Quarterly report pursuant to Section 13 or 15(d)

INVESTMENTS IN UNCONSOLIDATED ENTITIES

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INVESTMENTS IN UNCONSOLIDATED ENTITIES
 6 Months Ended
Jun. 30, 2021
Equity Method Investments and Joint Ventures [Abstract]  
INVESTMENTS IN UNCONSOLIDATED ENTITIES INVESTMENTS IN UNCONSOLIDATED ENTITIESWe may enter into joint ventures as a means of accessing larger parcels of land, expanding our market opportunities, managing our risk profile, optimizing deal structure for the impacted parties and leveraging our capital base. While purchasing land through a joint venture can be beneficial, currently we do not view joint ventures as critical to the success of our homebuilding operations. Our joint venture partners are generally other homebuilders, land sellers or other real estate investors. We generally do not have a controlling interest in these ventures, which means our joint venture partners could cause the venture to take actions we disagree with or fail to take actions we believe should be undertaken, including the sale of the underlying property to repay debt or recoup all or part of the partners' investments. Based on the structure of each joint venture, it may or may not be consolidated into our results. As of June 30, 2021, we had one active equity-method land joint venture with limited operations.
As of June 30, 2021, we also participated in one mortgage joint venture, which is engaged in mortgage activities and primarily provides services to our homebuyers. Our investment in this mortgage joint venture as of June 30, 2021 and December 31, 2020 was $0.7 million and $1.0 million, respectively.

Summarized condensed combined financial information related to unconsolidated joint ventures that are accounted for using the equity method was as follows (in thousands):
As of
June 30, 2021 December 31, 2020
Assets:
Cash
 $ 3,949  $ 4,656 
Real estate
 5,729  5,745 
Other assets
 4,524  5,118 
Total assets $ 14,202  $ 15,519 
Liabilities and equity:
Accounts payable and other liabilities $ 4,525  $ 5,588 
Equity of:
Meritage (1)
5,195  5,330 
Other 4,482  4,601 
Total liabilities and equity $ 14,202  $ 15,519 
 
  Three Months Ended June 30, Six Months Ended June 30,
  2021 2020 2021 2020
Revenue $ 10,108  $ 10,550  $ 19,103  $ 17,273 
Costs and expenses (8,404) (7,944) (16,529) (13,807)
Net earnings of unconsolidated entities $ 1,704  $ 2,606  $ 2,574  $ 3,466 
Meritage’s share of pre-tax earnings (1) (2)
$ 1,057  $ 1,048  $ 1,807  $ 1,735 

(1)Balance represents Meritage’s interest, as reflected in the financial records of the respective joint ventures. This balance may differ from the balance reported in our unaudited consolidated financial statements due to the following reconciling items: (i) timing differences for revenue and distributions recognition, (ii) step-up basis and corresponding amortization, (iii) capitalization of interest on qualified assets, (iv) income deferrals as discussed in Note (2) below and (v) the cessation of allocation of losses from joint ventures in which we have previously written down our investment balance to zero and where we have no commitment to fund additional losses.
(2)Our share of pre-tax earnings is recorded in Earnings from financial services unconsolidated entities and other, net and Other income, net on our unaudited consolidated income statements and excludes joint venture profit related to lots we purchased from the joint ventures, if any. Such profit is deferred until homes are delivered by us and title passes to a homebuyer.