What changed in this filing

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Item 7. Management’s Discussion and Analysis

2025-02-24 compared with 2024-03-04 · 153 added, 182 removed, 343 unchanged (49% of the section changed)

12 unchanged sentences

• Heritage Fields LLC (the “Great Park Venture”), which is developing Great Park Neighborhoods, our community in Orange County, California;

• Five Point Office Venture Holdings I, LLC (the “Gateway Commercial Venture”), which owns portions of the Five Point Gateway Campus, a commercial office, research and development and medical campus located within the Great Park Neighborhoods;

• Five Point Office Venture Holdings I, LLC (the “Gateway Commercial Venture”), which previously owned portions of the Five Point Gateway Campus, a commercial office, research and development and medical campus located within the Great Park Neighborhoods;

• Five Point Communities, LP and Five Point Communities Management, Inc.

(together, the “management company”), which provide development and property management services for the Great Park Neighborhoods and the Five Point Gateway Campus.

(together, the “management company”), which provide development management services for the Great Park Neighborhoods.

The operating company consolidates and controls the management of all of these entities, except for the Great Park Venture and the Gateway Commercial Venture.

The operating company owns a 37.5% percentage interest in the Great Park Venture and a 75% interest in the Gateway Commercial Venture and accounts for its interest in both using the equity method.

Please review “Structure and Formation of Our Company”, “Our Communities” and “Commercial” under Part I, Item 1 of this report for a description of our organizational structure, each of our communities and our commercial venture.

Please review “Structure and Formation of Our Company” and “Our Communities” under Part I, Item 1 of this report for a description of our organizational structure, each of our communities and our commercial venture.

Operational Highlights and Outlook

In 2023, we continued to focus on three main priorities:

generating revenue and positive cash flow, managing our capital spend to match near-term revenue opportunities, and controlling our selling, general and administrative (“SG&A”) costs.

Our execution on these priorities allowed us to have a strong year, notwithstanding the challenging economic environment.

In 2023, California’s housing dynamics remained favorable for new home sales, driven in part by California’s housing shortage and compounded by production constraints created by the limited availability of land, labor and materials.

Based in part on these continuing dynamics, we believe that we will see strong demand in 2024 for our land from the homebuilders in our markets.

We are also cautiously optimistic that improvement in the capital markets will allow for commercial land demand to rebound potentially in the latter half of 2024.

At Valencia, we closed the sale of 729 homesites on approximately 72 acres for an aggregate purchase price of $162.4 million in 2023.

With a focus on managing capital spend to optimize the timing and amount of spending in relation to anticipated revenues, we were able to work with our homebuilder partners to shift some of the final land development costs to the builder, and we adjusted our sales pricing accordingly.

In 2024, we continued to focus on our three main priorities:

generating revenue and positive cash flow;

managing our capital spend to match near-term revenue opportunities;

and controlling our selling, general and administrative (“SG&A”) costs.

Our execution on these priorities allowed us to have a record year, and we remain well positioned to continue executing on land sales to our guest builders at the Great Park Neighborhoods and Valencia in 2025.

At Valencia, we closed the sale of 493 homesites on 54.4 acres for an aggregate purchase price of $137.9 million in 2024.

We will continue to look to minimize our capital spend between revenue opportunities.

Valencia guest homebuilders sold 348 homes during 2024, for a total of 1,599 homes sold since sales began in May 2021.

By the end of 2023, 12 of our initial 18 neighborhoods had sold out, and our guest homebuilders had also opened three additional neighborhoods at our newest development area.

By the end of 2024, our guest homebuilders had sold out two of the three previously opened neighborhoods in our newest development area and opened five additional neighborhoods.

Homes in these neighborhoods consist of a wide mix of attached and detached single family homes that are attracting first time buyers along with trade-up buyers.

At the Great Park Neighborhoods, in which we have a 37.5% percentage interest and manage all aspects of the development cycle, the Great Park Venture recognized land sale revenue of $532.0 million from the sale of 38 acres of commercial land and 798 homesites on approximately 84 acres of land.

For the homesite sales, the Great Park Venture recognized $357.8 million in revenue, consisting of $214.7 million paid at closing, plus $143.1 million of additional revenue representing estimated variable consideration

from future price participation payments expected to be received when homes are sold to homebuyers.

We expect to continue land sales at Valencia in the second half of 2025.

At the Great Park Neighborhoods, in which we have a 37.5% percentage interest and manage all aspects of the development cycle, the Great Park Venture recognized land sale revenue of $480.0 million from the sale of 559 homesites on 56.1 acres of land and $25.4 million from the sale of 12.8 acres of commercial land.

The Great Park Venture made distributions and related participating payments with proceeds from the land sales, of which we received approximately $231.0 million for both our ownership interests and incentive management fee compensation.

Home sales by guest homebuilders totaled 628 homes in 2023, with very limited inventory available at the end of the year.

Our next neighborhood, Luna Park, is comprised of 798 homes across 13 builder collections and is expected to open in phases from March 2024 through December 2024.

At December 31, 2023, we had $353.8 million in cash and $125.0 million available under our revolving credit facility, giving us total liquidity of $478.8 million.

In January 2024, we utilized a portion of our cash in completing a senior notes exchange transaction in which we exchanged $623.5 million of our existing 7.875% senior notes due November 2025 for $100.0 million in cash and $523.5 million in new 10.500% initial rate senior notes due January 2028.

The new senior notes due January 2028 will accrue interest at a rate of 10.500% until November 2025, at a rate of 11.000% from November 2025 to November 2026, and at a rate of 12.000% from November 2026 through the maturity date.

Home sales by guest homebuilders totaled 441 homes in 2024.

Our next neighborhood is comprised of 372 homes across five builder collections and is expected to open in phases throughout 2025.

We expect the Great Park Venture will close the sale of approximately 979 homesites across fourteen different programs during 2025.

Twelve of the fourteen programs consisting of 868 homesites and approximately 74 acres are under contract, and two of those programs consisting of 197 homesites on approximately 11 acres closed in February 2025.

We currently expect approximately 210 additional homesites on

approximately 18 acres to close during the first half of 2025, with the remaining 572 homesites on approximately 54 acres scheduled to close in the fourth quarter of 2025.

In San Francisco, we obtained final approval of our revised development plans in the fourth quarter of 2024, including the transfer of approximately two million square feet of commercial entitlements from The San Francisco Shipyard community to our Candlestick community.

We have commenced engineering for the next phase of infrastructure at Candlestick and expect to begin construction as early as the first quarter of 2026.

We believe we are well positioned to move forward with the implementation of growth initiatives to complement our three existing communities, which represents an expansion of the operating strategy we have been executing.

As part of our growth strategy, we may pursue acquisitions, investments, joint ventures or other growth opportunities.

In particular, we may seek out capital partners to enter into joint ventures for the development of both our existing communities as well as new assets.

We believe these joint ventures offer the ability to de-risk and accelerate monetization of our existing communities and the opportunity to generate additional revenue streams from new assets and investments.

In addition, the joint venture strategy will allow us to move to an asset-lighter balance sheet model.

Although we may pursue a variety of potential acquisitions and investments, we believe a natural opportunity for us is to enter into joint ventures with third-party capital partners that will allow us to take a minority equity position while capitalizing on our expertise in land development and entitlement to generate management fees and incentive compensation.

We believe that we already have the core infrastructure and personnel required to pursue these opportunities.

Factors That May Influence our Results of Operations

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As a result of many of the factors described above, we have historically experienced, and expect to continue to experience, variability in results of operations between comparable periods.

Our four reportable operating segments include our three community segments, Valencia, San Francisco and Great Park, and our Commercial segment:

Following the sale of the Gateway Commercial Venture’s commercial operating assets in December 2024, our Commercial segment is no longer operating.

Our three remaining reportable operating segments include our three community segments, Valencia, San Francisco and Great Park:

• Our Valencia segment includes operating results related to the Valencia community and agricultural operations in Los Angeles and Ventura Counties, California.

2 unchanged sentences

• Our Great Park segment includes operating results for the Great Park Neighborhoods community as well as development management services provided by the management company for the Great Park Venture.

• Our Commercial segment includes the operating results of the Gateway Commercial Venture’s ownership in the Five Point Gateway Campus as well as property management services provided by the management company for the Gateway Commercial Venture.

Results of Operations

19 unchanged sentences

51,233 51,495

Restructuring — 19,437

Total costs and expenses

3 unchanged sentences

Miscellaneous

(5,977) (776)

Total other income

EQUITY IN EARNINGS FROM UNCONSOLIDATED ENTITIES 132,617 76,595

INCOME (LOSS) BEFORE INCOME TAX BENEFIT 109,298 (36,245)

INCOME TAX BENEFIT 4,418 1,471

NET INCOME (LOSS) 113,716 (34,774)

LESS NET INCOME (LOSS) ATTRIBUTABLE TO NONCONTROLLING INTERESTS 58,322 (19,371)

INCOME BEFORE INCOME TAX (PROVISION) BENEFIT 205,096 109,298

INCOME TAX (PROVISION) BENEFIT (27,462) 4,418

NET INCOME 177,634 113,716

LESS NET INCOME ATTRIBUTABLE TO NONCONTROLLING INTERESTS 109,337 58,322

NET INCOME (LOSS) ATTRIBUTABLE TO THE COMPANY $ 68,297 $ 55,394

Revenues increased by $26.2 million, to $237.9 million for the year ended December 31, 2024, from $211.7 million for the year ended December 31, 2023.

The increase in revenues was primarily due to land sales at our Valencia segment in 2023 compared to no land sales in 2022 and an increase in management services revenue at our Great Park segment in 2023.

The increase in revenues was primarily due to an increase in management services revenue at our Great Park segment in 2024, partially offset by lower land sales at our Valencia segment in 2024 compared to 2023.

Cost of land sales.

The cost of land sales for the year ended December 31, 2023 was attributable to land sales at our Valencia segment.

The cost of land sales decreased by $15.5 million, to $90.1 million for the year ended December 31, 2024, from $105.7 million for the year ended December 31, 2023.

The decrease in cost of land sales was attributable to lower land sales at our Valencia segment in 2024 compared to 2023.

Cost of management services.

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SG&A expenses decreased by $0.3 million, or 0.5%, to $51.2 million for the year ended December 31, 2024, from $51.5 million for the year ended December 31, 2023.

The decrease was mainly attributable to a decrease in employee related and selling and marketing expenses.

Restructuring.

On February 9, 2022, Daniel Hedigan was appointed as our Chief Executive Officer.

Preceding Mr.

Hedigan’s appointment, Emile Haddad stepped down from his roles as Chairman, Chief Executive Officer and President effective as of September 30, 2021 and transitioned into a senior advisory role pursuant to a three-year advisory agreement.

Haddad remains a member of our board of directors serving as Chairman Emeritus.

Concurrent with Mr.

Hedigan’s appointment, Lynn Jochim transitioned from her position as President and Chief Operating Officer into an advisory role pursuant to a three-year advisory agreement.

Upon the appointment of Mr.

Hedigan as our Chief Executive Officer, we accrued a related party liability of $15.6 million attributed to advisory agreement payments due to Mr.

Haddad and Ms.

Jochim over the term of the respective advisory agreements.

In addition, we determined the service condition associated with Mr.

Haddad’s and Ms.

Jochim’s unvested restricted share awards had been modified.

As a result of this modification, we recognized approximately $3.0 million in share-based compensation expense as a restructuring cost during the year ended December 31, 2022.

In addition to our executive management restructuring activities, during the year ended December 31, 2022, we incurred $0.9 million in restructuring costs for severance benefits from layoffs that occurred in March 2022.

The decrease was mainly attributable to a decrease in corporate general and administrative expenses.

Equity in earnings from unconsolidated entities.

Our consolidated results reflect our share in the earnings or losses of our interests in our unconsolidated entities, including the Great Park Venture and the Gateway Commercial Venture, within equity in earnings from unconsolidated entities on our consolidated statement of operations.

Our segment results for the Great Park segment and the Commercial segment present the results of the Great Park Venture and the Gateway Commercial Venture at the book basis of the ventures within the respective segments.

Our segment results for the Great Park segment present the results of the Great Park Venture at the book basis of the venture within the segment.

Equity in earnings from unconsolidated entities increased by $56.0 million, to $132.6 million for the year ended December 31, 2024, from $76.6 million for the year ended December 31, 2023.

Equity in earnings for the years ended December 31, 2023 and 2022 was primarily a result of recognizing our share of the net income of the Great Park Venture generated from land sales in 2023 and land and home sales in 2022.

Equity in earnings for the years ended December 31, 2024 and 2023 was primarily a result of recognizing our share of the net income of the Great Park Venture generated from land sales during each period and the net income of the Gateway Commercial Venture generated from the sale of its remaining interests in the Five Point Gateway Campus.

Income taxes.

All operations are carried on through our subsidiaries, the majority of which are pass-through entities that are generally not subject to federal or state income taxation, as all of the taxable income, gains, losses, deductions, and credits are passed through to the partners, including the partners of the operating company and the San Francisco Venture.

All operations are carried on through our subsidiaries, the majority of which are pass-through entities that are generally not subject to federal or state income taxation.

We are responsible for income taxes on our allocable share of the operating company’s income or gain.

Pre-tax income of $205.1 million for the year ended December 31, 2024 resulted in a tax provision of $27.5 million.

Pre-tax income of $109.3 million for the year ended December 31, 2023 resulted in a tax benefit of $4.4 million.

1 unchanged sentence

We assessed the realization of the net deferred tax asset and the need for a valuation allowance, based on positive and negative evidence, and determined that at December 31, 2023, it was more likely than not that such net deferred tax assets would be fully realized, and our valuation allowance was released.

Pre-tax loss of $36.2 million for the year ended December 31, 2022 resulted in a tax benefit of $1.5 million.

The tax benefit was primarily the result of the increase in net deferred tax assets exceeding the net increase in deferred tax liabilities after changes in our valuation allowance.

We assessed the realization of the net deferred tax asset and the need for a valuation allowance, based on positive and negative evidence, and determined that at December 31, 2022, it was more likely than not that such net deferred tax assets would not be fully realized.

Our effective tax rate for the year ended December 31, 2023 decreased from the year ended December 31, 2022 due to the release of the valuation allowance in the current period, net of changes in permanent differences, including executive compensation subject to limitations.

Net income (loss) attributable to noncontrolling interests.

Our effective tax rate for the year ended December 31, 2024 increased from the year ended December 31, 2023 due to the release of the valuation allowance in 2023, net of changes in permanent differences, including executive compensation subject to limitations.

Net income attributable to noncontrolling interests.

Until exchanged for our Class A common shares or, at our election, cash, noncontrolling interests represent interests held by other partners in the operating company and other members of the San Francisco Venture.

Net income or loss attributable to the noncontrolling interests on the consolidated statement of operations represents the portion of earnings or losses attributable to the interests in our subsidiaries held by the noncontrolling interests.

Net income attributable to the noncontrolling interests on the consolidated statement of operations represents the portion of earnings or losses attributable to the interests in our subsidiaries held by the noncontrolling interests.

Segment Results and Financial Information

1 unchanged sentence

Year Ended December 31, 2024

Valencia San Francisco Great Park Commercial Total reportable segments

Valencia San Francisco Great Park Total reportable segments

Corporate and unallocated Total under management Removal of unconsolidated entities (1)

8 unchanged sentences

Land sales 90,109 — 144,876 234,985 — 234,985 (144,876) 90,109

Home sales — — 161 — 161 — 161 (161) —

Management services (2)

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EQUITY IN EARNINGS FROM UNCONSOLIDATED ENTITIES 483 — — 483 12,347 12,830 119,787 132,617

SEGMENT PROFIT (LOSS)/INCOME BEFORE INCOME TAX BENEFIT 41,636 (3,313) 275,630 (3,454) 310,499 (30,509) 279,990 (170,692) 109,298

INCOME TAX BENEFIT — — — — — 4,418 4,418 — 4,418

SEGMENT PROFIT (LOSS)/INCOME BEFORE INCOME TAX PROVISION 35,679 (4,136) 421,287 452,830 (18,337) 434,493 (229,397) 205,096

INCOME TAX PROVISION — — — — (27,462) (27,462) — (27,462)

SEGMENT PROFIT (LOSS)/NET INCOME $ 35,679 $ (4,136) $ 421,287 $ 452,830 $ (45,799) $ 407,031 $ (229,397) $ 177,634

(1) Represents the removal of the Great Park Venture and Gateway Commercial Venture operating results, which are included in the Great Park segment and Commercial segment operating results at 100% of each venture’s historical basis, respectively, but are not included in our consolidated results as we account for our investment in each venture using the equity method of accounting.

(2) For the Great Park and Commercial segments, represents the revenues and expenses attributable to the management company for providing services to the Great Park Venture and the Gateway Commercial Venture, as applicable.

(1) Represents the removal of the Great Park Venture operating results, which are included in the Great Park segment operating results at 100% of the venture’s historical basis but are not included in our consolidated results as we account for our investment in the venture using the equity method of accounting.

After the sale of the Gateway Commercial Venture’s commercial operating assets in December 2024, our commercial segment is no longer operating.

We have recast the segment presentation for the full year to report the equity in earnings from our investment in the Gateway Commercial Venture within the corporate and unallocated column in the table above.

(2) For the Great Park segment, represents the revenues and expenses attributable to the management company for providing services to the Great Park Venture as applicable.

Year Ended December 31, 2023

Valencia San Francisco Great Park Commercial Total reportable segments

Valencia San Francisco Great Park Total reportable segments

Corporate and unallocated Total under management Removal of unconsolidated entities (1)

2 unchanged sentences

Land sales—related party 595 — 16,213 16,808 — 16,808 (16,213) 595

Home sales — — 40,475 — 40,475 — 40,475 (40,475) —

Management services—related party (2)

9 unchanged sentences

Selling, general, and administrative 11,577 3,989 10,927 26,493 35,929 62,422 (10,927) 51,495

Restructuring — — — — — 19,437 19,437 — 19,437

Management fees—related party — — 65,395 65,395 — 65,395 (65,395) —

3 unchanged sentences

Interest expense — — — — — — — —

Loss on extinguishment of debt — — — (89) (89) — (89) 89 —

Miscellaneous 1,012 — — 1,012 (1,788) (776) — (776)

1 unchanged sentence

EQUITY IN EARNINGS FROM UNCONSOLIDATED ENTITIES 562 — 1,926 2,488 (2,914) (426) 77,021 76,595

SEGMENT (LOSS) PROFIT/LOSS BEFORE INCOME TAX BENEFIT (8,823) (3,396) 79,708 249 67,738 (55,515) 12,223 (48,468) (36,245)

SEGMENT PROFIT (LOSS)/INCOME BEFORE INCOME TAX BENEFIT 41,636 (3,313) 275,630 313,953 (32,992) 280,961 (171,663) 109,298

INCOME TAX BENEFIT — — — — 4,418 4,418 — 4,418

SEGMENT (LOSS) PROFIT/NET LOSS $ (8,823) $ (3,396) $ 79,708 $ 249 $ 67,738 $ (54,044) $ 13,694 $ (48,468) $ (34,774)

SEGMENT PROFIT (LOSS)/NET INCOME $ 41,636 $ (3,313) $ 275,630 $ 313,953 $ (28,574) $ 285,379 $ (171,663) $ 113,716

After the sale of the Gateway Commercial Venture’s commercial operating assets in December 2024, our commercial segment is no longer operating.

We have recast the segment presentation for the comparative prior period to report the equity in loss from our investment in the Gateway Commercial Venture within the corporate and unallocated column in the table above.

(2) For the Great Park segment, represents the revenues and expenses attributable to the management company for providing services to the Great Park Venture as applicable.

Valencia Segment

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Land sales and related party land sales revenues.

Total land sales revenues increased by $153.0 million to $161.4 million for the year ended December 31, 2023, from $8.4 million for the year ended December 31, 2022.

The increase in total land sales revenues was attributable to the recognition of revenue from the sale of land entitled for an aggregate of 729 homesites on approximately 72 acres during the year ended December 31, 2023 compared to no land sales during the year ended December 31, 2022.

The aggregate base purchase price was $162.4 million for the 2023 sales.

In 2023, 583 of the homesites were sold to an

unaffiliated land banking entity whereby a related party retained the option to acquire the homesites in the future from the land bank entity.

Total land sales revenues decreased by $22.3 million to $139.1 million for the year ended December 31, 2024, from $161.4 million for the year ended December 31, 2023.

The decrease in total land sales revenues was attributable to the recognition of revenue from the sale of land entitled for an aggregate of 493 homesites on 54.4 acres during the year ended December 31, 2024 compared to the recognition of revenue from the sale of land entitled for an aggregate of 729 homesites on approximately 72 acres during the year ended December 31, 2023.

The aggregate base purchase price was $137.9 million and $162.4 million for the 2024 and 2023 sales, respectively.

In 2024 and 2023, 179 and 583 of the homesites, respectively, were sold to an unaffiliated land banking entity whereby Lennar retained the option to acquire the homesites in the future from the land bank entity.

Cost of land sales.

Cost of land sales during the year ended December 31, 2023 was $105.7 million, compared to a credit of $1.0 million to cost of land sales during year ended December 31, 2022.

Cost of land sales during the year ended December 31, 2024 was $90.1 million, compared to $105.7 million during year ended December 31, 2023.

The cost of land sales includes both actual and estimated future capitalized costs allocated based upon relative sales values.

2 unchanged sentences

SG&A expenses decreased by $1.2 million, or 10.5%, to $10.4 million for the year ended December 31, 2024, from $11.6 million for the year ended December 31, 2023.

The decrease was mainly attributable to a decrease in community related selling and marketing expenses and a decrease in employee related expenses.

The decrease was mainly attributable to a decrease in community related selling and marketing expenses and a decrease in office lease expense.

Equity in earnings from unconsolidated entity.

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The actual commercial square footage and number of homesites are subject to change based on ultimate use and land planning.

In October 2019, we received approval from the City of San Francisco on a revised development plan for the first phase of Candlestick that is currently planned to include approximately 750,000 square feet of office space, 1,600 homes, and 300,000 square feet of lifestyle amenities centered around retail and entertainment.

As currently planned, Candlestick ultimately is expected to include approximately 7,000 homes.

In November 2024, we received approvals from the City and County of San Francisco to (among other things) transfer approximately two million square feet of research and development and office space to Candlestick from The San Francisco Shipyard.

Candlestick now has the potential to include up to approximately 2.8 million square feet of research and development and office space, approximately 7,200 homesites, and approximately 550,000 square feet of retail, hotel, entertainment and community uses.

We have commenced engineering for the next phase of infrastructure at Candlestick and expect to begin construction in early 2026.

Our development at Candlestick and The San Francisco Shipyard is not subject to San Francisco’s Proposition M growth control measure, which imposes annual limitations on office development and is applicable to all other developers with projects in the city.

This means the full amount of permitted commercial square footage at Candlestick and The San Francisco Shipyard can be constructed as we determine, including all at once, even though Proposition M may delay new office developments elsewhere in San Francisco.

In 2018, our disposition and development agreement with the City of San Francisco was amended to increase the total amount of commercial use at Candlestick and The San Francisco Shipyard by over two million square feet and increases our total commercial space to approximately 6.3 million square feet.

At The San Francisco Shipyard, approximately 408 acres are still owned by the U.S.

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We do not include the Great Park Venture as a consolidated subsidiary in our consolidated financial statements.

However, because of the relationship between the management company and the Great Park Venture, we assess

our investment in the Great Park Venture based on the financial information for the Great Park Venture in its entirety, and not just our equity interest in it.

However, because of the relationship between the management company and the Great Park Venture, we assess our investment in the Great Park Venture based on the financial information for the Great Park Venture in its entirety, and not just our equity interest in it.

As a result, our Great Park segment consists of the operations of both the Great Park Venture and the development management services provided by the management company at the Great Park Venture.

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The Great Park Venture sold the first homesites in April 2013 and, as of December 31, 2024, had sold 8,683 homesites (including 853 affordable homesites) and 166 acres of commercial land, including the Five Point Gateway Campus, allowing for development of up to approximately 3.6 million square feet of commercial office and research and development space for aggregate consideration of approximately $4.4 billion.

Interests in the Great Park Venture are either “percentage interests” or “legacy interests.” Holders of the legacy interests were entitled to receive priority distributions in an aggregate amount equal to $476.0 million and up to an additional $89.0 million from participation in subsequent distributions.

The holders of percentage interests are entitled to all other distributions.

Interests in the Great Park Venture were previously either “percentage interests” or “legacy interests.” Holders of the legacy interests were entitled to receive priority distributions in an aggregate amount equal to $476.0 million and up to an additional $89.0 million from participation in subsequent distributions.

The holders of percentage interests were entitled to all other distributions.

During the year ended December 31, 2024, the Great Park Venture made aggregate distributions of $18.1 million to holders of legacy interests and $485.1 million to holders of percentage interests.

The Company received $181.9 million for its 37.5% percentage interest.

As of December 31, 2021, the Great Park Venture had fully satisfied the $476.0 million priority distribution rights, and the remaining maximum participating legacy interest distribution rights at December 31, 2023 were $18.1 million.

The remaining $18.1 million legacy interest will be paid on a pro-rata basis, with approximately 10% of future distributions paid to the holders of legacy interests and approximately 90% of such distributions paid to the holders of the percentage interests, until such time as the remaining balance has been fully paid.

As of December 31, 2021, the Great Park Venture had fully satisfied the $476.0 million priority distribution rights, and with the distributions to the holders of legacy interests during the year ended December 31, 2024, the Great Park Venture fully satisfied the $89.0 million maximum participating legacy interest distribution rights, as a result of which, the legacy interests are no longer deemed to be outstanding.

Land sales and related party land sales revenues.

Land sales and related party land sales revenues increased by $58.0 million to $612.8 million for the year ended December 31, 2024, from $554.8 million for the year ended December 31, 2023.

In 2024, the Great Park Venture sold 12.8 acres of commercial land planned for retail uses and land entitled for an aggregate of 559 homesites on 56.1 acres at the Great Park Neighborhoods.

In 2023, the Great Park Venture closed 38 acres of commercial land and land entitled for an aggregate of 798 homesites on approximately 84 acres.

In 2022, the Great Park Venture sold approximately 42 acres of commercial land and land entitled for an aggregate of 61 homesites on approximately three acres.

The base purchase price was $25.4 million and $480.0 million for the 2024 commercial land sales and homesite land sales, respectively.

Revenue recognized of $357.8 million for the 2023 homesite land sales consisted of $214.7 million paid at closing, plus $143.1 million in estimated variable consideration from future price participation payments expected to be received when homes are sold to homebuyers.

The 798 homesites were sold to an unaffiliated land banking entity whereby a related party retained the option to acquire the homesites in the future from the land bank entity.

The 798 homesites were sold to an unaffiliated land banking entity whereby Lennar retained the option to acquire the homesites in the future from the land bank entity.

The aggregate purchase price was $174.2 million for the 2023 commercial land sales.

The purchase price was $240.0 million for the 2022 commercial land sale.

The Great Park Venture recognized approximately $238.0 million in revenue at the close of the land sale and deferred $2.0 million in consideration related to potential development work on the sold land that will be completed by the Great Park Venture at a later date at the buyer’s discretion.

The base purchase price was $23.9 million for the 2022 homesite land sales.

The Great Park Venture also recognized $0.6 million in the transaction price as an estimate of the amount of variable consideration from marketing fees that it expects to be entitled to receive for the 2022 homesite sales.

During the years ended December 31, 2023 and 2022, revenues also included changes in estimates of variable consideration, including profit participation, from those amounts previously recorded by the Great Park Venture.

During the years ended December 31, 2023 and 2022, the Great Park Venture recognized $21.0 million and $19.6 million in profit participation revenue, respectively.

During the years ended December 31, 2024 and 2023, revenues also included changes in estimates of variable consideration, including profit participation and price participation, from those amounts previously recorded by the Great Park Venture.

During the years ended December 31, 2024 and 2023, the Great Park Venture recognized $39.8 million and $21.0 million, respectively, in profit participation revenues, primarily from amounts received from homebuilders.

During the year ended December 31, 2024, the Great Park Venture recognized additional estimated variable consideration of $66.6 million related to a residential land sale that closed in 2023 for future price participation payments expected to be received when homes are sold to homebuyers.

The increase in estimated variable consideration reflects updated pricing and absorption assumptions used to calculate expected price participation payments.

Cost of land sales.

2 unchanged sentences

Since this method requires the Great Park Venture to estimate future development costs and the expected sales prices for future land sales, the profit margin on subsequent parcels sold will be affected by both changes in the estimated total revenues, as well as any changes in the estimated total cost of the project.

Home sale revenues.

The Great Park Venture had a fee build agreement with an unrelated third-party (“Fee Builder”) that the Great Park Venture contracted to build and act as a sales agent for 38 homesites within the Great Park Neighborhoods.

The Fee Builder initially incurred all costs to build, market and sell the residential homes, and the Great Park Venture reimbursed the Fee Builder as construction progressed and paid the Fee Builder certain fees during the construction phase of the homes and when homes were sold to homebuyers.

All homes subject to the fee build agreement had been sold and closed escrow as of December 31, 2022.

During the year ended December 31, 2022, the Great Park Venture closed the sales of 22 homes to homebuyers generating $40.5 million in home sale revenues.

Cost of home sales.

Cost of home sales includes an allocation of land basis for each home sold in addition to home construction costs the Great Park Venture reimbursed to the Fee Builder and fees paid to the Fee Builder for the services provided.

During the year ended December 31, 2022, the Great Park Venture recognized $29.7 million in cost of home sales.

Management fee revenues.

Management fee revenues are revenues generated by the management company from development management services provided to the Great Park Venture.

Previously, the management company received a fixed base fee, reimbursement for certain variable costs and the right to receive certain variable incentive compensation.

The initial term of our development management agreement with the Great Park Venture expired on December 31, 2021 but had been extended by mutual agreement of the parties through December 31, 2022 (the “2022 extension”) and further renewed by mutual agreement of the parties through December 31, 2024.

In connection with the 2022 extension of the development management agreement, the variable cost reimbursement component was eliminated and the annual fixed base fee was increased to $12.0 million for 2022.

For the year ended December 31, 2023, we recognized $12.0 million in revenues attributable to the revised base fee, and as a result of changes in estimates of the amount of variable incentive compensation, we recognized $35.2 million in additional revenue.

For the year ended December 31, 2022, we recognized $12.0 million in revenues attributable to the revised base fee, and as a result of changes in estimates of the amount of variable incentive compensation, we recognized $19.0 million in additional revenue.

The increase in management services related party revenue was mainly attributable to an increase in variable incentive compensation revenue recognized during the year ended December 31, 2024.

For the years ended December 31, 2024 and 2023, we recognized $84.0 million and $35.2 million, respectively, attributable to variable incentive compensation, mostly as a result of changes in estimates of the amount of variable incentive compensation we expect to receive.

Management services costs and expenses.

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During the year ended December 31, 2024, management services costs and expenses increased by $1.7 million, or 7.6%, to $23.9 million, from $22.2 million for the year ended December 31, 2023.

The increase was mainly attributable to an increase in intangible asset amortization expense recognized, partially offset by a decrease in employee related project team expenses during the year ended December 31, 2023.

Selling, general, and administrative.

SG&A expenses are comprised of the Great Park Venture’s marketing related costs, property maintenance expenses and other administrative costs.

SG&A costs decreased by $7.2 million, or 39.7%, to $10.9 million for the year ended December 31, 2023, from $18.1 million for the year ended December 31, 2022.

The lower expense during the year ended December 31, 2023 was mainly attributable to a decrease in marketing expenses and property maintenance expenses and the elimination of the variable cost reimbursement component under the development management agreement that became effective in the second quarter of 2022.

Prior to the 2022 extension, project team and certain other administrative costs that were reimbursed to the management company were included in SG&A costs.

The increase was mainly attributable to an increase in intangible asset amortization expense recognized during the year ended December 31, 2024.

Management fees—related party.

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Equity in earnings from Great Park Venture $ 119,787 $ 78,947

Commercial Segment

We have a 75% interest in the Gateway Commercial Venture that is held through a wholly owned subsidiary of the operating company, and we serve as the manager of the Gateway Commercial Venture.

However, the manager’s authority is limited.

Major decisions by the Gateway Commercial Venture generally require unanimous approval by an executive committee composed of two people designated by us and two people designated by another investor.

Some decisions require approval by all of the members of the Gateway Commercial Venture.

We do not include the Gateway Commercial Venture as a consolidated subsidiary in our consolidated financial statements.

However, as a result of our 75% economic interest and our role as manager, we assess our investment in the Gateway Commercial Venture based on the financial information of the Gateway Commercial Venture in its entirety, and we include the Gateway Commercial Venture’s financial results within the Commercial segment.

Additionally, the management company has been engaged by the Gateway Commercial Venture to provide property management services to the Five Point Gateway Campus.

We include the management company’s results of operations related to these property management services within the Commercial segment.

The Five Point Gateway Campus is a commercial campus consisting of approximately 73 acres of land in the Great Park Neighborhoods acquired by the Gateway Commercial Venture in 2017.

The Five Point Gateway Campus currently includes approximately one million square feet planned for research and development, medical and office space in four buildings.

In 2020, the Gateway Commercial Venture sold three of the buildings and approximately 11 acres of land at the campus.

Our corporate headquarters are located in the fourth building, which remains owned by the Gateway Commercial Venture.

In addition to the fourth building, the Gateway Commercial Venture owns approximately 50 acres of commercial land with additional development rights at the campus.

The table below reconciles the Commercial segment results for the years ended December 31, 2023 and 2022 to the equity in loss from our investment in the Gateway Commercial Venture that is reflected in the consolidated statements of operations for the years ended December 31, 2023 and 2022, respectively.

Year Ended December 31,

(in thousands)

Segment (loss) profit from operations $ (3,454) $ 249

Less net income of management company attributed to the Commercial segment

Net loss of Gateway Commercial Venture (3,885) (169)

Equity in loss from Gateway Commercial Venture $ (2,914) $ (127)

Liquidity and Capital Resources

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The new senior notes due January 2028 will accrue interest at a rate of 11.000% starting in November 2025 and at a rate of 12.000% starting from November 2026 through the maturity date.

In 2024, we will make aggregate interest payments of $54.1 million on our existing and new senior notes, and $46.1 million in principal payments that were deferred from 2023 and are due under our related party reimbursement obligation.

Reimbursement payments may be deferred when our related party receives an extension on the maturity date of the associated EB-5 loan liability.

Our related party has a history of receiving maturity date extensions, however, such further extensions are not within our control and there can be no assurance that any such extensions will be obtained in the future.

In 2025, aggregate interest payments of $55.1 million on our existing and new senior notes are due, and $57.5 million in principal payments are due under our related party reimbursement obligation.

Pursuant to a reimbursement deferral agreement, principal and interest payments under our related party reimbursement obligation are deferred through March 31, 2025.

Reimbursement payments may be further deferred when our related party receives an extension on the maturity date of the associated EB-5 loan liability.

Our related party has a history of receiving maturity date extensions, however, further extensions are not within our control and there can be no assurance that any such extensions will be obtained in the future.

The development stages of our communities continue to require significant cash outlays on both a short-term and long-term basis, and we expect to invest significant amounts on continued horizontal development at Valencia over the next 12 months.

We manage our development activities and expenditures to coincide with projected demand for our residential and commercial land with the objective of maintaining an appropriate level of liquidity.

We expect to meet our cash requirements for at least the next 12 months with available cash, distributions from our unconsolidated entities, collection of management fees under our development management agreement with the Great Park Venture, proceeds from land sales, reimbursements from public financing in Valencia and access to financing sources, including our revolving credit facility.

Our long-term cash needs relate primarily to future horizontal development expenditures and investments in or vertical construction costs for properties that we may acquire or develop for an income-producing portfolio, along with debt service and

general and administrative expenses.

We expect to meet our cash requirements for at least the next 12 months with available cash, distributions from our unconsolidated entities, collection of management fees under our development management agreement with the Great Park Venture, proceeds from land sales, reimbursements from public financing and access to financing sources, including our revolving credit facility.

Our long-term cash needs relate primarily to future horizontal development expenditures and new investments and acquisitions, along with debt service and general and administrative expenses.

We budget our cash development costs on an annual basis.

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We may also modify our development plans or change the sequencing of our communities in response to changing economic conditions, consumer preferences and other factors, which could have a material impact on the timing and amount of our development costs.

Budgeted amounts are expected to be funded through a combination of available cash, cash flows from our communities and reimbursements from public financing, including community facilities districts, tax increment financing and local, state and federal grants.

Cash flows from our communities may occur in uneven patterns as cash is primarily generated by land sales and reimbursements, which can occur at various points over the life cycle of our communities.

We currently expect to have sufficient capital to fund the horizontal development of our communities in accordance with our development plan for several years.

Budgeted amounts are expected to be funded through a combination of available cash, cash flows from land sales at our communities and reimbursements from public financing, including community facilities districts, tax increment financing and local, state and federal grants.

Cash flows from our communities may occur in uneven

patterns as cash is primarily generated by land sales and reimbursements, which can occur at various points over the life cycle of our communities.

We currently expect to have sufficient capital to fund the horizontal development of our communities in accordance with our development plan and to pursue our growth strategies for several years.

The level of capital expenditures in any given year may vary due to, among other things, the number of communities or neighborhoods under development and the number of planned deliveries, which may vary based on market conditions.

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The TRA provides for payments by us to such investors or their successors in aggregate amounts equal to 85% of the cash savings, if any, in income tax that we realize as a result of (a) increases in tax basis that are attributable to exchanges of Class A units of the operating company for our Class A common shares or cash or certain other taxable acquisitions of equity interests by us, (b) allocations that result from the application of the principles of Section 704(c) of the Code and (c) tax benefits related to imputed interest or guaranteed payments deemed to be paid or incurred by us as a result of the TRA.

We expect the TRA payments to be substantial, however, the actual amount and timing of any payments under the TRA will vary depending upon a number of factors, including the timing of exchanges of Class A units of the operating company, the price of our Class A common shares at the time of such exchanges, the extent to which such exchanges are taxable and our ability to use the potential tax benefits, which will depend on the amount and timing of our taxable income and the rate at which we pay income tax.

As of December 31, 2023, there were no amounts currently payable under the TRA and based on current projections, we do not expect to make any payments for the next several years.

We expect the TRA payments to be substantial, however, the actual amount and timing of any payments under the TRA will vary depending upon a number of factors, including the timing of exchanges of Class A units of the operating company or Class A units of the San Francisco Venture, the price of our Class A common shares at the time of such exchanges, the extent to which such exchanges are taxable and our ability to use the potential tax benefits, which will depend on the amount and timing of our taxable income and the rate at which we pay income tax.

As of December 31, 2024, there were no amounts currently payable under the TRA.

However, TRA payments associated with California state taxes may become payable between 2026 and 2028 as a result of the passage in June 2024 of California Senate Bill 167, which, in part, suspends the usage of California net operating loss deductions for tax years 2024 through 2026.

The majority of TRA payments, however, are not expected to begin until after 2028.

We are committed under various performance bonds and letters of credit (“LOCs”) to perform certain development activities and provide certain guarantees in the normal course of the entitlement and development process.

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Senior notes payable $ 525,000 $ 1,500 $ — $ 523,500 $ —

$ 625,000 $ 100,000 $ 1,500 $ 523,500 $ —

Interest commitment on senior notes 185,959 55,085 120,404 10,470 —

240,049 54,091 112,669 73,289 —

Operating lease obligations

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$ 815,015 $ 122,890 $ 130,810 $ 540,985 $ 20,330

(1) In January 2024, we exchanged $623.5 million of our existing 7.875% senior notes due November 2025 for $100.0 million in cash and $523.5 million in new 10.500% initial rate senior notes due January 2028.

The new senior notes due January 2028 will

accrue interest at a rate of 11.000% starting in November 2025 and at a rate of 12.000% starting from November 2026 through the maturity date.

The table above reflects our material cash obligations and commitments after giving effect to the January 2024 exchange.

(1) We are subject to a water purchase agreement requiring annual payments in exchange for the delivery of water for our exclusive use.

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(2) Prior to our acquisition of the San Francisco Venture, certain subsidiaries of the San Francisco Venture entered into EB-5 loan agreements with lenders that are authorized by the United States Citizenship and Immigration Services to raise capital from foreign nationals who seek to obtain permanent residency in the United States.

Prior to our acquisition, related parties assumed the EB-5 loan liabilities, and the San Francisco Venture entered into reimbursement agreements pursuant to which it agreed to reimburse the related parties for a portion of the EB-5 loan liabilities and related interest.

Prior to our acquisition, related parties assumed the EB-5 loan liabilities, and the San Francisco Venture entered into reimbursement agreements pursuant to which it agreed to

reimburse the related parties for a portion of the EB-5 loan liabilities and related interest.

The amounts set forth in the above table include interest based on the weighted average interest rate of 4.6%.

Reimbursement payments may be deferred when the related parties receive an extension on the maturity date of the associated EB-5 loan liability.

Pursuant to a reimbursement deferral agreement, principal and interest payments under our related party reimbursement obligation are deferred through March 31, 2025.

Reimbursement payments may be further deferred when the related parties receive an extension on the maturity date of the associated EB-5 loan liability.

The above table does not present accounts payable and other development liabilities incurred in the normal course of business.

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Cash flows from operating activities are primarily comprised of cash inflows from land sales, management services and operating property results.

Cash outflows are comprised primarily of cash outlays for horizontal development costs, net of reimbursements and recoveries, employee compensation, and SG&A costs.

Cash outflows are comprised primarily of cash outlays for horizontal development costs, net of reimbursements and recoveries, and SG&A costs.

Our operating cash flows may vary significantly each year due to the timing of land sales and the development efforts related to our mixed-use planned communities.

Net cash provided by operating activities was $154.1 million for the year ended December 31, 2023, compared to $188.3 million net cash used in operating activities for the year ended December 31, 2022.

Major components of operating cash used in both periods consist of our continued investment in horizontal development at our communities, SG&A costs and the payment of $49.2 million each year for interest due on our senior notes.

Our horizontal development costs for the year ended December 31, 2023 were offset by $18.9 million in public financing reimbursements for public infrastructure development costs we incurred in Valencia and a nonrecurring $44.5 million recovery from a third party related to certain project development costs in Valencia.

Our horizontal development costs for the year ended December 31, 2022 were offset by $27.7 million in public financing reimbursements for public infrastructure development costs we incurred in Valencia.

Net cash provided by operating activities was $116.0 million for the year ended December 31, 2024, compared to $154.1 million net cash provided by operating activities for the year ended December 31, 2023.

During the year ended December 31, 2024, we received $137.9 million from the sale of land at our Valencia segment.

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The payment is net of $1.8 million that we concurrently distributed to the holders of the management company’s Class B units.

Additionally, we received total distributions of $154.2 million from the Great Park Venture, of which $78.2 million is reflected as a return on our investment (operating activity) in the statement of cash flows with the balance reflected as an investing activity.

During the year ended December 31, 2022, we received incentive compensation payments of $14.2 million under our development management agreement with the Great Park Venture.

As of December 31, 2024, the holders of the management company’s Class B units had no further distribution rights.

Additionally, we received total distributions of $181.9 million from the Great Park Venture, of which $119.8 million is reflected as a return on our investment (operating activity) in the statement of cash flows, with the balance reflected as an investing activity and a distribution of $17.2 million from the Gateway Commercial Venture, of which $9.4 million is reflected as a return on our investment (operating activity) in the statement of cash flows, with the balance reflected as an investing activity.

During the year ended December 31, 2023, we received $162.4 million from the sale of land at our Valencia segment.

We also received incentive compensation payments of $41.6 million under our development management agreement with the Great Park Venture.

The payment is net of $4.9 million that we concurrently distributed to the holders of the management company’s Class B units.

Additionally, we received total distributions of $8.6 million from the Gateway Commercial Venture, of which $0.4 million is reflected as a return on our investment (operating activity) in the statement of cash flows with the balance reflected as an investing activity.

Additionally, we received total distributions of $154.2 million from the Great Park Venture, of which $78.2 million is reflected as a return on our investment (operating activity) in the statement of cash flows, with the balance reflected as an investing activity.

Major components of operating cash used in both periods consisted of our continued investment in horizontal development at our communities and SG&A costs.

During the year ended December 31, 2024, we paid $8.3 million for interest accrued through the settlement date on our existing 7.875% senior notes due November 2025 that were exchanged in January 2024.

The exchange of $523.5 million of our existing senior notes for new senior notes was accounted for as a debt modification under ASC 470-50.

Under debt modification accounting, third party costs are expensed as incurred and reported as operating cash flows.

Included in operating cash outflows during the year ended December 31, 2024 is $7.7 million in third party transaction and advisory costs incurred in connection with the senior notes exchange.

During the year ended December 31, 2024, an additional $45.8 million was paid for interest due on our existing 7.875% senior notes and new 10.500% initial rate senior notes.

During the year ended December 31, 2023, $49.2 million was paid for interest due on our existing 7.875% senior notes.

Our horizontal development costs for the year ended December 31, 2024 were partially offset by $9.1 million in public financing reimbursements for public infrastructure development costs we incurred in Valencia.

Our horizontal development costs for the year ended December 31, 2023 were partially offset by $18.9 million in public financing reimbursements for public infrastructure development costs we incurred in Valencia and a nonrecurring $44.5 million recovery from a third party related to certain project development costs in Valencia .

Cash Flows from Investing Activities.

Net cash provided by investing activities was $70.1 million for the year ended December 31, 2024, compared to the net cash provided by investing activities of $77.1 million for the year ended December 31, 2023.

During the year ended December 31, 2023, we received total distributions of $154.2 million from the Great Park Venture, of which $76.0 million is reflected as a return of our investment (investing activity) in the statement of cash flows with the balance

reflected as an operating activity.

During the year ended December 31, 2024, we received total distributions of $181.9 million from the Great Park Venture, of which $62.1 million is reflected as a return of our investment (investing activity) in the statement of cash flows, with the balance reflected as an operating activity and a distribution of $17.2 million from the Gateway Commercial Venture, of which $7.8 million is

reflected as a return of our investment (investing activity) in the statement of cash flows, with the balance reflected as an operating activity.

Additionally, we received total distributions of $1.0 million from the Valencia Landbank Venture, which is reflected as a return of our investment (investing activity) in the statement of cash flows.

For the year ended December 31, 2022, we received distributions of $52.7 million and $3.3 million from the Great Park Venture and Valencia Landbank Venture, respectively, which is reflected as a return of our investment (investing activity) in the statement of cash flows.

Additionally, we received total distributions of $8.6 million from the Gateway Commercial Venture, of which $8.3 million is reflected as a return of our investment (investing activity) in the statement of cash flows with the balance reflected as an operating activity.

Additionally, we received total distributions of $1.1 million from the Valencia Landbank Venture, which is reflected as a return of our investment (investing activity) in the statement of cash flows.

Cash Flows from Financing Activities.

Net cash used in financing activities was $109.0 million for the year ended December 31, 2024, compared to net cash used in financing activities of $9.2 million for the year ended December 31, 2023.

During the year ended December 31, 2024, we repaid $100.0 million of our existing 7.875% senior notes due November 2025 in connection with our exchange transaction.

During the years ended December 31, 2024 and 2023, we made tax distributions of $7.7 million and $4.0 million, respectively, to noncontrolling interests in accordance with the operating company’s Limited Partnership Agreement (“LPA”).

The tax distribution is treated as an advance distribution under the LPA.

We also made payments of $4.3 million and $6.5 million to reduce our related party reimbursement obligation during the years ended December 31, 2023 and 2022, respectively.

We also made payments of $4.3 million to reduce our related party reimbursement obligation during the year ended December 31, 2023.

We used $0.8 million and $0.2 million during the years ended December 31, 2024 and 2023, respectively, to net settle certain share-based compensation awards with employees for tax withholding purposes.

During the year ended December 31, 2022, we borrowed and repaid $15.0 million under our revolving credit facility.

Changes in Capital Structure

During the year ended December 31, 2023, our ownership percentage in the operating company increased slightly to 62.6%, primarily due to our issuance of shared-based compensation in the form of 0.2 million restricted Class A common shares, partially offset by our reacquisition of approximately 0.1 million restricted Class A common shares from employees for income tax withholding purposes upon vesting.

During the year ended December 31, 2024, our 62.6% ownership percentage in the operating company increased slightly primarily due to our issuance of shared-based compensation in the form of 0.2 million restricted Class A common shares and 0.3 million restricted share units that were settled for Class A common shares, partially offset by our reacquisition of approximately 0.3 million restricted Class A common shares from employees for income tax withholding purposes upon vesting.

The issuances and settlements resulted in the operating company issuing to us an equal number of Class A units of the operating company or retiring an equal number of Class A units of the operating company that we previously held.

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We did not sell homesites directly to Lennar during the years ended December 31, 2024, 2023, and 2022 but did recognize revenues related to certain fees or profit participation associated with homes sold by Lennar to homebuyers at Valencia.

For the years ended December 31, 2023 and 2022, we recognized $0.6 million and $7.5 million, respectively, of revenue from Lennar, which primarily consisted of profit participation.

During the year ended December 31, 2023, we sold homesites to an unaffiliated land banking entity and recognized $101.8 million of such revenue.

Lennar has retained the option to acquire these homesites in the future from the unaffiliated land banking entity.

For the year ended December 31, 2023, we recognized $0.6 million of revenue from Lennar, which primarily consisted of profit participation.

During the years ended December 31, 2024 and 2023, we sold homesites to unaffiliated land banking entities and recognized $76.9 million and $101.8 million of such revenue, respectively.

Lennar has retained the option to acquire these homesites in the future from the unaffiliated land banking entities and has historically exercised its options to acquire such homesites.

We also provide management services to the Great Park Venture pursuant to a development management agreement.

In addition to our 37.5% percentage interest in the Great Park Venture, Lennar owns a 25% legacy interest in the Great Park Venture.

Lennar, along with an affiliate of Castlelake, also owns interests in an entity that owns a 12.5% legacy interest in the Great Park Venture.

For the years ended December 31, 2023 and 2022, we recognized $47.2 million and $31.0 million, respectively, of revenue from management services provided to the Great Park Venture.

Other than the Great Park Venture, no related party customer accounted for more than 10% of our

revenue during the year ended December 31, 2023.

Other than Lennar and the Great Park Venture, no related party customer accounted for more than 10% of our revenue during the year ended December 31, 2022.

For the years ended December 31, 2024 and 2023, we recognized $96.0 million and $47.2 million, respectively, of revenue from management

services provided to the Great Park Venture.

Other than the Great Park Venture, no related party customer accounted for more than 10% of our revenue during the years ended December 31, 2024 and 2023.

In addition to the related party revenues, during the year ended December 31, 2024, we recognized an aggregate of $31.2 million of revenue from a third-party home builder, which primarily consisted of homesites sold to the third-party home builder and accounted for more than 10% of total consolidated revenues.

Other than the third-party home builder and the unaffiliated land bank entity, no third-party customer accounted for more than 10% of our revenue during the year ended December 31, 2024.

In addition to the related party revenues, during the year ended December 31, 2023, we recognized an aggregate of $21.7 million and $39.4 million of revenue from two third-party home builders, respectively, which primarily consisted of homesites sold to the two third-party home builders and which separately accounted for more than 10% of total consolidated revenues.

Other than the third-party home builders and the unaffiliated land bank entity, no third-party customer accounted for more than 10% of our revenue during the year ended December 31, 2023.

No third-party customer accounted for more than 10% of our revenue during the year ended December 31, 2022.

Critical Accounting Estimates

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While many of the estimates are calculated based on historical and projected trends, all estimates are subjective and change as market and economic conditions change.

Incentive Management Agreement Fees

Management Services - Related Party - Incentive Compensation

Revenues from management services are recognized as the customer consumes the benefits of the performance obligation over time.

The transaction price pertaining to our management agreement with the Great Park Venture is comprised of fixed and variable components, including incentive compensation fee provisions that are contingent on the performance of the Great Park Venture.

In making estimates of incentive compensation we expect to be entitled to receive in exchange for providing management services, we make significant assumptions and judgments in evaluating the factors that may determine the amount of consideration we will ultimately receive.

In doing so, we typically utilize cash flow projections for the community.

We believe that the accounting estimate related to incentive management fees is a critical accounting estimate because when changes in our estimates and assumptions occur, our estimate of the amount of incentive compensation we expect to be entitled to receive may change, resulting in a cumulative adjustment being recorded in the period of the change that may be material.

In making estimates of incentive compensation we are entitled to receive in exchange for providing management services, we make significant assumptions and judgments in evaluating the factors that may determine the amount of consideration we will ultimately receive.

In doing so, we utilize cash flow projections for the community.

These cash flows are significantly affected by estimates and assumptions related to market supply and demand, the local economy, projected pace of sales of homesites, projected pricing over the estimated selling period, the length of the estimated development and selling periods, remaining development, general and administrative costs, the contract period, and other factors.

We believe that the accounting estimate related to incentive management fees is a critical accounting estimate because when changes in our estimates and assumptions occur, our estimate of the amount of incentive compensation we are entitled to receive may change, resulting in a cumulative adjustment being recorded in the period of the change that may be material.

Investments in Unconsolidated Entities

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We evaluate our investments in unconsolidated entities for other-than-temporary impairment by reviewing each investment for any indicators of impairment, including the fair value of such investments compared to their carrying amounts.

We typically estimate the fair value of our investments using a discounted cash flow of distributions we expect to receive from the venture.

We estimate the fair value of our investments using a discounted cash flow of distributions we expect to receive from the venture.

Significant input assumptions used in estimating the distributions we expect to receive from the venture include revenue and development cost estimates.

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Changes in these estimates can have a significant impact on the assessment of fair value, which could result in material impairment losses.

Impairment of Our Community Assets

We review for impairment our long-lived assets, including our Valencia and San Francisco communities, when events or changes in circumstances indicate that the carrying value of an asset group may not be recoverable.

If indicators of impairment exist, and the undiscounted cash flows expected to be generated by a long-lived asset are less than its carrying amount, an impairment charge is recorded to write down the carrying amount of such long-lived asset to its estimated fair value.

Impairment indicators for long-lived inventory assets include, but are not limited to, significant increases in horizontal development costs, significant decreases in the pace and pricing of home sales within our communities and surrounding areas, political and societal events that may negatively affect the local economy, and changes in development strategies, such as the contribution of an asset into a joint venture, that would result in acceleration of the realization of the value of such assets.

We generally estimate the fair value of our long-lived assets using a discounted cash flow model or sales comparison approach of the underlying property or a combination thereof.

Our projected cash flows for each long-lived inventory asset are significantly affected by estimates and assumptions related to market supply and demand, the local economy, projected pace of sales of homesites, pricing and price appreciation over the estimated selling period, the length of the estimated development and selling periods, remaining development costs, and other factors.

In determining these estimates and assumptions, we utilize historical trends from our past development projects in addition to internal and external market studies and trends, which generally include, but are not limited to, statistics on population demographics, unemployment rates and interest rates.

Using all available information, we calculate an estimate of projected cash flows for each long-lived asset.

While many of the estimates are calculated based on historical and projected trends, all estimates are subjective and change as market and economic conditions change.

In some instances, there may be various potential outcomes for future cash flows.

In these instances, the future cash flow models used to assess recoverability are probability-weighted based on our best estimates as of the date of evaluation.

The determination of fair value also requires discounting the estimated cash flows at a rate that we believe a market participant would determine to be commensurate with the inherent risks associated with the asset and related estimated cash flow streams.

The discount rate used in determining each asset’s fair value generally depends on the asset’s projected life and development stage.

We believe that the accounting related to the impairment of our community assets is a critical accounting estimate because projected cash flows used in our impairment evaluation use significant estimates.

Changes in these estimates can have a significant impact on the undiscounted cash flows that are used to test recoverability.

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-K

Item 7. Management’s Discussion and Analysis