Related Party Transactions |
12 Months Ended |
|---|---|
Dec. 31, 2022 | |
| Related Party Transactions [Abstract] | |
| Related Party Transactions | Related Party Transactions Following the Merger, the Company continues to pay for certain costs on behalf of its former parent and current majority shareholder. The Company records a due from affiliate balance for all such payments. As of December 31, 2022 and 2021, the Company had a net receivable due from affiliates of $2.9 million and $2.1 million, respectively.
During the year ended December 31, 2022, the Company sold one home to an officer of the Company and one home to a family member of a significant shareholder of the Company. The Company recognized home sales revenue of $4.0 million and cost of sales of $3.5 million from these transactions.
In June 2022, the Company entered into two transactions with its majority shareholder, Landsea Holdings. On June 1, 2022, the Board of Directors authorized the Company to buy back 4.4 million shares of common stock held by Landsea Holdings. The Company paid $30.0 million at a price of $6.82 per share, a discount of 5% compared to the closing price on May 31, 2022 of $7.18. Additionally, the Company repurchased all 5.5 million outstanding Private Placement Warrants, of which Landsea Holdings held 2.2 million. The Company paid Landsea Holdings $6.6 million at $3.00 per Private Placement Warrant. In addition, 2.8 million of the repurchased Private Placement Warrants were held by Level Field Capital, LLC, a related party that is controlled by a member of the Company’s Board of Directors. The Company paid Level Field Capital, LLC $8.4 million at $3.00 per Private Placement Warrant. The Company’s common stock and Warrants are discussed further in Note 17 – Stockholders’ Equity.
In June 2022, Landsea Capital Fund, who is under common control with the Company, contributed $55.0 million to the LCF JV. The LCF JV, which is consolidated by the Company, used these proceeds to purchase undeveloped land from the Company. The Company distributed $4.0 million to Landsea Capital Fund during the year ended December 31, 2022. All intercompany transactions between the Company and the LCF JV have been eliminated upon consolidation.
In December 2021, the Company sold model homes to a related party for total consideration of $15.2 million. Construction of certain of these model homes was not complete at the time of sale. The Company recognized lot sales and other revenue of $1.2 million and $3.2 million during the years ended December 31, 2022 and 2021, respectively, related to the model homes still under construction on the date of sale. Corresponding lot and other cost of sales of $1.3 million and $3.0 million was also recognized during the same periods, respectively. The Company recognized home sales revenue of $10.8 million and corresponding home cost of sales of $8.8 million during the year ended December 31, 2021 related to the completed model homes on the date of sale. No home sales revenue or corresponding home cost of sales was recognized on these model homes during the year ended December 31, 2022. As part of this transaction, the Company leased back these models. The total amount of rent payments made during the year ended December 31, 2022 is $0.8 million. No rent payments were made during the year ended December 31, 2021. The right-of-use asset and lease liability balances associated with these leases is $1.3 million and $1.3 million, respectively, as of December 31, 2022 and $2.0 million and $2.0 million, respectively, as of December 31, 2021.
In July 2021, the Company entered into a landbank agreement for a project in its California segment with a related party. The Company will make regular payments to the related party based on an annualized rate of 7% of the undeveloped land costs while the land is developed and may purchase, at the Company’s discretion, the lots at a predetermined price of $28.9 million. The total amount of interest payments made during the years ended December 31, 2022 and 2021 was $1.0 million and $0.4 million, respectively. During the year ended December 31, 2022, payments of $11.4 million have been made to purchase developed lots from the related party. No payments were made to purchase developed lots from the related party during the year ended December 31, 2021.
In connection with the Merger, we transferred a deferred tax asset (“DTA”) to Landsea Holdings, the majority shareholder, of $12.1 million. The DTA represented the deferred tax on interest expensed through cost of sales from a related party loan that remained with Landsea Holdings after the Merger.
Prior to the Merger, the Company incurred and capitalized interest to real estate inventories from a loan that Landsea Holdings entered into with a related party. Subsequent to the Merger, the Company no longer capitalizes interest from this related party transaction because the loan remained the obligation of Landsea Holdings and the Company no longer has any obligation associated with that loan. The previously capitalized amount is included in cost of sales as the related inventories are delivered. Refer to Note 6 – Capitalized Interest for more information.
Total capitalized interest from related party transactions included in real estate inventories on the consolidated balance sheets was $3.0 million and $7.5 million as of December 31, 2022 and 2021, respectively.
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