20. Investments in Unconsolidated Homebuilding and Land Development Joint Ventures

We enter into homebuilding and land development joint ventures from time to time as a means of accessing lot positions, expanding our market opportunities, establishing strategic alliances, managing our risk profile, leveraging our capital base and enhancing returns on capital.

During the second quarter of fiscal 2024, we contributed 11 communities we owned, including three active selling communities, to a new unconsolidated joint venture for $53.8 million of net cash.

During the third quarter of fiscal 2024, we assumed control of one of our unconsolidated joint ventures after the partner received their final cash distribution. We consolidated the remaining assets and liabilities that were in the unconsolidated joint venture at fair value on the date of distribution. Upon consolidation, we recorded a gain of $45.7 million in “Other (income) expense, net."

During the first quarter of fiscal 2025, we contributed four active selling communities we owned to one new unconsolidated joint venture for $20.8 million of net cash and a $50.0 million note receivable, resulting in a gain of $22.7 million, which was recorded in “Other (income) expense, net.”

During the second half of fiscal 2025, we contributed five communities in planning to a new unconsolidated joint venture for $17.9 million of net cash.

During the fourth quarter of fiscal 2025, we assumed control of one of our unconsolidated joint ventures after the partner received their final cash distribution. We consolidated the remaining assets and liabilities that were in the unconsolidated joint venture at fair value on the date of distribution. We also received a distribution of two active selling communities from an unconsolidated joint venture and recorded these distributions at fair value. The total gain recorded from the two transactions was $18.9 million, which was recorded to “Other (income) expense, net."

The tables set forth below summarize the combined financial information related to our unconsolidated homebuilding and land development joint ventures that are accounted for under the equity method:

	*October 31, 2025*
				*Land*
(In thousands)	*Homebuilding*			*Development*			*Total*
Assets:
Cash and cash equivalents	$	104,066		$	-		$	104,066
Inventories		487,965			-			487,965
Other assets		128,385			-			128,385
Total assets	$	720,416		$	-		$	720,416
Liabilities and equity:
Accounts payable and accrued liabilities	$	305,153		$	-		$	305,153
Notes payable		121,948			-			121,948
Total liabilities		427,101			-			427,101
Equity of:
Hovnanian Enterprises, Inc.		160,903			-			160,903
Others		132,412			-			132,412
Total equity		293,315			-			293,315
Total liabilities and equity	$	720,416		$	-		$	720,416
Debt to capitalization ratio		29	%		0	%		29	%

	*October 31, 2024*
				*Land*
(In thousands)	*Homebuilding*			*Development*			*Total*
Assets:
Cash and cash equivalents	$	130,532		$	-		$	130,532
Inventories		402,628			-			402,628
Other assets		311,955			-			311,955
Total assets	$	845,115		$	-		$	845,115
Liabilities and equity:
Accounts payable and accrued liabilities	$	469,320		$	-		$	469,320
Notes payable		88,653			-			88,653
Total liabilities		557,973			-			557,973
Equity of:
Hovnanian Enterprises, Inc.		140,540			-			140,540
Others		146,602			-			146,602
Total equity		287,142			-			287,142
Total liabilities and equity	$	845,115		$	-		$	845,115
Debt to capitalization ratio		24	%		0	%		24	%

As of October 31, 2025 and 2024, we had outstanding advances to unconsolidated joint ventures of $2.6 million and $2.4 million, respectively. These amounts were included in “Accounts payable and accrued liabilities” in the tables above. In some cases, our net investment in unconsolidated joint ventures is less than our proportionate share of the equity reflected in the table above because of the differences between asset impairments recorded against our unconsolidated joint venture investments and any impairments recorded in the applicable unconsolidated joint venture. During the periods presented, we did not recognize any write-downs related to our investments in unconsolidated joint ventures.

	*For The Year Ended October 31, 2025*
				*Land*
(In thousands)	*Homebuilding*			*Development*		*Total*
Revenues	$	629,889		$	-	$	629,889
Cost of sales and expenses		(575,888	)		-		(575,888	)
Joint venture net income	$	54,001		$	-	$	54,001
Our share of net income	$	46,437		$	-	$	46,437

	*For The Year Ended October 31, 2024*
				*Land*
(In thousands)	*Homebuilding*			*Development*		*Total*
Revenues	$	552,727		$	-	$	552,727
Cost of sales and expenses		(484,967	)		445		(484,522	)
Joint venture net income	$	67,760		$	445	$	68,205
Our share of net income	$	52,142		$	121	$	52,263

	*For The Year Ended October 31, 2023*
				*Land*
(In thousands)	*Homebuilding*			*Development*		*Total*
Revenues	$	783,298		$	-	$	783,298
Cost of sales and expenses		(654,217	)		-		(654,217	)
Joint venture net income	$	129,081		$	-	$	129,081
Our share of net income	$	43,160		$	-	$	43,160

The reason “Our share of net income” is higher or lower than the “Joint venture net income” in the tables above is a result of our varying ownership percentages in each investment. For the years ended October 31, 2025 and 2024, we had investments in six unconsolidated joint ventures for both periods and our ownership in these joint ventures ranged from 20% to over 50% for both periods. Therefore, depending on mix, if the unconsolidated joint ventures in which we have higher sharing percentages are more profitable than our other unconsolidated joint ventures, that results in us having a higher overall percentage of income in the aggregate than would occur if all joint ventures had the same sharing percentage; conversely, if the unconsolidated joint ventures in which we have lower sharing percentages are more profitable than our other unconsolidated joint ventures, that results in us having a lower overall percentage of income in the aggregate than would occur if all joint ventures had the same sharing percentage. For the year ended October 31, 2025, “Our share of net income” was less than the “Joint venture net income” due to two unconsolidated joint ventures with increased income during the period for which we currently recognize a lower profit sharing percentage based on the joint venture agreements, partially offset by one unconsolidated joint venture with increased losses during the period for which the book value of our investment is zero and therefore we did not recognize our share of the losses. For the year ended October 31, 2024, “Our share of net income” was less than the “Joint venture net income” due to five unconsolidated joint ventures with increased income during the period for which we currently recognize a lower profit-sharing percentage based on the joint venture agreements, partially offset by one unconsolidated joint venture with increased income during the period for which we recognized a higher profit-sharing percentage based on the joint venture agreements.

To compensate us for the administrative services we provide as the manager of certain unconsolidated joint ventures, we receive a management fee based on a percentage of the applicable unconsolidated joint venture’s revenue. These management fees, which totaled $25.3 million, $19.5 million and $16.3 million for the years ended October 31, 2025, 2024 and 2023, are recorded in “Selling, general and administrative” homebuilding expenses in the Consolidated Statements of Operations.

Typically, our unconsolidated joint ventures obtain separate project specific mortgage financing. For some of our unconsolidated joint ventures, obtaining financing was challenging, therefore, some of our unconsolidated joint ventures are capitalized only with equity. Any unconsolidated joint venture financing is on a nonrecourse basis, with guarantees from us limited only to performance and completion of development, environmental warranties and indemnification, standard indemnification for fraud, misrepresentation and other similar actions, including a voluntary bankruptcy filing. In some instances, the unconsolidated joint venture entity is considered a VIE due to the returns being capped to the equity holders; however, in these instances, we have determined that we are not the primary beneficiary, and therefore we do not consolidate these entities.