Investment in Unconsolidated Ventures

We have participated in real estate ventures for the purpose of acquiring and developing residential, multifamily and mixed-use communities in which we may or may not have a controlling financial interest. U.S. GAAP requires consolidation of Variable Interest Entities (VIEs) in which an enterprise has a controlling financial interest and is the primary beneficiary. A controlling financial interest will have both of the following characteristics: (a) the power to direct the VIE activities that most significantly impact economic performance and (b) the obligation to absorb the VIE losses and right to receive benefits that are significant to the VIE. We examine specific criteria and use judgment when determining whether a venture is a VIE and whether we are the primary beneficiary. We perform this review initially at the time we enter into venture agreements and reassess upon reconsideration events.

On February 8, 2018, we sold our ownership interest in eight of our unconsolidated ventures to Starwood as part of a strategic asset sale. (See Note 4—Held for Sale). During the six months ended June 30, 2018, we also sold our interest in a venture in Atlanta, generating $11,049,000 in net proceeds and recognizing a gain of $2,030,000 which is included in gain on sale of assets. At June 30, 2018, we had ownership interests in six ventures that we accounted for using the equity method, none of which were a VIE.

Combined summarized balance sheet information for our ventures accounted for using the equity method follows:



	June 30, 2018		December 31, 2017
	(In thousands)
Assets:
Cash and cash equivalents	$	5,854	$	13,119
Real estate	87,972		168,914
Other assets	982		21,721
Total assets	$	94,808	$	203,754
Liabilities and Equity:
Accounts payable and other liabilities	$	1,979	$	13,101
Debt ^(a)	45,639		85,133
Equity	47,190		105,520
Total liabilities and equity	$	94,808	$	203,754

Forestar's investment in unconsolidated ventures	$	17,965	$	64,579

Combined summarized income statement information for our ventures accounted for using the equity method follows:



	Three Months Ended June 30,				Six Months Ended June 30,
	2018		2017		2018		2017
	(In thousands)
Revenues	$	2,845	$	23,114	$	6,226	$	45,750
Earnings	$	2,661	$	6,327	$	6,941	$	18,548
Forestar's equity in earnings of unconsolidated ventures	$	1,000	$	2,747	$	2,529	$	9,109

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^(a)	As of June 30, 2018 and December 31, 2017, total unconsolidated venture debt outstanding includes $4,564,000 and $4,584,000 which is recourse to us.