XML 29 R16.htm IDEA: XBRL DOCUMENT

Investment in Unconsolidated Entities (Tables)
$ / shares in Units, $ in Thousands

1 Months Ended

12 Months Ended

Dec. 31, 2019

USD ($)

Oct. 31, 2019

USD ($)

Dec. 31, 2020

USD ($)

$ / shares

Dec. 31, 2019

USD ($)

Dec. 31, 2018

USD ($)

Aug. 15, 2017

board_seat

officer

Equity Method Investments and Joint Ventures [Abstract]

Equity Method Investments and Joint Ventures Disclosure [Text Block]

5. INVESTMENTS IN UNCONSOLIDATED ENTITIES

A summary of the Company’s investments in unconsolidated entities is as follows (in thousands):


	December 31, 2020		December 31, 2019
GB Challenger, LLC	$	29,488	$	23,822
GBTM Sendera, LLC	9,846		—
EJB River Holdings, LLC	5,296		5,299
Green Brick Mortgage, LLC	1,207		1,124
BHome Mortgage, LLC	606		—
Providence Group Title, LLC	—		49
Total investment in unconsolidated entities	$	46,443	$	30,294

Challenger

The Company holds two of the five board of managers (the “Managers”) seats of GB Challenger, LLC (“Challenger”). Challenger’s six officers, who are employees of the Challenger entities, were designated by the Managers for the purpose of managing the day to day operations. The Company does not have a controlling financial interest in Challenger as the Company has less than 50% of the voting interests in Challenger. The Company’s investment in Challenger is treated as an unconsolidated investment under the equity method of accounting and is included in investments in unconsolidated entities in the Company’s consolidated balance sheets.

The Company’s investment in Challenger is carried at cost, as adjusted for the Company’s share of income or losses and distributions received, as well as for adjustments related to basis differences between the Company’s cost and the Company’s underlying equity in net assets recorded in Challenger’s financial statements as of the date of acquisition.

As of December 31, 2020, the carrying value of the investment in Challenger was $29.5 million, whereas the underlying 49.9% equity in net assets of Challenger was $26.5 million. The $3.0 million difference represents the premium paid for the Company’s equity interest in excess of Challenger’s carrying value. This basis difference primarily relates to the estimated fair value of inventory, as well as the Challenger Homes trade name and capitalized acquisition costs. The amortization of the basis differences related to inventory is recorded as a reduction of equity in income of unconsolidated entities as homes are closed on and delivered to homebuyers. The basis difference related to the trade name is amortized over ten years as a reduction of equity in income of unconsolidated entities.

The Company recognized $11.9 million, $8.3 million, and $7.0 million related to Challenger in equity in income of unconsolidated entities during the years ended December 31, 2020, 2019, and 2018, respectively.

Providence Title

In March 2018, the Company formed a joint venture with a title company in Georgia to provide title closing and settlement services to our Atlanta-based builder. The Company, through its controlled builder, The Providence Group of Georgia, L.L.C. (“TPG”), owned a 49% equity interest in Providence Group Title, LLC (“Providence Title”). The Company’s investment in Providence Title was treated as an unconsolidated investment under the equity method of accounting and included in investments in unconsolidated entities in the Company’s consolidated balance sheets. In December 2020, this joint venture was terminated and the Company incurred a de minimis loss upon dissolution.

Green Brick Mortgage

In June 2018, the Company formed a joint venture with PrimeLending to provide mortgage loan origination services to our builders. The Company owns a 49% equity interest in Green Brick Mortgage, LLC (“Green Brick Mortgage”) which initiated mortgage loan origination activities in September 2018. The Company determined that the investment in Green Brick Mortgage should be treated as an unconsolidated investment under the equity method of accounting and included in investments in unconsolidated entities in the Company’s consolidated balance sheets. On September 1, 2020, the Company increased its ownership interest in GRBK Mortgage, LLC from 49.00% to 49.99%.

EJB River Holdings

In December 2018, EJB River Holdings joint venture was formed by TPG with the purpose to acquire and develop a tract of land in Gwinnett County, Georgia to be called Waterside. In May 2019, East Jones Bridge, LLC, a Georgia limited liability company (“EJB”) was admitted as a member of EJB River Holdings, which resulted in TPG and EJB each having a 50% ownership interest in EJB River Holdings. EJB River Holdings had no activity in the period from its formation until October 2019.

In October 2019, EJB River Holdings received two $5.0 million initial contributions from its two members, TPG and EJB. In December 2019, two additional contributions of $0.3 million were made by TPG and EJB to EJB River Holdings. Per EJB River Holdings’ operating agreement, TPG and EJB share equally in the profits and losses of EJB River Holdings, with the exception of certain customary fees.

In October 2019, EJB River Holdings issued two loans with the total maximum amount of borrowings of $21.9 million to finance its land acquisition and development in Gwinnett County, Georgia. One of the investors in EJB issued a personal guarantee on one of the loans in the amount of $9.4 million. Subsequently, in October 2019, a wholly owned subsidiary of the Company provided a limited $2.0 million guarantee to the investor in EJB. The approximate term of the guarantee is 35 months. In the event EJB River Holdings defaults on its $9.4 million loan and the investor in EJB makes the $9.4 million payment under his personal guarantee, the maximum potential amount of future payments that the Company could be required to make under its limited guarantee is $2.0 million. As of December 31, 2020, the Company has no current liability related to the guarantee obligation as the payment risk of the guarantee has been assessed to be very low.

Following the analysis of the above facts and provisions of EJB River Holdings’ operating agreement, the Company has determined that EJB River Holdings is a VIE in which the Company is not the primary beneficiary. Therefore, the investment in EJB River Holdings was treated as an unconsolidated investment under the equity method of accounting and was included in investments in unconsolidated entities in the Company’s consolidated balance sheets.

As of December 31, 2020, the carrying amounts of assets and liabilities of EJB River Holdings were $29.2 million and $18.6 million, respectively. Assets were comprised of real estate inventory and cash, whereas the liabilities were comprised of

loans and interest payable. As of December 31, 2020, the Company’s maximum exposure to loss as a result of its involvement with EJB River Holdings was $7.3 million, represented by the sum of the Company’s investment in EJB River Holdings of $5.3 million and the $2.0 million limited guarantee described above.

BHome Mortgage

In May 2020, we established a joint venture, BHome Mortgage, LLC (“BHome Mortgage”) with First Continental Mortgage, Ltd., to provide mortgage related services to homebuyers. The Company owns 49.0% in BHome Mortgage. In May 2020, BHome Mortgage received initial capital contributions of approximately $0.5 million from its two members in accordance with their membership interest.

The Company determined that the investment in BHome Mortgage should be treated as an unconsolidated investment under the equity method of accounting and included in investments in unconsolidated entities in the Company’s consolidated balance sheets.

GBTM Sendera, LLC

In August 2020, GBTM Sendera, LLC joint venture (“GBTM Sendera”) was formed by GRBK Edgewood, LLC (“GRBK Edgewood”) and TM Sendera, LLC (“TM Sendera”) with the purpose to acquire and develop a tract of land in Fort Worth,Texas. Each party holds a 50% ownership interest in GBTM Sendera. GBTM Sendera had no activity in the period but it is expected to begin its operations in the first quarter of 2021.

In August 2020, GBTM Sendera received two $9.0 million initial contributions from each of its two members, GBRK Edgewood and TM Sendera. Per the GBTM Sendera company agreement, GRBK Edgewood and TM Sendera share equally in the profits and losses of GBTM Sendera, with the exception of certain customary fees.

Following the analysis of the above facts and provisions of the GBTM Sendera company agreement, the Company has determined that GBTM Sendera is a joint venture to be evaluated under the voting interest model. Therefore, the investment in GBTM Sendera is treated as an unconsolidated investment under the equity method of accounting and is included in investments in unconsolidated entities in the Company’s consolidated balance sheets.

As of December 31, 2020, the carrying amount of GBTM Sendera net assets was $19.7 million. Assets were comprised of real estate inventory and cash, whereas the liabilities were comprised of accounts payable. As of December 31, 2020, the Company’s maximum exposure to loss as a result of its involvement with GBTM Sendera was $9.8 million, represented by the sum of the Company’s investment in GBTM Sendera of $9.0 million and an additional $0.8 million contribution made each by GBRK Edgewood and TM Sendera.

A summary of the financial information of the unconsolidated entities that are accounted for by the equity method, as described above, is as follows (in thousands):


			December 31, 2020		December 31, 2019
Assets:
Cash			$	12,765	$	11,699
Accounts receivable			1,815		3,252
Bonds and notes receivable			5,942		5,864
Loans held for sale, at fair value			14,530		23,143
Inventory			122,819		73,704
Other assets			8,377		4,012
Total assets			$	166,248	$	121,674
Liabilities:
Accounts payable			$	7,171	$	1,726
Accrued expenses and other liabilities			11,148		7,784
Notes payable			60,642		58,223
Total liabilities			$	78,961	$	67,733
Owners’ equity:
Green Brick			$	43,451	$	25,910
Others			43,836		28,031
Total owners’ equity			$	87,287	$	53,941
Total liabilities and owners’ equity			$	166,248	$	121,674

	Years Ended December 31,
	2020		2019		2018
Revenues	$	181,724	$	166,368	$	166,102
Costs and expenses	145,525		144,097		148,222
Net earnings of unconsolidated entities	$	36,199	$	22,271	$	17,880
Company’s share in net earnings of unconsolidated entities	$	16,654	$	9,809	$	7,259

A summary of the Company’s share in net (losses) earnings by unconsolidated entity is as follows (in thousands):


	Years Ended December 31,
	2020		2019
GB Challenger, LLC	$	11,899	$	8,309
Green Brick Mortgage, LLC	4,727		1,053
Providence Group Title, LLC	12		448
EJB River Holdings, LLC	(2)		(1)
BHome Mortgage, LLC	18		—
GBTM Sendera, LLC	—		—
Total net earnings from unconsolidated entities	$	16,654	$	9,809

During the years ended December 31, 2020, 2019, and 2018, the Company did not identify indicators of impairment for its investments in unconsolidated entities.

Equity Method Investments [Table Text Block]

A summary of the financial information of the unconsolidated entities that are accounted for by the equity method, as described above, is as follows (in thousands):


			December 31, 2020		December 31, 2019
Assets:
Cash			$	12,765	$	11,699
Accounts receivable			1,815		3,252
Bonds and notes receivable			5,942		5,864
Loans held for sale, at fair value			14,530		23,143
Inventory			122,819		73,704
Other assets			8,377		4,012
Total assets			$	166,248	$	121,674
Liabilities:
Accounts payable			$	7,171	$	1,726
Accrued expenses and other liabilities			11,148		7,784
Notes payable			60,642		58,223
Total liabilities			$	78,961	$	67,733
Owners’ equity:
Green Brick			$	43,451	$	25,910
Others			43,836		28,031
Total owners’ equity			$	87,287	$	53,941
Total liabilities and owners’ equity			$	166,248	$	121,674

	Years Ended December 31,
	2020		2019		2018
Revenues	$	181,724	$	166,368	$	166,102
Costs and expenses	145,525		144,097		148,222
Net earnings of unconsolidated entities	$	36,199	$	22,271	$	17,880
Company’s share in net earnings of unconsolidated entities	$	16,654	$	9,809	$	7,259