10-Q 1 tph-20220930.htm 10-Q tph-20220930
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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
_____________________________________________________________________________________________ 
FORM 10-Q
_____________________________________________________________________________________________ 
(Mark One)
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended September 30, 2022
or
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from              to             
Commission File Number 1-35796
_____________________________________________________________________________________________ 

tph-20220930_g1.jpg 
Tri Pointe Homes, Inc.
(Exact Name of Registrant as Specified in Its Charter)
 _____________________________________________________________________________________________ 
Delaware 61-1763235
(State or other Jurisdiction of
Incorporation or Organization)
 (I.R.S. Employer
Identification No.)
_____________________________________________________________________________________________ 
940 Southwood Blvd, Suite 200
Incline Village, Nevada 89451
(Address of principal executive offices) (Zip Code)
Registrant’s telephone number, including area code (775413-1030
Not Applicable
(Former name, former address and former fiscal year, if changed since last report)
____________________________________________________________________________________________________ 
Securities registered pursuant to Section 12(b) of the Act:
Title of each classTrading Symbol(s)Name of each exchange on which registered
Common Stock, par value $0.01 per shareTPHNew York Stock Exchange
    Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.    Yes      No  
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).    Yes      No  
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
Large accelerated filerAccelerated filer
Non-accelerated filerSmaller reporting company
Emerging growth company
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).    Yes      No  
100,913,958 shares of the registrant's common stock were issued and outstanding as of October 14, 2022.



EXPLANATORY NOTE
As used in this quarterly report on Form 10-Q, references to “Tri Pointe”, “the Company”, “we”, “us”, or “our” (including in the consolidated financial statements and related notes thereto in this annual report on Form 10-Q) refer to Tri Pointe Homes, Inc., a Delaware corporation, and its consolidated subsidiaries.





TRI POINTE HOMES, INC.
QUARTERLY REPORT ON FORM 10-Q
INDEX
September 30, 2022
 
Page
Number
Item 1.
Item 2.
Item 3.
Item 4.
Item 1.
Item 1A.
Item 2.
Item 6.

- 2 -


PART I. FINANCIAL INFORMATION

Item 1.    Financial Statements

TRI POINTE HOMES, INC.
CONSOLIDATED BALANCE SHEETS
(in thousands, except share and per share amounts)
 
September 30, 2022December 31, 2021
(unaudited)
Assets
Cash and cash equivalents$228,137 $681,528 
Receivables169,496 116,996 
Real estate inventories3,608,305 3,054,743 
Investments in unconsolidated entities132,998 118,095 
Goodwill and other intangible assets, net156,603 156,603 
Deferred tax assets, net57,095 57,096 
Other assets173,404 151,162 
Total assets$4,526,038 $4,336,223 
Liabilities  
Accounts payable$64,109 $84,854 
Accrued expenses and other liabilities494,727 466,013 
Loans payable250,000 250,504 
Senior notes, net1,089,752 1,087,219 
Total liabilities1,898,588 1,888,590 
Commitments and contingencies (Note 13)
Equity
Stockholders’ equity:
Preferred stock, $0.01 par value, 50,000,000 shares authorized; no
   shares issued and outstanding as of September 30, 2022 and
   December 31, 2021, respectively
  
Common stock, $0.01 par value, 500,000,000 shares authorized;
   100,913,958 and 109,644,474 shares issued and outstanding at
  September 30, 2022 and December 31, 2021, respectively
1,009 1,096 
Additional paid-in capital 91,077 
Retained earnings2,624,721 2,355,448 
Total stockholders’ equity2,625,730 2,447,621 
Noncontrolling interests1,720 12 
Total equity2,627,450 2,447,633 
Total liabilities and equity$4,526,038 $4,336,223 
 
See accompanying condensed notes to the unaudited consolidated financial statements.

- 3 -


TRI POINTE HOMES, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
(unaudited)
(in thousands, except share and per share amounts)
 
Three Months Ended September 30,Nine Months Ended September 30,
2022202120222021
Homebuilding:
Home sales revenue$1,057,491 $1,028,950 $2,787,386 $2,754,932 
Land and lot sales revenue2,626 581 4,337 7,520 
Other operations revenue674 646 2,021 1,969 
Total revenues1,060,791 1,030,177 2,793,744 2,764,421 
Cost of home sales771,148 758,024 2,033,160 2,064,595 
Cost of land and lot sales1,256 891 2,075 5,918 
Other operations expense670 801 2,020 2,111 
Sales and marketing41,950 44,875 112,712 130,824 
General and administrative54,786 53,490 160,071 146,102 
Homebuilding income from operations190,981 172,096 483,706 414,871 
Equity in loss of unconsolidated entities(122)(43)(34)(72)
Other income, net463 171 852 428 
Homebuilding income before income taxes191,322 172,224 484,524 415,227 
Financial Services:
Revenues11,005 3,016 31,985 7,802 
Expenses5,827 1,618 17,457 4,510 
Equity in income of unconsolidated entities 3,946 46 10,586 
Financial services income before income taxes5,178 5,344 14,574 13,878 
Income before income taxes196,500 177,568 499,098 429,105 
Provision for income taxes(45,923)(44,412)(122,084)(107,278)
Net income150,577 133,156 377,014 321,827 
Net income attributable to noncontrolling interests(1,351) (3,927) 
Net income available to common stockholders$149,226 $133,156 $373,087 $321,827 
Earnings per share  
Basic$1.47 $1.18 $3.60 $2.77 
Diluted$1.45 $1.17 $3.57 $2.75 
Weighted average shares outstanding
Basic101,242,708 112,781,663 103,555,717 116,296,265 
Diluted102,661,222 113,782,251 104,526,594 117,188,893 
 
See accompanying condensed notes to the unaudited consolidated financial statements.

- 4 -


TRI POINTE HOMES, INC.
CONSOLIDATED STATEMENTS OF EQUITY
(unaudited)
(in thousands, except share amounts)
 
Number of
Shares of Common
Stock (Note 1)
Common
Stock
Additional
Paid-in
Capital
Retained
Earnings
Total
Stockholders’
Equity
Noncontrolling
Interests
Total
Equity
Balance at June 30, 2022101,860,993 $1,019 $ $2,486,547 $2,487,566 $1,053 $2,488,619 
Net income— — 149,226 149,226 1,351 150,577 
Shares issued under share-based awards1,876 — — — — — — 
Tax withholding paid on behalf of employees for share-based awards    — — (18)— (18)— (18)
Stock-based compensation expense— — 5,717 — 5,717 — 5,717 
Share repurchases(948,911)(10)(16,751)— (16,761)— (16,761)
Distributions to noncontrolling interests, net— — — — — (684)(684)
Reclass the negative APIC to retained earnings— — 11,052 (11,052)— —  
Balance at September 30, 2022100,913,958 $1,009 $ $2,624,721 $2,625,730 $1,720 $2,627,450 
Number of
Shares of Common
Stock (Note 1)
Common
Stock
Additional
Paid-in
Capital
Retained
Earnings
Total
Stockholders'
Equity
Noncontrolling
Interests
Total
Equity
Balance at December 31, 2021109,644,474 $1,096 $91,077 $2,355,448 $2,447,621 $12 $2,447,633 
Net income— — — 373,087 373,087 3,927 377,014 
Shares issued under share-based awards665,865 7 23 — 30 — 30 
Tax withholding paid on behalf of employees for share-based awards    — — (9,110)— (9,110)— (9,110)
Stock-based compensation expense— — 16,740 — 16,740 — 16,740 
Share repurchases(9,396,381)(94)(202,544)— (202,638)— (202,638)
Distributions to noncontrolling interests, net— — — — — (2,464)(2,464)
Net effect of consolidations of VIE's— — — — — 245 245 
Reclass the negative APIC to retained earnings— — 103,814 (103,814)— —  
Balance at September 30, 2022100,913,958 $1,009 $ $2,624,721 $2,625,730 $1,720 $2,627,450 
Number of
Shares of Common
Stock (Note 1)
Common
Stock
Additional
Paid-in
Capital
Retained
Earnings
Total
Stockholders'
Equity
Noncontrolling
Interests
Total
Equity
Balance at June 30, 2021115,211,206 $1,150 $203,288 $2,074,852 $2,279,290 $12 $2,279,302 
Net income— — — 133,156 133,156 — 133,156 
Shares issued under share-based awards149,618 1 2,489 — 2,490 — 2,490 
Stock-based compensation expense— — 4,410 — 4,410 — 4,410 
Share repurchases(2,974,328)(27)(65,183)— (65,210)— (65,210)
Balance at September 30, 2021112,386,496 $1,124 $145,004 $2,208,008 $2,354,136 $12 $2,354,148 
Number of
Shares of Common
Stock (Note 1)
Common
Stock
Additional
Paid-in
Capital
Retained
Earnings
Total
Stockholders'
Equity
Noncontrolling
Interests
Total
Equity
Balance at December 31, 2020121,882,778 $1,219 $345,137 $1,886,181 $2,232,537 $12 $2,232,549 
Net income— — — 321,827 321,827 — 321,827 
Shares issued under share-based awards804,283 8 5,317 — 5,325 — 5,325 
Tax withholding paid on behalf of employees for share-based awards    — — (4,636)— (4,636)— (4,636)
Stock-based compensation expense— 12,572 12,572 12,572 
Share repurchases(10,300,565)(103)(213,386)— (213,489)— (213,489)
Balance at September 30, 2021112,386,496 $1,124 $145,004 $2,208,008 $2,354,136 $12 $2,354,148 

See accompanying condensed notes to the unaudited consolidated financial statements.
- 5 -


TRI POINTE HOMES, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(unaudited)
(in thousands)
 
 Nine Months Ended September 30,
 20222021
Cash flows from operating activities:  
Net income$377,014 $321,827 
Adjustments to reconcile net income to net cash (used in) provided by operating activities:  
Depreciation and amortization18,641 24,098 
Equity in income of unconsolidated entities, net(12)(10,513)
Deferred income taxes, net1 3,907 
Amortization of stock-based compensation16,740 12,572 
Charges for impairments and lot option abandonments5,174 713 
Returns on investments in unconsolidated entities, net2,253 10,941 
Changes in assets and liabilities:  
Real estate inventories(555,262)(223,972)
Receivables(52,500)(23,375)
Other assets(9,881)(1,561)
Accounts payable(20,745)40,009 
Accrued expenses and other liabilities37,019 49,317 
Net cash (used in) provided by operating activities(181,558)203,963 
Cash flows from investing activities:
Purchases of property and equipment(37,743)(19,467)
(Investments in) distributions from unconsolidated entities, net(17,001)(418)
Net cash used in investing activities(54,744)(19,885)
Cash flows from financing activities:
Borrowings from debt$75,000 $ 
Repayment of debt(75,504)(1,598)
Debt issuance costs(2,403)(3,570)
Distributions to noncontrolling interests(2,464) 
Proceeds from issuance of common stock under share-based awards30 5,325 
Tax withholding paid on behalf of employees for share-based awards(9,110)(4,636)
Share repurchases(202,638)(213,489)
Net cash used in financing activities(217,089)(217,968)
Net decrease in cash and cash equivalents(453,391)(33,890)
Cash and cash equivalents–beginning of period681,528 621,295 
Cash and cash equivalents–end of period228,137 587,405 
 
See accompanying condensed notes to the unaudited consolidated financial statements.

- 6 -


TRI POINTE HOMES, INC.
CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(unaudited)
 
1.    Organization, Basis of Presentation and Summary of Significant Accounting Policies

Organization
Tri Pointe is engaged in the design, construction and sale of innovative single-family attached and detached homes across ten states, including Arizona, California, Colorado, Maryland, Nevada, North Carolina, South Carolina, Texas, Virginia and Washington, and the District of Columbia.
Basis of Presentation
The accompanying financial statements have been prepared in accordance with U.S. generally accepted accounting principles (“GAAP”), as contained within the Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”), for interim financial information and with the instructions to Form 10-Q and Article 10 of Regulation S-X. They should be read in conjunction with our consolidated financial statements and footnotes thereto included in our Annual Report on Form 10-K for the year ended December 31, 2021. In the opinion of management, all adjustments consisting of normal recurring adjustments, necessary for a fair presentation with respect to interim financial statements, have been included. The results for the three and nine months ended September 30, 2022 are not necessarily indicative of the results to be expected for the full year ending December 31, 2022 due to seasonal variations and other factors.
The consolidated financial statements include the accounts of Tri Pointe Homes and its wholly owned subsidiaries, as well as other entities in which Tri Pointe Homes has a controlling interest and variable interest entities (“VIEs”) in which Tri Pointe Homes is the primary beneficiary. The noncontrolling interests as of September 30, 2022 and December 31, 2021 represent the outside owners’ interests in the Company’s consolidated entities. All significant intercompany accounts have been eliminated upon consolidation.
Unless the context otherwise requires, the terms “Tri Pointe”, “the Company”, “we”, “us”, and “our” used herein refer to Tri Pointe Homes, Inc., a Delaware corporation, and its consolidated subsidiaries.
Use of Estimates
The preparation of these financial statements requires our management to make estimates and judgments that affect the reported amounts of assets and liabilities and the disclosures of contingent liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting periods. Actual results could differ from our estimates.
Revenue Recognition
We recognize revenue in accordance with Accounting Standards Topic 606 (“ASC 606”), Revenue from Contracts with Customers. Under ASC 606, we apply the following steps to determine the timing and amount of revenue to recognize: (i) identify the contract(s) with a customer; (ii) identify the performance obligations in the contract; (iii) determine the transaction price; (iv) allocate the transaction price to the performance obligations in the contract; and (v) recognize revenue when (or as) the Company satisfies a performance obligation.
Home sales revenue
We generate the majority of our total revenues from home sales, which consists of our core business operation of building and delivering completed homes to homebuyers. Home sales revenue and related profit is generally recognized when title to and possession of the home are transferred to the homebuyer at the home closing date. Our performance obligation to deliver the agreed-upon home is generally satisfied in less than one year from the original contract date. Included in home sales revenue are forfeited deposits, which occur when homebuyers cancel home purchase contracts that include a nonrefundable deposit. Both revenue from forfeited deposits and deferred revenue resulting from uncompleted performance obligations existing at the time we deliver new homes to our homebuyers are immaterial.
- 7 -


Land and lot sales revenue
Historically, we have generated land and lot sales revenue from a small number of transactions, although in some periods we have realized a significant amount of revenue and gross margin. We do not expect our future land and lot sales revenue to be material, but we still consider these sales to be an ordinary part of our business, thus meeting the definition of contracts with customers. Similar to our home sales, revenue from land and lot sales is typically fully recognized when the land and lot sales transactions are consummated, at which time no further performance obligations are left to be satisfied. Some of our historical land and lot sales have included future profit participation rights. We will recognize future land and lot sales revenue in the periods in which all closing conditions are met, subject to the constraint on variable consideration related to profit participation rights, if such rights exist in the sales contract.
Other operations revenue
The majority of our homebuilding other operations revenue relates to a ground lease included in our West segment. We are responsible for making lease payments to the landowner, and we collect sublease payments from the buyers of the buildings. This ground lease is accounted for in accordance with Accounting Standards Topic 842 (“ASC 842”), Leases. We do not recognize a material profit on this ground lease.
Financial services revenues
Tri Pointe Solutions is a reportable segment and is comprised of our Tri Pointe Connect mortgage financing operations, Tri Pointe Assurance title and escrow services operations, and Tri Pointe Advantage property and casualty insurance agency operations.
Mortgage financing operations
Tri Pointe Connect was formed as a joint venture with an established mortgage lender. The joint venture acts as a preferred mortgage loan broker to our homebuyers in all of the markets in which we operate, generating income from fees paid by third party lenders for the successful funding and closing of loans for homebuyers that originate through Tri Pointe Connect. From inception and through the fiscal year ended December 31, 2021, Tri Pointe Connect was accounted for under the equity method of accounting where we recorded a percentage of income earned by Tri Pointe Connect based on our ownership percentage in this joint venture. Under the equity method of accounting, Tri Pointe Connect activity appeared as equity in income of unconsolidated entities under the Financial Services section of our consolidated statements of operations. Beginning in the fiscal year ending December 31, 2022, Tri Pointe Connect is fully consolidated under the Financial Services section of our consolidated statements of operations, with the noncontrolling interest recorded on the consolidated statements of operations as net income attributable to noncontrolling interests.
Title and escrow services operations
Tri Pointe Assurance provides title examinations for our homebuyers in the Carolinas and Colorado and both title examinations and escrow services for our homebuyers in Arizona, the District of Columbia, Maryland, Nevada, Texas, Washington and Virginia. Tri Pointe Assurance is a wholly owned subsidiary of Tri Pointe and acts as a title agency for First American Title Insurance Company. Revenue from our title and escrow services operations is fully recognized at the time of the consummation of the home sales transaction, at which time no further performance obligations are left to be satisfied. Tri Pointe Assurance revenue is included in the Financial Services section of our consolidated statements of operations.
Property and casualty insurance agency operations
Tri Pointe Advantage is a wholly owned subsidiary of Tri Pointe and provides property and casualty insurance agency services that help facilitate the closing process in all of the markets in which we operate. The total consideration for these services, including renewal options, is estimated upon the issuance of the initial insurance policy, subject to constraint. Tri Pointe Advantage revenue is included in the Financial Services section of our consolidated statements of operations.
Recently Issued Accounting Standards Not Yet Adopted
No recent accounting pronouncements or changes in accounting pronouncements have been issued or adopted since those discussed in the Company’s Annual Report on Form 10-K for the year ended December 31, 2021 that are of material significance, or have potential material significance, to the Company.


- 8 -


2.    Segment Information
We operate two principal businesses: homebuilding and financial services.
Effective January 15, 2021, we consolidated our six regional homebuilding brands into one unified name, Tri Pointe Homes, under which we continue to acquire and develop land and construct and sell single-family detached and attached homes. In accordance with ASC Topic 280, Segment Reporting, in determining the most appropriate reportable segments, we considered similar economic and other characteristics, including product types, average selling prices, gross profits, production processes, suppliers, subcontractors, regulatory environments, land acquisition results, and underlying demand and supply. Based upon these factors and in consideration of the geographical layout of our homebuilding markets, we have identified three homebuilding reporting segments, and as a result of such change, beginning in the quarter ended March 31, 2021, our homebuilding segments are reported under the following hierarchy:
West region: Arizona, California, Nevada and Washington
Central region: Colorado and Texas
East region: District of Columbia, Maryland, North Carolina, South Carolina and Virginia
Our Tri Pointe Solutions financial services operation is a reportable segment and is comprised of our Tri Pointe Connect mortgage financing operations, our Tri Pointe Assurance title and escrow services operations, and our Tri Pointe Advantage property and casualty insurance agency operations. For further details, see Note 1, Organization, Basis of Presentation and Summary of Significant Accounting Policies.
Corporate is a non-operating segment that develops and implements company-wide strategic initiatives and provides support to our homebuilding reporting segments by centralizing certain administrative functions, such as marketing, legal, accounting, treasury, insurance, internal audit, risk management, information technology and human resources, to benefit from economies of scale. Our Corporate non-operating segment also includes general and administrative expenses related to operating our corporate headquarters. All of the expenses incurred by Corporate are allocated to each of the homebuilding reporting segments based on their respective percentage of revenues.
The reportable segments follow the same accounting policies used for our consolidated financial statements, as described in Note 1, Organization, Basis of Presentation and Summary of Significant Accounting Policies. Operational results of each reportable segment are not necessarily indicative of the results that would have been achieved had the reportable segment been an independent, stand-alone entity during the periods presented.

Total revenues and income before income taxes for each of our reportable segments were as follows (in thousands):
Three Months Ended September 30,Nine Months Ended September 30,
2022202120222021
Revenues
West $751,218 $771,574 $1,952,406 $2,096,572 
Central206,861 167,267 558,360 438,005 
East102,712 91,336 282,978 229,844 
Total homebuilding revenues1,060,791 1,030,177 2,793,744 2,764,421 
Financial services11,005 3,016 31,985 7,802 
Total$1,071,796 $1,033,193 $2,825,729 $2,772,223 
Income before income taxes
West$150,030 $146,040 $380,191 $355,871 
Central32,109 18,524 78,956 44,074 
East9,183 7,660 25,377 15,282 
Total homebuilding income before income taxes191,322 172,224 484,524 415,227 
Financial services5,178 5,344 14,574 13,878 
Total$196,500 $177,568 $499,098 $429,105 
 
- 9 -


Total real estate inventories and total assets for each of our reportable segments, as of the date indicated, were as follows (in thousands):
September 30, 2022December 31, 2021
Real estate inventories
West$2,558,125 $2,242,314 
Central682,136 543,097 
East368,044 269,332 
Total$3,608,305 $3,054,743 
Total assets(1)
West$2,866,118 $2,505,237 
Central840,465 674,862 
East426,457 328,014 
Corporate346,095 781,265 
Total homebuilding assets4,479,135 4,289,378 
Financial services46,903 46,845 
Total$4,526,038 $4,336,223 
__________
(1)    Total assets as of September 30, 2022 and December 31, 2021 includes $139.3 million of goodwill, with $125.4 million included in the West segment, $8.3 million included in the Central segment and $5.6 million included in the East segment. Total Corporate assets as of September 30, 2022 and December 31, 2021 includes our Tri Pointe Homes trade name. For further details on goodwill and our intangible assets, see Note 8, Goodwill and Other Intangible Assets.


3.    Earnings Per Share
The following table sets forth the components used in the computation of basic and diluted earnings per share (in thousands, except share and per share amounts):
 Three Months Ended September 30,Nine Months Ended September 30,
 2022202120222021
Numerator:    
Net income available to common stockholders$149,226 $133,156 $373,087 $321,827 
Denominator:    
Basic weighted-average shares outstanding101,242,708 112,781,663 103,555,717 116,296,265 
Effect of dilutive shares:   
Stock options and unvested restricted stock units1,418,514 1,000,588 970,877 892,628 
Diluted weighted-average shares outstanding102,661,222 113,782,251 104,526,594 117,188,893 
Earnings per share    
Basic$1.47 $1.18 $3.60 $2.77 
Diluted$1.45 $1.17 $3.57 $2.75 
Antidilutive stock options and unvested restricted stock units not included in diluted earnings per share1,562,094 1,795,929 1,819,016 1,999,768 
  

4.    Receivables
Receivables consisted of the following (in thousands):
September 30, 2022December 31, 2021
Escrow proceeds and other accounts receivable, net$107,690 $53,096 
Warranty insurance receivable (Note 13)61,806 63,900 
Total receivables$169,496 $116,996 
- 10 -



Receivables are evaluated for collectability and allowances for potential losses are established or maintained on applicable receivables based on an expected credit loss approach. Receivables were net of allowances for doubtful accounts of $472,000 as of both September 30, 2022 and December 31, 2021.
 

5.    Real Estate Inventories
Real estate inventories consisted of the following (in thousands):
September 30, 2022December 31, 2021
Real estate inventories owned:
Homes completed or under construction$1,857,632 $1,222,468 
Land under development1,126,960 1,187,485 
Land held for future development140,411 200,362 
Model homes239,533 202,693 
Total real estate inventories owned3,364,536 2,813,008 
Real estate inventories not owned:
Land purchase and land option deposits243,769 241,735 
Total real estate inventories not owned243,769 241,735 
Total real estate inventories$3,608,305 $3,054,743 
 
Homes completed or under construction is comprised of costs associated with homes in various stages of construction and includes direct construction and related land acquisition and land development costs. Land under development primarily consists of land acquisition and land development costs, which include capitalized interest and real estate taxes, associated with land undergoing improvement activity. Land held for future development principally reflects land acquisition and land development costs related to land where development activity has not yet begun or has been suspended, but is expected to occur in the future. The decrease in land held for future development as of September 30, 2022 compared to December 31, 2021 is attributable to a project located in San Jose, California in our West segment that was transferred to land under development.
Real estate inventories not owned represents deposits related to land purchase and land and lot option agreements. For further details, see Note 7, Variable Interest Entities.
Interest incurred, capitalized and expensed were as follows (in thousands):
 Three Months Ended September 30,Nine Months Ended September 30,
 2022202120222021
Interest incurred$31,893 $24,280 $89,235 $68,017 
Interest capitalized(31,893)(24,280)(89,235)(68,017)
Interest expensed$ $ $ $ 
Capitalized interest in beginning inventory$188,877 $174,163 $173,563 $182,228 
Interest capitalized as a cost of inventory31,893 24,280 89,235 68,017 
Interest previously capitalized as a cost of
inventory, included in cost of sales
(26,611)(25,655)(68,639)(77,457)
Capitalized interest in ending inventory$194,159 $172,788 $194,159 $172,788 
 
Interest is capitalized to real estate inventory during development and other qualifying activities. During all periods presented, we capitalized all interest incurred to real estate inventory in accordance with ASC Topic 835, Interest, as our qualified assets exceeded our debt. Interest that is capitalized to real estate inventory is included in cost of home sales or cost of land and lot sales as related units or lots are delivered. Interest that is expensed as incurred is included in other (expense) income, net.
- 11 -


Real Estate Inventory Impairments and Land Option Abandonments
Real estate inventory impairments and land and lot option abandonments and pre-acquisition charges consisted of the following (in thousands):
 Three Months Ended September 30,Nine Months Ended September 30,
 2022202120222021
Real estate inventory impairments$ $ $ $ 
Land and lot option abandonments and pre-acquisition charges3,277 268 5,174 713 
Total$3,277 $268 $5,174 $713 
 
Impairments of real estate inventory, if any, relate primarily to projects or communities that include homes completed or under construction. Within a project or community, there may be individual homes or parcels of land that are currently held for sale. Impairment charges recognized as a result of adjusting individual held-for-sale assets within a community to estimated fair value less cost to sell are also included in the total impairment charges.
In addition to owning land and residential lots, we also have option agreements to purchase land and lots at a future date. We have option deposits and capitalized pre-acquisition costs associated with the optioned land and lots. When the economics of a project no longer support acquisition of the land or lots under option, we may elect not to move forward with the acquisition. Option deposits and capitalized pre-acquisition costs associated with the assets under option may be forfeited at that time. 
Real estate inventory impairments and land option abandonments are recorded in cost of home sales and cost of land and lot sales on the consolidated statements of operations.
  

6.    Investments in Unconsolidated Entities
As of September 30, 2022, we held equity investments in twelve active homebuilding partnerships or limited liability companies. Our participation in these entities may be as a developer, a builder, or an investment partner. Our ownership percentage varies from 7% to 50%, depending on the investment, with no controlling interest held in any of these investments. Our Tri Pointe Connect mortgage financing joint venture was accounted for as an equity-method investment as of December 31, 2021. During the first quarter of 2022, a reconsideration event under ASC 810 occurred for Tri Pointe Connect, resulting in the consolidation of this joint venture. For further details, see Note 7, Variable Interest Entities.
Unconsolidated Financial Information
Aggregated assets, liabilities and operating results of the entities we account for as equity-method investments are provided below. Because our ownership interest in these entities varies, a direct relationship does not exist between the information presented below and the amounts that are reflected on our consolidated balance sheets as our investments in unconsolidated entities or on our consolidated statements of operations as equity in income of unconsolidated entities.
Assets and liabilities of unconsolidated entities (in thousands):
 
September 30, 2022December 31, 2021
Assets
Cash$29,280 $35,966 
Receivables28,642 8,359 
Real estate inventories448,214 359,324 
Other assets4,765 534 
Total assets$510,901 $404,183 
Liabilities and equity
Accounts payable and other liabilities$140,557 $73,675 
Company’s equity132,998 118,095 
Outside interests’ equity237,346 212,413 
Total liabilities and equity$510,901 $404,183 
 
- 12 -


Results of operations from unconsolidated entities (in thousands):
 Three Months Ended September 30,Nine Months Ended September 30,
 2022202120222021
Net sales$8,111 $14,900 $30,833 $35,297 
Other operating expense(8,410)(8,897)(31,189)(19,718)
Other income (loss), net  94 (4)
Net (loss) income $(299)$6,003 $(262)$15,575 
Company’s equity in income of unconsolidated entities$(122)$3,903 $12 $10,514 
  

7.    Variable Interest Entities
Land and Lot Option Agreements
In the ordinary course of business, we enter into land and lot option agreements in order to procure land and residential lots for future development and the construction of homes. The use of such land and lot option agreements generally allows us to reduce the risks associated with direct land ownership and development, and reduces our capital and financial commitments. Pursuant to these land and lot option agreements, we generally provide a deposit to the seller as consideration for the right to purchase land at different times in the future, usually at predetermined prices. These deposits are recorded as land purchase and land option deposits under real estate inventories not owned on the accompanying consolidated balance sheets.
We analyze each of our land and lot option agreements and other similar contracts under the provisions of Accounting Standards Topic 810 (“ASC 810”), Consolidation to determine whether the land seller is a VIE and, if so, whether we are the primary beneficiary. Although we do not have legal title to the underlying land, if we are determined to be the primary beneficiary of the VIE, we will consolidate the VIE in our financial statements and reflect its assets as real estate inventory not owned included in our real estate inventories, its liabilities as debt (nonrecourse) held by VIEs in accrued expenses and other liabilities and the net equity of the VIE owners as noncontrolling interests on our consolidated balance sheets. In determining whether we are the primary beneficiary, we consider, among other things, whether we have the power to direct the activities of the VIE that most significantly impact the VIE’s economic performance. Such activities would include, among other things, determining or limiting the scope or purpose of the VIE, selling or transferring property owned or controlled by the VIE, or arranging financing for the VIE.
Creditors of the entities with which we have land and lot option agreements have no recourse against us. The maximum exposure to loss under our land and lot option agreements is generally limited to non-refundable option deposits and any capitalized pre-acquisition costs. In some cases, we have also contracted to complete development work at a fixed cost on behalf of the landowner and budget shortfalls and savings will be borne by us. Additionally, we have entered into land banking arrangements which require us to complete development work even if we terminate the option to procure land or lots.
The following provides a summary of our interests in land and lot option agreements (in thousands):
 September 30, 2022December 31, 2021
DepositsRemaining
Purchase
Price
Consolidated
Inventory
Held by VIEs
DepositsRemaining
Purchase
Price
Consolidated
Inventory
Held by VIEs
Unconsolidated VIEs$225,015 $1,267,975 N/A$211,835 $1,507,304 N/A
Other land option agreements18,754 227,326 N/A29,900 319,646 N/A
Total$243,769 $1,495,301 $ $241,735 $1,826,950 $ 
 
Unconsolidated VIEs represent land option agreements that were not consolidated because we were not the primary beneficiary. Other land option agreements were not with VIEs.
In addition to the deposits presented in the table above, our exposure to loss related to our land and lot option contracts consisted of capitalized pre-acquisition costs of $21.0 million and $17.9 million as of September 30, 2022 and December 31, 2021, respectively. These pre-acquisition costs are included in real estate inventories as land under development on our consolidated balance sheets.
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Tri Pointe Connect Joint Venture
During the first quarter of 2022, a reconsideration event under ASC 810 occurred for our Tri Pointe Connect joint venture that gave us the ability to direct the activities of the joint venture that most significantly affect the entity’s economic performance. Based on our reassessment, we concluded that the mortgage financing joint venture is a VIE and we are the primary beneficiary based on our controlling financial interest. As a result, beginning in January 2022, the joint venture is accounted for as a consolidated VIE. As of January 1, 2022, the accompanying consolidated balance sheets include the assets, liabilities and noncontrolling interests of this VIE. As of September 30, 2022, the carrying value of the VIE’s assets was $10.0 million, which was primarily included in other assets, $5.2 million of liabilities was included in accrued expenses and other liabilities and $1.7 million was included in noncontrolling interests in the accompanying consolidated balance sheets.
  

8.    Goodwill and Other Intangible Assets
As of September 30, 2022 and December 31, 2021, $139.3 million of goodwill is included in goodwill and other intangible assets, net on each of the consolidated balance sheets, which was recorded in connection with our merger with Weyerhaeuser Real Estate Company (“WRECO”) in 2014.
We have one intangible asset as of September 30, 2022, comprised of a Tri Pointe Homes trade name resulting from the acquisition of WRECO in 2014, which has an indefinite useful life.
Goodwill and other intangible assets consisted of the following (in thousands):
September 30, 2022December 31, 2021
Gross
Carrying
Amount
Accumulated
Amortization
Net
Carrying
Amount
Gross
Carrying
Amount
Accumulated
Amortization
Net
Carrying
Amount
Goodwill$139,304 $— $139,304 $139,304 $— $139,304 
Trade names27,979 (10,680)17,299 27,979 (10,680)17,299 
Total$167,283 $(10,680)$156,603 $167,283 $(10,680)$156,603 
 
In October 2020, in conjunction with the announcement of our move to a single brand, Tri Pointe Homes, we modified the useful life of the former Maracay trade name which expired in June 2021. The intangible asset related to the Maracay trade name was fully amortized during 2021. Amortization expense related to this intangible asset was $1.9 million for the nine-month period ended September 30, 2021. Amortization of this intangible was charged to sales and marketing expense. Our $17.3 million indefinite life intangible asset related to the Tri Pointe Homes trade name is not amortizing. All trade names and goodwill are evaluated for impairment on an annual basis or more frequently if indicators of impairment exist.


9.    Other Assets
Other assets consisted of the following (in thousands):
September 30, 2022December 31, 2021
Prepaid expenses$