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Lennar Corporation J.P. Morgan Homebuilding Conference
May 18, 2017
Disclaimer Statement
This presentation includes "forward-looking statements," as that term is defined in the Private
Securities Litigation Reform Act of 1995. These forward-looking statements include statements
regarding our business, financial condition, results of operations, cash flows, strategies and
prospects. You can identify forward-looking statements by the fact that these statements do not
relate strictly to historical or current matters. Rather, forward-looking statements relate to
anticipated or expected events, activities, trends or results. Because forward-looking
statements relate to matters that have not yet occurred, these statements are inherently subject
to risks and uncertainties. Many factors could cause our actual activities or results to differ
materially from the activities and results anticipated in forward-looking statements. These
factors include those described in our Securities and Exchange Commission filings, including
those under the caption “Risk Factors” in our most recent Annual Report on Form 10-K filed
with the Securities and Exchange Commission. We do not undertake any obligation to update
forward-looking statements, except as required by federal securities laws.
2
Macro Overview
813
1,1
51
1,3
09
1,1
32
888
892
1,1
62 1
,451
1,4
33
1,1
94
852
705
663
1,0
68
1,0
84
1,0
72
1,1
80
1,1
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1,0
81
1,0
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895
840 1,0
30
1,1
26
1,1
98
1,0
76
1,1
61
1,1
34
1,2
71
1,3
03
1,2
31
1,2
73
1,3
59
1,4
99
1,6
11
1,7
16
1,4
65
1,0
46
622
445
471
431
535
618
648
715
782 845
945
1,0
30
621
901
1,0
47
913
450
268
375
536
587
551
440
379
400
636
665
669
626
474
407
373
298
174
170 1
62
259
278 3
16
340
346
339
338
330 3
47
349
345
352
336
309
284
109
116
178
245 307
355 3
97 392 4
00 3
75 330
250
500
750
1,000
1,250
1,500
1,750
2,000
2,250
2,500
1970
1971
1972
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2011
2012
2013
2014
2015
2016
2017E
2018E
2019E
Tota
l Housing S
tart
s (0
00's
)
Starts SF Starts MF Pent-up Demand
Proj. Annual Housing Demand
Household Formations: 1,200 - 1,300Obsolescence: 200 - 400Second Homes: 100 - 200
1,500 - 1,900
• The market
overcorrected and
has been under
supplying
household demand
in both the for-sale
as well as for-rent
markets
Source: Housing starts from US Census Bureau (April 2017) and analyst estimates (March 2017); Proj. household formations: Joint Center for Housing Studies of 1.2-1.3M (March 2014), Wells Fargo (January 2015), Freddie Mac (August 2014)Note: Excludes manufactured housing
AnnualHousing Demand
Production
Deficit
Considered Normal Production
Considered Housing Depression
Macro Overview: Production deficit of homes, both for-sale and for-rent
4
158
60
80
100
120
140
160
180
200
220
'81 '83 '85 '87 '89 '91 '93 '95 '97 '99 '01 '03 '05 '07 '09 '11 '13 '15 '17
35 Year Average Affordability: 128
5.2
3
4
5
6
7
8
9
10
11
12
13
'63 '65 '67 '69 '71 '73 '75 '77 '79 '81 '83 '85 '87 '89 '91 '93 '95 '97 '99 '01 '03 '05 '07 '09 '11 '13 '15 '17
53 Year Average Months Supply: 6.1
5
Macro Overview: Inventories are tight and affordability remains strong
Source: National Association Realtors (NAR)Calculation: Median Family Income / Qualifying Income * 100Qualifying Income: Is the amount you would need to earn per year to afford a median priced SF home; if a maximum of only 25% of income could be designated to your mortgage payment
Months Supply of New Residential Sales: Inventory remains tight
Affordability: Housing affordability remains above long-term averages
Source: US Census Bureau
Macro Overview: Millennial population will be a driver of growth
6
U.S. Population Age 35-44 (000's)
Source: US Census Bureau. Population data in the International Data Base for 2016-2030 are based on the 2014 National Projections(1) Per analysis of US Census data by Trulia
• An astonishing 60%
of millennials in
America now either
live with parents,
siblings, other
relatives or
roommates, an 115-
year high(1)
36,000
38,000
40,000
42,000
44,000
46,000
48,000
50,000
'90 '92 '94 96 '98 '00 '02 '04 '06 '08 '10 '12 '14 '16 '18 '20 '22 '24 '26 '28 '30
Key homebuying demographic begins
to decline
Key homebuying demographic is poised
to return to growth after a 14-year decline
Strategic Overview
Stuart MillerChief Executive Officer
33 yrs. Experience33 yrs. with Lennar
Jon JaffeChief Operating Officer
32 yrs. Experience32 yrs. with Lennar
Jeff KrasnoffCEO of Rialto
38 yrs. Experience29 yrs. with Lennar/LNR
Rick BeckwittPresident
32 yrs. Experience10 yrs. with Lennar
Jay MantzPresident
Eric FederVice Chairman
Brett ErsoffPresident, RMF
John HermanCOO & CIO, RMF
Cheryl BaizanChief Financial Officer
Erik HigginsChief Financial Officer
Mike AlvaradoVP & Chief Legal Officer
Mike WhiteVP & Treasurer
Lynn JochimExecutive VP
Greg McWilliamsSouth Regional President
Kofi BonnerNorth Regional President
Emile HaddadChairman & CEO of FivePoint
33 yrs. Experience28 yrs. with Lennar
Todd FarrellPresident
Ed EasleyRegional President
11 Division Presidents
Rob HuttonCentral Regional President
7 Divisions
Greg McGuffPacific NW Regional President
4 Divisions
Jeff RoosWestern Regional President
8 Divisions
Fred RothmanEastern Regional President
14 Divisions
Bruce GrossChief Financial Officer
33 yrs. Experience25 yrs. with Lennar
Jimmy TimmonsPresident, Mortgage
Tom Fischer President, Title
Cristina PardoVP, Controller
Diane BessetteVP & Treasurer
David CollinsController
Carl GarraffoChief HR Officer
Kay HowardChief Marketing Officer
Laura LeteChief Information Officer
Mike PetrolinoVP Taxation
Mark SustanaGeneral Counsel
Financial Services FivePointRialtoMultifamilyHB Regional Presidents
Corporate
Strategic Overview: Deep and consistent management team
8
Strategic Overview: Diversified in Nation’s strongest housing markets
Homebuilding Division
9
Key
10
Strategic Overview: Summary
Over many cycles, Lennar’s management team has crafted a playbook of
strategies that flex as the cycle adjusts
Moderate growth rate
Soft pivot land strategy
Focus on operational efficiencies
Path to lower leverage
Reversion to pure-play homebuilder
Adjust growth rate throughout cycle based on land / strategic opportunities along with
embedded risk from cycle duration
Early cycle:
— Aggressive growth
— Divisions get to critical mass
Mid cycle:
— Moderate growth
— Less land acquisition needed and fewer new
communities to open, focusing on best land
— Less emphasis on hiring new marginal
associates, and focus on keeping best performers
— Less pressure on subcontractors and focus on quality
(less defects) rather than quantity
Mature cycle:
— Further reduce growth
Strategic Overview: Moderate growth rate
11
Growth Rate Cash Flow
Early cycle 15-20% + Negative
Mid cycle 7-10% Neutral to Positive
Mature cycle 3-5% Positive
Moderating
growth
Short-
term land
Positive
free cash
flow
Efficient
balance
sheet
8.7
7.8
6.9
6.3
5.2 4.8
2011 2012 2013 2014 2015 2016 2017E 2018E 2019E
Strategic Overview: Soft pivot land strategy
12
Years of land supply owned decreasing
Early cycle:
— Purchase deeply discounted, long duration land
Mid cycle:
— Soft pivot to purchase shorter duration land
Mature cycle:
— Purchase options, adjust contract terms, and purchase short duration land
for just-in-time production
Land Heavy
Land Lighter
Land Light
Support net margin with a lower growth rate by focusing on business efficiencies
SG&A efficiencies
— Transition to digital marketing
— Lower outside brokerage participation and
commission rate
— Targeted marketing leads to increasing
conversions
— Utilization of simplified technology systems
Construction efficiencies
— Streamline Everything’s Included ® platform
— Even-flow production
— Reduce floor plans
— Reduce SKUs
— Reduce model homes needed
— Utilize new technologies to reduce materials waste and labor hours
13
As land costs increase, operating efficiencies will lead to strong operating margins
Strategic Overview: Focus on operational efficiencies
Significant SG&A reduction
*Midpoint of 9.1-9.3% guidance provided by management
14.7%
12.6%
10.6% 10.5%
10.0%
9.4%9.2%
2011 2012 2013 2014 2015 2016 2017E*
54.0%
50.2% 49.1%
47.1%
39.4%
2012 2013 2014 2015 2016
14
Strategic Overview: Path to lower leverage
HB Debt / Capital
1) Stockholders’ Equity increasing: Homebuilding generating profits from increased volumes and strong operating leverage
Ancillary businesses pivoting from investing to harvesting phase
2) Generating positive cash flow: Soft pivot land lighter strategy
Moderate growth taking stress out of operations
Focus on operational efficiencies
3) Significant reduction in interest costs: June 1, 2017 maturity of $400 million @ 12.25% will significantly reduce interest costs
Strategic Overview: Ancillary businesses transitioning from investing to harvesting phase
15
Stand-alone platforms with maximum flexibility allowing for the creation of significant shareholder value
Financial Services is closely linked to Homebuilding, and Multifamily closely mirrors the core business in
many ways, giving it flexibility to remain or separate
Rialto
Financial Services
Asset Management: Focused on managing 3rd party
capital to generate superior, risk-adjusted returns on
commercial real estate opportunities
— Asset light model, limited investment, management
fees & high returns ($8B+ AUM)
Mortgage Finance: Commercial mortgage originator of
Class A operating properties
Independently financed with public debt and warehouse
lines of credit
Focused on originating mortgages to Lennar
homebuyers as well as 3rd parties
10th largest national non-bank mortgage originator by
retail sales volume
Among the top national title agents and title insurers
Utilizing warehouse lines of credit and immediately
selling to private and public financial institutions
Geographically diversified development pipeline, ~$8
billion, located in top growth and gateway U.S. markets
Lennar Multifamily Venture manages $2.2 billion in
equity commitments, focused on develop-hold portfolio
Fully integrated development, construction, property
and asset management platform
Exceptional land development and management
company
Directly managing ~40,000 homesites and ~21 million
square feet of commercial real estate in some of the
most desirable and land constrained markets in the
country
IPO completed on May 10, 2017 on the NYSE
FivePoint
Multifamily
Strategic Overview: Reversion to pure-play as we move from investing to harvesting phase
16
IPO
completed
on 5/10/17
Positioned for
strategic
opportunity
Creating significant shareholder value
Homebuilding &
Financial Services
Optionality with
Multifamily
Reversion
to
pure-playLEN maintains
~40% ownership
WCI Communities Acquisition
18
On February 10, 2017, Lennar closed on the acquisition of WCI Communities, a premier lifestyle
community developer and luxury homebuilder of single and multi-family homes throughout Florida
Terms of the deal:
— $643 million, or $23.50 per share in cash, and assumption of WCI’s $250 million senior notes
Value creation for shareholders:
— Acquired >13,500 homesites of low-cost land in most of the highest growth, largest FL coastal markets,
including 51 active communities and a pipeline of future communities that will produce strong gross margins
— Reallocation of WCI and Lennar product and branding will maximize our returns. ~1/3 of the communities
that we acquired will be converted to the Lennar brand
— Utilizing our efficient operating platform and leveraging our purchasing power we expect will decrease direct
costs by an estimated $8 - $12 psf or 200 - 300 bps on new starts once the re-bidding process is complete
— Synergies associated with lowering G&A costs will have some up front costs, but we anticipate annualized
savings of approximately $30 million beginning in late 2017
— Capturing incremental profits through the rollout of our mortgage operations to WCIs homebuilding
operations and its Berkshire Hathaway Home Services operation
Factors for 100% cash consideration, similar to a stock buyback:
— Operating strategies of moderating growth and soft pivot, leading to strong profitability, provide us with the
confidence that we will continue to generate strong cash flow
— WCI’s existing, proven, communities offset the need to purchase raw land at retail prices for future growth
— We continue to believe the housing market is strong and will continue to improve for the foreseeable future
— We believed our stock was undervalued given our strong core business and the maturity of our ancillaries
WCI Communities Acquisition: Overview
Strong Balance Sheet
$654
$400
$250
$400
$250 $275
$500 $600
$500 $600 $575
$400
$650
$500
$1,234
12.25%
6.875%(2)
4.75%
6.95% 4.125%
4.50%
4.50%
4.75%
4.125% 4.75%
4.875%
4.50%(3)
4.75%
HB Cash Jun-17 Aug-17 Dec-17 Jun-18 Dec-18 Jun-19 Nov-19 Apr-21 Jan-22 Nov-22 Dec-23 Apr-24 May-25
Credit Facility
(1)
20
At February 28, 2017*($ in millions)
* Pro forma for April 2017 debt issuance
(1) Revolving credit facility commitment of $1.502 billion, less: $250 million drawn and $18 million LOCs outstanding at 2/28/17
(2) WCI $250 million senior notes have a redemption price at August 15, 2017 of 103.438%
(3) $650 million debt issuance in April 2017
Strong Balance Sheet: Balanced debt maturity ladder
Ratings:
Moody’s: Ba1
S&P: BB
Fitch: BB+
Conclusion
Buy discounted
land and grow
aggressively
Soft pivot to shorter duration
retail land
Moderate growth, improve
operational efficiencies
Generate significant cash flow
Pay down debt
Consider strategic
cash deployment
22
Focused on being a pure-play HB, generating positive cash flow and investable through the cycle
Investable through the cycle