Related Party Transactions |
12 Months Ended |
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Dec. 31, 2024 | |
| Related Party Transactions [Abstract] | |
| Related Party Transactions | Related Party Transactions The Company occasionally has transactions with related parties, including Landsea Holdings Corporation (“Landsea Holdings”) which previously majority-owned the Company. As of December 31, 2024, the Company had a net payable due to affiliates of $0.5 million. As of December 31, 2023, the Company had a net receivable due from affiliates of $3.5 million. A description of recent related party transactions is included below.
In December 2024, Landsea Holdings and Ever Fast Holdings Limited (“Ever Fast”), which were related parties of the Company at such time, completed a registered secondary offering of the Company’s common stock. The Company did not participate in purchasing any of the offered shares. The Company did not receive any of the proceeds from this secondary offering, except that Landsea Holdings paid the Company approximately $4.3 million, net of transaction closing fees, using funds received from the secondary offering. The payment represented a reimbursement for various services previously provided by the Company to Landsea Holdings. Upon the closing of this transaction, the Company wrote-off the remaining $0.8 million previously due from Landsea Holdings. Ever Fast no longer qualified as a related party upon the completion of the offering. The Company paid costs, fees, and expenses for the offering of $0.4 million and $0.3 million on behalf of Landsea Holdings and Ever Fast, respectively. The Company expects to be reimbursed by Ever Fast for the costs paid on its behalf. Following this transaction, Landsea Holdings ownership was reduced to 17% of the Company’s outstanding common stock as of December 31, 2024.
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, 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 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.
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 15 – Stockholders’ Equity.
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 $27.9 million and $22.3 million to Landsea Capital Fund during the years ended December 31, 2024 and 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. 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 during the year ended December 31, 2022, related to the model homes still under construction on the date of sale. Corresponding lot and other cost of sales of $1.3 million was also recognized during the same period. No lot sales and other revenue or corresponding cost of sales was recognized on these model homes during the years ended December 31, 2024 and 2023. 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 years ended December 31, 2024, 2023, and 2022 was $0.3 million, $0.8 million, and $0.8 million, respectively. As of December 31, 2024, we have no remaining right-of-use asset or lease liability balances associated with this transaction. The right-of-use asset and lease liability balances associated with these leases was $0.5 million and $0.5 million, respectively, as of December 31, 2023.
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 years ended December 31, 2024, 2023, and 2022 was less than $0.1 million, $0.6 million, and $1.0 million, respectively. During the years ended December 31, 2024, 2023, and 2022, payments of $4.0 million, $11.4 million, and $11.4 million 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 $0.3 million and $1.0 million as of December 31, 2024, and 2023, respectively. Previously capitalized related party interest included in cost of sales during the years ended December 31, 2024, 2023, and 2022 was $0.7 million, $1.4 million, and $0.2 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 $0.1 million and $0.4 million as of December 31, 2024 and 2023, respectively. Previously capitalized related party interest included in cost of sales during the years ended December 31, 2024, 2023, and 2022, was $0.2 million, $1.7 million, and $5.0 million, respectively.
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