Related Party Transactions |
3 Months Ended |
|---|---|
Mar. 31, 2023 | |
| Related Party Transactions [Abstract] | |
| Related Party Transactions | Related Party Transactions The Company continues to pay for certain costs on behalf of Landsea Holdings. The Company records a due from affiliate balance for all such payments. As of March 31, 2023 and December 31, 2022, the Company had a net receivable due from affiliates balance of $3.2 million and $2.9 million, respectively.
In June 2022, 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 Warrants are discussed further in Note 14 – Stockholders’ Equity.
In June 2022, Landsea Capital Fund, who is under common control with the Company, 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 $0.9 million to Landsea Capital Fund during the three months ended March 31, 2023. 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 $1.1 million during the three months ended March 31, 2022 related to the model homes still under construction on the sale date. Corresponding lot and other cost of sales of $1.1 million was also recognized during the same period. The Company did not recognize any revenue or other cost of sales related to these model homes during the three months ended March 31, 2023. As part of this transaction, the Company leased back these models. The total amount of rent payments made during the three months ended March 31, 2023 and 2022 is $0.2 million and $0.2 million, respectively. The right-of-use asset and lease liability balances associated with these leases is $1.1 million and $1.1 million, respectively, as of March 31, 2023 and $1.3 million and $1.3 million, respectively, as of December 31, 2022.
In July 2021, the Company entered into a landbank agreement for a project in its California segment with a related party. The Company will make regular payments to the related party based on an annualized rate of 7% of the undeveloped land costs while the land is developed and may purchase, at the Company’s discretion, the lots at a predetermined price of $28.9 million. The total amount of interest payments made during the three months ended March 31, 2023 and 2022 is $0.2 million and $0.3 million, respectively. During the three months ended March 31, 2023 and 2022, payments of $1.0 million and $0.9 million, including fees, have been 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 $0.9 million and $0.8 million as of March 31, 2023 and December 31, 2022, respectively. Previously capitalized related party interest included in cost of sales during the three months ended March 31, 2023 was $0.3 million. There was no previously capitalized related party interest included in cost of sales during the three months ended March 31, 2022.
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 $1.5 million and $2.2 million as of March 31, 2023 and December 31, 2022, respectively.
Previously capitalized related party interest included in cost of sales during the three months ended March 31, 2023 and 2022 was $0.7 million and $1.5 million, respectively.
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