10-Q

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 10-Q

(Mark One)

x QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended June 30, 2013

OR

¨ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

Commission file number 333-177328

SHEA HOMES LIMITED PARTNERSHIP

(Exact name of registrant as specified in its charter)

California	95-4240219
(State or other jurisdiction of incorporation or organization)	(I.R.S. Employer Identification No.)
655 Brea Canyon Road, Walnut, CA 91789	92618-2215
(Address of principal executive offices)	(Zip Code)

(909) 594-9500

(Registrant’s telephone number, including area code)

Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.    Yes  ¨    No  x.

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).    Yes  x    No  ¨

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act. (Check one).

Large accelerated filer	¨	Accelerated filer	¨
Non-accelerated filer	x  (Do not check if a smaller reporting company)	Smaller reporting company	¨

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).    Yes  ¨    No  x.

EXPLANATORY NOTE

The registrant is a voluntary filer and is not subject to the filing requirements of the Securities Exchange Act of 1934 (the “Exchange Act”). Although not subject to these filing requirements, the registrant has filed all Exchange Act reports for the preceding 12 months.

SHEA HOMES LIMITED PARTNERSHIP

FORM 10-Q

INDEX

			Page No.
PART 1. Financial Information
	ITEM 1.	Financial Statements
		Condensed Consolidated Balance Sheets at June 30, 2013 (unaudited) and December 31, 2012		1
		Unaudited Condensed Consolidated Statements of Operations for the Three and Six Months Ended June 30, 2013 and 2012		2
		Unaudited Condensed Consolidated Statements of Comprehensive Income (Loss) for the Three and Six Months Ended June 30, 2013 and 2012		3
		Unaudited Condensed Consolidated Statements of Changes in Equity for the Six Months Ended June  30, 2013 and 2012		4
		Unaudited Condensed Consolidated Statements of Cash Flows for the Six Months Ended June  30, 2013 and 2012		5
		Notes  to Condensed Consolidated Financial Statements at June 30, 2013 (Unaudited) and December 31, 2012 and for the Three and Six Months Ended June 30, 2013 and 2012 (Unaudited)		6
	ITEM 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations		30
	ITEM 3.	Quantitative and Qualitative Disclosures About Market Risk		46
	ITEM 4.	Controls and Procedures		46
PART 2. Other Information
	ITEM 1.	Legal Proceedings		48
	ITEM 1A.	Risk Factors		48
	ITEM 5.	Other Information		48
	ITEM 6.	Exhibits		49
SIGNATURES				50

PART I. FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS

Shea Homes Limited Partnership

(A California Limited Partnership)

Condensed Consolidated Balance Sheets

(In thousands)

	June 30, 2013		December 31, 2012
	(unaudited)
Assets
Cash and cash equivalents	$	157,997	$	279,756
Restricted cash		2,334		13,031
Accounts and other receivables, net		146,018		141,289
Receivables from related parties, net		34,484		34,028
Inventory		994,103		837,653
Investments in unconsolidated joint ventures		39,400		28,653
Other assets, net		37,221		39,127
Total assets	$	1,411,557	$	1,373,537
Liabilities and equity
Liabilities:
Notes payable	$	759,740	$	758,209
Payables to related parties		4,159		125
Accounts payable		54,915		62,738
Other liabilities		246,890		233,218
Total liabilities		1,065,704		1,054,290
Equity:
SHLP equity:
Owners’ equity		340,693		314,321
Accumulated other comprehensive income		4,754		4,517
Total SHLP equity		345,447		318,838
Non-controlling interests		406		409
Total equity		345,853		319,247
Total liabilities and equity	$	1,411,557	$	1,373,537

See accompanying notes

1

Shea Homes Limited Partnership

(A California Limited Partnership)

Condensed Consolidated Statements of Operations

(In thousands)

	Three Months Ended June 30,						Six Months Ended June 30,
	2013			2012			2013			2012
	(unaudited)
Revenues	$	217,310		$	132,468		$	352,270		$	238,071
Cost of sales		(168,884	)		(107,978	)		(272,308	)		(193,013	)
Gross margin		48,426			24,490			79,962			45,058
Selling expenses		(12,848	)		(10,199	)		(23,002	)		(19,551	)
General and administrative expenses		(14,078	)		(11,573	)		(26,035	)		(19,824	)
Equity in income (loss) from unconsolidated joint ventures, net		478			317			(154	)		384
Loss on reinsurance transaction		(807	)		(8,163	)		(159	)		(7,367	)
Interest expense		(1,397	)		(5,909	)		(4,830	)		(12,197	)
Other income (expense), net		237			(235	)		1,007			1,275
Income (loss) before income taxes		20,011			(11,272	)		26,789			(12,222	)
Income tax expense		(479	)		(848	)		(420	)		(96	)
Net income (loss)		19,532			(12,120	)		26,369			(12,318	)
Less: Net loss (income) attributable to non-controlling interests		2			19			3			(194	)
Net income (loss) attributable to SHLP	$	19,534		$	(12,101	)	$	26,372		$	(12,512	)

See accompanying notes

2

Shea Homes Limited Partnership

(A California Limited Partnership)

Condensed Consolidated Statements of Comprehensive Income (Loss)

(In thousands)

	Three Months Ended June 30,						Six Months Ended June 30,
	2013			2012			2013			2012
Net income (loss)	$	19,532		$	(12,120	)	$	26,369		$	(12,318	)
Other comprehensive income (loss), before tax
Unrealized investment holding gains (losses) during the year		175			(290	)		425			1,953
Less: Reclassification adjustments for investment (gains) losses included in other income (expense)		0			23			(37	)		0
Comprehensive income (loss), before tax		19,707			(12,387	)		26,757			(10,365	)
Income tax expense relating to other comprehensive income / (loss)		(68	)		(374	)		(151	)		(1,151	)
Comprehensive income (loss), net of tax		19,639			(12,761	)		26,606			(11,516	)
Less: Comprehensive (income) loss attributable to non-controlling interests		2			19			3			(194	)
Comprehensive income (loss) attributable to SHLP	$	19,641		$	(12,742	)	$	26,609		$	(11,710	)

See accompanying notes

3

Shea Homes Limited Partnership

(A California Limited Partnership)

Condensed Consolidated Statements of Changes in Equity

(In thousands)

	Shea Homes Limited Partnership																	Non- controlling Interests			Total Equity
	Limited Partner							General Partner		Total Owners’ Equity			Accumulated Other Comprehensive Income (Loss)		Total SHLP Equity
	Common		Preferred Series B			Preferred Series D		Common
Balance, December 31, 2011	$	1	$	173,555		$	120,955	$	0	$	294,511		$	6,392	$	300,903		$	27,100		$	328,003
Comprehensive income (loss):
Net income (loss)		0		(12,512	)		0		0		(12,512	)		0		(12,512	)		194			(12,318	)
Change in unrealized gains on investments, net		0		0			0		0		0			802		802			0			802
Total comprehensive income (loss)																(11,710	)		194			(11,516	)
Redemption of Company’s interest in consolidated joint venture (see Note 12)		0		(11,580	)		0		0		(11,580	)		0		(11,580	)		(28,239	)		(39,819	)
Contributions from non-controlling interests		0		0			0		0		0			0		0			1,746			1,746
Distributions to non-controlling interests		0		0			0		0		0			0		0			(345	)		(345	)
Balance, June 30, 2012 (unaudited)	$	1	$	149,463		$	120,955	$	0	$	270,419		$	7,194	$	277,613		$	456		$	278,069
Balance, December 31, 2012	$	1,863	$	173,555		$	138,413	$	490	$	314,321		$	4,517	$	318,838		$	409		$	319,247
Comprehensive income (loss):
Net income (loss)		0		0			26,372		0		26,372			0		26,372			(3	)		26,369
Change in unrealized gains on investments, net		0		0			0		0		0			237		237			0			237
Total comprehensive income (loss)																26,609			(3	)		26,606
Balance, June 30, 2013 (unaudited)	$	1,863	$	173,555		$	164,785	$	490	$	340,693		$	4,754	$	345,447		$	406		$	345,853

See accompanying notes

4

Shea Homes Limited Partnership

(A California Limited Partnership)

Condensed Consolidated Statements of Cash Flows

(In thousands)

	Six Months Ended June 30,
	2013			2012
	(unaudited)			(unaudited)
Operating activities
Net income (loss)	$	26,369		$	(12,318	)
Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities:
Equity in (income) loss from joint ventures		154			(384	)
Loss on reinsurance transaction		159			7,367
Net gain on sale of available-for-sale investments		(10	)		(22	)
Depreciation and amortization expense		4,564			3,321
Net interest capitalized on investment in joint ventures		(763	)		(378	)
Distributions of earnings from joint ventures		6,000			1,000
Changes in operating assets and liabilities:
Restricted cash		10,697			(141	)
Receivables and other assets		(6,524	)		(4,846	)
Inventory		(158,601	)		(28,542	)
Payables and other liabilities		9,789			1,239
Net cash provided by (used in) operating activities		(108,166	)		(33,704	)
Investing activities
Proceeds from sale of available-for-sale investments		3,078			5,212
Net collections (advances) on promissory notes from related parties		431			1,843
Investments in unconsolidated joint ventures		(16,350	)		(1,183	)
Distributions from unconsolidated joint ventures		0			223
Net cash provided by (used in) investing activities		(12,841	)		6,095
Financing activities
Principal payments to financial institutions and others		(752	)		(1,053	)
Contributions from non-controlling interests		0			1,746
Distributions to non-controlling interests		0			(345	)
Other financing activities		0			(168	)
Net cash provided by (used in) by financing activities		(752	)		180
Net (decrease) increase in cash and cash equivalents		(121,759	)		(27,429	)
Cash and cash equivalents at beginning of period		279,756			268,366
Cash and cash equivalents at end of period	$	157,997		$	240,937

See accompanying notes

5

Shea Homes Limited Partnership

(A California Limited Partnership)

Notes to Unaudited Condensed Consolidated Financial Statements

June 30, 2013

1. Basis of Presentation

The accompanying unaudited, condensed consolidated financial statements include the accounts of Shea Homes Limited Partnership (“SHLP”) and its wholly-owned subsidiaries, including Shea Homes, Inc. (“SHI”) and its wholly-owned subsidiaries. The Company consolidates all joint ventures in which it has a controlling interest or other ventures in which it is the primary beneficiary of a variable interest entity (“VIE”). Material intercompany accounts and transactions are eliminated. The consolidated financial statements are prepared in accordance with U.S. generally accepted accounting principles (“GAAP”) for interim financial information, the instructions to Form 10-Q and Article 10 of Regulation S-X. Accordingly, these consolidated financial statements do not include all information and notes required by GAAP for complete financial statements and should be read in conjunction with the consolidated financial statements and accompanying notes for the year ended December 31, 2012. Adjustments, consisting of normal, recurring accruals, loss reserves and deferred tax asset valuation allowance adjustments, considered necessary for a fair presentation, are included.

Unless the context otherwise requires, the terms “we”, “us”, “our” and “the Company” refer to SHLP, its subsidiaries and its consolidated joint ventures.

Organization

SHLP, a California limited partnership, was formed January 4, 1989, pursuant to an agreement of partnership (the “Agreement”), as most recently amended August 6, 2013, by and between J.F. Shea, LP, a Delaware limited partnership, as general partner, and the Company’s limited partners who are comprised of entities and trusts, including J.F. Shea Co., Inc. (“JFSCI”), that are under the common control of Shea family members (collectively, the “Partners”). J.F. Shea, LP is 96% owned by JFSCI.

Nature of Operations

Our principal business purpose is homebuilding, which includes acquiring and developing land and constructing and selling new residential homes thereon. To a lesser degree, we develop lots and sell them to other homebuilders. Our principal markets are California, Arizona, Colorado, Washington, Nevada and Florida.

We own a captive insurance company, Partners Insurance Company, Inc. (“PIC”), which provided warranty, general liability, workers’ compensation and completed operations insurance for related companies and third-party subcontractors. Effective for the policy years commencing in 2007, PIC ceased issuing policies for these coverages (see Note 11).

Seasonality

Historically, the homebuilding industry experiences seasonal fluctuations. We typically experience the highest home sales order activity in spring and summer, although this activity is also highly dependent on the number of active selling communities, timing of community openings and other market factors. Since it typically takes three to eight months to construct a home, we close more homes in the second half of the year as spring and summer home sales orders convert to home closings. Because of this seasonality, home starts, construction costs and related cash outflows are historically highest from April to October, and the majority of cash receipts from home closings occur during the second half of the year. Therefore, operating results for the three and six months ended June 30, 2013 are not necessarily indicative of results expected for the year ended December 31, 2013.

Use of Estimates

Preparation of the consolidated financial statements in conformity with U.S. GAAP requires the Company to make estimates and assumptions that affect the amounts reported in the consolidated financial statements and accompanying notes. Actual results could differ significantly from those estimates.

Reclassifications

Certain reclassifications were made in the 2012 condensed consolidated financial statements to conform to classifications in 2013. As of December 31, 2012, investments of $12.1 million and property and equipment of $2.2 million were reclassified to other assets in the consolidated balance sheet. Additionally, for the six months ended June 30, 2012, a $7.4 million

6

loss on reinsurance was reclassified from other income (expense), net to gain (loss) on reinsurance transaction in the consolidated statements of operations and comprehensive income (loss), with corresponding changes made to operating cash flows in the consolidated statements of cash flows.

2. Summary of Significant Accounting Policies

Inventory

Inventory is stated at cost, unless the carrying amount is determined not to be recoverable, in which case inventory is adjusted to fair value or fair value less cost to sell. Quarterly, we review our real estate assets at each community for indicators of impairment. Real estate assets include projects actively selling, under development, held for future development or held for sale. Indicators of impairment include, but are not limited to, significant decreases in local housing market values and prices of comparable homes, significant decreases in gross margins and sales absorption rates, costs in excess of budget, and actual or projected cash flow losses.

If there are indications of impairment, we analyze the budgets and cash flows of our real estate assets and compare the estimated remaining undiscounted future cash flows of the community to the asset’s carrying value. If the undiscounted cash flows exceed the asset’s carrying value, no impairment adjustment is required. If the undiscounted cash flows are less than the asset’s carrying value, the asset is deemed impaired and adjusted to fair value. For land held for sale, if the fair value less costs to sell exceed the asset’s carrying value, no impairment adjustment in required. These impairment evaluations require use of estimates and assumptions regarding future conditions, including timing and amounts of development costs and sales prices of real estate assets, to determine if estimated future undiscounted cash flows will be sufficient to recover the asset’s carrying value.

When estimating undiscounted cash flows of a community, various assumptions are made, including: (i) the number of homes available and the expected prices and incentives offered by us or builders in other communities, and future price adjustments based on market and economic trends; (ii) expected sales pace and cancellation rates based on local housing market conditions, competition and historical trends; (iii) costs expended to date and expected to be incurred, including, but not limited to, land and land development, home construction, interest, indirect construction and overhead, and selling and marketing costs; (iv) alternative product offerings that may be offered that could have an impact on sales pace, price and/or building costs; and (v) alternative uses for the property.

Many assumptions are interdependent and a change in one may require a corresponding change to other assumptions. For example, increasing or decreasing sales rates has a direct impact on the estimated price of a home, the level of time sensitive costs (such as indirect construction, overhead and interest), and selling and marketing costs (such as model maintenance and advertising). Depending on the underlying objective of the community, assumptions could have a significant impact on the projected cash flows. For example, if our objective is to preserve operating margins, our cash flows will be different than if the objective is to increase sales. These objectives may vary significantly by community over time.

If assets are considered impaired, the impairment charge is the amount the asset’s carrying value exceeds its fair value. Fair value is determined based on estimated future cash flows discounted for inherent risks associated with real estate assets or other valuation techniques. These discounted cash flows are impacted by expected risk based on estimated land development, construction and delivery timelines; market risk of price erosion; uncertainty of development or construction cost increases; and other risks specific to the asset or market conditions where the asset is located when the assessment is made. These factors are specific to each community and may vary among communities. The discount rate used in determining each asset’s fair value depends on the community’s projected life and development stage.

Completed Operations Claim Costs

We maintain, and require our subcontractors to maintain, general liability insurance which includes coverage for completed operations losses and damages. Most subcontractors carry this insurance through our “rolling wrap-up” insurance program, where our risks and risks of participating subcontractors are insured through a common set of master policies.

Completed operations claims reserves primarily represent claims for property damage to completed homes and projects outside of our one-to-two year warranty period. Specific terms and conditions of completed operations warranties vary depending on the market in which homes are closed and can range up to 12 years from the closing of a home.

We record expenses and liabilities for estimated costs of potential completed operations claims based upon aggregated loss experience, which includes an estimate of completed operations claims incurred but not reported and is actuarially estimated using individual case-basis valuations and statistical analysis. These estimates make up our entire reserve and are subject to a high degree of variability due to uncertainties such as trends in completed operations claims related to our markets and products built, changes in claims reporting and settlement patterns, third party recoveries, insurance industry practices, insurance regulations and legal precedent. Because state regulations vary, completed operations claims are reported and resolved over an extended period, sometimes exceeding 12 years. As a result, actual costs may differ significantly from estimates.

7

The actuarial analyses that determine these incurred but not reported claims consider various factors, including frequency and severity of losses, which are based on our historical claims experience supplemented by industry data. The actuarial analyses of these claims and reserves also consider historical third party recovery rates and claims management expenses. Due to inherent uncertainties related to these factors, periodic changes to such factors based on updated relevant information could result in actual costs differing significantly from estimates.

In accordance with our underlying completed operations insurance policies, these completed operations claims costs are recoverable from our subcontractors or insurance carriers. Completed operations claims through July 31, 2009 are insured or reinsured with third-party insurance carriers and completed operations claims commencing August 1, 2009 are insured with third-party and affiliate insurance carriers.

Revenues

In accordance with Accounting Standards Codification (“ASC”) 360, revenues from housing and other real estate sales are recognized when the respective units close. Housing and other real estate sales close when all conditions of escrow are met, including delivery of the home or other real estate asset, title passage, appropriate consideration is received or collection of associated receivables, if any, is reasonably assured and when we have no other continuing involvement in the asset. Sales incentives are a reduction of revenues when the respective unit closes.

Income Taxes

SHLP is treated as a partnership for income tax purposes. As a limited partnership, SHLP is subject to certain minimal state taxes and fees; however, taxes on income realized by SHLP are generally the obligation of the Partners and their owners.

SHI and PIC are C corporations. Federal and state income taxes are provided for these entities in accordance with ASC 740. The provision for, or benefit from, income taxes is calculated using the asset and liability method, whereby deferred tax assets and liabilities are recorded based on the difference between the financial statement and tax basis of assets and liabilities using enacted tax rates in effect the year in which differences are expected to reverse.

Deferred tax assets are evaluated to determine whether a valuation allowance should be established based on our determination of whether it is more likely than not some or all of the deferred tax asset will not be realized. The ultimate realization of deferred tax assets depends primarily on generation of future taxable income during periods in which those temporary differences become deductible. Judgment is required in determining future tax consequences of events that have been recognized in the consolidated financial statements and/or tax returns. Differences between anticipated and actual outcomes of these future tax consequences could have a material impact on the consolidated financial position or results of operations.

New Accounting Pronouncements

In February 2013, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update No. 2013-02, Reporting of Amounts Reclassified Out of Accumulated Other Comprehensive Income (“ASU 2013-02”), which requires an entity to provide information about the amounts reclassified out of accumulated other comprehensive income by component. In addition, ASU 2013-02 requires an entity to present, either on the face of the income statement or in the notes to financial statements, significant amounts reclassified out of accumulated other comprehensive income by the respective line items of net income but only if the amount reclassified is required under GAAP to be reclassified to net income in its entirety in the same reporting period. For other amounts, an entity is required to cross-reference to other disclosures required under GAAP that provide additional detail about those amounts. The amendments in ASU 2013-02 do not change the current requirements for reporting net income or other comprehensive income in financial statements. For public entities, the amendments in ASU 2013-02 are effective prospectively for reporting periods beginning after December 15, 2012. The Company adopted ASU 2013-02 effective January 1, 2013, which concerned disclosure requirements only and did not impact our consolidated financial statements.

3. Restricted Cash

At December 31, 2012, restricted cash included cash used as collateral for potential obligations paid by the Company’s bank, customer deposits temporarily restricted in accordance with regulatory requirements, and cash used in lieu of bonds. In January 2013, $10.0 million of restricted cash used as collateral for potential obligations paid by the Company’s bank was released to the Company. At June 30, 2013 and December 31, 2012, restricted cash was $2.3 million and $13.0 million, respectively.

8

4. Fair Value Disclosures

At June 30, 2013 and December 31, 2012, as required by ASC 825, the following presents net book values and estimated fair values of notes payable.

	June 30, 2013				December 31, 2012
	Net Book Value		Estimated Fair Value		Net Book Value		Estimated Fair Value
	(In thousands)
$750,000 8.625% senior secured notes due May 2019	$	750,000	$	821,250	$	750,000	$	828,750
Secured promissory notes	$	9,740	$	9,740	$	8,209	$	8,209

The $750.0 million 8.625% senior secured notes due May 2019 (the “Secured Notes”) are level 2 financial instruments in which fair value was based on quoted market prices in an inactive market at the end of the period.

Other financial instruments consist primarily of cash and cash equivalents, restricted cash, accounts and other receivables, accounts payable and other liabilities and secured promissory notes. Book values of these financial instruments approximate fair value due to their relatively short-term nature. In addition, included in other assets are available-for-sale marketable securities, which are recorded at fair value.

5. Accounts and Other Receivables, net

At June 30, 2013 and December 31, 2012, accounts and other receivables, net were as follows:

	June 30, 2013			December 31, 2012
	(In thousands)
Insurance receivables	$	131,248		$	131,519
Escrow receivables		5,442			576
Notes receivables		3,181			3,662
Development receivables		3,095			3,325
Other receivables		4,973			4,147
Reserve		(1,921	)		(1,940	)
Total accounts and other receivables, net	$	146,018		$	141,289

Insurance receivables are from insurance carriers for reimbursable claims pertaining to resultant damage from construction defects on closed homes (see Note 11). Closed homes for policy years August 1, 2001 to July 31, 2009 are insured or reinsured with third-party insurance carriers, and closed homes for policy years commencing August 1, 2009 are insured with third-party and affiliate insurance carriers. At June 30, 2013 and December 31, 2012, insurance receivables from affiliate insurance carriers were $34.4 million and $30.2 million, respectively.

We reserve for uncollectible receivables that are specifically identified.

9

6. Inventory

At June 30, 2013 and December 31, 2012, inventory was as follows:

	June 30, 2013		December 31, 2012
	(In thousands)
Model homes	$	71,572	$	69,210
Completed homes for sale		21,496		14,015
Homes under construction		263,912		189,929
Lots available for construction		284,196		249,463
Land under development		189,261		175,922
Land held for future development		79,656		60,466
Land held for sale, including water system connection rights		73,024		71,381
Land deposits and preacquisition costs		10,986		7,267
Total inventory	$	994,103	$	837,653

Impairment

Inventory, including the captions above, are stated at cost, unless the carrying amount is determined to be unrecoverable, in which case inventories are adjusted to fair value (see Note 2).

For the six months ended June 30, 2013 and 2012, there were no inventory impairment charges.

Interest Capitalization

Interest is capitalized on inventory and investments in unconsolidated joint ventures during development and other qualifying activities. Interest capitalized as a cost of inventory is included in cost of sales when related units close. Interest capitalized as part of investments in unconsolidated joint ventures is included in equity in income (loss) from unconsolidated joint ventures when related units in the joint ventures close.

For the three and six months ended June 30, 2013 and 2012, interest incurred, capitalized and expensed was as follows:

	Three Months Ended June 30,						Six Months Ended June 30,
	2013			2012			2013			2012
	(In thousands)
Interest incurred	$	16,774		$	16,660		$	33,542		$	33,320
Interest expensed (a)	$	1,397		$	5,909		$	4,830		$	12,197
Interest capitalized as a cost of inventory during the period	$	14,871		$	10,550		$	27,949		$	20,745
Interest previously capitalized as a cost of inventory, included in cost of sales	$	(15,393	)	$	(10,074	)	$	(24,904	)	$	(17,858	)
Interest capitalized in ending inventory (b)	$	105,894		$	114,323		$	105,894		$	114,323
Interest capitalized as a cost of investments in unconsolidated joint ventures during the period	$	506		$	201		$	763		$	378
Interest previously capitalized as a cost of investments in unconsolidated joint ventures, included in equity in income (loss) from unconsolidated joint ventures	$	(328	)	$	(201	)	$	(585	)	$	(378	)
Interest capitalized in ending investments in unconsolidated joint ventures	$	178		$	0		$	178		$	0

(a) For the three and six months ended June 30, 2013 and 2012, assets qualifying for interest capitalization were less than debt; therefore, non-qualifying interest was expensed.

(b) Inventory impairment charges were recorded against total inventory of the respective community. Capitalized interest reflects the gross amount of capitalized interest as impairment charges recognized were generally not allocated to specific components of inventory.

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7. Investments in Joint Ventures

Unconsolidated joint ventures, which we do not control but have significant influence through ownership interests generally up to 50%, are accounted for using the equity method of accounting. These joint ventures are generally involved in real property development. Earnings and losses are allocated in accordance with terms of joint venture agreements.

Losses and distributions from joint ventures in excess of the carrying amount of our investment (“Deficit Distributions”) are included in other liabilities. We record Deficit Distributions since we are liable for this deficit to respective joint ventures. Deficit Distributions are offset by future earnings of, or future contributions to, joint ventures. At June 30, 2013 and December 31, 2012, Deficit Distributions were $0.5 million and $0.7 million, respectively.

For the three and six months ended June 30, 2013 and 2012, there were no impairment charges on investments in unconsolidated joint ventures.

At June 30, 2013 and December 31, 2012, total unconsolidated joint ventures’ notes payable were as follows:

	June 30, 2013		December 31, 2012
	(In thousands)
Bank and seller notes payable:
Guaranteed (subject to remargin obligations)	$	49,453	$	45,610
Non-guaranteed		10,936		22,894
Total bank and seller notes payable (a)		60,389		68,504
Partner notes payable:
Unsecured (b)		5,296		5,296
Total unconsolidated joint venture notes payable	$	65,685	$	73,800
Other unconsolidated joint venture notes payable (c)	$	43,002	$	57,839

(a) All bank seller notes were secured by real property.

(b) No guarantees were provided on partner notes payable.

(c) We have an indirect effective ownership in two joint ventures of 12.3% and .0003%, respectively, that had bank notes payable secured by real property, which we have not guaranteed.

At June 30, 2013 and December 31, 2012, remargin obligations and guarantees provided on debt of our unconsolidated joint ventures were on a joint and/or several basis and include, but are not limited to, project completion, interest and carry, and loan-to-value maintenance guarantees. At June 30, 2013 and December 31, 2012, we had an indemnification agreement from our joint venture partner for 90% of one secured loan balance, which was zero and zero, respectively. However, we cannot provide assurance we could collect under this indemnity agreement. In addition, for another joint venture, we have a remargin obligation that is limited to the lesser of 50% of the outstanding balances or $35.0 million in total for the joint venture loans, which outstanding loan balances were $49.4 million and $45.6 million at June 30, 2013 and December 31, 2012, respectively. Consequently, our maximum remargin obligation was $24.7 million and $22.8 million at June 30, 2013 and December 31, 2012, respectively. We also have an indemnification agreement from our joint venture partner under which we could potentially recover a portion of any remargin payments we made to the bank. However, we cannot provide assurance we could collect under this indemnity agreement. No liabilities were recorded for these guarantees at June 30, 2013 and December 31, 2012, as the fair value of the secured real estate assets exceeded the outstanding notes payable.

Our ability to make joint venture and other restricted payments and investments is governed by the Indenture governing the Secured Notes (the “Indenture”). We are permitted to make otherwise restricted payments under (i) a $70.0 million revolving basket available solely for joint venture investments and (ii) a broader restricted payment basket available as long as our Consolidated Fixed Charge Coverage Ratio (as defined in the Indenture), is at least 2.0 to 1.0. The aggregate amount of the restricted payments made under this broader restricted payment basket cannot exceed 50% of our cumulative Consolidated Net Income (as defined in the Indenture), generated subsequent to the issuance of the Secured Notes plus the aggregate net cash proceeds of, and the fair market value of, any property or other asset received by the Company as a capital contribution or upon the issuance of indebtedness or certain securities by the Company since the issuance of the Secured Notes, plus, to the extent not included in Consolidated Net Income, certain amounts received in connection with dispositions, distributions or repayments of restricted investments, plus the value of any unrestricted subsidiary which is redesignated as a restricted subsidiary under the Indenture. We have a number of joint ventures which have used, and are expected to use, capacity under these restricted payment baskets. During the second quarter of 2013, we entered into a joint venture in Southern California and committed to contribute up to $45.0 million of capital. At June 30, 2013 we made aggregate capital contributions of $9.5 million to this joint venture.

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8. Variable Interest Entities

ASC 810 requires a VIE to be consolidated in financial statements of a company if it is the primary beneficiary of the VIE. Accordingly, the primary beneficiary has the power to direct activities of the VIE that most significantly impact the VIE’s economic performance, and the obligation to absorb its losses or the right to receive its benefits. All VIEs at June 30, 2013 and December 31, 2012 were evaluated to determine the primary beneficiary.

Joint Ventures

We enter into joint ventures for homebuilding and land development activities. Investments in these joint ventures may create a variable interest in a VIE, depending on contractual terms of the venture. We analyze our joint ventures in accordance with ASC 810 to determine whether they are VIEs and, if so, whether we are the primary beneficiary. At June 30, 2013 and December 31, 2012, these joint ventures were not consolidated in our consolidated financial statements since they were not VIEs, or if they were VIEs, we were not the primary beneficiary.

At June 30, 2013 and December 31, 2012, we had a variable interest in an unconsolidated joint venture determined to be a VIE. The joint venture, RRWS, LLC (“RRWS”), was formed in December 2012 and is owned 50% by the Company and 50% by a third-party real estate developer (the “Partner”). Several acquisition, development and construction loans were entered into by RRWS, each with two-year terms and options to extend for one year, subject to certain conditions. The Company and Partner each executed limited completion, interest and carry guarantees and environmental indemnities on a joint and several basis. The Company also has a maximum aggregate liability under the re-margin arrangements of the lesser of 50% of the outstanding balances or $35.0 million in total. The obligations of the Company and Partner under the re-margin arrangements are limited during the first two years of the loans. In addition to re-margin arrangements, the Partner, and several of its principals, executed repayment guarantees with no limit on their liability. At June 30, 2013 and December 31, 2012, outstanding bank notes payable were $49.5 million and $45.6 million, respectively, of which the Company has a maximum remargin obligation of $24.7 million and $22.8 million, respectively. The Company also has an indemnification agreement from the Partner, under which the Company could potentially recover a portion of any remargin payments made to the bank. However, the Company cannot provide assurance it could collect under this indemnity agreement.

In accordance with ASC 810, we determined we were not the primary beneficiary of RRWS because we did not have the power to direct activities that most significantly impact the economic performance of RRWS, such as determining or limiting the scope or purpose of the entity, selling or transferring property owned or controlled by the entity, and arranging financing for the entity.

Land Option Contracts

We enter into land option contracts to procure land for home construction. Use of land option and similar contracts allows us to reduce market risks associated with direct land ownership and development, reduces capital and financial commitments, including interest and other carrying costs, and minimizes land inventory. Under these contracts, we pay a specified deposit for the right to purchase land, usually at a predetermined price. Under the requirements of ASC 810, certain contracts may create a variable interest with the land seller.

In accordance with ASC 810, we analyzed our land option and similar contracts to determine if respective land sellers are VIEs and, if so, if we are the primary beneficiary. Although we do not have legal title to the optioned land, ASC 810 requires us to consolidate a VIE if we are the primary beneficiary. At June 30, 2013 and December 31, 2012, we determined we were not the primary beneficiary of such VIEs because we did not have the power to direct activities of the VIE that most significantly impact the VIE’s economic performance, such as selling, transferring or developing land owned by the VIE.

At June 30, 2013, we had $2.0 million of refundable and non-refundable cash deposits associated with land option contracts with unconsolidated VIEs, having a $62.2 million remaining purchase price. We also had $4.7 million of refundable and non-refundable cash deposits associated with land option contracts that were not with VIEs, having a $293.2 million remaining purchase price.

Our loss exposure on land option contracts consists of non-refundable deposits, which were $5.8 million and $5.0 million at June 30, 2013 and December 31, 2012, respectively, and capitalized preacquisition costs of $4.2 million and $2.0 million, respectively, which were included in inventory in the consolidated balance sheets.

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9. Other Assets, Net

At June 30, 2013 and December 31, 2012, other assets were as follows:

	June 30, 2013		December 31, 2012
	(In thousands)
Income tax receivable	$	2,991	$	3,497
Investments		9,399		12,078
Property and equipment, net		2,142		2,237
Prepaid professional fees		3,181		3,451
Prepaid loan fees		6,164		6,688
Prepaid bank fees		380		403
Deposits in lieu of bonds and letters of credit		11,427		7,110
Prepaid insurance		481		2,148
Other		1,056		1,515
Total other assets, net	$	37,221	$	39,127

Investments

Investments consist of available-for-sale securities, primarily private debt obligations, and are measured at fair value, which is based on quoted market prices or cash flow models. Accordingly, unrealized gains and temporary losses on investments, net of tax, are reported as accumulated other comprehensive income (loss). Realized gains and losses are determined using the specific identification method.

For the three and six months ended June 30, 2013, and for the three and six months ended June 30, 2012, there were no realized gains on available-for-sale securities.

Prepaid Professional and Loan Fees

In accordance with ASC 470, these amounts are debt issuance costs and are amortized as interest over the term of the related debt.

Deposits in Lieu of Bonds and Letters of Credit

We are required to make cash deposits in lieu of bonds with various agencies for some of our homebuilding projects. These deposits may be returned as the collateral requirements decrease or they are replaced with new bonds.

In June 2010, due to maturity of an unsecured bank line of credit, certain letters of credit were presented for payment by the holders and the proceeds therefrom were recorded as deposits in lieu of letters of credit. These deposits may be returned as collateral requirements decrease or they are replaced with new letters of credit.

10. Notes Payable

At June 30, 2013 and December 31, 2012, notes payable were as follows:

	June 30, 2013		December 31, 2012
	(In thousands)
$750.0 million 8.625% senior secured notes, due May 2019	$	750,000	$	750,000
Promissory notes, interest ranging from 1% to 6%, maturing through 2014, secured by deeds of trust on inventory		9,740		8,209
Total notes payable	$	759,740	$	758,209

On May 10, 2011, our Secured Notes were issued at $750.0 million, bear interest at 8.625% paid semi-annually on May 15 and November 15, and do not require principal payments until maturity on May 15, 2019. The Secured Notes are redeemable, in whole or in part, at the Company’s option beginning on May 15, 2015 at a price of 104.313 per bond, reducing to 102.156 on May 15, 2016 and are redeemable at par beginning on May 15, 2017. At June 30, 2013 and December 31, 2012, accrued interest was $8.1 million and $8.1 million, respectively.

The Indenture governing the Secured Notes contains covenants that limit, among other things, our ability to incur additional indebtedness (including the issuance of certain preferred stock), pay dividends and distributions on our equity interests, repurchase our

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equity interests, retire unsecured or subordinated notes more than one year prior to their maturity, make investments in subsidiaries and joint ventures that are not restricted subsidiaries that guarantee the Secured Notes, sell certain assets, incur liens, merge with or into other companies, expand unto unrelated businesses, and enter in certain transaction with our affiliates. At June 30, 2013 and December 31, 2012, we were in compliance with these covenants.

11. Other Liabilities

At June 30, 2013 and December 31, 2012, other liabilities were as follows:

	June 30, 2013		December 31, 2012
	(In thousands)
Completed operations	$	131,248	$	131,519
Warranty reserves		18,521		17,749
Deferred revenue/gain		31,943		30,902
Provisions for closed homes/communities		13,149		8,135
Deposits (primarily homebuyer)		20,412		15,684
Legal reserves		4,082		4,916
Accrued interest		8,086		8,086
Accrued compensation and benefits		10,990		4,697
Distributions payable		2,712		2,892
Deficit Distributions (see Note 7)		504		716
Other		5,243		7,922
Total other liabilities	$	246,890	$	233,218

Completed Operations

Reserves for completed operations primarily represent claims for property damage to completed homes and projects outside of our one-to-two year warranty period. Specific terms and conditions of completed operations claims vary depending on the market in which homes close and can range to 12 years from the close of a home. Expenses and liabilities are recorded for potential completed operations claims based upon aggregated loss experience, which includes an estimate of completed operations claims incurred but not reported, and is actuarially estimated using individual case-based valuations and statistical analysis. For policy years from August 1, 2001 through the present, completed operations claims are insured or reinsured through a combination of third-party and affiliate insurance carriers.

For the three and six months ended June 30, 2013 and 2012, changes in completed operations reserves were as follows:

	Three Months Ended June 30,						Six Months Ended June 30,
	2013			2012			2013			2012
	(In thousands)
Insured completed operations
Balance, beginning of the period	$	131,250		$	103,980		$	131,519		$	109,390
Reserves provided (relieved)		1,096			17,517			3,068			18,908
Claims paid		(1,098	)		(4,368	)		(3,339	)		(11,169	)
Balance, end of the period	$	131,248		$	117,129		$	131,248		$	117,129

Reserves provided (relieved) for completed operations are generally fully offset by changes in insurance receivables (see Note 5), however, premiums paid for completed operations are included in cost of sales. For actual completed operations claims and estimates of completed operations claims incurred but not reported, we estimate and record insurance receivables under applicable policies when recovery is probable. At June 30, 2013 and December 31, 2012, insurance receivables were $131.2 million and $131.5 million, respectively.

Expenses, liabilities and receivables related to these claims are subject to a high degree of variability due to uncertainties such as trends in completed operations claims related to our markets and products built, claim settlement patterns and insurance industry practices. Although considerable variability is inherent in such estimates, we believe reserves for completed operations claims are adequate.

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Warranty Reserve

We offer a limited one or two year warranty for our homes. Specific terms and conditions of these warranties vary depending on the market in which homes close. We estimate warranty costs to be incurred and record a liability and an expense to cost of sales when home revenue is recognized. We also include in our warranty reserve the uncovered losses related to completed operations coverage, which approximates 12.5% of the total property damage estimate. Factors affecting warranty liability include number of homes closed, historical and anticipated warranty claims, and cost per claim history and trends. We periodically assess adequacy of our warranty liabilities and adjust amounts as necessary.

For the three and six months ended June 30, 2013 and 2012, changes in warranty liability were as follows:

	Three Months Ended June 30,						Six Months Ended June 30,
	2013			2012			2013			2012
	(In thousands)
Balance, beginning of the period	$	17,927		$	16,660		$	17,749		$	17,358
Provision for warranties		2,641			1,668			4,386			3,143
Warranty costs paid		(2,047	)		(1,982	)		(3,614	)		(4,155	)
Balance, end of the period	$	18,521		$	16,346		$	18,521		$	16,346

Deferred Revenue/Gain

Deferred revenue/gain represents deferred profit on transactions in which an insufficient down payment was received or a future performance, passage of time or event is required. At June 30, 2013 and December 31, 2012, deferred revenue/gain primarily represents the PIC Transaction described below.

Completed operations claims were insured through PIC for policy years August 1, 2001 to July 31, 2007. In December 2009, PIC entered into a series of novation and reinsurance transactions (the “PIC Transaction”).

First, PIC entered into a novation agreement with JFSCI to novate its deductible reimbursement obligations related to its workers’ compensation and general liability risks at September 30, 2009 for policy years August 1, 2001 to July 31, 2007, and its completed operations risks from August 1, 2005 to July 31, 2007. Concurrently, JFSCI entered into insurance arrangements with unrelated third party insurance carriers to insure these policies. As a result of this novation, a $19.2 million gain was originally deferred and will be recognized as income when related claims are paid. In addition, the deferred gain may be adjusted either up or down as changes to the underlying insurance reserves occur based on actuarial estimates. An increase to the deferred gain will result in a current period charge while a decrease in the deferred gain will result in current period income. At June 30, 2013 and December 31, 2012, the unamortized deferred gain was $19.7 million and $20.3 million, respectively. For the three and six months ended June 30, 2013, we recognized $0.4 million and $0.6 million, respectively, of this deferral as income, which was included in other income (expense), net and represented the impact of a decrease in the deferred gain due to actuarial estimates and income recognition on claims paid. For the three and six months ended June 30, 2012, we recognized $(2.3) million and $(1.7) million, respectively, of this deferral as expense, which was included in other income (expense), net and represented the impact of an increase in the deferred gain due to actuarial estimates, partially offset by income recognition on claims paid.

Second, PIC entered into reinsurance agreements with various unrelated reinsurers that reinsured 100% of the completed operations risks from August 1, 2001 to July 31, 2005. As a result of the reinsurance, a $15.6 million gain was originally deferred and will be recognized as income when the related claims are paid. In addition, the deferred gain can be increased or decreased based on changes in actuarial estimates. Any changes to the deferred gain will be recognized as a current period gain or charge. At June 30, 2013 and December 31, 2012, the unamortized deferred gain was $9.1 million and $8.4 million, respectively. For the three and six months ended June 30, 2013, we recognized $(1.2) million and $(0.7) million, respectively, of this deferral as expense, which was included in other income (expense), net. For the three and six months ended June 30, 2012, we recognized $(5.9) million and $(5.7) million, respectively, of this deferral as expense, which was included in other income (expense), net. The expense for the three and six months ended June 30, 2013 and 2012 represented the impact of an increase in the deferred gain due to actuarial estimates, partially offset by income recognition on claims paid.

As a result of the PIC Transaction, if the estimated ultimate loss to be paid under these policies exceeds the policy limits under the novation and reinsurance transactions, the shortfall is expected to be funded by JFSCI for the policies novated to JFSCI and by PIC for the policies they reinsured.

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Distributions Payable

In December 2011, our consolidated joint venture, Vistancia, LLC, sold its remaining interest in an unconsolidated joint venture (the “Vistancia Sale”). As a result of the Vistancia Sale, no other assets of Vistancia, LLC economically benefit the former non-controlling member of Vistancia, LLC and the Company recorded the remaining $3.3 million distribution payable to this member, which is paid $0.1 million quarterly. At June 30, 2013 and December 31, 2012, the remaining distribution payable was $2.7 million and $2.9 million, respectively.

12. Related Party Transactions

Related Party Receivables and Payables

At June 30, 2013 and December 31, 2012, receivables from related parties, net were as follows:

	June 30, 2013			December 31, 2012
	(In thousands)
Note receivable from JFSCI	$	24,648		$	24,498
Note receivable from unconsolidated joint venture		279			268
Notes receivable from related parties		19,385			19,940
Reserves for note receivables from related parties		(12,803	)		(12,766	)
Receivables from related parties		2,975			2,088
Total receivables from related parties, net	$	34,484		$	34,028

In May 2011, concurrent with issuance of the Secured Notes, the previous unsecured receivable from JFSCI was partially paid down and the balance converted to a $38.9 million unsecured term note receivable, bearing 4% interest, payable in equal quarterly installments and maturing May 15, 2019. In 2013 and 2012, JFSCI elected to make prepayments, including accrued interest, of $1.8 million and $1.9 million, respectively, and applied these prepayments to future installments such that JFSCI would not be required to make a payment until November 2014. At June 30, 2013 and December 31, 2012, the note receivable from JFSCI, including accrued interest, was $24.6 million and $24.5 million, respectively. Quarterly, we evaluate collectability of the note receivable from JFSCI, which includes consideration of JFSCI’s payment history, operating performance and future payment requirements under the note. Based on these criteria, and as JFSCI applied prepayments under the note to defer future installments until August 2014, we do not anticipate collection risks on the note receivable from JFSCI.

At June 30, 2013 and December 31, 2012, note receivable from unconsolidated joint venture, including accrued interest, was $0.3 million and $0.3 million, respectively. The note receivable bears interest at 8% and matures in 2020. Further, this note earns additional interest to achieve a 17.5% internal rate of return, subject to available cash flows of the joint venture, and can be repaid prior to 2020. Quarterly, we evaluate collectability of this note, which includes consideration of prior payment history, operating performance and future payment requirements under the applicable note. Based on these criteria, we do not anticipate collection risks on this note.

At June 30, 2013 and December 31, 2012, notes receivable from other related parties, including accrued interest, were $6.6 million and $7.2 million, respectively, net of related reserves of $12.8 million and $12.8 million, respectively. These notes are unsecured and mature from August 2016 through April 2021. At June 30, 2013 and December 31, 2012, these notes bore interest ranging from Prime less .75% (2.5%) to 4.25%. Quarterly, we evaluate collectability of these notes which includes consideration of prior payment history, operating performance and future payment requirements under the applicable notes. At December 31, 2009, based on these criteria, two notes receivable were deemed uncollectible and fully reserved. We do not anticipate collection risks on the other notes.

The Company, entities under common control and certain unconsolidated joint ventures also engage in transactions on behalf of the other, such as payment of invoices and payroll. The amounts resulting from these transactions are recorded in receivables from related parties or payables to related parties, are non-interest bearing, due on demand and generally paid monthly. At June 30, 2013 and December 31, 2012, these receivables were $3.0 million and $2.1 million, respectively, and these payables were $0.1 million and $0.1 million, respectively.

Real Property and Joint Venture Transactions

In May 2012, for a nominal amount, SHLP purchased the non-controlling member’s entire 16.7% interest in Vistancia, LLC, a consolidated joint venture. However, the distribution payable remained (see Note 11).

In March 2012, SHLP’s entire 58% interest in Shea Colorado, LLC (“SCLLC”), a consolidated joint venture with Shea Properties II, LLC, a related party and the non-controlling member, was redeemed by SCLLC. In valuing its 58% interest in SCLLC, and to ensure receipt of net assets of equal value to its ownership interest, SHLP used third-party real estate appraisals. The estimated fair value of the assets received by SHLP was $30.8 million. However, as the non-controlling member is a related party under common control, the assets and liabilities received by SHLP were recorded at net book value and the difference in SHLP’s investment in SCLLC and the net book value of the assets and liabilities received was recorded as a reduction to SHLP’s equity.

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As consideration for the redemption, SCLLC distributed assets and liabilities to SHLP having a net book value of $24.0 million, including $2.2 million cash, a $3.0 million secured note receivable, $20.0 million of inventory and $1.2 million of other liabilities. As a result of this redemption, SCLLC is no longer included in these consolidated financial statements effective March 31, 2012. This transaction resulted in a net reduction of $41.8 million in assets and $2.0 million in liabilities, and a $39.8 million reduction in total equity, of which $11.6 million was attributable to SHLP and $28.2 million was attributable to non-controlling interests.

At June 30, 2013 and 2012, we were the managing member for nine and seven, respectively, unconsolidated joint ventures and received a management fee from these joint ventures as reimbursement for direct and overhead costs incurred on behalf of the joint ventures and other associated costs. Fees from joint ventures representing reimbursement of our costs are recorded as a reduction to general and administrative expense. Fees from joint ventures representing amounts in excess of our costs are recorded as revenues. For the three and six months ended June 30, 2013, $2.0 million and $3.6 million of management fees, respectively, were offset against general and administrative expenses, and $0.1 million and $0.1 million of management fees, respectively, were included in revenues. For the three and six months ended June 30, 2012, $0.7 million and $1.7 million of management fees, respectively, were offset against general and administrative expenses, and $0.1 million and $0.2 million of management fees, respectively, were included in revenues.

Other Related Party Transactions

JFSCI provides corporate services to us, including management, legal, tax, information technology, risk management, facilities, accounting, treasury and human resources. For the three and six months ended June 30, 2013, general and administrative expenses included $5.9 million and $11.1 million, respectively, for corporate services provided by JFSCI. For the three and six months ended June 30, 2012, general and administrative expenses included $4.5 million and $8.4 million, respectively, for corporate services provided by JFSCI.

We lease office space from related parties under non-cancelable operating leases. Leases are for five to ten year terms and generally provide for five year renewal options. For the three and six months ended June 30, 2013, related-party rental expense was $0.1 million and $0.1 million, respectively. For the three and six months ended June 30, 2012, related-party rental expense was $0.1 million and $0.3 million, respectively.

We obtain workers compensation insurance, commercial general liability insurance and insurance for completed operations losses and damages with respect to our homebuilding operations from affiliate and unrelated third party insurance providers. These policies are purchased by affiliate entities and we pay premiums to these affiliates for the coverage provided by these third party and affiliate insurance providers. Policies covering these risks are written at various coverage levels but include a large self-insured retention or deductible. We have retention liability insurance from affiliated entities to insure these large retentions or deductibles. For the three and six months ended June 30, 2013, amounts paid to affiliates for this retention insurance coverage were $3.9 million and $7.8 million, respectively. For the three and six months ended June 30, 2012, amounts paid to affiliates for this retention insurance coverage were $3.2 million and $5.9 million, respectively.

13. Income Taxes

For the six months ended June 30, 2013, income tax benefit (expense) was $(0.4) million. At June 30, 2013, the net deferred tax asset was $31.5 million, which primarily related to available loss carryforwards, inventory and investment impairments, and housing inventory and land basis differences. The $31.5 million deferred tax asset valuation allowance fully reserves the net deferred tax asset due to inherent uncertainty of future income as the housing recovery is in its early stages. We will continue to monitor industry and economic conditions, and our ability to generate taxable income based on our business plan and available tax planning strategies, which would allow us to utilize the tax benefits of the net deferred tax assets and thereby allow us to reverse all, or a portion of, our valuation allowance.

In 2009, we filed a petition with the United States Tax Court (the “Tax Court”) regarding our position on the completed contract method of accounting for homebuilding activities by SHLP, SHI and subsidiaries. During 2010 and 2011, we engaged in formal and informal discovery with the IRS and the Tax Court heard trial testimony in July 2012 and ordered the Company and the IRS to exchange briefs, all of which have been filed. We expect the Tax Court to render its decision sometime during 2013 or 2014. We expect our position will prevail, and have accordingly, not recorded a liability for related taxes or interest for SHI and its subsidiaries. Furthermore, as a limited partnership, any income taxes, interest or penalties which may be imposed on SHLP are the responsibility of the Partners and are not reflected in the tax provision in these consolidated financial statements. However, if the Tax Court rules in favor of the IRS, which is reasonably possible, SHI could be obligated to pay the IRS and applicable state taxing authorities up to $64 million and, under the Tax Distribution Agreement, SHLP could be obligated to make a distribution to the Partners up to $107 million to fund their related payments to the IRS and the applicable state taxing authorities. However, the Indenture provides that the amount we may pay on behalf of SHI and distribute to the partners of SHLP for this matter may not exceed $70.0 million. Any potential shortfall would be absorbed by the Partners of SHLP (see Note 15).

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14. Owners’ Equity

Owners’ equity consists of partners’ preferred and common capital. Common capital is comprised of limited partners with a collective 78.38% ownership and a general partner with a 20.62% ownership. Preferred capital is comprised of limited partners with either series B (“Series B”) or series D (“Series D”) classification. Series B holders have no ownership interest but earn a preferred return at Prime less 2.05% per annum through December 31, 2012 (1.2% at December 31, 2012) on unreturned capital balances and Series D holders have a 1% ownership interest and earn a preferred return at 7% per annum through December 31, 2012 on unreturned preferred capital balances. In August 2013, the Agreement was amended and the rates on the Series B and Series D were changed, effective January 1, 2013. Series B earns a rate of 1.2% from January 1, 2013 to December 31, 2016, 2.25% from January 1, 2017 to December 31, 2020, and Prime less 2.05% from January 1, 2021 and thereafter on unreturned capital balances. Series D earns a rate of 2.0% from January 1, 2013 to December 31, 2016, 12.75% from January 1, 2017 to December 31, 2020, and 7.0% from January 1, 2021 and thereafter on unreturned capital balances. At June 30, 2013 and December 31, 2012, accumulated undistributed preferred returns for Series B holders were $21.7 million and $20.8 million, respectively. At June 30, 2013 and December 31, 2012, accumulated undistributed preferred returns for Series D holders were $54.7 million and $52.8 million, respectively.

Net income is allocated to Partners in a priority order that considers previously allocated net losses and preferred return considerations and, thereafter, in proportion to their respective ownership interests. Net loss is allocated in a priority order to Partners generally in proportion to their ownership interests and adjusted capital account balances, and, thereafter, to the general partner.

The general partner, in its sole discretion, may make additional capital contributions or accept additional capital contributions from the limited partners. Cash distributions are made to Partners in proportion to their unpaid preferred returns, unreturned capital and, thereafter, in proportion to their ownership interests. Distributions to Partners are made at the discretion of the general partner, including payment of personal income taxes related to the Company. In addition, distributions to Partners from other entities under control of Shea family members, such as JFSCI, can be used for payment of personal incomes taxes related to the Company and other uses.

15. Contingencies and Commitments

At June 30, 2013 and December 31, 2012, certain unrecorded contingent liabilities and commitments were as follows:

	June 30, 2013		December 31, 2012
	(In thousands)
Tax Court CCM case (capped at $70.0 million)	$	70,000	$	70,000
Remargin obligations and guarantees for unconsolidated joint ventures (see Note 7)		24,726		22,805
Outstanding letters of credit		457		4,216
Costs to complete on surety bonds for Company projects		94,672		85,490
Costs to complete on surety bonds for joint venture projects		27,659		30,804
Costs to complete on surety bonds for related party projects		2,274		2,311
Water system connection rights purchase obligation		33,615		33,615
Total unrecorded contingent liabilities and commitments	$	253,403	$	249,241

Legal Claims

Lawsuits, claims and proceedings have been and will likely be instituted or asserted against us in the normal course of business, including actions brought on behalf of various classes of claimants. We are also subject to local, state and federal laws and regulations related to land development activities, house construction standards, sales practices, employment practices and environmental protection. As a result, we are subject to periodic examinations or inquiry by agencies administering these laws and regulations.

We record a reserve for potential legal claims and regulatory matters when they are probable of occurring and a potential loss is reasonably estimable, and are based on specific facts and circumstances, and we revise these estimates when necessary. At June 30, 2013 and December 31, 2012, we had reserves of $4.1 million and $4.9 million, respectively, net of expected recoveries, relating to these claims and matters, and while their outcome cannot be predicted with certainty, we believe we have appropriately reserved for them. However, if the liability arising from their resolution exceeds their recorded reserves, we could incur additional charges that could be significant.

Due to the inherent difficulty of predicting outcomes of legal claims and related contingencies, we generally cannot predict their ultimate resolution, related timing or eventual loss. If our evaluations indicate loss contingencies that could be material are not probable, but are reasonably possible, we will disclose their nature with an estimate of possible range of losses or a statement that such loss is not reasonably estimable. At June 30, 2013, the range of reasonably possible losses in excess of amounts recorded was not material.

18

As described in Note 13, in 2009, we filed a petition with the Tax Court regarding our position on the completed contract method of accounting (“CCM”) for homebuilding activities. The Tax Court heard trial testimony in July 2012 and ordered the Company and the IRS to exchange briefs, all of which have been filed. We expect the Tax Court to render its decision sometime during 2013 or 2014. We expect our position will prevail, and accordingly, no liability for related taxes or interest has been recorded. However, if the Tax Court rules in favor of the IRS, which is reasonably possible, SHI could be obligated to pay the IRS and applicable state taxing authorities up to $64 million and SHLP could be obligated to make a distribution to the Partners up to $107 million to fund their related payments to the IRS and the applicable state taxing authorities.

Notwithstanding, the Indenture governing the Secured Notes restricts SHLP’s ability to make distributions to its partners pursuant to the Tax Distributions Agreement in excess of an amount specified by the indenture (such maximum amount of collective distributions referred to as the “Maximum CCM Payment”), unless SHLP receives a cash equity contribution from JFSCI for such excess. The initial Maximum CCM Payment is $70.0 million, which will be reduced by payments made by SHI in connection with any resolution of our dispute with the IRS regarding our use of CCM and payments made by SHLP on certain guarantee obligations described in the Indenture. SHLP and SHI expect to pay any CCM-related tax liability from existing cash, cash from operations and, to the extent SHLP is required by the Tax Distribution Agreement to pay amounts in excess of the Maximum CCM Payment, from cash equity contributions by JFSCI.

Letters of Credit, Surety Bonds and Project Obligations

On May 10, 2011, we entered into a $75.0 million letter of credit facility. At June 30, 2013 and December 31, 2012, outstanding letters of credit against the letter of credit facility were $0.5 million and $4.2 million, respectively.

We provide surety bonds that guarantee completion of certain infrastructure serving our homebuilding projects. At June 30, 2013, there were $94.7 million of costs to complete in connection with the $182.5 million of surety bonds that were issued. At December 31, 2012, there were $85.5 million of costs to complete in connection with the $186.0 million of surety bonds that were issued.

We also provided indemnification for bonds issued by certain unconsolidated joint ventures and other related party projects in which we have no ownership interest. At June 30, 2013, there were $27.7 million of costs to complete in connection with $64.5 million of surety bonds that were issued for unconsolidated joint venture projects, and $2.3 million of costs to complete in connection with $5.8 million of surety bonds that were issued for related party projects. At December 31, 2012, $30.8 million of costs to complete in connection with $71.6 million of surety bonds were issued for unconsolidated joint venture projects, and $2.3 million of costs to complete in connection with $6.1 million of surety bonds that were issued for related party projects.

Certain of our homebuilding projects utilize community facility district, metro-district and other local government bond financing programs to fund acquisition or construction of infrastructure improvements. Interest and principal on these bonds are typically paid from taxes and assessments levied on homeowners following the sale of new homes within the project. Occasionally, we enter into credit support arrangements requiring us to pay interest and principal on these bonds if the taxes and assessments levied on homeowners are insufficient to cover such obligations. Furthermore, reimbursement of these payments to us is dependent on the district or local government’s ability to generate sufficient tax and assessment revenues from the sale of new homes. At June 30, 2013 and December 31, 2012, in connection with a credit support arrangement, there was $6.0 million and $4.9 million, respectively, reimbursable to us from a metro-district in Colorado.

We also pay certain fees and costs associated with the construction of infrastructure improvements in homebuilding projects that utilize these district bond financing programs. These fees and costs are typically reimbursable to us from, and therefore dependent on, bond proceeds or taxes and assessments levied on homeowners. At June 30, 2013 and December 31, 2012, in connection with certain funding arrangements, there was $12.7 million and $16.3 million, respectively, reimbursable to us from certain metro-districts, including $11.4 million and $11.9 million, respectively, from a metro-district in Colorado.

Until bond proceeds or tax and assessment revenues are sufficient to cover our obligations and/or reimburse us, our responsibility to make interest and principal payments on these bonds or pay fees and costs associated with the construction of infrastructure improvements could be prolonged and significant.

As a condition of the Vistancia Sale, and the purchase of the non-controlling member’s remaining interest in Vistancia, LLC, the Company effectively remains a 10% guarantor on certain community facility district bond obligations to which the Company must meet a minimum calculated tangible net worth; otherwise, the Company is required to fund collateral to the bond issuer. At June 30, 2013 and December 31, 2012, the Company exceeded the minimum tangible net worth requirement.

In one consolidated homebuilding project, we have contractual obligations to purchase and receive water system connection rights which, at June 30, 2013 and December 31, 2012, had an estimated market value in excess of their contractual purchase price of $33.6 million. These water system connection rights are held and then transferred to homebuyers upon closing of their home or transferred upon sale of land to the respective buyer. These water system connection rights can also be sold or leased but generally only within the local jurisdiction.

19

16. Supplemental Disclosure to Consolidated Statements of Cash Flows

Supplemental disclosures to the consolidated statements of cash flows were as follows:

	Six Months Ended June 30,
	2013			2012
	(In thousands)
Supplemental disclosure of cash flow information
Income taxes paid (refunded)	$	66		$	(2,391	)
Interest paid, net of amounts capitalized	$	4,689		$	11,853
Supplemental disclosure of non-cash activities
Unrealized gain (loss) on available-for-sale investments, net	$	237		$	802
Reclassification of Deficit Distributions to (from) unconsolidated joint ventures from (to) other liabilities	$	(212	)	$	(82	)
Purchase of land in exchange for note payable	$	2,283		$	1,097
Elimination of joint venture inventory, receivables from related parties and other assets	$	0		$	(41,600	)
Elimination of joint venture note payable and other liabilities	$	0		$	(1,949	)
Redemption of Company’s interest in consolidated joint venture and elimination of non-controlling interest, less cash retained by non-controlling interest	$	0		$	(39,651	)

17. Segment Information

Our homebuilding business, which is responsible for most of our operating results, constructs and sells single-family attached and detached homes designed to appeal to first-time, move-up and active adult homebuyers. Our homebuilding business also provides management services to joint ventures and other related and unrelated parties. We manage each homebuilding community as an operating segment and have aggregated these communities into reportable segments based on geography as follows:

• Southern California, comprised of communities in Los Angeles, Ventura and Orange Counties, and the Inland Empire;

• San Diego, comprised of communities in San Diego County, California;

• Northern California, comprised of communities in northern and central California, and the central coast of California;

• Mountain West, comprised of communities in Colorado and Washington;

• South West, comprised of communities in Arizona and Nevada; and

• Other, comprised of communities in Florida.

In accordance with ASC 280, in determining the most appropriate aggregation of our homebuilding communities, we also considered similar economic and other characteristics, including product types, average selling prices, gross profits, production processes, suppliers, subcontractors, regulatory environments, land acquisition results, and underlying demand and supply.

Our Corporate segment primarily provides management services to our operating segments, and includes results of our captive insurance provider, which primarily administers claims reinsured by third party carriers and the deductibles and retentions under those third party policies. Results of our insurance brokerage services business are also included in our Corporate segment.

The reportable segments follow the same accounting policies as our consolidated financial statements described in Note 2. Operational results of each reportable segment are not necessarily indicative of the results that would have been achieved had the reportable segment been an independent, stand-alone entity during the periods presented.

20

Financial information relating to reportable segments was as follows:

	June 30, 2013		December 31, 2012
	(In thousands)
Total assets:
Southern California	$	271,882	$	213,481
San Diego		171,691		148,272
Northern California		298,340		256,728
Mountain West		334,449		297,276
South West		123,314		105,470
Other		6,318		6,943
Total homebuilding assets		1,205,994		1,028,170
Corporate		205,563		345,367
Total assets	$	1,411,557	$	1,373,537

	June 30, 2013		December 31, 2012
	(In thousands)
Inventory:
Southern California	$	213,816	$	161,700
San Diego		152,820		129,895
Northern California		260,990		226,307
Mountain West		261,872		227,130
South West		102,233		89,756
Other		2,372		2,865
Total inventory	$	994,103	$	837,653

	Three Months Ended June 30,				Six Months Ended June 30,
	2013		2012		2013		2012
	(In thousands)				(In thousands)
Revenues:
Southern California	$	56,134	$	30,104	$	96,289	$	56,484
San Diego		31,358		10,180		40,988		24,287
Northern California		53,483		30,438		81,132		56,396
Mountain West		39,884		33,211		62,190		51,806
South West		34,151		26,700		67,684		46,215
Other		1,964		1,585		3,530		2,390
Total homebuilding revenues		216,974		132,218		351,813		237,578
Corporate		336		250		457		493
Total revenues	$	217,310	$	132,468	$	352,270	$	238,071

	Three Months Ended June 30,						Six Months Ended June 30,
	2013			2012			2013			2012
	(In thousands)						(In thousands)
Income (loss) before income taxes:
Southern California	$	12,249		$	3,302		$	20,138		$	5,276
San Diego		1,004			(1,502	)		(420	)		(1,500	)
Northern California		5,648			612			7,542			1,429
Mountain West		2,108			(1,786	)		(690	)		(5,154	)
South West		169			(1,494	)		1,144			(3,150	)
Other		51			25			(302	)		(225	)
Total homebuilding income (loss) before income taxes		21,229			(843	)		27,412			(3,324	)
Corporate		(1,218	)		(10,429	)		(623	)		(8,898	)
Total income (loss) before income taxes	$	20,011		$	(11,272	)	$	26,789		$	(12,222	)

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18. Supplemental Guarantor Information

The obligations under the Secured Notes are not guaranteed by any SHLP joint venture where SHLP and Shea Homes Funding Corp., a wholly owned subsidiary (collectively “SHLP Corp.”), does not own 100% of the economic interest, including those that are consolidated, and the collateral securing the Secured Notes does not include a pledge of the capital stock of any subsidiary if such pledge would result in a requirement that SHLP Corp file separate financial statements with respect to such subsidiary pursuant to Rule 3-16 of Regulation S-X under the Securities Act.

Pursuant to the Indenture governing the Secured Notes, a guarantor may be released from its guarantee obligations only under certain customary circumstances specified in the Indenture, namely (1) upon the sale or other disposition (including by way of consolidation or merger) of such guarantor, (2) upon sale of disposition of all or substantially all the assets of such guarantor, (3) upon the designation of such guarantor as an unrestricted subsidiary for covenant purposes in accordance with the terms of the Indenture, (4) upon a legal defeasance or covenant defeasance pursuant to the Indenture, or (5) upon the full satisfaction of our obligations under the Indenture.

Presented herein are the condensed consolidated financial statements provided for in Rule 3-10(f) of Regulation S-K under the Securities Act for the guarantor subsidiaries and non-guarantor subsidiaries.

22

Condensed Consolidating Balance Sheet

June 30, 2013

	SHLP Corp.  (a)		Guarantor Subsidiaries			Non-Guarantor Subsidiaries		Eliminations			Total
	(In thousands)
Assets
Cash and cash equivalents	$	129,146	$	(375	)	$	29,226	$	0		$	157,997
Restricted cash		1,485		682			167		0			2,334
Accounts and other receivables, net		117,724		27,969			35,017		(34,692	)		146,018
Receivables from related parties, net		9,493		24,965			26		0			34,484
Inventory		675,830		316,507			2,262		(496	)		994,103
Investments in unconsolidated joint ventures		19,602		995			18,803		0			39,400
Investments in subsidiaries		706,597		63,778			92,483		(862,858	)		0
Other assets, net		19,152		17,665			404		0			37,221
Intercompany receivables		0		390,316			0		(390,316	)		0
Total assets	$	1,679,029	$	842,502		$	178,388	$	(1,288,362	)	$	1,411,557
Liabilities and equity
Liabilities:
Notes payable	$	759,740	$	0		$	0	$	0		$	759,740
Payables to related parties		20		5			5		4,129			4,159
Accounts payable		31,863		22,745			307		0			54,915
Other liabilities		170,201		41,569			70,308		(35,188	)		246,890
Intercompany payables		371,758		0			22,687		(394,445	)		0
Total liabilities		1,333,582		64,319			93,307		(425,504	)		1,065,704
Equity:
SHLP equity:
Owners’ equity		340,693		773,429			84,675		(858,104	)		340,693
Accumulated other comprehensive income		4,754		4,754			0		(4,754	)		4,754
Total SHLP equity		345,447		778,183			84,675		(862,858	)		345,447
Non-controlling interests		0		0			406		0			406
Total equity		345,447		778,183			85,081		(862,858	)		345,853
Total liabilities and equity	$	1,679,029	$	452,186		$	178,388	$	(898,046	)	$	1,411,557

(a) Includes Shea Homes Funding Corp., whose financial position at June 30, 2013 was not material.

23

Condensed Consolidating Balance Sheet

December 31, 2012

	SHLP Corp. (a)		Guarantor Subsidiaries		Non-Guarantor Subsidiaries		Eliminations			Total
	(In thousands)
Assets
Cash and cash equivalents	$	216,914	$	48,895	$	13,947	$	0		$	279,756
Restricted cash		11,999		875		157		0			13,031
Accounts and other receivables, net		117,560		23,537		35,250		(35,058	)		141,289
Receivables from related parties, net		8,271		25,668		89		0			34,028
Inventory		572,010		264,459		1,918		(734	)		837,653
Investments in unconsolidated joint ventures		13,948		984		13,721		0			28,653
Investments in subsidiaries		672,388		64,971		93,883		(831,242	)		0
Other assets, net		17,712		21,388		27		0			39,127
Intercompany receivables		0		376,420		0		(376,420	)		0
Total assets	$	1,630,802	$	827,197	$	158,992	$	(1,243,454	)	$	1,373,537
Liabilities and equity
Liabilities:
Notes payable	$	758,209	$	0	$	0	$	0		$	758,209
Payables to related parties		26		0		0		99			125
Accounts payable		34,384		27,879		475		0			62,738
Other liabilities		162,894		36,700		69,416		(35,792	)		233,218
Intercompany payables		356,451		0		20,068		(376,519	)		0
Total liabilities		1,311,964		64,579		89,959		(412,212	)		1,054,290
Equity:
SHLP equity:
Owners’ equity		314,321		758,101		68,624		(826,725	)		314,321
Accumulated other comprehensive income		4,517		4,517		0		(4,517	)		4,517
Total SHLP equity		318,838		762,618		68,624		(831,242	)		318,838
Non-controlling interests		0		0		409		0			409
Total equity		318,838		762,618		69,033		(831,242	)		319,247
Total liabilities and equity	$	1,630,802	$	450,777	$	158,992	$	(867,034	)	$	1,373,537

(a) Includes Shea Homes Funding Corp., whose financial position at December 31, 2012 was not material.

24

Condensed Consolidating Statement of Operations and Comprehensive Income (Loss)

Three Months Ended June 30, 2013

	SHLP Corp. (a)			Guarantor Subsidiaries			Non-Guarantor Subsidiaries			Eliminations			Total
	(In thousands)
Revenues	$	131,140		$	80,181		$	5,989		$	0		$	217,310
Cost of sales		(108,600	)		(60,071	)		(356	)		143			(168,884	)
Gross margin		22,540			20,110			5,633			143			48,426
Selling expenses		(7,526	)		(3,834	)		(1,488	)		0			(12,848	)
General and administrative expenses		(8,749	)		(4,732	)		(597	)		0			(14,078	)
Equity in income (loss) from unconsolidated joint ventures, net		23			(3	)		458			0			478
Equity in income (loss) from subsidiaries		15,098			(1,589	)		(799	)		(12,710	)		0
Gain (loss) on reinsurance transaction		0			0			(807	)		0			(807	)
Interest expense		(998	)		(399	)		0			0			(1,397	)
Other income (expense), net		(854	)		727			507			(143	)		237
Income (loss) before income taxes		19,534			10,280			2,907			(12,710	)		20,011
Income tax benefit (expense)		0			(475	)		(4	)		0			(479	)
Net income (loss)		19,534			9,805			2,903			(12,710	)		19,532
Less: Net loss (income) attributable to non-controlling interests		0			0			2			0			2
Net income (loss) attributable to SHLP	$	19,534		$	9,805		$	2,905		$	(12,710	)	$	19,534
Comprehensive income (loss)	$	19,641		$	9,912		$	2,903		$	(12,817	)	$	19,639

(a) Includes Shea Homes Funding Corp.; no significant activity occurred in 2013.

25

Condensed Consolidating Statement of Operations and Comprehensive Loss

Three Months Ended June 30, 2012

	SHLP Corp. (a)			Guarantor Subsidiaries			Non-Guarantor Subsidiaries			Eliminations			Total
	(In thousands)
Revenues	$	96,466		$	34,700		$	1,302		$	0		$	132,468
Cost of sales		(80,318	)		(27,496	)		(259	)		95			(107,978	)
Gross margin		16,148			7,204			1,043			95			24,490
Selling expenses		(6,234	)		(2,839	)		(1,126	)		0			(10,199	)
General and administrative expenses		(7,995	)		(2,979	)		(599	)		0			(11,573	)
Equity in income (loss) from unconsolidated joint ventures, net		10			(7	)		314			0			317
Equity in income (loss) from subsidiaries		(6,541	)		(9,534	)		(1,166	)		17,241			0
Gain (loss) on reinsurance transaction		0			0			(8,163	)		0			(8,163	)
Interest expense		(5,511	)		(398	)		0			0			(5,909	)
Other (expense) income, net		(1,977	)		1,368			469			(95	)		(235	)
Income (loss) before income taxes		(12,100	)		(7,185	)		(9,228	)		17,241			(11,272	)
Income tax expense		(1	)		(838	)		(9	)		0			(848	)
Net income (loss)		(12,101	)		(8,023	)		(9,237	)		17,241			(12,120	)
Less: Net loss (income) attributable to non-controlling interests		0			0			19			0			19
Net income (loss) attributable to SHLP	$	(12,101	)	$	(8,023	)	$	(9,218	)	$	17,241		$	(12,101	)
Comprehensive income (loss)	$	(12,742	)	$	(8,664	)	$	(9,237	)	$	17,882		$	(12,761	)

(a) Includes Shea Homes Funding Corp.; no significant activity occurred in 2012.

26

Condensed Consolidating Statement of Operations and Comprehensive income (Loss)

Six Months Ended June 30, 2013

	SHLP Corp. (a)			Guarantor Subsidiaries			Non-Guarantor Subsidiaries			Eliminations			Total
	(In thousands)
Revenues	$	201,105		$	139,356		$	11,809		$	0		$	352,270
Cost of sales		(164,380	)		(107,457	)		(709	)		238			(272,308	)
Gross margin		36,725			31,899			11,100			238			79,962
Selling expenses		(12,732	)		(7,224	)		(3,046	)		0			(23,002	)
General and administrative expenses		(16,320	)		(8,229	)		(1,486	)		0			(26,035	)
Equity in income (loss) from unconsolidated joint ventures, net		(640	)		(22	)		508			0			(154	)
Equity in income (loss) from subsidiaries		24,505			(1,194	)		(1,332	)		(21,979	)		0
Gain (loss) on reinsurance transaction		0			0			(159	)		0			(159	)
Interest expense		(3,432	)		(1,398	)		0			0			(4,830	)
Other income (expense), net		(1,731	)		1,968			1,008			(238	)		1,007
Income (loss) before income taxes		26,375			15,800			6,593			(21,979	)		26,789
Income tax benefit (expense)		(3	)		(405	)		(12	)		0			(420	)
Net income (loss)		26,372			15,395			6,581			(21,979	)		26,369
Less: Net loss (income) attributable to non-controlling interests		0			0			3			0			3
Net income (loss) attributable to SHLP	$	26,372		$	15,395		$	6,584		$	(21,979	)	$	26,372
Comprehensive income (loss)	$	26,609		$	15,632		$	6,581		$	(22,216	)	$	26,606

(a) Includes Shea Homes Funding Corp.; no significant activity occurred in 2013.

27

Condensed Consolidating Statement of Operations and Comprehensive Loss

Six Months Ended June 30, 2012

	SHLP Corp. (a)			Guarantor Subsidiaries			Non-Guarantor Subsidiaries			Eliminations			Total
	(In thousands)
Revenues	$	164,252		$	71,027		$	2,792		$	0		$	238,071
Cost of sales		(134,524	)		(58,203	)		(445	)		159			(193,013	)
Gross margin		29,728			12,824			2,347			159			45,058
Selling expenses		(11,613	)		(5,831	)		(2,107	)		0			(19,551	)
General and administrative expenses		(13,599	)		(5,030	)		(1,195	)		0			(19,824	)
Equity in income (loss) from unconsolidated joint ventures, net		139			(31	)		276			0			384
Equity in income (loss) from subsidiaries		(2,790	)		(10,387	)		(2,443	)		15,620			0
Gain (loss) on reinsurance transaction		0			0			(7,367	)		0			(7,367	))
Interest expense		(11,469	)		(724	)		(4	)		0			(12,197	)
Other income (expense), net		(2,903	)		3,213			1,124			(159	)		1,275
Income (loss) before income taxes		(12,507	)		(5,966	)		(9,369	)		15,620			(12,222	)
Income tax benefit (expense)		(5	)		(86	)		(5	)		0			(96	)
Net income (loss)		(12,512	)		(6,052	)		(9,374	)		15,620			(12,318	)
Less: Net loss (income) attributable to non-controlling interests		0			0			(194	)		0			(194	)
Net income (loss) attributable to SHLP	$	(12,512	)	$	(6,052	)	$	(9,568	)	$	15,620		$	(12,512	)
Comprehensive income (loss)	$	(11,710	)	$	(5,250	)	$	(9,374	)	$	14,818		$	(11,516	)

(a) Includes Shea Homes Funding Corp.; no significant activity occurred in 2012.

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Condensed Consolidating Statement of Cash Flows

Six Months Ended June 30, 2013

	SHLP Corp. (a)			Guarantor Subsidiaries			Non-Guarantor Subsidiaries			Eliminations			Total
	(In thousands)
Operating activities
Net cash provided by (used in) operating activities	$	(86,654	)	$	(38,172	)	$	12,630		$	4,030		$	(108,166	)
Investing activities
Investments in unconsolidated joint ventures		(6,792	)		(53	)		(9,505	)		0			(16,350	)
Other investing activities		590			2,919			0			0			3,509
Net cash provided by (used in) investing activities		(6,202	)		2,866			(9,505	)		0			(12,841	)
Financing activities
Intercompany		5,840			(13,964	)		12,154			(4,030	)		0
Principal payments to financial institutions and others		(752	)		0			0			0			(752	)
Net cash provided by (used in) financing activities		5,088			(13,964	)		12,154			(4,030	)		(752	)
Net increase (decrease) in cash and cash equivalents		(87,768	)		(49,270	)		15,279			0			(121,759	)
Cash and cash equivalents at beginning of period		216,914			48,895			13,947			0			279,756
Cash and cash equivalents at end of period	$	129,146		$	(375	)	$	29,226		$	0		$	157,997

(a) Includes Shea Homes Funding Corp.; no significant activity occurred in 2013.

Condensed Consolidating Statement of Cash Flows

Six Months Ended June 30, 2012

	SHLP Corp. (b)			Guarantor Subsidiaries			Non-Guarantor Subsidiaries			Eliminations			Total
	(In thousands)
Operating activities
Net cash (used in) provided by operating activities	$	(28,900	)	$	(29,876	)	$	22,534		$	2,538		$	(33,704	)
Investing activities
Proceeds from sale of available-for-sale investments		0			5,212			0			0			5,212
Other investing activities		131			1,536			(784	)		0			883
Net cash provided by (used in) investing activities		131			6,748			(784	)		0			6,095
Financing activities
Intercompany		11,860			14,613			(23,935	)		(2,538	)		0
Other financing activities		(854	)		0			1,034			0			180
Net cash provided by (used in) financing activities		11,006			14,613			(22,901	)		(2,538	)		180
Net decrease in cash and cash equivalents		(17,763	)		(8,515	)		(1,151	)		0			(27,429	)
Cash and cash equivalents at beginning of period		157,511			96,100			14,755			0			268,366
Cash and cash equivalents at end of period	$	139,748		$	87,585		$	13,604		$	0		$	240,937

(b) Includes Shea Homes Funding Corp.; no significant activity occurred in 2012.

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ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

The following discussion and analysis of our financial condition and results of operations should be read in conjunction with our unaudited consolidated financial statements and accompanying notes included under Item 1 of this Report and our audited consolidated financial statements and accompanying notes included in our Annual Report on Form 10-K for the year ended December 31, 2012.

RESULTS OF OPERATIONS

The tabular homebuilding operating data presented throughout this “Management’s Discussion and Analysis of Financial Condition and Results of Operations” includes data for SHLP and its wholly-owned subsidiaries and consolidated joint ventures. Data for our unconsolidated joint ventures is presented separately where indicated. Our ownership in unconsolidated joint ventures varies, but is generally less than or equal to 50%.

Our homebuilding business, which is responsible for most of our operating results, constructs and sells single-family attached and detached homes designed to appeal to first-time, move-up and active adult homebuyers. Our homebuilding business also provides management services to joint ventures and other related and unrelated parties. We manage each homebuilding community as an operating segment and have aggregated these communities into reportable segments based on geography as follows:

• Southern California, comprised of communities in Los Angeles, Ventura and Orange Counties, and the Inland Empire;

• San Diego, comprised of communities in San Diego County, California;

• Northern California, comprised of communities in northern and central California, and the central coast of California;

• Mountain West, comprised of communities in Colorado and Washington;

• South West, comprised of communities in Arizona and Nevada; and

• Other, comprised of communities in Florida.

In addition, the company announced last month that it will be entering the Houston, Texas housing market. This will be a start-up operation and we are expecting to deliver our first homes in Houston in 2014. It is anticipated that Houston will be included in our South West reporting segment.

In accordance with ASC 280, in determining the most appropriate aggregation of our homebuilding communities, we also considered similar economic and other characteristics, including product types, average selling prices, gross profits, production processes, suppliers, subcontractors, regulatory environments, land acquisition results, and underlying demand and supply.

Our Corporate segment primarily provides management services to our operating segments, and includes results of our captive insurance provider, which primarily administers claims reinsured by third-party carriers and the deductibles and retentions under those third party policies. Results of our insurance brokerage services business are also included in our Corporate segment.

Overview

Improvement in housing market conditions continued in the second quarter of 2013. For the three and six months ended June 30, 2013, as compared to the three and six months ended June 30, 2012, net homes sales orders decreased 12% and 5%, respectively, primarily as a result of a lower number of active selling communities. However, net home orders per community increased 2% and 14%, respectively. Homes closed increased 50% and 40%, respectively, and homebuilding revenues increased 64% and 48%, respectively, primarily driven by the 98% higher backlog at the beginning of 2013 versus 2012. Gross margin as a percentage of revenues improved from 18.5% to 22.3%, for the three months ended June 30, 2013 compared to June 30, 2012 and from 18.9% to 22.7%, for the six months ended June 30, 2013 compared to June 30, 2012. We have $160.3 million in cash, cash equivalents and restricted cash and we expect to continue to invest in land opportunities in desirable locations to supplement our existing land positions.

30

	Three Months Ended June 30,									Six Months Ended June 30,
	2013			2012			% Change			2013			2012			% Change
	(Dollars in thousands)
Revenues	$	217,310		$	132,468			64	%	$	352,270		$	238,071			48	%
Cost of sales		(168,884	)		(107,978	)		56			(272,308	)		(193,013	)		41
Gross margin		48,426			24,490			98			79,962			45,058			77
Selling expenses		(12,848	)		(10,199	)		26			(23,002	)		(19,551	)		18
General and administrative expenses		(14,078	)		(11,573	)		22			(26,035	)		(19,824	)		31
Equity in income (loss) from unconsolidated joint ventures		478			317			51			(154	)		384			—
Gain (loss) on reinsurance transaction		(807	)		(8,163	)		(90	)		(159	)		(7,367	)		(98	)
Interest expense		(1,397	)		(5,909	)		(76	)		(4,830	)		(12,197	)		(60	)
Other (expense) income, net		237			(235	)		—			1,007			1,275			(21	)
Income (loss) before income taxes		20,011			(11,272	)		—			26,789			(12,222	)		—
Income tax benefit (expense)		(479	)		(848	)		(44	)		(420	)		(96	)		338
Net income (loss)		19,532			(12,120	)		—			26,369			(12,318	)		—
Less: Net (loss) income attributable to non-controlling interests		2			19			(89	)		3			(194	)		—
Net income (loss) attributable to SHLP	$	19,534		$	(12,101	)		—	%	$	26,372		$	(12,512	)		—	%
Comprehensive income (loss), net of tax	$	19,639		$	(12,761	)		—	%	$	26,606		$	(11,516	)		—	%

For the three months ended June 30, 2013, net income (loss) attributable to SHLP was $19.5 million compared to $(12.1) million for the three months ended June 30, 2012. This increase in income was primarily attributable to an $23.9 million improvement in gross margins (from higher revenues and gross margin percentage), a $7.4 million decrease in the loss on our reinsurance transaction and a $4.5 million decrease in interest expense, partially offset by a $2.5 million increase in general and administrative expenses (from increased compensation expenses) and a $2.6 million increase in selling expenses (from increased new home closings).

For the six months ended June 30, 2013, net income (loss) attributable to SHLP was $26.4 million compared to $(12.5) million for the six months ended June 30, 2012. This increase in income was primarily attributable to an $34.9 million improvement in gross margins (from higher revenues and gross margin percentage), a $7.2 million decrease in the loss on our reinsurance transaction and a $7.4 million decrease in interest expense, partially offset by a $6.2 million increase in general and administrative expenses (from increased compensation expenses), and a $3.5 million increase in selling expenses.

Seasonality

Historically, the homebuilding industry experiences seasonal fluctuations. We typically experience the highest home sales order activity in spring and summer, although this activity is also highly dependent on the number of active selling communities, timing of community openings and other market factors. Since it typically takes three to eight months to construct a new home, we close more homes in the second half of the year as spring and summer home sales orders convert to home closings. Because of this seasonality, home starts, construction costs and related cash outflows have historically been highest from April to October, and the majority of cash receipts from home closings occur during the second half of the year. Therefore, operating results for the three and six months ended June 30, 2013 are not necessarily indicative of results expected for the year ended December 31, 2013.

Revenues

Revenues are derived primarily from home closings and land sales. House and land revenues are recorded at closing. Management fees from homebuilding ventures and projects are in other homebuilding revenues. Revenues generated from corporate, insurance brokerage services, and our captive insurance company, Partners Insurance Company (“PIC”), are in other revenues.

31

	Three Months Ended June 30,							Six Months Ended June 30,
	2013		2012		% Change			2013		2012		% Change
	(Dollars in thousands)
Revenues:
House revenues	$	212,392	$	127,108		67	%	$	343,878	$	228,016		51	%
Land revenues		4,213		4,738		(11	)		7,141		8,701		(18	)
Other homebuilding revenues		369		372		(1	)		794		861		(8	)
Total homebuilding revenues		216,974		132,218		64			351,813		237,578		48
Other revenues		336		250		34			457		493		(7	)
Total revenues	$	217,310	$	132,468		64	%	$	352,270	$	238,071		48	%

For the three months ended June 30, 2013, total revenues were $217.3 million compared to $132.5 million for the three months ended June 30, 2012. This increase was primarily attributable to a 50% increase in homes closed and a 12% increase in the average selling price (“ASP”) of homes closed.

For the six months ended June 30, 2013, total revenues were $352.3 million compared to $238.1 million for the six months ended June 30, 2012. This increase was primarily attributable to a 40% increase in homes closed and an 8% increase in the ASP of homes closed.

For the three and six months ended June 30, 2013 and 2012, homebuilding revenues by segment were as follows:

	Three Months Ended June 30,							Six Months Ended June 30,
	2013		2012		% Change			2013		2012		% Change
	(Dollars in thousands)
Southern California:
House revenues	$	56,128	$	30,098		86	%	$	94,101	$	53,416		76	%
Land revenues		0		0		0			2,175		3,056		(29	)
Other homebuilding revenues		6		6		0			13		12		8
Total homebuilding revenues	$	56,134	$	30,104		86	%	$	96,289	$	56,484		70	%
San Diego:
House revenues	$	31,355	$	10,136		209	%	$	40,983	$	24,241		69	%
Land revenues		0		0		0			0		0		0
Other homebuilding revenues		3		44		(93	)		5		46		(89	)
Total homebuilding revenues	$	31,358	$	10,180		208	%	$	40,988	$	24,287		69	%
Northern California:
House revenues	$	53,268	$	30,240		76	%	$	80,792	$	56,065		44	%
Land revenues		0		0		0			0		0		0
Other homebuilding revenues		215		198		9			340		331		3
Total homebuilding revenues	$	53,483	$	30,438		76	%	$	81,132	$	56,396		44	%
Mountain West:
House revenues	$	35,671	$	28,434		25	%	$	57,041	$	45,986		24	%
Land revenues		4,213		4,738		(11	)		4,966		5,645		(12	)
Other homebuilding revenues		0		39		(100	)		183		175		5
Total homebuilding revenues	$	39,884	$	33,211		20	%	$	62,190	$	51,806		20	%
South West:
House revenues	$	34,006	$	26,615		28	%	$	67,432	$	45,918		47	%
Land revenues		0		0		0			0		0		0
Other homebuilding revenues		145		85		71			252		297		(15	)
Total homebuilding revenues	$	34,151	$	26,700		28	%	$	67,684	$	46,215		46	%

32

	Three Months Ended June 30,							Six Months Ended June 30,
	2013		2012		% Change			2013		2012		% Change
	(Dollars in thousands)
Other:
House revenues	$	1,964	$	1,585		24	%	$	3,530	$	2,390		48	%
Land revenues		0		0		0			0		0		0
Other homebuilding revenues		0		0		0			0		0		0
Total homebuilding revenues	$	1,964	$	1,585		24	%	$	3,530	$	2,390		48	%

For the three months ended June 30, 2013, total homebuilding revenues were $217.0 million compared to $132.2 million for the three months ended June 30, 2012. This increase was primarily attributable to a 50% increase in homes closed and a 12% increase in the ASP of homes closed. The increase in home closings for the period was driven primarily by the 98% higher beginning of the year backlog at December 31, 2012 versus December 31, 2011. The increase in the ASP of homes closed was primarily attributable to the general increase in new home prices, net of a shift to lower priced homes in certain markets.

For the six months ended June 30, 2013, total homebuilding revenues were $351.8 million compared to $237.6 million for the six months ended June 30, 2012. This increase was primarily attributable to a 40% increase in homes closed and a 8% increase in the ASP of homes closed. The increase in home closings for the period was driven primarily by the 98% higher beginning of the year backlog at December 31, 2012 versus December 31, 2011. The increase in the ASP of homes closed was primarily attributable to the general increase in new home prices, net of a shift to lower priced homes in certain markets.

For the three and six months ended June 30, 2013 and 2012, homes closed, by segment were as follows:

	Three Months Ended June 30,							Six Months Ended June 30,
	2013		2012		% Change			2013		2012		% Change
Homes closed:
Southern California		80		64		25	%		131		111		18	%
San Diego		68		19		258			91		46		98
Northern California		116		58		100			177		115		54
Mountain West		78		64		22			131		102		28
South West		109		95		15			217		160		36
Other		9		7		29			15		11		36
Total consolidated		460		307		50			762		545		40
Unconsolidated joint ventures		51		37		38			78		57		37
Total homes closed		511		344		49	%		840		602		40	%

For the three and six months ended June 30, 2013 and 2012, the ASP of homes closed, by segment were as follows:

	Three Months Ended June 30,							Six Months Ended June 30,
	2013		2012		% Change			2013		2012		% Change
ASP of homes closed:
Southern California	$	701,600	$	470,281		49	%	$	718,328	$	481,225		49	%
San Diego		461,103		533,474		(14	)		450,341		526,978		(15	)
Northern California		459,207		521,379		(12	)		456,452		487,522		(6	)
Mountain West		457,321		444,281		3			435,427		450,843		(3	)
South West		311,982		280,158		11			310,747		286,988		8
Other		218,222		226,429		(4	)		235,285		217,273		8
Total consolidated		461,722		414,033		12			451,283		418,378		8
Unconsolidated joint ventures		317,118		298,459		6			324,923		302,456		7
Total ASP of homes closed	$	447,290	$	401,602		11	%	$	439,550	$	407,402		8	%

33

Gross Margin

Gross margin is revenues less cost of sales and is comprised of gross margins from our homebuilding and corporate segments.

Gross margin for the three and six months ended June 30, 2012 and 2011 was as follows:

	Three Months Ended June 30,										Six Months Ended June 30,
	2013		Gross Margin %			2012		Gross Margin %			2013		Gross Margin %			2012		Gross Margin %
	(Dollars in thousands)
Gross margin	$	48,426		22.3	%	$	24,490		18.5	%	$	79,962		22.7	%	$	45,058		18.9	%

For the three months ended June 30, 2013, total gross margin was $48.4 million compared to $24.5 million for the three months ended June 30, 2012. This increase was primarily attributable to increased homes closed and higher margins resulting from general price increases experienced in all of our segments, partially offset by higher labor and material costs.

For the six months ended June 30, 2013, total gross margin was $80.0 million compared to $45.1 million for the six months ended June 30, 2012. This increase was primarily attributable to increased homes closed and higher margins resulting from general price increases experienced in all of our segments, partially offset by higher labor and material costs.

Selling, General and Administrative Expense

Selling, general and administrative expense for the three and six months ended June 30, 2013 and 2012 were as follows:

	Three Months Ended June 30,									Six Months Ended June 30,
	2013			2012			% Change			2013			2012			% Change
	(Dollars in thousands)
Total homebuilding revenues	$	216,974		$	132,218			64	%	$	351,813		$	237,578			48	%
Selling expense	$	12,848		$	10,199			26	%	$	23,002		$	19,551			18	%
% of total homebuilding revenues		5.9	%		7.7	%		180 bp’s			6.5	%		8.2	%		170 bp’s
General and administrative expense	$	14,078		$	11,573			22	%	$	26,035		$	19,824			31	%
% of total homebuilding revenues		6.5	%		8.8	%		230 bp’s			7.4	%		8.3	%		90 bp’s
Total selling, general and administrative expense	$	26,926		$	21,772			24	%	$	49,037		$	39,375			25	%
% of total homebuilding revenues		12.4	%		16.5	%		410 bp’s			13.9	%		16.6	%		270 bp’s

Selling Expense

For the three months ended June 30, 2013, selling expense was $12.8 million compared to $10.2 million for the three months ended June 30, 2012, but decreased as a percentage of revenues. For the six months ended June 30, 2013, selling expense was $23.0 million compared to $19.6 million for the six months ended June 30, 2012, but also decreased as a percentage of revenues. As homebuilding revenues increase, we are generally able to achieve economies of scale and efficiencies on certain expenses that are more fixed in nature.

General and Administrative Expense

For the three months ended June 30, 2013, general and administrative expense was $14.1 million compared to $11.6 million for the three months ended June 30, 2012. The increase was primarily due to increased compensation expenses. For the six months ended June 30, 2013, general and administrative expense was $26.0 million compared to $19.8 million for the six months ended June 30, 2012. The increase was also primarily due to increased compensation expenses. However, G&A expenses as a percentage of revenue were lower for both the three month and six month periods in 2013, compared to 2012, as a result of greater operating efficiencies from the increased level of revenues.

34

Equity in Income (Loss) from Unconsolidated Joint Ventures

Equity in income (loss) from unconsolidated joint ventures represents our share of income (loss) from unconsolidated joint ventures accounted for under the equity method. These joint ventures are generally involved in real property development.

For the three months ended June 30, 2013, equity in income (loss) from joint ventures was $0.5 million compared to $0.3 million for the three months ended June 30, 2012. For the six months ended June 30, 2013, equity in income (loss) from joint ventures was $(0.2) million compared to $.4 million for the six months ended June 30, 2012. For the three and six months ended June 30, 2013 and 2012, there were no significant earnings or losses from any unconsolidated joint venture.

Gain (Loss) on Reinsurance Transaction

Completed operations claims were previously insured through PIC for policy years August 1, 2001 to July 31, 2007. In December 2009, PIC entered into a series of transactions (the “PIC Transaction”) in which these policies were either novated to JFSCI or reinsured with third-party insurance carriers. As a result of the PIC Transaction, a $34.8 million gain was generated but deferred and to be recognized as income when related claims are paid. In addition, the deferred gain can be increased or decreased based on changes in actuarial estimates. Any changes to the deferred gain will be recognized as a current period gain or charge.

For the three months ended June 30, 2013 and 2012, a $0.8 million and $8.2 million loss was recognized due to adjustments to actuarial estimates. For the six months ended June 30, 2013 and 2012, a $0.2 million and $7.4 million loss was recognized also due to adjustments to actuarial estimates.

Interest Expense

Interest expense represents interest incurred and not capitalized. For the three and six months ended June 30, 2013 and 2012, most interest incurred was capitalized to inventory with the remainder expensed as a result of debt exceeding the qualified asset amounts. Assets qualify for interest capitalization during their development and other qualifying activities such as construction; however, if qualified assets are less than the total amount of debt, then interest is expensed relative to the shortfall.

For the three months ended June 30, 2013, interest expense was $1.4 million compared to $5.9 million for the three months ended June 30, 2012. For the six months ended June 30, 2013, interest expense was $4.8 million compared to $12.2 million for the six months ended June 30, 2012. This decrease was primarily attributable to a higher level of qualified assets.

Other Income (Expense), Net

Other income (expense), net is comprised of interest income, gains (losses) on sales of investments, pre-acquisition cost and deposit write-offs, property tax expense and other income (expense). Interest income is primarily from related party notes receivables, investments and interest bearing cash accounts.

For the three and six months ended June 30, 2013 and 2012, other (expense) income, net was as follows:

	Three Months Ended June 30,									Six Months Ended June 30,
	2013			2012			% Change			2013			2012			% Change
	(Dollars in thousands)
Other income (expense), net:
Interest income	$	557		$	1,227			(55	)%	$	1,177		$	2,546			(54	)%
Gain on sale of investments		0			0			0			10			23			(57	)
Other income (expense)		(320	)		(1,462	)		(78	)		(180	)		(1,294	)		(86	)
Total other (expense) income, net	$	237		$	(235	)		—	%	$	1,007		$	1,275			(21	)%

For the three and six months ended June 30, 2013, other (expense) income, net was $0.2 million and $1.0 million, respectively, compared to $(0.2) million and $1.3 million, respectively, for the three and six months ended June 30, 2012. This decrease was primarily attributable to decreased interest income on the Company’s bank and investment accounts.

Income Tax Benefit (Expense)

SHLP is treated as a partnership for income tax purposes. As a limited partnership, SHLP is subject to certain minimal state taxes and fees; however, taxes on income realized by SHLP are generally the obligation of SHLP’s general and limited partners and their owners. SHI and its subsidiaries are C corporations, and therefore, federal and state income taxes for these entities are included in the consolidated financial statements.

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At June 30, 2013 and December 31, 2012, net deferred tax assets of SHI before reserves were $31.5 million and $32.7 million, respectively, which primarily related to available loss carryforwards, inventory and investment impairments, and housing and land inventory basis differences. The $31.5 million deferred tax asset valuation allowance fully reserves the net deferred tax asset due to the inherent uncertainty of future income as the housing recovery is in its early stages. We will continue to monitor industry and economic conditions, and our ability to generate taxable income based on our business plan and available tax planning strategies, which would allow us to utilize the tax benefits of the net deferred tax assets and thereby allow us to reverse all, or a portion of, our valuation allowance.

Net (Income) Expense Attributable to Non-Controlling Interests

Joint ventures are consolidated when we have a controlling interest or, absent a controlling interest, when we can substantially influence its business. Net loss (income) attributable to non-controlling interests represents the share of loss (income) attributable to the parties having a non-controlling interest. The net (income) expense attributable to non-controlling interests was not material for the periods presented.

Comprehensive Income (Loss)

Comprehensive income (loss) includes net income (loss) plus other comprehensive income (loss) attributable to unrealized gains (losses) from investments, net of reclassification adjustments for realized gains (losses) and tax benefit (expense).

For the three and six months ended June 30, 2013 and 2012, comprehensive income (loss) was as follows:

	Three Months Ended June 30,								Six Months Ended June 30,
	2013		2012			% Change			2013		2012			% Change
	(Dollars in thousands)
Comprehensive income (loss):
Net income (loss)	$	19,532	$	(12,120	)		—	%	$	26,369	$	(12,318	)		—	%
Unrealized gains (losses) on investments, net		107		(641	)		—			237		802			(70	)
Total comprehensive income (loss), net	$	19,639	$	(12,761	)		—	%	$	26,606	$	(11,516	)		—	%

SELECTED HOMEBUILDING OPERATIONAL DATA

Homes Sales Orders and Active Selling Communities

Home sales orders are contracts executed with homebuyers to purchase homes and are stated net of cancellations. Except where market conditions or other factors justify increasing available unsold home inventory, construction of a home typically begins when a sales contract for that home is executed and other conditions are satisfied, such as financing approval. Therefore, recognition of a home sales order usually represents the beginning of the home’s construction cycle. Homebuilding construction expenditures and, ultimately, homebuilding revenues and cash flow, are therefore dependent on the timing and magnitude of home sales orders.

An active selling community represents a new home community that advertises, markets and sells homes through a sales office located at a model complex in the community. Sales offices in communities near the end of their sales cycle are not designated as an active selling community. An active selling community is a designation similar to a store or sales outlet and is used to measure home sales order results on a per active selling community basis. Presentation of home sales orders per active selling community is a means of assessing sales growth or reductions across communities through a common analytical measurement. The average number of active selling communities for a particular period represents the aggregate number of active selling communities in operation at the end of each month in such period divided by the number of months in such period.

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For the three and six months ended June 30, 2013 and 2012, home sales orders, net of cancellations, were as follows:

	Three Months Ended June  30,							Six Months Ended June  30,
	2013		2012		% Change			2013		2012		% Change
Home sales orders, net:
Southern California		50		88		(43	)%		104		158		(34	)%
San Diego		74		57		30			165		110		50
Northern California		101		115		(12	)		221		236		(6	)
Mountain West		122		121		1			234		210		11
South West		163		194		(16	)		303		348		(13	)
Other		4		12		(67	)		6		24		(75	)
Total consolidated		514		587		(12	)%		1,033		1,086		(5	)%
Unconsolidated joint ventures		65		63		3			111		106		5
Total home sales orders, net		579		650		(11	)%		1,144		1,192		(4	)%

For the three and six months ended June 30, 2013 and 2012, cancellation rates were as follows:

	Three Months Ended June 30,						Six Months Ended June 30,
	2013			2012			2013			2012
Cancellation rates:
Southern California		7	%		11	%		10	%		12	%
San Diego		16			29			18			30
Northern California		11			14			10			11
Mountain West		12			12			12			13
South West		10			10			13			11
Other		20			14			25			17
Total consolidated		12	%		14	%		13	%		14	%
Unconsolidated joint ventures		22			11			21			12
Total cancellation rates		13	%		13	%		14	%		14	%

For the three and six months ended June 30, 2013 and 2012, active selling communities were as follows:

	Three Months Ended June  30,							Six Months Ended June  30,
	2013		2012		% Change			2013		2012		% Change
Average number of active selling communities:
Southern California		5		7		(29	)%		5		8		(38	)%
San Diego		6		9		(33	)		7		10		(30	)
Northern California		13		15		(13	)		13		16		(19	)
Mountain West		15		13		15			15		13		15
South West		14		16		(13	)		15		17		(12	)
Other		1		3		(67	)		1		3		(67	)
Total consolidated		54		63		(14	)		56		67		(16	)
Unconsolidated joint ventures		13		10		30			12		11		9
Total average number of active selling communities		67		73		(8	)%		68		78		(13	)%

For the three months ended June 30, 2013, consolidated home sales orders per active selling community were 9.5, or 3.2 per month, compared to 9.3, or 3.1 per month, for the three months ended June 30, 2012. The increase for the three months ended June 30, 2013 reflects the improved market conditions in each segment compared to the three months ended June 30, 2012. The improvement in housing demand for the three months ended June 30, 2013 is also reflected in our lower cancellation rates and higher traffic.

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For the six months ended June 30, 2013, consolidated home sales orders per active selling community were 18.4, or 3.1 per month, compared to 16.2, or 2.7 per month, for the six months ended June 30, 2012. The increase for the six months ended June 30, 2013 reflects the improved market conditions in each segment compared to the six months ended June 30, 2012. The improvement in housing demand for the six months ended June 30, 2013 is also reflected in our lower cancellation rates and higher traffic.

Sales Order Backlog

Sales order backlog represents homes sold and under contract to be built, but not closed. Backlog sales value is the revenue estimated to be realized at closing. A home is sold when a sales contract is signed by the seller and buyer, and upon receipt of a prerequisite deposit. A home is closed when all conditions of escrow are met, including delivery of the home, title passage, and appropriate consideration is received or collection of associated receivables, if any, is reasonably assured. A sold home is classified “in backlog” during the time between its sale and close. During that time, construction costs are generally incurred to complete the home except where market conditions or other factors justify increasing available unsold home inventory. Backlog is therefore an important performance measurement in analysis of cash outflows and inflows. However, because sales order contracts are cancelled by the buyer at times, not all homes in backlog will result in closings.

The overall increase in the number of homes in backlog at June 30, 2013 compared to June 30, 2012, is primarily due to the 98% higher backlog at the beginning of 2013 versus the beginning of 2012.

At June 30, 2013 and 2012, sales order backlog was as follows:

	Homes				Sales Value				ASP
	June 30,				June 30,				June 30,
	2013		2012		2013		2012		2013		2012
					(In thousands)				(In thousands)
Backlog:
Southern California		96		106	$	84,130	$	58,862	$	876	$	555
San Diego		181		103		87,566		41,266		484		401
Northern California		285		226		152,498		104,810		535		464
Mountain West		315		203		144,441		89,167		459		439
South West		298		340		93,290		92,717		313		273
Other		7		24		2,327		5,641		332		235
Total consolidated		1,182		1,002		564,252		392,463		477		392
Unconsolidated joint ventures		117		83		37,958		26,947		324		325
Total backlog		1,299		1,085	$	602,210	$	419,410	$	464	$	387

Land and Homes in Inventory

Inventory is comprised of housing projects under development, land under development, land held for future development, land held for sale, deposits and pre-acquisition costs. As land is acquired and developed, and homes are constructed, the underlying costs are capitalized to inventory. As homes and land transactions close, these costs are relieved from inventory and charged to cost of sales.

As land is acquired and developed, each parcel is assigned a lot count. For parcels of land, an estimated number of lots are added to inventory once entitlement occurs. Occasionally, when the intended use of a parcel changes, lot counts are adjusted. As homes and land are sold, lot counts are reduced. Lots are categorized as (i) owned, (ii) controlled (which includes a contractual right to purchase) or (iii) owned or controlled through unconsolidated joint ventures. The status of each lot is identified by land held for development, land under development, land held for sale, lots available for construction, homes under construction, completed homes and models. Homes under construction and completed homes are also classified as sold or unsold.

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At June 30, 2013, December 31, 2012 and June 30, 2012, total lots owned or controlled were as follows:

	June 30, 2013		December 31, 2012		% Change from December 31, 2012			June 30, 2012		% Change from June 30, 2012
Lots owned or controlled by segment:
Southern California		2,030		1,989		2	%		1,133		79	%
San Diego		699		764		(9	)		713		(2	)
Northern California		3,099		3,182		(3	)		3,963		(22	)
Mountain West		10,180		10,074		1			9,900		3
South West		3,284		1,876		75			1,819		81
Other		10		25		(60	)		45		(78	)
Total consolidated		19,302		17,910		8			17,573		10
Unconsolidated joint ventures		3,745		3,874		(3	)		1,919		95
Total lots owned or controlled		23,047		21,784		6	%		19,492		18	%
Lots owned or controlled by ownership type:
Lots owned for homebuilding		6,413		6,448		(1	)%		6,247		3	%
Lots owned and held for sale		3,269		3,382		(3	)		3,506		(7	)
Lots optioned or subject to contract for homebuilding		6,586		5,046		31			4,786		38
Lots optioned or subject to contract that will be held for sale		3,034		3,034		0			3,034		0
Unconsolidated joint venture lots		3,745		3,874		(3	)		1,919		95
Total lots owned or controlled		23,047		21,784		6	%		19,492		18	%

At June 30, 2013, December 31, 2012 and June 30, 2012, total homes under construction and completed homes were as follows:

	June 30, 2013		December 31, 2012		% Change from December 31, 2012			June 30, 2012		% Change from June 30, 2012
Homes under construction:
Sold		833		630		32	%		657		27	%
Unsold		134		133		1			139		(4	)
Total consolidated		967		763		27			796		21
Unconsolidated joint ventures		65		64		2			79		(18	)
Total homes under construction		1,032		827		25	%		875		18	%
Completed homes:(a)
Sold(b)		60		41		46	%		38		58	%
Unsold		16		22		(27	)		24		(33	)
Total consolidated		76		63		21			62		23
Unconsolidated joint ventures		16		9		78			8		100
Total completed homes		92		72		28	%		70		31	%

^(a)  Excludes model homes.

^(b)  Sold but not closed.

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LIQUIDITY AND CAPITAL RESOURCES

Operating and other short-term cash liquidity needs have been primarily funded from cash on our balance sheet and our homebuilding operations primarily through home closings and land sales, net of the underlying expenditures to fund these operations. In addition, the Company has, and will continue to utilize, land option contracts, public and private note offerings, land seller notes, joint venture structures (which typically obtain project level financing to reduce the amount of partner capital invested), assessment district bond financing, letters of credit and surety bonds, tax refunds and proceeds from related party note receivables as sources of liquidity. At present, we do not have a revolving credit facility to fund short-term cash liquidity needs. At June 30, 2013, cash and cash equivalents were $158.0 million, restricted cash was $2.3 million and total debt was $759.7 million, compared to cash and cash equivalents of $279.8 million, restricted cash of $13.0 million and total debt of $758.2 million at December 31, 2012. Restricted cash includes customer deposits temporarily restricted in accordance with regulatory requirements and cash used in lieu of bonds.

Based on our financial condition, we believe existing cash, cash equivalents, cash from operations and the other sources available to us will likely be sufficient to provide for our cash requirements in the next twelve months. However, at some point over the next twelve month period, it is likely we will need additional sources of capital to fund our growth objectives, otherwise we would have to make adjustments to our land acquisition and development expenditures. Those sources, if available, could be from a secured or unsecured credit facility, new secured or unsecured notes or a combination of these. In evaluating this sufficiency for the next twelve months, we considered the expected cash flow to be generated by homebuilding operations, our current cash position and other sources of liquidity available to us, compared to anticipated cash requirements for interest payments on the Secured Notes due May 2019 (the “Secured Notes”), land purchase commitments and land development expenditures, joint venture funding requirements and other cash operating expenses. We also continually monitor current and expected operational requirements to evaluate and determine the use and amount of our cash needs which includes, but is not limited to, the following disciplines:

• Strategic land acquisitions that meet our investment and marketing standards, including, in most cases, the quick turn of assets;

• Strict control and limitation of unsold home inventory and avoidance of excessive and untimely uses of cash;

• Pre-qualification of homebuyers, timely commencement of home construction thereon and mitigation of cancellations and creation of unsold inventory;

• Reduced construction cycle times, prompt closings of homes and improved cash flow thereon; and

• Maintenance of sufficient cash or other sources of liquidity that, depending on market conditions, will be available to acquire land and increase our active selling communities.

The availability of additional capital, whether from private capital sources (including banks) or the public capital markets, fluctuates as market conditions change. There may be times when the private capital markets and the public debt markets lack sufficient liquidity or when our securities cannot be sold at attractive prices, in which case we would be unable to access capital from these sources. A weakening of our financial condition, including a material increase in our leverage or decrease in our profitability or cash flows, could adversely affect our ability to obtain necessary funds, result in a credit rating downgrade or change in outlook, or otherwise increase our cost of borrowing.

In 2009, we filed a petition with the United States Tax Court (the “Tax Court”) regarding our use of the completed contract method (“CCM”) of accounting for our homebuilding operations. During 2010 and 2011, we engaged in formal and informal discovery with the IRS and the Tax Court heard trial testimony in July 2012 and ordered the Company and the IRS to exchange briefs, all of which have been filed. We expect the Tax Court to render its decision sometime during 2013 or 2014. Resolution of this matter, either through settlement or adjudication, may require payments (a) from SHI to the IRS and the applicable state taxing authorities for its income tax liability and interest and (b) from SHLP to its partners pursuant to the Tax Distribution Agreement for their liability attributable to SHLP’s income taxes and interest. We expect our position will prevail, but for adjudication contrary to our position, which is reasonably possible, the total amount of the SHI’s payment to the IRS and applicable state taxing authorities could be up to $64 million and the required distributions to SHLP’s partners pursuant to the Tax Distribution Agreement could be up to $107 million.

Notwithstanding, the Indenture governing the Secured Notes (the “Indenture”) restricts SHLP’s ability to make distributions to its partners pursuant to the Tax Distribution Agreement in excess of an amount specified by the Indenture (such maximum amount of collective distributions referred to as the “Maximum CCM Payment”), unless SHLP receives a cash equity contribution from JFSCI for such excess. The initial Maximum CCM Payment is $70.0 million, which amount will be reduced by payments made by SHI in connection with any resolution of our dispute with the IRS regarding our use of CCM and payments made by SHLP on certain guarantee obligations described in the Indenture. Payments of CCM-related tax liabilities by SHLP pursuant to the Tax Distribution Agreement or by SHI will not impact our Consolidated Fixed Charge Coverage Ratio (as defined below) or our ability to incur additional indebtedness under the terms of the Indenture.

If necessary, SHLP and SHI expect to pay any CCM-related tax liability from existing cash, cash from operations and, to the extent SHLP is required by the Tax Distribution Agreement to pay amounts in excess of the Maximum CCM Payment, from cash equity

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contributions by JFSCI. However, cash from homebuilding operations may be insufficient to cover such payments. See “Risk Factors—The IRS has disallowed certain income recognition methodologies. If we are unsuccessful in appealing this decision, we could become subject to a substantial tax liability from previous years” and “Risk Factors—Under our Tax Distribution Agreement, we are required to make distributions to our equity holders from time to time based on their ownership in SHLP, which is a limited partnership and, under certain circumstances, those distributions may occur even if SHLP does not have taxable income” in the Company’s Annual Report on Form 10-K for the year ended December 31, 2012.

We are unable to extend our evaluation of the sufficiency of our liquidity beyond twelve months, and we cannot assure in the future our homebuilding operations will generate sufficient cash flow to enable us to grow our business, service our indebtedness, make payments toward land purchase commitments, or fund our joint ventures. For more information, see “Risk Factors—Our ability to generate sufficient cash or access other limited sources of liquidity to operate our business and service our debt depends on many factors, some of which are beyond our control” and “Risk Factors—We have a significant number of contingent liabilities, and if any are satisfied by us, could have a material adverse effect on our liquidity and results of operations” in the Company’s Annual Report on Form 10-K for the year ended December 31, 2012.

The Indenture governing the Secured Notes provides that we and our restricted subsidiaries may not incur or guarantee the payment of any indebtedness (other than certain specified types of permitted indebtedness) unless, immediately after giving effect to such incurrence or guarantee and the application of the proceeds therefrom, the Consolidated Fixed Charge Coverage Ratio (as defined in the Indenture) would be at least 2.0 to 1.0. “Consolidated Fixed Charge Coverage Ratio” is defined in the Indenture as the ratio of (i) our Consolidated Cash Flow Available for Fixed Charges (as defined in the Indenture) for the prior four full fiscal quarters, to (ii) our aggregate Consolidated Interest Expense (as defined in the Indenture) for such prior four full fiscal quarters, in each case giving pro forma effect to certain transactions as specified in the Indenture. At June 30, 2013, our Consolidated Fixed Charge Coverage Ratio, determined as specified in the Indenture, was 1.80. The increase in the Consolidated Fixed Charge Coverage Ratio from 1.44 at March 31, 2013 was due to the increasing income of the Company and the change in the preferred rates on unreturned capital balances for the Series B and Series D preferred equity holders, which was effective retroactive to January 1, 2013.

The following table presents cash provided by (used in) operating, investing and financing activities:

	Six Months Ended June 30,
	2013			2012
	(In thousands)
Cash provided by (used in):
Operating activities	$	(108,166	)	$	(33,704	)
Investing activities		(12,841	)		6,095
Financing activities		(752	)		180
Net (decrease) increase in cash	$	(121,759	)	$	(27,429	)

Cash from Operating Activities

For the six months ended June 30, 2013, cash provided by (used in) operating activities was $(108.2) million compared to $(33.7) million for the six months ended June 30, 2012.This decrease was primarily attributed to increased land acquisitions, land development and construction costs totaling $(200.6) million, which were partially offset by cash receipts from increased home sales of $115.9 million, the release of $10.0 million in restricted cash and an $8.6 million increase in payables and other liabilities.

Cash from Investing Activities

For the six months ended June 30, 2013, cash provided by (used in) investing activities was $(12.8) million compared to $6.1 million for the six months ended June 30, 2012. This decrease was primarily attributable to increased investments in unconsolidated land development and homebuilding joint ventures formed in December 2012, and lower proceeds from the maturity and sale of available-for-sale investments.

Cash from Financing Activities

For the six months ended June 30, 2013, cash provided by (used in) financing activities was $(0.8) million compared to $0.2 million for the six months ended June 30, 2012. This decrease was primarily attributable to reduced contributions from non-controlling interests, net of distributions, partially offset by reduced principal payments to financial institutions and others.

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Notes Payable

At June 30, 2013 and December 31, 2012, notes payable were as follows:

	June 30, 2013		December 31, 2012
Notes payable:
$750.0 million 8.625% senior secured notes due May 2019	$	750,000	$	750,000
Other secured promissory notes		9,740		8,209
Total notes payable	$	759,740	$	758,209

On May 10, 2011, we issued $750.0 million of secured notes, which bear interest at 8.625% paid semi-annually on May 15 and November 15, and do not require principal payments until maturity on May 15, 2019. The Secured Notes are redeemable, in whole or in part, at the Company’s option beginning on May 15, 2015 at a price of 104.313 per bond, reducing to 102.156 on May 15, 2016 and are redeemable at par beginning on May 15, 2017. At June 30, 2013 and December 31, 2012, accrued interest was $8.1 million and $8.1 million, respectively.

The Indenture governing the Secured Notes contains covenants that limit, among other things, our ability to incur additional indebtedness (including the issuance of certain preferred stock), pay dividends and distributions on our equity interests, repurchase our equity interests, retire unsecured or subordinated notes more than one year prior to their maturity, make investments in subsidiaries and joint ventures that are not restricted subsidiaries that guarantee the Secured Notes, sell certain assets, incur liens, merge with or into other companies, expand into unrelated businesses, and enter into certain transactions with affiliates. At June 30, 2013 and December 31, 2012, we were in compliance with these covenants.

The Indenture governing the Secured Notes provides that we and our restricted subsidiaries may not incur or guarantee the payment of any indebtedness (other than certain specified types of permitted indebtedness) unless, immediately after giving effect to such incurrence or guarantee and the application of the proceeds therefrom, the Consolidated Fixed Charge Coverage Ratio (as defined in the Indenture would be at least 2.0 to 1.0. “Consolidated Fixed Charge Coverage Ratio” is defined in the Indenture as the ratio of (i) our Consolidated Cash Flow Available for Fixed Charges (as defined in the Indenture) for the prior four full fiscal quarters, to (ii) our aggregate Consolidated Interest Expense (as defined in the Indenture) for such prior four full fiscal quarters, in each case giving pro forma effect to certain transactions as specified in the Indenture. At June 30, 2013, our Consolidated Fixed Charge Coverage Ratio, determined as specified in the Indenture, was 1.80.

In addition, our ability to make joint venture and other restricted payments and investments is governed by the Indenture. We are permitted to make otherwise restricted payments under (i) a $70.0 million revolving basket available solely for joint venture investments and (ii) a broader restricted payment basket available as long as our Consolidated Fixed Charge Coverage Ratio (as defined in the Indenture) is at least 2.0 to 1.0. The aggregate amount of the restricted payments made under this broader restricted payment basket cannot exceed 50% of our cumulative Consolidated Net Income (as defined in the Indenture), generated subsequent to the issuance of the Secured Notes plus the aggregate net cash proceeds of, and the fair market value of, any property or other asset received by the Company as a capital contribution or upon the issuance of indebtedness or certain securities by the Company since the issuance of the Secured Notes, plus, to the extent not included in Consolidated Net Income, certain amounts received in connection with dispositions, distributions or repayments of restricted investments, plus the value of any unrestricted subsidiary which is redesignated as a restricted subsidiary under the Indenture. We have a number of joint ventures which have used, and are expected to use, capacity under these restricted payment baskets. During the second quarter of 2013, we entered into a joint venture in Southern California and committed to contribute up to $45.0 million of capital. At June 30, 2013 we made aggregate capital contributions of $9.5 million to this joint venture. We project that our peak investment of $45.0 million in this joint venture will occur in the fourth quarter of 2014 and, shortly thereafter, will be returned to the Company. We anticipate making additional investments in this joint venture in 2015 at amounts well below the $45.0 million commitment, and we expect such additional investments will be returned to us by the end of 2015.

CONTRACTUAL OBLIGATIONS, COMMERCIAL COMMITMENTS AND OFF-BALANCE SHEET ARRANGEMENTS

Contractual Obligations

Primary contractual obligations are payments under notes payable, operating leases and purchase obligations. Purchase obligations primarily represent land purchase and option contracts, and purchase obligations for water system connection rights. At June 30, 2013, there were no material changes to contractual obligations from those reported in Management’s Discussion and Analysis of Financial Condition and Results of Operations included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2012.

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Land Purchase and Option Contracts

In the ordinary course of business, we enter into land purchase and option contracts to procure land for construction of homes. These contracts typically require a cash deposit and the purchase is often contingent on satisfaction of certain requirements by land sellers, including securing property and development entitlements. We utilize option contracts as a method of acquiring large tracts of land in smaller parcels to better manage financial and market risk of holding land and to reduce use of funds. Option contracts generally require a non-refundable deposit after a diligence period for the right to acquire lots over a specified period of time at a predetermined price. However, in certain circumstances, the purchase price may not, in whole or in part, be determinable and payable until the homes or lots are sold. In such instances, an estimated purchase price for the unknown portion is not included in the total remaining purchase price. At June 30, 2013, we had owned or controlled 7,236 lots in Colorado for which the entire purchase price is determined at the time the underlying lots is sold to a home buyer or other purchaser of the lot. At our discretion, we generally have rights to terminate our obligations under purchase and option contracts by forfeiting our cash deposit or repaying amounts drawn under our letters of credit with no further financial responsibility to the land seller. However, purchase contracts can contain additional development obligations that must be completed even if a contract is terminated.

Use of option contracts is dependent on the willingness of land sellers, availability of capital, housing market conditions and geographic preferences. Options may be more difficult to obtain from land sellers in stronger housing markets and are more prevalent in certain geographic regions.

At June 30, 2013, we had $6.8 million in option contract deposits on land with a total remaining purchase price, excluding land subject to option contracts that do not specify a purchase price, of $355.4 million, compared to $5.3 million and $200.2 million, respectively, at December 31, 2012.

Water System Connection Rights

At one of our consolidated homebuilding projects, we have a contractual obligation to purchase and receive water system connection rights which, at June 30, 2013, had an estimated market value in excess of their contractual purchase price of $33.6 million. These water system connection rights are held and then transferred to homebuyers upon closing of their home or transferred upon the sale of land to the respective buyer. These water system connection rights can also be sold or leased but generally only within the local jurisdiction.

Land Development and Homebuilding Joint Ventures

We enter into land development and homebuilding joint ventures for the following purposes:

• leveraging our capital base;

• managing and reducing financial and market risks of holding land;

• establishing strategic alliances;

• accessing lot positions; and

• expanding market share.

These joint ventures typically obtain secured acquisition, development and construction financing, each designed to reduce use of our capital.

At June 30, 2013 and December 31, 2012, total unconsolidated joint ventures’ notes payable were as follows:

	June 30, 2013		December 31, 2012
	(In thousands)
Bank and seller notes payable:
Guaranteed (subject to remargin obligations)	$	49,453	$	45,610
Non-Guaranteed		10,936		22,894
Total bank and seller notes payable (a)		60,389		68,504
Partner notes payable:
Unsecured (b)		5,296		5,296
Total unconsolidated joint venture notes payable	$	65,685	$	73,800
Other unconsolidated joint venture notes payable (c)	$	43,002	$	57,839

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(a) All bank seller notes were secured by real property.

(b) No guarantees were provided on partner notes payable.

(c) We have an indirect effective ownership in two joint ventures of 12.3% and .0003%, respectively, that had bank notes payable secured by real property, which we have not guaranteed.

At June 30, 2013 and December 31, 2012, remargin obligations and guarantees provided on the debt of our unconsolidated joint ventures were on a joint and/or several basis and include, but are not limited to, project completion, interest and carry, and loan-to-value maintenance guarantees. At June 30, 2013 and December 31, 2012, we had an indemnification agreement from our joint venture partner for 90% of one secured loan balance, which was zero and zero, respectively. However, we cannot provide assurance we could collect under this indemnity agreement. In addition, for another joint venture, we have a remargin obligation that is limited to the lesser of 50% of the outstanding balances or $35.0 million in total for the joint venture loans, which outstanding loan balances were $49.4 million and $45.6 million at June 30, 2013 and December 31, 2012, respectively. Consequently, our maximum remargin obligation was $24.7 million and $22.8 million at June 30, 2013 and December 31, 2012, respectively. We also have an indemnification agreement from our joint venture partner under which we could potentially recover a portion of any remargin payments made to the bank. However, we cannot provide assurance we could collect under this indemnity agreement. No liabilities were recorded for these guarantees at June 30, 2013 and December 31, 2012, as the fair value of the secured real estate assets exceeded the outstanding notes payable.

We may be required to use funds for obligations of these unconsolidated joint ventures, such as:

• loans (including to replace expiring loans, to satisfy loan re-margin and land development and construction completion obligations or to satisfy environmental indemnity obligations);

• development and construction costs;

• indemnity obligations to surety providers;

• land purchase obligations; and

• dissolutions (including satisfaction of joint venture indebtedness through repayment or assumption of such indebtedness, payments to partners in connection with the dissolution, or payment of the remaining costs to complete, including warranty and legal obligations).

Guarantees, Surety Obligations and Other Contingencies

At June 30, 2013 and December 31, 2012, certain unrecorded loan remargin or other guarantees, surety obligations and other contingencies were as follows:

	June 30, 2013		December 31, 2012
	(In thousands)
Tax Court CCM case (capped at $70.0 million)	$	70,000	$	70,000
Remargin obligations and guarantees for unconsolidated joint ventures		24,726		22,805
Outstanding letters of credit		457		4,216
Costs to complete on surety bonds for Company projects		94,672		85,490
Costs to complete on surety bonds for joint venture projects		27,659		30,804
Costs to complete on surety bonds for related party projects		2,274		2,311
Total unrecorded contingent liabilities and commitments	$	219,788	$	215,626

On May 10, 2011, we entered into a $75.0 million letter of credit facility. At June 30, 2013 and December 31, 2012, outstanding letters of credit against the letter of credit facility were $0.5 million and $4.2 million, respectively.

We provide surety bonds that guarantee completion of certain infrastructure serving our homebuilding projects. At June 30, 2013, there were $94.7 million of costs to complete in connection with the $182.5 million of surety bonds that were issued. At December 31, 2012, there were $85.5 million of costs to complete in connection with the $186.0 million of surety bonds that were issued.

We also provided indemnification for bonds issued by certain unconsolidated joint ventures and other related party projects in which we have no ownership interest. At June 30, 2013, there were $27.7 million of costs to complete in connection with $64.5 million of surety bonds that were issued for unconsolidated joint venture projects, and a $2.3 million of costs to complete in connection with $5.8 million of surety bonds that were issued for related party projects. At December 31, 2012, there were $30.8 million of costs to complete in connection with $71.6 million of surety bonds that were issued for unconsolidated joint venture projects, and $2.3 million of costs to complete in connection with $6.1 million of surety bonds that were issued for related party projects.

44

Certain of our homebuilding projects utilize community facility district, metro-district and other local government bond financing programs to fund acquisition or construction of infrastructure improvements. Interest and principal on these bonds are typically paid from taxes and assessments levied on homeowners following the sale of new homes within the project. Occasionally, we enter into credit support arrangements requiring us to pay interest and principal on these bonds if the taxes and assessments levied on homeowners are insufficient to cover such obligations. Furthermore, reimbursement of these payments to us is dependent on the district or local government’s ability to generate sufficient tax and assessment revenues from the sale of new homes. At June 30, 2013 and December 31, 2012, in connection with a credit support arrangement, there was $6.0 million and $4.9 million, respectively, reimbursable to us from a metro-district in Colorado.

We also pay certain fees and costs associated with the construction of infrastructure improvements in homebuilding projects that utilize these district bond financing programs. These fees and costs are typically reimbursable to us from, and therefore dependent on, bond proceeds or taxes and assessments levied on homeowners. At June 30, 2013 and December 31, 2012, in connection with certain funding arrangements, there was $12.7 million and $16.3 million, respectively, reimbursable to us from certain metro-districts, including $11.4 million and $11.9 million, respectively, from a metro-district in Colorado.

Until bond proceeds or tax and assessment revenues are sufficient to cover our obligations and/or reimburse us, our responsibility to make interest and principal payments on these bonds or pay fees and costs associated with the construction of infrastructure improvements could be prolonged and significant.

In December 2011, Vistancia, LLC, a consolidated joint venture, sold its remaining interest in an unconsolidated joint venture (the “Vistancia Sale”). As a condition of the Vistancia Sale, and the purchase of the non-controlling member’s remaining interest in Vistancia, LLC, the Company effectively remains a 10% guarantor on certain community facility district bond obligations to which the Company must meet a minimum calculated tangible net worth; otherwise, the Company is required to fund collateral to the bond issuer. At June 30, 2013 and December 31, 2012, the Company exceeded the minimum tangible net worth requirement.

RELATED PARTY TRANSACTIONS

In March 2012, SHLP’s entire 58% interest in Shea Colorado, LLC (“SCLLC”), a consolidated joint venture with Shea Properties II, LLC, a related party and the non-controlling member, was redeemed by SCLLC. In valuing its 58% interest in SCLLC, and to ensure receipt of net assets of equal value to its ownership interest, SHLP used third-party real estate appraisals. The estimated fair value of the assets received by SHLP was $30.8 million. However, as the non-controlling member is a related party under common control, the assets and liabilities received by SHLP were recorded at net book value and the difference in SHLP’s investment in SCLLC and the net book value of the assets and liabilities received was recorded as a reduction to SHLP’s equity.

As consideration for the redemption, SCLLC distributed assets and liabilities to SHLP having a net book value of $24.0 million, including $2.2 million cash, a $3.0 million secured note receivable, $20.0 million of inventory and $1.2 million of other liabilities. As a result of this redemption, SCLLC is no longer included in these consolidated financial statements effective March 31, 2012. This transaction resulted in a net reduction of $41.8 million in assets and $2.0 million in liabilities, and a $39.8 million reduction in total equity, of which $11.6 million was attributable to SHLP and $28.2 million was attributable to non-controlling interests.

JFSCI provides corporate services to us, including management, legal, tax, information technology, risk management, facilities, accounting, treasury and human resources. For the three and six months ended June 30, 2013, general and administrative expenses included $5.9 million and $11.1 million, respectively, for corporate services provided by JFSCI. For the three and six months ended June 30, 2012, general and administrative expenses included $4.5 million and $8.4 million, respectively, for corporate services provided by JFSCI.

We obtain workers compensation insurance, commercial general liability insurance and insurance for completed operations losses and damages with respect to our homebuilding operations from affiliate and unrelated third party insurance providers. These policies are purchased by affiliate entities and we pay premiums to these affiliates for the coverages provided by these third party insurance providers. Policies covering these risks are written at various coverage levels but include a large self-insured retention or deductible. We have retention liability insurance from affiliated entities to insure these large retentions or deductibles. For the three months ended June 30, 2013 and 2012, amounts paid to affiliates for this retention insurance coverage were $3.9 million and $7.8 million, respectively. For the six months ended June 30, 2013 and 2012, amounts paid to affiliates for this retention insurance coverage were $3.2 million and $5.9 million, respectively.

45

CRITICAL ACCOUNTING POLICIES

We believe no significant changes occurred to our critical accounting policies during the six months ended June 30, 2013, as compared to those disclosed in Management’s Discussion and Analysis of Financial Condition and Results of Operations for December 31, 2012 included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2012.

NEW ACCOUNTING PRONOUNCEMENTS

See Note 2 of our consolidated financial statements included in Item 1 of this Quarterly Report on Form 10-Q for a discussion of new accounting pronouncements applicable to the Company.

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

We are exposed to market risk primarily from interest rate fluctuations. Historically, we have incurred fixed-rate and variable- rate debt. For fixed-rate debt, changes in interest rates generally affect the fair market value of the debt instrument, but not earnings or cash flow. Conversely, for variable-rate debt, changes in interest rates generally do not affect the fair market value of the debt but do affect earnings and cash flow. We did not utilize swaps, forward or option contracts on interest rates or commodities, or other types of derivative financial instruments at or during the six months ended June 30, 2013. We have not entered into and currently do not hold derivatives for trading or speculative purposes. As we do not have an obligation to prepay fixed-rate debt prior to maturity, interest rate risk and changes in fair market value should not have a significant impact on such debt until we refinance.

We believe no significant changes to our market risks occurred during the six months ended June 30, 2013, as compared to those disclosed in Management’s Discussion and Analysis of Financial Condition and Results of Operations included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2012.

ITEM 4. CONTROLS AND PROCEDURES

Evaluation of Disclosure Controls and Procedures

Management, with the participation of our Chief Executive Officer and Chief Financial Officer, evaluated the effectiveness of our disclosure controls and procedures at June 30, 2013. The term “disclosure controls and procedures,” as defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act, means controls and other procedures of a company that are designed to ensure that information required to be disclosed by a company in the reports that it files or submits under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the Securities and Exchange Commission’s rules and forms. Disclosure controls and procedures include, without limitation, controls and procedures designed to ensure that information required to be disclosed by a company in the reports that it files or submits under the Exchange Act is accumulated and communicated to the company’s management, including its principal executive and principal financial officers, as appropriate to allow timely decisions regarding required disclosure.

Based on the evaluation of our disclosure controls and procedures at June 30, 2013, our Chief Executive Officer and Chief Financial Officer have concluded, at such date, that our disclosure controls and procedures were effective at the reasonable assurance level.

Internal Control Over Financial Reporting

We made no change in internal control over financial reporting during the second quarter of 2013 that materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.

Limitations on Controls

Our disclosure controls and procedures are designed to provide reasonable assurance of achieving their objectives as specified above. Management does not expect, however, that our disclosure controls and procedures will prevent or detect all error and fraud. Any control system, no matter how well designed and operated, is based upon certain assumptions and can provide only reasonable, not absolute, assurance that its objectives will be met. Further, no evaluation of controls can provide absolute assurance that misstatements due to error or fraud will not occur or that all of our control issues and instances of fraud, if any, have been detected.

46

FORWARD-LOOKING STATEMENTS

Some of the statements in this Quarterly Report on Form 10-Q, contain forward-looking statements and information relating to us that are based on beliefs of management as well as assumptions made by, and information currently available to, us. When used in this document, words such as “anticipate,” “believe,” “estimate,” “expect,” “intend,” “plan” and “project” and similar expressions, as they relate to us are intended to identify forward-looking statements. These statements reflect our current views with respect to future events, are not guarantees of future performance and involve risks and uncertainties difficult to predict. Further, certain forward- looking statements are based upon assumptions of future events that may not prove to be accurate.

See the “Risk Factors” section included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2012 for a description of risk factors that could significantly affect our financial results. In addition, the following factors could cause actual results to differ materially from results that may be expressed or implied by such forward-looking statements. These factors include, among other things:

• changes in employment levels;

• changes in availability of financing for homebuyers;

• changes in interest rates;

• changes in consumer confidence;

• changes in levels of new and existing homes for sale;

• changes in demographic trends;

• changes in housing demands;

• changes in home prices;

• elimination or reduction of tax benefits associated with owning a home;

• litigation risks associated with home warranty and construction defect and other claims; and

• various other factors, both referenced and not referenced in this Quarterly Report on Form 10-Q.

Many of these factors are macroeconomic in nature and are, therefore, beyond our control. Should one or more of these risks or uncertainties materialize, or should underlying assumptions prove incorrect, actual results, performance or achievements may vary materially from those described in this Quarterly Report on Form 10-Q as anticipated, believed, estimated, expected, intended, planned or projected. Except as required by law, we neither intend nor assume any obligation to revise or update these forward- looking statements, which speak only as of their dates.

47

PART II. OTHER INFORMATION

ITEM 1. LEGAL PROCEEDINGS

Lawsuits, claims and proceedings have been and will likely be instituted or asserted against us in the normal course of business, including actions brought on behalf of various classes of claimants. We are also subject to local, state and federal laws and regulations related to land development activities, house construction standards, sales practices, employment practices and environmental protection. As a result, we are subject to periodic examinations or inquiry by agencies administering these laws and regulations.

We record a reserve for potential legal claims and regulatory matters when they are probable of occurring and a potential loss is reasonably estimable. We accrue for these matters based on facts and circumstances specific to each matter and revise these estimates when necessary. In such cases, there may exist an exposure to loss in excess of amounts accrued. In view of the inherent difficulty of predicting the outcome of legal claims and related contingencies, we generally cannot predict their ultimate resolution, related timing or eventual loss. While their outcome cannot be predicted with certainty, we believe we have appropriately reserved for these claims or matters. Other than the CCM matter described in “Liquidity and Capital Resources” and in Notes 13 and 15 to our consolidated financial statements, we do not believe we are subject to any material legal claims and regulatory matters at this time. However, if liabilities arising from their ultimate resolution of legal claims or regulatory matters exceeds their recorded reserves, we could incur additional charges that could be significant.

ITEM 1A. RISK FACTORS

There were no material changes to the risk factors disclosed in the Company’s Annual Report on Form 10-K for the year ended December 31, 2012.

ITEM 5. OTHER INFORMATION

On August 6, 2013, the Shea Homes Limited Partnership Seventh Amended and Restated Agreement (“Agreement”) was amended to change the interest rates on the Class B and Class D preferred returns, effective January 1, 2013. The Class B preferred return changed from Prime minus 2.05%, to 1.2% from January 1, 2013 to December 31, 2016, 2.25% from January 1, 2017 to December 31, 2020, and Prime less 2.05% from January 1, 2021 and thereafter on unreturned capital balances. The Class D preferred return changed from 7.0% to 2.0% from January 1, 2013 to December 31 2016, 12.75% from January 1, 2017 to December 31, 2020, and 7.0% from January 1, 2021 and thereafter on unreturned capital balances

48

ITEM 6. EXHIBITS

3.1	Certificate of Limited Partnership of Shea Homes Limited Partnership (incorporated by reference to Exhibit 3.1 to the Company’s Registration Statement on Form S-4 filed with the SEC on October 14, 2011 (File No. 333-177328))
3.2	First Amendment to Seventh Amended and Restated Agreement of Limited Partnership of Shea Homes Limited Partnership
31.1	Certification of Chief Executive Officer Pursuant to Rule 13-14(a) of the Securities Exchange Act of 1934 as Adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
31.2	Certification of Chief Financial Officer Pursuant to Rule 13-14(a) of the Securities Exchange Act of 1934 as Adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
32.1	Certification of Chief Executive Officer Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
32.2	Certification of Chief Financial Officer Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
101	The following materials from Shea Homes Limited Partnership’s Quarterly Report on Form 10-Q for the quarters ended June 30, 2013, formatted in eXtensible Business Reporting Language (XBRL): (i) Condensed Consolidated Balance Sheets, (ii) Unaudited Condensed Consolidated Statements of Operations, (iii) Unaudited Condensed Consolidated Statements of Comprehensive Income (Loss), (iv) Unaudited Condensed Consolidated Statements of Changes in Equity, (v) Unaudited Condensed Consolidated Statements of Cash Flows, and (vi) Notes to Unaudited Condensed Consolidated Financial Statements. Pursuant to Rule 406T of Regulation S-T, the Interactive Data Files on Exhibit 101 hereto are deemed furnished and not filed or part of a registration statement or prospectus for purposes of Sections 11 or 12 of the Securities Act of 1933, as amended, are deemed not filed for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, and otherwise are not subject to liability under those sections.

49

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

	SHEA HOMES LIMITED PARTNERSHIP
		(Registrant)
Dated: August 9, 2013	By:	/s/ Roberto F. Selva
		Roberto F. Selva
		Chief Executive Officer
		(Principal Executive Officer)
Dated: August 9, 2013	By:	/s/ Andrew H. Parnes
		Andrew H. Parnes
		Chief Financial Officer
		(Principal Financial Officer)

50

EX-3.2

Exhibit 3.2

FIRST AMENDMENT TO SEVENTH AMENDED AND RESTATED

AGREEMENT OF LIMITED PARTNERSHIP

OF

SHEA HOMES LIMITED PARTNERSHIP,

A CALIFORNIA LIMITED PARTNERSHIP

THIS FIRST AMENDMENT TO SEVENTH AMENDED AND RESTATED AGREEMENT OF LIMITED PARTNERSHIP OF SHEA HOMES LIMITED PARTNERSHIP (this “Amendment”) is entered into as of August 6, 2013, by and among J.F. Shea, G.P., a Delaware general partnership, as general partner (the “General Partner”), and the persons whose names are ascribed hereto, as Limited Partners, (the “Limited Partners”). Capitalized Terms not otherwise defined herein shall have the meanings set forth in the Seventh Amended Agreement (as defined below).

R E C I T A L S

A. The General Partner, and Limited Partners, entered into that certain Seventh Amended and Restated Agreement of Limited Partnership of Shea Homes Limited Partnership dated as of March 11, 2013 (the “Seventh Amended Agreement” or “Partnership Agreement”).

B. The General Partner and the Limited Partners desire to amend the Seventh Amended Agreement in order to modify the Class B Preferred Return and the Class D Preferred Return effective January 1, 2013.

A G R E E M E N T

NOW, THEREFORE, taking the foregoing Recitals into account, and in consideration of the mutual covenants and conditions set forth herein, and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the General Partner and the Limited Partners do hereby amend the Seventh Amended Agreement in the following particulars only:

1. Class B Preferred Return. Effective January 1, 2013 (and hence Fiscal Year 1 for the purposes of this Amendment shall be January 1, 2013 through December 31, 2013), the definition in Article 2 of Class B Preferred Return is hereby deleted in its entirety and replaced with the following: “Class B Preferred Return” means, with respect to any Partner a return equal to the following for the applicable Fiscal Year (or portion thereof):

i. Fiscal Years 1-4—an annual rate of return equal to one and two tenths percent (1.2%)

ii. Fiscal Years 5-8—an annual rate of return equal to two and twenty five one hundredths percent (2.25%)

iii. Fiscal Year 9 and every Fiscal Year thereafter—the Wells Fargo Bank Rate for such Fiscal Year (or portion thereof) calculated on the Class B Amount as of the first day of such Fiscal Year

1

2. Class D Preferred Return. Effective January 1, 2013 (and as noted above Fiscal Year 1 for the purposes of this Amendment shall be January 1, 2013 through December 31, 2013), the definition in Article 2 of Class D Preferred Return is hereby deleted in its entirety and replaced with the following: “Class D Preferred Return” means, with respect to any Partner a return equal to the following for the applicable Fiscal Year (or portion thereof):

i. Fiscal Years 1-4—an annual rate of return equal to two percent (2.0%)

ii. Fiscal Years 5-8—an annual rate of return equal to twelve and seventy five one hundredths percent (12.75%)

iii. Fiscal Year 9 and every Fiscal Year thereafter—an annual rate of return equal to seven percent (7.0%)

3. Miscellaneous.

a. Amendment Controlling. In the event of any inconsistency between the terms of this Amendment and the terms of the Partnership Agreement, the terms of this Amendment shall control. Except to the extent expressly amended pursuant to this Amendment, the terms and provisions of the Partnership Agreement shall remain in full force and effect without modification.

b. Counterparts; Facsimile. This Amendment may be (i) executed in any number of counterparts, each of which shall be an original and all of which shall together constitute one and the same document and (ii) executed and delivered by the exchange of electronic facsimile copies of the signed counterparts, which facsimile counterparts shall be binding upon the parties.

c. Authorization. By his or her signature, each person executing this Amendment on behalf of a party hereto represents and warrants to the other party hereto that he or she is duly authorized to do so.

d. Entire Agreement. This Amendment constitutes the entire agreement between the parties hereto with respect to the subject matter hereof and supersedes all prior agreements between the parties with respect to the matters contained in this Amendment. All prior and contemporaneous understandings, representations or agreements among the parties with respect to this subject matter, verbal or written, are merged into this Amendment.

SIGNATURES ON FOLLOWING PAGE

2

IN WITNESS WHEREOF, the undersigned have executed this Agreement on the date first written above.

SHEA HOMES LIMITED PARTNERSHIP, a California limited partnership
GENERAL PARTNER
J.F. SHEA, G.P., a Delaware general partnership
By:	J.F. Shea Management, L.P.,
	a Delaware limited partnership
	its general partner

By: J.F. Shea Construction Management, Inc., a California corporation, its general partner

By:	/s/ Peter O. Shea, Jr.
Name:	Peter O. Shea, Jr.
Title:	President
By:	/s/ James G. Shontere
Name:	James G. Shontere
Title:	Secretary

LIMITED PARTNERS
J.F. SHEA CO., INC., a Nevada corporation
By:	/s/ James G. Shontere
Name:	James G. Shontere
Title:	Secretary
By:	/s/ Robert O’dell
Name:	Robert O’dell
Title:	Vice-President & Treasurer

JOHN SHEA FAMILY TRUST, dated May 20, 2005
By:	/s/ John F. Shea
	John F. Shea, Trustee

3

ORLANDO ROAD LLC,
a Delaware limited liability company
By:	/s/ John F. Shea
Name:	John F. Shea
Title:	President
By:	/s/ James G. Shontere
Name:	James G. Shontere
Title:	Secretary
VIRGINIA ROAD LLC, a Delaware limited liability company
By:	/s/ John C. Morrissey
Name:	John C. Morrissey
Title:	President
By:	/s/ James G. Shontere
Name:	James G. Shontere
Title:	Secretary
BAY FRONT DRIVE, LLC, a Delaware limited liability company
By:	/s/ Peter O. Shea
Name:	Peter O. Shea
Title:	President
By:	/s/ James G. Shontere
Name:	James G. Shontere
Title:	Secretary
SHEA INVESTMENTS, a California general partnership
By:	/s/ Carrie Shea Tilton
	Carrie Shea Tilton, Trustee of Carrie
	Shea Tilton Revocable Trust

4

TAHOE PARTNERSHIP I, a California general partnership
By:	/s/ Peter O. Shea
Name:	Peter O. Shea
Title:	Managing Partner
BALBOA PARTNERSHIP, a California general partnership
By:	/s/ Peter O. Shea, Jr.
	Peter O. Shea, Jr., as Trustee of the Peter O. Shea Jr. Separate Property Trust dated March 17, 1985, Amended January 14, 2013
By:	/s/ Ronald L. Lakey
	Ronald L. Lakey, as Trustee of the Catherine
	Shea Johnson Trust dated November 13, 1984, as Amended on March 1, 1989, July 22, 1993 and September 30, 2004
By:	/s/ Ronald L. Lakey
	Ronald L. Lakey, as Trustee of the Sarah H. Shea Trust dated October 15, 1987, as amended on March 1, 1989 and June 29, 1999
SURVIVOR’S TRUST U/A EIGHTH – E & M SHEA REVOCABLE TRUST u/d/t 4/07/09
By:	/s/ John C. Morrissey
	John C. Morrissey, Trustee
By:	/s/ Mary Shea
	Mary Shea, Trustee
PETER O. AND CAROLYN H. SHEA REVOCABLE TRUST DATED JANUARY 11, 1995, AS AMENDED
By:	/s/ Peter O. Shea
	Peter O. Shea, Trustee

5

EX-31.1

Exhibit 31.1

CERTIFICATIONS

I, Roberto F. Selva, certify that:

1. I have reviewed this Quarterly Report on Form 10-Q of Shea Homes Limited Partnership;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) for the registrant and have:

(a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

(b) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

(c) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

(a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

(b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

By:	/s/ Roberto F. Selva
Roberto F. Selva
Chief Executive Officer
(Principal Executive Officer)

Date: August 9, 2013

EX-31.2

Exhibit 31.2

CERTIFICATIONS

I, Andrew H. Parnes, certify that:

1. I have reviewed this Quarterly Report on Form 10-Q of Shea Homes Limited Partnership;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) for the registrant and have:

(a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

(b) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

(c) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

(a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

(b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

By:	/s/ Andrew H. Parnes
Andrew H. Parnes
Chief Financial Officer
(Principal Financial Officer)

Date: August 9, 2013

EX-32.1

Exhibit 32.1

CERTIFICATION OF CHIEF EXECUTIVE OFFICER

PURSUANT TO 18 U.S.C. SECTION 1350,

AS ADOPTED PURSUANT TO SECTION 906 OF THE

SARBANES-OXLEY ACT OF 2002

In connection with the Quarterly Report on Form 10-Q for the fiscal quarter ended June 30, 2013 of Shea Homes Limited Partnership, (the “Company”) as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, Roberto F. Selva, Chief Executive Officer of the Company, certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that:

1. The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

2. The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

This written statement is being furnished to the Securities and Exchange Commission as an exhibit to such Quarterly Report on Form 10-Q. A signed original of this statement has been provided to Shea Homes Limited Partnership and will be retained by Shea Homes Limited Partnership and furnished to the Securities and Exchange Commission or its staff upon request.

/s/ Roberto F. Selva

Roberto F. Selva

Chief Executive Officer

(Principal Executive Officer)

Date: August 9, 2013

EX-32.2

Exhibit 32.2

CERTIFICATION OF CHIEF FINANCIAL OFFICER

PURSUANT TO 18 U.S.C. SECTION 1350,

AS ADOPTED PURSUANT TO SECTION 906 OF THE

SARBANES-OXLEY ACT OF 2002

In connection with the Quarterly Report on Form 10-Q for the fiscal quarter ended June 30, 2013 of Shea Homes Limited Partnership, (the “Company”) as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, Andrew H. Parnes, Chief Financial Officer of the Company, certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that:

1. The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

2. The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

This written statement is being furnished to the Securities and Exchange Commission as an exhibit to such Quarterly Report on Form 10-Q. A signed original of this statement has been provided to Shea Homes Limited Partnership and will be retained by Shea Homes Limited Partnership and furnished to the Securities and Exchange Commission or its staff upon request.

/s/ Andrew H. Parnes

Andrew H. Parnes

Chief Financial Officer

(Principal Financial Officer)

Date: August 9, 2013

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Condensed Consolidating Statement of Cash Flows (Detail) (USD $) In Thousands, unless otherwise specified	6 Months Ended
	Jun. 30, 2013		Jun. 30, 2012
Operating activities
Net cash (used in) provided by operating activities	$ (108,166)		$ (33,704)
Investing activities
Investments in unconsolidated joint ventures	(16,350)		(1,183)
Proceeds from sale of available-for-sale investments	3,078		5,212
Other investing activities	3,509		883
Net cash provided by (used in) investing activities	(12,841)		6,095
Financing activities
Intercompany	0		0
Principal payments to financial institutions and others	(752)		(1,053)
Other financing activities			180
Net cash provided by (used in) by financing activities	(752)		180
Net increase (decrease) in cash and cash equivalents	(121,759)		(27,429)
Cash and cash equivalents at beginning of period	279,756		268,366
Cash and cash equivalents at end of period	157,997		240,937
SHLP Corp
Operating activities
Net cash (used in) provided by operating activities	(86,654)	[1]	(28,900)	[2]
Investing activities
Investments in unconsolidated joint ventures	(6,792)	[1]
Proceeds from sale of available-for-sale investments			0	[2]
Other investing activities	590	[1]	131	[2]
Net cash provided by (used in) investing activities	(6,202)	[1]	131	[2]
Financing activities
Intercompany	5,840	[1]	11,860	[2]
Principal payments to financial institutions and others	(752)	[1]
Other financing activities			(854)	[2]
Net cash provided by (used in) by financing activities	5,088	[1]	11,006	[2]
Net increase (decrease) in cash and cash equivalents	(87,768)	[1]	(17,763)	[2]
Cash and cash equivalents at beginning of period	216,914	[1],[3]	157,511	[2]
Cash and cash equivalents at end of period	129,146	[1],[4]	139,748	[2]
Guarantor Subsidiaries
Operating activities
Net cash (used in) provided by operating activities	(38,172)		(29,876)
Investing activities
Investments in unconsolidated joint ventures	(53)
Proceeds from sale of available-for-sale investments			5,212
Other investing activities	2,919		1,536
Net cash provided by (used in) investing activities	2,866		6,748
Financing activities
Intercompany	(13,964)		14,613
Principal payments to financial institutions and others	0
Other financing activities			0
Net cash provided by (used in) by financing activities	(13,964)		14,613
Net increase (decrease) in cash and cash equivalents	(49,270)		(8,515)
Cash and cash equivalents at beginning of period	48,895		96,100
Cash and cash equivalents at end of period	(375)		87,585
Non-Guarantor Subsidiaries
Operating activities
Net cash (used in) provided by operating activities	12,630		22,534
Investing activities
Investments in unconsolidated joint ventures	(9,505)
Proceeds from sale of available-for-sale investments			0
Other investing activities	0		(784)
Net cash provided by (used in) investing activities	(9,505)		(784)
Financing activities
Intercompany	12,154		(23,935)
Principal payments to financial institutions and others	0
Other financing activities			1,034
Net cash provided by (used in) by financing activities	12,154		(22,901)
Net increase (decrease) in cash and cash equivalents	15,279		(1,151)
Cash and cash equivalents at beginning of period	13,947		14,755
Cash and cash equivalents at end of period	29,226		13,604
Consolidation, Eliminations
Operating activities
Net cash (used in) provided by operating activities	4,030		2,538
Investing activities
Investments in unconsolidated joint ventures	0
Proceeds from sale of available-for-sale investments			0
Other investing activities	0		0
Net cash provided by (used in) investing activities	0		0
Financing activities
Intercompany	(4,030)		(2,538)
Principal payments to financial institutions and others	0
Other financing activities			0
Net cash provided by (used in) by financing activities	(4,030)		(2,538)
Net increase (decrease) in cash and cash equivalents	0		0
Cash and cash equivalents at beginning of period	0		0
Cash and cash equivalents at end of period	$ 0		$ 0

[1] Includes Shea Homes Funding Corp.; no significant activity occurred in 2013.

[2] Includes Shea Homes Funding Corp.; no significant activity occurred in 2012.

[3] Includes Shea Homes Funding Corp., whose financial position at December 31, 2012 was not material.

[4] Includes Shea Homes Funding Corp., whose financial position at June 30, 2013 was not material.

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Other Liabilities

6 Months Ended

Jun. 30, 2013

Other Liabilities

11. Other Liabilities

At June 30, 2013 and December 31, 2012, other liabilities were as follows:

	June 30, 2013		December 31, 2012
	(In thousands)
Completed operations	$	131,248	$	131,519
Warranty reserves		18,521		17,749
Deferred revenue/gain		31,943		30,902
Provisions for closed homes/communities		13,149		8,135
Deposits (primarily homebuyer)		20,412		15,684
Legal reserves		4,082		4,916
Accrued interest		8,086		8,086
Accrued compensation and benefits		10,990		4,697
Distributions payable		2,712		2,892
Deficit Distributions (see Note 7)		504		716
Other		5,243		7,922
Total other liabilities	$	246,890	$	233,218

Completed Operations

Reserves for completed operations primarily represent claims for property damage to completed homes and projects outside of our one-to-two year warranty period. Specific terms and conditions of completed operations claims vary depending on the market in which homes close and can range to 12 years from the close of a home. Expenses and liabilities are recorded for potential completed operations claims based upon aggregated loss experience, which includes an estimate of completed operations claims incurred but not reported, and is actuarially estimated using individual case-based valuations and statistical analysis. For policy years from August 1, 2001 through the present, completed operations claims are insured or reinsured through a combination of third-party and affiliate insurance carriers.

For the three and six months ended June 30, 2013 and 2012, changes in completed operations reserves were as follows:

	Three Months Ended June 30,						Six Months Ended June 30,
	2013			2012			2013			2012
	(In thousands)
Insured completed operations
Balance, beginning of the period	$	131,250		$	103,980		$	131,519		$	109,390
Reserves provided (relieved)		1,096			17,517			3,068			18,908
Claims paid		(1,098	)		(4,368	)		(3,339	)		(11,169	)
Balance, end of the period	$	131,248		$	117,129		$	131,248		$	117,129

Reserves provided (relieved) for completed operations are generally fully offset by changes in insurance receivables (see Note 5), however, premiums paid for completed operations are included in cost of sales. For actual completed operations claims and estimates of completed operations claims incurred but not reported, we estimate and record insurance receivables under applicable policies when recovery is probable. At June 30, 2013 and December 31, 2012, insurance receivables were $131.2 million and $131.5 million, respectively.

Expenses, liabilities and receivables related to these claims are subject to a high degree of variability due to uncertainties such as trends in completed operations claims related to our markets and products built, claim settlement patterns and insurance industry practices. Although considerable variability is inherent in such estimates, we believe reserves for completed operations claims are adequate.

Warranty Reserve

We offer a limited one or two year warranty for our homes. Specific terms and conditions of these warranties vary depending on the market in which homes close. We estimate warranty costs to be incurred and record a liability and an expense to cost of sales when home revenue is recognized. We also include in our warranty reserve the uncovered losses related to completed operations coverage, which approximates 12.5% of the total property damage estimate. Factors affecting warranty liability include number of homes closed, historical and anticipated warranty claims, and cost per claim history and trends. We periodically assess adequacy of our warranty liabilities and adjust amounts as necessary.

For the three and six months ended June 30, 2013 and 2012, changes in warranty liability were as follows:

	Three Months Ended June 30,						Six Months Ended June 30,
	2013			2012			2013			2012
	(In thousands)
Balance, beginning of the period	$	17,927		$	16,660		$	17,749		$	17,358
Provision for warranties		2,641			1,668			4,386			3,143
Warranty costs paid		(2,047	)		(1,982	)		(3,614	)		(4,155	)
Balance, end of the period	$	18,521		$	16,346		$	18,521		$	16,346

Deferred Revenue/Gain

Deferred revenue/gain represents deferred profit on transactions in which an insufficient down payment was received or a future performance, passage of time or event is required. At June 30, 2013 and December 31, 2012, deferred revenue/gain primarily represents the PIC Transaction described below.

Completed operations claims were insured through PIC for policy years August 1, 2001 to July 31, 2007. In December 2009, PIC entered into a series of novation and reinsurance transactions (the “PIC Transaction”).

First, PIC entered into a novation agreement with JFSCI to novate its deductible reimbursement obligations related to its workers’ compensation and general liability risks at September 30, 2009 for policy years August 1, 2001 to July 31, 2007, and its completed operations risks from August 1, 2005 to July 31, 2007. Concurrently, JFSCI entered into insurance arrangements with unrelated third party insurance carriers to insure these policies. As a result of this novation, a $19.2 million gain was originally deferred and will be recognized as income when related claims are paid. In addition, the deferred gain may be adjusted either up or down as changes to the underlying insurance reserves occur based on actuarial estimates. An increase to the deferred gain will result in a current period charge while a decrease in the deferred gain will result in current period income. At June 30, 2013 and December 31, 2012, the unamortized deferred gain was $19.7 million and $20.3 million, respectively. For the three and six months ended June 30, 2013, we recognized $0.4 million and $0.6 million, respectively, of this deferral as income, which was included in other income (expense), net and represented the impact of a decrease in the deferred gain due to actuarial estimates and income recognition on claims paid. For the three and six months ended June 30, 2012, we recognized $(2.3) million and $(1.7) million, respectively, of this deferral as expense, which was included in other income (expense), net and represented the impact of an increase in the deferred gain due to actuarial estimates, partially offset by income recognition on claims paid.

Second, PIC entered into reinsurance agreements with various unrelated reinsurers that reinsured 100% of the completed operations risks from August 1, 2001 to July 31, 2005. As a result of the reinsurance, a $15.6 million gain was originally deferred and will be recognized as income when the related claims are paid. In addition, the deferred gain can be increased or decreased based on changes in actuarial estimates. Any changes to the deferred gain will be recognized as a current period gain or charge. At June 30, 2013 and December 31, 2012, the unamortized deferred gain was $9.1 million and $8.4 million, respectively. For the three and six months ended June 30, 2013, we recognized $(1.2) million and $(0.7) million, respectively, of this deferral as expense, which was included in other income (expense), net. For the three and six months ended June 30, 2012, we recognized $(5.9) million and $(5.7) million, respectively, of this deferral as expense, which was included in other income (expense), net. The expense for the three and six months ended June 30, 2013 and 2012 represented the impact of an increase in the deferred gain due to actuarial estimates, partially offset by income recognition on claims paid.

As a result of the PIC Transaction, if the estimated ultimate loss to be paid under these policies exceeds the policy limits under the novation and reinsurance transactions, the shortfall is expected to be funded by JFSCI for the policies novated to JFSCI and by PIC for the policies they reinsured.

Distributions Payable

In December 2011, our consolidated joint venture, Vistancia, LLC, sold its remaining interest in an unconsolidated joint venture (the “Vistancia Sale”). As a result of the Vistancia Sale, no other assets of Vistancia, LLC economically benefit the former non-controlling member of Vistancia, LLC and the Company recorded the remaining $3.3 million distribution payable to this member, which is paid $0.1 million quarterly. At June 30, 2013 and December 31, 2012, the remaining distribution payable was $2.7 million and $2.9 million, respectively.

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Other Assets (Detail) (USD $) In Thousands, unless otherwise specified	Jun. 30, 2013	Dec. 31, 2012
Other Assets [Line Items]
Income tax receivable	$ 2,991	$ 3,497
Investments	9,399	12,078
Property and equipment, net	2,142	2,237
Prepaid professional fees	3,181	3,451
Prepaid loan fees	6,164	6,688
Prepaid bank fees	380	403
Deposits in lieu of bonds and letters of credit	11,427	7,110
Prepaid insurance	481	2,148
Other	1,056	1,515
Total other assets, net	$ 37,221	$ 39,127

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Condensed Consolidated Statements of Comprehensive Income (Loss) (USD $) In Thousands, unless otherwise specified	3 Months Ended		6 Months Ended
	Jun. 30, 2013	Jun. 30, 2012	Jun. 30, 2013	Jun. 30, 2012
Net income (loss)	$ 19,532	$ (12,120)	$ 26,369	$ (12,318)
Other comprehensive income (loss), before tax
Unrealized investment holding gains (losses) during the year	175	(290)	425	1,953
Less: Reclassification adjustments for investment (gains) losses included in other income (expense)	0	23	(37)	0
Comprehensive income (loss), before tax	19,707	(12,387)	26,757	(10,365)
Income tax expense relating to other comprehensive income / (loss)	(68)	(374)	(151)	(1,151)
Comprehensive income (loss), net of tax	19,639	(12,761)	26,606	(11,516)
Less: Comprehensive (income) loss attributable to non-controlling interests	2	19	3	(194)
Comprehensive income (loss) attributable to SHLP	$ 19,641	$ (12,742)	$ 26,609	$ (11,710)

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Fair Value Disclosures

6 Months Ended

Jun. 30, 2013

Fair Value Disclosures

4. Fair Value Disclosures

At June 30, 2013 and December 31, 2012, as required by ASC 825, the following presents net book values and estimated fair values of notes payable.

	June 30, 2013				December 31, 2012
	Net Book Value		Estimated Fair Value		Net Book Value		Estimated Fair Value
	(In thousands)
$750,000 8.625% senior secured notes due May 2019	$	750,000	$	821,250	$	750,000	$	828,750
Secured promissory notes	$	9,740	$	9,740	$	8,209	$	8,209

The $750.0 million 8.625% senior secured notes due May 2019 (the “Secured Notes”) are level 2 financial instruments in which fair value was based on quoted market prices in an inactive market at the end of the period.

Other financial instruments consist primarily of cash and cash equivalents, restricted cash, accounts and other receivables, accounts payable and other liabilities and secured promissory notes. Book values of these financial instruments approximate fair value due to their relatively short-term nature. In addition, included in other assets are available-for-sale marketable securities, which are recorded at fair value.

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Supplemental Guarantor Information

6 Months Ended

Jun. 30, 2013

Supplemental Guarantor Information

18. Supplemental Guarantor Information

The obligations under the Secured Notes are not guaranteed by any SHLP joint venture where SHLP and Shea Homes Funding Corp., a wholly owned subsidiary (collectively “SHLP Corp.”), does not own 100% of the economic interest, including those that are consolidated, and the collateral securing the Secured Notes does not include a pledge of the capital stock of any subsidiary if such pledge would result in a requirement that SHLP Corp file separate financial statements with respect to such subsidiary pursuant to Rule 3-16 of Regulation S-X under the Securities Act.

Pursuant to the Indenture governing the Secured Notes, a guarantor may be released from its guarantee obligations only under certain customary circumstances specified in the Indenture, namely (1) upon the sale or other disposition (including by way of consolidation or merger) of such guarantor, (2) upon sale of disposition of all or substantially all the assets of such guarantor, (3) upon the designation of such guarantor as an unrestricted subsidiary for covenant purposes in accordance with the terms of the Indenture, (4) upon a legal defeasance or covenant defeasance pursuant to the Indenture, or (5) upon the full satisfaction of our obligations under the Indenture.

Presented herein are the condensed consolidated financial statements provided for in Rule 3-10(f) of Regulation S-K under the Securities Act for the guarantor subsidiaries and non-guarantor subsidiaries.

Condensed Consolidating Balance Sheet

June 30, 2013

	SHLP Corp.  (a)		Guarantor Subsidiaries			Non-Guarantor Subsidiaries		Eliminations			Total
	(In thousands)
Assets
Cash and cash equivalents	$	129,146	$	(375	)	$	29,226	$	0		$	157,997
Restricted cash		1,485		682			167		0			2,334
Accounts and other receivables, net		117,724		27,969			35,017		(34,692	)		146,018
Receivables from related parties, net		9,493		24,965			26		0			34,484
Inventory		675,830		316,507			2,262		(496	)		994,103
Investments in unconsolidated joint ventures		19,602		995			18,803		0			39,400
Investments in subsidiaries		706,597		63,778			92,483		(862,858	)		0
Other assets, net		19,152		17,665			404		0			37,221
Intercompany receivables		0		390,316			0		(390,316	)		0
Total assets	$	1,679,029	$	842,502		$	178,388	$	(1,288,362	)	$	1,411,557
Liabilities and equity
Liabilities:
Notes payable	$	759,740	$	0		$	0	$	0		$	759,740
Payables to related parties		20		5			5		4,129			4,159
Accounts payable		31,863		22,745			307		0			54,915
Other liabilities		170,201		41,569			70,308		(35,188	)		246,890
Intercompany payables		371,758		0			22,687		(394,445	)		0
Total liabilities		1,333,582		64,319			93,307		(425,504	)		1,065,704
Equity:
SHLP equity:
Owners’ equity		340,693		773,429			84,675		(858,104	)		340,693
Accumulated other comprehensive income		4,754		4,754			0		(4,754	)		4,754
Total SHLP equity		345,447		778,183			84,675		(862,858	)		345,447
Non-controlling interests		0		0			406		0			406
Total equity		345,447		778,183			85,081		(862,858	)		345,853
Total liabilities and equity	$	1,679,029	$	452,186		$	178,388	$	(898,046	)	$	1,411,557

(a) Includes Shea Homes Funding Corp., whose financial position at June 30, 2013 was not material.

Condensed Consolidating Balance Sheet

December 31, 2012

	SHLP Corp. (a)		Guarantor Subsidiaries		Non-Guarantor Subsidiaries		Eliminations			Total
	(In thousands)
Assets
Cash and cash equivalents	$	216,914	$	48,895	$	13,947	$	0		$	279,756
Restricted cash		11,999		875		157		0			13,031
Accounts and other receivables, net		117,560		23,537		35,250		(35,058	)		141,289
Receivables from related parties, net		8,271		25,668		89		0			34,028
Inventory		572,010		264,459		1,918		(734	)		837,653
Investments in unconsolidated joint ventures		13,948		984		13,721		0			28,653
Investments in subsidiaries		672,388		64,971		93,883		(831,242	)		0
Other assets, net		17,712		21,388		27		0			39,127
Intercompany receivables		0		376,420		0		(376,420	)		0
Total assets	$	1,630,802	$	827,197	$	158,992	$	(1,243,454	)	$	1,373,537
Liabilities and equity
Liabilities:
Notes payable	$	758,209	$	0	$	0	$	0		$	758,209
Payables to related parties		26		0		0		99			125
Accounts payable		34,384		27,879		475		0			62,738
Other liabilities		162,894		36,700		69,416		(35,792	)		233,218
Intercompany payables		356,451		0		20,068		(376,519	)		0
Total liabilities		1,311,964		64,579		89,959		(412,212	)		1,054,290
Equity:
SHLP equity:
Owners’ equity		314,321		758,101		68,624		(826,725	)		314,321
Accumulated other comprehensive income		4,517		4,517		0		(4,517	)		4,517
Total SHLP equity		318,838		762,618		68,624		(831,242	)		318,838
Non-controlling interests		0		0		409		0			409
Total equity		318,838		762,618		69,033		(831,242	)		319,247
Total liabilities and equity	$	1,630,802	$	450,777	$	158,992	$	(867,034	)	$	1,373,537

(a) Includes Shea Homes Funding Corp., whose financial position at December 31, 2012 was not material.

Condensed Consolidating Statement of Operations and Comprehensive Income (Loss)

Three Months Ended June 30, 2013

	SHLP Corp. (a)			Guarantor Subsidiaries			Non-Guarantor Subsidiaries			Eliminations			Total
	(In thousands)
Revenues	$	131,140		$	80,181		$	5,989		$	0		$	217,310
Cost of sales		(108,600	)		(60,071	)		(356	)		143			(168,884	)
Gross margin		22,540			20,110			5,633			143			48,426
Selling expenses		(7,526	)		(3,834	)		(1,488	)		0			(12,848	)
General and administrative expenses		(8,749	)		(4,732	)		(597	)		0			(14,078	)
Equity in income (loss) from unconsolidated joint ventures, net		23			(3	)		458			0			478
Equity in income (loss) from subsidiaries		15,098			(1,589	)		(799	)		(12,710	)		0
Gain (loss) on reinsurance transaction		0			0			(807	)		0			(807	)
Interest expense		(998	)		(399	)		0			0			(1,397	)
Other income (expense), net		(854	)		727			507			(143	)		237
Income (loss) before income taxes		19,534			10,280			2,907			(12,710	)		20,011
Income tax benefit (expense)		0			(475	)		(4	)		0			(479	)
Net income (loss)		19,534			9,805			2,903			(12,710	)		19,532
Less: Net loss (income) attributable to non-controlling interests		0			0			2			0			2
Net income (loss) attributable to SHLP	$	19,534		$	9,805		$	2,905		$	(12,710	)	$	19,534
Comprehensive income (loss)	$	19,641		$	9,912		$	2,903		$	(12,817	)	$	19,639

(a) Includes Shea Homes Funding Corp.; no significant activity occurred in 2013.

Condensed Consolidating Statement of Operations and Comprehensive Loss

Three Months Ended June 30, 2012

	SHLP Corp. (a)			Guarantor Subsidiaries			Non-Guarantor Subsidiaries			Eliminations			Total
	(In thousands)
Revenues	$	96,466		$	34,700		$	1,302		$	0		$	132,468
Cost of sales		(80,318	)		(27,496	)		(259	)		95			(107,978	)
Gross margin		16,148			7,204			1,043			95			24,490
Selling expenses		(6,234	)		(2,839	)		(1,126	)		0			(10,199	)
General and administrative expenses		(7,995	)		(2,979	)		(599	)		0			(11,573	)
Equity in income (loss) from unconsolidated joint ventures, net		10			(7	)		314			0			317
Equity in income (loss) from subsidiaries		(6,541	)		(9,534	)		(1,166	)		17,241			0
Gain (loss) on reinsurance transaction		0			0			(8,163	)		0			(8,163	)
Interest expense		(5,511	)		(398	)		0			0			(5,909	)
Other (expense) income, net		(1,977	)		1,368			469			(95	)		(235	)
Income (loss) before income taxes		(12,100	)		(7,185	)		(9,228	)		17,241			(11,272	)
Income tax expense		(1	)		(838	)		(9	)		0			(848	)
Net income (loss)		(12,101	)		(8,023	)		(9,237	)		17,241			(12,120	)
Less: Net loss (income) attributable to non-controlling interests		0			0			19			0			19
Net income (loss) attributable to SHLP	$	(12,101	)	$	(8,023	)	$	(9,218	)	$	17,241		$	(12,101	)
Comprehensive income (loss)	$	(12,742	)	$	(8,664	)	$	(9,237	)	$	17,882		$	(12,761	)

(a) Includes Shea Homes Funding Corp.; no significant activity occurred in 2012.

Condensed Consolidating Statement of Operations and Comprehensive income (Loss)

Six Months Ended June 30, 2013

	SHLP Corp. (a)			Guarantor Subsidiaries			Non-Guarantor Subsidiaries			Eliminations			Total
	(In thousands)
Revenues	$	201,105		$	139,356		$	11,809		$	0		$	352,270
Cost of sales		(164,380	)		(107,457	)		(709	)		238			(272,308	)
Gross margin		36,725			31,899			11,100			238			79,962
Selling expenses		(12,732	)		(7,224	)		(3,046	)		0			(23,002	)
General and administrative expenses		(16,320	)		(8,229	)		(1,486	)		0			(26,035	)
Equity in income (loss) from unconsolidated joint ventures, net		(640	)		(22	)		508			0			(154	)
Equity in income (loss) from subsidiaries		24,505			(1,194	)		(1,332	)		(21,979	)		0
Gain (loss) on reinsurance transaction		0			0			(159	)		0			(159	)
Interest expense		(3,432	)		(1,398	)		0			0			(4,830	)
Other income (expense), net		(1,731	)		1,968			1,008			(238	)		1,007
Income (loss) before income taxes		26,375			15,800			6,593			(21,979	)		26,789
Income tax benefit (expense)		(3	)		(405	)		(12	)		0			(420	)
Net income (loss)		26,372			15,395			6,581			(21,979	)		26,369
Less: Net loss (income) attributable to non-controlling interests		0			0			3			0			3
Net income (loss) attributable to SHLP	$	26,372		$	15,395		$	6,584		$	(21,979	)	$	26,372
Comprehensive income (loss)	$	26,609		$	15,632		$	6,581		$	(22,216	)	$	26,606

(a) Includes Shea Homes Funding Corp.; no significant activity occurred in 2013.

Condensed Consolidating Statement of Operations and Comprehensive Loss

Six Months Ended June 30, 2012

	SHLP Corp. (a)			Guarantor Subsidiaries			Non-Guarantor Subsidiaries			Eliminations			Total
	(In thousands)
Revenues	$	164,252		$	71,027		$	2,792		$	0		$	238,071
Cost of sales		(134,524	)		(58,203	)		(445	)		159			(193,013	)
Gross margin		29,728			12,824			2,347			159			45,058
Selling expenses		(11,613	)		(5,831	)		(2,107	)		0			(19,551	)
General and administrative expenses		(13,599	)		(5,030	)		(1,195	)		0			(19,824	)
Equity in income (loss) from unconsolidated joint ventures, net		139			(31	)		276			0			384
Equity in income (loss) from subsidiaries		(2,790	)		(10,387	)		(2,443	)		15,620			0
Gain (loss) on reinsurance transaction		0			0			(7,367	)		0			(7,367	))
Interest expense		(11,469	)		(724	)		(4	)		0			(12,197	)
Other income (expense), net		(2,903	)		3,213			1,124			(159	)		1,275
Income (loss) before income taxes		(12,507	)		(5,966	)		(9,369	)		15,620			(12,222	)
Income tax benefit (expense)		(5	)		(86	)		(5	)		0			(96	)
Net income (loss)		(12,512	)		(6,052	)		(9,374	)		15,620			(12,318	)
Less: Net loss (income) attributable to non-controlling interests		0			0			(194	)		0			(194	)
Net income (loss) attributable to SHLP	$	(12,512	)	$	(6,052	)	$	(9,568	)	$	15,620		$	(12,512	)
Comprehensive income (loss)	$	(11,710	)	$	(5,250	)	$	(9,374	)	$	14,818		$	(11,516	)

(a) Includes Shea Homes Funding Corp.; no significant activity occurred in 2012.

Condensed Consolidating Statement of Cash Flows

Six Months Ended June 30, 2013

	SHLP Corp. (a)			Guarantor Subsidiaries			Non-Guarantor Subsidiaries			Eliminations			Total
	(In thousands)
Operating activities
Net cash provided by (used in) operating activities	$	(86,654	)	$	(38,172	)	$	12,630		$	4,030		$	(108,166	)
Investing activities
Investments in unconsolidated joint ventures		(6,792	)		(53	)		(9,505	)		0			(16,350	)
Other investing activities		590			2,919			0			0			3,509
Net cash provided by (used in) investing activities		(6,202	)		2,866			(9,505	)		0			(12,841	)
Financing activities
Intercompany		5,840			(13,964	)		12,154			(4,030	)		0
Principal payments to financial institutions and others		(752	)		0			0			0			(752	)
Net cash provided by (used in) financing activities		5,088			(13,964	)		12,154			(4,030	)		(752	)
Net increase (decrease) in cash and cash equivalents		(87,768	)		(49,270	)		15,279			0			(121,759	)
Cash and cash equivalents at beginning of period		216,914			48,895			13,947			0			279,756
Cash and cash equivalents at end of period	$	129,146		$	(375	)	$	29,226		$	0		$	157,997

(a) Includes Shea Homes Funding Corp.; no significant activity occurred in 2013.

Condensed Consolidating Statement of Cash Flows

Six Months Ended June 30, 2012

	SHLP Corp. (b)			Guarantor Subsidiaries			Non-Guarantor Subsidiaries			Eliminations			Total
	(In thousands)
Operating activities
Net cash (used in) provided by operating activities	$	(28,900	)	$	(29,876	)	$	22,534		$	2,538		$	(33,704	)
Investing activities
Proceeds from sale of available-for-sale investments		0			5,212			0			0			5,212
Other investing activities		131			1,536			(784	)		0			883
Net cash provided by (used in) investing activities		131			6,748			(784	)		0			6,095
Financing activities
Intercompany		11,860			14,613			(23,935	)		(2,538	)		0
Other financing activities		(854	)		0			1,034			0			180
Net cash provided by (used in) financing activities		11,006			14,613			(22,901	)		(2,538	)		180
Net decrease in cash and cash equivalents		(17,763	)		(8,515	)		(1,151	)		0			(27,429	)
Cash and cash equivalents at beginning of period		157,511			96,100			14,755			0			268,366
Cash and cash equivalents at end of period	$	139,748		$	87,585		$	13,604		$	0		$	240,937

(b) Includes Shea Homes Funding Corp.; no significant activity occurred in 2012.

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Contingent Liabilities And Commitments (Parenthetical) (Detail) (USD $) In Thousands, unless otherwise specified	Jun. 30, 2013	Dec. 31, 2012
Commitment And Contingencies [Line Items]
Guarantee obligations maximum exposure	$ 70,000
Tax Court Member
Commitment And Contingencies [Line Items]
Guarantee obligations maximum exposure	$ 70,000	$ 70,000

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Notes Payable (Parenthetical) (Detail) (USD $) In Thousands, unless otherwise specified	Jun. 30, 2013	Dec. 31, 2012	May 10, 2011
8.625% senior secured notes due May 2019
Debt Instrument [Line Items]
Principal amount	$ 750,000	$ 750,000	$ 750,000
Interest rate	8.625%	8.625%
Maturity period	2019-05	2019-05
Promissory Notes Maturing 2014
Debt Instrument [Line Items]
Maturity year	2014	2014
Promissory Notes Maturing 2014 | Minimum
Debt Instrument [Line Items]
Interest rate	1.00%	1.00%
Promissory Notes Maturing 2014 | Maximum
Debt Instrument [Line Items]
Interest rate	6.00%	6.00%

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Related Party Transactions

6 Months Ended

Jun. 30, 2013

Related Party Transactions

12. Related Party Transactions

Related Party Receivables and Payables

At June 30, 2013 and December 31, 2012, receivables from related parties, net were as follows:

	June 30, 2013			December 31, 2012
	(In thousands)
Note receivable from JFSCI	$	24,648		$	24,498
Note receivable from unconsolidated joint venture		279			268
Notes receivable from related parties		19,385			19,940
Reserves for note receivables from related parties		(12,803	)		(12,766	)
Receivables from related parties		2,975			2,088
Total receivables from related parties, net	$	34,484		$	34,028

In May 2011, concurrent with issuance of the Secured Notes, the previous unsecured receivable from JFSCI was partially paid down and the balance converted to a $38.9 million unsecured term note receivable, bearing 4% interest, payable in equal quarterly installments and maturing May 15, 2019. In 2013 and 2012, JFSCI elected to make prepayments, including accrued interest, of $1.8 million and $1.9 million, respectively, and applied these prepayments to future installments such that JFSCI would not be required to make a payment until November 2014. At June 30, 2013 and December 31, 2012, the note receivable from JFSCI, including accrued interest, was $24.6 million and $24.5 million, respectively. Quarterly, we evaluate collectability of the note receivable from JFSCI, which includes consideration of JFSCI’s payment history, operating performance and future payment requirements under the note. Based on these criteria, and as JFSCI applied prepayments under the note to defer future installments until August 2014, we do not anticipate collection risks on the note receivable from JFSCI.

At June 30, 2013 and December 31, 2012, note receivable from unconsolidated joint venture, including accrued interest, was $0.3 million and $0.3 million, respectively. The note receivable bears interest at 8% and matures in 2020. Further, this note earns additional interest to achieve a 17.5% internal rate of return, subject to available cash flows of the joint venture, and can be repaid prior to 2020. Quarterly, we evaluate collectability of this note, which includes consideration of prior payment history, operating performance and future payment requirements under the applicable note. Based on these criteria, we do not anticipate collection risks on this note.

At June 30, 2013 and December 31, 2012, notes receivable from other related parties, including accrued interest, were $6.6 million and $7.2 million, respectively, net of related reserves of $12.8 million and $12.8 million, respectively. These notes are unsecured and mature from August 2016 through April 2021. At June 30, 2013 and December 31, 2012, these notes bore interest ranging from Prime less .75% (2.5%) to 4.25%. Quarterly, we evaluate collectability of these notes which includes consideration of prior payment history, operating performance and future payment requirements under the applicable notes. At December 31, 2009, based on these criteria, two notes receivable were deemed uncollectible and fully reserved. We do not anticipate collection risks on the other notes.

The Company, entities under common control and certain unconsolidated joint ventures also engage in transactions on behalf of the other, such as payment of invoices and payroll. The amounts resulting from these transactions are recorded in receivables from related parties or payables to related parties, are non-interest bearing, due on demand and generally paid monthly. At June 30, 2013 and December 31, 2012, these receivables were $3.0 million and $2.1 million, respectively, and these payables were $0.1 million and $0.1 million, respectively.

Real Property and Joint Venture Transactions

In May 2012, for a nominal amount, SHLP purchased the non-controlling member’s entire 16.7% interest in Vistancia, LLC, a consolidated joint venture. However, the distribution payable remained (see Note 11).

In March 2012, SHLP’s entire 58% interest in Shea Colorado, LLC (“SCLLC”), a consolidated joint venture with Shea Properties II, LLC, a related party and the non-controlling member, was redeemed by SCLLC. In valuing its 58% interest in SCLLC, and to ensure receipt of net assets of equal value to its ownership interest, SHLP used third-party real estate appraisals. The estimated fair value of the assets received by SHLP was $30.8 million. However, as the non-controlling member is a related party under common control, the assets and liabilities received by SHLP were recorded at net book value and the difference in SHLP’s investment in SCLLC and the net book value of the assets and liabilities received was recorded as a reduction to SHLP’s equity.

As consideration for the redemption, SCLLC distributed assets and liabilities to SHLP having a net book value of $24.0 million, including $2.2 million cash, a $3.0 million secured note receivable, $20.0 million of inventory and $1.2 million of other liabilities. As a result of this redemption, SCLLC is no longer included in these consolidated financial statements effective March 31, 2012. This transaction resulted in a net reduction of $41.8 million in assets and $2.0 million in liabilities, and a $39.8 million reduction in total equity, of which $11.6 million was attributable to SHLP and $28.2 million was attributable to non-controlling interests.

At June 30, 2013 and 2012, we were the managing member for nine and seven, respectively, unconsolidated joint ventures and received a management fee from these joint ventures as reimbursement for direct and overhead costs incurred on behalf of the joint ventures and other associated costs. Fees from joint ventures representing reimbursement of our costs are recorded as a reduction to general and administrative expense. Fees from joint ventures representing amounts in excess of our costs are recorded as revenues. For the three and six months ended June 30, 2013, $2.0 million and $3.6 million of management fees, respectively, were offset against general and administrative expenses, and $0.1 million and $0.1 million of management fees, respectively, were included in revenues. For the three and six months ended June 30, 2012, $0.7 million and $1.7 million of management fees, respectively, were offset against general and administrative expenses, and $0.1 million and $0.2 million of management fees, respectively, were included in revenues.

Other Related Party Transactions

JFSCI provides corporate services to us, including management, legal, tax, information technology, risk management, facilities, accounting, treasury and human resources. For the three and six months ended June 30, 2013, general and administrative expenses included $5.9 million and $11.1 million, respectively, for corporate services provided by JFSCI. For the three and six months ended June 30, 2012, general and administrative expenses included $4.5 million and $8.4 million, respectively, for corporate services provided by JFSCI.

We lease office space from related parties under non-cancelable operating leases. Leases are for five to ten year terms and generally provide for five year renewal options. For the three and six months ended June 30, 2013, related-party rental expense was $0.1 million and $0.1 million, respectively. For the three and six months ended June 30, 2012, related-party rental expense was $0.1 million and $0.3 million, respectively.

We obtain workers compensation insurance, commercial general liability insurance and insurance for completed operations losses and damages with respect to our homebuilding operations from affiliate and unrelated third party insurance providers. These policies are purchased by affiliate entities and we pay premiums to these affiliates for the coverage provided by these third party and affiliate insurance providers. Policies covering these risks are written at various coverage levels but include a large self-insured retention or deductible. We have retention liability insurance from affiliated entities to insure these large retentions or deductibles. For the three and six months ended June 30, 2013, amounts paid to affiliates for this retention insurance coverage were $3.9 million and $7.8 million, respectively. For the three and six months ended June 30, 2012, amounts paid to affiliates for this retention insurance coverage were $3.2 million and $5.9 million, respectively.

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Interest Incurred, Capitalized and Expensed (Detail) (USD $) In Thousands, unless otherwise specified	3 Months Ended				6 Months Ended
	Jun. 30, 2013		Jun. 30, 2012		Jun. 30, 2013		Jun. 30, 2012
Capitalized Interest [Line Items]
Interest incurred	$ 16,774		$ 16,660		$ 33,542		$ 33,320
Interest expensed	1,397	[1]	5,909	[1]	4,830	[1]	12,197	[1]
Inventory
Capitalized Interest [Line Items]
Interest capitalized as a cost of inventory during the period	14,871		10,550		27,949		20,745
Interest previously capitalized as a cost of inventory, included in cost of sales	(15,393)		(10,074)		(24,904)		(17,858)
Interest capitalized in ending inventory	105,894	[2]	114,323	[2]	105,894	[2]	114,323	[2]
Investments In Joint Ventures
Capitalized Interest [Line Items]
Interest capitalized as a cost of investments in unconsolidated joint ventures during the period	506		201		763		378
Interest previously capitalized as a cost of investments in unconsolidated joint ventures, included in equity in income (loss) from unconsolidated joint ventures	(328)		(201)		(585)		(378)
Interest capitalized in ending investments in unconsolidated joint ventures	$ 178		$ 0		$ 178		$ 0

[1] For the three and six months ended June 30, 2013 and 2012, assets qualifying for interest capitalization were less than debt; therefore, non-qualifying interest was expensed.

[2] Inventory impairment charges were recorded against total inventory of the respective community. Capitalized interest reflects the gross amount of capitalized interest as impairment charges recognized were generally not allocated to specific components of inventory.

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Notes Payable - Additional Information (Detail) (USD $) In Thousands, except Per Share data, unless otherwise specified	6 Months Ended
	Jun. 30, 2013	Dec. 31, 2012	May 10, 2011
Debt Instrument [Line Items]
Accrued interest	$ 8,086	$ 8,086
8.625% senior secured notes due May 2019
Debt Instrument [Line Items]
Maturity date	May 15, 2019
Accrued interest	8,100	8,100
Principal amount of debt issued	$ 750,000	$ 750,000	$ 750,000
8.625% senior secured notes due May 2019 | Semi Annual Payment, First Payment
Debt Instrument [Line Items]
Interest payment date	May 15
8.625% senior secured notes due May 2019 | Semi Annual Payment, Second Payment
Debt Instrument [Line Items]
Interest payment date	November 15
8.625% senior secured notes due May 2019 | Redeem On Or After May 15, 2015
Debt Instrument [Line Items]
Note redemption price	$ 104.313
8.625% senior secured notes due May 2019 | Redeem On Or After May 15, 2016
Debt Instrument [Line Items]
Note redemption price	$ 102.156

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Basis of Presentation - Additional Information (Detail) (USD $) In Millions, unless otherwise specified	12 Months Ended		6 Months Ended
	Dec. 31, 2012 Reclassification From Investments To Other Assets	Dec. 31, 2012 Reclassification From Property And Equipment To Other Assets	Jun. 30, 2012 Reclassification From Other Income Expense To Gain Loss On Reinsurance Transactions	Jun. 30, 2013 JFSCI
Schedule of Equity Method Investments [Line Items]
Ownership Interest				96.00%
Reclassification adjustment	$ 12.1	$ 2.2	$ 7.4

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Accounts and Other Receivables, net (Tables)

6 Months Ended

Jun. 30, 2013

Accounts and Other Receivables

At June 30, 2013 and December 31, 2012, accounts and other receivables, net were as follows:

	June 30, 2013			December 31, 2012
	(In thousands)
Insurance receivables	$	131,248		$	131,519
Escrow receivables		5,442			576
Notes receivables		3,181			3,662
Development receivables		3,095			3,325
Other receivables		4,973			4,147
Reserve		(1,921	)		(1,940	)
Total accounts and other receivables, net	$	146,018		$	141,289

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Fair Value Disclosures (Tables)

6 Months Ended

Jun. 30, 2013

Net Book Values and Estimated Fair Values of Notes Payable

At June 30, 2013 and December 31, 2012, as required by ASC 825, the following presents net book values and estimated fair values of notes payable.

	June 30, 2013				December 31, 2012
	Net Book Value		Estimated Fair Value		Net Book Value		Estimated Fair Value
	(In thousands)
$750,000 8.625% senior secured notes due May 2019	$	750,000	$	821,250	$	750,000	$	828,750
Secured promissory notes	$	9,740	$	9,740	$	8,209	$	8,209

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Inventory (Detail) (USD $) In Thousands, unless otherwise specified	Jun. 30, 2013	Dec. 31, 2012
Inventory [Line Items]
Homes under construction	$ 263,912	$ 189,929
Lots available for construction	284,196	249,463
Land under development	189,261	175,922
Land held for future development	79,656	60,466
Land held for sale, including water system connection rights	73,024	71,381
Land deposits and preacquisition costs	10,986	7,267
Total inventory	994,103	837,653
Model Homes
Inventory [Line Items]
Inventory finished homes	71,572	69,210
Completed Homes for Sale
Inventory [Line Items]
Inventory finished homes	$ 21,496	$ 14,015

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Contingencies and Commitments (Tables)

6 Months Ended

Jun. 30, 2013

Contingent Liabilities And Commitments

At June 30, 2013 and December 31, 2012, certain unrecorded contingent liabilities and commitments were as follows:

	June 30, 2013		December 31, 2012
	(In thousands)
Tax Court CCM case (capped at $70.0 million)	$	70,000	$	70,000
Remargin obligations and guarantees for unconsolidated joint ventures (see Note 7)		24,726		22,805
Outstanding letters of credit		457		4,216
Costs to complete on surety bonds for Company projects		94,672		85,490
Costs to complete on surety bonds for joint venture projects		27,659		30,804
Costs to complete on surety bonds for related party projects		2,274		2,311
Water system connection rights purchase obligation		33,615		33,615
Total unrecorded contingent liabilities and commitments	$	253,403	$	249,241

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Restricted Cash - Additional Information (Detail) (USD $) In Millions, unless otherwise specified	1 Months Ended
	Jan. 31, 2013	Jun. 30, 2013	Dec. 31, 2012
Restricted Cash and Cash Equivalents Items [Line Items]
Restricted cash used as collateral released	$ 10.0
Restricted cash		$ 2.3	$ 13.0

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Investments in Joint Ventures - Additional Information (Detail) (USD $)			6 Months Ended				6 Months Ended	3 Months Ended		6 Months Ended
	Jun. 30, 2013	Dec. 31, 2012	Jun. 30, 2013 Unconsolidated Joint Ventures	Jun. 30, 2013 Unconsolidated Joint Ventures Guarantee provided	Dec. 31, 2012 Unconsolidated Joint Ventures Guarantee provided	Jun. 30, 2013 Unconsolidated Joint Ventures Maximum	Jun. 30, 2013 Unconsolidated Joint Ventures Minimum	Jun. 30, 2013 Impairment on investments in joint ventures	Jun. 30, 2012 Impairment on investments in joint ventures	Jun. 30, 2013 Impairment on investments in joint ventures	Jun. 30, 2012 Impairment on investments in joint ventures	Jun. 30, 2013 Unconsolidated Joint Venture One Guarantee provided	Dec. 31, 2012 Unconsolidated Joint Venture One Guarantee provided	Jun. 30, 2013 Unconsolidated Joint Venture Two
Investment [Line Items]
Ownership Interest						50.00%
Deficit Distributions	$ 504,000	$ 716,000
Impairments charges on investments								0	0	0	0
Indemnification agreement from joint ventures, percentage				90.00%	90.00%							50.00%
Notes payable outstanding				0	0							49,400,000	45,600,000
Maximum remargin obligation	70,000,000											24,700,000	22,800,000
Maximum liability (cap)												35,000,000
Revolving basket available for joint venture investment			70,000,000
Consolidated fixed charge coverage ratio							200.00%
Percentage of cumulative consolidated net income			50.00%
Committed capital contribution in joint venture														45,000,000
Aggregate capital contributions	$ 39,400,000	$ 28,653,000												$ 9,500,000

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Notes Payable (Tables)

6 Months Ended

Jun. 30, 2013

Summary of Notes Payable

At June 30, 2013 and December 31, 2012, notes payable were as follows:

	June 30, 2013		December 31, 2012
	(In thousands)
$750.0 million 8.625% senior secured notes, due May 2019	$	750,000	$	750,000
Promissory notes, interest ranging from 1% to 6%, maturing through 2014, secured by deeds of trust on inventory		9,740		8,209
Total notes payable	$	759,740	$	758,209

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Income Taxes - Additional Information (Detail) (USD $)	3 Months Ended		6 Months Ended			12 Months Ended
	Jun. 30, 2013	Jun. 30, 2012	Jun. 30, 2013	Jun. 30, 2012	Jun. 30, 2013 SHI	Dec. 31, 2009 SHI Maximum	Dec. 31, 2009 SHLP Maximum
Income Taxes [Line Items]
Income tax benefit (expense)	$ 479,000	$ 848,000	$ 420,000	$ 96,000	$ (400,000)
Deferred tax asset					31,500,000
Deferred tax asset valuation allowance					31,500,000
Amount company could be obligated to pay						64,000,000	107,000,000
Initial Maximum CCM Payment	$ 70,000,000		$ 70,000,000

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Financial Information for Reportable Segments - Revenues (Detail) (USD $) In Thousands, unless otherwise specified	3 Months Ended		6 Months Ended
	Jun. 30, 2013	Jun. 30, 2012	Jun. 30, 2013	Jun. 30, 2012
Segment Reporting Disclosure [Line Items]
Revenues	$ 217,310	$ 132,468	$ 352,270	$ 238,071
Corporate
Segment Reporting Disclosure [Line Items]
Revenues	336	250	457	493
Homebuilding
Segment Reporting Disclosure [Line Items]
Revenues	216,974	132,218	351,813	237,578
Homebuilding | Southern California
Segment Reporting Disclosure [Line Items]
Revenues	56,134	30,104	96,289	56,484
Homebuilding | San Diego
Segment Reporting Disclosure [Line Items]
Revenues	31,358	10,180	40,988	24,287
Homebuilding | Northern California
Segment Reporting Disclosure [Line Items]
Revenues	53,483	30,438	81,132	56,396
Homebuilding | Mountain West
Segment Reporting Disclosure [Line Items]
Revenues	39,884	33,211	62,190	51,806
Homebuilding | South West
Segment Reporting Disclosure [Line Items]
Revenues	34,151	26,700	67,684	46,215
Homebuilding | Other Areas
Segment Reporting Disclosure [Line Items]
Revenues	$ 1,964	$ 1,585	$ 3,530	$ 2,390

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Related Party Transactions - Additional Information (Detail) (USD $)	3 Months Ended		6 Months Ended			6 Months Ended								6 Months Ended	12 Months Ended	1 Months Ended			3 Months Ended		6 Months Ended		1 Months Ended		1 Months Ended		1 Months Ended	6 Months Ended			3 Months Ended		6 Months Ended			6 Months Ended		3 Months Ended		6 Months Ended
	Jun. 30, 2013	Jun. 30, 2012	Jun. 30, 2013	Jun. 30, 2012	Dec. 31, 2012	Jun. 30, 2013 Minimum	Jun. 30, 2013 Maximum	Jun. 30, 2013 Related Party Receivables and Payables	Dec. 31, 2012 Related Party Receivables and Payables	Jun. 30, 2013 Related Party Receivables and Payables Minimum	Dec. 31, 2012 Related Party Receivables and Payables Minimum	Jun. 30, 2013 Related Party Receivables and Payables Maximum	Dec. 31, 2012 Related Party Receivables and Payables Maximum	Jun. 30, 2013 Related Party Receivables and Payables Other	Dec. 31, 2012 Related Party Receivables and Payables Other	Mar. 31, 2012 Real Property and Joint Venture Transactions Redemption or Purchase of Interest in Joint Venture	Jun. 30, 2013 Non Interest Bearing	Dec. 31, 2012 Non Interest Bearing	Jun. 30, 2013 Affiliated Entity	Jun. 30, 2012 Affiliated Entity	Jun. 30, 2013 Affiliated Entity	Jun. 30, 2012 Affiliated Entity	Mar. 31, 2012 SHLP Real Property and Joint Venture Transactions Redemption or Purchase of Interest in Joint Venture	May 31, 2012 SHLP Real Property and Joint Venture Transactions Redemption or Purchase of Interest in Joint Venture	Mar. 31, 2012 SCLLC Real Property and Joint Venture Transactions Redemption or Purchase of Interest in Joint Venture	Jun. 30, 2013 JFSCI	May 31, 2011 JFSCI Related Party Receivables and Payables	Jun. 30, 2013 JFSCI Related Party Receivables and Payables	Jun. 30, 2012 JFSCI Related Party Receivables and Payables	Dec. 31, 2012 JFSCI Related Party Receivables and Payables	Jun. 30, 2013 JFSCI General and Administrative Related Party Transactions	Jun. 30, 2012 JFSCI General and Administrative Related Party Transactions	Jun. 30, 2013 JFSCI General and Administrative Related Party Transactions	Jun. 30, 2012 JFSCI General and Administrative Related Party Transactions	Jun. 30, 2013 Unconsolidated Joint Ventures Maximum	Jun. 30, 2013 Unconsolidated Joint Ventures Related Party Receivables and Payables	Dec. 31, 2012 Unconsolidated Joint Ventures Related Party Receivables and Payables	Jun. 30, 2013 Partner Notes Payable Real Property and Joint Venture Transactions Other Real Property and Joint Venture Transactions	Jun. 30, 2012 Partner Notes Payable Real Property and Joint Venture Transactions Other Real Property and Joint Venture Transactions	Jun. 30, 2013 Partner Notes Payable Real Property and Joint Venture Transactions Other Real Property and Joint Venture Transactions Entity	Jun. 30, 2012 Partner Notes Payable Real Property and Joint Venture Transactions Other Real Property and Joint Venture Transactions Entity
Related Party Transaction [Line Items]
Convertible notes receivable																											$ 38,900,000
Bearing interest from notes receivable										2.50%	2.50%	4.25%	4.25%														4.00%									8.00%
Receivable maturity date																											May 15, 2019
Prepayment on notes																												1,800,000	1,900,000
Notes receivable	19,385,000		19,385,000		19,940,000									6,600,000	7,200,000													24,600,000		24,500,000						300,000	300,000
Notes receivable, maturity year																																				2020
Internal rate of returns																																				17.50%
Reserves for notes receivable from other related parties	12,803,000		12,803,000		12,766,000									12,800,000	12,800,000
Notes receivable, maturity periods														August 2016 through April 2021
Accrued interest monthly based on Prime less														0.75%	0.75%
Receivables from related parties	2,975,000		2,975,000		2,088,000												3,000,000	2,100,000
Payables to related parties	4,159,000		4,159,000		125,000			100,000	100,000
Ownership Interest																							58.00%	16.70%		96.00%									50.00%
Estimated fair value assets received																							30,800,000
Distributed assets and liabilities																							24,000,000
Cash from distribution																							2,200,000
Secured notes receivable	3,181,000		3,181,000		3,662,000																		3,000,000
Inventory																							20,000,000
Other liabilities	246,890,000		246,890,000		233,218,000																		1,200,000
Reduction in assets																									41,800,000
Reduction in liabilities																									2,000,000
Reduction in equity																39,800,000							11,600,000
Reduction in equity of non-controlling interest																28,200,000
Number of unconsolidated joint ventures																																								9	7
General and administrative expenses	14,078,000	11,573,000	26,035,000	19,824,000																											5,900,000	4,500,000	11,100,000	8,400,000				2,000,000	700,000	3,600,000	1,700,000
Management fees																																						100,000	100,000	100,000	200,000
Leases						5 years	10 years
Lease renewal option term			5 years
Related party rental expense	100,000	100,000	100,000	300,000
Amounts paid to affiliates for insurance coverage																			$ 3,900,000	$ 3,200,000	$ 7,800,000	$ 5,900,000

XML

Fair Value Disclosures - Additional Information (Detail) (8.625% senior secured notes due May 2019, USD $) In Thousands, unless otherwise specified	Jun. 30, 2013	Dec. 31, 2012
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Net Book Value	$ 750,000	$ 750,000
Interest rate	8.625%	8.625%
Maturity period	2019-05	2019-05
Fair Value, Inputs, Level 2
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Net Book Value	$ 750,000
Interest rate	8.625%	8.625%
Maturity period	2019-05	2019-05

XML

Supplemental Disclosures to Consolidated Statements of Cash Flows (Detail) (USD $) In Thousands, unless otherwise specified	6 Months Ended
	Jun. 30, 2013	Jun. 30, 2012
Supplemental disclosure of cash flow information
Income taxes paid (refunded)	$ 66	$ (2,391)
Interest paid, net of amounts capitalized	4,689	11,853
Supplemental disclosure of non-cash activities
Unrealized gain (loss) on available-for-sale investments, net	237	802
Reclassification of Deficit Distributions to (from) unconsolidated joint ventures from (to) other liabilities	(212)	(82)
Purchase of land in exchange for note payable	2,283	1,097
Elimination of joint venture inventory, receivables from related parties and other assets	0	(41,600)
Elimination of joint venture note payable and other liabilities	0	(1,949)
Redemption of Company's interest in consolidated joint venture and elimination of non-controlling interest, less cash retained by non-controlling interest	$ 0	$ (39,651)

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Summary of Significant Accounting Policies (Policies)

6 Months Ended

Jun. 30, 2013

Inventory

Inventory

Inventory is stated at cost, unless the carrying amount is determined not to be recoverable, in which case inventory is adjusted to fair value or fair value less cost to sell. Quarterly, we review our real estate assets at each community for indicators of impairment. Real estate assets include projects actively selling, under development, held for future development or held for sale. Indicators of impairment include, but are not limited to, significant decreases in local housing market values and prices of comparable homes, significant decreases in gross margins and sales absorption rates, costs in excess of budget, and actual or projected cash flow losses.

If there are indications of impairment, we analyze the budgets and cash flows of our real estate assets and compare the estimated remaining undiscounted future cash flows of the community to the asset’s carrying value. If the undiscounted cash flows exceed the asset’s carrying value, no impairment adjustment is required. If the undiscounted cash flows are less than the asset’s carrying value, the asset is deemed impaired and adjusted to fair value. For land held for sale, if the fair value less costs to sell exceed the asset’s carrying value, no impairment adjustment in required. These impairment evaluations require use of estimates and assumptions regarding future conditions, including timing and amounts of development costs and sales prices of real estate assets, to determine if estimated future undiscounted cash flows will be sufficient to recover the asset’s carrying value.

When estimating undiscounted cash flows of a community, various assumptions are made, including: (i) the number of homes available and the expected prices and incentives offered by us or builders in other communities, and future price adjustments based on market and economic trends; (ii) expected sales pace and cancellation rates based on local housing market conditions, competition and historical trends; (iii) costs expended to date and expected to be incurred, including, but not limited to, land and land development, home construction, interest, indirect construction and overhead, and selling and marketing costs; (iv) alternative product offerings that may be offered that could have an impact on sales pace, price and/or building costs; and (v) alternative uses for the property.

Many assumptions are interdependent and a change in one may require a corresponding change to other assumptions. For example, increasing or decreasing sales rates has a direct impact on the estimated price of a home, the level of time sensitive costs (such as indirect construction, overhead and interest), and selling and marketing costs (such as model maintenance and advertising). Depending on the underlying objective of the community, assumptions could have a significant impact on the projected cash flows. For example, if our objective is to preserve operating margins, our cash flows will be different than if the objective is to increase sales. These objectives may vary significantly by community over time.

If assets are considered impaired, the impairment charge is the amount the asset’s carrying value exceeds its fair value. Fair value is determined based on estimated future cash flows discounted for inherent risks associated with real estate assets or other valuation techniques. These discounted cash flows are impacted by expected risk based on estimated land development, construction and delivery timelines; market risk of price erosion; uncertainty of development or construction cost increases; and other risks specific to the asset or market conditions where the asset is located when the assessment is made. These factors are specific to each community and may vary among communities. The discount rate used in determining each asset’s fair value depends on the community’s projected life and development stage.

Completed Operations Claim Costs

Completed Operations Claim Costs

We maintain, and require our subcontractors to maintain, general liability insurance which includes coverage for completed operations losses and damages. Most subcontractors carry this insurance through our “rolling wrap-up” insurance program, where our risks and risks of participating subcontractors are insured through a common set of master policies.

Completed operations claims reserves primarily represent claims for property damage to completed homes and projects outside of our one-to-two year warranty period. Specific terms and conditions of completed operations warranties vary depending on the market in which homes are closed and can range up to 12 years from the closing of a home.

We record expenses and liabilities for estimated costs of potential completed operations claims based upon aggregated loss experience, which includes an estimate of completed operations claims incurred but not reported and is actuarially estimated using individual case-basis valuations and statistical analysis. These estimates make up our entire reserve and are subject to a high degree of variability due to uncertainties such as trends in completed operations claims related to our markets and products built, changes in claims reporting and settlement patterns, third party recoveries, insurance industry practices, insurance regulations and legal precedent. Because state regulations vary, completed operations claims are reported and resolved over an extended period, sometimes exceeding 12 years. As a result, actual costs may differ significantly from estimates.

The actuarial analyses that determine these incurred but not reported claims consider various factors, including frequency and severity of losses, which are based on our historical claims experience supplemented by industry data. The actuarial analyses of these claims and reserves also consider historical third party recovery rates and claims management expenses. Due to inherent uncertainties related to these factors, periodic changes to such factors based on updated relevant information could result in actual costs differing significantly from estimates.

In accordance with our underlying completed operations insurance policies, these completed operations claims costs are recoverable from our subcontractors or insurance carriers. Completed operations claims through July 31, 2009 are insured or reinsured with third-party insurance carriers and completed operations claims commencing August 1, 2009 are insured with third-party and affiliate insurance carriers.

Revenues

Revenues

In accordance with Accounting Standards Codification (“ASC”) 360, revenues from housing and other real estate sales are recognized when the respective units close. Housing and other real estate sales close when all conditions of escrow are met, including delivery of the home or other real estate asset, title passage, appropriate consideration is received or collection of associated receivables, if any, is reasonably assured and when we have no other continuing involvement in the asset. Sales incentives are a reduction of revenues when the respective unit closes.

Income Taxes

Income Taxes

SHLP is treated as a partnership for income tax purposes. As a limited partnership, SHLP is subject to certain minimal state taxes and fees; however, taxes on income realized by SHLP are generally the obligation of the Partners and their owners.

SHI and PIC are C corporations. Federal and state income taxes are provided for these entities in accordance with ASC 740. The provision for, or benefit from, income taxes is calculated using the asset and liability method, whereby deferred tax assets and liabilities are recorded based on the difference between the financial statement and tax basis of assets and liabilities using enacted tax rates in effect the year in which differences are expected to reverse.

Deferred tax assets are evaluated to determine whether a valuation allowance should be established based on our determination of whether it is more likely than not some or all of the deferred tax asset will not be realized. The ultimate realization of deferred tax assets depends primarily on generation of future taxable income during periods in which those temporary differences become deductible. Judgment is required in determining future tax consequences of events that have been recognized in the consolidated financial statements and/or tax returns. Differences between anticipated and actual outcomes of these future tax consequences could have a material impact on the consolidated financial position or results of operations.

New Accounting Pronouncements

New Accounting Pronouncements

In February 2013, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update No. 2013-02, Reporting of Amounts Reclassified Out of Accumulated Other Comprehensive Income (“ASU 2013-02”), which requires an entity to provide information about the amounts reclassified out of accumulated other comprehensive income by component. In addition, ASU 2013-02 requires an entity to present, either on the face of the income statement or in the notes to financial statements, significant amounts reclassified out of accumulated other comprehensive income by the respective line items of net income but only if the amount reclassified is required under GAAP to be reclassified to net income in its entirety in the same reporting period. For other amounts, an entity is required to cross-reference to other disclosures required under GAAP that provide additional detail about those amounts. The amendments in ASU 2013-02 do not change the current requirements for reporting net income or other comprehensive income in financial statements. For public entities, the amendments in ASU 2013-02 are effective prospectively for reporting periods beginning after December 15, 2012. The Company adopted ASU 2013-02 effective January 1, 2013, which concerned disclosure requirements only and did not impact our consolidated financial statements.

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Condensed Consolidated Statements of Cash Flows (USD $) In Thousands, unless otherwise specified	6 Months Ended
	Jun. 30, 2013	Jun. 30, 2012
Operating activities
Net income (loss)	$ 26,369	$ (12,318)
Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities:
Equity in (income) loss from joint ventures	154	(384)
Loss on reinsurance transaction	159	7,367
Net gain on sale of available-for-sale investments	(10)	(22)
Depreciation and amortization expense	4,564	3,321
Net interest capitalized on investment in joint ventures	(763)	(378)
Distributions of earnings from joint ventures	6,000	1,000
Changes in operating assets and liabilities:
Restricted cash	10,697	(141)
Receivables and other assets	(6,524)	(4,846)
Inventory	(158,601)	(28,542)
Payables and other liabilities	9,789	1,239
Net cash provided by (used in) operating activities	(108,166)	(33,704)
Investing activities
Proceeds from sale of available-for-sale investments	3,078	5,212
Net collections (advances) on promissory notes from related parties	431	1,843
Investments in unconsolidated joint ventures	(16,350)	(1,183)
Distributions from unconsolidated joint ventures	0	223
Net cash provided by (used in) investing activities	(12,841)	6,095
Financing activities
Principal payments to financial institutions and others	(752)	(1,053)
Contributions from non-controlling interests	0	1,746
Distributions to non-controlling interests	0	(345)
Other financing activities	0	(168)
Net cash provided by (used in) by financing activities	(752)	180
Net (decrease) increase in cash and cash equivalents	(121,759)	(27,429)
Cash and cash equivalents at beginning of period	279,756	268,366
Cash and cash equivalents at end of period	$ 157,997	$ 240,937

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Summary of Significant Accounting Policies

6 Months Ended

Jun. 30, 2013

Summary of Significant Accounting Policies

2. Summary of Significant Accounting Policies

Inventory

Inventory is stated at cost, unless the carrying amount is determined not to be recoverable, in which case inventory is adjusted to fair value or fair value less cost to sell. Quarterly, we review our real estate assets at each community for indicators of impairment. Real estate assets include projects actively selling, under development, held for future development or held for sale. Indicators of impairment include, but are not limited to, significant decreases in local housing market values and prices of comparable homes, significant decreases in gross margins and sales absorption rates, costs in excess of budget, and actual or projected cash flow losses.

If there are indications of impairment, we analyze the budgets and cash flows of our real estate assets and compare the estimated remaining undiscounted future cash flows of the community to the asset’s carrying value. If the undiscounted cash flows exceed the asset’s carrying value, no impairment adjustment is required. If the undiscounted cash flows are less than the asset’s carrying value, the asset is deemed impaired and adjusted to fair value. For land held for sale, if the fair value less costs to sell exceed the asset’s carrying value, no impairment adjustment in required. These impairment evaluations require use of estimates and assumptions regarding future conditions, including timing and amounts of development costs and sales prices of real estate assets, to determine if estimated future undiscounted cash flows will be sufficient to recover the asset’s carrying value.

When estimating undiscounted cash flows of a community, various assumptions are made, including: (i) the number of homes available and the expected prices and incentives offered by us or builders in other communities, and future price adjustments based on market and economic trends; (ii) expected sales pace and cancellation rates based on local housing market conditions, competition and historical trends; (iii) costs expended to date and expected to be incurred, including, but not limited to, land and land development, home construction, interest, indirect construction and overhead, and selling and marketing costs; (iv) alternative product offerings that may be offered that could have an impact on sales pace, price and/or building costs; and (v) alternative uses for the property.

Many assumptions are interdependent and a change in one may require a corresponding change to other assumptions. For example, increasing or decreasing sales rates has a direct impact on the estimated price of a home, the level of time sensitive costs (such as indirect construction, overhead and interest), and selling and marketing costs (such as model maintenance and advertising). Depending on the underlying objective of the community, assumptions could have a significant impact on the projected cash flows. For example, if our objective is to preserve operating margins, our cash flows will be different than if the objective is to increase sales. These objectives may vary significantly by community over time.

If assets are considered impaired, the impairment charge is the amount the asset’s carrying value exceeds its fair value. Fair value is determined based on estimated future cash flows discounted for inherent risks associated with real estate assets or other valuation techniques. These discounted cash flows are impacted by expected risk based on estimated land development, construction and delivery timelines; market risk of price erosion; uncertainty of development or construction cost increases; and other risks specific to the asset or market conditions where the asset is located when the assessment is made. These factors are specific to each community and may vary among communities. The discount rate used in determining each asset’s fair value depends on the community’s projected life and development stage.

Completed Operations Claim Costs

We maintain, and require our subcontractors to maintain, general liability insurance which includes coverage for completed operations losses and damages. Most subcontractors carry this insurance through our “rolling wrap-up” insurance program, where our risks and risks of participating subcontractors are insured through a common set of master policies.

Completed operations claims reserves primarily represent claims for property damage to completed homes and projects outside of our one-to-two year warranty period. Specific terms and conditions of completed operations warranties vary depending on the market in which homes are closed and can range up to 12 years from the closing of a home.

We record expenses and liabilities for estimated costs of potential completed operations claims based upon aggregated loss experience, which includes an estimate of completed operations claims incurred but not reported and is actuarially estimated using individual case-basis valuations and statistical analysis. These estimates make up our entire reserve and are subject to a high degree of variability due to uncertainties such as trends in completed operations claims related to our markets and products built, changes in claims reporting and settlement patterns, third party recoveries, insurance industry practices, insurance regulations and legal precedent. Because state regulations vary, completed operations claims are reported and resolved over an extended period, sometimes exceeding 12 years. As a result, actual costs may differ significantly from estimates.

The actuarial analyses that determine these incurred but not reported claims consider various factors, including frequency and severity of losses, which are based on our historical claims experience supplemented by industry data. The actuarial analyses of these claims and reserves also consider historical third party recovery rates and claims management expenses. Due to inherent uncertainties related to these factors, periodic changes to such factors based on updated relevant information could result in actual costs differing significantly from estimates.

In accordance with our underlying completed operations insurance policies, these completed operations claims costs are recoverable from our subcontractors or insurance carriers. Completed operations claims through July 31, 2009 are insured or reinsured with third-party insurance carriers and completed operations claims commencing August 1, 2009 are insured with third-party and affiliate insurance carriers.

Revenues

In accordance with Accounting Standards Codification (“ASC”) 360, revenues from housing and other real estate sales are recognized when the respective units close. Housing and other real estate sales close when all conditions of escrow are met, including delivery of the home or other real estate asset, title passage, appropriate consideration is received or collection of associated receivables, if any, is reasonably assured and when we have no other continuing involvement in the asset. Sales incentives are a reduction of revenues when the respective unit closes.

Income Taxes

SHLP is treated as a partnership for income tax purposes. As a limited partnership, SHLP is subject to certain minimal state taxes and fees; however, taxes on income realized by SHLP are generally the obligation of the Partners and their owners.

SHI and PIC are C corporations. Federal and state income taxes are provided for these entities in accordance with ASC 740. The provision for, or benefit from, income taxes is calculated using the asset and liability method, whereby deferred tax assets and liabilities are recorded based on the difference between the financial statement and tax basis of assets and liabilities using enacted tax rates in effect the year in which differences are expected to reverse.

Deferred tax assets are evaluated to determine whether a valuation allowance should be established based on our determination of whether it is more likely than not some or all of the deferred tax asset will not be realized. The ultimate realization of deferred tax assets depends primarily on generation of future taxable income during periods in which those temporary differences become deductible. Judgment is required in determining future tax consequences of events that have been recognized in the consolidated financial statements and/or tax returns. Differences between anticipated and actual outcomes of these future tax consequences could have a material impact on the consolidated financial position or results of operations.

New Accounting Pronouncements

In February 2013, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update No. 2013-02, Reporting of Amounts Reclassified Out of Accumulated Other Comprehensive Income (“ASU 2013-02”), which requires an entity to provide information about the amounts reclassified out of accumulated other comprehensive income by component. In addition, ASU 2013-02 requires an entity to present, either on the face of the income statement or in the notes to financial statements, significant amounts reclassified out of accumulated other comprehensive income by the respective line items of net income but only if the amount reclassified is required under GAAP to be reclassified to net income in its entirety in the same reporting period. For other amounts, an entity is required to cross-reference to other disclosures required under GAAP that provide additional detail about those amounts. The amendments in ASU 2013-02 do not change the current requirements for reporting net income or other comprehensive income in financial statements. For public entities, the amendments in ASU 2013-02 are effective prospectively for reporting periods beginning after December 15, 2012. The Company adopted ASU 2013-02 effective January 1, 2013, which concerned disclosure requirements only and did not impact our consolidated financial statements.

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Accounts and Other Receivables, net

6 Months Ended

Jun. 30, 2013

Accounts and Other Receivables, net

5. Accounts and Other Receivables, net

At June 30, 2013 and December 31, 2012, accounts and other receivables, net were as follows:

	June 30, 2013			December 31, 2012
	(In thousands)
Insurance receivables	$	131,248		$	131,519
Escrow receivables		5,442			576
Notes receivables		3,181			3,662
Development receivables		3,095			3,325
Other receivables		4,973			4,147
Reserve		(1,921	)		(1,940	)
Total accounts and other receivables, net	$	146,018		$	141,289

Insurance receivables are from insurance carriers for reimbursable claims pertaining to resultant damage from construction defects on closed homes (see Note 11). Closed homes for policy years August 1, 2001 to July 31, 2009 are insured or reinsured with third-party insurance carriers, and closed homes for policy years commencing August 1, 2009 are insured with third-party and affiliate insurance carriers. At June 30, 2013 and December 31, 2012, insurance receivables from affiliate insurance carriers were $34.4 million and $30.2 million, respectively.

We reserve for uncollectible receivables that are specifically identified.

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Financial Information Relating to Reportable Segments - Income (Loss) Before Income Taxes (Detail) (USD $) In Thousands, unless otherwise specified	3 Months Ended		6 Months Ended
	Jun. 30, 2013	Jun. 30, 2012	Jun. 30, 2013	Jun. 30, 2012
Segment Reporting Disclosure [Line Items]
Income (loss) before income taxes	$ 20,011	$ (11,272)	$ 26,789	$ (12,222)
Corporate
Segment Reporting Disclosure [Line Items]
Income (loss) before income taxes	(1,218)	(10,429)	(623)	(8,898)
Homebuilding
Segment Reporting Disclosure [Line Items]
Income (loss) before income taxes	21,229	(843)	27,412	(3,324)
Homebuilding | Southern California
Segment Reporting Disclosure [Line Items]
Income (loss) before income taxes	12,249	3,302	20,138	5,276
Homebuilding | San Diego
Segment Reporting Disclosure [Line Items]
Income (loss) before income taxes	1,004	(1,502)	(420)	(1,500)
Homebuilding | Northern California
Segment Reporting Disclosure [Line Items]
Income (loss) before income taxes	5,648	612	7,542	1,429
Homebuilding | Mountain West
Segment Reporting Disclosure [Line Items]
Income (loss) before income taxes	2,108	(1,786)	(690)	(5,154)
Homebuilding | South West
Segment Reporting Disclosure [Line Items]
Income (loss) before income taxes	169	(1,494)	1,144	(3,150)
Homebuilding | Other Areas
Segment Reporting Disclosure [Line Items]
Income (loss) before income taxes	$ 51	$ 25	$ (302)	$ (225)

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Restricted Cash

6 Months Ended

Jun. 30, 2013

Restricted Cash

3. Restricted Cash

At December 31, 2012, restricted cash included cash used as collateral for potential obligations paid by the Company’s bank, customer deposits temporarily restricted in accordance with regulatory requirements, and cash used in lieu of bonds. In January 2013, $10.0 million of restricted cash used as collateral for potential obligations paid by the Company’s bank was released to the Company. At June 30, 2013 and December 31, 2012, restricted cash was $2.3 million and $13.0 million, respectively.

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Net Book Values and Estimated Fair Values of Notes Payable (Detail) (USD $) In Thousands, unless otherwise specified	Jun. 30, 2013	Dec. 31, 2012
8.625% senior secured notes due May 2019
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Net Book Value	$ 750,000	$ 750,000
Estimated Fair Value	821,250	828,750
Secured Promissory Notes
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Net Book Value	9,740	8,209
Estimated Fair Value	$ 9,740	$ 8,209

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Inventory (Tables)

6 Months Ended

Jun. 30, 2013

Summary of Inventory

At June 30, 2013 and December 31, 2012, inventory was as follows:

	June 30, 2013		December 31, 2012
	(In thousands)
Model homes	$	71,572	$	69,210
Completed homes for sale		21,496		14,015
Homes under construction		263,912		189,929
Lots available for construction		284,196		249,463
Land under development		189,261		175,922
Land held for future development		79,656		60,466
Land held for sale, including water system connection rights		73,024		71,381
Land deposits and preacquisition costs		10,986		7,267
Total inventory	$	994,103	$	837,653

Interest Incurred, Capitalized and Expensed

For the three and six months ended June 30, 2013 and 2012, interest incurred, capitalized and expensed was as follows:

	Three Months Ended June 30,						Six Months Ended June 30,
	2013			2012			2013			2012
	(In thousands)
Interest incurred	$	16,774		$	16,660		$	33,542		$	33,320
Interest expensed (a)	$	1,397		$	5,909		$	4,830		$	12,197
Interest capitalized as a cost of inventory during the period	$	14,871		$	10,550		$	27,949		$	20,745
Interest previously capitalized as a cost of inventory, included in cost of sales	$	(15,393	)	$	(10,074	)	$	(24,904	)	$	(17,858	)
Interest capitalized in ending inventory (b)	$	105,894		$	114,323		$	105,894		$	114,323
Interest capitalized as a cost of investments in unconsolidated joint ventures during the period	$	506		$	201		$	763		$	378
Interest previously capitalized as a cost of investments in unconsolidated joint ventures, included in equity in income (loss) from unconsolidated joint ventures	$	(328	)	$	(201	)	$	(585	)	$	(378	)
Interest capitalized in ending investments in unconsolidated joint ventures	$	178		$	0		$	178		$	0

(a) For the three and six months ended June 30, 2013 and 2012, assets qualifying for interest capitalization were less than debt; therefore, non-qualifying interest was expensed.

(b) Inventory impairment charges were recorded against total inventory of the respective community. Capitalized interest reflects the gross amount of capitalized interest as impairment charges recognized were generally not allocated to specific components of inventory.

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Other Liabilities (Tables)

6 Months Ended

Jun. 30, 2013

Summary of Other Liabilities

At June 30, 2013 and December 31, 2012, other liabilities were as follows:

	June 30, 2013		December 31, 2012
	(In thousands)
Completed operations	$	131,248	$	131,519
Warranty reserves		18,521		17,749
Deferred revenue/gain		31,943		30,902
Provisions for closed homes/communities		13,149		8,135
Deposits (primarily homebuyer)		20,412		15,684
Legal reserves		4,082		4,916
Accrued interest		8,086		8,086
Accrued compensation and benefits		10,990		4,697
Distributions payable		2,712		2,892
Deficit Distributions (see Note 7)		504		716
Other		5,243		7,922
Total other liabilities	$	246,890	$	233,218

Changes in Completed Operations Reserves

For the three and six months ended June 30, 2013 and 2012, changes in completed operations reserves were as follows:

	Three Months Ended June 30,						Six Months Ended June 30,
	2013			2012			2013			2012
	(In thousands)
Insured completed operations
Balance, beginning of the period	$	131,250		$	103,980		$	131,519		$	109,390
Reserves provided (relieved)		1,096			17,517			3,068			18,908
Claims paid		(1,098	)		(4,368	)		(3,339	)		(11,169	)
Balance, end of the period	$	131,248		$	117,129		$	131,248		$	117,129

Changes in Warranty Liabilities

For the three and six months ended June 30, 2013 and 2012, changes in warranty liability were as follows:

	Three Months Ended June 30,						Six Months Ended June 30,
	2013			2012			2013			2012
	(In thousands)
Balance, beginning of the period	$	17,927		$	16,660		$	17,749		$	17,358
Provision for warranties		2,641			1,668			4,386			3,143
Warranty costs paid		(2,047	)		(1,982	)		(3,614	)		(4,155	)
Balance, end of the period	$	18,521		$	16,346		$	18,521		$	16,346

XML

Financial Information for Reportable Segments - Inventory (Detail) (USD $) In Thousands, unless otherwise specified	Jun. 30, 2013	Dec. 31, 2012
Segment Reporting Disclosure [Line Items]
Inventory	$ 994,103	$ 837,653
Homebuilding | Southern California
Segment Reporting Disclosure [Line Items]
Inventory	213,816	161,700
Homebuilding | San Diego
Segment Reporting Disclosure [Line Items]
Inventory	152,820	129,895
Homebuilding | Northern California
Segment Reporting Disclosure [Line Items]
Inventory	260,990	226,307
Homebuilding | Mountain West
Segment Reporting Disclosure [Line Items]
Inventory	261,872	227,130
Homebuilding | South West
Segment Reporting Disclosure [Line Items]
Inventory	102,233	89,756
Homebuilding | Other Areas
Segment Reporting Disclosure [Line Items]
Inventory	$ 2,372	$ 2,865

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Supplemental Guarantor Information (Tables)

6 Months Ended

Jun. 30, 2013

Condensed Consolidating Balance Sheet

Condensed Consolidating Balance Sheet

June 30, 2013

	SHLP Corp.  (a)		Guarantor Subsidiaries			Non-Guarantor Subsidiaries		Eliminations			Total
	(In thousands)
Assets
Cash and cash equivalents	$	129,146	$	(375	)	$	29,226	$	0		$	157,997
Restricted cash		1,485		682			167		0			2,334
Accounts and other receivables, net		117,724		27,969			35,017		(34,692	)		146,018
Receivables from related parties, net		9,493		24,965			26		0			34,484
Inventory		675,830		316,507			2,262		(496	)		994,103
Investments in unconsolidated joint ventures		19,602		995			18,803		0			39,400
Investments in subsidiaries		706,597		63,778			92,483		(862,858	)		0
Other assets, net		19,152		17,665			404		0			37,221
Intercompany receivables		0		390,316			0		(390,316	)		0
Total assets	$	1,679,029	$	842,502		$	178,388	$	(1,288,362	)	$	1,411,557
Liabilities and equity
Liabilities:
Notes payable	$	759,740	$	0		$	0	$	0		$	759,740
Payables to related parties		20		5			5		4,129			4,159
Accounts payable		31,863		22,745			307		0			54,915
Other liabilities		170,201		41,569			70,308		(35,188	)		246,890
Intercompany payables		371,758		0			22,687		(394,445	)		0
Total liabilities		1,333,582		64,319			93,307		(425,504	)		1,065,704
Equity:
SHLP equity:
Owners’ equity		340,693		773,429			84,675		(858,104	)		340,693
Accumulated other comprehensive income		4,754		4,754			0		(4,754	)		4,754
Total SHLP equity		345,447		778,183			84,675		(862,858	)		345,447
Non-controlling interests		0		0			406		0			406
Total equity		345,447		778,183			85,081		(862,858	)		345,853
Total liabilities and equity	$	1,679,029	$	452,186		$	178,388	$	(898,046	)	$	1,411,557

(a) Includes Shea Homes Funding Corp., whose financial position at June 30, 2013 was not material.

Condensed Consolidating Balance Sheet

December 31, 2012

	SHLP Corp. (a)		Guarantor Subsidiaries		Non-Guarantor Subsidiaries		Eliminations			Total
	(In thousands)
Assets
Cash and cash equivalents	$	216,914	$	48,895	$	13,947	$	0		$	279,756
Restricted cash		11,999		875		157		0			13,031
Accounts and other receivables, net		117,560		23,537		35,250		(35,058	)		141,289
Receivables from related parties, net		8,271		25,668		89		0			34,028
Inventory		572,010		264,459		1,918		(734	)		837,653
Investments in unconsolidated joint ventures		13,948		984		13,721		0			28,653
Investments in subsidiaries		672,388		64,971		93,883		(831,242	)		0
Other assets, net		17,712		21,388		27		0			39,127
Intercompany receivables		0		376,420		0		(376,420	)		0
Total assets	$	1,630,802	$	827,197	$	158,992	$	(1,243,454	)	$	1,373,537
Liabilities and equity
Liabilities:
Notes payable	$	758,209	$	0	$	0	$	0		$	758,209
Payables to related parties		26		0		0		99			125
Accounts payable		34,384		27,879		475		0			62,738
Other liabilities		162,894		36,700		69,416		(35,792	)		233,218
Intercompany payables		356,451		0		20,068		(376,519	)		0
Total liabilities		1,311,964		64,579		89,959		(412,212	)		1,054,290
Equity:
SHLP equity:
Owners’ equity		314,321		758,101		68,624		(826,725	)		314,321
Accumulated other comprehensive income		4,517		4,517		0		(4,517	)		4,517
Total SHLP equity		318,838		762,618		68,624		(831,242	)		318,838
Non-controlling interests		0		0		409		0			409
Total equity		318,838		762,618		69,033		(831,242	)		319,247
Total liabilities and equity	$	1,630,802	$	450,777	$	158,992	$	(867,034	)	$	1,373,537

(a) Includes Shea Homes Funding Corp., whose financial position at December 31, 2012 was not material.

Condensed Consolidating Statement of Operations and Comprehensive Income (Loss)

Condensed Consolidating Statement of Operations and Comprehensive Income (Loss)

Three Months Ended June 30, 2013

	SHLP Corp. (a)			Guarantor Subsidiaries			Non-Guarantor Subsidiaries			Eliminations			Total
	(In thousands)
Revenues	$	131,140		$	80,181		$	5,989		$	0		$	217,310
Cost of sales		(108,600	)		(60,071	)		(356	)		143			(168,884	)
Gross margin		22,540			20,110			5,633			143			48,426
Selling expenses		(7,526	)		(3,834	)		(1,488	)		0			(12,848	)
General and administrative expenses		(8,749	)		(4,732	)		(597	)		0			(14,078	)
Equity in income (loss) from unconsolidated joint ventures, net		23			(3	)		458			0			478
Equity in income (loss) from subsidiaries		15,098			(1,589	)		(799	)		(12,710	)		0
Gain (loss) on reinsurance transaction		0			0			(807	)		0			(807	)
Interest expense		(998	)		(399	)		0			0			(1,397	)
Other income (expense), net		(854	)		727			507			(143	)		237
Income (loss) before income taxes		19,534			10,280			2,907			(12,710	)		20,011
Income tax benefit (expense)		0			(475	)		(4	)		0			(479	)
Net income (loss)		19,534			9,805			2,903			(12,710	)		19,532
Less: Net loss (income) attributable to non-controlling interests		0			0			2			0			2
Net income (loss) attributable to SHLP	$	19,534		$	9,805		$	2,905		$	(12,710	)	$	19,534
Comprehensive income (loss)	$	19,641		$	9,912		$	2,903		$	(12,817	)	$	19,639

(a) Includes Shea Homes Funding Corp.; no significant activity occurred in 2013.

Condensed Consolidating Statement of Operations and Comprehensive Loss

Three Months Ended June 30, 2012

	SHLP Corp. (a)			Guarantor Subsidiaries			Non-Guarantor Subsidiaries			Eliminations			Total
	(In thousands)
Revenues	$	96,466		$	34,700		$	1,302		$	0		$	132,468
Cost of sales		(80,318	)		(27,496	)		(259	)		95			(107,978	)
Gross margin		16,148			7,204			1,043			95			24,490
Selling expenses		(6,234	)		(2,839	)		(1,126	)		0			(10,199	)
General and administrative expenses		(7,995	)		(2,979	)		(599	)		0			(11,573	)
Equity in income (loss) from unconsolidated joint ventures, net		10			(7	)		314			0			317
Equity in income (loss) from subsidiaries		(6,541	)		(9,534	)		(1,166	)		17,241			0
Gain (loss) on reinsurance transaction		0			0			(8,163	)		0			(8,163	)
Interest expense		(5,511	)		(398	)		0			0			(5,909	)
Other (expense) income, net		(1,977	)		1,368			469			(95	)		(235	)
Income (loss) before income taxes		(12,100	)		(7,185	)		(9,228	)		17,241			(11,272	)
Income tax expense		(1	)		(838	)		(9	)		0			(848	)
Net income (loss)		(12,101	)		(8,023	)		(9,237	)		17,241			(12,120	)
Less: Net loss (income) attributable to non-controlling interests		0			0			19			0			19
Net income (loss) attributable to SHLP	$	(12,101	)	$	(8,023	)	$	(9,218	)	$	17,241		$	(12,101	)
Comprehensive income (loss)	$	(12,742	)	$	(8,664	)	$	(9,237	)	$	17,882		$	(12,761	)

(a) Includes Shea Homes Funding Corp.; no significant activity occurred in 2012.

Condensed Consolidating Statement of Operations and Comprehensive income (Loss)

Six Months Ended June 30, 2013

	SHLP Corp. (a)			Guarantor Subsidiaries			Non-Guarantor Subsidiaries			Eliminations			Total
	(In thousands)
Revenues	$	201,105		$	139,356		$	11,809		$	0		$	352,270
Cost of sales		(164,380	)		(107,457	)		(709	)		238			(272,308	)
Gross margin		36,725			31,899			11,100			238			79,962
Selling expenses		(12,732	)		(7,224	)		(3,046	)		0			(23,002	)
General and administrative expenses		(16,320	)		(8,229	)		(1,486	)		0			(26,035	)
Equity in income (loss) from unconsolidated joint ventures, net		(640	)		(22	)		508			0			(154	)
Equity in income (loss) from subsidiaries		24,505			(1,194	)		(1,332	)		(21,979	)		0
Gain (loss) on reinsurance transaction		0			0			(159	)		0			(159	)
Interest expense		(3,432	)		(1,398	)		0			0			(4,830	)
Other income (expense), net		(1,731	)		1,968			1,008			(238	)		1,007
Income (loss) before income taxes		26,375			15,800			6,593			(21,979	)		26,789
Income tax benefit (expense)		(3	)		(405	)		(12	)		0			(420	)
Net income (loss)		26,372			15,395			6,581			(21,979	)		26,369
Less: Net loss (income) attributable to non-controlling interests		0			0			3			0			3
Net income (loss) attributable to SHLP	$	26,372		$	15,395		$	6,584		$	(21,979	)	$	26,372
Comprehensive income (loss)	$	26,609		$	15,632		$	6,581		$	(22,216	)	$	26,606

(a) Includes Shea Homes Funding Corp.; no significant activity occurred in 2013.

Condensed Consolidating Statement of Operations and Comprehensive Loss

Six Months Ended June 30, 2012

	SHLP Corp. (a)			Guarantor Subsidiaries			Non-Guarantor Subsidiaries			Eliminations			Total
	(In thousands)
Revenues	$	164,252		$	71,027		$	2,792		$	0		$	238,071
Cost of sales		(134,524	)		(58,203	)		(445	)		159			(193,013	)
Gross margin		29,728			12,824			2,347			159			45,058
Selling expenses		(11,613	)		(5,831	)		(2,107	)		0			(19,551	)
General and administrative expenses		(13,599	)		(5,030	)		(1,195	)		0			(19,824	)
Equity in income (loss) from unconsolidated joint ventures, net		139			(31	)		276			0			384
Equity in income (loss) from subsidiaries		(2,790	)		(10,387	)		(2,443	)		15,620			0
Gain (loss) on reinsurance transaction		0			0			(7,367	)		0			(7,367	))
Interest expense		(11,469	)		(724	)		(4	)		0			(12,197	)
Other income (expense), net		(2,903	)		3,213			1,124			(159	)		1,275
Income (loss) before income taxes		(12,507	)		(5,966	)		(9,369	)		15,620			(12,222	)
Income tax benefit (expense)		(5	)		(86	)		(5	)		0			(96	)
Net income (loss)		(12,512	)		(6,052	)		(9,374	)		15,620			(12,318	)
Less: Net loss (income) attributable to non-controlling interests		0			0			(194	)		0			(194	)
Net income (loss) attributable to SHLP	$	(12,512	)	$	(6,052	)	$	(9,568	)	$	15,620		$	(12,512	)
Comprehensive income (loss)	$	(11,710	)	$	(5,250	)	$	(9,374	)	$	14,818		$	(11,516	)

(a) Includes Shea Homes Funding Corp.; no significant activity occurred in 2012.

Condensed Consolidating Statement of Cash Flows

Condensed Consolidating Statement of Cash Flows

Six Months Ended June 30, 2013

	SHLP Corp. (a)			Guarantor Subsidiaries			Non-Guarantor Subsidiaries			Eliminations			Total
	(In thousands)
Operating activities
Net cash provided by (used in) operating activities	$	(86,654	)	$	(38,172	)	$	12,630		$	4,030		$	(108,166	)
Investing activities
Investments in unconsolidated joint ventures		(6,792	)		(53	)		(9,505	)		0			(16,350	)
Other investing activities		590			2,919			0			0			3,509
Net cash provided by (used in) investing activities		(6,202	)		2,866			(9,505	)		0			(12,841	)
Financing activities
Intercompany		5,840			(13,964	)		12,154			(4,030	)		0
Principal payments to financial institutions and others		(752	)		0			0			0			(752	)
Net cash provided by (used in) financing activities		5,088			(13,964	)		12,154			(4,030	)		(752	)
Net increase (decrease) in cash and cash equivalents		(87,768	)		(49,270	)		15,279			0			(121,759	)
Cash and cash equivalents at beginning of period		216,914			48,895			13,947			0			279,756
Cash and cash equivalents at end of period	$	129,146		$	(375	)	$	29,226		$	0		$	157,997

(a) Includes Shea Homes Funding Corp.; no significant activity occurred in 2013.

Condensed Consolidating Statement of Cash Flows

Six Months Ended June 30, 2012

	SHLP Corp. (b)			Guarantor Subsidiaries			Non-Guarantor Subsidiaries			Eliminations			Total
	(In thousands)
Operating activities
Net cash (used in) provided by operating activities	$	(28,900	)	$	(29,876	)	$	22,534		$	2,538		$	(33,704	)
Investing activities
Proceeds from sale of available-for-sale investments		0			5,212			0			0			5,212
Other investing activities		131			1,536			(784	)		0			883
Net cash provided by (used in) investing activities		131			6,748			(784	)		0			6,095
Financing activities
Intercompany		11,860			14,613			(23,935	)		(2,538	)		0
Other financing activities		(854	)		0			1,034			0			180
Net cash provided by (used in) financing activities		11,006			14,613			(22,901	)		(2,538	)		180
Net decrease in cash and cash equivalents		(17,763	)		(8,515	)		(1,151	)		0			(27,429	)
Cash and cash equivalents at beginning of period		157,511			96,100			14,755			0			268,366
Cash and cash equivalents at end of period	$	139,748		$	87,585		$	13,604		$	0		$	240,937

(b) Includes Shea Homes Funding Corp.; no significant activity occurred in 2012.

XML

Financial Information for Reportable Segments - Assets (Detail) (USD $) In Thousands, unless otherwise specified	Jun. 30, 2013	Dec. 31, 2012
Segment Reporting Disclosure [Line Items]
Assets	$ 1,411,557	$ 1,373,537
Corporate
Segment Reporting Disclosure [Line Items]
Assets	205,563	345,367
Homebuilding
Segment Reporting Disclosure [Line Items]
Assets	1,205,994	1,028,170
Homebuilding | Southern California
Segment Reporting Disclosure [Line Items]
Assets	271,882	213,481
Homebuilding | San Diego
Segment Reporting Disclosure [Line Items]
Assets	171,691	148,272
Homebuilding | Northern California
Segment Reporting Disclosure [Line Items]
Assets	298,340	256,728
Homebuilding | Mountain West
Segment Reporting Disclosure [Line Items]
Assets	334,449	297,276
Homebuilding | South West
Segment Reporting Disclosure [Line Items]
Assets	123,314	105,470
Homebuilding | Other Areas
Segment Reporting Disclosure [Line Items]
Assets	$ 6,318	$ 6,943

XML

Notes Payable (Detail) (USD $) In Thousands, unless otherwise specified	Jun. 30, 2013	Dec. 31, 2012
Debt Instrument [Line Items]
Notes payable	$ 759,740	$ 758,209
8.625% senior secured notes due May 2019
Debt Instrument [Line Items]
Notes payable	750,000	750,000
Promissory Notes Maturing 2014
Debt Instrument [Line Items]
Notes payable	$ 9,740	$ 8,209

XML

Total Unconsolidated Joint Ventures' Note Payable (Detail) (USD $) In Thousands, unless otherwise specified	Jun. 30, 2013		Dec. 31, 2012
Schedule of Equity Method Investments [Line Items]
Notes payable	$ 759,740		$ 758,209
Unconsolidated Joint Ventures
Schedule of Equity Method Investments [Line Items]
Joint venture debt	65,685		73,800
Unconsolidated Joint Ventures | Bank and Seller Financing Notes Payable
Schedule of Equity Method Investments [Line Items]
Notes payable	60,389	[1]	68,504	[1]
Unconsolidated Joint Ventures | Bank and Seller Financing Notes Payable | Guarantee provided
Schedule of Equity Method Investments [Line Items]
Notes payable	49,453		45,610
Unconsolidated Joint Ventures | Bank and Seller Financing Notes Payable | Non Guaranteed Obligations
Schedule of Equity Method Investments [Line Items]
Notes payable	10,936		22,894
Unconsolidated Joint Ventures | Partner Notes Payable | Unsecured Debt
Schedule of Equity Method Investments [Line Items]
Notes payable	5,296	[2]	5,296	[2]
Other Joint Ventures
Schedule of Equity Method Investments [Line Items]
Joint venture debt	$ 43,002	[3]	$ 57,839	[3]

[1] All bank seller notes were secured by real property.

[2] No guarantees were provided on partner notes payable.

[3] We have an indirect effective ownership in two joint ventures of 12.3% and .0003%, respectively, that had bank notes payable secured by real property, which we have not guaranteed.

XML

Accounts and Other Receivables, Net (Detail) (USD $) In Thousands, unless otherwise specified	Jun. 30, 2013	Dec. 31, 2012
Accounts and Other Receivables [Line Items]
Insurance receivable	$ 131,248	$ 131,519
Affiliate insurance carriers
Accounts and Other Receivables [Line Items]
Insurance receivable	$ 34,400	$ 30,200

XML

Condensed Consolidated Statements of Operations (USD $) In Thousands, unless otherwise specified	3 Months Ended				6 Months Ended
	Jun. 30, 2013		Jun. 30, 2012		Jun. 30, 2013		Jun. 30, 2012
Revenues	$ 217,310		$ 132,468		$ 352,270		$ 238,071
Cost of sales	(168,884)		(107,978)		(272,308)		(193,013)
Gross margin	48,426		24,490		79,962		45,058
Selling expenses	(12,848)		(10,199)		(23,002)		(19,551)
General and administrative expenses	(14,078)		(11,573)		(26,035)		(19,824)
Equity in income (loss) from unconsolidated joint ventures, net	478		317		(154)		384
Loss on reinsurance transaction	(807)		(8,163)		(159)		(7,367)
Interest expense	(1,397)	[1]	(5,909)	[1]	(4,830)	[1]	(12,197)	[1]
Other income (expense), net	237		(235)		1,007		1,275
Income (loss) before income taxes	20,011		(11,272)		26,789		(12,222)
Income tax expense	(479)		(848)		(420)		(96)
Net income (loss)	19,532		(12,120)		26,369		(12,318)
Less: Net loss (income) attributable to non-controlling interests	2		19		3		(194)
Net income (loss) attributable to SHLP	$ 19,534		$ (12,101)		$ 26,372		$ (12,512)

[1] For the three and six months ended June 30, 2013 and 2012, assets qualifying for interest capitalization were less than debt; therefore, non-qualifying interest was expensed.

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Variable Interest Entities

6 Months Ended

Jun. 30, 2013

Variable Interest Entities

8. Variable Interest Entities

ASC 810 requires a VIE to be consolidated in financial statements of a company if it is the primary beneficiary of the VIE. Accordingly, the primary beneficiary has the power to direct activities of the VIE that most significantly impact the VIE’s economic performance, and the obligation to absorb its losses or the right to receive its benefits. All VIEs at June 30, 2013 and December 31, 2012 were evaluated to determine the primary beneficiary.

Joint Ventures

We enter into joint ventures for homebuilding and land development activities. Investments in these joint ventures may create a variable interest in a VIE, depending on contractual terms of the venture. We analyze our joint ventures in accordance with ASC 810 to determine whether they are VIEs and, if so, whether we are the primary beneficiary. At June 30, 2013 and December 31, 2012, these joint ventures were not consolidated in our consolidated financial statements since they were not VIEs, or if they were VIEs, we were not the primary beneficiary.

At June 30, 2013 and December 31, 2012, we had a variable interest in an unconsolidated joint venture determined to be a VIE. The joint venture, RRWS, LLC (“RRWS”), was formed in December 2012 and is owned 50% by the Company and 50% by a third-party real estate developer (the “Partner”). Several acquisition, development and construction loans were entered into by RRWS, each with two-year terms and options to extend for one year, subject to certain conditions. The Company and Partner each executed limited completion, interest and carry guarantees and environmental indemnities on a joint and several basis. The Company also has a maximum aggregate liability under the re-margin arrangements of the lesser of 50% of the outstanding balances or $35.0 million in total. The obligations of the Company and Partner under the re-margin arrangements are limited during the first two years of the loans. In addition to re-margin arrangements, the Partner, and several of its principals, executed repayment guarantees with no limit on their liability. At June 30, 2013 and December 31, 2012, outstanding bank notes payable were $49.5 million and $45.6 million, respectively, of which the Company has a maximum remargin obligation of $24.7 million and $22.8 million, respectively. The Company also has an indemnification agreement from the Partner, under which the Company could potentially recover a portion of any remargin payments made to the bank. However, the Company cannot provide assurance it could collect under this indemnity agreement.

In accordance with ASC 810, we determined we were not the primary beneficiary of RRWS because we did not have the power to direct activities that most significantly impact the economic performance of RRWS, such as determining or limiting the scope or purpose of the entity, selling or transferring property owned or controlled by the entity, and arranging financing for the entity.

Land Option Contracts

We enter into land option contracts to procure land for home construction. Use of land option and similar contracts allows us to reduce market risks associated with direct land ownership and development, reduces capital and financial commitments, including interest and other carrying costs, and minimizes land inventory. Under these contracts, we pay a specified deposit for the right to purchase land, usually at a predetermined price. Under the requirements of ASC 810, certain contracts may create a variable interest with the land seller.

In accordance with ASC 810, we analyzed our land option and similar contracts to determine if respective land sellers are VIEs and, if so, if we are the primary beneficiary. Although we do not have legal title to the optioned land, ASC 810 requires us to consolidate a VIE if we are the primary beneficiary. At June 30, 2013 and December 31, 2012, we determined we were not the primary beneficiary of such VIEs because we did not have the power to direct activities of the VIE that most significantly impact the VIE’s economic performance, such as selling, transferring or developing land owned by the VIE.

At June 30, 2013, we had $2.0 million of refundable and non-refundable cash deposits associated with land option contracts with unconsolidated VIEs, having a $62.2 million remaining purchase price. We also had $4.7 million of refundable and non-refundable cash deposits associated with land option contracts that were not with VIEs, having a $293.2 million remaining purchase price.

Our loss exposure on land option contracts consists of non-refundable deposits, which were $5.8 million and $5.0 million at June 30, 2013 and December 31, 2012, respectively, and capitalized preacquisition costs of $4.2 million and $2.0 million, respectively, which were included in inventory in the consolidated balance sheets.

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Condensed Consolidated Statements of Changes in Equity (USD $) In Thousands, unless otherwise specified	Total	Members Equity	Accumulated Other Comprehensive Income (Loss)	Parent	Noncontrolling Interest	Limited Partner Common Stock	Limited Partner Series B Preferred Stock	Limited Partner Series D Preferred Stock	General Partner Common Stock
Beginning Balance at Dec. 31, 2011	$ 328,003	$ 294,511	$ 6,392	$ 300,903	$ 27,100	$ 1	$ 173,555	$ 120,955	$ 0
Comprehensive income (loss):
Net income (loss)	(12,318)	(12,512)	0	(12,512)	194	0	(12,512)	0	0
Change in unrealized gains on investments, net	802	0	802	802	0	0	0	0	0
Comprehensive income (loss), net of tax	(11,516)			(11,710)	194
Redemption of Company's interest in consolidated joint venture (see Note 12)	(39,819)	(11,580)	0	(11,580)	(28,239)	0	(11,580)	0	0
Contributions from non-controlling interests	1,746	0	0	0	1,746	0	0	0	0
Distributions to non-controlling interests	(345)	0	0	0	(345)	0	0	0	0
Ending Balance at Jun. 30, 2012	278,069	270,419	7,194	277,613	456	1	149,463	120,955	0
Beginning Balance at Dec. 31, 2012	319,247	314,321	4,517	318,838	409	1,863	173,555	138,413	490
Comprehensive income (loss):
Net income (loss)	26,369	26,372	0	26,372	(3)	0	0	26,372	0
Change in unrealized gains on investments, net	237	0	237	237	0	0	0	0	0
Comprehensive income (loss), net of tax	26,606			26,609	(3)
Ending Balance at Jun. 30, 2013	$ 345,853	$ 340,693	$ 4,754	$ 345,447	$ 406	$ 1,863	$ 173,555	$ 164,785	$ 490

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Other Liabilities (Detail) (USD $) In Thousands, unless otherwise specified	Jun. 30, 2013	Mar. 31, 2013	Dec. 31, 2012	Jun. 30, 2012	Mar. 31, 2012	Dec. 31, 2011
Other Liabilities [Line Items]
Completed operations	$ 131,248		$ 131,519
Warranty reserves	18,521	17,927	17,749	16,346	16,660	17,358
Deferred revenue/gain	31,943		30,902
Provisions for closed homes/communities	13,149		8,135
Deposits (primarily homebuyer)	20,412		15,684
Legal reserves	4,082		4,916
Accrued interest	8,086		8,086
Accrued compensation and benefits	10,990		4,697
Distributions payable	2,712		2,892
Deficit Distributions (see Note 7)	504		716
Other	5,243		7,922
Total other liabilities	$ 246,890		$ 233,218

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Condensed Consolidated Balance Sheets (USD $) In Thousands, unless otherwise specified	Jun. 30, 2013	Dec. 31, 2012	Jun. 30, 2012	Dec. 31, 2011
Assets
Cash and cash equivalents	$ 157,997	$ 279,756	$ 240,937	$ 268,366
Restricted cash	2,334	13,031
Accounts and other receivables, net	146,018	141,289
Receivables from related parties, net	34,484	34,028
Inventory	994,103	837,653
Investments in unconsolidated joint ventures	39,400	28,653
Other assets, net	37,221	39,127
Total assets	1,411,557	1,373,537
Liabilities:
Notes payable	759,740	758,209
Payables to related parties	4,159	125
Accounts payable	54,915	62,738
Other liabilities	246,890	233,218
Total liabilities	1,065,704	1,054,290
SHLP equity:
Owners' equity	340,693	314,321
Accumulated other comprehensive income	4,754	4,517
Total SHLP equity	345,447	318,838
Non-controlling interests	406	409
Total equity	345,853	319,247	278,069	328,003
Total liabilities and equity	$ 1,411,557	$ 1,373,537

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Total Unconsolidated Joint Ventures' Note Payable (Parenthetical) (Detail) (Indirect)	Jun. 30, 2013
Joint Venture One
Schedule of Equity Method Investments [Line Items]
Ownership Interest	12.30%
Joint Venture Two
Schedule of Equity Method Investments [Line Items]
Ownership Interest	0.0003%

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Condensed Consolidating Statement of Operations and Comprehensive Income (Loss) (Detail) (USD $) In Thousands, unless otherwise specified	3 Months Ended				6 Months Ended
	Jun. 30, 2013		Jun. 30, 2012		Jun. 30, 2013		Jun. 30, 2012
Condensed Financial Statements, Captions [Line Items]
Revenues	$ 217,310		$ 132,468		$ 352,270		$ 238,071
Cost of sales	(168,884)		(107,978)		(272,308)		(193,013)
Gross margin	48,426		24,490		79,962		45,058
Selling expenses	(12,848)		(10,199)		(23,002)		(19,551)
General and administrative expenses	(14,078)		(11,573)		(26,035)		(19,824)
Equity in income (loss) from unconsolidated joint ventures, net	478		317		(154)		384
Equity in income (loss) from subsidiaries	0		0		0		0
Gain (loss) on reinsurance transaction	(807)		(8,163)		(159)		(7,367)
Interest expense	(1,397)	[1]	(5,909)	[1]	(4,830)	[1]	(12,197)	[1]
Other income (expense), net	237		(235)		1,007		1,275
Income (loss) before income taxes	20,011		(11,272)		26,789		(12,222)
Income tax benefit (expense)	(479)		(848)		(420)		(96)
Net income (loss)	19,532		(12,120)		26,369		(12,318)
Less: Net loss (income) attributable to non-controlling interests	2		19		3		(194)
Net income (loss) attributable to SHLP	19,534		(12,101)		26,372		(12,512)
Comprehensive income (loss)	19,639		(12,761)		26,606		(11,516)
SHLP Corp
Condensed Financial Statements, Captions [Line Items]
Revenues	131,140	[2]	96,466	[3]	201,105	[2]	164,252	[3]
Cost of sales	(108,600)	[2]	(80,318)	[3]	(164,380)	[2]	(134,524)	[3]
Gross margin	22,540	[2]	16,148	[3]	36,725	[2]	29,728	[3]
Selling expenses	(7,526)	[2]	(6,234)	[3]	(12,732)	[2]	(11,613)	[3]
General and administrative expenses	(8,749)	[2]	(7,995)	[3]	(16,320)	[2]	(13,599)	[3]
Equity in income (loss) from unconsolidated joint ventures, net	23	[2]	10	[3]	(640)	[2]	139	[3]
Equity in income (loss) from subsidiaries	15,098	[2]	(6,541)	[3]	24,505	[2]	(2,790)	[3]
Gain (loss) on reinsurance transaction	0	[2]	0	[3]	0	[2]	0	[3]
Interest expense	(998)	[2]	(5,511)	[3]	(3,432)	[2]	(11,469)	[3]
Other income (expense), net	(854)	[2]	(1,977)	[3]	(1,731)	[2]	(2,903)	[3]
Income (loss) before income taxes	19,534	[2]	(12,100)	[3]	26,375	[2]	(12,507)	[3]
Income tax benefit (expense)	0	[2]	(1)	[3]	(3)	[2]	(5)	[3]
Net income (loss)	19,534	[2]	(12,101)	[3]	26,372	[2]	(12,512)	[3]
Less: Net loss (income) attributable to non-controlling interests	0	[2]	0	[3]	0	[2]	0	[3]
Net income (loss) attributable to SHLP	19,534	[2]	(12,101)	[3]	26,372	[2]	(12,512)	[3]
Comprehensive income (loss)	19,641	[2]	(12,742)	[3]	26,609	[2]	(11,710)	[3]
Guarantor Subsidiaries
Condensed Financial Statements, Captions [Line Items]
Revenues	80,181		34,700		139,356		71,027
Cost of sales	(60,071)		(27,496)		(107,457)		(58,203)
Gross margin	20,110		7,204		31,899		12,824
Selling expenses	(3,834)		(2,839)		(7,224)		(5,831)
General and administrative expenses	(4,732)		(2,979)		(8,229)		(5,030)
Equity in income (loss) from unconsolidated joint ventures, net	(3)		(7)		(22)		(31)
Equity in income (loss) from subsidiaries	(1,589)		(9,534)		(1,194)		(10,387)
Gain (loss) on reinsurance transaction	0		0		0		0
Interest expense	(399)		(398)		(1,398)		(724)
Other income (expense), net	727		1,368		1,968		3,213
Income (loss) before income taxes	10,280		(7,185)		15,800		(5,966)
Income tax benefit (expense)	(475)		(838)		(405)		(86)
Net income (loss)	9,805		(8,023)		15,395		(6,052)
Less: Net loss (income) attributable to non-controlling interests	0		0		0		0
Net income (loss) attributable to SHLP	9,805		(8,023)		15,395		(6,052)
Comprehensive income (loss)	9,912		(8,664)		15,632		(5,250)
Non-Guarantor Subsidiaries
Condensed Financial Statements, Captions [Line Items]
Revenues	5,989		1,302		11,809		2,792
Cost of sales	(356)		(259)		(709)		(445)
Gross margin	5,633		1,043		11,100		2,347
Selling expenses	(1,488)		(1,126)		(3,046)		(2,107)
General and administrative expenses	(597)		(599)		(1,486)		(1,195)
Equity in income (loss) from unconsolidated joint ventures, net	458		314		508		276
Equity in income (loss) from subsidiaries	(799)		(1,166)		(1,332)		(2,443)
Gain (loss) on reinsurance transaction	(807)		(8,163)		(159)		(7,367)
Interest expense	0		0		0		(4)
Other income (expense), net	507		469		1,008		1,124
Income (loss) before income taxes	2,907		(9,228)		6,593		(9,369)
Income tax benefit (expense)	(4)		(9)		(12)		(5)
Net income (loss)	2,903		(9,237)		6,581		(9,374)
Less: Net loss (income) attributable to non-controlling interests	2		19		3		(194)
Net income (loss) attributable to SHLP	2,905		(9,218)		6,584		(9,568)
Comprehensive income (loss)	2,903		(9,237)		6,581		(9,374)
Consolidation, Eliminations
Condensed Financial Statements, Captions [Line Items]
Revenues	0		0		0		0
Cost of sales	143		95		238		159
Gross margin	143		95		238		159
Selling expenses	0		0		0		0
General and administrative expenses	0		0		0		0
Equity in income (loss) from unconsolidated joint ventures, net	0		0		0		0
Equity in income (loss) from subsidiaries	(12,710)		17,241		(21,979)		15,620
Gain (loss) on reinsurance transaction	0		0		0		0
Interest expense	0		0		0		0
Other income (expense), net	(143)		(95)		(238)		(159)
Income (loss) before income taxes	(12,710)		17,241		(21,979)		15,620
Income tax benefit (expense)	0		0		0		0
Net income (loss)	(12,710)		17,241		(21,979)		15,620
Less: Net loss (income) attributable to non-controlling interests	0		0		0		0
Net income (loss) attributable to SHLP	(12,710)		17,241		(21,979)		15,620
Comprehensive income (loss)	$ (12,817)		$ 17,882		$ (22,216)		$ 14,818

[1] For the three and six months ended June 30, 2013 and 2012, assets qualifying for interest capitalization were less than debt; therefore, non-qualifying interest was expensed.

[2] Includes Shea Homes Funding Corp.; no significant activity occurred in 2013.

[3] Includes Shea Homes Funding Corp.; no significant activity occurred in 2012.

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Investments in Joint Ventures (Tables)

6 Months Ended

Jun. 30, 2013

Equity Method Investments Summarized Notes Payable Information

At June 30, 2013 and December 31, 2012, total unconsolidated joint ventures’ notes payable were as follows:

	June 30, 2013		December 31, 2012
	(In thousands)
Bank and seller notes payable:
Guaranteed (subject to remargin obligations)	$	49,453	$	45,610
Non-guaranteed		10,936		22,894
Total bank and seller notes payable (a)		60,389		68,504
Partner notes payable:
Unsecured (b)		5,296		5,296
Total unconsolidated joint venture notes payable	$	65,685	$	73,800
Other unconsolidated joint venture notes payable (c)	$	43,002	$	57,839

(a) All bank seller notes were secured by real property.

(b) No guarantees were provided on partner notes payable.

(c) We have an indirect effective ownership in two joint ventures of 12.3% and .0003%, respectively, that had bank notes payable secured by real property, which we have not guaranteed.

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Segment Information

6 Months Ended

Jun. 30, 2013

Segment Information

17. Segment Information

Our homebuilding business, which is responsible for most of our operating results, constructs and sells single-family attached and detached homes designed to appeal to first-time, move-up and active adult homebuyers. Our homebuilding business also provides management services to joint ventures and other related and unrelated parties. We manage each homebuilding community as an operating segment and have aggregated these communities into reportable segments based on geography as follows:

• Southern California, comprised of communities in Los Angeles, Ventura and Orange Counties, and the Inland Empire;

• San Diego, comprised of communities in San Diego County, California;

• Northern California, comprised of communities in northern and central California, and the central coast of California;

• Mountain West, comprised of communities in Colorado and Washington;

• South West, comprised of communities in Arizona and Nevada; and

• Other, comprised of communities in Florida.

In accordance with ASC 280, in determining the most appropriate aggregation of our homebuilding communities, we also considered similar economic and other characteristics, including product types, average selling prices, gross profits, production processes, suppliers, subcontractors, regulatory environments, land acquisition results, and underlying demand and supply.

Our Corporate segment primarily provides management services to our operating segments, and includes results of our captive insurance provider, which primarily administers claims reinsured by third party carriers and the deductibles and retentions under those third party policies. Results of our insurance brokerage services business are also included in our Corporate segment.

The reportable segments follow the same accounting policies as our consolidated financial statements described in Note 2. Operational results of each reportable segment are not necessarily indicative of the results that would have been achieved had the reportable segment been an independent, stand-alone entity during the periods presented.

Financial information relating to reportable segments was as follows:

	June 30, 2013		December 31, 2012
	(In thousands)
Total assets:
Southern California	$	271,882	$	213,481
San Diego		171,691		148,272
Northern California		298,340		256,728
Mountain West		334,449		297,276
South West		123,314		105,470
Other		6,318		6,943
Total homebuilding assets		1,205,994		1,028,170
Corporate		205,563		345,367
Total assets	$	1,411,557	$	1,373,537

	June 30, 2013		December 31, 2012
	(In thousands)
Inventory:
Southern California	$	213,816	$	161,700
San Diego		152,820		129,895
Northern California		260,990		226,307
Mountain West		261,872		227,130
South West		102,233		89,756
Other		2,372		2,865
Total inventory	$	994,103	$	837,653

	Three Months Ended June 30,				Six Months Ended June 30,
	2013		2012		2013		2012
	(In thousands)				(In thousands)
Revenues:
Southern California	$	56,134	$	30,104	$	96,289	$	56,484
San Diego		31,358		10,180		40,988		24,287
Northern California		53,483		30,438		81,132		56,396
Mountain West		39,884		33,211		62,190		51,806
South West		34,151		26,700		67,684		46,215
Other		1,964		1,585		3,530		2,390
Total homebuilding revenues		216,974		132,218		351,813		237,578
Corporate		336		250		457		493
Total revenues	$	217,310	$	132,468	$	352,270	$	238,071

	Three Months Ended June 30,						Six Months Ended June 30,
	2013			2012			2013			2012
	(In thousands)						(In thousands)
Income (loss) before income taxes:
Southern California	$	12,249		$	3,302		$	20,138		$	5,276
San Diego		1,004			(1,502	)		(420	)		(1,500	)
Northern California		5,648			612			7,542			1,429
Mountain West		2,108			(1,786	)		(690	)		(5,154	)
South West		169			(1,494	)		1,144			(3,150	)
Other		51			25			(302	)		(225	)
Total homebuilding income (loss) before income taxes		21,229			(843	)		27,412			(3,324	)
Corporate		(1,218	)		(10,429	)		(623	)		(8,898	)
Total income (loss) before income taxes	$	20,011		$	(11,272	)	$	26,789		$	(12,222	)

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Accounts and Other Receivables (Detail) (USD $) In Thousands, unless otherwise specified	Jun. 30, 2013	Dec. 31, 2012
Accounts and Other Receivables [Line Items]
Insurance receivables	$ 131,248	$ 131,519
Escrow receivables	5,442	576
Notes receivables	3,181	3,662
Development receivables	3,095	3,325
Other receivables	4,973	4,147
Reserve	(1,921)	(1,940)
Total accounts and other receivables, net	$ 146,018	$ 141,289

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Other Assets, Net - Additional Information (Detail) (USD $)	3 Months Ended		6 Months Ended
	Jun. 30, 2013	Jun. 30, 2012	Jun. 30, 2013	Jun. 30, 2012
Other Assets [Line Items]
Available of sale securities realized gains	$ 0	$ 0	$ 0	$ 0

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Owners' Equity - Additional Information (Detail) (USD $) In Millions, unless otherwise specified	Jun. 30, 2013 Series B	Dec. 31, 2012 Series B	Aug. 06, 2013 Series B Subsequent Event January 1, 2013 to December 31, 2016	Aug. 06, 2013 Series B Subsequent Event January 1, 2017 to December 31, 2020	Aug. 06, 2013 Series B Subsequent Event January 1, 2021 and thereafter	Jun. 30, 2013 Series D	Dec. 31, 2012 Series D	Aug. 06, 2013 Series D Subsequent Event January 1, 2013 to December 31, 2016	Aug. 06, 2013 Series D Subsequent Event January 1, 2017 to December 31, 2020	Aug. 06, 2013 Series D Subsequent Event January 1, 2021 and thereafter	Jun. 30, 2013 Limited Partner	Jun. 30, 2013 General Partner
Stockholders Equity Note [Line Items]
Ownership Interest							1.00%				78.38%	20.62%
Interest rate determination		2.05%			2.05%
Preferred return percentage earned on unreturned preferred capital		1.20%	1.20%	2.25%			7.00%	2.00%	12.75%	7.00%
Accumulated undistributed preferred returns	$ 21.7	$ 20.8				$ 54.7	$ 52.8

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Summary of Significant Accounting Policies - Additional Information (Detail)	6 Months Ended
	Jun. 30, 2013
Minimum
Significant Accounting Policies [Line Items]
Operations claims standard warranty period	1 year
Maximum
Significant Accounting Policies [Line Items]
Operations claims standard warranty period	2 years
Completed operations extended warranty period	12 years

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Supplemental Disclosure to Consolidated Statements of Cash Flows (Tables)

6 Months Ended

Jun. 30, 2013

Consolidated Statement of Cash Flow Supplemental Disclosure

Supplemental disclosures to the consolidated statements of cash flows were as follows:

	Six Months Ended June 30,
	2013			2012
	(In thousands)
Supplemental disclosure of cash flow information
Income taxes paid (refunded)	$	66		$	(2,391	)
Interest paid, net of amounts capitalized	$	4,689		$	11,853
Supplemental disclosure of non-cash activities
Unrealized gain (loss) on available-for-sale investments, net	$	237		$	802
Reclassification of Deficit Distributions to (from) unconsolidated joint ventures from (to) other liabilities	$	(212	)	$	(82	)
Purchase of land in exchange for note payable	$	2,283		$	1,097
Elimination of joint venture inventory, receivables from related parties and other assets	$	0		$	(41,600	)
Elimination of joint venture note payable and other liabilities	$	0		$	(1,949	)
Redemption of Company’s interest in consolidated joint venture and elimination of non-controlling interest, less cash retained by non-controlling interest	$	0		$	(39,651	)

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Segment Information (Tables)

6 Months Ended

Jun. 30, 2013

Financial Information Related to Reportable Segments

Financial information relating to reportable segments was as follows:

	June 30, 2013		December 31, 2012
	(In thousands)
Total assets:
Southern California	$	271,882	$	213,481
San Diego		171,691		148,272
Northern California		298,340		256,728
Mountain West		334,449		297,276
South West		123,314		105,470
Other		6,318		6,943
Total homebuilding assets		1,205,994		1,028,170
Corporate		205,563		345,367
Total assets	$	1,411,557	$	1,373,537

	June 30, 2013		December 31, 2012
	(In thousands)
Inventory:
Southern California	$	213,816	$	161,700
San Diego		152,820		129,895
Northern California		260,990		226,307
Mountain West		261,872		227,130
South West		102,233		89,756
Other		2,372		2,865
Total inventory	$	994,103	$	837,653

	Three Months Ended June 30,				Six Months Ended June 30,
	2013		2012		2013		2012
	(In thousands)				(In thousands)
Revenues:
Southern California	$	56,134	$	30,104	$	96,289	$	56,484
San Diego		31,358		10,180		40,988		24,287
Northern California		53,483		30,438		81,132		56,396
Mountain West		39,884		33,211		62,190		51,806
South West		34,151		26,700		67,684		46,215
Other		1,964		1,585		3,530		2,390
Total homebuilding revenues		216,974		132,218		351,813		237,578
Corporate		336		250		457		493
Total revenues	$	217,310	$	132,468	$	352,270	$	238,071

	Three Months Ended June 30,						Six Months Ended June 30,
	2013			2012			2013			2012
	(In thousands)						(In thousands)
Income (loss) before income taxes:
Southern California	$	12,249		$	3,302		$	20,138		$	5,276
San Diego		1,004			(1,502	)		(420	)		(1,500	)
Northern California		5,648			612			7,542			1,429
Mountain West		2,108			(1,786	)		(690	)		(5,154	)
South West		169			(1,494	)		1,144			(3,150	)
Other		51			25			(302	)		(225	)
Total homebuilding income (loss) before income taxes		21,229			(843	)		27,412			(3,324	)
Corporate		(1,218	)		(10,429	)		(623	)		(8,898	)
Total income (loss) before income taxes	$	20,011		$	(11,272	)	$	26,789		$	(12,222	)

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Investments in Joint Ventures

6 Months Ended

Jun. 30, 2013

Investments in Joint Ventures

7. Investments in Joint Ventures

Unconsolidated joint ventures, which we do not control but have significant influence through ownership interests generally up to 50%, are accounted for using the equity method of accounting. These joint ventures are generally involved in real property development. Earnings and losses are allocated in accordance with terms of joint venture agreements.

Losses and distributions from joint ventures in excess of the carrying amount of our investment (“Deficit Distributions”) are included in other liabilities. We record Deficit Distributions since we are liable for this deficit to respective joint ventures. Deficit Distributions are offset by future earnings of, or future contributions to, joint ventures. At June 30, 2013 and December 31, 2012, Deficit Distributions were $0.5 million and $0.7 million, respectively.

For the three and six months ended June 30, 2013 and 2012, there were no impairment charges on investments in unconsolidated joint ventures.

At June 30, 2013 and December 31, 2012, total unconsolidated joint ventures’ notes payable were as follows:

	June 30, 2013		December 31, 2012
	(In thousands)
Bank and seller notes payable:
Guaranteed (subject to remargin obligations)	$	49,453	$	45,610
Non-guaranteed		10,936		22,894
Total bank and seller notes payable (a)		60,389		68,504
Partner notes payable:
Unsecured (b)		5,296		5,296
Total unconsolidated joint venture notes payable	$	65,685	$	73,800
Other unconsolidated joint venture notes payable (c)	$	43,002	$	57,839

(a) All bank seller notes were secured by real property.

(b) No guarantees were provided on partner notes payable.

(c) We have an indirect effective ownership in two joint ventures of 12.3% and .0003%, respectively, that had bank notes payable secured by real property, which we have not guaranteed.

At June 30, 2013 and December 31, 2012, remargin obligations and guarantees provided on debt of our unconsolidated joint ventures were on a joint and/or several basis and include, but are not limited to, project completion, interest and carry, and loan-to-value maintenance guarantees. At June 30, 2013 and December 31, 2012, we had an indemnification agreement from our joint venture partner for 90% of one secured loan balance, which was zero and zero, respectively. However, we cannot provide assurance we could collect under this indemnity agreement. In addition, for another joint venture, we have a remargin obligation that is limited to the lesser of 50% of the outstanding balances or $35.0 million in total for the joint venture loans, which outstanding loan balances were $49.4 million and $45.6 million at June 30, 2013 and December 31, 2012, respectively. Consequently, our maximum remargin obligation was $24.7 million and $22.8 million at June 30, 2013 and December 31, 2012, respectively. We also have an indemnification agreement from our joint venture partner under which we could potentially recover a portion of any remargin payments we made to the bank. However, we cannot provide assurance we could collect under this indemnity agreement. No liabilities were recorded for these guarantees at June 30, 2013 and December 31, 2012, as the fair value of the secured real estate assets exceeded the outstanding notes payable.

Our ability to make joint venture and other restricted payments and investments is governed by the Indenture governing the Secured Notes (the “Indenture”). We are permitted to make otherwise restricted payments under (i) a $70.0 million revolving basket available solely for joint venture investments and (ii) a broader restricted payment basket available as long as our Consolidated Fixed Charge Coverage Ratio (as defined in the Indenture), is at least 2.0 to 1.0. The aggregate amount of the restricted payments made under this broader restricted payment basket cannot exceed 50% of our cumulative Consolidated Net Income (as defined in the Indenture), generated subsequent to the issuance of the Secured Notes plus the aggregate net cash proceeds of, and the fair market value of, any property or other asset received by the Company as a capital contribution or upon the issuance of indebtedness or certain securities by the Company since the issuance of the Secured Notes, plus, to the extent not included in Consolidated Net Income, certain amounts received in connection with dispositions, distributions or repayments of restricted investments, plus the value of any unrestricted subsidiary which is redesignated as a restricted subsidiary under the Indenture. We have a number of joint ventures which have used, and are expected to use, capacity under these restricted payment baskets. During the second quarter of 2013, we entered into a joint venture in Southern California and committed to contribute up to $45.0 million of capital. At June 30, 2013 we made aggregate capital contributions of $9.5 million to this joint venture.

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Related Party Transactions (Detail) (USD $) In Thousands, unless otherwise specified	Jun. 30, 2013	Dec. 31, 2012
Related Party Transaction [Line Items]
Note receivable from JFSCI	$ 24,648	$ 24,498
Note receivable from unconsolidated joint venture	279	268
Notes receivable from related parties	19,385	19,940
Reserves for note receivables from related parties	(12,803)	(12,766)
Receivables from related parties	2,975	2,088
Total receivables from related parties, net	$ 34,484	$ 34,028

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Other Assets, Net (Tables)

6 Months Ended

Jun. 30, 2013

Other Assets

At June 30, 2013 and December 31, 2012, other assets were as follows:

	June 30, 2013		December 31, 2012
	(In thousands)
Income tax receivable	$	2,991	$	3,497
Investments		9,399		12,078
Property and equipment, net		2,142		2,237
Prepaid professional fees		3,181		3,451
Prepaid loan fees		6,164		6,688
Prepaid bank fees		380		403
Deposits in lieu of bonds and letters of credit		11,427		7,110
Prepaid insurance		481		2,148
Other		1,056		1,515
Total other assets, net	$	37,221	$	39,127

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Net Book Values and Estimated Fair Values of Notes Payable (Parenthetical) (Detail) (8.625% senior secured notes due May 2019, USD $) In Thousands, unless otherwise specified	Jun. 30, 2013	Dec. 31, 2012	May 10, 2011
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Principal amount	$ 750,000	$ 750,000	$ 750,000
Interest rate	8.625%	8.625%
Maturity period	2019-05	2019-05
Fair Value, Inputs, Level 2
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Principal amount	$ 750,000	$ 750,000
Interest rate	8.625%	8.625%
Maturity period	2019-05	2019-05

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Notes Payable

6 Months Ended

Jun. 30, 2013

Notes Payable

10. Notes Payable

At June 30, 2013 and December 31, 2012, notes payable were as follows:

	June 30, 2013		December 31, 2012
	(In thousands)
$750.0 million 8.625% senior secured notes, due May 2019	$	750,000	$	750,000
Promissory notes, interest ranging from 1% to 6%, maturing through 2014, secured by deeds of trust on inventory		9,740		8,209
Total notes payable	$	759,740	$	758,209

On May 10, 2011, our Secured Notes were issued at $750.0 million, bear interest at 8.625% paid semi-annually on May 15 and November 15, and do not require principal payments until maturity on May 15, 2019. The Secured Notes are redeemable, in whole or in part, at the Company’s option beginning on May 15, 2015 at a price of 104.313 per bond, reducing to 102.156 on May 15, 2016 and are redeemable at par beginning on May 15, 2017. At June 30, 2013 and December 31, 2012, accrued interest was $8.1 million and $8.1 million, respectively.

The Indenture governing the Secured Notes contains covenants that limit, among other things, our ability to incur additional indebtedness (including the issuance of certain preferred stock), pay dividends and distributions on our equity interests, repurchase our equity interests, retire unsecured or subordinated notes more than one year prior to their maturity, make investments in subsidiaries and joint ventures that are not restricted subsidiaries that guarantee the Secured Notes, sell certain assets, incur liens, merge with or into other companies, expand unto unrelated businesses, and enter in certain transaction with our affiliates. At June 30, 2013 and December 31, 2012, we were in compliance with these covenants.

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Condensed Consolidating Balance Sheet (Detail) (USD $) In Thousands, unless otherwise specified	Jun. 30, 2013		Dec. 31, 2012		Jun. 30, 2012		Dec. 31, 2011
Assets
Cash and cash equivalents	$ 157,997		$ 279,756		$ 240,937		$ 268,366
Restricted cash	2,334		13,031
Accounts and other receivables, net	146,018		141,289
Receivables from related parties, net	34,484		34,028
Inventory	994,103		837,653
Investments in unconsolidated joint ventures	39,400		28,653
Investments in subsidiaries	0		0
Other assets, net	37,221		39,127
Intercompany receivables	0		0
Total assets	1,411,557		1,373,537
Liabilities:
Notes payable	759,740		758,209
Payables to related parties	4,159		125
Accounts payable	54,915		62,738
Other liabilities	246,890		233,218
Intercompany payables	0		0
Total liabilities	1,065,704		1,054,290
SHLP equity:
Owners' equity	340,693		314,321
Accumulated other comprehensive income	4,754		4,517
Total SHLP equity	345,447		318,838
Non-controlling interests	406		409
Total equity	345,853		319,247		278,069		328,003
Total liabilities and equity	1,411,557		1,373,537
SHLP Corp
Assets
Cash and cash equivalents	129,146	[1],[2]	216,914	[1],[3]	139,748	[4]	157,511	[4]
Restricted cash	1,485	[2]	11,999	[3]
Accounts and other receivables, net	117,724	[2]	117,560	[3]
Receivables from related parties, net	9,493	[2]	8,271	[3]
Inventory	675,830	[2]	572,010	[3]
Investments in unconsolidated joint ventures	19,602	[2]	13,948	[3]
Investments in subsidiaries	706,597	[2]	672,388	[3]
Other assets, net	19,152	[2]	17,712	[3]
Intercompany receivables	0	[2]	0	[3]
Total assets	1,679,029	[2]	1,630,802	[3]
Liabilities:
Notes payable	759,740	[2]	758,209	[3]
Payables to related parties	20	[2]	26	[3]
Accounts payable	31,863	[2]	34,384	[3]
Other liabilities	170,201	[2]	162,894	[3]
Intercompany payables	371,758	[2]	356,451	[3]
Total liabilities	1,333,582	[2]	1,311,964	[3]
SHLP equity:
Owners' equity	340,693	[2]	314,321	[3]
Accumulated other comprehensive income	4,754	[2]	4,517	[3]
Total SHLP equity	345,447	[2]	318,838	[3]
Non-controlling interests	0	[2]	0	[3]
Total equity	345,447	[2]	318,838	[3]
Total liabilities and equity	1,679,029	[2]	1,630,802	[3]
Guarantor Subsidiaries
Assets
Cash and cash equivalents	(375)		48,895		87,585		96,100
Restricted cash	682		875
Accounts and other receivables, net	27,969		23,537
Receivables from related parties, net	24,965		25,668
Inventory	316,507		264,459
Investments in unconsolidated joint ventures	995		984
Investments in subsidiaries	63,778		64,971
Other assets, net	17,665		21,388
Intercompany receivables	390,316		376,420
Total assets	842,502		827,197
Liabilities:
Notes payable	0		0
Payables to related parties	5		0
Accounts payable	22,745		27,879
Other liabilities	41,569		36,700
Intercompany payables	0		0
Total liabilities	64,319		64,579
SHLP equity:
Owners' equity	773,429		758,101
Accumulated other comprehensive income	4,754		4,517
Total SHLP equity	778,183		762,618
Non-controlling interests	0		0
Total equity	778,183		762,618
Total liabilities and equity	452,186		450,777
Non-Guarantor Subsidiaries
Assets
Cash and cash equivalents	29,226		13,947		13,604		14,755
Restricted cash	167		157
Accounts and other receivables, net	35,017		35,250
Receivables from related parties, net	26		89
Inventory	2,262		1,918
Investments in unconsolidated joint ventures	18,803		13,721
Investments in subsidiaries	92,483		93,883
Other assets, net	404		27
Intercompany receivables	0		0
Total assets	178,388		158,992
Liabilities:
Notes payable	0		0
Payables to related parties	5		0
Accounts payable	307		475
Other liabilities	70,308		69,416
Intercompany payables	22,687		20,068
Total liabilities	93,307		89,959
SHLP equity:
Owners' equity	84,675		68,624
Accumulated other comprehensive income	0		0
Total SHLP equity	84,675		68,624
Non-controlling interests	406		409
Total equity	85,081		69,033
Total liabilities and equity	178,388		158,992
Consolidation, Eliminations
Assets
Cash and cash equivalents	0		0		0		0
Restricted cash	0		0
Accounts and other receivables, net	(34,692)		(35,058)
Receivables from related parties, net	0		0
Inventory	(496)		(734)
Investments in unconsolidated joint ventures	0		0
Investments in subsidiaries	(862,858)		(831,242)
Other assets, net	0		0
Intercompany receivables	(390,316)		(376,420)
Total assets	(1,288,362)		(1,243,454)
Liabilities:
Notes payable	0		0
Payables to related parties	4,129		99
Accounts payable	0		0
Other liabilities	(35,188)		(35,792)
Intercompany payables	(394,445)		(376,519)
Total liabilities	(425,504)		(412,212)
SHLP equity:
Owners' equity	(858,104)		(826,725)
Accumulated other comprehensive income	(4,754)		(4,517)
Total SHLP equity	(862,858)		(831,242)
Non-controlling interests	0		0
Total equity	(862,858)		(831,242)
Total liabilities and equity	$ (898,046)		$ (867,034)

[1] Includes Shea Homes Funding Corp.; no significant activity occurred in 2013.

[2] Includes Shea Homes Funding Corp., whose financial position at June 30, 2013 was not material.

[3] Includes Shea Homes Funding Corp., whose financial position at December 31, 2012 was not material.

[4] Includes Shea Homes Funding Corp.; no significant activity occurred in 2012.

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Inventory

6 Months Ended

Jun. 30, 2013

Inventory

6. Inventory

At June 30, 2013 and December 31, 2012, inventory was as follows:

	June 30, 2013		December 31, 2012
	(In thousands)
Model homes	$	71,572	$	69,210
Completed homes for sale		21,496		14,015
Homes under construction		263,912		189,929
Lots available for construction		284,196		249,463
Land under development		189,261		175,922
Land held for future development		79,656		60,466
Land held for sale, including water system connection rights		73,024		71,381
Land deposits and preacquisition costs		10,986		7,267
Total inventory	$	994,103	$	837,653

Impairment

Inventory, including the captions above, are stated at cost, unless the carrying amount is determined to be unrecoverable, in which case inventories are adjusted to fair value (see Note 2).

For the six months ended June 30, 2013 and 2012, there were no inventory impairment charges.

Interest Capitalization

Interest is capitalized on inventory and investments in unconsolidated joint ventures during development and other qualifying activities. Interest capitalized as a cost of inventory is included in cost of sales when related units close. Interest capitalized as part of investments in unconsolidated joint ventures is included in equity in income (loss) from unconsolidated joint ventures when related units in the joint ventures close.

For the three and six months ended June 30, 2013 and 2012, interest incurred, capitalized and expensed was as follows:

	Three Months Ended June 30,						Six Months Ended June 30,
	2013			2012			2013			2012
	(In thousands)
Interest incurred	$	16,774		$	16,660		$	33,542		$	33,320
Interest expensed (a)	$	1,397		$	5,909		$	4,830		$	12,197
Interest capitalized as a cost of inventory during the period	$	14,871		$	10,550		$	27,949		$	20,745
Interest previously capitalized as a cost of inventory, included in cost of sales	$	(15,393	)	$	(10,074	)	$	(24,904	)	$	(17,858	)
Interest capitalized in ending inventory (b)	$	105,894		$	114,323		$	105,894		$	114,323
Interest capitalized as a cost of investments in unconsolidated joint ventures during the period	$	506		$	201		$	763		$	378
Interest previously capitalized as a cost of investments in unconsolidated joint ventures, included in equity in income (loss) from unconsolidated joint ventures	$	(328	)	$	(201	)	$	(585	)	$	(378	)
Interest capitalized in ending investments in unconsolidated joint ventures	$	178		$	0		$	178		$	0

(a) For the three and six months ended June 30, 2013 and 2012, assets qualifying for interest capitalization were less than debt; therefore, non-qualifying interest was expensed.

(b) Inventory impairment charges were recorded against total inventory of the respective community. Capitalized interest reflects the gross amount of capitalized interest as impairment charges recognized were generally not allocated to specific components of inventory.

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Basis of Presentation

6 Months Ended

Jun. 30, 2013

Basis of Presentation

1. Basis of Presentation

The accompanying unaudited, condensed consolidated financial statements include the accounts of Shea Homes Limited Partnership (“SHLP”) and its wholly-owned subsidiaries, including Shea Homes, Inc. (“SHI”) and its wholly-owned subsidiaries. The Company consolidates all joint ventures in which it has a controlling interest or other ventures in which it is the primary beneficiary of a variable interest entity (“VIE”). Material intercompany accounts and transactions are eliminated. The consolidated financial statements are prepared in accordance with U.S. generally accepted accounting principles (“GAAP”) for interim financial information, the instructions to Form 10-Q and Article 10 of Regulation S-X. Accordingly, these consolidated financial statements do not include all information and notes required by GAAP for complete financial statements and should be read in conjunction with the consolidated financial statements and accompanying notes for the year ended December 31, 2012. Adjustments, consisting of normal, recurring accruals, loss reserves and deferred tax asset valuation allowance adjustments, considered necessary for a fair presentation, are included.

Unless the context otherwise requires, the terms “we”, “us”, “our” and “the Company” refer to SHLP, its subsidiaries and its consolidated joint ventures.

Organization

SHLP, a California limited partnership, was formed January 4, 1989, pursuant to an agreement of partnership (the “Agreement”), as most recently amended August 6, 2013, by and between J.F. Shea, LP, a Delaware limited partnership, as general partner, and the Company’s limited partners who are comprised of entities and trusts, including J.F. Shea Co., Inc. (“JFSCI”), that are under the common control of Shea family members (collectively, the “Partners”). J.F. Shea, LP is 96% owned by JFSCI.

Nature of Operations

Our principal business purpose is homebuilding, which includes acquiring and developing land and constructing and selling new residential homes thereon. To a lesser degree, we develop lots and sell them to other homebuilders. Our principal markets are California, Arizona, Colorado, Washington, Nevada and Florida.

We own a captive insurance company, Partners Insurance Company, Inc. (“PIC”), which provided warranty, general liability, workers’ compensation and completed operations insurance for related companies and third-party subcontractors. Effective for the policy years commencing in 2007, PIC ceased issuing policies for these coverages (see Note 11).

Seasonality

Historically, the homebuilding industry experiences seasonal fluctuations. We typically experience the highest home sales order activity in spring and summer, although this activity is also highly dependent on the number of active selling communities, timing of community openings and other market factors. Since it typically takes three to eight months to construct a home, we close more homes in the second half of the year as spring and summer home sales orders convert to home closings. Because of this seasonality, home starts, construction costs and related cash outflows are historically highest from April to October, and the majority of cash receipts from home closings occur during the second half of the year. Therefore, operating results for the three and six months ended June 30, 2013 are not necessarily indicative of results expected for the year ended December 31, 2013.

Use of Estimates

Preparation of the consolidated financial statements in conformity with U.S. GAAP requires the Company to make estimates and assumptions that affect the amounts reported in the consolidated financial statements and accompanying notes. Actual results could differ significantly from those estimates.

Reclassifications

Certain reclassifications were made in the 2012 condensed consolidated financial statements to conform to classifications in 2013. As of December 31, 2012, investments of $12.1 million and property and equipment of $2.2 million were reclassified to other assets in the consolidated balance sheet. Additionally, for the six months ended June 30, 2012, a $7.4 million loss on reinsurance was reclassified from other income (expense), net to gain (loss) on reinsurance transaction in the consolidated statements of operations and comprehensive income (loss), with corresponding changes made to operating cash flows in the consolidated statements of cash flows.

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Variable Interest Entities - Additional Information (Detail) (USD $) In Millions, unless otherwise specified	6 Months Ended
	Jun. 30, 2013	Dec. 31, 2012
RRWS,LLC
Variable Interest Entities and Non Variable Interest Entities [Line Items]
Notes payable outstanding	$ 49.5	$ 45.6
Maximum liability (cap)	35.0
Maximum aggregate liability	The Company also has a maximum aggregate liability under the re-margin arrangements of the lesser of 50% of the outstanding balances or $35.0 million in total. The obligations of the Company and Partner under the re-margin arrangements are limited during the first two years of the loans.
Maximum remargin obligation	24.7	22.8
Land Option Contracts
Variable Interest Entities and Non Variable Interest Entities [Line Items]
Refundable and non-refundable cash deposits	4.7
Remaining purchase price of cash deposits	293.2
Land Option Contracts | Loss Exposure
Variable Interest Entities and Non Variable Interest Entities [Line Items]
Refundable and non-refundable cash deposits	5.8	5.0
Capitalized preacquisition costs	4.2	2.0
Affiliated Entity | RRWS,LLC
Variable Interest Entities and Non Variable Interest Entities [Line Items]
VIEs ownership interest	50.00%
Third Party | RRWS,LLC
Variable Interest Entities and Non Variable Interest Entities [Line Items]
VIEs ownership interest	50.00%
Unconsolidated Variable Interest Entities | Land Option Contracts
Variable Interest Entities and Non Variable Interest Entities [Line Items]
Refundable and non-refundable cash deposits	2.0
Remaining purchase price of cash deposits	$ 62.2

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Inventory - Additional Information (Detail) (USD $) In Millions, unless otherwise specified	6 Months Ended
	Jun. 30, 2013	Jun. 30, 2012
Inventory [Line Items]
Inventory impairment charges	$ 0	$ 0

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Related Party Transactions (Tables)

6 Months Ended

Jun. 30, 2013

Receivables from Related Parties

At June 30, 2013 and December 31, 2012, receivables from related parties, net were as follows:

	June 30, 2013			December 31, 2012
	(In thousands)
Note receivable from JFSCI	$	24,648		$	24,498
Note receivable from unconsolidated joint venture		279			268
Notes receivable from related parties		19,385			19,940
Reserves for note receivables from related parties		(12,803	)		(12,766	)
Receivables from related parties		2,975			2,088
Total receivables from related parties, net	$	34,484		$	34,028

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Contingent Liabilities And Commitments (Detail) (USD $) In Thousands, unless otherwise specified	Jun. 30, 2013	Dec. 31, 2012
Commitment And Contingencies [Line Items]
Outstanding letters of credit	$ 457	$ 4,216
Water system connection rights purchase obligation	33,615	33,615
Total unrecorded contingent liabilities and commitments	253,403	249,241
Partner Notes Payable
Commitment And Contingencies [Line Items]
Guarantee obligations	24,726	22,805
Unconsolidated Joint Ventures
Commitment And Contingencies [Line Items]
Exposure of surety bonds in connection with development of projects	27,700	30,800
Tax Court Member
Commitment And Contingencies [Line Items]
Guarantee obligations	70,000	70,000
Surety Bonds | Related Parties
Commitment And Contingencies [Line Items]
Exposure of surety bonds in connection with development of projects	2,274	2,311
Surety Bonds | Company
Commitment And Contingencies [Line Items]
Exposure of surety bonds in connection with development of projects	94,672	85,490
Surety Bonds | Unconsolidated Joint Ventures
Commitment And Contingencies [Line Items]
Exposure of surety bonds in connection with development of projects	$ 27,659	$ 30,804

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Other Liabilities - Additional Information (Detail) (USD $)	3 Months Ended		6 Months Ended			12 Months Ended			6 Months Ended		3 Months Ended		6 Months Ended				3 Months Ended		6 Months Ended
	Jun. 30, 2013	Jun. 30, 2012	Jun. 30, 2013	Jun. 30, 2012	Dec. 31, 2012	Dec. 31, 2011 Vistancia, LLC	Jun. 30, 2013 Vistancia, LLC	Dec. 31, 2012 Vistancia, LLC	Jun. 30, 2013 Minimum	Jun. 30, 2013 Maximum	Jun. 30, 2013 JFSCI	Jun. 30, 2012 JFSCI	Jun. 30, 2013 JFSCI	Jun. 30, 2012 JFSCI	Dec. 31, 2012 JFSCI	Dec. 31, 2009 JFSCI	Jun. 30, 2013 PIC	Jun. 30, 2012 PIC	Jun. 30, 2013 PIC	Jun. 30, 2012 PIC	Dec. 31, 2012 PIC	Dec. 31, 2009 PIC
Other Liabilities [Line Items]
Operations claims standard warranty period									1 year	2 years
Completed operations extended warranty period										12 years
Insurance receivables	$ 131,248,000		$ 131,248,000		$ 131,519,000
Percentage of uncovered losses related to completed operations	12.50%		12.50%
Deferred revenue on completed operation claims											19,700,000		19,700,000		20,300,000	19,200,000	9,100,000		9,100,000		8,400,000	15,600,000
Gain (loss) on reinsurance	(807,000)	(8,163,000)	(159,000)	(7,367,000)							400,000	(2,300,000)	600,000	(1,700,000)			(1,200,000)	(5,900,000)	(700,000)	(5,700,000)
Distribution payable to non-controlling interest	2,712,000		2,712,000		2,892,000	3,300,000	2,700,000	2,900,000
Distribution to non-controlling interest				$ 345,000		$ 100,000

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Income Taxes

6 Months Ended

Jun. 30, 2013

Income Taxes

13. Income Taxes

For the six months ended June 30, 2013, income tax benefit (expense) was $(0.4) million. At June 30, 2013, the net deferred tax asset was $31.5 million, which primarily related to available loss carryforwards, inventory and investment impairments, and housing inventory and land basis differences. The $31.5 million deferred tax asset valuation allowance fully reserves the net deferred tax asset due to inherent uncertainty of future income as the housing recovery is in its early stages. We will continue to monitor industry and economic conditions, and our ability to generate taxable income based on our business plan and available tax planning strategies, which would allow us to utilize the tax benefits of the net deferred tax assets and thereby allow us to reverse all, or a portion of, our valuation allowance.

In 2009, we filed a petition with the United States Tax Court (the “Tax Court”) regarding our position on the completed contract method of accounting for homebuilding activities by SHLP, SHI and subsidiaries. During 2010 and 2011, we engaged in formal and informal discovery with the IRS and the Tax Court heard trial testimony in July 2012 and ordered the Company and the IRS to exchange briefs, all of which have been filed. We expect the Tax Court to render its decision sometime during 2013 or 2014. We expect our position will prevail, and have accordingly, not recorded a liability for related taxes or interest for SHI and its subsidiaries. Furthermore, as a limited partnership, any income taxes, interest or penalties which may be imposed on SHLP are the responsibility of the Partners and are not reflected in the tax provision in these consolidated financial statements. However, if the Tax Court rules in favor of the IRS, which is reasonably possible, SHI could be obligated to pay the IRS and applicable state taxing authorities up to $64 million and, under the Tax Distribution Agreement, SHLP could be obligated to make a distribution to the Partners up to $107 million to fund their related payments to the IRS and the applicable state taxing authorities. However, the Indenture provides that the amount we may pay on behalf of SHI and distribute to the partners of SHLP for this matter may not exceed $70.0 million. Any potential shortfall would be absorbed by the Partners of SHLP (see Note 15).

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Other Assets, Net

6 Months Ended

Jun. 30, 2013

Other Assets, Net

9. Other Assets, Net

At June 30, 2013 and December 31, 2012, other assets were as follows:

	June 30, 2013		December 31, 2012
	(In thousands)
Income tax receivable	$	2,991	$	3,497
Investments		9,399		12,078
Property and equipment, net		2,142		2,237
Prepaid professional fees		3,181		3,451
Prepaid loan fees		6,164		6,688
Prepaid bank fees		380		403
Deposits in lieu of bonds and letters of credit		11,427		7,110
Prepaid insurance		481		2,148
Other		1,056		1,515
Total other assets, net	$	37,221	$	39,127

Investments

Investments consist of available-for-sale securities, primarily private debt obligations, and are measured at fair value, which is based on quoted market prices or cash flow models. Accordingly, unrealized gains and temporary losses on investments, net of tax, are reported as accumulated other comprehensive income (loss). Realized gains and losses are determined using the specific identification method.

For the three and six months ended June 30, 2013, and for the three and six months ended June 30, 2012, there were no realized gains on available-for-sale securities.

Prepaid Professional and Loan Fees

In accordance with ASC 470, these amounts are debt issuance costs and are amortized as interest over the term of the related debt.

Deposits in Lieu of Bonds and Letters of Credit

We are required to make cash deposits in lieu of bonds with various agencies for some of our homebuilding projects. These deposits may be returned as the collateral requirements decrease or they are replaced with new bonds.

In June 2010, due to maturity of an unsecured bank line of credit, certain letters of credit were presented for payment by the holders and the proceeds therefrom were recorded as deposits in lieu of letters of credit. These deposits may be returned as collateral requirements decrease or they are replaced with new letters of credit.

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Contingencies and Commitments - Additional Information (Detail) (USD $)																6 Months Ended
	Jun. 30, 2013	Dec. 31, 2012	May 10, 2011	Jun. 30, 2013 Credit Support Agreement Colorado	Dec. 31, 2012 Credit Support Agreement Colorado	Jun. 30, 2013 Funding Arrangements	Dec. 31, 2012 Funding Arrangements	Jun. 30, 2013 Funding Arrangements Colorado	Dec. 31, 2012 Funding Arrangements Colorado	Jun. 30, 2013 Related Parties	Dec. 31, 2012 Related Parties	Jun. 30, 2013 Unconsolidated Joint Ventures	Dec. 31, 2012 Unconsolidated Joint Ventures	Jun. 30, 2013 Homebuilding Operations	Dec. 31, 2012 Homebuilding Operations	Jun. 30, 2013 SHI Maximum	Jun. 30, 2013 SHLP Maximum
Commitments and Contingencies Disclosure [Line Items]
Legal reserves	$ 4,100,000	$ 4,900,000
Amount company could be obligated to pay																64,000,000	107,000,000
Initial Maximum CCM Payment	70,000,000
Letters of credit, borrowing capacity			75,000,000
Letters of credit, outstanding amount	457,000	4,216,000
Exposure of surety bonds in connection with development of projects										2,300,000	2,300,000	27,700,000	30,800,000	94,700,000	85,500,000
Bonds issued for development of projects										5,800,000	6,100,000	64,500,000	71,600,000	182,500,000	186,000,000
Reimbursements				6,000,000	4,900,000	12,700,000	16,300,000	11,400,000	11,900,000
Purchase of water system rights, contractual purchase price	$ 33,615,000	$ 33,615,000

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Supplemental Disclosure to Consolidated Statements of Cash Flows

6 Months Ended

Jun. 30, 2013

Supplemental Disclosure to Consolidated Statements of Cash Flows

16. Supplemental Disclosure to Consolidated Statements of Cash Flows

Supplemental disclosures to the consolidated statements of cash flows were as follows:

	Six Months Ended June 30,
	2013			2012
	(In thousands)
Supplemental disclosure of cash flow information
Income taxes paid (refunded)	$	66		$	(2,391	)
Interest paid, net of amounts capitalized	$	4,689		$	11,853
Supplemental disclosure of non-cash activities
Unrealized gain (loss) on available-for-sale investments, net	$	237		$	802
Reclassification of Deficit Distributions to (from) unconsolidated joint ventures from (to) other liabilities	$	(212	)	$	(82	)
Purchase of land in exchange for note payable	$	2,283		$	1,097
Elimination of joint venture inventory, receivables from related parties and other assets	$	0		$	(41,600	)
Elimination of joint venture note payable and other liabilities	$	0		$	(1,949	)
Redemption of Company’s interest in consolidated joint venture and elimination of non-controlling interest, less cash retained by non-controlling interest	$	0		$	(39,651	)

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Owners' Equity

6 Months Ended

Jun. 30, 2013

Owners' Equity

14. Owners’ Equity

Owners’ equity consists of partners’ preferred and common capital. Common capital is comprised of limited partners with a collective 78.38% ownership and a general partner with a 20.62% ownership. Preferred capital is comprised of limited partners with either series B (“Series B”) or series D (“Series D”) classification. Series B holders have no ownership interest but earn a preferred return at Prime less 2.05% per annum through December 31, 2012 (1.2% at December 31, 2012) on unreturned capital balances and Series D holders have a 1% ownership interest and earn a preferred return at 7% per annum through December 31, 2012 on unreturned preferred capital balances. In August 2013, the Agreement was amended and the rates on the Series B and Series D were changed, effective January 1, 2013. Series B earns a rate of 1.2% from January 1, 2013 to December 31, 2016, 2.25% from January 1, 2017 to December 31, 2020, and Prime less 2.05% from January 1, 2021 and thereafter on unreturned capital balances. Series D earns a rate of 2.0% from January 1, 2013 to December 31, 2016, 12.75% from January 1, 2017 to December 31, 2020, and 7.0% from January 1, 2021 and thereafter on unreturned capital balances. At June 30, 2013 and December 31, 2012, accumulated undistributed preferred returns for Series B holders were $21.7 million and $20.8 million, respectively. At June 30, 2013 and December 31, 2012, accumulated undistributed preferred returns for Series D holders were $54.7 million and $52.8 million, respectively.

Net income is allocated to Partners in a priority order that considers previously allocated net losses and preferred return considerations and, thereafter, in proportion to their respective ownership interests. Net loss is allocated in a priority order to Partners generally in proportion to their ownership interests and adjusted capital account balances, and, thereafter, to the general partner.

The general partner, in its sole discretion, may make additional capital contributions or accept additional capital contributions from the limited partners. Cash distributions are made to Partners in proportion to their unpaid preferred returns, unreturned capital and, thereafter, in proportion to their ownership interests. Distributions to Partners are made at the discretion of the general partner, including payment of personal income taxes related to the Company. In addition, distributions to Partners from other entities under control of Shea family members, such as JFSCI, can be used for payment of personal incomes taxes related to the Company and other uses.

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Document and Entity Information	6 Months Ended
	Jun. 30, 2013
Document Information [Line Items]
Document Type	10-Q
Amendment Flag	false
Document Period End Date	Jun. 30, 2013
Document Fiscal Year Focus	2013
Document Fiscal Period Focus	Q2
Entity Registrant Name	SHEA HOMES LIMITED PARTNERSHIP
Entity Central Index Key	0001531744
Current Fiscal Year End Date	--12-31
Entity Filer Category	Non-accelerated Filer
Entity Common Stock, Shares Outstanding	0

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Contingencies and Commitments

6 Months Ended

Jun. 30, 2013

Contingencies and Commitments

15. Contingencies and Commitments

At June 30, 2013 and December 31, 2012, certain unrecorded contingent liabilities and commitments were as follows:

	June 30, 2013		December 31, 2012
	(In thousands)
Tax Court CCM case (capped at $70.0 million)	$	70,000	$	70,000
Remargin obligations and guarantees for unconsolidated joint ventures (see Note 7)		24,726		22,805
Outstanding letters of credit		457		4,216
Costs to complete on surety bonds for Company projects		94,672		85,490
Costs to complete on surety bonds for joint venture projects		27,659		30,804
Costs to complete on surety bonds for related party projects		2,274		2,311
Water system connection rights purchase obligation		33,615		33,615
Total unrecorded contingent liabilities and commitments	$	253,403	$	249,241

Legal Claims

Lawsuits, claims and proceedings have been and will likely be instituted or asserted against us in the normal course of business, including actions brought on behalf of various classes of claimants. We are also subject to local, state and federal laws and regulations related to land development activities, house construction standards, sales practices, employment practices and environmental protection. As a result, we are subject to periodic examinations or inquiry by agencies administering these laws and regulations.

We record a reserve for potential legal claims and regulatory matters when they are probable of occurring and a potential loss is reasonably estimable, and are based on specific facts and circumstances, and we revise these estimates when necessary. At June 30, 2013 and December 31, 2012, we had reserves of $4.1 million and $4.9 million, respectively, net of expected recoveries, relating to these claims and matters, and while their outcome cannot be predicted with certainty, we believe we have appropriately reserved for them. However, if the liability arising from their resolution exceeds their recorded reserves, we could incur additional charges that could be significant.

Due to the inherent difficulty of predicting outcomes of legal claims and related contingencies, we generally cannot predict their ultimate resolution, related timing or eventual loss. If our evaluations indicate loss contingencies that could be material are not probable, but are reasonably possible, we will disclose their nature with an estimate of possible range of losses or a statement that such loss is not reasonably estimable. At June 30, 2013, the range of reasonably possible losses in excess of amounts recorded was not material.

As described in Note 13, in 2009, we filed a petition with the Tax Court regarding our position on the completed contract method of accounting (“CCM”) for homebuilding activities. The Tax Court heard trial testimony in July 2012 and ordered the Company and the IRS to exchange briefs, all of which have been filed. We expect the Tax Court to render its decision sometime during 2013 or 2014. We expect our position will prevail, and accordingly, no liability for related taxes or interest has been recorded. However, if the Tax Court rules in favor of the IRS, which is reasonably possible, SHI could be obligated to pay the IRS and applicable state taxing authorities up to $64 million and SHLP could be obligated to make a distribution to the Partners up to $107 million to fund their related payments to the IRS and the applicable state taxing authorities.

Notwithstanding, the Indenture governing the Secured Notes restricts SHLP’s ability to make distributions to its partners pursuant to the Tax Distributions Agreement in excess of an amount specified by the indenture (such maximum amount of collective distributions referred to as the “Maximum CCM Payment”), unless SHLP receives a cash equity contribution from JFSCI for such excess. The initial Maximum CCM Payment is $70.0 million, which will be reduced by payments made by SHI in connection with any resolution of our dispute with the IRS regarding our use of CCM and payments made by SHLP on certain guarantee obligations described in the Indenture. SHLP and SHI expect to pay any CCM-related tax liability from existing cash, cash from operations and, to the extent SHLP is required by the Tax Distribution Agreement to pay amounts in excess of the Maximum CCM Payment, from cash equity contributions by JFSCI.

Letters of Credit, Surety Bonds and Project Obligations

On May 10, 2011, we entered into a $75.0 million letter of credit facility. At June 30, 2013 and December 31, 2012, outstanding letters of credit against the letter of credit facility were $0.5 million and $4.2 million, respectively.

We provide surety bonds that guarantee completion of certain infrastructure serving our homebuilding projects. At June 30, 2013, there were $94.7 million of costs to complete in connection with the $182.5 million of surety bonds that were issued. At December 31, 2012, there were $85.5 million of costs to complete in connection with the $186.0 million of surety bonds that were issued.

We also provided indemnification for bonds issued by certain unconsolidated joint ventures and other related party projects in which we have no ownership interest. At June 30, 2013, there were $27.7 million of costs to complete in connection with $64.5 million of surety bonds that were issued for unconsolidated joint venture projects, and $2.3 million of costs to complete in connection with $5.8 million of surety bonds that were issued for related party projects. At December 31, 2012, $30.8 million of costs to complete in connection with $71.6 million of surety bonds were issued for unconsolidated joint venture projects, and $2.3 million of costs to complete in connection with $6.1 million of surety bonds that were issued for related party projects.

Certain of our homebuilding projects utilize community facility district, metro-district and other local government bond financing programs to fund acquisition or construction of infrastructure improvements. Interest and principal on these bonds are typically paid from taxes and assessments levied on homeowners following the sale of new homes within the project. Occasionally, we enter into credit support arrangements requiring us to pay interest and principal on these bonds if the taxes and assessments levied on homeowners are insufficient to cover such obligations. Furthermore, reimbursement of these payments to us is dependent on the district or local government’s ability to generate sufficient tax and assessment revenues from the sale of new homes. At June 30, 2013 and December 31, 2012, in connection with a credit support arrangement, there was $6.0 million and $4.9 million, respectively, reimbursable to us from a metro-district in Colorado.

We also pay certain fees and costs associated with the construction of infrastructure improvements in homebuilding projects that utilize these district bond financing programs. These fees and costs are typically reimbursable to us from, and therefore dependent on, bond proceeds or taxes and assessments levied on homeowners. At June 30, 2013 and December 31, 2012, in connection with certain funding arrangements, there was $12.7 million and $16.3 million, respectively, reimbursable to us from certain metro-districts, including $11.4 million and $11.9 million, respectively, from a metro-district in Colorado.

Until bond proceeds or tax and assessment revenues are sufficient to cover our obligations and/or reimburse us, our responsibility to make interest and principal payments on these bonds or pay fees and costs associated with the construction of infrastructure improvements could be prolonged and significant.

As a condition of the Vistancia Sale, and the purchase of the non-controlling member’s remaining interest in Vistancia, LLC, the Company effectively remains a 10% guarantor on certain community facility district bond obligations to which the Company must meet a minimum calculated tangible net worth; otherwise, the Company is required to fund collateral to the bond issuer. At June 30, 2013 and December 31, 2012, the Company exceeded the minimum tangible net worth requirement.

In one consolidated homebuilding project, we have contractual obligations to purchase and receive water system connection rights which, at June 30, 2013 and December 31, 2012, had an estimated market value in excess of their contractual purchase price of $33.6 million. These water system connection rights are held and then transferred to homebuyers upon closing of their home or transferred upon sale of land to the respective buyer. These water system connection rights can also be sold or leased but generally only within the local jurisdiction.

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Changes in Warranty Liabilities (Detail) (USD $) In Thousands, unless otherwise specified	3 Months Ended		6 Months Ended
	Jun. 30, 2013	Jun. 30, 2012	Jun. 30, 2013	Jun. 30, 2012
Warranty Liability [Line Items]
Balance, beginning of the period	$ 17,927	$ 16,660	$ 17,749	$ 17,358
Provision for warranties	2,641	1,668	4,386	3,143
Warranty costs paid	(2,047)	(1,982)	(3,614)	(4,155)
Balance, end of the period	$ 18,521	$ 16,346	$ 18,521	$ 16,346

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Changes in Completed Operations Reserves (Detail) (USD $) In Thousands, unless otherwise specified			3 Months Ended		6 Months Ended
	Jun. 30, 2013	Dec. 31, 2012	Jun. 30, 2013 Insured Operations	Jun. 30, 2012 Insured Operations	Jun. 30, 2013 Insured Operations	Jun. 30, 2012 Insured Operations
Completed Operations [Line Items]
Balance, beginning of the period	$ 131,248	$ 131,519	$ 131,250	$ 103,980	$ 131,519	$ 109,390
Reserves provided (relieved)			1,096	17,517	3,068	18,908
Claims paid			(1,098)	(4,368)	(3,339)	(11,169)
Balance, end of the period	$ 131,248	$ 131,519	$ 131,248	$ 117,129	$ 131,248	$ 117,129