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Investments in Unconsolidated Joint Ventures | 12 Months Ended
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Sep. 30, 2011
Investments in Unconsolidated Joint Ventures [Abstract] |
Investments in Unconsolidated Joint Ventures |
(3) | Investments in Unconsolidated Joint Ventures
As of September 30, 2011, we participated in certain land development joint ventures in which Beazer Homes had less than a controlling interest. The following table presents our investment in our unconsolidated joint ventures, the total equity and outstanding borrowings of these joint ventures and our guarantees of these borrowings as of September 30, 2011 and September 30, 2010 (in thousands):
|  | 2011 |  |  | 2010 |
Beazer’s investment in joint ventures |  | $ | 9,467 |  |  | $ | 8,721 |
Total equity of joint ventures |  |  | 96,966 |  |  |  | 94,392 |
Total outstanding borrowings of joint ventures |  |  | 394,414 |  |  |  | 394,301 |
Beazer’s estimate of its maximum exposure to our repayment guarantees |  |  | 17,916 |  |  |  | 15,789 |
The increase in our investment in unconsolidated joint ventures from September 30, 2010 to September 30, 2011 relates primarily to additional investments of $1.9 million offset by distributions of earnings in cash and lots totaling $1.2 million. For the fiscal years ended September 30, 2011, 2010 and 2009, our loss from joint venture activities, the impairments of our investments in certain of our unconsolidated joint ventures, and the overall equity in loss of unconsolidated joint ventures is as follows:
|  | 2011 |  | 2010 |  | 2009
|  | (In thousands)
Continuing operations: |  |  |  |  |  |  |  |  |  |  |  |
Income from joint venture activity |  | $ | 652 |  |  | $ | 10 |  |  | $ | 518 |
Impairment of joint venture investment |  |  | (92 | ) |  |  | (8,817 | ) |  |  | (12,630 | )
Equity in income (loss) of unconsolidated joint ventures |  | $ | 560 |  |  | $ | (8,807 | ) |  | $ | (12,112 | )
Reported in loss from discontinued operations, net of tax |  |  |  |  |  |  |  |  |  |  |  |
Loss from joint venture activity |  | $ | (16 | ) |  | $ | (32 | ) |  | $ | — |
Impairment of joint venture investment |  |  | (502 | ) |  |  | (15,511 | ) |  |  | (2,163 | )
Equity in loss of unconsolidated joint ventures — discontinued operations |  | $ | (518 | ) |  | $ | (15,543 | ) |  | $ | (2,163 | )
The aggregate debt of the unconsolidated joint ventures was $394.4 million and $394.3 million at September 30, 2011 and 2010, respectively. At September 30, 2011, total borrowings outstanding include $327.9 million related to our interest in South Edge. South Edge During fiscal 2008, the administrative agent for the lenders to our South Edge joint venture notified the joint venture members that it believed the joint venture was in default of certain joint venture loan agreements, in particular, the failure of the joint venture members to acquire and pay for specified parcels of land, resulting in a payment default. In December 2008, the lenders filed lawsuits against some of the joint venture members and certain of those members’ parent companies (including the Company), seeking to recover damages under completion guarantees, among other claims. Based on the Company’s revised estimates regarding the value of our investment, the Company impaired its equity interest of $8.8 million in this joint venture during the second quarter of fiscal 2010. In addition, one member of the joint venture filed an arbitration proceeding against the remaining members related to the plaintiff-member’s allegations that the other members failed to perform under the applicable joint venture agreements. The arbitration panel issued its decision on July 6, 2010 and awarded the plaintiff-member a monetary award against the remaining members. At that time, the Company recorded an accrual for such matter. On December 9, 2010, three lenders filed an involuntary bankruptcy petition against the South Edge joint venture. On February 3, 2011, the bankruptcy court granted this petition and the motion for appointment of a Chapter 11 trustee. Effective June 10, 2011, the Company and certain other joint venture members (the Participating Members) entered into a settlement agreement with the administrative agent and the three lenders. Under this agreement, the parties agreed to develop a plan of reorganization for the joint venture. At the same time, the members, the administrative agent and the three lenders entered into an agreement with the Chapter 11 Trustee, under which the Trustee agreed to support the plan of reorganization. Based on the terms of the agreement, the Company will pay the lenders an amount between approximately $15.7 million and $17.2 million in relation to the repayment guarantees. Payments pursuant to the plan of reorganization would give each payor lien rights to its share of the property currently owned by the joint venture. The Company also agreed to make other payments in connection with the bankruptcy proceeding. In addition, the Company and the other Participating Members reached a settlement, with the plaintiff- member, of the arbitration claims and other claims relating to the joint venture. On October 26, 2011, the bankruptcy court approved a plan of reorganization for South Edge that included approval of the settlement agreement with the lenders and the settlement of the arbitration award referred to above. The plan of reorganization calls for the formation of a new joint venture called Inspirada, LLC (Inspirada), with the Participating Members constituting the members of the new venture. Inspirada will take title to the South Edge assets including its real property and lien rights, and the debt to the lenders will be extinguished upon payment by the Inspirada members of their obligations under the plan of reorganization. All pending litigation claims by the lenders and the plaintiff-member against the Participating Members will be dismissed as well. The Participating Members also acquired all claims of the lender and South Edge against the non-Participating Members. In addition to the payments to the lenders, we, as a member of the Inspirada joint venture, will have obligations for future infrastructure and other development costs. At this time, these costs cannot be quantified due to, among other things, uncertainty over the future development configuration of the project and the related costs, market conditions, uncertainty over the remaining infrastructure deposits and previously filed bankruptcies of other joint venture members. As a result of these occurrences, during the fiscal 2011, we accrued $17.2 million related to our estimated obligation under the settlement agreement. In accordance with the final agreement, we paid $1.5 million into an escrow fund in June 2011, reducing our outstanding liability at September 30, 2011 to approximately $15.7 million. As previously discussed, the Company will ultimately obtain land in exchange for satisfaction of our obligations under the plan of reorganization. At the current time, there are uncertainties with respect to the location and density of the land we would receive, the products we would build on such land and the estimated selling prices of such homes. Considering the various potential scenarios and the current and expected market conditions in the Las Vegas area, we determined that the value of our future land purchase rights was approximately $11.7 million as of September 30, 2011 and recognized non-cash pre-tax impairments totaling $5.6 million on such future land purchase rights during the fiscal 2011. We have recorded $11.7 million to Other Assets as of September 30, 2011 representing our future land purchase rights from the ultimate payment of this repayment guarantee. Because there are uncertainties with respect to the value of the lien rights or title to our share of the underlying property, we may be required to record adjustments to the carrying value of these recognized Other Assets in future periods as better information becomes available. Guarantees Our joint ventures typically obtain secured acquisition, development and construction financing. Generally Beazer and our joint venture partners provide varying levels of guarantees of debt and other obligations for our unconsolidated joint ventures. At September 30, 2011, these guarantees included, for certain joint ventures, construction completion guarantees, repayment guarantees and environmental indemnities. As of September 30, 2011, we have a completion guarantee related to one joint venture loan which also has a repayment guarantee associated with it. With respect to this guaranty, we and our joint venture partners may be obligated to the project lenders to complete land development improvements and the construction of planned homes if the joint venture does not perform the required development. In addition, we and our joint venture partners have repayment guarantees related to certain joint ventures’ borrowings. These repayment guarantees require the repayment of all or a portion of the debt of the unconsolidated joint venture only in the event the joint venture defaults on its obligations under the borrowing or in some cases only in the event the joint venture files for bankruptcy. Our estimate of Beazer’s maximum exposure to our repayment guarantees related to the outstanding debt of its unconsolidated joint ventures was $17.9 million and $15.8 million at September 30, 2011 and 2010, respectively. As of September 30, 2011, $16.4 million has been recorded in Other Liabilities related to our repayment guarantees, which is net of the $1.5 million we paid in fiscal 2011 related to our South Edge joint venture. We and our joint venture partners also generally provide unsecured environmental indemnities to joint venture project lenders. In each case, we have performed due diligence on potential environmental risks. These indemnities obligate us to reimburse the project lenders for claims related to environmental matters for which they are held responsible. During the fiscal years ended September 30, 2011 and 2010, we were not required to make any payments related to environmental indemnities. In assessing the need to record a liability for the contingent aspect of these guarantees, we consider our historical experience in being required to perform under the guarantees, the fair value of the collateral underlying these guarantees and the financial condition of the applicable unconsolidated joint ventures. In addition, we monitor the fair value of the collateral of these unconsolidated joint ventures to ensure that the related borrowings do not exceed the specified percentage of the value of the property securing the borrowings. We have recorded a liability for guarantees we determined were probable and reasonably estimable, but we have not recorded a liability for the contingent aspects of any guarantees that we determined were reasonably possible but not probable.

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- Definition The entire disclosure for equity investment, or group of investments, for which combined disclosure is appropriate, including: (a) the name of each investee and percentage of ownership of common stock, (b) accounting policies for investments in common stock, (c) difference between the amount at which the investment is carried and the amount of underlying equity in net assets and the accounting treatment of the difference, (d) the total fair value of each identified investment for which a market value is available, (e) summarized information as to assets, liabilities, and results of operations of the investees (for investments in unconsolidated subsidiaries, common stock of joint ventures, or other investments using the equity method), and (f) material effects of possible conversions, exercises, or contingent issuances of the investee. Other disclosures include (a) the names of any investee in which the investor owns 20 percent or more of the voting stock and investment is not accounted for using the equity method, and the reasons why not, and (b) the names of any investee in which the investor owns less than 20 percent of the voting stock and the investment is accounted for using the equity method, and the reasons why it is. + References Reference 1: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 323 -SubTopic 10 -Section 50 -Paragraph 3 -URI http://asc.fasb.org/extlink&oid=6382943&loc=d3e33918-111571 Reference 2: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 323 -SubTopic 10 -Section 35 -Paragraph 32 -URI http://asc.fasb.org/extlink&oid=6903645&loc=d3e32787-111569 Reference 3: http://www.xbrl.org/2003/role/presentationRef -Publisher AICPA -Name Accounting Principles Board Opinion (APB) -Number 18 -Paragraph 20 -LegacyDoc This reference is SUPERSEDED by the Accounting Standards Codification effective for interim and annual periods ending after September 15, 2009. This reference is included to help users transition from the previous accounting hierarchy and will be removed from future versions of this taxonomy. Reference 4: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 210 -SubTopic 10 -Section S99 -Paragraph 1 -Subparagraph (SX 210.5-02.12) -URI http://asc.fasb.org/extlink&oid=6877327&loc=d3e13212-122682 Reference 5: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 323 -SubTopic 10 -Section 35 -Paragraph 35 -URI http://asc.fasb.org/extlink&oid=6903645&loc=d3e32847-111569 + Details
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