Related Party Disclosures

6 Months Ended

Mar. 31, 2023

Related Party Transactions [Abstract]

Related Party Transactions Disclosure [Text Block]

Related Party Transactions

The Company has a Shared Services Agreement with D.R. Horton whereby D.R. Horton provides the Company with certain administrative, compliance, operational and procurement services. In the six months ended March 31, 2023 and 2022, selling, general and administrative expense in the consolidated statements of operations included $1.9 million and $2.0 million for these shared services, $4.2 million and $3.3 million reimbursed to D.R. Horton for the cost of health insurance and other employee benefits and $0.9 million and $1.4 million for other corporate and administrative expenses paid by D.R. Horton on behalf of the Company.

Under the terms of the Master Supply Agreement with D.R. Horton, both companies identify land development opportunities to expand Forestar's portfolio of assets. At March 31, 2023 and September 30, 2022, the Company owned approximately 57,800 and 61,800 residential lots, of which D.R. Horton had the following involvement.

	March 31, 2023		September 30, 2022
	(Dollars in millions)
Residential lots under contract to sell to D.R. Horton	14,200		17,800
Residential lots subject to right of first offer with D.R. Horton	17,300		18,900
Earnest money deposits from D.R. Horton for lots under contract	$	122.4	$	130.1
Remaining sales price of lots under contract with D.R. Horton	$	1,246.7	$	1,389.7

In the three months ended March 31, 2023 and 2022, the Company sold 2,979 and 5,788 residential lots, and lot sales revenues were $252.9 million and $409.0 million. In the six months ended March 31, 2023 and 2022, the Company sold 5,242 and 10,304 residential lots, and lot sales revenues were $459.5 million and $813.1 million. Lot and land sales to D.R. Horton during those periods were as follows.

	Three Months Ended March 31,				Six Months Ended March 31,
	2023		2022		2023		2022
	(Dollars in millions)
Residential lots sold to D.R. Horton	2,666		4,771		4,760		8,785
Residential lot sales revenues from sales to D.R. Horton	$	219.9	$	390.2	$	407.0	$	718.2
Tract acres sold to D.R. Horton	379		—		379		—
Tract sales revenues from sales to D.R. Horton	$	32.5	$	—	$	32.5	$	—

In addition, the net impact of the change in contract liabilities increased revenues on lot sales to D.R. Horton by $0.7 million in the three months ended March 31, 2023 and decreased revenues on lot sales to D.R. Horton by $0.5 million in the three months ended March 31, 2022. The net impact of the change in contract liabilities increased revenues on lot sales to D.R. Horton by $3.4 million and $1.6 million in the six months ended March 31, 2023 and 2022, respectively.

In the three and six months ended March 31, 2023, the Company reimbursed D.R. Horton approximately $5.7 million and $10.4 million for pre-acquisition and other due diligence and development costs related to land purchase contracts identified by D.R. Horton that the Company independently underwrote and closed. In the six months ended March 31, 2023, the Company reimbursed D.R. Horton approximately $0.1 million for previously paid earnest money. In the three and six months ended March 31, 2022, the Company reimbursed D.R. Horton approximately $2.7 million and $5.4 million for previously paid earnest money and $16.2 million and $37.8 million for pre-acquisition and other due diligence and development costs related to land purchase contracts identified by D.R. Horton that the Company independently underwrote and closed.

In the three and six months ended March 31, 2023 and 2022, the Company paid D.R. Horton $0.3 million and $0.5 million for land development services compared to $0.7 million and $1.6 million for these services in the prior year periods. These amounts are included in cost of sales in the Company’s consolidated statements of operations.

At March 31, 2023 and September 30, 2022, land held for future development primarily consisted of undeveloped land which the Company has the contractual right to sell to D.R. Horton at a sales price equal to the carrying value of the land at the time of sale plus additional consideration of 12% to 16% per annum.

At March 31, 2023 and September 30, 2022, accrued expenses and other liabilities on the Company's consolidated balance sheets included $3.0 million and $3.2 million owed to D.R. Horton for any accrued and unpaid shared service charges, land purchase contract deposits and due diligence and other development cost reimbursements.