Related Party Transactions |
9 Months Ended |
|---|---|
Sep. 30, 2024 | |
| Related Party Transactions [Abstract] | |
| Related Party Transactions | Related Party Transactions The Company continues to pay for certain costs on behalf of Landsea Holdings Corporation (“Landsea Holdings”) which was previously the majority stockholder of the Company. The Company records a due from affiliate balance for all such payments. As of September 30, 2024 and December 31, 2023, the Company had a net receivable due from affiliates balance of $4.5 million and $3.5 million, respectively.
In March 2024, Landsea Holdings, the Company’s then-majority stockholder, completed a registered secondary offering of the Company’s common stock. The Company did not purchase any shares of common stock that were sold by Landsea Holdings in the offering. The Company paid costs, fees, and expenses for the offering of $0.6 million, and Landsea Holdings received all net proceeds from the sale. Landsea Holdings no longer owns greater than 50% of the Company’s common stock upon completion of the offering. As a result, the Company no longer qualifies as a “controlled company” under The Nasdaq Stock Market LLC listing standards.
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 (“Green Investment”), a beneficial owner of the Company, in a registered secondary offering, for a total purchase price of $7.8 million. The Company paid costs, fees, and expenses for the offering of $0.3 million, and Green Investment received all net proceeds from the sale. In October 2024, Green Investment reimbursed the Company for the costs, fees and expenses incurred during the offering. Green Investment no longer qualified as a related party upon the completion of the offering.
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, the Company’s then-majority stockholder, in a registered secondary offering, for a total purchase price of $3.3 million. The Company paid costs, fees, and expenses for the offering of $0.8 million, and Landsea Holdings received all net proceeds from the offering.
In June 2022, Landsea Capital Fund, who was under common control with the Company at the time of the transaction, 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 $4.3 million and $18.5 million to Landsea Capital Fund during the three and nine months ended September 30, 2024, respectively. The Company distributed $6.7 million and $8.6 million to Landsea Capital Fund during the three and nine months ended September 30, 2023, 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. As part of this transaction, the Company leased back these models. The leases completed in April 2024. The total amount of rent payments made during the nine months ended September 30, 2024 were $0.2 million. There were no payments made under this contract during the three months ended September 30, 2024. The total amount of rent payments made during the three and nine months ended September 30, 2023 were $0.2 million and $0.6 million, respectively. As the leases ended prior to September 30, 2024, we have no remaining right-of-use asset or lease liability balances associated with this transaction. As of December 31, 2023, we had right-of-use asset and lease liability balances of $0.5 million and $0.5 million, respectively.
In July 2021, the Company entered into a landbank agreement for a project in its California segment with a related party. The Company made regular payments to the related party based on an annualized rate of 7% of the undeveloped land costs while the land was being developed and purchased the lots at a predetermined price of $28.9 million. The total amount of interest payments made during the nine months ended September 30, 2024 was less than $0.1 million and the Company did not make any such payments during the three months ended September 30, 2024. The total amount of interest payments made during the three and nine months ended September 30, 2023 was $0.1 million and $0.5 million, respectively. During the nine months ended September 30, 2024, payments of $4.0 million were made to purchase the remaining land at the conclusion of the agreement during April 2024. No such payments were made during the three months ended September 30, 2024. During the three and nine months ended September 30, 2023, payments of $3.0 million and $7.0 million, including fees, were made to purchase developed lots from the related party, respectively. Capitalized interest included in real estate inventories on the consolidated balance sheets associated with this transaction was less than $0.1 million as of September 30, 2024 and was $1.0 million as of December 31, 2023. Previously capitalized related party interest included in cost of sales during the three and nine months ended September 30, 2024 was $0.1 million and $0.6 million, respectively. Previously capitalized related party interest included in cost of sales during the three and nine months ended September 30, 2023 was $0.4 million and $0.8 million, respectively.
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 5 – 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 (as defined below), 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 $0.3 million and $0.4 million as of September 30, 2024 and December 31, 2023, respectively. Previously capitalized related party interest included in cost of sales during both the three and nine months ended September 30, 2024 was $0.1 million. Previously capitalized related party interest included in cost of sales during the three and nine months ended September 30, 2023 was $0.3 million and $1.6 million, respectively.
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