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Investments in Unconsolidated Joint Ventures
 9 Months Ended
Aug. 31, 2025
Equity Method Investments and Joint Ventures [Abstract]  
Investments in Unconsolidated Joint Ventures Investments in Unconsolidated Joint Ventures
Homebuilding. 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 had investments in six homebuilding unconsolidated joint ventures as of August 31, 2025 and November 30, 2024. The following table presents combined condensed information from the statements of operations for our homebuilding unconsolidated joint ventures (in thousands):
 Three Months Ended August 31,Nine Months Ended August 31,
 2025202420252024
Revenues$19,027 $32,241 $58,767 $37,539 
Construction and land costs(14,371)(23,580)(44,176)(27,404)
Other expense, net(1,567)(1,694)(4,474)(3,541)
Income
$3,089 $6,967 $10,117 $6,594 

The combined revenues and construction and land costs for the three-month and nine-month periods ended August 31, 2025 and 2024 related to homes delivered by an unconsolidated joint venture in California, which delivered its first homes in the 2024 second quarter.
The following table presents combined condensed balance sheet information for our homebuilding unconsolidated joint ventures (in thousands):
August 31,
2025		November 30,
2024
Assets
Cash $12,968 $18,869 
Receivables
5,512 2,918 
Inventories
154,112 158,322 
Other assets
749 1,052 
Total assets$173,341 $181,161 
Liabilities and equity
Accounts payable and other liabilities$12,076 $8,091 
Notes payable (a)41,825 47,300 
Equity119,440 125,770 
Total liabilities and equity$173,341 $181,161 
(a)    As of both August 31, 2025 and November 30, 2024, the unconsolidated joint venture in California that delivered homes in the three-month and nine-month periods ended August 31, 2025 and 2024 had borrowings outstanding under a term loan with a third-party lender to finance its land acquisition, development and construction activities. In January 2025, the loan agreement was amended, increasing the aggregate commitment to $60.0 million from $55.0 million, and providing an eight-month loan extension option to replace the two previous six-month extension options. Pursuant to the amendment, the aggregate commitment was reduced to $55.2 million on August 31, 2025, and will be reduced to $40.0 million on February 28, 2026. This term loan is scheduled to mature on April 19, 2026, unless extended or terminated pursuant to its applicable terms. If the term loan is extended, the aggregate commitment would be reduced to $28.0 million effective April 19, 2026. Borrowings under the term loan are secured by the underlying property and related project assets. None of our other unconsolidated joint ventures had outstanding debt at August 31, 2025 or November 30, 2024.
We provide certain guarantees and indemnities to the lender in connection with the above-described term loan, including a guaranty of interest and carry costs; a guaranty to complete the construction of phases of the improvements for the project as such phases are commenced; a guaranty against losses suffered due to certain bad acts or failures to act by the unconsolidated joint venture or its partners; and an indemnity from environmental issues. Except to the extent related to the foregoing guarantees and indemnities, we do not have a guaranty or any other obligation to repay borrowings under term loan or to support the value of the underlying collateral. However, various financial and non-financial covenants apply under the term loan and with respect to the related guaranty and indemnity obligations, and a failure to comply with such covenants could result in a default and cause the lender to seek to enforce such guaranty and indemnity obligations. As of the date of this report, we were in compliance with the relevant covenants. We do not believe that our existing exposure under our guaranty and indemnity obligations related to outstanding borrowings under the term loan is material to our consolidated financial statements.
Financial Services. The following table presents combined condensed information from the statements of operations for our financial services unconsolidated joint venture (in thousands):
 Three Months Ended August 31,Nine Months Ended August 31,
 2025202420252024
Revenues$26,362 $31,615 $79,326 $93,485 
Expenses(17,854)(19,751)(52,437)(54,641)
Income$8,508 $11,864 $26,889 $38,844 
Revenues are primarily generated from fees earned on mortgage loan originations, interest earned for the period loans are held by KBHS, and gains on the sales of mortgage loans held for sale. Gains on the sales of mortgage loans held for sale include the realized and unrealized gains and losses associated with changes in the fair value of such loans and any related derivative financial instruments.
The following table presents combined condensed balance sheet information for our financial services unconsolidated joint venture (in thousands):
August 31,
2025		November 30,
2024
Assets
Cash and cash equivalents (a)
$23,496 $31,702 
Mortgage loans held for sale174,920 122,828 
Other assets13,503 22,815 
Total assets$211,919 $177,345 
Liabilities and equity
Accounts payable and other liabilities$13,686 $15,398 
Funding facilities167,461 117,953 
Equity30,772 43,994 
Total liabilities and equity$211,919 $177,345 
(a)Cash and cash equivalents included restricted cash of $.8 million at August 31, 2025 and $1.3 million at November 30, 2024.
Mortgage loans held for sale. Originated mortgage loans expected to be sold into the secondary market in the foreseeable future are reported as mortgage loans held for sale and carried in KBHS’ balance sheets at fair value, with changes in fair value recognized within revenues in KBHS’ statements of operations.
Interest Rate Lock Commitments (“IRLCs”). KBHS enters into IRLCs in connection with originating certain mortgage loans held for sale, at specified interest rates and within a specified period of time, with customers who have applied for a mortgage loan and meet certain credit and underwriting criteria. KBHS accounts for IRLCs as free-standing derivatives and does not designate any for hedge accounting. As a result, IRLCs are recognized in KBHS’ balance sheets at fair value, and gains or losses resulting from changes in fair value are recognized within revenues in KBHS’ statements of operations. The fair value of IRLCs is based on market prices, which includes an estimate of the fair value of the associated mortgage servicing rights, adjusted for estimated costs to originate the underlying mortgage loans as well as the probability that the mortgage loans will fund within the terms of the IRLCs. The fair value of IRLCs included in other assets in KBHS’ balance sheets was $9.4 million at August 31, 2025 and $16.0 million at November 30, 2024. The changes in the fair value of IRLCs, which were reported in revenues for the applicable periods, were losses of $3.0 million and $6.6 million for the three-month and nine-month periods ended August 31, 2025, respectively, and a loss of $.4 million and a gain of $3.8 million for the three-month and nine-month periods ended August 31, 2024, respectively.
KBHS manages the interest rate and price risk associated with its outstanding IRLCs by entering into best efforts forward sale commitments under which mortgage loans locked with a borrower are simultaneously committed to a secondary market investor at a fixed price, subject to the underlying mortgage loans being funded. These best efforts forward sale commitments do not meet the definition of derivative financial instruments and are therefore not recorded in KBHS’
balance sheets. If the mortgage loans underlying the IRLCs do not fund, KBHS has no obligation to fulfill the secondary market investor commitments.
Funding facilities. KBHS maintains warehouse lines of credit and master repurchase agreements with various financial institutions to fund its originated mortgage loans, with its mortgage loans held for sale pledged as collateral under these agreements. The agreements contain covenants which include certain financial requirements, including maintenance of minimum tangible net worth, minimum liquid assets, maximum debt to net worth ratio and positive net income, as defined in the agreements. KBHS was in compliance with these covenants as of August 31, 2025. In addition to its compliance with these covenants, KBHS also depends on the ability and willingness of the applicable lenders and financial institutions to extend such credit facilities to KBHS to fund its originated mortgage loans. KBHS intends to renew these facilities when they expire at various dates in 2025 and 2026. The warehouse lines of credit and master repurchase agreements are not guaranteed by us or any of the subsidiaries that guarantee our senior notes, unsecured revolving credit facility with various banks (“Credit Facility”) and senior unsecured term loan agreement (“Term Loan”) (collectively, “Guarantor Subsidiaries”).