Investments in Unconsolidated Entities

As of June 30, 2014, we participated in certain land development joint ventures and other unconsolidated entities in which Beazer Homes had less than a controlling interest. The following table presents our investment in our unconsolidated entities, the total equity and outstanding borrowings of these unconsolidated entities, and our guarantees of these borrowings, as of June 30, 2014 and September 30, 2013:



(In thousands)	June 30, 2014		September 30, 2013
Beazer’s investment in unconsolidated entities	$	34,224	$	44,997
Total equity of unconsolidated entities	171,860		385,040
Total outstanding borrowings of unconsolidated entities	124,265		85,938

For the three and nine months ended June 30, 2014 and 2013, our income (loss) from unconsolidated entity activities and the overall equity in income (loss) of unconsolidated entities is as follows:



	Three Months Ended						Nine Months Ended
	June 30,						June 30,
(In thousands)	2014			2013			2014		2013
Continuing operations:
(Loss) income from unconsolidated entity activity	$	(81	)	$	(129	)	$	221	$	(25	)
Impairment of unconsolidated entity investment	—			(181		)	—		(181		)
Equity in (loss) income of unconsolidated entities - continuing operations	$	(81	)	$	(310	)	$	221	$	(206	)

South Edge/Inspirada

During the nine months ended June 30, 2014, we and our joint venture partners received land in exchange for our investments in Inspirada. The change in total equity of unconsolidated entities above reflects these distributions.Also during the nine months ended June 30, 2014, we paid $1.0 million to the joint venture related to infrastructure and development costs. We continue to have an obligation for our portion of future infrastructure and other development costs which are estimated at approximately $5.7 million.

Pre-Owned Rental Homes

Effective May 3, 2012, we contributed $0.3 million in cash and our Pre-Owned Homes business at cost, including 190 homes in Arizona and Nevada, of which 187 were leased, for an initial 23.5% equity method investment in an unconsolidated real estate investment trust (the REIT). The Company also received grants of restricted units in the REIT, of which a portion was vested as of June 30, 2014. As of June 30, 2014, we held a 15.7% investment in the REIT.

On July 1, 2014, the REIT was sold to American Homes 4 Rent (AMH), a publicly traded real estate investment trust. As a result of the transaction, the Company received Class A common stock in AMH. Under the terms of the AMH agreement, AMH agreed to file a shelf registration statement for the resale of our AMH shares, pursuant to which we may sell such shares from time to time in one or more transactions. The Company expects to record a gain on the transaction of approximately $6 million during our fourth quarter of fiscal 2014.

Guarantees

Historically, Beazer and our land development joint venture partners provide varying levels of guarantees of debt and other debt-related obligations for these unconsolidated entities. As of June 30, 2014 and September 30, 2013, we had no outstanding guarantees or other debt-related obligations related to our unconsolidated entities.

During the fiscal year ended September 30, 2013, we entered into a settlement agreement related to one repayment guarantee, paid $0.5 million to settle our liability and recognized the remaining $0.2 million as other income.

We and our joint venture partners generally provide unsecured environmental indemnities to land development joint venture project lenders. In each case, we have performed due diligence on potential environmental risks. These indemnities obligate us to reimburse the project lenders for claims related to environmental matters for which they are held responsible. During the three and nine months ended June 30, 2014 and 2013, we were not required to make any payments related to environmental indemnities.

In assessing the need to record a liability for the contingent aspect of these guarantees, we consider our historical experience in being required to perform under the guarantees, the fair value of the collateral underlying these guarantees and the financial condition of the applicable unconsolidated entities. In addition, we monitor the fair value of the collateral of these unconsolidated entities to ensure that the related borrowings do not exceed the specified percentage of the value of the property securing the borrowings. We have not recorded a liability for the contingent aspects of any guarantees that we determined were reasonably possible but not probable.