| REAL ESTATE AND CAPITALIZED INTEREST |
REAL ESTATE AND CAPITALIZED INTEREST
Real estate consists of the following (in thousands):
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At September 30, 2014 |
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At December 31, 2013 |
Homes under contract under construction (1) |
$ |
440,033 |
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$ |
262,633 |
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Unsold homes, completed and under construction (1) |
283,883 |
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147,889 |
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Model homes (1) |
100,027 |
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81,541 |
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Finished home sites and home sites under development (2) |
1,041,108 |
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|
913,236 |
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$ |
1,865,051 |
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$ |
1,405,299 |
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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 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 interest incurred in connection with the development and construction of real estate. Completed homes and land not actively under development do not qualify for interest capitalization. Capitalized interest is allocated to real estate when incurred and charged to cost of closings when the related property is delivered to our customers. To the extent our debt exceeds our qualified assets base, we expense a proportionate share of the interest incurred.
A summary of our capitalized interest is as follows (in thousands):
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Three Months Ended |
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Nine Months Ended |
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September 30, |
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September 30, |
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2014 |
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2013 |
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2014 |
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2013 |
Capitalized interest, beginning of period |
$ |
44,355 |
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$ |
26,294 |
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$ |
32,992 |
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$ |
21,600 |
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Interest incurred |
14,695 |
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12,508 |
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43,333 |
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37,876 |
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Interest expensed |
(460 |
) |
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(3,462 |
) |
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(4,569 |
) |
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(13,113 |
) |
Interest amortized to cost of home and land closings |
(8,135 |
) |
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(6,342 |
) |
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(21,301 |
) |
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(17,365 |
) |
Capitalized interest, end of period (1) |
$ |
50,455 |
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$ |
28,998 |
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$ |
50,455 |
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$ |
28,998 |
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(1) |
Approximately $511,000 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 September 30, 2014 and December 31, 2013.
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