Homebuilders and Building Products: Weekly punch list: Lennar land banking exposure and Mohawk CEO transition

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Homebuilders and Building Products: Weekly punch list: Lennar land banking exposure and Mohawk CEO transition

Accessible version

Homebuilders and Building Products

Weekly punch list: Lennar land banking

exposure and Mohawk CEO transition

Industry Overview

LEN: Focus remains on land banking exposure post-F2Q 14 June 2026

Lennar’s F2Q results were in line, but we lowered our PO and EPS to reflect weaker F3Q

Equityguidance and a lower FY delivery outlook (see report: Lennar Corporation: Lower PO;

United StatesF2Q in-line and GM stabilizes, but land bank costs will continue to rise 14 June 2026). Homebuilders and Building Products

Lennar provided additional detail on its land banking exposure on the earnings call, with

~$18.5bn of partner capital deployed into controlled lots as of F1Q. These arrangements Rafe Jadrosich

carry an implied ~10% cost of capital, paid via option maintenance fees (OMFs). While ResearchBofAS Analyst

OMFs are paid in cash as incurred, they are capitalized on the balance sheet and only +1 646 855 5815

rafe.jadrosich@bofa.com

flow through cost of sales when homesites are purchased and delivered. This creates a

Shaun Calnan, CFA

timing mismatch, with current cash outflows exceeding P&L expense – we expect Research Analyst

additional margin pressure from higher OMFs over the next two years before cash BofAS

+1 646 855 1362

outflows and expense recognition are more closely aligned. shaun.calnan@bofa.com

Paul De Cock to succeed Jeff Lorberbaum as MHK CEO VictoriaResearch PiskarevAnalyst

Mohawk Industries (MHK) announced that current President and COO Paul De Cock will BofAS +1 646 855 0657

replace Jeff Lorberbaum as CEO on September 30, 2026. Lorberbaum will continue to victoria.piskarev@bofa.com

serve as Chairman of the Board.