Investments, Equity Method and Joint Ventures

12 Months Ended

Dec. 31, 2022

Equity Method Investments and Joint Ventures [Abstract]

Equity Method Investments and Joint Ventures Disclosure [Text Block]

5. INVESTMENTS IN UNCONSOLIDATED ENTITIES

We participate in a number of joint ventures and other investments with independent third parties. These entities generally focus on homebuilding, land development, and mortgage services to homebuyers. The Company’s investment in these entities is included in investments in unconsolidated entities in the Company’s consolidated balance sheets under the equity method of accounting.

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

	December 31, 2022		December 31, 2021
GB Challenger, LLC	$	49,897	$	37,737
GBTM Sendera, LLC	14,319		9,854
EJB River Holdings, LLC	8,554		6,130
Green Brick Mortgage, LLC	307		715
BHome Mortgage, LLC	1,147		1,180
Total investment in unconsolidated entities	$	74,224	$	55,616

Challenger

In August 2017, the Company acquired a 49.9% ownership interest in GB Challenger, LLC (“Challenger”). Challenger constructs townhouses, single family homes, and luxury patio homes and operates in Colorado Springs and Denver, Colorado.

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, 2022, the carrying value of the investment in Challenger was $49.9 million. The underlying 49.9% equity in net assets of Challenger was $47.4 million as of December 31, 2022. The $2.5 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 recognized as homes are delivered to homebuyers and the trade name is amortized over ten years. The amortization of the basis difference is a reduction of equity in income of unconsolidated entities.

The Company recognized $20.9 million, $14.8 million, and $11.9 million, related to Challenger in equity in income of unconsolidated entities during the years ended December 31, 2022, 2021, and 2020, respectively.

GBTM Sendera, LLC

In August 2020, the joint venture GBTM Sendera, LLC (“GBTM Sendera”) was formed by GRBK Edgewood, LLC (“GRBK Edgewood”) and TM Sendera, LLC (“TM Sendera”) to acquire and develop a tract of land in Fort Worth, Texas. Each party holds a 50% ownership interest in GBTM Sendera and share equally in the profits and losses of GBTM Sendera, with the exception of certain customary fees. The Company made capital contributions of $3.6 million during the year ended December 31, 2022. No cash contributions were made during the year ended December 31, 2021. A $9.8 million cash contribution was made by the Company during the year December 31, 2020.

As of December 31, 2022, the carrying amount of GBTM Sendera assets and liabilities were $35.2 million and $8.3 million, respectively. As of December 31, 2022, the Company’s maximum exposure to loss as a result of this joint venture was $13.5 million, representing the Company’s investment in GBTM Sendera.

EJB River Holdings

In December 2018, the joint venture EJB River Holdings (“EJB”) was formed by TPG to acquire and develop a tract of land in Gwinnett County, Georgia. In May 2019, East Jones Bridge, LLC was admitted as a member, which resulted in TPG having a 50% ownership interest in EJB River Holdings.

EJB River Holdings has borrowings of $12.7 million to finance its land acquisition and development. A wholly owned subsidiary of the Company provided a limited $2.0 million guarantee in connection with this debt. In the event EJB defaults on

one of its loans, 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, 2022 and 2021, the Company did not have a liability related to the guarantee obligation as the payment risk of the guarantee was assessed to be very low.

As of December 31, 2022, the carrying amounts of assets and liabilities of EJB River Holdings were $30.6 million and $13.5 million, respectively. As of December 31, 2022 the Company’s maximum exposure to loss as a result of its involvement with EJB River Holdings was $10.6 million, comprised of the sum of the Company’s investment in EJB of $8.6 million and the $2.0 million limited guarantee described above.

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 owned a 49.9% equity interest in Green Brick Mortgage, LLC. In 2022, this joint venture was terminated and the Company incurred a de minimis loss upon dissolution.

BHome Mortgage

In May 2020, the Company 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% of BHome Mortgage. BHome Mortgage received initial capital contributions of approximately $0.5 million from its two members in accordance with their membership interest during the year ended December 31, 2020.

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, TPG, owned a 49% equity interest in Providence Group Title, LLC (“Providence Title”). In December 2020, this joint venture was terminated and the Company incurred a de minimis loss upon dissolution.