INVESTMENTS IN CONSOLIDATED AND UNCONSOLIDATED ENTITIES

6 Months Ended

Jun. 30, 2022

Equity Method Investments and Joint Ventures [Abstract]

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.

During the quarter ended June 30, 2022, we transferred land at fair value as part of an investment in two new joint ventures with third parties. In accordance with ASC 606 this was considered a transfer as we have no continuing involvement and the joint venture obtained title, physical possession, maintains risks and rewards of the property and has accepted the property. Included in Other (income)/expense, net on the Condensed Consolidated Statements of Operations for the three and six months ended June 30, 2022 is a $13.7 million gain related to these transfers and represents the difference between the fair value and carrying value of the land at the time of contribution.

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


	As of
	June 30, 2022		December 31, 2021
Assets:
Real estate inventory	$	668,474	$	414,687
Other assets	129,062		118,990
Total assets	$	797,536	$	533,677
Liabilities and owners’ equity:
Debt	$	130,284	$	167,842
Other liabilities	23,169		16,245
Total liabilities	153,453		184,087
Owners’ equity:
TMHC	291,560		171,406
Others	352,523		178,184
Total owners’ equity	644,083		349,590
Total liabilities and owners’ equity	$	797,536	$	533,677


	Three Months Ended June 30,				Six Months Ended June 30,
	2022		2021		2022		2021
Revenues	$	94,166	$	29,745	$	124,567	$	79,626
Costs and expenses	(94,086)		(22,901)		(119,016)		(57,059)
Income of unconsolidated entities	$	80	$	6,844	$	5,551	$	22,567
TMHC’s share in (loss)/income of unconsolidated entities	$	(3,637)	$	2,126	$	(1,806)	$	7,788
Distributions to TMHC from unconsolidated entities	$	88,770	$	9,729	$	90,828	$	20,342

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 these entities are consolidated.

As of June 30, 2022, the assets of the consolidated joint ventures totaled $267.9 million, of which $27.9 million was cash and cash equivalents, $66.8 million was owned inventory and $124.0 million was fixed assets. The fixed asset balance is held for sale as of June 30, 2022. As of December 31, 2021, the assets of the consolidated joint ventures totaled $291.8 million, of which $22.3 million was cash and cash equivalents, $147.6 million was owned inventory and $74.3 million was fixed assets. The liabilities of the consolidated joint ventures totaled $145.1 million and $165.1 million as of June 30, 2022 and December 31, 2021, respectively, and were primarily comprised of notes payable, accounts payable and accrued liabilities.