Investments in Unconsolidated Joint Ventures

We have investments in unconsolidated joint ventures that conduct land acquisition, land development and/or other homebuilding activities in various markets where our homebuilding operations are located. We and our unconsolidated joint venture partners make initial and/or ongoing capital contributions to these unconsolidated joint ventures, typically on a pro rata basis, according to our respective equity interests. The obligations to make capital contributions are governed by each such unconsolidated joint venture’s respective operating agreement and related governing documents.

We typically have obtained rights to acquire portions of the land held by the unconsolidated joint ventures in which we currently participate. When an unconsolidated joint venture sells land to our homebuilding operations, we defer recognition of our share of such unconsolidated joint venture’s earnings (losses) until a home sale is closed and title passes to a homebuyer, at which time we account for those earnings (losses) as a reduction (increase) to the cost of purchasing the land from the unconsolidated joint venture. We defer recognition of our share of such unconsolidated joint venture losses only to the extent profits are to be generated from the sale of the home to a homebuyer.

We share in the earnings (losses) of these unconsolidated joint ventures generally in accordance with our respective equity interests. In some instances, we recognize earnings (losses) related to our investment in an unconsolidated joint venture that differ from our equity interest in the unconsolidated joint venture. This typically arises from our deferral of the unconsolidated joint venture’s earnings (losses) from land sales to us, or other items.

The following table presents combined condensed information from the statements of operations of our unconsolidated joint ventures (in thousands):



	Three Months Ended May 31,						Six Months Ended May 31,
	2018			2017			2018			2017
Revenues	$	7,827		$	7,080		$	16,624		$	26,802
Construction and land costs	(7,839		)	(6,898		)	(16,655		)	(24,793		)
Other expense, net	(611		)	(1,157		)	(1,983		)	(2,253		)
Loss	$	(623	)	$	(975	)	$	(2,014	)	$	(244	)

The following table presents combined condensed balance sheet information for our unconsolidated joint ventures (in thousands):



	May 31, 2018		November 30, 2017
Assets
Cash	$	17,237	$	21,193
Receivables	226		688
Inventories	143,136		145,519
Other assets	959		1,398
Total assets	$	161,558	$	168,798

Liabilities and equity
Accounts payable and other liabilities	$	22,744	$	25,426
Notes payable (a)	9,536		20,040
Equity	129,278		123,332
Total liabilities and equity	$	161,558	$	168,798

(a)

As of May 31, 2018 and November 30, 2017, two of our unconsolidated joint ventures had separate construction loan agreements with different third-party lenders to finance their respective land development activities. The outstanding debt under these agreements is secured by the corresponding underlying property and related project assets and is non-recourse to us. Of this outstanding secured debt at May 31, 2018, $9.1 million is scheduled to mature in August 2018 and the remainder is scheduled to mature in February 2020. None of our other unconsolidated joint ventures had outstanding debt at May 31, 2018 or November 30, 2017.

The following table presents additional information relating to our investments in unconsolidated joint ventures (dollars in thousands):



	May 31, 2018		November 30, 2017
Number of investments in unconsolidated joint ventures	7		7
Investments in unconsolidated joint ventures	$	69,015	$	64,794
Number of unconsolidated joint venture lots controlled under land option contracts and other similar contracts	354		377

We and our partners in the unconsolidated joint ventures that have the above-noted construction loan agreements provide certain guarantees and indemnities to the applicable lender, including a guaranty to complete the construction of improvements for the applicable project; a guaranty against losses the lender suffers due to certain bad acts or failures to act by the unconsolidated joint venture or its partners; an indemnity of the lender from environmental issues; and in one case, a guaranty of interest payments on the outstanding balance of the secured debt under the construction loan agreement. In each instance, our actual responsibility under the foregoing guaranty and indemnity obligations is limited to our pro rata interest in the unconsolidated joint venture. We do not have a guaranty or any other obligation to repay or to support the value of the collateral underlying the outstanding secured debt of these unconsolidated joint ventures. However, various financial and non-financial covenants apply with respect to the outstanding secured debt and the related guaranty and indemnity obligations, and a failure to comply with such covenants could result in a default and cause an applicable lender to seek to enforce such guaranty and indemnity obligations, if and as may be applicable. As of May 31, 2018, we were in compliance with the applicable terms of our relevant covenants with respect to the construction loan agreements. We do not believe that our existing exposure under our guaranty and indemnity obligations related to the outstanding secured debt of these unconsolidated joint ventures is material to our consolidated financial statements.

Of the unconsolidated joint venture lots controlled under land option and other similar contracts at May 31, 2018, we are committed to purchase 56 lots from one of our unconsolidated joint ventures in quarterly takedowns over the next two years for an aggregate purchase price of $25.3 million under agreements that we entered into with the unconsolidated joint venture in 2016.