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Investment In Unconsolidated Entities
 9 Months Ended
Sep. 30, 2024
Equity Method Investments and Joint Ventures [Abstract]  
Investment in Unconsolidated Entities INVESTMENT IN UNCONSOLIDATED ENTITIES
Great Park Venture
The Great Park Venture previously had two classes of membership interests—“Percentage Interests” and “Legacy Interests.” The Operating Company owned 37.5% of the Great Park Venture’s Percentage Interests as of September 30, 2024. Legacy Interest holders were entitled to receive priority distributions in an aggregate amount equal to $476.0 million, which were satisfied as of December 31, 2021, and up to an additional $89.0 million from participation in subsequent distributions.
During the nine months ended September 30, 2024, the Great Park Venture made aggregate distributions of $18.1 million to holders of Legacy Interests and $229.9 million to holders of Percentage Interests. The Company received $86.2 million for its 37.5% Percentage Interest. With the distributions to the holders of Legacy Interests during the nine months ended September 30, 2024, the Great Park Venture fully satisfied the $89.0 million maximum participating Legacy Interest distribution rights, as a result of which, the Legacy Interests are no longer deemed to be outstanding.
The Great Park Venture is the owner of Great Park Neighborhoods, a mixed-use planned community located in Orange County, California. The Company, through the A&R DMA, as amended, manages the planning, development and sale of land at the Great Park Neighborhoods and supervises the day-to-day affairs of the Great Park Venture. The Great Park Venture is governed by an executive committee of representatives appointed by only the holders of Percentage Interests. The Company serves as the administrative member but does not control the actions of the executive committee. The Company accounts for its investment in the Great Park Venture using the equity method of accounting.
The carrying value of the Company’s investment in the Great Park Venture is higher than the Company’s underlying share of equity in the carrying value of net assets of the Great Park Venture, resulting in a basis difference. The Company’s earnings or losses from the equity method investment are adjusted by amortization and accretion of the basis differences as the assets (mainly inventory) and liabilities that gave rise to the basis difference are sold, settled or amortized.
During the nine months ended September 30, 2024, the Great Park Venture recognized $19.8 million in land sale revenues to related parties of the Company and $273.7 million in land sale revenues to third parties.
During the nine months ended September 30, 2023, the Great Park Venture recognized $9.4 million in land sale revenues to related parties of the Company and $363.1 million in land sale revenues to third parties, of which $357.8 million relates to homesites sold to an unaffiliated land banking entity whereby a related party of the Company retained the option to acquire these homesites in the future from the land bank entity.
The following table summarizes the statements of operations of the Great Park Venture for the nine months ended September 30, 2024 and 2023 (in thousands):
Nine Months Ended September 30,
20242023
Land sale and related party land sale revenues$293,593 $372,472 
Cost of land sales
(67,062)(165,749)
Other costs and expenses
(95,068)(37,204)
Net income of Great Park Venture$131,463 $169,519 
The Company’s share of net income$49,299 $63,570 
Basis difference amortization, net(4,081)(10,498)
Equity in earnings from Great Park Venture$45,218 $53,072 
The following table summarizes the balance sheet data of the Great Park Venture and the Company’s investment balance as of September 30, 2024 and December 31, 2023 (in thousands):
September 30, 2024December 31, 2023
Inventories
$318,182 $391,352 
Cash and cash equivalents
58,120 61,054 
Contract assets, receivables and other assets, net215,327 166,793 
Total assets
$591,629 $619,199 
Accounts payable and other liabilities
$273,801 $184,847 
Redeemable Legacy Interests
— 18,075 
Capital (Percentage Interest)
317,828 416,277 
Total liabilities and capital
$591,629 $619,199 
The Company’s share of capital in Great Park Venture
$119,187 $156,105 
Unamortized basis difference
53,600 57,681 
The Company’s investment in the Great Park Venture
$172,787 $213,786 

Gateway Commercial Venture
The Company owned a 75% interest in the Gateway Commercial Venture as of September 30, 2024. The Gateway Commercial Venture is governed by an executive committee in which the Company is entitled to appoint two individuals. One of the other members of the Gateway Commercial Venture is also entitled to appoint two individuals to the executive committee. The unanimous approval of the executive committee is required for certain matters, which limits the Company’s ability to control the Gateway Commercial Venture, however, the Company is able to exercise significant influence and therefore accounts for its investment in the Gateway Commercial Venture using the equity method. The Company is the manager of the Gateway Commercial Venture, with responsibility to manage and administer its day-to-day affairs and implement a business plan approved by the executive committee.
The Gateway Commercial Venture owns one commercial office building and approximately 50 acres of commercial land with additional development rights at a 73 acre office, medical, research and development campus located within the Great Park Neighborhoods (the “Five Point Gateway Campus”). The Five Point Gateway Campus consists of four buildings totaling approximately one million square feet. The Company and a subsidiary of Lennar lease portions of the building owned by the Gateway Commercial Venture, and during the nine months ended September 30, 2024 and 2023, the Gateway Commercial Venture recognized $7.0 million and $6.3 million, respectively, in rental revenues from those leasing arrangements.
The following table summarizes the statements of operations of the Gateway Commercial Venture for the nine months ended September 30, 2024 and 2023 (in thousands):
Nine Months Ended September 30,
20242023
Rental revenues$7,002 $6,329 
Rental operating and other expenses(2,735)(2,875)
Depreciation and amortization (3,011)(2,982)
Interest expense(2,078)(1,829)
Net loss of Gateway Commercial Venture$(822)$(1,357)
Equity in loss from Gateway Commercial Venture$(617)$(1,018)
The following table summarizes the balance sheet data of the Gateway Commercial Venture and the Company’s investment balance as of September 30, 2024 and December 31, 2023 (in thousands):
September 30, 2024December 31, 2023
Real estate and related intangible assets, net$73,707 $76,719 
Cash and restricted cash7,349 5,574 
Other assets3,347 3,554 
Total assets$84,403 $85,847 
Notes payable, net$28,693 $28,850 
Other liabilities6,158 6,623 
Members’ capital49,552 50,374 
Total liabilities and capital$84,403 $85,847 
The Company’s investment in the Gateway Commercial Venture$37,164 $37,781 
In August 2023, the Gateway Commercial Venture refinanced its mortgage note, extending the maturity date to August 2025. As a condition of the refinancing, the Company is subject to certain guaranties of the Gateway Commercial Venture’s mortgage note, including an interest and carry guaranty along with a springing guaranty of 50% of the outstanding balance in the event the Gateway Commercial Venture’s leases with either the Company or the affiliate of Lennar are no longer in effect and the Gateway Commercial Venture is unable to meet certain financial covenants.
Valencia Landbank Venture
As of September 30, 2024, the Company owned a 10% interest in the Valencia Landbank Venture, an entity organized in December 2020 for the purpose of taking assignment from homebuilders of purchase and sale agreements for the purchase of residential lots within the Valencia community. The Valencia Landbank Venture concurrently enters into option and development agreements with homebuilders pursuant to which the homebuilders retain the option to purchase the land to construct and sell homes. The Company does not have a controlling financial interest in the Valencia Landbank Venture, however, the Company has the ability to significantly influence the Valencia Landbank Venture’s operating and financial policies, and most major decisions require the Company’s approval in addition to the approval of the Valencia Landbank Venture’s other unaffiliated member, and therefore the Company accounts for its investment in the Valencia Landbank Venture using the equity method. At September 30, 2024 and December 31, 2023, the Company’s investment in the Valencia Landbank Venture was $0.8 million and $1.2 million, respectively, and the Company recognized $0.5 million and $0.5 million in equity in earnings for the nine months ended September 30, 2024 and 2023, respectively.