Green Brick Partners Inc

Previous wording

This Annual Report on Form 10-K contains “forward-looking statements” within the meaning of the securities laws. These forward-looking statements are subject to a number of risks and uncertainties, many of which are beyond our control. All statements other than statements of historical facts included or incorporated by reference in this Annual Report on Form 10-K, including the statements regarding our strategy, future operations, financial position, estimated revenues, projected costs, prospects, plans, and objectives, are forward-looking statements. When used in this Annual Report, the words “will,” “believe,” “anticipate,” “plan,” “intend,” “estimate,” “expect,” “project,” and similar expressions are intended to identify forward-looking statements, although not all forward-looking statements contain these identifying words. Although we believe that our plans, intentions, and expectations reflected in or suggested by the forward-looking statements we make in this Annual Report on Form 10-K are reasonable, we cannot assure you that these plans, intentions, or expectations will be achieved. Forward-looking statements included or incorporated by reference in this Annual Report on Form 10-K include statements concerning (1) our balance sheet strategy and belief that we have ample liquidity; (2) our goals and strategies and their anticipated benefits, including expansion into new markets or new related businesses; (3) our intentions and the expected benefits and advantages of our product and land positioning strategies; (4) our expectations regarding future finished lots, the quality of those lots and the timing of backlog fulfillment; (5) expectations regarding our industry and our business in 2024 and beyond; (6) the contribution of certain market factors to our growth; (7) our land and lot acquisition strategy; (8) the sufficiency of our capital resources to support our business strategy and to service our debt; (9) the impact of new accounting standards and changes in accounting estimates; (10) trends and expectations regarding sales prices, sales orders, sales pace, cancellations, construction costs, gross margins, land costs and profitability and future home inventories; (11) our future cash needs; (12) our strategy to utilize leverage to invest in our business; (13) seasonal factors and the impact of seasonality in future quarters; (14) our expectations regarding access to additional growth capital; (15) our expectations regarding future land revenue recognition; (16) our ability to adapt to changing market conditions; and (17) our expectations regarding the sale of our ownership in Challenger; and (18) the disposition of legal claims and related contingencies.

Current wording

This Annual Report on Form 10-K contains “forward-looking statements” within the meaning of the securities laws. These forward-looking statements are subject to a number of risks and uncertainties, many of which are beyond our control. All statements other than statements of historical facts included or incorporated by reference in this Annual Report on Form 10-K, including the statements regarding our strategy, future operations, financial position, estimated revenues, projected costs, prospects, plans, and objectives, are forward-looking statements. When used in this Annual Report, the words “will,” “believe,” “anticipate,” “plan,” “intend,” “estimate,” “expect,” “project,” and similar expressions are intended to identify forward-looking statements, although not all forward-looking statements contain these identifying words. Although we believe that our plans, intentions, and expectations reflected in or suggested by the forward-looking statements we make in this Annual Report on Form 10-K are reasonable, we cannot assure you that these plans, intentions, or expectations will be achieved. Forward-looking statements included or incorporated by reference in this Annual Report on Form 10-K include statements concerning (1) our balance sheet strategy and belief that we have ample liquidity; (2) our goals and strategies and their anticipated benefits, including expansion into new markets or new related businesses and the attractiveness of the new markets; (3) our intentions and the expected benefits and advantages of our product and land positioning strategies; (4) our expectations regarding the reduction in our targeted debt to total capitalization ratio; (5) our expectations regarding future finished lots, the quality of those lots and the timing of backlog fulfillment; (6) expansion through Trophy Homes; (7) expectations regarding our industry and our business in 2025 and beyond; (8) the contribution of certain market factors to our growth; (9) the impact of elevated mortgage rates and high interest rate volatility on our absorption rate; (10) our land and lot acquisition strategy; (11) the sufficiency of our capital resources to support our business strategy and to service our debt; (12) our expectations regarding backlog; (13) the impact of new accounting standards and changes in accounting estimates; (14) trends and expectations regarding sales prices, sales orders, sales pace, cancellations, construction costs, gross margins, land costs and profitability and future home inventories; (15) our expectations regarding increased regulations on homebuilders and land developers; (16) our future cash needs; (17) our strategy to utilize leverage to invest in our business; (18) seasonal factors and the impact of seasonality in future quarters; (19) our expectations regarding access to additional growth capital; (20) our expectations regarding future land revenue recognition; (21) our ability to adapt to changing market conditions; and (22) the disposit…

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Previous wording

These forward-looking statements reflect our current views about future events and are subject to risks, uncertainties and assumptions. We wish to caution readers that certain important factors may have affected and could in the future affect our actual results and could cause actual results to differ significantly from what is anticipated by our forward-looking statements. These risks include, but are not limited to: (1) general economic conditions in our markets, seasonality, cyclicality and competition in the homebuilding industry; (2) changes in macroeconomic conditions, including interest and unemployment rates, that could adversely impact demand for new homes or the ability of our buyers to qualify; (3) shortages, delays or increased costs or performance issues of raw materials, or increases in other operating costs, including costs related to labor, real estate taxes and insurance, which in each case exceed our ability to increase prices; (4) significant periods of inflation or deflation; (5) a shortage of labor, (6) an inability to acquire land in our markets at anticipated prices or difficulty in obtaining land-use entitlements; (7) our inability to successfully execute our strategies, including the successful development of our communities within expected timeframes and the growth and expansion of our Trophy brand; (8) a failure to recruit, retain or develop highly skilled and competent employees; (9) the geographic concentration of our operations; (10) government regulation risks; (11) adverse changes in the availability or volatility of mortgage financing; (12) severe weather events or natural disasters; (13) difficulty in obtaining sufficient capital to fund our growth; (14) our ability to meet our debt service obligations; (15) a decline in the value of our inventories and resulting write-downs of the carrying value of our real estate assets; (16) our ability to adequately self-insure; and (17) changes in accounting standards that adversely affect our reported earnings or financial condition.

Current wording

These forward-looking statements reflect our current views about future events and are subject to risks, uncertainties and assumptions. We wish to caution readers that certain important factors may have affected and could in the future affect our actual results and could cause actual results to differ significantly from what is anticipated by our forward-looking statements. These risks include, but are not limited to: (1) general economic conditions in our markets, seasonality, cyclicality and competition in the homebuilding industry; (2) changes in macroeconomic conditions, including interest rates, that could adversely impact demand for new homes or the ability of our buyers to qualify; (3) shortages, delays or increased costs or performance issues of raw materials, or increases in other operating costs, including costs related to labor, real estate taxes and insurance, which in each case exceed our ability to increase prices; (4) significant periods of inflation or deflation; (5) a shortage of labor, (6) an inability to acquire land in our markets at anticipated prices or difficulty in obtaining land-use entitlements; (7) our inability to successfully execute our strategies, including the successful development of our communities within expected timeframes and the growth and expansion of our Trophy brand; (8) a failure to recruit, retain or develop highly skilled and competent employees; (9) the geographic concentration of our operations; (10) government regulation risks; (11) adverse changes in the availability or volatility of mortgage financing; (12) severe weather events or natural disasters; (13) difficulty in obtaining sufficient capital to fund our growth; (14) our ability to meet our debt service obligations; (15) a decline in the value of our inventories and resulting write-downs of the carrying value of our real estate assets; (16) our ability to adequately self-insure; and (17) changes in accounting standards that adversely affect our reported earnings or financial condition.

Previous wording

Our key financial and operating metrics are home deliveries, home closings revenue, average sales price of homes delivered, and net new home orders, which refers to the number of sales contracts executed reduced by the number of sales contracts canceled during the relevant period. Our results for each key financial and operating metric, as compared to the year ended December 31, 2022, are provided below:

Current wording

Our key financial and operating metrics are home deliveries, home closings revenue, average sales price of homes delivered, net new home orders, which refers to the number of sales contracts executed reduced by the number of sales contracts canceled during the relevant period, and homebuilding gross margin. Our results for each key financial and operating metric, as compared to the year ended December 31, 2023, are provided below:

Previous wording

Among the 12 largest metropolitan areas in the country, the Dallas and Atlanta areas ranked first and seventh, respectively, in annual rate of job growth from November 2022 to November 2023 (Source: US Bureau of Labor Statistics, November 2023). We believe we operate in two of the most desirable housing markets in the nation and that increasing demand and supply levels in our target markets create favorable conditions for our future growth.

Current wording

Among the 12 largest metropolitan areas in the country, the Dallas and Atlanta areas ranked second and tenth, respectively, in annual rate of job growth from November 2023 to November 2024 (Source: US Bureau of Labor Statistics, November 2024). We believe we operate in two of the most desirable housing markets in the nation and that increasing demand and supply levels in our target markets create favorable conditions for our future growth.

Previous wording

The $65.3 million increase in residential units revenue was driven by the 7.1% increase in the number of homes delivered partially offset by a 2.7% decrease in average sales price of new homes delivered. The increase in new homes delivered is attributable to the limited competition in our infill and infill-adjacent community sites, our reduced cycle times, and the continued low supply of existing and new home inventory in our markets. The decrease in the average sales price of homes delivered is attributable to an increase in the percentage of home deliveries by Trophy Signature Homes, Centre Living Homes, and CB JENI Homes over last year. These homebuilders had an average sales price below the Company average due to a mix of product type and selling more inventory in perimeter locations.

Current wording

The $300.9 million increase in residential units revenue was driven by the 21.1% increase in the number of homes delivered partially offset by a 3.4% decrease in average sales price of new homes delivered. The increase in new homes delivered is attributable to our increase in community count, the limited competition in our infill and infill-adjacent community sites, our reduced cycle times, and the continued low supply of existing and new home inventory in our markets. The decrease in the average sales price of homes delivered is primarily attributable to an increase in the percentage of home deliveries by

Previous wording

Net new home orders increased by 70.1% over the prior year, and our absorption rate per average active selling community increased 52.3% year over year. The increase in net new home orders is attributable to the increase in our active selling communities, the limited competition in our infill and infill-adjacent community sites, improved homebuyer sentiment, and the continued low supply of existing and new home inventory in our markets.

Current wording

Net new home orders increased by 9.7% over the prior year and our average active selling communities increased by 18.8% due to the continued opening of new communities that outpaced the sellout of existing communities. As a result, our absorption rate per average active selling community decreased 8.1% year over year, which we believe is due to elevated mortgage rates, high interest rate volatility, and the lock-in effect of homeowners with existing lower rate mortgages. The increase in net new home orders is attributable to the increase in our active selling communities, the limited competition in our infill and infill-adjacent community sites, and the strength in demand in our primary higher growth markets.

Previous wording

Backlog refers to homes under sales contracts that have not yet closed at the end of the relevant period, and absorption rate refers to the rate at which net new home orders are contracted per average active selling community during the relevant period. There are instances in which sales contracts are canceled after execution, such as when the homebuyer cancels because of the inability to obtain suitable mortgage financing within a contractually specified time period. Accordingly, backlog may not be indicative of our future revenue.

Current wording

Backlog refers to homes under sales contracts that have not yet closed at the end of the respective period, and absorption rate refers to the rate at which net new home orders are contracted per average active selling community during the respective period. Sales contracts may be canceled prior to closing for a number of reasons, including the inability of the homebuyer to obtain suitable mortgage financing. Accordingly, backlog may not be indicative of our future revenue.

Previous wording

Backlog increased by 50.4% with a 43.4% increase in backlog units and a 4.9% increase in the average sales price of backlog units. As a result, our spec units under construction as a percentage of total units under construction declined from 73.4% as of December 31, 2022 to 69.8% as of December 31, 2023.

Current wording

Backlog revenue decreased by 10.7% due to a 13.2% decrease in backlog units partially offset by a 3.0% increase in the average sales price of backlog units. As a result, our spec units under construction as a percentage of total units under construction increased from 69.8% as of December 31, 2023 to 75.6% as of December 31, 2024.

Previous wording

Our cancellation rate, which refers to sales contracts canceled divided by sales contracts executed during the relevant period, was 6.6% for the year ended December 31, 2023, compared to 13.8% for the year ended December 31, 2022.

Current wording

Our cancellation rate, which refers to sales contracts canceled divided by sales contracts executed during the relevant period, was 7.3% for the year ended December 31, 2024, compared to 6.6% for the year ended December 31, 2023. Our cancellation rate remained in a historically low range under 10.0% since December 31, 2022.

Previous wording

Residential units revenue increased by $65.3 million or 3.8% during the year ended December 31, 2023 due to the increase in home deliveries partially offset by a reduction in average sales price. Cost of residential units for the year ended December 31, 2023 increased by $26.2 million, or 2.2%, compared to the year ended December 31, 2022 due to the increase in units delivered.

Current wording

Residential units revenue increased by $300.9 million or 17.0% during the year ended December 31, 2024, mainly due to an increase in home deliveries of 21.1% partially offset by a 3.4% reduction in average sales price of homes delivered as discussed above. Cost of residential units as a percent of residential units revenue for the year ended December 31, 2024 decreased to 66.2% compared to 69.1% in the previous year due to a combination of product mix and a focus on delivering more affordable product to combat high interest rates.

Previous wording

The residential units gross margin percentage for the year ended December 31, 2023 increased to 30.9%, compared to 29.8% for the year ended December 31, 2022. The increase in residential units gross margin is primarily due to strong sales, lower construction costs, and limited competition in our infill and infill-adjacent community sites.

Current wording

Residential units gross margin for the year ended December 31, 2024 increased to 33.8%, compared to 30.9% for the year ended December 31, 2023. The increase in residential units gross margin is primarily due to limited competition in our infill and infill-adjacent community sites, our self-development strategy, our high growth primary markets of DFW and Atlanta, our infill locations, and our expertise in site selection.

Previous wording

From time to time, we will opportunistically sell finished lots to other homebuilders when we determine that we have excess capacity in specific neighborhoods or submarkets. Lots revenue decreased by 61.1% during the year ended December 31, 2023, driven by a 74.7% decrease in the number of lots closed partially offset by a 53.4% increase in the average lot price. Land revenue represents sales of tracts of land during the year ended December 31, 2022 and 2023.

Current wording

From time to time we will opportunistically sell finished lots to other homebuilders when we determine that we have excess capacity in specific neighborhoods or submarkets. Lots revenue increased by 98.3% during the year ended December 31, 2024, driven by a 153.4% increase in the number of lots closed partially offset by a 21.7% decrease in the average lot price. Land revenue represents sales of two tracts of commercial land during the year ended December 31, 2024.

Previous wording

Selling, general and administrative expense as a percentage of revenue increased by 1.6% for the year ended December 31, 2023 compared to the year ended December 31, 2022, primarily due to an increase in brokerage commissions.

Current wording

Selling, general and administrative expense as a percentage of revenue was 10.8% for the year ended December 31, 2024, which is substantially in line with 10.9% for the year ended December 31, 2023.

Previous wording

Selling, general and administrative expenses as a percentage of revenue for builder operations increased from 9.5% to 10.9% due to an increase in brokerage commissions. Builder operations expenditures include salaries, sales commissions, and community costs such as advertising and marketing expenses, rent, professional fees, and non-capitalized property taxes.

Current wording

Selling, general and administrative expenses as a percentage of revenue for builder operations remained flat year over year. Builder operations expenditures include salaries, sales commissions, and community costs such as advertising and marketing expenses, rent, professional fees, and non-capitalized property taxes.

Previous wording

Selling, general and administrative expense for the corporate, other and unallocated non-operating segment for the year ended December 31, 2023 was income of $0.3 million, compared to income of $3.5 million for the year ended December 31, 2022. The change was driven primarily by an increase in capitalized overhead adjustments that are not allocated to our builder operations and land development segments.

Current wording

Selling, general and administrative expense for the corporate, other and unallocated non-operating segment for the year ended December 31, 2024 was $8.1 million, compared to income of $0.3 million for the year ended December 31, 2023. The increase was driven by incentive compensation and charitable donations during the year ended December 31, 2024. Corporate, other and unallocated expenses generally include capitalized overhead adjustments that are not allocated to builder operations segments.

Previous wording

Equity in income of unconsolidated entities decreased to $16.7 million, or 34.7%, for the year ended December 31, 2023, compared to $25.6 million for the year ended December 31, 2022, primarily due to a decrease in earnings from GB Challenger. See Note 5 to our consolidated financial statements included in Part II, Item 8 of this Annual Report on Form 10-K for a summary of Green Brick’s share in net earnings by unconsolidated entity.

Current wording

Equity in income of unconsolidated entities decreased to $5.1 million, or 69.6%, for the year ended December 31, 2024, compared to $16.7 million for the year ended December 31, 2023. This decrease is mainly due to the sale of our ownership interest in Challenger during the three months ended March 31, 2024, wherein, we recognized only one month of net earnings from this investment during 2024 compared to twelve months in the prior year. See Note 5 to our consolidated financial statements included in Part II, Item 8 of this Annual Report on Form 10-K for a summary of Green Brick’s share in net earnings by unconsolidated entity.

Previous wording

Other income, net, increased to $19.4 million for the year ended December 31, 2023, compared to $11.8 million for the year ended December 31, 2022. The change was primarily due to an increase in interest income.

Current wording

Other income, net, increased to $29.8 million for the year ended December 31, 2024, compared to $19.4 million for the year ended December 31, 2023. The change was primarily due to a $10.7 million gain in the sale of our investment in Challenger.

Previous wording

Income tax expense increased to $84.6 million for the year ended December 31, 2023 from $82.5 million for the year ended December 31, 2022. The increase was primarily due to a reduction in Section 45L tax credits and increased state tax expense. See Note 13 to our consolidated financial statements included in Part II, Item 8 of this Annual Report on Form 10-K for a discussion on the Company’s income tax expense for the year ended December 31, 2023.

Current wording

Income tax expense increased to $94.7 million for the year ended December 31, 2024 from $84.6 million for the year ended December 31, 2023. The increase was substantially due to higher taxable income partially offset by investment tax credits purchased at a discount and an income tax benefit for equity compensation deductions. See Note 13 to our consolidated financial statements included in Part II, Item 8 of this Annual Report on Form 10-K for a discussion on the Company’s income tax expense for the year ended December 31, 2024.

Previous wording

The following table presents the lots we owned or controlled, including lot option contracts, as of December 31, 2023 and December 31, 2022. Owned lots are those for which we hold title, while controlled lots are lots past feasibility studies for which we do not hold title, but have the contractual right to acquire title.

Current wording

The following table presents the lots we owned or controlled, including lot option contracts, as of December 31, 2024 and December 31, 2023. Owned lots are those for which we hold title, while controlled lots are lots past feasibility studies and approved by land committee for which we do not hold title, but have the contractual right to acquire title.

Previous wording

(1) Total lots owned includes finished lot purchases, which were less than 3.2% of total lots self-developed as of December 31, 2023.

Current wording

(1) Total lots owned includes finished lot purchases, which were less than 1.4% of total lots self-developed as of December 31, 2024.

Previous wording

As of December 31, 2023 and December 31, 2022, we had $179.8 million and $76.6 million of unrestricted cash, respectively. Our historical cash management strategy includes redeploying net cash from the sale of home inventory to acquire and develop land and lots that represent opportunities to generate desired margins and returns, and using cash to make additional investments in business acquisitions, joint ventures, or other strategic activities.

Current wording

As of December 31, 2024 and December 31, 2023, we had $141.5 million and $179.8 million of unrestricted cash and cash equivalents, respectively. Our historical cash management strategy includes redeploying net cash from the sale of home inventory to acquire and develop land and lots that represent opportunities to generate desired margins and returns, and using cash to make additional investments in business acquisitions, joint ventures, or other strategic activities.

Previous wording

Our principal uses of capital for the year ended December 31, 2023 were home construction, land purchases, land development, repayments of lines of credit, operating expenses, payment of routine liabilities and stock repurchases. Historically, we have used funds generated by operations and available borrowings to meet our short-term working capital requirements. We remain focused on generating positive margins in our homebuilding operations and acquiring desirable land positions in order to maintain a strong balance sheet and remain poised for continued growth.

Current wording

Our principal uses of capital for the year ended December 31, 2024 were home construction, land purchases, land development, operating expenses, and payment of routine liabilities. Historically, we have used funds generated by operations and available borrowings to meet our short-term working capital requirements. We remain focused on generating positive margins in our homebuilding operations and acquiring desirable land positions in order to maintain a strong balance sheet and remain poised for continued growth.

Previous wording

Our debt to total capitalization ratio, which is calculated as the sum of borrowings on lines of credit, the senior unsecured notes, and notes payable, net of debt issuance costs (“total debt”), divided by the total capitalization, which equals the sum of Green Brick Partners, Inc. stockholders’ equity and total debt, was approximately 21.1% as of December 31, 2023.

Current wording

Our debt to total capitalization ratio, which is calculated as the sum of borrowings on lines of credit, the senior unsecured notes, and notes payable, net of debt issuance costs (“total debt”), divided by the total capitalization, which equals the sum of Green Brick Partners, Inc. stockholders’ equity and total debt, was approximately 17.2% as of December 31, 2024.

Previous wording

Additionally, as of December 31, 2023, our net debt to total capitalization ratio, which is a non-GAAP financial measure, remained low at 11.4%. It is our intent to prudently employ leverage to continue to invest in our land acquisition, development and homebuilding activities. We target a debt to total capitalization ratio of approximately 30%, which we expect will provide us with significant additional growth capital.

Current wording

Additionally, as of December 31, 2024, our net debt to total capitalization ratio, which is a non-GAAP financial measure, remained low at 10.7%. It is our intent to prudently employ leverage to continue to invest in our land acquisition, development and homebuilding activities. We target a debt to total capitalization ratio of approximately 20%, which we expect will provide us with significant additional growth capital.

Previous wording

In this Annual Report on Form 10-K, we utilize a financial measure of net debt to total capitalization ratio that is a non-GAAP financial measure as defined by the Securities and Exchange Commission (“SEC”). Net debt to total capitalization is calculated as total debt less cash and cash equivalents, divided by the sum of total Green Brick Partners, Inc. stockholders’ equity and total debt less cash and cash equivalents. We present this measure because we believe it is useful to management and investors in evaluating the Company’s financing structure. We also believe this measure facilitates the comparison of our financing structure with other companies in our industry. Because this measure is not calculated in accordance with U.S. Generally Accepted Accounting Principles (“GAAP”), it may not be comparable to other similarly titled measures of other companies and should not be considered in isolation, as a substitute for, or superior to, financial measures prepared in accordance with GAAP.

Current wording

In this Annual Report on Form 10-K, we utilize a financial measure of net debt to total capitalization ratio that is a non-GAAP financial measure as defined by the SEC. Net debt to total capitalization is calculated as total debt less cash and cash equivalents, divided by the sum of total Green Brick Partners, Inc. stockholders’ equity and total debt less cash and cash equivalents. We present this measure because we believe it is useful to management and investors in evaluating the Company’s financing structure. We also believe this measure facilitates the comparison of our financing structure with other companies in our industry. Because this measure is not calculated in accordance with U.S. Generally Accepted Accounting Principles (“GAAP”), it may not be comparable to other similarly titled measures of other companies and should not be considered in isolation, as a substitute for, or superior to, financial measures prepared in accordance with GAAP.

Previous wording

•Operating activities. Net cash provided by operating activities for the year ended December 31, 2023 was $213.3 million, compared to $90.7 million during the year ended December 31, 2022. The net cash inflows for the year ended December 31, 2023 were primarily generated from business operations of $306.7 million, partially offset by an increase in inventory of $109.2 million.

Current wording

•Operating activities. Net cash provided by operating activities for the year ended December 31, 2024 was $25.9 million, compared to $213.3 million during the year ended December 31, 2023. The net cash inflows for the year ended December 31, 2024 were primarily generated from business operations of $417.2 million offset by an increase in inventory of $403.3 million.

Previous wording

•Financing activities. Net cash used in financing activities for the year ended December 31, 2023 was $93.8 million, compared to a $84.5 million during the year ended December 31, 2022. The cash outflows for the year ended December 31, 2023 were primarily for share repurchases of $45.8 million, net repayments on our lines of credit of $20.0 million and distributions to noncontrolling interests of $19.1 million.

Current wording

•Financing activities. Net cash used in financing activities for the year ended December 31, 2024 was $93.5 million, compared to a $93.8 million during the year ended December 31, 2023. The cash outflows for the year ended December 31, 2024 were primarily related to share repurchases of $48.4 million, net borrowings on our lines of credit of $25.0 million, and repayments of our senior unsecured notes of $37.5 million.

Previous wording

Secured Revolving Credit Facility –As of December 31, 2023 and 2022, we had no outstanding amounts under our Secured Revolving Credit Facility. Borrowings under the Secured Revolving Credit Facility bear interest at a floating rate per annum equal to the rate announced by Bank of America, N.A. as its “Prime Rate” less 0.25%, subject to a minimum rate. On February 9, 2022, the Company entered into the Eighth Amendment to this credit agreement to extend its maturity date to May 1, 2025 and to reduce the minimum interest rate from 4.00% to 3.15%. All other material terms of the credit agreement, as amended, remained unchanged.

Current wording

Secured Revolving Credit Facility –As of December 31, 2024 and 2023, we had no outstanding amounts under our Secured Revolving Credit Facility. Borrowings under the Secured Revolving Credit Facility bear interest at a floating rate per annum equal to the rate announced by Bank of America, N.A. as its “Prime Rate” less 0.25%, subject to a minimum rate. As amended, this credit agreement matures on May 1, 2025 and carries a minimum interest rate of 3.15%.

Previous wording

Unsecured Revolving Credit Facility –As of December 31, 2023, we had no amounts outstanding under our Unsecured Revolving Credit facility compared to $20 million as of December 31, 2022. On December 8, 2023, the Company entered into the Eleventh Amendment to this credit agreement which revised certain financial covenants in order to appropriately reflect the Company’s size and growth. The Eleventh Amendment also extends the maturity of $300.0 million of the commitments under the credit facility through December 14, 2026, with the remaining $25.0 million commitment expiring December 14, 2025.

Current wording

Unsecured Revolving Credit Facility –As of December 31, 2024, we had $25 million outstanding under our Unsecured Revolving Credit facility compared no amounts outstanding as of December 31, 2023. On December 13, 2024, the Company entered into the Twelfth Amendment (the “Twelfth Amendment”) to this credit agreement which adopted a leverage-based pricing grid for a reduction in both interest rate and non-use fee and other administrative changes. The Twelfth Amendment removed one lender with a $25 million prior commitment and added $30 million in new commitments, thereby increasing total commitments to $330 million. The maturity of all commitments under the facility were extended to December 14, 2027.

Previous wording

Senior Unsecured Notes -As of December 31, 2023, we had four series of senior unsecured notes outstanding which were each issued pursuant to a note purchase agreement. The aggregate amount of senior unsecured notes outstanding was $336.2 million as of December 31, 2023, compared to $335.8 million as of December 31, 2022, respectively, net of issuance costs.

Current wording

Senior Unsecured Notes -As of December 31, 2024, we had four series of senior unsecured notes outstanding which were each issued pursuant to a note purchase agreement. The aggregate amount of senior unsecured notes outstanding was $299.1 million as of December 31, 2024, compared to $336.2 million as of December 31, 2023, respectively, net of issuance costs.

Previous wording

•In August 2019, we issued $75.0 million of senior unsecured notes (the “2026 Notes”). Interest accrues at an annual rate of 4.0% and is payable quarterly. Principal on the 2026 Notes is required to be paid in increments of $12.5 million on each of August 8, 2024 and August 8, 2025 with a final principal payment of $50.0 million on August 8, 2026.

Current wording

•In August 2019, we issued $75.0 million of senior unsecured notes (the “2026 Notes”) of which $62.5 million was outstanding as of December 31, 2024. Interest accrues at an annual rate of 4.0% and is payable quarterly. Principal on the 2026 Notes of $12.5 million is due on August 8, 2025 and the remaining principal amount of $50.0 million is due on August 8, 2026.

Previous wording

•In February 2021, we issued $125.0 million of senior unsecured notes (the “2028 Notes”). Interest accrues at an annual rate of 3.25% and is payable quarterly. Principal on the 2028 Notes is due in increments of $25.0 million annually on February 25 in each of 2024, 2025, 2026, 2027, and 2028.

Current wording

•In February 2021, we issued $125.0 million of senior unsecured notes (the “2028 Notes”) of which $100.0 million was outstanding as of December 31, 2024. Interest accrues at an annual rate of 3.25% and is payable quarterly. Principal on the 2028 Notes is due in increments of $25.0 million annually on February 25 in each of 2025, 2026, 2027, and 2028.

Previous wording

•a minimum interest coverage (consolidated EBITDA to interest incurred) of no less than 2.0 to 1.0. As of December 31, 2023, our interest coverage on a last 12 months’ basis was 26.4 to 1.0;

Current wording

•a minimum interest coverage (consolidated EBITDA to interest incurred) of no less than 2.0 to 1.0. As of December 31, 2024, our interest coverage on a last 12 months’ basis was 34.76 to 1.0;

Previous wording

•a Consolidated Tangible Net Worth of no less than approximately $820.8 million. As of December 31, 2023, our Consolidated Tangible Net Worth was $1,298.9 million; and

Current wording

•a Consolidated Tangible Net Worth of no less than approximately $1,010.7 million. As of December 31, 2024, our Consolidated Tangible Net Worth was $1,621.9 million; and

Previous wording

•a maximum debt to total capitalization rolling average ratio of no more than 40.0%. As of December 31, 2023, we had a rolling average ratio of 21.9%.

Current wording

•a maximum debt to total capitalization rolling average ratio of no more than 40.0%. As of December 31, 2024, we had a rolling average ratio of 18.0%.

Previous wording

As of December 31, 2023 and December 31, 2022 we had 2,000,000 Depositary Shares issued and outstanding, each representing 1/1000 of a share of our 5.75% Series A Cumulative Perpetual Preferred Stock (the “Series A Preferred Stock”). We pay cumulative cash dividends on the Series A Preferred Stock, when and as declared by the Board, at the rate of 5.75% of the $25,000 liquidation preference per share. Dividends are payable quarterly in arrears. During the year ended December 31, 2023 and December 31, 2022, we paid dividends of $2.9 million and $2.8 million, respectively, on the Series A Preferred Stock. As the series A Preferred Stock was issued in December 2021, no dividend payments were made during the year ended December 31, 2021. On February 15, 2024, the Board declared a quarterly cash dividend of $0.359 per depositary share on the Series A Preferred Stock. The dividend is payable on March 15, 2024 to stockholders of record as of March 1, 2024.

Current wording

As of December 31, 2024 and December 31, 2023 we had 2,000,000 Depositary Shares issued and outstanding, each representing 1/1000 of a share of our 5.75% Series A Cumulative Perpetual Preferred Stock (the “Series A Preferred Stock”). We pay cumulative cash dividends on the Series A Preferred Stock, when and as declared by the Board, at the rate of 5.75% of the $25,000 liquidation preference per share. Dividends are payable quarterly in arrears. During each of the years ended December 31, 2024 and 2023, we paid dividends of $2.9 million on the Series A Preferred Stock. During the year ended December 31, 2022, we paid dividends of $2.8 million. On February 17, 2025, the Board declared a quarterly cash dividend of $0.359 per depositary share on the Series A Preferred Stock. The dividend is payable on March 15, 2025 to stockholders of record as of March 1, 2025.

Previous wording

We also utilize option contracts with lot sellers as a method of acquiring lots in staged takedowns, which are the schedules that dictate when lots must be purchased to help manage the financial and market risk associated with land holdings, and to reduce the use of funds from our corporate financing sources. Lot option contracts generally require us to pay a non-refundable deposit for the right to acquire lots over a specified period of time at pre-determined prices that typically include escalations in lot prices over time.

Current wording

To a much lesser extent due to limited availability in our market of true lot developers, we also utilize option contracts with lot sellers as a method of acquiring lots in staged takedowns, which are the schedules that dictate when lots must be purchased to help manage the financial and market risk associated with land holdings, and to reduce the use of funds from our corporate financing sources. Lot option contracts generally require us to pay a non-refundable deposit for the right to acquire lots over a specified period of time at pre-determined prices that typically include escalations in lot prices over time.

Previous wording

Our utilization of lot option contracts is dependent on, among other things, the availability of land sellers willing to enter into these arrangements, the availability of capital to finance the development of optioned lots, general housing market conditions and local market dynamics. Options may be more difficult to procure from land sellers in strong housing markets and are more prevalent in certain geographic regions.

Current wording

Our utilization of lot option contracts is dependent on, among other things, the availability of lot developers willing to enter into these arrangements, the availability of capital to finance the development of optioned lots, general housing market conditions, and local market dynamics. Options may be more difficult to procure from land sellers in strong housing markets and are more prevalent in certain geographic regions.

Previous wording

As of December 31, 2023, we had earnest money deposits of $13.4 million at risk associated with contracts to purchase 3,757 lots past feasibility studies with an aggregate purchase price of approximately $177.0 million.

Current wording

As of December 31, 2024, we had earnest money deposits of $9.7 million at risk associated with contracts to purchase 2,975 lots past feasibility studies with an aggregate purchase price of approximately $160.3 million.

Previous wording

For our builder operations segments, during each reporting period, contribution margins on closed homes, average margins of homes under construction, and forecasted margins for future starts are reviewed at a community level by management. In the event that this review suggests higher potential for losses at a specific community, the Company monitors such communities by adding them to our “watchlist” communities, and, when an impairment indicator is present, further analysis is performed.

Current wording

For our builder operations segments, during each reporting period, contribution margins on closed homes and homes under construction, and forecasted margins for future starts are reviewed at a community level by management. In the event that this review suggests higher potential for losses at a specific community, the Company monitors such communities by adding them to our “watchlist” communities, and, when an impairment indicator is present, further analysis is performed.