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Investments in and Advances to Unconsolidated Entities
 12 Months Ended
Oct. 31, 2011
Investments in and Advances to Unconsolidated Entities and Non-Performing Loan Portfolio [Abstract]  
Investments in and Advances to Unconsolidated Entities and Non-Performing Loan Portfolio
3. Investments in and Advances to Unconsolidated Entities
The Company has investments in and advances to various unconsolidated entities. In fiscal 2010, the Company formed Gibraltar to invest in distressed real estate opportunities. Through Gibraltar, the Company has invested in a structured asset joint venture.
Development Joint Ventures
The Company has investments in and advances to, a number of joint ventures with unrelated parties to develop land (“Development Joint Ventures”). Some of these Development Joint Ventures develop land for the sole use of the venture participants, including the Company, and others develop land for sale to the joint venture participants and to unrelated builders. The Company recognizes its share of earnings from the sale of home sites by the Development Joint Ventures to other builders. With regard to home sites the Company purchases from the Development Joint Ventures, the Company reduces its cost basis in those home sites by its share of the earnings on the home sites. At October 31, 2011, the Company had approximately $17.1 million, net of impairment charges, invested in or advanced to the Development Joint Ventures. In addition, the Company has a funding commitment of $3.5 million to one Development Joint Venture should an additional investment in that venture be required.
As of October 31, 2011, the Company had recognized cumulative impairment charges in connection with its current Development Joint Ventures of $97.5 million. These impairment charges are attributable to investments in certain Development Joint Ventures where the Company determined there were losses in value in the investments that were other than temporary. In fiscal 2011 and 2009, the Company recognized impairment charges in connection with its Development Joint Ventures of $25.7 million and $5.3 million, respectively. The Company did not recognize any impairment charges in connection with the Development Joint Ventures in fiscal 2010.
On October 27, 2011, a bankruptcy court issued an order confirming a plan of reorganization for South Edge, LLC (“South Edge”), a Nevada land development joint venture, which was the subject of an involuntary bankruptcy petition filed in December 2010. Pursuant to the plan of reorganization, South Edge settled litigation regarding a loan made by a syndicate of lenders to it having a principal balance of $327.9 million, for which the Company had executed certain completion guarantees and conditional repayment guarantees. The confirmed plan of reorganization provided for a cash settlement to the lenders, the acquisition of land by the Company and the other members of South Edge which are parties to the agreement, and the resolution of all claims between members of the lending syndicate representing 99% of the outstanding amounts due under the loan, the bankruptcy trustee and the members of South Edge which are parties to the agreement. The Company believes it had made adequate provision at October 31 2011, for the settlement, including accruing for its share of the cash payments required under the agreement, for any remaining exposure to lenders which are not parties to the agreement and recording impairments to reflect the estimated fair value of land to be acquired. The Company paid $57.6 million in November 2011 to settle this matter. The disposition of the above matter did not have a material adverse effect on the Company’s results of operations and liquidity or on its financial condition.
Planned Community Joint Venture
The Company is a participant in a joint venture with an unrelated party to develop a single master planned community (the “Planned Community Joint Venture”). At October, 31, 2011, the Company had an investment of $32.0 million in this Planned Community Joint Venture. At October 31, 2011, each participant had agreed to contribute additional funds up to $8.3 million, if required. If a participant fails to make a required capital contribution, the other participant may make the additional contribution and diminish the non-contributing participant’s ownership interest. At October 31, 2011, this joint venture did not have any indebtedness. The Company recognized impairment charges in connection with the Planned Community Joint Venture of $15.2 million in fiscal 2011. The Company did not recognize any impairment charges in connection with the Planned Community Joint Venture in fiscal 2010 or fiscal 2009.
Condominium Joint Ventures
At October 31, 2011, the Company had an aggregate of $40.7 million of investments in four joint ventures with unrelated parties to develop luxury for-sale and rental residential units and commercial space (“Condominium Joint Ventures”). At October 31, 2011, the Condominium Joint Ventures had aggregate loan commitments of $39.0 million, against which approximately $35.9 million had been borrowed. Included in the aggregate loan commitments and amount borrowed was $18.4 million due to the Company.
As of October 31, 2011, the Company had recognized cumulative impairment charges against its investments in the Condominium Joint Ventures and its pro rata share of impairment charges recognized by these Condominium Joint Ventures in the amount of $63.9 million. The Company did not recognize any impairment charges in connection with its Condominium Joint Ventures in fiscal 2011 and 2010; however, it recognized $6.0 million of impairment charges in fiscal 2009. At October 31, 2011, the Company did not have any commitments to make contributions to any Condominium Joint Venture.
Structured Asset Joint Venture
In July 2010, the Company, through Gibraltar, invested $29.1 million in a joint venture in which it is a 20% participant with two unrelated parties to purchase a 40% interest in an entity that owns and controls a portfolio of loans and real estate (“Structured Asset Joint Venture”). At October 31, 2011, the Company had an investment of $34.7 million in this Structured Asset Joint Venture. At October 31, 2011, the Company did not have any commitments to make additional contributions to the joint venture and has not guaranteed any of the joint venture’s liabilities. If the joint venture needs additional capital and a participant fails to make a requested capital contribution, the other participants may make a contribution in consideration for a preferred return or may make the additional capital contribution and diminish the non-contributing participant’s ownership interest.
Toll Brothers Realty Trust and Trust II
In fiscal 2005, the Company, together with the Pennsylvania State Employees Retirement System (“PASERS”), formed Toll Brothers Realty Trust II (“Trust II”) to be in a position to invest in commercial real estate opportunities. Trust II is owned 50% by the Company and 50% by an affiliate of PASERS. At October 31, 2011, the Company had an investment of $1.5 million in Trust II. Prior to the formation of Trust II, the Company formed Toll Brothers Realty Trust (the “Trust”) in 1998 to invest in commercial real estate opportunities. The Trust is effectively owned one-third by the Company; one-third by Robert I. Toll, Bruce E. Toll (and members of his family), Zvi Barzilay (and members of his family), Douglas C. Yearley, Jr. and former members of the Company’s senior management; and one-third by an affiliate of PASERS (collectively, the “Shareholders”). As of October 31, 2011, the Company had a net investment in the Trust of $0.4 million. The Company provides development, finance and management services to the Trust and recognized fees under the terms of various agreements in the amounts of $2.9 million, $3.1 million and $2.1 million in fiscal 2011, 2010 and 2009, respectively. The Company believes that the transactions between itself and the Trust were on terms no less favorable than it would have agreed to with unrelated parties.
General
At October 31, 2011, the Company had accrued $60.1 million of aggregate exposure with respect to its estimated obligations to unconsolidated entities in which it has an investment. The Company’s investments in these entities are accounted for using the equity method. The Company recognized $40.9 million and $11.3 million of impairment charges related to its investments in and advances to unconsolidated entities in fiscal 2011 and 2009. The Company did not recognize any impairment charges related to its investments in and advances to unconsolidated entities in fiscal 2010. Impairment charges related to these entities are included in “(Loss) income from unconsolidated entities” in the Company’s consolidated statements of operations.
The condensed balance sheets as of October 31, 2011 and 2010 and condensed statements of operations for the years ended October 31, 2011, 2010 and 2009 for unconsolidated entities, aggregated by type of business, are as follows (in thousands):
Condensed Balance Sheets:
                                         
    October 31, 2011  
            Home     Toll     Structured        
    Develop-     Building     Brothers     Asset        
    ment Joint     Joint     Realty Trust     Joint        
    Ventures     Ventures     I and II     Venture     Total  
Cash and cash equivalents
  $ 14,190     $ 10,663     $ 11,726     $ 48,780     $ 85,359  
Inventory
    37,340       170,239       5,501               213,080  
Non-performing loan portfolio
                            295,044       295,044  
Rental properties
                    178,339               178,339  
Real estate owned
                    1,087       230,872       231,959  
Other assets (1)
    331,315       20,080       9,675       159,143       520,213  
 
                             
Total assets
  $ 382,845     $ 200,982     $ 206,328     $ 733,839     $ 1,523,994  
 
                             
 
                                       
Debt (1)
  $ 327,856     $ 50,515     $ 198,927     $ 310,847     $ 888,145  
Other liabilities
    5,352       9,745       3,427       382       18,906  
Members’ equity
    49,637       140,722       3,974       172,944       367,277  
Non-controlling interest
                            249,666       249,666  
 
                             
Total liabilities and equity
  $ 382,845     $ 200,982     $ 206,328     $ 733,839     $ 1,523,994  
 
                             
 
                                       
Company’s net investment in unconsolidated entities (2)
  $ 17,098     $ 72,734     $ 1,872     $ 34,651     $ 126,355  
 
                             
                                         
    October 31, 2010  
            Home     Toll     Structured        
    Develop-     Building     Brothers     Asset        
    ment Joint     Joint     Realty Trust     Joint        
    Ventures     Ventures     I and II     Venture     Total  
Cash and cash equivalents
  $ 21,224     $ 14,831     $ 13,154     $ 21,287     $ 70,496  
Inventory
    486,394       343,463       5,340               835,197  
Non-performing loan portfolio
                            498,256       498,256  
Rental properties
                    185,658               185,658  
Real estate owned
                    1,934       124,775       126,709  
Other assets (1)
    194,541       29,374       9,401       15,003       248,319  
 
                             
Total assets
  $ 702,159     $ 387,668     $ 215,487     $ 659,321     $ 1,964,635  
 
                             
 
                                       
Debt (1)
  $ 379,793     $ 208,295     $ 184,616     $ 303,192     $ 1,075,896  
Other liabilities
    60,385       11,207       3,952       265       75,809  
Members’ equity
    261,981       168,166       26,919       146,248       603,314  
Non-controlling interest
                            209,616       209,616  
 
                             
Total liabilities and equity
  $ 702,159     $ 387,668     $ 215,487     $ 659,321     $ 1,964,635  
 
                             
 
                                       
Company’s net investment in unconsolidated entities (2)
  $ 58,551     $ 99,259     $ 11,382     $ 29,250     $ 198,442  
 
                             
(1)   Included in other assets at October 31, 2011 and 2010 of the Structured Asset Joint Venture is $152.6 million and $8.5 million, respectively, of restricted cash held in a defeasance account which will be used to repay debt of the Structured Asset Joint Venture.
 
(2)   Differences between the Company’s net investment in unconsolidated entities and its underlying equity in the net assets of the entities is primarily a result of impairments related to the Company’s investments in unconsolidated entities, a loan made to one of the entities by the Company, and distributions from entities in excess of the carrying amount of the Company’s net investment.
Condensed Statements of Operations:
                                         
    For the year ended October 31, 2011  
            Home     Toll     Structured        
    Develop-     Building     Brothers     Asset        
    ment Joint     Joint     Realty Trust     Joint        
    Ventures     Ventures     I and II     Venture     Total  
Revenues
  $ 4,624     $ 242,326     $ 37,728     $ 46,187     $ 330,865  
 
                             
Cost of revenues
    3,996       191,922       15,365       30,477       241,760  
Other expenses
    1,527       8,954       18,808       10,624       39,913  
Gain on disposition of loans and REO
                            61,406       61,406  
 
                             
Income (loss) from operations
    (899 )     41,450       3,555       66,492.       110,598  
Other income
    9,498       1,605               252       11,355  
 
                             
Net income before noncontrolling interest
    8,599       43,055       3,555       66,744.       121,953  
Less: Net income attributable to noncontrolling interest
                            40,048       40,048  
 
                             
Net income
  $ 8,599     $ 43,055     $ 3,555     $ 26,696     $ 81,905  
 
                             
Company’s equity in (losses) earnings of unconsolidated entities (3)
  $ (25,272 )   $ 15,159     $ 3,580     $ 5,339     $ (1,194 )
 
                             
                                         
    For the year ended October 31, 2010  
            Home     Toll     Structured        
    Develop-     Building     Brothers     Asset        
    ment Joint     Joint     Realty Trust     Joint        
    Ventures     Ventures     I and II     Venture     Total  
Revenues
  $ 7,370     $ 132,878     $ 34,755     $ 16,582     $ 191,585  
 
                             
Cost of revenues
    6,402       106,638       13,375       6,693       133,108  
Other expenses
    1,522       8,121       18,693       2,977       31,313  
Loss on disposition of loans and REO
                            (5,272 )     (5,272 )
 
                             
Income (loss) from operations
    (554 )     18,119       2,687       1,640       21,892  
Other income
    13,616       572               5       14,193  
 
                             
Net income before noncontrolling interest
    13,062       18,691       2,687       1,645       36,085  
Less: Net income attributable to noncontrolling interest
                            987       987  
 
                             
Net income
  $ 13,062     $ 18,691     $ 2,687     $ 658     $ 35,098  
 
                             
Company’s equity in earnings of unconsolidated entities (3)
  $ 10,664     $ 11,272     $ 1,402     $ 132     $ 23,470  
 
                             
                                         
    For the year ended October 31, 2009  
            Home     Toll     Structured        
    Develop-     Building     Brothers     Asset        
    ment Joint     Joint     Realty Trust     Joint        
    Ventures     Ventures     I and II     Venture     Total  
Revenues
  $ 144     $ 48,719     $ 34,955     $       $ 83,818  
 
                             
Cost of revenues
    141       76,525       13,943               90,609  
Other expenses
    1,025       8,482       17,994               27,501  
 
                             
Income (loss) from operations
    (1,022 )     (36,288 )     3,018               (34,292 )
Other income (loss)
    15,483       (1,879 )                     13,604  
 
                             
Net (loss) income
  $ 14,461     $ (38,167 )   $ 3,018     $       $ (20,688 )
 
                             
Company’s equity in (losses) earnings of unconsolidated entities (3)
  $ (5,120 )   $ (3,676 )   $ 1,278     $       $ (7,518 )
 
                             
(3)   Differences between the Company’s equity in earnings (losses) of unconsolidated entities and the underlying net income of the entities is primarily a result of impairments related to the Company’s investment in unconsolidated entities, distributions from entities in excess of the carrying amount of the Company’s net investment, and the Company’s share of the entities profits related to home sites purchased by the Company which reduces the Company’s cost basis of the home sites.