Landsea Homes Corporation General form of registration statement for all companies including face-amount certificate companies

General form of registration statement for all companies including face-amount certificate companies

Fair Value Measurements

Fair Value Measurements

9 Months Ended

12 Months Ended

Sep. 30, 2020

Dec. 31, 2019

Fair Value Measurements

Note 8. Fair Value Measurements

The following table presents information about the Company’s assets that are measured on a recurring basis as of September 30, 2020 and December 31, 2019 and indicates the fair value hierarchy of the valuation techniques that the Company utilized to determine such fair value.

September 30, 2020
	Quoted Prices in Active Markets		Significant Other Observable Inputs		Significant Other Unobservable Inputs
Description	(Level 1)		(Level 2)		(Level 3)
Assets held in Trust:
Money market funds	$	129,127,500	$	-	$	-
	$	129,127,500	$	-	$	-

December 31, 2019
	Quoted Prices in Active Markets		Significant Other Observable Inputs		Significant Other Unobservable Inputs
Description	(Level 1)		(Level 2)		(Level 3)
Assets held in Trust:
U.S. Treasury Securities	$	161,991,526	$	-	$	-
Money market funds		28,383		-		-
	$	162,019,909	$	-	$	-

Transfers to/from Levels 1, 2, and 3 are recognized at the end of the reporting period. There were no transfers between levels for three and nine months ended September 30, 2020 and 2019.

Note 8. Fair Value Measurements

The following table presents information about the Company’s assets that are measured on a recurring basis as of December 31, 2019 and 2018 and indicates the fair value hierarchy of the valuation techniques that the Company utilized to determine such fair value.

	Quoted Prices in Active Markets		Significant Other Observable Inputs		Significant Other Unobservable Inputs
Description	(Level 1)		(Level 2)		(Level 3)
Assets held in Trust at December 31, 2019:
U.S. Treasury Securities	$	161,991,526	$	-	$	-
Money market funds		28,383		-		-
	$	162,019,909	$	-	$	-

Description	Quoted Prices in Active Markets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Other Unobservable Inputs (Level 3)
Assets held in Trust at December 31, 2018:
Money market fund	$	159,718,098	$	—	$	—
	$	159,718,098	$	—	$	—

Transfers to/from Levels 1, 2, and 3 are recognized at the end of the reporting period. There were no transfers between levels for the years ended December 31, 2019 and 2018.

Landsea Homes [Member]

Fair Value Measurements

14.

Fair Value

ASC 820 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 and estimated fair values of financial instruments:

		September 30, 2020				December 31, 2019
	Hierarchy	Carrying Value		Fair Value		Carrying Value		Fair Value
		(dollars in thousands)
Liabilities:
Construction loans ⁽¹⁾⁽²⁾	Level 2	$	80,207	$	80,207	$	92,640	$	92,640
Revolving credit facility ⁽¹⁾⁽²⁾	Level 2	$	143,362	$	143,362	$	8,680	$	8,680
EB-5 notes payable ⁽³⁾	Level 2	$	86,713	$	86,713	$	95,010	$	95,010
Loan payable	Level 2	$	4,265	$	4,265	$	—	$	—

⁽¹⁾

Carrying amount is net of any discount/premium and deferred financing costs.

⁽²⁾

Carrying amount approximates fair value due to the variable interest rate terms of these loans.

⁽³⁾

Carrying amount approximates fair value due to recent issuances of EB-5 debt having similar characteristics, including interest rate.

The carrying values of accounts and other receivables, restricted cash, deposits and 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 are measured at fair value on a nonrecurring 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 recoverable.

14.

Fair Value

Level 1 — Quoted prices for identical instruments in active markets.

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 and estimated fair values of financial instruments:

		December 31, 2019				December 31, 2018
	Hierarchy	Carrying		Fair Value		Carrying		Fair Value
	(dollars in thousands)
Asset:
Notes receivable from lot sales ⁽¹⁾	Level 2	$	25	$	25	$	17,475	$	17,475

Liabilities:
Construction loans ⁽²⁾⁽³⁾	Level 2	$	92,640	$	92,640	$	65,157	$	65,157
Revolving credit facility ⁽²⁾⁽³⁾	Level 2	$	8,680	$	8,680	$	50,793	$	50,793
EB-5 notes payable ⁽⁴⁾	Level 2	$	95,010	$	95,010	$	83,796	$	83,796

(1)

Carrying amount approximates fair value due to short-term nature.

(2)

Carrying amount is net of any discount/premium and deferred financing costs.

(3)

Carrying amount approximates fair value due to the variable interest rate terms of these loans.

(4)

Carrying amount approximates fair value due to recent issuances of EB-5 debt having similar characteristics, including interest rate.

The carrying values of accounts and other receivables, restricted cash, deposits and 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 include items such as real estate inventories that are measured at fair value on a nonrecurring basis when events and circumstances indicating its carrying values is not recoverable.

- Definition

The entire disclosure for the fair value of financial instruments (as defined), including financial assets and financial liabilities (collectively, as defined), and the measurements of those instruments as well as disclosures related to the fair value of non-financial assets and liabilities. Such disclosures about the financial instruments, assets, and liabilities would include: (1) the fair value of the required items together with their carrying amounts (as appropriate); (2) for items for which it is not practicable to estimate fair value, disclosure would include: (a) information pertinent to estimating fair value (including, carrying amount, effective interest rate, and maturity, and (b) the reasons why it is not practicable to estimate fair value; (3) significant concentrations of credit risk including: (a) information about the activity, region, or economic characteristics identifying a concentration, (b) the maximum amount of loss the entity is exposed to based on the gross fair value of the related item, (c) policy for requiring collateral or other security and information as to accessing such collateral or security, and (d) the nature and brief description of such collateral or security; (4) quantitative information about market risks and how such risks are managed; (5) for items measured on both a recurring and nonrecurring basis information regarding the inputs used to develop the fair value measurement; and (6) for items presented in the financial statement for which fair value measurement is elected: (a) information necessary to understand the reasons for the election, (b) discussion of the effect of fair value changes on earnings, (c) a description of [similar groups] items for which the election is made and the relation thereof to the balance sheet, the aggregate carrying value of items included in the balance sheet that are not eligible for the election; (7) all other required (as defined) and desired information.

+ References + Details