Quarterly report pursuant to Section 13 or 15(d)

Fair Value

v3.24.3
Fair Value
 9 Months Ended
Sep. 30, 2024
Fair Value Disclosures [Abstract]  
Fair Value Fair Value
ASC 820, Fair Value Measurement, defines fair value as the price that would be received for selling an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date and requires assets and liabilities carried at fair value to be classified and disclosed in the following three categories:
Level 1 — Quoted prices for identical instruments in active markets.
Level 2 — Quoted prices for similar instruments in active markets; quoted prices for identical or similar instruments in markets that are inactive; and model-derived valuations in which all significant inputs and significant value drivers are observable in active markets at measurement date.
Level 3 — Valuations derived from techniques where one or more significant inputs or significant value drivers are unobservable in active markets at measurement date.
The following table presents carrying values, excluding any discounts or deferred loan costs, and estimated fair values of financial instruments:
September 30, 2024 December 31, 2023
Hierarchy Carrying Value Fair Value Carrying Value Fair Value
(dollars in thousands)
Liabilities:
Line of credit facility (1)
Level 2 $ 207,400  $ 207,400  $ 315,000  $ 315,000 
11.0% Senior Notes
 Level 2 $ 250,000  $ 273,750  $ 250,000  $ 257,500 
8.875% Senior Notes
 Level 2 $ 300,000  $ 316,875  $ —  $ — 
(1)     Carrying amount approximates fair value due to the variable interest rate terms of this loan.
The carrying values of receivables, deposits, and other assets as well as accounts payable and accrued liabilities approximate the fair value for these financial instruments based upon an evaluation of the underlying characteristics, market data, and because of
the short period of time between origination of the instruments and their expected realization. The fair value of cash and cash equivalents is classified in Level 1 of the fair value hierarchy.
Non-financial assets such as real estate inventories and goodwill are measured at fair value on a non-recurring basis using a discounted cash flow approach with Level 3 inputs within the fair value hierarchy. This measurement is performed when events and circumstances indicate the asset’s carrying value is not fully recoverable. During the three and nine months ended September 30, 2024, it was determined that real estate inventories with a carrying value of $6.6 million within one community in the Florida segment were not expected to be fully recoverable. Accordingly, a real estate inventories impairment charge was recognized in the amount of $0.8 million to reflect the estimated fair value of the community of $5.8 million. During the nine months ended September 30, 2023, it was determined that real estate inventories with a carrying value of $24.1 million within one community in the California segment was not expected to be fully recoverable. Accordingly, a real estate inventories impairment charge was recognized in the amount of $4.7 million to reflect the estimated fair value of the community of $19.4 million. No additional impairments were recorded during the three months ended September 30, 2023. Refer to Note 4 – Real Estate Inventories for additional information.