Leases

12 Months Ended

Nov. 30, 2020

We lease certain property and equipment for use in our operations. We recognize lease expense for these leases generally on a straight-line basis over the lease term and combine lease and non-lease components for all leases. Lease right-of-use assets and lease liabilities are recorded on our consolidated balance sheets for leases with an expected term at the commencement date of more than 12 months. Some of our leases include one or more renewal options, the exercise of which is generally at our discretion. Such options are excluded from the expected term of the lease unless we determine it is reasonably certain the option will be exercised. Lease liabilities are equal to the present value of the remaining lease payments while the amount of lease right-of-use assets is based on the lease liabilities, subject to adjustment, such as for lease incentives. Our leases do not provide a readily determinable implicit interest rate; therefore, we estimate our incremental borrowing rate to calculate the present value of remaining lease payments. In determining our incremental borrowing rate, we considered the lease term, market interest rates, current interest rates on our senior notes and the effects of collateralization. Our lease population at November 30, 2020 was comprised of operating leases where we are the lessee, primarily real estate leases for our corporate office, division offices and design studios, as well as certain equipment leases. Our lease agreements do not contain any residual value guarantees or material restrictive covenants.

Lease expense is included in selling, general and administrative expenses in our consolidated statements of operations and includes costs for leases with terms of more than 12 months as well as short-term leases with terms of 12 months or less. For the year ended November 30, 2020, our total lease expense was $17.7 million, which included short-term lease costs of $6.0 million. Variable lease costs and external sublease income for the year ended November 30, 2020 were immaterial.

The following table presents our lease right-of-use assets, lease liabilities and the weighted-average remaining lease term and weighted-average discount rate (incremental borrowing rate) used in calculating the lease liabilities (dollars in thousands):


	November 30, 2020
Lease right-of-use assets (a)	$	36,270
Lease liabilities (b)	38,000
Weighted-average remaining lease term	4.5 years
Weighted-average discount rate (incremental borrowing rate)	5.1		%

(a)Represents lease right-of-use assets of $36.0 million within our homebuilding operations and $.3 million within our financial services operations.

(b)Represents lease liabilities of $37.7 million within our homebuilding operations and $.3 million within our financial services operations.

The following table presents additional information about our leases (in thousands):


	Year Ended November 30, 2020
Lease right-of-use assets obtained in exchange for new lease liabilities	$	14,229
Cash payments on lease liabilities	11,243

As of November 30, 2020, the future minimum lease payments required under our leases are as follows (in thousands):


Years Ending November 30,
2021	$	11,189
2022	10,232
2023	7,927
2024	5,834
2025	4,494
Thereafter	3,111
Total lease payments	42,787
Less: Interest	(4,787)
Present value of lease liabilities	$	38,000