| REAL ESTATE AND CAPITALIZED INTEREST |
REAL ESTATE AND CAPITALIZED INTEREST
Real estate consists of the following (in thousands):
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December 31, 2015 |
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December 31, 2014 |
Homes under contract under construction (1) |
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$ |
456,138 |
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$ |
328,931 |
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Unsold homes, completed and under construction (1) |
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307,425 |
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302,288 |
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Model homes (1) |
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138,546 |
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109,614 |
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Finished home sites and home sites under development (2) |
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1,196,193 |
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1,136,849 |
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$ |
2,098,302 |
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$ |
1,877,682 |
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(1) |
Includes the allocated land and land development costs associated with each lot for these homes. |
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(2) |
Includes raw land, land held for development and land held for sale. 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. For these parcels, we may have chosen not to currently develop certain land holdings as they typically represent a portion or phases of a larger land parcel that we plan to build out over several years. 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. |
Subject to sufficient qualifying assets, we capitalize our development period interest costs incurred in connection with the development and construction of real estate. 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):
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Years Ended December 31, |
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2015 |
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2014 |
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2013 |
Capitalized interest, beginning of year |
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$ |
54,060 |
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$ |
32,992 |
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$ |
21,600 |
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Interest incurred |
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67,542 |
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58,374 |
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51,152 |
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Interest expensed |
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(15,965 |
) |
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(5,163 |
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(15,092 |
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Interest amortized to cost of home and land closings |
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(44,435 |
) |
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(32,143 |
) |
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(24,668 |
) |
Capitalized interest, end of year (1) |
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$ |
61,202 |
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$ |
54,060 |
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$ |
32,992 |
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(1) |
Approximately $445,000, $490,000 and $511,000 of the capitalized interest is related to our joint venture investments and is a component of “Investments in unconsolidated entities” in our consolidated balance sheet as of December 31, 2015, 2014 and 2013, respectively.
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