Operating Leases

12 Months Ended

Sep. 30, 2025

The Company leases certain office space and equipment under operating leases for use in our operations. We recognize operating lease expense on a straight-line basis over the lease term. Certain of our lease agreements include one or more options to renew. The exercise of lease renewal options is generally at our discretion. Variable lease expense primarily relates to maintenance and other monthly expense that do not depend on an index or rate.

We determine if an arrangement is a lease at contract inception. Lease and non-lease components are accounted for as a single component for all leases. Operating lease right to use assets and liabilities are recognized at the lease commencement date based on the present value of the future lease payments over the expected lease term, which includes optional renewal periods if we determine it is reasonably certain that the option will be exercised. As our leases do not provide an implicit rate, the discount rate used in the present value calculation represents our incremental borrowing rate determined using information available at the commencement date.

Operating lease expense is included as a component of general and administrative expenses in our consolidated statements of operations. Sublease income and variable lease expenses are de minimis. For the fiscal years ended September 30, 2025, 2024 and 2023, we recorded operating lease expense of $4.7 million, $4.4 million and $4.0 million, respectively. Cash payments on lease liabilities during the fiscal years ended September 30, 2025, 2024 and 2023 totaled $4.6 million, $4.2 million and $4.3 million, respectively.

During the fiscal year ended September 30, 2025, the Company executed a model sale-leaseback transaction involving the sale of 83 model homes, which were immediately leased back for terms ranging from 12 to 54 months. The Company determined that control of the model homes transferred to the buyer and the transaction qualified as a sale. The model sale-leaseback transaction generated homebuilding revenue of $45.0 million, home construction expense of $38.3 million, and cash proceeds of $36.2 million. The transaction revenue reflected the estimated fair value of the model homes, which exceeded the cash proceeds by $8.8 million. This difference was recognized as a prepayment of rent. The model home leases from the transaction are accounted for as operating leases and the Company recorded total right-of-use assets and lease liabilities of $16.5 million and $7.7 million, respectively, at the time of the transaction in the accompanying consolidated balance sheets.

At September 30, 2025 and 2024, weighted-average remaining lease term and discount rate were as follows:


	September 30,
	2025	2024
Weighted-average remaining lease term	5.0 years	6.6 years
Weighted-average discount rate	4.64%	6.30%

The following is a maturity analysis of the annual undiscounted cash flows reconciled to the carrying value of the operating lease liabilities as of September 30, 2025:


Fiscal Years Ending September 30,
in thousands
2026	$	8,738
2027	7,025
2028	4,682
2029	3,846
2030	3,080
Thereafter	5,553
Total lease payments	32,924
Less: imputed interest	5,162
Total operating lease liabilities	$	27,762