LENNAR CORP /NEW/LEN
LENNAR CORP /NEW/ Fair Value Disclosure
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 November 30, 2025 and 2024, 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.
| At November 30, | |||||||||||||||||||||||||||||
| 2025 | 2024 | ||||||||||||||||||||||||||||
| Fair Value | Carrying | Fair | Carrying | Fair | |||||||||||||||||||||||||
| (In thousands) | Hierarchy | Amount | Value | Amount | Value | ||||||||||||||||||||||||
| ASSETS | |||||||||||||||||||||||||||||
| Financial Services: | |||||||||||||||||||||||||||||
| Loans held-for-investment, net (1) | Level 3 | $ | — | — | 60,969 | 61,044 | |||||||||||||||||||||||
| Loan held-for-sale (1) | Level 3 | 15,547 | 15,547 | — | — | ||||||||||||||||||||||||
| Investments held-to-maturity | Level 3 | 132,868 | 132,032 | 135,646 | 138,160 | ||||||||||||||||||||||||
| LIABILITIES | |||||||||||||||||||||||||||||
| Homebuilding senior notes and other debt payable, net | Level 2 | $ | 4,084,686 | 4,122,169 | 2,258,283 | 2,264,375 | |||||||||||||||||||||||
| Financial Services notes and other debt payable, net | Level 2 | 1,790,309 | 1,790,789 | 1,930,956 | 1,931,515 | ||||||||||||||||||||||||
(1)During the year ended November 30, 2025, loans held-for-investment of $61.0 million (fair value of $50.3 million) were transferred to loans held-for-sale, based on the Company's intent to sell the loans in the near future.
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 financial information. The fair value of residential loans held-for-sale for which there is no active market for similar mortgage loans is determined using an independent third-party valuation that uses a discounted cash flow model to estimate fair value and is categorized as Level 3. The key assumptions used in the model, which are generally unobservable inputs, are mortgage prepayment rates, default rates, loss severity rates, and discount rates. Loans held-for-sale are carried at the lower of cost or fair value. For notes and other debt 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.
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 at November 30, | |||||||||||||||||
| (In thousands) | Fair Value Hierarchy | 2025 | 2024 | ||||||||||||||
| Financial Services Assets: | |||||||||||||||||
| Residential loans held-for-sale | Level 2 | $ | 2,170,677 | 2,200,402 | |||||||||||||
LMF Commercial loans held-for-sale | Level 3 | 26,401 | 50,316 | ||||||||||||||
| Mortgage servicing rights | Level 3 | 3,266 | 3,463 | ||||||||||||||
| Lennar Other Assets: | |||||||||||||||||
| Investments in equity securities | Level 1 | 232,372 | 204,777 | ||||||||||||||
| Investments available-for-sale | Level 3 | 39,060 | 40,578 | ||||||||||||||
Residential and LMF Commercial loans held-for-sale in the table above include:
| At November 30, | |||||||||||||||||||||||
| 2025 | 2024 | ||||||||||||||||||||||
| (In thousands) | Aggregate Principal Balance | Change in Fair Value | Aggregate Principal Balance | Change in Fair Value | |||||||||||||||||||
| Residential loans held-for-sale | $ | 2,206,966 | (36,289) | 2,263,310 | (62,907) | ||||||||||||||||||
LMF Commercial loans held-for-sale | 26,525 | (124) | 50,020 | 296 | |||||||||||||||||||
The estimated fair values of the Company’s financial instruments have been determined by 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 following methods and assumptions are used by the Company in estimating fair values:
Financial Services residential loans held-for-sale - The fair value of residential loans held-for-sale that trade in active secondary markets is determined based upon quoted market prices for similar mortgage loans, adjusted for credit risk and other loan characteristics, and is categorized as Level 2. 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 November 30, 2025 and 2024. 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. 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:
| November 30, 2025 | |||||
| Unobservable inputs | |||||
| Mortgage prepayment rate | 9% | ||||
| Discount rate | 13% | ||||
| Delinquency rate | 11% | ||||
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 consolidated statements of operations and comprehensive income (loss).
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:
| For the Years Ended November 30, | |||||||||||||||||
| (In thousands) | 2025 | 2024 | 2023 | ||||||||||||||
| Changes in fair value included in Financial Services revenues: | |||||||||||||||||
| Loans held-for-sale | $ | 26,618 | (52,482) | (26,658) | |||||||||||||
| Mortgage loan commitments | 19,930 | (44,106) | 1,016 | ||||||||||||||
| Forward contracts | 9,346 | 61,270 | (28,431) | ||||||||||||||
| Changes in fair value included in Lennar Other gains (losses) from technology investments: | |||||||||||||||||
| Investments in equity securities and other assets | $ | 130,166 | 25,180 | (50,162) | |||||||||||||
| Changes in fair value included in other comprehensive income (loss), net of tax: | |||||||||||||||||
| Lennar Other investments available-for-sale | $ | (1,518) | 2,650 | 2,471 | |||||||||||||
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.
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:
| For the Years Ended November 30, | |||||||||||||||||||||||
| 2025 | 2024 | ||||||||||||||||||||||
| (In thousands) | Mortgage servicing rights | LMF Commercial loans held-for-sale | Mortgage servicing rights | LMF Commercial loans held-for-sale | |||||||||||||||||||
| Beginning balance | $ | 3,463 | 50,316 | 3,440 | 13,459 | ||||||||||||||||||
| Purchases/loan originations | 408 | 707,262 | 463 | 568,520 | |||||||||||||||||||
| Sales/loan originations sold, including those not settled | — | (730,564) | — | (522,647) | |||||||||||||||||||
| Disposals/settlements (1) | (332) | — | (261) | (9,500) | |||||||||||||||||||
| Changes in fair value (2) | (273) | (124) | (179) | 296 | |||||||||||||||||||
| Interest and principal paydowns | — | (489) | — | 188 | |||||||||||||||||||
| Ending balance | $ | 3,266 | 26,401 | 3,463 | 50,316 | ||||||||||||||||||
(1)LMF Commercial includes $9.5 million of loans that was converted to loans held-for-sale during the year ended November 30, 2024.
(2)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:
| For the Years Ended November 30, | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| 2025 | 2024 | 2023 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| (In thousands) | Fair Value Hierarchy | Carrying Value | Fair Value | Total Losses, Net (1) | Carrying Value | Fair Value | Total Losses, Net (1) | Carrying Value | Fair Value | Total Losses, Net (1) | |||||||||||||||||||||||||||||||||||||||||||||||||
| Homebuilding - non-financial assets: | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Finished homes and construction in progress (2) | Level 3 | $ | 1,817,075 | 1,631,871 | (185,204) | 516,081 | 467,946 | (48,135) | 458,569 | 396,795 | (61,774) | ||||||||||||||||||||||||||||||||||||||||||||||||
Land and land under development (2) | Level 3 | 4,891 | — | (4,891) | — | — | — | 52,147 | 49,539 | (2,608) | |||||||||||||||||||||||||||||||||||||||||||||||||
| Deposits and pre-acquisition costs on real estate (3) | Level 3 | 23,082 | — | (23,082) | 5,120 | — | (5,120) | 19,914 | — | (19,914) | |||||||||||||||||||||||||||||||||||||||||||||||||
| Investments in unconsolidated entities (4) | Level 3 | — | — | — | — | — | — | 78,834 | 37,792 | (41,042) | |||||||||||||||||||||||||||||||||||||||||||||||||
| Financial Services - financial assets: | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Loan held-for-sale (5) | Level 3 | 17,660 | 15,547 | (2,113) | — | — | — | — | — | — | |||||||||||||||||||||||||||||||||||||||||||||||||
| Multifamily - non-financial assets: | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Land and land under development (6) | Level 3 | $ | — | — | — | 139,980 | 49,970 | (90,010) | — | — | — | ||||||||||||||||||||||||||||||||||||||||||||||||
| Investments in unconsolidated entities (7) | Level 3 | 23,216 | — | (23,216) | 24,753 | — | (24,753) | — | — | — | |||||||||||||||||||||||||||||||||||||||||||||||||
(1)Represents losses due to valuation adjustments and deposit and pre-acquisition write-offs recorded during the respective periods.
(2)Valuation adjustments for finished homes and construction in progress, and land and land under development were included in Homebuilding costs and expenses in the Company's consolidated financial statements.
(3)Forfeited deposits and write-off of pre-acquisition costs on real estate were included in Homebuilding costs and expenses in the Company's consolidated statements of operations and comprehensive income (loss).
(4)Valuation adjustments related to Homebuilding investments in unconsolidated entities were primarily included in other income (expense), net and other gains (losses), net in the Company's consolidated statements of operations and comprehensive income (loss) for the years ended November 30, 2023.
(5)Changes in fair value below amortized cost basis are recognized through a valuation allowance, with the adjustment included in Financial Services earnings in the Company's consolidated financial statements.
(6)Valuation adjustments for land and land under development were included in Multifamily costs and expenses.
(7)Valuation adjustments related to Multifamily investments in unconsolidated entities were included in other income (expense), net and other gains (losses), net in the Company's consolidated statements of operations and comprehensive income (loss) for the years ended November 30, 2025 and 2024.
During the year ended November 30, 2025, the Company wrote off $33.0 million relating to one of the Company's non-public technology cost method investments which was recorded in Other income (expense), net and other gains (losses), net in the Company’s consolidated statements of operations and comprehensive income (loss). During the year ended November 30, 2023, the Company wrote off $65.0 million relating to one of the Company's non-public technology cost method investments which was recorded in Other income (expense), net and other gains (losses), net in the Company’s consolidated statements of operations and comprehensive income (loss).
See Note 1 for a detailed description of the Company’s process for identifying and recording valuation adjustments related to Homebuilding inventory and investments in unconsolidated entities.
Historical Timeline
| Fiscal Year | Filed | |
|---|---|---|
| 2025 | Jan 28, 2026 | Showing above |
| 2024 | Jan 23, 2025 | |
| 2023 | Jan 26, 2024 | |
| 2022 | Jan 26, 2023 | |
| 2021 | Jan 28, 2022 | |
| 2020 | Jan 22, 2021 | |
| 2019 | Jan 27, 2020 | |
| 2018 | Jan 28, 2019 | |
| 2017 | Jan 25, 2018 | |
| 2016 | Jan 20, 2017 | |
| 2015 | Jan 22, 2016 | |
About Fair Value Disclosures
Fair value disclosures classify all assets and liabilities measured at fair value into a three-level hierarchy: Level 1 (quoted market prices), Level 2 (observable inputs like yield curves), and Level 3 (unobservable inputs requiring management estimates). The proportion of Level 3 assets directly reflects how much of the balance sheet depends on internal models rather than market evidence.
Key signals: a growing Level 3 balance relative to total fair-value assets increases valuation uncertainty and earnings volatility risk. Watch for transfers between levels — assets moving from Level 2 to Level 3 often signal deteriorating market liquidity. Unrealized gains and losses on Level 3 positions flow through earnings or other comprehensive income, so large swings deserve scrutiny. For financial institutions, examine the sensitivity disclosures that show how Level 3 valuations change under alternative assumptions. Compare the fair value of debt against its carrying amount to gauge hidden leverage.