Lennar (LEN) risk factors, FY2024 10-K

Market and Economic Risks

1. 01Demand for homes we build may be adversely affected by a variety of macroeconomic factors beyond our control
2. 02Negative publicity could hurt our reputation, which could cause our revenues or results of operations to decline
3. 03Our business strategies for our homebuilding and mortgage finance businesses may not increase our value
4. 04The market for new homes is cyclical, and a continuing downturn in the homebuilding market could adversely affect our operations
5. 05Inflation could adversely affect our profitability
6. 06Further increase in mortgage interest rates could reduce potential buyers’ ability or desire to obtain financing with which to buy homes
7. 07A decline in prices of new homes could require us to write down the carrying value of land we own and to write off option costs
8. 08Current and threatened international conflicts could affect demand for the homes we build
9. 09Our results of operations and financial condition may be adversely affected by public health issues, and resulting governmental actions

Operational Risks

1. 10Homebuilding, mortgage lending and home rentals are very competitive industries, and competitive conditions could adversely affect our business or financial results
2. 11We may be subject to costs of warranty and liability claims in excess of the insurance coverage we can purchase
3. 12Excessive health and safety incidents relating to our operations could be costly to us
4. 13Products supplied to us and work done by subcontractors can expose us to risks that could adversely affect our business
5. 14A reduced number of home sales would extend the time it takes us to recover land purchase and property development costs
6. 15Increased interest rates could increase our cost of building homes
7. 16Increases in the rate of cancellations of home sale agreements could have an adverse effect on our business
8. 17Our success to a substantial extent depends on our ability to acquire land that is suitable for residential homebuilding and meets our land investment criteria
9. 18We could be hurt if land banks are not able to raise investor funds needed to enable them to supplement land acquisitions by Millrose
10. 19We could be hurt by refusals of owners of land to honor options or contracts to sell land to us
11. 20The loss of the services of members of our senior management or a significant number of our operating employees could negatively affect our business
12. 21Natural disasters and severe weather conditions could delay deliveries and increase costs of new homes in affected areas, which could harm our sales and results of operations
13. 22If our homebuyers are not able to obtain suitable financing, that would reduce demand for our homes and our home sales revenues
14. 23Changes in tax laws could increase the cost of owning a home
15. 24Our Financial Services segment can be adversely affected by reduced demand for our homes
16. 25If our ability to sell residential mortgages into the secondary market is impaired, that could significantly reduce our ability to sell homes unless we are willing to become a long-term investor in loans we originate
17. 26We may be liable for certain limited representations and warranties we make in connection with the sale of loans
18. 27Failure to comply with the covenants and conditions imposed by our lenders could restrict future borrowing or cause our debt to become immediately due and payable
19. 28We have a substantial level of indebtedness, which may have an adverse effect on our business or limit our ability to take advantage of business, strategic or financing opportunities
20. 29Our access to capital and our ability to obtain additional financing could be affected if there was a downgrade of our credit ratings
21. 30An inability to obtain performance bonds or post letters of credit could adversely affect our operations
22. 31We conduct some of our operations through joint ventures with independent third parties and we can be adversely impacted by our joint venture partners' failures to fulfill their obligations or decisions to act contrary to our wishes

Regulatory Risks

1. 32Changes in U.S. trade policies and retaliatory responses from other countries may substantially increase the costs or limit supplies of building materials and products used in our homes
2. 33We may be adversely impacted by legal and regulatory changes
3. 34Governmental regulations regarding land use and environmental matters could increase the cost and limit the availability of our development and homebuilding projects and adversely affect our business or financial results
4. 35We are also subject to laws and regulations related to workers' health and safety, and there are efforts to subject homebuilders like us to other labor related laws or rules, some of which may make us responsible for things done by our subcontractors over which we have little or no control
5. 36We can be injured by improper acts of persons over whom we do not have control
6. 37We could be held responsible for obligations of, and labor law violations by, our subcontractors and other contract parties

Risk Related to Planned Spin-Off

1. 38The Millrose Spin-Off of much of our land assets may not occur on the timeline we expect or at all and we may not realize some or all of the expected benefits from this transaction even if completed
2. 39If the planned Millrose Spin-Off is completed, Millrose may fail to perform under various transaction agreements that we expect to enter into in connection with the Millrose Spin-Off and our homebuilding operations could be seriously disrupted if Millrose refused to honor purchase options it is expected to grant us
3. 40If the planned Millrose Spin-Off is completed, we may lose access to the land or homesites we would contribute to Millrose or that Millrose acquires in the future pursuant to our specifications in the event of lender foreclosures or bankruptcy proceedings

Risks Related to Ownership of our Stock

1. 41We have a stockholder who can exercise significant influence over matters that are brought to a vote of our stockholders
2. 42Our Class B common stock is less liquid than and has traded at a price substantially lower than that of our Class A common stock
3. 43The trading price for our Class A common stock and our Class B common stock may continue to be volatile

Other Risks

1. 44We have substantial investments in real estate related funds and businesses in which we are a minority investor
2. 45Our results of operations could be adversely affected if legal claims against us are not resolved in our favor
3. 46We could be subject to unexpected tax liabilities
4. 47Information technology failures and data security breaches could harm our business
5. 48Failure to maintain the security of personally identifiable information could adversely affect us
6. 49International activities subject us to risks inherent in international operations
7. 50We experience variability in our operating results on a quarterly basis
8. 51We could suffer significant losses if there are reductions in the market value of our investments in publicly traded companies
9. 52Changes in global or regional environmental conditions and governmental actions in response to such changes may adversely affect us by increasing the costs of or restricting our planned or future growth activities