Business Combinations and Asset Acquisitions |
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| Business Combination, Asset Acquisition, and Joint Venture Formation [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Business Combinations and Asset Acquisitions | Business Combinations and Asset Acquisitions On April 1, 2024, the Company completed the acquisition of Antares Acquisition, LLC (“Antares”), a Dallas-Fort Worth based homebuilder, for approximately $239.8 million (subject to certain customary post-closing adjustments) using a combination of cash on hand and borrowings under the Company’s existing credit facility, which included repayment of approximately $40.2 million of Antares debt. The total assets of Antares included approximately 2,100 lots owned or controlled in the Dallas-Fort Worth market. This acquisition was accounted for as a business combination.
In accordance with ASC 805, the assets acquired and liabilities assumed from the acquisition of Antares were measured and recognized at fair value as of the date of the acquisition to reflect the purchase price paid.
Acquired inventories consist of land, land deposits, and work in process inventories. For acquired land and land options, the Company typically utilizes, with the assistance of a third-party appraiser, a sales comparison approach. For work in process inventories, the Company, with the assistance of a third-party valuation specialist, estimates the fair value based upon the stage of production of each unit and a gross margin that management believes a market participant would require to complete the remaining development and requisite selling efforts. On the acquisition date, the stage of production for each lot ranged from recently started lots to fully completed homes. The intangible assets acquired relate to the Antares trade name and material contracts, which are estimated to have a fair value of $2.0 million and are being amortized over 12 to 18 months. Goodwill represents the excess of the purchase price over the fair value of assets acquired and liabilities assumed and relates primarily to the assembled workforce and business synergies. Goodwill of $87.0 million was recorded on the consolidated balance sheets as a result of this transaction and is expected to be deductible for tax purposes over 15 years. The acquired goodwill is included in the Texas reporting segment in Note 12 – Segment Reporting. The Company incurred transaction related costs of $3.6 million related to the Antares acquisition during the twelve months ending December 31, 2024. These transaction costs are included in general and administrative expenses on the consolidated statements of operations. Measurement period adjustments were recorded through December 31, 2024 resulting from updated valuations of real estate assets acquired. The adjustments were determined based on additional information received and resulted in an increase to goodwill of $3.3 million.
The Company’s results of operations include homebuilding revenues from the Antares Acquisition of $131.4 million for the year ended December 31, 2024. The accompanying results of operations also include pretax loss of $1.6 million from the Antares Acquisition during the year ended December 31, 2024. The pretax loss is inclusive of purchase price accounting and an allocation of corporate general and administrative expenses.
The following is a summary of the allocation of the purchase price based on the fair value of assets acquired and liabilities assumed (dollars in thousands).
On October 10, 2023, the Company expanded into the Colorado market by acquiring certain assets of Richfield Homes, LLC (“Richfield”). The Company paid an aggregate cash purchase price of $22.5 million to acquire approximately 290 owned or controlled lots in the greater Denver, Colorado area, including any construction in progress on those lots. This acquisition was accounted for as an asset acquisition.
On January 18, 2022, the Company acquired 100% of Hanover Family Builders, LLC (“Hanover”), a Florida-based homebuilder, for an aggregate cash purchase price, net of working capital adjustments, of $262.6 million (the “Hanover Acquisition”). The aggregate purchase price included a pay-off of $69.3 million related to debt held by Hanover and a payment of $15.6 million for land-related deposits. The total assets of Hanover included approximately 20 development projects and 3,800 lots owned or controlled in various stages of development. The intangible asset acquired relates to the Hanover trade name, which was estimated to have a fair value of $1.6 million and was amortized over one year. Goodwill of $44.2 million was recorded on the consolidated balance sheets as a result of this transaction and is expected to be deductible for tax purposes over 15 years. The acquired goodwill is included in the Florida reporting segment in Note 12 – Segment Reporting. The Company incurred transaction related costs of $0.7 million related to the Hanover Acquisition during the year ended December 31, 2022.
The Company’s results of operations include homebuilding revenues from the Hanover Acquisition of $334.0 million for the year ended December 31, 2022. The accompanying results of operations also include pretax income of $20.1 million from the Hanover Acquisition during the year ended December 31, 2022. The pretax income is inclusive of purchase price accounting and an allocation of corporate general and administrative expenses.
The following is a summary of the allocation of the purchase price based on the fair value of assets acquired and liabilities assumed (dollars in thousands).
Unaudited Pro Forma Financial Information
Unaudited pro forma revenue and net income for the years ended December 31, 2024, 2023, and 2022 give effect to the results of the acquisitions of Antares and Hanover as though the respective acquisition dates were as of January 1, 2023 and January 1, 2021, the beginning of the year preceding the respective acquisitions. Unaudited pro forma net income adjusts the operating results of the stated acquisitions to reflect the additional costs that would have been recorded assuming the fair value adjustments had been applied as of the beginning of the year preceding the year of acquisition, including the tax-effected amortization of the acquired trade names and transaction related costs.
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