INVESTMENTS IN CONSOLIDATED AND UNCONSOLIDATED ENTITIES

9 Months Ended

Sep. 30, 2023

Equity Method Investments and Joint Ventures [Abstract]

INVESTMENTS IN CONSOLIDATED AND UNCONSOLIDATED ENTITIES

5. INVESTMENTS IN CONSOLIDATED AND UNCONSOLIDATED ENTITIES

Unconsolidated Entities

We have investments in a number of joint ventures with third parties. These entities are generally involved in real estate development, homebuilding, Build-to-Rent, and/or mortgage lending activities. The primary activity of the real estate development joint ventures is development and sale of lots to joint venture partners and/or unrelated builders. Our share of the joint venture profit relating to lots we purchase from the joint ventures is deferred until homes are delivered by us and title passes to a homebuyer.

Summarized, unaudited condensed combined financial information of unconsolidated entities that are accounted for by the equity method are as follows (in thousands):

	As of
	September 30, 2023		December 31, 2022
Assets:
Real estate inventory	$	895,627	$	749,942
Other assets		161,331		146,770
Total assets	$	1,056,958	$	896,712
Liabilities and owners’ equity:
Debt	$	286,941	$	238,263
Other liabilities		40,086		31,824
Total liabilities	$	327,027	$	270,087
Owners’ equity:
TMHC	$	329,634	$	282,900
Others		400,297		343,725
Total owners’ equity	$	729,931	$	626,625
Total liabilities and owners’ equity	$	1,056,958	$	896,712

	Three Months Ended September 30,						Nine Months Ended September 30,
	2023			2022			2023			2022
Revenues	$	44,010		$	25,495		$	95,647		$	150,062
Costs and expenses		(37,810	)		(27,310	)		(76,575	)		(145,238	)
Net income/(loss) from unconsolidated entities	$	6,200		$	(1,815	)	$	19,072		$	4,824
TMHC’s share in net income/(loss) of unconsolidated entities	$	1,934		$	(1,180	)	$	7,049		$	(2,986	)
Distributions to TMHC from unconsolidated entities	$	2,226		$	10,006		$	8,110		$	100,835

Consolidated Entities

We have several joint ventures for the purpose of real estate development and homebuilding activities, which we have determined to be VIEs. As the managing member, we oversee the daily operations and have the power to direct the activities of the VIEs, or joint ventures. For this specific subset of joint ventures, based upon the allocation of income and loss per the applicable joint venture agreements and certain performance guarantees, we have potentially significant exposure to the risks and rewards of the joint ventures. Therefore, we are the primary beneficiary of these joint venture VIEs, and the entities are consolidated.

As of September 30, 2023, the assets of the consolidated joint ventures totaled $278.0 million, of which $27.9 million was cash and cash equivalents, $78.7 million was owned inventory and $122.0 million was fixed assets (primarily related to Urban Form). The majority of the fixed asset balance which was classified as held for sale as of December 31, 2022, was reclassified as held for investment during the second quarter of 2023. As of December 31, 2022, the assets of the consolidated joint ventures totaled $277.6 million, of which $38.9 million was cash and cash equivalents, $72.0 million was owned inventory and $123.2 million was fixed assets. The liabilities of the consolidated joint ventures totaled $149.0 million and $155.5 million as of September 30, 2023 and December 31, 2022, respectively, and were primarily comprised of loans payable and other borrowings, accounts payable and accrued expenses and other liabilities.