Document

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

__________

FORM 10-Q

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

For the quarterly period ended June 30, 2017

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

For the transition period from to

Commission File Number 1-10153

HOMEFED CORPORATION

(Exact name of registrant as specified in its Charter)



Delaware (State or other jurisdiction of incorporation or organization)	33-0304982 (I.R.S. Employer

1903 Wright Place, Suite 220, Carlsbad, California (Address of principal executive offices)	Identification Number) 92008 (Zip Code)

(760) 918-8200

(Registrant’s telephone number, including area code)

N/A

(Former name, former address and former fiscal year, if changed since last report)

______________________

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	X	NO

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, smaller reporting company or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company” and "emerging growth company" in Rule 12b-2 of the Exchange Act.



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

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).



YES	NO	X

APPLICABLE ONLY TO CORPORATE ISSUERS:

Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date. On July 24, 2017, there were 15,451,532 outstanding shares of the Registrant’s Common Stock, par value $.01 per share.

Part I -FINANCIAL INFORMATION

Item 1. Financial Statements.

HOMEFED CORPORATION AND SUBSIDIARIES

Consolidated Balance Sheets

June 30, 2017 and December 31, 2016

(Dollars in thousands, except par value)

(Unaudited)



	June 30,			December 31,
	2017			2016
ASSETS
Real estate held for development	$	304,069		$	297,665
Real estate held for investment, net	38,610			42,536
Cash and cash equivalents	54,140			53,140
Restricted cash	2,670			2,672
Equity method investments	128,898			127,379
Accounts receivable, deposits and other assets	22,645			18,564
Intangible assets, net	4,317			5,634
Net deferred tax asset	43,234			34,742

TOTAL	$	598,583		$	582,332

LIABILITIES
Accounts payable and accrued liabilities	$	23,348		$	13,438
Below market lease contract intangibles, net	2,327			2,729
Non-refundable option payments	25			25
Liability for environmental remediation	1,452			1,455
Deferred revenue	1,731			4,311
Income taxes payable	—			1,338
Other liabilities	2,029			5,778
Long-term debt, net	102,114			102,084

Total liabilities	133,026			131,158

COMMITMENTS AND CONTINGENCIES (Note 12)

EQUITY
Common stock, $.01 par value; 25,000,000 shares authorized; 15,448,500 and 15,448,500 shares outstanding after deducting 395,409 shares held in treasury	154			154
Additional paid-in capital	599,437			599,033
Accumulated deficit	(141,104		)	(155,011		)
Total HomeFed Corporation common shareholders' equity	458,487			444,176
Noncontrolling interest	7,070			6,998
Total equity	465,557			451,174

TOTAL	$	598,583		$	582,332

The accompanying notes are an integral part of these consolidated financial statements.

HOMEFED CORPORATION AND SUBSIDIARIES

Consolidated Statements of Operations

For the periods ended June 30, 2017 and 2016

(In thousands, except per share amounts)

(Unaudited)



	For the Three Months Ended June 30,						For the Six Months Ended June 30,
	2017			2016			2017			2016
REVENUES
Sales of real estate	$	20,178		$	33,155		$	35,128		$	35,048
Rental income	6,357			5,823			12,289			11,706
Co-op marketing and advertising fees	127			196			237			310
	26,662			39,174			47,654			47,064

EXPENSES
Cost of sales	18,248			23,829			30,750			24,794
Rental operating expenses	4,101			4,451			8,219			8,658
Farming expenses	988			814			1,925			1,940
General and administrative expenses	4,257			3,439			8,068			6,838
Depreciation and amortization	915			961			1,852			1,978
Administrative services fees to Leucadia National Corporation	45			45			90			90
	28,554			33,539			50,904			44,298

Income (loss) from operations before income (losses) from equity method investment	(1,892		)	5,635			(3,250		)	2,766

Income (losses) from equity method investments	2,657			(273		)	4,410			(1,337		)

Income from operations	765			5,362			1,160			1,429

Interest and other income	95			954			193			2,316

Income before income taxes and noncontrolling interest	860			6,316			1,353			3,745

Income tax benefit	12,816			29,428			12,626			30,538

Net income	13,676			35,744			13,979			34,283

Net (income) loss attributable to the noncontrolling interest	5			12			(72		)	15

Net income attributable to HomeFed Corporation common shareholders	$	13,681		$	35,756		$	13,907		$	34,298

Basic earnings per common share attributable to HomeFed Corporation common shareholders	$	0.89		$	2.32		$	0.90		$	2.22

Diluted earnings per common share attributable to HomeFed Corporation common shareholders	$	0.88		$	2.32		$	0.90		$	2.22

The accompanying notes are an integral part of these consolidated financial statements.

HOMEFED CORPORATION AND SUBSIDIARIES

Consolidated Statements of Changes in Equity

For the periods ended June 30, 2017 and 2016

(In thousands, except par value)

(Unaudited)



	HomeFed Corporation Common Shareholders
	Common Stock $.01 Par Value		Additional Paid-In Capital		Accumulated Deficit			Subtotal		Noncontrolling Interest			Total
Balance, January 1, 2016	$	154	$	597,922	$	(191,695	)	$	406,381	$	10,019		$	416,400

Net income (loss)					34,298			34,298		(15		)	34,283
Exercise of options to purchase common shares, including excess tax benefit			953					953					953
Share-based compensation expense			36					36					36

Balance, June 30, 2016	$	154	$	598,911	$	(157,397	)	$	441,668	$	10,004		$	451,672

Balance January 1, 2017	$	154	$	599,033	$	(155,011	)	$	444,176	$	6,998		$	451,174

Net income					13,907			13,907		72			13,979
Share-based compensation expense			404					404					404

Balance, June 30, 2017	$	154	$	599,437	$	(141,104	)	$	458,487	$	7,070		$	465,557

The accompanying notes are an integral part of these consolidated financial statements.

HOMEFED CORPORATION AND SUBSIDIARIES

Consolidated Statements of Cash Flows

For the periods ended June 30, 2017 and 2016

(In thousands)

(Unaudited)



	2017			2016
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income	13,979			$	34,283
Adjustments to reconcile net income to net cash provided by (used for) operating activities:
(Income) losses from equity method investments	(4,410		)	1,337
Benefit for deferred income taxes	(8,492		)	(31,853		)
Share-based compensation expense	624			36
Excess tax benefit from exercise of options	—			(6		)
Depreciation and amortization of property, equipment and leasehold improvements	254			246
Other amortization	2,253			2,401
Amortization related to investments	—			(538		)
Changes in operating assets and liabilities:
Real estate, held for development	2,730			6,284
Real estate, held for investment	3,183			(100		)
Restricted cash related to development activities	2			(16		)
Accounts receivable, deposits and other assets	(2,943		)	(1,806		)
Deferred revenue	(2,580		)	(1,067		)
Accounts payable and accrued liabilities	1,325			(69		)
Liability for environmental remediation	(3		)	(14		)
Income taxes payable	(3,150		)	(2,804		)
Other liabilities	(3,969		)	58
Net cash provided by (used for) operating activities	(1,197		)	6,372

CASH FLOWS FROM INVESTING ACTIVITIES:
Investments in equity method investments	(17,109		)	(5,115		)
Capital distributions from equity method investments	20,000			—
Net cash provided by (used for) investing activities	2,891			(5,115		)

CASH FLOWS FROM FINANCING ACTIVITIES:
Payment of debt issuance costs	(694		)	(586		)
Reduction of debt	—			(618		)
Exercise of options to purchase common shares	—			947
Excess tax benefit from exercise of stock options	—			6
Net cash used for financing activities	(694		)	(251		)

Net increase in cash and cash equivalents	1,000			1,006

Cash and cash equivalents, beginning of period	53,140			66,676

Cash and cash equivalents, end of period	$	54,140		$	67,682

Supplemental disclosures of cash flow information:
Cash paid for income taxes, net of tax refunds	$	3,513		$	4,403
Cash paid for interest (net of amounts capitalized)	$	—		$	—

Non-cash operating and investing activities:
Land contributed as an investment in Village III Master	$	—		$	15,150
Project development costs incurred that remain payable at end of period	$	16,969		$	6,627

The accompanying notes are an integral part of these consolidated financial statements.

HOMEFED CORPORATION AND SUBSIDIARIES

Notes to Interim Consolidated Financial Statements

1. Accounting Developments

The unaudited interim consolidated financial statements, which reflect all adjustments (consisting of normal recurring items or items discussed herein) that management believes necessary to fairly state results of interim operations, should be read in conjunction with the Notes to Consolidated Financial Statements (including the Summary of Significant Accounting Policies) included in our audited consolidated financial statements for the year ended December 31, 2016, which are included in our Annual Report filed on Form 10-K for such year (the “2016 10-K”). Results of operations for interim periods are not necessarily indicative of annual results of operations. The consolidated balance sheet at December 31, 2016 was extracted from the audited annual consolidated financial statements and does not include all disclosures required by accounting principles generally accepted in the United States of America (“GAAP”) for annual financial statements.

There is no other comprehensive income for the three and six months ended June 30, 2017 and 2016.

Certain amounts have been reclassified to be consistent with the 2017 presentation.

Accounting Developments- Accounting Standards to be Adopted in Future Periods

In May 2014, the Financial Accounting Standards Board (“FASB”) issued new guidance that defines how companies report revenues from contracts with customers, and also requires enhanced disclosures. The core principle of this new guidance is that an entity should recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods and services. This guidance is effective for interim and annual periods beginning after December 15, 2017. We intend to adopt the new guidance with a cumulative-effect adjustment to opening retained earnings. We do not expect this guidance will have any impact on our farming revenues, and our evaluation of the impact this new guidance will have on our revenue sources in our consolidated financial statements is ongoing.

In January 2016, the FASB issued new guidance that affects the accounting for equity investments, financial liabilities under the fair value option and the presentation and disclosure requirements for financial instruments. The guidance is effective for annual and interim periods beginning after December 15, 2017. We are currently evaluating the impact of the new guidance related to equity investments and the presentation and disclosure requirements of financial instruments on our consolidated financial statements.

In February 2016, the FASB issued new guidance that affects the accounting and disclosure requirements for leases. The FASB requires the recognition of lease assets and lease liabilities on the statement of financial condition. The guidance is effective for annual and interim periods beginning after December 15, 2018. We are currently evaluating the impact this new guidance will have on our consolidated financial statements.

In August 2016, the FASB issued new guidance to reduce the diversity in practice in how certain transactions are classified in the statement of cash flows. The guidance adds or clarifies guidance on the classification of certain cash receipts and payments in the statement of cash flows. The guidance is effective for annual and interim periods beginning after December 15, 2017. In November 2016, the FASB issued new guidance on restricted cash. The guidance requires that a statement of cash flows explain the change during the period in the total of cash, cash equivalents and amounts generally described as restricted cash or restricted cash equivalents. The guidance is effective for annual and interim periods beginning after December 15, 2017. We are currently evaluating the impact this new guidance will have on our consolidated financial statements.

In May 2017, the FASB issued new guidance providing clarity and reducing diversity in practice and cost and complexity when accounting for a change to the terms or conditions of a share-based payment award. The guidance

is effective for annual and interim periods beginning after December 15, 2017 and early adoption is permitted. We are currently evaluating the impact of the new guidance on our consolidated financial statements.

Accounting Developments- Adopted Accounting Standards

Beginning January 1, 2017, we adopted the FASB's new guidance that simplifies and improves accounting for share-based payments. The amendments include the recognition of all excess tax benefits and tax deficiencies as income tax expense or benefit in the statement of operations and changes to the timing of recognition of excess tax benefits, the accounting for forfeitures and classification of awards as either equity or liabilities and classification on the statement of cash flows. The adoption of this guidance did not have a significant impact on our consolidated financial statements. We elected to account for forfeitures as they occur.

2. Intangibles, Net

As more fully discussed in the Annual Report on Form 10-K for the year ended December 31, 2014, intangible assets include above market leases and leases in place and intangible liabilities include below market leases which were recorded at fair value when we acquired substantially all of the real estate properties and operations of Leucadia National Corporation ("Leucadia"), the membership interests in Brooklyn Renaissance Plaza ("BRP Holding") and Brooklyn Renaissance Hotel LLC ("BRP Hotel") and cash in exchange for 7.5 million of our common shares (the "Acquisition") during 2014.

A summary of intangible assets is as follows (in thousands):



	June 30, 2017		December 31, 2016		Amortization (in years)
Above market lease contracts, net of accumulated amortization of $7,777 and $6,719	$	3,097	$	4,155	1 to 24
Lease in place value, net of accumulated amortization of $2,865 and $2,606	1,220		1,479		1 to 24
Intangible assets, net	$	4,317	$	5,634

Below market lease contracts, net of accumulated amortization of $3,261 and $2,859	$	2,327	$	2,729	1 to 24

The amortization of above and below market lease contracts is recognized in Rental income. Above market lease values are amortized over the remaining terms of the underlying leases, and below market lease values are amortized over the initial terms plus the terms of any below market renewal options of the underlying leases. The estimated future amortization expense recognized in Rental income for the above market lease intangible assets is as follows: remainder of 2017 - $1,050,000; 2018 - $1,700,000; 2019 - $50,000; 2020 - $50,000; 2021 - $50,000 and thereafter - $200,000. The estimated future negative amortization expense recognized in Rental income for the below market lease intangible assets is as follows: remainder of 2017 - $(400,000); 2018 - $(550,000); 2019 - $(200,000); 2020 - $(200,000); 2021 - $(200,000) and thereafter - $(750,000).

The lease in place intangible is reflected in Depreciation and amortization expenses and amortized over the life of the related lease. The estimated future amortization expense for the lease in place intangible asset for each of the next five years is as follows: remainder of 2017 - $250,000; 2018 - $300,000; 2019 - $100,000; 2020 - $100,000; 2021 - $100,000 and thereafter - $400,000. Amortization expense on lease in place intangible assets was $100,000 and $150,000 for the three months ended June 30, 2017 and 2016, respectively, and was $250,000 and $300,000 for the six months ended June 30, 2017 and 2016, respectively.

3. Equity Method Investments

Otay project:

In April 2016, through a HomeFed subsidiary, we formed a limited liability company, HomeFed Village III Master, LLC (“Village III Master”), to own and develop an approximate 450 acre community planned for 992 homes in the Otay Ranch General Plan Area of Chula Vista, California. We entered into an operating agreement with three builders as members of Village III Master to build and sell 948 homes within the community. We made an initial non-cash capital contribution of $20,000,000 which represents the fair market value of the land we contributed to Village III Master after considering proceeds of $30,000,000 we received from the builders at closing, which represents the value of their capital contributions. The historical book value of the land we contributed to Village III Master is $15,150,000, which represents a basis difference of $4,850,000. The basis difference will be amortized as additional income for us as future real estate sales occur.

In January 2017, we recorded the final map that subdivided the approximately 450 acre parcel of land in the Otay Ranch General Plan Area of Chula Vista, California, which is now known as the community of Village of Escaya. We formed three limited liability companies (each, a "Builder LLC") to own and develop 948 homes within Village of Escaya and entered into individual operating agreements with each of the three builders as members of the Builder LLCs. Upon admittance of the three builders into their respective Builder LLCs, each of the three builders withdrew as members of Village III Master, which is now a wholly owned subsidiary of HomeFed Corporation. On January 5, 2017, we made an aggregate capital contribution valued at $33,200,000 to the three Builder LLCs, representing land and completed improvement value. In addition to the $30,000,000 contribution made by the builders, as mentioned above, and $2,250,000 of capitalizable land improvements made by the builders, the builders then made an additional cash contribution of $20,000,000 in January 2017 upon final map subdivision and entry into their respective Builder LLCs, which was used to fund infrastructure costs completed by us.

Although each of the three Builder LLCs is considered a variable interest entity, we do not consolidate any of them since we are not deemed to be the primary beneficiary as we share joint control with each Builder LLC through a management committee and we lack authority over establishing home sales prices and accepting offers. However, since two of our executive officers are members of the four-member management committee at each Builder LLC, designated to consider major decisions for that Builder LLC, we account for them under the equity method of accounting. Our share of the income earned from the sales of built homes in any of these three Builder LLCs will be recorded as income from equity method investments.

Our maximum exposure to loss is limited to our equity commitment in each Builder LLC and any cost overruns as described below. We are responsible for the remaining cost of developing the community infrastructure, for which we have received credit to date as a capital contribution, with funding guaranteed by us under the respective operating agreements and for the marketing costs of the Village of Escaya. Under the Builder LLCs, credit for capital contributions related to our infrastructure improvements is limited to $78,600,000, and we are responsible for any costs in excess of this limit to complete the community infrastructure. The builders are responsible for the remaining construction and the selling of the 948 homes with funding guaranteed by their respective parent entities.

We are contractually obligated to obtain infrastructure improvement bonds on behalf of each Builder LLC. See Note 12 for more information.

Summarized financial information for our interest in the three Builder LLCs (in thousands):



	Financial Statement Carrying Amounts
	Financial Statement Carrying Amounts				VIE
June 30, 2017	Assets		Liabilities		Assets
Builder LLCs	$	25,422	$	—	$	100,820

Brooklyn Renaissance Plaza and Hotel:

We own a 61.25% membership interest in BRP Holding. Although we have a majority interest, we concluded that we do not have control but only have the ability to exercise significant influence on this investment. As such, we account for BRP Holding under the equity method of accounting. We also own a 25.8% membership interest in BRP Hotel, which we account for BRP Hotel under the equity method of accounting.

Under the equity method of accounting, our share of the investee’s underlying net income or loss is recorded as income (loss) from equity method investments. The recognition of our share of the investees’ results takes into account any special rights or priorities of investors; accordingly, we employ the hypothetical liquidation at book value model to calculate our share of the investees’ profits or losses.

Summarized financial information:

At June 30, 2017 and December 31, 2016, our equity method investments are comprised of the following (in thousands):



	June 30,		December 31,
	2017		2016
BRP Holding	$	80,437	$	74,972
BRP Hotel	23,039		24,020
Village III Master	—		28,387
Builder LLCs	25,422		—
Total	$	128,898	$	127,379

The decrease in investment from Village III Master to Builder LLCs relates to our right to receive reimbursement for infrastructure improvements completed by us from funds contributed to the Builder LLCs by the three builders and was distributed to us during the first quarter of 2017.

Income (losses) from equity method investments includes the following for the three and six months ended June 30, 2017 and 2016 (in thousands):



	For the Three Months Ended June 30,						For the Six Months Ended June 30,
	2017			2016			2017			2016
BRP Holding	$	2,825		$	(402	)	$	5,465		$	(405	)
BRP Hotel	(94		)	129			(981		)	(932		)
Builder LLCs	(74		)	—			(74		)	—
Total	$	2,657		$	(273	)	$	4,410		$	(1,337	)

The following table provides summarized data with respect to our significant equity method investments in BRP Holding and BRP Hotel for the six months ended June 30, 2017 and 2016 (in thousands):



	For the Six Months Ended June 30,
	2017		2016
Total revenues	$	59,463	$	45,164
Income from continuing operations before extraordinary items	10,200		14
Net income	10,200		14
Equity earnings (losses) of equity method investments	4,484		(1,337		)

4. Debt

Lines of Credit:

In April 2015, we entered into a $15,000,000 revolving line of credit agreement. Loans outstanding under this line of credit bear interest at monthly LIBOR plus 2.6% and are secured by the Rampage property. The draw period expires on January 1, 2021, and the loan matures on January 1, 2035. There is also a $3,000,000 operational line of credit available which is secured by the Rampage property’s crops and matures on January 1, 2018. As of July 24, 2017, no amounts have been drawn under either line of credit.

Senior Notes:

On June 30, 2015, we issued $125,000,000 principal amount of 6.5% Senior Notes due 2018 (the “Notes”) in a private placement. The Notes were issued at 99% of principal amount and bear interest at a rate of 6.5%, payable semi-annually in arrears on January 1 and July 1 of each year. The Notes are fully and unconditionally guaranteed by our wholly-owned domestic subsidiaries (the "Guarantors") and any of our future domestic wholly-owned subsidiaries, and mature on June 30, 2018. The Notes are senior unsecured obligations and the guarantees are the senior unsecured obligations of the Guarantors.

The indenture governing the Notes contains covenants that, among other things, limit our and certain of our subsidiaries’ ability to incur, issue, assume or guarantee certain indebtedness subject to exceptions (including allowing us to borrow up to $15,000,000 under our Rampage Vineyard revolving facility and another $35,000,000 of indebtedness collateralized by our other assets), issue shares of disqualified or preferred stock, pay dividends on equity, buyback our common shares or consummate certain asset sales or affiliate transactions. Additionally, certain customary events of default may result in an acceleration of the maturity of the Notes. At June 30, 2017, we are in compliance with all debt covenants.

On January 27, 2017, we entered into a supplemental indenture (the “Supplemental Indenture”) to the indenture dated as of June 30, 2015 (as supplemented from time to time, the “Indenture”) among the Company, certain guarantors party thereto and Wilmington Trust, National Association as trustee (the “Trustee”) pursuant to which the Company had issued its Notes.

The Supplemental Indenture amends and waives certain provisions in the Indenture to, among other things, permit certain financing transactions in connection with the Immigrant Investor Program administered by the U.S. Citizenship and Immigration Service pursuant to the Immigration and Nationality Act ("EB-5 Program") (the “Financing Transactions”) for the project involving infrastructure improvements at Otay Ranch Village 3 North subject to certain restrictions and limitations set forth in the Supplemental Indenture. Such amendments and waivers include amendments to certain negative covenants to permit the incurrence of indebtedness pursuant to the Financing Transactions and subject to certain restrictions in the Supplemental Indenture and to release guarantees by certain specified subsidiaries that are not Significant Subsidiaries (as defined in the Indenture). Holders of a majority in aggregate principal amount of the outstanding Notes consented to the amendments and waivers set forth in the Supplemental Indenture. The Supplemental Indenture became effective upon execution.

The Notes are currently redeemable at our option, in whole or in part, at any time, at a redemption price equal to 100% of the principal amount outstanding and any accrued and unpaid interest. Upon the occurrence of a Change of Control (as defined in the indenture), we must make an offer to purchase all of the Notes at a price in cash equal to 101% of the aggregate principal amount outstanding plus any accrued and unpaid interest.

In addition, we are required to use the net proceeds of certain asset sales to offer to purchase the Notes at a price equal to 100% of the aggregate principal amount outstanding plus accrued and unpaid interest as of the date fixed for the closing of such asset sale offer. Accordingly, we have made the following repurchases:



Date of Repurchase	Principal Repurchased	Approximate Interest Payment Associated with Repurchase

December 15, 2016	$4,162,000	$120,000

November 15, 2016	$9,176,000	$220,000

September 27, 2016	$625,000	$10,000

January 28, 2016	$618,000	$3,000

October 20, 2015	$7,274,000	$146,000

After considering the repurchases, the remaining principal due under the Notes is $103,150,000 as of June 30, 2017.

Real estate held for development includes capitalized interest, including amortization of issuance costs and debt discount, of $3,900,000 and $4,400,000 for the six months ended June 30, 2017 and 2016, respectively.

The Notes are presented on the Balance Sheet net of issuance costs of $700,000 and $550,000 and debt discount of $350,000 and $500,000 at June 30, 2017 and December 31, 2016, respectively.

5. Income Taxes

During the second quarter of 2017, we effectively settled our 2014 federal tax examination with the IRS and, as a result, recorded an $8,600,000 reduction to deferred tax liabilities and a $4,600,000 reduction to unrecognized tax benefits. The statute of limitations with respect to the Company’s federal income tax returns has expired for all years through 2012, and with respect to California state income tax returns through 2011. We are currently under examination by the state of California for the years ended 2014 to 2015. We do not expect that resolution of this examination will have a significant effect on our consolidated financial position, but it could have a significant impact on the consolidated results of operations for the period in which resolution occurs.

6. Earnings Per Common Share

Basic and diluted earnings per share amounts were calculated by dividing net income by the weighted average number of common shares outstanding. The numerators and denominators used to calculate basic and diluted earnings per share for the three and six months ended June 30, 2017 and 2016 are as follows (in thousands):



	For the Three Months Ended June 30,				For the Six Months Ended June 30,
	2017		2016		2017	2016
Numerator – net income attributable to HomeFed Corporation common shareholders	$	13,681	$	35,756	13,907	$	34,298

Denominator for basic earnings per share– weighted average shares	15,448		15,432		15,448	15,422

Restricted stock units	45		—		26	—
Stock options	5		13		5	15

Denominator for diluted earnings per share– weighted average shares	15,498		15,445		15,479	15,437

7. Fair Value Information

The carrying amounts and estimated fair values of our principal financial instruments that are not recognized on a recurring basis are as follows (in thousands):



	June 30, 2017				December 31, 2016
	Carrying Amount		Fair Value		Carrying Amount		Fair Value
Financial Liabilities:
Long-term debt (a)	$	102,114	$	103,611	$	102,084	$	103,274

(a) The fair value of the long-term debt was determined by utilizing available market data inputs that are considered level 2 inputs. Quoted prices are available but trading is infrequent. We utilized the available market data based on the quoted market prices to determine an average fair market value over the last 10 business days of the reporting period.

For cash and cash equivalents, the carrying amounts of such financial instruments approximate their fair values. We did not invest in any derivatives or engage in any hedging activities.

8. Related Party Transactions

On March 23, 2017, Ian M. Cumming resigned from the Board of Directors. To fill the vacancy, the Board of Directors elected Jimmy Hallac, who is a Managing Director for Leucadia, on March 28, 2017. Leucadia executives now hold three of the seven board of director positions. Our Chairman, Joseph S. Steinberg, is a significant stockholder of Leucadia and Chairman of Leucadia’s board, and one of our Directors, Brian P. Friedman, is the President and a director of Leucadia.

Prior to Mr. Cumming's resignation, he sold 783,889 of our shares for $31,300,000 to Leucadia in a privately negotiated transaction during March 2017. Mr. Cumming was considered to be a “Related Person” under our related person transactions policy (the “Policy”) at the time of the sale. Accordingly, the independent Audit Committee of the Board (the “Audit Committee”) considered the transaction and recommended to the Board the approval of the sales transaction, which was unanimously approved by the Board (with Mr. Cumming abstaining from the vote).

In 2015, Mr. Steinberg, the chairman of our Board of Directors, and Mr. Cumming, who then was one of our directors, each entered into a Purchase Agreement with us and the Guarantors, pursuant to which they each purchased Notes with a value of $5 million, or four percent (4%), of the principal amount of the Notes issued (such purchases, the “Affiliate Note Purchases”). Mr. Steinberg is and Mr. Cumming was considered to be a “Related Person” under our Policy at the time of the Affiliate Note Purchases. Accordingly, the Audit Committee considered the Affiliate Note Purchases and approved, and recommended to the Board the approval of, the Affiliate Note Purchases, which were unanimously approved by the Board (with Messrs. Steinberg and Cumming abstaining from the vote).

Pursuant to a Placement Agency Agreement, Jefferies acted as Placement Agent for the Notes. Jefferies is a wholly-owned subsidiary of Jefferies Group LLC, a wholly owned subsidiary of Leucadia. Leucadia is our affiliate and a “Related Person” under the Policy. Accordingly, pursuant to and in accordance with the Policy, the Audit Committee considered the Placement Agency Agreement and approved, and recommended to the Board the approval of, the Placement Agency Agreement, which was unanimously approved by the Board (with Mr. Friedman, Chairman of the Executive Committee of Jefferies Group LLC and Mr. Steinberg, abstaining from the vote). Pursuant to the Placement Agency Agreement, Jefferies received a fee equal to 50 basis points from the gross proceeds of the offering, received a fee equal to 50 basis points of the outstanding balance of the Notes on the first anniversary of the Issue Date and received a fee equal to 50 basis points of the outstanding balance on

the second anniversary of the Issue Date. Additionally, we and each of the Guarantors has agreed to indemnify Jefferies against certain liabilities, including liabilities under the Securities Act, and to reimburse Jefferies all reasonable out-of-pocket expenses incurred in connection with any action or claim for which indemnification has or is reasonably likely to be sought by Jefferies.

Builder LLCs:

Two of our executive officers are members of the four-member management committee at each Builder LLC and are designated to consider major decisions for each of the three Builder LLCs. Each Builder LLC appointed two members to the management committee, which is controlled jointly by us and the respective builder. HomeFed is contractually obligated to obtain infrastructure improvement bonds on behalf of the Builder LLCs. See Note 12 for more information. HomeFed may also be responsible for the funding of the real estate improvement costs for the infrastructure of the development if our subsidiary that invested in each Builder LLC fails to do so.

Brooklyn Renaissance Plaza:

As more fully discussed in the 2016 10-K, BRP Leasing holds a master lease at BRP Holding and subleases the office space to multiple tenants. Future minimum annual rental expense (exclusive of real estate taxes, maintenance and certain other charges) that BRP Leasing is obligated to pay to BRP Holding for office space is as follows at June 30, 2017 (in thousands):



Remainder of 2017	$	3,781
2018	6,301
	$	10,082

In the aggregate, substantially all of the office space has been sublet for amounts in excess of BRP Leasing’s contractual commitment in the underlying lease.

Leucadia:

Pursuant to an administrative services agreement, Leucadia provides us certain administrative and accounting services, including providing the services of our Secretary. Administrative services fee expenses were $45,000 and $90,000 for each of the three and six months ended June 30, 2017 and 2016, respectively. The administrative services agreement automatically renews for successive annual periods unless terminated in accordance with its terms. We sublease office space to Leucadia under a sublease agreement until October 2018. Amounts reflected in other income pursuant to this agreement were $3,000 for each of the three months ended June 30, 2017 and 2016 and $6,000 for each of the six months ended June 30, 2017 and 2016.

Leucadia is contractually obligated to obtain infrastructure improvement bonds on behalf of the San Elijo Hills project. See Note 12 for more information.

9. Interest and Other Income

Interest income was not significant for the three months ended June 30, 2017 and was $250,000 for the three months ended June 30, 2016, and $10,000 and $550,000 for the six months ended June 30, 2017 and 2016, respectively.

During the second quarter of 2016, our subsidiary at the SweetBay project received $550,000 related to the settlement of a claim against British Petroleum ("BP") arising from the damages caused by the Deepwater Horizon incident in April 2010 and the resulting BP oil spill in the Gulf of Mexico and recognized this amount as other income. For the six months ended June 30, 2016, interest and other income includes a $1,000,000 recovery in January 2016 from the judgment against certain defendants in the Flat Rock litigation. See Note 12 for more information on this legal matter. Other income also includes service income related to a utility bundling service

agreement with the homeowners at the Ashville Park project. Income of $90,000 and $80,000 was recognized during the three months ended June 30, 2017 and 2016, respectively, and $170,000 and $140,000 was recognized during the six months ended June 30, 2017 and 2016.

10. Real Estate Sales Activity

Otay Land project:

In April 2016, through a HomeFed subsidiary as the managing member, we formed a limited liability company (the “LLC”) to own and develop an approximate 450 acre community in the Otay Ranch General Plan Area of Chula Vista, California and entered into an operating agreement with three builders as members of the LLC. As a result of contributing land to the LLC, we received $30,000,000 from the builders at closing which was recognized as revenue from sales of real estate for the three and six months ended June 30, 2016. Our share of the income earned from the sales of built homes by the LLC will be recorded as income from equity method investments. For more details on this transaction, please refer to Note 3.

San Elijo Hills project:

The 48,800 square feet of commercial space in phase one and two of the Towncenter and the 12 multi-family units in phase two were sold during the first quarter of 2017 to a local developer for a cash payment of $5,800,000.

The third phase of the Towncenter is a 2.5 acre parcel of land, formerly designated as a church site. The third phase of the Towncenter is under contract with a local developer for a cash payment of $600,000 plus $100,000 per multi-family unit that the buyer is able to entitle, currently anticipated to be 12 multi-family units. Closing of the third phase of the Towncenter is subject to entitlement approvals by the City of San Marcos and is expected to occur in the second half of 2017.

During June 2015, we entered into an agreement with a local San Diego based luxury homebuilder to construct and sell on our behalf, for a fee, up to 58 homes at the San Elijo Hills project. We received a $500,000 deposit during the third quarter of 2015 which is reflected in Other liabilities. This deposit is a builder performance deposit that will be fully refundable to the builder after the builder performs all of its requirements under the agreement. For the three and six months ended June 30, 2017, we sold nine of these homes for $13,100,000. At time of closing, we recognized real estate revenues of $13,000,000 and cost of sales of $12,200,000.

As of July 24, 2017, we have entered into agreements to sell 10 single family homes at the San Elijo Hills project under these agreements for aggregate cash proceeds of $13,700,000, which we expect to close during the second half of 2017.

There were no sales at the San Elijo Hills project during the three and six month period ended June 30, 2016.

Ashville Park project:

There were no sales at the Ashville Park project during the three and six months ended June 30, 2017 and 2016. The entitlement effort to re-plan Villages C, D and E is currently impacted by a delay within the City of Virginia Beach (the "City"). In 2014 and 2016, severe storm events caused regional flooding and large portions of the City’s storm water management system did not perform as expected. In 2016, the City hired outside civil engineers to study the system and provide possible solutions. The study is now complete and reveals that significant improvements to the storm water management system within the City are needed. The impact of the study and related City storm water management system issues on the timing of our future development is uncertain.

The Market Common:

For the three and six months ended June 30, 2017 and 2016, we closed on sales of real estate at The Market Common as follows:



	For the Three Months Ended June 30,						For the Six Months Ended June 30,
	2017			2016			2017		2016
	Number of units sold	Cash Proceeds		Number of units sold	Cash Proceeds		Number of units sold	Cash Proceeds	Number of units sold	Cash Proceeds
Single family lots	6	$	270,000	11	$	500,000	22	$980,000	22	$	1,050,000
Multi-family lots	8	200,000		5	100,000		8	200,000	10	250,000
Profit sharing agreements	N/A	400,000		N/A	350,000		N/A	750,000	N/A	650,000

As of July 24, 2017, we have entered into an agreement to sell 42 single family lots for $2,100,000 and 70 multi-family lots for $1,050,000 at The Market Common to a homebuilder. A non-refundable option deposit of $25,000 was transferred from Leucadia to us as part of the Acquisition.

SweetBay project:

During May 2015, we signed an agreement with a local builder to construct and sell on our behalf, for a fee, up to 127 homes at the SweetBay project. We sold 13 and 32 single family homes for $5,300,000 and $11,650,000 during the three and six months ended June 30, 2017, respectively. Cost of sales of real estate was $5,100,000 and $11,300,000 during the three and six months ended June 30, 2017, respectively. During the three and six months ended June 30, 2016, we received $1,300,000 from the Florida Department of Transportation for the purchase of approximately seven acres of land at the SweetBay project to be used for the expansion of State Road 390.

As of July 24, 2017, we have entered into agreements to sell 34 single family homes at the SweetBay project under the local builder agreement for aggregate cash proceeds of $10,800,000 which are expected to close in 2017.

11. Real Estate Acquisitions

During August 2015, we agreed to purchase 67 acres of land for $5,000,000 located adjacent to our Ashville Park project with the intention to entitle an additional 67 single family lots into the project. We placed a $200,000 refundable deposit and submitted the plans to the City of Virginia Beach. The purchase was contingent upon approval of the 67 lot entitlement by the City of Virginia Beach. We have terminated the transaction and expect to have the refundable deposit returned to us in August 2017.

In 2016, Pacific Gas & Electric ("PG&E"), an affiliate of the lessor of the Pacho Property in which we have a leasehold interest, began the process of decommissioning its Diablo Canyon Power Plant, which could take an undetermined period of time. The lessor has stated that it will not make any commitments on the disposition of certain lands, including the Pacho Property, until PG&E’s recommendations for decommissioning the Diablo Canyon Power Plant have been considered by the California Public Utility Commission as part of PG&E’s decommissioning plan. The time frame for completion of the review and approval of the decommissioning plan is uncertain. We are cooperating with PG&E during their public review process regarding disposition of the lands and are continuing to pursue fee title to the Pacho Property, which we acquired in the Acquisition and which is currently held for development as a leasehold interest with a book value of $17,800,000 as of June 30, 2017. If we are unable to obtain fee title to the property in a reasonable period of time, we may not develop the property and an impairment of the asset may be taken.

12. Commitments and contingencies

In April 2016, the school at the SweetBay project refinanced its $5,500,000 loan for which we had pledged 42 acres of land as collateral. The school increased the total loan to $8,100,000. Additionally, we dedicated the school site land and building to the school and terminated their below market lease. We were also released from our pledge of 42 acres of land as collateral. We retained a repurchase right in the event the school defaults on their loan. The loan is now only collateralized by the school cash flow and the real estate now owned by the school.

For real estate development projects, we are generally required to obtain infrastructure improvement bonds at the beginning of construction work and warranty bonds upon completion of such improvements. These bonds are issued by surety companies to guarantee satisfactory completion of a project and provide funds primarily to a municipality in the event we are unable or unwilling to complete certain infrastructure improvements. As we develop the planned area and the municipality accepts the improvements, the bonds are released. Should the respective municipality or others draw on the bonds for any reason, certain of our subsidiaries would be obligated to pay.

Specifically for the San Elijo Hills project, Leucadia is contractually obligated to obtain these bonds on behalf of the project pursuant to the terms of agreements entered into when the project was acquired by us. We are responsible for paying all third party fees related to obtaining the bonds.

As of June 30, 2017, the amount of outstanding bonds for each project is as follows:



	Amount of outstanding bonds
Otay Land project		$49,500,000
San Elijo Hills project	2,050,000
Ashville Park project	800,000

The Market Common is required to provide a letter of credit for the benefit of the City of Myrtle Beach to secure the completion of certain infrastructure improvements in the amount of $1,250,000. We placed $1,250,000 on deposit with a qualified financial institution to obtain the replacement letter of credit; such amount is reflected as restricted cash.

BRP Leasing holds a master lease at BRP Holding and subleases the office space to multiple tenants. See Note 8 for information concerning BRP Leasing’s minimum annual rental expense.

BRP Leasing is required to keep a minimum of $500,000 on deposit in an escrow account to secure its lease obligations. At June 30, 2017, $1,400,000 was in the escrow account and is classified as restricted cash.

A former subsidiary of Leucadia was the primary obligor under certain lease obligations to BRP Holding. In connection with Leucadia's earlier sale of that subsidiary to a third party, Leucadia assumed its lease obligations through another of its subsidiaries at that time, BRP Leasing. When HomeFed purchased BRP Leasing, we agreed to indemnify Leucadia for these obligations. The primary lease expires in 2018 and the aggregate amount of rental obligations was approximately $10,100,000 as of June 30, 2017, plus approximately $5,550,000 of projected operating expenses and taxes related to the real estate. Substantially all of the space under the primary lease has been sublet to various third-party tenants for the full length of the lease term in amounts in excess of the obligations under the primary lease.

As more fully discussed in the Annual Report on Form 10-K for the year ended December 31, 2013, upon receipt of required approvals, we commenced remediation activities on approximately 30 acres of undeveloped land owned by Flat Rock Land Company, LLC (“Flat Rock”), a subsidiary of Otay. The remediation activities were completed in February 2013. We received final approval of the remediation from the County of San Diego Department of Environmental Health in June 2013. Otay and Flat Rock had commenced a lawsuit in California Superior Court seeking compensation from the parties who they believe are responsible for the contamination of the property. In February 2015, the court denied us any recovery. As a result, the defendants may be entitled to be reimbursed by us for their legal costs incurred, and we accordingly accrued $350,000 during the first quarter of 2016 as we believe that such loss is probable and reasonably estimable. In addition, the defendants are seeking to recover attorney’s fees in the amount of approximately $13,500,000 pursuant to an attorneys’ fee provision in Otay Land’s purchase agreement for the property. In August 2015, the court denied the defendants’ request for recovery of attorney fees. The defendants have appealed the ruling. Based on our evaluation of applicable law, we believe the claim for

attorney’s fees is without merit and we intend to defend against this claim vigorously. We can give no assurances as to the ultimate outcome of this matter or that our appeal will be successful.

During the course of the Otay and Flat Rock litigation, we settled with one of the peripheral defendants which settlement included a cash payment of $400,000 and an assignment of the settling defendant’s then pending lawsuit in California Superior Court for the County of Orange against several other co-defendants for the costs of the settling defendant’s defense fees and costs and indemnification for settlement monies paid in connection with the environmental cost recovery action. Otay and Flat Rock proceeded to prosecute that assigned action and obtained a judgment against some of the defendants in an amount in excess of $4,000,000. In January 2016, we collected $1,000,000 of this judgment to settle the matter. However, other defendants prevailed on a defense resulting in a judgment against Otay and Flat Rock subjecting them to payment of the prevailing defendants’ litigation costs and attorneys’ fees. As a result, we paid $200,000 during the third quarter of 2015.

13. Share-based compensation

On August 13, 2014, the Board of Directors adopted the RSU Opportunity Plan (the “RSU Plan”). An aggregate of 100,000 shares of Common Stock was authorized for issuance under the RSU Plan to our executive officers (the “Participants”). Participants were eligible for restricted stock unit (“RSU”) awards based on satisfaction of performance criteria established by the Board of Directors in 2014. The performance period under the RSU Plan ended on December 31, 2016. The Board of Directors evaluated the Participants' performance against the performance criteria and determined to award an aggregate of 75,000 RSUs to the Participants on March 15, 2017.

Fifty percent of the RSU award will vest on December 31, 2017, and the remaining fifty percent of the RSU award will vest on December 31, 2018, provided that the executive officer has been continuously employed by the Company through the applicable vesting date.

The RSU grant consists of two settlement features: (i) 45,000 RSUs will be settled with shares of common stock within 30 days of each vesting date. This component is classified as an equity award for accounting purposes. The closing price on March 15, 2017 of $44.20 was used to value this component of the award. Stock compensation expense for this component of the award was $300,000 and $350,000, respectively, for the three and six months ended June 30, 2017 and (ii) 30,000 RSUs will be settled in cash based on the average closing price over a period of ten trading days immediately preceding the date of declaration which must occur within thirty days of the respective vesting date. This component is classified as a liability award for accounting purposes, which requires us to measure the fair value of the award at the end of each reporting period. Using a fair value approach, stock compensation expense for this component of the award was $200,000 and $230,000, respectively, for the three and six months ended June 30, 2017.

14. Segment Information

We have three reportable segments—real estate, farming and corporate. Real estate operations consist of a variety of residential land development projects and commercial properties and other unimproved land, all in various stages of development. Real estate also includes the equity method investments in BRP Holding, BRP Hotel and the Builder LLCs in the Otay Land project. Farming operations consist of the Rampage property which includes an operating grape vineyard and an almond orchard under development. Corporate primarily consists of investment income and overhead expenses. Corporate amounts are not allocated to the operating units.

Farming revenues are generally recognized during the second half of the year when the crop is harvested and sold.

Certain information concerning our segments for the three and six months ended June 30, 2017 and 2016 is presented in the following table.



	For the Three Months Ended June 30,						For the Six Months Ended June 30,
	2017			2016			2017			2016
	(in thousands)
Revenues:
Real estate	$	26,659		$	39,171		$	47,648		$	47,058
Corporate	3			3			6			6
Total consolidated revenues	$	26,662		$	39,174		$	47,654		$	47,064

Income (loss) from continuing operations before income taxes and noncontrolling interest:
Real estate	$	4,685		$	9,495		$	8,825		$	10,258
Farming	(1,107		)	(889		)	(2,159		)	(2,116		)
Corporate	(2,718		)	(2,290		)	(5,313		)	(4,397		)
Total consolidated income (loss) from continuing operations before income taxes and noncontrolling interest	$	860		$	6,316		$	1,353		$	3,745

Depreciation and amortization expenses:
Real estate	$	820		$	885		$	1,671		$	1,837
Farming	80			64			152			118
Corporate	15			12			29			23
Total consolidated depreciation and amortization expenses	$	915		$	961		$	1,852		$	1,978

Identifiable assets employed:				June 30, 2017			December 31, 2016
Real estate				$	526,713		$	516,260
Farming				11,416			13,468
Corporate				60,454			52,604
Total consolidated assets				$	598,583		$	582,332

15. Subsequent event

In July 2017, we closed on the sale of nine single family homes at the SweetBay project for aggregate cash proceeds of $2,950,000.

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Interim Operations.

Statements included in this Report may contain forward-looking statements. See “Cautionary Statement for Forward-Looking Information” below. The following should be read in conjunction with Management’s Discussion and Analysis of Financial Condition and Results of Operations included in our Annual Report on Form 10-K for the fiscal year ended December 31, 2016 (the “2016 10-K”).

Overview

HomeFed Corporation is a developer and owner of residential and mixed-use real estate projects in California, Virginia, South Carolina, Florida, Maine and New York. After many years in the entitlement process, the majority of our assets are now either operating real estate or entitled land ready for sale. We may also from time to time investigate and pursue the acquisition of new real estate projects, both residential and commercial.

Results of Operations

We have three reportable segments—real estate, farming and corporate. Real estate operations consist of a variety of residential land development projects and commercial properties and other unimproved land, all in various stages of development. Real estate also includes the equity method investments in BRP Holding, BRP Hotel and the Builder LLCs in the Otay Land project. Farming operations consist of the Rampage property which includes an operating grape vineyard and an almond orchard. Corporate primarily consists of interest income and overhead expenses. Corporate amounts are not allocated to the operating units.

Certain information concerning our segments for the three and six months ended June 30, 2017 and 2016 is presented in the following table.



	For the Three Months Ended June 30,						For the Six Months Ended June 30,
	2017			2016			2017			2016
	(in thousands)
Revenues:
Real estate	$	26,659		$	39,171		$	47,648		$	47,058
Corporate	3			3			6			6
Total consolidated revenues	$	26,662		$	39,174		$	47,654		$	47,064

Income (loss) from continuing operations before income taxes and noncontrolling interest:
Real estate	$	4,685		$	9,495		$	8,825		$	10,258
Farming	(1,107		)	(889		)	(2,159		)	(2,116		)
Corporate	(2,718		)	(2,290		)	(5,313		)	(4,397		)
Total consolidated income (loss) from continuing operations before income taxes and noncontrolling interest	$	860		$	6,316		$	1,353		$	3,745

Real Estate

Otay Land Project:

We own approximately 4,450 acres of land within the Otay Ranch community. Approximately 2,800 acres are designated as various qualities of non-developable open space mitigation land. We refer to all of our acreage as our Otay Land project, which is currently approved for approximately 13,050 residential units and 1.85 million square feet of commercial space. The Otay Land project is in the early stages of development and additional permits are in process. Development will occur in phases, or by village. We are currently developing in the first of five villages (village three, now known as Village of Escaya). During the course of development, we discovered the presence of underground soil gas impacted with methane and certain volatile organic compounds (collectively "compounds") in a portion of the Village of Escaya project. These types of compounds commonly exist in soils and can be mitigated through the construction process. We are working with local authorities and have developed measures to mitigate the effect of the impacted soil gas. The number of homes that will need mitigating is to be determined as further testing is conducted while development progresses. We expect that costs associated with mitigating during the homebuilding process will be shared with the builders through our Builder LLCs.

The grand opening occurred in June 2017. As of July 24, 2017, 81 homes have been released for sale and 68 homes are under contract with closings expected to begin in the fourth quarter of 2017.

There were no sales of real estate at the Otay Land project during the three and six months ended June 30, 2017. As discussed above in Notes 3 and 10, revenues include $30,000,000 for the land sold to the LLC during the three and six months ended June 30, 2016. Cost of sales was $22,800,000 for the three and six months ended June 30, 2016.

General and administrative expenses increased by $650,000 and $700,000, respectively, for the three and six months ended June 30, 2017 as compared to the same periods in 2016 which includes a $650,000 and $800,000 increase in marketing expenses, respectively, related to the initial launch of the Village of Escaya. For the six months 2017 period versus the six months 2016 period, legal expenses declined by $100,000 due to decreased legal fees related to the Flat Rock litigation (see Note 12 for more information).

Interest and other income decreased by $1,000,000 during the six month 2017 period versus the six month 2016 period due to the recovery of $1,000,000 in 2016 from the judgment against certain defendants in the Flat Rock litigation.

San Elijo Hills Project:

We own 85% of and serve as the development manager for San Elijo Hills, a master-planned community in San Diego County, California, consisting of about 3,500 homes and apartments and a commercial and residential Towncenter.

The Towncenter consists of three phases. The first and second phases, which include a total of 48,800 square feet of commercial space and 12 multi-family units, were sold for $5,800,000 to a local developer during the six months ended June 30, 2017. Revenue of $5,800,000 was recognized at the time of sale, and cost of sales aggregated $4,700,000. The third phase of the Towncenter is a 2.5 acre parcel of land that is under contract with a local developer for a cash payment of $600,000 plus $100,000 per multi-family unit that the buyer is able to entitle, currently anticipated to be 12 multi-family units. Closing of the third phase is subject to entitlement approvals and is anticipated to close in the second half of 2017.

Through June 30, 2017, we have sold 3,400 of the total of 3,463 single family lots and multi-family units, and have an agreement in place with a homebuilder to construct and sell on our behalf, for a fee, homes on the remaining 49 single family lots. For the three and six months period ended June 30, 2017, we sold 9 of 58 homes under the agreement with a local San Diego luxury homebuilder for $13,100,000. At time of closing, we recognized real estate revenues of $13,000,000 and cost of sales of $12,200,000.

Since we are obligated to complete certain improvements to the lots sold, a portion of the revenue from sales of real estate is deferred, and is recognized as revenues upon the completion of the required improvements to the property, including costs related to common areas, under the percentage of completion method of accounting. For the three months ended June 30, 2017 and 2016, revenues include amounts that were deferred from lot sales in prior periods of $1,000,000 and $200,000, respectively. For the six months ended June 30, 2017 and 2016, revenues include amounts that were previously deferred of $2,800,000 and $700,000, respectively.

Cost of sales of real estate related to the recognized deferred revenue for the three months ended June 30, 2017 and 2016 was $650,000 and $100,000, respectively, and cost of sales of real estate for the six months ended June 30, 2017 and 2016 was $1,600,000 and $350,000, respectively. Cost of sales was recognized in the same proportion to the amount of revenue recognized under the percentage of completion method of accounting.

We recorded co-op marketing and advertising fee revenue of approximately $80,000 and $90,000 for the three months ended June 30, 2017 and 2016, respectively, and $150,000 and $170,000 for the six months ended June 30, 2017 and

2016, respectively. We record these fees pursuant to contractual agreements, which are generally recorded when builders sell homes, and the fees are based upon a fixed percentage of the homes’ selling price.

General and administrative expenses decreased by $50,000 for the three and six months ended June 30, 2017 as compared to the same period in 2016 primarily due to lower legal activity at the project.

Depreciation and amortization expenses decreased by $50,000 for the six month 2017 period versus the same period in 2016 primarily due to the sale of phase one and two of the Towncenter during the first quarter of 2017.

Ashville Park:

Ashville Park is a 450 acre master planned community in Virginia Beach, Virginia, which we are developing in phases. The first two phases, which together consist of 91 finished lots and a 164 lot development, have been sold. We are currently awaiting approval for the remaining three phases. There have been delays associated with the City of Virginia Beach’s need to address storm water management issues, causing the timing of our future development to be uncertain. We are cooperating with the City and working toward a solution that may allow us to proceed with development of Village C, a 116 single family lot development, in the near term and may require that we participate in a share of the cost associated with improvement of the City storm water system.

There were no sales of residential lots at the Ashville Park project during the three and six months ended June 30, 2017 and 2016.

Since we are obligated to complete certain improvements to the lots sold, a portion of the revenue from sales of real estate is deferred, and is recognized as revenues upon the completion of the required improvements to the property, including costs related to common areas, under the percentage of completion method of accounting. Revenues include previously deferred amounts that were not significant for the three and six months ended June 30, 2017, and $50,000 and $350,000 for the three and six months ended June 30, 2016, respectively.

We recorded co-op marketing and advertising fee revenue of approximately $50,000 and $110,000 for the three months ended June 30, 2017 and 2016, respectively, and $90,000 and $140,000 for the six months ended June 30, 2017 and

2016, respectively. We record these fees pursuant to contractual agreements, which are generally recorded when builders sell the homes as the fees are based upon a fixed percentage of the homes’ selling price.

Revenues from sales of real estate also include amounts recognized pursuant to revenue or profit sharing with a homebuilder of $20,000 and $85,000 for the three months ended June 30, 2017 and 2016, respectively, and $50,000 and $110,000 for the six months ended June 30, 2017 and 2016, respectively.

Cost of sales of real estate was not significant for the three and six months ended June 30, 2017, and $350,000 and $450,000 for the three and six months ended June 30, 2016, respectively. Cost of sales was recognized in the same proportion to the amount of revenue recognized under the percentage of completion method of accounting.

The Market Common:

The Market Common is a 114 acre mixed-use retail, office and residential lifestyle center, including adjacent land for future commercial and residential development. It includes retail and office space, as well as long term apartments, all of which are about 90% leased.

For the three and six months ended June 30, 2017 and 2016, the rental activity is as follows:



	For the Three Months Ended June 30,						For the Six Months Ended June 30,
	2017			2016			2017			2016
Rental income	$	3,050,000		$	2,550,000		$	5,700,000		$	5,050,000
Amortization of lease intangibles included in rental income	(100,000		)	(90,000		)	(200,000		)	(180,000		)
Adjustment for straight-line rental income	(30,000		)	(30,000		)	(60,000		)	—

Rental operating expenses	$	1,100,000		$	1,500,000		$	2,250,000		$	2,700,000

Rental income for the three and six months period ended June 30, 2017 includes $400,000 pursuant to the termination of the lease with Piggly Wiggly in June 2017.

For the three and six months ended June 30, 2017 and 2016, we have closed on sales of real estate as follows:



	For the Three Months Ended June 30,						For the Six Months Ended June 30,
	2017			2016			2017			2016
	Number of units sold	Cash Proceeds		Number of units sold	Cash Proceeds		Number of units sold	Cash Proceeds		Number of units sold	Cash Proceeds
Single family lots	6	$	270,000	11	$	500,000	22	$	980,000	22	$	1,050,000
Multi-family lots	8	200,000		5	100,000		8	200,000		10	250,000

Revenues from sales of real estate at The Market Common also include amounts recognized pursuant to revenue or profit sharing with a homebuilder of $400,000 and $350,000 for the three months ended June 30, 2017 and 2016, respectively, and $750,000 and $650,000 for the six months ended June 30, 2017 and 2016, respectively.

General and administrative expenses decreased by $200,000 for the three and six months ended June 30, 2017 as compared to the same period in 2016 primarily due to the reversal of certain fees previously accrued regarding an uncertain tax liability that was successfully resolved during the second quarter of 2017. Legal expenses decreased by $50,000 for the six months ended June 30, 2017 as compared to the same period in 2016 primarily due to lower activity at the project.

Depreciation and amortization expenses decreased by $150,000 for the six month 2017 period versus the same period in 2016 primarily due to a runoff of certain depreciable and amortizable assets over the course of 2016.

SweetBay project:

The SweetBay project is a 700 acre mixed use master planned community located in Panama City, Florida. The project is entitled for up to 3,200 single family and multi-family units, 700,000 square feet of commercial space, and a marina with up to 117 wet slips and 240 dry docks. Development continues in the initial portion of Phase 1 of the community consisting of 127 single family homes, which are currently being built for us by a local homebuilder, for a fee, with nine model homes and the welcome center which are opened. Development has begun in the second portion of Phase 1 consisting of 58 single family homes, a community pool and a neighborhood park.

We sold 13 and 32 single family homes for $5,300,000 and $11,650,000, respectively, during the three and six months ended June 30, 2017. Cost of sales of real estate was $5,100,000 and $11,300,000, respectively, for the three and six months ended June 30, 2017. During the three and six months period ended June 30, 2016, we received and recognized $1,300,000 as sales of real estate from the Florida Department of Transportation for the purchase of approximately seven acres of land at the SweetBay project to be used for the expansion of State Road 390. Cost of sales related to this transaction was $70,000. This sale was a unique transaction in that we sold raw, unimproved land.

Pacho Project:

The Pacho project is a leasehold interest in approximately 2,369 acres of unentitled property located along the central California coast in San Luis Obispo County, California. We own a 90% controlling interest in the partnerships that are the lessees under a long term lease entered into on December 26, 1968. The lessor is an affiliate of Pacific Gas & Electric (“PG&E”), which owns the nearby Diablo Canyon Power Plant.

In 2016, PG&E began the process of decommissioning its Diablo Canyon Power Plant, which could take an undetermined period of time. The lessor has recently stated that it will not make any commitments on the disposition of certain lands, including the Pacho Property, until PG&E’s recommendations for decommissioning the Diablo Canyon Power Plant have been considered by the California Public Utility Commission as part of PG&E’s decommissioning plan. The time frame for completion of the review and approval of the decommissioning plan is uncertain. We are cooperating with PG&E during their public review process regarding disposition of the lands and are continuing to pursue fee title to the Pacho Property, which we acquired in the Acquisition and which is currently held for development as a leasehold interest with a book value of $17,800,000 as of June 30, 2017. If we are unable to obtain fee title to the property in a reasonable period of time, we may not develop the property and an impairment of the asset may be taken.

General administration expenses decreased by $100,000 and $50,000, respectively, for the three and six months ended June 30, 2017 as compared to the same period in 2016 due to decreased legal fees.

Brooklyn Renaissance Plaza and Hotel:

Brooklyn Renaissance Plaza is comprised of a 665 room hotel operated by Marriott, an approximately 850,000 square foot office building complex and an 888 space parking garage located in Brooklyn, New York. We own a 25.80% equity interest in the hotel and a 61.25% equity interest in the office building and garage.

General and administrative expenses increased by $100,000 during the six months ended June 30, 2017 as compared to the same period in 2016 due to an increase in the estimation of annual capital taxes for New York City and New York State.

BRP Leasing:

BRP leasing is the indirect obligor under a lease through October 2018 of approximately 286,500 square feet of office space at Brooklyn Renaissance Plaza, substantially all of which has been sublet through October 2018.

For the three and six months ended June 30, 2017 and 2016, the rental activity is as follows:



	For the Three Months Ended June 30,					For the Six Months Ended June 30,
	2017		2016			2017		2016
Rental income	$	3,250,000	$	3,100,000		$	6,350,000	$	6,300,000
Amortization of lease intangibles included in rental income	400,000		400,000			800,000		800,000
Adjustment for straight-line rental income	100,000		(20,000		)	200,000		(40,000		)

Rental operating expenses	$	3,000,000	$	2,950,000		$	5,950,000	$	5,900,000

Farming

Rampage Property:

The Rampage property is an approximately 1,650 acre grape vineyard and almond orchard located in southern Madera County, California. Farming revenues are generally recognized during the second half of the year when the crop is

harvested and sold. In June 2017, the southern Madera County, California area experienced an extended period of days with temperatures in excess of 100 degrees. A portion of the vineyard was adversely impacted by the excessive and extended period of heat. The financial impact of this weather event remains uncertain and a claim has been filed under the crop insurance program.

Farming expenses increased by $150,000 during the three months ended June 30, 2017 as compared to the same period in 2016, primarily due to higher utility expenses and consulting fees related to the irrigation system.

Corporate

General and administrative expenses increased by $500,000 during the three months ended June 30, 2017 as compared to the same period in 2016, primarily due to an increase in stock compensation and salaries expense. Stock compensation increased by $500,000 related to the grant of RSUs to executive officers in March 2017 (see Note 13 for more information). Compensation and benefits expense increased by $100,000 due to higher headcount and estimated bonus expense. Professional fees declined by $100,000 due to decreased business activity pursuing new deals during the three month 2017 period versus the three month 2016 period.

General and administrative expenses increased by $800,000 during the six months ended June 30, 2017 as compared to the same period in 2016, primarily due to an increase in stock compensation, salaries and travel expenses. Stock compensation increased by $600,000 related to the grant of RSUs to executive officers in March 2017 (see Note 13 for more information). Compensation and benefits increased by $200,000 due to higher headcount and estimated bonus expense. Travel expenses increased by $100,000 primarily related to traveling abroad to enroll investors in the EB-5 Program. Professional fees declined by $100,000 due to decreased business activity pursuing new deals during the six month 2017 period versus the six month 2016 period.

During the second quarter of 2017, we effectively settled our 2014 federal tax examination with the IRS and, as a result, we recognized an income tax benefit of $13,200,000 in our consolidated results of operations. During the second quarter of 2016, we were able to conclude that it is more likely than not that we will be able to realize the entire portion of our net deferred tax asset. As a result, $31,850,000 of the deferred tax valuation allowance was released as a credit to income tax expense during the three and six months ended June 30, 2016. For the three months ended June 30, 2017 and 2016, our benefit for income taxes was $12,800,000 and $29,450,000, respectively, and for the six months ended June 30, 2017 and 2016, our benefit for income taxes was $12,650,000 and $30,550,000, respectively.

Liquidity and Capital Resources

Net cash of $1,200,000 was used for operating activities during the six months ended June 30, 2017. For the six months ended June 30, 2017, cash was used for payments of federal and state income taxes and real estate expenditures on held for development properties; however, this decrease in cash was partially offset by cash generated primarily from the sales at the San Elijo Hills and SweetBay projects. For the six months ended June 30, 2016, cash was provided by the sale of real estate at the Otay Land project for $30,000,000. Additionally, for the six months ended June 30, 2016, cash was used for payments of federal and state income taxes and real estate expenditures on held for development properties including the improvement of the almond orchard.

Net cash of $2,900,000 was provided by investing activities during the six months 2017 period consisting of a $20,000,000 capital distribution from the Builder LLCs as a credit for the infrastructure improvements at the Village of Escaya community and a $17,100,000 equity investment in the Builder LLCs in order to fund the infrastructure improvements at the Village of Escaya community. Net cash of $5,100,000 was used for investing activities during the six months 2016 period consisting of a $2,200,000 equity investment in BRP Hotel for the funding of the hotel renovation and a $2,900,000 equity investment in Village III Master in order to fund the project for the infrastructure improvements.

Net cash was used for financing activities related to the payment of debt issuances costs of $500,000 on the Senior Notes and a prepayment of debt issuance costs of $200,000 related to the EB-5 Program during the six months ended

June 30, 2017. Net cash of $250,000 was used for financing activities during the six months 2016 period related to the payment of debt issuance costs of $600,000 and the repurchase of $600,000 of debt through tender offers. During the six months ended June 30, 2016, we received $950,000 from the exercise of options to purchase common shares.

Our principal sources of funds are cash and cash equivalents, proceeds from the sale of real estate, proceeds from sales of bulk grapes, rental income from leased properties, fee income from certain projects, dividends and tax sharing payments from subsidiaries, interest income, distributions from equity method investments, Rampage property’s lines of credit, proceeds from the issuance of the Notes (as described below) and financing from Immigration and Nationality Act (“EB-5 Program”) (see below for more information).

The Supplemental Indenture amends and waives certain provisions in the Indenture to, among other things, permit certain financing transactions in connection with the EB-5 Immigrant Investor Program (the “Financing Transactions”) for a project involving infrastructure improvements at Otay Ranch Village 3 North subject to certain restrictions and limitations set forth in the Supplemental Indenture. Such amendments and waivers include amendments to certain negative covenants to permit the incurrence of indebtedness pursuant to the Financing Transactions and subject to certain restrictions in the Supplemental Indenture and to release guarantees by certain specified subsidiaries that are not Significant Subsidiaries (as defined in the Indenture). Holders of a majority in aggregate principal amount of the outstanding Notes consented to the amendments and waivers set forth in the Supplemental Indenture.



Date of Repurchase	Principal Repurchased	Approximate Interest Payment Associated with Repurchase

December 15, 2016	$4,162,000	$120,000

November 15, 2016	$9,176,000	$220,000

September 27, 2016	$625,000	$10,000

January 28, 2016	$618,000	$3,000

October 20, 2015	$7,274,000	$146,000

After considering the repurchases, the remaining principal due under the Notes is $103,150,000 as of June 30, 2017.

We expect that our cash and cash equivalents, together with the other sources described above, will be sufficient for both our short and long term liquidity needs. We also have the flexibility to refinance our long term debt if we choose to conserve cash for future business opportunities. Residential sales at the Otay Land, San Elijo Hills, Ashville Park, The Market Common and the SweetBay projects are expected to be a source of funds to us in the future; however, except as otherwise disclosed, the amount and timing is uncertain. We are not relying on receipt of funds from our other projects for the short and intermediate term, since the timing of development activity and sales of developable and undevelopable property cannot be predicted with any certainty. Except as disclosed herein, we are not committed to acquire any new real estate projects, but we believe we have sufficient liquidity to take advantage of appropriate acquisition opportunities if they are presented.

Information about the Otay Land, San Elijo Hills and Ashville Park projects, The Market Common, SweetBay and our other projects is provided below. Because of the nature of our real estate projects, we do not expect operating cash flows will be consistent from year to year.

Otay Land Project:

In January 2017, we recorded the final map that subdivided the approximately 450 acre parcel of land in the Otay Ranch General Plan Area of Chula Vista, California, which is now known as the Village of Escaya. We formed three limited liability companies (each, a "Builder LLC") to own and develop 948 homes within the Village of Escaya and entered into individual operating agreements with each of the three builders as members of the Builder LLCs. Upon admittance of the three builders into their respective Builder LLCs, each of the three builders withdrew as members of Village III Master, which is now a wholly owned subsidiary of HomeFed Corporation. On January 5, 2017, we made an aggregate capital contribution valued at $33,200,000 to the three Builder LLCs, representing land and completed improvement value. In addition to the $30,000,000 contribution made by the builders, as mentioned above, and $2,250,000 of capitalizable land improvements made by the builders, the builders then made an additional cash contribution of $20,000,000 in January 2017 upon final map subdivision and entry into their respective Builder LLCs, which was used to fund infrastructure costs completed by us.

Although each of the three Builder LLCs is considered a variable interest entity, we do not consolidate any of them since we are not deemed to be the primary beneficiary as we share joint control of each Builder LLC through a management committee and lack authority over establishing home sales prices and accepting offers. However, since two of our executive officers are members of the four-member management committee at each Builder LLC, designated to consider major decisions for that Builder LLC, we account for them under the equity method of accounting. Our share of the income earned from the sales of built homes in any of these three Builder LLCs will be recorded as income from equity method investments.

We are contractually obligated to obtain infrastructure improvement bonds on behalf of each Builder LLC. See Note 12 for more information.

We intend to fund our Otay Ranch Village 3 North project (“Village 3”or the “Project”) in part by raising funds under the Immigrant Investor Program administered by the U.S. Citizenship and Immigration Services pursuant to the Immigration and Nationality Act (“EB-5 Program”). This program was created to stimulate the U.S. economy through the creation of jobs and capital investments in U.S. companies by foreign investors. The program allocates a limited number of immigrant visas per year to qualified individuals seeking lawful permanent resident status on the basis of their investment in a U.S. commercial enterprise. Regional centers are organizations, either publicly owned by cities, states or regional development agencies or privately owned, which facilitate investment in job-creating economic development projects by pooling capital raised under the EB-5 Program. Areas within regional centers that are rural areas or areas experiencing unemployment numbers higher than the national unemployment average rates are designated as Targeted Employment Areas (“TEA”). The EB-5 program is set to expire on September 30, 2017 but is expected to be extended. Various reforms and bills have been proposed and will be considered by Congress in the coming months. We are monitoring the status of the EB-5 Program and do not expect the proposed actions to have a negative effect on our ability to raise funds under the EB-5 Program. However, no assurance can be made that the EB-5 Program will be extended on favorable terms to us.

In February 2017, we formed Otay Village III Lender, LLC, which is intended to serve as a new commercial enterprise under the EB-5 Program (“NCE”). The NCE is managed by Otay Village III Manager, LLC, a wholly owned subsidiary of HomeFed. The NCE is seeking to raise up to $125 million by offering up to 250 units in the NCE to qualified accredited EB-5 investors for a subscription price of $500,000 per unit, which is the minimum investment that an investor in a TEA project is required to make pursuant to EB-5 Program rules. The proceeds of the offering will be used to repay any outstanding bridge loan provided by HomeFed to its wholly owned subsidiary HomeFed Village III, LLC, a job creating entity under the EB-5 Program, and to fund infrastructure costs related to the development of Village 3.

The NCE has offered the units to investors primarily located in China, Vietnam, and South Korea either directly or through relationships with agents qualified in their respective countries, in which case the NCE will pay an agent fee. Once an investor’s subscription and funds are accepted by the NCE, the investor must file a I-526 petition with the USCIS seeking approval of the investment’s suitability under the EB-5 program requirements and the investor’s suitability and source of funds. All investments will be held in an escrow account and will not be released until the investor files their I-526 petition with the USCIS and we have identified and provided collateral to secure the amount of the funds drawn from escrow. As of July 24, 2017, no amounts have been drawn from escrow related to the EB-5 financing. The Village 3 project must be approved by the State of California as a TEA and by the USCIS under the

EB-5 program rules. Prior to approval by the USCIS, funds may be drawn from the escrow account with a HomeFed guarantee that funds will be returned in the event the Village 3 project is not approved.

San Elijo Hills Project:

The Towncenter consists of multi-family residential units and commercial space, which are being constructed in three phases. During the six months ended June 30, 2017, the 48,800 square feet of commercial space in phases one and two of the Towncenter and the 12 multi-family units in phase two were sold to a local developer for a cash payment of $5,800,000.

The third phase remains to be sold at the Towncenter which is a 2.5 acre parcel of land, formerly designated as a church site, and it is under contract with a local developer for a cash payment of $600,000 plus $100,000 per multi-family unit that the buyer is able to entitle, currently anticipated to be 12 multi-family units. Closing of the third phase of the Towncenter is subject to entitlement approvals by the City of San Marcos, and anticipated in the second half of 2017.

During June 2015, we entered into an agreement with a local San Diego based luxury homebuilder to construct and sell on our behalf, for a fee, up to 58 homes at the San Elijo Hills project. We received a $500,000 deposit during the third quarter of 2015 which is reflected in Other liabilities. This deposit is a builder performance deposit that will be fully refundable to the builder after the builder performs all of its requirements under the agreement. During the six months ended June 30, 2017, we sold nine of these homes for $13,100,000.

As of July 24, 2017, we have entered into agreements to sell 10 single family homes at the San Elijo Hills project under this agreement for aggregate cash proceeds of $13,700,000. These home closings are anticipated to occur during the second half of 2017.

As of June 30, 2017, the remaining land at the San Elijo Hills project to be sold or leased consists of 63 dwelling units (combined single and multi-family lots).

Ashville Park Project:

There were no sales of real estate at the Ashville Park project during the three and six months ended June 30, 2017 and 2016.

During August 2015, we agreed to purchase 67 acres of land for $5,000,000 located adjacent to our Ashville Park project with the intention to entitle an additional 67 single family lots into the project. We placed a $200,000 refundable deposit and submitted the plans to the City of Virginia Beach. The purchase was contingent upon approval of the 67 lot entitlement into our project by the City of Virginia Beach. We have terminated the transaction and expect to have the refundable deposit returned to us in August 2017.

The Market Common:

Cash proceeds from sales of real estate and other real estate activities at The Market Common during the three and six months ended June 30, 2017 and 2016 is comprised of the following:



	For the Three Months Ended June 30,						For the Six Months Ended June 30,
	2017			2016			2017			2016
	Number of units sold	Cash Proceeds		Number of units sold	Cash Proceeds		Number of units sold	Cash Proceeds		Number of units sold	Cash Proceeds
Single family lots	6	$	270,000	11	$	500,000	22	$	980,000	22	$	1,050,000
Multi-family lots	8	200,000		5	100,000		8	200,000		10	250,000
Profit sharing agreements	N/A	400,000		N/A	350,000		N/A	750,000		N/A	650,000

We have placed $1,250,000 on deposit with a qualified financial institution to obtain a letter of credit for the City of Myrtle Beach in connection with The Market Common; such amount is reflected as restricted cash at June 30, 2017.

SweetBay project:

During May 2015, we signed an agreement with a local builder to construct and sell on our behalf, for a fee, up to 127 homes at the SweetBay project. We sold 32 single family homes for $11,650,000 during the six months ended June 30, 2017, respectively. As of July 24, 2017, we have entered into agreements to sell 34 single family homes at the SweetBay project under the local builder agreement for aggregate cash proceeds of $10,800,000 which are expected to close during 2017.

Other projects:

In April 2015, we entered into a $15,000,000 revolving line of credit agreement. Loans outstanding under this line of credit bear interest at monthly LIBOR plus 2.6% and are secured by the Rampage property. The draw period expires on January 1, 2021, and the loan matures on January 1, 2035. There is also a $3,000,000 operational line of credit available that is secured by the Rampage property’s crops and matures on January 1, 2018. As of June 30, 2017, no amounts have been drawn under either line of credit.

BRP Leasing is required to keep a minimum of $500,000 on deposit in an escrow account to secure its lease obligations. At June 30, 2017, $1,400,000 was in the escrow account and is reflected as restricted cash.

Other liquidity information:

Option payments are non-refundable if we fulfill our obligations under the agreements, and will be applied to reduce the amount due from the purchasers at closing. Although these agreements are binding on the purchasers, should we fulfill our obligations under the agreements within the specified timeframes and the purchasers decide not to close, our recourse will be primarily limited to retaining the option payments.

Since we are obligated to complete certain improvements to lots sold at the San Elijo Hills, Ashville Park, SweetBay projects and The Market Common, a portion of the revenue from sales of real estate is deferred, and is recognized as revenues upon the completion of the required improvements to the property, including costs related to common areas, under the percentage of completion method of accounting. As of June 30, 2017, $1,750,000 of revenue has been deferred pending completion of the required improvements. Estimates of future property available for sale, the timing of the sales, selling prices and future development costs are based upon current development plans for the projects and will change based on the strength of the real estate market or other factors that are not within our control.

As of June 30, 2017, we had consolidated cash and cash equivalents aggregating $54,150,000.

Cautionary Statement for Forward-Looking Information

Statements included in this Report may contain forward-looking statements. Such statements may relate, but are not limited, to projections of revenues, income or loss, development expenditures, plans for growth and future operations, competition and regulation, as well as assumptions relating to the foregoing. Such forward-looking statements are made pursuant to the safe-harbor provisions of the Private Securities Litigation Reform Act of 1995.

Forward-looking statements are inherently subject to risks and uncertainties, many of which cannot be predicted or quantified. When used in this Report, the words “estimates,” “expects,” “anticipates,” “believes,” “plans,” “intends” and variations of such words and similar expressions are intended to identify forward-looking statements that involve risks and uncertainties. Future events and actual results could differ materially from those set forth in, contemplated by or underlying the forward-looking statements.

Factors that could cause actual results to differ materially from any results projected, forecasted, estimated or budgeted or may materially and adversely affect our actual results include but are not limited to the following: the performance of the real estate industry in general; changes in mortgage interest rate levels or changes in consumer lending practices that reduce demand for housing; turmoil in the mortgage lending markets; the economic strength of the regions where our business is concentrated; changes in domestic laws and government regulations or in the implementation and/or enforcement of government rules and regulations; demographic changes that reduce the demand for housing; increases in real estate taxes and other local government fees; significant competition from other real estate developers and homebuilders; delays in construction schedules and cost overruns; increased costs for land, materials and labor; imposition of limitations on our ability to develop our properties resulting from condemnations, environmental laws and regulations and developments in or new applications thereof; earthquakes, fires and other natural disasters where our properties are located; construction defect liability on structures we build or that are built on land that we develop; our ability to insure certain risks economically; shortages of adequate water resources and reliable energy sources in the areas where we own real estate projects; the actual cost of environmental liabilities concerning our land could exceed liabilities recorded; opposition from local community or political groups at our development projects; risks associated with the acquisition of Leucadia’s real estate assets and investments; influence over our affairs by our principal stockholders; our ability to generate sufficient taxable income to fully realize our deferred tax asset; limitations on our business activities imposed by the terms of our indentures and our ability to finance our development projects and related business activities. For additional information see Part I, Item 1A. Risk Factors in the 2016 10-K and in Item 1A. Risk Factors in Part II in this quarterly report.

Undue reliance should not be placed on these forward-looking statements, which are applicable only as of the date hereof. We undertake no obligation to revise or update these forward-looking statements to reflect events or circumstances that arise after the date of this Report or to reflect the occurrence of unanticipated events.

Item 3. Quantitative and Qualitative Disclosures About Market Risk.

Information required under this Item is contained in Item 7A of the 2016 10-K, and is incorporated by reference herein.

Item 4. Controls and Procedures.

Our management evaluated, with the participation of our principal executive and principal financial officers, the effectiveness of our disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as amended (the “Exchange Act”)), as of June 30, 2017. Based on their evaluation, our principal executive and principal financial officers concluded that our disclosure controls and procedures were effective as of June 30, 2017.

There has been no change in our internal control over financial reporting (as defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act) that occurred during our fiscal quarter ended June 30, 2017, that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.

PART II – OTHER INFORMATION

Item 1A. Risk Factors.

Our Annual Report on Form 10-K for the fiscal year ended December 31, 2016 includes a detailed discussion of the Risk Factors applicable to us. The following are updates to our risk factors since December 31, 2016:

Cancellation of the EB-5 Program, significant changes in the program guidelines, or the inability to successfully raise capital under the program may adversely affect our ability to complete capital improvements at our projects and could adversely impact our operations. The current EB-5 Program expires on September 30, 2017 but is expected to be extended. Though the program has been regularly extended since inception, there is no guarantee that it will be approved for future extensions. In addition, the program guidelines may change which may adversely impact our ability to raise capital under the program. We intend to fund our Otay Ranch Village 3 project in part by raising funds under the program. Delay in extension of the program or changes in the program guidelines may adversely impact our ability to fund the improvements necessary to complete the project.

Under the EB-5 program, investor funds may be drawn from escrow prior to project approval by the USCIS. If the project is denied, investor funds must be returned within 60 days after conclusion of any appeal. Our collateral may be at risk if we are not able to raise sufficient capital within the repayment time period in the event of a project denial. We have submitted an application to the USCIS and State of California for approval of our Village 3 project at the Otay Land project under the EB-5 Program. Prior to project approval, funds may be drawn from the escrow account with a HomeFed guarantee that funds will be returned to the investor in the event the Village 3 project is not approved. In addition, all funds will be held in escrow until we have identified and provided collateral to secure the amount of funds drawn from escrow. To the extent the project is not approved, investors may seek recovery through possession of the collateral if repayment is not made within the cure period.

Item 6. Exhibits.

31.1 Certification of President pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

31.2 Certification of Vice President, Treasurer and Controller pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

32.1 Certification of Principal Executive Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

32.2 Certification of Principal Financial Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

101 Financial statements from the Quarterly Report on Form 10-Q of HomeFed Corporation for the quarter ended June 30, 2017 formatted in Extensible Business Reporting Language (XBRL): (i) the Consolidated Balance Sheets, (ii) the Consolidated Statements of Operations, (iii) Consolidated Statements of Comprehensive Income (Loss), (iv) the Consolidated Statements of Changes in Equity, (v) the Consolidated Statements of Cash Flows, and (vi) the Notes to Consolidated Financial Statements.

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.




	HOMEFED CORPORATION
	(Registrant)

Date: August 2, 2017	By:	/s/ Erin N. Ruhe
		Erin N. Ruhe
		Vice President, Treasurer and Controller
		(Principal Accounting Officer)

EXHIBIT INDEX


Exhibit Number	Description

31.1 Certification of President pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

31.2 Certification of Vice President, Treasurer and Controller pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

32.1 Certification of Principal Executive Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

32.2 Certification of Principal Financial Officer pursuant to Section 906 of the Sarbanes- Oxley Act of 2002.

101 Financial statements from the Quarterly Report on Form 10-Q of HomeFed Corporation for the quarter ended June 30, 2017, formatted in Extensible Business Reporting Language (XBRL): (i) the Consolidated Balance Sheets, (ii) the Consolidated Statements of Operations, (iii) Consolidated Statements of Comprehensive Income (Loss), (iv) the Consolidated Statements of Changes in Equity, (v) the Consolidated Statements of Cash Flows, and (vi) the Notes to Consolidated Financial Statements.

Document And Entity Information - shares	6 Months Ended
Document And Entity Information - shares	Jun. 30, 2017	Jul. 24, 2017
Document And Entity Information [Abstract]
Entity Registrant Name	HOMEFED CORP
Entity Central Index Key	0000833795
Current Fiscal Year End Date	--12-31
Entity Filer Category	Accelerated Filer
Document Type	10-Q
Document Period End Date	Jun. 30, 2017
Document Fiscal Year Focus	2017
Document Fiscal Period Focus	Q2
Amendment Flag	false
Entity Common Stock, Shares Outstanding (in shares)		15,451,532

Consolidated Balance Sheets (Parenthetical) - $ / shares	Jun. 30, 2017	Dec. 31, 2016
Statement of Financial Position [Abstract]
Common stock, par value (USD per share)	$ 0.01	$ 0.01
Common shares, authorized (in shares)	25,000,000	25,000,000
Common shares, shares outstanding (in shares)	15,448,500	15,448,500
Treasury stock, shares (in shares)	395,409	395,409

Accounting Developments	6 Months Ended
Accounting Developments	Jun. 30, 2017
Accounting Policies [Abstract]
Accounting Developments	Accounting Developments The unaudited interim consolidated financial statements, which reflect all adjustments (consisting of normal recurring items or items discussed herein) that management believes necessary to fairly state results of interim operations, should be read in conjunction with the Notes to Consolidated Financial Statements (including the Summary of Significant Accounting Policies) included in our audited consolidated financial statements for the year ended December 31, 2016, which are included in our Annual Report filed on Form 10-K for such year (the “2016 10-K”). Results of operations for interim periods are not necessarily indicative of annual results of operations. The consolidated balance sheet at December 31, 2016 was extracted from the audited annual consolidated financial statements and does not include all disclosures required by accounting principles generally accepted in the United States of America (“GAAP”) for annual financial statements. There is no other comprehensive income for the three and six months ended June 30, 2017 and 2016. Certain amounts have been reclassified to be consistent with the 2017 presentation. Accounting Developments- Accounting Standards to be Adopted in Future Periods In May 2014, the Financial Accounting Standards Board (“FASB”) issued new guidance that defines how companies report revenues from contracts with customers, and also requires enhanced disclosures. The core principle of this new guidance is that an entity should recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods and services. This guidance is effective for interim and annual periods beginning after December 15, 2017. We intend to adopt the new guidance with a cumulative-effect adjustment to opening retained earnings. We do not expect this guidance will have any impact on our farming revenues, and our evaluation of the impact this new guidance will have on our revenue sources in our consolidated financial statements is ongoing. In January 2016, the FASB issued new guidance that affects the accounting for equity investments, financial liabilities under the fair value option and the presentation and disclosure requirements for financial instruments. The guidance is effective for annual and interim periods beginning after December 15, 2017. We are currently evaluating the impact of the new guidance related to equity investments and the presentation and disclosure requirements of financial instruments on our consolidated financial statements. In February 2016, the FASB issued new guidance that affects the accounting and disclosure requirements for leases. The FASB requires the recognition of lease assets and lease liabilities on the statement of financial condition. The guidance is effective for annual and interim periods beginning after December 15, 2018. We are currently evaluating the impact this new guidance will have on our consolidated financial statements. In August 2016, the FASB issued new guidance to reduce the diversity in practice in how certain transactions are classified in the statement of cash flows. The guidance adds or clarifies guidance on the classification of certain cash receipts and payments in the statement of cash flows. The guidance is effective for annual and interim periods beginning after December 15, 2017. In November 2016, the FASB issued new guidance on restricted cash. The guidance requires that a statement of cash flows explain the change during the period in the total of cash, cash equivalents and amounts generally described as restricted cash or restricted cash equivalents. The guidance is effective for annual and interim periods beginning after December 15, 2017. We are currently evaluating the impact this new guidance will have on our consolidated financial statements. In May 2017, the FASB issued new guidance providing clarity and reducing diversity in practice and cost and complexity when accounting for a change to the terms or conditions of a share-based payment award. The guidance is effective for annual and interim periods beginning after December 15, 2017 and early adoption is permitted. We are currently evaluating the impact of the new guidance on our consolidated financial statements. Accounting Developments- Adopted Accounting Standards Beginning January 1, 2017, we adopted the FASB's new guidance that simplifies and improves accounting for share-based payments. The amendments include the recognition of all excess tax benefits and tax deficiencies as income tax expense or benefit in the statement of operations and changes to the timing of recognition of excess tax benefits, the accounting for forfeitures and classification of awards as either equity or liabilities and classification on the statement of cash flows. The adoption of this guidance did not have a significant impact on our consolidated financial statements. We elected to account for forfeitures as they occur.

Income Taxes	6 Months Ended
Income Taxes	Jun. 30, 2017
Income Tax Disclosure [Abstract]
Income Taxes	Income Taxes During the second quarter of 2017, we effectively settled our 2014 federal tax examination with the IRS and, as a result, recorded an $8,600,000 reduction to deferred tax liabilities and a $4,600,000 reduction to unrecognized tax benefits. The statute of limitations with respect to the Company’s federal income tax returns has expired for all years through 2012, and with respect to California state income tax returns through 2011. We are currently under examination by the state of California for the years ended 2014 to 2015. We do not expect that resolution of this examination will have a significant effect on our consolidated financial position, but it could have a significant impact on the consolidated results of operations for the period in which resolution occurs.

Interest And Other Income	6 Months Ended
Interest And Other Income	Jun. 30, 2017
Other Income and Expenses [Abstract]
Interest and Other Income	Interest and Other Income Interest income was not significant for the three months ended June 30, 2017 and was $250,000 for the three months ended June 30, 2016, and $10,000 and $550,000 for the six months ended June 30, 2017 and 2016, respectively. During the second quarter of 2016, our subsidiary at the SweetBay project received $550,000 related to the settlement of a claim against British Petroleum ("BP") arising from the damages caused by the Deepwater Horizon incident in April 2010 and the resulting BP oil spill in the Gulf of Mexico and recognized this amount as other income. For the six months ended June 30, 2016, interest and other income includes a $1,000,000 recovery in January 2016 from the judgment against certain defendants in the Flat Rock litigation. See Note 12 for more information on this legal matter. Other income also includes service income related to a utility bundling service agreement with the homeowners at the Ashville Park project. Income of $90,000 and $80,000 was recognized during the three months ended June 30, 2017 and 2016, respectively, and $170,000 and $140,000 was recognized during the six months ended June 30, 2017 and 2016.


1.	I have reviewed this quarterly report on Form 10-Q of HomeFed Corporation;


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 officers 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)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:



Date: August 2, 2017	By:	/s/ Paul J. Borden
		Paul J. Borden
		President


(1)	the accompanying Form 10-Q report for the period ending June 30, 2017 as filed with the U.S. Securities and Exchange Commission (the “Report”) fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended; and


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

Consolidated Balance Sheets - USD ($) $ in Thousands	Jun. 30, 2017	Dec. 31, 2016
ASSETS
Real estate held for development	$ 304,069	$ 297,665
Real estate held for investment, net	38,610	42,536
Cash and cash equivalents	54,140	53,140
Restricted cash	2,670	2,672
Equity method investments	128,898	127,379
Accounts receivable, deposits and other assets	22,645	18,564
Intangible assets, net	4,317	5,634
Net deferred tax asset	43,234	34,742
TOTAL	598,583	582,332
LIABILITIES
Accounts payable and accrued liabilities	23,348	13,438
Below market lease contract intangibles, net	2,327	2,729
Non-refundable option payments	25	25
Liability for environmental remediation	1,452	1,455
Deferred revenue	1,731	4,311
Income taxes payable	0	1,338
Other liabilities	2,029	5,778
Long-term debt, net	102,114	102,084
Total liabilities	133,026	131,158
COMMITMENTS AND CONTINGENCIES (Note 12)
EQUITY
Common stock, $.01 par value; 25,000,000 shares authorized; 15,448,500 and 15,448,500 shares outstanding after deducting 395,409 shares held in treasury	154	154
Additional paid-in capital	599,437	599,033
Accumulated deficit	(141,104)	(155,011)
Total HomeFed Corporation common shareholders' equity	458,487	444,176
Noncontrolling interest	7,070	6,998
Total equity	465,557	451,174
TOTAL	$ 598,583	$ 582,332

Consolidated Statements of Operations - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2017	Jun. 30, 2016	Jun. 30, 2017	Jun. 30, 2016
REVENUES
Sales of real estate	$ 20,178	$ 33,155	$ 35,128	$ 35,048
Rental income	6,357	5,823	12,289	11,706
Co-op marketing and advertising fees	127	196	237	310
Total revenue	26,662	39,174	47,654	47,064
EXPENSES
Cost of sales	18,248	23,829	30,750	24,794
Rental operating expenses	4,101	4,451	8,219	8,658
Farming expenses	988	814	1,925	1,940
General and administrative expenses	4,257	3,439	8,068	6,838
Depreciation and amortization	915	961	1,852	1,978
Administrative services fees to Leucadia National Corporation	45	45	90	90
Total expenses	28,554	33,539	50,904	44,298
Income (loss) from operations before income (losses) from equity method investment	(1,892)	5,635	(3,250)	2,766
Income (losses) from equity method investments	2,657	(273)	4,410	(1,337)
Income from operations	765	5,362	1,160	1,429
Interest and other income	95	954	193	2,316
Income before income taxes and noncontrolling interest	860	6,316	1,353	3,745
Income tax benefit	12,816	29,428	12,626	30,538
Net income	13,676	35,744	13,979	34,283
Net (income) loss attributable to the noncontrolling interest	5	12	(72)	15
Net income attributable to HomeFed Corporation common shareholders	$ 13,681	$ 35,756	$ 13,907	$ 34,298
Basic earnings per common share attributable to HomeFed Corporation common shareholders (in dollars per share)	$ 0.89	$ 2.32	$ 0.90	$ 2.22
Diluted earnings per common share attributable to HomeFed Corporation common shareholders (in dollars per share)	$ 0.88	$ 2.32	$ 0.90	$ 2.22

Consolidated Statements of Changes In Equity - USD ($) $ in Thousands	Total	Common Stock $.01 Par Value	Additional Paid-In Capital	Accumulated Deficit	Subtotal	Noncontrolling Interest
Beginning balance at Dec. 31, 2015	$ 416,400	$ 154	$ 597,922	$ (191,695)	$ 406,381	$ 10,019
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Net income (loss)	34,283			34,298	34,298	(15)
Exercise of options to purchase common shares, including excess tax benefit	953		953		953
Share-based compensation expense	36		36		36
Ending balance at Jun. 30, 2016	451,672	154	598,911	(157,397)	441,668	10,004
Beginning balance at Dec. 31, 2016	451,174	154	599,033	(155,011)	444,176	6,998
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Net income (loss)	13,979			13,907	13,907	72
Share-based compensation expense	404		404		404
Ending balance at Jun. 30, 2017	$ 465,557	$ 154	$ 599,437	$ (141,104)	$ 458,487	$ 7,070

Consolidated Statements of Cash Flows - USD ($) $ in Thousands	6 Months Ended
	Jun. 30, 2017	Jun. 30, 2016
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income (loss)	$ 13,979	$ 34,283
Adjustments to reconcile net income to net cash provided by (used for) operating activities:
(Income) losses from equity method investments	(4,410)	1,337
Benefit for deferred income taxes	(8,492)	(31,853)
Share-based compensation expense	624	36
Excess tax benefit from exercise of options	0	(6)
Depreciation and amortization of property, equipment and leasehold improvements	254	246
Other amortization	2,253	2,401
Amortization related to investments	0	(538)
Changes in operating assets and liabilities:
Real estate, held for development	2,730	6,284
Real estate, held for investment	3,183	(100)
Restricted cash related to development activities	2	(16)
Accounts receivable, deposits and other assets	(2,943)	(1,806)
Deferred revenue	(2,580)	(1,067)
Accounts payable and accrued liabilities	1,325	(69)
Liability for environmental remediation	(3)	(14)
Income taxes payable	(3,150)	(2,804)
Other liabilities	(3,969)	58
Net cash provided by (used for) operating activities	(1,197)	6,372
CASH FLOWS FROM INVESTING ACTIVITIES:
Investments in equity method investments	(17,109)	(5,115)
Capital distributions from equity method investments	20,000	0
Net cash provided by (used for) investing activities	2,891	(5,115)
CASH FLOWS FROM FINANCING ACTIVITIES:
Payment of debt issuance costs	(694)	(586)
Reduction of debt	0	(618)
Exercise of options to purchase common shares	0	947
Excess tax benefit from exercise of stock options	0	6
Net cash used for financing activities	(694)	(251)
Net increase in cash and cash equivalents	1,000	1,006
Cash and cash equivalents, beginning of period	53,140	66,676
Cash and cash equivalents, end of period	54,140	67,682
Supplemental disclosures of cash flow information:
Cash paid for income taxes, net of tax refunds	3,513	4,403
Cash paid for interest (net of amounts capitalized)	0	0
Non-cash operating and investing activities:
Land contributed as an investment in Village III Master	0	15,150
Project development costs incurred that remain payable at end of period	$ 16,969	$ 6,627

Real Estate Acquisitions	6 Months Ended
Real Estate Acquisitions	Jun. 30, 2017
Real Estate Acquisitions [Abstract]
Real Estate Acquisitions	Real Estate Acquisitions During August 2015, we agreed to purchase 67 acres of land for $5,000,000 located adjacent to our Ashville Park project with the intention to entitle an additional 67 single family lots into the project. We placed a $200,000 refundable deposit and submitted the plans to the City of Virginia Beach. The purchase was contingent upon approval of the 67 lot entitlement by the City of Virginia Beach. We have terminated the transaction and expect to have the refundable deposit returned to us in August 2017. In 2016, Pacific Gas & Electric ("PG&E"), an affiliate of the lessor of the Pacho Property in which we have a leasehold interest, began the process of decommissioning its Diablo Canyon Power Plant, which could take an undetermined period of time. The lessor has stated that it will not make any commitments on the disposition of certain lands, including the Pacho Property, until PG&E’s recommendations for decommissioning the Diablo Canyon Power Plant have been considered by the California Public Utility Commission as part of PG&E’s decommissioning plan. The time frame for completion of the review and approval of the decommissioning plan is uncertain. We are cooperating with PG&E during their public review process regarding disposition of the lands and are continuing to pursue fee title to the Pacho Property, which we acquired in the Acquisition and which is currently held for development as a leasehold interest with a book value of $17,800,000 as of June 30, 2017. If we are unable to obtain fee title to the property in a reasonable period of time, we may not develop the property and an impairment of the asset may be taken.

Share-based compensation	6 Months Ended
Share-based compensation	Jun. 30, 2017
Disclosure of Compensation Related Costs, Share-based Payments [Abstract]
Share-based compensation	Share-based compensation On August 13, 2014, the Board of Directors adopted the RSU Opportunity Plan (the “RSU Plan”). An aggregate of 100,000 shares of Common Stock was authorized for issuance under the RSU Plan to our executive officers (the “Participants”). Participants were eligible for restricted stock unit (“RSU”) awards based on satisfaction of performance criteria established by the Board of Directors in 2014. The performance period under the RSU Plan ended on December 31, 2016. The Board of Directors evaluated the Participants' performance against the performance criteria and determined to award an aggregate of 75,000 RSUs to the Participants on March 15, 2017. Fifty percent of the RSU award will vest on December 31, 2017, and the remaining fifty percent of the RSU award will vest on December 31, 2018, provided that the executive officer has been continuously employed by the Company through the applicable vesting date. The RSU grant consists of two settlement features: (i) 45,000 RSUs will be settled with shares of common stock within 30 days of each vesting date. This component is classified as an equity award for accounting purposes. The closing price on March 15, 2017 of $44.20 was used to value this component of the award. Stock compensation expense for this component of the award was $300,000 and $350,000, respectively, for the three and six months ended June 30, 2017 and (ii) 30,000 RSUs will be settled in cash based on the average closing price over a period of ten trading days immediately preceding the date of declaration which must occur within thirty days of the respective vesting date. This component is classified as a liability award for accounting purposes, which requires us to measure the fair value of the award at the end of each reporting period. Using a fair value approach, stock compensation expense for this component of the award was $200,000 and $230,000, respectively, for the three and six months ended June 30, 2017.

Subsequent Event	6 Months Ended
Subsequent Event	Jun. 30, 2017
Subsequent Events [Abstract]
Subsequent Event	Subsequent event In July 2017, we closed on the sale of nine single family homes at the SweetBay project for aggregate cash proceeds of $2,950,000.

Accounting Developments (Policies)	6 Months Ended
Accounting Developments (Policies)	Jun. 30, 2017
Accounting Policies [Abstract]
Accounting Developments	Accounting Developments- Accounting Standards to be Adopted in Future Periods In May 2014, the Financial Accounting Standards Board (“FASB”) issued new guidance that defines how companies report revenues from contracts with customers, and also requires enhanced disclosures. The core principle of this new guidance is that an entity should recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods and services. This guidance is effective for interim and annual periods beginning after December 15, 2017. We intend to adopt the new guidance with a cumulative-effect adjustment to opening retained earnings. We do not expect this guidance will have any impact on our farming revenues, and our evaluation of the impact this new guidance will have on our revenue sources in our consolidated financial statements is ongoing. In January 2016, the FASB issued new guidance that affects the accounting for equity investments, financial liabilities under the fair value option and the presentation and disclosure requirements for financial instruments. The guidance is effective for annual and interim periods beginning after December 15, 2017. We are currently evaluating the impact of the new guidance related to equity investments and the presentation and disclosure requirements of financial instruments on our consolidated financial statements. In February 2016, the FASB issued new guidance that affects the accounting and disclosure requirements for leases. The FASB requires the recognition of lease assets and lease liabilities on the statement of financial condition. The guidance is effective for annual and interim periods beginning after December 15, 2018. We are currently evaluating the impact this new guidance will have on our consolidated financial statements. In August 2016, the FASB issued new guidance to reduce the diversity in practice in how certain transactions are classified in the statement of cash flows. The guidance adds or clarifies guidance on the classification of certain cash receipts and payments in the statement of cash flows. The guidance is effective for annual and interim periods beginning after December 15, 2017. In November 2016, the FASB issued new guidance on restricted cash. The guidance requires that a statement of cash flows explain the change during the period in the total of cash, cash equivalents and amounts generally described as restricted cash or restricted cash equivalents. The guidance is effective for annual and interim periods beginning after December 15, 2017. We are currently evaluating the impact this new guidance will have on our consolidated financial statements. In May 2017, the FASB issued new guidance providing clarity and reducing diversity in practice and cost and complexity when accounting for a change to the terms or conditions of a share-based payment award. The guidance is effective for annual and interim periods beginning after December 15, 2017 and early adoption is permitted. We are currently evaluating the impact of the new guidance on our consolidated financial statements. Accounting Developments- Adopted Accounting Standards Beginning January 1, 2017, we adopted the FASB's new guidance that simplifies and improves accounting for share-based payments. The amendments include the recognition of all excess tax benefits and tax deficiencies as income tax expense or benefit in the statement of operations and changes to the timing of recognition of excess tax benefits, the accounting for forfeitures and classification of awards as either equity or liabilities and classification on the statement of cash flows. The adoption of this guidance did not have a significant impact on our consolidated financial statements. We elected to account for forfeitures as they occur.

Segment Information (Tables)	6 Months Ended
Segment Information (Tables)	Jun. 30, 2017
Segment Reporting [Abstract]
Schedule of Segment Reporting	Farming revenues are generally recognized during the second half of the year when the crop is harvested and sold.

Accounting Developments - Narrative (Details) - USD ($)	3 Months Ended		6 Months Ended
Accounting Developments - Narrative (Details) - USD ($)	Jun. 30, 2017	Jun. 30, 2016	Jun. 30, 2017	Jun. 30, 2016
Accounting Policies [Abstract]
Comprehensive income (loss)	$ 0	$ 0	$ 0	$ 0

Intangibles, Net (Details) - USD ($) $ in Thousands	6 Months Ended
Intangibles, Net (Details) - USD ($) $ in Thousands	Jun. 30, 2017	Dec. 31, 2016
Finite-Lived Intangible Assets [Line Items]
Intangible assets	$ 4,317	$ 5,634
Below market lease contracts	2,327	2,729
Below market lease contracts, accumulated amortization	$ 3,261	2,859
Minimum
Finite-Lived Intangible Assets [Line Items]
Below market lease contracts, amortization of useful life	1 year
Maximum
Finite-Lived Intangible Assets [Line Items]
Below market lease contracts, amortization of useful life	24 years
Above Market Lease Contracts
Finite-Lived Intangible Assets [Line Items]
Intangible assets	$ 3,097	4,155
Intangible assets, accumulated amortization	$ 7,777	6,719
Above Market Lease Contracts \| Minimum
Finite-Lived Intangible Assets [Line Items]
Intangible assets, amortization of useful life	1 year
Above Market Lease Contracts \| Maximum
Finite-Lived Intangible Assets [Line Items]
Intangible assets, amortization of useful life	24 years
Leases In Place Value
Finite-Lived Intangible Assets [Line Items]
Intangible assets	$ 1,220	1,479
Intangible assets, accumulated amortization	$ 2,865	$ 2,606
Leases In Place Value \| Minimum
Finite-Lived Intangible Assets [Line Items]
Intangible assets, amortization of useful life	1 year
Leases In Place Value \| Maximum
Finite-Lived Intangible Assets [Line Items]
Intangible assets, amortization of useful life	24 years

Equity Method Investments (Narrative) (Details)		1 Months Ended
Equity Method Investments (Narrative) (Details)	Jan. 05, 2017 USD ($)	Jan. 31, 2017 USD ($) a builder home	Apr. 30, 2016 USD ($) a builder home	Jun. 30, 2017
Schedule of Equity Method Investments [Line Items]
Payments to acquire and develop real estate	$ 33,200,000
BRP Holding
Schedule of Equity Method Investments [Line Items]
Ownership percentage				61.25%
BRP Hotel
Schedule of Equity Method Investments [Line Items]
Ownership percentage				25.80%
Otay Ranch
Schedule of Equity Method Investments [Line Items]
Area of land (in acres) \| a		450	450
Number of planned homes (in homes) \| home		948	992
Number of builders \| builder		3	3
Number of homes planned to build and sell \| home			948
Market value of land contributed as an investment in lieu of cash			$ 20,000,000
Proceeds from sale of real estate			30,000,000
Land			15,150,000
Land, difference in basis			$ 4,850,000
Land improvements		$ 2,250,000
Credit for capital contributions		$ 78,600,000
Village III Master
Schedule of Equity Method Investments [Line Items]
Number of builders \| builder		3
Builder LLCs \| Otay Ranch
Schedule of Equity Method Investments [Line Items]
Payments to acquire and develop real estate		$ 20,000,000

Equity Method Investments (Schedule of Equity Method Investments) (Details) - USD ($) $ in Thousands	Jun. 30, 2017	Dec. 31, 2016
Schedule of Equity Method Investments [Line Items]
Equity method investments	$ 128,898	$ 127,379
Builder LLCs
Schedule of Equity Method Investments [Line Items]
Assets	25,422
Liabilities	0
VIE, Assets	100,820
Equity method investments	25,422	0
BRP Holding
Schedule of Equity Method Investments [Line Items]
Equity method investments	80,437	74,972
BRP Hotel
Schedule of Equity Method Investments [Line Items]
Equity method investments	23,039	24,020
Village III Master
Schedule of Equity Method Investments [Line Items]
Equity method investments	$ 0	$ 28,387

Debt (Narrative) (Details) - USD ($)		1 Months Ended	6 Months Ended
Debt (Narrative) (Details) - USD ($)	Jun. 30, 2015	Apr. 30, 2015	Jun. 30, 2017	Jul. 24, 2017	Dec. 31, 2016	Jun. 30, 2016
Debt Instrument [Line Items]
Long-term notes payable			$ 103,150,000
Capitalized interest on real estate held for development			3,900,000			$ 4,400,000
Debt issuance costs			700,000		$ 550,000
Debt discount			$ 350,000		$ 500,000
Secured Debt
Debt Instrument [Line Items]
Amount allowed to borrow under debt covenants	$ 35,000,000
6.5 % Senior Notes due 2018
Debt Instrument [Line Items]
Amount allowed to borrow under debt covenants	$ 125,000,000
Interest rate	6.50%
Redemption price percentage	99.00%		100.00%
Redemption price percentage after change of control			101.00%
Revolving Credit Facility
Debt Instrument [Line Items]
Credit facility	$ 15,000,000	$ 15,000,000
Revolving Credit Facility \| LIBOR
Debt Instrument [Line Items]
Spread on variable rate		2.60%
Operational Line of Credit
Debt Instrument [Line Items]
Credit facility		$ 3,000,000
Subsequent Event \| Revolving Credit Facility
Debt Instrument [Line Items]
Draws under line of credit				$ 0
Subsequent Event \| Operational Line of Credit
Debt Instrument [Line Items]
Draws under line of credit				$ 0

Debt Schedule of Debt Repurchases (Details) - USD ($) $ in Thousands						6 Months Ended
	Dec. 15, 2016	Nov. 15, 2016	Sep. 27, 2016	Jan. 28, 2016	Oct. 20, 2015	Jun. 30, 2017	Jun. 30, 2016
Debt Disclosure [Abstract]
Principal Repurchased	$ 4,162	$ 9,176	$ 625	$ 618	$ 7,274	$ 0	$ 618
Approximate Interest Payment Associated with Repurchase	$ 120	$ 220	$ 10	$ 3	$ 146

Income Taxes (Narrative) (Details) $ in Millions	3 Months Ended
Income Taxes (Narrative) (Details) $ in Millions	Jun. 30, 2017 USD ($)
Income Tax Disclosure [Abstract]
Decrease in deferred liabilities	$ 8.6
Reduction in unrecognized tax benefits	$ 4.6

Related Party Transactions (Narrative) (Details) $ in Thousands	1 Months Ended	3 Months Ended		6 Months Ended		12 Months Ended
	Mar. 31, 2017 USD ($) shares	Jun. 30, 2017 USD ($) director employee	Jun. 30, 2016 USD ($)	Jun. 30, 2017 USD ($) director employee	Jun. 30, 2016 USD ($)	Dec. 31, 2015 USD ($)
Related Party Transaction [Line Items]
Number of board of directors \| director		7		7
Administrative services fee expenses		$ 45	$ 45	$ 90	$ 90
Rental income		$ 6,357	5,823	$ 12,289	11,706
Director
Related Party Transaction [Line Items]
Value of note outstanding purchased by related party						$ 5,000
Percentage of note outstanding purchased by related party						4.00%
Jefferies \| 6.5 % Senior Notes due 2018
Related Party Transaction [Line Items]
Fee amount as percentage				0.50%
Fee amount as percentage on first and second anniversary				0.50%
Builder LLCs
Related Party Transaction [Line Items]
Members of management committee \| employee		4		4
Employee \| Builder LLCs
Related Party Transaction [Line Items]
Members of management committee \| employee		2		2
Leucadia
Related Party Transaction [Line Items]
Number of board of directors \| director		3		3
Expiration of sublease to Leucadia				Oct. 01, 2018
Rental income		$ 3	$ 3	$ 6	$ 6
Leucadia \| Board of Directors Chairman
Related Party Transaction [Line Items]
Sale of stock, number of shares sold (in shares) \| shares	783,889
Sale of stock, consideration received	$ 31,300

Related Party Transactions (Schedule Of Future Minimum Annual Rental Expense) (Details) - BRP Holding $ in Thousands	Jun. 30, 2017 USD ($)
Related Party Transaction [Line Items]
Remainder of 2017	$ 3,781
2018	6,301
Total	$ 10,082

Interest and Other Income (Details) - USD ($)	1 Months Ended	3 Months Ended		6 Months Ended		12 Months Ended
Interest and Other Income (Details) - USD ($)	Jan. 31, 2016	Jun. 30, 2017	Jun. 30, 2016	Jun. 30, 2017	Jun. 30, 2016	Dec. 31, 2015
Real Estate Properties [Line Items]
Interest income		$ 0	$ 250,000	$ 10,000	$ 550,000
Other income		$ 90,000	80,000	$ 170,000	140,000
Otay Ranch And Flat Rock
Real Estate Properties [Line Items]
Settlement amount						$ 400,000
Recovery of judgment, amount	$ 1,000,000				$ 1,000,000
SweetBay Project
Real Estate Properties [Line Items]
Settlement amount			$ 550,000

Real Estate Sales Activity (Narrative) (Details)		1 Months Ended			3 Months Ended				6 Months Ended
Real Estate Sales Activity (Narrative) (Details)	Jul. 24, 2017 USD ($) property home	Jul. 31, 2017 USD ($) home	Jun. 30, 2015 property	May 31, 2015 property	Jun. 30, 2017 USD ($) property home	Mar. 31, 2017 USD ($) a ft² home	Jun. 30, 2016 USD ($) a property	Sep. 30, 2015 USD ($)	Jun. 30, 2017 USD ($) property home	Jun. 30, 2016 USD ($) a property	Apr. 30, 2016 a	Aug. 31, 2015 a
Real Estate Properties [Line Items]
Cost of sales of real estate					$ 18,248,000		$ 23,829,000		$ 30,750,000	$ 24,794,000
Sales of real estate					20,178,000		33,155,000		35,128,000	35,048,000
Otay Land
Real Estate Properties [Line Items]
Area of land (in acres) \| a											450
Cash proceeds							$ 30,000,000			$ 30,000,000
Towncenter - Phase 1 & 2
Real Estate Properties [Line Items]
Cash proceeds						$ 5,800,000
Area of real estate property (in acres) \| ft²						48,800
Towncenter - Phase 1 & 2 \| Multi-family lots
Real Estate Properties [Line Items]
Number of units sold \| home						12
Towncenter - Phase 3
Real Estate Properties [Line Items]
Area of land (in acres) \| a						2.5	7			7
Cash proceeds						$ 600,000
Towncenter - Phase 3 \| Multi-family lots
Real Estate Properties [Line Items]
Number of units sold \| home						12
Sales of real estate						$ 100,000
San Elijo Hills project
Real Estate Properties [Line Items]
Cash proceeds							$ 0		$ 13,100,000	$ 0
Number of units sold \| home									9
Number of real estate properties contracted to construct and sell (in properties) \| property			58
Refundable deposit payment received								$ 500,000
Real estate revenue									$ 13,000,000
Cost of sales of real estate									12,200,000
Ashville Park project
Real Estate Properties [Line Items]
Cash proceeds					$ 0		$ 0		$ 0	$ 0
Area of real estate property (in acres) \| a												67
The Market Common \| Single family lots
Real Estate Properties [Line Items]
Number of units sold \| property					6		11		22	22
Sales of real estate					$ 270,000		$ 500,000		$ 980,000	$ 1,050,000
The Market Common \| Multi-family lots
Real Estate Properties [Line Items]
Number of units sold \| property					8		5		8	10
Sales of real estate					$ 200,000		$ 100,000		$ 200,000	$ 250,000
SweetBay Project
Real Estate Properties [Line Items]
Cash proceeds					5,300,000				11,650,000	0
Number of real estate properties contracted to construct and sell (in properties) \| property				127
Cost of sales of real estate					$ 5,100,000				$ 11,300,000
Sales of real estate							$ 1,300,000			$ 1,300,000
SweetBay Project \| Single family lots
Real Estate Properties [Line Items]
Number of units sold \| home					13				32
Subsequent Event \| San Elijo Hills project
Real Estate Properties [Line Items]
Number of real estate properties contracted to sell \| home	10
Subsequent Event \| The Market Common \| Homebuilder
Real Estate Properties [Line Items]
Non-refundable option payment received	$ 25,000
Subsequent Event \| The Market Common \| Homebuilder \| Single family lots
Real Estate Properties [Line Items]
Number of real estate lots agreed to sell (in properties) \| property	42
Sales price of real estate lots contracted to sell	$ 2,100,000
Subsequent Event \| The Market Common \| Homebuilder \| Multi-family lots
Real Estate Properties [Line Items]
Number of real estate lots agreed to sell (in properties) \| property	70
Sales price of real estate lots contracted to sell	$ 1,050,000
Subsequent Event \| SweetBay Project
Real Estate Properties [Line Items]
Cash proceeds		$ 2,950,000
Subsequent Event \| SweetBay Project \| Single family lots
Real Estate Properties [Line Items]
Number of units sold \| home		9
Scenario, Forecast \| San Elijo Hills project
Real Estate Properties [Line Items]
Sales price of real estate lots contracted to sell	13,700,000
Scenario, Forecast \| SweetBay Project
Real Estate Properties [Line Items]
Sales price of real estate lots contracted to sell	$ 10,800,000
Scenario, Forecast \| SweetBay Project \| Single family lots
Real Estate Properties [Line Items]
Number of real estate lots agreed to sell (in properties) \| home	34

Real Estate Sales Activity (Schedule Of Real Estate Sales Activity) (Details) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2017 USD ($) property	Jun. 30, 2016 USD ($) property	Jun. 30, 2017 USD ($) property	Jun. 30, 2016 USD ($) property
Real Estate Properties [Line Items]
Sales of real estate	$ 20,178	$ 33,155	$ 35,128	$ 35,048
Single family lots \| The Market Common
Real Estate Properties [Line Items]
Number of units sold \| property	6	11	22	22
Sales of real estate	$ 270	$ 500	$ 980	$ 1,050
Multi-family lots \| The Market Common
Real Estate Properties [Line Items]
Number of units sold \| property	8	5	8	10
Sales of real estate	$ 200	$ 100	$ 200	$ 250
Profit sharing agreements \| The Market Common
Real Estate Properties [Line Items]
Sales of real estate	$ 400	$ 350	$ 750	$ 650

Real Estate Acquisitions (Details) $ in Thousands	1 Months Ended
Real Estate Acquisitions (Details) $ in Thousands	Aug. 31, 2015 USD ($) a property	Jun. 30, 2017 USD ($)
Ashville Park project
Real Estate Properties [Line Items]
Area of real estate property (in acres) \| a	67
Cash used for the purchase of real estate	$ 5,000
Number of real estate lots (in properties) \| property	67
Refundable deposit on real estate	$ 200
Pacho
Real Estate Properties [Line Items]
Land held for development		$ 17,800

Commitments and Contingencies (Narrative) (Details)	1 Months Ended		3 Months Ended		6 Months Ended		12 Months Ended
Commitments and Contingencies (Narrative) (Details)	Apr. 30, 2016 USD ($) a	Jan. 31, 2016 USD ($)	Jun. 30, 2016 USD ($)	Mar. 31, 2016 USD ($)	Jun. 30, 2017 USD ($)	Jun. 30, 2016 USD ($)	Dec. 31, 2015 USD ($)	Dec. 31, 2013 a	Dec. 31, 2016 USD ($)	Apr. 29, 2016 USD ($)	Sep. 30, 2015 USD ($)
Business Acquisition [Line Items]
Restricted cash					$ 2,670,000				$ 2,672,000
Otay Ranch And Flat Rock
Business Acquisition [Line Items]
Recovery sought on purchase agreement							$ 4,000,000
Settlement amount							$ 400,000
Recovery of judgment, amount		$ 1,000,000				$ 1,000,000
Cash paid to settle a lawsuit											$ 200,000
The Market Common
Business Acquisition [Line Items]
Letter of credit					1,250,000
Restricted cash					1,250,000
BRP Leasing
Business Acquisition [Line Items]
Restricted cash					1,400,000
Amount of indemnification					10,100,000
Amount of indemnification in projected operating expenses and taxes					5,550,000
BRP Leasing \| Minimum
Business Acquisition [Line Items]
Restricted cash					$ 500,000
Flat Rock
Business Acquisition [Line Items]
Area of land related to environmental remediation (in acres) \| a								30
Amount of legal costs to be reimbursed by us to the defendants				$ 350,000
Recovery sought on purchase agreement				$ 13,500,000
SweetBay Project
Business Acquisition [Line Items]
Loan outstanding of school	$ 8,100,000									$ 5,500,000
Area of land, pledged as collateral (in acres) \| a	42
Area of land, released from collateral (in acres) \| a	42
Settlement amount			$ 550,000