Investments in Unconsolidated Joint Ventures

12 Months Ended

Nov. 30, 2021

Equity Method Investments and Joint Ventures [Abstract]

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. Our partners in these unconsolidated joint ventures are unrelated homebuilders, and/or land developers and other real estate entities, or commercial enterprises. These investments are designed primarily to reduce market and development risks and to increase the number of lots we own or control. In some instances, participating in unconsolidated joint ventures has enabled us to acquire and develop land that we might not otherwise have had access to due to a project’s size, financing needs, duration of development or other circumstances. While we consider our participation in unconsolidated joint ventures as potentially beneficial to our homebuilding activities, we do not view such participation as essential.

For distributions we receive from these unconsolidated joint ventures, we have elected to use the cumulative earnings approach for our consolidated statements of cash flows. Under the cumulative earnings approach, distributions up to the amount of cumulative equity in earnings recognized are treated as returns on investment within operating cash flows and those in excess of that amount are treated as returns of investment within investing cash flows.

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 we recognize revenues on the corresponding home sale, which is generally when title to and possession of the home and the risks and rewards of ownership are transferred to the homebuyer on the closing date. At that time, we account for the 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.

We had investments in six unconsolidated joint ventures as of November 30, 2021 and five unconsolidated joint ventures as of November 30, 2020 and 2019. The following table presents combined condensed information from the statements of operations of our unconsolidated joint ventures (in thousands):


	Years Ended November 30,
	2021		2020		2019
Revenues	$	14,818	$	127,270	$	23,676
Construction and land costs	(12,398)		(93,162)		(23,659)
Other expenses, net	(2,640)		(8,850)		(2,644)
Income (loss)	$	(220)	$	25,258	$	(2,627)

For the years ended November 30, 2021 and 2020, combined revenues and construction and land costs primarily related to homes delivered from an unconsolidated joint venture in California. The lower combined revenues and construction and land costs for 2021 as compared to 2020 mainly reflected a decrease in the number of homes delivered from this unconsolidated joint venture to 10 in 2021 from 99 in 2020. The joint venture delivered its last home in the 2021 second quarter. For the year ended November 30, 2019, combined revenues and construction and land costs were generated primarily from land sales.

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


	November 30,
	2021		2020
Assets
Cash	$	15,731	$	38,837
Receivables	795		96
Inventories	64,034		65,233
Other assets	50		593
Total assets	$	80,610	$	104,759
Liabilities and equity
Accounts payable and other liabilities	$	12,285	$	14,037
Equity	68,325		90,722
Total liabilities and equity	$	80,610	$	104,759