Related Party Transactions |
12 Months Ended |
|---|---|
Dec. 31, 2023 | |
| Related Party Transactions [Abstract] | |
| Related Party Transactions | Related Party Transactions The Company continues to pay for certain costs on behalf of Landsea Holdings, the Company’s majority stockholder. The Company records a due from affiliate balance for all such payments. As of December 31, 2023 and 2022, the Company had a net receivable due from affiliates of $3.5 million and $2.9 million, respectively.
In August 2023, the Company repurchased from the underwriters, at the public offering price of $9.75 per share, 800,000 shares of common stock that were sold by Green Investment Alpha Limited, a beneficial owner of the Company, in a registered secondary offering, for a total purchase price of $7.8 million. Green Investment Alpha Limited no longer qualifies as a related party upon the completion of the sale.
In June 2023, the Company repurchased from the underwriters, at the public offering price of $7.50 per share, 443,478 shares of common stock that were sold by Landsea Holdings in a registered secondary offering, for a total purchase price of $3.3 million.
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 costs of sales of $3.5 million from these transactions.
In June 2022, the Company entered into two transactions with 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 16 – 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 $22.3 million and $4.0 million to Landsea Capital Fund during the years ended December 31, 2023 and 2022, respectively. 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. No lot sales and other revenue or corresponding cost of sales was recognized on these model homes during the year ended December 31, 2023. 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 cost of sales was recognized on these model homes during the years ended December 31, 2023 and 2022. As part of this transaction, the Company leased back these models. The total amount of rent payments made during the years ended December 31, 2023 and 2022 was $0.8 million and $0.8 million, respectively. 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 $0.5 million and $0.5 million, respectively, as of December 31, 2023 and $1.3 million and $1.3 million, respectively, as of December 31, 2022.
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, 2023, 2022, and 2021 was $0.6 million, $1.0 million, and $0.4 million, respectively. During the years ended December 31, 2023, and 2022, payments of $11.4 million and $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. Capitalized interest included in real estate inventories on the consolidated balance sheets associated with this transaction was $1.0 million and $0.8 million as of December 31, 2023, and 2022, respectively. Previously capitalized related party interest included in cost of sales during the years ended December 31, 2023 and 2022 was $1.4 million and
$0.2 million, respectively. There was no previously capitalized related party interest included in cost of sales during the year ended December 31, 2021.
In connection with the Merger, we transferred a deferred tax asset (“DTA”) to Landsea Holdings 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.
Landsea Holdings holds a series of notes payable to affiliated entities of its parent. The cash Landsea Holdings received from this debt was previously utilized to partially fund operations of the Company. Related party interest incurred by Landsea Holdings was historically pushed down to the Company and reflected on the consolidated balance sheets of the Company, primarily in real estate inventories, and on the consolidated statements of operations in cost of sales. Refer to Note 6 – Capitalized Interest for further detail. As the Company did not guarantee the notes payable nor have any obligations to repay the notes payable, and as the notes payable were not assigned to the Company, the notes payable do not represent a liability of the Company and accordingly have not been reflected in the consolidated balance sheets. Additionally, in connection with the Merger, the Company is precluded from repaying Landsea Holdings’ notes payable to the affiliated entities of its parent. Therefore, beginning January 7, 2021, additional interest from these notes payable is no longer pushed down to the Company. Capitalized interest included in real estate inventories on the consolidated balance sheets associated with this transaction was $0.4 million and $2.2 million as of December 31, 2023 and 2022, respectively. Previously capitalized related party interest included in cost of sales during the years ended December 31, 2023, 2022, and 2021, was $1.7 million, $5.0 million, and $12.9 million, respectively.
|