Real Estate Inventory and Land Deposits

3 Months Ended

Mar. 31, 2017

Real Estate [Abstract]

Real Estate Inventory and Land Deposits

REAL ESTATE INVENTORY AND LAND DEPOSITS

Inventory consists of the following (in thousands):

	As of
	March 31, 2017		December 31, 2016
Real estate developed and under development	$	2,069,795	$	2,074,651
Real estate held for development or held for sale (1)	176,688		183,638
Operating communities (2)	709,474		650,036
Capitalized interest	103,059		102,642
Total owned inventory	3,059,016		3,010,967
Real estate not owned under option agreements	4,682		6,252
Total real estate inventory	$	3,063,698	$	3,017,219

⁽¹⁾ Real estate held for development or held for sale includes properties which are not in active production. This includes raw land recently purchased or awaiting entitlement, future phases of current projects that will be developed as prior phases sell out and long-term strategic assets.

⁽²⁾ Operating communities consists of all vertical construction costs relating to homes in progress and completed homes for all active production of inventory.

The development status of our land inventory is as follows (dollars in thousands):

	As of
	March 31, 2017			December 31, 2016
	Owned Lots	Book Value of Land and Development		Owned Lots	Book Value of Land and Development
Raw	6,145	$	341,389	7,142	$	403,902
Partially developed	7,983	549,083		8,037	501,496
Finished	11,571	1,341,236		11,318	1,336,709
Long-term strategic assets	1,425	14,775		1,489	16,182
Total	27,124	$	2,246,483	27,986	$	2,258,289

Land Deposits — We provide deposits related to land options and land purchase contracts, which are capitalized when paid and classified as land deposits until the associated property is purchased.

As of March 31, 2017 and December 31, 2016, we had the right to purchase 7,294 and 7,583 lots under land option purchase contracts, respectively, for an aggregate purchase price of $506.5 million and $542.6 million as of March 31, 2017 and December 31, 2016, respectively. We do not have title to the properties and the creditors generally have no recourse against the Company. As of March 31, 2017 and December 31, 2016, our exposure to loss related to our option contracts with third parties and unconsolidated entities consist of non-refundable option deposits totaling $36.3 million and $37.2 million, respectively, in land deposits related to land options and land purchase contracts.

Capitalized Interest — Interest capitalized, incurred and amortized is as follows (in thousands):

	Three Months Ended March 31,
	2017			2016
Interest capitalized - beginning of period	$	102,642		$	105,148
Interest incurred	20,714			22,244
Interest amortized to cost of home closings	(20,297		)	(16,430		)
Interest capitalized - end of period	$	103,059		$	110,962