Filing Compare · BROOKFIELD HOMES CORP

~~Table~~UNITED ofSTATES SECURITIES ~~Contents~~AND EXCHANGE COMMISSION

~~UNITED~~Washington, ~~STATES SECURITIES~~D.C. ~~AND EXCHANGE COMMISSION~~20549

~~Washington,~~FORM ~~D.C. 20549~~10-K

~~FORM~~ANNUAL ~~10-K~~REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

~~ANNUAL~~For ~~REPORT~~the ~~PURSUANT~~fiscal TOyear ~~SECTION~~ended 13December 31, ~~OR 15(d) OF THE~~ 2010 ~~SECURITIES~~ Commission ~~EXCHANGE~~File ~~ACT~~Number: ~~OF 1934~~ 001-31524

~~For~~BROOKFIELD ~~the~~HOMES ~~fiscal year ended December 31, 2009~~CORPORATION

~~Commission~~(Exact ~~File~~Name ~~Number:~~of ~~001-31524~~ Registrant as Specified in Its Charter)

BROOKFIELD HOMES CORPORATION


Delaware		37-1446709
(State or Other Jurisdiction of Incorporation or Organization)		(I.R.S. Employer Identification No.)

8500 Executive Park Avenue Suite 300, Fairfax, Virginia		22031
(Address of Principal Executive Offices)		(Zip Code)

(703) 270-1700 (~~Exact~~Registrant’s ~~Name~~Telephone ofNumber, ~~Registrant~~Including asArea ~~Specified~~Code) Securities inregistered ~~Its~~pursuant ~~Charter~~to Section 12(b) of the Act:

Delaware (State or Other Jurisdiction of Incorporation or Organization)		37-1446709 (I.R.S. Employer Identification No.)
8500 Executive Park Avenue Suite 300, Fairfax, Virginia (Address of Principal Executive Offices)		22031 (Zip Code)


Title of Each Class		Name of Each Exchange on Which Registered

Common Stock		New York Stock Exchange

~~(703) 270-1700 (Registrant’s Telephone Number, Including Area Code)~~ Securities registered pursuant to Section 12(bg) of the Act:

~~Title of Each Class Name of Each Exchange on Which Registered Common Stock New York Stock Exchange~~None

~~Securities~~Indicate ~~registered~~by ~~pursuant~~check tomark ~~Section 12(g)~~if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act:.

~~None~~Yes o No þ

Indicate by check mark if the registrant is anot ~~well-known~~required ~~seasoned~~to ~~issuer,~~file asreports ~~defined~~pursuant into ~~Rule~~Section 13 or ~~405~~Section 15(d) of the ~~Securities~~ Act.

Yes o No þ

Indicate by check mark ifwhether the registrant is(1) has ~~not~~filed ~~required~~all ~~to file~~ reports ~~pursuant~~required to be filed by Section 13 or ~~Section~~ 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 o þ No þo

Indicate by check mark whether the registrant ~~(1)~~ has ~~filed~~submitted ~~all~~electronically ~~reports~~and posted on its corporate Web site, if any, every Interactive Data File required to be ~~filed~~submitted byand posted ~~Section 13~~pursuant orto ~~15(d)~~Rule 405 of ~~the~~Registration ~~Securities~~S-T ~~Exchange~~(s.232.405 ~~Act~~ of ~~1934~~this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to ~~file~~submit ~~such reports)~~ and ~~(2) has~~post ~~been subject to~~ such ~~filing requirements for the past 90 days~~files).

Yes þ o No o

Indicate by check mark ~~whether~~if ~~the~~disclosure ~~registrant~~of ~~has~~delinquent ~~submitted~~filers ~~electronically~~pursuant ~~and~~to ~~posted~~Item 405 onof ~~its~~Regulation S-K is ~~corporate~~not ~~Web~~contained ~~site~~herein, ifand ~~any,~~will ~~every~~not ~~Interactive~~be ~~Data~~contained, ~~File~~to ~~required~~the tobest beof ~~submitted~~registrant’s ~~and~~knowledge, ~~posted~~in ~~pursuant~~definitive toproxy ~~Rule 405~~or ofinformation ~~Registration~~statements ~~S-T~~incorporated ~~(s.232.405~~by ofreference ~~this~~in ~~chapter)~~Part III ~~during~~of ~~the~~this ~~preceding~~Form ~~12 months~~10-K (or ~~for~~any ~~such~~amendment ~~shorter period that the registrant was required~~ to ~~submit~~this ~~and~~Form ~~post such files)~~10-K.þ

~~Yes~~Indicate ~~o No~~by ocheck mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act. (Check one):

~~Indicate~~Large byaccelerated ~~check~~filer ~~mark~~o ifAccelerated ~~disclosure~~filer ofþ ~~delinquent~~Non-accelerated ~~filers~~filer ~~pursuant~~o toSmaller ~~Item 405~~reporting ofcompany ~~Regulation S-K~~o ~~is not~~(Do ~~contained herein, and will~~ not becheck ~~contained,~~if toa ~~the~~smaller ~~best~~reporting ~~of registrant’s knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K o.~~ company)

Indicate by check mark whether the registrant is a ~~large~~shell ~~accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting~~ company. ~~See~~(as ~~the~~defined ~~definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company”~~ in Rule 12b-2 of the ~~Exchange~~ Act). ~~(Check one):~~

~~Large~~Yes ~~accelerated filer~~ o ~~Accelerated~~No ~~filer~~ þ ~~Non-accelerated filer o (Do not check if a smaller reporting company) Smaller reporting company o~~

~~Indicate~~As byof ~~check~~June 30, ~~mark~~2010, ~~whether~~the aggregate market value of the voting stock held by non-affiliates of the registrant iswas aapproximately ~~shell~~$66,586,259 ~~company~~based ~~(as~~upon ~~defined~~the inclosing ~~Rule~~market price on June ~~12b-2~~30, 2010 of a share of common stock on the ~~Act)~~New York Stock Exchange.

~~Yes~~As ~~o No~~of þFebruary 22, 2011, the registrant had outstanding 29,677,984 shares of its common stock, $0.01 par value per share.

AsPART ~~of June 30, 2009, the aggregate market value of the voting stock held by non-affiliates of the~~I ~~registrant was approximately $39,229,680 based upon the closing market price on June 30, 2009 of a share of common stock on the New York Stock Exchange.~~

AsIntroductory ~~of February 18, 2010, the registrant had outstanding 28,402,299 shares of its common stock,~~Note ~~$0.01 par value per share.~~

~~DOCUMENTS~~On ~~INCORPORATED~~October 4, BY2010, ~~REFERENCE~~Brookfield Properties Corporation, Brookfield Homes Corporation and Brookfield Residential Properties Inc. (“Brookfield Residential”), a wholly-owned subsidiary of Brookfield Asset Management Inc., entered into a definitive agreement to combine Brookfield Homes and the North American residential land and housing division of Brookfield Properties into Brookfield Residential (the “transaction”). Completion of the transaction is subject to regulatory approval in the United States and Canada, the approval of the holders of a majority of the outstanding Brookfield Homes common stock and other customary closing conditions. Brookfield beneficially owns, through Brookfield Residential, sufficient shares to approve the transaction and has agreed to vote in favor of the transaction at the Brookfield Homes stockholders meeting scheduled for March 25, 2011.

~~Portions of the registrant’s 2010 definitive proxy statement, to be filed with the Commission no later than April 30, 2010, are incorporated by reference into~~ Item 101. ~~(Directors, Executive~~Business Officers and Corporate Governance), Item 11 (Executive Compensation), Item 12 (Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters), Item 13 (Certain Relationships and Related Transactions, and Director Independence) and Item 14 (Principal Accounting Fees and Services) of Part III of this annual report on Form 10-K.

~~TABLE OF CONTENTS~~Introduction

PART I
	Item 1. Business
	Item 1A. Risk Factors
	Item 1B. Unresolved Staff Comments
	Item 2. Properties
	Item 3. Legal Proceedings
	Item 4. Submission of Matters to a Vote of Security Holders
PART II
	Item 5. Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities
	Item 6. Selected Financial Data
	Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations
	Item 7A. Quantitative and Qualitative Disclosures About Market Risk
	Item 8. Financial Statements and Supplementary Data
	Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure
	Item 9A. Controls and Procedures
	Item 9B. Other Information
PART III
	Item 10. Directors, Executive Officers and Corporate Governance
	Item 11. Executive Compensation
	Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters
	Item 13. Certain Relationships and Related Transactions, and Director Independence
	Item 14. Principal Accounting Fees and Services
PART IV
	Item 15. Exhibits, Financial Statement Schedules
SIGNATURES
EXHIBIT INDEX
EX-4.14
EX-10.7
EX-23.1
EX-31.1
EX-31.2
EX-32.1

Brookfield Homes Corporation is a land developer and homebuilder that operates its business through local business units responsible for projects in their geographic area (unless the context requires otherwise, references in this report to “we,” “our,” “us” and “the Company” refer to Brookfield Homes and the subsidiaries through which it conducts all of its land development and homebuilding operations). Through the activities of our operating subsidiaries, we entitle and develop land for our own communities and sell lots to third parties. We also design, construct and market single-family and multi-family homes primarily to move-up homebuyers. Our operations are currently focused primarily in the following markets: Northern California (San Francisco Bay Area and Sacramento); Southland / Los Angeles; San Diego / Riverside; and the Washington D.C. Area. We target these markets as we believe over the longer term they offer the following positive characteristics: strong housing demand, a constrained supply of developable land and close proximity to areas where we expect strong employment growth. Our Washington D.C. Area operations commenced in the mid 1980s and our California operations commenced in 1996. We also own interests in unconsolidated entities that are not consolidated subsidiaries.

~~Table~~General Development of ~~Contents~~Our Business

~~PART~~Brookfield IHomes Corporation was incorporated on August 28, 2002 in Delaware and thereafter we acquired all the California and Washington D.C. Area homebuilding and land development operations of Brookfield Properties Corporation. Our common stock began trading on the New York Stock Exchange on January 7, 2003, under the symbol “BHS.”

~~Item 1.~~The ~~Business~~following chart summarizes our principal operating subsidiaries and the year in which they commenced operations:

Introduction


Principal Subsidiary	Market	Year of Entry
Brookfield Bay Area Holdings LLC	San Francisco Bay Area	1996
Brookfield Southland Holdings LLC	Southland / Los Angeles	1996
Brookfield San Diego Holdings LLC	San Diego / Riverside	1996
Brookfield Washington LLC	Washington D.C. Area	1984
Brookfield California Land Holdings LLC	California	1998

~~Brookfield~~Current ~~Homes~~Business ~~Corporation is a land developer and homebuilder that operates its business through~~Environment local business units responsible for projects in their geographic area (unless the context requires otherwise, references in this report to “we,” “our,” “us” and “the Company” refer to Brookfield Homes and the subsidiaries through which it conducts all of its land development and homebuilding operations). Through the activities of our operating subsidiaries, we entitle and develop land for our own communities and sell lots to third parties. We also design, construct and market single-family and multi-family homes primarily to move-up and luxury homebuyers. Our operations are currently focused primarily in the following markets: Northern California (San Francisco Bay Area and Sacramento); Southland / Los Angeles; San Diego / Riverside; and the Washington D.C. Area. We target these markets because we believe over the longer term they offer the following positive characteristics: strong housing demand, a constrained supply of developable land and close proximity to areas where we expect strong employment growth. Our Washington D.C. Area operations commenced in the mid 1980s and our California operations commenced in 1996. We also own interests in unconsolidated entities that are not consolidated subsidiaries.

~~General~~In ~~Development~~the first quarter, we were encouraged by the improvement in sales and closings. However, since then, selling communities have seen a drop in the number of ~~Our~~potential ~~Business~~homebuyers, which we believe is a result of expired government stimulus programs, together with continued uncertain economic conditions, which have negatively impacted homebuyer confidence. The supply of finished lots has been depleted substantially over the last few years and negligible development has occurred since 2006. As a result, we believe our strong financial position and owning entitled and/or developed lots in supply-constrained markets places us in a solid position as the markets improve. The United States homebuilding industry continues to face a number of challenges with home foreclosures and tight credit standards continuing to have an effect on inventory and new home sale rates and prices. Despite these challenging conditions still faced by the homebuilding market, we believe the risk is mitigated by our assets,

~~Brookfield Homes Corporation was incorporated on August 28, 2002 in Delaware and thereafter we~~1 acquired all the California and Washington D.C. Area homebuilding and land development operations of Brookfield Properties Corporation. Our common stock began trading on the New York Stock Exchange on January 7, 2003, under the symbol “BHS.”

~~The~~ ~~following~~which ~~chart~~are ~~summarizes~~largely ~~our~~located ~~principal~~in ~~operating~~geographic ~~subsidiaries~~areas with a constrained supply of lots and which have demonstrated strong economic characteristics over the ~~year~~long interm. ~~which~~For ~~they~~additional information and analysis of the impact ~~commenced~~on our operations: and financial condition, see “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in Item 7 of this Form 10-K.

Principal Subsidiary	Market	Year of Entry
Brookfield Bay Area Holdings LLC	San Francisco Bay Area	1996
Brookfield Southland Holdings LLC	Southland / Los Angeles	1996
Brookfield San Diego Holdings LLC	San Diego / Riverside	1996
Brookfield Washington LLC	Washington D.C. Area	1984
Brookfield California Land Holdings LLC	California	1998

Overview of the Land Development and Homebuilding Industry

~~Current~~The ~~Business~~residential ~~Environment~~land development and homebuilding industry involves converting raw or undeveloped land into residential housing. This process begins with the purchase or control of raw land and is followed by the entitlement and development of the land, and the marketing and sale of homes constructed on the land.

InRaw ~~2009, selling communities saw an increased number of homebuyers take advantage of improved~~Land affordability, low interest rates, declining home prices and government stimulus programs. While the United States homebuilding industry continues to face a number of challenges with home foreclosures and tight credit standards continuing to have an effect on inventory and new home sale rates and prices, homebuyer confidence has improved as homebuyers appear to have recognized that home prices have begun to stabilize. Despite the challenging conditions still faced by the homebuilding market, we believe the risk is mitigated by our assets, which are largely located in geographic areas with a constrained supply of lots and which have demonstrated strong economic characteristics over the long term. For additional information and analysis of the impact on our operations and financial condition, see “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in Item 7 of this Form 10-K.

~~Overview~~Raw land is usually unentitled property, without the regulatory approvals which allow the construction of residential, industrial, commercial or mixed-use buildings. Acquiring and developing raw land requires significant capital expenditures and has associated carrying costs, including property taxes and interest. The selection and purchase of raw land provides the inventory ~~Land~~required ~~Development~~for development purposes and ~~Homebuilding~~is ~~Industry~~an important aspect of the real estate development process. Developers of land, from time to time, sell raw or partially approved land to other land developers and homebuilders as part of the normal course of their business.

~~The~~Land ~~residential land development and homebuilding industry involves converting raw or undeveloped~~Development land into residential housing. This process begins with the purchase or control of raw land and is followed by the entitlement and development of the land, and the marketing and sale of homes constructed on the land.

~~Raw~~ Land development involves the conversion of raw land to the stage where homes may be constructed on the land. Regulatory bodies at the various governmental levels must approve the proposed end use of the land and many of the details of the development process. The time required to obtain the necessary approvals varies. In most jurisdictions, development occurs on a contiguous basis to existing land services such as water and sanitation.

~~Raw~~To ~~land~~shorten ~~is usually unentitled property, without~~ the ~~regulatory~~development ~~approvals which allow the construction of residential~~period, ~~industrial,~~many ~~commercial~~developers orpurchase ~~mixed-use buildings. Acquiring and developing raw~~ land ~~requires~~that ~~significant capital expenditures and~~ has ~~associated~~been ~~carrying~~partially ~~costs,~~developed. ~~including~~This ~~property~~land ~~taxes~~is ~~and~~generally ~~interest.~~higher ~~The~~in ~~selection~~value ~~and~~than ~~purchase of~~ raw land ~~provides~~because ~~the inventory~~a ~~required~~portion ~~for development purposes and is an important aspect~~ of the ~~real~~costs ~~estate development~~and ~~process. Developers of land, from time to time, sell raw or partially approved land to~~risk ~~other~~associated ~~land~~with ~~developers and homebuilders as part of~~ the ~~normal~~development ~~course~~have ofbeen ~~their business~~incurred.

1Generally, the first significant step in developing a residential community is to complete a draft specific plan incorporating major street patterns and designating parcels of land for various uses, such as parks, schools, rights of way and residential and commercial uses that is consistent with the local city or county general plan. This plan is then submitted for approval to the governmental authority with principal jurisdiction in the area such as a city or county. The draft specific plan is then refined with the local, state and federal agencies designating main and side streets, lot sizes for residential use and the sizes and locations of parcels of land to be used for schools, parks, open space, commercial properties and multi-family dwellings. These refinements are usually made in consultation with local planning officials, state agencies and, if required, federal agencies. In most cases, this process takes several years to complete.

~~Table~~Once the plan has been approved, the developer generally commences negotiations with the local governmental authority on a formal development agreement, which governs the principal aspects of the ~~Contents~~construction of the community. These negotiations generally involve the review and approval of engineering designs pertaining to various aspects of the development, such as the construction and installation of sewer lines, water mains, utilities, roads and sidewalks. At the same time, the allocation of the costs of these items between the governmental authority and the developer, and the amount of fees which the developer will pay in order to obtain final approval of the plan, must be settled.

Upon execution of the development agreement and grading and improvement plans, the developer generally posts a bond with the local governmental authority to secure the developer’s obligations and the plan receives final approval. The developer is generally required to convey to the local municipality, for no consideration, the land upon which roads, sidewalks, rights of way and parks are constructed. Land ~~Development~~for schools, if any, is sold to the local school district. The school district normally takes responsibility to construct the schools with developer fees and local and state bonds. The developer is usually responsible for the grading of the land and the installation of sewers, water mains, utilities, roads and sidewalks, while the municipality is usually responsible for the construction of recreational and community amenities such as libraries and community centers. The municipality funds its portion of these costs through fees charged to the developer in connection with plan approvals and through the collection of property taxes from local residents.

~~Land development involves the conversion of raw land to the stage where homes may be constructed on~~2 the land. Regulatory bodies at the various governmental levels must approve the proposed end use of the land and many of the details of the development process. The time required to obtain the necessary approvals varies. In most jurisdictions, development occurs on a contiguous basis to existing land services such as water and sanitation.

ToAfter ~~shorten~~a period of one to two years, following the completion by the developer of certain obligations under the development ~~period~~agreement, ~~many~~the ~~developers~~municipality ~~purchase~~takes ~~land~~responsibility ~~that~~from ~~has~~the developer ~~been~~for ~~partially~~the ~~developed.~~underground services, roads and sidewalks, and a portion of the improvement bond ~~This~~posted ~~land~~by the developer is ~~generally~~released. ~~higher~~The indeveloper ~~value~~is ~~than~~generally ~~raw~~required ~~land~~to ~~because~~maintain a minimum portion of the ~~costs~~bond ~~and~~with ~~risk associated~~the ~~with~~municipality after completion of the ~~development~~community ~~have~~to ~~been~~ensure ~~incurred~~performance by the developer of its remaining obligations under the development agreement.

~~Generally,~~Home ~~the~~Construction ~~first significant step in developing a residential community is to complete a draft specific plan incorporating major street patterns~~ and ~~designating parcels of land for various uses,~~Marketing such as parks, schools, rights of way and residential and commercial uses that is consistent with the local city or county general plan. This plan is then submitted for approval to the governmental authority with principal jurisdiction in the area such as a city or county. The draft specific plan is then refined with the local, state and federal agencies designating main and side streets, lot sizes for residential use and the sizes and locations of parcels of land to be used for schools, parks, open space, commercial properties and multi-family dwellings. These refinements are usually made in consultation with local planning officials, state agencies and, if required, federal agencies. In most cases, this process takes several years to complete.

~~Once~~Residential home construction involves the ~~plan~~actual ~~has~~construction ~~been~~of ~~approved,~~single-family ~~the~~houses ~~developer~~and multi-family ~~generally~~buildings ~~commences~~such ~~negotiations~~as ~~with~~townhouses ~~the~~and ~~local~~condominiums. Each dwelling is generally referred to ~~governmental~~as ~~authority~~a on“unit.” A planned community typically includes a ~~formal~~number ~~development~~of ~~agreement,~~“lots” on which ~~governs~~single-family ~~the~~units will ~~principal~~be ~~aspects~~situated and a smaller number of ~~the~~ ~~construction~~“pads” of ~~the~~land ~~community.~~which ~~These~~have ~~negotiations~~been ~~generally~~designated ~~involve~~for the construction ~~review~~of multi-family units, schools, parks and ~~approval~~commercial ofbuildings. The approved ~~engineering~~development ~~designs~~plan ~~pertaining~~specifically toprovides ~~various~~the ~~aspects~~total number of ~~the~~lots ~~development,~~and ~~such~~pads asin the ~~construction~~project. ~~and~~The ~~installation~~construction ofphase ~~sewer~~normally ~~lines~~involves consulting, ~~water mains~~architectural, ~~utilities~~engineering, ~~roads~~merchandising and marketing ~~sidewalks.~~personnel Atwho assist the ~~same~~homebuilder ~~time,~~in planning the project. Residential home ~~allocation~~construction is usually performed by subcontractors under the supervision of the ~~costs~~homebuilder’s construction management personnel. Marketing and sales of ~~these~~residential ~~items~~units ~~between~~are ~~the~~conducted ~~governmental~~by marketing ~~authority~~sales ~~and~~staff employed by the ~~developer,~~homebuilder ~~and~~or by independent realtors. Pre-selling residential units before the ~~amount~~commencement of ~~fees~~their ~~which~~construction ~~the~~is ~~developer~~a ~~will~~common ~~pay~~sales inpractice ~~order~~that usually toinvolves ~~obtain~~the ~~final~~creation ~~approval~~of model homes or drawings of the ~~plan,~~proposed ~~must~~homes in a besales ~~settled~~location close to or within the project.

~~Upon~~Narrative ~~execution~~Description of ~~the~~Our ~~development agreement and grading and improvement plans, the developer~~Business generally posts a bond with the local governmental authority to secure the developer’s obligations and the plan receives final approval. The developer is generally required to convey to the local municipality, for no consideration, the land upon which roads, sidewalks, rights of way and parks are constructed. Land for schools, if any, is sold to the local school district. The school district normally takes responsibility to construct the schools with developer fees and local and state bonds. The developer is usually responsible for the grading of the land and the installation of sewers, water mains, utilities, roads and sidewalks, while the municipality is usually responsible for the construction of recreational and community amenities such as libraries and community centers. The municipality funds its portion of these costs through fees charged to the developer in connection with plan approvals and through the collection of property taxes from local residents.

~~After~~Through athe ~~period~~activities of ~~one~~our tooperating ~~two years~~subsidiaries, ~~following~~we ~~the~~develop ~~completion~~land byfor ~~the~~our ~~developer~~own ofcommunities ~~certain~~and ~~obligations~~sell ~~under~~lots ~~the~~to ~~development~~other ~~agreement,~~homebuilders ~~the~~and ~~municipality~~third ~~takes~~parties. ~~responsibility~~In ~~from~~our ~~the~~own communities, we design, construct and ~~developer~~market ~~for~~single-family ~~the~~and ~~underground~~multi-family ~~services,~~homes ~~roads~~primarily to move-up and ~~sidewalks~~luxury homebuyers. In each of our markets, ~~and~~we aoperate ~~portion~~through local business units which are involved in all phases of the planning ~~improvement~~and ~~bond~~building of our master-planned communities and infill developments. These phases ~~posted~~include bysourcing and evaluating land acquisitions, site planning, obtaining entitlements, developing the ~~developer~~land, isproduct ~~released~~design, constructing, marketing and selling homes and homebuyer customer service. ~~The~~In ~~developer~~the isfive ~~generally~~year ~~required~~period toended ~~maintain~~December 31, 2010, we closed a ~~minimum portion~~total of ~~the~~4,048 homes ~~bond~~and ~~with~~sold ~~the~~6,227 ~~municipality~~lots ~~after~~in ~~completion~~various stages of ~~the~~development ~~community~~ to ~~ensure~~other ~~performance~~homebuilders and third parties. byA ~~the~~home ~~developer~~or oflot ~~its~~is ~~remaining~~considered ~~obligations~~closed ~~under~~when title has passed to the ~~development~~homebuyer, ~~agreement~~and for a lot when a significant cash down payment or appropriate security has been received.

~~Home~~We ~~Construction~~believe we have developed a reputation for innovative planning of master-planned communities and infill ~~Marketing~~developments. Master-planned communities are new home communities that typically feature community centers, parks, recreational areas, schools and other amenities. Within a master-planned community there may be smaller neighborhoods offering a variety of home styles and price levels from which homebuyers may choose. In an infill development, we construct homes in previously urbanized areas on under-utilized land. In connection with planning and building each of our master-planned communities and infill developments, we consider, among other things, amenities, views, traffic flows, open space, schools and security.

~~Residential~~In ~~home~~2010, ~~construction~~we ~~involves~~closed ~~the actual construction of single-family houses and multi-family buildings such as townhouses and condominiums. Each dwelling is generally referred to as~~ a ~~“unit.”~~total ~~A planned community typically includes a number~~ of ~~“lots”~~575 ~~on which single-family units will be situated and a smaller number of “pads” of land which have been designated for the construction of multi-family units~~homes, ~~schools,~~compared ~~parks~~with ~~and~~703 ~~commercial~~in ~~buildings~~2009. The ~~approved development~~breakdown ~~plan specifically provides the total number~~ of ~~lots~~our and pads in the project. The construction phase normally involves consulting, architectural, engineering, merchandising and marketing personnel who assist the homebuilder in planning the project. Residential home ~~construction~~closings ~~is usually performed~~ by ~~subcontractors~~market ~~under~~in the ~~supervision~~last ofthree ~~the~~years homebuilder’s construction management personnel. Marketing and sales of residential units are conducted by marketing sales staff employed by the homebuilder or by independent realtors. Pre-selling residential units before the commencement of their construction is aas ~~common sales practice that~~follows: ~~usually involves the creation of model homes or drawings of the proposed homes in a sales location close to or within the project.~~


*(Units)*	2010		2009		2008
Northern California		66		121		139
Southland / Los Angeles		189		204		227
San Diego / Riverside		100		136		128
Washington D.C. Area		210		232		245
Corporate and Other		8		6		6

		573		699		745
Unconsolidated Entities		2		4		5

Total		575		703		750

~~Table~~At December 31, 2010, we had in backlog 85 homes, a decrease of ~~Contents~~102 homes when compared to 2009. Backlog represents the number of homes subject to pending sales contracts. We believe $44 million of our backlog to be firm as of December 31, 2010, subject to future cancellations, which for 2010 were 21%. This compares to $88 million believed to be firm at December 31, 2009.

~~Narrative Description of Our Business~~3

~~Through~~We ~~the~~also ~~activities~~sell ofserviced ~~our operating subsidiaries, we develop land for our own communities~~ and ~~sell~~ unserviced lots to other homebuilders ~~and third parties. In our own communities~~, wegenerally ~~design,~~on ~~construct~~an ~~and~~opportunistic ~~market~~basis ~~single-family~~where ~~and~~we ~~multi-family~~can ~~homes~~enhance ~~primarily to move-up and luxury homebuyers. In each of~~ our ~~markets~~returns, wereduce ~~operate~~our ~~through~~risk ~~local business units which are involved~~ in ~~all~~a ~~phases~~market ofor ~~the planning~~re-deploy ~~and building of~~ our ~~master-planned~~capital ~~communities~~to ~~and infill developments. These phases~~an ~~include~~asset ~~sourcing~~providing ~~and~~higher ~~evaluating land acquisitions, site planning, obtaining entitlements, developing the land, product design, constructing, marketing and selling homes and homebuyer customer service~~returns. In ~~the five year period ended December 31~~2010, ~~2009,~~ we ~~closed a total of 5,091 homes and~~ sold ~~7,099~~370 lots ~~in various stages of development~~ to other homebuilders ~~and~~compared ~~third parties. A home or lot is considered closed when title has passed~~ to ~~the homebuyer, and for a lot when a~~469 ~~significant~~lots ~~cash~~in ~~down payment or appropriate security has been received~~2009.

WeOur ~~believe~~average wehome ~~have~~price ~~developed~~in a2010 ~~reputation~~from ~~for~~directly ~~innovative~~owned ~~planning~~projects ofwas ~~master-planned communities and infill developments. Master-planned communities are new home communities that typically feature community centers~~$510, ~~parks~~000, ~~recreational~~an ~~areas,~~increase ~~schools~~of ~~and~~$24,000 ~~other amenities. Within a master-planned~~or ~~community~~5% ~~there~~when ~~may~~compared beto ~~smaller~~our ~~neighborhoods~~average ~~offering a variety of~~ home ~~styles and~~ price ~~levels from~~in ~~which~~2009 ~~homebuyers~~of ~~may choose~~$486,000. InThe anbreakdown ~~infill~~of ~~development,~~the weaverage ~~construct homes in previously~~home ~~urbanized~~prices ~~areas~~ on ~~under-utilized land. In connection with planning and building each of~~ our ~~master-planned~~ ~~communities~~closings ~~and~~in ~~infill~~the ~~developments,~~last wethree ~~consider,~~years ~~among other things, amenities,~~follows: ~~views, traffic flows, open space, schools and security.~~

In 2009, we closed a total of 703 homes, compared with 750 in 2008. The breakdown of our home closings by market in the last three years is as follows:


	2010				2009				2008
			Average				Average				Average
	Sales		Price		Sales		Price		Sales		Price
	*(Millions)*				*(Millions)*				*(Millions)*
Northern California	$	71	$	1,084,000	$	102	$	845,000	$	127	$	913,000
Southland / Los Angeles		83		437,000		79		388,000		94		413,000
San Diego / Riverside		54		543,000		69		507,000		68		533,000
Washington D.C. Area		80		381,000		86		369,000		122		499,000
Corporate and Other		4		440,000		4		635,000		4		689,000

Consolidated Average	$	292	$	510,000	$	340	$	486,000	$	415	$	557,000

(Units)	2009		2008		2007
Northern California		121		139		131
Southland / Los Angeles		204		227		258
San Diego / Riverside		136		128		150
Washington D.C. Area		232		245		272
Corporate and Other		6		6		14
		699		745		825
Unconsolidated Entities		4		5		14
Total		703		750		839

For more detailed financial information with respect to our revenues, earnings and assets, please see the accompanying consolidated financial statements and related notes included elsewhere in this report.

AtBusiness ~~December 31, 2009, we had in backlog 187 homes, an increase of 53 homes when compared to~~Strategy 2008. Backlog represents the number of homes subject to pending sales contracts. We believe $88 million of our backlog to be firm as of December 31, 2009, subject to future cancellations, which for 2009 were 19%. This compares to $86 million believed to be firm at December 31, 2008.

WeOur ~~also~~goal ~~sell~~is ~~serviced and unserviced lots~~ to ~~other~~maximize ~~homebuilders,~~the ~~generally~~total return on ~~an opportunistic basis where we can enhance~~ our ~~returns,~~common ~~reduce~~equity ~~our~~over ~~risk~~the inlong aterm. ~~market~~The orkey ~~re-deploy~~elements of our ~~capital~~strategy to ~~an asset~~achieve ~~providing~~this ~~higher~~goal ~~returns.~~are Inas ~~2009, we sold 469 lots to other homebuilders compared to 616~~follows: ~~lots in 2008.~~

~~Our~~Selective ~~average~~Acquisition ~~home price in 2009 from directly owned projects was $486,000, a decrease of $71,000 or~~Policies ~~13% when compared to our average home price in 2008 of $557,000. The breakdown of the average home prices on our closings in the last three years follows:~~

	2009				2008				2007
			Average				Average				Average
	Sales		Price		Sales		Price		Sales		Price
	(Millions)				(Millions)				(Millions)
Northern California	$	102	$	845,000	$	127	$	913,000	$	121	$	921,000
Southland / Los Angeles		79		388,000		94		413,000		176		682,000
San Diego / Riverside		69		507,000		68		533,000		89		597,000
Washington D.C. Area		86		369,000		122		499,000		143		528,000
Corporate and Other		4		635,000		4		689,000		12		831,000
Total	$	340	$	486,000	$	415	$	557,000	$	541	$	656,000

We selectively acquire land that provides us with attractive residential projects that are consistent with our overall strategy and management expertise. We acquire land only if we believe that it will provide us with a minimum return on our invested capital. We also acquire options to purchase land rather than purchasing the land outright, in order to reduce our capital at risk in controlling land. In determining the minimum return we will accept, we take into account the risk inherent in increasing our land inventory and the specific development project. In making additional land acquisitions in one of our current markets, we consider our recent financial returns achieved in that market. In order to expand our market presence, we selectively pursue jointly owned projects with landowners and other homebuilders.

~~For~~During ~~more~~2010, ~~detailed~~we ~~financial~~acquired ~~information~~946 ~~with~~lots ~~respect~~and toobtained ~~our~~control ~~revenues,~~of ~~earnings~~a ~~and~~further ~~assets~~1, ~~please~~103 ~~see~~lots ~~the~~through ~~accompanying~~options. ~~consolidated~~All of ~~financial~~the ~~statements~~acquired ~~and~~lots ~~related~~were ~~notes~~obtained ~~included~~through ~~elsewhere in~~foreclosure ~~this report~~sales.

3Decentralized Operating Structure

~~Table~~We operate our homebuilding business through local business units responsible for projects in their geographic area. Each of ~~Contents~~our business units has significant experience in the land development and homebuilding industry in the market in which it operates. We believe that in-depth knowledge of a local market enables our business units to better meet the needs of our customers and to more effectively address the issues that arise on each project. Our business units are responsible for all elements of the land development and homebuilding process, including sourcing and evaluating land acquisitions, site planning and entitlements, developing the land, product design, constructing, marketing and selling homes, customer service and management reporting. Given the nature of their responsibilities, the compensation of each of the management teams in our business units is directly related to the business units’ results. Each business unit operates as a fully integrated profit center and the senior management of each business unit is compensated through a combination of base salary, a participation in his or her business unit’s profits and for 2010, participations were objective based. Furthermore, each of our business unit presidents own a minority equity interest in their business unit.

~~Business~~The ~~Strategy~~corporate team sets our strategic goals and overall strategy. The corporate team approves all acquisitions, allocates capital to the business units based on expected returns and levels of risk, establishes succession plans, ensures operations maintain a consistent level of quality, evaluates and manages risk and holds management of the business units accountable for the performance of their business unit.

~~Our goal is to maximize the total return on our common equity over the long term. The key elements~~4 ~~of our strategy to achieve this goal are as follows:~~

~~Selective~~Proactive ~~Acquisition~~Asset ~~Policies~~Management

WeOur ~~selectively~~business ~~acquire~~generally ~~land~~comprises ~~that~~four ~~provides~~stages uswhere ~~with~~we ~~attractive~~make ~~residential~~strategic ~~projects~~decisions ~~that~~to ~~are~~deploy capital: ~~consistent~~entitling ~~with~~the ~~our~~raw ~~overall strategy and management expertise. We acquire~~ land ~~only~~that if we ~~believe that~~control; itacquiring ~~will provide us with a minimum return on our invested capital. We also acquire options to purchase~~ land; ~~rather~~the ~~than~~development ~~purchasing~~of the land; ~~outright,~~and inthe construction ~~order~~of tohomes ~~reduce~~on ~~our~~the ~~capital at risk in controlling~~ land. InAs ~~determining~~our ~~the~~assets ~~minimum~~evolve ~~return~~through wethese ~~will accept~~stages, we ~~take~~continually ~~into~~assess our ~~account~~ability ~~the~~to ~~risk inherent~~maximize inreturns ~~increasing~~on our ~~land~~capital, ~~inventory~~while ~~and~~attempting ~~the~~to ~~specific~~minimize ~~development~~our ~~project~~risks. ~~In making~~The ~~additional~~decision ~~land~~to ~~acquisitions~~invest in ~~one~~or dispose of ~~our~~an ~~current~~asset ~~markets,~~at weeach ~~consider~~stage ~~our~~of ~~recent~~development ~~financial returns~~is ~~achieved~~based inon ~~that~~a ~~market.~~number Inof factors, ~~order~~including tothe ~~expand~~amount ~~our~~of ~~market~~capital ~~presence~~to be deployed, wethe ~~selectively~~level ~~pursue jointly~~of ~~owned~~incremental ~~projects~~returns ~~with~~at ~~landowners~~each stage and returns on other ~~homebuilders~~investment opportunities.

~~During~~Creating ~~2009, we acquired 3,254 lots and obtained control of a further 22 lots through options. All~~Communities ~~of the acquired lots were obtained at foreclosure sales.~~

~~Decentralized~~We ~~Operating~~seek ~~Structure~~to acquire land that allows us to create communities that include recreational amenities such as parks, biking and walking trails, efficient traffic flows, schools and public service facilities. We integrate land planning and development with housing product design in order to deliver lifestyle, comfort and value. We cooperate with local and regulatory authorities in order to be responsive to community conditions, and we attempt to balance our goal of maximizing the value of our land with the impact of development on the community and the environment. We encourage our employees to actively participate in local community activities and associations.

WeRisk ~~operate our homebuilding business through local business units responsible for projects in their~~Management geographic area. Each of our business units has significant experience in the land development and homebuilding industry in the market in which it operates. We believe that in-depth knowledge of a local market enables our business units to better meet the needs of our customers and to more effectively address the issues that arise on each project. Our business units are responsible for all elements of the land development and homebuilding process, including sourcing and evaluating land acquisitions, site planning and entitlements, developing the land, product design, constructing, marketing and selling homes, customer service and management reporting. Given the nature of their responsibilities, the compensation of each of the management teams in our business units is directly related to the business units’ results. Each business unit operates as a fully integrated profit center and the senior management of each business unit is compensated through a combination of base salary, a participation in his or her business unit’s profits and for 2009 and 2010, participations are objective based. Furthermore, each of our business unit presidents own a minority equity interest in their business unit.

~~The~~We ~~corporate~~focus ~~team~~on ~~sets~~managing ~~our~~risk ~~strategic~~in ~~goals~~each ~~and~~stage ~~overall~~of ~~strategy.~~the ~~The~~land ~~corporate~~development ~~team~~and ~~approves~~homebuilding ~~all~~process. In the ~~acquisitions~~land acquisition phase, ~~allocates~~we ~~capital~~use options to mitigate the ~~business~~risk ~~units~~that ~~based~~we onare ~~expected~~unable ~~returns~~to ~~and~~obtain ~~levels~~approval for development of ~~risk, establishes~~a ~~succession~~proposed ~~plans,~~community ~~ensures~~and/or ~~operations~~land ~~maintain~~values adecline ~~consistent~~due ~~level~~to ofpoor ~~quality,~~economic ~~evaluates~~or real ~~and~~estate ~~manages~~market conditions. We attempt to limit development approval risk ~~and~~by ~~holds~~conducting ~~management~~significant due ofdiligence ~~the~~before ~~business~~we ~~units~~close ~~accountable~~land ~~for~~acquisitions. ~~the~~We ~~performance~~sell oflots and parcels when we believe we can ~~their~~redeploy ~~business~~capital ~~unit~~to an asset providing higher returns or reduce risk in a market.

~~Proactive~~When ~~Asset~~constructing ~~Management~~homes, we strive to satisfy our customers and limit our product liability risk by:

~~Our~~• ~~business~~selecting ~~generally~~carefully ~~comprises four stages where we make strategic decisions to deploy capital: entitling~~ the ~~raw~~building ~~land~~materials that we ~~control~~use; ~~acquiring~~• ~~land;~~emphasizing ~~the~~to ~~development~~our ofemployees ~~the land;~~ and ~~the construction~~subcontractors ofthat ~~homes on the land. As~~ our ~~assets~~homes ~~evolve~~be ~~through~~built ~~these stages, we continually assess our ability~~ to ~~maximize~~meet ~~returns~~a onhigh ~~our~~standard ~~capital, while attempting to minimize our risks. The decision to invest in or dispose~~ of anquality ~~asset~~and atworkmanship; ~~each~~• ~~stage~~using ofonly ~~development~~insured issubcontractors ~~based on a number of factors, including the amount of capital~~ to beperform ~~deployed,~~construction ~~the~~activities; ~~level~~• ofproviding ~~incremental~~on-site ~~returns~~quality atcontrol; ~~each stage~~ and ~~returns~~• onproviding ~~other~~after-sales ~~investment opportunities~~service.

~~Creating~~Finally, ~~Communities~~we limit the risk of overbuilding by attempting to match our construction starts to our sales rates. We generally do not begin selling homes until a significant portion of the homes’ construction costs have been established through firm subcontractor bids.

WeAsset ~~seek to acquire land that allows us to create communities that include recreational amenities~~Profile such as parks, biking and walking trails, efficient traffic flows, schools and public service facilities. We integrate land planning and development with housing product design in order to deliver lifestyle, comfort and value. We cooperate with local and regulatory authorities in order to be responsive to community conditions, and we attempt to balance our goal of maximizing the value of our land with the impact of development on the community and the environment. We encourage our employees to actively participate in local community activities and associations.

~~Risk~~Our ~~Management~~assets are focused on single-family and multi-family homebuilding and land development in the markets in which we operate. They consist primarily of housing and land inventory and investments in unconsolidated entities. Our total assets, net of deferred income taxes as of December 31, 2010 were $958 million, with $658 million of these assets located in California, $239 million in the Washington D.C. Area and $61 million in other operations.

WeAs ~~focus~~of onDecember 31, ~~managing~~2010, ~~risk~~we incontrolled ~~each~~26,817 ~~stage~~lots. ofControlled ~~the~~lots ~~land~~include ~~development~~those ~~and~~we ~~homebuilding~~directly ~~process. In the~~own ~~land~~and ~~acquisition~~our ~~phase,~~share weof ~~use~~those ~~options~~owned toby ~~mitigate~~unconsolidated ~~the~~entities. ~~risk~~Our ~~that~~controlled welots ~~are~~provide ~~unable~~a ~~to obtain approval~~strong foundation for ~~development~~our offuture ahomebuilding ~~proposed~~business ~~community~~ and~~/or~~ ~~land~~visibility ~~values~~on ~~decline~~our ~~due~~future tocash ~~poor~~flow. Approximately ~~economic~~72% orof ~~real estate~~our ~~market~~owned ~~conditions.~~lots Weare ~~attempt~~entitled toand ~~limit~~ready for development ~~approval~~and ~~risk~~our byoptioned ~~conducting significant~~lots ~~due~~are ~~diligence~~mainly ~~before~~unentitled weand ~~close~~require ~~land~~various ~~acquisitions.~~regulatory Weapprovals ~~sell~~before ~~lots~~development ~~and~~can ~~parcels~~commence. ~~when~~The number weof ~~believe~~residential building lots we ~~can redeploy~~control ~~capital~~in toeach anof ~~asset~~our ~~providing~~primary ~~higher~~markets ~~returns~~as orof ~~reduce~~December 31, 2010 ~~risk~~and in2009 ais ~~market.~~as follows:


									Total		Total
	Housing & Land				Unconsolidated Entities				December		December
*(Units)*	Owned⁽¹⁾		Options		Owned		Options		31, 2010		31, 2009
Northern California		3,273		4,950		—		—		8,223		6,951
Southland / Los Angeles		880		320		775		2,759		4,734		3,262
San Diego / Riverside		8,709		—		52		—		8,761		8,853
Washington D.C. Area		2,497		1,165		1,184		—		4,846		4,916
Corporate and Other		196		—		57		—		253		263

Total December 31, 2010		15,555		6,435		2,068		2,759		26,817

Total December 31, 2009		14,233		6,279		1,746		1,987				24,245

~~Table~~(1) ofIncludes ~~Contents~~consolidated options.

~~When constructing homes, we strive to satisfy our customers and limit our product liability risk~~5 ~~by:~~

•Our ~~selecting~~housing ~~carefully~~and ~~the~~land ~~building~~inventory ~~materials~~includes ~~that~~homes wecompleted ~~use;~~or •under ~~emphasizing~~construction, todeveloped ~~our~~land, raw ~~employees~~land and ~~subcontractors~~option ~~that~~deposits. ~~our~~The ~~homes~~book bevalue ~~built to meet a high standard~~ of ~~quality~~our housing and ~~workmanship;~~land •inventory ~~using~~in ~~only~~each ~~insured~~of ~~subcontractors~~our primary tomarkets ~~perform~~as ~~construction~~of ~~activities;~~the •end ~~providing~~of ~~on-site~~the ~~quality~~last ~~control;~~two ~~and~~years ~~• providing after-sales service.~~follows:

Finally, we limit the risk of overbuilding by attempting to match our construction starts to our sales rates. We generally do not begin selling homes until a significant portion of the homes’ construction costs have been established through firm subcontractor bids.


	December		December
*(Book Value, $ millions)*	31, 2010		31, 2009
Northern California	$	207	$	201
Southland / Los Angeles		128		123
San Diego / Riverside		314		336
Washington D.C. Area		234		227
Corporate and Other		43		41

Total	$	926	$	928

Total Controlled Lots (units)		26,817		24,245

~~Asset~~The ~~Profile~~book value of our investments in unconsolidated entities as of December 31, 2010 was $124 million. The total book value of the assets and liabilities of these unconsolidated entities and our share of the equity of the unconsolidated entities as of December 31, 2010 follows:

Our assets are focused on single-family and multi-family homebuilding and land development in the markets in which we operate. They consist primarily of housing and land inventory, investments in unconsolidated entities as well as consolidated land inventory not owned. Our total assets, net of deferred income taxes as of December 31, 2009 were $997 million, with $665 million of these assets located in California, $230 million in the Washington D.C. Area and $102 million in other operations.


	December		December
*(Book Value, $ millions)*	31, 2010		31, 2009
Assets	$	303	$	243
Liabilities	$	56	$	66
Brookfield Homes’ net investment	$	124	$	92

AsThe ofbook ~~December 31,~~value ~~2009,~~of ~~we controlled 24,245 lots. Controlled lots include those we directly own,~~ our ~~share~~investments ofin ~~those owned by our~~ unconsolidated entities ~~and~~in ~~those~~each ~~that we have the option to purchase. Our controlled lots provide a strong foundation for our future homebuilding business and visibility on our future cash flow. Approximately 70%~~ of our ~~owned~~primary ~~lots~~markets ~~are entitled and ready for~~as ~~development and our optioned lots are mainly unentitled and require various regulatory approvals before development can commence. The number~~ of ~~residential~~the ~~building~~end ~~lots we control in each~~ of ~~our primary~~the ~~markets~~last astwo ofyears ~~December 31, 2009 and 2008~~ follows:

	Owned				Optioned				Total	Total
	December		December
			Unconsolidated				Not		December	December
(Book Value, $ millions)	31, 2010		31, 2009
(Units)	Directly		Entities		Consolidated		Consolidated (1)		31, 2009	31, 2008
Northern California	$	—	$	—
Northern California		769		—		1,232		4,950	6,951	7,290
Southland / Los Angeles		65		48
Southland / Los Angeles		981		254		—		2,027	3,262	3,460
San Diego / Riverside		2		3
San Diego / Riverside		6,852		1		2,000		—	8,853	8,105
Washington D.C. Area		46		34
Washington D.C. Area		2,195		1,432		—		1,289	4,916	4,981
Corporate and Other		11		7
Corporate and Other		204		59		—		—	263	273
Total	$	124	$	92
Total December 31, 2009		11,001		1,746		3,232		8,266	24,245
Total December 31, 2008		11,252		1,832		—		11,025		24,109

~~(1)~~Property ~~Includes~~Acquisition ~~proportionate~~and ~~share of lots under option related to investments in unconsolidated entities.~~Sale

~~Our~~Before ~~housing~~entering ~~and~~into an agreement to purchase land, ~~inventory~~we ~~includes~~complete ~~homes~~comparative ~~completed~~studies orand ~~under~~analyses that ~~construction,~~assist ~~developed~~us ~~land,~~in evaluating the acquisition. We manage our risk and attempt to maximize our return ~~raw~~on invested capital on land ~~and~~acquisitions by either entering into option ~~deposits~~agreements or joint ownership arrangements. ~~The~~We ~~book~~attempt ~~value~~to oflimit our ~~housing~~development ~~and~~approval risk by conducting significant due diligence before we close land ~~inventory~~acquisitions. inWe ~~each~~regularly ofevaluate our land inventory and ~~primary~~strategically ~~markets~~sell aslots and parcels of ~~the~~land ~~end~~to third parties at various stages of the ~~last~~development process ~~two~~to ~~years~~increase ~~follows:~~our returns from a project.

(Book Value, $ millions)	December31, 2009		December31, 2008
Northern California	$	201	$	240
Southland / Los Angeles		123		144
San Diego / Riverside		336		366
Washington D.C. Area		227		247
Corporate and Other		41		58
Total	$	928	$	1,055
Total Controlled Lots (units)		24,245		24,109

Construction and Development

~~The~~We ~~book~~attempt ~~value~~to ofmatch our ~~investments~~construction instarts ~~unconsolidated~~to ~~entities~~our assales ofrate. ~~December 31,~~We ~~2009~~control ~~was~~our ~~$92~~construction starts ~~million~~by constructing and selling homes in phases. ~~The~~Generally, ~~total~~we ~~book~~will ~~value~~not start construction of ~~the~~a ~~assets~~phase of ~~and~~homes ~~liabilities~~until sales of homes to be built in the phase have met predetermined targets. The size of these ~~unconsolidated~~phases ~~entities~~depends upon factors such as current sales and cancellation rates, the type of buyer targeted for a particular project, the time of year and our ~~share~~assessment of ~~the~~prevailing ~~equity~~and anticipated economic conditions. We generally do not begin selling homes until a significant portion of the ~~unconsolidated~~homes’ ~~entities~~construction ascosts ofare ~~December 31,~~established ~~2009~~through ~~follows:~~firm subcontractor bids.

(Book Value, $ millions)	December31, 2009		December31, 2008
Assets	$	243	$	319
Liabilities	$	66	$	79
Brookfield Homes’ net investment	$	92	$	105

We attempt to limit the number of unsold units under construction by limiting the size of each construction phase and closely monitoring sales activity. Building homes of a similar product type in phases also allows us to utilize production techniques that reduce our construction costs. The number of our unsold homes fluctuates depending upon the timing of completion of construction and absorption of home phases. As of December 31, 2010, we had 38 completed and unsold homes, excluding the model homes we currently maintain. We continue to match new home starts with our sales rate.

5We function as a general contractor, subcontracting the construction activities for our projects. We manage these activities with on-site supervisory employees and informational and management control systems. We

~~Table of Contents~~6

~~The~~ engage ~~book~~independent ~~value~~architectural, ofdesign, ~~our~~engineering ~~investments~~and other consulting firms to assist in project ~~unconsolidated~~planning. ~~entities~~We do not have long-term contractual commitments with our subcontractors, consultants or suppliers of materials, who are generally selected on a competitive bid basis. We employ subcontractors for site improvement and for virtually all of the work involved in ~~each~~the construction of homes. It is our ~~primary~~general ~~markets~~practice asto have our subcontractors commit to complete the specified work in accordance with written price schedules. These price schedules normally change to meet fluctuations in labor and material costs. We do not own heavy construction equipment and we have a relatively small labor force used to supervise development and construction, and to perform routine maintenance services. We generally have been able to obtain sufficient materials and subcontractors, even during times of high demand for new homes. We build a home in approximately five to eight months, depending upon design, the ~~end~~availability of ~~the~~raw ~~last~~materials ~~two~~and ~~years~~supplies, governmental ~~follows:~~approvals, local labor situation, time of year and other factors.

(Book Value, $ millions)	December31, 2009		December31, 2008
Northern California	$	—	$	—
Southland / Los Angeles		48		46
San Diego / Riverside		3		2
Washington D.C. Area		34		43
Corporate and Other		7		14
Total	$	92	$	105

Sales and Marketing

~~Property~~We ~~Acquisition~~advertise in local newspapers and ~~Sale~~magazines and on billboards to assist us in selling our homes. We also utilize direct mailings, special promotional events, illustrated brochures and model homes in our marketing program. The internet is also an important source of information for our customers. Through the internet, potential buyers are able to search for their home, take a virtual video tour of selected homes, obtain general information about our projects and communicate directly with our personnel.

~~Before~~We ~~entering~~sell ~~into~~our anhomes ~~agreement~~through toour ~~purchase~~own ~~land,~~sales werepresentatives ~~complete~~and ~~comparative~~through ~~studies~~independent ~~and~~real ~~analyses~~estate ~~that~~brokers. ~~assist~~Our us in-house ~~evaluating~~sales ~~the~~force ~~acquisition.~~typically Weworks ~~manage~~from ~~our~~sales ~~risk~~offices ~~and~~located ~~attempt~~in model homes close to ~~maximize~~or ~~our~~in ~~return on~~each ~~invested~~community. ~~capital~~Sales onrepresentatives ~~land~~assist ~~acquisitions~~potential buyers by ~~either~~providing ~~entering~~them ~~into~~with ~~option~~basic floor ~~agreements~~plans, orprice ~~joint~~information, development and construction timetables, tours of model homes and ~~ownership~~the ~~arrangements~~selection of options. WeSales ~~attempt~~personnel toare ~~limit~~licensed ~~our~~by ~~development~~the ~~approval~~applicable ~~risk~~real byestate ~~conducting~~bodies ~~significant~~in ~~due~~their ~~diligence~~respective ~~before~~markets, weare ~~close~~trained ~~land~~by ~~acquisitions~~us and generally have had prior experience selling new homes in the local market. WeOur ~~regularly~~personnel, ~~evaluate~~along ~~our~~with ~~land~~subcontracted ~~inventory~~marketing and design ~~strategically~~consultants, ~~sell~~carefully ~~lots~~design exteriors and ~~parcels~~interiors of ~~land~~each home to ~~third~~coincide ~~parties~~with atthe lifestyles of targeted buyers. We use various ~~stages~~floor ofplan ~~the~~types ~~development process~~and elevations to ~~increase~~provide ~~our~~a ~~returns~~more ~~from~~varied street scene and a ~~project~~sense of customization for buyers.

~~Construction~~As of December 31, 2010, we owned 56 model homes and ~~Development~~leased nine model homes from third parties, which are not generally available for sale until the final build-out of a project. Generally, two to four different model homes are built and decorated at each project to display design features. Model homes play a role in helping buyers understand the efficiencies and value provided by each floor plan type. In addition to model homes, customers can gain an understanding of the various design features and options available to them using our design centers. At each design center, customers can meet with a designer and are shown the standard and upgraded selections available to them, including professional interior design furnishings and accessories.

We ~~attempt~~typically tosell ~~match~~homes ~~our~~using ~~construction~~sales ~~starts~~contracts tothat ~~our~~include ~~sales~~cash ~~rate.~~deposits Weby ~~control~~the ~~our~~purchasers. ~~construction starts~~Before byentering ~~constructing~~into ~~and~~sales ~~selling~~contracts, ~~homes~~we inpre-qualify ~~phases~~our customers. ~~Generally~~However, wepurchasers ~~will~~can ~~not~~generally cancel ~~start~~sales ~~construction~~contracts ofif athey ~~phase of~~are ~~homes~~unable ~~until~~to ~~sales~~sell oftheir existing homes, toif bethey ~~built~~fail into ~~the~~qualify ~~phase~~for financing, ~~have~~or ~~met~~under ~~predetermined~~certain ~~targets~~other circumstances. ~~The~~Although ~~size~~cancellations ~~of these~~can ~~phases~~delay ~~depends~~the ~~upon~~sale ~~factors~~of ~~such~~our homes, asthey ~~current~~have ~~sales~~historically ~~and~~not ~~cancellation~~had ~~rates,~~a ~~the~~material ~~type~~impact ofon ~~buyer targeted~~our ~~for~~operating aresults. ~~particular~~During ~~project~~2010, ~~the~~our cancellation ~~time~~rate of ~~year~~21% ~~and~~was high relative to our ~~assessment~~historical average of ~~prevailing~~15%. ~~and~~We continue to closely ~~anticipated~~monitor ~~economic~~the ~~conditions.~~progress Weof ~~generally~~prospective dobuyers ~~not~~in ~~begin~~obtaining ~~selling~~financing. ~~homes~~We ~~until~~also amonitor ~~significant portion~~and ofattempt ~~the~~to adjust ~~homes’~~our planned construction ~~costs~~starts ~~are~~depending ~~established~~on ~~through~~the ~~firm~~level ~~subcontractor~~of ~~bids~~demand for our homes.

WeCustomer ~~attempt~~Service ~~to limit the number of unsold units under construction by limiting the size of each construction phase~~ and ~~closely~~Quality ~~monitoring sales activity. Building homes of a similar product type~~Control in phases also allows us to utilize production techniques that reduce our construction costs. The number of our unsold homes fluctuates depending upon the timing of completion of construction and absorption of home phases. As of December 31, 2009, we had 21 completed and unsold homes, excluding the model homes we currently maintain. The level of completed homes has decreased when compared to 2008 as markets improved during 2009 and we continued to match new home starts with our sales rate.

We ~~function~~pay asparticular aattention ~~general~~to ~~contractor, subcontracting~~ the ~~construction~~product ~~activities~~design ~~for~~process ~~our projects. We manage these activities with on-site supervisory employees~~ and ~~informational~~carefully ~~and~~consider ~~management control~~quality ~~systems. We engage independent architectural, design, engineering~~ and ~~other consulting~~choice ~~firms to assist in project planning. We do not have long-term contractual commitments with our subcontractors, consultants or suppliers~~ of materials, ~~who~~in ~~are~~order ~~generally~~to ~~selected~~attempt onto aeliminate ~~competitive bid~~building ~~basis~~deficiencies. WeThe ~~employ~~quality ~~subcontractors for site improvement~~ and ~~for~~workmanship ~~virtually all~~ of ~~the work involved~~ in the ~~construction~~trade ofcontractors ~~homes.~~we Itemploy isare ~~our~~monitored ~~general practice to have our subcontractors commit to complete the specified work in accordance with written price schedules. These price schedules normally change to meet fluctuations in labor~~ and ~~material costs. We do not own heavy construction equipment and~~ we ~~have~~make aregular ~~relatively~~inspections ~~small labor force used~~ to ~~supervise~~ensure ~~development and~~our ~~construction,~~standards ~~and~~are ~~to perform routine maintenance services~~met. ~~We generally have been able to obtain~~ sufficient materials and subcontractors, even during times of high demand for new homes. We build a home in approximately five to eight months, depending upon design, the availability of raw materials and supplies, governmental approvals, local labor situation, time of year and other factors.

~~Sales~~We staff each business unit with quality control and ~~Marketing~~customer service staff whose role includes providing a positive experience for each customer throughout the pre-sale, sale, building, closing and post-closing periods. These employees are also responsible for providing after sales customer service. Our quality and service initiatives include taking customers on a comprehensive tour of their home prior to closing and using customer survey results to improve our standards of quality and customer satisfaction.

~~We advertise in local newspapers and magazines and on billboards to assist us in selling our homes.~~7 We also utilize direct mailings, special promotional events, illustrated brochures and model homes in our marketing program. The internet is also an important source of information for our customers. Through the internet, potential buyers are able to search for their home, take a virtual video tour of selected homes, obtain general information about our projects and communicate directly with our personnel.

6Relationship with Affiliates

~~Table~~We are a land developer and homebuilder, developing land and building homes primarily in four markets in California and in the Washington D.C. Area. None of ~~Contents~~our affiliates, including Brookfield Asset Management Inc. and Brookfield Properties Corporation, operate in similar businesses in our markets. Nevertheless, there are agreements among our affiliates to which we are a party or subject relating to a name license, the lease of office space and two unsecured revolving credit facilities. In addition, on October 4, 2010, Brookfield Properties, Brookfield Homes and Brookfield Residential Properties Inc. (“Brookfield Residential”), a wholly-owned subsidiary of Brookfield, entered into a definitive agreement to combine Brookfield Homes and the North American residential land and housing division of Brookfield Properties into Brookfield Residential. For a further description of these agreements refer to Item 13 of this report “Certain Relationships and Related Transactions, and Director Independence.”

WeThree ~~sell~~of our ~~homes~~directors ~~through~~serve ~~our~~as ~~own~~executive ~~sales~~officers ~~representatives~~ and/or ~~through~~directors ~~independent~~of ~~real~~our ~~estate brokers~~affiliates. ~~Our~~For ~~in-house sales force typically works from sales offices located in model homes close~~a todescription ~~or in each community. Sales representatives assist potential buyers by providing them with basic floor plans, price information, development and construction timetables, tours~~ of ~~model~~those ~~homes~~relationships ~~and~~refer ~~the~~to ~~selection~~Item 13 of ~~options.~~ ~~Sales~~this ~~personnel~~report ~~are~~“Certain ~~licensed~~Relationships ~~by the applicable real estate bodies in their respective markets, are trained by us~~ and ~~generally have had prior experience selling new homes in the local~~ ~~market.~~Related ~~Our personnel~~Transactions, ~~along with subcontracted marketing~~ and ~~design~~Director ~~consultants, carefully design exteriors and interiors of each home to coincide with the lifestyles of targeted buyers~~Independence. ~~We use~~” ~~various floor plan types and elevations to provide a more varied street scene and a sense of customization for the buyers.~~

~~As of December 31, 2009, we owned 68 model homes and leased nine model homes from third parties,~~Competition which are not generally available for sale until the final build-out of a project. Generally, two to four different model homes are built and decorated at each project to display design features. Model homes play a role in helping buyers understand the efficiencies and value provided by each floor plan type. In addition to model homes, customers can gain an understanding of the various design features and options available to them using our design centers. At each design center, customers can meet with a designer and are shown the standard and upgraded selections available to them, including professional interior design furnishings and accessories.

WeThe ~~typically~~residential ~~sell~~homebuilding ~~homes~~industry ~~using~~is ~~sales~~highly ~~contracts~~competitive. ~~that~~We ~~include~~compete ~~cash~~against ~~deposits~~numerous bylocal, regional ~~the~~and ~~purchasers.~~national ~~Before entering~~homebuilders ~~into~~and ~~sales~~others ~~contracts,~~in wethe ~~pre-qualify~~real ~~our~~estate ~~customers.~~business ~~However,~~in ~~purchasers~~and ~~can~~near ~~generally~~the areas ~~cancel~~where ~~sales~~our ~~contracts~~communities ifare ~~they~~located. ~~are~~We ~~unable~~also tocompete ~~sell~~with ~~their~~re-sales of existing homes, ifwhether ~~they~~by ~~fail~~a homeowner toor ~~qualify~~by ~~for financing~~a financial institution that has acquired a home through foreclosure, orand ~~under~~with ~~certain~~the rental ~~other~~housing ~~circumstances~~market. ~~Although~~We ~~cancellations~~may ~~can~~compete ~~delay~~for ~~the~~investment ~~sale~~opportunities, offinancing, ~~our homes~~available land, ~~they~~raw materials ~~have~~and ~~historically~~skilled ~~not~~labor ~~had~~with aentities ~~material~~that ~~impact~~possess ongreater ~~our~~financial, ~~operating~~marketing ~~results~~and other resources than us. ~~During~~We ~~2009,~~also ~~our cancellation~~compete ~~rate~~for ofland ~~19%~~buyers ~~was~~with ~~high~~third ~~relative~~parties toin our ~~historical~~efforts ~~average~~to ofsell ~~15%~~lots to other homebuilders. We ~~continue~~compete toprimarily ~~closely monitor~~on the ~~progress~~basis of ~~prospective~~community ~~buyers~~location inand ~~obtaining~~planning, design, ~~financing.~~customer Weservice, ~~also~~quality ~~monitor~~control and ~~attempt~~price. ~~to adjust~~Competition ~~our~~may ~~planned~~increase ~~construction~~if ~~starts~~there ~~depending~~is onfuture consolidation in the ~~level~~land ofdevelopment ~~demand~~and ~~for~~homebuilding ~~our homes~~industry.

~~Customer~~Material ~~Service and Quality Control~~Contracts

WeExcept ~~pay~~for ~~particular~~a ~~attention~~merger toand ~~the~~contribution ~~product~~agreement ~~design~~with ~~process~~Brookfield Properties Corporation and ~~carefully~~a wholly-owned ~~consider~~subsidiary ~~quality~~of Brookfield Asset Management Inc., and ~~choice of~~two ~~materials~~unsecured inrevolving ~~order~~credit facilities towith ~~attempt~~subsidiaries toof ~~eliminate~~Brookfield ~~building~~Asset ~~deficiencies~~Management Inc., ~~The~~we ~~quality~~are ~~and~~not ~~workmanship~~party ~~of the~~or ~~trade~~subject ~~contractors~~to any wematerial ~~employ~~contracts. ~~are~~For ~~monitored~~a ~~and~~description weof ~~make~~the ~~regular~~material ~~inspections~~contracts refer to ~~ensure~~Item 13 ~~our~~of this report ~~standards~~“Certain ~~are~~Relationships ~~met~~and Related Transactions, and Director Independence.”

WeRegulation ~~staff each business unit with quality control~~ and ~~customer service staff whose role includes~~Environment providing a positive experience for each customer throughout the pre-sale, sale, building, closing and post-closing periods. These employees are also responsible for providing after-sales customer service. Our quality and service initiatives include taking customers on a comprehensive tour of their home prior to closing and using customer survey results to improve our standards of quality and customer satisfaction.

~~Mortgage~~We ~~Services~~are subject to local and state laws and regulations concerning zoning, design, construction and similar matters, including local regulations which impose restrictive zoning and density requirements in order to limit the number of homes that eventually can be built within the boundaries of a particular area. We are also subject to periodic delays in our homebuilding projects due to building moratoria. In addition, new development projects may be subject to various assessments for schools, parks, streets and highways and other public improvements, the costs of which can be substantial. When made, these assessments can have a negative impact on our sales by raising the price that homebuyers must pay for our homes.

We ~~have~~are ~~agreements~~also ~~with~~subject ~~various lenders~~ to ~~receive~~local, astate ~~fee~~and onfederal ~~loans~~laws ~~made~~and byregulations concerning the ~~lenders~~protection ~~to customers~~of ~~we introduce to~~ the ~~lenders~~environment. ~~Prior~~The toenvironmental ~~the~~laws ~~second~~that ~~quarter,~~apply weto ~~provided~~a ~~mortgage~~given ~~origination~~homebuilding ~~services to~~site ~~our~~depend ~~customers~~upon in the site’s ~~Washington~~location, ~~D.C.~~its ~~Area~~environmental conditions and ~~did not retain or service~~ the ~~mortgages~~present ~~we originated.~~and Weformer ~~customarily~~uses ~~sold all~~ of the ~~loans~~site and ~~loan servicing rights that we originated in~~its ~~the~~adjoining ~~secondary~~properties. ~~market~~Environmental ~~within~~laws ~~a month of origination~~ and onconditions amay ~~limited~~result ~~recourse~~in ~~basis~~delays, ~~generally limited to early payment defaults~~ or ~~fraud~~cause ~~and~~us ~~misrepresentation.~~to ~~Effective April 1, 2009, the~~incur ~~Company~~substantial nocompliance ~~longer originates~~ and ~~sells~~other ~~mortgages. For the year ended December 31~~costs, ~~2009, less than 1% of our revenue~~ and ~~less~~can ~~than~~prohibit 1%or ofseverely ~~our~~restrict ~~net~~homebuilding ~~income~~activity in ~~was~~environmentally ~~derived~~sensitive ~~from~~regions ~~our~~or ~~mortgage service operations~~areas.

~~Relationship~~We ~~with~~do ~~Affiliates~~not currently have any material estimated capital expenditures related to governmental assessments or environmental compliance costs for the remainder of fiscal 2011, fiscal 2012 or fiscal 2013.

WeIn ~~are~~connection awith ~~land~~our ~~developer and homebuilder~~operations, ~~developing~~some ~~land and building homes primarily in four markets in California and in the Washington D.C. Area. None~~ of our ~~affiliates,~~employees ~~including~~have ~~Brookfield Asset~~general ~~Management~~contractor ~~Inc.~~ and ~~Brookfield~~real ~~Properties Corporation, operate in similar businesses in our~~estate ~~markets.~~sales ~~Nevertheless~~licenses, ~~there are agreements among our affiliates to~~ which we are ~~a party or~~ subject ~~relating~~ to agovernmental ~~name license, the lease of office space and two unsecured revolving credit facilities~~regulations. ~~For~~Our aemployees ~~further~~holding ~~description~~those ~~of these agreements refer to “Certain Relationships and~~licenses ~~Related~~are ~~Transactions,~~currently ~~and~~in ~~Director~~material ~~Independence”~~compliance ~~which is incorporated by reference into Item 13 of this report from our definitive 2010 proxy statement, which will be filed~~ with ~~the~~all ~~Securities~~such ~~and Exchange~~applicable ~~Commission not later than April 30, 2010~~regulations.

~~Table of Contents~~Seasonality

~~Four~~We ofhave historically experienced variability in our ~~directors~~results ~~serve~~of asoperations ~~executive~~from ~~officers~~quarter to quarter due to the seasonal nature of the homebuilding business and~~/or~~ ~~directors~~the timing of ~~our~~new ~~affiliates~~community openings and the closing out of projects. ~~For~~We ~~a description~~typically experience the highest rate of ~~those~~orders ~~relationships~~for ~~refer~~new tohomes in ~~“Certain~~the ~~Relationships~~first ~~and~~six ~~Related~~months ~~Transactions~~of the calendar year, ~~and Director~~although ~~Independence”~~the ~~which~~rate isof ~~incorporated~~orders byfor ~~reference~~new ~~into~~homes ~~Item 13~~is highly dependent upon the number of ~~this~~active ~~report~~communities. ~~from~~Because ~~our~~new home deliveries trail orders for new ~~definitive~~homes ~~2010~~by ~~proxy~~several ~~statement~~months, ~~which~~we ~~will~~typically bedeliver ~~filed~~a greater percentage of new homes in the second half of the year compared with the ~~Securities~~first ~~and~~half ~~Exchange~~of ~~Commission not~~the ~~later~~year. ~~than~~As ~~April 30~~a result, ~~2010~~our revenues from sales of homes are generally higher in the second half of the year.

~~Competition~~Employees

~~The~~As ~~residential~~of ~~homebuilding~~December 31, ~~industry~~2010, iswe ~~highly~~had ~~competitive~~271 employees. We ~~compete~~consider ~~against~~our ~~numerous~~relations ~~local, regional~~with ~~and~~our ~~national~~employees ~~homebuilders~~to ~~and~~be good. ~~others~~Our inconstruction ~~the~~operations ~~real~~are ~~estate~~conducted ~~business~~primarily inthrough ~~and~~independent ~~near~~subcontractors, thereby limiting the ~~areas where~~number of our ~~communities are located~~employees. WeNone ~~also~~of ~~compete~~our ~~with~~employees ~~resales~~are ofcurrently ~~existing~~represented ~~homes, whether~~ by a ~~homeowner~~union or covered by a ~~financial~~collective ~~institution~~bargaining ~~that has acquired a home through foreclosure, and with the rental housing market~~agreement. We ~~may~~have ~~compete~~not ~~for~~recently ~~investment~~experienced ~~opportunities,~~any ~~financing, available land, raw~~work ~~materials and skilled labor with entities that possess greater financial, marketing and other resources than us~~stoppages. ~~We also compete for land buyers with third parties in our efforts to sell lots~~ ~~to other homebuilders. Competition may increase if there is future consolidation in the land development and homebuilding industry.~~

~~Material~~Available ~~Contracts~~Information

~~Except~~We ~~for~~make ~~two~~available ~~unsecured~~free ~~revolving~~of ~~credit~~charge ~~facilities~~on ~~with~~our ~~subsidiaries~~website ofour ~~Brookfield~~annual ~~Asset~~reports on Form 10-K, quarterly reports ~~Management~~on ~~Inc.~~Form 10-Q, wecurrent ~~are~~reports ~~not~~on ~~party~~Form or8-K ~~subject~~and any amendments to ~~any~~these reports as soon as reasonably practicable after we file such material ~~contracts.~~with, ~~For~~or afurnish ~~description~~it ofto, the SEC. The reports may be ~~material~~accessed ~~contracts~~by ~~refer~~visiting toour ~~“Certain~~website ~~Relationships~~at www.brookfieldhomes.com and ~~Related~~clicking ~~Transactions,~~on ~~and~~the ~~Director~~“Investor ~~Independence~~Relations” ~~which~~link. isWe ~~incorporated~~will byalso ~~reference~~provide ~~into~~these ~~Item 13~~reports ofin ~~this~~paper ~~report~~format ~~from~~to our ~~definitive~~stockholders free of ~~2010~~charge ~~proxy~~upon ~~statement,~~request ~~which~~made ~~will~~to beour ~~filed~~Investor ~~with~~Relations ~~the~~department. ~~Securities~~Information ~~and~~on ~~Exchange~~our ~~Commission~~website ~~(the~~is ~~“SEC”)~~ not part ~~later~~of ~~than~~this ~~April 30,~~annual ~~2010~~report on Form 10-K.

~~Regulation~~NYSE ~~and~~Annual ~~Environment~~Disclosure

We ~~are~~confirm subject to local and state laws and regulations concerning zoning, design, construction and similar matters, including local regulations which impose restrictive zoning and density requirements in order to limit the number of homes that ~~eventually~~we ~~can~~have besubmitted ~~built within the boundaries of~~ a ~~particular area~~Section 303A.12 We(a) CEO ~~are~~Certification ~~also subject~~ to ~~periodic~~the ~~delays~~New inYork ~~our homebuilding~~Stock ~~projects~~Exchange ~~due~~(“NYSE”) toin ~~building~~2010 ~~moratoria. In addition, new development projects may be subject to various assessments for schools, parks, streets~~ and ~~highways~~filed ~~and~~with ~~other~~the ~~public~~SEC ~~improvements,~~ the ~~costs~~CEO ~~of which~~/ ~~can~~CFO becertification ~~substantial.~~required ~~When~~under ~~made,~~Section 302 ~~these~~of ~~assessments~~the ~~can~~Sarbanes-Oxley ~~have~~Act afor ~~negative impact on our sales by raising~~ the ~~price~~2010 ~~that~~fiscal ~~homebuyers must pay for our homes~~year.

~~We are also subject to local, state and federal laws and regulations concerning the protection of the environment~~Item 1A. ~~The~~Risk ~~environmental laws that apply to a given homebuilding site depend upon the~~Factors site’s location, its environmental conditions and the present and former uses of the site and its adjoining properties. Environmental laws and conditions may result in delays, or cause us to incur substantial compliance and other costs, and can prohibit or severely restrict homebuilding activity in environmentally sensitive regions or areas.

WeThis dosection ~~not~~describes ~~currently~~the ~~have~~material risks associated with an investment in our common stock. Stockholders should carefully consider each of the risks described below and all of the other information in this Form 10-K. If any ~~material~~of ~~estimated~~the ~~capital~~following ~~expenditures~~risks ~~related~~occurs, toour ~~governmental~~business, prospects, ~~assessments~~financial condition, results of operations or ~~environmental~~cash ~~compliance~~flow ~~costs~~could ~~for~~be materially and adversely affected. In such an event, the ~~remainder~~trading price of ~~fiscal~~shares ~~2010~~of our common stock could decline substantially, ~~fiscal~~and ~~2011~~stockholders may lose all or ~~fiscal~~ ~~2012~~part of the value of their shares of our common stock.

InIf ~~connection~~the transaction with ~~our~~Brookfield ~~operations,~~Residential ~~some~~and ofBrookfield ~~our~~Properties ~~employees~~Corporation ~~have~~is ~~general~~not completed ~~contractor~~or ~~and~~is ~~real estate sales licenses~~delayed, ~~which~~our ~~are~~share ~~subject~~price, tobusiness ~~governmental~~and ~~regulations.~~results ~~Our~~of ~~employees~~operations ~~holding~~may ~~those~~materially ~~licenses are currently in material compliance with all such applicable regulations~~suffer.

~~Seasonality~~While we believe the transaction with Brookfield Residential and Brookfield Properties Corporation will close in the current calendar quarter, it is possible the transaction might not be completed or could be delayed for a number of reasons. If the consummation of the transaction is delayed or otherwise not consummated within the contemplated time periods or not at all, we could suffer a number of consequences that may affect our business, results of operations and share price in a material and adverse manner, including: significant costs related to the proposed transaction, including legal and accounting expenses; and a potential loss of business and organizational opportunities due to covenants in the merger and contribution agreement that restrict certain actions by us prior to completion of the transaction, or other factors.

WeOur ~~have~~business ~~historically~~and ~~experienced variability in our~~ results of operations ~~from~~will ~~quarter~~be tomaterially ~~quarter due to the seasonal nature of the homebuilding business~~ and ~~the~~adversely ~~timing~~affected of new community openings and the closing out of projects. We typically experience the highest rate of orders for new homes in the first six months of the calendar year, although the rate of orders for new homes is highly dependent upon the number of active communities. Because new home deliveries trail orders for new homes by ~~several~~weakness ~~months, we typically deliver a greater percentage of new homes~~ in ~~the second half~~ ofgeneral ~~the year compared with the first half of the year. As a result~~economic, ~~our~~real ~~revenues~~estate ~~from~~and ~~sales~~other ~~of homes are generally higher in the second half of the year~~conditions.

8The land development and homebuilding industry is cyclical and is significantly affected by changes in general and local economic and industry conditions, such as employment levels, availability of financing for homebuyers, interest rates, consumer confidence, levels of new and existing homes for sale, demographic trends and housing demand. In addition, an oversupply of alternatives to new homes, such as resale homes, including homes held for

~~Table of Contents~~9

~~Employees~~sale by investors and speculators, foreclosed homes and rental properties may reduce our ability to sell new homes, depress prices and reduce our margins from the sale of new homes. The United States homebuilding industry continues to face a number of challenges, with home foreclosures and tight credit standards continuing to have an effect on inventory and new home sale rates and prices.

AsHomebuilders are also subject to risks related to the availability and cost of ~~December 31,~~materials ~~2009~~and labor, and weadverse ~~had~~weather ~~291~~conditions ~~employees~~that can cause delays in construction schedules and cost overruns. Furthermore, Wethe ~~consider~~market ~~our~~value ~~relations~~of ~~with~~undeveloped land, buildable lots and housing inventories held by us can fluctuate significantly as a result of changing economic and real estate market conditions and may result in inventory impairment charges or putting our ~~employees~~deposits for lots controlled under option at risk. If there are significant adverse changes in economic or real estate market conditions, we may have to sell homes at a loss or hold land in inventory longer than planned. Inventory carrying costs can be significant and can result in losses in a poorly performing project ~~good~~or market. ~~Our~~We ~~construction~~may ~~operations~~be ~~are~~particularly ~~conducted~~affected ~~primarily~~by ~~through~~changes ~~independent~~in ~~subcontractors~~local market conditions in California, ~~thereby~~where ~~limiting~~we ~~the~~derive ~~number~~a large proportion of our ~~employees~~revenue. ~~None~~As a result of ~~our~~the ~~employees~~present ~~are~~challenging ~~currently~~market conditions, ~~represented~~we byhave ~~a union~~sold orhomes ~~covered~~and bylots afor ~~collective~~lower ~~bargaining~~profit ~~agreement~~margins than in the past. WeIf ~~have~~market conditions ~~not~~continue ~~recently~~to ~~experienced~~deteriorate, ~~any~~some ~~work~~of our assets may be subject to impairments and option ~~stoppages~~write-off charges adversely affecting our operations and financial results.

~~Available~~Rising ~~Information~~mortgage rates or decreases in the availability of mortgage financing will discourage people from buying new homes.

WeVirtually ~~make~~all ~~available~~of ~~free~~our ofcustomers ~~charge~~finance ontheir ~~our~~home ~~website~~acquisitions ~~our~~through ~~annual~~lenders ~~reports~~providing onmortgage financing. ~~Form~~Prior ~~10-K~~to the recent volatility in the financial markets, ~~quarterly~~a ~~reports~~variety of mortgage products onwere ~~Form~~available. ~~10-Q~~As a result, ~~current~~more ~~reports~~homebuyers onwere ~~Form~~able ~~8-K~~to ~~and~~qualify ~~any~~for ~~amendments~~mortgage tofinancing. ~~these~~Increases in ~~reports~~mortgage asrates ~~soon~~or asdecreases ~~reasonably practicable~~in ~~after~~the weavailability ~~file~~of ~~such~~mortgage ~~material~~financing ~~with,~~could ordepress ~~furnish~~the itmarket for ~~to,~~new homes because of the ~~SEC.~~increased ~~The~~monthly ~~reports~~mortgage ~~may~~costs beto potential homebuyers. Even if ~~accessed~~potential bycustomers ~~visiting~~do ~~our~~not ~~website~~need atfinancing, ~~www.brookfieldhomes.com~~changes ~~and~~in ~~clicking~~mortgage oninterest ~~the~~rates ~~“Investor~~and mortgage ~~Relations”~~availability ~~link.~~could Wemake ~~will~~it ~~also~~harder ~~provide~~for ~~these~~them ~~reports~~to insell ~~paper~~their ~~format~~homes to ~~our~~potential ~~stockholders~~buyers ~~free~~who ofneed ~~charge~~financing, ~~upon~~which ~~request~~would ~~made~~result toin ~~our~~reduced ~~Investor~~demand ~~Relations~~for ~~department~~new homes. ~~Information~~As ona ~~our~~result, ~~website~~rising ismortgage ~~not~~rates ~~part~~and ofreduced ~~this~~mortgage ~~annual~~availability ~~report~~could onadversely ~~Form~~affect ~~10-K~~our ability to sell new homes and the price at which we can sell them.

~~NYSE~~Since ~~Annual~~2007, ~~Disclosure~~there has been a significant decrease in the type of mortgage products available and a general increase in the qualification requirements for mortgages. Fewer loan products and tighter loan qualifications made it more difficult for some borrowers to finance the purchase of our homes. This, coupled with higher mortgage interest rates for some mortgage products has reduced demand for new homes. These reductions in demand have adversely affected our operations and financial results, and the duration and severity of the effects remain uncertain.

WeLaws ~~confirm~~and ~~that~~regulations werelated ~~have~~to ~~submitted~~property adevelopment ~~Section 303A.12~~and ~~(a) CEO~~related ~~Certification~~ to the ~~New~~environment ~~York~~subject ~~Stock~~us to ~~Exchange~~additional ~~(“NYSE”)~~costs ~~in 2009~~ and ~~filed~~delays ~~with~~which ~~the~~adversely ~~SEC~~affect ~~the~~our ~~CEO~~business /and ~~CFO~~results ~~certification required under Section 302~~ of ~~the Sarbanes-Oxley Act for the 2009 fiscal year~~operations.

~~Item 1A~~We must comply with extensive and complex regulations affecting the land development and homebuilding process. ~~Risk~~These ~~Factors~~regulations impose on us additional costs and delays, which adversely affect our business and results of operations. In particular, we are required to obtain the approval of numerous governmental authorities regulating matters such as permitted land uses, levels of density, the installation of utility services, zoning and building standards. These regulations often provide broad discretion to the administering governmental authorities as to the conditions we must meet prior to being approved for a particular development or project, if approved at all. In addition, new development projects may be subject to various assessments for schools, parks, streets and highways and other public improvements, the costs of which can be substantial. When made, these assessments can have a negative impact on our sales by raising the price that homebuyers must pay for our homes. We must also comply with a variety of local, state and federal laws and regulations concerning the protection of health and the environment, including with respect to hazardous or toxic substances. These environmental laws sometimes result in delays, cause us to incur additional costs, or severely restrict land development and homebuilding activity in environmentally sensitive regions or areas.

~~This~~If ~~section~~we ~~describes~~are ~~the~~not ~~material~~able ~~risks~~to ~~associated~~develop ~~with~~and anmarket ~~investment in~~ our ~~common stock. Stockholders should carefully consider each of the risks described below and all of the other information in this Form 10~~master-K.planned Ifcommunities ~~any of the following risks occurs~~successfully, our business~~, prospects,~~ ~~financial~~and ~~condition,~~ results of operations orwill ~~cash flow could~~ be ~~materially and~~ adversely affected. ~~In such an event, the trading price of shares of our common stock could decline~~ ~~substantially, and stockholders may lose all or part of the value of their shares of our common stock.~~

~~Our~~Before ~~business~~a ~~and~~master-planned ~~results~~community ofgenerates ~~operations~~any ~~will~~revenues, bematerial ~~materially~~expenditures are incurred to acquire land, obtain development approvals and ~~adversely~~construct ~~affected~~significant byportions ~~weakness~~of inproject ~~general~~infrastructure, ~~economic~~amenities, ~~real~~model ~~estate~~homes and ~~other~~sales ~~conditions~~facilities. It generally takes several years for a master-planned community development to achieve cumulative positive cash flow. If we are unable to develop and market our master-planned communities successfully

~~The land development and homebuilding industry is cyclical and is significantly affected by changes~~10 in general and local economic and industry conditions, such as employment levels, availability of financing for homebuyers, interest rates, consumer confidence, levels of new and existing homes for sale, demographic trends and housing demand. In addition, an oversupply of alternatives to new homes, such as resale homes, including homes held for sale by investors and speculators, foreclosed homes and rental properties may reduce our ability to sell new homes, depress prices and reduce our margins from the sale of new homes. The United States homebuilding industry continues to face a number of challenges, with home foreclosures and tight credit standards continuing to have an effect on inventory and new home sale rates and prices.

~~Homebuilders~~and ~~are also subject~~ to ~~risks~~generate ~~related~~positive tocash ~~the availability and cost of materials and labor,~~flows ~~and~~from ~~adverse~~these ~~weather~~operations ~~conditions that can cause delays~~ in ~~construction schedules and cost overruns. Furthermore, the market value of undeveloped land, buildable lots and housing inventories held by us can fluctuate significantly as~~ a ~~result~~timely of changing economic and real estate market conditions and may result in inventory impairment charges or putting our deposits for lots controlled under option at risk. If there are significant adverse changes in economic or real estate market conditionsmanner, weit ~~may~~will have ~~to sell homes at~~ a ~~loss~~material oradverse ~~hold~~effect ~~land~~on in inventory longer than planned. Inventory carrying costs can be significant and can result in losses in a poorly performing project or market. We may be particularly affected by changes in local market conditions in California, where we derive a large proportion of our ~~revenue. As a result of the present challenging market~~business ~~conditions, we have sold homes~~ and ~~lots~~results for lower profit margins than in the past and we have recorded inventory and unconsolidated entity impairments and lot option write-off charges that resulted in a loss during fiscal 2009. If market conditions continue to deteriorate, some of ~~our assets may be subject to further impairments and option write-off charges further adversely affecting our~~ operations ~~and financial results~~.

9Difficulty in retaining qualified trades workers, or obtaining required materials and supplies, will adversely affect our business and results of operations.

~~Table~~The homebuilding industry has from time to time experienced significant difficulties in the supply of ~~Contents~~materials and services, including with respect to: shortages of qualified trades people; labor disputes; shortages of building materials; unforeseen environmental and engineering problems; and increases in the cost of certain materials (particularly increases in the price of lumber, wall board, petroleum-based products and cement, which are significant components of home construction costs). When any of these difficulties occur, it causes delays and increases the cost of constructing our homes.

~~Rising~~Homebuilding ~~mortgage~~is ~~rates~~subject orto ~~decreases~~home warranty and construction defect claims in the ~~availability~~ordinary course of business ~~mortgage~~and ~~financing~~furthermore ~~will~~we ~~discourage~~sometimes ~~people~~face liabilities when we act as a general contractor, and we ~~from~~are ~~buying~~sometimes ~~new~~responsible ~~homes~~for losses when we hire general contractors.

~~Virtually~~As ~~all~~a ofhomebuilder, ~~our~~we ~~customers~~are ~~finance~~subject ~~their~~to construction defect and home ~~acquisitions~~warranty ~~through~~claims ~~lenders~~arising ~~providing~~in ~~mortgage~~the ~~financing.~~ordinary ~~Prior~~course toof ~~the~~our ~~recent~~business. ~~volatility~~These inclaims ~~the~~are ~~financial~~common ~~markets,~~in athe ~~variety~~homebuilding ofindustry ~~mortgage~~and ~~products were~~can ~~available~~be costly. AsFurther, awhere ~~result,~~we ~~more~~act ~~homebuyers~~as ~~were~~the ~~able~~general tocontractor, ~~qualify~~we are responsible for ~~mortgage~~the ~~financing.~~performance ~~Increases~~of inthe ~~mortgage~~entire ~~rates~~contract, orincluding ~~decreases~~work inassigned ~~the~~to ~~availability~~subcontractors. ofClaims ~~mortgage~~may ~~financing~~be ~~could~~asserted ~~depress~~against ~~the market~~us for ~~new~~construction ~~homes~~defects, ~~because~~personal ofinjury or property damage caused by the ~~increased~~subcontractors, ~~monthly~~and ~~mortgage~~if successful ~~costs~~these toclaims ~~potential~~give ~~homebuyers~~rise to liability. ~~Even~~Where we hire general contractors, if there are ~~potential~~unforeseen ~~customers~~events dolike ~~not~~the ~~need~~bankruptcy ~~financing~~of, ~~changes~~or inan ~~mortgage~~uninsured ~~interest~~or ~~rates~~under-insured ~~and~~loss ~~mortgage~~claimed against our ~~availability~~general ~~could~~contractors, ~~make~~we itsometimes ~~harder~~become responsible for ~~them~~the tolosses ~~sell~~or ~~their~~other ~~homes~~obligations toof ~~potential~~the general ~~buyers~~contractors. ~~who~~The ~~need~~cost of insuring against construction defect and product liability claims ~~financing~~are high, ~~which~~and ~~would~~the ~~result~~amount inof ~~reduced~~coverage ~~demand~~offered ~~for~~by ~~new~~insurance ~~homes.~~companies Asmay abe ~~result,~~limited. ~~rising~~There ~~mortgage~~can ~~rates~~be no ~~and~~assurance ~~reduced~~that ~~mortgage~~this ~~availability~~coverage ~~could~~will ~~adversely~~not ~~affect~~be ~~our~~further ~~ability~~restricted and become more costly. If we are not able to ~~sell~~obtain ~~new~~adequate ~~homes~~insurance ~~and~~against these claims in the ~~price~~ atfuture, ~~which~~our webusiness ~~can~~and ~~sell~~results ~~them~~of operations will be adversely affected.

~~Since~~If ~~2007,~~we ~~there~~are ~~has~~not ~~been~~able a significant decrease in the type of mortgage products available and a general increase in the qualification requirements for mortgages. Fewer loan products and tighter loan qualifications made it more difficult for some borrowers to ~~finance~~raise ~~the~~capital ~~purchase~~on offavorable ~~our homes. This~~terms, ~~coupled with higher mortgage interest rates for some mortgage products has reduced demand for new homes. These reductions in demand have adversely affected~~ our ~~operations~~business and ~~financial~~ results~~, and~~ ~~the duration and severity~~ of ~~the~~operations ~~effects~~will be ~~remain~~adversely ~~uncertain~~affected.

~~Laws~~We operate in a capital intensive industry and ~~regulations~~require ~~related~~capital to ~~property~~maintain ~~development~~our ~~and~~competitive position. ~~related~~The failure to ~~the~~secure ~~environment~~additional ~~subject~~debt usor equity financing or the failure to do so on ~~additional~~favorable ~~costs~~terms ~~and~~will ~~delays~~limit our ability to grow our business, which in turn will adversely affect our business and results of operations. We expect to make significant capital expenditures in the future to enhance and maintain the operations of our properties and to expand and develop our real estate inventory. If our plans or assumptions change or prove to be inaccurate, or if our cash flow from operations proves to be insufficient due to unanticipated expenses or otherwise, we will likely seek to minimize cash expenditures and/or obtain additional financing in order to support our plan of operations.

WeThe ~~must~~availability ~~comply~~of ~~with~~financing ~~extensive~~from banks and ~~complex regulations affecting~~ the ~~land~~public ~~development~~debt ~~and homebuilding~~markets ~~process.~~has ~~These~~declined ~~regulations impose on us additional costs and delays, which adversely~~significantly. ~~affect~~Due ~~our business and results of operations. In particular, we are required~~ to ~~obtain~~ the ~~approval~~ ofdeterioration ~~numerous governmental authorities regulating matters such as permitted land uses, levels~~ of ~~density,~~ the ~~installation~~credit ofmarkets ~~utility services, zoning~~ and ~~building standards. These regulations often provide broad discretion to~~ the ~~administering~~uncertainties ~~governmental~~that ~~authorities~~exist asin to the ~~conditions~~ weeconomy ~~must meet prior to being approved~~ and for ahomebuilders ~~particular~~in ~~development or project~~general, ~~if approved~~we atcannot ~~all.~~be Incertain ~~addition,~~that ~~new~~we ~~development~~will ~~projects may~~ be ~~subject~~able to ~~various~~replace ~~assessments for~~existing ~~schools,~~financing ~~parks,~~or ~~streets~~find ~~and~~additional ~~highways~~sources ~~and other public improvements, the costs~~ of ~~which can be substantial~~financing. ~~When~~If ~~made~~sufficient funding, ~~these~~whether ~~assessments~~obtained ~~can have a negative impact on our sales by raising the~~through ~~price~~public ~~that~~or ~~homebuyers~~private ~~must pay for our homes. We must also comply with a variety of local~~debt, ~~state and~~equity ~~federal~~financing ~~laws~~or ~~and~~from ~~regulations~~strategic ~~concerning~~alliances ~~the~~is ~~protection~~not ofavailable ~~health~~when ~~and the environment, including~~needed ~~with respect to hazardous~~ or ~~toxic~~is ~~substances.~~not ~~These~~available ~~environmental~~on ~~laws~~acceptable ~~sometimes result in delays~~terms, ~~cause~~ usour tobusiness ~~incur additional costs, or severely restrict land development~~ and ~~homebuilding~~results ~~activity in~~of ~~environmentally~~operations ~~sensitive~~will ~~regions~~be ~~or areas~~adversely affected.

IfEven weif ~~are~~available, ~~not~~additional ~~able~~financing tocould ~~develop~~be costly or have adverse consequences. The securities markets in general, and ~~market~~trading in our ~~master-planned~~common ~~communities~~stock ~~successfully~~in particular, have recently experienced significant volatility. As a result, our ~~business~~market capitalization has recently been less ~~and~~than ~~results~~the value of ~~operations~~our stockholders’ equity. To the extent that our market capitalization is below the value of our stockholders’ equity, the amount of dilution our stockholders would experience will be ~~adversely~~increased ~~affected~~should we issue additional shares of common stock.

~~Before~~Our adebt ~~master-planned community generates any revenues, material expenditures are incurred to acquire land, obtain development approvals~~ and ~~construct~~leverage ~~significant~~could ~~portions~~adversely ofaffect project infrastructure, amenities, model homes and sales facilities. It generally takes several years for a master-planned community development to achieve cumulative positive cash flow. If we are unable to develop and market our ~~master-planned~~financial ~~communities successfully and to generate positive cash flows from these operations in a timely manner, it will have a material adverse effect on our business and results of operations~~condition.

~~Difficulty~~Our intotal ~~retaining~~debt ~~qualified~~as ~~trades~~of ~~workers~~December 31, 2010 was $332 million, of which a total of $330 million matures prior to the end of 2012. Our leverage could have important consequences, including the following: our ability to obtain additional financing for working capital, capital expenditures or acquisitions ~~obtaining~~may ~~required~~be ~~materials~~impaired in the future; a substantial portion of our cash flow from operations must be dedicated to the payment of principal and ~~supplies~~interest on our debt, thereby reducing the funds ~~will~~available ~~adversely~~to ~~affect~~us for other purposes; some of our ~~business~~borrowings are and ~~results~~will ofcontinue ~~operations.~~to be at

~~The homebuilding industry has from time to time experienced significant difficulties in the supply~~11 of materials and services, including with respect to: shortages of qualified trades people; labor disputes; shortages of building materials; unforeseen environmental and engineering problems; and increases in the cost of certain materials (particularly increases in the price of lumber, wall board and cement, which are significant components of home construction costs). When any of these difficulties occur, it causes delays and increases the cost of constructing our homes.

~~Homebuilding~~variable rates isof ~~subject~~interest, towhich ~~home~~will ~~warranty~~expose ~~and~~us ~~construction~~to ~~defect~~the ~~claims~~risk inof ~~the~~increased ~~ordinary~~interest ~~course~~rates; ofand our ~~business~~substantial ~~and~~leverage ~~furthermore~~may welimit ~~sometimes~~our ~~face~~flexibility ~~liabilities~~to ~~when~~adjust weto ~~act~~changing aseconomic aor ~~general~~market ~~contractor~~conditions, reduce ~~and~~our ~~we are~~ability ~~sometimes~~to ~~responsible~~withstand ~~for~~competitive ~~losses~~pressures ~~when~~and wemake ~~hire~~us more vulnerable to a general economic ~~contractors~~downturn.

AsIf aany ~~homebuilder~~of these conditions occur, or should we ~~are~~be ~~subject~~unable to ~~construction~~repay ~~defect~~these obligations as they become due, our financial condition will be adversely affected. In addition, our various debt instruments contain financial and ~~home~~other ~~warranty~~restrictive ~~claims~~covenants ~~arising~~that may limit our ability to, among other things, borrow additional funds that we might need in the future. We also guarantee shortfalls ~~ordinary~~under ~~course~~some of our ~~business.~~community ~~These~~bond ~~claims~~debt, ~~are~~when ~~common in~~ the ~~homebuilding~~revenues, ~~industry~~fees and ~~can~~assessments bewhich are designed ~~costly.~~to ~~Further,~~cover ~~where~~principal weand ~~act~~interest asand other operating costs of the bonds are not paid.

10We finance each of our projects individually. As a result, to the extent we increase the number of our projects and our related investment, our total debt obligations may increase. In general, we repay the principal of our debt from the proceeds of home closings.

~~Table~~Based on our interest rate sensitive net debt levels as of ~~Contents~~December 31, 2010, a 1% change up or down in interest rates could have either a negative or positive effect of approximately $1 million on our cash flows. Refer also to the section of our Form 10-K entitled “Management’s Discussion and Analysis of Financial Condition and Results of Operations — Quantitative and Qualitative Disclosures About Market Risk — Interest Rates.”

~~general~~Our ~~contractor,~~business weand ~~are~~results ~~responsible for the performance~~ of ~~the~~ ~~entire~~operations ~~contract,~~will ~~including work assigned to subcontractors. Claims may~~ be ~~asserted~~adversely ~~against~~affected ~~us for construction defects, personal injury or property damage caused by the subcontractors, and~~ if ~~successful~~poor ~~these~~relations ~~claims~~with ~~give rise to liability. Where we hire general contractors, if there are unforeseen events like~~ the ~~bankruptcy~~ residents of, ~~or an uninsured or under-insured loss claimed against~~ our ~~general~~communities ~~contractors,~~negatively weimpact sometimes become responsible for the losses or other obligations of the general contractors. The cost of insuring against construction defect and product liability claims are high, and the amount of coverage offered by insurance companies may be limited. There can be no assurance that this coverage will not be further restricted and become more costly. If we are not able to obtain adequate insurance against these claims in the future, our ~~business and results of operations will be adversely affected~~sales.

IfAs a master-planned community developer, we are ~~not~~sometimes ~~able~~expected by community residents to resolve ~~raise~~any ~~capital~~issues onor ~~favorable~~disputes ~~terms~~that arise in connection with the development of our communities. Our sales may be negatively affected if any efforts made by us to resolve these issues or disputes are unsatisfactory to the affected residents, which in turn would adversely affect our results of operations. In addition, our business and results of operations ~~will~~ would be adversely affected if we are required to make material expenditures related to the settlement of these issues or disputes, or to modify our community development plans.

WeOur operate in a capital intensive industry and require capital to maintain our competitive position. The failure to secure additional debt or equity financing or the failure to do so on favorable terms will limit our ability to grow our business, ~~which~~is insusceptible ~~turn will adversely affect our business and results of operations. We expect~~ to ~~make~~adverse ~~significant~~weather ~~capital~~conditions ~~expenditures in the future to enhance~~ and ~~maintain~~natural ~~the operations of our properties and to expand and develop our real estate inventory~~disasters. ~~If our plans or assumptions change or prove to be inaccurate, or if our cash flow~~ from operations proves to be insufficient due to unanticipated expenses or otherwise, we will likely seek to minimize cash expenditures and/or obtain additional financing in order to support our plan of operations.

~~The~~Adverse ~~availability~~weather ofconditions ~~financing from banks~~ and ~~the~~natural ~~public~~disasters ~~debt~~such ~~markets~~as ~~has~~hurricanes, ~~declined~~tornadoes, ~~significantly.~~earthquakes, ~~Due~~droughts, tofloods ~~the~~and ~~deterioration~~fires ofcan ~~the~~have ~~credit~~a ~~markets~~significant ~~and~~effect ~~the~~on ~~uncertainties~~our ~~that~~ability ~~exist~~to indevelop ~~the~~our ~~economy and~~communities. ~~for~~These ~~homebuilders~~adverse inweather ~~general,~~conditions weand ~~cannot~~natural bedisasters ~~certain~~can ~~that~~cause wedelays ~~will~~and beincreased ~~able~~costs toin ~~replace existing~~the ~~financing~~construction orof ~~find~~new ~~additional~~homes ~~sources~~and the development of ~~financing~~new communities. If ~~sufficient~~insurance ~~funding,~~is ~~whether~~unavailable ~~obtained~~to ~~through~~us ~~public~~ or ~~private~~is ~~debt,~~unavailable ~~equity~~on ~~financing~~acceptable terms, or ~~from~~if ~~strategic~~our ~~alliances~~insurance is not ~~available~~adequate ~~when~~to ~~needed~~cover business interruption or islosses ~~not~~resulting ~~available~~from onadverse ~~acceptable~~weather ~~terms~~or natural disasters, our business and results of operations will be adversely affected. In addition, damage to new homes caused by adverse weather or a natural disaster can cause our insurance costs to increase.

~~Even~~Increased ifinsurance ~~available,~~risk ~~additional~~adversely ~~financing~~affects ~~could be costly or have adverse consequences. The securities markets in general, and trading in~~ our ~~common stock in particular, have recently experienced significant volatility~~business. ~~As a result, our market capitalization has recently been less~~ than the value of our stockholders’ equity. To the extent that our market capitalization remains below the value of our stockholders’ equity, the amount of dilution our stockholders would experience will be increased should we issue additional shares of common stock.

~~Our~~We ~~debt~~are confronting reduced insurance capacity, and ~~leverage~~generally lower limits for insurance against some of the risks associated with our business. Some of the actions that have been or could be taken by insurance companies include: increasing insurance premiums; requiring higher self-insured retention and deductibles; requiring collateral on surety bonds; imposing additional exclusions, such as with respect to sabotage and terrorism; and refusing to underwrite certain risks and classes of business. The imposition of any of the preceding actions has and will continue to adversely affect our ~~financial~~ability ~~condition~~to obtain appropriate insurance coverage at reasonable costs.

~~Our~~Tax ~~total~~law ~~debt~~changes ~~as of December 31, 2009 was $382 million, of which a total of $323 million matures prior to the end of 2011. Our leverage~~ could ~~have~~make ~~important~~home ~~consequences,~~ownership ~~including~~more ~~the~~expensive ~~following: our ability to obtain additional financing for working capital, capital expenditures~~ or ~~acquisitions~~ ~~may~~less be impaired in the future; a substantial portion of our cash flow from operations must be dedicated to the payment of principal and interest on our debt, thereby reducing the funds available to us for other purposes; some of our borrowings are and will continue to be at variable rates of interest, which will expose us to the risk of increased interest rates; and our substantial leverage may limit our flexibility to adjust to changing economic or market conditions, reduce our ability to withstand competitive pressures and make us more vulnerable to a general economic downturnattractive.

IfTax ~~any~~law ofchanges ~~these~~could ~~conditions~~make ~~occur,~~home orownership ~~should~~more weexpensive beor ~~unable~~less toattractive. ~~repay~~Significant ~~these~~expenses of ~~obligations~~owning asa ~~they become due~~home, ~~our~~including ~~financial~~mortgage ~~condition~~interest ~~will~~expense beand ~~adversely~~real ~~affected.~~estate ~~In addition~~taxes, ~~our~~generally ~~various debt instruments~~are ~~contain~~deductible ~~financial~~expenses ~~and~~for ~~other~~an ~~restrictive~~individual’s ~~covenants~~federal ~~that~~and, ~~may~~in ~~limit~~some ~~our~~cases, ~~ability~~state ~~to,~~income ~~among~~taxes ~~other~~subject to ~~things,~~various ~~borrow~~limitations ~~additional~~under ~~funds~~current ~~that~~tax welaw ~~might~~and ~~need~~policy. inIf the ~~future.~~federal Wegovernment ~~also~~or ~~guarantee~~a ~~shortfalls~~state ~~under~~government ~~some~~changes ofincome ~~our~~tax ~~community~~laws ~~bond~~to ~~debt~~eliminate or substantially modify these income tax deductions, ~~when~~then the ~~revenues,~~after-tax ~~fees~~cost ~~and~~of ~~assessments~~owning ~~which~~a ~~are~~new ~~designed to~~home ~~cover~~would ~~principal~~increase ~~and~~substantially. ~~interest~~This ~~and~~could adversely ~~other~~impact ~~operating~~demand ~~costs~~for, ofand/or ~~the~~sales ~~bonds~~prices ~~are~~of ~~not~~new ~~paid~~homes.

~~We finance each of our projects individually. As a result, to the extent we increase the number of~~12 ~~our projects and our related investment, our total debt obligations may increase. In general, we repay the principal of our debt from the proceeds of home closings.~~

~~Based~~Residential onhomebuilding ~~our~~is ~~interest rate sensitive net debt levels as of December 31, 2009,~~ a 1%competitive ~~change up or down in interest rates could have either a negative or positive effect of approximately $1 million on our cash flows~~industry, ~~refer~~and ~~also~~competitive toconditions ~~the~~adversely ~~section~~affect of our ~~Form 10-K entitled “Management’s Discussion and~~ ~~Analysis~~results of ~~Financial Condition and Results of Operations — Quantitative and Qualitative Disclosures About Market Risks — Interest Rates~~operations.”

11The residential homebuilding industry is highly competitive. Residential homebuilders compete not only for homebuyers, but also for desirable properties, building materials, labor and capital. We compete with other local, regional and national homebuilders, often within larger communities designed, planned and developed by such homebuilders. Any improvement in the cost structure or service of our competitors will increase the competition we face. We also compete with the resale of existing homes including foreclosed homes, sales by housing speculators and investors and rental housing. Competitive conditions in the homebuilding industry could result in: difficulty in acquiring suitable land at acceptable prices; increased selling incentives; lower sales volumes and prices; lower profit margins; impairments in the value of our inventory and other assets; increased construction costs; and delays in construction.

~~Table~~Provisions in our charter documents and Delaware law may make it difficult for a third party to acquire us, which could depress the price of ~~Contents~~our securities.

~~Our~~Provisions ~~business~~in our certificate of incorporation, our by-laws and ~~results~~Delaware law could delay, defer or prevent a change of ~~operations~~control ~~will~~of beour ~~adversely~~Company. ~~affected~~These ifprovisions, ~~poor~~which ~~relations~~include ~~with~~authorizing the board ~~residents~~of directors to issue preferred stock and limiting the persons who may call special meetings of stockholders, ~~our~~could ~~communities~~also ~~negatively~~discourage ~~impact~~proxy contests and make it more difficult for stockholders to elect directors and take other corporate actions. We are also subject to provisions of Delaware law that could delay, deter or prevent us from entering into an acquisition. The existence of any of the above factors could adversely affect the market price of our ~~sales~~common stock.

AsThe atrading ~~master-planned~~price ~~community developer, we are sometimes expected by community residents to resolve any issues or disputes that arise in connection with the development~~ of our ~~communities. Our~~securities ~~sales~~could ~~may~~fluctuate besignificantly negatively affected if any efforts made by us to resolve these issues or disputes are unsatisfactory to the affected residents, which in turn would adversely affect our results of operations. In addition, our business and ~~results~~could ~~of operations would~~ be adversely affected ~~if we~~ ~~are~~because ~~required~~Brookfield toAsset ~~make~~Management ~~material~~Inc. ~~expenditures~~beneficially ~~related~~owns toapproximately ~~the~~82.6% ~~settlement~~ of ~~these issues or disputes, or to modify~~ our ~~community~~common ~~development plans~~stock.

~~Our~~The trading prices of shares of our common stock in the open market cannot be predicted. The trading prices could fluctuate significantly in response to factors such as: variations in our quarterly or annual operating results and financial condition; changes in government regulations affecting our business; isthe ~~susceptible~~announcement of significant events by us or our competitors; market conditions specific to ~~adverse~~the ~~weather~~homebuilding industry; changes in general economic conditions; differences between our actual financial and ~~natural~~operating ~~disasters~~results and those expected by investors and analysts; changes in analysts’ recommendations or projections; the depth and liquidity of the market for shares of our common stock; investor perception of the homebuilding industry; events in the homebuilding industry; investment restrictions; and our dividend policy. In addition, securities markets have experienced significant price and volume fluctuations in recent years that have often been unrelated or disproportionate to the operating performance of particular companies. These broad fluctuations may adversely affect the trading price of our common stock.

~~Homebuilding~~Also, inBrookfield ~~California~~Asset ~~and~~Management ~~the Washington D~~Inc.C. ~~Area~~beneficially isowns ~~susceptible~~approximately ~~to,~~82.6% ~~and~~of isthe ~~significantly~~outstanding ~~affected~~shares ~~by,~~of ~~adverse~~our ~~weather~~common ~~conditions~~stock, ~~and~~on ~~natural~~an ~~disasters such~~ as ~~hurricanes,~~converted ~~tornadoes, earthquakes,~~basis ~~droughts,~~assuming ~~floods~~the ~~and~~full ~~fires.~~conversion ~~These~~of ~~adverse~~our ~~weather conditions and natural disasters can~~8% ~~cause~~convertible ~~delays~~preferred ~~and~~stock ~~increased~~owned ~~costs~~by init. ~~the~~If ~~construction~~Brookfield ofAsset ~~new~~Management ~~homes~~Inc. ~~and~~should ~~the~~decide ~~development~~in ~~of new~~the ~~communities.~~future ~~If insurance is unavailable~~ to ussell orany isof ~~unavailable on acceptable terms, or if~~ our ~~insurance~~ issecurities ~~not~~owned ~~adequate~~beneficially toby ~~cover~~it, ~~business~~the ~~interruption~~sale (or ~~losses~~the ~~resulting~~perception ~~from~~of ~~adverse weather~~the ormarket ~~natural~~that ~~disasters,~~a ~~our~~sale ~~business~~may ~~and~~occur) ~~results~~could ~~of operations will be~~ adversely ~~affected.~~affect ~~In addition,~~the ~~damage~~trading toprice ~~new~~of ~~homes~~those ~~caused by adverse weather or a natural disaster can cause our insurance costs to increase~~securities.

~~Increased~~If ~~insurance~~we ~~risk~~are ~~adversely~~not ~~affects~~able to retain our executive officers, our business and results of operations could be adversely affected.

We ~~are~~do ~~confronting~~not ~~reduced~~have ~~insurance~~employment ~~capacity,~~agreements ~~and~~with ~~generally~~any ~~lower~~of ~~limits~~our ~~for~~executive ~~insurance~~officers, ~~against some~~which ofcould ~~the~~affect ~~risks~~our ability ~~associated~~to ~~with~~retain ~~our~~their ~~business~~services. ~~Some~~Should ofwe lose the ~~actions~~services ~~that~~of ~~have~~one ~~been~~ or ~~could~~all ~~be taken~~of byour ~~insurance companies include: increasing insurance premiums; requiring higher self-insured~~executive ~~retention~~officers and ~~deductibles;~~they ~~requiring~~cannot ~~collateral~~be onadequately ~~surety bonds; imposing additional exclusions~~replaced, ~~such~~ asour ~~with~~ability ~~respect~~ to ~~sabotage~~accomplish ~~and~~the ~~terrorism;~~objectives ~~and~~set ~~refusing to underwrite certain risks and~~forth ~~classes~~in ofour business. ~~The~~plan ~~imposition~~could ofbe ~~any of the preceding actions has and will continue to~~ adversely ~~affect our ability to obtain appropriate insurance coverage at reasonable costs~~affected.

~~Tax~~Our ~~law~~relationships ~~changes~~with ~~could~~our ~~make~~affiliates ~~home~~may ~~ownership~~be ~~more~~on ~~expensive~~terms more or less ~~attractive~~favorable than those that could be obtained from third parties.

~~Tax~~Brookfield ~~law~~Asset ~~changes~~Management ~~could~~Inc. ~~make~~beneficially ~~home~~owns ~~ownership~~approximately 61.9% ~~more~~of ~~expensive~~our orcurrently outstanding ~~less~~common ~~attractive~~stock (82.6% ~~Significant~~assuming ~~expenses~~ full conversion by it of ~~owning~~our a8% ~~home,~~convertible ~~including~~preferred stock ~~mortgage~~owned ~~interest~~by ~~expense~~it) and ~~real~~our ~~estate~~relationships ~~taxes,~~with ~~generally~~Brookfield ~~are~~Asset Management Inc. and its affiliates ~~deductible~~include ~~expenses~~two ~~for~~unsecured anrevolving ~~individual’s~~credit ~~federal~~facilities and, inthe ~~some~~lease ~~cases,~~of ~~state~~our ~~income~~administrative ~~taxes~~office ~~subject to~~in ~~various~~Toronto. ~~limitations~~There ~~under~~can ~~current~~be ~~tax~~no ~~law~~assurance ~~and~~that ~~policy.~~these Ifarrangements ~~the~~are ~~federal~~on ~~government~~terms orat aleast ~~state~~as favorable to us ~~government~~as ~~changes~~those ~~income~~that ~~tax~~could ~~laws~~be tonegotiated ~~eliminate~~with third parties, or ~~substantially~~that ~~modify~~procedural ~~these~~protections ~~income~~put ~~tax~~in place ~~deductions~~to simulate arm’s length negotiations, ~~then~~such as the ~~after-tax~~prior ~~cost~~approval of ~~owning~~related aparty ~~new~~transactions ~~home~~by our ~~would~~independent ~~increase~~directors, ~~substantially.~~will ~~This~~have ~~could adversely~~such ~~impact~~effect. ~~demand for~~Conversely, ~~and/or~~the ~~sales~~terms ~~prices~~ of ~~new~~our ~~homes.~~agreements with our affiliates could be

~~Residential homebuilding is a competitive industry, and competitive conditions adversely affect our~~13 ~~results of operations.~~

~~The~~more ~~residential~~favorable ~~homebuilding~~to ~~industry~~us isthan ~~highly~~would ~~competitive.~~be ~~Residential~~available ~~homebuilders~~from ~~compete~~a ~~not only~~third ~~for homebuyers, but also for desirable properties, building materials, labor and capital~~party. ~~We compete~~In ~~with~~such ~~other local~~event, ~~regional~~should and national homebuilders, often within larger communities designed, planned and developed by such homebuilders. Any improvement in the cost structure or service of our competitors will increase the competition we ~~face. We also compete with the resale~~be ofrequired ~~existing~~to ~~homes~~replace ~~including~~these ~~foreclosed homes~~arrangements, ~~sales~~there bycan ~~housing~~be ~~speculators~~no ~~and~~assurance ~~investors~~that ~~and~~we ~~rental housing. Competitive conditions in the homebuilding industry~~ could ~~result~~obtain ~~in:~~terms ~~difficulty in~~as ~~acquiring~~least ~~suitable land~~ at ~~acceptable~~favorable ~~prices;~~as ~~increased~~those ~~selling~~with ~~incentives; lower sales volumes and prices; lower profit margins; impairments in the value of~~ our ~~inventory and other assets; increased construction costs; and delays in construction~~affiliates.

~~Provisions~~Item 1B. inUnresolved ~~our~~Staff ~~charter documents and Delaware law may make it difficult for a third party to~~Comments ~~acquire us, which could depress the price of our securities.~~

~~Provisions in our certificate of incorporation, our by-laws and Delaware law could delay, defer or prevent a change of control of our Company~~None. ~~These provisions, which include authorizing the board~~ of directors to issue preferred stock and limiting the persons who may call special meetings of stockholders, could also discourage proxy contests and make it more difficult for stockholders to elect directors and take other corporate actions.

~~We are also subject to provisions of Delaware law that could delay, deter or prevent us from entering into an acquisition, including Section~~Item ~~203~~2. ~~of the Delaware General Corporation Law, which~~Properties ~~prohibits a Delaware~~

12In addition to real estate held for development and sale, which we either own or hold under an option to purchase, we lease and maintain an administrative office in Toronto, Canada. Our Toronto lease is a sublease from Brookfield Asset Management Inc.

~~Table~~In addition, we have other offices located in the markets in which we conduct business, generally in our communities or in leased space. None of ~~Contents~~these other office premises are material to our business. We believe that our office space is suitable and adequate for our needs for the foreseeable future.

~~corporation from engaging in a business combination with an interested stockholder unless specific conditions are met~~Item 3. ~~The~~Legal ~~existence of any of the above factors could adversely affect the market~~Proceedings ~~price of our common stock.~~

~~The~~We ~~trading~~are ~~price~~party to various legal actions arising in the ordinary course of our ~~securities~~business. ~~could~~We believe ~~fluctuate~~that ~~significantly~~none ~~and~~of ~~could~~these beactions, ~~adversely~~either ~~affected because~~individually ~~Brookfield~~or ~~Asset~~in ~~Management~~the ~~Inc.~~aggregate, ~~beneficially~~will ~~owns~~have ~~approximately~~a ~~82.4%~~material adverse ofeffect on our ~~common~~financial ~~stock~~condition or results of operations.

~~The~~On ~~trading~~or ~~prices~~about ofDecember 13, ~~shares~~2010, Plymouth County Retirement Association, on behalf of ~~our~~itself ~~common~~and other ~~stock~~similarly insituated ~~the~~parties, ~~open~~filed ~~market~~an ~~cannot~~action bein ~~predicted.~~Delaware ~~The trading~~Chancery ~~prices~~Court ~~could~~alleging ~~fluctuate~~breach ~~significantly~~of fiduciary duties in ~~response~~connection towith ~~factors~~the ~~such~~proposed ~~as:~~transactions ~~variations~~contemplated inby ~~our~~the merger and ~~quarterly~~contribution oragreement ~~annual~~dated ~~operating~~October 4, ~~results~~2010 among Brookfield Properties, Brookfield Homes and Brookfield ~~financial~~Residential ~~condition;~~Properties ~~changes~~Inc. inThe ~~government~~complaint ~~regulations~~names Brookfield Homes, Brookfield Asset ~~affecting~~Management, ~~our~~Brookfield ~~business;~~Office Properties, Brookfield Residential Acquisition Corporation, each member of the ~~announcement~~Board of ~~significant~~Directors ~~events~~of byBrookfield usHomes, orand ~~our~~a ~~competitors;~~former ~~market~~member of the Board of Directors ~~conditions~~of ~~specific~~Brookfield toHomes, ~~the~~as ~~homebuilding~~defendants. ~~industry;~~The ~~changes~~complaint inasserts ~~general~~a ~~economic~~claim ~~conditions;~~against all defendants for ~~differences~~alleged ~~between~~breaches ~~our~~of ~~actual~~their ~~financial~~purported ~~and~~fiduciary ~~operating~~duties ~~results~~in ~~and~~connection ~~those~~with ~~expected~~the bymerger. ~~investors~~The ~~and~~plaintiff ~~analysts;~~alleges ~~changes~~that inall ~~analysts’~~defendants ~~recommendations~~breached orfiduciary ~~projections;~~duties ~~the~~of ~~depth~~loyalty and ~~liquidity~~care purportedly owed to the minority stockholders of Brookfield Homes by agreeing to the proposed transactions. According to ~~market~~the ~~for~~complaint, ~~shares~~Brookfield Homes’ Board of ~~our~~Directors ~~common~~allegedly ~~stock;~~breached ~~investor~~these ~~perception~~fiduciary ofduties because the ~~homebuilding~~proposed ~~industry;~~transaction ~~events~~“was in initiated, structured and timed for the ~~homebuilding~~benefit ~~industry;~~of [Brookfield ~~investment~~Asset ~~restrictions;~~Management]” and ~~our~~because ~~dividend~~the ~~policy.~~proposed Intransaction ~~addition,~~“is not entirely fair to” the ~~securities~~minority ~~markets~~stockholders ~~have~~of ~~experienced~~Brookfield ~~significant~~Homes. ~~price~~The complaint also asserts a claim against Brookfield Office Properties for aiding and ~~volume~~abetting ~~fluctuations~~the inalleged ~~recent~~breaches. ~~years~~In addition to requesting that the ~~have~~case ~~often~~proceed ~~been~~as ~~unrelated~~a orclass ~~disproportionate~~action, the complaint seeks to enjoin consummation of the ~~operating~~merger ~~performance~~as well as an award of ~~particular~~unspecified ~~companies~~damages and attorney’s fees. There have been no substantive developments ~~These~~in ~~broad~~the ~~fluctuations~~litigation. ~~may~~The ~~adversely~~defendants ~~affect~~believe the ~~trading~~claims ~~price~~are ofwithout ~~our~~merit ~~common~~and ~~stock~~intend to vigorously defend these claims.

~~Also, Brookfield Asset Management Inc~~Item 4. ~~beneficially~~Submission ~~owns approximately 82.4%~~ of ~~the~~Matters outstanding shares of our common stock, on an as converted basis assuming the full conversion of our 8% convertible preferred stock owned by it. If Brookfield Asset Management Inc. should decide in the future to ~~sell any of our securities owned beneficially by it, the sale (or the perception of the market that~~ a ~~sale~~Vote ~~may occur) could adversely affect the trading price~~ of ~~those~~Security ~~securities.~~Holders

IfRemoved ~~we are not able to retain our executive officers, our business~~ and ~~results of operations could be adversely affected~~Reserved.

~~We do not have employment agreements with any of our executive officers, which could affect our~~14 ability to retain their services. Should we lose the services of one or all of our executive officers and they cannot be adequately replaced, our ability to accomplish the objectives set forth in our business plan could be adversely affected.

~~Our~~PART ~~relationships with our affiliates may be on terms more or less favorable than those that could~~II ~~be obtained from third parties.~~

~~Brookfield Asset Management Inc~~Item 5. ~~beneficially~~Market ~~owns~~for approximately 60.44% of our currently outstanding common stock (82.4% assuming full conversion by it of our 8% convertible preferred stock owned by it) and our relationships with Brookfield Asset Management Inc. and its affiliates include two unsecured revolving credit facilities and the lease of our administrative office in Toronto. There can be no assurance that these arrangements are on terms at least as favorable to us as those that could be negotiated with third parties, or that procedural protections put in place to simulate armRegistrant’s ~~length~~Common ~~negotiations~~Equity, ~~such~~Related asStockholder ~~the~~Matters ~~prior~~and ~~approval~~Issuer ofPurchases ~~related party transactions by our independent directors, will have such effect. Conversely, the terms~~ of ~~our agreements with our~~ ~~affiliates~~Equity ~~could be more favorable to us than would be available from a third party. In such event,~~Securities ~~should we be required to replace these arrangements, there can be no assurance that we could obtain terms as least at favorable as those with our affiliates.~~

~~Item~~Our common stock is listed on the New York Stock Exchange under the symbol “BHS,” and began regular trading on January 1B7, 2003. ~~Unresolved~~The ~~Staff~~following ~~Comments~~table shows high and low sales prices for our common stock, for the periods included, as reported by the NYSE.

None.


	Year Ended December 31, 2010						Year Ended December 31, 2009
					Cash Dividends						Cash Dividends
	High		Low		Per Share		High		Low		Per Share

1^st Quarter	$	9.96	$	6.36		—	$	4.54	$	1.49		—
2^nd Quarter	$	11.98	$	6.71		—	$	5.86	$	3.20		—
3^rd Quarter	$	8.48	$	5.95		—	$	8.46	$	3.19		—
4^th Quarter	$	10.49	$	7.69		—	$	8.10	$	5.25		—

~~Item~~As of February 2.22, ~~Properties~~2011, there were approximately 831 holders of record of our common stock.

InOur ~~addition~~Board toof ~~real~~Directors ~~estate~~periodically ~~held~~reviews ~~for~~our ~~development~~dividend ~~and~~policy. ~~sale~~Future dividends on our common stock, ~~which~~if weany, ~~either~~will ~~own~~be orat ~~hold~~the ~~under~~discretion anof our Board of Directors and will depend upon, among ~~option~~other tothings, ~~purchase~~our results of operations, wecash ~~lease~~requirements and ~~maintain~~surplus, anfinancial ~~administrative~~condition, contractual ~~office~~restrictions, ininvestment ~~Toronto,~~opportunities ~~Canada.~~and ~~Our~~other ~~Toronto~~factors that our Board of Directors ~~lease~~considers isrelevant. aWe ~~sublease~~do ~~from~~not ~~Brookfield~~currently ~~Asset~~pay ~~Management~~a ~~Inc~~dividend on our common stock.

InThere ~~addition,~~are weno ~~have~~current ~~other~~or ~~offices~~anticipated ~~located~~contractual terms in ~~the~~our ~~markets~~credit inor ~~which~~other wearrangements ~~conduct~~that restrict ~~business~~our ability to pay dividends, ~~generally in~~other than the requirements imposed by our ~~communities~~project orspecific financings inthat ~~leased~~require ~~space~~Brookfield Homes Holdings Inc., ~~None~~our wholly-owned subsidiary, to maintain a tangible net worth of ~~these~~at ~~other~~least ~~office~~$325 million, ~~premises~~a ~~are~~net ~~material~~debt to tangible net worth ratio of 2.50 to 1.00 and a net debt to capitalization ratio of no greater than 65%, and the requirements of our ~~business.~~revolving Wecredit ~~believe~~facility with Brookfield Asset Management Inc., that ~~our~~currently ~~office~~requires ~~space~~Brookfield Homes isCorporation ~~suitable~~to maintain minimum stockholders’ equity of $300 million and ~~adequate~~a consolidated net debt to book capitalization ratio of no greater than 70%. Refer to “Management’s Discussion and Analysis of Financial Condition and Results of Operations – Contractual Obligations and Other Commitments” for additional information about these restrictions. In addition, the terms of our ~~needs~~8% convertible ~~for~~preferred stock contain limitations on when we may pay dividends on our common stock. In addition, the terms of the merger and contribution agreement entered into on October 4, 2010 ~~foreseeable~~restrict ~~future~~our ability to pay dividends on our common stock.

13Our Board of Directors approved a share repurchase program that allows us to repurchase in aggregate up to $144 million of our outstanding common shares, of which the remaining amount approved for repurchases at December 31, 2010 was approximately $49 million. During the three months and year ended December 31, 2010, we did not repurchase any shares of our common stock.

~~Table~~Securities ofAuthorized ~~Contents~~for Issuance Under Equity Compensation Plans

~~Item~~The following table summarizes our equity compensation plans approved by stockholders as of December 331, 2010. ~~Legal~~We ~~Proceedings~~have no equity compensation plans not approved by stockholders.

We are party to various legal actions arising in the ordinary course of our business. We believe that none of these actions, either individually or in the aggregate, will have a material adverse effect on our financial condition or results of operations.

(c)

Number of Securities

Remaining Available for

(a)

(b)

Future Issuance Under

Number of Securities to be

Weighted-average

Equity Compensation

Issued Upon Exercise of

Exercise Price of

Plans (Excluding

Outstanding Options,

Securities

Warrants and Rights

Reflected in Column (a))

Equity compensation plans approved by stockholders

2,637,000

9.88

1,300,000

Equity compensation plans not approved by stockholders

none

n/a

none

Total

2,637,000

9.88

1,300,000

~~Item 4. Submission of Matters to a Vote of Security Holders~~15

~~None.~~Performance Graph

~~PART~~The IIfollowing graph illustrates the cumulative total stockholder return on Brookfield Homes’ common stock for the last five fiscal years assuming a hypothetical investment of $100 and a reinvestment of all dividends paid on such investment, compared to Standard & Poor’s 500 Stock Index and the Standard & Poor’s Homebuilding 500 Index.

~~Item 5.~~COMPARISON ~~Market~~OF ~~for~~CUMULATIVE ~~Registrant’s~~TOTAL ~~Common~~RETURN PERIOD ~~Equity,~~ENDED ~~Related~~DECEMBER ~~Stockholder~~31, ~~Matters and Issuer Purchases of~~2010 ~~Equity Securities~~

~~Our~~Base ~~common stock is listed on the New York Stock Exchange under the symbol “BHS,” and began~~Period ~~regular trading on January 7, 2003. The following table shows high and low sales prices for our common stock, for the periods included, as reported by the NYSE.~~

	Year Ended December 31, 2009						Year Ended December 31, 2008
Period ended December 31	Legend		2005		2006		2007		2008		2009		2010
					Cash Dividends						Cash Dividends
Brookfield Homes Corporation				100		76.43		32.80		9.11		16.87		19.82
	High		Low		Per Share		High		Low		Per Share
S & P 500 Homebuilding Index				100		80.00		32.89		20.09		23.77		25.22
1st Quarter	$	4.54	$	1.49		—	$	17.52	$	10.51		—
S & P 500 Index				100		115.79		122.16		76.96		97.33		111.99
2nd Quarter	$	5.86	$	3.20		—	$	17.30	$	12.28	$	0.20
3rd Quarter	$	8.46	$	3.19		—	$	16.75	$	9.26		—
4th Quarter	$	8.10	$	5.25		—	$	13.90	$	1.49		—

~~As of February~~Item ~~18,~~6. ~~2010,~~Selected ~~there~~Financial ~~were approximately 833 holders of record of our common stock.~~Data

~~Our~~The ~~Board~~following oftables ~~Directors~~include ~~periodically~~selected ~~reviews~~historical ~~our~~consolidated ~~dividend~~financial ~~policy.~~data ~~Future~~for ~~dividends~~each onyear ~~our common~~in ~~stock, if any, will be at~~ the ~~discretion~~five ofyear ~~our~~period ~~Board~~ended ~~of Directors and will depend upon~~December 31, among other things, our results of operations, cash requirements and surplus, financial condition, contractual restrictions, investment opportunities and other factors that our Board of Directors considers relevant2010. ~~We do not currently pay a dividend on our common stock.~~

~~There~~This ~~are~~selected nofinancial ~~current~~data orshould ~~anticipated~~be ~~contractual~~read ~~terms~~along in our credit or other arrangements that restrict our ability to pay dividends, other than the requirements imposed by our project specific financings that require Brookfield Homes Holdings Inc., our wholly-owned subsidiary, to maintain a tangible net worth of at least $250 million, a net debt to tangible net worth ratio of 2.50 to 1.00 and a net debt to capitalization ratio of no greater than 65%, and the requirements of our revolving credit facility with Brookfield Asset Management Inc., that currently requires Brookfield Homes Corporation to maintain minimum stockholders’ equity of $300 million and a consolidated net debt to book capitalization ratio of no greater than 70%. Refer to “Management’s Discussion and Analysis of Financial Condition and Results of Operations” ~~— Contractual Obligations~~ and ~~Other Commitments”~~our ~~for~~audited ~~additional~~historical ~~information~~consolidated ~~about~~financial statements ~~these~~and ~~restrictions. In addition,~~ the ~~terms~~related ofnotes ~~our~~included ~~8% convertible~~elsewhere ~~preferred~~in ~~stock~~this ~~contain limitations on when we may pay dividends on our common stock~~report.

~~Our Board of Directors approved a share repurchase program that allows us to repurchase in~~16 aggregate up to $144 million of our outstanding common shares, of which the remaining amount approved for repurchases at December 31, 2009 was approximately $49 million. During the three months and year ended December 31, 2009, we did not repurchase any shares of our common stock.

14United States GAAP

~~Table~~Our statement of ~~Contents~~operations data, balance sheet data and supplementary financial data prepared in accordance with U.S. GAAP and our operating data are as follows:

Securities Authorized for Issuance Under Equity Compensation Plans


*Statement of Operations Data*	Years Ended December 31
*($ millions, except per share amounts)*	2010			2009			2008			2007		2006
Total revenue⁽¹⁾	$	339		$	376		$	449		$	583	$	872
Housing revenue		292			340			415			541		784
Impairment of housing and land inventory and write-offs of option deposits		¯			24			115			88		10
Total gross margin ⁽²⁾		55			(2	)		(82	)		14		245
Impairment of investments in unconsolidated entities		¯			13			38			15		—
Net income / (loss)		3			(33	)		(133	)		23		167
Net income / (loss) attributable to Brookfield Homes Corporation		4			(28	)		(116	)		16		148
Diluted (loss) / earnings per share		(0.54	)		(1.54	)		(4.33	)		0.58		5.45
Cash dividends per common share		—			—			0.20			0.40		0.40

The following table summarizes our equity compensation plans approved by stockholders as of December 31, 2009. We have no equity compensation plans not approved by stockholders.


	At December 31
*Balance Sheet Data ($ millions)*	2010		2009		2008		2007		2006
Housing and land inventory ⁽³⁾	$	926	$	928	$	1,055	$	1,236	$	1,225
Total assets		991		1,037		1,207		1,351		1,401
Total debt ⁽⁴⁾		332		382		749		735		618
Total liabilities ⁽⁵⁾		510		551		944		969		1,030
Total equity ⁽⁵⁾		481		486		263		382		371

							(c)
	Years Ended December 31
							Number of
Supplemental Financial Data ($ millions)	2010			2009			2008			2007			2006
							Securities
Cash provided by / (used in):
	(a)						Remaining Available
Operating activities	$	89		$	137		$	66		$	(44	)	$	26
	Number of						for Future Issuance
Investment activities		(36	)		(9	)		(32	)		(58	)		(47	)
	Securities to be			(b)			Under Equity
Financing activities		(53	)		(128	)		(43	)		24			(91	)
	Issued Upon			Weighted-average			Compensation Plans
Net debt to total capitalization percent (6)		39	%		42	%		71	%		61	%		53	%
	Exercise of			Exercise Price of			(Excluding
	Outstanding			Outstanding			Securities
	Options, Warrants			Options, Warrants			Reflected in Column
	and Rights			and Rights			(a))
Equity compensation plans approved by stockholders		2,155,000		$	10.21			1,841,000
Equity compensation plans not approved by stockholders	none				n/a		none
Total		2,155,000		$	10.21			1,841,000

Performance Graph


	Years Ended December 31
*Operating Data*	2010		2009		2008		2007		2006
Home closings (units)		575		703		750		839		1,181
Lots sold to homebuilders (units)		370		469		616		1,328		834
Net new orders (units) ⁽⁷⁾		473		756		729		735		960
Backlog (units at end of period) ⁽⁸⁾		85		187		134		155		259
Average selling price	$	511,000	$	488,000	$	562,000	$	662,000	$	679,000
Lots controlled		26,817		24,245		24,109		25,371		27,616

The following graph illustrates the cumulative total stockholder return on Brookfield Homes’ common stock for the last five fiscal years assuming a hypothetical investment of $100 and a reinvestment of all dividends paid on such investment, compared to Standard & Poor’s 500 Stock Index and the Standard & Poor’s Homebuilding 500 Index.


(1)		To conform to the current year presentation, for years prior to 2007, total revenue excludes other income.

(2)		Gross margin represents the contribution from our housing and land projects, after all costs for development and construction, including related overhead and interest, impairments and other charges and before all other income / (expense), selling, general and administrative expense and noncontrolling interest.

(3)		Housing and land inventory includes investment in unconsolidated entities and, for years prior to 2010, consolidated land inventory not owned.

(4)		To conform to the current year presentation, for years prior to 2007, total debt excludes deferred compensation which is now shown as a component of accounts payable and other liabilities.

(5)		To conform to the current year presentation, for years prior to 2009, total liabilities excludes noncontrolling interest of unconsolidated entities which is now shown as a component of total equity.

(6)		Net debt to total capitalization percent is defined as total interest bearing debt less cash multiplied by 100 and divided by total interest bearing debt less cash plus equity and other interests in consolidated subsidiaries (total capitalization).

(7)		Net new orders for any period represents the aggregate of all homes ordered by customers, net of cancellations, including unconsolidated entities.

(8)		Backlog represents the number of new homes subject to pending sales contracts, including unconsolidated entities.

~~COMPARISON OF CUMULATIVE TOTAL RETURN~~17 ~~PERIOD ENDED DECEMBER 31, 2009~~

Item 67. ~~Selected~~Management’s Discussion and Analysis of Financial ~~Data~~Condition and Results of Operations

The following ~~tables~~discussion ~~include~~and ~~selected~~analysis ~~historical~~should be read along with “Selected Financial Data” and our consolidated financial ~~data~~statements ~~for~~and ~~each~~the ~~year~~related notes included elsewhere in this report. This discussion includes forward-looking statements that reflect our current views with respect to future events and financial performance and that involve risks and uncertainties. Our actual results, performance or achievements could differ materially from those anticipated in the forward-looking ~~five~~statements ~~year~~as ~~period~~a ~~ended~~result ~~December 31~~of certain factors, ~~2009~~including risks discussed in “Management’s Discussion and Analysis of Financial Condition and Results of Operations — Forward-Looking Statements” and Item 1A — “Risk Factors” included elsewhere in this report.

~~This~~Forward-Looking ~~selected financial data should be read along with “Management’s Discussion and Analysis of~~Statements ~~Financial Condition and Results of Operations” and our audited historical consolidated financial statements and the related notes included elsewhere in this report.~~

15This annual report on Form 10-K contains “forward-looking statements” within the meaning of the United States federal securities laws. The words “may,” “believe,” “will,” “anticipate,” “expect,” “planned,” “estimate,” “project,” “future,” and other expressions which are predictions of or indicate future events and trends and which do not relate to historical matters identify forward-looking statements. The forward-looking statements in this annual report on Form 10-K include, among others, statements with respect to:

~~Table~~• consummation of ~~Contents~~the merger and contribution agreement; • ability to create shareholder value; • business goals and strategy; • strategies for shareholder value creation; • the stability of home prices; • effect of challenging conditions on us; • financing sources; • ability to generate sufficient cash flow from our assets in 2011, 2012 and 2013 to repay maturing project specific financings; • the visibility of our future cash flow; • expected backlog and closings; • sufficiency of our access to capital resources; • supply and demand equilibrium; • the timing of the effect of interest rate changes on our cash flows; • the effect on our business of existing lawsuits; and • whether or not our letters of credit or performance bonds will be drawn upon.

~~United~~Reliance ~~States~~should ~~GAAP~~not be placed on forward-looking statements because they involve both known and unknown risks, uncertainties and other factors, which may cause the actual results to differ materially from the anticipated future results expressed or implied by such forward-looking statements. Factors that could cause actual results to differ materially from those set forward in the forward-looking statements include, but are not limited to:

~~Our~~• ~~statement~~changes ofin ~~operations~~general ~~data~~economic, ~~balance~~real ~~sheet~~estate ~~data~~and other conditions; • mortgage rate and ~~supplementary~~availability ~~financial~~changes; ~~data~~• ~~prepared~~availability of suitable undeveloped land at acceptable prices; • adverse legislation or regulation; • ability to obtain necessary permits and approvals for the development of our land; • availability of labor or materials or increases in ~~accordance~~ their costs; • ability to develop and market our master-planned communities successfully; • ability to obtain regulatory approvals; • confidence levels of consumers; • ability to raise capital on favorable terms; • our debt and leverage; • adverse weather conditions and natural disasters; • relations with ~~U.S.~~the ~~GAAP~~residents of our communities; • risks associated with increased insurance costs or unavailability of adequate coverage; • ability to obtain surety bonds; • competitive conditions in the homebuilding industry, including product and pricing pressures; • ability to retain our ~~operating~~executive ~~data~~officers; • relationships with our affiliates; • failure to obtain any required regulatory and shareholders approvals with respect to the transaction; and • additional risks and uncertainties, many of which are asbeyond ~~follows:~~ our control, referred to in this Form 10-K and our other SEC filings.

	Years Ended December 31
Statement of Operations Data
($ millions, except per share amounts)	2009			2008			2007		2006		2005
Total revenue (1)	$	376		$	449		$	583	$	872	$	1,214
Housing revenue		340			415			541		784		1,074
Impairment of housing and land inventory and write-offs of option deposits		24			115			88		10		—
Total gross margin (2)		(2	)		(82	)		14		245		398
Impairment of investments in unconsolidated entities		13			38			15		—		—
Net (loss) / income		(33	)		(133	)		23		167		255
Net (loss) / income attributable to Brookfield Homes Corporation		(28	)		(116	)		16		148		219
Diluted (loss) / earnings per share		(1.54	)		(4.33	)		0.58		5.45		7.04
Cash dividends per common share		—			0.20			0.40		0.40		0.32

	At December 31
Balance Sheet Data ($ millions)	2009		2008		2007		2006		2005
Housing and land inventory (3)	$	928	$	1,055	$	1,236	$	1,225	$	988
Total assets		1,037		1,207		1,351		1,401		1,330
Total debt (4)		382		749		735		618		636
Total liabilities (5)		551		944		969		1,030		1,065
Total equity (5)		486		263		382		371		265

Except as required by law, we undertake no obligation to publicly update any forward-looking statements, whether as a result of new information, future events or otherwise. However, any further disclosures made on related subjects in subsequent reports on Forms 10-K, 10-Q and 8-K should be consulted.

	Years Ended December 31
Supplemental Financial Data ($ millions)	2009			2008			2007			2006			2005
Cash provided by / (used in):
Operating activities	$	137		$	66		$	(44	)	$	26		$	60
Investment activities		(9	)		(32	)		(58	)		(47	)		(5	)
Financing activities		(128	)		(43	)		24			(91	)		(44	)
Net debt to total capitalization percent (6)		42	%		71	%		61	%		53	%		58	%

Overview

	Years Ended December 31
Operating Data	2009		2008		2007		2006		2005
Home closings (units)		703		750		839		1,181		1,618
Lots sold to homebuilders (units)		469		616		1,328		834		1,242
Net new orders (units) (7)		756		729		735		960		1,482
Backlog (units at end of period) (8)		187		134		155		259		480
Average selling price	$	488,000	$	562,000	$	662,000	$	679,000	$	683,000
Lots controlled		24,245		24,109		25,371		27,616		29,512

On October 4, 2010, Brookfield Properties Corporation, Brookfield Homes Corporation and Brookfield Residential Properties Inc. (“Brookfield Residential”), a wholly-owned subsidiary of Brookfield Asset Management Inc., entered into a definitive agreement to combine Brookfield Homes and the North American residential land and housing division of Brookfield Properties into Brookfield Residential (the “transaction”). Completion of the transaction is subject to regulatory approval in the United States and Canada, the approval of the holders of a majority of the outstanding Brookfield Homes common stock and other customary closing conditions. Brookfield beneficially owns, through Brookfield Residential, sufficient shares to approve the transaction and has agreed to vote in favor of the transaction at the Brookfield Homes stockholders meeting scheduled for March 25, 2011.

(1)		To conform to the current year presentation, for years prior to 2007, total revenue excludes other income.
(2)		Gross margin represents the contribution from our housing and land projects, after all costs for development and construction, including related overhead and interest, impairments and other charges and before all other income / (expense), selling, general and administrative expense and noncontrolling interest.
(3)		Housing and land inventory includes investment in unconsolidated entities and consolidated land inventory not owned.
(4)		To conform to the current year presentation, for years prior to 2007, total debt excludes deferred compensation which is now shown as a component of accounts payable and other liabilities. Total debt is defined as project specific financings and revolving and other financings.
(5)		To conform to the current year presentation, for years prior to 2009, total liabilities excludes noncontrolling interest of unconsolidated entities which is now shown as a component of total equity.
(6)		Net debt to total capitalization percent is defined as total interest bearing debt less cash multiplied by 100 and divided by total interest bearing debt less cash plus equity and other interests in consolidated subsidiaries (total capitalization).
(7)		Net new orders for any period represents the aggregate of all homes ordered by customers, net of cancellations, including unconsolidated entities.
(8)		Backlog represents the number of new homes subject to pending sales contracts, including unconsolidated entities.

In the first quarter, we were encouraged by the improvement in sales and closings. However, since then, selling communities have seen a drop in the number of visits from potential homebuyers, which we believe is a result of expired government stimulus programs, together with continued uncertain economic conditions, which have negatively impacted homebuyer confidence. The United States homebuilding industry continues to face a number of challenges with home foreclosures and tight credit standards continuing to have an effect on inventory and new home sale rates and prices. Despite these challenging conditions, we believe the risk is mitigated by our assets which are largely located in geographic areas with a constrained supply of lots and which have demonstrated strong economic characteristics over the long term. The supply of finished lots has been depleted substantially over the last few years and negligible development has occurred since 2006. As a result, we believe our strong financial position and owning entitled and/or developed lots in supply-constrained markets places us in a solid position as the markets improve.

16Through the activities of our operating subsidiaries, we entitle and develop land for our own communities and sell lots to third parties. We also design, construct and market single and multi-family homes primarily to move-up homebuyers.

~~Table~~We ofoperate ~~Contents~~in the following geographic regions, which are presented as our reportable segments: Northern California (San Francisco Bay Area and Sacramento), Southland / Los Angeles, San Diego / Riverside and the Washington D.C. Area. Our other operations that do not meet the quantitative thresholds for separate segment disclosure are included in “Corporate and Other.”

~~Item~~For the five year period 2006 to 2010, cash provided from operations was $273 7million, which was used primarily to to repay debt. ~~Management’s~~Despite ~~Discussion~~the ~~and~~continuing ~~Analysis~~challenges of ~~Financial~~the ~~Condition~~United States housing market, we believe our business is positioned to create further stockholder value over the long term through the selective control of a number of strategic projects and ~~Results~~the overall level of ~~Operations~~lots controlled.

The ~~following~~26,817 ~~discussion~~lots ~~and~~that ~~analysis~~we ~~should~~control beprovide ~~read~~a ~~along~~strong ~~with~~foundation ~~“Selected~~for ~~Financial Data” and~~ our ~~consolidated~~future ~~financial~~operations ~~statements~~ and visibility ~~the~~on ~~related~~our ~~notes~~future ~~included~~cash ~~elsewhere in this report~~flow. ~~This discussion~~We ~~includes~~believe ~~forward-looking~~we ~~statements~~add ~~that~~value ~~reflect~~to ~~our~~the ~~current~~lots ~~views~~we ~~with~~control ~~respect to~~through ~~future~~entitlements, ~~events~~development and ~~financial~~the ~~performance~~construction ~~and~~of ~~that~~homes. ~~involve~~In ~~risks~~allocating ~~and~~capital ~~uncertainties.~~to ~~Our~~our ~~actual results~~operations, we ~~performance~~generally orlimit ~~achievements~~our ~~could~~capital ~~differ~~at ~~materially~~risk ~~from~~on ~~those~~unentitled ~~anticipated~~land inby ~~the forward-looking~~optioning ~~statements~~such asland apositions. ~~result of certain factors, including risks discussed in~~Option ~~“Management’s~~contracts ~~Discussion~~for ~~and~~the ~~Analysis~~purchase of ~~Financial~~land ~~Condition~~permit ~~and~~us ~~Results~~to ofcontrol ~~Operations~~lots ~~– Forward-Looking~~for ~~Statements”~~an ~~and~~extended ~~Item 1A~~period –of ~~“Risk Factors” included elsewhere in this report~~time.

~~Forward-Looking~~Operating ~~Statements~~in markets with higher price points, our average home selling price in 2010 of $511,000 was well in excess of the national average sales price. We also sell serviced and unserviced lots to other homebuilders, generally on an opportunistic basis where we can redeploy capital to an asset providing higher returns. In 2010, we sold 370 lots to homebuilders. The number of lots we sell may vary significantly from period to period due to the timing and nature of such sales which are also affected by local market conditions.

~~This~~Our ~~annual~~housing ~~report~~and onland ~~Form~~inventory ~~10-K~~and ~~contains~~investments ~~“forward-looking~~in ~~statements”~~unconsolidated ~~within~~entities ~~the~~together ~~meaning~~comprised of93% ~~the~~of ~~United~~our ~~States~~total ~~federal~~assets ~~securities~~of ~~laws.~~$991 million ~~The~~as ~~words~~of ~~“may~~December 31,” ~~“believe,”~~2010. ~~“will,”~~In ~~“anticipate~~addition,” ~~“expect,” “planned,”~~we ~~“estimate,”~~had ~~“project,”~~$65 million ~~“future,”~~in ~~and~~ other assets. ~~expressions~~Other ~~which~~assets ~~are~~consist ~~predictions~~ of ~~or indicate~~restricted ~~future~~cash ~~events~~of ~~and~~$7 million, ~~trends~~deferred ~~and~~taxes ~~which~~of do$33 million ~~not relate to historical matters identify~~and ~~forward-looking~~receivables ~~statements.~~and ~~The~~other ~~forward-looking~~assets ~~statements~~of ~~in this annual report on Form 10-K~~$25 million. ~~include, among others, statements with respect to:~~

•As ~~ability~~at toDecember 31, ~~create~~2010, ~~shareholder value; • business goals and strategy; • strategies for shareholder value creation; •~~ the ~~stability~~market ofcapitalization ~~home prices; • effect~~ of ~~challenging~~our ~~conditions~~common onstock ~~us;~~was •$279 million, ~~financing sources; • ability~~ compared to ~~generate sufficient cash flow from~~ our ~~assets~~book invalue ~~2010 and 2011 to repay maturing project specific financings; • the visibility~~ of ~~our~~$225 million. ~~future~~Market ~~cash~~capitalization ~~flow;~~will •vary ~~expected~~depending ~~backlog~~on market sentiment and ~~closings;~~may •not ~~sufficiency~~have ofa ~~our~~relationship ~~access~~ to ~~capital resources; • supply and demand equilibrium; •~~ the ~~timing~~underlying value of ~~the~~a ~~effect~~share of ~~interest rate changes on~~ our ~~cash~~Company ~~flows;~~over • the ~~effect on our business of existing lawsuits; and • whether or not our letters of credit or performance bonds will be drawn upon~~longer term.

~~Reliance should not be placed on forward-looking statements because they involve both known and~~19 unknown risks, uncertainties and other factors, which may cause the actual results to differ materially from the anticipated future results expressed or implied by such forward-looking statements. Factors that could cause actual results to differ materially from those set forward in the forward-looking statements include, but are not limited to:

•Results ~~changes in general economic, real estate and other conditions; • mortgage rate and availability changes; • availability~~ of suitable undeveloped land at acceptable prices; • adverse legislation or regulation; • ability to obtain necessary permits and approvals for the development of our land; • availability of labor or materials or increases in their costs; • ability to develop and market our master-planned communities successfully; • ability to obtain regulatory approvals; • confidence levels of consumers; • ability to raise capital on favorable terms; • our debt and leverage; • adverse weather conditions and natural disasters; • relations with the residents of our communities; • risks associated with increased insurance costs or unavailability of adequate coverage; • ability to obtain surety bonds; • competitive conditions in the homebuilding industry, including product and pricing pressures; • ability to retain our executive officers; • relationships with our affiliates; and • additional risks and uncertainties, many of which are beyond our control, referred to in this Form 10-K and our other SEC filings.Operations


	Years Ended December 31
*Selected Financial Information ($US millions)*	2010			2009			2008
Revenue:
Housing	$	292		$	340		$	415
Land		47			36			34

Total revenues		339			376			449
Direct cost of sales		(284	)		(354	)		(416	)
Impairment of housing and land inventory and write-off of option deposits		—			(24	)		(115	)

Gross margin / (loss)		55			(2	)		(82	)
Selling, general and administrative expense		(56	)		(52	)		(69	)
Equity in earnings from unconsolidated entities		—			1			3
Impairment of unconsolidated entities		—			(13	)		(38	)
Other income / (expense)		8			13			(18	)

Income / (loss) before income taxes		7			(53	)		(204	)
Income tax (expense) / recovery		(4	)		20			71

Net income / (loss)		3			(33	)		(133	)
Loss attributable to noncontrolling interests		1			5			17

Net income / (loss) attributable to Brookfield Homes Corporation	$	4		$	(28	)	$	(116	)


	Years Ended December 31
*Segment Information*	2010			2009			2008
Housing revenue ($US millions):
Northern California	$	71		$	102		$	127
Southland / Los Angeles		83			79			94
San Diego / Riverside		54			69			68
Washington D.C. Area		80			86			122
Corporate and Other		4			4			4

Total	$	292		$	340		$	415


Land revenue ($US millions):
Northern California	$	—		$	—		$	2
Southland / Los Angeles		4			—			—
San Diego / Riverside		27			20			19
Washington D.C. Area		16			8			13
Corporate and Other		—			8			—

Total	$	47		$	36		$	34


Impairment of housing and land inventory and write-off of option deposits ($US millions):
Northern California	$	—		$	—		$	21
Southland / Los Angeles		—			3			16
San Diego / Riverside		—			1			42
Washington D.C. Area		—			13			36
Corporate and Other		—			7			—

Total	$	—		$	24		$	115


Gross margin / (loss) ($US millions):
Northern California	$	12		$	1		$	(18	)
Southland / Los Angeles		14			5			(3	)
San Diego / Riverside		11			(4	)		(42	)
Washington D.C. Area		19			4			(17	)
Corporate and Other		(1	)		(8	)		(2	)

Total	$	55		$	(2	)	$	(82	)

~~Except as required by law, we undertake no obligation to publicly update any forward-looking~~20 statements, whether as a result of new information, future events or otherwise. However, any further disclosures made on related subjects in subsequent reports on Forms 10-K, 10-Q and 8-K should be consulted.

Overview


	Years Ended December 31
	2010		2009		2008
Home closings (units):
Northern California		66		121		139
Southland / Los Angeles		189		204		227
San Diego / Riverside		100		136		128
Washington D.C. Area		210		232		245
Corporate and Other		8		6		6

Consolidated Total		573		699		745
Unconsolidated Entities		2		4		5

Total		575		703		750


Average selling price ($US):
Northern California	$	1,084,000	$	845,000	$	913,000
Southland / Los Angeles		437,000		388,000		413,000
San Diego / Riverside		543,000		507,000		533,000
Washington D.C. Area		381,000		369,000		499,000
Corporate and Other		440,000		635,000		689,000

Consolidated Average		510,000		486,000		557,000
Unconsolidated Entities		817,000		821,000		1,288,000

Average	$	511,000	$	488,000	$	562,000


Lots controlled (units at end of year):
Northern California		3,273		2,001		1,108
Southland / Los Angeles		1,655		1,235		1,417
San Diego / Riverside		8,761		8,853		6,605
Washington D.C. Area		3,681		3,627		3,681
Corporate and Other		253		263		273

		17,623		15,979		13,084
Lots under option ⁽¹⁾		9,194		8,266		11,025

Total		26,817		24,245		24,109

~~During~~(1) ~~the~~Includes ~~year~~proportionate ~~ended~~share ~~December 31, 2009, selling communities have seen an increased number~~ of ~~homebuyers~~ ~~take~~lots ~~advantage~~under ofoption ~~improved~~related ~~affordability, low interest rates, declining home prices and government stimulus programs. While the United States homebuilding industry continues~~ to ~~face~~unconsolidated a number of challenges with home foreclosures and tight credit standards continuing to have an effect on inventory and new home sale rates and prices, homebuyer confidence has improved as homebuyers appear to have recognized that home prices have begun to stabilizeentities. Despite the challenging conditions still faced by the homebuilding market, we believe the risk is mitigated by our assets which are largely located in geographic areas with a constrained supply of lots and which have demonstrated strong economic characteristics over the long term.

~~Through~~Year ~~the~~Ended ~~activities of our operating subsidiaries~~December 31, we2010 ~~entitle~~Compared ~~and~~with ~~develop~~Year ~~land~~Ended ~~for our own communities and sell lots to third parties. We also design~~December 31, ~~construct and market single and~~2009 ~~multi-family homes primarily to move-up and luxury homebuyers.~~

WeNet ~~operate in the following geographic regions, which are presented as our reportable segments:~~Income Northern California (San Francisco Bay Area and Sacramento), Southland / Los Angeles, San Diego / Riverside and the Washington D.C. Area. Our other operations that do not meet the quantitative thresholds for separate segment disclosure are included in “Corporate and Other.”

~~For~~Net ~~the~~income ~~five~~for the year ~~period~~ended ~~2005~~December 31, to2010 ~~2009~~was $3 million, ~~cash~~an ~~provided~~increase ~~from~~of ~~operations~~$36 million ~~was~~when compared to net loss of $~~245~~33 million for the year ended December 31, ~~which~~2009. ~~was used~~The increase primarily relates to ~~return~~a ~~cash~~decrease toof ~~stockholders~~$37 million ~~through~~in ~~the~~impairments ~~repurchase~~and ofwrite-offs ~~shares~~on our housing and toland ~~repay~~assets ~~debt.~~and investments in ~~Despite~~unconsolidated ~~the~~entities. ~~continuing~~This ~~challenges~~is ofreflected ~~the~~as ~~United~~an ~~States~~increase in housing ~~market,~~and weland ~~believe~~gross ~~our~~margin ~~business~~of is$33 ~~positioned~~million, topartially ~~create~~offset ~~further~~by ~~stockholder~~an ~~value~~increase ~~over~~in ~~the~~tax ~~long~~expense ~~term~~of ~~through~~$24 million, ~~the~~selling, ~~selective~~general ~~control of~~and aadministrative ~~number~~costs of ~~strategic~~$4 million ~~projects~~ and ~~the~~a ~~overall~~decrease ~~level~~in ofother ~~lots~~income ~~controlled~~of $5 million.

~~The~~Results ~~24,245 lots that we control, 15,979~~ of ~~which we own directly, are held through unconsolidated~~Operations entities or consolidated inventory not owned, provide a strong foundation for our future homebuilding business and visibility on our future cash flow. We believe we add value to the lots we control through entitlements, development and the construction of homes. In allocating capital to our operations, we generally limit our risk on unentitled land by optioning such land positions in all our markets thereby mitigating our capital at risk. Option contracts for the purchase of land permit us to control lots for an extended period of time.

~~Homebuilding~~Company-wide: isHousing ~~our primary source of~~ revenue ~~and~~was ~~has~~$292 million ~~represented~~for ~~approximately~~the ~~90%~~year ofended ~~our total revenue since 2003. Operating in markets with higher price points and catering to move-up and luxury buyers~~December 31, ~~our average sales price in 2009 of $488~~2010,~~000~~ ~~was~~a ~~well~~decrease ~~in excess~~ of ~~the national~~ ~~average~~$48 million ~~sales~~when ~~price.~~compared ~~We also sell serviced and unserviced lots~~ to ~~other~~2009. ~~homebuilders,~~The ~~generally~~decrease ~~on an opportunistic basis where we can reduce our risk~~ in ahousing ~~market~~revenue orwas ~~redeploy~~primarily ~~capital~~due to anfewer ~~asset~~home ~~providing~~closings ~~higher~~for ~~returns.~~2010 Inof ~~2009~~575 units, wea ~~sold~~decrease ~~469 lots to homebuilders. The number~~ of ~~lots~~128 weunits ~~sell~~or ~~may vary~~18% ~~significantly~~when ~~from~~compared ~~period~~ to ~~period~~2009, ~~due to the timing and nature of such sales which are also~~partially ~~affected~~offset by ~~local~~a ~~market~~higher ~~conditions~~average selling price.

~~Our~~Housing ~~housing~~revenues ~~and~~were ~~land~~net ~~inventory,~~of ~~investments~~incentives ~~in unconsolidated entities, and consolidated land inventory not owned together comprised 89%~~ of ~~our~~$23 million ~~total~~for ~~assets~~the asyear ofended December 31, ~~2009. In addition~~2010, compared weto ~~had~~ $~~109~~57 million infor ~~other~~the ~~assets.~~same ~~Other~~period ~~assets~~in ~~consist~~2009. ofOur ~~restricted~~incentives ~~cash~~on ofhomes ~~$7 million,~~closed ~~income~~by ~~taxes~~reportable ~~receivable~~segment offor the ~~$40 million,~~years ~~deferred~~ended ~~taxes of $40~~December ~~million~~31, 2010 and ~~other receivables~~2009 ofwere ~~$22 million.~~as ~~Homebuyer receivables consist primarily of proceeds due from homebuyers~~follows: ~~on the closing of homes.~~

~~As at December 31, 2009, the market capitalization of our common stock was $227 million, compared~~21 to our book value of $229 million. Market capitalization will vary depending on market sentiment and may not have a relationship to the underlying value of a share of our common stock over the longer term.


	Years Ended December 31
	2010					2009
	Incentives		% of Gross			Incentives		% of Gross
*($ millions)*	Recognized		Revenues			Recognized		Revenues
Northern California	$	9		11	%	$	27		26	%
Southland / Los Angeles		4		4	%		5		7	%
San Diego / Riverside		3		5	%		4		6	%
Washington D.C. Area		7		8	%		21		24	%
Corporate and Other		—		—			—		—

Total	$	23		7	%	$	57		17	%

~~Table~~Land revenue in 2010 totaled $47 million on the sale of ~~Contents~~370 lots to homebuilders compared with $36 million in 2009 on the sale of 469 lots. Our land revenues may vary significantly from period to period due to the timing and nature of land sales, as they generally occur on an opportunistic basis and are affected by local market conditions.

~~Results~~Gross margin was $55 million compared with a loss of ~~Operations~~$2 million in 2009. The increase in gross margin was primarily a result of a decrease in impairment charges and other write-offs.

	Years Ended December 31
Selected Financial Information ($US millions)	2009			2008			2007
Revenue:
Housing	$	340		$	415		$	541
Land		36			34			42
Total revenues		376			449			583
Direct cost of sales		(354	)		(416	)		(481	)
Impairment of housing and land inventory and write-offs of option deposits		(24	)		(115	)		(88	)
Gross margin / (loss)		(2	)		(82	)		14
Selling, general and administrative expense		(52	)		(69	)		(69	)
Equity in earnings from unconsolidated entities		1			3			13
Impairment of unconsolidated entities		(13	)		(38	)		(15	)
Other income / (expense)		13			(18	)		(6	)
Loss before income taxes		(53	)		(204	)		(63	)
Income tax recovery		20			71			72
Net (loss) / income		(33	)		(133	)		9
Less net loss attributable to noncontrolling interests		5			17			7
Net (loss) / income attributable to Brookfield Homes Corporation	$	(28	)	$	(116	)	$	16

In 2010, we did not recognize any impairment charges or option write-offs on our housing and land inventory compared to impairment charges of $24 million in 2009. Forty-two projects were tested for impairment charges and option write-offs for the year ended December 31, 2010 and no impairment charges or option write-offs were required.

	Years Ended December 31
Segment Information	2009			2008			2007
Housing revenue ($US millions):
Northern California	$	102		$	127		$	121
Southland / Los Angeles		79			94			176
San Diego / Riverside		69			68			89
Washington D.C. Area		86			122			143
Corporate and Other		4			4			12
Total	$	340		$	415		$	541
Land revenue ($US millions):
Northern California	$	—		$	2		$	—
Southland / Los Angeles		—			—			30
San Diego / Riverside		20			19			—
Washington D.C. Area		8			13			12
Corporate and Other		8			—			—
Total	$	36		$	34		$	42
Impairment of housing and land inventory and write-offs of option deposits ($US millions):
Northern California	$	—		$	21		$	5
Southland / Los Angeles		3			16			3
San Diego / Riverside		1			42			33
Washington D.C. Area		13			36			47
Corporate and Other		7			—			—
Total	$	24		$	115		$	88
Gross margin / (loss) ($US millions):
Northern California	$	1		$	(18	)	$	12
Southland / Los Angeles		5			(3	)		36
San Diego / Riverside		(4	)		(42	)		(10	)
Washington D.C. Area		4			(17	)		(26	)
Corporate and Other		(8	)		(2	)		2
Total	$	(2	)	$	(82	)	$	14

The number of projects where impairment charges and option write-offs were recognized and the fair value of the projects impaired for the years ended December 31, 2010 and 2009 were as follows:


	Years Ended December 31
	2010						2009
	Projects				Fair Value		Projects				Fair Value
	Tested for		Projects		of Projects		Tested for		Projects		of Projects
*($ millions)*	Impairment		Impaired		Impaired		Impairment		Impaired		Impaired
Northern California		7		—	$	—		6		1	$	—
Southland / Los Angeles		4		—		—		4		1		14
San Diego / Riverside		14		—		—		15		—		—
Washington D.C. Area		15		—		—		18		3		5
Corporate and Other		2		—		—		3		2		6

Total		42		—	$	—		46		7	$	25

~~Table~~Northern California: Housing revenue was $71 million for the year ended December 31, 2010, a decrease of $31 million ~~Contents~~when compared to 2009. The gross margin on housing revenue was $12 million, or an increase of $2 million when compared to 2009. The increase was a result of higher average selling prices. Land revenue was nil in 2010 and 2009. The gross margin on land revenue was nil in 2010 compared to $(9) million in 2009. The negative gross margin on land revenue in 2009 comprised a loss on the disposal to another homebuilder of a to be constructed 120 unit senior living facility.

	Years Ended December 31
	2009		2008		2007
Home closings (units):
Northern California		121		139		131
Southland / Los Angeles		204		227		258
San Diego / Riverside		136		128		150
Washington D.C. Area		232		245		272
Corporate and Other		6		6		14
Consolidated Total		699		745		825
Unconsolidated Entities		4		5		14
Total		703		750		839
Average selling price ($US):
Northern California	$	845,000	$	913,000	$	921,000
Southland / Los Angeles		388,000		413,000		682,000
San Diego / Riverside		507,000		533,000		597,000
Washington D.C. Area		369,000		499,000		528,000
Corporate and Other		635,000		689,000		831,000
Consolidated Average		486,000		557,000		656,000
Unconsolidated Entities		821,000		1,288,000		1,020,000
Average	$	488,000	$	562,000	$	662,000
Lots controlled (units at end of year):
Northern California		2,001		1,108		1,325
Southland / Los Angeles		1,235		1,417		1,993
San Diego / Riverside		8,853		6,605		6,064
Washington D.C. Area		3,627		3,681		8,371
Corporate and Other		263		273		282
		15,979		13,084		18,035
Lots under option (1)		8,266		11,025		7,336
Total		24,245		24,109		25,371

Southland / Los Angeles: Housing revenue was $83 million for the year ended December 31, 2010, an increase of $4 million when compared to 2009. The increase for the year ended December 31, 2010 compared to 2009 was primarily attributable to higher average selling prices partially offset by a decrease in home closings of 15 units. Land revenue was $4 million for the year ended December 31, 2010 compared with nil in 2009. The gross margin for the year ended December 31, 2010 was $14 million compared with $5 million in 2009. The increase in the gross margin for the year ended December 31, 2010 compared to the same period in 2009 was primarily a result of no impairment charges in 2010 and higher average selling prices. Impairment charges for the year ended December 31, 2010 were nil compared to $3 million in 2009.

~~(1)~~San ~~Includes~~Diego ~~options~~/ ~~not~~Riverside: ~~consolidated~~Housing ~~and~~revenue ~~proportionate~~was ~~share~~$54 million for the year ended December 31, 2010, a decrease of $15 million ~~lots~~when ~~under~~compared ~~option~~to ~~related~~2009. The decrease for the year ended December 31, 2010 compared to 2009 ~~unconsolidated~~was ~~entities~~primarily attributable to a decrease in home closings partially offset by higher average selling prices. Land revenue was $27 million for the year ended December 31, 2010, compared with $20 million for the same period in 2009. The gross margin for the year ended December 31, 2010 was $11 million compared with $(4) million in 2009.

~~Year Ended December 31, 2009 Compared with Year Ended December 31, 2008~~22

~~Net~~Impairment ~~Income~~charges and option write-offs for the year ended December 31, 2010 were nil compared with $1 million in 2009.

~~Net~~Washington ~~loss~~D.C. Area: Housing revenue was $80 million for the year ended December 31, ~~2009 was $33 million~~2010, a decrease ~~decline in net loss~~ of ~~$101~~ $6 million when compared to ~~net~~2009. ~~loss~~The ofdecrease ~~$133 million~~ for the year ended December 31, ~~2008.~~2010 ~~The~~compared to ~~decrease~~2009 inwas ~~net loss~~ primarily ~~relates~~due to a decrease ofin home closings, partially offset by higher selling prices. Land revenue was $~~116~~16 million infor ~~impairments~~the ~~and~~year ~~write-offs on~~ended ~~our~~December 31, ~~housing~~2010, ~~and~~compared ~~land~~with ~~assets~~$8 million ~~and~~in 2009. ~~investments~~The ingross ~~unconsolidated~~margin ~~entities,~~for ~~lower~~the ~~selling~~year ~~general and~~ended ~~administrative~~December 31, ~~costs~~2010 ofwas $1719 million, ~~and~~compared anwith ~~increase~~$4 million in ~~income~~2009. ~~from~~The ~~our~~increase ~~interest~~in ~~rate~~gross ~~swap contracts~~margin offor ~~$30~~the year ended December ~~million~~31, ~~partially~~2010 ~~offset~~compared byto 2009 was primarily a ~~decrease~~result inof ~~housing~~no impairment charges and ~~land~~other ~~gross~~write-offs. ~~margin~~Impairment ofcharges ~~$10~~and other ~~million~~write-offs ~~and~~for athe ~~reduction~~year inended ~~tax~~December 31, ~~recoveries~~2010 ofwere nil compared with $5113 million in 2009.

~~Results~~Selling, general and administrative expense was $56 million in 2010, an increase of ~~Operations~~$4 million when compared to 2009. The components of the 2010 and 2009 expense are summarized as follows:

Company-wide: Housing revenue was $340 million for the year ended December 31, 2009, a decrease of $75 million when compared to the same period in 2008. The decrease in housing revenue was primarily due to fewer home closings for 2009 of 703 units, a decrease of 47 units or 6% when compared to 2008 as well as reduced average selling prices and product mix.


	Years Ended December 31
*($ millions)*	2010			2009
General and administrative expenses	$	36		$	30
Sales and marketing expenses		18			22
Stock compensation		3			4
Change in fair value of equity swap contracts		(1	)		(4	)

	$	56		$	52

20Equity in earnings from investments in unconsolidated entities in 2010 totaled $(0.2) million, a decrease of $1 million when compared to 2009. The impairment of our investments in unconsolidated entities totaled nil in 2010 compared to $13 million in 2009.

~~Table~~Other income / (expense) in 2010 totaled $8 million, a decrease of ~~Contents~~$5 million when compared to 2009. The components of the 2010 and 2009 other income are summarized as follows:

Housing revenues were net of incentives of $57 million for the year ended December 31, 2009, compared to $73 million for the same period in 2008. Our incentives on homes closed by reportable segment for the years ended December 31, 2009 and 2008 are as follows:


	Years Ended December 31
*($ millions)*	2010			2009
Change in fair value of interest rate swap contracts	$	(1	)	$	11
Other		9			2

	$	8		$	13

	Years Ended December 31
	2009					2008
	Incentives		% of Gross			Incentives		% of Gross
($ millions)	Recognized		Revenues			Recognized		Revenues
Northern California	$	27		26	%	$	37		29	%
Southland / Los Angeles		5		7	%		8		8	%
San Diego / Riverside		4		6	%		4		5	%
Washington D.C. Area		21		24	%		24		20	%
Corporate and Other		—		—			—		—
Total	$	57		17	%	$	73		18	%

Sales Activity

~~Land~~Our ~~revenue~~net innew ~~2009~~home ~~totaled~~orders ~~$36~~for the year ended December ~~million~~31, on2010 ~~the~~were ~~sale~~473 ofunits, ~~469~~a ~~lots~~decrease toof ~~homebuilders~~283 units compared ~~with $34 million~~to in2009. ~~2008~~Based on ~~the~~our ~~sale~~average of ~~616~~22 ~~lots~~active selling communities during the year, our average sales rate during 2010 was approximately 0.4 ~~Our~~sales ~~land~~per ~~revenues~~week ~~may~~per ~~vary~~community, ~~significantly~~which ~~from~~is ~~period~~below towhat ~~period~~may ~~due~~be toconsidered ~~the~~a ~~timing~~normal ~~and~~housing ~~nature~~market of ~~land~~one ~~sales,~~sale asper ~~they~~week ~~generally~~per ~~occur~~active onselling ~~an opportunistic~~community. ~~basis~~The ~~and~~net ~~are~~new ~~affected~~home orders in units for 2010 and 2009 by ~~local~~reportable ~~market~~segment ~~conditions.~~were as follows:

Gross margin was a loss of $2 million compared with a loss of $82 million for the same period in 2008. The increase in gross margin was primarily a result of a decrease in impairment charges and other write-offs, partially offset by fewer home closings during the year ended December 31, 2009, as well as reduced average selling prices. Included in gross margin is a loss of $19 million on the abandonment of 2,610 lots which was offset in the same market area with the extension and renegotiation of a land option contract on 2,000 lots, which is included in consolidated land inventory not owned.


	Years Ended December 31
	2010		2009
Northern California		51		135
Southland / Los Angeles		140		218
San Diego / Riverside		94		151
Washington D.C. Area		176		263
Corporate and Other		10		(14	)

Consolidated Total		471		753
Unconsolidated Entities		2		3

Total		473		756

InNet ~~2009,~~new weorders ~~recognized~~for ~~impairment~~any ~~charges~~period ~~and~~represent ~~option~~the ~~write-offs~~aggregate ~~on our housing and land inventory~~ of ~~$24 million~~all ~~compared~~homes toordered ~~$115 million~~by ~~in 2008. The impairment charges and option write-offs related primarily to lots located in the Southland~~customers, ~~Washington D.C. Area and Corporate and Other~~net ~~reportable~~of ~~segments, optioned lots located primarily in California and the Washington D~~cancellations.~~C. Area, as~~ ~~well as a commercial site located in the Washington D.C. Area reportable segment.~~

~~The~~Our ~~number~~backlog, ofwhich ~~projects~~represents ~~where impairment charges and option write-offs were recognized and~~ the ~~fair value~~number of ~~the~~new ~~projects~~homes ~~impaired~~subject ~~for~~to ~~the~~pending ~~years~~sales ~~ended~~contracts, at December 31, ~~2009~~2010 and ~~2008~~2009 ~~are~~by reportable segment was as follows:

	Years Ended December 31
	2009						2008
	Projects				Fair Value		Projects				Fair Value
	Tested for		Projects		of Projects		Tested for		Projects		of Projects
($ millions)	Impairment		Impaired		Impaired		Impairment		Impaired		Impaired
Northern California		6		1	$	—		9		3	$	91
Southland / Los Angeles		4		1		14		6		3		49
San Diego / Riverside		15		—		—		14		3		91
Washington D.C. Area		18		3		5		22		13		79
Corporate and Other		3		2		6		2		—		—
Total		46		7	$	25		53		22	$	310

A summary of our gross margin / (loss) is as follows:


	Backlog December 31
	2010				2009
	Units		$ millions		Units		$ millions
Northern California		9	$	10		24	$	24
Southland / Los Angeles		20		6		69		29
San Diego / Riverside		17		10		23		11
Washington D.C. Area		37		17		71		24
Corporate and Other		1		1		—		—

Consolidated Total		84		44		187		88
Unconsolidated Entities		1		1		—		—

Total		85	$	45		187	$	88

	Years Ended December 31
($ millions)	2009			2008
Housing	$	45		$	52
Land		(23	)		(19	)
Impairment charges / write-downs		(24	)		(115	)
	$	(2	)	$	(82	)

We expect 85 units of our backlog to close in 2010 subject to any future cancellations that may occur. The cancellation rates for 2010 and 2009 by reportable segment were as follows:

Northern California: Housing revenue was $102 million for the year ended December 31, 2009, a decrease of $25 million when compared to the same period in 2008. The gross margin on housing was $10 million, consistent with the same period in 2008. While there were fewer option contract write-offs and impairment charges recorded in 2009, this was offset by lower average selling prices. Impairments and option contract write-offs for the year ended December 31, 2009 were nil compared with $21 million for the same period in 2008.


	Years Ended December 31
	2010					2009
	Units		%			Units		%
Northern California		14		22	%		19		12	%
Southland / Los Angeles		22		14	%		49		18	%
San Diego / Riverside		26		22	%		30		16	%
Washington D.C. Area		62		26	%		62		19	%
Corporate and Other		—		—			20		250	%

Total		124		21	%		180		19	%

21Year Ended December 31, 2009 Compared with Year Ended December 31, 2008

~~Table~~Net ~~of Contents~~Income

~~Land~~Net ~~revenue~~loss ~~was~~for ~~nil~~the inyear ended December 31, 2009 was $33 million, a decline in net loss of $101 million when compared ~~with~~to net loss of $2133 million infor the year ended December 31, 2008. The decrease ~~land~~in ~~revenue~~net inloss ~~2008~~primarily ~~comprised the~~relates ~~sale~~to ofa 78decrease ~~raw~~of ~~lots.~~$116 million ~~The~~in ~~gross~~impairments ~~margin~~and write-offs on ~~land~~our ~~revenue~~housing ~~was~~and ~~$(9)~~land ~~million~~assets and investments in ~~2009~~unconsolidated ~~compared~~entities, tolower ~~$(7)~~selling general and administrative costs of $17 million, and an increase in ~~2008.~~income ~~The~~from ~~negative~~our ~~gross~~interest ~~margin~~rate onswap contracts ~~land~~of ~~revenue~~$30 million, inpartially ~~2009~~offset ~~comprised~~by a ~~loss~~decrease onin ~~the~~housing ~~disposal to~~and ~~another~~land ~~homebuilder~~gross margin of $10 million and a ~~120~~reduction ~~unit~~in ~~senior~~tax ~~living~~recoveries ~~facility~~of ~~site~~$51 million.

~~Southland~~Results ~~/ Los Angeles: Housing revenue was $79 million for the year ended December 31, 2009, a decrease~~ of ~~$15 million~~ ~~when compared to the same period in 2008. The decrease for the year ended December 31,~~Operations 2009 compared to the same period in 2008 was primarily attributable to a decrease in home closings of 23 units. The gross margin for the year ended December 31, 2009 was $5 million compared with $(3) million for the same period in 2008. The increase in the gross margin for the year ended December 31, 2009 compared to the same period in 2008 was primarily a result of fewer impairment charges partially offset by lower average selling prices. Impairment charges for the year ended December 31, 2009 were $3 million compared to $16 million for the same period in 2008.

~~San Diego / Riverside~~Company-wide: Housing revenue was $69340 million for the year ended December 31, 2009, ~~an increase~~a decrease of $175 million when compared to the same period in 2008. ~~Land~~The ~~revenue~~decrease ~~was~~in ~~$20 million~~housing ~~for~~revenue ~~the~~was ~~year~~primarily ~~ended~~due ~~December 31,~~to ~~2009,~~fewer ~~compared~~home ~~with~~closings ~~$19 million~~ for ~~the~~2009 ~~same~~of ~~period~~703 ~~in 2008. During the year ended December 31~~units, ~~2009,~~a 60decrease ~~lots~~of ~~located~~47 inunits ~~the~~or ~~Carlsbad~~6% ~~region,~~when ~~150~~compared ~~lots located in the Imperial~~to ~~Valley~~2008 ~~region,~~ as well as 71 lots located in the Inland Empire region were sold. The gross margin for the year ended December 31, 2009 was $(4) million compared with $(42) million for the same period in 2008. The increase in the gross margin was primarily a result of fewer impairment charges partially offset by reduced average selling prices. ~~Impairment charges~~ and ~~option~~product ~~write-offs for the year ended December 31, 2009 were $1 million compared with $42 million for the same period in 2008~~mix.

~~Washington D.C. Area:~~ Housing ~~revenue~~revenues ~~was~~were ~~$86 million~~net ~~for~~of ~~the~~incentives ~~year ended December 31, 2009, a decrease~~ of ~~$36 million~~ ~~when compared to the same period in 2008 primarily due to a decrease in home closings and reduced selling prices. Land revenue was~~ $857 million for the year ended December 31, 2009, compared ~~with~~ to $1373 million for the same period in 2008. ~~The~~Our ~~gross~~incentives ~~margin~~on ~~for~~homes ~~the~~closed ~~year~~by ~~ended~~reportable ~~December 31,~~segment ~~2009 was $4 million compared with $(17) million~~ for ~~the same period in 2008. The increase in~~ ~~gross margin for~~ the ~~year~~years ended December 31, 2009 ~~compared~~and ~~to the same period in~~ 2008 ~~was~~are ~~primarily a~~as ~~result of a decrease in impairment charges and other write-offs, partially offset by reduced~~follows: ~~selling prices. Impairment charges and other write-offs for the year ended December 31, 2009 were $13 million compared with $36 million for the same period in 2008.~~

Other Income and Expenses


	Years Ended December 31
	2009					2008
	Incentives		% of Gross			Incentives		% of Gross
*($ millions)*	Recognized		Revenues			Recognized		Revenues
Northern California	$	27		26	%	$	37		29	%
Southland / Los Angeles		5		7	%		8		8	%
San Diego / Riverside		4		6	%		4		5	%
Washington D.C. Area		21		24	%		24		20	%
Corporate and Other		—		—			—		—

Total	$	57		17	%	$	73		18	%

~~Equity in earnings from investments in unconsolidated entities in 2009 totaled $1 million, a~~24 decrease of $2 million when compared to 2008. The impairment of our investments in unconsolidated entities totaled $13 million in 2009 compared to $38 million in 2008. The impairment charges in 2009 primarily relate to 907 lots in the Inland Empire of California in one project and the write-off of costs related to a commercial site in the Washington D.C. Area.

~~Other~~Land ~~income~~revenue ~~/ (expense)~~ in 2009 totaled $1336 million, anon ~~increase~~the sale of ~~$31 million~~469 ~~when~~lots to homebuilders compared towith $34 million in 2008. ~~The~~on ~~components~~the sale of 616 lots. Our land revenues may vary significantly from period to period due to the ~~2009~~timing and ~~2008~~nature ~~other~~of ~~income~~land sales, as they generally occur on an opportunistic basis and are ~~summarized~~affected asby ~~follows:~~local market conditions.

	Years Ended December 31
($ millions)	2009		2008
Change in fair value of interest rate swap contracts	$	11	$	(19	)
Other		2		1
	$	13	$	(18	)

~~Selling~~In 2009, ~~general~~we ~~and~~recognized ~~administrative~~impairment ~~expense~~charges ~~was~~and ~~$52 million~~option inwrite-offs ~~2009,~~on aour ~~decrease~~housing and land inventory of $1724 million ~~when~~ compared to $115 million in 2008. The ~~components~~impairment ofcharges and option write-offs related primarily to lots located in the ~~2009~~Southland, Washington D.C. Area and ~~2008~~Corporate ~~expense~~and ~~are~~Other reportable ~~summarized~~segments, optioned lots located primarily in California and the Washington D.C. Area, as well ~~follows:~~as a commercial site located in the Washington D.C. Area reportable segment.

	Years Ended December 31
($ millions)	2009			2008
General and administrative expenses	$	(30	)	$	(35	)
Sales and marketing expenses		(22	)		(30	)
Stock compensation		(4	)		7
Change in fair value of equity swap contracts		4			(11	)
	$	(52	)	$	(69	)

The number of projects where impairment charges and option write-offs were recognized and the fair value of the projects impaired for the years ended December 31, 2009 and 2008 are as follows:


	Years Ended December 31
	2009						2008
	Projects				Fair Value		Projects				Fair Value
	Tested for		Projects		of Projects		Tested for		Projects		of Projects
*($ millions)*	Impairment		Impaired		Impaired		Impairment		Impaired		Impaired
Northern California		6		1	$	—		9		3	$	91
Southland / Los Angeles		4		1		14		6		3		49
San Diego / Riverside		15		—		—		14		3		91
Washington D.C. Area		18		3		5		22		13		79
Corporate and Other		3		2		6		2		—		—

Total		46		7	$	25		53		22	$	310

~~Table~~A summary of ~~Contents~~our gross margin / (loss) is as follows:

Sales Activity


	Years Ended December 31
*($ millions)*	2009			2008
Housing	$	45		$	52
Land		(23	)		(19	)
Impairment charges / write-downs		(24	)		(115	)

	$	(2	)	$	(82	)

~~Our~~Northern ~~net~~California: ~~new~~Housing ~~home~~revenue ~~orders~~was $102 million for the year ended December 31, 2009 ~~were 756 units~~, ana decrease ~~increase~~ of 27 ~~units~~$25 million when compared to ~~2008.~~the ~~Based~~same onperiod ~~our~~in ~~average~~2008. ofThe 24gross ~~active~~margin ~~selling~~on ~~communities~~housing ~~during~~was ~~the year~~$10 million, ~~our~~ ~~average~~consistent ~~sales~~with ~~rate~~the ~~during~~same ~~2009~~period ~~was~~in ~~approximately 0~~2008.6 ~~sales~~While ~~per~~there ~~week~~were ~~per~~fewer ~~community,~~option ~~which~~contract iswrite-offs ~~50%~~and ~~higher~~impairment ~~per~~charges ~~selling~~recorded ~~community~~in ~~than~~2009, ~~2008~~this ~~but~~was ~~below~~offset ~~what~~by ~~may~~lower beaverage ~~considered~~selling aprices. ~~normal housing market of~~Impairments ~~one~~and ~~sale~~option ~~per~~contract ~~week~~write-offs ~~per~~for ~~active~~the ~~selling~~year ~~community.~~ended ~~The~~December 31, ~~net~~2009 ~~new~~were ~~home~~nil ~~orders~~compared inwith ~~units~~$21 million for ~~2009~~the ~~and~~same ~~2008 by~~period ~~reportable~~in ~~segment are as follows:~~2008.

	Years Ended December 31
	2009			2008
Northern California		135			122
Southland / Los Angeles		218			237
San Diego / Riverside		151			128
Washington D.C. Area		263			233
Corporate and Other		(14	)		7
Consolidated Total		753			727
Unconsolidated Entities		3			2
Total		756			729

Land revenue was nil in 2009, compared with $2 million in 2008. The land revenue in 2008 comprised the sale of 78 raw lots. The gross margin on land revenue was $(9) million in 2009 compared to $(7) million in 2008. The negative gross margin on land revenue in 2009 comprised a loss on the disposal to another homebuilder of a 120 unit senior living facility site.

~~Net~~Southland ~~new~~/ ~~orders~~Los Angeles: Housing revenue was $79 million for ~~any~~the year ended December 31, 2009, a decrease of $15 million when compared to the same period ~~represent~~in 2008. The decrease for the ~~aggregate~~year ended December 31, 2009 compared to the same period in 2008 was primarily attributable to a decrease in home closings of ~~all~~23 ~~homes~~units. ~~ordered~~The bygross ~~customers~~margin for the year ended December 31, ~~net~~2009 was $5 million compared with $(3) million for the same period in 2008. The increase in the gross margin for the year ended December 31, 2009 compared to the same period in 2008 was primarily a result of ~~cancellations~~fewer impairment charges partially offset by lower average selling prices. Impairment charges for the year ended December 31, 2009 were $3 million compared to $16 million for the same period in 2008.

~~Our backlog, which represents the number of new homes subject to pending sales contracts, at~~25 ~~December 31, 2009 and 2008 by reportable segment are as follows:~~

	Backlog December 31
	2009				2008
	Units		$ millions		Units		$ millions
Northern California		24	$	24		10	$	9
Southland / Los Angeles		69		29		55		23
San Diego / Riverside		23		11		8		4
Washington D.C. Area		71		24		40		35
Corporate and Other		—		—		20		14
Consolidated Total		187		88		133		85
Unconsolidated Entities		—		—		1		1
Total		187	$	88		134	$	86

San Diego / Riverside: Housing revenue was $69 million for the year ended December 31, 2009, an increase of $1 million when compared to the same period in 2008. Land revenue was $20 million for the year ended December 31, 2009, compared with $19 million for the same period in 2008. During the year ended December 31, 2009, 60 lots located in the Carlsbad region, 150 lots located in the Imperial Valley region, as well as 71 lots located in the Inland Empire region were sold. The gross margin for the year ended December 31, 2009 was $(4) million compared with $(42) million for the same period in 2008. The increase in the gross margin was primarily a result of fewer impairment charges partially offset by reduced selling prices. Impairment charges and option write-offs for the year ended December 31, 2009 were $1 million compared with $42 million for the same period in 2008.

WeWashington ~~expect~~D.C. ~~all~~Area: ~~units~~Housing revenue was $86 million for the year ended December 31, 2009, a decrease of $36 million ~~our~~when ~~backlog~~compared to ~~close~~the same period in ~~2010,~~2008 ~~subject~~primarily due to ~~future~~a ~~cancellations~~decrease in home closings and reduced selling prices. Land revenue was $8 million for the year ended December 31, 2009, compared with $13 million for the same period in 2008. The gross margin for the year ended December ~~cancellation~~31, ~~rates~~2009 was $4 million compared with $(17) million for the same period in 2008. The increase in gross margin for the year ended December 31, 2009 ~~and~~compared to the same period in 2008 was primarily a result of a decrease in impairment charges and other write-offs, partially offset by ~~reportable~~reduced selling ~~segment~~prices. ~~are~~Impairment ascharges ~~follows:~~and other write-offs for the year ended December 31, 2009 were $13 million compared with $36 million for the same period in 2008.

	Years Ended December 31
	2009					2008
	Units		%			Units		%
Northern California		19		12	%		25		17	%
Southland / Los Angeles		49		18	%		45		16	%
San Diego / Riverside		30		16	%		28		18	%
Washington D.C. Area		62		19	%		88		27	%
Corporate and Other		20		250	%		7		44	%
Total		180		19	%		193		21	%

Selling, general and administrative expense was $52 million in 2009, a decrease of $17 million when compared to 2008. The components of the 2009 and 2008 expense are summarized as follows:

The cancellation rate for 2009 in the Corporate and Other reportable segment results from deferral of the start of a project in Hawaii due to the market conditions in this location.


	Years Ended December 31
*($ millions)*	2009			2008
General and administrative expenses	$	30		$	35
Sales and marketing expenses		22			30
Stock compensation		4			(7	)
Change in fair value of equity swap contracts		(4	)		11

	$	52		$	69

~~Year~~Equity ~~Ended~~in ~~December~~earnings from investments in unconsolidated entities in 2009 totaled $1 31million, a decrease of $2 million when compared to 2008. ~~Compared~~The ~~with~~impairment ~~Year~~of ~~Ended~~our ~~December~~investments in unconsolidated entities totaled $13 ~~31,~~million ~~2007~~in 2009 compared to $38 million in 2008. The impairment charges in 2009 primarily relate to 907 lots in the Inland Empire of California in one project and the write-off of costs related to a commercial site in the Washington D.C. Area.

~~Net~~Other ~~Income~~income / (expense) in 2009 totaled $13 million, an increase of $31 million when compared to 2008. The components of the 2009 and 2008 other income are summarized as follows:

Net loss for the year ended December 31, 2008 was $133 million, a decrease of $142 million when compared to net income of $9 million for the year ended December 31, 2007. The decrease in net income was due to continued challenging market conditions in all our markets which resulted in impairment charges and write-downs on our


	Years Ended December 31
*($ millions)*	2009		2008
Change in fair value of interest rate swap contracts	$	11	$	(19	)
Other		2		1

	$	13	$	(18	)

23Sales Activity

~~Table~~Our net new home orders for the year ended December 31, 2009 were 756 units, an increase of ~~Contents~~27 units compared to 2008. Based on our average of 24 active selling communities during the year, our average sales rate during 2009 was approximately 0.6 sales per week per community, which is 50% higher per selling community than 2008 but below what may be considered a normal housing market of one sale per week per active selling community. The net new home orders in units for 2009 and 2008 by reportable segment are as follows:

housing and land assets, an 11% decrease in home closings and a reduction in our 2008 housing gross margin to 13% compared to 17% in 2007. The decrease in net income was also due to an expense of $19 million related to our interest rate swaps in 2008 compared to an expense of $8 million in 2007.


	Years Ended December 31
	2009			2008
Northern California		135			122
Southland / Los Angeles		218			237
San Diego / Riverside		151			128
Washington D.C. Area		263			233
Corporate and Other		(14	)		7

Consolidated Total		753			727
Unconsolidated Entities		3			2

Total		756			729

~~Results~~Net new orders for any period represent the aggregate of ~~Operations~~all homes ordered by customers, net of cancellations.

~~Company-wide: Housing revenue was $415 million in 2008, a decrease of $126 million when compared to~~26 2007. The decrease in housing revenue was a result of 80 or 10% fewer homes closed from directly owned projects to 745 units when compared to 2007 home closings. The gross margin on housing revenue in 2008 was $(43) million or (10%) compared with $4 million or 1% in 2007. The decrease in gross margin and gross margin percentage was due to fewer home closings, continued increases in homebuyer incentives and reduced prices and product mix.

~~Land~~Our ~~revenue~~backlog, inwhich ~~2008~~represents ~~totaled $34 million on~~ the ~~sale~~number of ~~616~~new ~~lots~~homes ~~compared~~subject ~~with~~to ~~$42 million~~pending insales ~~2007 on the sale of 1~~contracts,~~328~~ ~~lots. The gross margin on land revenue was $(39) million~~at December 31, a2009 ~~decrease of $49 million when compared to 2007. Our land revenues may vary significantly from period to period due to the timing~~ and ~~nature~~2008 ofby ~~land~~reportable ~~sales,~~segment ~~as they generally occur on an opportunistic basis and additionally such revenues~~ are ~~affected~~as ~~by local market conditions.~~follows:

In 2008, we recognized impairment and write-downs on our housing and land inventory of $115 million compared to $88 million in 2007. The impairment charges and write-downs related to 2,326 finished lots located in the Inland Empire of California and Washington D.C. Area and 819 optioned lots located in California and the Washington D.C. Area.


	Backlog December 31
	2009				2008
	Units		$ millions		Units		$ millions
Northern California		24	$	24		10	$	9
Southland / Los Angeles		69		29		55		23
San Diego / Riverside		23		11		8		4
Washington D.C. Area		71		24		40		35
Corporate and Other		—		—		20		14

Consolidated Total		187		88		133		85
Unconsolidated Entities		—		—		1		1

Total		187	$	88		134	$	86

AWe ~~summary~~expect all units of our ~~gross~~backlog ~~margin~~to isclose in 2010, subject to future cancellations. The cancellation rates for 2009 and 2008 by reportable segment are as follows:

	Years Ended December 31
($ millions)	2008			2007
	2009						2008
Housing	$	52		$	92
	Units			%			Units		%
Land		(19	)		10
Northern California		19			12	%		25		17	%
Impairment charges / write-downs		(115	)		(88	)
Southland / Los Angeles		49			18	%		45		16	%
	$	(82	)	$	14
San Diego / Riverside		30			16	%		28		18	%
Washington D.C. Area		62			19	%		88		27	%
Corporate and Other		20			250	%		7		44	%
Total		180			19	%		193		21	%

~~Northern~~The ~~California:~~cancellation ~~Housing~~rate ~~revenue~~for ~~was~~2009 ~~$127 million~~ in ~~2008,~~the anCorporate ~~increase~~and ofOther ~~$6 million~~reportable ~~when~~segment results from ~~compared~~deferral toof ~~2007.~~the ~~The~~start ~~increase~~of ina ~~revenue~~project ~~was~~in ~~primarily~~Hawaii due to anthe ~~increase~~market ofconditions ~~eight homes closed. The gross margin on housing revenue was $(11) million or (9%)~~ in ~~2008,~~this ~~compared with $12 million or 10% in 2007~~location.

~~Land~~Liquidity ~~revenue was $2 million in 2008, compared with nil in 2007. The land revenue in 2008 comprised the sale of 78 raw lots. The gross margin on land revenue was $(7) million. Impairment~~ and ~~other charges~~Capital ~~totaled $21 million in 2008, compared with $15 million in 2007.~~Resources

~~Southland~~Financial ~~/ Los Angeles: Housing revenue was $94 million in 2008, a decrease of $82 million when~~Position compared to 2007. The decrease was due to a 39% decrease in our average selling price to $413,000 and 31 fewer homes closed. The gross margin on housing revenue was $(3) million or (4%) compared with $27 million or 16% in 2007. The decrease in the gross margin percentage was a result of reduced selling prices, increases in homebuyer incentives and product mix.

~~Land~~Our ~~revenue~~assets ~~was~~as ~~nil~~of inDecember 31, ~~2008~~2010 totaled $991 million compared to $1,037 million as of December 31, 2009, a decrease of $3046 million. ~~when~~The ~~compared~~decrease in 2010 was due primarily to ~~2007.~~a ~~The~~decrease of $34 million in housing and land ~~revenue~~inventory and a decrease in ~~2007~~ ~~comprised~~receivables and other assets as a result of the ~~sale~~cash tax refund of 1$43 million,~~249~~ ~~lots~~partially ~~held~~offset ~~under~~by ~~option~~an increase of $32 million in our investments in unconsolidated entities. ~~Impairment~~Our housing and ~~other~~land ~~charges~~inventory ~~totaled~~and ~~$15 million~~investments in unconsolidated ~~2008,~~entities ~~compared~~are our most significant assets with a combined book value of $3926 million inor ~~2007~~approximately 93% of our total assets. Our housing and land assets include homes completed and under construction and lots ready for construction, model homes and land under and held for development.

~~San~~Our ~~Diego~~total /debt ~~Riverside:~~as ~~Housing~~of ~~revenue~~December 31, 2010 was $68332 million ~~in 2008~~, a decrease of $2150 million ~~when~~from ~~compared~~December 31, ~~to 2007~~2009. ~~The~~Total ~~decrease~~debt ~~was~~as ~~primarily~~of ~~due~~December 31, to2010 22consisted ~~fewer~~of ~~homes~~$172 million ~~closed~~of project specific financings and a$160 million ~~decrease~~related into amounts drawn on facilities with subsidiaries of our largest ~~average~~stockholder, ~~selling~~Brookfield ~~price~~Asset Management Inc. ~~The~~Our ~~gross~~project ~~margin~~specific onfinancings ~~housing~~represent construction ~~revenue~~and ~~was~~development ~~$(5)~~loans ~~million~~that orare ~~(6%)~~used ~~compared~~to ~~with $(10)~~fund ~~million~~the oroperations ~~(11%)~~of inour ~~2007~~communities. ~~The~~Our major ~~increase~~project inspecific ~~the~~lenders ~~gross~~are ~~margin~~Wells ~~percentage~~Fargo, ~~was~~Housing aCapital ~~result~~Corporation, Bank of aAmerica and ~~decrease~~M&T. inInterest ~~impairment~~charged ~~charges,~~under ~~partially~~project ~~offset~~specific byfinancings ~~reduced~~include ~~selling~~LIBOR ~~prices,~~and ~~increases~~prime inrate ~~homebuyer~~pricing ~~incentives~~options. As of December 31, 2010, the average interest rate on our project specific and ~~product~~other financings ~~mix~~was 3.8%, with stated maturities as follows:

Land revenue was $19 million in 2008, compared with nil in 2007. The land revenue in 2008 comprised the sale of 451 finished lots. The gross margin in land revenues was $(35) million. Impairment and other charges totaled $43 million in 2008, compared with $33 million in 2007.


	Maturities
	2011		2012		2013		Total
Northern California	$	9	$	—	$	—	$	9
Southland / Los Angeles		8		18		—		26
San Diego / Riverside		74		10		2		86
Washington D.C. Area		36		7		—		43
Corporate and Other		108		60		—		168

December 31, 2010	$	235	$	95	$	2	$	332

~~Washington D.C. Area: Housing revenue was $122 million in 2008, a decrease of $21 million when compared to 2007. The decrease was primarily due to~~ 27 ~~fewer homes closed. The gross margin on~~ ~~housing revenue was $(20) million or (16%) compared with $(28) million or (19%) in 2007.~~

24Our debt maturing in 2011, 2012 and 2013 is expected to be repaid from home and/or lot deliveries over this period or extended. During the year ended December 31, 2010, proceeds from housing and land deliveries exceeded the corresponding debt repayments made during the year. During the year ended December 31, 2010, in the normal course of operations, we extended repayment terms on $103 million of debt originally maturing in 2010 and now maturing in 2011. Additionally, as of December 31, 2010, we had project specific debt of $118 million that is available to complete land development and construction activities. The “Cash Flow” section below discloses our future available capital resources should proceeds from our future home closings not be sufficient to repay our debt obligations.

~~Table~~Other financings at December 31, 2010 included $100 million on an unsecured revolving operating facility and $60 million on an unsecured revolving acquisition and operating facility, both with subsidiaries of ~~Contents~~our largest stockholder, Brookfield Asset Management Inc. The revolving operating facility matures in December 2011, bears interest at LIBOR plus 3.50% and was fully drawn upon as of December 31, 2010. The revolving acquisition and operating facility is in a principal amount not to exceed $100 million. This facility matures in December 2012, currently bears interest at 14% and could be fully drawn upon without violation of any covenants.

~~Land~~Stockholders ~~revenue~~of ~~was~~our ~~$13 million~~Company infully ~~2008~~subscribed for 10,000,000 ~~compared~~shares of 8% convertible preferred stock pursuant to our rights offering that expired on April 27, 2009. We received gross proceeds of approximately $12250 million inupon ~~2007~~issuance of the shares of convertible preferred stock. The ~~gross~~proceeds from ~~margin~~the rights offering were used for general corporate purposes, including repayment on ~~land~~our ~~revenue~~revolving ~~was~~operating credit facility due to a subsidiary of our largest stockholder, Brookfield ~~$3 million~~Asset Management Inc. Assuming the full conversion of the 8% convertible preferred stock held beneficially by it, Brookfield Asset Management Inc. will own approximately 82.6% of our common stock. Brookfield Asset Management has agreed to convert its shares of 8% convertible preferred stock to common stock prior to the merger transaction. Holders of the 8% convertible preferred stock issued in ~~2008~~the ~~compared~~rights ~~with~~offering are entitled to receive, when, as and if declared by our Board of Directors, dividends per year at the per share rate of 8%, representing annual dividends of $2 20 million. These declared dividends are payable semi-annually and may be paid, at the election of our board of directors, in ~~2007~~cash or shares of common stock. ~~Impairment~~During ~~and~~the ~~other~~year ~~charges~~ended ~~totaled~~December 31, ~~$36~~2010, a $10 million individend ~~2008~~on June 30, ~~compared~~2010 ~~with~~was paid in the form of common stock and a $4710 million cash dividend was payable on December 31, 2010. Please see Note 11 to our consolidated financial statements included in ~~2007~~this Form 10-K for additional information on the rights offering.

~~Other~~Cash ~~Income and Expenses~~Flow

~~Equity~~Our inprincipal ~~earnings~~uses ~~from~~of ~~unconsolidated~~working ~~entities~~capital ininclude ~~2008~~home ~~totaled $3 million~~construction, apurchases ~~decrease~~ of ~~$10~~land and land ~~million~~development. ~~when~~Cash ~~compared~~flows tofor ~~2007.~~each ~~This~~of ~~decrease~~our ~~was~~communities ~~primarily~~depend aupon ~~result~~the applicable stage of athe development ~~decrease~~cycle inand ~~earnings~~can differ substantially from reported earnings. Early stages of development ~~our~~require ~~Windemere~~significant ~~unconsolidated~~cash ~~entity~~outlays for land acquisitions, site approvals and entitlements, construction of ~~$8 million.~~model ~~Impairments~~homes, ~~from~~roads, ~~unconsolidated~~certain ~~entities~~utilities ~~totaled~~and other amenities and general landscaping. ~~$38 million~~As inthese ~~2008~~costs ~~compared~~are tocapitalized, ~~$15 million~~earnings inreported ~~2007~~for financial statement purposes during such early stages may significantly exceed cash flows. ~~The~~Later, ~~impairment~~cash ~~charges~~flows incan ~~2008~~exceed ~~related~~earnings toreported for ~~907~~financial statement purposes, as cost of sales include charges for substantial amounts of ~~lots~~previously inexpended ~~Riverside~~costs.

~~Other~~We ~~expense~~believe inwe ~~2008~~currently ~~totaled~~have ~~$18 million,~~sufficient anaccess ~~increase~~to ofcapital ~~$12 million~~resources. ~~when~~Our ~~compared~~future tocapital ~~2007. The~~resources ~~components~~include ofcash ~~the~~flow ~~2008~~from ~~and~~operations, ~~2007~~borrowings under project and other ~~(expense)~~credit /facilities ~~income~~and proceeds ~~are~~from ~~summarized~~potential asfuture ~~follows:~~debt issues or equity offerings, if required.

	Years Ended December 31
($ millions)	2008			2007
Change in fair value of interest rate swap contracts	$	(19	)	$	(8	)
Interest income		—			1
Other		1			1
	$	(18	)	$	(6	)

While we do not anticipate that an equilibrium between the supply and demand for housing will be reached in 2011, we continue to work through the challenging market conditions and remain focused on proactively managing our balance sheet, placing a strong emphasis on liquidity. We are continuing to manage our inventory levels through matching homebuilding starts with net new orders.

~~Selling~~Cash provided by our operating activities during the year ended December 31, ~~general~~2010 ~~and~~totaled ~~administrative~~$89 million ~~expense~~compared ~~was~~with $69137 million in ~~2008,~~2009. ~~consistent~~During ~~with~~the ~~2007.~~year ~~The~~ended December 31, 2010, our operating ~~components~~cash flow was positively impacted by the receipt of cash tax refunds of $43 million (December 31, 2009 — $63 million), the ~~2008~~net asset reduction of our housing and ~~2007~~land ~~expense~~inventory ~~are~~and ~~summarized~~an asincrease ~~follows:~~in accounts payable and other liabilities.

	Years Ended December 31
($ millions)	2008			2007
Selling, general and administrative expenses	$	(65	)	$	(68	)
Stock compensation		7			18
Changes in fair value of equity swap contract		(11	)		(19	)
Total	$	(69	)	$	(69	)

During the year ended December 31, 2010, 575 homes closed and 370 lots were delivered to other homebuilders. As a result, cash flow from operations was positively affected by these home closings and lot sales. These deliveries were partially offset by land acquisitions made during the year ended December 31, 2010. We have limited our development of land while the demand for finished lots has decreased.

~~Sales~~A ~~Activity~~summary of our lots owned, directly or through our share of unconsolidated entities excluding lot options, and their stage of development at December 31, 2010 compared with last year follows:

~~Our net new home orders for the year ended December 31, 2008 were 729 units, a decrease of six~~28 units compared to 2007. Based on our average of 33 active selling communities, our average sales rate during 2008 was approximately 0.4 sales per week per community, consistent with 2007, but below what may be considered a normal housing market of one sale per week per active selling community. The net new home orders in units for 2008 and 2007 by reportable segment are as follows:

	Years Ended December 31
	December 31,		December 31,
	2008		2007
	2010		2009
Northern California		122		141
Housing units, including models		430		361
Southland / Los Angeles		237		183
Finished lots		1,253		1,710
San Diego / Riverside		128		123
Lots commenced grading		2,290		1,991
Washington D.C. Area		233		249
Raw lots		13,650		8,685
Corporate and Other		7		13
		17,623		12,747
Consolidated Total		727		709
Unconsolidated Entities		2		26
Total		729		735

~~Net~~Cash ~~new~~used ~~orders~~in ~~for~~our ~~any~~investing ~~period~~activities ~~represent~~for the ~~aggregate~~year ended December 31, 2010 was $36 million, an increase of $27 million ~~all~~when ~~homes~~compared ~~ordered~~with $9 million in 2009. The increase was primarily a result of acquisition expenditures in unconsolidated entities partially offset by ~~customers,~~an ~~net~~increase in restricted ofcash ~~cancellations~~in conjunction with entering into the total return swap contract in 2009.

25Cash used in our financing activities for the year ended December 31, 2010 was $53 million compared with cash used of $128 million in 2009. The cash used in the current year was used primarily to repay project specific financings of $60 million offset by an increase in other financings of $10 million.

~~Table~~Contractual ofObligations ~~Contents~~and Other Commitments

~~Our~~A ~~backlog,~~total ~~which~~of ~~represents~~$170 million of our project specific financings mature prior to the ~~number~~end of ~~new~~2012. ~~homes~~The debt ~~subject~~maturing in 2011 and 2012 is expected to ~~pending~~be ~~sales~~repaid ~~contracts,~~from athome and/or lot deliveries over this period. Our net debt to total capitalization ratio as of December 31, ~~2008~~2010, ~~and~~which ~~2007~~we define as total interest bearing debt less cash, divided by ~~reportable~~total ~~segment~~interest bearing debt less cash plus total equity and other interests in consolidated subsidiaries, was 39%, compared to 42% at December 31, 2009. For a description of the specific risks facing us if, for any reason, we are asunable ~~follows:~~to meet these obligations, refer to the section of this Form 10-K entitled “Risk Factors — Our debt and leverage could adversely affect our financial condition.”

	Backlog December 31
	2008				2007
	Units		$ millions		Units		$ millions
Northern California		10	$	9		27	$	29
Southland / Los Angeles		55		23		45		24
San Diego / Riverside		8		4		8		4
Washington D.C. Area		40		35		52		43
Corporate and Other		20		14		19		15
Consolidated Total		133		85		151		115
Unconsolidated Entities		1		1		4		4
Total		134	$	86		155	$	119

Our project specific financings require Brookfield Homes Holdings Inc., a wholly-owned subsidiary of our Company, to maintain a tangible net worth of at least $325 million, a net indebtedness to capitalization ratio of no greater than 65% and a net indebtedness to tangible net worth ratio of no greater than 2.50 to 1.00. Indebtedness is defined as total interest bearing debt plus non-interest bearing liabilities less cash. At December 31, 2010, we were in compliance with all our project specific financing covenants. The following are computations of the most restrictive of Brookfield Homes Holdings Inc.’s tangible net worth, net indebtedness to capitalization ratio, and net indebtedness to tangible net worth debt ratio covenants:

Our backlog is subject to future cancellations. The cancellation rates for 2008 and 2007 by reportable segment are as follows:


				Actual as of
	Covenant			December 31, 2010
Tangible net worth ($US millions)	$	325		$	523
Net indebtedness to capitalization		65	%		46	%
Net indebtedness to tangible net worth		2.50 to 1			0.80 to 1

	Years Ended December 31
	2008					2007
	Units		%			Units		%
Northern California		25		17	%		31		18	%
Southland / Los Angeles		45		16	%		140		41	%
San Diego / Riverside		28		18	%		30		19	%
Washington D.C. Area		88		27	%		134		33	%
Corporate and Other		7		44	%		7		44	%
Total		193		21	%		342		31	%

At December 31, 2010, our revolving operating facility with a subsidiary of Brookfield Asset Management Inc. required us to maintain minimum stockholders’ equity of $300 million and a consolidated net debt to book capitalization ratio of no greater than 70%. At December 31, 2010, we were in compliance with all our covenants. The following are computations of Brookfield Homes Corporation’s minimum stockholders’ equity and net debt to capitalization ratio covenants:

Liquidity and Capital Resources

~~Financial~~A ~~Position~~summary of our contractual obligations and purchase agreements as of December 31, 2010 follows:

Our assets as of December 31, 2009 totaled $1,037 million compared to $1,207 million as of December 31, 2008, a decrease of $170 million. The decrease in 2009 was due primarily to decreases in housing and land inventory, our investment in unconsolidated entities and in our current tax receivables, partially offset by an increase in our consolidated land inventory not owned. Our housing and land inventory, investments in unconsolidated entities and our consolidated land inventory not owned are our most significant assets with a combined book value of $928 million or approximately 89% of our total assets. Our housing and land assets decreased by a combined $127 million in 2009 when compared to 2008. When impairments and other write-downs of $24 million are excluded, the decrease was $103 million. This decrease during 2009 was primarily a result of lower inventories with our focus on closing homes and reducing standing inventory, the disposition and sales of both finished and raw lots, impairments and write-offs of option deposits of $24 million, partially offset by the acquisition of 3,212 lots for $29 million in San Diego / Riverside.


	Payment Due by Period
			Less than		1-3		3-5		More than
*($ millions)*	Total		1 Year		Years		Years		5 Years
Project specific and other financings^(a)	$	332	$	235	$	97	$	—	$	—
Operating lease obligations ^(b)		6		2		4		—		—
Purchase agreements ^(c)		151		27		20		104		—

Total^(d)	$	489	$	264	$	121	$	104	$	—

~~Our~~(a) ~~total~~Amounts ~~debt~~are asincluded ofon ~~December 31,~~the ~~2009~~Consolidated ~~was~~Balance ~~$382 million,~~Sheets. aSee ~~decrease~~Note 6 of ~~$367 million~~the ~~from December 31,~~Notes ~~2008.~~to ~~Total~~the ~~debt~~Consolidated asFinancial ofStatements ~~December 31,~~included ~~2009~~in ~~consisted~~this ofForm ~~$232 million~~10-K offor additional information regarding project specific ~~financings~~ and ~~$150 million~~other financings and related tomatters. ~~amounts~~(b) ~~drawn~~Amounts onrelate ~~two~~to ~~facilities~~non-cancelable ~~with~~operating ~~subsidiaries~~leases ofinvolving ~~our largest~~office ~~stockholder~~space, ~~Brookfield~~design ~~Asset~~centers ~~Management~~and ~~Inc~~model homes. ~~Our~~(c) ~~project~~Amounts ~~specific~~represent ~~financings~~our ~~represent construction~~expected ~~and~~acquisition ~~development~~of ~~loans~~land ~~which~~under ~~are~~options ~~used~~or purchase agreements. See Note 2 to ~~fund~~the Consolidated Financial Statements included in this Form 10-K for additional information regarding purchase agreements. (d) Amounts do not include interest due to the ~~development~~floating nature of our ~~communities~~debt. See Note 6 to the Consolidated Financial Statements included in this Form 10-K for additional information regarding our floating rate debt.

~~As new homes are constructed, further loan facilities are arranged. Our major project specific~~29 lenders are Wells Fargo, Bank of America, Housing Capital Corporation and M&T Bank. Interest charged under project specific financings include LIBOR and prime rate pricing options. As of December 31, 2009, the average interest rate on our project specific debt was 4.2%, with stated maturities as follows:

	Maturities
($ millions)	2010		2011		2012		Total
Northern California	$	1	$	30	$	—	$	31
Southland / Los Angeles		30		8		—		38
San Diego / Riverside		76		5		9		90
Washington D.C. Area		25		37		—		62
Corporate and Other		11		—		—		11
Total	$	143	$	80	$	9	$	232

Off-Balance Sheet Arrangements

26In the ordinary course of business, we use land and lot option contracts and unconsolidated entities to acquire control of land to mitigate the risk of declining land values. Option contracts for the purchase of land permit us to control the land for an extended period of time, until options expire and/or we are ready to develop the land for home construction. This reduces our financial risk associated with land holdings. As of December 31, 2010, we had $69 million of primarily non-refundable option deposits and advanced costs. The total exercise price of these options was $177 million including applicable deposits of $20 million. Pursuant to the guidance now incorporated in Accounting Standards Codification (“ASC”) Topic 810 (formerly Statement of Financial Accounting Standard (“SFAS”) 167), as described in Note 2 to our consolidated financial statements included elsewhere in this Form 10-K, we have consolidated $25 million of these option contracts. Please see Note 2 to our consolidated financial statements included in this Form 10-K for additional information on our lot options.

~~Table~~We also own 2,068 lots and control under option 2,759 lots through our proportionate share of unconsolidated ~~Contents~~entities. As of December 31, 2010, our investment in unconsolidated entities totaled $124 million. We have provided varying levels of guarantees of debt in our unconsolidated entities. As of December 31, 2010, we had completion guarantees of nil and limited maintenance guarantees of $14 million with respect to debt in our unconsolidated entities. During 2010, we did not make any loan re-margin repayments on our debt in our unconsolidated entities. Please see Note 3 to our consolidated financial statements included elsewhere in this Form 10-K for additional information about our investments in unconsolidated entities.

~~Our~~We ~~debt~~obtain ~~maturing~~letters inof ~~2010~~credit, ~~and~~performance ~~2011~~bonds isand ~~expected~~other bonds to besupport ~~repaid~~our ~~from~~obligations ~~home~~with respect ~~and/or~~to ~~lot~~the ~~deliveries over~~development ~~this~~of ~~period~~our orprojects. ~~extended~~The ~~and~~amount isof ~~secured~~these byobligations ~~the~~outstanding ~~housing~~at ~~and~~any ~~land~~time varies ~~inventory~~in weaccordance ~~own.~~with ~~During~~our ~~the year,~~development ~~proceeds~~activities. ~~from~~If ~~the~~these ~~housing~~letters ~~and~~of ~~land~~credit ~~deliveries~~or ~~exceeded~~bonds ~~the~~are ~~corresponding~~drawn upon, ~~debt~~we ~~repayments~~will ~~made during~~be ~~the~~obligated ~~year.~~to ~~During~~reimburse the ~~year~~issuer ~~ended~~of ~~December 31,~~the ~~2009,~~letter inof ~~the~~credit ~~normal~~or ~~course~~bonds. As of ~~operations we~~December ~~extended~~31, ~~repayment~~2010, ~~terms~~we onhad $277 million ofin ~~debt~~letters ~~originally~~of ~~maturing~~credit inoutstanding ~~2009~~ and ~~now~~$140 million ~~maturing~~ in performance bonds ~~2010.~~for ~~Additionally,~~these aspurposes. ofThe ~~December 31,~~costs ~~2009,~~to wecomplete ~~had~~related ~~project~~to ~~specific~~our ~~debt~~letters of ~~$203 million~~credit ~~that is~~and ~~available~~performance tobonds ~~complete~~are ~~land~~$3 million ~~development~~ and ~~construction~~$66 million, ~~activities~~respectively. ~~The~~We ~~“Cash~~do ~~Flow”~~not ~~section~~believe ~~below discloses~~that ~~our~~any ~~future~~of ~~available~~these letters ~~capital~~of ~~resources~~credit ~~should~~or ~~proceeds~~bonds ~~from~~are ~~our~~likely ~~future~~to ~~home closings not~~ be ~~sufficient~~drawn ~~to repay our debt obligations~~upon.

~~Other~~Critical ~~revolving~~Accounting ~~financings~~Policies ~~includes $100 million on an unsecured revolving operating credit facility~~ and ~~$50 million~~ ~~on an unsecured revolving acquisition and operating credit facility, both with~~Estimates subsidiaries of our largest stockholder, Brookfield Asset Management Inc. The revolving operating credit facility matures in December 2011, bears interest at LIBOR plus 3.50% and was fully drawn upon as of December 31, 2009. During July 2009, the revolving acquisition and operating credit facility was amended to increase the maximum available amount to $100 million and provide for an initial commitment amount of $50 million. This facility matures in December 2012 and initially bears interest at 12% and both of these facilities could be fully drawn upon without violation of any of our covenants. In October 2009, the initial commitment amount was increased to $80 million of which $50 million is available for general corporate purposes.

~~Stockholders~~The discussion and analysis of our ~~company~~financial ~~fully~~condition ~~subscribed~~and ~~for~~results ~~10,000,000~~of ~~shares~~operations ofis 8%based ~~convertible~~upon ~~preferred~~the ~~stock~~consolidated ~~pursuant~~financial tostatements of our ~~rights offering that expired on April 27~~Company, ~~2009.~~which Wehave ~~received~~been ~~gross~~prepared ~~proceeds~~in ofaccordance with ~~approximately~~accounting ~~$250 million~~principles ~~upon~~generally ~~issuance~~accepted ofin the ~~shares~~United ~~of convertible preferred stock~~States. The ~~proceeds from~~preparation ~~the~~of ~~rights~~these ~~offering~~financial statements ~~were~~requires ~~used~~us ~~for~~to ~~general~~make ~~corporate purposes~~assumptions, ~~including~~estimates ~~repayment~~and onjudgments ~~our revolving~~that ~~operating~~affect ~~credit~~the ~~facility~~reported amounts ~~due to a subsidiary~~ of ~~our~~assets, ~~largest stockholder~~liabilities, ~~Brookfield Asset~~revenues ~~Management~~and ~~Inc.~~expenses, ~~Assuming~~and the ~~full~~related ~~conversion~~disclosure of ~~the~~contingent assets 8%and ~~convertible~~liabilities. ~~preferred~~We ~~stock~~evaluate ~~held~~our ~~by it,~~estimates ~~Brookfield~~on ~~Asset~~an ~~Management~~on-going ~~Inc~~basis. ~~will~~We ~~own~~base ~~approximately 82.4% of~~ our ~~common~~estimates ~~stock. Holders of~~on ~~the~~historical 8%experience ~~convertible~~and ~~preferred~~on ~~stock~~various ~~issued~~other inassumptions ~~the~~that ~~rights~~we ~~offering~~believe are ~~entitled~~reasonable tounder ~~receive, when, as~~the ~~and if declared by our Board of Directors~~circumstances, ~~dividends per year at~~ the ~~per~~results ~~share rate~~ of ~~8%, representing~~which ~~annual~~form ~~dividends~~the ofbasis ~~$20 million.~~for ~~These~~making ~~declared~~judgments ~~dividends~~about ~~are payable semi-annually and may be paid, at~~ the ~~election~~carrying values of ~~our~~assets ~~board~~and ofliabilities ~~directors,~~and ~~in cash or shares of common stock. During~~ the ~~year~~reported ~~ended~~amount ~~December 31, 2009, we paid a prorated cash dividend~~ of ~~$4 million~~ onrevenues ~~June 30, 2009~~ and aexpenses ~~$10 million~~that ~~dividend~~are onnot ~~December 31,~~readily apparent ~~2009~~from ~~paid~~other ~~in the form of common stock~~sources. ~~Please~~Our ~~see~~actual ~~Note~~results 12may todiffer ~~our~~from ~~consolidated~~these ~~financial~~estimates ~~statements~~under ~~included in this Form~~different ~~10-K~~assumptions ~~for~~or ~~additional information on the rights offering~~conditions.

~~Cash~~ Our ~~Flow~~most critical accounting policies are those that we believe are the most important in portraying our financial condition and results of operations, and require the most subjectivity and estimates by our management. A summary of our significant accounting policies, including the critical accounting policies discussed below, is provided in the notes to the consolidated financial statements of our Company included elsewhere in this Form 10-K.

~~Our~~Carrying ~~principal uses of working capital include home construction, purchases of land and land~~Values development. Cash flows for each of our communities depend upon the applicable stage of the development cycle and can differ substantially from reported earnings. Early stages of development require significant cash outlays for land acquisitions, site approvals and entitlements, construction of model homes, roads, certain utilities and other amenities and general landscaping. Because these costs are capitalized, earnings reported for financial statement purposes during such early stages may significantly exceed cash flows. Later, cash flows can exceed earnings reported for financial statement purposes, as cost of sales include charges for substantial amounts of previously expended costs.

WeIn ~~believe~~accordance wewith ~~currently~~the ~~have~~ASC ~~sufficient~~Topic ~~access~~360 to“Property, ~~capital~~Plant ~~resources~~and Equipment” (formerly SFAS 144), housing and ~~will~~land ~~continue~~assets towe ~~use~~own ~~our~~directly and through unconsolidated entities are reviewed for recoverability ~~available~~on ~~capital~~a ~~resources~~regular tobasis ~~fund~~and ~~our~~whenever ~~existing~~events ~~business~~or ~~plan~~changes in circumstances indicate that the carrying amount of an asset may not be recoverable. ~~Our~~Recoverability ~~future~~is ~~capital~~measured ~~resources~~by comparing the carrying ~~include~~amount of an asset to future undiscounted cash ~~flow~~flows ~~from~~expected ~~operations,~~to ~~borrowings~~be ~~under~~generated ~~project~~by ~~and~~the ~~other~~asset. ~~credit~~To arrive ~~facilities~~at the estimated fair value of housing and land inventory impaired, we estimate the cash ~~proceeds~~flow ~~from~~for ~~potential~~the ~~future~~life ~~equity~~of ~~offerings~~each project. Specifically, ifon ~~required.~~a housing project, we evaluate the margins on

~~While we do not anticipate that an equilibrium between the supply and demand for housing will be~~30 reached in 2010, we continue to work through the challenging market conditions and remain focused on proactively managing our balance sheet, placing a strong emphasis on liquidity. We are continuing to manage our inventory levels through matching homebuilding starts with net new orders.

~~Cash~~homes ~~provided~~that byhave ~~our~~been ~~operating~~closed, ~~activities~~margins ~~during~~on sales contracts which are in backlog and estimated margins with regard to future home sales over the ~~year~~life ~~ended~~of ~~December 31~~the project. On a land project, ~~2009~~we ~~totaled~~estimate ~~$137~~the ~~million~~timing ~~compared~~of ~~with~~future ~~$66 million~~land ~~for~~sales, the ~~same~~estimated ~~period~~revenue inper ~~2008~~lot, as well as estimated margins with respect to future land sales. ~~During~~For the ~~year~~housing ~~ended~~and ~~December 31~~land inventory, we continuously evaluate projects ~~2009,~~where ~~our~~inventory ~~operating~~is ~~cash~~turning ~~flow~~over ~~was~~slower ~~positively~~than ~~impacted~~expected byor whose average sales price and margins are declining and are expected to continue to decline. These projections take into account the ~~receipt~~specific business plans for each project and management’s best estimate of ~~cash~~the ~~tax~~most ~~refunds~~probable set of ~~$63~~economic ~~million~~conditions anticipated to prevail in the market area. Such projections generally assume current home selling prices, cost estimates and ~~the~~sales ~~net~~rates ~~reduction~~for ofshort-term ~~our~~projects are consistent with recent sales activity. For longer-term projects, planned sales rates for 2011 and 2012 assume recent sales activity and normalized sales rates beyond 2012. We identify potentially impaired housing and land ~~inventory,~~projects ~~offset~~based byon athese ~~reduction~~quantitative infactors ~~accounts~~as well as qualitative factors ~~payable~~obtained from the local market areas. If the future undiscounted cash flows are less than the carrying amount, the asset is considered to be impaired and ~~other~~is ~~liabilities~~then written down to fair value less estimated selling costs using a discounted cash flow methodology which incorporates market participant assumptions.

~~During~~We ~~the~~have ~~year~~also ~~ended~~entered ~~December 31,~~into ~~2009,~~a ~~703~~number ~~homes~~of ~~and~~option ~~469~~contracts to acquire land or lots toin ~~other~~the ~~homebuilders,~~future in ~~respectively,~~accordance ~~were~~with ~~delivered~~specific terms and conditions. AsA amajority ~~result,~~of the option contracts require a non-refundable cash ~~flow~~deposit ~~from~~based ~~operations~~on ~~was~~a ~~positively~~percentage ~~affected~~of ~~by these~~the ~~home~~purchase ~~closings~~price ~~and~~of ~~lot~~the ~~sales~~property. ~~These~~The ~~deliveries~~option contracts ~~were~~are ~~partially~~recorded ~~offset~~at bycost. ~~land~~In ~~acquisitions~~determining ~~made~~whether to pursue an option contract, we estimate ~~during~~the option primarily based upon the ~~year~~expected ~~ended~~cash ~~December 31,~~flows ~~2009~~from the optioned property. WeIf ~~have~~the ~~limited~~intent is ~~our~~to ~~development~~no oflonger ~~land~~pursue ~~while~~an option contract, we record a charge to earnings of the ~~demand~~deposit amounts ~~for~~and ~~finished~~any ~~lots~~other ~~has~~related ~~decreased~~pre-acquisition entitlement costs in the period the decision is made.

27Capitalized Costs

~~Table~~Our housing and land inventory on our consolidated balance sheet includes the costs of ~~Contents~~acquiring land, development and construction costs, interest, property taxes and overhead directly related to the development of the land and housing. Direct costs are capitalized to individual homes and lots and other costs are allocated to each lot in proportion to our anticipated revenue.

AEstimates ~~summary~~of costs to complete homes and lots sold are recorded at the time of ~~our~~closing. These estimates are prepared on an individual home and lot basis and take into account the specific cost components of each individual home and lot. The estimation process to allocate costs to homes and lots ~~owned~~is dependent on project budgets that are based on various assumptions, including construction schedules and ~~consolidated~~future ~~land~~costs ~~inventory~~to ~~not~~be ~~owned~~incurred. These estimates are reviewed for accuracy based on actual payments made after closing and ~~their~~adjustments ~~stage~~are made if necessary. If the estimates of costs ~~development~~are atsignificantly ~~December 31~~different from our actual results, ~~2009~~our ~~compared~~housing ~~with~~and ~~the~~land ~~same~~inventory may be over-or under-stated on our balance sheet, and accordingly gross margins in a particular period ~~last~~may ~~year~~be over-or ~~follows:~~under-stated.

	2009		2008
Completed homes, including models		101		265
Homes under construction		121		64
Homes with foundation / slabs		85		76
Total housing units		307		405
Lots ready for house construction		1,643		2,544
		1,950		2,949
Graded lots and lots commenced grading		2,141		900
Undeveloped land		11,888		9,235
		15,979		13,084

Revenue Recognition

~~Cash~~Revenues ~~used~~from inthe ~~our~~sale ~~investing~~of ~~activities~~homes inare ~~unconsolidated~~recognized ~~entities~~when ~~for~~title passes to the ~~year~~purchaser ~~ended~~upon ~~December 31~~closing, wherein ~~2009~~all ~~was $9 million,~~proceeds aare ~~decrease~~received ofor ~~$23 million~~collectability ~~when~~is ~~compared~~evident. ~~with~~Land ~~$32 million~~sales ~~for~~are ~~the~~recognized ~~same~~when title ~~period~~passes into ~~2008. The~~the ~~decrease~~purchaser ~~was~~upon ~~primarily~~closing, aall ~~result~~material conditions of the ~~curtailment~~sales ofcontract ~~land~~have ~~development~~been met and ~~acquisition expenditures,~~a ~~partially~~significant ~~offset by an increase in restricted~~ cash indown ~~conjunction~~payment ~~with~~or ~~entering~~appropriate ~~into the~~security ~~total~~is ~~return~~received, ~~swap~~and ~~contract~~collectability ~~in the current year~~is evident.

~~Cash~~Income ~~used in our financing activities for the year ended December 31, 2009 was $128 million~~Taxes compared with cash used of $43 million for the same period in 2008. The cash used in the current year was used to repay both project specific financings of $184 million as well as revolving and other financings of $192 million and pay cash dividends of $4 million on our 8% convertible preferred stock, which was partially offset by $250 million of proceeds received as a result of the 8% convertible preferred stock issuance.

~~Contractual~~Income ~~Obligations~~taxes are accounted for in accordance with ASC Topic 740 “Income Taxes” (formerly SFAS 109). Under ASC Topic 740, deferred tax assets and ~~Other~~liabilities ~~Commitments~~are determined based on differences between financial reporting and tax bases of assets and liabilities, and are measured by using enacted tax rates expected to apply to taxable income in the years in which those differences are expected to reverse.

AIn ~~total~~accordance ofwith ~~$223 million~~the provisions of ~~our~~ASC ~~project~~Topic ~~specific~~740, ~~financings~~we ~~mature~~assess, ~~prior~~on a quarterly basis, our ability to realize ~~the~~our ~~end~~deferred oftax ~~2011~~asset. ~~The debt~~In ~~maturing~~determining inthe ~~2010~~need ~~and~~for ~~2011~~a isvaluation ~~expected~~allowance, towe beconsider ~~repaid~~the following ~~from~~significant ~~home~~factors: ~~and~~an ~~/or~~assessment ~~lot~~of ~~deliveries~~recent ~~over~~years’ ~~this period~~profitability and islosses ~~secured~~which considers by the ~~housing~~nature, frequency and ~~land~~severity ~~inventory~~of wecurrent ~~own.~~and ~~Our~~cumulative ~~net~~losses ~~debt~~adjusted to ~~total~~reflect ~~capitalization~~the ~~ratio~~effects as of ~~December 31,~~changes ~~2009,~~to ~~which~~our wecapital ~~define~~structure asthat ~~total~~have resulted in a significant reduction in the amount of interest- bearing debt; ~~less~~our forecasts or expectation of profits based on margins and ~~cash~~volumes ~~divided~~expected byto ~~total~~be ~~interest-bearing~~realized ~~debt~~(which ~~less~~are ~~cash~~based ~~plus~~on ~~total~~current ~~equity~~pricing and ~~other~~volume ~~interests~~trends) inand ~~consolidated~~including ~~subsidiaries,~~the ~~was~~effects ~~42%.~~of ~~The~~reduced ~~issuance~~interest expense; the financial support of our 8%largest ~~convertible~~stockholder as ~~preferred~~evidenced ~~stock~~by asthe ~~well~~revolving as credit facilities; the ~~repayment~~long duration of ~~debt~~ten ~~during~~to ~~the~~twenty ~~year~~years ~~resulted~~or more in aall ~~40%~~significant ~~improvement~~operating ~~since~~jurisdictions ~~December 31,~~before ~~2008~~the inexpiry ~~our~~ of net ~~debt~~operating tolosses, ~~total~~and ~~capitalization~~we ~~ratio.~~take into ~~For~~consideration that a ~~description~~substantial portion of the ~~specific~~deferred ~~risks~~tax ~~facing~~asset usis ~~if,~~composed ~~for~~of deductible ~~any~~temporary ~~reason,~~differences wethat are ~~unable~~not subject to ~~meet~~an ~~these~~expiry ~~obligations,~~period ~~refer~~until torealized ~~the~~under ~~section~~tax oflaw. However, ~~this~~the ~~Form~~recognition ~~10-K entitled~~of ~~“Risk~~deferred ~~Factors~~tax –assets ~~Our~~is ~~debt~~based ~~and~~upon ~~leverage~~assumptions ~~could~~about ~~adversely~~the ~~affect~~future including ~~our~~an ~~financial~~estimate ~~condition.”~~of

Our project specific financings require Brookfield Homes Holdings Inc., a wholly-owned subsidiary of our company, to maintain a tangible net worth of at least $250 million, a net debt to capitalization ratio of no greater than 65% and a net debt to tangible net worth ratio of no greater than 2.50 to 1.00. At December 31~~, 2009, we were in compliance with all our project specific~~ financing covenants. The following are computations of the most restrictive of Brookfield Homes Holdings Inc.’s tangible net worth, net debt to capitalization ratio, and net debt to tangible net worth debt ratio covenants:

				Actual as of
	Covenant			December 31, 2009
Tangible net worth ($US millions)	$	250		$	518
Net debt to capitalization		65	%		49	%
Net debt to tangible net worth		2.50 to 1			0.89 to 1

future results, and differences between the expected and actual financial performance could require all or a portion of the deferred tax assets to be expensed. We will continue to evaluate the need for a valuation allowance in future periods. At December 31, 2010 and 2009 our deferred tax asset was $33 million and $40 million, respectively. Based on the more likely than not standard in the guidance and the weight of available evidence, we do not believe a valuation allowance against the deferred tax asset at December 31, 2010 is necessary.

AtRecent ~~December 31, 2009, our revolving operating credit facility with a subsidiary of Brookfield~~Accounting Asset Management Inc. required us to maintain minimum stockholders’ equity of $300 million and a consolidated net debt to book capitalization ratio of no greater than 70%. The following are computations of Brookfield Homes Corporation’s minimum stockholders’ equity and net debt to capitalization ratio covenants:

				Actual as of
	Covenant			December 31, 2009
Minimum stockholders’ equity ($US millions)	$	300		$	486
Net debt to capitalization		70	%		42	%

In June 2009, the FASB issued guidance now incorporated into ASC Topic 810 “Consolidation” (formerly SFAS 167) amending the consolidation guidance applicable to variable interest entities and the definition of a variable interest entity, and requiring enhanced disclosures to provide more information about a Company’s involvement in a variable interest entity. This guidance also requires ongoing assessments of whether an enterprise is the primary beneficiary of a variable interest entity. This guidance is effective for our fiscal year beginning January 1, 2010. We have adopted this guidance in our consolidated financial statements. See Notes 2 and 3 in our consolidated financial statements included elsewhere in this Form 10-K for disclosure regarding the impact on our consolidated financial statements.

28In July 2009, the FASB’s ASC became the single official source of authoritative, nongovernmental generally accepted accounting principles (GAAP) in the United States. The historical GAAP hierarchy was eliminated and the ASC became the only level of authoritative GAAP, other than guidance issued by the Securities and Exchange Commission. This guidance is effective for interim and annual periods ending after September 15, 2009. We adopted the provisions of this guidance for the year ended December 31, 2009. Our accounting policies were not affected by the conversion to the ASC. However, references to specific accounting standards have been changed to refer to the appropriate section of the ASC.

~~Table~~Seasonality ofand ~~Contents~~Quarterly Information

AWe ~~summary~~have historically experienced variability in results of ~~our~~operations ~~contractual~~from ~~obligations~~quarter to quarter due to the seasonal nature of the homebuilding business and ~~purchase~~the ~~agreements~~timing asof new community openings and the closing out of ~~December 31~~projects. We typically experience the highest rate of orders for new homes in the first six months of the calendar year. New home deliveries trail new home orders by several months, ~~2009~~therefore we normally have a greater percentage of new home deliveries in the second half ~~follows:~~of our fiscal year. As a result, our revenues from deliveries of homes are generally higher in the second half of the year.

	Payment Due by Period
			Less than		1-3		3-5		More than
($ millions)	Total		1 Year		Years		Years		5 Years
Project specific and revolving and other financings (a)	$	382	$	143	$	239	$	—	$	—
Operating lease obligations (b)		7		2		4		1		—
Purchase agreements (c)		183		27		21		135		—
Total (d)	$	572	$	172	$	264	$	136	$	—

The following table presents a summary of our operating results for each of the last eight quarters:

(a) Amounts are included on the Consolidated Balance Sheets. See Note 6 and Note 7 of the Notes to the Consolidated Financial Statements included in this Form 10-K for additional information regarding project specific and other financings and related matters. (b) Amounts relate to non-cancelable operating leases involving office space, design centers and model homes. (c) Amounts represent our expected acquisition of land under options or purchase agreements. See Note 2 to the Consolidated Financial Statements included in this Form 10-K for additional information regarding purchase agreements. (d) Amounts do not include interest due to the floating nature of our debt. See Note 6 and Note 7 to the Consolidated Financial Statements included in this From 10-K for additional information regarding our floating rate debt.


*($ millions, except home closings*	December 31					September 30						June 30						March 31
*and per share amounts)*	2010		2009			2010			2009			2010			2009			2010			2009
Total revenue	$	123	$	145		$	75		$	99			95		$	95			46		$	37
Gross margin / (loss)		18		(12	)		13			5			17			5			7			—
Net income / (loss)		5		(17	)		(1	)		(4	)		3			—			(3	)		(12	)
Net income / (loss) attributable to Brookfield Homes Corporation		5		(17	)		(1	)		(1	)		3			—			(3	)		(10	)
Diluted (loss) / earnings per share ⁽¹⁾		—		(0.81	)		(0.19	)		(0.22	)		(0.08	)		(0.12	)		(0.27	)		(0.39	)
Home closings (units) ⁽²⁾		186		268			98			192			210			169			81			74
Cash provided by / ( used in) operating activities		55		68			(9	)		28			21			16			21			25
Total assets		991		1,037			1,049			1,130			1,010			1,141			1,009			1,157
Total debt		332		382			392			471			353			490			365			725

Off-Balance Sheet Arrangements


(1)		Quarterly and year-to-date computations of per share amounts are made independently. Therefore, the sum of per share amounts for the quarters may not agree with per share amounts for the year.

(2)		Includes unconsolidated entities.

In the ordinary course of business, we use lot option contracts and unconsolidated entities to acquire control of land to mitigate the risk of declining land values. Option contracts for the purchase of land permit us to control the land for an extended period of time, until options expire and/or we are ready to develop the land for home construction. This reduces our financial risk associated with land holdings. As of December 31, 2009, we had $66 million of primarily nonNon-~~refundable~~Arms’ ~~option~~Length ~~deposits and advanced costs. The total exercise price of these options was~~Transactions $183 million. Pursuant to Accounting Standards Codification (“ASC”) Topic 860 (formerly FIN 46(R)), as defined elsewhere in this Form 10-K, we have consolidated $25 million of these option contracts. Please see Note 2 to our consolidated financial statements included in this Form 10-K for additional information on our lot options.

We ~~also~~are ~~own~~party ~~1,746~~to ~~lots~~a ~~through~~license ~~our~~agreement ~~proportionate~~with ~~share~~Brookfield ofProperties ~~unconsolidated entities~~(US) Inc., Asan ofindirect ~~December~~wholly-owned ~~31,~~subsidiary ~~2009,~~of ~~our~~Brookfield ~~investment~~Properties inCorporation, ~~unconsolidated~~for ~~entities~~the ~~totaled~~right ~~$92 million.~~to Weuse ~~have~~the ~~provided~~names ~~varying~~“Brookfield” and ~~levels~~“Brookfield ofHomes.” ~~guarantees~~A subsidiary of ~~debt~~Brookfield inAsset ~~our~~Management ~~unconsolidated entities~~Inc. Ashas ofprovided ~~December 31,~~us ~~2009,~~with ~~we had~~an ~~completion~~unsecured ~~guarantees~~revolving ofoperating ~~$8 million~~facility ~~and~~in ~~limited~~the ~~maintenance~~form ~~guarantees~~ of ~~$15 million~~a ~~with~~promissory ~~respect to~~note ~~debt~~that inwas ~~our~~amended ~~unconsolidated~~most recently ~~entities~~in April 2009. ~~During~~The ~~2009,~~facility webears ~~did~~interest ~~not~~at ~~make~~LIBOR ~~any~~plus ~~loan~~3.5% ~~re-margin~~per ~~repayments~~annum, matures December on2011 ~~our~~and, ~~debt~~at inDecember 31, ~~our~~2010, ~~unconsolidated~~there ~~entities.~~was $100 million outstanding

~~We obtain letters of credit, performance bonds and other bonds to support our obligations with~~32 respect to the development of our projects. The amount of these obligations outstanding at any time varies in accordance with our development activities. If these letters of credit or bonds are drawn upon, we will be obligated to reimburse the issuer of the letter of credit or bonds. As of December 31, 2009, we had $8 million in letters of credit outstanding and $121 million in performance bonds for these purposes. The costs to complete related to our letters of credit and performance bonds are $6 million and $70 million, respectively. We do not believe that any of these letters of credit or bonds are likely to be drawn upon.

~~Critical~~under ~~Accounting~~this ~~Policies~~facility. During 2009, we entered into a second unsecured credit facility that was amended most recently in July 2009. This operating and ~~Estimates~~acquisition facility currently bears interest at 14% per annum, matures December 2012 and, at December 31, 2010, there was $60 million outstanding under this facility. In addition, on October 4, 2010, Brookfield Properties, Brookfield Homes and Brookfield Residential Properties Inc. (“Brookfield Residential”), a wholly-owned subsidiary of Brookfield, entered into an definitive agreement to combine Brookfield Homes and the North American residential land and housing division of Brookfield Properties into Brookfield Residential. For details of these arrangements and other non-arms’ length transactions refer to Item 13 of this Form 10-K “Certain Relationships and Related Transactions, and Director Independence.”

The discussion and analysis of our financial condition and results of operations is based upon the consolidated financial statements of our Company, which have been prepared in accordance with accounting principles generally accepted in the United StatesItem 7A. ~~The~~Quantitative ~~preparation of these financial statements requires us to make assumptions, estimates~~ and ~~judgments~~Qualitative ~~that~~Disclosures ~~affect~~About ~~the~~Market ~~reported~~Risk amounts of assets, liabilities, revenues and expenses, and the related disclosure of contingent assets and liabilities. We evaluate our estimates on an on-going basis. We base our estimates on historical experience and on various other assumptions that we believe are reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities and the reported amount of revenues and expenses that are not readily apparent from other sources. Our actual results may differ from these estimates under different assumptions or conditions.

~~Our~~Exchange ~~most critical accounting policies are those that we believe are the most important in~~Rates portraying our financial condition and results of operations, and require the most subjectivity and estimates by our management. A summary of our significant accounting policies, including the critical accounting policies discussed below, is provided in the notes to the consolidated financial statements of our Company included elsewhere in this Form 10-K.

29We conduct business in U.S. dollars only, so we are not exposed to currency risks.

~~Table~~Interest ~~of Contents~~Rates

~~Carrying~~We ~~Values~~are exposed to financial risks that arise from the fluctuations in interest rates. Our interest-bearing assets and liabilities are mainly at floating rates, so we would be negatively affected, on balance, if interest rates increase. In addition, we have interest rate swap contracts which effectively fix $150 million of our variable rate debt at an average rate of 5%. Based on our net debt levels as of December 31, 2010, a 1% change up or down in interest rates would have either a negative or positive effect of approximately $1 million on our cash flows.

InOur ~~accordance~~interest ~~with~~rate ~~the~~swaps ~~ASC~~are ~~Topic~~not ~~360~~designated ~~“Property,~~as ~~Plant~~hedges ~~and~~under ~~Equipment”~~ASC 815 (formerly ~~Statement of Financial Accounting Standard (“~~SFAS”) ~~144~~133), “Derivatives ~~housing~~ and ~~land~~Hedging.” ~~assets~~We ~~we own directly and through unconsolidated entities~~ are ~~reviewed~~exposed ~~for~~to ~~recoverability~~market onrisk aassociated ~~regular~~with ~~basis and whenever events or~~ changes in ~~circumstances indicate that~~ the carrying amount of an asset may not be recoverable. Recoverability is measured by comparing the carrying amount of an asset to future undiscounted cash flows expected to be generated by the asset. To arrive at the estimated fair ~~value of housing and~~values ~~land inventory impaired, we estimate the cash flow for the life~~ of ~~each project. Specifically, on a housing project, we evaluate~~ the ~~margins on homes that have been closed~~swaps, ~~margins on sales contracts which are in backlog~~ and ~~estimated~~such ~~margins~~changes ~~with~~must ~~regard~~be toreflected ~~future~~in ~~home~~our ~~sales~~consolidated ~~over~~statements ~~the life~~ of ~~the project~~operations. ~~On a land project, we estimate the timing of future land sales, the estimated revenue per~~As lot, as well as estimated margins with respect to future land sales. For the housing and land inventory, we continuously evaluate projects where inventory is turning over slower than expected or whose average sales price and margins are declining and are expected to continue to decline. These projections take into account the specific business plans for each project and management’s best estimate of ~~the most probable set of economic conditions anticipated to prevail in the market area. Such projections generally assume current home selling prices~~December 31, ~~cost estimates and sales rates for short-term projects are consistent with recent sales activity. For longer-term projects, planned sales rates for~~ 2010 and 2011 assume recent sales activity and normalized sales rates beyond 2011. We identify potentially impaired housing and land projects based on these quantitative factors as well as qualitative factors obtained from the local market areas. If the future undiscounted cash flows are less than the carrying amount, the ~~asset is considered to be impaired and is then written down to~~ fair value ~~less~~of ~~estimated~~the ~~selling~~interest ~~costs~~rate ~~using~~swaps totaled a ~~discounted~~liability ~~cash~~of ~~flow methodology which incorporates market participant assumptions~~$15 million.

~~We have also entered into a number of option contracts to acquire land or lots in the future in~~33 accordance with specific terms and conditions. A majority of the option contracts require a non-refundable cash deposit based on a percentage of the purchase price of the property. The option contracts are recorded at cost. In determining whether to pursue an option contract, we estimate the option primarily based upon the expected cash flows from the optioned property. If the intent is to no longer pursue an option contract, we record a charge to earnings of the deposit amounts and any other related pre-acquisition entitlement costs in the period the decision is made.

~~Capitalized~~Item ~~Costs~~ 8. Financial Statements and Supplementary Data

~~Our~~INDEX ~~housing~~TO ~~and~~FINANCIAL ~~land inventory on our consolidated balance sheet includes the costs of acquiring~~STATEMENTS land, development and construction costs, interest, property taxes and overhead directly related to the development of the land and housing. Direct costs are capitalized to individual homes and lots and other costs are allocated to each lot in proportion to our anticipated revenue.

Estimates of costs to complete homes and lots sold are recorded at the time of closing. These estimates are prepared on an individual home and lot basis and take into account the specific cost components of each individual home and lot. The estimation process to allocate costs to homes and lots is dependent on project budgets that are based on various assumptions, including construction schedules and future costs to be incurred. These estimates are reviewed for accuracy based on actual payments made after closing and adjustments are made if necessary. If the estimates of costs are significantly different from our actual results, our housing and land inventory may be over-or under-stated on our balance sheet, and accordingly gross margins in a particular period may be over-or under-stated.


	Page
Report of Independent Registered Chartered Accountants		35

Consolidated Balance Sheets as at December 31, 2010 and 2009		36

Consolidated Statements of Operations for each of the Three Years Ended December 31, 2010, 2009 and 2008		37

Consolidated Statements of Stockholders’ Equity for each of the Three Years Ended December 31, 2010, 2009 and 2008		38

Consolidated Statements of Cash Flows for each of the Three Years Ended December 31, 2010, 2009 and 2008		39

Notes to Consolidated Financial Statements		40

~~Revenue Recognition~~34

~~Revenues~~REPORT ~~from~~OF ~~the~~INDEPENDENT ~~sale~~REGISTERED ofCHARTERED ~~homes are recognized when title passes to the purchaser upon closing,~~ACCOUNTANTS wherein all proceeds are received or collectability is evident. Land sales are recognized when title passes to the purchaser upon closing, all material conditions of the sales contract have been met and a significant cash down payment or appropriate security is received, and collectability is evident.

~~Income~~To ~~Taxes~~the Board of Directors and Stockholders of Brookfield Homes Corporation

~~Income~~We ~~taxes~~have ~~are~~audited ~~accounted~~the ~~for~~accompanying inconsolidated ~~accordance~~balance ~~with~~sheets ~~ASC~~of ~~Topic~~Brookfield ~~740~~Homes ~~“Income~~Corporation ~~Taxes”~~and subsidiaries (~~formerly~~the ~~SFAS 109~~“Company”)~~. Under~~ ~~ASC~~as ~~Topic~~of ~~740~~December 31, ~~deferred~~2010 ~~tax~~and ~~assets~~2009, and ~~liabilities~~the ~~are~~related ~~determined~~consolidated statements ~~based~~of onoperations, ~~differences between~~equity, ~~financial~~and ~~reporting~~cash ~~and~~flows ~~tax~~for ~~bases~~each of ~~assets~~the ~~and~~three ~~liabilities~~years in the period ended December 31, ~~and~~2010. These financial statements are ~~measured~~the byresponsibility ~~using enacted~~of ~~tax~~the ~~rates~~Company’s ~~expected~~management. Our toresponsibility ~~apply~~is to ~~taxable~~express ~~income~~an inopinion ~~the~~on ~~years~~these infinancial ~~which~~statements ~~those~~based ~~differences~~on ~~are expected~~our ~~to reverse~~audits.

InWe conducted our audits in accordance with the ~~provisions~~standards of ~~ASC~~the ~~Topic~~Public ~~740,~~Company weAccounting ~~assess,~~Oversight Board on(United aStates). ~~quarterly~~Those ~~basis,~~standards ~~our~~require ~~ability~~that we plan and perform the audit to obtain ~~realize~~reasonable ~~our~~assurance ~~deferred~~about ~~tax~~whether ~~assets.~~the Infinancial ~~determining~~statements ~~the~~are ~~need~~free ~~for~~of material misstatement. An audit includes examining, on a ~~valuation~~test ~~allowance~~basis, weevidence ~~consider~~supporting the ~~following~~ ~~significant~~amounts ~~factors:~~and andisclosures ~~assessment~~in ofthe financial ~~recent~~statements. ~~years’~~An ~~profitability~~audit ~~and~~also ~~losses~~includes ~~which considers~~assessing the ~~nature,~~accounting ~~frequency~~principles used and significant ~~severity~~estimates ofmade ~~current~~by ~~and~~management, ~~cumulative~~as ~~losses~~well ~~adjusted~~as toevaluating ~~reflect~~ the ~~effects~~overall offinancial ~~changes~~statement presentation. toWe believe that our ~~capital~~audits ~~structure~~provide ~~that~~a ~~have~~reasonable ~~resulted~~basis infor aour opinion.

30In our opinion, such consolidated financial statements present fairly, in all material respects, the financial position of Brookfield Homes Corporation and subsidiaries as of December 31, 2010 and 2009, and the results of their operations and their cash flows for each of the three years in the period ended December 31, 2010, in conformity with accounting principles generally accepted in the United States of America.

~~Table~~We have also audited, in accordance with the standards of ~~Contents~~the Public Company Accounting Oversight Board (United States), the Company’s internal control over financial reporting as of December 31, 2010, based on the criteria established in Internal Control — Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission and our report dated February 17, 2011 expressed an unqualified opinion on the Company’s internal control over financial reporting.

~~significant reduction in the amount of interest bearing debt; our forecasts or expectation of~~ ~~profits~~Independent ~~based~~Registered onChartered ~~margins and volumes expected to be realized (which are based on current pricing~~Accountants ~~and~~Licensed ~~volume~~Public ~~trends) and including the effects of reduced interest expense; the financial support of~~Accountants ~~our largest stockholder as evidenced by the revolving credit facilities~~Toronto, ~~the long duration of ten~~Canada to twenty years or more in all significant operating jurisdictions before the expiry of net operating losses, and we take into consideration that a substantial portion of the deferred tax asset is composed of deductible temporary differences that are not subject to an expiry period until realized under tax law. However, the recognition of deferred tax assets is based upon assumptions about the future including an estimate of future results, and differences between the expected and actual financial performance could require all or a portion of the deferred tax assets to be derecognized. We will continue to evaluate the need for a valuation allowance in future periods. At DecemberFebruary 3117, ~~2009 and 2008, our deferred tax asset was $40 million and $59 million,~~2011 ~~respectively. Based on the more likely than not standard in the guidance and the weight of~~ ~~available evidence, we do not believe a valuation allowance against the deferred tax asset at December 31, 2009 is necessary.~~

~~Recent Accounting~~35

InBROOKFIELD ~~July 2009,~~HOMES ~~the FASB’s ASC became the single official source of authoritative, nongovernmental~~CORPORATION generally accepted accounting principles (GAAP) in the United States. The historical GAAP hierarchy was eliminated and the ASC became the only level of authoritative GAAP, other than guidance issued by the Securities and Exchange Commission. This guidance is effective for interim and annual periods ending after September 15, 2009. We adopted the provisions of this guidance for the year ended December 31, 2009. Our accounting policies were not affected by the conversion to the ASC. However, references to specific accounting standards have been changed to refer to the appropriate section of the ASC.

InCONSOLIDATED ~~December 2007,~~BALANCE ~~the FASB issued guidance now incorporated in ASC Topic 810 “Consolidation”~~SHEETS (formerly SFAS 160). The guidance clarifies the accounting for noncontrolling interests and establishes accounting and reporting standards for the noncontrolling interest in a subsidiary, including classification as a component of total equity. This guidance was effective for our fiscal year beginning January 1, 2009. We have adopted this guidance in our consolidated financial statements for the year ended December 31, 2009. On a retrospective basis, noncontrolling interest has been classified as a component of equity and the net loss on the consolidated statements of operations has been adjusted to include the net loss attributable to noncontrolling interest. See Note 11 for further disclosure regarding its impact on our consolidated financial statements.

In(all ~~March 2008,~~dollar ~~the~~amounts ~~FASB~~are ~~issued guidance now incorporated~~ in ~~ASC~~thousands ~~Topic~~of ~~815 “Derivatives and Hedging” (formerly SFAS 161)~~U. The guidance is intended to improve financial reporting about derivative instruments and hedging activities by requiring enhanced disclosures that enable investors to better understand how and why an entity uses derivative instruments and the instruments’ effects on an entity’s financial position, financial performance and cash flowsS. ~~The guidance is effective for~~dollars) financial statements issued for fiscal years and interim periods beginning after November 15, 2008 with early application encouraged. This pronouncement is related to disclosure and did not have a material impact on our consolidated financial statements.

In December 2008, the FASB issued guidance now incorporated in ASC Topic 860 “Transfers and Servicing” (formerly FASB Staff Position (“FSP”) SFAS 140-4 and FASB Interpretation (“FIN”) 46R). The guidance increases disclosure requirements for public companies and is effective for reporting periods (interim and annual) that end after December 15, 2008. The guidance requires public entities to provide additional disclosures about transferors’ continuing involvements with transferred financial assets. It also requires public enterprises, including sponsors that have a variable interest in a variable interest entity, to provide additional disclosures about their involvement with variable interest entities. This pronouncement is related to disclosure only and did not have a material impact on our consolidated financial statements.


			As at December 31
	Note		2010			2009
Assets
Housing and land inventory		2	$	801,409		$	835,263
Investments in unconsolidated entities		3		124,369			92,477
Receivables and other assets		4		24,826			61,744
Restricted cash		5		7,366			7,485
Deferred income taxes		8		32,631			40,112

			$	990,601		$	1,037,081

Liabilities and Equity
Project specific and other financings		6	$	331,794		$	381,567
Accounts payable and other liabilities		7		135,264			122,190

Total liabilities				467,058			503,757

Other interests in consolidated subsidiaries		10		42,461			47,011

Commitments, contingent liabilities and other		13		—			—
Preferred stock — 10,000,000 shares authorized, 9,995,739 shares issued (December 31, 2009 — 10,000,000 shares authorized, 10,000,000 shares issued)		11		249,582			249,688
Common stock — 200,000,000 shares authorized, 32,088,997 shares issued (December 31, 2009 — 32,073,781 shares issued)		11		321			321
Additional paid-in capital		11		143,317			142,106
Treasury stock, at cost — 2,420,089 shares (December 31, 2009 — 3,671,482 shares)		11		(110,807	)		(166,113	)
Retained earnings				192,213			252,994
Noncontrolling interest		10		6,456			7,317

Total equity				481,082			486,313

			$	990,601		$	1,037,081

InSee ~~April 2009,~~accompanying ~~the~~notes FASB issued guidance now incorporated in ASC Topic 825 “Financial Instruments” (formerly FSP SFAS 107-1). The guidance requires that the fair value disclosures required for financial instruments be included in interim financial statements. In addition, the guidance requires public companies to ~~disclose the method and significant assumptions used to estimate the fair value of those~~ financial instruments and to discuss any changes of method or assumptions, if any, during the reporting period. The guidance was effective for our year ended December 31, 2009. This pronouncement is related to disclosure only and did not have a material impact on our consolidated financial statements.

3136

~~Table~~BROOKFIELD ofHOMES ~~Contents~~CORPORATION

InCONSOLIDATED ~~May 2009,~~STATEMENTS ~~the~~OF ~~FASB issued guidance now incorporated in ASC Topic 855 “Subsequent Events”~~OPERATIONS (formerly SFAS 165). This guidance establishes general standards of accounting for and disclosures of events that occur after the balance sheet date but before the consolidated financial statements are issued or are available to be issued. Among other items, the guidance requires the disclosure of the date through which an entity has evaluated subsequent events and the basis for that date. We have adopted this guidance in its consolidated financial statements for the year ended December 31, 2009.

~~In June 2009, the FASB issued guidance now incorporated into ASC Topic 810 “Consolidation”~~ (~~formerly~~all ~~SFAS~~dollar ~~167)~~amounts ~~amending~~are the consolidation guidance applicable to variable interest entities and the definition of a variable interest entity, and requiring enhanced disclosures to provide more information about a company’s involvement in athousands ~~variable interest entity. This guidance also requires ongoing assessments~~ of ~~whether an enterprise is the primary beneficiary of a variable interest entity~~U.S. ~~This guidance is effective for our fiscal year beginning January 1~~dollars, ~~2010.~~except Weper ~~are currently~~share ~~reviewing the impact of the guidance on our consolidated financial statements.~~amounts)

Seasonality and Quarterly Information


			Years Ended December 31
	Note		2010			2009			2008
Revenue
Housing			$	292,095		$	339,625		$	415,311
Land				46,771			36,355			33,692

				338,866			375,980			449,003
Direct Cost of Sales
Housing				(243,301	)		(294,493	)		(363,038	)
Land				(40,686	)		(59,308	)		(53,057	)
Impairment of housing and land inventory and write-off of option deposits		2		—			(23,963	)		(115,124	)

				54,879			(1,784	)		(82,216	)
Selling, general and administrative expense				(55,585	)		(52,339	)		(69,498	)
(Loss) / equity in earnings from unconsolidated entities		3		(192	)		1,331			3,302
Impairment of investments in unconsolidated entities		3		—			(12,995	)		(37,863	)
Other income / (expense)		10, 13(e)		8,055			13,191			(17,823	)

Income / (Loss) Before Income Taxes				7,157			(52,596	)		(204,098	)
Income tax (expense) / recovery		8		(3,706	)		20,134			70,861

Net Income / (Loss)				3,451			(32,462	)		(133,237	)
Net loss attributable to noncontrolling interest and other interests in consolidated subsidiaries		10		(976	)		(4,753	)		(17,622	)

Net Income / (Loss) Attributable to Brookfield Homes Corporation			$	4,427		$	(27,709	)	$	(115,615	)

Loss Per Share attributable to Brookfield Homes Corporation Common Stockholders
Basic		12	$	(0.54	)	$	(1.54	)	$	(4.33	)
Diluted		12	$	(0.54	)	$	(1.54	)	$	(4.33	)
Weighted Average Common Shares Outstanding (in thousands)
Basic		12		29,087			26,838			26,688
Diluted		12		29,087			26,838			26,688

WeSee ~~have~~accompanying ~~historically~~notes ~~experienced variability in results of operations from quarter~~ to ~~quarter~~financial ~~due~~statements to the seasonal nature of the homebuilding business and the timing of new community openings and the closing out of projects. We typically experience the highest rate of orders for new homes in the first six months of the calendar year. New home deliveries trail new home orders by several months, therefore we normally have a greater percentage of new home deliveries in the second half of our fiscal year. As a result, our revenues from deliveries of homes are generally higher in the second half of the year.

~~The following table presents a summary of our operating results for each of the last eight~~37 ~~quarters:~~

	December 31						September 30						June 30						March 31
($ millions, except home closings
and per share amounts)	2009			2008			2009			2008			2009			2008			2009			2008
Total revenue	$	145		$	150		$	99		$	110		$	95		$	120		$	37		$	69
Gross margin / (loss)		(12	)		(65	)		5			(19	)		5			(2	)		—			4
Net (loss) / income		(17	)		(79	)		(4	)		(29	)		—			(11	)		(12	)		(14	)
Net loss attributable to Brookfield Homes Corporation		(17	)		(70	)		(1	)		(25	)		—			(9	)		(10	)		(12	)
Diluted (loss) / earnings per share (1)		(0.81	)		(2.58	)		(0.22	)		(0.95	)		(0.12	)		(0.33	)		(0.39	)		(0.47	)
Home closings (units) (2)		268			230			192			184			169			216			74			120
Cash provided by / ( used in) operating activities		68			37			28			12			16			49			25			(32	)
Total assets		1,037			1,207			1,130			1,320			1,141			1,354			1,157			1,394
Total debt		382			749			471			783			490			792			725			798

BROOKFIELD HOMES CORPORATION

(1)		Quarterly and year-to-date computations of per share amounts are made independently. Therefore, the sum of per share amounts for the quarters may not agree with per share amounts for the year.
(2)		Includes unconsolidated entities.

CONSOLIDATED STATEMENTS OF EQUITY

~~Non-Arms’~~(all ~~Length~~dollar ~~Transactions~~amounts are in thousands of U.S. dollars)

We are party to a license agreement with Brookfield Properties (US) Inc., an indirect wholly-owned subsidiary of Brookfield Properties Corporation, for the right to use the names “Brookfield” and “Brookfield Homes.” A subsidiary of Brookfield Asset Management Inc. has provided us with an unsecured revolving operating facility in the form of a promissory note that was amended most recently in April 2009. The facility bears interest at LIBOR plus 3.5% per annum, matures December 2011 and, at December 31, 2009, there was $100 million outstanding under this facility. During 2009, we entered into a second unsecured credit facility that was amended most recently in July 2009. This operating and acquisition facility initially bears interest at 12% per annum, matures December 2012 and, at December 31, 2009, there was $50 million outstanding under this facility. We entered into a management services agreement with an affiliate of Brookfield Asset Management Inc., effective February 2009. Pursuant to the agreement, we paid directly to the Brookfield Asset Management Inc. affiliate a quarterly service fee of $80,000 with respect to Craig Laurie’s employment by us as our Chief Financial Officer in 2009. For details of these arrangements and other non-arms’ length transactions refer to “Certain Relationships and Related Transactions, and Director Independence,” which is incorporated by reference into Item 13 of this Form 10-K from our definitive 2010 proxy statement, which will be filed with the SEC not later than April 30, 2010.


			Years Ended December 31
	Note		2010			2009			2008
Preferred Stock
Opening balance			$	249,688		$	—		$	—
Preferred stock issuance, net of issuance costs of $312		11		—			249,688			—
Conversion of preferred stock				(106	)		—			—

Ending balance				249,582			249,688			—


Common Stock				321			321			321


Additional Paid-in Capital
Opening balance				142,106			141,286			145,101
Adjustment to stock-based compensation plan				—			145			—
Stock option compensation costs		11		1,105			675			—
Stock option compensation exercises		11		—			—			(3,815	)
Conversion of preferred stock				106			—			—

Ending balance				143,317			142,106			141,286


Treasury Stock
Opening balance				(166,113	)		(238,957	)		(243,701	)
Stock option exercises		11		93			66			4,744
Preferred stock dividends		11		55,213			72,778			—

Ending balance				(110,807	)		(166,113	)		(238,957	)


Retained Earnings
Opening balance				252,994			356,981			477,929
Net income / (loss) attributable to Brookfield Homes Corporation				4,427			(27,709	)		(115,615	)
Common stock dividends		11		—			—			(5,333	)
Preferred stock dividends		11		(19,995	)		(13,500	)		—
Treasury stock issued		11		(45,213	)		(62,778	)		—

Ending balance				192,213			252,994			356,981

Total Brookfield Homes Corporation stockholders’ equity			$	474,626		$	478,996		$	259,631


Noncontrolling Interest
Opening balance			$	7,317		$	2,888		$	1,749
Net loss attributable to noncontrolling interest		10		(1,132	)		(437	)		—
Contributions				271			4,866			1,139

Ending balance			$	6,456		$	7,317		$	2,888


Total Equity			$	481,082		$	486,313		$	262,519

32See accompanying notes to financial statements

~~Table of Contents~~38

~~Item 7A.~~BROOKFIELD ~~Quantitative~~HOMES ~~and Qualitative Disclosures About Market Risk~~CORPORATION

~~Exchange~~CONSOLIDATED ~~Rates~~STATEMENTS OF CASH FLOWS

We(all ~~conduct~~dollar ~~business~~amounts are in thousands of U.S. dollars ~~only, so we are not exposed to currency risks.~~)

Interest Rates


	Years Ended December 31
	2010			2009			2008
Cash Flows From / (Used in) Operating Activities
Net income / (loss)	$	3,451		$	(32,462	)	$	(133,237	)
Adjustments to reconcile net income / (loss) to net cash from operating activities:
Distributed / (undistributed) income from unconsolidated entities		204			(1,091	)		(1,902	)
Deferred income taxes		7,481			19,326			(3,495	)
Impairment of housing and land inventory and write-off of option deposits		—			23,963			115,124
Impairment of investments in unconsolidated entities		—			12,995			37,863
Stock option compensation costs		1,105			675			—
Other changes in operating assets and liabilities:
Decrease / (increase) in receivables and other assets		36,918			27,439			(48,677	)
Decrease in housing and land inventory		31,915			90,648			132,269
Increase / (decrease) in accounts payable and other liabilities		7,473			(4,303	)		(31,539	)

Net cash provided by operating activities		88,547			137,190			66,406


Cash Flows From / (Used in) Investing Activities
Investments in unconsolidated entities		(43,087	)		(11,222	)		(28,344	)
Distribution from unconsolidated entities		7,666			9,359			3,046
Restricted cash		119			(7,485	)		—
Acquisition of additional interest in unconsolidated entities		—			—			(6,844	)

Net cash used in investing activities		(35,302	)		(9,348	)		(32,142	)


Cash Flows From / (Used in) Financing Activities
Net repayments under revolving project specific and other financing		(49,773	)		(376,233	)		(46,742	)
Distributions to noncontrolling interest and other interests in consolidated subsidiaries		(5,356	)		(1,122	)		(580	)
Contributions from noncontrolling interest and other interests in consolidated subsidiaries		1,864			3,259			9,130
Exercise of stock options		93			66			129
Preferred stock issuance		—			250,000			—
Preferred stock issuance costs		—			(312	)		—
Preferred stock dividends		(73	)		(3,500	)		—
Common stock dividends paid in cash		—			—			(5,333	)

Net cash used in financing activities		(53,245	)		(127,842	)		(43,396	)


Decrease in cash and cash equivalents		—			—			(9,132	)
Cash and cash equivalents at beginning of year		—			—			9,132

Cash and cash equivalents at end of year	$	—		$	—		$	—


Supplemental Cash Flow Information
Interest paid	$	31,042		$	36,484		$	57,754
Income taxes recovered		42,766			63,286			22,299

Acquisitions of Unconsolidated Entities’ Assets and Liabilities
Increase in housing and land inventory		—		$	14,521		$	97,828
Reduction in investment in unconsolidated entities		—			9,604			33,960
Liabilities assumed		—			51			63,868

WeSee ~~are~~accompanying ~~exposed~~notes to consolidated financial ~~risks that arise from the fluctuations in interest rates. Our~~statements interest-bearing assets and liabilities are mainly at floating rates, so we would be negatively affected, on balance, if interest rates increase. In addition, we have interest rate swap contracts which effectively fix $200 million of our variable rate debt at an average rate of 7%. Based on our net debt levels as of December 31, 2009, a 1% change up or down in interest rates would have either a negative or positive effect of approximately $1 million on our cash flows.

~~Our interest rate swaps are not designated as hedges under ASC 815 (formerly SFAS 133),~~39 “Derivatives and Hedging.” We are exposed to market risk associated with changes in the fair values of the swaps, and such changes must be reflected in our consolidated statements of operations. As of December 31, 2009, the fair value of the interest rate swaps totaled a liability of $14 million.

33BROOKFIELD HOMES CORPORATION

~~Table~~NOTES ofTO ~~Contents~~THE CONSOLIDATED FINANCIAL STATEMENTS

~~Item 8~~(Tabular amounts in thousands of U.S. ~~Financial~~dollars ~~Statements~~except share and ~~Supplementary~~per ~~Data~~share amounts)

~~INDEX~~Note TO1. ~~FINANCIAL~~Significant ~~STATEMENTS~~Accounting Policies

			Page
Report of Independent Registered Chartered Accountants			35
Consolidated Balance Sheets as at December 31, 2009 and 2008			36
Consolidated Statements of Operations for each of the Three Years Ended December 31, 2009, 2008 and 2007			37
Consolidated Statements of Stockholders’ Equity for each of the Three Years Ended December 31, 2009, 2008 and 2007			38
Consolidated Statements of Cash Flows for each of the Three Years Ended December 31, 2009, 2008 and 2007			39
Notes to Consolidated Financial Statements			40

(a) Basis of Presentation

34Brookfield Homes Corporation (the “Company” or “Brookfield Homes”) was incorporated on August 28, 2002 in Delaware and thereafter acquired all the California and Washington D.C. area land development and homebuilding operations of Brookfield Properties Corporation. The Company began trading on the New York Stock Exchange on January 7, 2003, under the symbol “BHS.”

~~Table~~These consolidated financial statements have been prepared in conformity with accounting principles generally accepted in the United States of ~~Contents~~America (“U.S. GAAP”) and include the consolidated accounts of Brookfield Homes and its subsidiaries and investments in unconsolidated entities and variable interest entities in which the Company is the primary beneficiary.

~~REPORT~~(b) OFHousing ~~INDEPENDENT~~and ~~REGISTERED~~Land ~~CHARTERED ACCOUNTANTS~~Inventory

To(i) Revenue recognition: Revenues from the ~~Board~~sale of ~~Directors~~homes ~~and~~are ~~Stockholders~~recognized when title passes to the purchaser upon closing, wherein all proceeds are received or collectability is evident. Land sales are recognized when title passes to the purchaser upon closing, all material conditions of the ~~Brookfield~~sales ~~Homes~~contract ~~Corporation~~have been met and a significant cash down payment or appropriate security is received and collectability is evident.

We(ii) Carrying ~~have~~values: ~~audited~~In accordance with the ~~accompanying~~Accounting ~~consolidated~~Standards ~~balance~~Codification ~~sheets~~(“ASC”) Topic 360 “Property, Plant and Equipment” (formerly Statement of ~~Brookfield~~Financial ~~Homes~~Accounting ~~Corporation~~Standards (“SFAS”) 144), housing and land assets the Company owns directly and through unconsolidated entities are ~~subsidiaries~~reviewed (for recoverability on a regular basis and whenever events or changes in circumstances indicate that the “carrying amount of an asset may not be recoverable. Recoverability is measured by comparing the carrying amount of an asset to future undiscounted cash flows expected to be generated by the asset. To arrive at the estimated fair value of housing and land inventory impaired, the Company”) asestimates the cash flow for the life of ~~December 31~~each project. Specifically, ~~2009~~on ~~and~~a housing ~~2008~~project, ~~and~~the Company evaluates the ~~related~~margins ~~consolidated~~on homes that have been closed, margins on ~~statements~~sales contracts which are in backlog and estimated margins with regard to future home sales over the life of ~~operations~~the project. On a land project, ~~equity~~the Company estimates the timing of future land sales, the estimated revenue per lot, as well as estimated margins with respect to future land sales. For the housing and ~~cash~~land ~~flows~~inventory, the Company continuously evaluates projects where inventory is turning over more slowly than expected or whose average sales price and margins are declining and are expected to continue to decline. These projections take into account the specific business plans for each project and management’s best estimate of the ~~three~~most ~~years~~probable set of economic conditions anticipated to prevail in the ~~period~~market ~~ended~~area. Such projections generally ~~December 31~~assume current home selling prices, ~~2009.~~cost ~~These~~estimates ~~financial~~and ~~statements~~sales rates for short-term projects are consistent ~~the~~with ~~responsibility~~recent ofsales activity. For longer-term projects, planned sales rates for 2011 and 2012 assume recent sales activity and normalized sales rates beyond 2012. Management identifies potentially impaired housing and land projects based on these quantitative factors as well as qualitative factors obtained from the ~~Company’s~~local ~~management~~market areas. If the future undiscounted ~~Our~~cash ~~responsibility~~flows are less than the carrying amount, the asset is considered to ~~express~~be animpaired ~~opinion~~and onis ~~these~~then written ~~financial~~down ~~statements~~to ~~based~~fair onvalue ~~our~~less ~~audits~~estimated selling costs using a discounted cash flow methodology which incorporates market participant assumptions.

WeThe ~~conducted~~Company ~~our~~has ~~audits~~also inentered ~~accordance~~into ~~with~~a ~~the~~number ~~standards~~ of ~~the~~option ~~Public~~contracts ~~Company~~to ~~Accounting~~acquire ~~Oversight~~land or lots in the ~~Board~~future ~~(United~~in ~~States)~~accordance with specific terms and conditions. ~~Those~~The ~~standards~~majority of the option contracts require ~~that~~a wenon-refundable ~~plan~~cash ~~and~~deposit ~~perform~~based ~~the~~on ~~audit~~a topercentage ~~obtain reasonable~~of ~~assurance~~the ~~about~~purchase ~~whether~~price of the property. ~~financial~~Option ~~statements~~contracts are ~~free~~recorded ofat ~~material misstatement~~cost. ~~An audit~~In ~~includes~~determining ~~examining,~~whether onto apursue ~~test~~an ~~basis~~option contract, ~~evidence~~the ~~supporting~~Company estimates the ~~amounts~~option ~~and~~primarily ~~disclosures~~based inupon the ~~financial~~ ~~statements.~~expected Ancash ~~audit~~flows ~~also~~from ~~includes~~the optioned ~~assessing~~property. If the ~~accounting~~intent ~~principles~~is ~~used~~to ~~and significant~~no ~~estimates~~longer ~~made~~pursue byan ~~management~~option contract, asthe ~~well~~Company asrecords a ~~evaluating~~charge to earnings of the ~~overall~~deposit ~~financial~~amounts ~~statement presentation.~~and Weany ~~believe~~other ~~that~~related ~~our~~pre-acquisition ~~audits~~entitlement costs ~~provide~~in athe ~~reasonable~~period ~~basis~~the ~~for~~decision ~~our~~is ~~opinion~~made.

~~In our opinion, such financial statements present fairly, in all material respects, the financial~~40 position of Brookfield Homes Corporation and subsidiaries as of December 31, 2009 and 2008, and the results of their operations and their cash flows for each of the three years in the period ended December 31, 2009, in conformity with accounting principles generally accepted in the United States of America.

WeBROOKFIELD ~~have~~HOMES ~~also audited, in accordance with the standards of the Public Company Accounting Oversight~~CORPORATION Board (United States), the Company’s internal control over financial reporting as of December 31, 2009, based on the criteria established in Internal Control — Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission and our report dated February 18, 2010 expressed an unqualified opinion on the Company’s internal control over financial reporting.

~~Independent~~NOTES ~~Registered~~TO ~~Chartered~~THE ~~Accountants Licensed~~CONSOLIDATED ~~Public~~FINANCIAL ~~Accountants~~STATEMENTS ~~Toronto, Canada February 18, 2010~~

35(Tabular amounts in thousands of U.S. dollars except share and per share amounts)

~~Table~~(iii) Capitalized costs: Capitalized costs include the costs of ~~Contents~~acquiring land, development and construction costs, interest, property taxes and overhead related to the development of land and housing. Direct costs are capitalized to individual homes and lots and other costs are allocated to each lot in proportion to the Company’s anticipated revenue.

~~BROOKFIELD~~(c) ~~HOMES~~Unconsolidated ~~CORPORATION~~Entities

~~CONSOLIDATED~~The ~~BALANCE~~Company ~~SHEETS~~participates in a number of unconsolidated entities in which it has less than a controlling interest to develop and sell land to the unconsolidated entity members and other third parties. These unconsolidated entities are accounted for using the equity method. The Company recognizes its proportionate share of the earnings from the sale of lots to other third parties. The Company does not recognize earnings from the purchase of lots from its unconsolidated entities and reduces its cost basis of the land purchased accordingly.

(~~all~~d) ~~dollar~~Use ~~amounts are in thousands~~ of ~~U.S. dollars)~~Estimates

			As at December 31
	Note		2009			2008
Assets
Housing and land inventory		2	$	809,829		$	946,875
Investments in unconsolidated entities		3		92,477			105,261
Consolidated land inventory not owned		2		25,434			3,328
Receivables and other assets		4		61,744			92,333
Restricted cash		5		7,485			—
Deferred income taxes		9		40,112			59,438
			$	1,037,081		$	1,207,235
Liabilities and Equity
Project specific financings		6	$	231,567		$	433,580
Revolving and other financings		7		150,000			314,977
Accounts payable and other liabilities		8		122,190			146,320
Total liabilities				503,757			894,877
Other interests in consolidated subsidiaries		11		47,011			49,839
Commitments, contingent liabilities and other		14		—			—
Preferred stock — 10,000,000 shares authorized, 10,000,000 shares issued (December 31, 2008 — 10,000,000 shares authorized, nil shares issued)		12		249,688			—
Common stock — 200,000,000 authorized, 32,073,781 shares issued (December 31, 2008 — 32,073,781 shares issued)		12		321			321
Additional paid-in capital		12		142,106			141,286
Treasury stock, at cost — 3,671,482 shares (December 31, 2008 — 5,305,049 shares)		12		(166,113	)		(238,957	)
Retained earnings				252,994			356,981
Noncontrolling interest		11		7,317			2,888
Total equity				486,313			262,519
			$	1,037,081		$	1,207,235

The preparation of financial statements, in conformity with accounting principles generally accepted in the United States, requires management to make estimates and assumptions that affect the carrying amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from these estimates.

~~See~~(e) ~~accompanying~~Cash ~~notes~~and toCash ~~financial statements~~Equivalents

36For purposes of the consolidated statements of cash flows, cash and cash equivalents include cash on hand, demand deposits, and all highly liquid short-term investments with original maturity less than 90 days. The carrying value of these investments approximates their fair value.

~~Table~~(f) ofRestricted ~~Contents~~Cash

~~BROOKFIELD~~Restricted ~~HOMES~~cash ~~CORPORATION~~includes cash held on deposit with a financial institution in the form of collateral, required by terms outlined in the total return swap transaction entered into during the year ended December 31, 2010.

~~CONSOLIDATED~~(g) ~~STATEMENTS~~Income ~~OF OPERATIONS~~Taxes

Income taxes are accounted for in accordance with ASC Topic 740 “Income Taxes” (~~all~~formerly ~~dollar~~SFAS ~~amounts~~109). Under ASC Topic 740, deferred tax assets and liabilities are indetermined ~~thousands~~based on differences between financial reporting and tax bases of ~~U.S.~~assets ~~dollars~~and liabilities, ~~except~~and ~~per~~are ~~share~~measured ~~amounts)~~by using enacted tax rates expected to apply to taxable income in the years in which those differences are expected to reverse.

				Years Ended December 31
	Note			2009			2008			2007
Revenue
Housing				$	339,625		$	415,311		$	541,432
Land					36,355			33,692			41,922
					375,980			449,003			583,354
Direct Cost of Sales
Housing					(294,493	)		(363,038	)		(449,695	)
Land					(59,308	)		(53,057	)		(31,568	)
Impairment of housing and land inventory and write-off of option deposits		2			(23,963	)		(115,124	)		(87,630	)
					(1,784	)		(82,216	)		14,461
Selling, general and administrative expense					(52,339	)		(69,498	)		(69,819	)
Equity in earnings from unconsolidated entities		3			1,331			3,302			12,745
Impairment of investments in unconsolidated entities		3			(12,995	)		(37,863	)		(15,029	)
Other income / (expense)		14	(e)		13,191			(17,823	)		(5,717	)
Loss Before Income Taxes					(52,596	)		(204,098	)		(63,359	)
Income tax recovery					20,134			70,861			71,958
Net (Loss) / Income					(32,462	)		(133,237	)		8,599
Less net loss attributable to noncontrolling interest and other interests in consolidated subsidiaries		11			4,753			17,622			7,028
Net (Loss) / Income attributable to Brookfield Homes Corporation				$	(27,709	)	$	(115,615	)	$	15,627
(Loss) / Earnings Per Share attributable to Brookfield Homes Corporation Common Stockholders
Basic		13		$	(1.54	)	$	(4.33	)	$	0.59
Diluted		13		$	(1.54	)	$	(4.33	)	$	0.58
Weighted Average Common Shares Outstanding (in thousands)
Basic		13			26,838			26,688			26,627
Diluted		13			26,838			26,688			26,851

In accordance with the provisions of ASC Topic 740, the Company assesses, on a quarterly basis, its ability to realize its deferred tax asset. In determining the need for a valuation allowance, the Company considers the following significant factors: an assessment of recent years’ profitability and losses which considers the nature, frequency and severity of current and cumulative losses adjusted to reflect the effects of changes to the capital structure that have resulted in a significant reduction in the amount of interest bearing debt; its forecasts or expectation of profits based on margins and volumes expected to be realized (which are based on current pricing and volume trends) and including the effects of reduced interest expense; the financial support of its largest stockholder as evidenced by the revolving credit facilities, the long duration of ten to twenty years or more in all significant operating jurisdictions before the expiry of net operating losses and that a substantial portion of the deferred tax asset is comprised of deductible temporary differences that are not subject to an expiry period until realized under tax law. However, the recognition of deferred tax assets is based upon assumptions about the future including an estimate of future results, and differences between the expected and actual financial performance could require all or a portion of the deferred tax asset to be expensed. The Company will continue to evaluate the need for a valuation allowance in future periods. Based on the more likely than not standard in the guidance and the weight of available evidence, the Company does not believe a valuation allowance against the deferred tax asset at December 31, 2010 is necessary.

~~See accompanying notes to financial statements~~41

37BROOKFIELD HOMES CORPORATION

~~Table~~NOTES ofTO ~~Contents~~THE CONSOLIDATED FINANCIAL STATEMENTS

~~BROOKFIELD~~(Tabular amounts ~~HOMES~~in ~~CORPORATION~~thousands of U.S. dollars except share and per share amounts)

~~CONSOLIDATED~~ASC ~~STATEMENTS~~Topic OF740 ~~EQUITY~~clarifies the accounts for uncertainty in income taxes recognized and prescribes a recognition threshold and measurement affiliates for the financial statement recognition and measurement of a tax position taken or expected to be taken in a tax return. It requires that a company determine whether it is more-likely-than-not that a position will be sustained upon examination by taxation authorities, based upon the technical merits of the position. A tax position that meets the more-than-likely-not threshold is then measured to determine the amount of the tax benefit to recognize in the financial statements. At December 31, 2010 and 2009, the Company did not have any unrecognized tax benefits / liabilities.

~~(all~~The ~~dollar~~Company ~~amounts~~recognizes ~~are~~interest and penalties accrued related to unrecognized tax benefits / liabilities in ~~thousands~~income oftax ~~U.S.~~recovery ~~dollars)~~/ expense.

			Years Ended December 31
	Note		2009			2008			2007
Preferred Stock
Opening balance			$	—		$	—		$	—
Preferred stock issuance, net of issuance costs of $312		12		249,688			—			—
Ending balance				249,688			—			—
Common Stock				321			321			321
Additional Paid-in Capital
Opening balance				141,286			145,101			146,730
Adjustment to stock-based compensation plan		10		145			—			—
Stock option compensation costs		12		675			—			—
Stock option compensation exercises		12		—			(3,815	)		(1,629	)
Ending balance				142,106			141,286			145,101
Treasury Stock
Opening balance				(238,957	)		(243,701	)		(248,606	)
Stock option exercises		12		66			4,744			4,905
Preferred stock dividends		12		72,778			—			—
Ending balance				(166,113	)		(238,957	)		(243,701	)
Retained Earnings
Opening balance				356,981			477,929			472,961
Net (loss) / income attributable to Brookfield Homes Corporation				(27,709	)		(115,615	)		15,627
Common stock dividends		12		—			(5,333	)		(10,659	)
Preferred stock dividends		12		(13,500	)		—			—
Treasury stock issued		12		(62,778	)		—			—
Ending balance				252,994			356,981			477,929
Total Brookfield Homes Corporation equity			$	478,996		$	259,631		$	379,650
Noncontrolling Interest
Opening balance			$	2,888		$	1,749		$	1,749
Net loss attributable to noncontrolling interest		11		(437	)		—			—
Contributions				4,866			1,139			—
Ending balance			$	7,317		$	2,888		$	1,749
Total Equity			$	486,313		$	262,519		$	381,399

(h) Stock-Based Compensation

~~See~~The ~~accompanying~~Company ~~notes~~accounts for stock option grants and deferred share unit grants in accordance with ASC Topic 718 “Compensation-Stock Compensation” (formerly SFAS 123(R)). All stock options granted have exercise prices equal to ~~financial~~the ~~statements~~market value of the stock on the date of the grant. Participants in the option plan can exercise their options to purchase shares at the exercise price. The option to elect to receive cash equal to the difference between the exercise price and the current market price was eliminated in 2009 in conjunction with the modification of the Company’s stock option plan.

38Accordingly, the Company records the fair value of these options using a Black-Scholes option pricing model. These options have been recorded in additional paid-in capital in 2010 and 2009 as a result of an amendment to existing stock option awards made under the 2002 stock option plan and the approval and adoption of the 2009 stock option plan. In prior years, these options were recorded in accounts payable and other liabilities. The Company records the deferred share units as a liability as disclosed in accounts payable and other liabilities. See Note 9 “Stock-Based Compensation” for further discussion.

~~Table~~(i) ofOther ~~Contents~~Comprehensive Income

~~BROOKFIELD~~The ~~HOMES~~Company ~~CORPORATION~~adheres to U.S. GAAP reporting requirements with respect to the presentation and disclosure of other comprehensive income; however, it has been determined by management that no material differences exist between net income and comprehensive income for each of the periods presented.

~~CONSOLIDATED~~(j) ~~STATEMENTS~~Loss OFPer ~~CASH FLOWS~~Share

~~(all~~Loss ~~dollar~~per ~~amounts~~share ~~are~~is computed in ~~thousands~~accordance with ASC Topic 260 “Earnings Per Share” (formerly SFAS 128). Basic earnings per share is calculated by dividing net loss attributable to Brookfield Homes Corporation less preferred share dividends by the weighted average number of Ucommon shares outstanding for the year.S. ~~dollars)~~Diluted earnings per share is calculated by dividing net income less preferred share dividends by the average number of common shares outstanding including all dilutive potentially issuable shares under various stock option plans.

	Years Ended December 31
	2009			2008			2007
Cash Flows From / (Used in) Operating Activities
Net (loss) / income	$	(32,462	)	$	(133,237	)	$	8,599
Adjustments to reconcile net (loss) / income to net cash from operating activities:
(Undistributed) / distributed income from unconsolidated entities		(1,091	)		(1,902	)		277
Deferred income taxes		19,326			(3,495	)		(3,228	)
Impairment of housing and land inventory and write-off of option deposits		23,963			115,124			87,630
Impairment of investments in unconsolidated entities		12,995			37,863			15,029
Stock option compensation costs		675			—			—
Other changes in operating assets and liabilities:
Decrease / (increase) in receivables and other assets		27,439			(48,677	)		(13,035	)
Decrease in housing and land inventory		90,648			132,269			10,272
Decrease in accounts payable and other liabilities		(4,303	)		(31,539	)		(149,820	)
Net cash provided by / (used in) operating activities		137,190			66,406			(44,276	)
Cash Flows From / (Used in) Investing Activities
Investments in unconsolidated entities		(11,222	)		(28,344	)		(77,102	)
Distribution from unconsolidated entities		9,359			3,046			19,146
Restricted cash		(7,485	)		—			—
Acquisition of additional interest in unconsolidated entities		—			(6,844	)		—
Net cash used in investing activities		(9,348	)		(32,142	)		(57,956	)
Cash Flows From / (Used in) Financing Activities
Net repayments under revolving project specific financing		(184,013	)		(271,719	)		(41,820	)
Net (repayments) / borrowings under other revolving and other financings		(192,220	)		224,977			75,000
Distributions to noncontrolling interest and other interests in consolidated subsidiaries		(1,122	)		(580	)		(5,675	)
Contributions from noncontrolling interest and other interests in consolidated subsidiaries		3,259			9,130			7,588
Exercise of stock options		66			129			121
Preferred stock issuance		250,000			—			—
Preferred stock issuance costs		(312	)		—			—
Preferred stock dividends		(3,500	)		—			—
Common stock dividends paid in cash		—			(5,333	)		(10,659	)
Net cash (used in) / provided by financing activities		(127,842	)		(43,396	)		24,555
Decrease in cash and cash equivalents		—			(9,132	)		(77,677	)
Cash and cash equivalents at beginning of year		—			9,132			86,809
Cash and cash equivalents at end of year	$	—		$	—		$	9,132
Supplemental Cash Flow Information
Interest paid	$	36,484		$	57,754		$	58,300
Income taxes recovered / (paid)		63,286			22,299			(22,154	)
Non-cash (increase) / decrease in consolidated land inventory not owned		(22,106	)		18,463			18,744
Acquisitions of Unconsolidated Entities’ Assets and Liabilities
Increase in housing and land inventory	$	14,521		$	97,828		$	104,050
Reduction in investment in unconsolidated entities		9,604			33,960			2,429
Liabilities assumed		51			63,868			101,621

(k) Advertising Costs

~~See~~The ~~accompanying~~Company ~~notes~~expenses toadvertising ~~consolidated~~costs ~~financial~~as ~~statements~~incurred. For the years ended December 31, 2010, 2009 and 2008, the Company incurred advertising costs of $7.0 million, $7.0 million and $14.0 million, respectively.

39(l) Warranty Costs

~~Table~~Estimated future warranty costs are accrued and charged to cost of ~~Contents~~sales at the time the revenue associated with the sale of each home is recognized. Factors that affect the Company’s warranty liability include the number of homes sold, historical and anticipated rates of warranty claims, and cost per claim. Costs are accrued based upon historical experience.

~~BROOKFIELD~~(m) ~~HOMES~~Variable ~~CORPORATION~~Interest Entities

~~NOTES~~The TOCompany ~~THE~~accounts ~~CONSOLIDATED~~for ~~FINANCIAL~~its ~~STATEMENTS~~variable interest entities (“VIEs”) in accordance with ASC Topic 810 “Consolidation” (formerly SFAS 167). The decision whether to consolidate a VIE begins with establishing that a VIE exists. A VIE

~~(Tabular amounts in thousands of U.S. dollars except share and per share amounts)~~42

~~Note~~BROOKFIELD 1.HOMES ~~Significant Accounting Policies~~CORPORATION

~~(a)~~NOTES ~~Basis~~TO ofTHE ~~Presentation~~CONSOLIDATED FINANCIAL STATEMENTS

~~Brookfield Homes Corporation~~ (~~the “Company” or “Brookfield Homes”) was incorporated on August 28,~~Tabular ~~2002~~amounts in ~~Delaware~~thousands ~~and~~of ~~thereafter acquired all the California and Washington D~~U.CS. ~~area~~dollars ~~land development~~except share and ~~homebuilding~~per ~~operations of Brookfield Properties Corporation. The Company began~~share ~~trading on the New York Stock Exchange on January 7, 2003, under the symbol “BHS.”~~amounts)

~~These~~exists ~~consolidated~~when ~~financial~~either ~~statements~~the ~~have~~total ~~been~~equity ~~prepared~~investment inat ~~conformity~~risk ~~with~~is ~~accounting principles~~not ~~generally~~sufficient ~~accepted~~to inpermit the ~~United~~entity ~~States~~to finance its activities by itself, or the equity investor lacks one of ~~America~~three ~~(“U~~characteristics associated with owning a controlling financial interest.S. ~~GAAP”)~~Those characteristics ~~and~~are ~~include~~the power to direct the ~~consolidated~~activities of an entity that most significantly impact ~~accounts~~the entity’s economic performance, the obligation to absorb the expected losses of ~~Brookfield~~the ~~Homes~~entity, and the ~~its~~right ~~subsidiaries~~to receive the expected residual returns of the entity. The entity that has both the power to direct the activities of a VIE that most significantly impact the VIE’s economic performance and ~~investments~~the obligation to absorb losses or the right to receive benefits of the VIE that could potentially be significant to the VIE is considered to have a controlling financial interest in ~~unconsolidated~~a ~~entities~~VIE and is required to consolidate such entity. The Company has determined it has a ~~variable~~controlling financial interest ~~entities~~ in certain VIEs which are included in these financial statements as a component of “Housing and land inventory” with the ~~Company~~interests isof others included in accounts payable and other liabilities. See Notes 2 and 3 for further discussion on the ~~primary~~consolidation ~~beneficiary~~of land option contracts and unconsolidated entities.

(bn) ~~Housing~~Derivative Financial Instruments and ~~Land~~Hedging ~~Inventory~~Activities

The Company accounts for its derivative and hedging activities in accordance with ASC Topic 815, “Derivatives and Hedging” (formerly SFAS 133 and SFAS 149 and related interpretations). ASC Topic 815 requires the Company to recognize all derivative instruments at their fair values as either assets or liabilities on its balance sheet. The accounting for changes in fair value (i.e. gains or losses) ~~Revenue~~ ~~recognition:~~of ~~Revenues~~a ~~from~~derivative instrument depends on whether the ~~sale~~Company has designated it, and whether it qualifies, as part of ~~homes~~a hedging relationship and on the type of hedging relationship. For those derivative instruments that are ~~recognized~~designated ~~when~~and ~~title~~qualify ~~passes~~as tohedging instruments, the Company must ~~purchaser~~designate the hedging instrument, based upon ~~closing~~the exposure being hedged, ~~wherein~~as ~~all~~a ~~proceeds~~fair ~~are~~value ~~received~~hedge, a cash flow hedge or ~~collectability~~a ishedge ~~evident~~of a net investment in a foreign operation. ~~Land~~The Company had no fair ~~sales~~value ~~are~~hedges ~~recognized~~or ~~when~~hedges ~~title~~of ~~passes~~a tonet ~~the~~investment ~~purchaser~~in ~~upon~~foreign ~~closing~~operations as of December 31, ~~all~~2010 ~~material~~or ~~conditions~~as of ~~the~~December 31, ~~sales~~2009. ~~contract~~For ~~have~~derivative ~~been~~instruments ~~met~~that are designated and qualify as a ~~significant~~cash flow hedge (i.e. hedging the exposure to variability in expected future cash ~~down~~flows ~~payment~~that are attributable to a particular risk), the effective portion of the gain or ~~appropriate~~loss ~~security~~on the derivative instrument is ~~received~~reported as a component of other comprehensive income and ~~collectability~~reclassified into earnings in the same line item associated with the forecasted transaction in the same period or periods during which the hedged transaction affects earnings (i.e. in ''interest expense’’ when the hedged transactions are interest cash flows associated with floating-rate debt). The remaining gain or loss on the derivative instrument in excess of the cumulative changes in the present value of future cash flows of the hedged item, if any, is ~~evident~~recognized in the realized and unrealized gain (loss) on derivatives in current earnings during the period of change. For derivative instruments not designated as hedging instruments, the gain or loss is recognized in realized and unrealized gain (loss) on derivatives in the current earnings during the period of change. Income and/or expense from interest rate swaps are recognized as an adjustment to interest expense. The Company accounts for income and expense from interest rate swaps over the period to which the payments and/or receipts relate.

(iio) ~~Carrying~~ ~~values:~~Recent ~~In accordance with the~~ Accounting ~~Standards Codification (“ASC”) Topic 360~~Pronouncements “Property, Plant and Equipment” (formerly Statement of Financial Accounting Standards (“SFAS”) 144), housing and land assets the Company owns directly and through unconsolidated entities are reviewed for recoverability on a regular basis and whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. Recoverability is measured by comparing the carrying amount of an asset to future undiscounted cash flows expected to be generated by the asset. To arrive at the estimated fair value of housing and land inventory impaired, the Company estimates the cash flow for the life of each project. Specifically, on a housing project, the Company evaluates the margins on homes that have been closed, margins on sales contracts which are in backlog and estimated margins with regard to future home sales over the life of the project. On a land project, the Company estimates the timing of future land sales, the estimated revenue per lot, as well as estimated margins with respect to future land sales. For the housing and land inventory, the Company continuously evaluates projects where inventory is turning over more slowly than expected or whose average sales price and margins are declining and are expected to continue to decline. These projections take into account the specific business plans for each project and management’s best estimate of the most probable set of economic conditions anticipated to prevail in the market area. Such projections generally assume current home selling prices, cost estimates and sales rates for short-term projects are consistent with recent sales activity. For longer-term projects, planned sales rates for 2010 and 2011 assume recent sales activity and normalized sales rates beyond 2011. Management identifies potentially impaired housing and land projects based on these quantitative factors as well as qualitative factors obtained from the local market areas. If the future undiscounted cash flows are less than the carrying amount, the asset is considered to be impaired and is then written down to fair value less estimated selling costs using a discounted cash flow methodology which incorporates market participant assumptions.

~~The~~In ~~Company~~June 2009, ~~has~~the ~~also~~FASB ~~entered~~issued ~~into~~guidance anow ~~number~~incorporated ofin ~~option~~ASC ~~contracts~~Topic to810 ~~acquire~~“Consolidation” ~~land~~(formerly SFAS or167) ~~lots~~amending in the ~~future~~ inconsolidation ~~accordance~~guidance ~~with~~applicable ~~specific~~to ~~terms~~variable ~~and~~interest ~~conditions.~~entities ~~The~~and ~~majority~~the definition of ~~the~~a ~~option~~variable ~~contracts require~~interest aentity, ~~non-refundable~~and ~~cash~~requiring ~~deposit~~enhanced ~~based~~disclosures onto provide more information about a ~~percentage~~company’s ofinvolvement ~~the~~in ~~purchase~~a ~~price~~variable ofinterest ~~the property~~entity. ~~Option~~This ~~contracts~~guidance ~~are~~also requires ~~recorded~~ongoing atassessments ~~cost.~~of Inwhether ~~determining~~an ~~whether~~enterprise tois ~~pursue~~the anprimary ~~option contract,~~beneficiary ~~the~~of ~~Company~~a ~~estimates~~variable interest ~~the~~entity. ~~option~~This ~~primarily~~guidance ~~based~~was ~~upon~~effective for the ~~expected~~Company’s ~~cash~~fiscal ~~flows~~year ~~from~~beginning ~~the~~January 1, ~~optioned property~~2010. IfThe ~~the~~Company ~~intent~~has isadopted tothis noguidance ~~longer~~in ~~pursue~~its anconsolidated ~~option~~financial ~~contract,~~statements for the ~~Company records~~year aended ~~charge~~December 31, to2010. ~~earnings~~See ofNotes ~~the~~2 ~~deposit amounts~~ and ~~any~~3 ~~other~~for ~~related~~disclosure ~~pre-acquisition~~regarding ~~entitlement costs~~its inimpact ~~the~~on ~~period~~ the ~~decision~~consolidated financial ~~is made~~statements.

40In July 2009, the FASB’s ASC became the single, official source of authoritative, non-governmental GAAP in the United States. The historical GAAP hierarchy was eliminated and the ASC became the only level of authoritative GAAP, other than guidance issued by the Securities and Exchange Commission (the “SEC”). This guidance is effective for interim and annual periods ending after September 15, 2009. The Company adopted the provisions of this guidance for the year ended December 31, 2010. The Company’s accounting policies were not affected by the conversion to the ASC. However, references to specific accounting standards have been changed to refer to the appropriate section of the ASC.

~~Table of Contents~~43

BROOKFIELD HOMES CORPORATION

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

(Tabular amounts in thousands of U.S. dollars except share and per share amounts)

(~~iii~~p) ~~Capitalized costs: Capitalized costs include the costs of acquiring land, development and~~Reclassification construction costs, interest, property taxes and overhead related to the development of land and housing. Direct costs are capitalized to individual homes and lots and other costs are allocated to each lot in proportion to the Company’s anticipated revenue.

~~(c)~~Certain ~~Unconsolidated~~prior ~~Entities~~period amounts in the consolidated balance sheet have been reclassified to conform with the December 31, 2010 presentation. Specifically, consolidated land inventory not owned, which had previously been shown as a separate line, is now shown as a component of housing and land inventory. Other revolving financings, which had previously been shown as a separate line, is now shown as a component of project specific and other financings. These reclassifications had no impact on the Company’s results from operations.

~~The~~Note ~~Company participates in a number of unconsolidated entities in which it has less than a controlling interest to develop and sell land to the unconsolidated entity members and other third parties~~2. ~~These~~Housing unconsolidated entities are accounted for using the equity method. The Company recognizes its proportionate share of the earnings from the sale of lots to other third parties. The Company does not recognize earnings from the purchase of lots from its unconsolidated entities and ~~reduces~~Land ~~its cost basis of the land purchased accordingly.~~Inventory

~~(d)~~Housing ~~Use~~and land inventory includes homes completed and under construction and lots ready for construction, model homes and land under and held for development, which will be used in the Company’s homebuilding operations or sold as building lots to other homebuilders. The following summarizes the components of ~~Estimates~~housing and land inventory:


	December 31
	2010		2009
Housing inventory	$	261,611	$	359,132
Model homes		18,631		32,542
Land and land under development		521,167		443,589

	$	801,409	$	835,263

~~(e)~~The ~~Cash~~Company capitalizes interest which is released with cost of sales when housing units and building ~~Cash~~lots ~~Equivalents~~are sold. For the years ended December 31, 2010, 2009 and 2008, interest incurred and capitalized by the Company was $31.0 million, $36.5 million and $57.8 million, respectively. Capitalized interest expensed as direct cost of sales for the same periods was $20.2 million, $24.0 million and $29.1 million, respectively.

~~For~~No ~~purposes~~impairment ofcharges ~~the~~were ~~consolidated~~recognized ~~statements~~related ofto ~~cash~~the ~~flows,~~Company’s ~~cash~~housing and ~~cash~~land ~~equivalents~~inventory ~~include cash~~during on2010 ~~hand,~~(2009 ~~demand~~—$11.2 million; ~~deposits,~~2008 ~~and~~— ~~all highly liquid short-term investments with original maturity less than 90~~$97.4 ~~days~~million).

In the ordinary course of business, the Company has entered into a number of option contracts to acquire land or lots in the future in accordance with specific terms and conditions and the Company will advance deposits to secure these rights. Effective for the Company’s fiscal year beginning January 1, 2010, the Company is no longer required to follow quantitative guidance determining the primary beneficiary of a VIE, but is required by ASC Topic 810 “Consolidation” to qualitatively assess whether it is the primary beneficiary based on whether it has the power over the significant activities of the VIE and an obligation to absorb losses or the right to receive benefits that could be potentially significant to the VIE. The Company has evaluated its option contracts in accordance with this revised guidance and determined that, for those entities considered to be VIEs, it is the primary beneficiary of options with an aggregate exercise price of $25.2 million (fDecember 31, 2009 — $25.4 million), ~~Restricted~~which ~~Cash~~are required to be consolidated. In these cases, the only asset recorded is the Company’s exercise price for the option to purchase included in housing and land inventory, with an increase in accounts payable and other liabilities of $25.2 million (2009 — $25.4 million) for the assumed third-party investment in the VIE.

~~Restricted~~Housing ~~cash~~and land inventory includes ~~cash~~non-refundable ~~held~~deposits onand ~~deposit~~other ~~with~~entitlement acosts ~~financial~~totaling $49.5 million ~~institution~~(December 31, 2009 — $42.6 million) in ~~the~~connection ~~form~~with ~~of collateral,~~options ~~required~~that byare ~~terms~~not ~~outlined~~required to be consolidated in terms of the ~~total~~guidance ~~return~~incorporated ~~swap~~in ~~transaction~~ASC ~~entered~~Topic ~~into~~810 ~~during~~“Consolidation” ~~the~~(formerly ~~year~~FIN ~~ended~~46R). The total exercise price of these options is $151.6 million (December 31, 2009 — $156.9 million) including the non-refundable deposits identified above. The number of lots which the Company has obtained an option to purchase, excluding those already consolidated and those held through unconsolidated entities and their respective dates of expiry and their exercise price follows:

~~(g) Income Taxes~~44

~~Income~~BROOKFIELD ~~taxes~~HOMES ~~are accounted for in accordance with ASC Topic 740 “Income Taxes” (formerly SFAS 109).~~CORPORATION Under ASC Topic 740, deferred tax assets and liabilities are determined based on differences between financial reporting and tax bases of assets and liabilities, and are measured by using enacted tax rates expected to apply to taxable income in the years in which those differences are expected to reverse.

InNOTES ~~accordance~~TO ~~with~~THE ~~the~~CONSOLIDATED ~~provisions~~FINANCIAL ~~of ASC Topic 740, the Company assesses, on a quarterly basis, its~~STATEMENTS ability to realize its deferred tax assets. In determining the need for a valuation allowance, the Company considers the following significant factors: an assessment of recent years’ profitability and losses, adjusted to reflect the effects of changes to its capital structure that have resulted in a significant reduction in the amount of interest bearing debt; its expectation of profits based on margins and volumes expected to be realized (which are based on current pricing and volume trends) and including the effects of reduced interest expense; the financial support of its largest stockholder as evidenced by the revolving credit facilities; the long period of ten years or more in all significant operating jurisdictions before the expiry of net operating losses; and that a substantial portion of the deferred tax asset is composed of deductible temporary differences that are not subject to an expiry period until realized under tax law. However, the recognition of deferred tax assets is based upon an estimate of future results and differences between the expected and actual financial performance could require all or a portion of the deferred tax assets to be derecognized. The Company will continue to evaluate the need for a valuation allowance in future periods. Based on the more likely than not standard in the guidance and the weight of available evidence, the Company does not believe a valuation allowance against the deferred tax asset at December 31, 2009 is necessary.

41(Tabular amounts in thousands of U.S. dollars except share and per share amounts)


	Number		Total Exercise
Year of Expiry	of Lots		Price
2011		680	$	26,910
2012		320		20,187
Thereafter		5,435		104,491

		6,435	$	151,588

~~BROOKFIELD~~The ~~HOMES~~Company ~~CORPORATION~~holds agreements for a further 4,878 acres of longer term land, with an aggregate exercise price of $59.6 million with non-refundable deposits and other entitlement costs of $5.8 million which is included in housing and land inventory that may provide additional lots upon obtaining entitlements. However, given that the Company is in the initial stage of land entitlement, the Company has concluded at this time that the level of uncertainty in entitling these properties does not warrant including them in the above totals.

~~NOTES~~During TOthe year ~~THE~~ended ~~CONSOLIDATED~~December 31, ~~FINANCIAL~~2010, ~~STATEMENTS~~the Company did not have any write-offs (2009 — $12.3 million; 2008 — $17.7 million) related to unentitled lot option agreements.

~~(Tabular~~Note ~~amounts in thousands of U~~3.S. ~~dollars~~Investments ~~except~~in ~~share~~Unconsolidated ~~and per share amounts)~~Entities

~~Effective~~The ~~January 1, 2007, the~~ Company ~~adopted~~participates ~~the provisions of the Financial Accounting Standards Board (“FASB”) Interpretation 48 (“FIN 48”), “Accounting for Uncertainty~~ in ~~Income~~ten ~~Taxes,~~unconsolidated ~~an Interpretation~~entities ~~of FASB Statement No. 109,” as identified~~ in ~~ASC~~which ~~740.~~it ~~There~~has ~~was~~less nothan ~~impact to the Company’s financial statements as~~ a ~~result of adopting this interpretation~~controlling interest. ~~ASC~~Summarized ~~Topic~~condensed ~~740 clarifies the accounts for uncertainty in income taxes recognized and prescribes a recognition threshold and measurement affiliates for the~~ financial ~~statement~~information ~~recognition~~on ~~and measurement of~~ a ~~tax~~combined ~~position taken~~100% orbasis expected to be taken in a tax return. It requires that a company determine whether it is more-likely-than-not that a position will be sustained upon examination by taxation authorities, based upon the technical merits of the ~~position. A tax position that meets the more-than-likely-not~~unconsolidated ~~threshold~~entities ~~is then measured to determine the amount of the tax benefit to recognize in the financial~~follows: ~~statements. At December 31, 2009 and 2008, the Company did not have any unrecognized tax benefits / liabilities.~~

The Company recognizes interest and penalties accrued related to unrecognized tax benefits / liabilities in income tax recovery / expense.


	December 31
Assets	2010		2009
Housing and land inventory	$	294,526	$	235,864
Other assets		7,976		6,722

	$	302,502	$	242,586


Liabilities and Equity
Project specific financings	$	33,173	$	52,175

Accounts payable and other liabilities		22,362		14,082

Equity
Brookfield Homes interest		124,369		92,477
Others’ interest		122,598		83,852

	$	302,502	$	242,586

(h) Stock-Based Compensation


	December 31
Revenue and Expenses	2010			2009			2008
Revenue	$	12,709		$	12,663		$	21,547
Cost of sales		(15,088	)		(13,414	)		(15,581	)
Other income / (expense)		2,776			(4,081	)		(2,548	)

Net income / (loss)	$	397		$	(4,832	)	$	3,418

Brookfield Homes’ share of net (loss) / income	$	(192	)	$	1,331		$	3,302

Impairment of investments in unconsolidated entities	$	—		$	(12,995	)	$	(37,863	)

~~The~~In ~~Company~~reporting ~~accounts~~the ~~for~~Company’s ~~stock option grants and deferred~~ share ~~unit~~of ~~grants~~net inincome ~~accordance~~/ ~~with ASC Topic 718 “Compensation-Stock Compensation”~~ (~~formerly SFAS 123(R~~loss))., ~~All~~all ~~stock~~inter-company ~~options~~profits ~~granted~~or ~~have~~losses ~~exercise~~from ~~prices~~unconsolidated ~~equal~~entities toare ~~the~~eliminated ~~market~~on ~~value~~lots ofpurchased ~~the~~by ~~stock on~~ the ~~date~~Company offrom the unconsolidated ~~grant~~entities. ~~Participants~~For in the ~~option~~year ~~plan~~ended ~~can~~December 31, ~~exercise~~2010, ~~their~~the ~~options~~difference tobetween ~~purchase~~the ~~shares~~Company’s share atof the ~~exercise~~loss ~~price.~~of ~~The~~its ~~option~~investments ~~to elect~~in tounconsolidated ~~receive~~entities ~~cash~~for ~~equal to~~ the ~~difference~~year ~~between~~ended ~~the~~December 31, 2010 ~~exercise price~~ and ~~the~~equity ~~current market price was eliminated~~ in ~~the~~earnings ~~current~~from ~~year~~unconsolidated inentities ~~conjunction~~primarily ~~with~~arises ~~the~~from ~~modification~~differences ofin accounting ~~the~~policies ~~Company’s stock~~followed ~~option~~by ~~plan~~unconsolidated entities.

~~Accordingly, the Company records the fair value of these options using a Black-Scholes option~~45 pricing model. These options have been recorded in additional paid-in capital in 2009 as a result of an amendment to existing stock option awards made under the 2002 stock option plan and the approval and adoption of the 2009 stock option plan. In prior years, these options were recorded in accounts payable and other liabilities. The Company records the deferred share units as a liability as disclosed in accounts payable and other liabilities. See Note 10 “Stock-Based Compensation” for further discussion.

~~(i)~~BROOKFIELD ~~Other~~HOMES ~~Comprehensive Income~~CORPORATION

~~The~~NOTES ~~Company~~TO ~~adheres~~THE toCONSOLIDATED ~~U.S.~~FINANCIAL ~~GAAP reporting requirements with respect to the presentation and~~STATEMENTS disclosure of other comprehensive income; however, it has been determined by management that no material differences exist between net income and comprehensive income for each of the periods presented.

(j)Tabular amounts ~~Earnings~~in ~~Per~~thousands ~~Share~~of U.S. dollars except share and per share amounts)

~~Earnings~~Investments ~~per share is computed~~ in ~~accordance~~unconsolidated ~~with~~entities ~~ASC~~includes ~~Topic 260 “Earnings Per Share” (formerly SFAS 128)~~$26.4 million ~~Basic~~of ~~earnings~~the ~~per~~Company’s share ~~is calculated by dividing net loss attributable to Brookfield Homes~~of ~~Corporation~~non-refundable ~~less~~deposits ~~preferred~~and ~~share~~other ~~dividends~~entitlement bycosts ~~the~~in ~~weighted~~connection ~~average~~with ~~number~~2,759 oflots ~~common~~under ~~shares~~option ~~outstanding~~(2009 ~~for~~— ~~the year~~$27.0 million ~~Diluted~~in ~~earnings~~connection ~~per~~with ~~share~~1,987 islots ~~calculated~~under byoption). ~~dividing~~The ~~net~~Company’s ~~income less preferred~~ share ~~dividends~~of by the total ~~average~~exercise ~~number~~price of ~~common~~these ~~shares~~options ~~outstanding~~is ~~including all dilutive potentially issuable shares under various stock option plans~~$93.2 million.

During the year ended December 31, 2010, in accordance with ASC Topic 323 “Investments — Equity Method and Joint Ventures” (kformerly Accounting Position Bulletin 18) ~~Advertising~~and ~~Costs~~ASC Topic 360 “Property, Plant and Equipment” (formerly SFAS 144), the Company recognized impairment charges of nil (2009 — $13.0 million; 2008 — $37.9 million).

~~The~~As ~~Company~~described ~~expenses~~in ~~advertising~~Note ~~costs~~1(c), asunconsolidated ~~incurred.~~entities ~~For~~in which the ~~years~~Company ~~ended~~has ~~December 31,~~a ~~2009,~~noncontrolling interest ~~2008~~are ~~and 2007~~accounted for using the equity method. In addition, the Company ~~incurred~~has ~~advertising~~performed ~~costs~~an evaluation of ~~$7.0 million,~~its ~~$14.0 million~~existing ~~and~~unconsolidated ~~$11.9 million,~~entity relationships by applying the provisions of ASC ~~respectively~~Topic 810 “Consolidation” (formerly SFAS 160).

The Company and/or its unconsolidated entity partners have provided varying levels of guarantees of debt in its unconsolidated entities. At December 31, 2010, the Company had completion guarantees of nil (lDecember 31, 2009 — $7.9 million) ~~Warranty~~and ~~Costs~~limited maintenance guarantees of $13.8 million (December 31, 2009 — $15.3 million) with respect to debt in its unconsolidated entities.

~~Estimated~~Note ~~future warranty costs are accrued and charged to cost of sales at the time the revenue associated with the sale of each home is recognized~~4. ~~Factors~~Receivables ~~that affect the Company’s warranty liability include the number of homes sold, historical~~ and ~~anticipated~~Other ~~rates of warranty claims,~~Assets ~~and cost per claim. Costs are accrued based upon historical experience.~~

42The components of receivables and other assets included in the Company’s balance sheet are summarized as follows:


	December 31
	2010		2009
Proceeds and escrow receivable	$	4,943	$	1,414
Refundable deposits		989		4,815
Notes receivable		2,425		2,425
Prepaid expense		725		2,970
Miscellaneous receivables		9,353		5,261
Swap contract (Note 13 (f))		2,238		674
Other assets		865		4,183
Taxes receivable		3,288		40,002

Actual as of

Covenant

December 31, 2010

Minimum stockholders’ equity ($US millions)

Net debt to capitalization