Annual report pursuant to Section 13 and 15(d)

INVESTMENTS IN UNCONSOLIDATED ENTITIES

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INVESTMENTS IN UNCONSOLIDATED ENTITIES
 12 Months Ended
Dec. 31, 2021
Equity Method Investments and Joint Ventures [Abstract]  
INVESTMENTS IN UNCONSOLIDATED ENTITIES INVESTMENTS IN UNCONSOLIDATED ENTITIES We 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 generally are 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 these joint ventures, they may or may not be consolidated into our results. As of December 31, 2021, we had two active equity-method land ventures and one mortgage joint venture, which is engaged in mortgage activities and primarily provides services to our homebuyers.
Summarized condensed combined financial information related to unconsolidated joint ventures that are accounted for using the equity method was as follows (in thousands):
At December 31,
2021 2020
Assets:
Cash
 $ 7,983  $ 4,656 
Real estate
 7,989  5,745 
Other assets
 3,903  5,118 
Total assets $ 19,875  $ 15,519 
Liabilities and equity:
Accounts payable and other liabilities $ 7,899  $ 5,588 
Equity of:
Meritage (1) 4,752  5,330 
Other 7,224  4,601 
Total liabilities and equity $ 19,875  $ 15,519 
  Years Ended December 31,
  2021 2020 2019
Revenue $ 41,929  $ 39,823  $ 53,841 
Costs and expenses (34,693) (31,918) (31,375)
Net earnings of unconsolidated entities $ 7,236  $ 7,905  $ 22,466 
Meritage’s share of pre-tax earnings (1) (2) $ 4,667  $ 4,559  $ 11,945 

(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 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. As discussed in Note 2 to these consolidated financial statements, the balances above do not include $208,000, $217,000 and $279,000 of capitalized interest that is a component of our investment balances at December 31, 2021, 2020 and 2019, respectively.
(2)Our share of pre-tax earnings is recorded in Earnings from financial services unconsolidated entities and other, net or Other income, net, as applicable, on our consolidated income statements and excludes joint venture profit related to lots we purchased from the joint ventures. Such profit is deferred until homes are delivered by us and title passes to a homebuyer.

Our total investment in all of these joint ventures is $5.8 million as of December 31, 2021. We believe these ventures are in compliance with their respective debt agreements, if applicable, and such debt is non-recourse to us.