Investments in Unconsolidated Entities

9 Months Ended

Sep. 30, 2024

Equity Method Investments and Joint Ventures [Abstract]

As of September 30, 2024, we held equity investments in fourteen active partnerships or limited liability companies. Our participation in these entities may be as a developer, a builder, or an investment partner. Our ownership percentage varies from 8% to 50%, depending on the investment, with no controlling interest held in any of these investments.

Aggregated assets, liabilities and equity of the entities we account for as equity-method investments are as follows (in thousands):


	September 30, 2024		December 31, 2023
Assets
Cash	$	46,185	$	35,308
Receivables	105,645		38,839
Real estate inventories	400,317		450,097
Other assets	6,584		27,632
Total assets	$	558,731	$	551,876
Liabilities and equity
Debt obligations and other liabilities	$	148,610	$	155,616
Company’s equity	130,798		131,824
Outside interests’ equity	279,323		264,436
Total liabilities and equity	$	558,731	$	551,876

Guarantees

The unconsolidated entities in which we hold an equity investment generally finance their activities with a combination of equity and secured project debt financing. We have, and in some cases our joint venture partner has, guaranteed portions of the loan obligations for some of the homebuilding partnerships or limited liability companies, which may include any or all of the following: (i) project completion; (ii) remargin obligations; and (iii) environmental indemnities.

In circumstances in which we have entered into joint and several guarantees with our joint venture partner, we generally seek to implement a reimbursement agreement with our partner that provides that neither party is responsible for more than its proportionate share or agreed-upon share of the guaranteed obligations. In the event our joint venture partner does not have adequate financial resources to meet its obligations under such a reimbursement agreement, or otherwise fails to satisfy its obligations thereunder, we may be responsible for more than our proportionate share of any obligations under such guarantees.

As of September 30, 2024 and December 31, 2023, we have not recorded any liabilities for these obligations and guarantees, as the fair value of the related joint venture real estate assets exceeded the threshold where a remargin payment would be required and no other obligations under the guarantees existed as of such time. At September 30, 2024 and December 31, 2023, aggregate outstanding debt for unconsolidated entities, included in the “Debt obligations and other liabilities” line of the aggregated assets, liabilities and equity shown in the table above, was $124.1 million and $125.9 million, respectively.

Aggregated results of operations from unconsolidated entities (in thousands):


	Three Months Ended September 30,				Nine Months Ended September 30,
	2024		2023		2024		2023
Net sales	$	42,183	$	17,588	$	106,097	$	77,483
Other operating expense	(42,306)		(17,422)		(103,657)		(76,361)
Other income (expense), net	24		100		849		94
Net income	$	(99)	$	266	$	3,289	$	1,216
Company’s equity in income of unconsolidated entities	$	227	$	3	$	383	$	272

The aggregate results of operations from unconsolidated entities include related party transactions with the Company. When we purchase land from a joint venture in which we are a partner, such transactions are reflected as net sales in the joint ventures’ operating results, with any profit eliminated in the consolidated financial statements. Additionally, when we act as the general partner or managing member, we earn an immaterial, market-based administrative fee for services provided, which is

reflected as other operating expense in the joint ventures’ operating results, and as other income (expense) on our consolidated statements of operations.