Post-effective amendment to a registration statement that is not immediately effective upon filing

Investment in and Advances to Unconsolidated Joint Ventures

v3.20.4
Investment in and Advances to Unconsolidated Joint Ventures
 12 Months Ended
Dec. 31, 2020
Landsea Homes [Member]  
Schedule of Investments [Line Items]  
Investment in and Advances to Unconsolidated Joint Ventures

 

6. Investment in and Advances to Unconsolidated Joint Ventures

 

As of December 31, 2020 and 2019, the Company had two unconsolidated joint ventures with ownership interests of 51% and 25% in LS-NJ Port Imperial JV LLC and LS-Boston Point LLC, respectively, and concluded that these joint ventures were VIEs. The Company concluded that it was not the primary beneficiary of the variable interest entities and, accordingly, accounted for these entities under the equity method of accounting. The Company’s maximum exposure to loss is limited to the investment in the unconsolidated joint venture amounts included on the consolidated balance sheets. The condensed combined balance sheets for the Company’s unconsolidated joint ventures accounted for under the equity method are as follows:

               
    December 31,
    2020   2019
    (dollars in thousands)
Cash and cash equivalents   $ 2,740     $ 6,159  
Restricted cash     4,870       —  
Real estate inventories     41,214       98,811  
Investment in unconsolidated joint venture     —       225  
Other assets     123       339  
Total assets   $ 48,947     $ 105,534  
                 
Accounts payable   $ 188     $ 1,892  
Accrued expenses and other liabilities     3,928       2,957  
Due to affiliates     5,735       482  
EB-5 notes payable     —       21,000  
Total liabilities     9,851       26,331  
Members’ capital     39,096       79,203  
Total liabilities and members’ capital   $ 48,947     $ 105,534  

 

The condensed combined statements of operations for the Company’s unconsolidated joint ventures accounted for under the equity method are as follows:

 

    Year Ended December 31,
    2020   2019   2018
    (dollars in thousands)
Revenues   $ 37,403     $ 54,633     $ 73,587  
Cost of sales and expenses     (40,230 )     (62,145 )     (71,286 )
Impairment of real estate inventories     (27,094 )     (5,800 )     —  
Equity in net income from unconsolidated joint ventures     —       1,087       33,314  
Net (loss) income of unconsolidated joint ventures   $ (29,921 )   $ (12,225 )   $ 35,615  
Equity in net (loss) income from investment in unconsolidated joint ventures (1)   $ (16,418 )   $ (7,901 )   $ 13,018  
(1) The equity in net (loss) income of unconsolidated joint ventures consists of the allocation of the Company’s proportionate share of income or loss from the unconsolidated joint ventures of $15.2 million loss, $5.9 million loss, and $17.8 million income as well as $1.2 million, $2.0 million, and $4.8 million of expense related to capitalized interest and other costs for the years ended December 31, 2020, 2019, and 2018, respectively.

 

For the years ended December 31, 2020 and 2019, one of the Company’s unconsolidated joint ventures recorded impairment charges of $27.1 million and $5.8 million, respectively, related to slowing absorption and weaker pricing than expected. The impairment charges, based on the ownership percentage of 51%, are $13.8 million and $3.0 million are reflected in the equity in net (loss) income of unconsolidated joint ventures line in the consolidated statements of operations. For the year ended December 31, 2018, the unconsolidated joint ventures did not recognize any real estate inventory impairments.