended August 31, 2023 is primarily due to the removal of LMV I as the Fund does not expect to call for equity in the future. As a result, LMV I is not a VIE as of August 31, 2023.

(3)As of August 31, 2023 and November 30, 2022, the Company's maximum exposure to loss of the Financial Services segment was limited to its investment in the unconsolidated VIEs and related to the Financial Services' CMBS investments held-to-maturity.

(4)As of August 31, 2023, the Company's maximum recourse exposure to loss of the Lennar Other segment was limited to its investments in the unconsolidated VIEs.

The Company and its JV partners generally fund JVs as needed and in accordance with business plans to allow the entities to finance their activities. Because such JVs are expected to make future capital calls in order to continue to finance their activities, the entities are determined to be VIEs as of August 31, 2023 in accordance with ASC 810 due to insufficient equity at risk. While these entities are VIEs, the Company has determined that the power to direct the activities of the VIEs that most significantly impact the VIEs’ economic performance is generally shared and the Company and its partners are not de-facto agents. While the Company generally manages the day-to-day operations of the VIEs, each of these VIEs has an executive committee made up of representatives from each partner. The members of the executive committee have equal votes and major decisions require unanimous consent and approval from all members. The Company does not have the unilateral ability to exercise participating voting rights without partner consent.

There are no liquidity arrangements or agreements to fund capital or purchase assets that could require the Company to provide financial support to the VIEs. Except for the unconsolidated VIEs discussed above, the Company and the other partners did not guarantee any debt of the other unconsolidated VIEs. While the Company has option contracts to purchase land from certain of its unconsolidated VIEs, the Company is not required to purchase the assets and could walk away from the contracts.

Lennar Corporation and Subsidiaries

Notes to Condensed Consolidated Financial Statements (Unaudited) (Continued)

Option Contracts

The Company has access to land through option contracts, which generally enable it to control portions of properties owned by third parties (including land funds) until the Company has determined whether to exercise the options.

The Company evaluates option contracts with third party land holding companies for land to determine whether they are VIEs and, if so, whether the Company is the primary beneficiary of certain of these option contracts. Although the Company does not have legal title to the optioned land, if the Company is deemed to be the primary beneficiary, makes a significant deposit or pre-acquisition cost investment for optioned land, or is otherwise economically compelled to takedown the optioned land it may need to consolidate the land under option at the purchase price of the optioned land. Land under option with third party holding companies that the Company is economically compelled to takedown was $925.0 million as of August 31, 2023 and is included in consolidated inventory not owned. Consolidated inventory not owned related to land financing transactions, which are land sale transactions that did not meet the criteria for revenue recognition and derecognition of land by the Company as a result of the Company maintaining an option to repurchase the land in the future, was $1.8 billion as of August 31, 2023.

During the nine months ended August 31, 2023, consolidated inventory not owned increased by $356.1 million with a corresponding increase to liabilities related to consolidated inventory not owned in the accompanying condensed consolidated balance sheet as of August 31, 2023. The increase was primarily due to land financing transactions and the consolidation of homesites under option that the Company is economically compelled to takedown. These increases were partially offset by homesite takedowns. To reflect the purchase price of the homesite takedowns, the Company had a net reclass related to option deposits from consolidated inventory not owned to finished homes and construction in progress in the accompanying condensed consolidated balance sheet as of August 31, 2023. The liabilities related to consolidated inventory not owned primarily represent the difference between the option exercise prices for the optioned land and the Company’s cash deposits.

The Company's exposure to losses on its option contracts with third parties and unconsolidated entities was as follows:

(Dollars in thousands)			August 31, 2023						November 30, 2022
Non-refundable option deposits and pre-acquisition costs			$	2,168,595					1,990,946
Letters of credit in lieu of cash deposits under certain land and option contracts			162,634						163,942

**(10)**Commitments and Contingent Liabilities

The Company is party to various claims, legal actions and complaints relating to homes sold by the Company arising in the ordinary course of business. In the opinion of management, the disposition of these matters will not have a material adverse effect on the Company’s condensed consolidated financial statements. From time to time, the Company is also a party to various lawsuits involving purchases and sales of real property. These lawsuits often include claims regarding representations and warranties made in connection with the transfer of properties and disputes regarding the obligation to purchase or sell properties.

The Company does not believe that the ultimate resolution of these claims or lawsuits will have a material adverse effect on its business or financial position. However, the financial effect of litigation concerning purchases and sales of property may depend upon the value of the subject property, which may have changed from the time the agreement for purchase or sale was entered into.

Product Warranty

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 on historical data and trends with respect to similar product types and geographical areas. The activity in the Company’s warranty reserve, which is included in Homebuilding other liabilities, was as follows:

			Three Months Ended												Nine Months Ended
			August 31,												August 31,
(In thousands)			2023						2022						2023						2022
Warranty reserve, beginning of the period			$	415,154					377,990						418,017						377,021
Warranties issued			75,024						73,697						195,924						190,704
Adjustments to pre-existing warranties from changes in estimates (1)			(8,568)						10,301						1,620						16,023
Payments			(80,279)						(67,395)						(214,230)						(189,155)
Warranty reserve, end of period			$	401,331					394,593						401,331						394,593

(1)The adjustments to pre-existing warranties from changes in estimates during the three and nine months ended August 31, 2023 and 2022 primarily related to specific claims in certain of the Company's homebuilding communities and other adjustments.

Lennar Corporation and Subsidiaries

Notes to Condensed Consolidated Financial Statements (Unaudited) (Continued)

Leases

The Company has entered into agreements to lease certain office facilities and equipment under operating leases. The Company recognizes lease expense for these leases on a straight-line basis over the lease term. Right-of-use ("ROU") assets and lease liabilities are recorded on the balance sheet for all leases, except leases with an initial term of 12 months or less. Many of the Company's leases include options to renew. The exercise of lease renewal options is at the Company's option and therefore renewal option payments have not been included in the ROU assets or lease liabilities. The following table includes additional information about the Company's leases:

(Dollars in thousands)			August 31, 2023						November 30, 2022
Right-of-use assets			$	137,822					149,966
Lease liabilities			146,006						158,832
Weighted-average remaining lease term (in years)			7.6						7.9
Weighted-average discount rate			3.2%						3.0%

Future minimum payments under the noncancellable leases in effect at August 31, 2023 were as follows:

(In thousands)			Lease Payments
2023			$	8,491
2024			30,400
2025			26,485
2026			20,905
2027			17,471
Thereafter			60,367
Total future minimum lease payments (1)			$	164,119
Less: Interest (2)			18,113
Present value of lease liabilities (2)			$	146,006

(1)Total future minimum lease payments exclude variable lease costs of $29.2 million and short-term lease costs of $2.3 million.

(2)The Company's leases do not include a readily determinable implicit rate. As such, the Company has estimated the discount rate for these leases to determine the present value of lease payments at the lease commencement date or as of December 1, 2019, which was the effective date of ASU 2016-02. The Company recognized the lease liabilities on its condensed consolidated balance sheets within accounts payable and other liabilities of the respective segments.

The Company's rental expense on lease liabilities were as follows:

			Nine Months Ended
			August 31,
(In thousands)			2023						2022
Rental expense			$	78,053					78,244

On occasion, the Company may sublease rented space which is no longer used for the Company's operations. For both the nine months ended August 31, 2023 and 2022, the Company had an immaterial amount of sublease income.

Forward-Looking Statements

Some of the statements in this Quarterly Report on Form 10-Q are forward-looking statements. These statements are intended to qualify for the "safe harbor" from liability established by 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," "outlook," "will," "should," "could" or other words of similar meaning, as well as statements written in the future tense. 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 investigations 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: an extended slowdown in some or all of the real estate markets in which we have significant homebuilding activity, including a slowdown in either the market for single family homes or the multifamily rental market; 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; decreased demand for our homes or Multifamily rental properties; the impact of inflation or a higher interest rate environment; the effect of increased interest rates with regard to borrowings by the funds we manage on the willingness of those funds to invest in new projects; the effects of public health issues such as a major epidemic or pandemic that could have a negative impact on the economy and on our businesses; the duration, impact and severity of which is highly uncertain; 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; our inability to successfully execute our strategies, including our land lighter strategy and our strategy to monetize noncore assets; 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; 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; and our inability to refinance our debt on terms that are as favorable as our current arrangements.

Please see our Annual Report on Form 10-K for the fiscal year ended November 30, 2022 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.