Investments in Unconsolidated Entities (Tables)

6 Months Ended

Apr. 30, 2022

Investments in and Advances to Affiliates, Schedule of Investments [Abstract]

Summary of Joint Venture Information

The table below provides information as of April 30, 2022, regarding active joint ventures that we are invested in, by joint venture category ($ amounts in thousands):

	Land Development Joint Ventures		Home Building Joint Ventures		Rental Property Joint Ventures		Gibraltar Joint Ventures		Total
Number of unconsolidated entities	14		2		38		4		58
Investment in unconsolidated entities (1)	$	285,070	$	6,676	$	383,135	$	9,504	$	684,385
Number of unconsolidated entities with funding commitments by the Company	11		—		15		1		27
Company’s remaining funding commitment to unconsolidated entities (2)	$	107,738	$	—	$	132,526	$	18,799	$	259,063

(1)    Our total investment includes $84.2 million related to 13 unconsolidated joint venture-related variable interests in VIEs and our maximum exposure to losses related to these VIEs is approximately $263.1 million as of April 30, 2022. Our ownership interest in such unconsolidated Joint Venture VIEs ranges from 20% to 50%.

(2)    Our remaining funding commitment includes approximately $168.1 million related to our unconsolidated joint venture-related variable interests in VIEs.

Summary of Joint Ventures Borrowing information

Certain joint ventures in which we have investments obtained debt financing to finance a portion of their activities. The table below provides information at April 30, 2022, regarding the debt financing obtained by category ($ amounts in thousands):

	Land Development Joint Ventures		Rental Property Joint Ventures		Total
Number of joint ventures with debt financing	8		29		37
Aggregate loan commitments	$	507,427	$	2,789,904	$	3,297,331
Amounts borrowed under loan commitments	$	375,481	$	1,492,027	$	1,867,508

New joint venture formations

The table below provides information on joint ventures entered into during the six-months ended April 30, 2022 ($ amounts in thousands):

	Land Development Joint Ventures		Rental Property Joint Ventures		Gibraltar Joint Ventures
Number of unconsolidated joint ventures entered into during the period	2		7		1
Investment balance at April 30, 2022	$	13,816	$	69,513	$	2,093

In addition, in the first quarter of fiscal 2022, we entered into a joint venture with an unrelated party to develop a luxury for-rent residential apartment project in Washington, D.C. on land which we contributed to the venture. The land we contributed has a carrying value of $60.1 million and remains on our balance sheet under “Receivables, prepaid expenses, and other assets”. Under the terms of the joint venture agreement, our partner has the right to put their interest back to us if certain conditions are not satisfied. If those conditions are satisfied, we would expect to deconsolidate this land and recognize a land sale at that time. In the second quarter of fiscal 2022, the joint venture entered into a $162.7 million construction loan commitment agreement to finance the development of the project. As of April 30, 2022, no amounts were borrowed under this commitment.

The table below provides information on joint ventures entered into during the six-months ended April 30, 2021 ($ amounts in thousands):

	Land Development Joint Ventures		Rental Property Joint Ventures
Number of unconsolidated joint ventures entered into during the period	4		3
Investment balance at April 30, 2021	$	86,200	$	43,700

Summary of Unconsolidated Entities Debt Obligations, Loan Commitments and Guarantees

Information with respect to certain of the Company’s unconsolidated entities’ outstanding debt obligations, loan commitments and our guarantees thereon are as follows ($ amounts in thousands):

	April 30, 2022
Loan commitments in the aggregate	$	2,789,200
Our maximum estimated exposure under repayment and carry cost guarantees if the full amount of the debt obligations were borrowed (1)	$	481,900
Debt obligations borrowed in the aggregate	$	1,359,400
Our maximum estimated exposure under repayment and carry cost guarantees of the debt obligations borrowed	$	266,600
Estimated fair value of guarantees provided by us related to debt and other obligations	$	12,900
Terms of guarantees	1 month - 4.0 years

(1)    Our maximum estimated exposure under repayment and carry cost guarantees includes approximately $95.0 million related to our unconsolidated Joint Venture VIEs.

Condensed balance sheet

Condensed Combined Balance Sheets:

	April 30, 2022		October 31, 2021
Cash and cash equivalents	$	189,373	$	153,582
Inventory	1,037,284		964,962
Loans receivable – net	58,547		86,727
Rental properties	1,447,011		1,496,355
Rental properties under development	1,205,474		697,659
Other assets	250,783		227,579
Total assets	$	4,188,472	$	3,626,864
Debt – net of deferred financing costs	$	1,861,211	$	1,677,619
Other liabilities	267,771		248,545
Members’ equity	2,059,490		1,700,700
Total liabilities and equity	$	4,188,472	$	3,626,864
Company’s net investment in unconsolidated entities (1)	$	684,385	$	599,101

(1)    Our underlying equity in the net assets of the unconsolidated entities exceeded our net investment in unconsolidated entities by $22.1 million and $16.5 million as of April 30, 2022 and October 31, 2021, respectively, and these differences are primarily a result of other than temporary impairments we have recognized; interest capitalized on our investments; the estimated fair value of the guarantees provided to the joint ventures; unrealized gains on our retained joint venture interests; gains recognized from the sale of our ownership interests; and distributions from entities in excess of the carrying amount of our net investment.

Condensed statements of operations and comprehensive income

Condensed Combined Statements of Operations:

	Three months ended April 30,				Six months ended April 30,
	2022		2021		2022		2021
Revenues	$	130,771	$	86,422	$	286,523	$	178,952
Cost of revenues	86,219		60,136		194,701		156,859
Other expenses	39,172		35,081		82,776		70,470
Total expenses	125,391		95,217		277,477		227,329
Loss on disposition of loans and real estate owned	—		(209)		(113)		(209)
Income (loss) from operations	5,380		(9,004)		8,933		(48,586)
Other income (2)	7,064		34,385		40,410		35,332
Income (loss) before income taxes	12,444		25,381		49,343		(13,254)
Income tax expense (benefit)	74		(152)		156		(1,659)
Net income (loss) including earnings from noncontrolling interests	12,370		25,533		49,187		(11,595)
Less: income attributable to noncontrolling interest	—		—		—		(174)
Net income (loss) attributable to controlling interest	$	12,370	$	25,533	$	49,187	$	(11,769)
Company’s equity in earnings of unconsolidated entities (3)	$	2,933	$	10,483	$	24,970	$	11,677

(2)     The six months ended April 30, 2022 includes $29.9 million related to the sale of an asset by one Rental Property Joint Venture. The three months and six months ended April 30, 2021 includes $32.6 million related to the sale of an asset by one Rental Property Joint Venture.

(3)    Differences between our equity in earnings of unconsolidated entities and the underlying net income (loss) of the entities are primarily a result of distributions from entities in excess of the carrying amount of our investment; promote earned on the gains recognized by joint ventures and those promoted cash flows being distributed; other than temporary impairments

we have recognized; recoveries of previously incurred charges; unrealized gains on our retained joint venture interests; gains recognized from the sale of our investment to our joint venture partner; and our share of the entities’ profits related to home sites purchased by us which reduces our cost basis of the home sites acquired.

Consolidated Joint Venture Related Variable Interest Entities

The table below provides information as of April 30, 2022 and October 31, 2021, regarding our consolidated joint venture-related variable interests in VIEs ($ amounts in thousands):

	Balance Sheet Classification	April 30, 2022		October 31, 2021
Number of Joint Venture VIEs that the Company is the primary beneficiary and consolidates		5		5
Carrying value of consolidated VIEs assets	Receivables prepaid expenses, and other assets	$	36,000	$	90,800
Our partners’ interests in consolidated VIEs	Noncontrolling interest	$	9,700	$	39,400

Our ownership interest in the above consolidated Joint Venture VIEs ranges from 50% to 98%. We are actively looking for additional partners for these investments and to the extent we are able to find such partners, we will reduce our ownership interest in these entities.