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Investment In Unconsolidated Entities | 9 Months Ended
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Sep. 30, 2023
Equity Method Investments and Joint Ventures [Abstract] |
Investment in Unconsolidated Entities | INVESTMENT IN UNCONSOLIDATED ENTITIES Great Park Venture The Great Park Venture has two classes of interests—“Percentage Interests” and “Legacy Interests.” The Operating Company owned 37.5% of the Great Park Venture’s Percentage Interests as of September 30, 2023. During the nine months ended September 30, 2023, the Great Park Venture made aggregate distributions of $25.5 million to holders of Legacy Interests and $218.0 million to holders of Percentage Interests. The Company received $81.8 million for its 37.5% Percentage Interest. As of September 30, 2023, Legacy Interest holders were entitled to receive a maximum of $40.7 million in distributions to be paid pro-rata with Percentage Interest holders. Approximately 10% of future distributions will be paid to the Legacy Interest holders until such time as the remaining balance has been fully paid. The holders of the Percentage Interests will receive all other distributions. The Great Park Venture is the owner of Great Park Neighborhoods, a mixed-use planned community located in Orange County, California. The Company, through the A&R DMA, as amended, manages the planning, development and sale of land at the Great Park Neighborhoods and supervises the day-to-day affairs of the Great Park Venture. The Great Park Venture is governed by an executive committee of representatives appointed by only the holders of Percentage Interests. The Company serves as the administrative member but does not control the actions of the executive committee. The Company accounts for its investment in the Great Park Venture using the equity method of accounting. The carrying value of the Company’s investment in the Great Park Venture is higher than the Company’s underlying share of equity in the carrying value of net assets of the Great Park Venture, resulting in a basis difference. The Company’s earnings or losses from the equity method investment are adjusted by amortization and accretion of the basis differences as the assets (mainly inventory) and liabilities that gave rise to the basis difference are sold, settled or amortized. During the nine months ended September 30, 2023, the Great Park Venture recognized $9.4 million in land sale revenues to related parties of the Company and $363.1 million in land sale revenues to third parties, of which $357.8 million relates to homesites sold to an unaffiliated land banking entity whereby a related party of the Company retained the option to acquire these homesites in the future from the land bank entity. During the nine months ended September 30, 2022, the Great Park Venture recognized $9.7 million in land sale revenues to related parties of the Company and $29.3 million in land sale revenues to third parties. The following table summarizes the statements of operations of the Great Park Venture for the nine months ended September 30, 2023 and 2022 (in thousands):
| Nine Months Ended September 30,
| 2023 |  | 2022
Land sale and related party land sale revenues | $ | 372,472 |  |  | $ | 39,020 |
Home sale revenues | — |  |  | 40,475 |
Cost of land sales | (165,749) |  |  | (15,118) |
Cost of home sales | — |  |  | (30,784) |
Other costs and expenses | (37,204) |  |  | (53,251) |
Net income (loss) of Great Park Venture | $ | 169,519 |  |  | $ | (19,658) |
The Company’s share of net income (loss) | $ | 63,570 |  |  | $ | (7,372) |
Basis difference (amortization) accretion, net | (10,498) |  |  | 1,738 |
Equity in earnings (loss) from Great Park Venture | $ | 53,072 |  |  | $ | (5,634) |
The following table summarizes the balance sheet data of the Great Park Venture and the Company’s investment balance as of September 30, 2023 and December 31, 2022 (in thousands):
| September 30, 2023 |  | December 31, 2022
Inventories | $ | 435,499 |  |  | $ | 605,893 |
Cash and cash equivalents | 150,555 |  |  | 149,326 |
Contract assets, receivable and other assets | 165,076 |  |  | 43,955 |
Total assets | $ | 751,130 |  |  | $ | 799,174 |
Accounts payable and other liabilities | $ | 182,112 |  |  | $ | 156,085 |
Redeemable Legacy Interests | 40,705 |  |  | 66,254 |
Capital (Percentage Interest) | 528,313 |  |  | 576,835 |
Total liabilities and capital | $ | 751,130 |  |  | $ | 799,174 |
The Company’s share of capital in Great Park Venture | $ | 198,118 |  |  | $ | 216,313 |
Unamortized basis difference | 62,215 |  |  | 72,713 |
The Company’s investment in the Great Park Venture | $ | 260,333 |  |  | $ | 289,026 |
Gateway Commercial Venture The Company owned a 75% interest in the Gateway Commercial Venture as of September 30, 2023. The Gateway Commercial Venture is governed by an executive committee in which the Company is entitled to appoint two individuals. One of the other members of the Gateway Commercial Venture is also entitled to appoint two individuals to the executive committee. The unanimous approval of the executive committee is required for certain matters, which limits the Company’s ability to control the Gateway Commercial Venture, however, the Company is able to exercise significant influence and therefore accounts for its investment in the Gateway Commercial Venture using the equity method. The Company is the manager of the Gateway Commercial Venture, with responsibility to manage and administer its day-to-day affairs and implement a business plan approved by the executive committee. The Gateway Commercial Venture owns one commercial office building and approximately 50 acres of commercial land with additional development rights at a 73 acre office, medical, research and development campus located within the Great Park Neighborhoods (the “Five Point Gateway Campus”). The Five Point Gateway Campus consists of four buildings totaling approximately one million square feet. The Company and a subsidiary of Lennar lease portions of the building owned by the Gateway Commercial Venture, and during the nine months ended September 30, 2023 and 2022, the Gateway Commercial Venture recognized $6.3 million and $6.2 million, respectively, in rental revenues from those leasing arrangements. The following table summarizes the statements of operations of the Gateway Commercial Venture for the nine months ended September 30, 2023 and 2022 (in thousands):
| Nine Months Ended September 30,
| 2023 |  | 2022
Rental revenues | $ | 6,329 |  |  | $ | 6,248 |
Rental operating and other expenses | (2,875) |  |  | (2,147) |
Depreciation and amortization | (2,982) |  |  | (2,966) |
Interest expense | (1,829) |  |  | (1,006) |
Net (loss) income of Gateway Commercial Venture | $ | (1,357) |  |  | $ | 129 |
Equity in (loss) earnings from Gateway Commercial Venture | $ | (1,018) |  |  | $ | 97 |
The following table summarizes the balance sheet data of the Gateway Commercial Venture and the Company’s investment balance as of September 30, 2023 and December 31, 2022 (in thousands):
| September 30, 2023 |  | December 31, 2022
Real estate and related intangible assets, net | $ | 79,811 |  |  | $ | 82,797 |
Cash and restricted cash | 5,843 |  |  | 4,244 |
Other assets | 3,468 |  |  | 4,588 |
Total assets | $ | 89,122 |  |  | $ | 91,629 |
Notes payable, net | $ | 28,902 |  |  | $ | 29,418 |
Other liabilities | 7,317 |  |  | 7,951 |
Members’ capital | 52,903 |  |  | 54,260 |
Total liabilities and capital | $ | 89,122 |  |  | $ | 91,629 |
The Company’s investment in the Gateway Commercial Venture | $ | 39,677 |  |  | $ | 40,695 |
The Company is subject to certain guaranties of the Gateway Commercial Venture's mortgage note, including an interest and carry guaranty along with a springing guaranty of 50% of the outstanding balance in the event the Gateway Commercial Venture's leases with either the Company or the affiliate of Lennar are no longer in effect and the Gateway Commercial Venture is unable to meet certain financial covenants. Valencia Landbank Venture As of September 30, 2023, the Company owned a 10% interest in the Valencia Landbank Venture, an entity organized in December 2020 for the purpose of taking assignment from homebuilders of purchase and sale agreements for the purchase of residential lots within the Valencia community. The Valencia Landbank Venture concurrently enters into option and development agreements with homebuilders pursuant to which the homebuilders retain the option to purchase the land to construct and sell homes. The Company does not have a controlling financial interest in the Valencia Landbank Venture, however, the Company has the ability to significantly influence the Valencia Landbank Venture’s operating and financial policies, and most major decisions require the Company’s approval in addition to the approval of the Valencia Landbank Venture’s other unaffiliated member, and therefore the Company accounts for its investment in the Valencia Landbank Venture using the equity method. At September 30, 2023 and December 31, 2022, the Company’s investment in the Valencia Landbank Venture was $1.4 million and $1.9 million, respectively, and the Company recognized $0.5 million and $0.9 million in equity in earnings for the nine months ended September 30, 2023 and 2022, respectively.

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- Definition The entire disclosure for equity method investments and joint ventures. Equity method investments are investments that give the investor the ability to exercise significant influence over the operating and financial policies of an investee. Joint ventures are entities owned and operated by a small group of businesses as a separate and specific business or project for the mutual benefit of the members of the group. + References Reference 1: http://www.xbrl.org/2003/role/disclosureRef -Topic 323 -SubTopic 10 -Name Accounting Standards Codification -Section 50 -Paragraph 3 -Subparagraph (a)(3) -Publisher FASB -URI https://asc.fasb.org//1943274/2147481687/323-10-50-3 Reference 2: http://www.xbrl.org/2003/role/disclosureRef -Topic 323 -SubTopic 10 -Name Accounting Standards Codification -Section 50 -Paragraph 3 -Subparagraph (d) -Publisher FASB -URI https://asc.fasb.org//1943274/2147481687/323-10-50-3 Reference 3: http://www.xbrl.org/2003/role/recommendedDisclosureRef -Topic 323 -SubTopic 740 -Name Accounting Standards Codification -Section 50 -Paragraph 2 -Subparagraph (f) -Publisher FASB -URI https://asc.fasb.org//1943274/2147481543/323-740-50-2 Reference 4: http://www.xbrl.org/2003/role/disclosureRef -Name Accounting Standards Codification -Topic 323 -Publisher FASB -URI https://asc.fasb.org//323/tableOfContent + Details
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