UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

_____________________________________________________________________________________________

FORM 10-Q

_____________________________________________________________________________________________

(Mark One)



☒			QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended ~~September~~June 30, ~~2017~~2020



☐			TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period fromto

Commission File Number 1-35796

_____________________________________________________________________________________________

TRI Pointe Group, Inc.

(Exact Name of Registrant as Specified in Its Charter)

_____________________________________________________________________________________________



Delaware						61-1763235
(State or other Jurisdiction of Incorporation or Organization)						(I.R.S. Employer Identification No.)

_____________________________________________________________________________________________

19540 Jamboree Road, Suite 300

Irvine, California 92612

(Address of principal executive offices) (Zip Code)

Registrant’s telephone number, including area code (949) 438-1400

~~_____________________________________________________________________________________________~~ Not Applicable

(Former name, former address and former fiscal year, if changed since last report)

____________________________________________________________________________________________________

Securities registered pursuant to Section 12(b) of the Act:

Title of each class

Trading Symbol(s)

Name of each exchange on which registered

Common Stock, par value $0.01 per share

TPH

New York Stock Exchange

Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically ~~and posted on its corporate Web site, if any,~~ every Interactive Data File required to be submitted ~~and posted~~ pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit ~~and post~~ such files). Yes ☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company” and ~~"emerging~~“emerging growth ~~company"~~company” in Rule 12b-2 of the Exchange Act.



Large accelerated filer	☒	Accelerated filer	☐
Non-accelerated filer	☐~~(Do not check if a smaller reporting company)~~	Smaller reporting company	☐
		Emerging ~~Growth Company~~growth company	☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒

~~150,432,421 shares~~130,325,865 shares of the registrant's common stock were issued and outstanding as of ~~October 16, 2017.~~

July 10, 2020.

~~- 1 -~~

EXPLANATORY NOTE

As used in this Quarterly Report on Form 10-Q, references to “TRI Pointe”, ~~“the Company”~~the “Company”, “we”, “us”, or “our” (including in the consolidated financial statements and related notes thereto in this report) refer to TRI Pointe Group, Inc., a Delaware corporation (“TRI Pointe Group”) and its consolidated subsidiaries.

~~- 2 -~~

TRI POINTE GROUP, INC.

QUARTERLY REPORT ON FORM 10-Q

INDEX

~~September~~June 30, ~~2017~~2020

Page
Number

PART I. FINANCIAL INFORMATION

Item 1.

~~Page~~Financial Statements

~~Number~~3

~~PART I. FINANCIAL INFORMATION~~

~~Item 1.~~

~~Financial Statements~~

Consolidated Balance Sheets as of ~~September~~June 30 ~~2017~~, 2020 (unaudited) and December 31, ~~2016~~2019

Consolidated Statements of Operations for the Three and ~~Nine~~Six Months Ended ~~September~~June 30 ~~2017~~, 2020 and ~~2016~~2019 (unaudited)

Consolidated Statements of Equity for the ~~Year Ended December 31, 2016~~ Three and ~~the Nine~~ Six Months Ended ~~September~~June 30 ~~2017~~, 2020 and 2019 (unaudited)

Consolidated Statements of Cash Flows for the ~~Nine~~Six Months Ended ~~September~~June 30 ~~2017~~, 2020 and ~~2016~~2019 (unaudited)

~~Condensed~~ Notes to Consolidated Financial Statements (unaudited)

Item 2.

Management’s Discussion and Analysis of Financial Condition and Results of Operations

3534

Item 3.

Quantitative and Qualitative Disclosures About Market Risk

5859

Item 4.

Controls and Procedures

5859

Part II. OTHER INFORMATION

Item 1.

Legal Proceedings

Item 1.1A.

~~Legal Proceedings~~Risk Factors

5960

Item ~~1A.~~2.

~~Risk Factors~~

~~Item 2.~~

Unregistered Sales of Equity Securities and Use of Proceeds

Item 6.

- 2 -

PART I. FINANCIAL INFORMATION


~~Item 1.~~	~~Financial Statements~~

Item 1. Financial Statements

TRI POINTE GROUP, INC.

CONSOLIDATED BALANCE SHEETS

(in thousands, except share and per share amounts)


	September 30, 2017		December 31, 2016			June 30, 2020		December 31, 2019
	(unaudited)					(unaudited)
Assets					Assets
Cash and cash equivalents	$	162,396	$	208,657	Cash and cash equivalents	$	474,545	$	329,011
Receivables	84,583		82,500		Receivables	87,580		69,276
Real estate inventories	3,303,421		2,910,627		Real estate inventories	3,012,622		3,065,436
Investments in unconsolidated entities	17,616		17,546		Investments in unconsolidated entities	36,040		11,745
Goodwill and other intangible assets, net	161,094		161,495		Goodwill and other intangible assets, net	159,626		159,893
Deferred tax assets, net	108,664		123,223		Deferred tax assets, net	39,744		49,904
Other assets	58,292		60,592		Other assets	167,747		173,425
Total assets	$	3,896,066	$	3,564,640	Total assets	$	3,977,904	$	3,858,690
Liabilities					Liabilities
Accounts payable	$	64,038	$	70,252	Accounts payable	$	71,086	$	66,120
Accrued expenses and other liabilities	316,487		263,845		Accrued expenses and other liabilities	314,818		322,043
Unsecured revolving credit facility	200,000		200,000
Seller financed loan	—		13,726
Loans payable					Loans payable	250,000		250,000
Senior notes, net	1,469,558		1,168,307		Senior notes, net	1,166,189		1,033,985
Total liabilities	2,050,083		1,716,130		Total liabilities	1,802,093		1,672,148

Commitments and contingencies (Note 13)					Commitments and contingencies (Note 13)

Equity					Equity
Stockholders’ Equity:
Preferred stock, $0.01 par value, 50,000,000 shares authorized; no shares issued and outstanding as of September 30, 2017 and December 31, 2016, respectively	—		—
Common stock, $0.01 par value, 500,000,000 shares authorized; 150,429,021 and 158,626,229 shares issued and outstanding at September 30, 2017 and December 31, 2016, respectively	1,504		1,586
Stockholders’ equity:					Stockholders’ equity:
Preferred stock, $0.01 par value, 50,000,000 shares authorized; 0 shares issued and outstanding as of June 30, 2020 and December 31, 2019, respectively					Preferred stock, $0.01 par value, 50,000,000 shares authorized; 0 shares issued and outstanding as of June 30, 2020 and December 31, 2019, respectively	—		—
Common stock, $0.01 par value, 500,000,000 shares authorized; 130,325,865 and 136,149,633 shares issued and outstanding at June 30, 2020 and December 31, 2019, respectively					Common stock, $0.01 par value, 500,000,000 shares authorized; 130,325,865 and 136,149,633 shares issued and outstanding at June 30, 2020 and December 31, 2019, respectively	1,303		1,361
Additional paid-in capital	780,715		880,822		Additional paid-in capital	482,111		581,195
Retained earnings	1,060,210		947,039		Retained earnings	1,692,385		1,603,974
Total stockholders’ equity	1,842,429		1,829,447		Total stockholders’ equity	2,175,799		2,186,530
Noncontrolling interests	3,554		19,063		Noncontrolling interests	12		12
Total equity	1,845,983		1,848,510		Total equity	2,175,811		2,186,542
Total liabilities and equity	$	3,896,066	$	3,564,640	Total liabilities and equity	$	3,977,904	$	3,858,690

See accompanying condensed notes to the unaudited consolidated financial statements.

- 3 -

TRI POINTE GROUP, INC.

CONSOLIDATED STATEMENTS OF OPERATIONS

(unaudited)

(in thousands, except share and per share amounts)


	Three Months Ended September 30,						Nine Months Ended September 30,							Three Months Ended June 30,						Six Months Ended June 30,
	2017			2016			2017			2016				2020		2019		2020		2019
Homebuilding:													Homebuilding:
Home sales revenue	$	648,638		$	578,653		$	1,609,458		$	1,558,633		Home sales revenue	$	766,942	$	692,138	$	1,361,780	$	1,184,841
Land and lot sales revenue	68,218			2,535			69,661			70,204			Land and lot sales revenue	220		5,183		220		6,212
Other operations revenue	584			606			1,752			1,790			Other operations revenue	648		637		1,266		1,235
Total revenues	717,440			581,794			1,680,871			1,630,627			Total revenues	767,810		697,958		1,363,266		1,192,288
Cost of home sales	521,918			462,323			1,294,563			1,219,560			Cost of home sales	601,434		574,684		1,074,316		996,220
Cost of land and lot sales	12,001			1,734			13,299			16,973			Cost of land and lot sales	374		5,562		576		7,057
Other operations expense	575			575			1,726			1,724			Other operations expense	624		627		1,248		1,217
Sales and marketing	33,179			31,852			92,209			90,621			Sales and marketing	45,194		47,065		87,831		86,054
General and administrative	32,956			31,278			101,293			90,293			General and administrative	37,554		36,854		77,391		75,451
Restructuring charges													Restructuring charges	5,549		—		5,549		—
Homebuilding income from operations	116,811			54,032			177,781			211,456			Homebuilding income from operations	77,081		33,166		116,355		26,289
Equity in (loss) income of unconsolidated entities	—			(20		)	1,646			181
Other income, net	26			21			147			287
Equity in loss of unconsolidated entities													Equity in loss of unconsolidated entities	(25)		(26)		(39)		(51)
Other (expense) income, net													Other (expense) income, net	(6,328)		153		(5,955)		6,394
Homebuilding income before income taxes	116,837			54,033			179,574			211,924			Homebuilding income before income taxes	70,728		33,293		110,361		32,632
Financial Services:													Financial Services:
Revenues	295			235			881			762			Revenues	2,296		756		3,890		1,058
Expenses	82			72			233			183			Expenses	1,285		627		2,364		948
Equity in income of unconsolidated entities	1,351			1,247			2,911			3,246			Equity in income of unconsolidated entities	2,932		1,972		4,488		2,747
Financial services income before income taxes	1,564			1,410			3,559			3,825			Financial services income before income taxes	3,943		2,101		6,014		2,857
Income before income taxes	118,401			55,443			183,133			215,749			Income before income taxes	74,671		35,394		116,375		35,489
Provision for income taxes	(46,112		)	(20,298		)	(69,824		)	(77,701		)	Provision for income taxes	(18,143)		(9,132)		(27,964)		(9,156)
Net income	72,289			35,145			113,309			138,048			Net income	$	56,528	$	26,262	$	88,411	$	26,333
Net income attributable to noncontrolling interests	(25		)	(311		)	(138		)	(738		)
Net income available to common stockholders	$	72,264		$	34,834		$	113,171		$	137,310

Earnings per share													Earnings per share
Basic	$	0.48		$	0.22		$	0.73		$	0.85		Basic	$	0.43	$	0.18	$	0.67	$	0.19
Diluted	$	0.48		$	0.22		$	0.73		$	0.85		Diluted	$	0.43	$	0.18	$	0.67	$	0.18
Weighted average shares outstanding													Weighted average shares outstanding
Basic	151,214,744			160,614,055			155,238,206			161,456,520			Basic	130,292,563		142,244,166		132,326,856		142,055,766
Diluted	152,129,825			161,267,509			155,936,076			161,916,352			Diluted	130,506,567		142,471,191		132,763,775		142,431,725

See accompanying condensed notes to the unaudited consolidated financial statements.

- 4 -

TRI POINTE GROUP, INC.

CONSOLIDATED STATEMENTS OF EQUITY

(unaudited)

(in thousands, except share amounts)


	Number of Shares of Common Stock	Common Stock		Additional Paid-in Capital		Retained Earnings		Total Stockholders’ Equity		Noncontrolling Interests		Total Equity
Balance at March 31, 2020	130,236,981	$	1,302	$	478,122	$	1,635,857	$	2,115,281	$	12	$	2,115,293
Net income	—	—		—		56,528		56,528		—		56,528
Shares issued under share-based awards	88,884	1		230		—		231		—		231
Minimum tax withholding paid on behalf of employees for restricted stock units	—	—		(27)		—		(27)		—		(27)
Stock-based compensation expense	—	—		3,786		—		3,786		—		3,786
Share repurchases	—	—		—		—		—		—		—

Balance at June 30, 2020	130,325,865	$	1,303	$	482,111	$	1,692,385	$	2,175,799	$	12	$	2,175,811

	Number of Shares of Common Stock (Note 1)	Common Stock		Additional Paid-in Capital		Retained Earnings		Total Stockholders' Equity		Noncontrolling Interests		Total Equity
Balance at December 31, 2019	136,149,633	$	1,361	$	581,195	$	1,603,974	$	2,186,530	$	12	$	2,186,542
Net income	—	—		—		88,411		88,411		—		88,411
Shares issued under share-based awards	734,555	8		913		—		921		—		921
Minimum tax withholding paid on behalf of employees for restricted stock units	—	—		(5,473)		—		(5,473)		—		(5,473)
Stock-based compensation expense	—	—		7,411		—		7,411		—		7,411
Share repurchases	(6,558,323)	(66)		(101,935)		—		(102,001)		—		(102,001)

Balance at June 30, 2020	130,325,865	$	1,303	$	482,111	$	1,692,385	$	2,175,799	$	12	$	2,175,811

	Number of Shares of Common Stock (Note 1)	Common Stock		Additional Paid-in Capital		Retained Earnings		Total Stockholders' Equity		Noncontrolling Interests		Total Equity
Balance at March 31, 2019	142,210,147	$	1,422	$	658,743	$	1,396,858	$	2,057,023	$	13	$	2,057,036

Net income	—	—		—		26,262		26,262		—		26,262
Shares issued under share-based awards	48,516	1		—		—		1		—		1
Minimum tax withholding paid on behalf of employees for restricted stock units	—	—		(7)		—		(7)		—		(7)
Stock-based compensation expense	—	—		3,351		—		3,351		—		3,351


Balance at June 30, 2019	142,258,663	$	1,423	$	662,087	$	1,423,120	$	2,086,630	$	13	$	2,086,643

	Number of Shares of Common Stock (Note 1)	Common Stock		Additional Paid-in Capital		Retained Earnings		Total Stockholders' Equity		Noncontrolling Interests		Total Equity
Balance at December 31, 2018	141,661,713	$	1,417	$	658,720	$	1,396,787	$	2,056,924	$	13	$	2,056,937

Net income	—	—		—		26,333		26,333		—		26,333
Shares issued under share-based awards	596,950	6		193		—		199		—		199
Minimum tax withholding paid on behalf of employees for restricted stock units	—	—		(3,612)		—		(3,612)		—		(3,612)
Stock-based compensation expense		—		6,786				6,786				6,786


Balance at June 30, 2019	142,258,663	$	1,423	$	662,087	$	1,423,120	$	2,086,630	$	13	$	2,086,643

Number of
Shares of Common
Stock (Note 1)

Common
Stock

Additional
Paid-in
Capital

Retained
Earnings

Total
Stockholders'
Equity

Noncontrolling
Interests

Total
Equity
Balance at December 31, 2015 161,813,750
$ 1,618
$ 911,197
$ 751,868
$ 1,664,683
$ 21,780
$ 1,686,463
Net income —
—
—
195,171
195,171
962
196,133
Shares issued under share-based awards 373,332
4
583
—
587
—
587
Excess tax deficit of share-based awards, net —
—
(165 ) —
(165 ) —
(165 )
Minimum tax withholding paid on behalf of employees for restricted stock units —
—
(1,359 ) —
(1,359 ) —
(1,359 )
Stock-based compensation expense —
—
12,612
—
12,612
—
12,612
Share repurchases (3,560,853 ) (36 ) (42,046 ) —
(42,082 ) —
(42,082 )
Distributions to noncontrolling interests, net —
—
—
—
—
(3,363 ) (3,363 )
Net effect of consolidations, de-consolidations and other transactions —
—
—
—
—
(316 ) (316 )
Balance at December 31, 2016 158,626,229
1,586
880,822
947,039
1,829,447
19,063
1,848,510
Net income —
—
—
113,171
113,171
138
113,309
Shares issued under share-based awards 797,497
8
3,285
—
3,293
—
3,293
Minimum tax withholding paid on behalf of employees for restricted stock units —
—
(2,896 ) —
(2,896 ) —
(2,896 )
Stock-based compensation expense —
—
11,631
—
11,631
—
11,631
Share repurchases (8,994,705 ) (90 ) (112,127 ) —
(112,217 ) —
(112,217 )
Distributions to noncontrolling interests, net —
—
—
—
—
(987 ) (987 )
Net effect of consolidations, de-consolidations and other transactions —
—
—
—
—
(14,660 ) (14,660 )
Balance at September 30, 2017 150,429,021
$ 1,504
$ 780,715
$ 1,060,210
$ 1,842,429
$ 3,554
$ 1,845,983

See accompanying condensed notes to the unaudited consolidated financial statements.

- 5 -

TRI POINTE GROUP, INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS

(unaudited)

(in thousands)


	Nine Months Ended September 30,							Six Months Ended June 30,
	2017			2016				2020		2019
Cash flows from operating activities:							Cash flows from operating activities:
Net income	$	113,309		$	138,048		Net income	$	88,411	$	26,333
Adjustments to reconcile net income to net cash used in operating activities:
Adjustments to reconcile net income to net cash provided by (used in) operating activities:							Adjustments to reconcile net income to net cash provided by (used in) operating activities:
Depreciation and amortization	2,567			2,322			Depreciation and amortization	12,176		11,561
Equity in income of unconsolidated entities, net	(4,557		)	(3,427		)	Equity in income of unconsolidated entities, net	(4,449)		(2,696)
Deferred income taxes, net	14,559			18,770			Deferred income taxes, net	10,160		3,097
Amortization of stock-based compensation	11,631			9,648			Amortization of stock-based compensation	7,411		6,786
Charges for impairments and lot option abandonments	1,203			678			Charges for impairments and lot option abandonments	1,729		5,490
Excess tax deficit of share-based awards	—			(170		)
Changes in assets and liabilities:							Changes in assets and liabilities:
Real estate inventories	(401,322		)	(442,671		)	Real estate inventories	53,902		(50,700)
Receivables	(3,263		)	8,549			Receivables	(18,304)		(6,778)
Other assets	3,894			(16,806		)	Other assets	3,677		(1,774)
Accounts payable	(6,214		)	12,827			Accounts payable	4,966		(18,221)
Accrued expenses and other liabilities	52,640			5,876			Accrued expenses and other liabilities	(5,784)		(80,964)
Returns on investments in unconsolidated entities, net	4,897			5,049			Returns on investments in unconsolidated entities, net	5,475		3,927
Net cash used in operating activities	(210,656		)	(261,307		)
Loss on extinguishment of debt							Loss on extinguishment of debt	6,858		—
Net cash provided by (used in) operating activities							Net cash provided by (used in) operating activities	166,228		(103,939)
Cash flows from investing activities:							Cash flows from investing activities:
Purchases of property and equipment	(2,212		)	(2,056		)	Purchases of property and equipment	(12,002)		(13,142)
Proceeds from sale of property and equipment	6			—			Proceeds from sale of property and equipment	17		46
Investments in unconsolidated entities	(934		)	(32		)	Investments in unconsolidated entities	(25,715)		(712)
Net cash used in investing activities	(3,140		)	(2,088		)	Net cash used in investing activities	(37,700)		(13,808)
Cash flows from financing activities:							Cash flows from financing activities:
Borrowings from debt	500,000			491,069			Borrowings from debt	850,000		400,000
Repayment of debt	(213,726		)	(276,826		)	Repayment of debt	(721,673)		(381,895)
Debt issuance costs	(5,932		)	(5,061		)	Debt issuance costs	(4,768)		(3,125)
Net repayments of debt held by variable interest entities	—			(2,442		)
Contributions from noncontrolling interests	—			1,955
Distributions to noncontrolling interests	(987		)	(5,059		)

Proceeds from issuance of common stock under share-based awards	3,293			461			Proceeds from issuance of common stock under share-based awards	921		199
Minimum tax withholding paid on behalf of employees for share-based awards	(2,896		)	(1,359		)	Minimum tax withholding paid on behalf of employees for share-based awards	(5,473)		(3,612)
Share repurchases	(112,217		)	(25,113		)	Share repurchases	(102,001)		—
Net cash provided by financing activities	167,535			177,625			Net cash provided by financing activities	17,006		11,567
Net decrease in cash and cash equivalents	(46,261		)	(85,770		)
Cash and cash equivalents - beginning of period	208,657			214,485
Cash and cash equivalents - end of period	$	162,396		$	128,715
Net increase (decrease) in cash and cash equivalents							Net increase (decrease) in cash and cash equivalents	145,534		(106,180)
Cash and cash equivalents–beginning of period							Cash and cash equivalents–beginning of period	329,011		277,696
Cash and cash equivalents–end of period							Cash and cash equivalents–end of period	$	474,545	$	171,516

See accompanying condensed notes to the unaudited consolidated financial statements.

- 6 -

TRI POINTE GROUP, INC.

CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(unaudited)


1.	~~Organization, Basis of Presentation and Summary of Significant Accounting Policies~~

1. Organization, Basis of Presentation and Summary of Significant Accounting Policies

Organization

TRI Pointe ~~Group~~ is engaged in the design, construction and sale of innovative single-family attached and detached homes through its portfolio of ~~six~~6 quality brands across ~~eight~~10 states, including Maracay ~~Homes~~ in Arizona, Pardee Homes in California and Nevada, Quadrant Homes in Washington, Trendmaker Homes in Texas, TRI Pointe Homes in California, Colorado and ~~Colorado~~the Carolinas and Winchester Homes in Maryland and Virginia.

Basis of Presentation

The accompanying financial statements have been prepared in accordance with U.S. generally accepted accounting principles (“GAAP”), as contained within the Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”), for interim financial information and with the instructions to Form 10-Q and Article 10 of Regulation S-X. They should be read in conjunction with our consolidated financial statements and footnotes thereto included in our Annual Report on Form 10-K for the year ended December 31, ~~2016.~~2019. In the opinion of management, all adjustments consisting of normal recurring adjustments, necessary for a fair presentation with respect to interim financial statements, have been included. The results for the three ~~months~~ and ~~nine~~six months ended ~~September~~June 30, ~~2017~~2020 are not necessarily indicative of the results to be expected for the full year ending December 31, 2020 due to seasonal variations and other ~~factors.~~factors, such as the effects of the novel coronavirus (“COVID-19”) and its influence on our future results.

The consolidated financial statements include the accounts of TRI Pointe Group and its wholly owned subsidiaries, as well as other entities in which TRI Pointe Group has a controlling interest and variable interest entities (“VIEs”) in which TRI Pointe Group is the primary beneficiary. The noncontrolling interests as of ~~September~~June 30, ~~2017~~2020 and December 31, ~~2016~~2019 represent the outside owners’ interests in the Company’s consolidated ~~entities and the net equity of the VIE owners.~~entities. All significant intercompany accounts have been eliminated upon consolidation.

Use of Estimates

Our financial statements have been prepared in accordance with GAAP. The preparation of ~~our~~these financial statements requires our management to make estimates and judgments that affect the reported amounts of assets and liabilities and the disclosures of contingent liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting periods. Actual results could differ from our estimates.

~~Reclassifications~~Revenue Recognition

~~Certain amounts~~We recognize revenue in our consolidated financial statements for the prior year periods have been reclassified to conform to the presentation of the current year periods, including the Company's reclassification of restructuring charges, which was presented as a separate line item on the consolidated statement of operations in the prior year, and has been reclassified to general and administrative expense for both the current and prior years. This reclassification had no material impact on the Company's condensed consolidated financial statements.

~~- 7 -~~

~~Recently Issued~~accordance with Accounting Standards

~~In May 2014, the FASB issued Accounting Standards Update 2014-09,~~ Topic 606 (“ASC 606”), Revenue from Contracts with Customers~~(Codified as "ASC 606")~~. ~~The core principle of~~Under ASC 606, is that an entity should recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. To achieve that core principle, an entity shouldwe apply the following ~~steps:~~steps to determine the timing and amount of revenue to recognize: (i) identify the contract(s) with a customer; (ii) identify the performance obligations in the contract; (iii) determine the transaction price; (iv) allocate the transaction price to the performance obligations in the contract; and (v) recognize revenue when (or as) the ~~entity~~Company satisfies a performance obligation. ~~ASC 606 supersedes~~

Home sales revenue

We generate the ~~revenue-recognition requirements in ASC Topic 605,~~ ~~Revenue Recognition, most industry-specific guidance throughout the industry topics~~majority of our total revenues from home sales, which consists of our core business operation of building and delivering completed homes to homebuyers. Home sales revenue and related profit is generally recognized when title to and possession of the ~~accounting standards codification, and some cost guidance related~~home is transferred to ~~construction-type and production-type contracts. ASC 606~~the homebuyer at the home closing date. Our performance obligation to deliver the agreed-upon home is effective for public entities for the annual periods ending after December 15, 2017, and for annual and interim periods thereafter. Companies may use either a full retrospective or a modified retrospective approach to adopt ASC 606, and we expect to adopt the new standard under the modified retrospective approach. The Company's assessment efforts to date have included reviewing current accounting policies and processes, as well as assigning internal resources to assistgenerally satisfied in ~~the process. Additionally, the Company has begun to review historical contracts and other arrangements to identify potential differences that could arise~~less than one year from the ~~adoption~~original contract date. Included in home sales revenue are forfeited deposits, which occur when homebuyers cancel home purchase contracts that include a nonrefundable deposit. Both revenue from forfeited deposits and deferred revenue resulting from uncompleted performance obligations existing at the time we deliver new homes to our homebuyers are immaterial.

- 7 -

Land and lot sales revenue

Historically, we have generated land and lot sales revenue from a small number of ~~ASC 606.~~transactions, although in some years we have realized a significant amount of revenue and gross margin. We ~~are still evaluating the accounting for certain marketing costs~~do not expect our future land and ~~it is likely that the adoption of ASC 606 will impact the timing of recognition and classification in our consolidated financial statements of certain marketing costs that we incur to obtain~~lot sales ~~contracts from our customers. For example, we currently capitalize and amortize various marketing costs with each home delivered in a community. Under the new guidance, these costs may need~~revenue to be ~~expensed when incurred or capitalized~~material, but we still consider these sales to ~~other assets and amortized~~be an ordinary part of our business, thus meeting the definition of contracts with customers. Similar to ~~selling expense. Although we are still evaluating our contracts, we do not believe the adoption of ASC 606 will have a material impact on the amount or timing of~~ our home sales, revenue ~~but could impact the amount and timing of~~from land and lot ~~sales.~~sales is typically fully recognized when the land and lot sales transactions are consummated, at which time no further performance obligations are left to be satisfied. Some of our historical land and lot sales have included future profit participation rights. We will recognize future land and lot sales revenue in the periods in which all closing conditions are met, subject to the constraint on variable consideration related to profit participation rights, if such rights exist in the sales contract.

Other operations revenue

The majority of our homebuilding other operations revenue relates to a ground lease at our Quadrant Homes reporting segment. We are ~~continuing~~responsible for making lease payments to ~~evaluate~~ the ~~exact impact~~landowner, and we collect sublease payments from the ~~new standard will have~~buyers of the buildings. This ground lease is accounted for in accordance with ASC Topic 842, Leases. We do not recognize a material profit on ~~recording revenue~~this ground lease.

Financial services revenues

TRI Pointe Solutions is a reportable segment and is comprised of our ~~marketing costs~~TRI Pointe Connect mortgage financing operations, TRI Pointe Assurance title and escrow services operations, and TRI Pointe Advantage property and casualty insurance agency operations.

Mortgage financing operations

TRI Pointe Connect was formed as a joint venture with an established mortgage lender and is accounted for under the equity method of accounting. We record a percentage of income earned by TRI Pointe Connect based on our ownership percentage in this joint venture. TRI Pointe Connect activity appears as equity in income of unconsolidated entities under the Financial Services section of our consolidated ~~financial~~ statements of operations.

Title and escrow services operations

TRI Pointe Assurance provides title examinations for our homebuyers in Austin (Texas), Colorado and Maryland and both title examinations and escrow services for our homebuyers in Arizona, Nevada, Texas and Virginia. TRI Pointe Assurance is a wholly owned subsidiary of TRI Pointe and acts as a title agency for First American Title Insurance Company. Revenue from our title and escrow services operations is fully recognized at the time of the consummation of the home sales transaction, at which time no further performance obligations are left to be satisfied. TRI Pointe Assurance revenue is included in the Financial Services section of our consolidated statements of operations.

Property and casualty insurance agency operations

TRI Pointe Advantage is a wholly owned subsidiary of TRI Pointe and provides property and casualty insurance agency services that help facilitate the closing process in all of the markets in which we operate. The total consideration for these services, including renewal options, is estimated upon the issuance of the initial insurance policy, subject to constraint. TRI Pointe Advantage revenue is included in the Financial Services section of our consolidated statements of operations.

Restructuring Charges

Recently Issued Accounting Standards Not Yet Adopted

In ~~February 2016,~~December 2019, the FASB issued Accounting Standards Update (“ASU”) No. ~~2016-02, (Codified as “ASC 842”~~2019-12, Income Taxes (Topic 740): Simplifying the Accounting for Income Taxes (“ASU 2019-12”), which ~~requires an entity~~is intended to ~~recognize assets~~simplify various aspects related to accounting for income taxes. ASU 2019-12 removes certain exceptions to the general principles in Topic 740 and ~~liabilities on the balance sheet for the rights~~also clarifies and ~~obligations created by leased assets and provide additional disclosures. ASC 842~~amends existing guidance to improve consistent application. ASU 2019-12 is effective for ~~fiscal years, and interim periods within those years,~~the Company beginning after December 15, ~~2018, and, at that time, we will adopt the new standard using a modified retrospective approach.~~2020. We ~~are currently evaluating the impact that~~do not expect the adoption of ~~ASC 842 may have on our consolidated financial statements and disclosures.~~

~~In March 2016, the FASB issued Accounting Standards Update No. 2016-09, (“~~ASU ~~2016-09”),~~ ~~Compensation-Stock Compensation (Topic 718): Improvements~~2019-12 to ~~Employee Share-Based Payment Accounting.~~ On January 1, 2017, we adopted ASU 2016-09. This new guidance requires that we record excess tax benefit and tax deficiencies related to the settlement of employee stock-based compensation to the income tax expense line item on our consolidated statement of operations. We previously recorded the excess tax benefits and tax deficiencies to the additional paid-in capital line item on our consolidated balance sheets. Under the new guidance, the Company elected the option to no longer apply a forfeiture rate to our stock-based compensation expense, and to recognize forfeitures as they occur. The adoption of the aforementioned amendments in ASU 2016-09 were applied using the modified retrospective approach and did not have a material impact on our ~~current or prior year~~consolidated financial statements, with no resulting cumulative-effect adjustment to retained earnings. The new guidance also requires excess tax benefits to be classified as an operating activity in the statement of cash flows rather than as a financing activity. Additionally, ASU 2016-09 requires that the minimum tax withholding paid on behalf of employees for share-based awards be classified as a financing activity in the statement of cash flows. statements.

- 8 -

Adoption of ~~ASU 2016-09 did not result in any adjustments to prior period disclosures on the statement of cash flows.~~

~~In August 2016, the FASB issued~~New Accounting Standards ~~Update No. 2016-15, (“ASU 2016-15”),~~ ~~Statement of Cash Flows (Topic 230)~~: ~~Classification of Certain Cash Receipts and Cash Payments,~~ which provides guidance on how certain cash receipts and cash payments are to be presented and classified in the statement of cash flows. ASU 2016-15 is effective for fiscal years, and interim periods within those years, beginning after December 15, 2017. Early adoption is permitted. We are currently evaluating the impact that adoption of ASU 2016-15 may have on our consolidated financial statements and disclosures, however we do not believe the guidance will have a material impact on our financial statements upon adoption.

In January 2017, the FASB issued ~~Accounting Standards Update~~ASU No. 2017-04, ~~(“ASU 2017-04”),~~ Intangibles - –Goodwill and Other (Topic 350): Simplifying the Accounting for Goodwill Impairment(“ASU 2017-04”), which removes the requirement to perform a hypothetical purchase price allocation to measure goodwill impairment. A goodwill impairment will now be the amount by which a reporting unit’s carrying value exceeds its fair value, not to exceed the carrying amount of goodwill. ASU 2017-04 is effective for fiscal years, and interim periods within those years, beginning after December 15, 2019, with early adoption permitted, and applied prospectively. We ~~do not expect~~adopted ASU 2017-04 toon January 1, 2020 and our adoption did not have a material impact on our consolidated financial statements.

In June 2016, the FASB issued ASU No. 2016-13, Financial Instruments–Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments (“ASU 2016-13”), which replaces the incurred loss impairment methodology with a methodology that reflects expected credit losses and requires consideration of a broader range of reasonable and supportable information to estimate credit losses for financial instruments, including receivables from community facilities districts or similar municipalities. ASU 2016-13 is effective for fiscal years, and interim periods within those years, beginning after December 15, 2019, with early adoption permitted. We adopted ASU 2016-13 on January 1, 2020 and our adoption did not have a material impact on our consolidated financial statements.

~~- 8 -~~

2. Segment Information


2.	~~Segment Information~~

We operate ~~two~~2 principal businesses: homebuilding and financial services.

Our homebuilding operations consist of ~~six~~6 homebuilding brands that acquire and develop land and construct and sell single-family detached and attached homes. In accordance with ASC Topic 280, Segment Reporting, in determining the most appropriate reportable segments, we considered similar economic and other characteristics, including product types, average selling prices, gross profits, production processes, suppliers, subcontractors, regulatory environments, land acquisition results, and underlying demand and supply. Based upon ~~the above~~these factors, our homebuilding operations are comprised of the following ~~six~~6 reportable segments: Maracay, ~~Homes,~~ consisting of operations in Arizona; Pardee Homes, consisting of operations in California and Nevada; Quadrant Homes, consisting of operations in Washington; Trendmaker Homes, consisting of operations in Texas; TRI Pointe Homes, consisting of operations in California and ~~Colorado;~~Colorado, as well as early stage operations in the Carolinas; and Winchester Homes, consisting of operations in Maryland and Virginia.

Our TRI Pointe Solutions financial services operation ~~(“TRI Pointe Solutions”)~~ is a reportable segment and is comprised of our TRI Pointe Connect mortgage financing operations, ~~(“TRI Pointe Connect”) and title services operations (“TRI Pointe Assurance”). While~~ our homebuyers may obtain financing from any mortgage provider of their choice, TRI Pointe Connect, which was formed as a joint venture with an established mortgage lender, can act as a preferred mortgage broker to our homebuyers in all of the markets in which we operate, providing mortgage originations that help facilitate the sale and closing process as well as generate additional fee income for us. TRI Pointe Assurance ~~provides~~ title ~~examinations for~~and escrow services operations, and our ~~homebuyers at our Trendmaker Homes and Winchester Homes brands.~~ TRI Pointe ~~Assurance is a wholly owned subsidiary~~Advantage property and casualty insurance agency operations. For further details, seeNote 1, Organization, Basis of ~~TRI Pointe~~Presentation and ~~acts as a title agency for First American Title Insurance Company.~~Summary of Significant Accounting Policies.

Corporate is a non-operating segment that develops and implements company-wide strategic initiatives and provides support to our homebuilding reporting segments by centralizing certain administrative functions, such as marketing, legal, accounting, treasury, insurance, internal audit and risk management, information technology and human resources, to benefit from economies of scale. Our Corporate non-operating segment also includes general and administrative expenses related to operating our corporate headquarters. A portion of the expenses incurred by Corporate is allocated to the homebuilding reporting segments.

The reportable segments follow the same accounting policies used for our consolidated financial statements, as described in Note 1, Organization, Basis of Presentation and Summary of Significant Accounting Policies. Operational results of each reportable segment are not necessarily indicative of the results that would have been achieved had the reportable segment been an independent, stand-alone entity during the periods presented.

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Total revenues and income before income taxes for each of our reportable segments were as follows (in thousands):


	Three Months Ended September 30,						Nine Months Ended September 30,							Three Months Ended June 30,						Six Months Ended June 30,
	2017			2016			2017			2016				2020		2019		2020		2019
Revenues													Revenues
Maracay Homes	$	78,167		$	68,024		$	204,981		$	161,318
Maracay													Maracay	$	86,674	$	55,653	$	158,426	$	95,214
Pardee Homes	231,376			188,148			495,452			547,311			Pardee Homes	242,282		194,699		420,684		329,562
Quadrant Homes	54,781			48,354			135,599			153,575			Quadrant Homes	37,298		71,066		81,372		114,937
Trendmaker Homes	53,787			64,251			171,615			172,509			Trendmaker Homes	121,257		121,963		217,377		192,784
TRI Pointe Homes	239,110			167,769			524,159			452,553			TRI Pointe Homes	206,474		192,752		365,144		364,543
Winchester Homes	60,219			45,248			149,065			143,361			Winchester Homes	73,825		61,825		120,263		95,248
Total homebuilding revenues	717,440			581,794			1,680,871			1,630,627			Total homebuilding revenues	767,810		697,958		1,363,266		1,192,288
Financial services	295			235			881			762			Financial services	2,296		756		3,890		1,058
Total	$	717,735		$	582,029		$	1,681,752		$	1,631,389		Total	$	770,106	$	698,714	$	1,367,156	$	1,193,346

Income (loss) before income taxes													Income (loss) before income taxes
Maracay Homes	$	6,431		$	4,385		$	14,429		$	9,544
Maracay													Maracay	$	8,042	$	2,986	$	12,604	$	4,176
Pardee Homes	82,407			37,508			128,570			165,718			Pardee Homes	48,980		14,735		82,459		13,944
Quadrant Homes	6,251			5,497			13,104			14,808			Quadrant Homes	2,246		5,193		4,943		2,554
Trendmaker Homes	3,233			3,516			9,657			9,439			Trendmaker Homes	10,512		6,908		15,309		5,310
TRI Pointe Homes	24,382			11,723			39,779			34,651			TRI Pointe Homes	15,741		12,280		20,101		22,489
Winchester Homes	4,284			1,692			6,903			6,345			Winchester Homes	4,670		2,555		5,716		1,789
Corporate	(10,151		)	(10,288		)	(32,868		)	(28,581		)	Corporate	(19,463)		(11,364)		(30,771)		(17,630)
Total homebuilding income before income taxes	116,837			54,033			179,574			211,924			Total homebuilding income before income taxes	70,728		33,293		110,361		32,632
Financial services	1,564			1,410			3,559			3,825			Financial services	3,943		2,101		6,014		2,857
Total	$	118,401		$	55,443		$	183,133		$	215,749		Total	$	74,671	$	35,394	$	116,375	$	35,489

- 10 -

Total real estate inventories and total assets for each of our reportable segments, as of the date indicated, were as follows (in thousands):


	June 30, 2020		December 31, 2019
Real estate inventories
Maracay	$	352,316	$	338,259
Pardee Homes	1,209,444		1,218,384
Quadrant Homes	270,446		264,437
Trendmaker Homes	240,467		268,759
TRI Pointe Homes	699,708		737,662
Winchester Homes	240,241		237,935
Total	$	3,012,622	$	3,065,436

Total assets
Maracay	$	389,587	$	382,262
Pardee Homes	1,306,846		1,300,047
Quadrant Homes	320,792		331,187
Trendmaker Homes	300,157		353,610
TRI Pointe Homes	893,417		930,348
Winchester Homes	304,466		291,456
Corporate	429,512		241,357
Total homebuilding assets	3,944,777		3,830,267
Financial services	33,127		28,423
Total	$	3,977,904	$	3,858,690

September 30, 2017 December 31, 2016
Real estate inventories
Maracay Homes $ 246,223
$ 228,965
Pardee Homes 1,251,842
1,098,608
Quadrant Homes 281,272
221,386
Trendmaker Homes 213,179
211,035
TRI Pointe Homes 981,813
868,088
Winchester Homes 329,092
282,545
Total $ 3,303,421
$ 2,910,627

Total assets
Maracay Homes $ 274,263
$ 255,466
Pardee Homes 1,338,304
1,201,302
Quadrant Homes 312,160
242,208
Trendmaker Homes 236,800
225,025
TRI Pointe Homes 1,162,397
1,052,400
Winchester Homes 351,717
305,379
Corporate 210,574
275,923
Total homebuilding assets 3,886,215
3,557,703
Financial services 9,851
6,937
Total $ 3,896,066
$ 3,564,640
3. Earnings Per Share


3.	~~Earnings Per Share~~

The following table sets forth the components used in the computation of basic and diluted earnings per share (in thousands, except share and per share amounts):


	Three Months Ended September 30,				Nine Months Ended September 30,					Three Months Ended June 30,						Six Months Ended June 30,
	2017		2016		2017		2016			2020		2019		2020		2019
Numerator:									Numerator:
Net income available to common stockholders	$	72,264	$	34,834	$	113,171	$	137,310
Net income									Net income	$	56,528	$	26,262	$	88,411	$	26,333
Denominator:									Denominator:
Basic weighted-average shares outstanding	151,214,744		160,614,055		155,238,206		161,456,520		Basic weighted-average shares outstanding	130,292,563		142,244,166		132,326,856		142,055,766
Effect of dilutive shares:									Effect of dilutive shares:
Stock options and unvested restricted stock units	915,081		653,454		697,870		459,832		Stock options and unvested restricted stock units	214,004		227,025		436,919		375,959
Diluted weighted-average shares outstanding	152,129,825		161,267,509		155,936,076		161,916,352		Diluted weighted-average shares outstanding	130,506,567		142,471,191		132,763,775		142,431,725
Earnings per share									Earnings per share
Basic	$	0.48	$	0.22	$	0.73	$	0.85	Basic	$	0.43	$	0.18	$	0.67	$	0.19
Diluted	$	0.48	$	0.22	$	0.73	$	0.85	Diluted	$	0.43	$	0.18	$	0.67	$	0.18
Antidilutive stock options and unvested restricted stock not included in diluted earnings per share	3,406,498		3,806,396		3,710,674		4,551,337
Antidilutive stock options and unvested restricted stock units not included in diluted earnings per share									Antidilutive stock options and unvested restricted stock units not included in diluted earnings per share	3,090,298		2,920,708		2,992,479		3,144,445

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4. Receivables


4.	~~Receivables~~

Receivables consisted of the following (in thousands):


	June 30, 2020		December 31, 2019
Escrow proceeds and other accounts receivable, net	$	47,836	$	29,282
Warranty insurance receivable (Note 13)	39,744		39,994
Total receivables	$	87,580	$	69,276

September 30, 2017 December 31, 2016
Escrow proceeds and other accounts receivable, net $ 38,660
$ 35,625
Warranty insurance receivable (Note 13) 45,923
46,875
Total receivables $ 84,583
$ 82,500

~~Receivables~~Receivables are evaluated for collectability and allowances for potential losses are established or maintained on applicable receivables when collection becomes doubtful. Receivables were net of allowances for doubtful accounts of ~~$286,000~~$419,000 and $426,000 as of ~~both September~~June 30, ~~2017~~2020 and December 31, ~~2016.~~2019, respectively.


5.	~~Real Estate Inventories~~

5. Real Estate Inventories

Real estate inventories consisted of the following (in thousands):


	September 30, 2017		December 31, 2016			June 30, 2020		December 31, 2019
Real estate inventories owned:					Real estate inventories owned:
Homes completed or under construction	$	1,045,648	$	659,210	Homes completed or under construction	$	1,039,681	$	951,974
Land under development	1,873,806		1,824,989		Land under development	1,452,440		1,641,354
Land held for future development	135,801		226,915		Land held for future development	152,032		122,847
Model homes	218,274		155,039		Model homes	286,760		275,204
Total real estate inventories owned	3,273,529		2,866,153		Total real estate inventories owned	2,930,913		2,991,379
Real estate inventories not owned:					Real estate inventories not owned:
Land purchase and land option deposits	26,992		26,174		Land purchase and land option deposits	81,709		74,057
Consolidated inventory held by VIEs	2,900		18,300

Total real estate inventories not owned	29,892		44,474		Total real estate inventories not owned	81,709		74,057
Total real estate inventories	$	3,303,421	$	2,910,627	Total real estate inventories	$	3,012,622	$	3,065,436

Homes completed or under construction is comprised of costs associated with homes in various stages of construction and includes direct construction and related land acquisition and land development costs. Land under development primarily consists of land acquisition and land development costs, which include capitalized interest and real estate taxes, associated with land undergoing ~~improvement~~improvement activity. Land held for future development principally reflects land acquisition and land development costs related to land where development activity has not yet begun or has been suspended, but is expected to occur in the future. The increase in land held for future development is attributable to two projects located in the Inland Empire in California at our Pardee Homes reporting segment that were transferred from land under development.

Real estate inventories not owned represents deposits related to land purchase and land and lot option agreements, as well as consolidated inventory held by variable interest entities. For further details, see Note 7, Variable Interest Entities.

During the quarter ended September 30, 2017, our Pardee Homes reporting segment sold a parcel, consisting of 69 homebuilding lots, located in the Pacific Highlands Ranch community in San Diego, California. The land sold in this sale was classified as land under development and represented $66.8 million of land and lot sales revenue in the consolidated statements of operations for the three and nine months ended September 30, 2017.

During the quarter ended June 30, 2016, our Pardee Homes reporting segment sold two parcels, totaling 102 homebuilding lots, located in the Pacific Highlands Ranch community in San Diego, California. The land sold in this sale was classified as land under development and represented $61.6 million of land and lot sales revenue in the consolidated statements of operations for nine months ended September 30, 2016.

~~- 12 -~~

Interest incurred, capitalized and expensed were as follows (in thousands):


	Three Months Ended September 30,						Nine Months Ended September 30,							Three Months Ended June 30,						Six Months Ended June 30,
	2017			2016			2017			2016				2020		2019		2020		2019
Interest incurred	$	22,865		$	18,601		$	61,669		$	50,030		Interest incurred	$	21,828	$	21,962	$	42,607	$	45,335
Interest capitalized	(22,865		)	(18,601		)	(61,669		)	(50,030		)	Interest capitalized	(21,828)		(21,962)		(42,607)		(45,335)
Interest expensed	$	—		$	—		$	—		$	—		Interest expensed	$	—	$	—	$	—	$	—
Capitalized interest in beginning inventory	$	173,261		$	151,347		$	157,329		$	140,311		Capitalized interest in beginning inventory	$	196,313	$	193,440	$	192,356	$	184,400
Interest capitalized as a cost of inventory	22,865			18,601			61,669			50,030			Interest capitalized as a cost of inventory	21,828		21,962		42,607		45,335
Interest previously capitalized as a cost of inventory, included in cost of sales	(15,899		)	(14,415		)	(38,771		)	(34,808		)	Interest previously capitalized as a cost of inventory, included in cost of sales	(21,806)		(18,107)		(38,628)		(32,440)
Capitalized interest in ending inventory	$	180,227		$	155,533		$	180,227		$	155,533		Capitalized interest in ending inventory	$	196,335	$	197,295	$	196,335	$	197,295

- 12 -

Interest is capitalized to real estate inventory during development and other qualifying activities. During all periods presented, we capitalized all interest incurred to real estate inventory in accordance with ASC Topic 835, Interest, as our qualified assets exceeded our debt. Interest that is capitalized to real estate inventory is included in cost of home sales or cost of land and lot sales as related units or lots are delivered. Interest that is expensed as incurred is included in other (expense) income, net.

Real ~~estate inventory impairments~~Estate Inventory Impairments and ~~land option abandonments~~Land Option Abandonments

Real estate inventory impairments and land and lot option abandonments and pre-acquisition charges consisted of the following (in thousands):


	Three Months Ended September 30,				Nine Months Ended September 30,					Three Months Ended June 30,						Six Months Ended June 30,
	2017		2016		2017		2016			2020		2019		2020		2019
Real estate inventory impairments	$	—	$	—	$	267	$	—	Real estate inventory impairments	$	—	$	—	$	—	$	—
Land and lot option abandonments and pre-acquisition charges	374		389		936		678		Land and lot option abandonments and pre-acquisition charges	1,380		288		1,729		5,490
Total	$	374	$	389	$	1,203	$	678	Total	$	1,380	$	288	$	1,729	$	5,490

Impairments of real estate inventory relate primarily to projects or communities that include homes completed or under construction. Within a project or community, there may be individual homes or parcels of land that are currently held for sale. Impairment charges recognized as a result of adjusting individual held-for-sale assets within a community to estimated fair value less cost to sell are also included in the total impairment charges. NaN real estate inventory impairments were recorded for the three or six-month periods ended June 30, 2020 or 2019.

In addition to owning land and residential lots, we also have option agreements to purchase land and lots at a future date. We have option deposits and capitalized pre-acquisition costs associated with the optioned land and lots. When the economics of a project no longer support acquisition of the land or lots under option, we may elect not to move forward with the acquisition. Option deposits and capitalized pre-acquisition costs associated with the assets under option may be forfeited at that time.

Real estate inventory impairments and land option abandonments are recorded in cost of home sales and cost of land and lot sales on the consolidated statements of operations.


6.	~~Investments in Unconsolidated Entities~~

6. Investments in Unconsolidated Entities

As of ~~September~~June 30, ~~2017,~~2020, we held equity ~~investments~~investments in ~~five~~6 active homebuilding partnerships or limited liability companies and ~~one~~1 financial services limited liability company. Our participation in these ~~entities~~entities may be as a developer, a builder, or an investment partner. Our ownership percentage varies from 7% to 65%, depending on the investment, with no controlling interest held in any of these investments.

~~- 13 -~~

~~Investments Held~~

~~Our cumulative investment in entities accounted for on the equity method, including our share of earnings and losses, consisted of the following (in thousands):~~

September 30, 2017 December 31, 2016
Limited liability company interests $ 14,433
$ 14,327
General partnership interests 3,183
3,219
Total $ 17,616
$ 17,546

Unconsolidated Financial Information

Aggregated assets, liabilities and operating results of the entities we account for as equity-method investments are provided below. Because our ownership interest in these entities varies, a direct relationship does not exist between the information presented below and the amounts that are reflected on our consolidated balance sheets as our investments in unconsolidated entities or on our consolidated statements of operations as equity in income of unconsolidated entities.

- 13 -

Assets and liabilities of unconsolidated entities (in thousands):


	September 30, 2017		December 31, 2016			June 30, 2020		December 31, 2019
Assets					Assets
Cash	$	11,895	$	9,796	Cash	$	12,005	$	8,537
Receivables	4,871		10,203		Receivables	2,498		7,393
Real estate inventories	98,370		97,402		Real estate inventories	198,789		116,760
Other assets	924		1,087		Other assets	604		703
Total assets	$	116,060	$	118,488	Total assets	$	213,896	$	133,393
Liabilities and equity					Liabilities and equity
Accounts payable and other liabilities	$	8,612	$	12,844	Accounts payable and other liabilities	$	42,248	$	11,009
Company’s equity	17,616		17,546		Company’s equity	36,040		11,745
Outside interests' equity	89,832		88,098
Outside interests’ equity					Outside interests’ equity	135,608		110,639
Total liabilities and equity	$	116,060	$	118,488	Total liabilities and equity	$	213,896	$	133,393

Results of operations from unconsolidated entities (in thousands):


	Three Months Ended September 30,						Nine Months Ended September 30,							Three Months Ended June 30,						Six Months Ended June 30,
	2017			2016			2017			2016				2020		2019		2020		2019
Net sales	$	5,404		$	4,619		$	15,722		$	12,516		Net sales	$	8,726	$	6,353	$	14,696	$	10,464
Other operating expense	(3,532		)	(2,913		)	(9,714		)	(8,067		)	Other operating expense	(4,400)		(3,528)		(8,156)		(6,280)
Other income	36			1			60			3
Other income, net													Other income, net	(1)		(7)		(4)		1
Net income	$	1,908		$	1,707		$	6,068		$	4,452		Net income	$	4,325	$	2,818	$	6,536	$	4,185
Company’s equity in income of unconsolidated entities	$	1,351		$	1,227		$	4,557		$	3,427		Company’s equity in income of unconsolidated entities	$	2,907	$	1,946	$	4,449	$	2,696


7.	~~Variable Interest Entities~~

7. Variable Interest Entities

In the ordinary course of business, we enter into land and lot option agreements in order to procure land and residential lots for future development and the construction of homes. The use of such land and lot option agreements generally allows us to reduce the risks associated with direct land ownership and development, and reduces our capital and financial commitments. Pursuant to these land and lot option agreements, we generally provide a deposit to the seller as consideration for the right to purchase land at different times in the future, usually at predetermined prices. ~~Such~~These deposits are recorded as land purchase and land option deposits under real estate inventories not owned inon the accompanying consolidated balance sheets.

~~- 14 -~~

We analyze each of our land and lot option agreements and other similar contracts under the provisions of ASC 810, Consolidation to determine whether the land seller is a VIE and, if so, whether we are the primary beneficiary. Although we do not have legal title to the underlying land, if we are determined to be the primary beneficiary of the VIE, we will consolidate the VIE in our financial statements and reflect its assets as real estate inventory not owned included in our real estate inventories, its liabilities as debt (nonrecourse) held by VIEs in accrued expenses and other liabilities and the net equity of the VIE owners as noncontrolling interests on our consolidated balance sheets. In determining whether we are the primary beneficiary, we consider, among other things, whether we have the power to direct the activities of the VIE that most significantly impact the VIE’s economic performance. Such activities would include, among other things, determining or limiting the scope or purpose of the VIE, selling or transferring property owned or controlled by the VIE, or arranging financing for the VIE.

Creditors of the entities with which we have land and lot option agreements have no recourse against us. The maximum exposure to loss under our land and lot option agreements is generally limited to non-refundable option deposits and any capitalized pre-acquisition costs. In some cases, we have also contracted to complete development work at a fixed cost on behalf of the ~~land owner~~landowner and budget shortfalls and savings will be borne by us. Additionally, we have entered into land banking arrangements which require us to complete development work even if we terminate the option to procure land or lots.

- 14 -

The following provides a summary of our interests in land and lot option agreements (in thousands):


	September 30, 2017						December 31, 2016							June 30, 2020										December 31, 2019
	Deposits		Remaining Purchase Price		Consolidated Inventory Held by VIEs		Deposits		Remaining Purchase Price		Consolidated Inventory Held by VIEs			Deposits		Remaining Purchase Price		Consolidated Inventory Held by VIEs		Deposits		Remaining Purchase Price		Consolidated Inventory Held by VIEs
Consolidated VIEs	$	75	$	2,828	$	2,900	$	400	$	17,900	$	18,300	Consolidated VIEs	$	—	$	—	$	—	$	—	$	—	$	—
Unconsolidated VIEs	2,450		74,034		N/A		2,375		49,016		N/A		Unconsolidated VIEs	39,070		441,528		N/A		42,896		440,974		N/A
Other land option agreements	24,542		278,566		N/A		23,799		246,658		N/A		Other land option agreements	42,639		374,674		N/A		31,161		358,345		N/A
Total	$	27,067	$	355,428	$	2,900	$	26,574	$	313,574	$	18,300	Total	$	81,709	$	816,202	$	—	$	74,057	$	799,319	$	—

Unconsolidated VIEs represent land option agreements that were not consolidated because we were not the primary beneficiary. Other land option agreements were not considered VIEs.

In addition to the deposits presented in the table above, our exposure to loss related to our land and lot option contracts consisted of capitalized pre-acquisition ~~costs~~costs of ~~$3.7~~$7.9 million ~~and $3.6~~and $6.0 million as of ~~September~~June 30, ~~2017~~2020 and December 31, ~~2016,~~2019, respectively. These pre-acquisition costs ~~were~~are included in real estate inventories as land under development on our consolidated balance sheets.


8.	~~Goodwill and Other Intangible Assets~~

8. Goodwill and Other Intangible Assets

As of ~~September~~June 30, ~~2017~~2020 and December 31, ~~2016,~~2019, $139.3 million of goodwill is included in goodwill and other intangible assets, net on each of the consolidated balance sheets. The ~~Company's~~Company’s goodwill balance is included in the TRI Pointe Homes reporting segment in Note 2, Segment Information.

We have ~~two~~2 intangible assets as of ~~September~~June 30, ~~2017,~~2020, comprised of an existing trade name from the acquisition of Maracay ~~Homes~~ in 2006, which has a 20 year useful life, and a TRI Pointe Homes trade name resulting from the acquisition of Weyerhaeuser Real Estate Company ~~(“WRECO”)~~ in 2014, which has an indefinite useful life.

Goodwill and other intangible assets consisted of the following (in thousands):


	September 30, 2017							December 31, 2016								June 30, 2020										December 31, 2019
	Gross Carrying Amount		Accumulated Amortization			Net Carrying Amount		Gross Carrying Amount		Accumulated Amortization			Net Carrying Amount			Gross Carrying Amount		Accumulated Amortization		Net Carrying Amount		Gross Carrying Amount		Accumulated Amortization		Net Carrying Amount
Goodwill	$	139,304	$	—		$	139,304	$	139,304	$	—		$	139,304	Goodwill	$	139,304	$	—	$	139,304	$	139,304	$	—	$	139,304
Trade names	27,979		(6,189		)	21,790		27,979		(5,788		)	22,191		Trade names	27,979		(7,657)		20,322		27,979		(7,390)		20,589
Total	$	167,283	$	(6,189	)	$	161,094	$	167,283	$	(5,788	)	$	161,495	Total	$	167,283	$	(7,657)	$	159,626	$	167,283	$	(7,390)	$	159,893

~~- 15 -~~

The remaining useful life of our amortizing intangible asset related to the Maracay ~~Homes~~ trade name was ~~8.4~~5.7 and ~~9.2~~6.2 years as of ~~September~~June 30, ~~2017~~2020 and December 31, ~~2016,~~2019, respectively. The net carrying amount related to this intangible asset was $3.0 million and $3.3 million as of June 30, 2020 and December 31, 2019, respectively. Amortization expense related to this intangible asset was $134,000 for each of the three-month periods ended ~~September~~June 30, ~~2017~~2020 and ~~2016,~~2019, respectively, and ~~$401,000~~$267,000 for each of the ~~nine-month~~six-month periods ended ~~September~~June 30, ~~2017~~2020 and ~~2016,~~December 31, 2019, respectively. Amortization of this intangible was charged to sales and marketing expense. Our $17.3 million indefinite life intangible asset related to the TRI Pointe Homes trade name is not amortizing. All trade names and goodwill are evaluated for impairment on an annual basis or more frequently if indicators of impairment exist.

- 15 -

Expected amortization of our intangible asset related to Maracay ~~Homes~~ for the remainder of ~~2017,~~2020, the next four years and thereafter is (in thousands):


Remainder of 2020	$	267
2021	534
2022	534
2023	534
2024	534
Thereafter	619
Total	$	3,022

Remainder of 2017 $ 133
2018 534
2019 534
2020 534
2021 534
Thereafter 2,221
Total $ 4,490
9. Other Assets


9.	~~Other Assets~~

Other assets consisted of the following (in thousands):


	June 30, 2020		December 31, 2019
Prepaid expenses	$	21,273	$	24,070
Refundable fees and other deposits	29,785		30,242
Development rights, held for future use or sale	2,063		2,213
Deferred loan costs—loans payable	3,709		4,345
Operating properties and equipment, net	58,155		57,803
Lease right-of-use assets	49,506		50,947
Other	3,256		3,805
Total	$	167,747	$	173,425

September 30, 2017 December 31, 2016
Prepaid expenses $ 19,117
$ 24,495
Refundable fees and other deposits 18,921
17,731
Development rights, held for future use or sale 2,569
2,569
Deferred loan costs - unsecured revolving credit facility 3,655
2,101
Operating properties and equipment, net 10,696
10,884
Income tax receivable 1,181
—
Other 2,153
2,812
Total $ 58,292
$ 60,592
10. Accrued Expenses and Other Liabilities


~~10.~~	~~Accrued Expenses and Other Liabilities~~

Accrued expenses and other liabilities consisted of the following (in thousands):


	June 30, 2020		December 31, 2019
Accrued payroll and related costs	$	25,015	$	42,798
Warranty reserves(Note 13)	79,190		76,607
Estimated cost for completion of real estate inventories	78,601		90,899
Customer deposits	29,925		20,390
Income tax liability to Weyerhaeuser	346		346
Accrued income taxes payable	18,605		1,530
Liability for uncertain tax positions (Note 15)	486		486
Accrued interest	6,886		11,952

Other tax liability	7,665		8,448
Lease liabilities	54,395		56,125
Other	13,704		12,462
Total	$	314,818	$	322,043

September 30, 2017 December 31, 2016
Accrued payroll and related costs $ 26,133
$ 33,761
Warranty reserves(Note 13)
80,922
83,135
Estimated cost for completion of real estate inventories 84,793
59,531
Customer deposits 28,039
13,437
Income tax liability to Weyerhaeuser (Note 16) 7,200
8,589
Accrued income taxes payable 10,978
1,200
Liability for uncertain tax positions (Note 16) 1,416
—
Accrued interest 22,599
11,570
Other tax liability 36,657
34,961
Other 17,750
17,661
Total $ 316,487
$ 263,845

- 16 -

11. Senior Notes and Loans Payable


~~11.~~	~~Senior Notes, Unsecured Revolving Credit Facility and Seller Financed Loans~~

Senior Notes

The ~~Senior Notes~~Company’s outstanding senior notes (together, the “Senior Notes”) consisted of the following (in thousands):


								June 30, 2020		December 31, 2019
	September 30, 2017			December 31, 2016
4.375% Senior Notes due June 15, 2019	$	450,000		$	450,000
4.875% Senior Notes due July 1, 2021	300,000			300,000			4.875% Senior Notes due July 1, 2021	$	83,734	$	300,000
5.875% Senior Notes due June 15, 2024	450,000			450,000			5.875% Senior Notes due June 15, 2024	450,000		450,000
5.250% Senior Notes due June 1, 2027	300,000			—			5.250% Senior Notes due June 1, 2027	300,000		300,000
5.700% Senior Notes due June 15, 2028							5.700% Senior Notes due June 15, 2028	350,000		—
Discount and deferred loan costs	(30,442		)	(31,693		)	Discount and deferred loan costs	(17,545)		(16,015)
Total	$	1,469,558		$	1,168,307		Total	$	1,166,189	$	1,033,985

In June 2020, TRI Pointe Group issued $350 million aggregate principal amount of 5.700% Senior Notes due 2028 (the “2028 Notes”) at 100.00% of their aggregate principal amount. Net proceeds of this issuance were $345.2 million, after debt issuance costs and discounts. The 2028 Notes mature on June 15, 2028 and interest is paid semiannually in arrears on June 15 and December 15.

In June 2017, TRI Pointe Group issued $300 million aggregate principal amount of 5.250% Senior Notes due 2027 (the ~~"2027 Notes"~~“2027 Notes”) at 100.00% of their aggregate principal amount. Net proceeds of this issuance were $296.3 million, after debt issuance costs and discounts. The 2027 Notes mature on June 1, 2027 and interest is paid semiannually in arrears on June 1 and December ~~1 of each year until maturity, beginning on December 1, 2017.~~1.

In May 2016, TRI Pointe Group issued $300 million aggregate principal amount of 4.875% Senior Notes due 2021 (the ~~"2021 Notes"~~“2021 Notes”) at 99.44% of their aggregate principal amount. Net proceeds of this issuance were $293.9 million, after debt issuance costs and discounts. The 2021 Notes mature on July 1, 2021 and interest is paid semiannually in arrears on January 1 and July 1. On June 3, 2020, the Company commenced a cash tender offer for any and all of the outstanding 2021 Notes at a price of $1,025 per $1,000 principal amount of 2021 Notes tendered before the expiration of the tender offer. The principal amount of 2021 Notes tendered was $216.3 million, or 72% of the outstanding principal amount, after which $83.7 million principal amount of 2021 Notes remained outstanding as of June 30, 2020. The remaining outstanding principal amount of $83.7 million was fully paid in July 2020 in connection with the redemption of the remaining 2021 Notes.

TRI Pointe Group and its ~~100%~~wholly owned subsidiary TRI Pointe Homes, Inc. ("(“TRI Pointe ~~Homes"~~Homes”) are co-issuers of the ~~4.375% Senior Notes due 2019 (the "2019 Notes") and the~~$450 million aggregate principal amount 5.875% Senior Notes due 2024 (the ~~"2024 Notes"~~“2024 Notes”). The ~~2019 Notes were issued at 98.89% of their aggregate principal amount and the~~ 2024 Notes were issued at 98.15% of their aggregate principal amount. The net proceeds from the offering ~~were $861.3~~of the 2024 Notes was $429.0 million, after debt issuance costs and discounts. The ~~2019 Notes and~~ 2024 Notes mature on June ~~15, 2019~~ ~~and June~~ 15, 2024, ~~respectively. Interest is~~with interest payable semiannually in arrears on June 15 and December 15.

As of ~~September~~June 30, ~~2017, no principal has been paid on the 2019 Notes, 2021 Notes, 2024 Notes and 2027 Notes (together, the "Senior Notes"), and~~2020, there ~~was $21.1~~were $13.6 million of capitalized debt financing costs, included in senior notes, net on our consolidated balance sheet, related to the Senior Notes that will amortize over the lives of the Senior Notes. Accrued interest related to the Senior Notes was ~~$22.1~~$5.6 million and ~~$10.7~~$9.8 million as of ~~September~~June 30, ~~2017~~2020 and December 31, ~~2016,~~2019, respectively.

~~Unsecured Revolving Credit Facility~~Loans Payable

~~Unsecured revolving credit facility~~The Company’s outstanding loans payable consisted of the following (in thousands):


	June 30, 2020		December 31, 2019
Term loan facility	$	250,000	$	250,000

Total	$	250,000	$	250,000

September 30, 2017 December 31, 2016
Unsecured revolving credit facility $ 200,000
$ 200,000

On ~~June 20, 2017,~~March 29, 2019, the Company ~~modified its existing unsecured~~entered into a Second Amended and Restated Credit Agreement (the “Credit Agreement”), which amended and restated the Company’s Amended and Restated Credit Agreement, dated as of July 7, 2015. The Credit Facility (as defined below), which matures on March 29, 2023, consists of a $600 million revolving credit facility (the “Revolving Facility”) and a $250 million term loan facility (the “Term Facility” and together with the Revolving Facility, the “Credit Facility”). The Term Facility includes a 90-day delayed draw provision that allowed the Company to ~~extend~~draw the full

- 17 -

$250 million from the Term Facility in June 2019 in connection with the maturity ~~date by two years to May 18, 2021, while decreasing~~of the ~~total commitments under~~4.375% Senior Notes that matured on June 15, 2019. The Company may increase the Credit Facility to ~~$600 million from $625 million. In addition,~~not more than $1 billion in the ~~Credit Facility was modified to give the Company the option to make offers to the lenders to extend the maturity date of the facility in twelve-month increments, subject to the~~aggregate, at its request, upon satisfaction of ~~certain~~specified conditions. The ~~Credit~~Revolving Facility contains a sublimit of $75 million for letters of credit. The Company may borrow under the ~~Credit~~Revolving Facility in the ordinary course of business to repay senior notes and fund its operations, including its land acquisition, land development and homebuilding activities. Borrowings under the ~~Credit~~Revolving Facility will be governed by, among other things, a borrowing base. Interest rates on borrowings under the ~~Credit~~Revolving Facility will be based on either a daily Eurocurrency base rate or a Eurocurrency rate, in either case, plus a spread ranging from 1.25% to 2.00%, depending on the Company’s leverage ratio. Interest rates on borrowings under the Term Facility will be based on either a daily Eurocurrency base rate or a Eurocurrency rate, in either case, plus a spread ranging from 1.10% to 1.85%, depending on the Company’s leverage ratio.

As of ~~September~~June 30, ~~2017, the~~2020, we had no outstanding ~~balance~~debt under the ~~Credit~~Revolving Facility ~~was $200.0 million with an interest rate of 2.99% per annum~~ and there ~~was $392.2~~was $559.4 million of availability after considering the borrowing base provisions and outstanding letters of

~~- 17 -~~

credit. As of ~~September~~June 30, ~~2017~~2020, we had $250 million outstanding debt under the Term Facility with an interest rate of 1.52%. As of June 30, 2020, there ~~was~~were $3.7 million of capitalized debt financing costs, included in other assets on our consolidated balance sheet, related to the Credit Facility ~~that~~that will amortize over the ~~life~~remaining term of the Credit ~~Facility, maturing on May 18, 2021.~~Facility. Accrued interest, including loan commitment fees, related to the Credit Facility was ~~$505,000~~$488,000 and ~~$658,000~~$1.2 million as of ~~September~~June 30, ~~2017~~2020 and December 31, ~~2016,~~2019, respectively.

At ~~September~~June 30, ~~2017~~2020 and December 31, 2019, we had outstanding letters ofof credit of ~~$7.8 million.~~$40.6 million and $32.6 million, respectively. These letters of credit were issued to secure various financial obligations. We believe it is not probable that any outstanding letters of credit will be drawn upon.

~~Seller Financed Loans~~

~~Seller financed loans consisted of the following (in thousands):~~

September 30, 2017 December 31, 2016
Seller financed loans $ —
$ 13,726

~~Accrued interest on a seller financed loan outstanding as of December 31, 2016 was $519,000.~~

Interest Incurred

During the ~~three-month periods~~three months ended ~~September~~June 30, ~~2017~~2020 and ~~2016,~~2019, the Company incurred interest of ~~$22.9~~$21.8 million and ~~$18.6~~$22.0 million, respectively, related to all debt during the period. Included in interest incurred are amortization of deferred financing and Senior Note discount costs of $1.2 million and $1.9 million for the three months ended June 30, 2020 and 2019, respectively. During the six months ended June 30, 2020 and 2019, the Company incurred interest of $42.6 million and $45.3 million, respectively, related to all debt during the period. Included in interest incurred was amortization of deferred ~~financing~~financing and Senior Note discount costs of ~~$2.0~~$2.4 million and ~~$1.8~~$3.8 million for the ~~three~~six months ended ~~September~~June 30, ~~2017~~2020 and 2016, respectively. During the nine-month periods ended September 30, 2017 and 2016, the Company incurred interest of $61.7 million and $50.0 million, respectively, related to all debt during the period. Included in interest incurred was amortization of deferred financing and Senior Notes discount costs of $5.6 million and $4.7 million for the nine months ended September 30, 2017 and 2016,2019, respectively. Accrued interest related to all outstanding debt at ~~September~~June 30, ~~2017~~2020 and December 31, ~~2016~~2019 was ~~$22.6~~$6.9 million and ~~$11.6~~$12.0 million, respectively.

Covenant Requirements

The Senior Notes contain covenants that restrict our ability to, among other things, create liens or other encumbrances, enter into sale and leaseback transactions, or merge or sell all or substantially all of our assets. These limitations are subject to a number of qualifications and exceptions.

Under the Credit Facility, the Company is required to comply with certain financial covenants, including ~~but not limited~~those relating to ~~(i) a minimum~~ consolidated tangible net ~~worth; (ii) a maximum total~~worth, leverage, ~~ratio; and (iii) a minimum~~liquidity or interest coverage, ~~ratio.~~and a spec unit inventory test. The Credit Facility also requires that at least 97.0% of consolidated tangible net worth must be attributable to the Company and its guarantor subsidiaries, subject to certain grace periods.

The Company was in compliance with all applicable financial covenants as of ~~September~~June 30, ~~2017~~2020 and December 31, ~~2016.~~2019.

12. Fair Value Disclosures


~~12.~~	~~Fair Value Disclosures~~

Fair Value Measurements

ASC Topic 820, Fair Value Measurements and Disclosures, defines “fair value” as the price that would be received for selling an asset or paid to transfer a liability in an orderly transaction between market participants at measurement date and requires assets and liabilities carried at fair value to be classified and disclosed in the following three categories:

•Level 1—Quoted prices for identical instruments in active markets

•Level 2—Quoted prices for similar instruments in active markets; quoted prices for identical or similar instruments in markets that are inactive; and model-derived valuations in which all significant inputs and significant value drivers are observable in active markets at measurement date

- 18 -

•Level 3—Valuations derived from techniques where one or more significant inputs or significant value drivers are unobservable in active markets at measurement date

~~- 18 -~~

Fair Value of Financial Instruments

A summary of assets and liabilities at ~~September~~June 30, ~~2017~~2020 and December 31, ~~2016,~~2019, related to our financial instruments, measured at fair value on a recurring basis, is set forth below (in thousands):


		June 30, 2020						December 31, 2019
	Hierarchy	Book Value		Fair Value		Book Value		Fair Value
Senior Notes⁽¹⁾	Level 2	$	1,179,783	$	1,195,826	$	1,045,072	$	1,104,750

Term loan facility⁽²⁾	Level 2	$	250,000	$	250,000	$	250,000	$	250,000

September 30, 2017 December 31, 2016
Hierarchy Book Value Fair Value Book Value Fair Value
Senior Notes ⁽¹⁾
Level 2 $ 1,490,706
$ 1,558,500
$ 1,189,180
$ 1,219,125
Unsecured revolving credit facility ⁽²⁾
Level 2 $ 200,000
$ 195,058
$ 200,000
$ 177,410
Seller financed loan ⁽³⁾
Level 2 $ —
$ —
$ 13,726
$ 13,189
__________

~~__________~~


⁽¹⁾	The book value of the Senior Notes is net of discounts, excluding deferred loan costs of $21.1 million and $20.9 million as of September 30, 2017 and December 31, 2016, respectively. The estimated fair value of the Senior Notes at September 30, 2017 and December 31, 2016 is based on quoted market prices.


⁽²⁾	~~The estimated fair value of the Credit Facility at September 30, 2017 and December 31, 2016 is based on a treasury curve analysis.~~


⁽³⁾	~~The estimated fair value of the seller financed loan at December 31, 2016 is based on a treasury curve analysis.~~

~~At September~~⁽¹⁾The book value of the Senior Notes is net of discounts, excluding deferred loan costs of $13.6 million and $11.1 million as of June 30, ~~2017~~2020 and December 31, ~~2016,~~2019, respectively. The estimated fair value of the Senior Notes at June 30, 2020 and December 31, 2019 is based on quoted market prices.

⁽²⁾The estimated fair value of the Term Loan Facility as of June 30, 2020 approximated book value due to the variable interest rate terms of this loan.

At June 30, 2020 and December 31, 2019, the carrying value of cash and cash equivalents and receivables approximated fair ~~value.~~value due to their short-term nature and variable interest rate terms.

Fair Value of Nonfinancial Assets

Nonfinancial assets include items such as real estate inventories and long-lived assets that are measured at fair value on a nonrecurring basis when events and circumstances indicating the carrying value is not recoverable. ~~The following table presents impairment charges and the remaining net fair value for nonfinancial assets that were measured during the periods presented (in thousands):~~

Nine Months Ended September 30, 2017 Year Ended December 31, 2016

Impairment
Charge

Fair Value
Net of
Impairment

Impairment
Charge

Fair Value
Net of
Impairment
Real estate inventories⁽¹⁾
$ 267
$ 1,574
$ —
$ —

~~__________~~

⁽¹⁾~~Fair value of real estate inventories, net of impairment charges represents only those assets whose~~No carrying values were adjusted to fair value infor the ~~respective periods presented. The fair value of these real estate inventories impaired was determined based on an analysis of future undiscounted net cash flows. In~~six months ended June 30, 2020 or the ~~case of lots for sale, fair value was determined based on recent land~~year ended December 31, 2019.

13. Commitments and ~~lot sales for similar assets.~~Contingencies


~~13.~~	~~Commitments and Contingencies~~

Legal Matters

Lawsuits, claims and proceedings have been and may be instituted or asserted against us in the normal course of business, including actions brought on behalf of various classes of claimants. We are also subject to local, state and federal laws and regulations related to land development activities, house construction standards, sales practices, employment practices, environmental protection and financial services. As a result, we are subject to periodic examinations or inquiry by agencies administering these laws and regulations.

We record a reserve for potential legal claims and regulatory matters when they are probable of occurring and a potential loss is reasonably estimable. We accrue for these matters based on facts and circumstances specific to each matter and revise ~~these~~these estimates when necessary. In view of the inherent difficulty of predicting outcomes of legal claims and related contingencies, we generally cannot predict their ultimate resolution, related timing or eventual loss. Accordingly, it is possible that the ultimate outcome of any matter, if in excess of a related accrual or if no accrual was made, could be material to our financial statements. For matters as to which the Company believes a loss is probable and reasonably estimable, we had ~~legal~~$319,000 and $419,000 of legal reserves ~~of $100,000 and $225,000~~ as of ~~September~~June 30, ~~2017~~2020 and December 31, ~~2016,~~2019, respectively.

~~- 19 -~~

On April 3, 2017, Pardee Homes was named as a defendant in a lawsuit filed in San Diego County Superior Court by Scripps Health (“Scripps”) related to the April 1989 sale by Pardee Homes of real property located in Carmel Valley, California to Scripps pursuant to a purchase agreement dated December 18, 1987 (as amended, the “Purchase Agreement”). In March 2003, Scripps contacted Pardee Homes and alleged Pardee Homes had breached a covenant in the Purchase Agreement by failing to record a restriction against the development of the surrounding property then owned by Pardee Homes for medical office use. In November 2003, the parties entered into a tolling agreement, pursuant to which the parties agreed to toll any applicable statutes of limitation from November 3, 2003 until the expiration of the agreement. The tolling agreement did not revive any cause of action already time barred by a statute of limitation as of November 3, 2003. The tolling agreement was terminated as of February 21, 2017. Pardee Homes became an indirect, wholly owned subsidiary of TRI Pointe on July 7, 2014 in connection with TRI Pointe’s acquisition of WRECO.

We intend to vigorously defend the action, and intend to continue challenging Scripps' claims. Although we cannot predict or determine the timing or final outcome of the lawsuit or the effect that any adverse findings or determinations may have on us, we believe Scripps' claims against Pardee Homes are without merit and that this dispute will not have a material impact on our business, liquidity, financial condition and results of operations. An unfavorable determination could result in the payment by us of monetary damages, which could be significant. The complaint does not indicate the amount of relief sought, and an estimate of possible loss or range of loss cannot presently be made with respect to this matter. No reserve with respect to this matter has been recorded on our consolidated financial statements.

Warranty

Warranty reserves are accrued as home deliveries occur. Our warranty reserves on homes delivered will vary based on product type and geographic area and also depending on state and local laws. The warranty reserve is included in accrued expenses and other liabilities on our consolidated balance sheets and represents expected future costs based on our historical experience over previous years. Estimated warranty costs are charged to cost of home sales in the period in which the related home sales revenue is recognized.

We maintain general liability insurance designed to protect us against a portion of our risk of loss from warranty and construction defect-related claims. We also generally require our subcontractors and design professionals to indemnify us for liabilities arising from their work, subject to various limitations. However, such indemnity is significantly limited with respect to certain subcontractors that are added to our general liability insurance policy.

- 19 -

Our warranty reserve and related estimated insurance recoveries are based on actuarial analysis that uses our historical claim and expense data, as well as industry data to estimate these overall costs and related recoveries. Key assumptions used in developing these estimates include claim frequencies, severities and resolution patterns, which can occur over an extended period of time. These estimates are subject to variability due to the length of time between the delivery of a home to a homebuyer and when a warranty or construction defect claim is made, and the ultimate resolution of such claim; uncertainties regarding such claims relative to our markets and the types of product we build; and legal or regulatory actions and/or interpretations, among other factors. Due to the degree of judgment involved and the potential for variability in these underlying assumptions, our actual future costs could differ from those estimated. There can be no assurance that the terms and limitations of the limited warranty will be effective against claims made by homebuyers, that we will be able to renew our insurance coverage or renew it at reasonable rates, that we will not be liable for damages, cost of repairs, and/or the expense of litigation surrounding possible construction defects, soil subsidence or building related claims or that claims will not arise out of uninsurable events or circumstances not covered by insurance and not subject to effective indemnification agreements with certain subcontractors.

We also record expected recoveries from insurance carriers based on actual insurance claims made and actuarially determined amounts that depend on various factors, including the above-described reserve estimates, our insurance policy coverage limits for the applicable policy years and historical recovery rates. Because of the inherent uncertainty and variability in these assumptions, our actual insurance recoveries could differ significantly from amounts currently estimated. Outstanding warranty insurance receivables were ~~$45.9~~$39.7 million and ~~$46.9~~$40.0 million as of ~~September~~June 30, ~~2017~~2020 and December 31, ~~2016,~~2019, respectively. Warranty insurance receivables are recorded in receivables on the accompanying consolidated balance ~~sheet.~~

~~- 20 -~~

sheets.

Warranty reserve activity consisted of the following (in thousands):


														Three Months Ended June 30,						Six Months Ended June 30,
	Three Months Ended September 30,						Nine Months Ended September 30,							2020		2019		2020		2019
Warranty reserves, beginning of period													Warranty reserves, beginning of period	$	76,487	$	70,947	$	76,607	$	71,836
Warranty reserves accrued													Warranty reserves accrued	6,988		6,385		12,144		10,655
	2017			2016			2017			2016
Warranty reserves, beginning of period⁽¹⁾	$	80,128		$	45,272		$	83,135		$	45,948
Warranty reserves accrued	4,448			3,329			10,122			8,373
Adjustments to pre-existing reserves	400			200			1,021			460
Warranty expenditures	(4,054		)	(3,136		)	(13,356		)	(9,116		)	Warranty expenditures	(4,285)		(5,861)		(9,561)		(11,020)
Warranty reserves, end of period	$	80,922		$	45,665		$	80,922		$	45,665		Warranty reserves, end of period	$	79,190	$	71,471	$	79,190	$	71,471

~~__________~~

⁽¹⁾

Included in the 2017 opening balance is approximately $38.0 million of additional warranty liabilities estimated to be covered by our insurance policies that were adjusted to present the warranty reserves and related estimated warranty insurance receivable on a gross basis at December 31, 2016. Of the $38.0 million, approximately $36.5 million related to prior year estimated warranty insurance recoveries.

Performance Bonds

We obtain surety bonds in the normal course of business to ensure completion of certain infrastructure improvements of our projects. The beneficiaries of the bonds are various municipalities. As of ~~September~~June 30, ~~2017~~2020 and December 31, ~~2016,~~2019, the Company had outstanding surety bonds totaling ~~$544.3~~$614.2 million and ~~$449.6~~$611.6 million, respectively. ~~The beneficiaries~~As of June 30, 2020 and December 31, 2019, our estimated cost to complete obligations related to these surety bonds was $390.8 million and $382.3 million, respectively.

Lease Obligations

Under ASC 842 we recognize a right-of-use lease asset and a lease liability for contracts deemed to contain a lease at the inception of the ~~bonds~~contract. Our lease population is fully comprised of operating leases, which are ~~various municipalities.~~now recorded at the net present value of future lease obligations existing at each balance sheet date. At the inception of a lease, or if a lease is subsequently modified, we determine whether the lease is an operating or financing lease. Key estimates involved with ASC 842 include the discount rate used to measure our future lease obligations and the lease term, where considerations include renewal options and intent to renew. Lease right-of-use assets are included in other assets and lease liabilities are included in accrued expenses and other liabilities on our consolidated balance sheet.

Operating Leases

We lease certain property and equipment under non-cancelable operating leases. Office leases are for terms of up to ten years and generally provide renewal options. In most cases, we expect that, in the normal course of business, leases that expire will be renewed or replaced by other leases. Equipment leases are typically for terms of three to four years.

Ground Leases

In 1987, we obtained 2 55-year ground leases of commercial property that provided for 3 renewal options of ten years each and 1 45-year renewal option. We exercised the 3 ten-year extensions on 1 of these ground leases to extend

- 20 -

the lease through 2071. The commercial buildings on these properties have been sold and the ground leases have been sublet to the buyers.

For one of these leases, we are responsible for making lease payments to the landowner, and we collect sublease payments from the buyers of the buildings. This ground lease has been subleased through 2041 to the buyers of the commercial buildings. For the second lease, the buyers of the buildings are responsible for making lease payments directly to the landowner, however, we have guaranteed the performance of the buyers/lessees. See below for additional information on leases (dollars in thousands):


	Three Months Ended June 30, 2020		Three Months Ended June 30, 2019		Six Months Ended June 30, 2020		Six Months Ended June 30, 2019
Lease Cost
Operating lease cost (included in SG&A expense)	$	2,456	$	2,166	$	4,794	$	4,210
Ground lease cost (included in other operations expense)	624		627		1,248		1,217
Sublease income, operating leases	—		—		—		—
Sublease income, ground leases (included in other operations revenue)	(648)		(637)		(1,266)		(1,235)
Net lease cost	$	2,432	$	2,156	$	4,776	$	4,192

Other information
Cash paid for amounts included in the measurement of lease liabilities:
Operating lease cash flows (included in operating cash flows)	$	2,220	$	1,641	$	4,234	$	3,250
Ground lease cash flows (included in operating cash flows)	$	624	$	609	$	1,248	$	1,217
Right-of-use assets obtained in exchange for new operating lease liabilities	$	1,135	$	346	$	1,155	$	2,053


	June 30, 2020		December 31, 2019
Weighted-average discount rate:
Operating leases	5.9	%	5.9	%
Ground leases	10.2	%	10.2	%
Weighted-average remaining lease term (in years):
Operating leases	5.8		6.1
Ground leases	47.5		48.1

The future minimum lease payments under our operating leases are as follows (in thousands):


	Property, Equipment and Other Leases		Ground Leases ⁽¹⁾
Remaining in 2020	$	4,460	$	1,535
2021	7,855		3,070
2022	5,610		3,070
2023	4,503		3,070
2024	2,779		3,070
Thereafter	6,410		83,515
Total lease payments	$	31,617	$	97,330
Less: Interest	4,762		69,790
Present value of operating lease liabilities	$	26,855	$	27,540

__________

⁽¹⁾Ground leases are fully subleased through 2041, representing $65.5 million of the $97.3 million future ground lease obligations.

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14. Stock-Based Compensation


~~14.~~	~~Stock-Based Compensation~~

2013 Long-Term Incentive Plan

The Company’s stock compensation plan, the 2013 Long-Term Incentive Plan (the “2013 Incentive Plan”), was adopted by TRI Pointe in January 2013 and amended, with the approval of our stockholders, in 2014 and 2015. In addition, our board of directors amended the 2013 Incentive Plan in 2014 to prohibit repricing (other than in connection with any equity restructuring or any change in capitalization) of outstanding options or stock appreciation rights without stockholder approval. The 2013 Incentive Plan provides for the grant of equity-based awards, including options to purchase shares of common stock, stock appreciation rights, bonus stock, restricted stock, restricted stock units (“RSUs”) and performance awards. The 2013 Incentive Plan will automatically expire on the tenth anniversary of its effective date. Our board of directors may terminate or amend the 2013 Incentive Plan at any time, subject to any requirement of stockholder approval required by applicable law, rule or regulation.

As amended, the number of shares of our common stock that may be issued under the 2013 Incentive Plan is 11,727,833 shares. To the extent that shares of our common stock subject to an outstanding option, stock appreciation right, stock award or performance award granted under the 2013 Incentive Plan are not issued or delivered by reason of the expiration, termination, cancellation or forfeiture of such award or the settlement of such award in cash, then such shares of our common stock generally shall again be available under the 2013 Incentive Plan. As of ~~September~~June 30, ~~2017,~~2020, there were ~~6,207,889~~5,468,092 shares available for future grant under the 2013 Incentive Plan.

~~Converted Awards~~

On July 16, 2014, the Company filed a registration statement on Form S-8 (Registration No. 333-197461) to register 4,105,953 shares of common stock related to converted equity awards issued in connection with the Company's acquisition of WRECO. The converted awards have the same terms and conditions as the prior equity awards except that all performance share units were surrendered in exchange for time-vesting restricted stock units without any performance-based vesting conditions or requirements and the exercise price of each converted stock option is equal to the original exercise price divided by an exchange ratio of 2.1107, rounded down to the nearest whole number of shares of common stock. There will be no future grants under the WRECO equity incentive plans.

The following table presents compensation expense recognized related to all stock-based awards (in thousands):

Three Months Ended September 30, Nine Months Ended September 30,
2017 2016 2017 2016
Total stock-based compensation $ 3,887
$ 3,285
$ 11,631
$ 9,648


	Three Months Ended June 30,						Six Months Ended June 30,
	2020		2019		2020		2019
Total stock-based compensation	$	3,786	$	3,351	$	7,411	$	6,786

Stock-based compensation is charged to general and administrative expense on the accompanying consolidated statements of operations. As of ~~September~~June 30, ~~2017,~~2020, total unrecognized stock-based compensation related to all stock-based awards was ~~$21.3~~$24.7 million and the weighted average term over which the expense was expected to be recognized was ~~1.7~~2.1 years.

Summary of Stock Option Activity

The following table presents a summary of stock option awards for the ~~nine~~six months ended ~~September~~June 30, ~~2017:~~2020:


									Options	Weighted Average Exercise Price Per Share		Weighted Average Remaining Contractual Life	Aggregate Intrinsic Value (in thousands)
	Options		Weighted Average Exercise Price Per Share		Weighted Average Remaining Contractual Life	Aggregate Intrinsic Value (in thousands)
Options outstanding at December 31, 2016	2,971,370		$	13.12	4.4	$	1,568
Options outstanding at December 31, 2019								Options outstanding at December 31, 2019	891,343	$	15.03	3.4	$	994
Granted	—		—		—	—		Granted	—	—		—	—
Exercised	(318,419	)	10.34		—	—		Exercised	(78,506)	$	11.94	—	—
Forfeited	(686,720	)	14.16		—	—		Forfeited	(8,257)	$	14.37	—	—
Options outstanding at September 30, 2017	1,966,231		13.44		5.0	2,322
Options exercisable at September 30, 2017	1,851,395		13.39		4.9	2,322
Options outstanding at June 30, 2020								Options outstanding at June 30, 2020	804,580	$	15.34	3	$	247
Options exercisable at June 30, 2020								Options exercisable at June 30, 2020	804,580	$	15.34	3	$	247

~~- 22 -~~

The intrinsic value of each stock option award outstanding or exercisable is the difference between the fair market value of the Company’s common stock at the end of the period and the exercise price of each stock option award to the extent it is considered “in-the-money”. A stock option award is considered to be “in-the-money” if the fair market value of the Company’s stock is greater than the exercise price of the stock option award. The aggregate intrinsic value of options outstanding and options exercisable represents the value that would have been received by the holders of stock option awards had they exercised their stock option award on the last trading day of the period and sold the underlying shares at the closing price on that day.

Summary of Restricted Stock Unit Activity

The following table presents a summary of ~~restricted stock units (“RSUs”)~~RSUs for the ~~nine~~six months ended ~~September~~June 30, ~~2017:~~2020:

- 22 -


								Restricted Stock Units	Weighted Average Grant Date Fair Value Per Share		Aggregate Intrinsic Value (in thousands)
	Restricted Stock Units		Weighted Average Grant Date Fair Value Per Share		Aggregate Intrinsic Value (in thousands)
Nonvested RSUs at December 31, 2016	3,412,719		$	9.77	$	39,178
Nonvested RSUs at December 31, 2019							Nonvested RSUs at December 31, 2019	3,384,351	$	12.39	$	52,694
Granted	1,670,936		11.00		22,508		Granted	1,458,633	$	18.45	—
Vested	(714,612	)	12.34		—		Vested	(990,929)	$	13.36	—
Forfeited	(40,362	)	11.68		—		Forfeited	(744,904)	$	10.81	—
Nonvested RSUs at September 30, 2017	4,328,681		9.80		58,307
Nonvested RSUs at June 30, 2020							Nonvested RSUs at June 30, 2020	3,107,151	$	15.30	$	43,997

RSUs that vested, as reflected in the table above, during the six months ended June 30, 2020 include previously granted time-based RSUs. RSUs that were forfeited, as reflected in the table above, during the six months ended June 30, 2020 include performance-based RSUs and time-based RSUs that were forfeited for no consideration.

On ~~March 1, 2016,~~April 27, 2020, the Company granted an aggregate of ~~1,120,677 time-vested~~47,080 time-based RSUs to ~~employees and officers.~~the non-employee members of its board of directors. The RSUs granted to non-employee directors vest in ~~equal installments annually~~their entirety on the ~~anniversary~~day immediately prior to the Company’s 2021 annual meeting of ~~the grant date over a three year period.~~stockholders. The fair value of each RSU granted on ~~March 1, 2016~~April 27, 2020 was measured using a price of ~~$10.49~~$10.62 per share, which was the closing stock price on the date of grant. Each award will be expensed on a straight-line basis over the vesting period.

On March ~~1, 2016,~~9, 2020 and February 20, 2020, the Company granted ~~297,426, 285,986~~an aggregate of 17,692 and ~~125,834~~639,395, respectively, time-based RSUs to certain employees and officers. The RSUs granted vest in equal installment annually on the anniversary of the grant date over a three-year period. The fair value of each RSU granted on March 9, 2020 and February 20, 2020 was measured using a price of $14.13 and $18.39 per share, respectively, which were the closing stock prices on the dates of grant. Each award will be expensed on a straight-line basis over the vesting period.

On February 20, 2020, the Company granted an aggregate of 547,166 performance-based RSUs to the Company’s Chief Executive Officer, Chief Operating Officer and President, ~~and~~ Chief Financial Officer, ~~respectively.~~General Counsel, Chief Marketing Officer and Chief Human Resources Officer. These performance-based RSUs are allocated to two separate performance metrics, as follows: (i) 50% to homebuilding revenue, and (ii) 50% to pre-tax earnings. The vesting, if at all, of these performance-based RSUs may range from 0% to 100% and will be based on the Company’s percentage attainment of specified threshold, target and maximum performance goals. ~~The percentage of these performance-based RSUs that vest will~~Any award earned based on performance achieved may be ~~determined~~increased or decreased by ~~comparing~~25% based on the Company’s total stockholder return (“~~TSR”~~TSR'”) relative to ~~the TSRs of a group of peer homebuilding companies.~~its peer-group homebuilders. The performance period for these performance-based RSUs is January 1, ~~2016~~2020 to December 31, 2018. These performance-based RSUs will not vest if the Company’s total stockholder return from January 1, 2016 to December 31, 2018 is not a positive number, provided that the executive will thereafter become vested in the award units, or portion thereof, that would have otherwise vested on December 31, 2018 if on any day after December 31, 2018 and on or before December 31, 2020, the Company’s total stockholder return is greater than zero and the executive is employed by the Company on that date. If the performance-based RSUs have not vested on or before December 31, 2020, such performance-based RSUs shall be cancelled and forfeited for no consideration.2022. The fair value of these performance-based RSUs was determined to be ~~$4.76~~$19.36 per share based on a Monte Carlo simulation. Each award will be expensed over the requisite service period.

On ~~June 6, 2016,~~February 20, 2020, the Company granted an aggregate of ~~74,466~~207,300 performance-based RSUs to the ~~non-employee members~~Company’s division presidents. These performance-based RSUs are allocated to two separate performance metrics, as follows: (i) 50% to homebuilding revenue of ~~its board~~the applicable Company division, and (ii) 50% to pre-tax earnings of ~~directors. On March 27, 2017, 21,276~~the applicable Company division. The vesting, if at all, of these performance-based RSUs ~~vested in their entirety~~may range from 0% to 100% and will be based on ~~May 25, 2017, 53,190~~the applicable Company division’s percentage attainment of specified threshold, target and maximum performance goals. The performance period for these performance-based RSUs ~~vested in their entirety.~~is January 1, 2020 to December 31, 2022. The fair value of ~~each RSU granted on June 6, 2016~~these performance-based RSUs was measured using a price of ~~$11.75 per share,~~$18.39, which was the closing stock price on the date of grant. Each award ~~was~~will be expensed ~~on a straight-line basis~~ over the ~~vesting~~requisite service period.

On ~~February 27, 2017,~~May 6, 2019, the Company granted an aggregate of ~~990,279 time-vested~~61,488 time-based RSUs to ~~employees~~the non-employee members of its board of directors and ~~officers.~~1,098 time-based RSUs to certain employees. The RSUs granted to non-employee directors vest in their entirety on the day immediately prior to the Company’s 2020 annual meeting of stockholders and the RSUs granted to employees vest in equal installments annually on the anniversary of the grant date over a three ~~year~~-year period. The fair value of each RSU granted on ~~February 27, 2017~~May 6, 2019 was measured using a price of ~~$12.10~~$13.66 per share which was the closing stock price on the date of grant. Each award will be expensed on a straight-line basis over the vesting period.

On March 11, 2019 and February 28, 2019, the Company granted an aggregate of 3,025 and 990,723, respectively, of time-based RSUs to certain employees and officers. The RSUs granted vest in equal installments annually on the anniversary of the grant date over a three-year period. The fair value of each RSU granted on March 11, 2019 and February 28, 2019 was measured using a price of $13.22 and $12.60 per share, respectively, which were the closing stock prices on the dates of grant. Each award will be expensed on a straight-line basis over the vesting period.

- 23 -

On February ~~27, 2017,~~28, 2019, the Company granted ~~257,851, 247,933~~247,619, 238,095 and ~~119,008~~114,285 performance-based RSUs to the Company’s Chief Executive Officer, President, and Chief Financial Officer, respectively. These performance-based RSUs are allocated ~~in equal parts~~ to two separate performance ~~metrics:~~metrics, as follows: (i) 30% to TSR, with vesting based on the Company’s TSR relative to its peer-group homebuilders; and (ii) 70% to earnings per share. The vesting, if at all, of these performance-based RSUs may range from 0% to 100% and will be based on the Company’s percentage attainment of specified threshold, target and maximum performance goals. The performance period for these performance-based RSUs is January 1, ~~2017~~2019 to December 31, ~~2019.~~2021. The fair value of the performance-based RSUs related to the TSR metric was determined to be ~~$6.16~~$8.16 per share based on a Monte Carlo simulation. The fair value of the performance-based RSUs related to the earnings per share goal was measured using a price of ~~$12.10~~$12.60 per share, which was the closing stock price on the date of grant. Each award will be expensed over the requisite service ~~period.~~

On May 30, 2017, the Company granted an aggregate of 55,865 RSUs to the non-employee members of its board of directors. These RSUs vest in their entirety on the day immediately prior to the Company's 2018 Annual Meeting of Stockholders. The fair value of each RSU granted on May 30, 2017 was measured using a price of $12.53 per share, which was the closing stock price on the date of grant. Each award will be expensed on a straight-line basis over the vesting period.

As RSUs vest for employees, a portion of the shares awarded is generally withheld to cover employee tax withholdings. As a result, the number of RSUs vested and the number of shares of TRI Pointe common stock issued will differ.


~~15.~~	~~Stock Repurchase Program~~

On February 23, 2017, our board of directors approved a new stock repurchase program, authorizing the repurchase of our common stock with an aggregate value of up to $100 million through March 31, 2018 (the “2017 Repurchase Program”)15. On July 25, 2017 our board of directors authorized the repurchase of up to an additional $50 million of our common stock under the 2017 Repurchase Program, increasing the aggregate authorization from $100 million to $150 million. Purchases of common stock pursuant to the 2017 Repurchase Program may be made in open market transactions effected through a broker-dealer at prevailing market prices, in block trades, or by other means in accordance with federal securities laws, including pursuant to any trading plan that may be adopted in accordance with Rule 10b5-1 of the Securities Exchange Act of 1934, as amended. We are not obligated under the 2017 Repurchase Program to repurchase any specific number or amount of shares of common stock, and we may modify, suspend or discontinue the program at any time. Our management will determine the timing and amount of repurchase in its discretion based on a variety of factors, such as the market price of our common stock, corporate requirements, general market economic conditions and legal requirements. For the three months ended September 30, 2017, we repurchased and retired 975,700 shares of our common stock under the 2017 Repurchase Program at a weighted average price of $12.83 per share for a total cost of $12.5 million. For the nine months ended September 30, 2017, we repurchased and retired 8,994,705 shares of our common stock under the 2017 Repurchase Program at a weighted average price of $12.48 per share for a total cost of $112.2 million.Income Taxes


~~16.~~	~~Income Taxes~~

We account for income taxes in accordance with ASC Topic 740, Income Taxes (“ASC 740”), which requires an asset and liability approach for measuring deferred taxes based on temporary differences between the financial statements and tax bases of assets and liabilities using enacted tax rates for the years in which taxes are expected to be paid or recovered. Each quarter we assess our deferred tax asset to determine whether all or any portion of the asset is more likely than not unrealizable under ASC 740. We are required to establish a valuation allowance for any portion of the asset we conclude is more likely than not to be unrealizable. Our assessment considers, among other things, the nature, frequency and severity of our current and cumulative losses, forecasts of our future taxable income, the duration of statutory carryforward periods and tax planning alternatives.

We had net deferred tax assets of ~~$108.7~~$39.7 million and ~~$123.2~~$49.9 million as of ~~September~~June 30, ~~2017~~2020 and December 31, ~~2016, respectively.~~2019. We had a valuation allowance related to those net deferred tax assets of ~~$323,000~~$3.5 million as of ~~both September~~June 30, ~~2017~~2020 and December 31, ~~2016.~~2019. The Company will continue to evaluate both positive and negative evidence in determining the need for a valuation allowance against its deferred tax assets. Changes in positive and negative evidence, including differences between the ~~Company's~~Company’s future operating results and the estimates utilized in the determination of the valuation allowance, could result in changes in the ~~Company's~~Company’s estimate of the valuation allowance against its deferred tax assets. The accounting for deferred taxes is based upon estimates of future results. Differences between the anticipated and actual outcomes of these future results could have a material impact on the ~~Company's~~Company’s consolidated results of operations or financial position. Also, changes in existing federal and state tax laws and tax rates could affect future tax results and the valuation allowance against the ~~Company's~~Company’s deferred tax assets.

~~- 24 -~~

TRI Pointe has certain liabilities ~~with~~to Weyerhaeuser Company (“Weyerhaeuser”) related to a tax sharing agreement. As of ~~September~~both June 30, ~~2017~~2020 and December 31, ~~2016,~~2019, we had an income tax liability to Weyerhaeuser of ~~$7.2 million and $8.6 million, respectively.~~$346,000. The income tax liability to Weyerhaeuser is recorded in accrued expenses and other liabilities on the accompanying consolidated balance sheets. During the six months ended June 30, 2019, we amended our existing tax sharing agreement with Weyerhaeuser, pursuant to which the parties agreed, among other things, that we had no further obligation to remit payment to Weyerhaeuser in connection with any potential utilization of certain deductions or losses associated with certain Weyerhaeuser entities with respect to federal and state taxes. As a result of the amendment, during the three months ended March 31, 2019, we decreased our income tax liability to Weyerhaeuser and recorded other income of $6.0 million, which is included in other income, net in the accompanying consolidated statements of operations.

Our provision for income taxes totaled ~~$46.1~~$18.1 million and ~~$20.3~~$9.1 million for the three months ended ~~September~~June 30, ~~2017~~2020 and ~~2016, respectively. Our provision for income taxes totaled $69.8~~2019, respectively and $28.0 million and ~~$77.7~~$9.2 million for the ~~nine~~six months ended ~~September~~June 30, ~~2017~~2020 and ~~2016,~~2019, respectively. The Company classifies any interest and penalties related to income taxes assessed by jurisdiction as part of income tax expense. The Company had ~~$1.4 million~~$486,000 of uncertain tax positions recorded as of ~~September~~June 30, ~~2017. The Company had no uncertain tax positions as of~~2020 and December 31, ~~2016.~~2019. The Company has not been assessed interest or penalties by any major tax jurisdictions related to prior years.


~~17.~~	~~Related Party Transactions~~

16. Related Party Transactions

We had no0 related party transactions for the ~~nine~~six months ended ~~September~~June 30, ~~2017.~~2020 and 2019.

~~In May~~

- 24 -

17. Supplemental Disclosure to Consolidated Statements of 2016, we entered into an agreement with an affiliate of Starwood Capital Group, a then greater than 5% holder of our common stock, to acquire 52 lots located in Azusa, California, for an aggregate purchase price of $18.4 million. In October of 2016, we acquired 27 of these lots for a purchase price of $9.6 million. Our former Chairman of the Board is also the Chairman and Chief Executive Officer of Starwood Capital Group. This acquisition was approved by our independent directors. In August of 2016, we entered into an agreement with an affiliate of Starwood Capital Group to purchase 257 lots located in Castle Rock, Colorado, for an aggregate purchase price of approximately $8.6 million. In October of 2016, we acquired 126 of these lots for a purchase price of $4.2 million. This acquisition was approved by our independent directors. As of March 27, 2017, Starwood Capital Group is no longer a related party.Cash Flows

In 2016, we acquired 93 lots located in Dublin, California, for a purchase price of approximately $25.5 million from an affiliate of BlackRock, Inc., a greater than 5% holder of our common stock. This acquisition was approved by the vote of our independent directors in accordance with the requirements of the Company’s Code of Business Conduct and Ethics.


~~18.~~	~~Supplemental Disclosure to Consolidated Statements of Cash Flows~~

The following are supplemental disclosures to the consolidated statements of cash flows (in thousands):

Nine Months Ended September 30,
2017 2016
Supplemental disclosure of cash flow information:
Cash paid during the period for:
Interest, net of amounts capitalized of $61,669 and $50,030 (Note 5) $ —
$ —
Income taxes $ 44,784
$ 89,269
Supplemental disclosures of noncash activities:
Amortization of senior note discount capitalized to real estate inventory $ 1,525
$ 1,321
Amortization of deferred loan costs capitalized to real estate inventory $ 4,104
$ 2,865
Effect of net consolidation and de-consolidation of variable interest entities:
Decrease in consolidated real estate inventory not owned $ (14,660 ) $ 3,484
Decrease in noncontrolling interests $ 14,660
$ (3,484 )


	Six Months Ended June 30,
	2020		2019
Supplemental disclosure of cash flow information:
Interest paid (capitalized), net	$	1,191	$	(3,104)
Income taxes paid (refunded), net	$	(12)	$	10,601
Supplemental disclosures of noncash activities:
Amortization of senior note discount capitalized to real estate inventory	$	579	$	981
Amortization of deferred loan costs capitalized to real estate inventory	$	1,844	$	2,826

~~- 25 -~~18. Supplemental Guarantor Information


~~19.~~	~~Supplemental Guarantor Information~~

2021 Notes, ~~and~~ 2027 Notes and 2028 Notes

On May 26, 2016, TRI Pointe Group issued the 2021 ~~Notes. On~~Notes, on June 5, 2017, TRI Pointe Group issued the 2027 Notes and on June 10, 2020, TRI Pointe Group issued the 2028 Notes. All of TRI Pointe Group’s 100% owned subsidiaries that are guarantors (each a “Guarantor” and, collectively, the “Guarantors”) of the Credit Facility, including TRI Pointe Homes, are party to supplemental indentures pursuant to which they jointly and severally guarantee TRI Pointe Group’s obligations with respect to ~~the 2021 Notes and the 2027~~these Notes. Each Guarantor of the 2021 Notes, the 2027 Notes and the ~~2027~~2028 Notes is 100% owned by TRI Pointe Group, and all guarantees are full and unconditional, subject to customary exceptions pursuant to the indentures governing the 2021 Notes, the 2027 Notes and the ~~2027~~2028 Notes, as described in the following paragraph. All of our non-Guarantor subsidiaries have nominal assets and operations and are considered minor, as defined in Rule 3-10(h) of Regulation S-X. In addition, TRI Pointe Group has no independent assets or operations, as defined in Rule 3-10(h) of Regulation S-X. There are no significant restrictions upon the ability of TRI Pointe Group or any Guarantor to obtain funds from any of their respective wholly owned subsidiaries by dividend or loan. None of the assets of our subsidiaries represent restricted net assets pursuant to Rule 4-08(e)(3) of Regulation S-X.

A Guarantor of the 2021 Notes, the 2027 Notes and the ~~2027~~2028 Notes shall be released from all of its obligations under its guarantee if (i) all of the assets of the Guarantor have been sold; (ii) all of the equity interests of the Guarantor held by TRI Pointe Group or a subsidiary thereof have been sold; (iii) the Guarantor merges with and into TRI Pointe Group or another Guarantor, with TRI Pointe Group or such other Guarantor surviving the merger; (iv) the Guarantor is designated “unrestricted” for covenant purposes; (v) the Guarantor ceases to guarantee any indebtedness of TRI Pointe Group or any other Guarantor which gave rise to such Guarantor guaranteeing the 2021 Notes, the 2027 Notes or the ~~2027~~2028 Notes; (vi) TRI Pointe Group exercises its legal defeasance or covenant defeasance options; or (vii) all obligations under the applicable supplemental indenture are discharged.

~~2019 Notes and~~ 2024 Notes

TRI Pointe Group and TRI Pointe Homes are co-issuers of ~~the 2019 Notes and~~ the 2024 Notes. All of the Guarantors (other than TRI Pointe Homes) have entered into supplemental indentures pursuant to which they jointly and severally guarantee the obligations of TRI Pointe Group and TRI Pointe Homes with respect to the ~~2019 Notes and the~~ 2024 Notes. Each Guarantor of ~~the 2019 Notes and~~ the 2024 Notes is 100% owned by TRI Pointe Group and TRI Pointe Homes, and all guarantees are full and unconditional, subject to customary exceptions pursuant to the indentures governing the ~~2019 Notes and the~~ 2024 Notes, as described below.

A Guarantor of ~~the 2019 Notes and~~ the 2024 Notes shall be released from all of its obligations under its guarantee if (i) all of the assets of the Guarantor have been sold; (ii) all of the equity interests of the Guarantor held by TRI Pointe or a subsidiary thereof have been sold; (iii) the Guarantor merges with and into TRI Pointe or another Guarantor, with TRI Pointe or such other Guarantor surviving the merger; (iv) the Guarantor is designated “unrestricted” for covenant purposes; (v) the Guarantor ceases to guarantee any indebtedness of TRI Pointe or any other Guarantor which gave rise to such Guarantor guaranteeing the ~~2019 Notes and~~ 2024 Notes; (vi) TRI Pointe exercises its legal defeasance or covenant defeasance options; or (vii) all obligations under the applicable indenture are discharged.

Presented below are the condensed consolidating balance sheets at ~~September~~June 30, ~~2017~~2020 and December 31, ~~2016,~~2019, condensed consolidating statements of operations for the three and ~~nine~~six months ended ~~September~~June 30, ~~2017~~2020 and ~~2016~~2019 and condensed consolidating statement of cash flows for the ~~nine~~six months ended ~~September~~June 30, ~~2017~~2020 and ~~2016.~~ 2019. Because TRI Pointe’s non-Guarantor subsidiaries are considered minor, as defined in Rule 3-10(h) of Regulation S-X, the non-Guarantor subsidiaries’ information is not

- 25 -

separately presented in the tables below, but is included with the Guarantors. Additionally, because TRI Pointe Group has no independent assets or operations, as defined in Rule 3-10(h) of Regulation S-X, the condensed consolidated financial information of TRI Pointe Group and TRI Pointe Homes, the co-issuers of the ~~2019 Notes and~~ 2024 Notes, is presented together in the column titled “Issuer”.

~~- 26 -~~

Condensed Consolidating Balance Sheet (in thousands):


	June 30, 2020
	Issuer		Guarantor Subsidiaries		Consolidating Adjustments		Consolidated TRI Pointe Group, Inc.
Assets
Cash and cash equivalents	$	393,481	$	81,064	$	—	$	474,545
Receivables	27,555		60,025		—		87,580
Intercompany receivables	421,075		—		(421,075)		—
Real estate inventories	699,708		2,312,914		—		3,012,622
Investments in unconsolidated entities	—		36,040		—		36,040
Goodwill and other intangible assets, net	156,604		3,022		—		159,626
Investments in subsidiaries	1,968,697		—		(1,968,697)		—
Deferred tax assets, net	9,021		30,723		—		39,744
Other assets	5,192		162,555		—		167,747
Total assets	$	3,681,333	$	2,686,343	$	(2,389,772)	$	3,977,904

Liabilities
Accounts payable	$	16,911	$	54,175	$	—	$	71,086
Intercompany payables	—		421,075		(421,075)		—
Accrued expenses and other liabilities	72,434		242,384		—		314,818
Loans payable	250,000		—		—		250,000
Senior notes	1,166,189		—		—		1,166,189
Total liabilities	1,505,534		717,634		(421,075)		1,802,093

Equity
Total stockholders’ equity	2,175,799		1,968,697		(1,968,697)		2,175,799
Noncontrolling interests	—		12		—		12
Total equity	2,175,799		1,968,709		(1,968,697)		2,175,811
Total liabilities and equity	$	3,681,333	$	2,686,343	$	(2,389,772)	$	3,977,904

September 30, 2017
Issuer
Guarantor
Subsidiaries

Consolidating
Adjustments

Consolidated
TRI Pointe
Group, Inc.
Assets
Cash and cash equivalents $ 86,046
$ 76,350
$ —
$ 162,396
Receivables 29,963
54,620
—
84,583
Intercompany receivables 940,894
—
(940,894 ) —
Real estate inventories 981,813
2,321,608
—
3,303,421
Investments in unconsolidated entities —
17,616
—
17,616
Goodwill and other intangible assets, net 156,604
4,490
—
161,094
Investments in subsidiaries 1,388,227
—
(1,388,227 ) —
Deferred tax assets, net 15,644
93,020
—
108,664
Other assets 7,953
50,339
—
58,292
Total Assets $ 3,607,144
$ 2,618,043
$ (2,329,121 ) $ 3,896,066

Liabilities
Accounts payable $ 8,561
$ 55,477
$ —
$ 64,038
Intercompany payables —
940,894
(940,894 ) —
Accrued expenses and other liabilities 86,596
229,891
—
316,487
Unsecured revolving credit facility 200,000
—
—
200,000
Senior notes 1,469,558
—
—
1,469,558
Total Liabilities 1,764,715
1,226,262
(940,894 ) 2,050,083

Equity
Total stockholders’ equity 1,842,429
1,388,227
(1,388,227 ) 1,842,429
Noncontrolling interests —
3,554
—
3,554
Total Equity 1,842,429
1,391,781
(1,388,227 ) 1,845,983
Total Liabilities and Equity $ 3,607,144
$ 2,618,043
$ (2,329,121 ) $ 3,896,066

- 2726 -

Condensed Consolidating Balance Sheet (in thousands):


	December 31, 2019
	Issuer		Guarantor Subsidiaries		Consolidating Adjustments		Consolidated TRI Pointe Group, Inc.
Assets
Cash and cash equivalents	$	186,200	$	142,811	$	—	$	329,011
Receivables	26,016		43,260		—		69,276
Intercompany receivables	576,846		—		(576,846)		—
Real estate inventories	737,662		2,327,774		—		3,065,436
Investments in unconsolidated entities	—		11,745		—		11,745
Goodwill and other intangible assets, net	156,604		3,289		—		159,893
Investments in subsidiaries	1,870,885		—		(1,870,885)		—
Deferred tax assets, net	9,020		40,884		—		49,904
Other assets	14,676		158,749		—		173,425
Total assets	$	3,577,909	$	2,728,512	$	(2,447,731)	$	3,858,690

Liabilities
Accounts payable	$	14,915	$	51,205	$	—	$	66,120
Intercompany payables	—		576,846		(576,846)		—
Accrued expenses and other liabilities	92,479		229,564		—		322,043
Loans payable	250,000		—		—		250,000

Senior notes	1,033,985		—		—		1,033,985
Total liabilities	1,391,379		857,615		(576,846)		1,672,148

Equity
Total stockholders’ equity	2,186,530		1,870,885		(1,870,885)		2,186,530
Noncontrolling interests	—		12		—		12
Total equity	2,186,530		1,870,897		(1,870,885)		2,186,542
Total liabilities and equity	$	3,577,909	$	2,728,512	$	(2,447,731)	$	3,858,690

December 31, 2016
Issuer
Guarantor
Subsidiaries

Consolidating
Adjustments

Consolidated
TRI Pointe
Group, Inc.
Assets
Cash and cash equivalents $ 141,568
$ 67,089
$ —
$ 208,657
Receivables 26,692
55,808
—
82,500
Intercompany receivables 775,321
—
(775,321 ) —
Real estate inventories 868,088
2,042,539
—
2,910,627
Investments in unconsolidated entities —
17,546
—
17,546
Goodwill and other intangible assets, net 156,604
4,891
—
161,495
Investments in subsidiaries 1,285,295
—
(1,285,295 ) —
Deferred tax assets, net 15,644
107,579
—
123,223
Other assets 11,401
49,191
—
60,592
Total Assets $ 3,280,613
$ 2,344,643
$ (2,060,616 ) $ 3,564,640

Liabilities
Accounts payable $ 20,637
$ 49,615
$ —
$ 70,252
Intercompany payables —
775,321
(775,321 ) —
Accrued expenses and other liabilities 48,496
215,349
—
263,845
Unsecured revolving credit facility 200,000
—
—
200,000
Seller financed loans 13,726
—
—
13,726
Senior notes 1,168,307
—
—
1,168,307
Total Liabilities 1,451,166
1,040,285
(775,321 ) 1,716,130

Equity
Total stockholders’ equity 1,829,447
1,285,295
(1,285,295 ) 1,829,447
Noncontrolling interests —
19,063
—
19,063
Total Equity 1,829,447
1,304,358
(1,285,295 ) 1,848,510
Total Liabilities and Equity $ 3,280,613
$ 2,344,643
$ (2,060,616 ) $ 3,564,640

- 2827 -

Condensed Consolidating Statement of Operations (in thousands):


	Three Months Ended June 30, 2020
	Issuer		Guarantor Subsidiaries		Consolidating Adjustments		Consolidated TRI Pointe Group, Inc.
Homebuilding:
Home sales revenue	$	206,473	$	560,469	$	—	$	766,942
Land and lot sales revenue	—		220		—		220
Other operations revenue	—		648		—		648
Total revenues	206,473		561,337		—		767,810
Cost of home sales	172,086		429,348		—		601,434
Cost of land and lot sales	—		374		—		374
Other operations expense	—		624		—		624
Sales and marketing	10,667		34,527		—		45,194
General and administrative	19,875		17,679		—		37,554
Restructuring charges	1,111		4,438		—		5,549
Homebuilding income from operations	2,734		74,347		—		77,081
Equity in loss of unconsolidated entities	—		(25)		—		(25)
Other loss, net	(6,320)		(8)		—		(6,328)
Homebuilding (loss) income before income taxes	(3,586)		74,314		—		70,728
Financial Services:
Revenues	—		2,296		—		2,296
Expenses	—		1,285		—		1,285
Equity in income of unconsolidated entities	—		2,932		—		2,932
Financial services income before income taxes	—		3,943		—		3,943
(Loss) income before income taxes	(3,586)		78,257		—		74,671
Equity of net income of subsidiaries	60,114		—		(60,114)		—
Provision for income taxes	—		(18,143)		—		(18,143)
Net income	$	56,528	$	60,114	$	(60,114)	$	56,528

Three Months Ended September 30, 2017
Issuer
Guarantor
Subsidiaries

Consolidating
Adjustments

Consolidated
TRI Pointe
Group, Inc.
Homebuilding:
Home sales revenue $ 239,110
$ 409,528
$ —
$ 648,638
Land and lot sales revenue —
68,218
—
68,218
Other operations revenue —
584
—
584
Total revenues 239,110
478,330
—
717,440
Cost of home sales 200,384
321,534
—
521,918
Cost of land and lot sales —
12,001
—
12,001
Other operations expense —
575
—
575
Sales and marketing 8,816
24,363
—
33,179
General and administrative 15,560
17,396
—
32,956
Homebuilding income from operations 14,350
102,461
—
116,811
Equity in income of unconsolidated entities —
—
—
—
Other income, net 15
11
—
26
Homebuilding income before income taxes 14,365
102,472
—
116,837
Financial Services:
Revenues —
295
—
295
Expenses —
82
—
82
Equity in income of unconsolidated entities —
1,351
—
1,351
Financial services income before income taxes —
1,564
—
1,564
Income before income taxes 14,365
104,036
—
118,401
Equity of net income of subsidiaries 59,725
—
(59,725 ) —
Provision for income taxes (1,826 ) (44,286 ) —
(46,112 )
Net income 72,264
59,750
(59,725 ) 72,289
Net income attributable to noncontrolling interests —
(25 ) —
(25 )
Net income available to common stockholders $ 72,264
$ 59,725
$ (59,725 ) $ 72,264

- 2928 -

Condensed Consolidating Statement of Operations (in thousands):


	Three Months Ended June 30, 2019
	Issuer		Guarantor Subsidiaries		Consolidating Adjustments		Consolidated TRI Pointe Group, Inc.
Homebuilding:
Home sales revenue	$	192,752	$	499,386	$	—	$	692,138
Land and lot sales revenue	—		5,183		—		5,183
Other operations revenue	—		637		—		637
Total revenues	192,752		505,206		—		697,958
Cost of home sales	163,356		411,328		—		574,684
Cost of land and lot sales	—		5,562		—		5,562
Other operations expense	—		627		—		627
Sales and marketing	9,961		37,104		—		47,065
General and administrative	18,391		18,463		—		36,854

Homebuilding income from operations	1,044		32,122		—		33,166
Equity in loss of unconsolidated entities	—		(26)		—		(26)
Other income, net	8		145		—		153
Homebuilding income before income taxes	1,052		32,241		—		33,293
Financial Services:
Revenues	—		756		—		756
Expenses	—		627		—		627
Equity in income of unconsolidated entities	—		1,972		—		1,972
Financial services income before income taxes	—		2,101		—		2,101
Income before income taxes	1,052		34,342		—		35,394
Equity of net income of subsidiaries	25,215		—		(25,215)		—
Provision for income taxes	(5)		(9,127)		—		(9,132)
Net income	$	26,262	$	25,215	$	(25,215)	$	26,262

Three Months Ended September 30, 2016
Issuer
Guarantor
Subsidiaries

Consolidating
Adjustments

Consolidated
TRI Pointe
Group, Inc.
Homebuilding:
Home sales revenue $ 167,769
$ 410,884
$ —
$ 578,653
Land and lot sales revenue —
2,535
—
2,535
Other operations revenue —
606
—
606
Total revenues 167,769
414,025
—
581,794
Cost of home sales 144,217
318,106
—
462,323
Cost of land and lot sales —
1,734
—
1,734
Other operations expense —
575
—
575
Sales and marketing 6,598
25,254
—
31,852
General and administrative 15,192
16,086
—
31,278
Homebuilding income from operations 1,762
52,270
—
54,032
Equity in loss of unconsolidated entities —
(20 ) —
(20 )
Other (loss) income, net (345 ) 366
—
21
Homebuilding income before income taxes 1,417
52,616
—
54,033
Financial Services:
Revenues —
235
—
235
Expenses —
72
—
72
Equity in income of unconsolidated entities —
1,247
—
1,247
Financial services income before income taxes —
1,410
—
1,410
Income before income taxes 1,417
54,026
—
55,443
Equity of net income of subsidiaries 34,639
—
(34,639 ) —
Provision for income taxes (1,222 ) (19,076 ) —
(20,298 )
Net income 34,834
34,950
(34,639 ) 35,145
Net income attributable to noncontrolling interests —
(311 ) —
(311 )
Net income available to common stockholders $ 34,834
$ 34,639
$ (34,639 ) $ 34,834

- 3029 -

Condensed Consolidating Statement of Operations (in thousands):


	Nine Months Ended September 30, 2017												Six Months Ended June 30, 2020
	Issuer		Guarantor Subsidiaries			Consolidating Adjustments			Consolidated TRI Pointe Group, Inc.				Issuer (1)		Guarantor Subsidiaries		Consolidating Adjustments		Consolidated TRI Pointe Group, Inc.
Homebuilding:												Homebuilding:
Home sales revenue	$	524,159	$	1,085,299		$	—		$	1,609,458		Home sales revenue	$	365,143	$	996,637	$	—	$	1,361,780
Land and lot sales revenue	—		69,661			—			69,661			Land and lot sales revenue	—		220		—		220
Other operations revenue	—		1,752			—			1,752			Other operations revenue	—		1,266		—		1,266
Total revenues	524,159		1,156,712			—			1,680,871			Total revenues	365,143		998,123		—		1,363,266
Cost of home sales	445,501		849,062			—			1,294,563			Cost of home sales	307,986		766,330		—		1,074,316
Cost of land and lot sales	—		13,299			—			13,299			Cost of land and lot sales	—		576		—		576
Other operations expense	—		1,726			—			1,726			Other operations expense	—		1,248		—		1,248
Sales and marketing	22,265		69,944			—			92,209			Sales and marketing	21,102		66,729		—		87,831
General and administrative	49,113		52,180			—			101,293			General and administrative	39,218		38,173		—		77,391
Homebuilding income from operations	7,280		170,501			—			177,781
Equity in income of unconsolidated entities	—		1,646			—			1,646
Other income, net	33		114			—			147
Homebuilding income before income taxes	7,313		172,261			—			179,574
Restructuring charges												Restructuring charges	1,111		4,438		—		5,549
Homebuilding (loss) income from operations												Homebuilding (loss) income from operations	(4,274)		120,629		—		116,355
Equity in loss of unconsolidated entities												Equity in loss of unconsolidated entities	—		(39)		—		(39)
Other (loss) income, net												Other (loss) income, net	(6,128)		173		—		(5,955)
Homebuilding (loss) income before income taxes												Homebuilding (loss) income before income taxes	(10,402)		120,763		—		110,361
Financial Services:												Financial Services:
Revenues	—		881			—			881			Revenues	—		3,890		—		3,890
Expenses	—		233			—			233			Expenses	—		2,364		—		2,364
Equity in income of unconsolidated entities	—		2,911			—			2,911			Equity in income of unconsolidated entities	—		4,488		—		4,488
Financial services income before income taxes	—		3,559			—			3,559			Financial services income before income taxes	—		6,014		—		6,014
Income before income taxes	7,313		175,820			—			183,133
(Loss) income before income taxes												(Loss) income before income taxes	(10,402)		126,777		—		116,375
Equity of net income of subsidiaries	103,177		—			(103,177		)	—			Equity of net income of subsidiaries	98,813		—		(98,813)		—
Benefit (provision) for income taxes	2,681		(72,505		)				(69,824		)
Provision for income taxes												Provision for income taxes	—		(27,964)		—		(27,964)
Net income	113,171		103,315			(103,177		)	113,309			Net income	$	88,411	$	98,813	$	(98,813)	$	88,411
Net income attributable to noncontrolling interests	—		(138		)	—			(138		)
Net income available to common stockholders	$	113,171	$	103,177		$	(103,177	)	$	113,171

- 3130 -

Condensed Consolidating Statement of Operations (in thousands):


	Nine Months Ended September 30, 2016													Six Months Ended June 30, 2019
	Issuer			Guarantor Subsidiaries			Consolidating Adjustments			Consolidated TRI Pointe Group, Inc.				Issuer (1)		Guarantor Subsidiaries		Consolidating Adjustments		Consolidated TRI Pointe Group, Inc.
Homebuilding:													Homebuilding:
Home sales revenue	$	452,553		$	1,106,080		$	—		$	1,558,633		Home sales revenue	$	364,543	$	820,298	$	—	$	1,184,841
Land and lot sales revenue	—			70,204			—			70,204			Land and lot sales revenue	—		6,212		—		6,212
Other operations revenue	—			1,790			—			1,790			Other operations revenue	—		1,235		—		1,235
Total revenues	452,553			1,178,074			—			1,630,627			Total revenues	364,543		827,745		—		1,192,288
Cost of home sales	383,574			835,986			—			1,219,560			Cost of home sales	308,431		687,789		—		996,220
Cost of land and lot sales	—			16,973			—			16,973			Cost of land and lot sales	—		7,057		—		7,057
Other operations expense	—			1,724			—			1,724			Other operations expense	—		1,217		—		1,217
Sales and marketing	19,683			70,938			—			90,621			Sales and marketing	19,260		66,794		—		86,054
General and administrative	42,984			47,309			—			90,293			General and administrative	37,870		37,581		—		75,451
Homebuilding income from operations	6,312			205,144			—			211,456
Equity in income of unconsolidated entities	—			181			—			181

Homebuilding (loss) income from operations													Homebuilding (loss) income from operations	(1,018)		27,307		—		26,289
Equity in loss of unconsolidated entities													Equity in loss of unconsolidated entities	—		(51)		—		(51)
Other income, net	157			130			—			287			Other income, net	6,148		246		—		6,394
Homebuilding income before income taxes	6,469			205,455			—			211,924
Homebuilding income before taxes													Homebuilding income before taxes	5,130		27,502		—		32,632
Financial Services:													Financial Services:
Revenues	—			762			—			762			Revenues	—		1,058		—		1,058
Expenses	—			183			—			183			Expenses	—		948		—		948
Equity in income of unconsolidated entities	—			3,246			—			3,246
Financial services income before income taxes	—			3,825			—			3,825
Income before income taxes	6,469			209,280			—			215,749
Equity in loss of unconsolidated entities													Equity in loss of unconsolidated entities	—		2,747		—		2,747
Financial services income from operations before taxes													Financial services income from operations before taxes	—		2,857		—		2,857
Income before taxes													Income before taxes	5,130		30,359		—		35,489
Equity of net income of subsidiaries	135,024			—			(135,024		)	—			Equity of net income of subsidiaries	21,208		—		(21,208)		—
Provision for income taxes	(4,183		)	(73,518		)	—			(77,701		)	Provision for income taxes	(5)		(9,151)		—		(9,156)
Net income	137,310			135,762			(135,024		)	138,048			Net income	$	26,333	$	21,208	$	(21,208)	$	26,333
Net income attributable to noncontrolling interests	—			(738		)	—			(738		)
Net income available to common stockholders	$	137,310		$	135,024		$	(135,024	)	$	137,310

- 3231 -

Condensed Consolidating Statement of Cash Flows (in thousands):


	Six Months Ended June 30, 2020
	Issuer		Guarantor Subsidiaries		Consolidating Adjustments		Consolidated TRI Pointe Group, Inc.
Cash flows from operating activities:
Net cash provided by operating activities	$	36,321	$	129,907	$	—	$	166,228
Cash flows from investing activities:
Purchases of property and equipment	(4,162)		(7,840)		—		(12,002)
Proceeds from sale of property and equipment	—		17		—		17
Investments in unconsolidated entities	—		(25,715)		—		(25,715)
Intercompany	158,116		—		(158,116)		—
Net cash used in (provided by) investing activities	153,954		(33,538)		(158,116)		(37,700)
Cash flows from financing activities:
Borrowings from debt	850,000		—		—		850,000
Repayment of debt	(721,673)		—		—		(721,673)
Debt issuance costs	(4,768)		—		—		(4,768)

Proceeds from issuance of common stock under share-based awards	921		—		—		921
Minimum tax withholding paid on behalf of employees for restricted stock units	(5,473)		—		—		(5,473)
Share repurchases	(102,001)		—		—		(102,001)
Intercompany	—		(158,116)		158,116		—
Net cash provided by (used in) financing activities	17,006		(158,116)		158,116		17,006
Net increase (decrease) in cash and cash equivalents	207,281		(61,747)		—		145,534
Cash and cash equivalents–beginning of period	186,200		142,811		—		329,011
Cash and cash equivalents–end of period	$	393,481	$	81,064	$	—	$	474,545

Nine Months Ended September 30, 2017
Issuer
Guarantor
Subsidiaries

Consolidating
Adjustments

Consolidated
TRI Pointe
Group, Inc.
Cash flows from operating activities
Net cash used in operating activities $ (60,816 ) $ (149,840 ) $ —
$ (210,656 )
Cash flows from investing activities:
Purchases of property and equipment (1,473 ) (739 ) —
(2,212 )
Proceeds from sale of property and equipment —
6
—
6
Investments in unconsolidated entities —
(934 ) —
(934 )
Intercompany (161,755 ) —
161,755
—
Net cash (used in) provided by investing activities (163,228 ) (1,667 ) 161,755
(3,140 )
Cash flows from financing activities:
Borrowings from debt 500,000
—
—
500,000
Repayment of debt (213,726 ) —
—
(213,726 )
Debt issuance costs (5,932 ) —
—
(5,932 )
Distributions to noncontrolling interests —
(987 ) —
(987 )
Proceeds from issuance of common stock under
share-based awards
3,293
—
—
3,293
Minimum tax withholding paid on behalf of employees for
restricted stock units
(2,896 ) —
—
(2,896 )
Share repurchases (112,217 ) —
—
(112,217 )
Intercompany —
161,755
(161,755 ) —
Net cash provided by (used in) financing activities 168,522
160,768
(161,755 ) 167,535
Net (decrease) increase in cash and cash equivalents (55,522 ) 9,261
—
(46,261 )
Cash and cash equivalents - beginning of period 141,568
67,089
—
208,657
Cash and cash equivalents - end of period $ 86,046
$ 76,350
$ —
$ 162,396

- 3332 -

Condensed Consolidating Statement of Cash Flows (in thousands):


	Six Months Ended June 30, 2019
	Issuer		Guarantor Subsidiaries		Consolidating Adjustments		Consolidated TRI Pointe Group, Inc.
Cash flows from operating activities:
Net cash provided by (used in) operating activities	$	32,114	$	(136,053)	$	—	$	(103,939)
Cash flows from investing activities:
Purchases of property and equipment	(4,532)		(8,610)		—		(13,142)
Proceeds from sale of property and equipment	—		46		—		46
Investments in unconsolidated entities	—		(712)		—		(712)
Intercompany	(133,658)		—		133,658		—
Net cash used in investing activities	(138,190)		(9,276)		133,658		(13,808)
Cash flows from financing activities:
Borrowings from notes payable	400,000		—		—		400,000
Repayment of notes payable	(381,895)		—		—		(381,895)
Debt issuance costs	(3,125)		—		—		(3,125)



Proceeds from issuance of common stock under share-based awards	199		—		—		199
Minimum tax withholding paid on behalf of employees for restricted stock units	(3,612)		—		—		(3,612)

Intercompany	—		133,658		(133,658)		—
Net cash provided by (used in) financing activities	11,567		133,658		(133,658)		11,567
Net decrease in cash and cash equivalents	(94,509)		(11,671)		—		(106,180)
Cash and cash equivalents–beginning of period	148,129		129,567		—		277,696
Cash and cash equivalents–end of period	$	53,620	$	117,896	$	—	$	171,516

Nine Months Ended September 30, 2016
Issuer
Guarantor
Subsidiaries

Consolidating
Adjustments

Consolidated
TRI Pointe
Group, Inc.
Cash flows from operating activities
Net cash used in operating activities $ (186,487 ) $ (74,820 ) $ —
$ (261,307 )
Cash flows from investing activities:
Purchases of property and equipment (831 ) (1,225 ) —
(2,056 )
Investments in unconsolidated entities —
(32 ) —
(32 )
Intercompany (82,951 ) —
82,951
—
Net cash (used in) provided by investing activities (83,782 ) (1,257 ) 82,951
(2,088 )
Cash flows from financing activities:
Borrowings from notes payable 491,069
—
—
491,069
Repayment of notes payable (276,426 ) (400 ) —
(276,826 )
Debt issuance costs (5,061 ) —
—
(5,061 )
Net repayments of debt held by variable interest entities —
(2,442 ) —
(2,442 )
Contributions from noncontrolling interests —
1,955
—
1,955
Distributions to noncontrolling interests —
(5,059 ) —
(5,059 )
Proceeds from issuance of common stock under
share-based awards
461
—
—
461
Minimum tax withholding paid on behalf of employees for restricted stock units (1,359 ) —
—
(1,359 )
Share repurchases (25,113 ) —
—
(25,113 )
Intercompany —
82,951
(82,951 ) —
Net cash provided by (used in) financing activities 183,571
77,005
(82,951 ) 177,625
Net (decrease) increase in cash and cash equivalents (86,698 ) 928
—
(85,770 )
Cash and cash equivalents - beginning of period 147,771
66,714
—
214,485
Cash and cash equivalents - end of period $ 61,073
$ 67,642
$ —
$ 128,715

- 3433 -


~~Item 2.~~	Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations

CAUTIONARY NOTE CONCERNING FORWARD-LOOKING STATEMENTS

This Quarterly Report on Form 10-Q contains ~~certain statements that are~~ “forward-looking” statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended (the ~~"Exchange Act"~~“Exchange Act”). These forward-looking statements are based on our current intentions, beliefs, expectations and predictions for the future, and you should not place undue reliance on these statements. These statements use forward-looking terminology, are based on various assumptions made by us, and may not be accurate because of risks and uncertainties surrounding the assumptions that are made.

Factors listed in this ~~section~~–section—as well as other factors not ~~included~~–included—may cause actual results to differ significantly from the forward-looking statements included in this Quarterly Report on Form 10-Q. There is no guarantee that any of the events anticipated by the forward-looking statements in this Quarterly Report on Form 10-Q will occur, or if any of the events occurs, there is no guarantee what effect it will have on our operations, financial condition, or share price.

We undertake no, and hereby disclaim any, obligation to update or revise any forward-looking statements, unless required by law. However, we reserve the right to make such updates or revisions from time to time by press release, periodic report, or other method of public disclosure without the need for specific reference to this Quarterly Report on Form 10-Q. No such update or revision shall be deemed to indicate that other statements not addressed by such update or revision remain correct or create an obligation to provide any other updates or revisions.

Forward-Looking Statements

~~These forward-looking~~Forward-looking statements that are included in this Quarterly Report on Form 10-Q are generally accompanied by words such as “anticipate,” “believe,” “could,” “estimate,” “expect,” “future,” “goal,” “intend,” “likely,” “may,” “might,” “plan,” “potential,” “predict,” “project,” “should,” “target,” “will,” “would,” or other words that convey the uncertainty of future events or outcomes. These forward-looking statements may include, but are not limited to, statements regarding our strategy, projections and estimates concerning the timing and success of specific projects and our future production, land and lot sales, the outcome of legal proceedings, the anticipated impact of natural disasters or contagious diseases on our operations, operational and financial results, including our estimates for growth, financial condition, sales prices, prospects and capital spending.

Risks, Uncertainties and Assumptions

The major risks and ~~uncertainties~~–uncertainties—and assumptions that are ~~made~~–made—that affect our business and may cause actual results to differ from these forward-looking statements include, but are not limited to:

•the ~~effect~~effects of the ongoing novel coronavirus (“COVID-19”) pandemic, which are highly uncertain and subject to rapid change, cannot be predicted and will depend upon future developments, including the severity and duration of the outbreak, the duration of existing and future social distancing and shelter-in-place orders, further mitigation strategies taken by applicable government authorities, the availability and efficacy of a vaccine, adequate testing and treatments and the prevalence of widespread immunity to COVID-19;

•the effects of general economic conditions, including employment rates, housing starts, interest rate levels, availability of financing for home mortgages and strength of the U.S. dollar;

•market demand for our products, which is related to the strength of the various U.S. business segments and U.S. and international economic conditions;

•the availability of desirable and reasonably priced land and our ability to control, purchase, hold and develop such parcels;

•access to adequate capital on acceptable terms;

•geographic concentration of our operations, particularly within California;

•levels of competition;

•the successful execution of our internal performance plans, including restructuring and cost reduction initiatives;

~~global economic conditions;~~

•raw material ~~prices;~~and labor prices and availability;

•oil and other energy prices;

•the ~~effect~~effects of U.S. trade policies, including the imposition of tariffs and duties on homebuilding products and retaliatory measures taken by other countries;

•the effects of weather, including the re-occurrence of drought conditions in California;

- 34 -

•the risk of loss from earthquakes, volcanoes, fires, floods, droughts, windstorms, hurricanes, pest infestations and other natural disasters, and the risk of delays, reduced consumer demand, and shortages and price increases in labor or materials associated with such natural disasters;

•the risk of loss from acts of war, terrorism, civil unrest or outbreaks of contagious diseases, such as COVID-19;

•transportation costs;

•federal and state tax policies;

•the ~~effect~~effects of land use, environment and other governmental laws and regulations;

•legal proceedings or disputes and the adequacy of reserves;

•risks relating to any unforeseen changes to or effects on liabilities, future capital expenditures, revenues, expenses, earnings, synergies, indebtedness, financial condition, losses and future prospects;

~~change~~•changes in accounting principles;

~~- 35 -~~

•risks related to unauthorized access to our computer systems, theft of our homebuyers’ confidential information or other forms of cyber-attack; and

•other factors described in “Risk ~~Factors.”~~Factors” included in our Annual Report on Form 10-K for the year ended December 31, 2019 and in other filings we make with the Securities and Exchange Commission (“SEC”).

The following discussion and analysis should be read in conjunction with our consolidated financial statements and related condensed notes thereto contained elsewhere in this Quarterly Report on Form 10-Q. The information contained in this Quarterly Report on Form 10-Q is not a complete description of our business or the risks associated with an investment in our securities. We urge investors to review and consider carefully the various disclosures made by us in this report and in our other reports filed with the ~~Securities and Exchange Commission (“SEC”),~~SEC, including our Annual Report on Form 10-K for the year ended December 31, ~~2016~~2019 and subsequent reports on Form 8-K, which discuss our business in greater detail. The section entitled “Risk Factors” set forth in Item 1A of our Annual Report on Form 10-K, and similar disclosures in our other SEC filings, discuss some of the important risk factors that may affect our business, results of operations and financial condition. Investors should carefully consider those risks, in addition to the information in this report and in our other filings with the SEC, before deciding to invest in, or maintain an ~~investment~~investment in, our common stock.

Overview

Our second quarter 2020 results reflect a sharp rebound from the COVID-19-related economic uncertainty and ~~Outlook~~

~~We continue to be encouraged by~~reduced demand environment we experienced towards the ~~strength~~end of the ~~overall U.S. new-home market, which continues~~first quarter and through the beginning of the second quarter. In May, as state and local governments began relaxing restrictions related to ~~be supported by strong general~~COVID-19 and economic conditions in our local markets regained strength, new home demand began to steadily improve. This demand continued to increase in June, which resulted in particularly strong new home orders for the month, which increased approximately 28% as compared to June 2019. We believe this demand environment was aided by favorable housing market fundamentals, including low ~~unemployment levels, modest wage gains, favorable~~ interest rates and ~~increasing consumer confidence combined with~~ a ~~limited~~relatively constrained supply of homes in many of our markets. Additionally, we believe our results for the most recent quarter reflect the effects of fiscal and monetary stimulus programs, a degree of pent-up demand among consumers, as well as evolving consumer preferences as it relates to new ~~and existing homes. We believe demand will continue to be strong across the U.S.~~home characteristics in ~~general and in a majority~~light of the ~~markets in~~COVID-19 pandemic and the degree to which ~~we operate over~~many individuals are working from home. Notwithstanding our positive results during the ~~next several years. Nevertheless,~~second quarter 2020 and the strong demand we continue to see variability from market to market with demand mostly driven by general local economic conditions. In certain markets, price and affordability issues are potentially limiting demand. Additionally, homebuilding activityexperience in ~~many markets continues to be constrained by land and labor availability, as well as fee increases and delays imposed by local municipalities, which we expect will continue to constrict supply. While~~July, the ~~limited supply and production deficits have supported price appreciation in many markets, these increases have been partially or sometimes fully offset by increases in labor and material costs~~COVID-19 pandemic has impacted, and we expect that ~~these construction cost pressures~~it will continue. We believe these demand and supply trends will result in a continued growth trajectory in the homebuilding market, with consumer, job and household formation growth serving as leading indicators of positive demand, offset by certain downward pressures.

~~The Houston area was severely impacted by Hurricane Harvey, which caused significant flooding and widespread damage~~continue to ~~existing homes, commercial buildings, and infrastructure. While our active projects in Houston sustained minimal damage, and the hurricane did not significantly~~ impact, our ~~overall~~business and operations due to the high level of uncertainty that still exists as to future developments, including the duration of the outbreak. With several states (and local authorities within those states) re-imposing restrictions as a result of recent increases in new COVID-19 cases and an historically high unemployment rate, we remain cautious as we enter the back half of 2020.

Highlights of the quarter include an increase in homebuilding gross margin percentage to 21.6% and a reduction in selling, general and administrative expense as a percentage of home sales revenue to 10.8%. These improvements, along with a slight increase in average sales price of homes delivered to $624,000, helped us achieve net income of $56.5 million, representing a 115% increase compared to the prior-year period. Despite a substantially reduced sales pace in April due to COVID-19, we ended the quarter with a monthly absorption rate of 3.1, resulting in 1,332 net new home orders, down 11% from the prior-year period. As of the end of the quarter, we had 2,558 units in backlog, representing $1.7 billion in backlog dollar value, up 16% and 17% from the prior-year period, respectively. In addition, we ended the quarter with total liquidity of $1.0 billion, including cash and cash equivalents of $474.5 million and $559.4 million of availability under our Credit Facility.

Our results for the three ~~or nine~~ months ended ~~September~~June 30, ~~2017,~~2020 are not indicative of trends that we ~~did experience some delivery delays during~~expect to persist as uncertainty caused by COVID-19 and government responses to the ~~third quarter~~pandemic have impacted, and will continue to impact, our business and operations.

- 35 -

Impact of ~~2017~~COVID-19 and Business Outlook

On March 11, 2020, the World Health Organization declared the outbreak of COVID-19 a global pandemic, and on March 13, 2020, the United States issued a proclamation declaring a national emergency concerning COVID-19. As a result of the pandemic, a number of states and local governments issued shelter-in-place orders or guidance for individuals not engaged in essential activities to remain at home other than for essential needs. While our TRI Pointe Homes—Bay Area and Quadrant Homes divisions were prohibited from engaging in residential construction activities in the Bay Area in California and Seattle, Washington, respectively, for several weeks beginning in late March 2020, residential homebuilding operations are currently designated as ~~approximately 30 deliveries~~an essential business activity and remain exempt from the application of “stay-at-home” orders in all of our markets. However, there can be no assurance that ~~would~~our homebuilding operations will continue to remain exempt in all of our markets.

In response to the COVID-19 pandemic and measures taken by applicable governmental authorities, in mid-March 2020, we implemented new operating measures relating to our sales, construction and other operations, including protocols relating to social distancing, enhanced sanitation, monitoring of symptoms related to COVID-19 and other processes. Under these measures, we encouraged employees at our corporate and division offices whose duties could be performed from home to work remotely; our new home galleries and design studios transitioned to virtual appointments or appointment-only with pre-screened individuals, as permitted by law; we instituted social distancing, hygiene and sanitation guidelines in accordance with recommended protocols throughout the organization (including in our new home sales galleries and design studios, and with respect to trade partners and their employees on our jobsites); and we postponed non-essential customer care service and warranty requests. As of the date of this report, as permitted by applicable government orders or guidelines, we have ~~delivered~~transitioned substantially all of our employees back to our corporate and division offices (in many cases, using staggered or flexible schedules to limit the number of individuals in ~~2017 will instead deliver~~our offices on a given day), have resumed non-essential customer care service and warranty requests in ~~early 2018. Additionally,~~substantially all of our ~~Houston operations,~~markets, and are no longer appointment-only in many of our new home galleries. Our field-based team members continue to report to their assigned communities in all jurisdictions where homebuilding has been deemed an essential activity or is otherwise permitted by applicable government authorities. We have also encouraged our employees to use our virtual working and communication platforms in lieu of holding in-person meetings whenever possible.

The COVID-19 outbreak and the measures taken by governmental authorities to delay and contain its spread have resulted in substantial adverse effects on the United States economy and could result in a severe and/or prolonged economic recession. The ongoing impact of COVID-19 on the United States economy and our ~~consolidated~~business and operations is unknown, as the velocity of this economic slowdown and the subsequent job losses are unprecedented. While demand for new homes has rebounded substantially over the last couple months, given the dynamic nature of the situation, recent increases in new COVID-19 cases in many states and the re-imposition by local and state governments throughout the U.S. of restrictive measures, we cannot estimate the duration and severity of the impact of COVID-19 on the homebuilding industry or whether the current demand environment will persist. To the extent we experience further negative impacts, however, we anticipate that such impacts may include reduced consumer confidence, difficulties in obtaining financing for potential homebuyers, shortages of or increased costs associated with obtaining building materials, increased unemployment levels, declining wage growth and fluctuating interest rates. The uncertainty surrounding the containment of this virus, in the form of testing, vaccination and/or treatments, is a key unknown, and the ultimate strategy adopted to address the pandemic, if any, will substantially impact the form of any resulting economic recovery. Similarly, the extent of the impact of COVID-19 on our liquidity and operational and financial ~~statements, could be further impacted in future quarters by,~~performance will depend on, among other things, ~~a decline~~existing and future federal, state and local restrictions regarding virus containment, as we believe these factors are highly correlated with consumer strength as it relates to employment and economic well-being.

As of the date of this report, we continue to build and sell homes in ~~homebuyer traffic~~all of our markets, and net new ~~home orders; land development~~orders and ~~home construction delays, resulting~~traffic in ~~delayed deliveries;~~our sales offices have increased significantly as compared to the beginning of the second quarter. Notwithstanding, the new protocols we implemented in response to the COVID-19 outbreak and ~~increased costs stemming from general hurricane-related recovery efforts that heighten~~ the ~~demand for,~~measures taken by governmental authorities to contain its spread continue to affect our business and ~~constrain~~operations as of the ~~supply~~date of ~~building materials~~this report, in many regards, including by requiring a substantial investment of time and ~~available labor;~~resources by our management and ~~warranty repair claims from~~organization and causing other material disruptions to our ~~affected homeowners.~~ normal operations.

As noted above, as of June 30, 2020, we had total liquidity of $1.0 billion. We have implemented a strategy to maximize operating cash flows and maintain our existing liquidity by reducing or deferring cash expenditures as much as possible,

- 36 -

including negotiating with land sellers and developers to extend the closing date of land acquisitions and lot take-downs, as well as postponing land development activities for certain communities.

Consolidated Financial Data (in thousands, except per share amounts):


	Three Months Ended June 30,						Six Months Ended June 30,
	2020		2019		2020		2019
Homebuilding:
Home sales revenue	$	766,942	$	692,138	$	1,361,780	$	1,184,841
Land and lot sales revenue	220		5,183		220		6,212
Other operations revenue	648		637		1,266		1,235
Total revenues	767,810		697,958		1,363,266		1,192,288
Cost of home sales	601,434		574,684		1,074,316		996,220
Cost of land and lot sales	374		5,562		576		7,057
Other operations expense	624		627		1,248		1,217
Sales and marketing	45,194		47,065		87,831		86,054
General and administrative	37,554		36,854		77,391		75,451
Restructuring charges	5,549		—		5,549		—
Homebuilding income from operations	77,081		33,166		116,355		26,289
Equity in loss of unconsolidated entities	(25)		(26)		(39)		(51)
Other (expense) income, net	(6,328)		153		(5,955)		6,394
Homebuilding income before income taxes	70,728		33,293		110,361		32,632
Financial Services:
Revenues	2,296		756		3,890		1,058
Expenses	1,285		627		2,364		948
Equity in income of unconsolidated entities	2,932		1,972		4,488		2,747
Financial services income before income taxes	3,943		2,101		6,014		2,857
Income before income taxes	74,671		35,394		116,375		35,489
Provision for income taxes	(18,143)		(9,132)		(27,964)		(9,156)
Net income	$	56,528	$	26,262	$	88,411	$	26,333


Earnings per share
Basic	$	0.43	$	0.18	$	0.67	$	0.19
Diluted	$	0.43	$	0.18	$	0.67	$	0.18

Three Months Ended September 30, Nine Months Ended September 30,
2017 2016 2017 2016
Homebuilding:

Home sales revenue $ 648,638
$ 578,653
$ 1,609,458
$ 1,558,633
Land and lot sales revenue 68,218
2,535
69,661
70,204
Other operations revenue 584
606
1,752
1,790
Total revenues 717,440
581,794
1,680,871
1,630,627
Cost of home sales 521,918
462,323
1,294,563
1,219,560
Cost of land and lot sales 12,001
1,734
13,299
16,973
Other operations expense 575
575
1,726
1,724
Sales and marketing 33,179
31,852
92,209
90,621
General and administrative 32,956
31,278
101,293
90,293
Homebuilding income from operations 116,811
54,032
177,781
211,456
Equity in (loss) income of unconsolidated entities —
(20 ) 1,646
181
Other income, net 26
21
147
287
Homebuilding income before income taxes 116,837
54,033
179,574
211,924
Financial Services:
Revenues 295
235
881
762
Expenses 82
72
233
183
Equity in income of unconsolidated entities 1,351
1,247
2,911
3,246
Financial services income before income taxes 1,564
1,410
3,559
3,825
Income before income taxes 118,401
55,443
183,133
215,749
Provision for income taxes (46,112 ) (20,298 ) (69,824 ) (77,701 )
Net income 72,289
35,145
113,309
138,048
Net income attributable to noncontrolling interests (25 ) (311 ) (138 ) (738 )
Net income available to common stockholders $ 72,264
$ 34,834
$ 113,171
$ 137,310
Earnings per share

Basic $ 0.48
$ 0.22
$ 0.73
$ 0.85
Diluted $ 0.48
$ 0.22
$ 0.73
$ 0.85

Three Months Ended ~~September~~June 30, ~~2017~~2020 Compared to Three Months Ended ~~September~~June 30, ~~2016~~2019

Net New Home Orders, Average Selling Communities and Monthly Absorption Rates by Segment


														Three Months Ended June 30, 2020					Three Months Ended June 30, 2019							Percentage Change
	Three Months Ended September 30, 2017			Three Months Ended September 30, 2016			Percentage Change							Net New Home Orders	Average Selling Communities	Monthly Absorption Rates	Net New Home Orders	Average Selling Communities	Monthly Absorption Rates	Net New Home Orders		Average Selling Communities		Monthly Absorption Rates
	Net New Home Orders	Average Selling Communities	Monthly Absorption Rates	Net New Home Orders	Average Selling Communities	Monthly Absorption Rates	Net New Home Orders		Average Selling Communities		Monthly Absorption Rates
Maracay Homes	158	13.5	3.9	134	17.8	2.5	18	%	(24	)%	56	%
Maracay													Maracay	162	19.0	2.8	253	15.0	5.6	(36)	%	27	%	(49)	%
Pardee Homes	421	30.8	4.6	283	22.5	4.2	49	%	37	%	10	%	Pardee Homes	423	44.0	3.2	522	44.5	3.9	(19)	%	(1)	%	(18)	%
Quadrant Homes	84	8.3	3.4	49	7.3	2.3	71	%	14	%	48	%	Quadrant Homes	105	9.5	3.7	67	6.5	3.4	57	%	46	%	7	%
Trendmaker Homes	113	29.3	1.3	130	29.0	1.5	(13	)%	1	%	(13	)%	Trendmaker Homes	205	29.8	2.3	247	37.5	2.2	(17)	%	(21)	%	4	%
TRI Pointe Homes	378	34.7	3.6	239	28.7	2.8	58	%	21	%	29	%	TRI Pointe Homes	327	30.3	3.6	294	28.5	3.4	11	%	6	%	5	%
Winchester Homes	114	13.2	2.9	97	13.7	2.4	18	%	(4	)%	21	%	Winchester Homes	110	11.7	3.1	108	14.0	2.6	2	%	(16)	%	22	%
Total	1,268	129.8	3.3	932	119.0	2.6	36	%	9	%	27	%	Total	1,332	144.3	3.1	1,491	146.0	3.4	(11)	%	(1)	%	(10)	%

- 37 -

Net new home orders for the three months ended ~~September~~June 30, ~~2017 increased~~2020 decreased by ~~336~~159 orders, or ~~36%~~11%, to ~~1,268,~~1,332, compared to ~~932~~1,491 during the ~~prior year~~prior-year period. The ~~increase~~decrease in net new home orders was due primarily to a ~~9% increase in average selling communities and a 27% increase~~10% decrease in monthly absorption rates. New home order demand was severely impacted during the month of April, though began to slowly and steadily improve in May, followed by exceptionally strong demand in June. We believe this order demand volatility during the quarter can be attributed to the impacts of COVID-19 pandemic. As our results for the three months ended June 30, 2020 have been impacted by the COVID-19 pandemic, they may not be indicative of results going forward.

Maracay ~~Homes~~ reported ~~an 18% increase~~a 36% decrease in net new home orders driven by a ~~56% increase~~49% decrease in monthly absorption rate as a result of improved market conditions compared to the prior year period. We experienced a 24% decrease in average selling communities due to the timing of community openings and closings compared to the prior year period. Pardee Homes increased net new home orders by 49% due to a 37% increase in average community count and a 10% increase in monthly absorption rate. The increase in monthly absorption rate was driven by strong demand for new community openings, particularly in the San Diego and Los Angeles markets. Net new home orders increased 71% at Quadrant Homes due primarily to a 55% increase in monthly absorption rate, and enhancedoffset by a ~~14%~~27% increase in average selling communities. ~~The increase in~~While the monthly absorption rate was 2.8 for the ~~result~~quarter, Maracay experienced extreme demand volatility during the quarter, with a substantially slow pace in April before increasing to a more robust pace in June, during which we achieved a monthly absorption rate of ~~our well located communities and continued strong market fundamentals. Trendmaker Homes'~~4.7. Pardee Homes reported a 19% decrease in net new home orders ~~decreased 13% due to a 13%~~driven by an 18% decrease in monthly absorption ~~rate~~rates and a ~~relatively flat~~1% decrease in average selling ~~community count.~~communities. The decrease in monthly absorption rate was due ~~in part~~ to the ~~loss of two weeks of selling homes~~extreme market slowdown we experienced during ~~and after Hurricane Harvey, as well as the continued challenges with the Houston market~~April as a result of COVID-19. The absorption rates in the ~~continued economic pressure on oil prices~~Inland Empire, Los Angeles, San Diego and Las Vegas all improved significantly during May and June as restrictions related to COVID-19 were reduced. Net new home orders increased 57% at Quadrant Homes due to a 46% increase in average selling communities and a 7% increase in monthly absorption rate as compared to the prior-year period. Despite experiencing slow demand in the month of April due to COVID-19, market conditions improved significantly during the second half of the current-year period, as evidenced by a monthly absorption rate of 3.7 for the quarter. In addition, two of our new community openings were particularly well-received by the market, which resulted in an increased sales pace. Trendmaker Homes’ net new home orders decreased 17% due to a 21% decrease in average selling communities offset by a 4% increase in monthly absorption rate. Despite being impacted by COVID-19 and the ~~related impact~~volatility in the oil market, our Houston division achieved a monthly absorption rate of 2.1 for the current quarter, which represents a decrease of 0.2 as compared to the prior-year period. Our sales pace in both our Austin and Dallas–Fort Worth markets improved on ~~job growth.~~a year-over-year basis, despite noticeable slowdown in both markets during April resulting from COVID-19. TRI Pointe Homes’ net new home orders increased ~~58%~~11% due to a ~~29% increase in monthly absorption rate and a 21%~~6% increase in average selling ~~communities. Demand remains strong~~communities and a 5% increase in the ~~markets~~monthly absorption rate. The increase in ~~which~~ TRI Pointe ~~Homes builds, as evidenced by a~~Homes’ monthly absorption rate ~~of 3.6 homes at average selling prices above~~was driven by stronger market conditions in both our Bay Area and Colorado markets compared to the ~~Company average.~~prior-year period. Winchester Homes ~~experienced an 18%~~reported a 2% increase in net new home orders ~~largely~~ as a result of a ~~21%~~22% increase in monthly absorption rate ~~partially~~ offset by a 4%16% decrease in average selling communities. The increase in Winchester Homes’ monthly absorption rate was due to strong ~~customer~~order demand ~~in some of our larger master plan communities.~~and more favorable overall market conditions compared to the prior-year period.

Backlog Units, Dollar Value and Average Sales Price by Segment (dollars in thousands)


																		As of June 30, 2020								As of June 30, 2019								Percentage Change
	As of September 30, 2017					As of September 30, 2016					Percentage Change							Backlog Units	Backlog Dollar Value		Average Sales Price		Backlog Units	Backlog Dollar Value		Average Sales Price		Backlog Units		Backlog Dollar Value		Average Sales Price
	Backlog Units	Backlog Dollar Value		Average Sales Price		Backlog Units	Backlog Dollar Value		Average Sales Price		Backlog Units		Backlog Dollar Value		Average Sales Price
Maracay Homes	305	$	154,324	$	506	329	$	144,127	$	438	(7	)%	7	%	16	%
Maracay																	Maracay	427	$	255,916	$	599	385	$	211,935	$	550	11	%	21	%	9	%
Pardee Homes	646	436,376		676		382	182,263		477		69	%	139	%	42	%	Pardee Homes	739	494,785		670		790	602,054		762		(6)	%	(18)	%	(12)	%
Quadrant Homes	206	160,202		778		130	83,467		642		58	%	92	%	21	%	Quadrant Homes	228	213,093		935		77	65,968		857		196	%	223	%	9	%
Trendmaker Homes	213	107,968		507		186	98,874		532		15	%	9	%	(5	)%	Trendmaker Homes	321	146,650		457		399	195,871		491		(20)	%	(25)	%	(7)	%
TRI Pointe Homes	659	481,537		731		495	319,823		646		33	%	51	%	13	%	TRI Pointe Homes	552	383,826		695		384	252,708		658		44	%	52	%	6	%
Winchester Homes	236	141,858		601		189	121,617		643		25	%	17	%	(7	)%	Winchester Homes	291	184,798		635		173	110,012		636		68	%	68	%	—	%
Total	2,265	$	1,482,265	$	654	1,711	$	950,171	$	555	32	%	56	%	18	%	Total	2,558	$	1,679,068	$	656	2,208	$	1,438,548	$	652	16	%	17	%	1	%

Backlog units reflect the number of homes, net of actual cancellations experienced during the period, for which we have entered into a sales contract with a homebuyer but for which we have not yet delivered the home. Homes in backlog are generally delivered within three to nine months, although we may experience cancellations of sales contracts prior to delivery. Our cancellation rate of homebuyers who contracted to buy a home but ~~did not close escrow~~cancelled prior to delivery of the home (as a percentage of overall orders) ~~decreased to 15% from 17% for~~was 21% and 16% during the ~~same period in 2016.~~three-month periods ended June 30, 2020 and 2019, respectively. The dollar value of backlog was ~~approximately $1.5~~$1.7 billion as of ~~September~~June 30, ~~2017,~~2020, an increase of ~~$532.1~~$240.5 million, or ~~56%~~17%, compared to ~~$950.2 million~~$1.4 billion as of ~~September~~June 30, ~~2016.~~2019. This increase was due to an increase in backlog units of ~~554,~~350, or ~~32%~~16%, to ~~2,265~~2,558 as of ~~September~~June 30, ~~2017,~~2020, compared to ~~1,711~~2,208 as of ~~September~~June 30, ~~2016~~2019, and ~~an 18%~~a 1% increase in the average sales price of homes in backlog to ~~$654,000~~$656,000 as of ~~September~~June 30, ~~2017,~~2020, compared to ~~$555,000~~$652,000 as of ~~September~~June 30, ~~2016.~~2019.

~~Maracay~~Maracay’s backlog dollar value increased 21% compared to the prior-year period due to an 11% increase in backlog units and a 9% increase in average sales price. The increase in backlog units is due to the strong market conditions in Arizona

- 38 -

for most of the current-year period and the success of recently opened communities. In addition, we opened the current-year period with a higher number of backlog units, which resulted in higher carryforward of opening backlog units in the current-year period compared to the prior-year period, which had been impacted by the housing slowdown in late 2018. Pardee Homes’ backlog dollar value decreased 18% due to a decrease in backlog average sales price of 12% and a decrease in backlog units of 6%. The decrease in backlog units is largely due to the decrease in net new home orders we experienced during the quarter, particularly in the month of April due to uncertainty surrounding COVID-19. Quadrant Homes’ backlog dollar value increased 7%223% as a result of a 196% increase in backlog units and a 9% increase in average sales price. The increase in backlog units was a result of starting the current-year period with an increase in backlog units, which further increased due to the 57% increase in net new home orders during the period, as market conditions in Seattle remained strong for most of the quarter despite COVID-19. Trendmaker Homes’ backlog dollar value decreased 25% due primarily to a 20% decrease in backlog units. The decrease in backlog units resulted primarily from a 21% decrease in average selling communities for the quarter. TRI Pointe Homes’ backlog dollar value increased 52% mainly due to a 44% increase in backlog units. The increase in backlog units resulted primarily from a strong demand environment in both California and Colorado during the quarter. Winchester Homes’ backlog dollar value increased 68% due to a 68% increase in backlog units. The increase in backlog units is a result of a 27% increase in net new home orders for the six months ended June 30, 2020, in addition to a significantly higher unit backlog to start the current-year period compared to the ~~prior year~~prior-year period.

New Homes Delivered, Homes Sales Revenue and Average Sales Price by Segment (dollars in thousands)


	Three Months Ended June 30, 2020								Three Months Ended June 30, 2019								Percentage Change
	New Homes Delivered	Home Sales Revenue		Average Sales Price		New Homes Delivered	Home Sales Revenue		Average Sales Price		New Homes Delivered		Home Sales Revenue		Average Sales Price
Maracay	165	$	86,674	$	525	106	$	55,653	$	525	56	%	56	%	—	%
Pardee Homes	362	242,282		669		325	194,700		599		11	%	24	%	12	%
Quadrant Homes	40	36,649		916		67	70,429		1,051		(40)	%	(48)	%	(13)	%
Trendmaker Homes	254	121,257		477		250	117,010		468		2	%	4	%	2	%
TRI Pointe Homes	292	206,474		707		281	192,752		686		4	%	7	%	3	%
Winchester Homes	116	73,606		635		96	61,594		642		21	%	20	%	(1)	%
Total	1,229	$	766,942	$	624	1,125	$	692,138	$	615	9	%	11	%	1	%

Home sales revenue increased $74.8 million, or 11%, to $766.9 million for the three months ended June 30, 2020. The increase was comprised of (i) $64.0 million related to an increase of 104 new homes delivered in the three months ended June 30, 2020 compared to the prior-year period, and (ii) $10.8 million related to an increase of $9,000 in average sales price of homes delivered in the three months ended June 30, 2020 compared to the prior-year period.

Maracay home sales revenue increased 56% due to a ~~16%~~56% increase in new homes delivered during the current-year period. The increase in new homes delivered is due to a 119% increase in backlog units to start the current-year period compared to the prior-year period. Pardee Homes’ home sales revenue increased 24% due to a 12% increase in average sales price ~~offset by a 7% decrease~~and an 11% increase in ~~units.~~new homes delivered. The increase in average sales price was due to a product mix shift that included a greater proportion of move-up and luxury product compared to the prior year. Pardee Homes' backlog dollar value increased 139% due to an increase in both backlog units and average selling price. The increase in backlog units was due to the 49% increase in orders during the quarter while the increase in average selling price was due to increased pricing power indeliveries from our markets and a higher end product mix with higher price points. Quadrant Homes’ backlog dollar value increased 92% as a result of an increase in backlog units and average sales price. The increase in backlog units directly relates to the 71% increase in orders during the quarter and the increase in average sales price was related to a higher mix of homes in backlog from the core Seattle markets of King and Snohomish counties, which have higher price points. Trendmaker Homes' backlog dollar value increased 9% primarily due to a 15% increase in backlog units. TRI Pointe Homes’ backlog dollar value increased 51%

~~- 38 -~~

due to an increase in backlog units and average selling price. The increase in backlog units was the result of a 58% increase in orders for the three months ended September 30, 2017. Winchester Homes’ backlog dollar value increased 17% largely driven by the increase in backlog units as a result of the 18% increase in orders during the quarter.

~~New Homes Delivered, Homes Sales Revenue and Average Sales Price by Segment (dollars in thousands)~~

Three Months Ended September 30, 2017 Three Months Ended September 30, 2016 Percentage Change

New
Homes
Delivered

Home
Sales
Revenue

Average
Sales
Price

New
Homes
Delivered

Home
Sales
Revenue

Average
Sales
Price

New
Homes
Delivered

Home
Sales
Revenue

Average
Sales
Price
Maracay Homes 164
$ 78,166
$ 477
165
$ 68,024
$ 412
(1 )% 15 % 16 %
Pardee Homes 328
164,548
502
302
188,148
623
9 % (13 )% (19 )%
Quadrant Homes 79
54,197
686
90
47,749
531
(12 )% 14 % 29 %
Trendmaker Homes 104
52,453
504
121
62,408
516
(14 )% (16 )% (2 )%
TRI Pointe Homes 332
239,110
720
260
167,769
645
28 % 43 % 12 %
Winchester Homes 104
60,164
579
81
44,555
550
28 % 35 % 5 %
Total 1,111
$ 648,638
$ 584
1,019
$ 578,653
$ 568
9 % 12 % 3 %

Home sales revenue increased $70.0 million, or 12%, to $648.6 million for the three months ended September 30, 2017. The increase was comprised of (i) $52.2 million related to an increase in homes delivered to 1,111 for the three months ended September 30, 2017 from 1,019higher-priced California assets in the ~~prior year~~current-year period, ~~and (ii) a $16,000, or 3%, increase in the average sales price of homes delivered to $584,000 for the three months ended September 30, 2017,~~particularly from ~~$568,000 in the prior year period.~~

Maracay Homes had a 15% increase in home sales revenue due to an increase in average sales price and relatively flat new home deliveries. The increase in average sales price was due to a product mix shift that included a greater proportion of move-up and luxury products compared to the prior year. Pardeeour San Diego market. Quadrant Homes’ home sales revenue decreased ~~13%~~48% due to a 19% decrease in average sales price, offset by a 9% increase in new homes delivered. The decrease in average sales price was due to a product mix shift that included a greater proportion of entry-level product, specifically in our San Diego market. Quadrant Homes increased home sales revenue by 14% due to a 29% increase in average sales price offset by a 12% decrease in new homes delivered. The increase in average sales price was the result of delivering more units in the core Seattle markets of King and Snohomish counties, which have higher price points. Trendmaker Homes' home sales revenue decreased 16% due to a 14%40% decrease in new homes delivered and a 2%13% decrease in average sales ~~price of homes delivered.~~price. The decrease in new homes delivered was due ~~in part~~ to ~~Hurricane Harvey, which caused significant flooding~~timing and ~~widespread damage in Houston, and was responsible for delivery delays during~~ the ~~third quarter~~impact of ~~2017. Approximately 30 deliveries that would have delivered in the third quarter of 2017 will instead deliver in early 2018 at~~COVID-19-related construction delays. Trendmaker ~~Homes. TRI Pointe Homes had a 43% increase in~~Homes’ home sales revenue increased 4% due to a ~~28%~~2% increase in new homes delivered and a ~~12%~~2% increase in average sales price. TRI Pointe Homes’ home sales revenue increased 7% due primarily to a 4% increase in new homes delivered and a 3% increase in average sales price. The increase in new homes delivered was driven by ~~higher backlog to start~~ the ~~quarter compared to the same prior year period.~~timing of deliveries. Home sales revenue increased at Winchester Homes by ~~35% largely~~20% due to ana 21% increase in new homes delivered. The increase in new homes delivered aswas due to a ~~result~~higher number of ~~higher~~ backlog tounits at the start of the ~~quarter~~current-year period compared to the ~~same prior year~~prior-year period.

- 39 -

Homebuilding Gross Margins (dollars in thousands)


	Three Months Ended September 30,											Three Months Ended June 30,
	2017			%		2016			%			2020			%		2019			%
Home sales revenue	$	648,638		100.0	%	$	578,653		100.0	%	Home sales revenue	$	766,942		100.0	%	$	692,138		100.0	%
Cost of home sales	521,918			80.5	%	462,323			79.9	%	Cost of home sales	601,434			78.4	%	574,684			83.0	%
Homebuilding gross margin	126,720			19.5	%	116,330			20.1	%	Homebuilding gross margin	165,508			21.6	%	117,454			17.0	%
Add: interest in cost of home sales	15,623			2.4	%	14,385			2.5	%	Add: interest in cost of home sales	21,801			2.8	%	18,071			2.6	%
Add: impairments and lot option abandonments	374			0.1	%	389			0.1	%	Add: impairments and lot option abandonments	1,380			0.2	%	288			0.0	%
Adjusted homebuilding gross margin⁽¹⁾	$	142,717		22.0	%	$	131,104		22.7	%	Adjusted homebuilding gross margin⁽¹⁾	$	188,689		24.6	%	$	135,813		19.6	%
Homebuilding gross margin percentage	19.5		%			20.1		%			Homebuilding gross margin percentage	21.6		%			17.0		%
Adjusted homebuilding gross margin percentage⁽¹⁾	22.0		%			22.7		%			Adjusted homebuilding gross margin percentage⁽¹⁾	24.6		%			19.6		%

__________


⁽¹⁾ ⁽¹⁾Non-GAAP financial measure (as discussed below).	~~Non-GAAP financial measure (as discussed below).~~

Our homebuilding gross margin percentage ~~decreased~~increased to ~~19.5%~~21.6% for the three months ended ~~September~~June 30, ~~2017~~2020 as compared to ~~20.1%~~17.0% for the ~~prior year~~prior-year period. The ~~decrease~~increase in gross margin percentage was ~~primarily~~ due to a decrease in incentives as compared to the ~~mix~~prior-year period, during which we experienced weaker pricing trends, in addition to higher current-year period revenue from some of ~~deliveries from~~ our long-dated California ~~communities,~~assets, which produce gross margins above the Company ~~average, having less of an impact on our overall gross margin percentage compared to the same period in the prior year.~~average. Excluding interest and impairment and lot option abandonments in cost of home sales, adjusted homebuilding gross margin percentage was ~~22.0%~~24.6% for the three months ended ~~September~~June 30, ~~2017,~~2020, compared to ~~22.7%~~19.6% for the ~~prior year~~prior-year period.

Adjusted homebuilding gross margin is a non-GAAP financial measure. We believe this information is meaningful as it isolates the impact that leverage and noncash charges have on homebuilding gross margin and permits investors to make better comparisons with our competitors, who adjust gross margins in a similar fashion. Because adjusted homebuilding gross margin is not calculated in accordance with GAAP, it may not be comparable to other similarly titled measures of other companies and should not be considered in isolation or as a substitute for, or superior to, financial measures prepared in accordance with GAAP. See the table above reconciling this non-GAAP financial measure to homebuilding gross margin, the ~~nearest~~most directly comparable GAAP ~~equivalent.~~measure.

~~Land~~Sales and ~~Lot Gross Margins~~Marketing, General and Administrative Expense (dollars in thousands)


	Three Months Ended June 30,						As a Percentage of Home Sales Revenue
	2020		2019		2020		2019
Sales and marketing	$	45,194	$	47,065	5.9	%	6.8	%
General and administrative (G&A)	37,554		36,854		4.9	%	5.3	%
Total sales and marketing and G&A	$	82,748	$	83,919	10.8	%	12.1	%

Three Months Ended September 30,
2017 % 2016 %
Land and lot sales revenue $ 68,218
100.0 % $ 2,535
100.0 %
Cost of land and lot sales 12,001
17.6 % 1,734
68.4 %
Land and lot gross margin $ 56,217
82.4 % $ 801
31.6 %

~~Our land~~Total sales and ~~lot gross margin~~marketing and general and administrative (“SG&A”) as a percentage ~~increased~~of home sales revenue decreased to ~~82.4%~~10.8% for the three months ended ~~September~~June 30, ~~2017 as~~2020, compared to ~~31.6%~~12.1% in the prior-year period. Total SG&A expense decreased $1.2 million to $82.7 million for the ~~prior year period. During the quarter~~three months ended ~~September~~June 30, ~~2017, our Pardee Homes reporting segment sold a parcel consisting of 69 homebuilding lots, located~~2020 from $83.9 million in the Pacific Highlands Ranch community in San Diego, California, representing $66.8 million in land and lot sales revenue and $56.1 million in land and lot gross margin. This sale resulted in significant gross margin due to the low land basis of the Pacific Highlands Ranch community, which was acquired in 1981. Land and lot sales gross margin percentage can vary significantly due to the type of land and its related cost basis. Additionally, we expect land and lot sales revenue to vary significantly between reporting periods based on our business decisions to maintain or decrease our land ownership in various markets. Our land and lot sale decisions will be based on a variety of factors, including, without limitation, prevailing market conditions.

~~- 40 -~~

~~Sales and Marketing, General and Administrative Expense (dollars in thousands)~~

Three Months Ended September 30,
As a Percentage of
Home Sales Revenue
2017 2016 2017 2016
Sales and marketing $ 33,179
$ 31,852
5.1 % 5.5 %
General and administrative (G&A) 32,956
31,278
5.1 % 5.4 %
Total sales and marketing and G&A $ 66,135
$ 63,130
10.2 % 10.9 %

prior-year period.

Sales and marketing expense as a percentage of home sales revenue decreased to ~~5.1%~~5.9% for the three months ended ~~September~~June 30, ~~2017,~~2020, compared to ~~5.5%~~6.8% for the ~~prior year~~prior-year period. The decrease was ~~the result of~~due primarily to lower advertising expense and higher ~~operating~~ leverage on the fixed components of sales and marketing ~~expenses~~expense as a result of the ~~12%~~11% increase in ~~homes sales revenue.~~homebuilding revenue compared to the prior-year period. In addition, we realized some cost savings related to the workforce reduction plan implemented in May 2020. Sales and marketing expense decreased to $45.2 million for the three months ended June 30, 2020 compared to $47.1 million in the prior-year period due primarily to the decrease in advertising expense.

General and administrative (“G&A”) ~~expenses~~expense as a percentage of home sales revenue decreased to ~~5.1%~~4.9% of home sales revenue for the three months ended ~~September~~June 30, ~~2017~~2020 compared to ~~5.4%~~5.3% for the ~~prior year~~prior-year period largely due to higher leverage on our G&A expense as a result of ~~higher operating leverage due~~the 11% increase in homebuilding revenue compared to the ~~12% increase~~prior-year period. In addition, G&A expense was favorably impacted by the realization of cost savings related to our workforce reduction plan implemented in ~~home sales revenue.~~May

- 40 -

2020. G&A ~~expenses~~expense increased to ~~$33.0~~$37.6 million for the three months ended ~~September~~June 30, ~~2017~~2020 compared to ~~$31.3~~$36.9 million infor the ~~prior year period primarily as~~prior-year period.

Restructuring Charges

In May 2020, due to the existing and anticipated future impact of the COVID-19 pandemic on our business, we implemented a workforce reduction plan. As a result of the workforce reduction plan, we incurred $5.5 million of pre-tax restructuring charges consisting of severance and related costs, substantially all of which had been paid as of June 30, 2020. We believe that our restructuring activities are substantially complete as of June 30, 2020. However, until market conditions stabilize, we may incur additional ~~headcount to support future growth, along with~~restructuring charges. We expect that this workforce reduction will decrease our ~~continued expansion into Austin, Texas and Los Angeles, California and the recently announced expansion into the Sacramento, California market. G&A expense was positively impacted~~overhead expenses by approximately $33 million on an annualized basis.

Other Income (Expense), Net

Other income (expense), net for the three months ended ~~September~~June 30, ~~2017 by~~2020 included a ~~decrease~~$6.9 million loss in connection with the ~~income tax liability~~early extinguishment of a portion of our 4.875% Senior Notes due 2021 (the “2021 Notes”). In June 2020, we commenced and settled a cash tender offer for any and all of our then outstanding $300 million principal amount of 2021 Notes as part of a plan to ~~Weyerhaeuser of $1.4 million related to the~~refinance our long-term debt due in 2021 with longer maturity financing. Upon expiration of ~~stock options whose benefit would have been passed on to Weyerhaeuser under our tax sharing agreement.~~

~~Total sales~~the tender offer in June 2020, $216.3 million, or 72% of the outstanding principal amount, of the 2021 Notes were validly tendered and ~~marketing and G&A (“SG&A”) as a percentage of home sales revenue decreased to 10.2%~~accepted for the three months ended September 30, 2017, compared to 10.9% in the prior year period. Total SG&A expense increased $3.0 million, to $66.1 million for the three months ended September 30, 2017 from $63.1 million in the prior year period. purchase.

Interest

Interest, which ~~was~~we incurred principally to finance land acquisitions, land development and home construction, totaled ~~$22.9~~$21.8 million and ~~$18.6~~$22.0 million for the three months ended ~~September~~June 30, ~~2017~~2020 and ~~2016,~~2019, respectively. All interest incurred in both periods was capitalized. The increase in interest incurred during the three months ended September 30, 2017 as compared to the prior year period was primarily attributable to an increase in our debt balance and our weighted average interest rate as a result of the issuance in June of 2017 of our $300 million aggregate principal amount of 5.250% Senior Notes due 2027 ("the 2027 Notes").

Income Tax

For the three months ended ~~September~~June 30, ~~2017,~~2020, we recorded a tax provision of ~~$46.1~~$18.1 million based on an effective tax rate of ~~38.9%~~24.3%. For the three months ended ~~September~~June 30, ~~2016,~~2019, we recorded a tax provision of ~~$20.3~~$9.1 million based on an effective tax rate of ~~36.6%~~25.8%. The increase in the current year income tax rate is due to the expiration of federal energy tax credits in 2017 as well as a negative impact on the tax rate from the expiration of non-qualified stock options. The increase in provision for income taxes is due to ana $39.3 million increase in income before income taxes ~~of $63.0 million~~ to ~~$118.4~~$74.7 million for the three months ended ~~September~~June 30, ~~2017,~~2020, compared to ~~$55.4~~$35.4 million for the ~~prior year~~prior-year period.

During the three months ended June 30, 2020, California enacted tax legislation that approved the suspension of California net operating loss deductions for tax years 2020, 2021 and 2022. The suspension of California net operating loss deductions did not have an impact on our tax provision for the three months ended June 30, 2020.

Financial Services Segment

Income before income taxes from our financial services operations increased to $3.9 million for the three months ended June 30, 2020 compared to $2.1 million for the prior-year period. This increase is due to higher home sales volume in the three months ended June 30, 2020 compared to the prior-year period, resulting in a corresponding increase in financial services captured in the current year. We experienced higher financial services profit in all three areas of our financial services segment, represented by mortgage financing, title and escrow services, and property and casualty insurance operations.

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~~Nine~~Six Months Ended ~~September~~June 30, ~~2017~~2020 Compared to ~~Nine~~Six Months Ended ~~September~~June 30, ~~2016~~2019

Net New Home Orders, Average Selling Communities and Monthly Absorption Rates by Segment


														Six Months Ended June 30, 2020					Six Months Ended June 30, 2019							Percentage Change
	Nine Months Ended September 30, 2017			Nine Months Ended September 30, 2016			Percentage Change							Net New Home Orders	Average Selling Communities	Monthly Absorption Rates	Net New Home Orders	Average Selling Communities	Monthly Absorption Rates	Net New Home Orders		Average Selling Communities		Monthly Absorption Rates
	Net New Home Orders	Average Selling Communities	Monthly Absorption Rates	Net New Home Orders	Average Selling Communities	Monthly Absorption Rates	Net New Home Orders		Average Selling Communities		Monthly Absorption Rates
Maracay Homes	504	15.3	3.7	526	18.1	3.2	(4	)%	(15	)%	16	%
Maracay													Maracay	402	16.9	4.0	414	13.4	5.1	(3)	%	26	%	(22)	%
Pardee Homes	1,282	29.3	4.9	936	22.8	4.6	37	%	29	%	7	%	Pardee Homes	898	43.0	3.5	955	44.4	3.6	(6)	%	(3)	%	(3)	%
Quadrant Homes	311	7.6	4.5	274	8.5	3.6	14	%	(11	)%	25	%	Quadrant Homes	231	8.3	4.6	142	6.9	3.4	63	%	20	%	35	%
Trendmaker Homes	393	30.9	1.4	385	26.8	1.6	2	%	15	%	(13	)%	Trendmaker Homes	439	30.1	2.4	490	38.6	2.1	(10)	%	(22)	%	14	%
TRI Pointe Homes	1,144	31.9	4.0	883	27.3	3.6	30	%	17	%	11	%	TRI Pointe Homes	741	31.4	3.9	589	29.6	3.3	26	%	6	%	18	%
Winchester Homes	378	12.4	3.4	335	13.5	2.8	13	%	(8	)%	21	%	Winchester Homes	282	12.7	3.7	222	14.1	2.6	27	%	(10)	%	42	%
Total	4,012	127.4	3.5	3,339	117.0	3.2	20	%	9	%	9	%	Total	2,993	142.4	3.5	2,812	147.0	3.2	6	%	(3)	%	9	%

Net new home orders for the ~~nine~~six months ended ~~September~~June 30, ~~2017~~2020 increased by ~~673~~181 orders, or ~~20%~~6%, to ~~4,012,~~2,993, compared to ~~3,339~~2,812 during the ~~prior year~~prior-year period. The increase in net new home orders was due to a 9% increase in monthly absorption rates, offset by a 3% decrease in average selling ~~communities~~communities. New home order demand was exceptionally strong through January and February of 2020, followed by a ~~9% increase~~significant decline in ~~monthly absorption rates.~~March and April, a slow and steady improvement in May and exceptionally strong demand in June. This unusual volatility was due to the COVID-19 pandemic and the measures taken to contain its spread, as well as the impacts on consumers and the overall economy. As our results for the six months ended June 30, 2020 have been impacted by the COVID-19 pandemic, they may not be indicative of results going forward.

Maracay ~~Homes had~~reported a 4%3% decrease in net new home orders driven by a ~~15%~~22% decrease in monthly absorption rates, offset by a 26% increase in average selling communities. The decrease in Maracay’s monthly absorption rate to 4.0 for the six months ended June 30, 2020 was due to the impact of COVID-19 and the slower market conditions experienced through March and April. Despite this impact, our monthly absorption rate of 4.0 for the current year demonstrates strong demand for Maracay’s new community openings during the current-year period as well as strong market fundamentals in Arizona throughout most of the quarter. Pardee Homes reported a 6% decrease in net new home orders driven by a 3% decrease in monthly absorption rates and a 3% decrease in average selling communities. The decrease in monthly absorption rate was due to the impact of COVID-19, as net new home order activity slowed considerably during parts of March, April and May. Net new home orders increased 63% at Quadrant Homes due to a 35% increase in monthly absorption rate and a 20% increase in average selling communities during the current-year period as compared to the prior-year period. The increase in monthly absorption rate to 4.6 was due to an exceptionally strong demand environment in January and February of the current-year period, as well as a significant improvement in market conditions during the latter half of May and into June, notwithstanding reduced demand in the month of April due to COVID-19. In addition, two of our new community openings were particularly well-received by the market, which resulted in an increased sales pace. Trendmaker Homes’ net new home orders decreased 10% due to a 22% decrease in average selling communities ~~due to the timing of community openings and closings compared to the prior year period. This was~~ offset by a ~~16%~~14% increase in monthly absorption rate as a result of improved market conditions compared to the prior year period. Pardee Homes increased net new home orders by 37% largely due to a 29% increase in average selling communities and a 7% increase in absorption rate to 4.9 orders per community per month. Net new home orders increased 14% at Quadrant Homes mainly due to a 25% increase inrate. Though we experienced stronger monthly absorption ~~rate due to continued strong market fundamentals. This was offset by an 11% decrease~~rates at each of our Houston, Austin and Dallas–Fort Worth markets in ~~average selling communities due to~~ the timing of new community openings and closings. Trendmaker Homes increased net new home orders by 2% primarily based on a 15% increase in average selling communities. Trendmaker Homes’ monthly absorption rate declined compared to the prior yearcurrent-year period, ~~as a result of the loss of two weeks of selling due to the impact of Hurricane Harvey~~COVID-19 and the ~~continued softer market conditions due to the decrease in oil prices and the related impact on job growth~~volatility in the ~~Houston market.~~oil market negatively impacted our sales pace in the current-year period, particularly in March and April. TRI Pointe Homes’ net new home orders increased ~~30%~~26% due to an 18% increase in the monthly absorption rate and a ~~17%~~6% increase in average selling ~~communities and an 11%~~communities. The increase in ~~monthly absorption rate. Demand remains strong in the markets in which~~ TRI Pointe ~~Homes builds, as evidenced by a~~Homes’ monthly absorption rate ~~of 4.0 homes at average selling prices above~~was driven by stronger market conditions in both our Bay Area and Colorado markets compared to the ~~Company average.~~prior-year period. Winchester Homes ~~experienced~~reported a ~~13%~~27% increase in net new home orders ~~due to~~as a ~~21%~~result of a 42% increase in monthly absorption rate ~~partially~~ offset by ~~an 8%~~a 10% decrease in average selling communities. The increase in Winchester Homes’ monthly absorption rate was due to strong ~~customer~~order demand ~~in some of our larger master plan communities.~~and more favorable overall market conditions compared to the prior-year period.

- 42 -

New Homes Delivered, Homes Sales Revenue and Average Sales Price by Segment (dollars in thousands)


																		Six Months Ended June 30, 2020								Six Months Ended June 30, 2019								Percentage Change
	Nine Months Ended September 30, 2017					Nine Months Ended September 30, 2016					Percentage Change							New Homes Delivered	Home Sales Revenue		Average Sales Price		New Homes Delivered	Home Sales Revenue		Average Sales Price		New Homes Delivered		Home Sales Revenue		Average Sales Price
	New Homes Delivered	Home Sales Revenue		Average Sales Price		New Homes Delivered	Home Sales Revenue		Average Sales Price		New Homes Delivered		Home Sales Revenue		Average Sales Price
Maracay Homes	447	$	204,981	$	459	400	$	161,318	$	403	12	%	27	%	14	%
Maracay																	Maracay	305	$	158,426	$	519	180	$	95,214	$	529	69	%	66	%	(2)	%
Pardee Homes	896	428,624		478		828	485,683		587		8	%	(12	)%	(19	)%	Pardee Homes	619	420,684		680		567	329,562		581		9	%	28	%	17	%
Quadrant Homes	206	133,747		649		287	147,935		515		(28	)%	(10	)%	26	%	Quadrant Homes	92	80,106		871		111	113,702		1,024		(17)	%	(30)	%	(15)	%
Trendmaker Homes	343	169,189		493		335	169,423		506		2	%	—	%	(3	)%	Trendmaker Homes	463	217,377		469		404	187,130		463		15	%	16	%	1	%
TRI Pointe Homes	783	524,159		669		678	452,553		667		15	%	16	%	—	%	TRI Pointe Homes	518	365,143		705		523	364,543		697		(1)	%	—	%	1	%
Winchester Homes	265	148,758		561		256	141,721		554		4	%	5	%	1	%	Winchester Homes	190	120,044		632		154	94,690		615		23	%	27	%	3	%
Total	2,940	1,609,458		$	547	2,784	$	1,558,633	$	560	6	%	3	%	(2	)%	Total	2,187	$	1,361,780	$	623	1,939	$	1,184,841	$	611	13	%	15	%	2	%

Home sales revenue increased ~~$50.8~~$176.9 million, or 3%15%, to ~~$1.6~~$1.4 billion for the ~~nine~~six months ended ~~September~~June 30, ~~2017.~~2020. The increase was comprised ~~of:~~of (i) ~~$87.3~~$151.5 million related to ~~a 156, or 6%,~~an increase inof 248 new homes delivered ~~to 2,940 for the nine months~~

~~- 42 -~~

~~ended September 30, 2017, from 2,784~~ in the ~~prior year~~six months ended June 30, 2020 compared to the prior-year period, ~~offset by~~and (ii) ~~a decrease of $36.5~~$25.4 million related to ~~the decrease~~an increase of $12,000 in average sales price of homes delivered ~~by 2%, or $13,000, to $547,000 for~~in the ~~nine~~six months ended ~~September~~June 30, ~~2017, from $560,000 in~~2020 compared to the ~~prior year~~prior-year period.

Maracay ~~Homes had a 27% increase in~~ home sales revenue increased 66% due to ~~increases~~an 69% increase in ~~both~~ new homes delivered ~~and average sales price.~~during the current-year period. The increase in new homes delivered ~~was~~is due to ~~starting the year with more homes in backlog. The~~a 119% increase in ~~average sales price was driven by a product mix shift that included a greater proportion of move-up and luxury product~~backlog units to start the current-year period compared to the ~~prior year~~prior-year period. Pardee Homes’ home sales revenue ~~decreased by 12% largely~~increased 28% due to a ~~19% decrease~~17% increase in average sales ~~price.~~price and a 9% increase in new homes delivered. The ~~decrease~~increase in average sales price was due to a product mix shift that included a greater proportion of ~~entry level homes delivered, specifically~~deliveries from our higher-priced California assets in the current-year period, particularly from our San Diego market. ~~This difference in product mix was due to the timing of deliveries compared to the prior year period.~~ Quadrant ~~Homes decreased~~Homes’ home sales revenue ~~by 10%,~~decreased 30% due to a ~~result of a 28%~~17% decrease in new homes delivered ~~partially offset by~~and a ~~26% increase~~15% decrease in average sales price. The ~~large~~ decrease in new homes delivered was due to ~~starting~~timing and the ~~year with a lower number~~impact of backlog units compared to the prior year period as a result of lower average selling communities. The large increase in average sales price was the result of delivering more homes in the core Seattle markets of King and Snohomish counties, which have higher price points. HomeCOVID-19-related construction delays. Trendmaker Homes’ home sales revenue was flat at Trendmaker Homes due to relatively flat new homes delivered and average sales price of homes delivered. Hurricane Harvey, which caused significant flooding and widespread damage in Houston, was responsible for delivery delays during the third quarter of 2017 at Trendmaker Homes. Approximately 30 deliveries that would have delivered in the third quarter of 2017 will instead deliver in early 2018 at Trendmaker Homes. Home sales revenue at TRI Pointe Homes increased by 16% due to a 15% increase in new homes delivered. The increase in new homes delivered was due to the timing of deliveries. TRI Pointe Homes’ home sales revenue was flat, as we achieved consistent new homes delivered and average sales price. Home sales revenue increased at Winchester Homes by ~~5% mainly~~27% due to a 4%23% increase in new homes delivered and a 3% increase in average sales price. The increase in new homes delivered was due to a higher number of backlog units at the ~~timing~~start of ~~deliveries.~~the current-year period compared to the prior-year period.

Homebuilding Gross Margins (dollars in thousands)


	Nine Months Ended September 30,											Six Months Ended June 30,
	2017			%		2016			%			2020			%		2019			%
Home sales revenue	$	1,609,458		100.0	%	$	1,558,633		100.0	%	Home sales revenue	$	1,361,780		100.0	%	$	1,184,841		100.0	%
Cost of home sales	1,294,563			80.4	%	1,219,560			78.2	%	Cost of home sales	1,074,316			78.9	%	996,220			84.1	%
Homebuilding gross margin	314,895			19.6	%	339,073			21.8	%	Homebuilding gross margin	287,464			21.1	%	188,621			15.9	%
Add: interest in cost of home sales	38,448			2.4	%	34,653			2.2	%	Add: interest in cost of home sales	38,623			2.8	%	32,262			2.7	%
Add: impairments and lot option abandonments	1,169			0.1	%	678			—	%	Add: impairments and lot option abandonments	1,729			0.1	%	5,490			0.5	%
Adjusted homebuilding gross margin⁽¹⁾	$	354,512		22.0	%	$	374,404		24.0	%	Adjusted homebuilding gross margin⁽¹⁾	$	327,816		24.1	%	$	226,373		19.1	%
Homebuilding gross margin percentage	19.6		%			21.8		%			Homebuilding gross margin percentage	21.1		%			15.9		%
Adjusted homebuilding gross margin percentage⁽¹⁾	22.0		%			24.0		%			Adjusted homebuilding gross margin percentage⁽¹⁾	24.1		%			19.1		%

__________


⁽¹⁾ ⁽¹⁾Non-GAAP financial measure (as discussed below).	~~Non-GAAP financial measure (as discussed below).~~

Our homebuilding gross margin percentage ~~decreased~~increased to ~~19.6%~~21.1% for the ~~nine~~six months ended ~~September~~June 30, ~~2017~~2020 as compared to ~~21.8%~~15.9% for the ~~prior year~~prior-year period. The ~~decrease~~increase in gross margin percentage was ~~primarily~~ due to a decrease in incentives as compared to the ~~mix~~prior-year period, during which we delivered homes impacted by the weaker pricing trends experienced in the second half of ~~homes delivered and increased labor and materials cost.~~2018. In addition, we benefited from the favorable impact of higher current-year period revenue from some of our long-dated California assets, which produce gross margins above the Company average. Excluding interest and impairment and lot option abandonments in cost of home sales, adjusted homebuilding gross margin percentage was ~~22.0%~~24.1% for the ~~nine~~six months ended ~~September~~June 30, ~~2017,~~2020, compared to ~~24.0%~~19.1% for the ~~prior year~~prior-year period.

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~~- 43 -~~

~~Land and Lot Gross Margins (dollars in thousands)~~

Nine Months Ended September 30,
2017 % 2016 %
Land and lot sales revenue $ 69,661
100.0 % $ 70,204
100.0 %
Cost of land and lot sales 13,299
19.1 % 16,973
24.2 %
Land and lot gross margin $ 56,362
80.9 % $ 53,231
75.8 %

Our land and lot gross margin percentage increased to 80.9% for the nine months ended September 30, 2017 as compared to 75.8% for the prior year period. During the quarter ended September 30, 2017, our Pardee Homes reporting segment sold a parcel consisting of 69 homebuilding lots, located in the Pacific Highlands Ranch community in San Diego, California, representing $66.8 million in land and lot sales revenue and $56.1 million in land and lot gross margin. This sale resulted in significant gross margin due to the low land basis of the Pacific Highlands Ranch community, which was acquired in 1981. In June of 2016, our Pardee Homes reporting segment sold two parcels, totaling 102 homebuilding lots, located in the Pacific Highlands Ranch community in San Diego, California. Pardee Homes received $61.6 million in cash proceeds from the related sales in 2016. Land and lot sales gross margin percentage can vary significantly due to the type of land and its related cost basis. Additionally, we expect land and lot sales revenue to vary significantly between reporting periods based on our business decisions to maintain or decrease our land ownership in various markets. Our land and lot sale decisions will be based on a variety of factors, including, without limitation, prevailing market conditions.

Sales and Marketing, General ~~and~~and Administrative Expense (dollars in thousands)


	Six Months Ended June 30,						As a Percentage of Home Sales Revenue
	2020		2019		2020		2019
Sales and marketing	$	87,831	$	86,054	6.4	%	7.3	%
General and administrative (G&A)	77,391		75,451		5.7	%	6.4	%
Total sales and marketing and G&A	$	165,222	$	161,505	12.1	%	13.6	%

Nine Months Ended September 30, As a Percentage of
Home Sales Revenue
2017 2016 2017 2016
Sales and marketing $ 92,209
$ 90,621
5.7 % 5.8 %
General and administrative (G&A) 101,293
90,293
6.3 % 5.8 %
Total sales and marketing and G&A $ 193,502
$ 180,914
12.0 % 11.6 %

Total SG&A as a percentage of home sales revenue decreased to 12.1% for the six months ended June 30, 2020, compared to 13.6% in the prior-year period. Total SG&A expense increased $3.7 million to $165.2 million for the six months ended June 30, 2020 from $161.5 million in the prior-year period.

Sales and marketing expense as a percentage of home sales revenue decreased to ~~5.7%~~6.4% for the ~~nine~~six months ended ~~September~~June 30, ~~2017,~~2020, compared to ~~5.8%~~7.3% for the ~~prior year~~prior-year period. The decrease was due primarily ~~the result of~~to higher ~~operating~~ leverage on the fixed components of sales and marketing ~~expenses~~expense as a result of the 3%15% increase in ~~homes sales revenue. Total sales~~homebuilding revenue compared to the prior-year period. In addition, we realized some cost savings related to the workforce reduction plan implemented in May 2020. Sales and marketing expense increased ~~by $1.6 million~~ to ~~$92.2~~$87.8 million for the ~~nine~~six months ended ~~September~~June 30, ~~2017,~~2020 compared to ~~$90.6~~$86.1 million in the ~~prior year period.~~prior-year period due primarily to higher variable commission costs associated with higher home sales revenue.

G&A ~~expenses~~expense as a percentage of home sales revenue ~~increased~~decreased to ~~6.3%~~5.7% of home sales revenue for the ~~nine~~six months ended ~~September~~June 30, ~~2017~~2020 compared to ~~5.8%~~6.4% for the ~~prior year period.~~prior-year period largely due to higher leverage on our G&A ~~expenses increased to $101.3 million for the nine months ended September 30, 2017 compared to $90.3 million in the prior year period primarily~~expense as a result of ~~additional headcount to support future growth, along with our continued expansion into Austin, Texas and Los Angeles, California and~~ the ~~recently announced expansion into the Sacramento, California market.~~

~~SG&A as a percentage of home sales~~15% increase in homebuilding revenue ~~increased to 12.0% for the nine months ended September 30, 2017,~~ compared to ~~11.6%~~the prior-year period. In addition, G&A expense was favorably impacted by the realization of cost savings related to our workforce reduction plan implemented in ~~the prior year period. Total SG~~May 2020. G&A expense increased ~~$12.6 million,~~ to ~~$193.5~~$77.4 million for the ~~nine~~six months ended ~~September~~June 30, ~~2017 from $180.9~~2020 compared to $75.5 million infor the ~~prior year~~prior-year period.

Interest

Interest, which ~~was~~we incurred principally to finance land acquisitions, land development and home construction, totaled ~~$61.7~~$42.6 million and ~~$50.0~~$45.3 million for the ~~nine~~six months ended ~~September~~June 30, ~~2017~~2020 and ~~2016,~~2019, respectively. All interest incurred in both periods was capitalized. The increase in interest incurred during the nine months ended September 30, 2017 as compared to the prior year period was primarily attributable to an increase in our debt balance and our weighted average interest rate as a result of the issuance of the 2021 Notes in May of 2016, along with the 2027 Notes in June of 2017.

~~- 44 -~~

Income Tax

For the ~~nine~~six months ended ~~September~~June 30, ~~2017,~~2020, we recorded a tax provision of ~~$69.8~~$28.0 million based on an effective tax rate of ~~38.1%~~24.0%. For the ~~nine~~six months ended ~~September~~June 30, ~~2016,~~2019, we recorded a tax provision of ~~$77.7~~$9.2 million based on an effective tax rate of ~~36.0%~~25.8%. The increase in the current year income tax rate is due to the expiration of federal energy tax credits in 2017 as well as a negative impact on the tax rate from the expiration of non-qualified stock options. The decrease in provision for income taxes is due to a ~~decrease~~$80.9 million increase in income before income taxes ~~of $32.6 million~~ to ~~$183.1~~$116.4 million for the ~~nine~~six months ended ~~September~~June 30, ~~2017,~~2020, compared to ~~$215.7~~$35.5 million for the ~~prior year~~prior-year period.

Financial Services Segment

Income before income taxes from our financial services operations increased to $6.0 million for the six months ended June 30, 2020 compared to $2.9 million for the prior-year period. This increase is due to higher home sales volume in the six months ended June 30, 2020 compared to the prior-year period, resulting in a corresponding increase in financial services captured in the current year. We experienced higher financial services profit in all three areas of our financial services segment, represented by mortgage financing, title and escrow services, and property and casualty insurance operations.

- 44 -

Lots Owned or Controlled by Segment

Excluded from owned and controlled lots are those related to Note 6, Investments in Unconsolidated Entities., to the accompanying condensed notes to unaudited consolidated financial statements included in this Quarterly Report on Form 10-Q. The table below summarizes our lots owned or controlled by segment as of the dates presented:


	September 30,		Increase (Decrease)					June 30,			Increase (Decrease)
	2017	2016	Amount		%			2020	2019	Amount	%
Lots Owned							Lots Owned
Maracay Homes	1,855	1,662	193		12	%
Maracay							Maracay	2,070	2,234	(164)	(7)	%
Pardee Homes	15,348	15,906	(558	)	(4	)%	Pardee Homes	12,622	13,649	(1,027)	(8)	%
Quadrant Homes	1,169	969	200		21	%	Quadrant Homes	1,010	853	157	18	%
Trendmaker Homes	1,542	1,757	(215	)	(12	)%	Trendmaker Homes	2,672	1,924	748	39	%
TRI Pointe Homes	3,117	3,048	69		2	%	TRI Pointe Homes	2,497	2,759	(262)	(9)	%
Winchester Homes	1,772	1,886	(114	)	(6	)%	Winchester Homes	878	1,211	(333)	(27)	%
Total	24,803	25,228	(425	)	(2	)%	Total	21,749	22,630	(881)	(4)	%
Lots Controlled⁽¹⁾							Lots Controlled⁽¹⁾
Maracay Homes	751	596	155		26	%
Maracay							Maracay	1,420	1,377	43	3	%
Pardee Homes	307	1,081	(774	)	(72	)%	Pardee Homes	328	755	(427)	(57)	%
Quadrant Homes	516	926	(410	)	(44	)%	Quadrant Homes	—	589	(589)	(100)	%
Trendmaker Homes	314	373	(59	)	(16	)%	Trendmaker Homes	1,541	778	763	98	%
TRI Pointe Homes	667	912	(245	)	(27	)%	TRI Pointe Homes	3,872	1,646	2,226	135	%
Winchester Homes	534	597	(63	)	(11	)%	Winchester Homes	890	342	548	160	%
Total	3,089	4,485	(1,396	)	(31	)%	Total	8,051	5,487	2,564	47	%
Total Lots Owned or Controlled⁽¹⁾	27,892	29,713	(1,821	)	(6	)%	Total Lots Owned or Controlled⁽¹⁾	29,800	28,117	1,683	6	%

__________


⁽¹⁾	~~As of September 30, 2017 and 2016, lots controlled included lots that were under land or lot option contracts or purchase contracts.~~

⁽¹⁾As of June 30, 2020 and 2019, lots controlled represented lots that were under land or lot option contracts or purchase contracts.

Liquidity and Capital Resources

Overview

Our principal uses of capital for the ~~nine~~six months ended ~~September~~June 30, ~~2017~~2020 were operating expenses, land purchases, land development and home construction. We used funds generated by our operations ~~and available borrowings~~ to meet our short-term working capital requirements. We monitor financing requirements to evaluate potential financing sources, including bank credit facilities and note offerings. In March 2020, we borrowed a total of $500 million under our revolving credit facility to, in part, safeguard our balance sheet as the credit and banking market showed signs of distress in the wake of the COVID-19 outbreak. In June 2020, we determined that any concerns regarding near term access to liquidity had sufficiently receded and, as a result, we repaid all outstanding amounts under our revolving credit facility. While the current economic environment resulting from the COVID-19 pandemic is unprecedented, and the ultimate effects of COVID-19 and the related restrictions imposed on businesses and individuals across the world remain unknown, we continue to monitor the credit markets as we remain focused on generating positive margins in our homebuilding ~~operations and~~operations. While acquiring desirable land positions ~~in order~~is critical to ~~maintain~~our long-term growth initiatives, under the current conditions we are focused on maintaining a strong balance sheet ~~and keep us poised for growth.~~while maximizing flexibility as to future land spend. As of ~~September~~June 30, ~~2017,~~2020, we had total liquidity of ~~$554.6 million,~~$1.0 billion, including cash and cash equivalents of ~~$162.4~~$474.5 million and ~~$392.2~~$559.4 million of availability under our Credit Facility, as described below, after considering the borrowing base provisions and outstanding letters of credit.

Our board of directors will consider a number of factors when evaluating our level of indebtedness and when making decisions regarding the incurrence of new indebtedness, including the purchase price of assets to be acquired with debt financing, the estimated market value of our assets and the ~~ability~~availability of particular assets, and our Company as a whole, to generate cash flow to cover the expected debt service. ~~Our charter does not contain a limitation on the amount of debt we may incur and our board of directors may change our target debt levels at any time without the approval of our stockholders.~~

- 45 -

Senior Notes

In June 2017, TRI Pointe Group issued ~~the~~$300 million aggregate principal amount of 5.250% Senior Notes due 2027 ~~Notes~~(the “2027 Notes”) at 100.00% of their aggregate principal amount. Net proceeds of this issuance ~~was~~were $296.3 million, after debt issuance costs and discounts. The 2027 Notes mature on June 1, 2027 and interest is paid semiannually in arrears on June 1 and December 1.

In May 2016, TRI Pointe Group issued $300 million aggregate principal amount of ~~4.875% Senior~~2021 Notes ~~due 2021 (the “2021 Notes”)~~ at 99.44% of their aggregate principal amount. Net proceeds of this issuance ~~was~~were $293.9 million, after debt issuance costs and discounts. The 2021 Notes mature on July 1, 2021 and interest is paid semiannually in arrears on January 1 and July 1. On June 3, 2020, the Company commenced a cash tender offer for any and all of the outstanding 2021 Notes at a price of $1,025 per $1,000 principal amount of 2021 Notes tendered before the expiration of the tender offer. The principal amount of 2021 Notes tendered was $216.3 million, or 72% of the outstanding principal amount, after which $83.7 million principal amount of 2021 Notes remained outstanding as of June 30, 2020. The remaining outstanding principal amount of $83.7 million was fully paid in July 2020 in connection with the redemption of the remaining 2021 Notes.

TRI Pointe Group and its wholly owned subsidiary TRI Pointe Homes, Inc. (“TRI Pointe Homes”) are co-issuers of the $450 million aggregate principal amount ~~of 4.375% Senior Notes due 2019 (“2019 Notes”) and $450 million aggregate principal amount of~~ 5.875% Senior Notes due 2024 ~~(“2024~~(the “2024 Notes”). The ~~2019 Notes were issued at 98.89% of their aggregate principal amount and the~~ 2024 Notes were issued at 98.15% of their aggregate principal amount. The net proceeds from the offering ~~were $861.3~~of the 2024 Notes was $429.0 million, after debt issuance costs and discounts. The ~~2019 Notes and~~ 2024 Notes mature on June 15, ~~2019 and June 15, 2024. Interest is~~2024, with interest payable semiannually in arrears on June 15 and December 15.

Our outstanding senior notes (the “Senior Notes”) contain covenants that restrict our ability to, among other things, create liens or other encumbrances, enter into sale and leaseback transactions, or merge or sell all or substantially all of our assets. These limitations are subject to a number of qualifications and exceptions. As of ~~September~~June 30, ~~2017, no principal has been paid on~~2020, we were in compliance with the covenants required by our Senior Notes.

Loans Payable

On March 29, 2019, ~~Notes, 2021 Notes, 2024 Notes~~we entered into a Second Amended and ~~2027 Notes (together, the "Senior Notes"~~Restated Credit Agreement (the “Credit Agreement”), which amended and ~~there was $21.1 million of capitalized debt financing costs, included in senior notes, net on~~restated our ~~consolidated balance sheet, related to the Senior Notes that will amortize over the lives of the Senior Notes. Accrued interest related to the Senior Notes was $22.1 million~~Amended and ~~$10.7 million~~Restated Credit Agreement, dated as of ~~September 30, 2017 and December 31, 2016, respectively.~~

~~Unsecured Revolving~~July 7, 2015. The Credit Facility

~~On June 20, 2017, the Company modified its existing unsecured~~ (as defined below), which matures on March 29, 2023, consists of a $600 million revolving credit facility (the “Revolving Facility”) and a $250 million term loan facility (the “Term Facility” and together with the Revolving Facility, the “Credit Facility”). The Term Facility includes a 90-day delayed draw provision, which allowed us to ~~extend~~draw the full $250 million from the Term Facility in June 2019 in connection with the maturity ~~date by two years to May 18, 2021, while decreasing~~of the ~~total commitments under~~4.375% Senior Notes that matured on June 15, 2019. We may increase the Credit Facility to ~~$600 million from $625 million. In addition,~~not more than $1 billion in the ~~Credit Facility was modified to give the Company the option to make offers to the lenders to extend the maturity date of the facility in twelve-month increments, subject to the~~aggregate, at our request, upon satisfaction of ~~certain~~specified conditions. The ~~Credit~~Revolving Facility contains a sublimit of $75 million for letters of credit. ~~The Company~~We may borrow under the ~~Credit~~Revolving Facility in the ordinary course of business to repay senior notes and fund ~~its~~our operations, including ~~its~~our land acquisition, land development and homebuilding activities. Borrowings under the ~~Credit~~Revolving Facility will be governed by, among other things, a borrowing base. ~~The Credit Facility contains customary affirmative and negative covenants, including financial covenants relating to consolidated tangible net worth, leverage, and liquidity or interest coverage.~~ Interest rates on borrowings under the Revolving Facility will be based on either a daily Eurocurrency base rate or a Eurocurrency rate, in either case, plus a spread ranging from 1.25% to 2.00%, depending on our leverage ratio. Interest rates on borrowings under the Term Facility will be based on either a daily Eurocurrency base rate or a Eurocurrency rate, in either case, plus a spread ranging from 1.10% to 1.85%, depending on the Company’s leverage ratio.

As of ~~September~~June 30, ~~2017, the~~2020, we had no outstanding ~~balance~~debt under the ~~Credit~~Revolving Facility ~~was $200.0 million with an interest rate 2.99% per annum~~ and ~~$392.2~~there was $559.4 million of availability after considering the borrowing base provisions and outstanding letters of credit. As of June 30, 2020, we had $250 million outstanding debt under the Term Facility with an interest rate of 1.52%. As of June 30, 2020, there were $3.7 million of capitalized debt financing costs, included in other assets on our consolidated balance sheet, related to the Credit Facility that will amortize over the remaining term of the Credit Facility. Accrued interest, including loan commitment fees, related to the Credit Facility was $488,000 and $1.2 million as of June 30, 2020 and December 31, 2019, respectively.

At ~~September~~June 30, ~~2017,~~2020 and December 31, 2019, we had outstanding letters of credit of ~~$7.8 million.~~$40.6 million and $32.6 million, respectively. These letters of credit were issued to secure various financial obligations. We believe it is not probable that any outstanding letters of credit will be drawn upon.

- 46 -

Under the Credit Facility, we are required to comply with certain financial covenants, including, but not limited to, those set forth in the table below (dollars in thousands):


	Actual at June 30,			Covenant Requirement at June 30,
Financial Covenants	2020			2020
Consolidated Tangible Net Worth	$	2,016,173		$	1,497,799
(Not less than $1.35 billion plus 50% of net income and 50% of the net proceeds from equity offerings after December 31, 2018)
Leverage Test	32.4		%	≤55%
(Not to exceed 55%)
Interest Coverage Test	6.0			≥1.5
(Not less than 1.5:1.0)

In addition, the Credit Facility limits the aggregate number of single family dwellings (where construction has commenced) owned by the Company or any guarantor that are not presold or model units to no more than the greater of (i) 50% of the number of housing unit closings (as defined) during the preceding 12 months; or (ii) 100% of the number of housing unit closings during the preceding 6 months. However, a failure to comply with this “Spec Unit Inventory Test” will not be an event of default or default, but will be excluded from the borrowing base as of the last day of the quarter in which the non-compliance occurs. The Credit Facility further requires that at least 97.0% of consolidated tangible net worth must be attributable to the Company and its guarantor subsidiaries, subject to certain grace periods.

As of June 30, 2020, we were in compliance with all of these financial covenants.

Stock Repurchase Program

On February ~~23, 2017,~~13, 2020, our board of directors discontinued and cancelled our 2019 Repurchase Program and approved ~~the 2017~~our 2020 Repurchase ~~Program. On July 25, 2017 our board of directors authorized~~Program, authorizing the repurchase of shares of common stock with an aggregate value of up to ~~an additional $50~~$200 million ~~of our common stock under the 2017 Repurchase Program, increasing the aggregate authorization from $100 million to $150 million.~~through March 31, 2021. Purchases of common stock pursuant to the ~~2017~~2020 Repurchase Program may be made in open market transactions effected through a broker-dealer at prevailing market prices, in block trades, or by other means in accordance with federal securities laws, including pursuant to any trading plan that may be adopted in accordance with Rule 10b5-1 ofunder the Exchange Act. We are not obligated under the ~~2017~~2020 Repurchase Program to repurchase any specific number or dollar amount of shares of common stock, and we may modify, suspend or discontinue the ~~program~~2020 Repurchase Program at any time. Our management will determine the timing and amount of repurchase in its discretion based on a variety of factors, such as the market price of our common stock, corporate requirements, general market economic conditions and legal requirements. ~~For~~During the three months ended ~~September~~June 30, ~~2017,~~2020, we did not repurchase any shares under the 2020 Repurchase Program. For the six months ended June 30, 2020, we repurchased and retired ~~975,700~~an aggregate of 6,558,323 shares of our common stock ~~under this program~~ at ~~a weighted~~an average price of ~~$12.83 per share~~$15.55 under the 2019 Repurchase Program and 2020 Repurchase Program for a total ~~cost~~ of ~~$12.5~~$102.0 million. For the nine months ended September 30, 2017, we repurchased and retired 8,994,705 shares of common stock under this program at a weighted average price of $12.48 per share, for a total cost of $112.2 million.

~~- 46 -~~

~~Covenant Compliance~~

~~Under our Credit Facility, we are required to comply with certain financial covenants, including, but not limited to, those set forth in the table below (dollars in thousands):~~

Actual at
September 30, Covenant
Requirement at
September 30,
Financial Covenants 2017 2017
Consolidated Tangible Net Worth $ 1,681,335
$ 1,152,489
(Not less than $1.1 billion plus 50% of net income and
50% of the net proceeds from equity offerings after
March 31, 2017)

Leverage Test 47.7 % ≤55%
(Not to exceed 55%)
Interest Coverage Test 4.3
≥1.5
(Not less than 1.5:1.0)

~~As of September 30, 2017, we were in compliance with all of these financial covenants.~~

Leverage Ratios

We believe that our leverage ratios provide useful information to the users of our financial statements regarding our financial position and cash and debt management. The ratio of debt-to-capital and the ratio of net debt-to-net capital are calculated as follows (dollars in thousands):

September 30, 2017 December 31, 2016
Unsecured revolving credit facility $ 200,000
$ 200,000
Seller financed loans —
13,726
Senior Notes 1,469,558
1,168,307
Total debt 1,669,558
1,382,033
Stockholders’ equity 1,842,429
1,829,447
Total capital $ 3,511,987
$ 3,211,480
Ratio of debt-to-capital⁽¹⁾
47.5 % 43.0 %

Total debt $ 1,669,558
$ 1,382,033
Less: Cash and cash equivalents (162,396 ) (208,657 )
Net debt 1,507,162
1,173,376
Stockholders’ equity 1,842,429
1,829,447
Net capital $ 3,349,591
$ 3,002,823
Ratio of net debt-to-net capital⁽²⁾
45.0 % 39.1 %

~~__________~~


⁽¹⁾	~~The ratio of debt-to-capital is computed as the quotient obtained by dividing total debt by the sum of total debt plus equity.~~

⁽²⁾

The ratio of net debt-to-net capital is a non-GAAP measure and is computed as the quotient obtained by dividing net debt (which is total debt less cash and cash equivalents) by the sum of net debt plus equity. The most directly comparable GAAP financial measure is the ratio of debt-to-capital. We believe the ratio of net debt-to-net capital is a relevant financial measure for investors to understand the leverage employed in our operations and as an indicator of our ability to obtain financing. See the table above reconciling this non-GAAP financial measure to the ratio of debt-to-capital. Because the ratio of net debt-to-net capital is not calculated in accordance with GAAP, it may not be comparable to other similarly titled measures of other companies and should not be considered in isolation or as a substitute for, or superior to, financial measures prepared in accordance with GAAP.

- 47 -


	June 30, 2020			December 31, 2019
Loans Payable	$	250,000		$	250,000
Senior Notes	1,166,189			1,033,985
Total debt	1,416,189			1,283,985
Stockholders’ equity	2,175,799			2,186,530
Total capital	$	3,591,988		$	3,470,515
Ratio of debt-to-capital⁽¹⁾	39.4		%	37.0		%

Total debt	$	1,416,189		$	1,283,985
Less: Cash and cash equivalents	(474,545)			(329,011)
Net debt	941,644			954,974
Stockholders’ equity	2,175,799			2,186,530
Net capital	$	3,117,443		$	3,141,504
Ratio of net debt-to-net capital⁽²⁾	30.2		%	30.4		%

__________

⁽¹⁾The ratio of debt-to-capital is computed as the quotient obtained by dividing total debt by the sum of total debt plus stockholders’ equity.

⁽²⁾The ratio of net debt-to-net capital is a non-GAAP financial measure and is computed as the quotient obtained by dividing net debt (which is total debt less cash and cash equivalents) by the sum of net debt plus stockholders’ equity. The most directly comparable GAAP financial measure is the ratio of debt-to-capital. We believe the ratio of net debt-to-net capital is a relevant financial measure for investors to understand the leverage employed in our operations and as an indicator of our ability to obtain financing. See the table above reconciling this non-GAAP financial measure to the ratio of debt-to-capital. Because the ratio of net debt-to-net capital is not calculated in accordance with GAAP, it may not be comparable to other similarly titled measures of other companies and should not be considered in isolation or as a substitute for, or superior to, financial measures prepared in accordance with GAAP.

Cash Flows—~~Nine~~Six Months Ended ~~September~~June 30, ~~2017~~2020 Compared to ~~Nine~~Six Months Ended ~~September~~June 30, ~~2016~~2019

For the ~~nine~~six months ended ~~September~~June 30, ~~2017~~2020 as compared to the ~~nine~~six months ended ~~September~~June 30, ~~2016, the comparison of cash flows is as follows:~~2019:

•Net cash ~~used in~~provided by operating activities ~~decreased~~increased by ~~$50.7~~$270.2 million to ~~$210.7~~$166.2 million for the ~~nine~~six months ended ~~September~~June 30, ~~2017,~~2020, from ~~$261.3~~net cash used of $103.9 million for the ~~nine~~six months ended ~~September~~June 30, ~~2016.~~2019. The change was comprised of offsetting activity, including (i) a decrease in cash used for real estate inventory purchases of $104.6 million, (ii) an increase in ~~real estate inventory of $401.3~~net income to $88.4 million for the six months ended June 30, 2020 compared to $26.3 million in ~~2017~~the prior-year period, (iii) a decrease in cash used for accrued expenses and other liabilities of $75.2 million to $5.8 million in the six months ended June 30, 2020 compared to ~~an increase of $442.7~~$81.0 million in ~~2016,~~the prior-year period, (iv) offset by ~~(ii) decrease in net income of $24.7 million in 2017 compared to the prior year period, and (iii) other offsetting activity including~~ changes in other assets, receivables, accounts payable, deferred income taxes and ~~accrued expenses.~~returns on investments in unconsolidated entities.

•Net cash used in investing activities was ~~$3.1~~$37.7 million for the ~~nine~~six months ended ~~September~~June 30, ~~2017,~~2020, compared to ~~$2.1~~$13.8 million for the ~~prior year period in 2016.~~prior-year period. The increase in cash used in investing activities was due mainly to ~~increased~~an increase in investments in unconsolidated entities.

•Net cash provided by financing activities ~~decreased to $167.5~~was $17.0 million for the ~~nine~~six months ~~ending September~~ended June 30, ~~2017, from $177.6~~2020, compared to net cash provided by financing activities of $11.6 million for the ~~same period~~prior-year period. Net cash provided by financing activities in the ~~prior year. The change~~current-year period was ~~primarily~~comprised of the issuance of $350 million principal amount of 2028 Notes, of which we used approximately $216 million to purchase a ~~result~~portion of ~~higher~~our 2021 Notes pursuant to a tender offer, resulting in a net ~~borrowings from debt~~borrowing of ~~$280.3 million during the nine months ended September 30, 2017, compared to $209.2 million for the nine months ended September 30, 2016,~~approximately $134 million. This activity was offset by ~~higher~~$102.0 million of cash used for share repurchases ~~of $112.2 million during~~for the ~~nine months ended September 30, 2017,~~current-year period, compared to ~~$25.1 million~~no similar cash transactions for the ~~nine months ended September 30, 2016.~~prior-year period.

~~As of September 30, 2017, our cash and cash equivalents balance was $162.4 million.~~

Off-Balance Sheet Arrangements and Contractual Obligations

In the ordinary course of business, we enter into ~~land and lot option~~purchase contracts in order to procure lots for the construction of our homes. We are subject to customary obligations associated with entering into contracts for the purchase of land and improved lots. These purchase contracts typically require a cash deposit and the purchase of properties under these contracts is generally contingent upon satisfaction of certain requirements by the sellers, including obtaining applicable property and development entitlements. We also utilize option contracts with land sellers and land banking arrangements as a method of acquiring land in

- 48 -

staged takedowns, to help us manage the financial and market risk associated with land holdings, and to reduce the use of funds from our corporate financing sources. ~~Option~~These option contracts and land banking arrangements generally require a non-refundable deposit for the right to acquire land and lots over a specified period of time at pre-determined prices. We generally have the right, at our discretion, to terminate our obligations under both purchase contracts and option contracts by forfeiting our cash deposit with no further financial responsibility to the land seller. In some cases, however, we may be contractually obligated to complete development work even if we terminate the option to procure land or lots. As of ~~September~~June 30, ~~2017,~~2020, we had ~~$27.1~~$81.7 million of cash deposits, the majority of which are non-refundable, pertaining to land and lot option contracts and purchase contracts with an aggregate remaining purchase price of ~~$355.4~~$816.2 million (net of deposits). See Note 7, Variable Interest Entities, to the accompanying condensed notes to unaudited consolidated financial statements included in this Quarterly Report on Form 10-Q.

Our utilization of land and lot option contracts and land banking arrangements is dependent on, among other things, the availability of land sellers or land banking firms willing to enter into ~~option takedown~~such arrangements, the availability of capital to finance the development of optioned land and 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.

As of September 30, 2017, we had total liquidity of $554.6 million, including cash of $162.4 million and $392.2 million of availability under our Credit Facility after considering the borrowing base provisions and outstanding letters of credit.

Inflation

Our operations can be adversely impacted by inflation, primarily from higher land, financing, labor, material and construction costs. In addition, inflation can lead to higher mortgage rates, which can significantly affect the affordability of mortgage financing to homebuyers. While we attempt to pass on cost increases to customers through increased prices, when weak housing market conditions exist, we are often unable to offset cost increases with higher selling prices.

~~- 48 -~~

Seasonality

Historically, the homebuilding industry experiences seasonal fluctuations in quarterly operating results and capital requirements. We typically experience the highest new home order activity during the first and second quarters of our fiscal year, although this activity is also highly dependent on the number of active selling communities, timing of new community openings and other market factors. Since it typically takes three to nine months to construct a new home, the number of homes delivered and associated home sales revenue typically increases in the third and fourth quarters of our fiscal year as new home orders sold earlier in the year convert to home deliveries. Because of this seasonality, home starts, construction costs and related cash outflows have historically been highest in the second and third quarters of our fiscal year, and the majority of cash receipts from home deliveries occur during the second half of the year. We expect this seasonal pattern to continue over the long-term, although it may be affected by volatility in the homebuilding ~~industry.~~industry and the impacts of the COVID-19 pandemic.

Description of Projects and Communities ~~under~~Under Development

The following table presents project information relating to each of our markets as of ~~September~~June 30, ~~2017~~2020 and includes ~~information~~information on current projects under development where we are building and selling homes.

- 49 -

Maracay

~~Maracay Homes~~


County, Project, City	Year of First Delivery⁽¹⁾	Total Number of Lots⁽²⁾	Cumulative Homes Delivered as of June 30, 2020	Lots Owned as of June 30, 2020⁽³⁾	Backlog as of June 30, 2020⁽⁴⁾⁽⁵⁾	Homes Delivered for the Six Months Ended June 30, 2020	Sales Price Range (in thousands)⁽⁶⁾
Phoenix, Arizona
City of Buckeye:
Arroyo Seco	2020	44	—	44	20	—	$414 - $478
City of Chandler:
Mission Estates	2019	26	21	5	5	9	$537 - $598
Windermere Ranch	2019	91	39	52	34	19	$532 - $572
Canopy North	2020	129	—	12	—	—	$471 - $540
Canopy South	2020	112	—	11	—	—	$556 - $578
City of Gilbert:
Lakes At Annecy	2019	216	66	150	47	30	$289 - $363
Annecy P3	2021	251	—	251	—	—	$259 - $331
Lakeview Trails	2019	92	64	28	20	23	$570 - $655
Lakeview Trails II	2021	68	—	68	6	—	$570 - $655
Copper Bend	2020	38	9	29	21	9	$492 - $511
Avocet at Waterston	2020	115	—	115	24	—	$526 - $611
Brighton at Waterston	2020	88	—	88	24	—	$632 - $676
Domaine at Waterston	2020	128	—	128	18	—	$774 - $819
City of Goodyear:
Villages at Rio Paseo	2018	117	101	16	7	40	$204 - $234
Cottages at Rio Paseo	2018	93	84	9	4	3	$243 - $264
Sedella	2021	75	—	75	—	—	$441 - $521
City of Mesa:
Cadence	2021	127	—	127	—	—	$312 - $345
City of Peoria:
Legacy at The Meadows	2017	74	68	6	—	—	$425 - $451
Estates at The Meadows	2017	272	191	81	22	29	$530 - $616
Enclave at The Meadows	2018	126	98	28	21	28	$417 - $512
Deseo	2019	94	23	71	34	17	$528 - $622
City of Phoenix:
Loma @ Avance	2019	124	47	77	17	25	$400 - $459
Ranger @ Avance	2019	145	28	117	33	26	$439 - $511
Piedmont @ Avance	2019	99	21	78	16	19	$515 - $530
Alta @ Avance	2020	26	5	21	9	5	$630 - $659
Town of Queen Creek
Madera 50's	2022	105	—	105	—	—	$330 - $410
Madera 60's	2022	70	—	70	—	—	$391 - $453
Madera 75's	2022	91	—	91	—	—	$463 - $510
Pathfinder South At Spur Cross	2020	53	—	53	29	—	$494 - $514
Pathfinder North At Spur Cross	2020	65	1	64	16	1	$575 - $589
Closed Communities	N/A	—	—	—	—	20
Phoenix, Arizona Total		3,154	866	2,070	427	303
Tucson, Arizona
Closed Communities	N/A	—	—	—	—	2
Tucson, Arizona Total		—	—	—	—	2
Maracay Total		3,154	866	2,070	427	305

County, Project, City
Year of
First
Delivery⁽¹⁾

Total
Number of
Lots⁽²⁾

Cumulative
Homes
Delivered
as of
September 30,
2017

Lots
Owned as of
September 30,
2017⁽³⁾

Backlog as of
September 30,
2017⁽⁴⁾⁽⁵⁾

Homes
Delivered
for the Nine
Months Ended
September 30,
2017

Sales Price
Range
(in thousands)⁽⁶⁾
Phoenix, Arizona
City of Buckeye:
Verrado Palisades 2015 63
55
8
6
22
$301 - $374
Verrado Victory 2015 98
43
55
15
13
$363 - $396
City of Chandler:
Sendera Place 2015 79
79
—
—
21
$277 - $324
Hawthorn Manor 2017 84
12
72
31
12
$517 - $559
Mission Estates 2019 26
—
26
—
—
$545 - $570
City of Gilbert:
Marquis at Morrison Ranch 2016 66
61
5
3
25
$414 - $501
Artisan at Morrison Ranch 2016 105
69
36
20
34
$339 - $392
The Preserve at Adora Trails 2017 82
11
71
30
11
$408 - $451
Marathon Ranch 2018 63
—
63
—
—
$486 - $535
Lakes At Annecy 2018 216
—
216
—
—
$276 - $309
Lakeview Trails 2019 92
—
92
—
—
$451 - $511
City of Goodyear:
Rio Paseo Villages 2018 117
—
117
—
—
$213 - $227
Rio Paseo Cottages 2018 93
—
93
—
—
$253 - $271
City of Mesa:
Kinetic Point at Eastmark 2013 80
77
3
—
2
$294 - $373
Lumiere Garden at Eastmark 2013 85
82
3
3
7
$332 - $409
Aileron Square at Eastmark 2016 58
46
12
12
22
$332 - $409
Curie Court at Eastmark 2016 106
50
56
26
20
$294 - $373
Palladium Point 2016 53
22
31
24
18
$321 - $390
The Vista at Granite Crossing 2018 37
—
37
—
—
$412 - $488
Town of Peoria:
The Reserve at Plaza del Rio 2013 162
162
—
—
27
$227 - $270
Maracay at Northlands 2014 90
90
—
—
13
$330 - $411
Legacy at The Meadows 2017 74
19
55
25
19
$415 - $441
Estates at The Meadows 2017 272
27
245
31
27
$471 - $545
Enclave at The Meadows 2018 126
—
126
5
—
$377 - $472
City of Phoenix:
Navarro Groves 2018 54
—
54
—
—
$402 - $447
Vistal 2019 204
—
204
—
—
$336 - $598
Town of Queen Creek:
The Preserve at Hastings Farms 2014 89
89
—
—
1
$300 - $385
Villagio 2013 135
135
—
—
6
$291 - $352
Phoenix, Arizona Total 2,809
1,129
1,680
231
300

Tucson, Arizona
Marana:
Tortolita Vistas 2014 55
55
—
—
14
$458 - $515
Oro Valley:
Rancho del Cobre 2014 68
66
2
—
11
$410 - $478
Desert Crest - Center Pointe Vistoso 2016 103
40
63
17
27
$257 - $302
The Cove - Center Pointe Vistoso 2016 83
37
46
24
19
$344 - $404
Summit N & S - Center Pointe Vistoso 2016 88
55
33
11
32
$393 - $428
The Pinnacle - Center Pointe Vistoso 2016 69
51
18
12
29
$446 - $478
Tucson:
Ranches at Santa Catalina 2016 34
21
13
10
15
$414 - $460
Tucson, Arizona Total 500
325
175
74
147

Maracay Total 3,309
1,454
1,855
305
447

- 50 -

Pardee Homes

County, Project, City
Year of
First
Delivery⁽¹⁾

Total
Number of
Lots⁽²⁾

Cumulative
Homes
Delivered
as of
September 30,
2017

Lots
Owned as of
September 30,
2017⁽³⁾

Backlog as of
September 30,
2017⁽⁴⁾⁽⁵⁾

Homes
Delivered
for the Nine
Months Ended
September 30,
2017

Sales Price
Range
(in thousands)⁽⁶⁾
California
San Diego County:
Casabella 2015 139
139
—
—
39
$900 - $1,000
Casavia 2017 83
34
49
47
34
$980 - $1,070
Artesana 2017 56
11
45
33
11
$1,680 - $1,910
Almeria 2017 80
—
80
18
—
$1,440 - $1,530
Olvera 2017 84
—
84
27
—
$1,310 - $1,425
Pacific Highlands Ranch Future TBD 605
—
536
—
—
TBD
Olive Hill Estate 2016 37
35
2
2
19
$650 - $770
Sandstone (Castlerock) 2018 81
—
81
—
—
$650 - $680
Lake Ridge (Castlerock) 2018 129
—
129
—
—
$740 - $800
Meadowood TBD 844
—
844
—
—
$290 - $590
Parkview Condos 2016 73
73
—
—
37
$435 - $515
Luna 2017 96
36
60
48
36
$370 - $470
Azul 2017 121
48
73
45
48
$360 - $460
Ocean View Hills Future 2017 691
—
691
—
—
TBD
South Otay Mesa TBD 893
—
893
—
—
TBD
Los Angeles County:
Aliento - Verano 2017 95
—
95
11
—
$540 - $660
Aliento - Arista 2017 112
11
101
25
11
$695 - $760
Aliento - 55x100 2018 94
—
94
—
—
TBD
Aliento - 70x100 2018 67
—
67
—
—
TBD
Skyline Ranch TBD 1,220
—
1,220
—
—
$550 - $810
Riverside County:
Meadow Glen 2014 142
142
—
—
2
$350 - $410
Senterra 2016 82
61
21
16
36
$415 - $480
Vantage 2016 83
40
43
11
25
$370 - $390
Viewpoint 2016 75
69
6
4
51
$305 - $330
Overlook 2016 112
60
52
33
36
$315 - $345
Aura 2017 79
34
45
11
34
$350 - $375
Starling 2017 107
4
103
13
4
$410 - $425
Canyon Hills Future 70 x 115 2018 125
—
125
—
—
TBD
Tournament Hills Future TBD 268
—
268
—
—
TBD
Northstar 2015 102
96
6
4
30
$320 - $340
Skycrest 2015 131
90
41
17
22
$370 - $390
Flagstone 2016 79
52
27
11
18
$420 - $450
Lunetta 2016 89
88
1
1
33
$290 - $320
Elara 2016 215
80
135
39
60
$290 - $310
Daybreak 2017 139
—
139
29
—
$325 - $340
Cascade 2017 105
—
105
17
—
$296 - $312
Abrio 2018 83
—
83
—
—
TBD
Beacon 2018 108
—
108
—
—
TBD
Sundance Future Active Adult TBD 704
—
704
—
—
TBD
Sundance Future TBD 101
—
101
—
—
TBD
Avena 2017 84
—
84
—
—
$400 - $440
Tamarack 2017 84
—
84
—
—
$430 - $460
Centennial TBD 359
—
359
—
—
$375 - $450
Banning TBD 4,318
—
4,318
—
—
TBD
San Joaquin County:
Bear Creek TBD 1,252
—
1,252
—
—
TBD
California Total 14,626
1,203
13,354
462
586

Nevada


County, Project, City	Year of First Delivery⁽¹⁾	Total Number of Lots⁽²⁾	Cumulative Homes Delivered as of June 30, 2020	Lots Owned as of June 30, 2020⁽³⁾	Backlog as of June 30, 2020⁽⁴⁾⁽⁵⁾	Homes Delivered for the Six Months Ended June 30, 2020	Sales Price Range (in thousands)⁽⁶⁾
California
San Diego County:
Sendero	2019	112	80	32	20	19	$1,470 - $1,600
Vista Santa Fe	2019	44	30	14	13	12	$1,910 - $2,010
Terraza	2019	81	70	11	11	24	$1,360 - $1,430
Carmel	2019	105	62	43	12	15	$1,530 - $1,640
Vista Del Mar	2019	79	46	33	12	13	$1,670 - $1,800
Highlands	2021	52	—	52	—	—	$1,640 - $1,930
Sendero Collection	2021	76	—	76	—	—	$1,350 - $1,400
Pacific Highlands Ranch Future	2021	42	—	42	—	—	TBD
Lake Ridge	2018	129	95	34	12	18	$790 - $865
Veraz	2018	111	74	37	13	28	$425 - $500
Solmar	2019	74	37	37	9	28	$390 - $485
Solmar Sur	2021	108	—	108	—	—	$390 - $485
Marea	2020	143	—	143	—	—	$365 - $435
PA61 Townhomes	2021	170	—	170	—	—	TBD
Meadowood	TBD	844	—	844	—	—	$390 - $630
South Otay Mesa	TBD	893	—	893	—	—	TBD
Los Angeles County:
Cresta	2018	67	42	25	11	8	$830 - $890
Verano	2017	95	65	30	10	10	$550 - $650
Arista	2017	143	101	42	10	10	$740 - $800
Lyra	2019	141	53	88	27	20	$650 - $720
Sola	2019	189	79	110	39	18	$560 - $610
Luna	2020	114	—	114	19	—	$615 - $660
Strata	2021	292	—	292	—	—	$550 - $670
Skyline Ranch Future	TBD	334	—	334	—	—	TBD
Riverside County:
Canyon Hills Future 70 x 115	TBD	125	—	125	—	—	TBD
Westlake	2020	163	—	163	26	—	$310 - $325
Daybreak	2017	159	140	19	16	17	$360 - $385
Abrio	2018	113	89	24	16	19	$415 - $450
Cascade	2017	194	169	25	21	11	$335 - $360
Beacon	2018	106	83	23	17	12	$510 - $560
Alisio	2019	84	69	15	14	18	$300 - $335
Elan	2019	96	18	78	17	6	$390 - $425
Mira	2019	95	13	82	9	3	$365 - $395
Avid	2019	68	21	47	4	4	$340 - $365
Vita	2019	115	32	83	11	4	$315 - $340
Sundance Future Active Adult	TBD	330	—	330	—	—	TBD
Avena	2018	84	66	18	10	14	$455 - $485
Braeburn	2018	82	65	17	13	20	$415 - $450
Overland at Spencer's Crossing	2021	85	—	85	—	—	$485 - $515
Canvas	2018	89	85	4	4	27	$405 - $430
Kadence	2018	85	64	21	15	15	$420 - $435
Newpark	2018	93	56	37	17	14	$445 - $490
Easton	2018	92	46	46	16	12	$480 - $530
Compass at Audie Murphy Ranch	2021	52	—	52	—	—	$450 - $510
Tournament Hills Future	TBD	268	—	268	—	—	TBD
Terramor	2022	75	—	75	—	—	TBD
Arroyo	2020	110	—	110	38	—	$305 - $350
Cienega	2020	106	—	106	41	—	$310 - $345

- 51 -


Centerstone	2021	120	—	120	—	—	$320 - $335
Landmark	2021	130	—	130	—	—	$340 - $365
Horizon	2021	130	—	130	—	—	$395 - $420
Atwell Future	TBD	3,742	—	3,742	—	—	TBD
San Joaquin County:
Bear Creek	TBD	1,252	—	1,252	—	—	TBD
Closed Communities	N/A	—	—	—	—	11
California Total		12,681	1,850	10,831	523	430
Nevada
Clark County:
Tera Luna	2018	116	39	77	7	10	$560 - $670
Linea	2018	123	121	2	2	13	$370 - $410
Strada 2.0	2019	62	17	45	29	12	$460 - $550
Strada III	2021	30	—	30	—	—
Arden	2020	79	—	79	7	—	$390 - $430
Capri	2020	114	—	114	13	—	$302 - $328
Arden 2.0	2022	154	—	154	—	—	$370 - $400
Capri 2.0	2022	214	—	214	—	—	$300 - $325
Pebble Estate Future	TBD	8	—	8	—	—	TBD
Evolve	2019	74	48	26	12	23	$305 - $335
Midnight Ridge	2020	104	9	95	26	9	$525 - $645
Axis	2017	52	53	—	—	3	$860 - $1,125
Axis at the Canyons	2019	26	15	10	4	3	$800 - $920
Cobalt	2017	107	86	21	4	12	$380 - $460
Onyx	2018	88	65	23	19	13	$470 - $510
Pivot	2017	88	87	1	—	1	$405 - $470
Nova Ridge	2017	78	74	4	—	5	$670 - $850
Nova Ridge at the Cliffs	2019	30	7	23	6	4	$670 - $850
Corterra	2018	53	44	9	3	10	$455 - $545
Highline	2020	59	1	58	8	1	$470 - $570
Indogo	2018	202	101	101	15	24	$300 - $370
Larimar	2018	106	49	57	8	18	$355 - $420
Blackstone	2018	105	60	45	10	11	$410 - $510
35 x 90 Product	TBD	140	—	140	—	—	TBD
Cirrus	2019	54	20	34	15	13	$370 - $410
Sandalwood	2020	116	—	116	28	—	$740 - $910
Silverado Entry-Level	2021	96	—	96	—	—	$400 - $450
Silverado Move-Up	2021	93	—	93	—	—	$440 - $485
Silverado Courtyard Townhome	2021	116	—	116	—	—	$300 - $320
Closed Communities	N/A	—	—	—	—	4
Nevada Total		2,687	896	1,791	216	189
Pardee Total		15,368	2,746	12,622	739	619

Clark County:
LivingSmart Sandstone 2013 145
145
—
—
1
$228 - $255
North Peak 2015 171
96
75
24
39
$299 - $350
Castle Rock 2015 188
98
90
18
37
$340 - $430
Camino 2016 86
82
4
4
59
$255 - $270
Solano 2014 132
132
—
—
15
$300 - $335
Alterra 2014 47
47
—
—
2
$425 - $505
Bella Verdi 2015 57
49
8
4
2
$400 - $440
Escala 2016 103
39
64
10
20
$520 - $590
Montero 2016 77
33
44
26
25
$420 - $500
Strada 2017 119
13
106
11
13
$405 - $440
Linea 2018 87
—
87
—
—
$300 - $350
Meridian 2016 62
30
32
20
10
$590 - $680
Encanto 2016 51
26
25
8
15
$470 - $525
Luma 2017 71
—
71
—
—
$470 - $526
Encanto Townhomes 2018 70
—
70
—
—
TBD
Horizon Terrace 2014 165
124
41
14
30
$410 - $465
Horizon Valle Verde 2018 53
—
53
—
—
$450 - $470
Summerglen 2014 140
140
—
—
27
$300 - $305
Keystone 2017 70
15
55
9
14
$450 - $540
Cobalt 2017 107
—
107
5
—
$355 - $420
Axis 2017 78
1
77
16
1
$825 - $1,035
The Canyons at MacDonald Ranch - R 2017 22
—
22
—
—
$515 - $585
Pivot 2017 88
—
88
8
—
$400 - $440
Strada at Pivot 2017 27
—
27
7
—
$440 - $475
Nova Ridge 2018 108
—
108
—
—
$620 - $760
Tera Luna 2017 116
—
116
—
—
$540 - $590
Onyx 2018 88
—
88
—
—
$425 - $465
Tule Springs TBD 339
—
339
—
—
TBD
Cactus/Jones TBD 54
—
54
—
—
TBD
Commerce & Deer Springs TBD 143
—
143
—
—
TBD
Nevada Total 3,064
1,070
1,994
184
310

Pardee Total 17,690
2,273
15,348
646
896

- 52 -

Quadrant Homes


County, Project, City	Year of First Delivery⁽¹⁾	Total Number of Lots⁽²⁾	Cumulative Homes Delivered as of June 30, 2020	Lots Owned as of June 30, 2020⁽³⁾	Backlog as of June 30, 2020⁽⁴⁾⁽⁵⁾	Homes Delivered for the Six Months Ended June 30, 2020	Sales Price Range (in thousands)⁽⁶⁾
Washington
Snohomish County:
Grove North, Bothell	2019	43	21	22	22	10	$780 - $910
Trailside at Meadowdale Beach, Edmonds	2021	38	—	38	—	—	$735 - $785
Cypress, Lynnwood	2021	42	—	42	—	—	$535 - $655
King County:
Vareze, Kirkland	2020	82	14	68	28	14	$720 - $895
Cedar Landing, North Bend	2019	138	35	103	47	11	$780 - $920
Monarch Ridge, Sammamish	2019	59	20	39	34	7	$1,000 - $1,285
Overlook at Summit Park, Maple Valley	2019	126	43	83	30	14	$595 - $765
Aurea, Sammamish	2019	41	21	20	15	12	$675 - $821
Aldea, Newcastle	2019	129	52	77	18	14	$685 - $838
Lario, Bellevue	2020	46	7	39	25	7	$905 - $1,197
Lakeview Crest, Renton	2020	17	—	17	1	—	$1,400 - $1,875
Eagles Glen, Sammamish	2020	10	—	10	5	—	$1,150 - $1,525
Willows 124, Redmond	2023	173	—	173	—	—	$745 - $930
Finn Meadows, Kirkland	2020	10	2	8	3	2	$1,050 - $1,245
Woodlands Reserve, Kirkland	2022	37	—	37	—	—	$945 - $1,350
Hazelwood Gardens, Newcastle	2021	15	—	15	—	—	$1,180 - $1,340
Kitsap County:
Blue Heron, Poulsbo	2022	85	—	85	—	—	$536 - $706
McCormick Villages, Port Orchard	2021	88	—	88	—	—	$470 - $525
Poulsbo Meadows, Poulsbo	2021	46	—	46	—	—	$515 - $551
Closed Communities	N/A	—	—	—	—	1	N/A
Washington Total		1,225	215	1,010	228	92
Quadrant Total		1,225	215	1,010	228	92

County, Project, City
Year of
First
Delivery⁽¹⁾

Total
Number of
Lots⁽²⁾

Cumulative
Homes
Delivered
as of
September 30,
2017

Lots
Owned as of
September 30,
2017⁽³⁾

Backlog as of
September 30,
2017⁽⁴⁾⁽⁵⁾

Homes
Delivered
for the Nine
Months Ended
September 30,
2017

Sales Price
Range
(in thousands)⁽⁶⁾
Washington
Snohomish County:
Evergreen Heights, Monroe 2016 71
46
25
25
43
$459 - $558
The Grove at Canyon Park, Bothell 2017 60
9
51
46
9
$645 - $780
Greenstone Heights, Bothell 2017 41
—
41
12
—
$920 - $1,102
King County:
Viscaia, Bellevue 2017 18
17
1
1
17
$880
Trailside, Redmond 2017 9
2
7
5
2
$1,119 - $1,317
Vareze, Kirkland 2019 82
—
82
—
—
$661 - $871
Parkwood Terrace, Woodinville 2017 15
2
13
13
2
$759 - $960
Hazelwood Ridge, Newcastle 2017 30
3
27
25
3
$805 - $1,025
Inglewood Landing, Sammamish 2018 21
—
21
—
—
$1,100 - $1,280
Jacobs Landing, Issaquah 2017 20
—
20
1
—
$1,160 - $1,289
Kirkwood Terrace, Sammamish 2018 12
—
12
—
—
$1,725 - $2,026
English Landing P2, Redmond 2017 25
—
25
9
—
$1,084 - $1,340
English Landing P1, Redmond 2018 50
—
50
—
—
$1,100 - $1,350
Cedar Landing, North Bend 2018 138
—
138
—
—
$660 - $810
Monarch Ridge, Sammamish 2018 59
—
59
—
—
$915 - $1,065
Overlook at Summit Park, Maple Valley 2018 122
—
122
—
—
$600 - $765
Ray Meadows, Redmond 2018 27
—
27
—
—
$1,094 - $1,355
Wynstone, Federal Way TBD 4
—
4
—
—
TBD
Breva, Bellevue 2017 29
—
29
15
—
$777 - $888
Canton Crossing, Maple Valley 2017 51
2
49
14
2
$563 - $655
Aurea, Sammamish 2018 41
—
41
—
—
$670 - $860
Aldea (Avalon Townhomes), Newcastle 2018 129
—
129
—
—
$620 - $885
Pierce County:
Harbor Hill S-5/6, Gig Harbor 2017 72
12
60
10
12
$443 - $501
Harbor Hill S-2, Gig Harbor 2017 41
—
41
5
—
$425 - $464
Kitsap County:
Mountain Aire, Poulsbo 2016 145
69
76
25
40
$412 - $473
Winslow Grove, Bainbridge Island 2018 19
—
19
—
—
$1,067 - $1,212
Closed Communities N/A —
—
—
—
76
N/A
Washington Total 1,331
162
1,169
206
206

Quadrant Total 1,331
162
1,169
206
206

- 53 -

Trendmaker Homes

County, Project, City
Year of
First
Delivery⁽¹⁾

Total
Number of
Lots⁽²⁾

Cumulative
Homes
Delivered
as of
September 30,
2017

Lots
Owned as of
September 30,
2017⁽³⁾

Backlog as of
September 30,
2017⁽⁴⁾⁽⁵⁾

Homes
Delivered
for the Nine
Months Ended
September 30,
2017

Sales Price
Range
(in thousands)⁽⁶⁾
Texas
Brazoria County:
Sedona Lakes, Pearland 2014 34
27
7
6
6
$380
Pomona, Manvel 2015 49
18
31
8
13
$360 - $455
Rise Meridiana 2016 31
14
17
4
13
$288 - $346
Fort Bend County:
Cross Creek Ranch 60', Fulshear 2013 35
13
22
4
9
$370 - $465
Cross Creek Ranch 65', Fulshear 2013 61
47
14
4
14
$429 - $488
Cross Creek Ranch 70', Fulshear 2013 100
70
30
5
10
$485 - $548
Cross Creek Ranch 80', Fulshear 2013 68
63
5
2
10
$551 - $666
Cross Creek Ranch 90', Fulshear 2013 28
22
6
4
10
$654 - $718
Villas at Cross Creek Ranch, Fulshear 2013 101
101
—
—
1
$454 - $496
Fulshear Run, Richmond 2016 45
11
34
4
10
$562 - $668
Harvest Green 75', Richmond 2015 21
16
5
2
7
$426 - $500
Sienna Plantation 85', Missouri City 2015 39
20
19
1
10
$546 - $645
Villas at Sienna South, Missouri City 2015 19
17
2
2
8
$383 - $407
Lakes of Bella Terra, Richmond 2013 109
109
—
—
8
$465 - $553
Villas at Aliana, Richmond 2013 117
98
19
5
11
$399 - $451
Riverstone 55', Sugar Land 2013 97
97
—
—
1
$437 - $467
Harris County:
Towne Lake Living Views, Cypress 2013 122
122
—
—
4
$468 - $561
The Groves, Humble 2015 72
41
31
2
12
$323 - $524
Lakes of Creekside 2015 21
7
14
1
6
$512 - $585
Bridgeland '80, Cypress 2015 117
96
21
6
12
$522 - $611
Bridgeland Patio, Cypress 2017 30
8
22
10
7
$344 - $413
Bridgeland 70' TBD 4
—
4
—
—
TBD
Villas at Bridgeland 50' TBD 1
—
1
—
—
TBD
Elyson 70', Cypress 2017 20
4
16
3
4
$454 - $496
Hidden Arbor, Cypress 2015 129
66
63
26
42
$366 - $586
Clear Lake, Houston 2015 770
255
515
54
53
$330 - $655
Montgomery County:
Woodtrace, Woodtrace 2014 39
26
13
3
8
$438 - $480
Northgrove, Tomball 2015 25
5
20
—
4
$454 - $498
Bender's Landing Estates, Spring 2014 104
50
54
11
11
$468 - $563
The Woodlands, Creekside Park 2015 100
29
71
10
15
$410 - $624
Waller County:
Cane Island, Katy 2015 23
17
6
1
3
$525 - $634
Mustang Estates TBD 350
—
350
—
—
TBD
Williamson County:
Crystal Falls 2016 29
7
22
8
4
$460 - $535
Rancho Sienna 60' 2017 26
1
25
4
1
$350 - $422
Hays County:
Belterra 60', Austin 2017 28
3
25
7
3
$375 - $466
Belterra 80', Austin 2016 37
14
23
5
8
$535 - $603
Headwaters, Dripping Springs 2017 30
3
27
9
3
$420 - $479
Travis County:
Lakes Edge 70' TBD 6
—
6
1
—
$620 - $806
Other:
Avanti Custom Homes 2007 125
123
2
1
2
$480 - $856
Texas Total 3,162
1,620
1,542
213
343

Trendmaker Homes Total 3,162
1,620
1,542
213
343


County, Project, City	Year of First Delivery⁽¹⁾	Total Number of Lots⁽²⁾	Cumulative Homes Delivered as of June 30, 2020	Lots Owned as of June 30, 2020⁽³⁾	Backlog as of June 30, 2020⁽⁴⁾⁽⁵⁾	Homes Delivered for the Six Months Ended June 30, 2020	Sales Price Range (in thousands)⁽⁶⁾
Texas
Brazoria County:
Rise Meridiana	2016	47	46	1	—	3	$348 - $369
Fort Bend County:
Cross Creek Ranch 60', Fulshear	2013	48	26	22	3	14	$431 - $567
Cross Creek Ranch 65', Fulshear	2013	89	66	23	4	7	$463 - $677
Cross Creek Ranch 70', Fulshear	2013	107	87	20	9	16	$525 - $663
Cross Creek Ranch 80', Fulshear	2013	71	67	4	3	18	$664 - $785
Cross Creek Ranch 90', Fulshear	2013	49	36	13	8	2	$700 - $816
Fulshear Run 1/2 Acre, Richmond	2016	145	54	91	—	4	$646
Harvest Green 75', Richmond	2015	63	52	11	6	9	$454 - $581
Sienna Plantation 80', Missouri City	TBD	25	—	25	1	—	$573 - $640
Sienna Plantation 85', Missouri City	2015	54	45	9	2	9	$589 - $636
Grayson Woods 60'	2019	37	8	29	10	7	$434 - $438
Grayson Woods 70'	2019	26	10	16	10	8	$502 - $577
Katy Gaston	TBD	129	—	129	—	—	TBD
Harris County:
The Groves, Humble	2015	117	99	18	5	10	$315 - $371
Lakes of Creekside 80'	2016	17	15	2	—	6	$475 - $611
Lakes of Creekside 65'	TBD	18	—	18	—	—	$400 - $450
Balmoral 50'	2019	46	11	35	3	4	$255 - $337
Bridgeland '80, Cypress	2015	141	120	21	8	12	$621 - $705
Bridgeland 70'	2018	41	32	9	3	15	$498 - $583
Villas at Bridgeland 50'	2018	48	20	28	2	4	$350 - $405
Falls at Dry Creek	2019	20	9	11	4	6	$530 - $685
Grant-Cyp-Rosehill	TBD	428	—	428	—	—	TBD
Hidden Arbor, Cypress (Land)	TBD	156	129	27	2	—	$365 - $465
Clear Lake, Houston (Land)	2015	772	661	111	28	65	$439 - $707
Northgrove, Tomball	TBD	25	7	18	—	—	TBD
The Woodlands, Creekside Park	2015	131	128	3	1	11	$450 - $459
Montgomery County:
Grand Central Park	TBD	17	—	17	—	—	$299 - $340
Rodriguez	TBD	342	—	342	—	—	TBD
Royal Brook, Porter	2019	26	7	19	4	4	$349 - $450
Waller County:
LakeHouse	2019	351	68	283	27	37	$269 - $619
Williamson County:
Crystal Falls - Lots for Sale	2016	29	25	4	—	—	TBD
Rancho Sienna 60'	2016	51	41	10	3	8	$380 - $500
Highlands at Mayfield Ranch 50'	2019	63	42	21	23	12	$303 - $420
Highlands at Mayfield Ranch 60'	2019	46	24	22	18	10	$351 - $485
Meyer Ranch	TBD	10	—	10	3	—	$300 - $485
Rancho Sienna 50'	2019	54	15	39	9	7	$300 - $439
Palmera Ridge	2019	49	30	19	15	14	$291 - $360
Hays County:
6 Creeks 50' Section 1 & 2	2020	35	12	23	10	12	$269 - $352
6 Creeks 60' Section 1 & 2	2020	15	4	11	5	4	$309 - $375
Travis County:
Lakes Edge 80'	2018	14	13	1	1	3	$797
Turner's Crossing (Land)	TBD	324	—	324	—	—	TBD
Williamson County:
Cressman Tract (Land)	TBD	85	—	85	—	—	TBD

- 54 -


Collin County:
Creeks of Legacy, Celina	2020	24	—	24	—	—	$349 - $379
Miramonte, Frisco	2016	62	60	2	2	8	$475 - $560
Retreat at Craig Ranch, McKinney	2012	165	159	6	1	5	$375 - $415
Dallas County:
Vineyards, Rowlett	2017	40	36	4	3	8	$368 - $480
Denton County:
Glenview, Frisco	2017	50	42	8	5	10	$345 - $485
Paloma Creek, Little Elm	2015	267	187	80	19	10	$275 - $390
Parks at Legacy, Prosper	2017	55	39	16	8	7	$384 - $495
Valencia, Little Elm	2016	82	63	19	4	6	$350 - $444
Villages of Carmel, Denton	2017	96	92	4	2	12	$290 - $360
Kaufman County:
Gateway Parks, Forney	2020	12	—	12	—	—	$270 - $355
Rockwall County:
Heath Golf and Yacht, Heath	2016	112	88	24	7	14	$294 - $490
Woodcreek, Fate	2017	153	102	51	13	14	$267 - $330
Tarrant County:
Chisholm Trail Ranch, Fort Worth	2017	104	75	29	9	11	$270 - $375
Lakes of River Trails, Fort Worth	2011	172	158	14	10	4	$317 - $416
Ventana, Benbrook	2017	94	67	27	8	12	$318 - $430
Closed Communities	N/A	—	—	—	—	1
Texas Total		5,849	3,177	2,672	321	463
Trendmaker Homes Total		5,849	3,177	2,672	321	463

- 55 -

TRI Pointe Homes


County, Project, City	Year of First Delivery⁽¹⁾	Total Number of Lots⁽²⁾	Cumulative Homes Delivered as of June 30, 2020	Lots Owned as of June 30, 2020⁽³⁾	Backlog as of June 30, 2020⁽⁴⁾⁽⁵⁾	Homes Delivered for the Six Months Ended June 30, 2020	Sales Price Range (in thousands)⁽⁶⁾
Southern California
Orange County:
Varenna at Orchard Hills, Irvine	2016	135	112	23	6	11	$1,223 - $1,306
Lyric	2019	70	62	8	5	21	$779 - $946
Windbourne	2019	46	20	26	24	14	$1,164 - $1,276
Cerise at Canvas	2020	40	2	38	5	2	$795 - $823
Violet at Canvas	2020	48	7	41	12	7	$545 - $735
Claret at Canvas	2020	48	5	43	16	5	$560 - $671
San Diego County:
Prism at Weston	2018	142	106	36	32	15	$574 - $644
Riverside County:
Citron at Bedford	2019	101	70	31	14	24	$387 - $398
Cassis at Rancho Soleo	2020	79	—	79	17	—	$492 - $507
Cava at Rancho Soleo	2020	63	—	63	13	—	$386 - $417
Cerro at Rancho Soleo	2020	103	—	103	14	—	$375 - $430
Los Angeles County:
Tierno at Aliento	2017	63	49	14	3	—	$667 - $710
Tierno II at Aliento	2018	63	47	16	13	16	$667 - $701
Paloma at West Creek	2018	155	151	4	4	19	$475 - $550
Mystral	2019	78	53	25	25	5	$629 - $685
Celestia	2019	72	67	5	5	17	$597 - $633
San Bernardino County:
Ivy at The Preserve	2019	113	19	94	21	14	$355 - $427
Hazel at The Preserve	2020	133	24	109	35	24	$360 - $426
Tempo at The Resort	2020	80	—	80	16	—	$504 - $565
Closed Communities	N/A	—	—	—	—	27
Southern California Total		1,632	794	838	280	221
Northern California
Contra Costa County:
Greyson Place	2019	44	28	16	12	12	$835 - $960
Santa Clara County:
Madison Gate	2018	65	60	5	5	13	$729 - $1,134
Blanc at Glen Loma	2019	49	15	34	28	10	$735 - $785
Noir at Glen Loma	2019	64	15	49	14	6	$815 - $865
Lotus at Urban Oak	2023	65	—	65	—	—	$940 - $1,064
Solano County:
Bloom at Green Valley, Fairfield	2018	91	87	4	4	12	$557 - $597
Lantana, Fairfield	2019	133	75	58	13	20	$483 - $528
One Lake	2021	45	—	45	—	—
San Joaquin County:
Sundance, Mountain House	2015	113	108	5	5	—	$668 - $760
Sundance II, Mountain House	2017	138	113	25	25	14	$653 - $731
River Islands	2021	24	—	24	7	—	$467 - $519
Alameda County:
Onyx at Jordan Ranch, Dublin	2017	105	93	12	6	13	$914 - $966
Apex, Fremont	2018	77	76	1	1	19	$734 - $996
Palm, Fremont	2019	31	15	16	8	7	$2,250 - $2,392
Ellis at Central Station, Oakland	2020	128	—	128	5	—	$740 - $815
Sonoma County:
Riverfront Petaluma	2021	5	—	5	—	—	$740 - $901
Sacramento County:

County, Project, City
Year of
First
Delivery⁽¹⁾

Total
Number of
Lots⁽²⁾

Cumulative
Homes
Delivered
as of
September 30,
2017

Lots
Owned as of
September 30,
2017⁽³⁾

Backlog as of
September 30,
2017⁽⁴⁾⁽⁵⁾

Homes
Delivered
for the Nine
Months Ended
September 30,
2017

Sales Price
Range
(in thousands)⁽⁶⁾
Southern California
Orange County:
Messina, Irvine 2014 102
88
14
8
18
$1,565 - $1,710
Aria, Rancho Mission Viejo 2016 151
82
69
17
34
$623 - $688
Aubergine, Rancho Mission Viejo 2016 66
38
28
24
15
$983 - $1,129
Viridian 2017 57
—
57
—
—
$855 - $920
Carlisle 10-Pack Garden Court, Irvine 2017 74
8
66
39
8
$670 - $780
Sterling Row Townhomes, Irvine 2017 96
11
85
33
11
$574 - $754
Varenna at Orchard Hills, Irvine 2016 71
26
18
13
18
$1,170 - $1,235
Alston, Anaheim 2017 75
—
75
19
—
$805 - $850
StrataPointe, Buena Park 2017 149
10
139
55
10
$515 - $656
Cadence Park 2018 70
—
70
—
—
TBD
San Diego County:
Prism at Weston 2018 142
—
142
—
—
$585 - $620
Talus at Weston 2018 63
—
63
—
—
$680 - $705
Riverside County:
Kite Ridge, Riverside 2014 87
87
—
—
25
$472 - $500
Serrano Ridge at Sycamore Creek, Riverside 2015 87
87
—
—
24
$403 - $429
Terrassa Court, Corona 2015 94
51
43
29
38
$421 - $474
Terrassa Villas, Corona 2015 52
14
38
—
8
$453 - $495
Los Angeles County:
Grayson at Five Knolls, Santa Clarita 2015 119
89
30
16
40
$559 - $586
VuePointe, El Monte 2017 102
—
102
22
—
$452 - $552
Bradford @ Rosedale, Azusa 2017 52
5
22
13
5
$816 - $871
Golden Valley/ Lucera at Aliento 2017 67
6
61
16
6
$622 - $645
Golden Valley/Tierno at Aliento 2017 63
8
55
20
8
$667 - $695
Sonrisa 2017 155
—
155
—
—
TBD
San Bernardino County:
Sedona at Parkside, Ontario 2015 152
140
12
12
48
$405 - $443
Kensington at Park Place, Ontario 2015 67
67
—
—
22
$507 - $539
St. James at Park Place, Ontario 2015 125
89
36
29
38
$514 - $544
Ventura County:
The Westerlies, Oxnard 2015 116
95
21
21
50
$435 - $552
Southern California Total 2,454
1,001
1,401
386
426

Northern California
Contra Costa County:

Berkshire at Barrington, Brentwood 2014 123
122
1
—
16
$508 - $587
Hawthorne at Barrington, Brentwood 2014 105
103
2
1
9
$572 - $620
Marquette at Barrington, Brentwood 2015 90
64
26
9
20
$695 - $730
Wynstone at Barrington, Brentwood 2017 92
19
73
18
19
$480 - $634
Santa Clara County:
Derose, Morgan Hill 2018 65
—
65
—
—
$600 - $820
Solano County:
Redstone, Vacaville 2015 141
91
50
16
31
$470 - $533
Green Valley-Lewis, Fairfield 2018 91
—
91
—
—
$510 - $550
Green Valley-Westgate, Fairfield 2018 56
—
56
—
—
$555 - $599
San Joaquin County:
Ventana, Tracy 2015 93
85
8
4
29
$457 - $557
Sundance, Mountain House 2015 113
102
11
5
28
$595 - $675
Sundance II, Mountain House 2018 138
—
138
8
—
$600 - $710

~~- 55 -~~

Alameda County:

Cadence, Alameda Landing 2015 91
77
14
13
15
$1,182 - $1,390
Linear, Alameda Landing 2015 106
69
37
15
5
$769 - $1,020
Symmetry, Alameda Landing 2016 56
51
5
—
25
$865 - $950
Commercial, Alameda Landing 2
—
2
—
—
$620
Parasol, Fremont 2016 39
39
—
—
15
$770 - $1,050
Blackstone at the Cannery, Hayward SFA 2016 105
40
65
32
16
$626 - $726
Blackstone at the Cannery, Hayward SFD 2016 52
47
5
8
28
$709 - $769
Coopers Place, Livermore 2017 31
2
29
18
2
$660 - $670
Slate at Jordan Ranch, Dublin 2017 56
2
54
12
2
$1,050 - $1,169
Onyx at Jordan Ranch, Dublin 2017 105
—
105
8
—
$875 - $925
Jordan Ranch II, Dublin 2018 45
—
45
—
—
$855 - $1,035
Mission Stevenson, Fremont 2018 77
—
77
—
—
$675 - $965
Palm Avenue, Fremont 2018 31
—
31
—
—
$2,080 - $2,235
Pleasant Hill 2018 44
—
44
—
—
TBD
Sacramento County:
Natomas 2018 94
—
94
—
—
TBD
Northern California Total 2,041
913
1,128
167
260

California Total 4,495
1,914
2,529
553
686

Colorado

Douglas County:
Terrain 4000 Series, Castle Rock 2013 149
147
2
—
5
$358 - $411
Terrain 3500 Series, Castle Rock 2015 67
64
3
—
—
$327 - $350
Terrain Ravenwood Village (3500) 2017 157
—
88
7
—
$379 - $426
Terrain Ravenwood Village (4000) 2017 100
—
38
5
—
$400 - $463
Jefferson County:
Leyden Rock 5000 Series, Arvada 2015 67
67
—
—
3
$454 - $509
Candelas 6000 Series, Arvada 2015 76
40
36
19
19
$534 - $671
Candelas 3500 Series, Arvada 2016 97
22
75
18
18
$405 - $467
Candelas 5000 Series, Arvada 2017 62
—
62
12
—
$510 - $564
Crown Pointe, Westminster 2018 64
—
64
—
—
$415 - $486
Larimer County:
Centerra 5000 Series, Loveland 2015 79
63
16
9
24
$411 - $469
Arapahoe County:

Whispering Pines, Aurora 2015 115
19
96
21
16
$589 - $656
Adams County:
Amber Creek, Thornton 2017 121
13
108
15
12
$386 - $469
Colorado Total 1,154
435
588
106
97

TRI Pointe Total 5,649
2,349
3,117
659
783

- 56 -


Natomas	TBD	94	—	94	—	—	$360 - $412
Mangini - Brookstone	2020	47	15	32	19	15	$576 - $655
Mangini - Waterstone	2020	40	12	28	18	12	$630 - $733
Placer County:
La Madera	2019	102	33	69	12	23	$461 - $546
San Francisco County:
Cambridge Street (SFA)	2020	54	—	54	—	—	$1,145 - $1,388
Closed Communities	N/A	—	—	—	—	2
Northern California Total		1,514	745	769	182	178
California Total		3,146	1,539	1,607	462	399
Colorado
Douglas County:
Terrain Ravenwood Village (3500)	2018	157	110	47	21	22	$390 - $429
Terrain Ravenwood Village (4000)	2018	100	92	8	8	22	$415 - $481
Trails at Crowfoot	2021	100	—	100	—	—	TBD
Sterling Ranch Alley	2020	80	—	80	1	—	TBD
Sterling Ranch TH	2021	46	—	46	—	—	TBD
Canyons 4500	2020	89	1	88	12	1	$774 - $974
Terrain Sunstone	2021	74	—	74	—	—	TBD
Jefferson County:
Candelas 4020 Series, Arvada	2019	98	72	26	23	26	$471 - $531
Crown Point, Westminster	2019	64	57	7	6	26	$449 - $491
Candelas TH, Arvada	2022	92	—	92	—	—	TBD
Arapahoe County:
Whispering Pines, Aurora	2016	115	108	7	7	13	$611 - $681
Adonea 3500, Aurora	2020	71	—	71	12	—	$393 - $435
Adams County:
Reunion Alley, Commerce City	2021	50	—	50	—	—	TBD
Closed Communities	N/A	—	—	—	—	9
Colorado Total		1,136	440	696	90	119
North Carolina
Wake County:
Lakeview Townhomes, Raleigh, NC	2020	23	—	23	—	—	$335 - $351
Townes at North Salem St., Apex, NC	2021	55	—	55	—	—	$312 - $339
Mecklenburg County:
Mayes Hall, Davidson, NC	2021	50	—	50	—	—	$335 - $406
North Carolina Total		128	—	128	—	—
South Carolina
York County:
Balsam, Rock Hill, SC	2021	53	—	53	—	—	$279 - $304
Ashburn, York County, SC	2020	13	—	13	—	—	$258 - $294
South Carolina Total		66	—	66	—	—
TRI Pointe Total		4,476	1,979	2,497	552	518

~~Winchester Homes~~

County, Project, City
Year of
First
Delivery⁽¹⁾

Total
Number of
Lots⁽²⁾

Cumulative
Homes
Delivered
as of
September 30,
2017

Lots
Owned as of
September 30,
2017⁽³⁾

Backlog as of
September 30,
2017⁽⁴⁾⁽⁵⁾

Homes
Delivered
for the Nine
Months Ended
September 30,
2017

Sales Price
Range
(in thousands)⁽⁶⁾
Maryland
Anne Arundel County:
Two Rivers Townhomes, Crofton 2017 36
—
36
17
—
$440 - $520
Two Rivers Cascades SFD, Crofton 2018 7
—
7
—
—
$600 - $620
Watson's Glen, Millersville 2015 103
4
99
—
—
Closed
Frederick County:
Landsdale, Monrovia —

Landsdale SFD 2015 222
69
153
26
29
$495 - $597
Landsdale Townhomes 2015 100
33
67
12
7
$320 - $378
Landsdale TND Neo SFD 2015 77
25
52
5
11
$440 - $473
Montgomery County:
Cabin Branch, Clarksburg
Cabin Branch SFD 2014 359
123
236
33
32
$480 - $745
Cabin Branch Avenue Townhomes 2017 121
1
120
16
1
$425 - $485
Cabin Branch Townhomes 2014 507
192
315
22
61
$391 - $435
Preserve at Stoney Spring N/A 5
—
5
—
—
N/A
Poplar Run, Silver Spring
Poplar Run SFD 2010 305
270
35
19
21
$562 - $786
Poplar Run Single Family Neos 2016 29
26
3
1
11
$545 - $635
Potomac Highlands, Potomac 2017 23
5
18
7
# 5
$1,191 - $1,289
Glenmont MetroCenter, Silver Spring 2016 171
20
151
17
13
$435 - $513
Chapman Row, Rockville 2018 61
—
61
—
—
TBD
Closed Communities N/A —
—
—
—
1

Maryland Total 2,126
768
1,358
175
192

Virginia
Fairfax County:
Stuart Mill & Timber Lake, Oakton 2014 14
8
6
4
1
$1,363 - $1,675
Stuart Mill, Oakton N/A 5
—
5
—
—
N/A
Westgrove, Fairfax 2018 24
—
24
—
—
TBD
West Oaks Corner 2019 188
—
188
—
—
TBD
Prince William County:
Villages of Piedmont, Haymarket 2015 168
84
84
31
35
$370 - $440
Loudoun County:
Brambleton, Ashburn

West Park SFD 2018 12
—
12
4
—
$708 - $724
Vistas at Lansdowne, Lansdowne 2015 120
52
68
17
14
$574 - $674
Willowsford Grant II, Aldie 2017 29
7
22
5
7
$1,000 - $1,326
Willowsford Greens N/A 5
—
5
—
—
N/A
Closed Communities N/A —
—
—
—
16

Virginia Total 565
151
414
61
73

Winchester Total 2,691
919
1,772
236
265

Combined Company Total 33,832
8,777
24,803
2,265
2,940

~~__________~~


⁽¹⁾	~~Year of first delivery for future periods is based upon management’s estimates and is subject to change.~~


⁽²⁾	~~The number of homes to be built at completion is subject to change, and there can be no assurance that we will build these homes.~~


⁽³⁾	~~Owned lots as of September 30, 2017 include owned lots in backlog as of September 30, 2017.~~


⁽⁴⁾	~~Backlog consists of homes under sales contracts that had not yet been delivered, and there can be no assurance that delivery of sold homes will occur.~~


⁽⁵⁾	Of the total homes subject to pending sales contracts that have not been delivered as of September 30, 2017, 1,695 homes are under construction, 278 homes have completed construction, and 292 homes have not started construction.

- 57 -

Winchester Homes

⁽⁶⁾


County, Project, City	Year of First Delivery⁽¹⁾	Total Number of Lots⁽²⁾	Cumulative Homes Delivered as of June 30, 2020	Lots Owned as of June 30, 2020⁽³⁾	Backlog as of June 30, 2020⁽⁴⁾⁽⁵⁾	Homes Delivered for the Six Months Ended June 30, 2020	Sales Price Range (in thousands)⁽⁶⁾
Maryland
Anne Arundel County:
Two Rivers Townhomes, Crofton	2017	152	79	73	9	14	$454 - $535
Two Rivers Cascades SFD, Crofton	2018	43	35	8	8	10	$520 - $590
Watson's Glen, Millersville	2015	103	9	94	20	5	$368 - $381
Frederick County:
Landsdale, Monrovia
Landsdale SFD	2015	222	180	42	20	20	$515 - $607
Landsdale Townhomes	2015	100	100	—	—	3	Closed Out
Landsdale TND Neo SFD	2015	77	66	11	11	7	$450 - $483
Montgomery County:
Cabin Branch, Clarksburg
Cabin Branch SFD	2014	359	252	107	21	15	$560 - $775
Cabin Branch Avenue Townhomes	2017	86	86	—	—	4	Closed Out
Cabin Branch Crossings Townhomes	2019	114	7	107	29	6	$422 - $493
Cabin Branch Manor Townhomes	2014	428	367	61	13	16	$393 - $464
Preserve at Stoney Spring - Lots for Sale	TBD	2	—	2	—	—
Glenmont MetroCenter, Silver Spring	2016	171	146	25	25	15	$460 - $518
Chapman Row, Rockville	2019	61	16	45	22	6	$700 - $750
North Quarter, North Bethesda	2020	104	9	95	12	9	$620 - $670
Maryland Total		2,022	1,352	670	190	130
Virginia
Fairfax County:
Stuart Mill, Oakton - Lots for Sale	TBD	5	—	5	—	—	TBD
Westgrove, Fairfax	2018	24	22	2	2	3	$1,001 - $1,107
West Oaks Corner, Fairfax	2019	188	41	147	53	15	$705 - $830
Bren Pointe SFA, Fairfax	2020	13	—	13	—	—	TBD
Loudoun County:
Brambleton, Ashburn
Birchwood Bungalows AA	2018	55	43	8	12	10	$582 - $639
Birchwood Carriages AA	2019	45	20	25	26	19	$537 - $570
Willowsford Grant II, Aldie	2017	55	47	8	8	9	$1,000 - $1,255
Closed Communities	N/A	—	—	—	—	4
Virginia Total		385	173	208	101	60
Winchester Total		2,407	1,525	878	291	190

Combined Company Total		32,479	10,508	21,749	2,558	2,187

__________

⁽¹⁾Year of first delivery for future periods is based upon management’s estimates and is subject to change.

⁽²⁾The number of homes to be built at completion is subject to change, and there can be no assurance that we will build these homes.

⁽³⁾Owned lots as of June 30, 2020 include owned lots in backlog as of June 30, 2020.

⁽⁴⁾Backlog consists of homes under sales contracts that have not yet been delivered, and there can be no assurance that delivery of sold homes will occur.

⁽⁵⁾Of the total homes subject to pending sales contracts that have not been delivered as of June 30, 2020, 1,679 homes are under construction, 345 homes have completed construction, and 534 homes have not started construction.

⁽⁶⁾Sales price range reflects base price only and excludes any lot premium, buyer incentives and buyer-selected options, which may vary from project to project. Sales prices for homes required to be sold pursuant to affordable housing requirements are excluded from sales price range. Sales prices reflect current pricing and might not be indicative of past or future pricing.

- 58 -

Sales price range reflects base price only and excludes any lot premium, buyer incentives and buyer-selected options, which may vary from project to project. Sales prices for homes required to be sold pursuant to affordable housing requirements are excluded from sales price range. Sales prices reflect current pricing and might not be indicative of past or future pricing.

Critical Accounting Policies

Our discussion and analysis of our financial condition and results of operations is based on our unaudited condensed consolidated financial statements ~~contained elsewhere~~included in this ~~report,~~Quarterly Report on Form 10-Q, which have been prepared in accordance with GAAP. Our condensed notes to the unaudited consolidated financial statements ~~contained elsewhere~~included in this ~~report~~Quarterly Report on Form 10-Q and the audited financial statements ~~contained~~included in our Annual Report on Form 10-K for the year ended December 31, ~~2016~~2019 describe the significant accounting policies essential to our unaudited condensed consolidated financial statements. The preparation of our financial statements requires our management to make estimates, judgments and assumptions. We believe that the estimates, judgments and assumptions that we have used are appropriate and correct based on information available at the time they were made. These estimates, judgments and assumptions can affect our reported assets and liabilities as of the date of the financial statements, as well as the reported revenues and expenses during the period presented. If there is a material difference between these estimates, judgments and assumptions and actual facts, our financial statements may be affected.

In many cases, the accounting treatment of a particular transaction is specifically dictated by GAAP and does not require our judgment in its application. There are areas in which our judgment in selecting among available alternatives would not produce a materially different result, but there are some areas in which our judgment in selecting among available alternatives would produce a materially different result. See the condensed notes to the unaudited consolidated financial statements that contain additional information regarding our accounting policies and other disclosures.

There have been no material changes to our critical accounting policies and estimates as compared to the critical accounting policies and estimates described in our Annual Report on Form 10-K for the fiscal year ended December 31, 2019.

Recently Issued Accounting Standards

See Note 1, Organization, Basis of Presentation and Summary of Significant Accounting Policies, to the accompanying condensed notes to unaudited consolidated financial statements included in this Quarterly Report on Form 10-Q.


~~Item 3.~~	Item 3. Quantitative and Qualitative Disclosures about Market Risk

We are exposed to market risks related to fluctuations in interest rates on our outstanding debt. We did not utilize swaps, forward or option contracts on interest rates or commodities, or other types of derivative financial instruments as of or during the ~~nine~~six months ended ~~September~~June 30, ~~2017.~~2020. We did not enter into during the ~~nine~~six months ended ~~September~~June 30, ~~2017,~~2020, and currently do not hold, derivatives for trading or speculative purposes.


~~Item 4.~~	Item 4. Controls and Procedures

We have established disclosure controls and procedures to ensure that information we are required to disclose in the reports we file or submit under the Exchange Act, is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms, and accumulated and communicated to management, including the Chief Executive Officer (the “Principal Executive Officer”) and Chief Financial Officer (the “Principal Financial Officer”), as appropriate, to allow timely decisions regarding required disclosure. Under the supervision and with the participation of senior management, including our Principal Executive Officer and Principal Financial Officer, we evaluated our disclosure controls and procedures, as such term is defined under Rule 13a-15(e) promulgated under the Exchange Act. Based on this evaluation, our Principal Executive Officer and Principal Financial Officer concluded that our disclosure controls and procedures were effective as of ~~September~~June 30, ~~2017.~~2020.

Our management, including our Principal Executive Officer and Principal Financial Officer, has evaluated our internal control over financial reporting to determine whether any change occurred during the ~~nine~~three months ended ~~September~~June 30, ~~2017~~2020 that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting. Based on that evaluation, there has been no such change during the ~~nine~~three or six months ended ~~September~~June 30, ~~2017.~~2020.

- 5859 -

PART II. OTHER INFORMATION


~~Item 1.~~	~~Legal Proceedings~~

Item 1. Legal Proceedings

The information required with respect to this item can be found under Note 13, Commitments and ~~Contingencies-Legal~~Contingencies—Legal Matters, ofto the accompanying condensed notes to unaudited consolidated financial statements included in this Quarterly Report on Form 10-Q and is incorporated by reference into this Item 1.


~~Item 1A.~~	~~Risk Factors~~

Item 1A. Risk Factors

The following supplements and updates the risk factors in Part I, Item 1A “Risk ~~Factors,”~~Factors” in our Annual Report on Form 10-K for the year ended December 31, ~~2016.~~2019, as revised or supplemented by any Quarterly Reports on Form 10-Q filed with the SEC since the filing of our Annual Report on Form 10-K for the year ended December 31, 2019. If any of the risks discussed below or in our Annual Report on Form 10-K (as revised or supplemented by any Quarterly Reports on Form 10-Q) occur, our business, prospects, liquidity, financial condition and results of operations (individually and collectively referred to in the following risk factor as “Financial Performance”) could be materially and adversely affected, in which case the trading price of our common stock could decline significantly and you could lose all or a part of your investment. Some statements in this Quarterly Report on Form 10-Q, including statements in the following risk factor, constitute forward-looking statements. Please refer to Part I, Item 2 of this Quarterly Report on Form 10-Q entitled “Cautionary Note Concerning Forward-Looking Statements.”

Risks Related to Our Business

Our Financial Performance has been and may continue to be materially and adversely affected by the ongoing COVID-19 pandemic.

In March 2020, the World Health Organization declared the outbreak of COVID-19, a novel strain of coronavirus first identified in Wuhan, China in December 2019, a pandemic. This outbreak, which has spread widely throughout the United States and nearly all other regions of the world, has prompted federal, state and local governmental authorities in the United States to declare states of emergency and institute preventative measures to contain and/or mitigate the public health effects. These preventative measures, which include quarantines, shelter-in-place orders and similar mandates that substantially restrict daily activities for many individuals, as well as orders requiring the closure and/or curtailment of operations for many businesses, have caused and continue to cause significant disruption to businesses in affected areas, as well as the financial markets both globally and in the United States, more broadly.

In response to the COVID-19 pandemic and measures taken by applicable governmental authorities, in mid-March 2020, we began encouraging all employees at our corporate and division offices whose duties could be ~~responsible for employment-related liabilities~~performed from home to work remotely until further notice, transitioned all of our new home galleries and design studios to appointment-only with pre-screened individuals or virtual appointments, instituted mandatory social distancing and hygiene/sanitation guidelines in accordance with recommended protocols throughout the organization (including in our new home galleries and design studios, and with respect to trade partners and their employees on our ~~contractors’ employees.~~

~~Several~~jobsites) and postponed non-essential customer care service and warranty requests. While we believe these measures were advisable and in the best interests of our employees, trade partners, customers and communities, such measures, in combination with other ~~homebuilders~~factors, reduced traffic in our new home galleries and design studios, slowed the pace of our home sales, delayed home deliveries and caused other material disruptions to our normal operations, including a substantial investment of time and resources by our management and organization, and may continue to do so during the pendency of such measures. We have ~~received inquiries from regulatory agencies concerning whether homebuilders using contractors~~transitioned substantially all of our employees back to our corporate and division offices, have resumed non-essential customer care service and warranty requests in substantially all of our markets, and, to the extent permitted by applicable law, are ~~deemed~~no longer appointment-only in many of our new home galleries. However, in the event that we are required or believe it is advisable to re-implement these or other measures in all or some of our markets in response to a resurgence of COVID-19 or orders by applicable governmental authorities, our Financial Performance could be ~~employers~~materially and adversely affected. Additionally, certain of our service providers and trade partners have instituted or may institute similar preventative measures, which could result in reductions in the availability, capacity and/or efficiency of the services upon which we depend for our operations, which could materially and adversely affect our Financial Performance. Further, in the event any of our employees, and/or employees of our service providers or trade partners, contract COVID-19 or are otherwise compelled to self-quarantine, we may experience shortages in labor and services that we require for our operations. Our increased use of remote work environments and virtual platforms in response to the COVID-19 pandemic may also increase our risk of cyber-attack or data security breaches.

- 60 -

While residential homebuilding operations are currently exempt from the application of “stay-at-home” orders in all of our markets, existing and future orders by governmental authorities in any of our markets may require us to cease our homebuilding operations for an uncertain or indefinite period of time, which could significantly affect new home orders and deliveries and negatively impact our home sales revenue in such ~~contractors under certain circumstances. Although contractors are independent~~markets. For example, in late March 2020, authorities in Seattle, Washington and the Bay Area in California revised then-existing restrictions against non-essential business activities to extend to most residential construction activities. As a result, our TRI Pointe Homes—Bay Area and Quadrant Homes divisions were prohibited for several weeks from engaging in residential construction activities. We anticipate that any further such orders will have a material and adverse impact on our ability to meet applicable development and construction timelines, as well as sales activity, in applicable markets in the event such prohibitions remain in effect for a significant duration.

We may also be materially and adversely affected by the disruptions to U.S. and local economies that result from the COVID-19 pandemic, including reduced consumer confidence, availability of financing for potential homebuyers, shortages of or increased costs associated with obtaining building materials, unemployment levels, wage growth and fluctuating interest rates. The COVID-19 pandemic has also resulted in substantial volatility in U.S. and international debt and equity markets and has caused significant fluctuations in the market prices of equity securities, including our common stock. The possibility of a prolonged recession or economic downturn could result in, among other things, a decrease in demand and prices for our homes; an increase in selling incentives required to sell homes; an oversupply of new and existing homes available for sale; increased home order cancellation rates; diminished value of our real estate investments, including potential impairments, write downs or dispositions of real estate assets, or lot option abandonments; and an inability to access our Credit Facility, service or refinance our existing indebtedness or access the debt and equity capital markets on commercially reasonable terms or at all.

Ultimately, the effects of the homebuilders that contract with them under normal management practices and the terms of trade contracts and subcontracts within the homebuilding industry, if regulatory agencies reclassify the employees of contractors as employees of homebuilders, homebuilders using contractors could be responsible for wage and hour labor laws, employment discrimination, workers’ compensation and other employment-related liabilities of their contractors. A 2015 National Labor Relations Board ruling held that for labor law purposes a firm could under some circumstances be responsible as a joint employer of its contractors' employees. This ruling has been appealed and legislation has been introduced to limit joint-employer liability. If the ruling is not overturned on appeal, limited by legislation, or revisited by the National Labor Relations Board, it could make us responsible for collective bargaining obligations and labor law violations by our subcontractors. Governmental rulings that make us responsible for labor practices by our subcontractors could create substantial exposures for us in situations that are not within our control. Even if we are not deemed to be joint employers with our contractors, we may be subject to legislation, such as California Labor Code Section 2810.3 that requires us to share liability with our contractors for the payment of wages and the failure to secure valid workers’ compensation coverage. In addition, California’s Governor recently signed legislation, AB 1701, that will require direct construction contractors to assume and be liable for unpaid wages, fringe or other benefit payments or contributions, including interest, incurred by a subcontractor at any tier for contracts entered into on or after January 1, 2018. While we are still analyzing the ultimate impact this legislation could haveCOVID-19 pandemic on our business ~~we believe it~~and Financial Performance, which are highly uncertain and cannot be predicted, will depend upon future developments, including the severity of COVID-19 and the duration of the outbreak; the duration of existing and future social distancing and shelter-in-place orders; further mitigation strategies taken by applicable government authorities; the availability of a vaccine, adequate testing and treatments and the prevalence of widespread immunity to COVID-19; the impacts on our supply chain; the health of our employees, service providers and trade partners; and the reactions of U.S. and global markets and their effects on consumer confidence and spending. Such adverse effects, however, may ~~result~~include decreases in ~~increased costs. While we attempt~~home sales revenue, new home deliveries, average sales prices of homes, homebuilding gross margin percentages, active selling communities and backlog units, and increases in cancellation rates of home sales contracts, which may materially impact our Financial Performance during the third quarter of 2020 and beyond, as well as our ability to ~~pass~~satisfy the covenants in our existing and any future debt agreements, including our Credit Facility, and service our outstanding indebtedness. The impact of COVID-19 may also exacerbate other risks discussed in Part I, Item 1A “Risk Factors” in our Annual Report on ~~cost increases to homebuyers through increased prices, we may be unable to offset cost increases~~Form 10-K, as revised or supplemented by our Quarterly Reports on Form 10-Q filed with ~~higher selling prices.~~the SEC since the filing of our most recent Annual Report on Form 10-K, any of which could have a material effect on us.


~~Item 2.~~	~~Unregistered Sales of Equity Securities and Use of Proceeds~~

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds

On February ~~28, 2017, we announced that~~21, 2019, our board of directors approved ~~the 2017~~our 2019 Repurchase Program, authorizing the repurchase of shares of common stock with an aggregate value of up to $100 million through March 31, ~~2018.~~2020. On ~~July 25, 2017~~December 16, 2019, we announced that our board of directors had authorized the repurchase of up to an additional $50 million ~~of our common stock under the 2017 Repurchase Program,~~through March 31, 2020, increasing the aggregate ~~authorization~~value of shares of common stock authorized to be repurchased under the 2019 Repurchase Program to $150 million from $100 million.

On February 13, 2020, our board of directors discontinued and cancelled the 2019 Repurchase Program and approved our 2020 Repurchase Program, authorizing the repurchase of shares of common stock with an aggregate value of up to $200 million ~~to $150 million.~~through March 31, 2021. Purchases of common stock pursuant to the ~~2017~~2020 Repurchase Program may be made in open market transactions effected through a broker-dealer at prevailing market prices, in block trades, or by other means in accordance with federal securities laws, including pursuant to any trading plan that may be adopted in accordance with Rule 10b5-1 ofunder the Exchange Act. We are not obligated under the ~~2017~~2020 Repurchase Program to repurchase any specific number or dollar amount of shares of common stock, and we may modify, suspend or discontinue the ~~program~~2020 Repurchase Program at any time. Our management will determine the timing and amount of ~~repurchase~~repurchases in its discretion based on a variety of factors, such as the market price of our common stock, corporate requirements, general market economic conditions and legal requirements.

~~During~~ During the three months ended ~~September~~June 30, ~~2017,~~2020, we ~~repurchased and retired~~did not repurchase any shares under the ~~following shares pursuant to our 2017~~2020 Repurchase ~~Program:~~

~~- 59 -~~

Total number of shares purchased Average price paid per share Total number of shares purchased as part of publicly announced program
Approximate dollar value of shares that may yet be purchased under the program ⁽¹⁾
July 1, 2017 to July 31, 2017 —
$ —
—
$ 50,303,199
August 1, 2017 to August 31, 2017 310,000
$ 12.84
310,000
$ 46,321,839
September 1, 2017 to September 30, 2017 665,700
$ 12.83
665,700
$ 37,783,295
Total 975,700
$ 12.83
975,700

~~__________~~

⁽¹⁾ ~~During~~Program. For the ~~three~~six months ended ~~September~~June 30, ~~2017,~~2020, we repurchased and retired an aggregate of ~~975,700~~6,558,323 shares of ~~our~~ common stock at an average price of $15.55 under the 2019 Repurchase Program and 2020 Repurchase Program for ~~$12,519,904.~~a total of $102.0 million.

- 6061 -

Item 6. Exhibits


~~Item 6.~~Exhibit Number			~~Exhibits~~

Exhibit Description

~~Exhibit~~ ~~Number~~3.1		~~Exhibit Description~~

~~3.1~~	Amended and Restated Certificate of Incorporation of TRI Pointe Group, Inc. (incorporated by reference to Exhibit 3.1 to the ~~Company's~~Company’s Current Report on Form 8-K (filed July 7, 2015))

3.2		Amended and Restated Bylaws of TRI Pointe Group, Inc. (incorporated by reference to Exhibit 3.1 to the Company’s Current Report on Form 8-K (filed October 27, 2016))

4.1		Fifth Supplemental Indenture, dated as of June 10, 2020, among TRI Pointe Group, Inc., the guarantors party thereto and U.S. Bank National Association, as trustee (incorporated by reference to Exhibit 4.1 to the Company’s Current Report on Form 8-K (filed June 10, 2020))

4.2		Form of 5.700% Senior Note due 2028 (incorporated by reference to Exhibit 4.2 to the Company’s Current Report on Form 8-K (filed June 10, 2020))

31.1		Chief Executive Officer Section 302 Certification of the Sarbanes-Oxley Act of 2002

31.2		Chief Financial Officer Section 302 Certification of the Sarbanes-Oxley Act of 2002

32.1		Chief Executive Officer Section 906 Certification of the Sarbanes-Oxley Act of 2002

32.2		Chief Financial Officer Section 906 Certification of the Sarbanes-Oxley Act of 2002

101		The following materials from TRI Pointe Group, Inc.’s Quarterly Report on Form 10-Q for the ~~nine~~three months ended ~~September~~June 30, ~~2017,~~2020, formatted in Inline eXtensible Business Reporting Language ~~(XBRL)~~(iXBRL): (i) Consolidated Balance Sheets, (ii) Consolidated Statements of Operations, (iii) Consolidated ~~Statements of Comprehensive Income, (iv) Consolidated~~ Statement of Cash Flows, and ~~(v)~~(iv) Condensed Notes to Consolidated Financial Statement.

104		Cover page from TRI Pointe Group, Inc.’s Quarterly Report on Form 10-Q for the quarter ended June 30, 2020, formatted in Inline XBRL (and contained in Exhibit 101).

- 6162 -

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.


			TRI Pointe Group, Inc.

Date: July 24, 2020			~~TRI Pointe Group, Inc.~~
By:
	~~By:~~	/s/ Douglas F. Bauer
				Douglas F. Bauer
				Chief Executive Officer
			~~By:~~	~~/s/ Michael D. Grubbs~~(Principal Executive Officer)
Date: July 24, 2020			By:	~~Michael D. Grubbs~~/s/ Glenn J. Keeler
~~Date: October 25, 2017~~				Glenn J. Keeler
				Chief Financial Officer
				(Principal Financial Officer)

- 6263 -



	September 30, 2017		December 31, 2016
Limited liability company interests	$	14,433	$	14,327
General partnership interests	3,183		3,219
Total	$	17,616	$	17,546



Remainder of 2017	$	133
2018	534
2019	534
2020	534
2021	534
Thereafter	2,221
Total	$	4,490



	September 30, 2017		December 31, 2016
Seller financed loans	$	—	$	13,726



	Nine Months Ended September 30, 2017				Year Ended December 31, 2016
	Impairment Charge		Fair Value Net of Impairment		Impairment Charge		Fair Value Net of Impairment
Real estate inventories⁽¹⁾	$	267	$	1,574	$	—	$	—



	Actual at September 30,			Covenant Requirement at September 30,
Financial Covenants	2017			2017
Consolidated Tangible Net Worth	$	1,681,335		$	1,152,489
(Not less than $1.1 billion plus 50% of net income and 50% of the net proceeds from equity offerings after March 31, 2017)
Leverage Test	47.7		%	≤55%
(Not to exceed 55%)
Interest Coverage Test	4.3			≥1.5
(Not less than 1.5:1.0)



Clark County:
LivingSmart Sandstone	2013	145	145	—	—	1	$228 - $255
North Peak	2015	171	96	75	24	39	$299 - $350
Castle Rock	2015	188	98	90	18	37	$340 - $430
Camino	2016	86	82	4	4	59	$255 - $270
Solano	2014	132	132	—	—	15	$300 - $335
Alterra	2014	47	47	—	—	2	$425 - $505
Bella Verdi	2015	57	49	8	4	2	$400 - $440
Escala	2016	103	39	64	10	20	$520 - $590
Montero	2016	77	33	44	26	25	$420 - $500
Strada	2017	119	13	106	11	13	$405 - $440
Linea	2018	87	—	87	—	—	$300 - $350
Meridian	2016	62	30	32	20	10	$590 - $680
Encanto	2016	51	26	25	8	15	$470 - $525
Luma	2017	71	—	71	—	—	$470 - $526
Encanto Townhomes	2018	70	—	70	—	—	TBD
Horizon Terrace	2014	165	124	41	14	30	$410 - $465
Horizon Valle Verde	2018	53	—	53	—	—	$450 - $470
Summerglen	2014	140	140	—	—	27	$300 - $305
Keystone	2017	70	15	55	9	14	$450 - $540
Cobalt	2017	107	—	107	5	—	$355 - $420
Axis	2017	78	1	77	16	1	$825 - $1,035
The Canyons at MacDonald Ranch - R	2017	22	—	22	—	—	$515 - $585
Pivot	2017	88	—	88	8	—	$400 - $440
Strada at Pivot	2017	27	—	27	7	—	$440 - $475
Nova Ridge	2018	108	—	108	—	—	$620 - $760
Tera Luna	2017	116	—	116	—	—	$540 - $590
Onyx	2018	88	—	88	—	—	$425 - $465
Tule Springs	TBD	339	—	339	—	—	TBD
Cactus/Jones	TBD	54	—	54	—	—	TBD
Commerce & Deer Springs	TBD	143	—	143	—	—	TBD
Nevada Total		3,064	1,070	1,994	184	310
Pardee Total		17,690	2,273	15,348	646	896



Alameda County:
Cadence, Alameda Landing	2015	91	77	14	13	15	$1,182 - $1,390
Linear, Alameda Landing	2015	106	69	37	15	5	$769 - $1,020
Symmetry, Alameda Landing	2016	56	51	5	—	25	$865 - $950
Commercial, Alameda Landing		2	—	2	—	—	$620
Parasol, Fremont	2016	39	39	—	—	15	$770 - $1,050
Blackstone at the Cannery, Hayward SFA	2016	105	40	65	32	16	$626 - $726
Blackstone at the Cannery, Hayward SFD	2016	52	47	5	8	28	$709 - $769
Coopers Place, Livermore	2017	31	2	29	18	2	$660 - $670
Slate at Jordan Ranch, Dublin	2017	56	2	54	12	2	$1,050 - $1,169
Onyx at Jordan Ranch, Dublin	2017	105	—	105	8	—	$875 - $925
Jordan Ranch II, Dublin	2018	45	—	45	—	—	$855 - $1,035
Mission Stevenson, Fremont	2018	77	—	77	—	—	$675 - $965
Palm Avenue, Fremont	2018	31	—	31	—	—	$2,080 - $2,235
Pleasant Hill	2018	44	—	44	—	—	TBD
Sacramento County:
Natomas	2018	94	—	94	—	—	TBD
Northern California Total		2,041	913	1,128	167	260
California Total		4,495	1,914	2,529	553	686
Colorado
Douglas County:
Terrain 4000 Series, Castle Rock	2013	149	147	2	—	5	$358 - $411
Terrain 3500 Series, Castle Rock	2015	67	64	3	—	—	$327 - $350
Terrain Ravenwood Village (3500)	2017	157	—	88	7	—	$379 - $426
Terrain Ravenwood Village (4000)	2017	100	—	38	5	—	$400 - $463
Jefferson County:
Leyden Rock 5000 Series, Arvada	2015	67	67	—	—	3	$454 - $509
Candelas 6000 Series, Arvada	2015	76	40	36	19	19	$534 - $671
Candelas 3500 Series, Arvada	2016	97	22	75	18	18	$405 - $467
Candelas 5000 Series, Arvada	2017	62	—	62	12	—	$510 - $564
Crown Pointe, Westminster	2018	64	—	64	—	—	$415 - $486
Larimer County:
Centerra 5000 Series, Loveland	2015	79	63	16	9	24	$411 - $469
Arapahoe County:
Whispering Pines, Aurora	2015	115	19	96	21	16	$589 - $656
Adams County:
Amber Creek, Thornton	2017	121	13	108	15	12	$386 - $469
Colorado Total		1,154	435	588	106	97
TRI Pointe Total		5,649	2,349	3,117	659	783



	Total number of shares purchased	Average price paid per share		Total number of shares purchased as part of publicly announced program	Approximate dollar value of shares that may yet be purchased under the program ⁽¹⁾
July 1, 2017 to July 31, 2017	—	$	—	—	$	50,303,199
August 1, 2017 to August 31, 2017	310,000	$	12.84	310,000	$	46,321,839
September 1, 2017 to September 30, 2017	665,700	$	12.83	665,700	$	37,783,295
Total	975,700	$	12.83	975,700