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 (Tables)

Real Estate and Capitalized Interest (Tables)

6 Months Ended

Jun. 30, 2012

Real Estate and Capitalized Interest [Abstract]


	At June 30, 2012		At December 31, 2011
Homes under contract under construction (1)	$	188,006	$	101,445
Unsold homes, completed and under construction (1)		95,027		97,246
Model homes (1)		52,655		49,892
Finished home sites and home sites under development		494,782		441,242
Land held for development (2)		54,472		55,143
Land held for sale		29,733		29,908
Communities in mothball status (3)		40,558		40,549

	$	955,233	$	815,425

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

(2)

Land held for development primarily reflects land and land development costs related to land where development activity is not currently underway but is expected to begin in the future. In these cases, we may have chosen not to currently develop certain land holdings as they typically represent a portion of a large land parcel that we plan to build out over several years.

(3)

Represents communities where we have decided to cease operations (mothball) as we have determined that their economic performance would be maximized by deferring development. In the future, some of these communities may be re-opened while others may be sold to third parties. If we deem our carrying value to not be fully recoverable, we adjust our carrying value for these assets to fair value at the time they are placed into mothball status. As of June 30, 2012, we had three mothballed communities with a carrying value of $11.3 million in our West Region and eight mothballed communities with a carrying value of $29.3 million in our Central Region. During the six months ended June 30, 2012, we did not place any additional communities into mothball status. We do not capitalize interest for such mothballed assets, and all ongoing costs of land ownership (i.e. property taxes, homeowner association dues, etc.) are also expensed as incurred.

Real-estate and joint venture impairment charges


	Three Months Ended June 30,				Six Months Ended June 30,
	2012		2011		2012		2011
Terminated option/purchase contracts and related pre-acquisition costs:
West	$	0	$	0	$	0	$	0
Central		0		2		83		2
East		0		0		0		0

Total	$	0	$	2	$	83	$	2

Real estate inventory impairments (1):
West	$	116	$	57	$	242	$	257
Central		71		432		143		767
East		7		99		19		228

Total	$	194	$	588	$	404	$	1,252

Impairments of land held for sale:
West	$	669	$	0	$	669	$	0
Central		0		0		0		0
East		0		0		0		0

Total	$	669	$	0	$	669	$	0

Total impairments:
West	$	785	$	57	$	911	$	257
Central		71		434		226		769
East		7		99		19		228

Total	$	863	$	590	$	1,156	$	1,254

(1)	Included in the real estate inventory impairments are impairments of individual homes in a community where the underlying community was not also impaired, as follows (in thousands):


	Three Months Ended June 30,				Six Months Ended June 30,
	2012		2011		2012		2011
Individual home impairments:
West	$	116	$	57	$	242	$	257
Central		71		121		143		456
East		7		99		19		228

Total	$	194	$	277	$	404	$	941

Number of communities with real estate inventory impairments & fair value of these communities


	Three and Six Months Ended June 30, 2011
	Number of Communities Impaired		Impairment Charges		Fair Value of Communities Impaired (Carrying Value less Impairments)
West		0	$	0	$	N/A
Central		2		311		6,827
East		0		0		N/A

Total		2	$	311	$	6,827

Summary of capitalized interest


	Three Months Ended June 30,						Six Months Ended June 30,
	2012			2011			2012			2011
Capitalized interest, beginning of period	$	15,908		$	12,309		$	14,810		$	11,679
Interest incurred		11,318			10,848			22,165			21,697
Interest expensed		(6,338	)		(7,496	)		(13,709	)		(15,519	)
Interest amortized to cost of home, land closings and impairments		(3,052	)		(2,456	)		(5,430	)		(4,652	)

Capitalized interest, end of period (1)	$	17,836		$	13,205		$	17,836		$	13,205

(1)	Approximately $750,000 of the capitalized interest is related to our joint venture investments and is a component of “Investments in unconsolidated entities” on our consolidated balance sheets as of June 30, 2012 and December 31, 2011.