Meritage Homes Corporation Quarterly report pursuant to Section 13 or 15(d)

Quarterly report pursuant to Section 13 or 15(d)

REAL ESTATE AND CAPITALIZED INTEREST

REAL ESTATE AND CAPITALIZED INTEREST

3 Months Ended

Mar. 31, 2023

Real estate consists of the following (in thousands):


	As of
	March 31, 2023		December 31, 2022
Homes under contract under construction (1)	$	1,021,522	$	822,428
Unsold homes, completed and under construction (1)	896,093		1,155,543
Model homes (1)	107,291		97,198
Finished home sites and home sites under development (2) (3)	2,330,272		2,283,094
Total	$	4,355,178	$	4,358,263

(1)Includes the allocated land and land development costs associated with each lot for these homes.

(2)Includes raw land, land held for development and land held for sale, less impairments, if any. We do not capitalize interest for inactive assets, and all ongoing costs of land ownership (i.e. property taxes, homeowner association dues, etc.) are expensed as incurred.

(3)Includes land held for sale of $29.0 million and $66.8 million as of March 31, 2023 and December 31, 2022, respectively.

Subject to sufficient qualifying assets, we capitalize our development period interest costs incurred to applicable qualifying assets in connection with our real estate development and construction activities. Capitalized interest is allocated to active real estate when incurred and charged to Cost of closings when the related property is delivered. A summary of our capitalized interest is as follows (in thousands):


	Three Months Ended March 31,
	2023		2022
Capitalized interest, beginning of period	$	60,169	$	56,253
Interest incurred	15,030		15,213
Interest expensed	—		(41)
Interest amortized to cost of home and land closings	(12,747)		(12,343)
Capitalized interest, end of period	$	62,452	$	59,082