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Business Acquisition
12 Months Ended
Dec. 31, 2018
Business Combinations [Abstract]  
Business Combination Disclosure
ACQUISITION
On August 2, 2018, we acquired certain homebuilding assets owned by Crosswind Properties, LLC, Wynn Construction, Inc., Crosswind Development, Inc., Crosswind Investments, Inc. and First Continental Communities, Inc. (collectively, “Wynn Homes”), and assumed certain related liabilities. As a result of the Wynn Homes acquisition, we expanded our North Carolina presence in the Raleigh market, as well as established an immediate presence in the Wilmington market. We acquired approximately 200 homes under construction and more than 4,000 owned and controlled lots. The total purchase price for the Wynn Homes acquisition was approximately $78.5 million, consisting of approximately $74.5 million in cash and $4.0 million in shares of our common stock.
The acquisition was accounted for in accordance with ASC Topic 805, Business Combinations (“ASC 805”). Our purchase accounting for Wynn Homes as of December 31, 2018 was complete concerning the working capital adjustment and valuation of the tangible assets, intangible assets and liabilities assumed as of the acquisition date. At December 31, 2018, the acquired assets and assumed liabilities have been recorded at their estimated fair values at the acquisition date as noted below (amounts in thousands):
Purchase Consideration:
 
Total
Cash paid for net assets
 
$
74,463

Common Stock
 
4,000

            Total consideration
 
78,463

Assets acquired and liabilities assumed:
 
 
Real estate inventory
 
75,927

Pre-acquisition costs, deposits and other assets
 
8,143

            Total assets
 
84,070

Accounts payable and accrued liabilities
 
(5,607
)
            Total liabilities
 
(5,607
)
 
 
 
          Net assets acquired
 
$
78,463


Pre-acquisition costs, which approximate fair value, deposits and other assets, accounts payable and accrued liabilities, are stated at historical carrying values given the short-term nature of these assets and liabilities. Real estate inventory was adjusted to reflect fair value.
We determined the estimated fair values of the real estate inventory with the assistance of appraisals performed by independent third-party specialists and estimates by management.
Significant assumptions included in our estimates of the fair value of the assets acquired include market comparisons, gross margin comparisons, future development costs and the timing of the completion of development activities, absorption rates, and mix of products sold in each community. Based on the estimated purchase consideration, management believes that the purchase price for the Wynn Homes acquisition was at market value and there was no excess of purchase price over the net fair value of assets acquired and liabilities assumed.
We expensed approximately $0.8 million of acquisition related costs for legal and due diligence services; these costs are included in the general and administrative expenses in the accompanying consolidated statements of operations.