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 March 31, 2019
or

		
☐	TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934	
For the transition period from              to             
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)
____________________________________________________________________________________________________ 
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   x     No   ☐
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted 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 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 growth company” in Rule 12b-2 of the Exchange Act.

				
Large accelerated filer	x	Accelerated filer	☐	
Non-accelerated filer	☐  	Smaller reporting company	☐	
 	 	Emerging 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   x
142,210,147 shares of the registrant's common stock were issued and outstanding as of April 12, 2019.

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EXPLANATORY NOTE
As used in this Quarterly Report on Form 10-Q, references to “TRI Pointe”, 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.

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TRI POINTE GROUP, INC.
QUARTERLY REPORT ON FORM 10-Q
INDEX
March 31, 2019

	
			
 	 	Page
Number	
PART I.  FINANCIAL INFORMATION	
 	 	 	
Item 1.	Financial Statements	3	
 	 	 	
 	Consolidated Balance Sheets as of March 31, 2019 (unaudited) and December 31, 2018	3	
 	 	 	
 	Consolidated Statements of Operations for the Three Months Ended March 31, 2019 and 2018 (unaudited)	4	
 	 	 	
 	Consolidated Statements of Equity for the Three Months Ended March 31, 2019 and 2018 (unaudited)	5	
 	 	 	
 	Consolidated Statements of Cash Flows for the Three Months Ended March 31, 2019 and 2018 (unaudited)	6	
 	 	 	
 	Notes to Consolidated Financial Statements (unaudited)	7	
 	 	 	
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	32	
 	 	 	
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	53	
 	 	 	
Item 4.	Controls and Procedures	53	
 	
Part II.  OTHER INFORMATION	
 	 	 	
Item 1.	Legal Proceedings	54	
 	 	 	
Item 1A.	Risk Factors	54	
 	 	 	
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	54	
 	 	 	
Item 6.	Exhibits	55	
 	 	 	
SIGNATURES	56	

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PART I. FINANCIAL INFORMATION

Item 1.	Financial Statements	

TRI POINTE GROUP, INC.
CONSOLIDATED BALANCE SHEETS
(in thousands, except share and per share amounts)

	
								
 	March 31, 2019	 	December 31, 2018	
 	(unaudited)	 	 	
Assets	 	 	 	
Cash and cash equivalents	$	148,782		 	$	277,696		
Receivables	58,234		 	51,592		
Real estate inventories	3,242,678		 	3,216,059		
Investments in unconsolidated entities	4,191		 	5,410		
Goodwill and other intangible assets, net	160,293		 	160,427		
Deferred tax assets, net	67,761		 	67,768		
Other assets	173,956		 	105,251		
Total assets	$	3,855,895		 	$	3,884,203		
Liabilities	 	 	 	
Accounts payable	$	66,605		 	$	81,313		
Accrued expenses and other liabilities	319,791		 	335,149		
Senior notes, net	1,412,463		 	1,410,804		
Total liabilities	1,798,859		 	1,827,266		
 	 	 	 	
Commitments and contingencies (Note 13)		 		
 	 	 	 	
Equity	 	 	 	
Stockholders’ equity:	 	 	 	
Preferred stock, $0.01 par value, 50,000,000 shares authorized; no
   shares issued and outstanding as of March 31, 2019 and
   December 31, 2018, respectively	—		 	—		
Common stock, $0.01 par value, 500,000,000 shares authorized;
   142,210,147 and 141,661,713 shares issued and outstanding at
   March 31, 2019 and December 31, 2018, respectively	1,422		 	1,417		
Additional paid-in capital	658,743		 	658,720		
Retained earnings	1,396,858		 	1,396,787		
Total stockholders’ equity	2,057,023		 	2,056,924		
Noncontrolling interests	13		 	13		
Total equity	2,057,036		 	2,056,937		
Total liabilities and equity	$	3,855,895		 	$	3,884,203		
 
See accompanying condensed notes to the unaudited consolidated financial statements.

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TRI POINTE GROUP, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
(unaudited)
(in thousands, except share and per share amounts)

	
								
 	Three Months Ended March 31,	
 	2019	 	2018	
Homebuilding:	 	 	 	
Home sales revenue	$	492,703		 	$	582,572		
Land and lot sales revenue	1,029		 	223		
Other operations revenue	598		 	598		
Total revenues	494,330		 	583,393		
Cost of home sales	421,536		 	450,502		
Cost of land and lot sales	1,495		 	503		
Other operations expense	590		 	602		
Sales and marketing	38,989		 	38,283		
General and administrative	38,597		 	36,814		
Homebuilding (loss) income from operations	(6,877	)	 	56,689		
Equity in loss of unconsolidated entities	(25	)	 	(468	)	
Other income, net	6,241		 	171		
Homebuilding (loss) income before income taxes	(661	)	 	56,392		
Financial Services:	 	 	 	
Revenues	302		 	283		
Expenses	321		 	137		
Equity in income of unconsolidated entities	775		 	1,002		
Financial services income before income taxes	756		 	1,148		
Income before income taxes	95		 	57,540		
Provision for income taxes	(24	)	 	(14,660	)	
Net income	$	71		 	$	42,880		
Earnings per share	 		 	 		
Basic	$	0.00		 	$	0.28		
Diluted	$	0.00		 	$	0.28		
Weighted average shares outstanding	 	 	 	
Basic	141,865,270		 	151,464,547		
Diluted	142,390,163		 	152,775,851		
 
See accompanying condensed notes to the unaudited consolidated financial statements.

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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 December 31, 2018	141,661,713		 	$	1,417		 	$	658,720		 	$	1,396,787		 	$	2,056,924		 	$	13		 	$	2,056,937		
Net income	—		 	—		 	—		 	71		 	71		 	—		 	71		
Shares issued under share-based awards	548,434		 	5		 	193		 	—		 	198		 	—		 	198		
Minimum tax withholding paid on behalf of employees for restricted stock units	—		 	—		 	(3,605	)	 	—		 	(3,605	)	 	—		 	(3,605	)	
Stock-based compensation expense	—		 	—		 	3,435		 	—		 	3,435		 	—		 	3,435		
Balance at March 31, 2019	142,210,147		 	$	1,422		 	$	658,743		 	$	1,396,858		 	$	2,057,023		 	$	13		 	$	2,057,036		
 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Balance at December 31, 2017	151,162,999		 	$	1,512		 	$	793,980		 	$	1,134,230		 	$	1,929,722		 	$	605		 	$	1,930,327		
Cumulative effect of accounting change  	—		 	—		 	—		 	(7,354	)	 	(7,354	)	 	—		 	(7,354	)	
Net income	—		 	—		 	—		 	42,880		 	42,880		 	—		 	42,880		
Shares issued under share-based awards	759,460		 	7		 	968		 	—		 	975		 	—		 	975		
Minimum tax withholding paid on behalf of employees for restricted stock units	—		 	—		 	(6,049	)	 	—		 	(6,049	)	 	—		 	(6,049	)	
Stock-based compensation expense	—		 	—		 	3,470		 	—		 	3,470		 	—		 	3,470		
Distributions to noncontrolling interests, net	—		 	—		 	—		 	—		 	—		 	(1	)	 	(1	)	
Balance at March 31, 2018	151,922,459		 	$	1,519		 	$	792,369		 	$	1,169,756		 	$	1,963,644		 	$	604		 	$	1,964,248		

See accompanying condensed notes to the unaudited consolidated financial statements.

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TRI POINTE GROUP, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(unaudited)
(in thousands)

	
								
 	Three Months Ended March 31,	
 	2019	 	2018	
Cash flows from operating activities:	 	 	 	
Net income	$	71		 	$	42,880		
Adjustments to reconcile net income to net cash (used in) provided by operating activities:	 	 	 	
Depreciation and amortization	5,085		 	5,488		
Equity in income of unconsolidated entities, net	(750	)	 	(534	)	
Deferred income taxes, net	7		 	5,024		
Amortization of stock-based compensation	3,435		 	3,470		
Charges for impairments and lot option abandonments	5,202		 	248		
Changes in assets and liabilities:	 	 	 	
Real estate inventories	(29,695	)	 	(87,107	)	
Receivables	(6,642	)	 	70,351		
Other assets	(5,476	)	 	2,308		
Accounts payable	(14,708	)	 	3,379		
Accrued expenses and other liabilities	(73,446	)	 	2,165		
Returns on investments in unconsolidated entities, net	1,992		 	2,214		
Net cash (used in) provided by operating activities	(114,925	)	 	49,886		
Cash flows from investing activities:	 	 	 	
Purchases of property and equipment	(7,224	)	 	(2,170	)	
Proceeds from sale of property and equipment	7		 	—		
Investments in unconsolidated entities	(231	)	 	(947	)	
Net cash used in investing activities	(7,448	)	 	(3,117	)	
Cash flows from financing activities:	 	 	 	
Repayment of debt	(10	)	 	—		
Debt issuance costs	(3,124	)	 	—		
Distributions to noncontrolling interests	—		 	(1	)	
Proceeds from issuance of common stock under share-based awards	198		 	975		
Minimum tax withholding paid on behalf of employees for share-based awards	(3,605	)	 	(6,049	)	
Net cash used in financing activities	(6,541	)	 	(5,075	)	
Net (decrease) increase in cash and cash equivalents	(128,914	)	 	41,694		
Cash and cash equivalents–beginning of period	277,696		 	282,914		
Cash and cash equivalents–end of period	$	148,782		 	$	324,608		
 
See accompanying condensed notes to the unaudited consolidated financial statements.

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TRI POINTE GROUP, INC.
CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(unaudited)

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

Organization
TRI Pointe is engaged in the design, construction and sale of innovative single-family attached and detached homes through its portfolio of six quality brands across ten states, including Maracay in Arizona, Pardee Homes in California and Nevada, Quadrant Homes in Washington, Trendmaker Homes in Texas, TRI Pointe Homes in California, Colorado and 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, 2018 . 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 ended March 31, 2019 are not necessarily indicative of the results to be expected for the full year ending December 31, 2019 due to seasonal variations and other factors.
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 March 31, 2019 and December 31, 2018 represent the outside owners’ interests in the Company’s consolidated 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 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.
Revenue Recognition
We recognize revenue in accordance with Accounting Standards Update 2014-09, Revenue from Contracts with Customers (Codified as “ASC 606”). Under ASC 606, we apply the following 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 Company satisfies a performance obligation.
Home sales revenue
We generate the 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 home is transferred to the homebuyer at the home closing date. Our performance obligation to deliver the agreed-upon home is generally satisfied in less than one year from the 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.
Land and lot sales revenue
Historically, we have generated land and lot sales revenue from a small number of transactions, although in some years we have realized a significant amount of revenue and gross margin. We do not expect our future land and lot sales revenue to

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be material, but we still consider these sales to be an ordinary part of our business, thus meeting the definition of contracts with customers. Similar to our home sales, revenue from land and lot 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 other homebuilding operations revenue relates to a ground lease at our Quadrant Homes reporting segment. We are responsible for making lease payments to the land owner, and we collect sublease payments from the 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 this ground lease.
Financial services revenues
TRI Pointe Solutions is a reportable segment and is comprised of our TRI Pointe Connect mortgage financing operations, TRI Pointe Assurance title 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 statements of operations.
Title services operations
TRI Pointe Assurance provides title examinations for our homebuyers in Texas, Maryland 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. At the time of the consummation of the home sales transactions, we recognize a percentage of revenue captured by First American Title Insurance Company. 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.
Recently Issued Accounting Standards Not Yet Adopted
In January 2017, the FASB issued Accounting Standards Update No. 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 the adoption of ASU 2017-04 to have a material impact on our financial statements.

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Adoption of New Accounting Standards
In February 2016, the FASB issued Accounting Standards Update No. 2016-02, Leases (Codified as “ASC 842”), which requires an entity to recognize a lease right-of-use asset and lease liability on the balance sheet for the rights and obligations created by leases with durations of greater than 12 months. Right-of-use lease assets represent our right to use the underlying asset for the lease term and the lease obligation represents our commitment to make the lease payments arising from the lease. The guidance also requires more disclosures about leases in the notes to financial statements. We adopted ASC 842 on January 1, 2019, using a modified retrospective approach resulting in the recognition of a cumulative effect adjustment to the opening balance sheet of $57.4 million , which included a lease right-of-use asset offset by a lease liability on our consolidated balance sheet. No prior period adjustment was recorded. Additionally, we have elected the transition package of three practical expedients permitted under ASC 842, which among other things, allows us to retain the current operating classification for all of our existing leases prior the effective adoption date. For further details on the adoption of ASC 842, see Note 13, Commitments and Contingencies.

		
2.	Segment Information	
We operate two principal businesses: homebuilding and financial services.
Our homebuilding operations consist of six 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 these factors, our homebuilding operations are comprised of the following six reportable segments: Maracay, 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, Colorado and the Carolinas; and Winchester Homes, consisting of operations in Maryland and Virginia.
Our TRI Pointe Solutions financial services operation is a reportable segment and is comprised of our TRI Pointe Connect mortgage financing operations, our TRI Pointe Assurance title services operations, and our TRI Pointe Advantage property and casualty insurance agency operations. For further details, see Note 1, Organization, Basis of Presentation and 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 March 31,	
 	2019	 	2018	
Revenues	 	 	 	
Maracay	$	39,561		 	$	58,455		
Pardee Homes	134,863		 	180,470		
Quadrant Homes	43,871		 	61,903		
Trendmaker Homes	70,821		 	41,408		
TRI Pointe Homes	171,791		 	190,420		
Winchester Homes	33,423		 	50,737		
Total homebuilding revenues	494,330		 	583,393		
Financial services	302		 	283		
Total	$	494,632		 	$	583,676		
 	 	 	 	
Income (loss) before income taxes	 	 	 	
Maracay	$	1,190		 	$	4,391		
Pardee Homes	(791	)	 	39,191		
Quadrant Homes	(2,639	)	 	8,140		
Trendmaker Homes	(1,598	)	 	370		
TRI Pointe Homes	10,209		 	14,531		
Winchester Homes	(766	)	 	1,607		
Corporate	(6,266	)	 	(11,838	)	
Total homebuilding (loss) income before income taxes	(661	)	 	56,392		
Financial services	756		 	1,148		
Total	$	95		 	$	57,540		

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

								
 	March 31, 2019	 	December 31, 2018	
Real estate inventories	 	 	 	
Maracay	$	320,459		 	$	293,217		
Pardee Homes	1,300,853		 	1,286,877		
Quadrant Homes	273,621		 	279,486		
Trendmaker Homes	284,734		 	271,061		
TRI Pointe Homes	780,568		 	812,799		
Winchester Homes	282,443		 	272,619		
Total	$	3,242,678		 	$	3,216,059		
 	 	 	 	
Total assets	 	 	 	
Maracay	$	352,968		 	$	318,703		
Pardee Homes	1,404,466		 	1,391,503		
Quadrant Homes	346,697		 	313,947		
Trendmaker Homes	315,713		 	325,943		
TRI Pointe Homes	966,252		 	987,610		
Winchester Homes	312,636		 	298,602		
Corporate	136,689		 	228,010		
Total homebuilding assets	3,835,421		 	3,864,318		
Financial services	20,474		 	19,885		
Total	$	3,855,895		 	$	3,884,203		

		
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 March 31,	
 	2019	 	2018	
Numerator:	 		 	 		
Net income	$	71		 	$	42,880		
Denominator:	 		 	 		
Basic weighted-average shares outstanding	141,865,270		 	151,464,547		
Effect of dilutive shares:	 		 	 	
Stock options and unvested restricted stock units	524,893		 	1,311,304		
Diluted weighted-average shares outstanding	142,390,163		 	152,775,851		
Earnings per share	 		 	 		
Basic	$	0.00		 	$	0.28		
Diluted	$	0.00		 	$	0.28		
Antidilutive stock options and unvested restricted stock units not included in diluted earnings per share	2,864,509		 	1,248,483		

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4.	Receivables	
Receivables consisted of the following (in thousands):

								
 	March 31, 2019	 	December 31, 2018	
Escrow proceeds and other accounts receivable, net	$	20,715		 	$	13,995		
Warranty insurance receivable (Note 13)	37,519		 	37,597		
Total receivables	$	58,234		 	$	51,592		

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 $456,000 and $667,000 as of March 31, 2019 and December 31, 2018 , respectively.

		
5.	Real Estate Inventories	
Real estate inventories consisted of the following (in thousands):

								
 	March 31, 2019	 	December 31, 2018	
Real estate inventories owned:	 	 	 	
Homes completed or under construction	$	1,037,271		 	$	959,911		
Land under development	1,668,075		 	1,743,537		
Land held for future development	203,476		 	201,874		
Model homes	258,545		 	238,828		
Total real estate inventories owned	3,167,367		 	3,144,150		
Real estate inventories not owned:	 	 	 	
Land purchase and land option deposits	75,311		 	71,909		
Total real estate inventories not owned	75,311		 	71,909		
Total real estate inventories	$	3,242,678		 	$	3,216,059		
 
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 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.
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 .
Interest incurred, capitalized and expensed were as follows (in thousands):

								
 	Three Months Ended March 31,	
 	2019	 	2018	
Interest incurred	$	23,373		 	$	21,520		
Interest capitalized	(23,373	)	 	(21,520	)	
Interest expensed	$	—		 	$	—		
Capitalized interest in beginning inventory	$	184,400		 	$	176,348		
Interest capitalized as a cost of inventory	23,373		 	21,520		
Interest previously capitalized as a cost of
inventory, included in cost of sales	(14,333	)	 	(14,242	)	
Capitalized interest in ending inventory	$	193,440		 	$	183,626		

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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 and 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 March 31,	
 	2019	 	2018	
Real estate inventory impairments	$	—		 	$	—		
Land and lot option abandonments and pre-acquisition charges	5,202		 	248		
Total	$	5,202		 	$	248		
 
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. No real estate inventory impairments were recorded for the three-month periods ended March 31, 2019 or 2018, respectively.
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	
As of March 31, 2019 , we held equity investments in four active homebuilding partnerships or limited liability companies and one financial services limited liability company. Our participation in these 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.
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.

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Assets and liabilities of unconsolidated entities (in thousands):

	
								
 	March 31, 2019	 	December 31, 2018	
Assets	 	 	 	
Cash	$	10,261		 	$	13,337		
Receivables	3,358		 	4,674		
Real estate inventories	100,986		 	99,864		
Other assets	746		 	811		
Total assets	$	115,351		 	$	118,686		
Liabilities and equity	 	 	 	
Accounts payable and other liabilities	$	6,930		 	$	11,631		
Company’s equity	4,191		 	5,410		
Outside interests’ equity	104,230		 	101,645		
Total liabilities and equity	$	115,351		 	$	118,686		
 
Results of operations from unconsolidated entities (in thousands):

								
 	Three Months Ended March 31,	
 	2019	 	2018	
Net sales	$	4,111		 	$	4,390		
Other operating expense	(2,752	)	 	(3,287	)	
Other income	8		 	63		
Net income	$	1,367		 	$	1,166		
Company’s equity in income of unconsolidated entities	$	750		 	$	534		

		
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. These deposits are recorded as land purchase and land option deposits under real estate inventories not owned on the accompanying consolidated balance sheets.
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 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.

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

																								
 	March 31, 2019	 	December 31, 2018	
 	Deposits	 	Remaining
Purchase
Price	 	Consolidated
Inventory
Held by VIEs	 	Deposits	 	Remaining
Purchase
Price	 	Consolidated
Inventory
Held by VIEs	
Consolidated VIEs	$	—		 	$	—		 	$	—		 	$	—		 	$	—		 	$	—		
Unconsolidated VIEs	49,589		 	390,757		 	N/A		 	41,198		 	433,720		 	N/A		
Other land option agreements	25,722		 	271,299		 	N/A		 	30,711		 	307,498		 	N/A		
Total	$	75,311		 	$	662,056		 	$	—		 	$	71,909		 	$	741,218		 	$	—		
 
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 of $7.0 million and $7.5 million as of March 31, 2019 and December 31, 2018 , respectively. These pre-acquisition costs are included in real estate inventories as land under development on our consolidated balance sheets.  

		
8.	Goodwill and Other Intangible Assets	
As of March 31, 2019 and December 31, 2018 , $139.3 million of goodwill is included in goodwill and other intangible assets, net on each of the consolidated balance sheets. The Company’s goodwill balance is included in the TRI Pointe Homes reporting segment in Note 2, Segment Information . 
We have two intangible assets as of March 31, 2019 , comprised of an existing trade name from the acquisition of Maracay 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 in 2014, which has an indefinite useful life.
Goodwill and other intangible assets consisted of the following (in thousands):

																								
 	March 31, 2019	 	December 31, 2018	
 	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		
Trade names	27,979		 	(6,990	)	 	20,989		 	27,979		 	(6,856	)	 	21,123		
Total	$	167,283		 	$	(6,990	)	 	$	160,293		 	$	167,283		 	$	(6,856	)	 	$	160,427		
 
The remaining useful life of our amortizing intangible asset related to the Maracay trade name was 6.9 and 7.2 years as of March 31, 2019 and December 31, 2018 , respectively. The net carrying amount related to this intangible asset was $3.7 million and $3.8 million as of March 31, 2019 and December 31, 2018 , respectively. Amortization expense related to this intangible asset was $134,000 for each of the three-month periods ended March 31, 2019 and 2018 , 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 are evaluated for impairment on an annual basis or more frequently if indicators of impairment exist.
Expected amortization of our intangible asset related to Maracay for the remainder of 2019 , the next four years and thereafter is (in thousands):

				
Remainder of 2019	$	400		
2020	534		
2021	534		
2022	534		
2023	534		
Thereafter	1,153		
Total	$	3,689		

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9.	Other Assets	
Other assets consisted of the following (in thousands):

								
 	March 31, 2019	 	December 31, 2018	
Prepaid expenses	$	30,414		 	$	31,983		
Refundable fees and other deposits	18,071		 	12,376		
Development rights, held for future use or sale	2,288		 	845		
Deferred loan costs–loans payable	5,298		 	2,424		
Operating properties and equipment, net	56,462		 	54,198		
Lease right-of-use assets	58,088		 	—		
Other	3,335		 	3,425		
Total	$	173,956		 	$	105,251		

Lease right-of-use assets was impacted by our one-time cumulative adjustment resulting from the adoption of ASC 842. As a result of our cumulative adjustment, the December 31, 2018 balance increased by $57.4 million on January 1, 2019. For further details, see Note 1, Organization, Basis of Presentation and Summary of Significant Accounting Policies.

		
10.	Accrued Expenses and Other Liabilities	
Accrued expenses and other liabilities consisted of the following (in thousands):

								
 	March 31, 2019	 	December 31, 2018	
Accrued payroll and related costs	$	17,458		 	$	44,010		
Warranty reserves   (Note 13)	70,947		 	71,836		
Estimated cost for completion of real estate inventories	77,533		 	114,928		
Customer deposits	21,051		 	17,464		
Income tax liability to Weyerhaeuser	577		 	6,577		
Accrued income taxes payable	10,853		 	8,335		
Liability for uncertain tax positions (Note 15)	972		 	972		
Accrued interest	24,345		 	12,572		
Other tax liability	21,171		 	21,892		
Lease liabilities	61,284		 	3,196		
Other	13,600		 	33,367		
Total	$	319,791		 	$	335,149		

Lease liabilities was impacted by our one-time cumulative adjustment resulting from the adoption of ASC 842. As a result of our cumulative adjustment, the December 31, 2018 balance increased by $57.4 million on January 1, 2019. For further details, see Note 1, Organization, Basis of Presentation and Summary of Significant Accounting Policies.

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11.	Senior Notes and Loans Payable	
Senior Notes
The Company’s outstanding senior notes (together, the “Senior Notes”) consisted of the following (in thousands):

	
								
 	March 31, 2019	 	December 31, 2018	
4.375% Senior Notes due June 15, 2019	$	381,885		 	$	381,895		
4.875% Senior Notes due July 1, 2021	300,000		 	300,000		
5.875% Senior Notes due June 15, 2024	450,000		 	450,000		
5.250% Senior Notes due June 1, 2027	300,000		 	300,000		
Discount and deferred loan costs	(19,422	)	 	(21,091	)	
Total	$	1,412,463		 	$	1,410,804		
 
In June 2017, TRI Pointe Group issued $300 million aggregate principal amount of 5.250% Senior Notes due 2027 (the “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.
In May 2016, TRI Pointe Group issued $300 million aggregate principal amount of 4.875% Senior Notes due 2021 (the “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.
TRI Pointe Group and its wholly owned subsidiary TRI Pointe Homes, Inc. (“TRI Pointe Homes”) are co-issuers of the 4.375% Senior Notes due 2019 (the “2019 Notes”) and the 5.875% Senior Notes due 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 of the 2019 Notes and the 2024 Notes were $861.3 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 payable semiannually in arrears on June 15 and December 15. During the three months ended March 31, 2019, we repurchased and cancelled an aggregate principal amount of $10,000 of the 2019 Notes. During the year ended December 31, 2018, we repurchased and cancelled an aggregate principal amount of $68.1 million of the 2019 Notes.
As of March 31, 2019 , there was $13.4 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 $23.3 million and $11.5 million as of March 31, 2019 and December 31, 2018 , respectively.
Loans Payable
On March 29, 2019, the Company 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. The Company plans to draw $250 million from the Term Facility in June of 2019 in connection with the maturity of the 2019 Notes. The Company may increase the Credit Facility to not more than $1 billion in the aggregate, at its request, upon satisfaction of specified conditions. The Revolving Facility contains a sublimit of $75 million for letters of credit. The Company may borrow under the Revolving Facility in the ordinary course of business to fund its operations, including its land acquisition, land development and homebuilding activities. Borrowings under the Revolving Facility will be governed by, among other things, a borrowing base. 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 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 March 31, 2019 , we had no outstanding debt under the Credit Facility and $818.8 million of availability after considering the borrowing base provisions and outstanding letters of credit.  As of March 31, 2019 , there was $5.3 million of capitalized debt financing costs, included in other assets on our consolidated balance sheet, related to the Credit Facility that

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will amortize over the remaining term of the Credit Facility.  Accrued interest, including loan commitment fees, related to the Credit Facility was $432,000 and $402,000 as of March 31, 2019 and December 31, 2018 , respectively.
At March 31, 2019 and December 31, 2018 , we had outstanding letters of credit of $31.2 million and $31.8 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.
Interest Incurred
During the three months ended March 31, 2019 and 2018 , the Company incurred interest of $23.4 million and $21.5 million , respectively, related to all debt during the period.  Included in interest incurred was amortization of deferred financing and Senior Note discount costs of  $1.9 million and $2.0 million  for the three months ended  March 31, 2019  and  2018 , respectively. Accrued interest related to all outstanding debt at March 31, 2019 and December 31, 2018 was $24.3 million and $12.6 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 those relating to consolidated tangible net worth, leverage, liquidity or interest coverage, 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 March 31, 2019 and December 31, 2018 .

		
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	
		
•	Level 3—Valuations derived from techniques where one or more significant inputs or significant value drivers are unobservable in active markets at measurement date	
Fair Value of Financial Instruments
A summary of assets and liabilities at March 31, 2019 and December 31, 2018 , related to our financial instruments, measured at fair value on a recurring basis, is set forth below (in thousands):

																		
 	 	 	March 31, 2019	 	December 31, 2018	
 	Hierarchy	 	Book Value	 	Fair Value	 	Book Value	 	Fair Value	
Senior Notes (1)	Level 2	 	$	1,425,892		 	$	1,395,794		 	$	1,425,397		 	$	1,308,826		
  __________
		
(1)  	The book value of the Senior Notes is net of discounts, excluding deferred loan costs of $13.4 million and $14.6 million as of March 31, 2019 and December 31, 2018 , respectively. The estimated fair value of the Senior Notes at March 31, 2019 and December 31, 2018 is based on quoted market prices.	

At March 31, 2019 and December 31, 2018 , the carrying value of cash and cash equivalents and receivables approximated fair value due to their short-term nature and variable interest rate terms.

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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. No carrying values were adjusted to fair value for the three months ended March 31, 2019 or the year ended December 31, 2018.

		
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 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 no legal reserve as of March 31, 2019 . As of December 31, 2018 , we had a $17.5 million legal reserve related to a settlement in connection with a previously disclosed lawsuit involving a land sale that occurred in 1987. This settlement was paid on February 4, 2019.
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. 
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.

- 19 -

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 $37.5 million and $37.6 million as of March 31, 2019 and December 31, 2018 , respectively. Warranty insurance receivables are recorded in receivables on the accompanying consolidated balance sheets.
Warranty reserve activity consisted of the following (in thousands):

	
								
 	Three Months Ended March 31,	
 	2019	 	2018	
Warranty reserves, beginning of period	$	71,836		 	$	69,373		
Warranty reserves accrued	4,270		 	4,746		
Warranty expenditures	(5,159	)	 	(3,637	)	
Warranty reserves, end of period	$	70,947		 	$	70,482		
 
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 March 31, 2019 and December 31, 2018 , the Company had outstanding surety bonds totaling $653.9 million and $685.7 million , respectively. As of March 31, 2019 and December 31, 2018 , our estimated cost to complete obligations related to these surety bonds was $415.2 million and $423.4 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 contract. Our lease population is fully comprised of operating leases, which are 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 two 55 -year ground leases of commercial property that provided for three renewal options of ten years each and one 45 -year renewal option.  We exercised the three ten year extensions on one of these ground leases extending 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 land owner, 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 land owner, however, we have guaranteed the performance of the buyers/lessees. See below for additional information on leases (dollars in thousands):

- 20 -

	
				
 	Three Months Ended March 31, 2019	
Lease cost	 	
Operating lease cost (included in SG&A expense)	$	2,044		
Ground lease cost (included in other operations expense)	590		
Sublease income, ground leases (included in other operations revenue)	(598	)	
Net lease cost	$	2,036		
 	 	
Other information	 	
Cash paid for amounts included in the measurement of lease liabilities:	 	
Operating lease cash flows (included in operating cash flows)	$	1,609		
Ground lease cash flows (included in operating cash flows)	$	608		
Right-of-use assets obtained in exchange for new operating lease liabilities	$	1,707		

			
 	March 31, 2019	
Weighted-average discount rate:	 	
Operating leases	6.0	%	
Ground leases	10.2	%	
Weighted-average remaining lease term (in years):	 	
Operating leases	6.3		
Ground leases	49.2		
The future minimum lease payments under our operating leases are as follows (in thousands):

								
 	Property, Equipment and Other Leases	 	Ground Leases (1)	
Remaining in 2019	$	6,347		 	$	2,238		
2020	8,322		 	2,984		
2021	7,048		 	2,984		
2022	5,453		 	2,984		
2023	4,349		 	2,984		
Thereafter	8,799		 	84,266		
 	$	40,318		 	$	98,440		
(1)     Ground leases are fully subleased through 2041, representing $67.4 million of the $98.4 million future ground lease obligations.

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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 March 31, 2019 , there were 5,886,605 shares available for future grant under the 2013 Incentive Plan.
The following table presents compensation expense recognized related to all stock-based awards (in thousands):

	
								
 	Three Months Ended March 31,	
 	2019	 	2018	
Total stock-based compensation	$	3,435		 	$	3,470		
 
Stock-based compensation is charged to general and administrative expense on the accompanying consolidated statements of operations.  As of March 31, 2019 , total unrecognized stock-based compensation related to all stock-based awards was $29.6 million and the weighted average term over which the expense was expected to be recognized was 2.3 years .
Summary of Stock Option Activity
The following table presents a summary of stock option awards for the three months ended March 31, 2019 :

														
 	Options	 	Weighted
Average
Exercise
Price
Per Share	 	Weighted
Average
Remaining
Contractual
Life	 	Aggregate
Intrinsic
Value
(in thousands)	
Options outstanding at December 31, 2018	953,905		 	$	14.58		 	4.2		 	$	296		
Granted	—		 	—		 	—		 	—		
Exercised	(32,486	)	 	$	6.50		 	—		 	—		
Forfeited	—		 	$	—		 	—		 	—		
Options outstanding at March 31, 2019	921,419		 	$	14.87		 	4.1		 	$	350		
Options exercisable at March 31, 2019	921,419		 	$	14.87		 	4.1		 	$	350		
 
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 RSUs for the three months ended March 31, 2019 :

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 	Restricted
Stock
Units	 	Weighted
Average
Grant Date
Fair Value
Per Share	 	Aggregate
Intrinsic
Value
(in thousands)	
Nonvested RSUs at December 31, 2018	3,341,848		 	$	11.05		 	$	36,526		
Granted	1,593,747		 	$	12.10		 	—		
Vested	(795,528	)	 	$	12.70		 	—		
Forfeited	(745,756	)	 	$	5.20		 	—		
Nonvested RSUs at March 31, 2019	3,394,311		 	$	12.45		 	$	42,904		
On March 11, 2019 and February 28, 2019, the Company granted an aggregate of 3,025 and 990,723 , respectively, of time-vested 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 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 February 28, 2019, the Company granted  247,619 , 238,095 and 114,285 performance-based RSUs to the Company’s Chief Executive Officer, President, and Chief Financial Officer, respectively. These performance-based RSUs are allocated to two separate performance metrics, as follows: (i) thirty percent to total stockholder return (“TSR”), with vesting based on the Company’s TSR relative to its peer-group homebuilders; and (ii) seventy percent 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, 2019 to December 31, 2021. The fair value of the performance-based RSUs related to the TSR metric was determined to be $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  $12.60  per share, which was the closing stock price on the date of grant. Each award will be expensed over the requisite service period.

RSUs that vested, as reflected in the table above, during the three months ended March 31, 2019 included time-based RSUs that were previously granted. RSUs that were forfeited, as reflected in the table above, during the three months ended March 31, 2019 included performance-based RSUs and time-based RSUs that were forfeited for no consideration.

On April 30, 2018, the Company granted an aggregate of 40,910 RSUs to the non-employee members of its board of directors. On July 23, 2018, the Company granted 6,677 RSUs to a non-employee member of its board of directors in connection with such individual's appointment to the board of directors. These RSUs vest in their entirety on the day immediately prior to the Company's 2019 Annual Meeting of Stockholders. The fair value of each RSU granted on April 30, 2018 and July 23, 2018 was measured using a price of $17.11 and $16.37 per share, respectively, 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 May 7, 2018 and February 22, 2018, the Company granted an aggregate of 4,258 and 633,107 , respectively, of time-vested 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 May 7, 2018 and February 22, 2018 was measured using a price of $17.61 and $16.94 per share, respectively, 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 February 22, 2018, the Company granted  184,179 , 177,095 , and 85,005 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: (i) TSR, with vesting based on the Company’s TSR relative to its peer-group homebuilders; and (ii) 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, 2018 to December 31, 2020. The fair value of the performance-based RSUs related to the TSR metric was determined to be $10.97 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  $16.94  per share, which was the closing stock price on the date of grant. Each award will be expensed over the requisite service 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.

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15.	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 $67.8 million as of both March 31, 2019 and December 31, 2018 .  We had a valuation allowance related to those net deferred tax assets of $3.4 million as of both March 31, 2019 and December 31, 2018 .  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 future operating results and the estimates utilized in the determination of the valuation allowance, could result in changes in the 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 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 deferred tax assets.
TRI Pointe has certain liabilities to Weyerhaeuser Company (“Weyerhaeuser”) related to a tax sharing agreement.  As of March 31, 2019 and December 31, 2018 , we had an income tax liability to Weyerhaeuser of $577,000 and $6.6 million , respectively. The income tax liability to Weyerhaeuser is recorded in accrued expenses and other liabilities on the accompanying consolidated balance sheets. During the three months ended March 31, 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 $24,000 and $14.7 million for the three months ended March 31, 2019 and 2018 , respectively. The Company classifies any interest and penalties related to income taxes assessed by jurisdiction as part of income tax expense.  The Company had $1.0 million of uncertain tax positions recorded as of both March 31, 2019 and December 31, 2018 .  The Company has not been assessed interest or penalties by any major tax jurisdictions related to prior years. 

16.	Related Party Transactions	
We had no related party transactions for the three months ended March 31, 2019 and 2018.

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17.	Supplemental Disclosure to Consolidated Statements of Cash Flows	
The following are supplemental disclosures to the consolidated statements of cash flows (in thousands):

								
 	Three Months Ended March 31,	
 	2019	 	2018	
Supplemental disclosure of cash flow information:	 	 	 	
Interest paid (capitalized), net	$	(13,697	)	 	$	(13,858	)	
Income taxes paid (refunded), net	$	(2,538	)	 	$	30		
Supplemental disclosures of noncash activities:	 	 	 	
Amortization of senior note discount capitalized to real estate inventory	$	505		 	$	531		
Amortization of deferred loan costs capitalized to real estate inventory	$	1,415		 	$	1,492		
Increase in other assets related to adoption of ASC 606	$	—		 	$	39,534		

18.	Supplemental Guarantor Information	
2021 Notes and 2027 Notes
On May 26, 2016, TRI Pointe Group issued the 2021 Notes. On June 5, 2017, TRI Pointe Group issued the 2027 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 Notes. Each Guarantor of the 2021 Notes and the 2027 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 and the 2027 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 and the 2027 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 or the 2027 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

- 25 -

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 March 31, 2019 and December 31, 2018 , condensed consolidating statements of operations for the three months ended March 31, 2019 and 2018 and condensed consolidating statement of cash flows for the three months ended March 31, 2019 and 2018 .  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 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”.
Condensed Consolidating Balance Sheet (in thousands):

	
																
 	March 31, 2019	
 	Issuer	 	Guarantor
Subsidiaries	 	Consolidating
Adjustments	 	Consolidated
TRI Pointe
Group, Inc.	
Assets	 	 	 	 	 	 	 	
Cash and cash equivalents	$	55,854		 	$	92,928		 	$	—		 	$	148,782		
Receivables	20,616		 	37,618		 	—		 	58,234		
Intercompany receivables	858,286		 	—		 	(858,286	)	 	—		
Real estate inventories	780,568		 	2,462,110		 	—		 	3,242,678		
Investments in unconsolidated entities	—		 	4,191		 	—		 	4,191		
Goodwill and other intangible assets, net	156,603		 	3,690		 	—		 	160,293		
Investments in subsidiaries	1,668,464		 	—		 	(1,668,464	)	 	—		
Deferred tax assets, net	14,822		 	52,939		 	—		 	67,761		
Other assets	20,894		 	153,062		 	—		 	173,956		
Total assets	$	3,576,107		 	$	2,806,538		 	$	(2,526,750	)	 	$	3,855,895		
 	 	 	 	 	 	 	 	
Liabilities	 	 	 	 	 	 	 	
Accounts payable	$	11,973		 	$	54,632		 	$	—		 	$	66,605		
Intercompany payables	—		 	858,286		 	(858,286	)	 	—		
Accrued expenses and other liabilities	94,648		 	225,143		 	—		 	319,791		
Senior notes	1,412,463		 	—		 	—		 	1,412,463		
Total liabilities	1,519,084		 	1,138,061		 	(858,286	)	 	1,798,859		
 	 	 	 	 	 	 	 	
Equity	 	 	 	 	 	 	 	
Total stockholders’ equity	2,057,023		 	1,668,464		 	(1,668,464	)	 	2,057,023		
Noncontrolling interests	—		 	13		 	—		 	13		
Total equity	2,057,023		 	1,668,477		 	(1,668,464	)	 	2,057,036		
Total liabilities and equity	$	3,576,107		 	$	2,806,538		 	$	(2,526,750	)	 	$	3,855,895		

- 26 -

Condensed Consolidating Balance Sheet (in thousands):

	
																
 	December 31, 2018	
 	Issuer	 	Guarantor
Subsidiaries	 	Consolidating
Adjustments	 	Consolidated
TRI Pointe
Group, Inc.	
Assets	 	 	 	 	 	 	 	
Cash and cash equivalents	$	148,129		 	$	129,567		 	$	—		 	$	277,696		
Receivables	16,589		 	35,003		 	—		 	51,592		
Intercompany receivables	758,501		 	—		 	(758,501	)	 	—		
Real estate inventories	812,799		 	2,403,260		 	—		 	3,216,059		
Investments in unconsolidated entities	—		 	5,410		 	—		 	5,410		
Goodwill and other intangible assets, net	156,604		 	3,823		 	—		 	160,427		
Investments in subsidiaries	1,672,635		 	—		 	(1,672,635	)	 	—		
Deferred tax assets, net	14,822		 	52,946		 	—		 	67,768		
Other assets	12,984		 	92,267		 	—		 	105,251		
Total assets	$	3,593,063		 	$	2,722,276		 	$	(2,431,136	)	 	$	3,884,203		
 	 	 	 	 	 	 	 	
Liabilities	 	 	 	 	 	 	 	
Accounts payable	$	13,433		 	$	67,880		 	$	—		 	$	81,313		
Intercompany payables	—		 	758,501		 	(758,501	)	 	—		
Accrued expenses and other liabilities	111,902		 	223,247		 	—		 	335,149		
Senior notes	1,410,804		 	—		 	—		 	1,410,804		
Total liabilities	1,536,139		 	1,049,628		 	(758,501	)	 	1,827,266		
 	 	 	 	 	 	 	 	
Equity	 	 	 	 	 	 	 	
Total stockholders’ equity	2,056,924		 	1,672,635		 	(1,672,635	)	 	2,056,924		
Noncontrolling interests	—		 	13		 	—		 	13		
Total equity	2,056,924		 	1,672,648		 	(1,672,635	)	 	2,056,937		
Total liabilities and equity	$	3,593,063		 	$	2,722,276		 	$	(2,431,136	)	 	$	3,884,203		

- 27 -

Condensed Consolidating Statement of Operations (in thousands):

	
																
 	Three Months Ended March 31, 2019	
 	Issuer	 	Guarantor
Subsidiaries	 	Consolidating
Adjustments	 	Consolidated
TRI Pointe
Group, Inc.	
Homebuilding:	 	 	 	 	 	 	 	
Home sales revenue	$	171,791		 	$	320,912		 	$	—		 	$	492,703		
Land and lot sales revenue	—		 	1,029		 	—		 	1,029		
Other operations revenue	—		 	598		 	—		 	598		
Total revenues	171,791		 	322,539		 	—		 	494,330		
Cost of home sales	145,075		 	276,461		 	—		 	421,536		
Cost of land and lot sales	—		 	1,495		 	—		 	1,495		
Other operations expense	—		 	590		 	—		 	590		
Sales and marketing	9,299		 	29,690		 	—		 	38,989		
General and administrative	19,479		 	19,118		 	—		 	38,597		
Homebuilding loss from operations	(2,062	)	 	(4,815	)	 	—		 	(6,877	)	
Equity in loss of unconsolidated entities	—		 	(25	)	 	—		 	(25	)	
Other income, net	6,140		 	101		 	—		 	6,241		
Homebuilding income (loss) before income taxes	4,078		 	(4,739	)	 	—		 	(661	)	
Financial Services:	 	 	 	 	 	 	 	
Revenues	—		 	302		 	—		 	302		
Expenses	—		 	321		 	—		 	321		
Equity in income of unconsolidated entities	—		 	775		 	—		 	775		
Financial services income before income taxes	—		 	756		 	—		 	756		
Income (loss) before income taxes	4,078		 	(3,983	)	 	—		 	95		
Equity of net (loss) of subsidiaries	(4,007	)	 	—		 	4,007		 	—		
Provision for income taxes	—		 	(24	)	 	—		 	(24	)	
Net income (loss)	$	71		 	$	(4,007	)	 	$	4,007		 	$	71		

- 28 -

 
Condensed Consolidating Statement of Operations (in thousands):

	
																
 	Three Months Ended March 31, 2018	
 	Issuer	 	Guarantor
Subsidiaries	 	Consolidating
Adjustments	 	Consolidated
TRI Pointe
Group, Inc.	
Homebuilding:	 	 	 	 	 	 	 	
Home sales revenue	$	190,420		 	$	392,152		 	$	—		 	$	582,572		
Land and lot sales revenue	—		 	223		 	—		 	223		
Other operations revenue	—		 	598		 	—		 	598		
Total revenues	190,420		 	392,973		 	—		 	583,393		
Cost of home sales	159,055		 	291,447		 	—		 	450,502		
Cost of land and lot sales	—		 	503		 	—		 	503		
Other operations expense	—		 	602		 	—		 	602		
Sales and marketing	10,517		 	27,766		 	—		 	38,283		
General and administrative	18,159		 	18,655		 	—		 	36,814		
Homebuilding income from operations	2,689		 	54,000		 	—		 	56,689		
Equity in loss of unconsolidated entities	—		 	(468	)	 	—		 	(468	)	
Other income, net	139		 	32		 	—		 	171		
Homebuilding income before income taxes	2,828		 	53,564		 	—		 	56,392		
Financial Services:	 	 	 	 	 	 	 	
Revenues	—		 	283		 	—		 	283		
Expenses	—		 	137		 	—		 	137		
Equity in income of unconsolidated entities	—		 	1,002		 	—		 	1,002		
Financial services income before income taxes	—		 	1,148		 	—		 	1,148		
Income before income taxes	2,828		 	54,712		 	—		 	57,540		
Equity of net income of subsidiaries	40,052		 	—		 	(40,052	)	 	—		
Provision for income taxes	—		 	(14,660	)	 	—		 	(14,660	)	
Net income	$	42,880		 	$	40,052		 	$	(40,052	)	 	$	42,880		

- 29 -

Condensed Consolidating Statement of Cash Flows (in thousands):

	
																
 	Three Months Ended March 31, 2019	
 	Issuer	 	Guarantor
Subsidiaries	 	Consolidating
Adjustments	 	Consolidated
TRI Pointe
Group, Inc.	
Cash flows from operating activities:	 	 	 	 	 	 	 	
Net cash provided by (used in) operating activities	$	15,054		 	$	(129,979	)	 	$	—		 	$	(114,925	)	
Cash flows from investing activities:	 	 	 	 	 	 	 	
Purchases of property and equipment	(2,065	)	 	(5,159	)	 	—		 	(7,224	)	
Proceeds from sale of property and equipment	—		 	7		 	—		 	7		
Investments in unconsolidated entities	—		 	(231	)	 	—		 	(231	)	
Intercompany	(98,723	)	 	—		 	98,723		 	—		
Net cash (used in) provided by investing activities	(100,788	)	 	(5,383	)	 	98,723		 	(7,448	)	
Cash flows from financing activities:	 	 	 	 	 	 	 	
Repayment of debt	(10	)	 	—		 	—		 	(10	)	
Debt issuance costs	(3,124	)	 	—		 	—		 	(3,124	)	
Proceeds from issuance of common stock under
   share-based awards	198		 	—		 	—		 	198		
Minimum tax withholding paid on behalf of employees for
   restricted stock units	(3,605	)	 	—		 	—		 	(3,605	)	
Intercompany	—		 	98,723		 	(98,723	)	 	—		
Net cash (used in) provided by financing activities	(6,541	)	 	98,723		 	(98,723	)	 	(6,541	)	
Net decrease in cash and cash equivalents	(92,275	)	 	(36,639	)	 	—		 	(128,914	)	
Cash and cash equivalents–beginning of period	148,129		 	129,567		 	—		 	277,696		
Cash and cash equivalents–end of period	$	55,854		 	$	92,928		 	$	—		 	$	148,782		

- 30 -

Condensed Consolidating Statement of Cash Flows (in thousands):

	
																
 	Three Months Ended March 31, 2018	
 	Issuer	 	Guarantor
Subsidiaries	 	Consolidating
Adjustments	 	Consolidated
TRI Pointe
Group, Inc.	
Cash flows from operating activities:	 	 	 	 	 	 	 	
Net cash provided by (used in) operating activities	$	52,793		 	$	(2,907	)	 	$	—		 	$	49,886		
Cash flows from investing activities:	 	 	 	 	 	 	 	
Purchases of property and equipment	(419	)	 	(1,751	)	 	—		 	(2,170	)	
Proceeds from sale of property and equipment	—		 	—		 	—		 	—		
Investments in unconsolidated entities	—		 	(947	)	 	—		 	(947	)	
Intercompany	(18,449	)	 	—		 	18,449		 	—		
Net cash used in investing activities	(18,868	)	 	(2,698	)	 	18,449		 	(3,117	)	
Cash flows from financing activities:	 	 	 	 	 	 	 	
Distributions to noncontrolling interests	—		 	(1	)	 	—		 	(1	)	
Proceeds from issuance of common stock under
   share-based awards	975		 	—		 	—		 	975		
Minimum tax withholding paid on behalf of employees for restricted stock units	(6,049	)	 	—		 	—		 	(6,049	)	
Intercompany	—		 	18,449		 	(18,449	)	 	—		
Net cash (used in) provided by financing activities	(5,074	)	 	18,448		 	(18,449	)	 	(5,075	)	
Net increase in cash and cash equivalents	28,851		 	12,843		 	—		 	41,694		
Cash and cash equivalents–beginning of period	176,684		 	106,230		 	—		 	282,914		
Cash and cash equivalents–end of period	$	205,535		 	$	119,073		 	$	—		 	$	324,608		

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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”). 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–as well as other factors not 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
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 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 – and assumptions that are 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 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;	
		
•	levels of competition;	
		
•	the successful execution of our internal performance plans, including restructuring and cost reduction initiatives;	
		
•	global economic conditions;	
		
•	raw material and labor prices and availability;	
		
•	oil and other energy prices;	
		
•	the effect of weather, including the re-occurrence of drought conditions in California;  	
		
•	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;	
		
•	transportation costs;	
		
•	federal and state tax policies;	
		
•	the effect 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;	
		
•	changes in accounting principles;	

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•	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” included in our Annual Report on Form 10-K for the year ended December 31, 2018 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 SEC, including our Annual Report on Form 10-K for the year ended December 31, 2018 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 in, our common stock.
Overview and Outlook
We are encouraged by the economic conditions experienced in the first quarter of 2019, which resulted in a steady monthly increase in net new home orders during the quarter. We attribute this positive trend to a growing U.S. economy, aided by lower interest rates, strong unemployment metrics, and stable core inflation projected to persist through the remainder of 2019. We feel our industry has favorable long term trends due to favorable demand characteristics from both the millennial and baby boomer demographics that are buffeted by the constraints of supply, labor and the regulatory environment. We expect fiscal and monetary policy to remain favorable to our industry throughout the remainder of 2019. However, the global economy appears to be showing signs of a slowdown that could negatively impact the U.S. economy, and uncertainty in the market can act as a significant headwind to our industry. We remain optimistic as the spring selling season has moved into the second quarter.

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

	
								
 	Three Months Ended March 31,	
 	2019	 	2018	
Homebuilding:	 		 	 		
Home sales revenue	$	492,703		 	$	582,572		
Land and lot sales revenue	1,029		 	223		
Other operations revenue	598		 	598		
Total revenues	494,330		 	583,393		
Cost of home sales	421,536		 	450,502		
Cost of land and lot sales	1,495		 	503		
Other operations expense	590		 	602		
Sales and marketing	38,989		 	38,283		
General and administrative	38,597		 	36,814		
Homebuilding (loss) income from operations	(6,877	)	 	56,689		
Equity in loss of unconsolidated entities	(25	)	 	(468	)	
Other income, net	6,241		 	171		
Homebuilding (loss) income before income taxes	(661	)	 	56,392		
Financial Services:	 	 	 	
Revenues	302		 	283		
Expenses	321		 	137		
Equity in income of unconsolidated entities	775		 	1,002		
Financial services income before income taxes	756		 	1,148		
Income before income taxes	95		 	57,540		
Provision for income taxes	(24	)	 	(14,660	)	
Net income	$	71		 	$	42,880		
Earnings per share	 	 	 		
Basic	$	0.00		 	$	0.28		
Diluted	$	0.00		 	$	0.28		
Three Months Ended March 31, 2019 Compared to Three Months Ended March 31, 2018
Net New Home Orders, Average Selling Communities and Monthly Absorption Rates by Segment

	
																											
 	Three Months Ended March 31, 2019	 	Three Months Ended March 31, 2018	 	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	
Maracay	161		 	11.8		 	4.5		 	153		 	13.2		 	3.9		 	5	 %	 	(11	)%	 	18	 %	
Pardee Homes	433		 	44.5		 	3.2		 	473		 	32.5		 	4.9		 	(8	)%	 	37	 %	 	(33	)%	
Quadrant Homes	75		 	7.2		 	3.5		 	108		 	7.0		 	5.1		 	(31	)%	 	3	 %	 	(32	)%	
Trendmaker Homes	243		 	39.3		 	2.1		 	155		 	29.8		 	1.7		 	57	 %	 	32	 %	 	19	 %	
TRI Pointe Homes	295		 	30.8		 	3.2		 	459		 	33.8		 	4.5		 	(36	)%	 	(9	)%	 	(29	)%	
Winchester Homes	114		 	14.2		 	2.7		 	148		 	13.5		 	3.7		 	(23	)%	 	5	 %	 	(27	)%	
Total	1,321		 	147.8		 	3.0		 	1,496		 	129.8		 	3.8		 	(12	)%	 	14	 %	 	(22	)%	

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Net new home orders for the three months ended March 31, 2019 decreased by 175 orders, or 12%, to 1,321 , compared to 1,496 during the prior-year period.  The decrease in net new home orders was due to a 22% decrease in monthly absorption rate, offset by a 14% increase in average selling communities. The overall decrease in our monthly absorption rate was primarily due to reduced sales in January 2019, as well as our exceptionally strong sales numbers in the first quarter of 2018. Our monthly net new home order rate increased sequentially during the current year period. The increase in average selling communities was due primarily to our acquisition of a Dallas–Fort Worth-based homebuilder in December 2018.
Maracay reported a 5% increase in net new home orders driven by an 18% increase in monthly absorption rate offset by an 11% decrease in average selling communities. The increase in Maracay’s monthly absorption rate to 4.5 for the three months ended March 31, 2019 was driven by strong demand for Maracay’s new community openings during the quarter as well as continued strong market fundamentals. The decrease in average selling communities from the prior-year period was due to the timing of community openings and closings. Pardee Homes reported an 8% decrease in net new home orders driven by a 33% decrease in monthly absorption rate, offset by a 37% increase in average selling communities. Pardee Homes’ monthly absorption rate remained strong at 3.2 homes per community per month, but decreased from a robust 4.9 in the prior-year period. The increase in average selling communities was a result of increased community count in the Los Angeles, Inland Empire and San Diego markets. Net new home orders decreased 31% at Quadrant Homes due to a 32% decrease in monthly absorption rate during the current-year period as compared to the prior-year period. Quadrant Homes’ monthly absorption rate of 3.5 for the three months ended March 31, 2019 was consistent with seasonal expectations but represented a decrease compared to the substantially strong absorptions in the prior-year period. Trendmaker Homes’ net new home orders increased 57% due to a 32% increase in average selling communities and a 19% increase in monthly absorption rate. The increase in average selling communities was largely the result of the acquisition of a Dallas–Fort Worth-based homebuilder in the fourth quarter of 2018. During the three months ended March 31, 2019, Trendmaker Homes’ reported 85 net new home orders from 13.8 average selling communities in Dallas–Fort Worth. The increase in Trendmaker Homes’ monthly absorption rate was due to both the addition of our Dallas–Fort Worth operations as well as a slight improvement in the monthly absorption rate in Houston. TRI Pointe Homes’ net new home orders decreased 36% due to a 29% decrease in its monthly absorption rate and a 9% decrease in average selling communities. The decrease in TRI Pointe Homes’ monthly absorption rate was due both to the unfavorable comparison to the strong demand in the prior-year period discussed above and lower overall demand due to rising interest rates and affordability concerns in certain higher priced Northern and Southern California communities. Winchester Homes reported a 23% decrease in net new home orders as a result of a 27% decrease in our monthly absorption rate, offset by a 5% increase in average selling communities. The decrease in Winchester Homes’ monthly absorption rate was due to slower overall market conditions.
Backlog Units, Dollar Value and Average Sales Price by Segment (dollars in thousands)

																															
 	As of March 31, 2019	 	As of March 31, 2018	 	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	
Maracay	238		 	$	139,862		 	$	588		 	245		 	$	123,617		 	$	505		 	(3	)%	 	13	 %	 	16	 %	
Pardee Homes	593		 	472,729		 	797		 	608		 	408,324		 	672		 	(2	)%	 	16	 %	 	19	 %	
Quadrant Homes	77		 	75,599		 	982		 	169		 	138,025		 	817		 	(54	)%	 	(45	)%	 	20	 %	
Trendmaker Homes	402		 	196,256		 	488		 	244		 	134,632		 	552		 	65	 %	 	46	 %	 	(12	)%	
TRI Pointe Homes	371		 	247,399		 	667		 	667		 	474,240		 	711		 	(44	)%	 	(48	)%	 	(6	)%	
Winchester Homes	161		 	105,993		 	658		 	210		 	130,204		 	620		 	(23	)%	 	(19	)%	 	6	 %	
Total	1,842		 	$	1,237,838		 	$	672		 	2,143		 	$	1,409,042		 	$	658		 	(14	)%	 	(12	)%	 	2	 %	
 
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 cancelled prior to delivery of the home (as a percentage of overall orders) increased to 15% compared to 14% during the prior-year period. The dollar value of backlog was $1.2 billion as of March 31, 2019, a decrease of $171.2 million, or 12%, compared to $1.4 billion as of March 31, 2018.  This decrease was due to a decrease in backlog units of 301, or 14%, to 1,842 as of March 31, 2019, compared to 2,143 as of March 31, 2018, offset by a 2% increase in the average sales price of homes in backlog to $672,000 as of March 31, 2019, compared to $658,000 as of March 31, 2018.

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Maracay’s backlog dollar value increased 13% compared to the prior-year period largely due to a 16% increase in average sales price. The increase in average sales price was due to product mix and increasing prices due to favorable overall market conditions. Pardee Homes’ backlog dollar value increased 16% due to an increase in average sales price of 19%. The increase in average sales price is due to a higher priced mix of homes in backlog in both the San Diego and Las Vegas markets. Quadrant Homes’ backlog dollar value decreased 45% as a result of a 54% decrease in backlog units offset by a 20% increase in average sales price. The decrease in backlog units was a result of the decrease in net new home orders resulting from generally slower year over year market conditions in the Seattle area. The increase in average sales price was related to an increase in the number of homes in backlog from the core Seattle markets of King and Snohomish counties, which tend to have higher price points. Trendmaker Homes’ backlog dollar value increased 46% primarily due to an 65% increase in backlog units. The increase in backlog units resulted primarily from our expansion into Dallas–Fort Worth where we had 167 homes in backlog as of March 31, 2019. TRI Pointe Homes’ backlog dollar value decreased 48% due to a 44% decrease in backlog units and a 6% decrease in average sales price. The decrease in backlog units was due to a decrease in net new home orders in Northern and Southern California as a result of lower demand compared to the prior-year period. Winchester Homes’ backlog dollar value decreased 19% due to a 23% decrease in backlog units offset by a 6% increase in average sales price. The decrease in backlog units is a result of the 23% decrease in net new home orders for the three months ended March 31, 2019 as well as the reduced number of units in backlog as of the beginning of the current-year period as compared to the prior-year period.
New Homes Delivered, Homes Sales Revenue and Average Sales Price by Segment (dollars in thousands)

																															
 	Three Months Ended March 31, 2019	 	Three Months Ended March 31, 2018	 	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	74		 	$	39,561		 	$	535		 	125		 	$	58,455		 	$	468		 	(41	)%	 	(32	)%	 	14	 %	
Pardee Homes	242		 	134,863		 	557		 	274		 	180,470		 	659		 	(12	)%	 	(25	)%	 	(15	)%	
Quadrant Homes	44		 	43,273		 	983		 	83		 	61,305		 	739		 	(47	)%	 	(29	)%	 	33	 %	
Trendmaker Homes	154		 	70,120		 	455		 	84		 	41,185		 	490		 	83	 %	 	70	 %	 	(7	)%	
TRI Pointe Homes	242		 	171,791		 	710		 	269		 	190,420		 	708		 	(10	)%	 	(10	)%	 	—	 %	
Winchester Homes	58		 	33,095		 	571		 	89		 	50,737		 	570		 	(35	)%	 	(35	)%	 	—	 %	
Total	814		 	$	492,703		 	$	605		 	924		 	$	582,572		 	$	630		 	(12	)%	 	(15	)%	 	(4	)%	
 
Home sales revenue decreased $89.9 million, or 15%, to $492.7 million for the three months ended March 31, 2019. The decrease was comprised of (i) $69.4 million related to a decrease of 110 new homes delivered in the three months ended March 31, 2019 compared to the prior-year period, and (ii) $20.5 million related to a decrease of $25,000 in average sales price of homes delivered in the three months ended March 31, 2019 compared to the prior-year period.
Maracay had a 32% decrease in home sales revenue due primarily to a 41% decrease in new homes delivered. The decrease in new home deliveries was due to the decrease in backlog units at the start of the current-year period compared to the prior-year period. Pardee Homes’ home sales revenue decreased 25% due to a 15% decrease in average sales price and a 12% decrease in new homes delivered. The decrease in average sales price was due to a product mix shift that included a lesser proportion of deliveries from our higher priced long-dated California assets in the current-year period. Quadrant Homes’ home sales revenue decreased by 29% due to a 47% decrease in new homes delivered, offset by a 33% increase in average sales price. The decrease in new homes delivered was due to starting the current-year period with a lower number of backlog units compared to the prior-year period. The increase in average sales price was the result of delivering more units in the core Seattle markets of King and Snohomish counties, which tend to have higher price points. Trendmaker Homes’ home sales revenue increased 70% due to an 83% increase in new homes delivered. The increase in new homes delivered was largely due to 53 deliveries from our Dallas–Fort Worth operations, along with higher volume in the Austin market. TRI Pointe Homes had a 10% decrease in home sales revenue due to a 10% decrease in new homes delivered. The decrease in new homes delivered was driven by lower backlog units at the start of the current-year period compared to the prior-year period. Home sales revenue decreased at Winchester Homes by 35% due to a 35% decrease in new homes delivered as a result of lower backlog units at the start of the current-year period compared to the prior-year period.

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Homebuilding Gross Margins (dollars in thousands)

														
 	Three Months Ended March 31,	
 	2019	 	%	 	2018	 	%	
Home sales revenue	$	492,703		 	100.0	%	 	$	582,572		 	100.0	%	
Cost of home sales	421,536		 	85.6	%	 	450,502		 	77.3	%	
Homebuilding gross margin	71,167		 	14.4	%	 	132,070		 	22.7	%	
Add:  interest in cost of home sales	14,191		 	2.9	%	 	14,229		 	2.4	%	
Add:  impairments and lot option abandonments	5,202		 	1.1	%	 	248		 	0.0	%	
Adjusted homebuilding gross margin (1)	$	90,560		 	18.4	%	 	$	146,547		 	25.2	%	
Homebuilding gross margin percentage	14.4	%	 	 	 	22.7	%	 	 	
Adjusted homebuilding gross margin percentage (1)	18.4	%	 	 	 	25.2	%	 	 	
__________

(1)  	Non-GAAP financial measure (as discussed below).	
Our homebuilding gross margin percentage decreased to 14.4% for the three months ended March 31, 2019 as compared to 22.7% for the prior-year period.  The decrease in gross margin percentage was due to an increase in lot option abandonments, as well as lower revenue from some of our long-dated California communities, which produce gross margins above the Company average. In addition, we increased incentives in the fourth quarter of 2018 to sell inventory homes, which impacted gross margin percentage upon delivery of those homes during the first quarter of 2019, as well as purchase accounting adjustments related to the acquisition of a Dallas-Fort Worth based building in the fourth quarter of 2018. Excluding interest and impairment and lot option abandonments in cost of home sales, adjusted homebuilding gross margin percentage was 18.4% for the three months ended March 31, 2019 , compared to 25.2% for the 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 most directly comparable GAAP measure.
Sales and Marketing, General and Administrative Expense (dollars in thousands)

														
 	Three Months Ended March 31,	 	As a Percentage of
Home Sales Revenue	
 	2019	 	2018	 	2019	 	2018	
Sales and marketing	$	38,989		 	$	38,283		 	7.9	%	 	6.6	%	
General and administrative (G&A)	38,597		 	36,814		 	7.8	%	 	6.3	%	
Total sales and marketing and G&A	$	77,586		 	$	75,097		 	15.7	%	 	12.9	%	
 
Total sales and marketing and general and administrative (“SG&A”) as a percentage of home sales revenue increased to 15.7% for the three months ended March 31, 2019 , compared to 12.9% in the prior-year period. Total SG&A expense increased $2.5 million to $77.6 million for the three months ended March 31, 2019 from $75.1 million in the prior-year period.  
Sales and marketing expense as a percentage of home sales revenue increased to 7.9% for the three months ended March 31, 2019 , compared to 6.6% for the prior-year period. The increase was due primarily to advertising costs associated with the timing of current and future community openings. In addition, our ending community count increased from 131 as of March 31, 2018 to 146 as of March 31, 2019, resulting in higher fixed sales and marketing costs on a year over year basis. Sales and marketing expense increased to $39.0 million for the three months ended March 31, 2019 compared to $38.3 million in the prior-year period due to the higher fixed cost associated with a higher community count.
General and administrative (“G&A”) expense as a percentage of home sales revenue increased to 7.8% of home sales revenue for the three months ended March 31, 2019 compared to 6.3% for the prior-year period as a result of lower operating leverage due to the 15% decrease in home sales revenue.  G&A expense increased to $38.6 million for the three months ended

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March 31, 2019 compared to $36.8 million for the prior-year period primarily as a result of additional headcount to support future growth in our new and existing markets, including our organic expansion into the Carolinas in October 2018 and our acquisition of a Dallas–Fort Worth based homebuilder in December 2018.
Interest
Interest, which we incurred principally to finance land acquisitions, land development and home construction, totaled $23.4 million and $21.5 million for the three months ended March 31, 2019 and 2018 , respectively.  All interest incurred in both periods was capitalized.  
Other Income, Net
Other income, net for the three months ended March 31, 2019 and 2018 was $6.2 million and $0.2 million, respectively. During the three months ended March 31, 2019, we amended our existing tax sharing agreement with Weyerhaeuser Company (“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 recorded other income of $6.0 million related to the reduction of our income tax liability to Weyerhaeuser.
Income Tax
For the three months ended March 31, 2019 , we recorded a tax provision of $24,000 based on an effective tax rate of 25.3% .  For the three months ended March 31, 2018 , we recorded a tax provision of $ 14.7 million based on an effective tax rate of 25.5% . The decrease in provision for income taxes is due to a $57.4 million decrease in income before income taxes to $95,000 for the three months ended March 31, 2019 , compared to $57.5 million for the prior-year period.
Financial Services Segment
Income from our financial services operations decreased to $756,000 for the three months ended March 31, 2019 compared to $1.1 million for the prior-year period.  The decrease in financial services income for the three months ended March 31, 2019 compared to the prior-year period relates to the 12% decrease in new homes delivered, which resulted in fewer opportunities to capture financial services income. 

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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:

												
 	March 31,	 	Increase
(Decrease)	
 	2019	 	2018	 	Amount	 	%	
Lots Owned	 	 	 	 	 	 	 	
Maracay	2,272		 	1,825		 	447		 	24	 %	
Pardee Homes	13,523		 	14,814		 	(1,291	)	 	(9	)%	
Quadrant Homes	854		 	1,148		 	(294	)	 	(26	)%	
Trendmaker Homes	1,787		 	1,503		 	284		 	19	 %	
TRI Pointe Homes	2,914		 	2,845		 	69		 	2	 %	
Winchester Homes	1,291		 	1,555		 	(264	)	 	(17	)%	
Total	22,641		 	23,690		 	(1,049	)	 	(4	)%	
Lots Controlled (1)	 	 	 	 	 	 	 	
Maracay	738		 	1,176		 	(438	)	 	(37	)%	
Pardee Homes	731		 	799		 	(68	)	 	(9	)%	
Quadrant Homes	694		 	625		 	69		 	11	 %	
Trendmaker Homes	611		 	429		 	182		 	42	 %	
TRI Pointe Homes	927		 	872		 	55		 	6	 %	
Winchester Homes	359		 	600		 	(241	)	 	(40	)%	
Total	4,060		 	4,501		 	(441	)	 	(10	)%	
Total Lots Owned or Controlled (1)	26,701		 	28,191		 	(1,490	)	 	(5	)%	
__________
		
(1)  	As of March 31, 2019 and 2018 , 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 three months ended March 31, 2019 were operating expenses, land purchases, land development and home construction. We used funds generated by our operations to meet our short-term working capital requirements. We monitor financing requirements to evaluate potential financing sources, including bank credit facilities and note offerings. We remain focused on generating positive margins in our homebuilding operations and acquiring desirable land positions in order to maintain a strong balance sheet and keep us poised for growth. As of March 31, 2019 , we had total liquidity of $967.6 million , including cash and cash equivalents of $148.8 million and $818.8 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 availability of particular assets, and our Company as a whole, to generate cash flow to cover the expected debt service.
Senior Notes
In June 2017, TRI Pointe Group issued $300 million aggregate principal amount of 5.250% Senior Notes due 2027 (the “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.
In May 2016, TRI Pointe Group issued $300 million aggregate principal amount of 4.875% Senior Notes due 2021 (the “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.

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TRI Pointe Group and its wholly owned subsidiary TRI Pointe Homes, Inc. (“TRI Pointe Homes”) are co-issuers of the 4.375% Senior Notes due 2019 (the “2019 Notes”) and the 5.875% Senior Notes due 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 of the 2019 Notes and 2024 Notes were $861.3 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 payable semiannually in arrears on June 15 and December 15. During the three months ended March 31, 2019, we repurchased and cancelled an aggregate principal amount of $10,000 of the 2019 Notes. During the year ended December 31, 2018, we repurchased and cancelled an aggregate principal amount of $68.1 million of the 2019 Notes. As of March 31, 2019 the principal amount outstanding under the 2019 Notes was $381.9 million .
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 March 31, 2019, we were in compliance with the covenants required by our Senior Notes.
Loans Payable
On March 29, 2019, we entered into a Second Amended and Restated Credit Agreement (the “Credit Agreement”), which amended and restated our 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. The Company plans to draw $250 million from the Term Facility in June of 2019 in connection with the maturity of the 2019 Notes. The Company may increase the Credit Facility to not more than $1 billion in the aggregate, at its request, upon satisfaction of specified conditions. The Revolving Facility contains a sublimit of $75 million for letters of credit. The Company may borrow under the Revolving Facility in the ordinary course of business to fund its operations, including its land acquisition, land development and homebuilding activities. Borrowings under the Revolving Facility will be governed by, among other things, a borrowing base. 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 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 March 31, 2019 , we had no outstanding debt under the Credit Facility and $818.8 million of availability after considering the borrowing base provisions and outstanding letters of credit.  At March 31, 2019 we had outstanding letters of credit of $31.2 million .  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.
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
March 31,	 	Covenant
Requirement at
March 31,	
Financial Covenants	2019	 	2019	
Consolidated Tangible Net Worth	$	1,896,730		 	$	1,350,036		
(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	40.5	%	 	≤55%		
(Not to exceed 55%)	 	 	 		
Interest Coverage Test	4.9		 	≥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-

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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 March 31, 2019 , we were in compliance with all of these financial covenants.
Stock Repurchase Program
On February 21, 2019, our board of directors discontinued and cancelled the 2018 Repurchase Program and approved the 2019 Repurchase Program, authorizing the repurchase of shares of common stock with an aggregate value of up to $100 million through March 31, 2020. Purchases of common stock pursuant to the 2019 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 under the Exchange Act. We are not obligated under the 2019 Repurchase Program to repurchase any specific number or dollar amount of shares of common stock, and we may modify, suspend or discontinue the 2019 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. Through the date of the filing of this Quarterly Report on Form 10-Q, no shares of common stock have been repurchased under the 2019 Repurchase Program.
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):  

								
 	March 31, 2019	 	December 31, 2018	
Senior Notes	$	1,412,463		 	$	1,410,804		
Total debt	1,412,463		 	1,410,804		
Stockholders’ equity	2,057,023		 	2,056,924		
Total capital	$	3,469,486		 	$	3,467,728		
Ratio of debt-to-capital (1)	40.7	%	 	40.7	%	
 	 	 	 	
Total debt	$	1,412,463		 	$	1,410,804		
Less: Cash and cash equivalents	(148,782	)	 	(277,696	)	
Net debt	1,263,681		 	1,133,108		
Stockholders’ equity	2,057,023		 	2,056,924		
Net capital	$	3,320,704		 	$	3,190,032		
Ratio of net debt-to-net capital (2)	38.1	%	 	35.5	%	
__________

(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.	

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Cash Flows— Three Months Ended March 31, 2019 Compared to Three Months Ended March 31, 2018
For the three months ended March 31, 2019 as compared to the three months ended March 31, 2018 , the comparison of cash flows is as follows:
		
•	Net cash used in operating activities increased by $164.8 million to $114.9 million for the three months ended March 31, 2019 , from net cash provided of $49.9 million for the three months ended March 31, 2018 . The change was comprised of offsetting activity, including (i) a decrease in net income to $71,000 for the three months ended March 31, 2019 compared to $42.9 million in the prior-year period, (ii) a decrease in cash collected to cash used of $6.6 million in the three months ended March 31, 2019 compared to cash provided of $70.4 million in the prior-year period, and (iii) other offsetting activity, including changes in inventory, other assets, accounts payable and accrued expenses.	
		
•	Net cash used in investing activities was $7.4 million for the three months ended March 31, 2019 , compared to $3.1 million for the prior-year period.  The increase in cash used in investing activities was due mainly to increased purchases of property and equipment.	
		
•	Net cash used in financing activities was $6.5 million for the three months ending March 31, 2019 , compared to net cash provided by financing activities of $5.1 million for the same period in the prior year.	
Off-Balance Sheet Arrangements and Contractual Obligations
In the ordinary course of business, we enter into 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 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.  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 March 31, 2019 , we had $75.3 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 $662.1 million (net of deposits).
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 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 March 31, 2019 , we had total liquidity of $967.6 million , including cash of $148.8 million and $818.8 million of availability under the 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. 

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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.

Description of Projects and Communities Under Development
The following table presents project information relating to each of our markets as of March 31, 2019 and includes information on current projects under development where we are building and selling homes.

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Maracay

																			
County, Project, City	Year of
First
Delivery (1)	 	Total
Number of
Lots (2)	 	Cumulative
Homes
Delivered
as of
March 31,
2019	 	Lots
Owned as of
March 31, 2019 (3)	 	Backlog as of
March 31,
2019 (4)(5)	 	Homes
Delivered
for the Three
Months Ended
March 31,
2019	 	Sales Price
Range
(in thousands) (6)	
Phoenix, Arizona	 	 	 	 	 	 	 	 	 	 	 	 	 	
City of Buckeye:	 	 	 	 	 	 	 	 	 	 	 	 	 	
Verrado Victory	2015	 	98		 	85		 	13		 	7		 	5		 	 $373 - $405	
Arroyo Seco	2020	 	44		 	—		 	44		 	—		 	—		 	 $406 - $458	
City of Chandler:	 	 	 	 	 	 	 	 	 	 	 	 	 	
Hawthorn Manor	2017	 	84		 	66		 	18		 	14		 	7		 	 $490 - $564	
Mission Estates	2019	 	26		 	—		 	26		 	7		 	—		 	 $530 - $590	
Windermere Ranch	2019	 	91		 	—		 	91		 	7		 	—		 	 $499 - $539	
City of Gilbert:	 	 	 	 	 	 	 	 	 	 	 	 	 	
Marathon Ranch	2018	 	63		 	19		 	44		 	27		 	10		 	$515 - $558	
Lakes At Annecy	2019	 	216		 	—		 	216		 	5		 	—		 	$250 - $350	
Annecy P3	2020	 	250		 	—		 	250		 	—		 	—		 	$226 - $301	
Lakeview Trails	2019	 	92		 	—		 	92		 	38		 	—		 	$528 - $603	
Copper Bend	2020	 	38		 	—		 	38		 	—		 	—		 	$451 - $484	
Hamstra Assemblage	2020	 	332		 	—		 	332		 	—		 	—		 	$470 - $750	
City of Goodyear:	 	 	 	 	 	 	 	 	 	 	 	 	 	
Villages at Rio Paseo	2018	 	117		 	24		 	93		 	9		 	6		 	 $190 - $220	
Cottages at Rio Paseo	2018	 	93		 	38		 	55		 	12		 	7		 	 $231 - $251	
City of Mesa:	 	 	 	 	 	 	 	 	 	 	 	 	 	
The Vista at Granite Crossing	2018	 	37		 	31		 	6		 	6		 	6		 	 $438 - $513	
Electron at Eastmark	2019	 	53		 	—		 	53		 	20		 	—		 	 $361 - $438	
City of Peoria:	 	 	 	 	 	 	 	 	 	 	 	 	 	
Legacy at The Meadows	2017	 	74		 	68		 	6		 	—		 	2		 	 $425 - $451	
Estates at The Meadows	2017	 	272		 	114		 	158		 	46		 	14		 	 $499 - $576	
Enclave at The Meadows	2018	 	126		 	32		 	94		 	21		 	3		 	 $375 - $470	
Deseo	2019	 	94		 	—		 	94		 	—		 	—		 	 $501 - $583	
City of Phoenix:	 	 	 	 	 	 	 	 	 	 	 	 	 	
Navarro Groves	2018	 	54		 	31		 	23		 	18		 	7		 	 $439 - $484	
Loma at Avance	2019	 	124		 	—		 	124		 	—		 	—		 	 $352 - $412	
Ranger at Avance	2019	 	143		 	—		 	143		 	—		 	—		 	 $398 - $466	
Piedmont at Avance	2019	 	101		 	—		 	101		 	—		 	—		 	 $475 - $495	
Alta at Avance	2019	 	26		 	—		 	26		 	—		 	—		 	 $595 - $625	
Town of Queen Creek:	 	 	 	 	 	 	 	 	 	 	 	 	 	
Spur Cross	2020	 	118		 	—		 	118		 	—		 	—		 	 $454 - $544	
Closed Communities	N/A	 	—		 	—		 	—		 	—		 	—		 	 	
Phoenix, Arizona Total	 	 	2,766		 	508		 	2,258		 	237		 	67		 	 	
Tucson, Arizona	 	 	 	 	 	 	 	 	 	 	 	 	 	
Oro Valley:	 	 	 	 	 	 	 	 	 	 	 	 	 	
Desert Crest - Center Pointe Vistoso	2016	 	103		 	90		 	13		 	1		 	3		 	$262 - $307	
The Cove - Center Pointe Vistoso	2016	 	83		 	83		 	—		 	—		 	1		 	$345 - $405	
Summit N & S - Center Pointe Vistoso	2016	 	88		 	88		 	—		 	—		 	3		 	$397 - $432	
The Pinnacle - Center Pointe Vistoso	2016	 	69		 	68		 	1		 	—		 	—		 	$448 - $480	
Tucson, Arizona Total	 	 	343		 	329		 	14		 	1		 	7		 	 	
Maracay Total	 	 	3,109		 	837		 	2,272		 	238		 	74		 	 	

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Pardee Homes

																			
County, Project, City	Year of
First
Delivery (1)	 	Total
Number of
Lots (2)	 	Cumulative
Homes
Delivered
as of
March 31,
2019	 	Lots
Owned as of
March 31, 2019 (3)	 	Backlog as of
March 31,
2019 (4)(5)	 	Homes
Delivered
for the Three
Months Ended
March 31,
2019	 	Sales Price
Range
(in thousands) (6)	
California	 	 	 	 	 	 	 	 	 	 	 	 	 	
San Diego County:	 	 	 	 	 	 	 	 	 	 	 	 	 	
Almeria	2017	 	80		 	80		 	—		 	—		 	5		 	$1,440 - $1,560	
Vista Santa Fe	2019	 	44		 	—		 	44		 	8		 	—		 	$1,760 - $1,900	
Sendero	2019	 	112		 	—		 	112		 	56		 	—		 	$1,150 - $1,300	
Terraza	2019	 	81		 	—		 	81		 	30		 	—		 	$1,260 - $1,370	
Carmel	2019	 	105		 	—		 	105		 	27		 	—		 	$1,380 - $1,490	
Vista Del Mar	2019	 	79		 	—		 	79		 	22		 	—		 	$1,530 - $1,720	
Pacific Highlands Ranch Future	2020	 	115		 	—		 	115		 	—		 	—		 	$1,800 - $1,900	
Sandstone	2018	 	81		 	63		 	18		 	10		 	14		 	$640 - $710	
Lake Ridge	2018	 	129		 	50		 	79		 	13		 	16		 	$710 - $860	
Veraz	2018	 	111		 	15		 	96		 	3		 	5		 	$380 - $460	
Moderna	2018	 	44		 	18		 	26		 	6		 	8		 	$355 - $440	
Marea	2020	 	135		 	—		 	135		 	—		 	—		 	$370 - $470	
Solmar	2019	 	74		 	—		 	74		 	—		 	—		 	$365 - $440	
Solmar Sur	2019	 	108		 	—		 	108		 	—		 	—		 	$365 - $440	
Meadowood	TBD	 	845		 	—		 	845		 	—		 	—		 	$290 - $590	
South Otay Mesa	TBD	 	893		 	—		 	893		 	—		 	—		 	TBD	
Los Angeles County:	 	 	 	 	 	 	 	 	 	 	 	 	 	
Verano	2017	 	95		 	45		 	50		 	4		 	8		 	$565 - $670	
Arista	2017	 	143		 	75		 	68		 	3		 	7		 	$700 - $785	
Cresta	2018	 	67		 	14		 	53		 	10		 	4		 	$790 - $890	
Lyra	2019	 	84		 	—		 	84		 	10		 	—		 	 $648 - $720	
Sola	2019	 	73		 	—		 	73		 	34		 	—		 	 $545 - $590	
Skyline Ranch Future	TBD	 	913		 	—		 	913		 	—		 	—		 	 $550 - $810	
Riverside County:	 	 	 	 	 	 	 	 	 	 	 	 	 	
Vantage	2016	 	101		 	100		 	1		 	—		 	1		 	$390 - $410	
Aura	2017	 	100		 	100		 	—		 	—		 	3		 	$370 - $385	
Starling	2017	 	68		 	49		 	19		 	4		 	9		 	$425 - $430	
Canyon Hills Future 70 x 115	TBD	 	125		 	—		 	125		 	—		 	—		 	TBD	
Westlake	2020	 	163		 	—		 	163		 	—		 	—		 	$318 - $325	
Elara	2016	 	260		 	213		 	47		 	14		 	11		 	$300 - $330	
Daybreak	2017	 	159		 	83		 	76		 	5		 	9		 	$360 - $385	
Cascade	2017	 	209		 	118		 	91		 	8		 	18		 	$325 - $340	
Abrio	2018	 	98		 	37		 	61		 	11		 	5		 	$400 - $420	
Beacon	2018	 	106		 	27		 	79		 	21		 	9		 	$465 - $520	
Alisio	2019	 	84		 	—		 	84		 	28		 	—		 	$300 - $330	
Vita	2019	 	111		 	—		 	111		 	17		 	—		 	$310 - $335	
Avid	2019	 	72		 	—		 	72		 	14		 	—		 	$340 - $365	
Elan	2019	 	101		 	—		 	101		 	6		 	—		 	$410 - $440	
Mira	2019	 	90		 	—		 	90		 	5		 	—		 	$375 - $400	
Sundance Future Active Adult	TBD	 	330		 	—		 	330		 	—		 	—		 	TBD	
Avena	2018	 	84		 	32		 	52		 	8		 	7		 	$450 - $475	
Tamarack	2018	 	84		 	57		 	27		 	6		 	2		 	$470 - $520	
Braeburn	2018	 	82		 	14		 	68		 	8		 	6		 	$420 - $450	
Canvas	2018	 	89		 	12		 	77		 	12		 	4		 	$400 - $425	
Kadence	2018	 	85		 	10		 	75		 	7		 	2		 	$420 - $440	
Newpark	2018	 	93		 	11		 	82		 	9		 	3		 	$450 - $495	
Easton	2018	 	92		 	7		 	85		 	8		 	2		 	$475 - $530	
Tournament Hills Future	TBD	 	268		 	—		 	268		 	—		 	—		 	TBD	
Banning	2020	 	4,344		 	—		 	4,344		 	—		 	—		 	TBD	
San Joaquin County:	 	 	 	 	 	 	 	 	 	 	 	 	 	

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Bear Creek	TBD	 	1,252		 	—		 	1,252		 	—		 	—		 	TBD	
Closed Communities	 	 	—		 	—		 	—		 	—		 	—		 	 	
California Total	 	 	13,061		 	1,230		 	11,831		 	427		 	158		 	 	
Nevada	 	 	 	 	 	 	 	 	 	 	 	 	 	
Clark County:	 	 	 	 	 	 	 	 	 	 	 	 	 	
North Peak	2015	 	176		 	176		 	—		 	—		 	1		 	$312 - $370	
Castle Rock	2015	 	183		 	181		 	2		 	2		 	2		 	$365 - $455	
Escala	2016	 	64		 	64		 	—		 	—		 	1		 	 $520 - $590	
Strada	2017	 	140		 	59		 	81		 	7		 	—		 	 $425 - $480	
Linea	2018	 	123		 	58		 	65		 	33		 	10		 	$360 - $400	
Strada 2.0	2019	 	35		 	—		 	35		 	—		 	—		 	$425 - $480	
Linea II	2020	 	79		 	—		 	79		 	—		 	—		 	$360 - $400	
Inspirada Townhomes	2020	 	114		 	—		 	114		 	—		 	—		 	TBD	
Meridian	2016	 	62		 	62		 	—		 	—		 	1		 	 $595 - $690	
Pebble Estate Future	TBD	 	8		 	—		 	8		 	—		 	—		 	 TBD	
Encanto	2016	 	51		 	50		 	1		 	—		 	1		 	 $475 - $530	
Luma	2018	 	63		 	49		 	14		 	10		 	8		 	 $490 - $530	
Evolve	2019	 	74		 	—		 	74		 	—		 	—		 	 $300	
Corterra	2018	 	112		 	10		 	102		 	6		 	7		 	 $465 - $550	
Keystone	2017	 	70		 	66		 	4		 	2		 	3		 	 $465 - $550	
Cobalt	2017	 	124		 	51		 	73		 	8		 	5		 	 $380 - $455	
Onyx	2018	 	71		 	15		 	56		 	14		 	1		 	 $450 - $485	
Axis	2017	 	52		 	36		 	16		 	11		 	3		 	 $860 - $1,125	
Axis at the Canyons	2019	 	26		 	—		 	26		 	2		 	—		 	 $875 - $905	
Midnight Ridge	2019	 	104		 	—		 	104		 	—		 	—		 	 $540 - $585	
Pivot	2017	 	88		 	54		 	34		 	11		 	10		 	 $405 - $470	
Strada at Pivot	2017	 	27		 	26		 	1		 	1		 	1		 	 $450 - $480	
Nova Ridge	2017	 	108		 	44		 	64		 	20		 	5		 	 $680 - $840	
Tera Luna	2018	 	116		 	9		 	107		 	6		 	5		 	 $545 - $660	
Indogo	2018	 	202		 	32		 	170		 	10		 	10		 	 $315 - $360	
Larimar	2018	 	170		 	8		 	162		 	5		 	4		 	 $380 - $420	
Blackstone	2018	 	140		 	11		 	129		 	18		 	6		 	 $405 - $500	
Cirrus	2019	 	54		 	—		 	54		 	—		 	—		 	 $350 - $375	
Sandalwood	2020	 	117		 	—		 	117		 	—		 	—		 	 $685 - $815	
Nevada Total	 	 	2,753		 	1,061		 	1,692		 	166		 	84		 	 	
Pardee Total	 	 	15,814		 	2,291		 	13,523		 	593		 	242		 	 	

- 46 -

Quadrant Homes  

																			
County, Project, City	Year of
First
Delivery (1)	 	Total
Number of
Lots (2)	 	Cumulative
Homes
Delivered
as of
March 31,
2019	 	Lots
Owned as of
March 31, 2019 (3)	 	Backlog as of
March 31,
2019 (4)(5)	 	Homes
Delivered
for the Three
Months Ended
March 31,
2019	 	Sales Price
Range
(in thousands) (6)	
Washington	 	 	 	 	 	 	 	 	 	 	 	 	 	
Snohomish County:	 	 	 	 	 	 	 	 	 	 	 	 	 	
Grove North, Bothell	2019	 	43		 	—		 	43		 	—		 	—		 	$765 - $900	
Grove South, Bothell	2019	 	9		 	—		 	9		 	—		 	—		 	$785 - $820	
King County:	 	 	 	 	 	 	 	 	 	 	 	 	 	
Vareze, Kirkland	2019	 	82		 	—		 	82		 	—		 	—		 	$700 - $900	
Inglewood Landing, Sammamish	2019	 	21		 	1		 	20		 	9		 	1		 	$1,115 - $1,295	
Kirkwood Terrace, Sammamish	2018	 	12		 	8		 	4		 	2		 	3		 	$1,800 - $1,900	
English Landing P1, Redmond	2018	 	50		 	44		 	6		 	5		 	7		 	$1,245	
Cedar Landing, North Bend	2019	 	138		 	—		 	138		 	14		 	—		 	$740 - $880	
Monarch Ridge, Sammamish	2019	 	59		 	—		 	59		 	—		 	—		 	$970 - $1,135	
Overlook at Summit Park, Maple Valley	2019	 	126		 	1		 	125		 	13		 	1		 	$590 - $700	
Ray Meadows, Redmond	2018	 	27		 	14		 	13		 	12		 	4		 	$1,065	
Aurea, Sammamish	2019	 	41		 	—		 	41		 	—		 	—		 	$710 - $860	
Aldea, Newcastle	2019	 	129		 	11		 	118		 	8		 	11		 	$695 - $925	
Lario, Bellevue	2019	 	46		 	—		 	46		 	—		 	—		 	$795 - $1,125	
Soundview, Federal Way	2018	 	21		 	4		 	17		 	6		 	—		 	$531 - $660	
Eagles Glen, Sammamish	2020	 	10		 	—		 	10		 	—		 	—		 	$1,100 - $2,000	
Finn Meadows, Kirkland	2020	 	5		 	—		 	5		 	—		 	—		 	$900 - $1,049	
Pierce County:	 	 	 	 	 	 	 	 	 	 	 	 	 	
Harbor Hill S-5/6, Gig Harbor	2017	 	72		 	69		 	3		 	3		 	6		 	$493	
Kitsap County:	 	 	 	 	 	 	 	 	 	 	 	 	 	
Lone Pine, Poulsbo	2019	 	15		 	—		 	15		 	—		 	—		 	$473 - $530	
Winslow Grove, Bainbridge Island	2018	 	19		 	4		 	15		 	5		 	2		 	$1,042 - $1,142	
Blue Heron, Poulsbo	2021	 	85		 	—		 	85		 	—		 	—		 	$474 - $649	
Closed Communities	 	 	—		 	—		 	—		 	—		 	9		 	 	
Washington Total	 	 	1,010		 	156		 	854		 	77		 	44		 	 	
Quadrant Total	 	 	1,010		 	156		 	854		 	77		 	44		 	 	

- 47 -

Trendmaker Homes

																			
County, Project, City	Year of
First
Delivery (1)	 	Total
Number of
Lots (2)	 	Cumulative
Homes
Delivered
as of
March 31,
2019	 	Lots
Owned as of
March 31, 2019 (3)	 	Backlog as of
March 31,
2019 (4)(5)	 	Homes
Delivered
for the Three
Months Ended
March 31,
2019	 	Sales Price
Range
(in thousands) (6)	
Texas	 	 	 	 	 	 	 	 	 	 	 	 	 	
Brazoria County:	 	 	 	 	 	 	 	 	 	 	 	 	 	
Pomona, Manvel	2015	 	49		 	37		 	12		 	3		 	2		 	$422 - $489	
Rise Meridiana	2016	 	47		 	31		 	16		 	1		 	1		 	$292 - $373	
Fort Bend County:	 	 	 	 	 	 	 	 	 	 	 	 	 	
Cross Creek Ranch 60', Fulshear	2013	 	48		 	31		 	17		 	6		 	—		 	$399 - $500	
Cross Creek Ranch 65', Fulshear	2013	 	89		 	71		 	18		 	7		 	7		 	$442 - $557	
Cross Creek Ranch 70', Fulshear	2013	 	72		 	50		 	22		 	11		 	4		 	$510 - $609	
Cross Creek Ranch 80', Fulshear	2013	 	54		 	30		 	24		 	16		 	3		 	$600 - $655	
Cross Creek Ranch 90', Fulshear	2013	 	37		 	33		 	4		 	1		 	1		 	$695 - $759	
Fulshear Run 1/2 Acre, Richmond	2016	 	54		 	33		 	21		 	11		 	2		 	$573 - $679	
Harvest Green 75', Richmond	2015	 	44		 	37		 	7		 	4		 	2		 	$446 - $543	
Sienna Plantation 85', Missouri City	2015	 	54		 	32		 	22		 	1		 	2		 	$546 - $661	
Grayson Woods 60'	TBD	 	10		 	—		 	10		 	—		 	—		 	TBD	
Grayson Woods 70'	TBD	 	8		 	—		 	8		 	—		 	—		 	TBD	
Harris County:	 	 	 	 	 	 	 	 	 	 	 	 	 	
The Groves, Humble	2015	 	117		 	77		 	40		 	5		 	6		 	$483 - $511	
Lakes of Creekside	2015	 	38		 	17		 	21		 	7		 	1		 	$534 - $611	
Balmoral 50'	2019	 	24		 	—		 	24		 	—		 	—		 	TBD	
Bridgeland '80, Cypress	2015	 	147		 	127		 	20		 	5		 	2		 	$549 - $708	
Bridgeland 70'	2018	 	41		 	8		 	33		 	5		 	1		 	$511 - $574	
Villas at Bridgeland 50'	2018	 	48		 	4		 	44		 	2		 	2		 	$370 - $409	
Elyson 70', Cypress	2016	 	20		 	18		 	2		 	2		 	—		 	$463 - $482	
Falls at Dry Creek	2019	 	1		 	—		 	1		 	—		 	—		 	TBD	
Clear Lake, Houston	2015	 	778		 	491		 	287		 	52		 	18		 	$395 - $717	
Montgomery County:	 	 	 	 	 	 	 	 	 	 	 	 	 	
Northgrove, Tomball	2015	 	25		 	7		 	18		 	—		 	—		 	TBD	
Bender's Landing Estates, Spring	2014	 	104		 	95		 	9		 	5		 	4		 	$553 - $596	
The Woodlands, Creekside Park	2015	 	126		 	88		 	38		 	13		 	14		 	$423 - $699	
Royal Brook, Porter	2019	 	25		 	—		 	25		 	2		 	—		 	$386 - $479	
Waller County:	 	 	 	 	 	 	 	 	 	 	 	 	 	
LakeHouse	TBD	 	350		 	—		 	350		 	—		 	—		 	$260 - $575	
Williamson County:	 	 	 	 	 	 	 	 	 	 	 	 	 	
Crystal Falls	2016	 	29		 	25		 	4		 	—		 	—		 	TBD	
Rancho Sienna 60'	2016	 	51		 	22		 	29		 	4		 	4		 	$335 - $420	
Rancho Sienna 80'	2018	 	5		 	2		 	3		 	3		 	—		 	$456 - $519	
Highlands at Mayfield Ranch 50'	2018	 	36		 	12		 	24		 	8		 	4		 	$280 - $330	
Highlands at Mayfield Ranch 60'	2018	 	23		 	5		 	18		 	4		 	4		 	$340 - $407	
Rancho Sienna 50'	2019	 	30		 	—		 	30		 	2		 	—		 	$330 - $372	
Palmera Ridge	2019	 	30		 	—		 	30		 	12		 	—		 	$270 - $326	
Hays County:	 	 	 	 	 	 	 	 	 	 	 	 	 	
Belterra 60', Austin	2017	 	36		 	32		 	4		 	4		 	6		 	$445 - $489	
Belterra 80', Austin	2016	 	37		 	35		 	2		 	1		 	1		 	$600	
Headwaters, Dripping Springs	2017	 	30		 	26		 	4		 	4		 	3		 	$453 - $485	
6 Creeks 50' Section 1 & 2	2019	 	35		 	—		 	35		 	—		 	—		 	TBD	
6 Creeks 60' Section 1 & 2	2019	 	15		 	—		 	15		 	—		 	—		 	TBD	
Travis County:	 	 	 	 	 	 	 	 	 	 	 	 	 	
Lakes Edge 70'	2018	 	45		 	17		 	28		 	27		 	4		 	$645 - $830	
Lakes Edge 80'	2018	 	14		 	5		 	9		 	7		 	1		 	$742 - $792	
Collin County:	 	 	 	 	 	 	 	 	 	 	 	 	 	
Miramonte, Frisco	2016	 	62		 	40		 	22		 	8		 	4		 	$475 - $560	
Retreat at Craig Ranch, McKinney	2012	 	165		 	145		 	20		 	4		 	2		 	$375 - $415	

- 48 -

	
																			
Dallas County:	 	 	 	 	 	 	 	 	 	 	 	 	 	
Vineyards, Rowlett	2017	 	34		 	15		 	19		 	6		 	3		 	$368 - $480	
Denton County:	 	 	 	 	 	 	 	 	 	 	 	 	 	
Glenview, Frisco	2017	 	50		 	13		 	37		 	7		 	5		 	$345 - $485	
Paloma Creek, Little Elm	2015	 	267		 	151		 	116		 	16		 	7		 	$275 - $390	
Parks at Legacy, Prosper	2017	 	49		 	18		 	31		 	8		 	4		 	$384 - $495	
Shadow Creek, Hickory Creek	2016	 	40		 	38		 	2		 	1		 	2		 	$360 - $400	
Valencia, Little Elm	2016	 	76		 	42		 	34		 	8		 	5		 	$350 - $444	
Villages of Carmel, Denton	2017	 	94		 	46		 	48		 	33		 	4		 	$290 - $360	
Kaufman County:	 	 	 	 	 	 	 	 	 	 	 	 	 	
Park Trails, Forney	2015	 	85		 	80		 	5		 	2		 	7		 	$240 - $280	
Rockwall County:	 	 	 	 	 	 	 	 	 	 	 	 	 	
Heath Golf and Yacht, Heath	2016	 	91		 	59		 	32		 	9		 	2		 	$294 - $490	
Woodcreek, Fate	2017	 	83		 	65		 	18		 	13		 	3		 	$267 - $330	
Tarrant County:	 	 	 	 	 	 	 	 	 	 	 	 	 	
Chisholm Trail Ranch, Fort Worth	2017	 	70		 	45		 	25		 	15		 	1		 	$270 - $375	
Lakes of River Trails, Fort Worth	2011	 	143		 	123		 	20		 	20		 	2		 	$317 - $416	
Ventana, Benbrook	2017	 	61		 	31		 	30		 	17		 	2		 	$318 - $430	
Closed Communities	N/A	 	—		 	—		 	—		 	—		 	2		 	 	
Texas Total	 	 	4,196		 	2,409		 	1,787		 	402		 	154		 	 	
Trendmaker Homes Total	 	 	4,196		 	2,409		 	1,787		 	402		 	154		 	 	

- 49 -

TRI Pointe Homes

	
																			
County, Project, City	Year of
First
Delivery (1)	 	Total
Number of
Lots (2)	 	Cumulative
Homes
Delivered
as of
March 31,
2019	 	Lots
Owned as of
March 31, 2019 (3)	 	Backlog as of
March 31,
2019 (4)(5)	 	Homes
Delivered
for the Three
Months Ended
March 31,
2019	 	Sales Price
Range
(in thousands) (6)	
Southern California	 	 	 	 	 	 	 	 	 	 	 	 	 	
Orange County:	 	 	 	 	 	 	 	 	 	 	 	 	 	
Aria, Rancho Mission Viejo	2016	 	151		 	148		 	3		 	2		 	2		 	 $687 - $719	
Viridian	2018	 	72		 	21		 	51		 	12		 	4		 	 $895 - $982	
Sterling Row Townhomes, Irvine	2017	 	96		 	96		 	—		 	—		 	1		 	 $572 - $779	
Varenna at Orchard Hills, Irvine	2016	 	89		 	79		 	10		 	5		 	6		 	 $1,225 - $1,326	
Alston, Anaheim	2017	 	75		 	72		 	3		 	3		 	12		 	 $828 - $869	
StrataPointe, Buena Park	2017	 	149		 	133		 	16		 	15		 	8		 	 $564 - $720	
Lyric	2019	 	70		 	15		 	55		 	10		 	15		 	 $790 - $937	
Citron at Bedford	2019	 	35		 	7		 	28		 	11		 	7		 	 $383 - $411	
San Diego County:	 	 	 	 	 	 	 	 	 	 	 	 	 	
Prism at Weston	2018	 	142		 	42		 	100		 	13		 	8		 	 $574 - $632	
Talus at Weston	2018	 	63		 	37		 	26		 	9		 	5		 	 $680 - $730	
Riverside County:	 	 	 	 	 	 	 	 	 	 	 	 	 	
Terrassa Court, Corona	2015	 	94		 	94		 	—		 	—		 	1		 	 $421 - $499	
Terrassa Villas, Corona	2015	 	52		 	49		 	3		 	1		 	3		 	 $491 - $549	
Cassis at Rancho Soleo	2020	 	79		 	—		 	79		 	—		 	—		 	 TBD	
Cava at Rancho Soleo	2020	 	63		 	—		 	63		 	—		 	—		 	 TBD	
Cerro at Rancho Soleo	2020	 	103		 	—		 	103		 	—		 	—		 	 TBD	
Los Angeles County:	 	 	 	 	 	 	 	 	 	 	 	 	 	
VuePointe, El Monte	2017	 	102		 	98		 	4		 	1		 	11		 	 $479 - $587	
Bradford at Rosedale, Azusa	2017	 	52		 	52		 	—		 	—		 	1		 	 $816 - $906	
Lucera at Aliento	2017	 	67		 	66		 	1		 	—		 	4		 	 $622 - $648	
Tierno at Aliento	2017	 	63		 	49		 	14		 	—		 	—		 	 $667 - $695	
Tierno II at Aliento	2018	 	63		 	15		 	48		 	7		 	5		 	 $642 - $703	
Paloma at West Creek	2018	 	155		 	67		 	88		 	13		 	17		 	 $453 - $516	
Mystral	2019	 	78		 	—		 	78		 	17		 	—		 	 $635 - $679	
Celestia	2019	 	72		 	—		 	72		 	20		 	—		 	 $597 - $626	
San Bernardino County:	 	 	 	 	 	 	 	 	 	 	 	 	 	
St. James at Park Place, Ontario	2015	 	125		 	119		 	6		 	—		 	—		 	 $509 - $560	
St. James III at Park Place, Ontario	2018	 	82		 	43		 	39		 	11		 	6		 	 $509 - $560	
Ivy at The Preserve	2020	 	113		 	—		 	113		 	—		 	—		 	 TBD	
Hazel at The Preserve	2020	 	133		 	—		 	133		 	—		 	—		 	 TBD	
Tempo at The Resort	2019	 	80		 	—		 	80		 	—		 	—		 	 TBD	
Southern California Total	 	 	2,518		 	1,302		 	1,216		 	150		 	116		 	 	
Northern California	 	 	 	 	 	 	 	 	 	 	 	 	 	
Contra Costa County:	 	 	 	 	 	 	 	 	 	 	 	 	 	
Wynstone at Barrington, Brentwood	2017	 	92		 	83		 	9		 	5		 	6		 	 $536 - $675	
Greyson Place	2019	 	44		 	—		 	44		 	1		 	—		 	 $910 - $980	
Santa Clara County:	 	 	 	 	 	 	 	 	 	 	 	 	 	
Madison Gate	2018	 	65		 	30		 	35		 	—		 	6		 	 $815 - $1,134	
Luchessa	2019	 	49		 	—		 	49		 	—		 	—		 	 $755 - $799	
The Grove	2019	 	64		 	—		 	64		 	—		 	—		 	 $850 - $920	
The Heights	2020	 	25		 	—		 	25		 	—		 	—		 	 TBD	
Solano County:	 	 	 	 	 	 	 	 	 	 	 	 	 	
Bloom at Green Valley, Fairfield	2018	 	91		 	38		 	53		 	8		 	7		 	 $530 - $570	
Harvest at Green Valley, Fairfield	2018	 	56		 	33		 	23		 	3		 	5		 	 $550 - $630	
Lantana, Fairfield	2019	 	133		 	—		 	133		 	23		 	—		 	 $455 - $490	
San Joaquin County:	 	 	 	 	 	 	 	 	 	 	 	 	 	
Sundance, Mountain House	2015	 	113		 	108		 	5		 	—		 	—		 	 $648 - $721	
Sundance II, Mountain House	2017	 	138		 	65		 	73		 	8		 	6		 	 $648 - $721	

- 50 -

	
																			
Alameda County:	 	 		 		 		 		 		 	 	
Commercial, Alameda Landing	2019	 	2		 	—		 	2		 	2		 	—		 	$500	
Blackstone at the Cannery, Hayward SFA	2016	 	105		 	105		 	—		 	—		 	1		 	$666 - $776	
Slate at Jordan Ranch, Dublin	2017	 	56		 	54		 	2		 	2		 	3		 	$1,125 - $1,225	
Onyx at Jordan Ranch, Dublin	2017	 	105		 	61		 	44		 	3		 	7		 	$899 - $951	
Quartz at Jordan Ranch, Dublin	2018	 	45		 	34		 	11		 	6		 	4		 	$958 - $1,098	
Apex, Fremont	2018	 	77		 	45		 	32		 	2		 	6		 	$784 - $1,096	
Palm, Fremont	2019	 	31		 	3		 	28		 	5		 	3		 	$2,119 - $2,225	
Ellis at Central Station, Oakland	2019	 	128		 	—		 	128		 	—		 	—		 	$711 - $807	
Sacramento County:	 	 	 	 	 	 	 	 	 	 	 	 	 	
Natomas	2019	 	94		 	—		 	94		 	—		 	—		 	$344 - $410	
Placer County:	 	 	 	 	 	 	 	 	 	 	 	 	 	
Twelve Bridges	2019	 	102		 	—		 	102		 	—		 	—		 	$432 - $528	
San Francisco County:	 	 		 		 		 		 		 	 	
Lofton at NOPO, San Francisco	2020	 	54		 	—		 	54		 	—		 	—		 	$995 - $1,237	
Northern California Total	 	 	1,669		 	659		 	1,010		 	68		 	54		 	 	
California Total	 	 	4,187		 	1,961		 	2,226		 	218		 	170		 	 	
Colorado	 	 		 		 		 		 		 	 	
Douglas County:	 	 	 	 	 	 	 	 	 	 	 	 	 	
Terrain Ravenwood Village (3500)	2018	 	157		 	50		 	107		 	26		 	16		 	 $375 - $427	
Terrain Ravenwood Village (4000)	2018	 	100		 	39		 	61		 	20		 	6		 	 $403 - $471	
Trails at Crowfoot	2020	 	100		 	—		 	100		 	—		 	—		 	 TBD	
Sterling Ranch	2020	 	80		 	—		 	80		 	—		 	—		 	 TBD	
The Canyons	2020	 	89		 	—		 	89		 	—		 	—		 	 TBD	
Jefferson County:	 	 	 	 	 	 	 	 	 	 	 	 	 	
Candelas 6000 Series, Arvada	2015	 	76		 	76		 	—		 	—		 	1		 	 $516 - $656	
Candelas 3500 Series, Arvada	2016	 	97		 	92		 	5		 	5		 	11		 	 $408 - $466	
Candelas 5000 Series, Arvada	2017	 	62		 	56		 	6		 	3		 	12		 	 $516 - $584	
Candelas 4020 Series, Arvada	2019	 	98		 	3		 	95		 	35		 	3		 	 $465 - $520	
Crown Pointe, Westminster	2019	 	64		 	2		 	62		 	25		 	2		 	 $430 - $482	
Arapahoe County:	 	 	 	 	 	 	 	 	 	 	 	 	 	
Whispering Pines, Aurora	2016	 	115		 	69		 	46		 	22		 	5		 	 $636 - $681	
Adams County:	 	 	 	 	 	 	 	 	 	 	 	 	 	
Amber Creek, Thornton	2017	 	121		 	84		 	37		 	17		 	16		 	 $398 - $483	
Colorado Total	 	 	1,159		 	471		 	688		 	153		 	72		 	 	
TRI Pointe Total	 	 	5,346		 	2,432		 	2,914		 	371		 	242		 	 	

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Winchester Homes

																			
County, Project, City	Year of
First
Delivery (1)	 	Total
Number of
Lots (2)	 	Cumulative
Homes
Delivered
as of
March 31,
2019	 	Lots
Owned as of
March 31, 2019 (3)	 	Backlog as of
March 31,
2019 (4)(5)	 	Homes
Delivered
for the Three
Months Ended
March 31,
2019	 	Sales Price
Range
(in thousands) (6)	
Maryland	 	 	 	 	 	 	 	 	 	 	 	 	 	
Anne Arundel County:	 	 	 	 	 	 	 	 	 	 	 	 	 	
Two Rivers Townhomes, Crofton	2017	 	100		 	43		 	57		 	15		 	4		 	$450 - $560	
Two Rivers Cascades SFD, Crofton	2018	 	37		 	16		 	21		 	7		 	—		 	$540 - $625	
Watson's Glen, Millersville	2015	 	103		 	4		 	99		 	—		 	—		 	 TBD	
Frederick County:	 	 	 	 	 	 	 	 	 	 	 	 	 	
Landsdale, Monrovia	 	 	 	 	 	 	 	 	 	 	 	 	 	
Landsdale SFD	2015	 	222		 	130		 	92		 	16		 	5		 	$495 - $597	
Landsdale Townhomes	2015	 	100		 	78		 	22		 	4		 	2		 	$330 - $383	
Landsdale TND Neo SFD	2015	 	77		 	47		 	30		 	6		 	3		 	$440 - $473	
Montgomery County:	 	 	 	 	 	 	 	 	 	 	 	 	 	
Cabin Branch, Clarksburg	 	 	 	 	 	 	 	 	 	 	 	 	 	
Cabin Branch SFD	2014	 	359		 	210		 	149		 	14		 	6		 	 $510 - $760	
Cabin Branch Avenue Townhomes	2017	 	121		 	59		 	62		 	5		 	7		 	$420 - $488	
Cabin Branch Townhomes	2014	 	507		 	303		 	204		 	11		 	4		 	 $360 - $458	
Preserve at Stoney Spring - Lots for Sale	N/A	 	4		 	—		 	4		 	—		 	—		 	 N/A	
Glenmont MetroCenter, Silver Spring	2016	 	171		 	81		 	90		 	23		 	6		 	 $435 - $513	
Chapman Row, Rockville	2019	 	61		 	—		 	61		 	6		 	—		 	 $710 - $799	
Randolph Farms, Rockville	2019	 	104		 	—		 	104		 	—		 	—		 	 TBD	
Closed Communities	N/A	 	—		 	—		 	—		 	—		 	1		 	  	
Maryland Total	 	 	1,966		 	971		 	995		 	107		 	38		 	 	
Virginia	 	 	 	 	 	 	 	 	 	 	 	 	 	
Fairfax County:	 	 	 	 	 	 	 	 	 	 	 	 	 	
Stuart Mill, Oakton - Lots for Sale	N/A	 	5		 	—		 	5		 	—		 	—		 	N/A	
Westgrove, Fairfax	2018	 	24		 	5		 	19		 	9		 	4		 	$1,001 - $1,107	
West Oaks Corner, Fairfax	2019	 	188		 	—		 	188		 	—		 	—		 	TBD	
Loudoun County:	 	 	 	 	 	 	 	 	 	 	 	 	 	
Brambleton, Ashburn	 	 	 	 	 	 	 	 	 	 	 	 	 	
West Park SFD	2018	 	48		 	24		 	24		 	14		 	4		 	$700 - $724	
Birchwood AA	2018	 	37		 	14		 	23		 	15		 	5		 	$577 - $634	
Vistas at Lansdowne, Lansdowne	2015	 	120		 	115		 	5		 	5		 	6		 	$536 - $576	
Willowsford Grant II, Aldie	2016	 	55		 	23		 	32		 	11		 	—		 	$950 - $1,226	
Closed Communities	N/A	 	—		 	—		 	—		 	—		 	1		 	 	
Virginia Total	 	 	477		 	181		 	296		 	54		 	20		 	 	
Winchester Total	 	 	2,443		 	1,152		 	1,291		 	161		 	58		 	 	
 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Combined Company Total	 	 	31,918		 	9,277		 	22,641		 	1,842		 	814		 	 	
__________

(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 March 31, 2019 include owned lots in backlog as of March 31, 2019 .	
		
(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 March 31, 2019 , 1,160 homes are under construction, 317 homes have completed construction, and 365 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.	

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Critical Accounting Policies
Our discussion and analysis of our financial condition and results of operations is based on our unaudited condensed consolidated financial statements included in this Quarterly Report on Form 10-Q, which have been prepared in accordance with GAAP. Our condensed notes to the unaudited consolidated financial statements included in this Quarterly Report on Form 10-Q and the audited financial statements included in our Annual Report on Form 10-K for the year ended December 31, 2018 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.
Except for accounting policies related to our adoption of ASC 842, 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, 2018. 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 for the critical accounting policies resulting from our adoption of ASC 842.
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.	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 three months ended March 31, 2019 . We did not enter into during the three months ended March 31, 2019 , and currently do not hold, derivatives for trading or speculative purposes.

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 March 31, 2019 .
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 three months ended March 31, 2019 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 three months ended March 31, 2019 .

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PART II. OTHER INFORMATION

Item 1.	Legal Proceedings	
The information required with respect to this item can be found under Note 13, Commitments and Contingencies – Legal Matters , to 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	

There have been no material changes in our risk factors from those disclosed in our Annual Report on Form 10-K for the year ended December 31, 2018.  If any of the risks discussed in our Annual Report on Form 10-K occur, our business, prospects, liquidity, financial condition and results of operations 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 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.”

Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	
On February 21, 2019, our board of directors discontinued and cancelled the 2018 Repurchase Program and approved the 2019 Repurchase Program, authorizing the repurchase of shares of common stock with an aggregate value of up to $100 million through March 31, 2020. Purchases of common stock pursuant to the 2019 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 under the Exchange Act. We are not obligated under the 2019 Repurchase Program to repurchase any specific number or dollar amount of shares of common stock, and we may modify, suspend or discontinue the 2019 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. Through the date of the filing of this Quarterly Report on Form 10-Q, no shares of common stock have been repurchased under the 2019 Repurchase Program.

- 54 -

		
Item 6.	Exhibits  	

			
Exhibit
Number	 	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 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))	
 	 	 	
10.1 †	 	Amended and Restated 2013 Long-Term Incentive Plan (incorporated by reference to Exhibit 10.1 to the Company’s Current Report on Form 8-K (filed February 26, 2019))	
 	 	 	
10.2 †	 	Form of Non-Employee Director Restricted Stock Unit Award Agreement (incorporated by reference to Exhibit 10.2 to the Company’s Current Report on Form 8-K (filed February 26, 2019))	
 	 	 	
10.3 †	 	Form of Time-Vested Restricted Stock Unit Award Agreement (incorporated by reference to Exhibit 10.3 to the Company’s Current Report on Form 8-K (filed February 26, 2019))	
 	 	 	
10.4 †	 	Form of Time-Vested Restricted Stock Unit Award Agreement	
 	 	 	
10.5 †	 	Form of Performance-Based Cash Award Agreement	
 	 	 	
10.6 †	 	Form of Performance-Based Restricted Stock Unit Award Agreement (earnings per share)	
 	 	 	
10.7 †	 	Form of Performance-Based Restricted Stock Unit Award Agreement (total stockholder return)	
 	 	 	
10.8	 	Second Amended and Restated Credit Agreement, dated as of March 29, 2019, among TRI Pointe Group, Inc., U.S. Bank National Association, and the lenders party thereto (incorporated by reference to Exhibit 10.1 to the Company’s Current Report on Form 8-K (filed April 4, 2019))	
 	 	 	
10.9	 	Second Amendment to Tax Sharing Agreement, dated as of March 29, 2019, among TRI Pointe Group, Inc., TRI Pointe Homes, Inc., TRI Pointe Holdings, Inc. and Weyerhaeuser Company (incorporated by reference to Exhibit 10.2 to the Company’s Current Report on Form 8-K (filed April 4, 2019))	
 	 	 	
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 three months ended March 31, 2019, formatted in eXtensible Business Reporting Language (XBRL): (i) Consolidated Balance Sheets, (ii) Consolidated Statements of Operations, (iii) Consolidated Statements of Comprehensive Income, (iv) Consolidated Statement of Cash Flows, and (v) Condensed Notes to Consolidated Financial Statement.	
 	 	 	
†	 	Management Contract or Compensatory Plan or Arrangement	

- 55 -

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: April 25, 2019	By:	/s/ Douglas F. Bauer	
 	 	Douglas F. Bauer	
 	 	Chief Executive Officer	
 	 	(Principal Executive Officer)	
Date: April 25, 2019	By:	/s/ Michael D. Grubbs	
 	 	Michael D. Grubbs	
 	 	Chief Financial Officer	
 	 	(Principal Financial Officer)	

- 56 -

Exhibit 10.4

TRI POINTE GROUP, INC.
2013 LONG-TERM INCENTIVE PLAN
RESTRICTED STOCK UNIT AWARD AGREEMENT – TIME VESTED 
 (EXECUTIVE FORM)
TRI Pointe Group, Inc., a Delaware corporation (the “ Company ”), hereby grants to [NAME] (the ” Holder ”) as of [DATE] (the “ Grant Date ”), pursuant to the terms and conditions of the TRI Pointe Group, Inc. 2013 Long-Term Incentive Plan, as amended (the “ Plan ”), an award of restricted stock units (the “ Award ” and the restricted stock units granted pursuant to this Agreement, the “ Award Units ”) with respect to [###] shares of the Company’s Common Stock, par value $0.01 per share (“ Common Stock ”), upon and subject to the restrictions, terms, and conditions set forth in the Plan and this agreement (the “ Agreement ”).
1. Award Subject to Acceptance of Agreement . The Award shall be null and void unless the Holder accepts this Agreement by executing it in the space provided below and returning such original execution copy to the Company, or by approving this Agreement by electronic means in a manner that has been approved by the Company.
2.     Rights as a Stockholder . Each Award Unit shall represent the Holder’s right to receive one share of the Company’s Common Stock if and to the extent that such Award Unit becomes vested pursuant to the terms and conditions of this Agreement and the Plan. The Holder shall not be entitled to any privileges of ownership with respect to the shares of Common Stock subject to the Award unless and until, and only to the extent, such shares become vested pursuant to Section 3 hereof and the Holder becomes a stockholder of record with respect to such shares. As of each date on which the Company pays a cash dividend to record owners of shares of Common Stock (a “ Dividend Date ”), then the number of Award Units and shares subject to the Award shall increase by (i) the product of the total number of shares subject to the Award immediately prior to such Dividend Date multiplied by the dollar amount of the cash dividend paid per share of Common Stock by the Company on such Dividend Date, divided by (ii) the Fair Market Value of a share of Common Stock on such Dividend Date. Any such additional Award Units and shares shall be subject to the same restrictions, vesting conditions, and payment terms set forth herein as the shares to which they relate.
3.     Restriction Period and Vesting .
3.1.     Service-Based Vesting Condition . Except as otherwise provided in this Section 3 , the Award shall vest (i) on the first anniversary of the Grant Date with respect to one-third of the number of Award Units and shares subject thereto on the Grant Date, rounded down to the nearest whole share, (ii) on the second anniversary of the Grant Date with respect to an additional one-third of the number of Award Units and shares subject thereto on the Grant Date, rounded up to the nearest whole share, and (iii) on the third anniversary of the Grant Date with respect to the remaining Award Units and shares subject thereto on the Grant Date, provided the Holder does not incur a Separation from Service before the applicable vesting date. The period of time prior to the vesting shall be referred to herein as the “ Restriction Period .”
3.2.     Change in Control and Acceleration . In the event a Change in Control occurs prior to the end of the Restriction Period, the following provisions shall apply:
3.2.1.    If (a) the Holder does not incur a Separation from Service before the date of the closing of the Change in Control transaction, and (b) the Award is not assumed in full by the acquiring or successor company or its affiliate upon the closing of the Change in Control or otherwise expressly continued in full force and effect pursuant to the terms of the Change in Control transaction, the Award Units shall vest as of the date of the closing of the Change in Control.
3.2.2.    If (a) the Holder does not incur a Separation from Service before the date of the closing of the Change in Control transaction, and (b) the Award is assumed in full by the acquiring or successor company or its affiliate upon the closing of the Change in Control, or is otherwise expressly continued in full force and effect pursuant to the terms of the Change in Control transaction, the Award Units shall become vested in accordance with the provisions of Section 3.1 , provided that if the Holder suffers a Qualifying

	

	

Termination before all the Award Units become vested and the Holder remains continuously employed by the Company or its successor-in-interest or an affiliate thereof through the date of such Qualifying Termination, the Award Units will become fully vested as to all remaining Award Units upon the effective date of such Qualifying Termination. A “ Qualifying Termination ” means a Separation from Service that occurs within 3 months prior to or 24 months following a Change in Control, by the Company (or its successor-in-interest) without Cause or by the Holder for Good Reason.
As used herein, a “Change in Control” means (i) the acquisition, other than from the Company, by any individual, entity, or group (within the meaning of Section 13(d)(3) or 14(d)(2) of the Exchange Act ) of beneficial ownership (within the meaning of Rule 13d-3 promulgated under the Exchange Act) of 50% or more of either the then outstanding shares of Common Stock of the Company or the combined voting power of the then outstanding voting securities of the Company entitled to vote generally in the election of directors, but excluding, for this purpose, any such acquisition by the Company or any of its Subsidiaries, or any employee benefit plan (or related trust) of the Company or its Subsidiaries, or any entity with respect to which, following such acquisition, more than 50% of, respectively, the then outstanding equity of such entity and the combined voting power of the then outstanding voting equity of such entity entitled to vote generally in the election of all or substantially all of the members of such entity’s governing body is then beneficially owned, directly or indirectly, by the individuals and entities who were the beneficial owners, respectively, of the Common Stock and voting securities of the Company immediately prior to such acquisition in substantially the same proportion as their ownership, immediately prior to such acquisition, of the then outstanding shares of Common Stock of the Company or the combined voting power of the then outstanding voting securities of the Company entitled to vote generally in the election of directors, as the case may be; or (ii) the consummation of a reorganization, merger, or consolidation of the Company, in each case, with respect to which all or substantially all of the individuals and entities who were the respective beneficial owners of the Common Stock and voting securities of the Company immediately prior to such reorganization, merger, or consolidation do not, following such reorganization, merger, or consolidation, beneficially own, directly or indirectly, more than 50% of, respectively, the then outstanding shares of Common Stock and the combined voting power of the then outstanding voting securities entitled to vote generally in the election of directors, as the case may be, of the corporation resulting from such reorganization, merger, or consolidation; or (iii) a complete liquidation or dissolution of the Company or the sale or other disposition of all or substantially all of the assets of the Company; or (iv) individuals who at the beginning of any two-year period constitute the Board (the “ Incumbent Board ”) cease for any reason to constitute at least a majority of the Board; provided, however, that any individual who becomes a director of the Company during such two-year period and whose election, or whose nomination for election by the Company’s stockholders, to the Board was either (A) approved by a vote of at least a majority of the directors then comprising the Incumbent Board or (B) recommended by a nominating committee comprised entirely of directors who are then Incumbent Board members, shall be considered as though such individual were a member of the Incumbent Board, but excluding, for this purpose, any such individual whose initial assumption of office occurs as a result of either an actual or threatened election contest (as such terms are used in Rule 14a-11 of Regulation 14A promulgated under the Exchange Act), other actual or threatened solicitation of proxies or consents, or an actual or threatened tender offer. Notwithstanding the foregoing, (I) any bona fide primary or secondary public offering shall not constitute a Change in Control and (II) if a Change in Control constitutes a payment event with respect to any payment or benefit that provides for the deferral of compensation and is subject to Section 409A, the Change in Control transaction or event with respect to such payment or benefit must also constitute a “change in control event,” as defined in Treasury Regulation § 1.409A-3(i)(5) to the extent required by Section 409A.
As used herein, the term “ Good Reason ” shall be defined as that term is defined in the Holder’s offer letter, employment agreement, change in control agreement, or other similar agreement; or if there is no such definition, “Good Reason” shall mean any of the following are undertaken without the Holder’s prior written consent: (a) a material diminution in the Holder’s title, authority, duties, or responsibilities that substantially reduces the nature or character of the Holder’s position with the Company (or the highest parent entity if the Company has one or more parent entities); (b) a reduction by the Company of the Holder’s base salary as in effect immediately prior to such reduction; (c) a material reduction by the Company of the Holder’s target annual bonus as in effect immediately prior to such reduction; (d) relocation of the Holder’s principal

	
			
 	2	

office (defined as a relocation of the Holder’s principal office to a location that increases the Holder’s one-way commute by more than 50 miles), provided, that, for the avoidance of doubt, reasonable required travel by the Holder on the Company’s business shall not constitute a relocation; (e) a change in the Employee’s title following a Change in Control such that the Employee does not serve as [TITLE] of the surviving entity’s highest parent entity; or (f) any material breach by the Company of any provision of this Agreement. Notwithstanding the foregoing, the Holder’s resignation shall not constitute a resignation for “Good Reason” as a result of any event described in the preceding sentence unless (A) the Holder provides written notice thereof to the Company within 30 days after the first occurrence of such event; (B) to the extent correctable, the Company fails to remedy such circumstance or event within 30 days following the Company’s receipt of such written notice; and (C) the effective date of the Holder’s resignation for “Good Reason” is not later than 90 days after the initial existence of the circumstances constituting Good Reason.
3.3.     Separation from Service . Except as set forth in Section 3.2 and Sections 5.9(a) and 5.9(b) of the Plan, if the Holder incurs a Separation from Service prior to the end of the Restriction Period for any reason, then the portion of the Award Units that were not vested immediately prior to such Separation from Service shall be immediately forfeited by the Holder for no consideration and cancelled by the Company.
4.     Delivery of Certificates . Subject to Section 6 , as soon as practicable (but no later than 30 days) after the vesting of Award Units, in whole or in part, the Company shall (i) deliver or cause to be delivered one or more certificates issued in the Holder’s name (or such other name as is acceptable to the Company and designated in writing by the Holder) or (ii) issue in book entry form registered in the name of the Holder (or such other name as is acceptable to the Company and designated in writing by the Holder) a written or electronic notice or statement representing the number of vested shares represented by such vested Award Units. The Company shall pay all original issue or transfer taxes and all fees and expenses incident to such delivery, except as otherwise provided in Section 6 . Prior to the issuance to the Holder of the shares of Common Stock subject to the Award, the Holder shall have no direct or secured claim in any specific assets of the Company or in such shares of Common Stock, and will have the status of a general unsecured creditor of the Company.
5.     Transfer Restrictions and Investment Representation .
5.1.     Nontransferability of Award . The Award may not be transferred by the Holder other than by will or the laws of descent and distribution, pursuant to the designation of one or more beneficiaries on the form prescribed by the Company, a trust or entity established by the Holder for estate planning purposes, or a charitable organization designated by the Holder or pursuant to a qualified domestic relations order, in each case, without consideration. Except to the extent permitted by the foregoing sentence, the Award and the Award Units may not be sold, transferred, assigned, pledged, hypothecated, encumbered, or otherwise disposed of (whether by operation of law or otherwise) or be subject to execution, attachment, or similar process. Upon any attempt to so sell, transfer, assign, pledge, hypothecate, encumber, or otherwise dispose of the Award or the Award Units in violation of this Agreement or the Plan, the Award and the Award Units and all rights hereunder shall immediately become null and void.
5.2.     Investment Representation . The Holder hereby represents and covenants that (a) any share of Common Stock acquired upon the vesting of the Award Units will be acquired for investment and not with a view to the distribution thereof within the meaning of the Securities Act of 1933, as amended (the “ Securities Act ”), unless such acquisition has been registered under the Securities Act and any applicable state securities laws; (b) any subsequent sale of any such shares shall be made either pursuant to an effective registration statement under the Securities Act and any applicable state securities laws, or pursuant to an exemption from registration under the Securities Act and such state securities laws; and (c) if requested by the Company, the Holder shall submit a written statement, in form satisfactory to the Company, to the effect that such representation (x) is true and correct as of the date of vesting of any shares of Common Stock hereunder or (y) is true and correct as of the date of any sale of any such share, as applicable. As a further condition precedent to the delivery to the Holder of any shares of Common Stock subject to the Award, the Holder shall comply with all regulations and requirements of any regulatory authority having control of or supervision over the issuance or delivery of the shares and, in connection therewith, shall execute any documents which the Board shall in its sole discretion deem necessary or advisable.

	
			
 	3	

6.     Additional Terms and Conditions of Award .
6.1.     Withholding Taxes . (a) The Company shall have the right to require, prior to the issuance or delivery of any shares of Common Stock upon the vesting of the Award Units, payment by the Holder of such Award of any federal, state, local, or other taxes which may be required to be withheld or paid in connection with such Award (the “ Required Tax Payments ”).
(b)    The Holder may satisfy his or her obligation to advance the Required Tax Payments by any of the following means: (1) a cash payment to the Company, (2) delivery (either actual delivery or by attestation procedures established by the Company) to the Company of previously owned whole shares of Common Stock having an aggregate Fair Market Value, determined as of the Tax Date, equal to the Required Tax Payments, (3) authorizing the Company to withhold up to the maximum required number of shares of Common Stock which would otherwise be delivered or an amount of cash which would otherwise be payable to the Holder having an aggregate Fair Market Value, determined as of the Tax Date, equal to the Required Tax Payments, or (4) any combination of (1), (2), and (3). To the extent applicable, the Holder may satisfy his or her withholding obligation only with shares that are not subject to any repurchase, forfeiture, unfulfilled vesting, or other similar requirements.
6.2.     Adjustment . In the event of any equity restructuring (within the meaning of Financial Accounting Standards Board Accounting Standards Codification Topic 718, Compensation-Stock Compensation) that causes the per share value of shares of Common Stock to change, such as a stock dividend, stock split, spinoff, rights offering, or recapitalization through an extraordinary dividend, the terms of this Award, including the number and class of securities subject hereto, shall be appropriately adjusted by the Committee. In the event of any other change in corporate capitalization, including a merger, consolidation, reorganization, or partial or complete liquidation of the Company, such equitable adjustments described in the foregoing sentence may be made as determined to be appropriate and equitable by the Committee (or, if the Company is not the surviving corporation in any such transaction, the board of directors of the surviving corporation) to prevent dilution or enlargement of rights of participants. The decision of the Committee regarding any such adjustment shall be final, binding, and conclusive.
6.3.     Compliance with Applicable Law . The Award is subject to the condition that if the listing, registration or qualification of the shares of Common Stock subject to the Award upon any securities exchange or under any law, or the consent or approval of any governmental body, or the taking of any other action is necessary or desirable as a condition of, or in connection with, the delivery of shares hereunder, the shares of Common Stock subject to the Award shall not be delivered, in whole or in part, unless such listing, registration, qualification, consent, approval, or other action shall have been effected or obtained, free of any conditions not acceptable to the Company. The Company agrees to use reasonable efforts to effect or obtain any such listing, registration, qualification, consent, approval, or other action.
6.4.     Award Confers No Rights to Continued Employment or Service . In no event shall the granting of the Award or its acceptance by the Holder, or any provision of this Agreement or the Plan, give or be deemed to give the Holder any right to continued employment by or service to the Company, any Subsidiary, or any affiliate of the Company or affect in any manner the right of the Company, any Subsidiary, or any affiliate of the Company to terminate the employment or service of any person at any time.
6.5.     Interpretation . Any dispute regarding the interpretation of this Agreement shall be submitted by the Holder or by the Company forthwith to the Committee for review. The resolution of such a dispute by the Committee shall be final and binding on all parties.
6.6.     Successors and Assigns . The Company may assign any of its rights under this Agreement to single or multiple assignees, and this Agreement shall inure to the benefit of the successors and assigns of the Company. Subject to the restrictions on transfer herein set forth, this Agreement shall be binding upon the Holder and his or her heirs, executors, administrators, successors, and assigns.
6.7.     Notices . All notices, requests or other communications provided for in this Agreement shall be made, if to the Company, to TRI Pointe Group, Inc., Attn: Chief Financial Officer, 19540 Jamboree Road, Suite 300,

	
			
 	4	

Irvine, California 92612, and if to the Holder, to the last known mailing address of the Holder contained in the records of the Company. All notices, requests or other communications provided for in this Agreement shall be made in writing either (a) by personal delivery, (b) by facsimile or electronic mail with confirmation of receipt, (c) by mailing in the United States mails, or (d) by express courier service. The notice, request, or other communication shall be deemed to be received upon personal delivery, upon confirmation of receipt of facsimile or electronic mail transmission, or upon receipt by the party entitled thereto if by United States mail or express courier service; provided , however , that if a notice, request, or other communication sent to the Company is not received during regular business hours, it shall be deemed to be received on the next succeeding business day of the Company.
6.8.     Governing Law . This Agreement, the Award, and all determinations made and actions taken pursuant hereto and thereto, to the extent not governed by the laws of the United States, shall be governed by the laws of the State of Delaware and construed in accordance therewith without giving effect to principles of conflicts of laws.
6.9.     Agreement Subject to the Plan . This Agreement is subject to the provisions of the Plan and shall be interpreted in accordance therewith. To the extent of any inconsistency between the terms of the Plan and the terms of this Agreement, the terms of the Plan shall control. The Holder hereby acknowledges receipt of a copy of the Plan.
6.10.     Entire Agreement . The Plan is incorporated herein by reference. Capitalized terms not defined herein shall have the meanings specified in the Plan. This Agreement and the Plan constitute the entire agreement of the parties with respect to the subject matter hereof and supersede in their entirety all prior undertakings and agreements of the Company and the Holder with respect to the subject matter hereof, and may not be modified adversely to the Holder’s interest except by means of a writing signed by the Company and the Holder.
6.11.     Partial Invalidity . The invalidity or unenforceability of any particular provision of this Agreement shall not affect the other provisions hereof and this Agreement shall be construed in all respects as if such invalid or unenforceable provision was omitted.
6.12.     Amendment and Waiver . The provisions of this Agreement may be amended or waived only by the written agreement of the Company and the Holder, and no course of conduct or failure or delay in enforcing the provisions of this Agreement shall affect the validity, binding effect, or enforceability of this Agreement.
6.13.     Counterparts . This Agreement may be executed in two counterparts each of which shall be deemed an original and both of which together shall constitute one and the same instrument.
6.14.     Section 409A . This Agreement will be interpreted in accordance with Section 409A of the Code, to the extent applicable, including without limitation any Treasury Regulations or other Department of Treasury guidance that may be issued or amended after the date hereof, and will not be amended or modified in any manner that would cause this Agreement to violate the requirements of Section 409A. If, following the date hereof, the Committee determines that the Award may be subject to Section 409A, including such Department of Treasury guidance as may be issued after the date hereof, the Committee may, in its discretion, adopt such amendments to this Agreement or adopt such other policies and procedures (including amendments, policies, and procedures with retroactive effect), or take any other actions, as the Committee determines are necessary or appropriate to (i) exempt the Award from Section 409A and/or preserve the intended tax treatment of the benefits provided with respect to the Award, or (ii) comply with the requirements of Section 409A. Notwithstanding anything to the contrary in the Plan or in this Agreement, the Holder agrees that the Holder (or the Holder’s estate or permitted beneficiary(ies)) will be solely responsible for the satisfaction of all taxes, interest, and penalties that may be imposed on the Holder or for the Holder’s account in connection with this Award (including, without limitation, any taxes, interest, and penalties under Section 409A), and neither the Company nor its Affiliates will have any obligation to reimburse, indemnify, or otherwise hold the Holder (or the Holder’s estate or permitted beneficiary(ies)) harmless from any or all of such taxes, interest, or penalties.
[Signature page follows.]

	
			
 	5	

TRI POINTE GROUP, INC.,
a Delaware corporation
By:______________________________________
Name:
Its:

Accepted this ___ day of [MONTH], [YEAR].
    
[NAME]

	

	

Exhibit 10.5

TRI POINTE GROUP, INC.
2013 LONG-TERM INCENTIVE PLAN
PERFORMANCE-BASED CASH AWARD AGREEMENT
TRI Pointe Group, Inc., a Delaware corporation (the “ Company ”), hereby grants to [NAME] (the “ Employee ”) as of [DATE] (the “ Grant Date ”), pursuant to the terms and conditions of the TRI Pointe Group, Inc. 2013 Long-Term Incentive Plan, as amended (the “ Plan ”), a performance-based cash award (the “ Award ”), upon and subject to the restrictions, terms, and conditions set forth in the Plan and this agreement (the “ Agreement ”). Capitalized terms used in this Agreement and not defined herein or set forth in Attachment A have the respective meanings given to them in the Plan.
1. Award Subject to Acceptance of Agreement . The Award shall be null and void unless the Employee accepts this Agreement by executing it in the space provided below and returning such original execution copy to the Company, or by approving this Agreement by electronic means in a manner that has been approved by the Company.
2.     Grant . The Company hereby grants to the Employee the Award, which entitles the Employee to earn a cash payment in an amount equal to the product of (a) the Cash Target Amount, and (b) the Percentage of the Award that Vests. Employee shall not be entitled to any privileges of ownership with respect to the cash subject to the Award unless and until, and only to the extent, such cash award becomes vested pursuant to Section 3 hereof.
3.     Performance Period and Vesting .
3.1.     Performance-Based Vesting Conditions . The Award granted pursuant to this Agreement shall constitute a Performance Award (as defined in the Plan). Except as otherwise provided in this Section 3 , if and to the extent that all or a portion of the Award (as determined in accordance with the provisions of this Section 3 and Attachment B ) shall vest on the Vesting Date as a result of the Company satisfying the Performance Measures set forth in Attachment B to this Agreement over the Performance Period, the Employee shall become vested in the cash Award, or the applicable portion thereof, if any, on the Vesting Date, provided that the Employee does not incur a Separation from Service before the Vesting Date. As used herein, (i) the term “ Performance Period ” shall mean the one-year period beginning on [DATE] and ending on [DATE] and (ii) the term “ Vesting Date ” shall mean the date on which the vested portion of the cash under the Award is delivered under Section 4 .
3.2.     Separation from Service; Failure to Satisfy Performance Measures; Change in Control .
3.2.1.    Except as otherwise provided in this Section 3.2 and Sections 5.9(a) and 5.9(b) of the Plan, if the Employee incurs a Separation from Service prior to the Vesting Date for any reason, then the entire Award shall be immediately forfeited by the Employee for no consideration and cancelled, effective as of the date of the Employee’s Separation from Service.
3.2.2.    If the Employee incurs a Separation from Service (i) by the Company (or its successor-in-interest after a Change in Control) without Cause or (ii) by the Employee for Good Reason (each, an “ Involuntary Termination ”), the Award shall be eligible to vest as follows: (a) the proportion of the Award vesting under this provision shall be equal to the number of days in the Performance Period that elapsed before the Involuntary Termination divided by the total number of days in such Performance Period (for the avoidance of doubt, net of any proportion of the Award that has already vested), and (b) the amount of the Award vesting under this provision shall be based on actual achievement of the Performance Measures measured at the end of the Performance Period. Any awards vesting under this provision shall vest at the end of the applicable Performance Period.
As used herein, a “ Change in Control ” means (i) the acquisition, other than from the Company, by any individual, entity, or group (within the meaning of Section 13(d)(3) or 14(d)(2) of the Exchange Act ) of beneficial ownership (within the meaning of Rule 13d-3 promulgated under the Exchange Act) of 50% or more of either the then outstanding shares of Common Stock of the Company or the combined voting power of the then outstanding voting securities of the Company entitled to vote generally in the election of directors, but excluding, for this purpose, any such acquisition by the Company or any of its Subsidiaries,

	

	

or any employee benefit plan (or related trust) of the Company or its Subsidiaries, or any entity with respect to which, following such acquisition, more than 50% of, respectively, the then outstanding equity of such entity and the combined voting power of the then outstanding voting equity of such entity entitled to vote generally in the election of all or substantially all of the members of such entity’s governing body is then beneficially owned, directly or indirectly, by the individuals and entities who were the beneficial owners, respectively, of the Common Stock and voting securities of the Company immediately prior to such acquisition in substantially the same proportion as their ownership, immediately prior to such acquisition, of the then outstanding shares of Common Stock of the Company or the combined voting power of the then outstanding voting securities of the Company entitled to vote generally in the election of directors, as the case may be; or (ii) the consummation of a reorganization, merger, or consolidation of the Company, in each case, with respect to which all or substantially all of the individuals and entities who were the respective beneficial owners of the Common Stock and voting securities of the Company immediately prior to such reorganization, merger, or consolidation do not, following such reorganization, merger, or consolidation, beneficially own, directly or indirectly, more than 50% of, respectively, the then outstanding shares of Common Stock and the combined voting power of the then outstanding voting securities entitled to vote generally in the election of directors, as the case may be, of the corporation resulting from such reorganization, merger, or consolidation; or (iii) a complete liquidation or dissolution of the Company or the sale or other disposition of all or substantially all of the assets of the Company; or (iv) individuals who at the beginning of any two-year period constitute the Board (the “ Incumbent Board ”) cease for any reason to constitute at least a majority of the Board; provided, however, that any individual who becomes a director of the Company during such two-year period and whose election, or whose nomination for election by the Company’s stockholders, to the Board was either (A) approved by a vote of at least a majority of the directors then comprising the Incumbent Board or (B) recommended by a nominating committee comprised entirely of directors who are then Incumbent Board members, shall be considered as though such individual were a member of the Incumbent Board, but excluding, for this purpose, any such individual whose initial assumption of office occurs as a result of either an actual or threatened election contest (as such terms are used in Rule 14a-11 of Regulation 14A promulgated under the Exchange Act), other actual or threatened solicitation of proxies or consents, or an actual or threatened tender offer. Notwithstanding the foregoing, (I) any bona fide primary or secondary public offering shall not constitute a Change in Control and (II) if a Change in Control constitutes a payment event with respect to any payment or benefit that provides for the deferral of compensation and is subject to Section 409A, the Change in Control transaction or event with respect to such payment or benefit must also constitute a “change in control event,” as defined in Treasury Regulation § 1.409A-3(i)(5) to the extent required by Section 409A.
As used herein, the term “ Good Reason ” shall be defined as that term is defined in the Employee’s offer letter, employment agreement, change in control agreement, or other similar agreement; or if there is no such definition, “Good Reason” shall mean any of the following are undertaken without the Employee’s prior written consent: (a) a material diminution in the Employee’s title, authority, duties, or responsibilities that substantially reduces the nature or character of the Employee’s position with the Company (or the highest parent entity if the Company has one or more parent entities); (b) a reduction by the Company of the Employee’s base salary as in effect immediately prior to such reduction; (c) a material reduction by the Company of the Employee’s target annual bonus as in effect immediately prior to such reduction; (d) relocation of the Employee’s principal office (defined as a relocation of the Employee’s principal office to a location that increases the Employee’s one-way commute by more than 50 miles), provided, that, for the avoidance of doubt, reasonable required travel by the Employee on the Company’s business shall not constitute a relocation; (e) a change in the Employee’s title following a Change in Control such that the Employee does not serve as [TITLE] of the surviving entity’s highest parent entity; or (f) any material breach by the Company of any provision of this Agreement. Notwithstanding the foregoing, the Employee’s resignation shall not constitute a resignation for “Good Reason” as a result of any event described in the preceding sentence unless (A) the Employee provides written notice thereof to the Company within 30 days after the first occurrence of such event; (B) to the extent correctable, the Company fails to remedy such circumstance or event within 30 days following the Company’s receipt of such written notice; and (C) the effective date of the Employee’s resignation

	
			
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for “Good Reason” is not later than 90 days after the initial existence of the circumstances constituting Good Reason.
3.2.3.    If the Employee does not incur a Separation from Service before the Vesting Date, but the Performance Measures set forth in Attachment B to this Agreement do not equal or exceed the Maximum Performance Level, and the Employee thus does not become vested in 200% of the Cash Target Amount, then the right to receive any portion of the cash under the Award in which the Employee does not become vested pursuant to the Performance Measures set forth in said Attachment B shall be immediately forfeited by the Employee for no consideration and cancelled, effective as of the last day of the Performance Period.
4.     Delivery of Cash Payment . Subject to Section 6 , within 30 days after the determination of the Performance Measures set forth in Attachment B , in whole or in part, but in no event later than 180 days after the end of the Performance Period, the Company shall deliver or cause to be delivered the vested portion of the cash under the Award, as calculated in accordance with this Agreement and Attachment B hereto. Prior to the payment to the Employee of the cash that has vested under the Award, the Employee shall have no direct or secured claim in any specific assets of the Company, and will have the status of a general unsecured creditor of the Company.
		
5.	Transfer Restrictions and Investment Representation .	
5.1.     Nontransferability of Award . The Award may not be transferred by the Employee other than by will or the laws of descent and distribution, pursuant to the designation of one or more beneficiaries on the form prescribed by the Company, a trust or entity established by the Employee for estate planning purposes, or a charitable organization designated by the Employee or pursuant to a qualified domestic relations order, in each case, without consideration. Except to the extent permitted by the foregoing sentence, the Award may not be sold, transferred, assigned, pledged, hypothecated, encumbered, or otherwise disposed of (whether by operation of law or otherwise) or be subject to execution, attachment, or similar process. Upon any attempt to so sell, transfer, assign, pledge, hypothecate, encumber, or otherwise dispose of the Award in violation of this Agreement or the Plan, the Award and all rights hereunder shall immediately become null and void.
5.2.     Additional Restrictions . If the Employee is, or becomes, a person subject to any policy of the Company providing for recoupment of performance based compensation in the event of a restatement of the Company’s financial results, then Employee agrees the Award (and any cash issued with respect thereto) will be subject to such recoupment policy.
		
6.	Additional Terms and Conditions of Award .	
6.1.     Withholding Taxes . The Company shall have the right to withhold from any cash payment under the Award and remit to the appropriate taxing authorities all taxes required to be withheld under applicable law, as determined by the Company in its sole and absolute discretion.
6.2.     Award Confers No Rights to Continued Employment or Service . In no event shall the granting of the Award or its acceptance by the Employee, or any provision of this Agreement or the Plan, give or be deemed to give the Employee any right to continued employment by or service to the Company, any Subsidiary, or any affiliate of the Company or affect in any manner the right of the Company, any Subsidiary, or any affiliate of the Company to terminate the employment or service of any person at any time.
6.3.     Interpretation . Any dispute regarding the interpretation of this Agreement shall be submitted by the Employee or by the Company forthwith to the Committee for review. The resolution of such a dispute by the Committee shall be final and binding on all parties.
6.4.     Successors and Assigns . The Company may assign any of its rights under this Agreement to single or multiple assignees, and this Agreement shall inure to the benefit of the successors and assigns of the Company. Subject to the restrictions on transfer herein set forth, this Agreement shall be binding upon the Employee and his or her heirs, executors, administrators, successors, and assigns.

	
			
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6.5.     Notices . All notices, requests or other communications provided for in this Agreement shall be made, if to the Company, to TRI Pointe Group, Inc., Attn: Chief Financial Officer, 19540 Jamboree Road, Suite 300, Irvine, California 92612, and if to the Employee, to the last known mailing address of the Employee contained in the records of the Company. All notices, requests or other communications provided for in this Agreement shall be made in writing either (a) by personal delivery, (b) by facsimile or electronic mail with confirmation of receipt, (c) by mailing in the United States mails, or (d) by express courier service. The notice, request, or other communication shall be deemed to be received upon personal delivery, upon confirmation of receipt of facsimile or electronic mail transmission, or upon receipt by the party entitled thereto if by United States mail or express courier service; provided , however , that if a notice, request, or other communication sent to the Company is not received during regular business hours, it shall be deemed to be received on the next succeeding business day of the Company.
6.6.     Governing Law . This Agreement, the Award and all determinations made and actions taken pursuant hereto and thereto, to the extent not governed by the laws of the United States, shall be governed by the laws of the State of Delaware and construed in accordance therewith without giving effect to principles of conflicts of laws.
6.7.     Agreement Subject to the Plan . This Agreement is subject to the provisions of the Plan, including without limitation, Section 4.2 relating to terms of Performance Awards, and shall be interpreted in accordance therewith. To the extent of any inconsistency between the terms of the Plan and the terms of this Agreement, the terms of the Plan shall control. The Employee hereby acknowledges receipt of a copy of the Plan.
6.8.     Entire Agreement . The Plan is incorporated herein by reference. This Agreement and the Plan constitute the entire agreement of the parties with respect to the Award and supersede in their entirety all prior undertakings and agreements of the Company and the Employee with respect to the Award, and may not be modified adversely to the Employee’s interest except by means of a writing signed by the Company and the Employee.
6.9.     Partial Invalidity . The invalidity or unenforceability of any particular provision of this Agreement shall not affect the other provisions hereof and this Agreement shall be construed in all respects as if such invalid or unenforceable provision was omitted.
6.10.     Amendment and Waiver . The provisions of this Agreement may be amended or waived only by the written agreement of the Company and the Employee, and no course of conduct or failure or delay in enforcing the provisions of this Agreement shall affect the validity, binding effect, or enforceability of this Agreement.
6.11.     Counterparts . This Agreement may be executed in two counterparts each of which shall be deemed an original and both of which together shall constitute one and the same instrument.
6.12.     Section 409A . This Agreement will be interpreted in accordance with Section 409A of the Code, to the extent applicable, including without limitation any Treasury Regulations or other Department of Treasury guidance that may be issued or amended after the date hereof, and will not be amended or modified in any manner that would cause this Agreement to violate the requirements of Section 409A. If, following the date hereof, the Committee determines that the Award may be subject to Section 409A, including such Department of Treasury guidance as may be issued after the date hereof, the Committee may, in its discretion, adopt such amendments to this Agreement or adopt such other policies and procedures (including amendments, policies, and procedures with retroactive effect), or take any other actions, as the Committee determines are necessary or appropriate to (i) exempt the Award from Section 409A and/or preserve the intended tax treatment of the benefits provided with respect to the Award, or (ii) comply with the requirements of Section 409A. Notwithstanding anything to the contrary in the Plan or in this Agreement, the Employee agrees that the Employee (or the Employee’s estate or permitted beneficiary(ies)) will be solely responsible for the satisfaction of all taxes, interest, and penalties that may be imposed on the Employee or for the Employee’s account in connection with this Award (including, without limitation, any taxes, interest, and penalties under Section 409A), and neither the Company nor its Affiliates will have any obligation to reimburse, indemnify, or otherwise hold the Employee (or the Employee’s estate or permitted beneficiary(ies)) harmless from any or all of such taxes, interest, or penalties.
[Signature page follows.]

	
			
 	4 #	

TRI POINTE GROUP, INC.,
a Delaware corporation
By:______________________________________
Name:
Its:

Accepted this ______ day of [MONTH], [YEAR].
    
[NAME]

	

	

Attachment A
DEFINITIONS
For purpose of this Agreement, the following terms shall have the meanings set forth below:
“ Adjusted Pre-Tax Income ” means the income from continuing operations before taxes of the Company, as reported in the Company’s consolidated financial statements for the relevant periods, after such adjustments thereto as the Committee deems appropriate in its sole discretion (i) to exclude the effect of extraordinary, unusual, and/or nonrecurring items, including net income attributable to non-controlling interests, and changes in applicable accounting standards and (ii) to reflect such other factors as the Committee deems appropriate to fairly reflect pre-tax income.
“ Cash Target Amount ” means the product of (i) []% multiplied by (ii) the Employee’s annualized base salary for the fiscal year of the Company during which the Grant Date falls.
“ Pre-Tax Income ” means the sum of the Adjusted Pre-Tax Income over the Performance Period for each period in which Adjusted Pre-Tax Income is measured pursuant to the above definition of Adjusted Pre-Tax Income.
“ Percentage of the Award that Vests ” means the percentage set forth on Attachment B to this Agreement in the column labeled “Percentage of Cash Target Amount That Vests,” as determined based on the applicable Performance Level met for the Performance Period (as determined in accordance with Attachment B to this Agreement), or portion thereof, as applicable.
“ Performance Measures ” means the Performance Measures set forth on Attachment B to this Agreement.

Attachment B
PERFORMANCE MEASURES

	

Performance Level	 	[PERFORMANCE MEASURE]	 	Percentage of Cash Target
Amount That Vests	
Maximum	 	  [] or above	 	[]%	
Target	 	  []	 	[]%	
Threshold	 	  []	 	[]%	
Below Threshold	 	  Below []	 	0%	
The percentage of the Award that vests if [PERFORMANCE MEASURE] is between the “Threshold” and “Target” or “Target” and “Maximum” performance levels, as applicable, shall be determined by straight line interpolation. The Committee shall determine the portion of the Award that shall vest by multiplying the “Percentage of Award That Vests,” set forth above, by the Cash Target Amount.

Exhibit 10.6

TRI POINTE GROUP, INC.
2013 LONG-TERM INCENTIVE PLAN

PERFORMANCE-BASED RESTRICTED STOCK UNIT AWARD AGREEMENT –
EPS PERFORMANCE MEASUREMENT
(EXECUTIVE FORM)
TRI Pointe Group, Inc., a Delaware corporation (the “ Company ”), hereby grants to [NAME] (the “ Holder ”) as of [DATE] (the “ Grant Date ”), pursuant to the terms and conditions of the TRI Pointe Group, Inc. 2013 Long-Term Incentive Plan, as amended (the “ Plan ”), an award of performance-based restricted stock units (the “ Award ” and the restricted stock units granted pursuant to this Agreement, the “ Award Units ”) with respect to [###] shares of the Company’s Common Stock, par value $0.01 per share (“ Common Stock ”), upon and subject to the restrictions, terms, and conditions set forth in the Plan and this agreement (the “ Agreement ”). Capitalized terms used in this Agreement and not defined herein or set forth in Attachment A have the respective meanings given to them in the Plan.
1. Award Subject to Acceptance of Agreement . The Award shall be null and void unless the Holder accepts this Agreement by executing it in the space provided below and returning such original execution copy to the Company, or by approving this Agreement by electronic means in a manner that has been approved by the Company.
2.     Rights as a Stockholder . Each Award Unit shall represent the Holder’s right to receive one share of the Company’s Common Stock if and to the extent that such Award Unit becomes vested pursuant to the terms and conditions of this Agreement and the Plan. The Holder shall not be entitled to any privileges of ownership with respect to the shares of Common Stock subject to the Award unless and until, and only to the extent, such shares become vested pursuant to Section 3 hereof and the Holder becomes a stockholder of record with respect to such shares. As of each date on which the Company pays a cash dividend to record owners of shares of Common Stock (a “ Dividend Date ”), then the number of Award Units and shares subject to the Award shall increase by (i) the product of the total number of shares subject to the Award immediately prior to such Dividend Date multiplied by the dollar amount of the cash dividend paid per share of Common Stock by the Company on such Dividend Date, divided by (ii) the Fair Market Value of a share of Common Stock on such Dividend Date. Any such additional Award Units and shares shall be subject to the same restrictions, vesting conditions, and payment terms set forth herein as the shares to which they relate.
3.     Performance Period and Vesting .
3.1     Performance-Based Vesting Conditions . The Award granted pursuant to this Agreement shall constitute a Performance Award (as defined in the Plan). Except as otherwise provided in this Section 3 , if and to the extent that all or a portion of the Award (as determined in accordance with the provisions of Attachment B ) shall vest on the Vesting Date as a result of the Company satisfying the Performance Measures set forth in Attachment B to this Agreement over the Performance Period, the Holder shall become vested in the Award Units, or the applicable portion thereof, if any, on the Vesting Date, provided that the Holder does not incur a Separation from Service before the Vesting Date. As used herein, (i) the term “ Performance Period ” shall mean the three-year period beginning on [DATE] and ending on [DATE] and (ii) the term “ Vesting Date ” shall mean [DATE]. If the Performance Period is shortened pursuant to Section 3.2 as a result of a Change in Control, appropriate adjustments to the performance targets, performance periods, and the determination of actual performance shall be made by the Committee in order to carry out the intent of this Agreement.

	

	

3.2     Change in Control and Acceleration . In the event a Change in Control occurs after the first day of the Performance Period but prior to the end of the Performance Period, the Performance Period shall terminate on the closing date of the Change in Control transaction and the following provisions shall apply:
3.2.1    If (a) the closing of the Change in Control transaction occurs on or before the 12-month anniversary of the first day of the Performance Period, (b) the Holder does not incur a Separation from Service before the date of the closing of the Change in Control transaction, and (c) the Award is not assumed in full by the acquiring or successor company or its affiliate upon the closing of the Change in Control or otherwise expressly continued in full force and effect pursuant to the terms of the Change in Control transaction, 50% of the Award Units shall vest as of the date of the closing of the Change in Control.
3.2.2    If (a) the closing of the Change in Control transaction occurs on or before the 12-month anniversary of the first day of the Performance Period and (b) the Award is assumed in full by the acquiring or successor company or its affiliate upon the closing of the Change in Control, or is otherwise expressly continued in full force and effect pursuant to the terms of the Change in Control transaction, 50% of the Award Units may become vested in accordance with the provisions of the last sentence of this Section 3.2.2 . If (i) the Holder remains in service with the Company or its successor-in-interest or an affiliate thereof through the Vesting Date, 50% of the Award Units shall become fully vested effective as of the Vesting Date or (ii) if the Holder suffers a Qualifying Termination before the Vesting Date, 50% of the Award Units shall become vested upon the later of the effective date of such Qualifying Termination and the closing of the Change in Control.
3.2.3    If (a) the closing of the Change in Control transaction occurs after the 12-month anniversary of the first day of the Performance Period, (b) the Holder does not incur a Separation from Service before the date of the closing of the Change in Control transaction, and (c) the Award is not assumed in full by the acquiring or successor company or its affiliate upon the closing of the Change in Control or otherwise expressly continued in full force and effect pursuant to the terms of the Change in Control transaction, the Award shall vest as of the date of the closing of the Change in Control transaction, but only with respect to a number of Award Units equal to the Change in Control Units.
3.2.4    If (a) the closing of the Change in Control transaction occurs after the 12-month anniversary of the first day of the Performance Period and (b) the Award is assumed in full by the acquiring or successor company or its affiliate upon the closing of the Change in Control, or is otherwise expressly continued in full force and effect pursuant to the terms of the Change in Control transaction, the Award Units may become vested in accordance with the provisions of the last sentence of this Section 3.2.4 , but only with respect to a number of Award Units equal to the Change in Control Units. If (i) the Holder remains in service with the Company or its successor-in-interest or an affiliate thereof through the Vesting Date, such Change in Control Units shall become fully effective as of the Vesting Date or (ii) if the Holder suffers a Qualifying Termination before the Vesting Date and the Holder remains in service with the Company or its successor-in-interest or an affiliate thereof through the date of such Qualifying Termination, the Change in Control Units shall become vested upon the later of the effective date of such Qualifying Termination and the closing of the Change in Control.
3.2.5    The portion of the Award Units that do not vest in the event of a Change in Control pursuant to Sections 3.2.1 , 3.2.2 , 3.2.3 , or 3.2.4 (i.e., the total number of Award Units less the number of Award Units that become vested pursuant to Sections 3.2.1 , 3.2.2 , 3.2.3 , and 3.2.4 ) shall be cancelled and forfeited by the Holder for no consideration on the date of the Change in Control.
3.2.6    As used herein, a “ Change in Control ” means (i) the acquisition, other than from the Company, by any individual, entity, or group (within the meaning of Section 13(d)(3) or 14(d)(2) of the Exchange Act ) of beneficial ownership (within the meaning of Rule 13d-3 promulgated under the Exchange Act) of 50% or more of either the then outstanding shares of Common Stock of the Company or the combined voting power of the then outstanding voting securities of the Company entitled to vote generally in the election of directors, but excluding, for this purpose, any such acquisition by the Company or any of its Subsidiaries, or any employee benefit plan (or related trust) of the Company or its Subsidiaries, or any entity with respect to which, following such acquisition, more than 50% of, respectively, the then outstanding equity of such entity and the combined voting power of the then outstanding

	
			
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voting equity of such entity entitled to vote generally in the election of all or substantially all of the members of such entity’s governing body is then beneficially owned, directly or indirectly, by the individuals and entities who were the beneficial owners, respectively, of the Common Stock and voting securities of the Company immediately prior to such acquisition in substantially the same proportion as their ownership, immediately prior to such acquisition, of the then outstanding shares of Common Stock of the Company or the combined voting power of the then outstanding voting securities of the Company entitled to vote generally in the election of directors, as the case may be; or (ii) the consummation of a reorganization, merger, or consolidation of the Company, in each case, with respect to which all or substantially all of the individuals and entities who were the respective beneficial owners of the Common Stock and voting securities of the Company immediately prior to such reorganization, merger, or consolidation do not, following such reorganization, merger, or consolidation, beneficially own, directly or indirectly, more than 50% of, respectively, the then outstanding shares of Common Stock and the combined voting power of the then outstanding voting securities entitled to vote generally in the election of directors, as the case may be, of the corporation resulting from such reorganization, merger, or consolidation; or (iii) a complete liquidation or dissolution of the Company or the sale or other disposition of all or substantially all of the assets of the Company; or (iv) individuals who at the beginning of any two-year period constitute the Board (the “ Incumbent Board ”) cease for any reason to constitute at least a majority of the Board; provided, however, that any individual who becomes a director of the Company during such two-year period and whose election, or whose nomination for election by the Company’s stockholders, to the Board was either (A) approved by a vote of at least a majority of the directors then comprising the Incumbent Board or (B) recommended by a nominating committee comprised entirely of directors who are then Incumbent Board members, shall be considered as though such individual were a member of the Incumbent Board, but excluding, for this purpose, any such individual whose initial assumption of office occurs as a result of either an actual or threatened election contest (as such terms are used in Rule 14a-11 of Regulation 14A promulgated under the Exchange Act), other actual or threatened solicitation of proxies or consents, or an actual or threatened tender offer. Notwithstanding the foregoing, (I) any bona fide primary or secondary public offering shall not constitute a Change in Control and (II) if a Change in Control constitutes a payment event with respect to any payment or benefit that provides for the deferral of compensation and is subject to Section 409A, the Change in Control transaction or event with respect to such payment or benefit must also constitute a “change in control event,” as defined in Treasury Regulation § 1.409A-3(i)(5) to the extent required by Section 409A.
3.3     Separation from Service; Death or Disability; Failure to Satisfy Performance Measures .
3.3.1    Except as otherwise provided in Section 3.2 and in Sections 5.9(a) and 5.9(b) of the Plan, if the Holder incurs a Separation from Service before the Vesting Date for any reason, then the entire Award shall be immediately forfeited by the Holder for no consideration and cancelled, effective as of the date of the Holder’s Separation from Service.
3.3.2    If the Holder does not incur a Separation from Service before the Vesting Date, but the Cumulative EPS for the Company for the Performance Period does not equal or exceed the Maximum Performance Level, as set forth on Attachment B to this Agreement and the Holder thus does not become vested in 100% of the Award Units, then any Award Units in which the Holder does not become vested pursuant to the Performance Measures set forth in said Attachment B shall be immediately forfeited by the Holder for no consideration and cancelled, effective as of the last day of the Performance Period.
4.     Delivery of Certificates . Subject to Section 6 , as soon as practicable after the vesting of Award Units, in whole or in part, but in no event later than March 15 of the calendar year immediately following the year in which Award Units become vested, the Company shall (i) deliver or cause to be delivered one or more certificates issued in the Holder’s name (or such other name as is acceptable to the Company and designated in writing by the Holder), or (ii) issue in book entry form registered in the name of the Holder (or such other name as is acceptable to the Company and designated in writing by the Holder) a written or electronic notice or statement representing the number of vested shares represented by such vested Award Units. The Company shall pay all original issue or transfer taxes and all fees and expenses incident to such delivery, except as otherwise provided in Section 6 . Prior to the issuance to the Holder of the shares of Common Stock subject to the Award, the Holder shall have no direct or secured claim in any specific assets of the Company or in such shares of Common Stock, and will have the status of a general unsecured creditor of the Company.

	
			
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5.     Transfer Restrictions and Investment Representation .
5.1     Nontransferability of Award . The Award may not be transferred by the Holder other than by will or the laws of descent and distribution, pursuant to the designation of one or more beneficiaries on the form prescribed by the Company, a trust or entity established by the Holder for estate planning purposes, or a charitable organization designated by the Holder or pursuant to a qualified domestic relations order, in each case, without consideration. Except to the extent permitted by the foregoing sentence, the Award and the Award Units may not be sold, transferred, assigned, pledged, hypothecated, encumbered, or otherwise disposed of (whether by operation of law or otherwise) or be subject to execution, attachment, or similar process. Upon any attempt to so sell, transfer, assign, pledge, hypothecate, encumber, or otherwise dispose of the Award or the Award Units in violation of this Agreement or the Plan, the Award and the Award Units and all rights hereunder shall immediately become null and void.
5.2     Investment Representation . The Holder hereby represents and covenants that (a) any share of Common Stock acquired upon the vesting of the Award Units will be acquired for investment and not with a view to the distribution thereof within the meaning of the Securities Act of 1933, as amended (the “ Securities Act ”), unless such acquisition has been registered under the Securities Act and any applicable state securities laws; (b) any subsequent sale of any such shares shall be made either pursuant to an effective registration statement under the Securities Act and any applicable state securities laws, or pursuant to an exemption from registration under the Securities Act and such state securities laws; and (c) if requested by the Company, the Holder shall submit a written statement, in form satisfactory to the Company, to the effect that such representation (x) is true and correct as of the date of vesting of any shares of Common Stock hereunder or (y) is true and correct as of the date of any sale of any such share, as applicable. As a further condition precedent to the delivery to the Holder of any shares of Common Stock subject to the Award, the Holder shall comply with all regulations and requirements of any regulatory authority having control of or supervision over the issuance or delivery of the shares and, in connection therewith, shall execute any documents which the Board shall in its sole discretion deem necessary or advisable.
5.3     Additional Restrictions . If the Holder is, or becomes, a person subject to any policy of the Company providing for recoupment of performance based compensation in the event of a restatement of the Company’s financial results, then Holder agrees the Award and the Award Units (and any shares of Common Stock issued with respect thereto) will be subject to such recoupment policy. The Company may impose, and Holder agrees to be bound by, such restrictions, conditions, or limitations as the Company determines appropriate as to the timing and manner of any resales or other transfers of any Award Units (and any shares of Common Stock issued with respect thereto) as to which transferability restrictions have lapsed as provided under this Agreement, including without limitation (a) restrictions under an insider trading or other Company policy, (b) restrictions designed to delay and/or coordinate the timing and manner of sales by Holder and others following a public offering of the Company’s securities, (c) stock ownership or holding requirements, and (d) the required use of a specified brokerage firm for such resales or other transfers.
6.     Additional Terms and Conditions of Award .
6.1     Withholding Taxes . The Company shall have the right to require, prior to the issuance or delivery of any shares of Common Stock upon the vesting of the Award Units, payment by the Holder of such Award of any federal, state, local or other taxes which may be required to be withheld or paid in connection with such Award (the “ Required Tax Payments ”). The Holder may satisfy his or her obligation to advance the Required Tax Payments by any of the following means: (1) a cash payment to the Company, (2) delivery (either actual delivery or by attestation procedures established by the Company) to the Company of previously owned whole shares of Common Stock having an aggregate Fair Market Value, determined as of the Tax Date, equal to the Required Tax Payments, (3) authorizing the Company to withhold up to the maximum required number of shares of Common Stock which would otherwise be delivered or an amount of cash which would otherwise be payable to the Holder having an aggregate Fair Market Value, determined as of the Tax Date, equal to the Required Tax Payments, or (4) any combination of (1), (2), and (3). To the extent applicable, the Holder may satisfy his or her withholding obligation only with shares that are not subject to any repurchase, forfeiture, unfulfilled vesting, or other similar requirements.

	
			
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6.2     Adjustment . In the event of any equity restructuring (within the meaning of Financial Accounting Standards Board Accounting Standards Codification Topic 718, Compensation-Stock Compensation) that causes the per share value of shares of Common Stock to change, such as a stock dividend, stock split, spinoff, rights offering, or recapitalization through an extraordinary dividend, the terms of this Award, including the number and class of securities subject hereto, shall be appropriately adjusted by the Committee. In the event of any other change in corporate capitalization, including a merger, consolidation, reorganization, or partial or complete liquidation of the Company, such equitable adjustments described in the foregoing sentence may be made as determined to be appropriate and equitable by the Committee (or, if the Company is not the surviving corporation in any such transaction, the board of directors of the surviving corporation) to prevent dilution or enlargement of rights of participants. The decision of the Committee regarding any such adjustment shall be final, binding, and conclusive.
6.3     Compliance with Applicable Law . The Award is subject to the condition that if the listing, registration, or qualification of the shares of Common Stock subject to the Award upon any securities exchange or under any law, or the consent or approval of any governmental body, or the taking of any other action is necessary or desirable as a condition of, or in connection with, the delivery of shares hereunder, the shares of Common Stock subject to the Award shall not be delivered, in whole or in part, unless such listing, registration, qualification, consent, approval, or other action shall have been effected or obtained, free of any conditions not acceptable to the Company. The Company agrees to use reasonable efforts to effect or obtain any such listing, registration, qualification, consent, approval, or other action.
6.4     Award Confers No Rights to Continued Employment or Service . In no event shall the granting of the Award or its acceptance by the Holder, or any provision of this Agreement or the Plan, give or be deemed to give the Holder any right to continued employment by or service to the Company, any Subsidiary, or any affiliate of the Company or affect in any manner the right of the Company, any Subsidiary, or any affiliate of the Company to terminate the employment or service of any person at any time.
6.5     Interpretation . Any dispute regarding the interpretation of this Agreement shall be submitted by the Holder or by the Company forthwith to the Committee for review. The resolution of such a dispute by the Committee shall be final and binding on all parties.
6.6     Successors and Assigns . The Company may assign any of its rights under this Agreement to single or multiple assignees, and this Agreement shall inure to the benefit of the successors and assigns of the Company. Subject to the restrictions on transfer herein set forth, this Agreement shall be binding upon the Holder and his or her heirs, executors, administrators, successors, and assigns.
6.7     Notices . All notices, requests or other communications provided for in this Agreement shall be made, if to the Company, to TRI Pointe Group, Inc., Attn: Chief Financial Officer, 19540 Jamboree Road, Suite 300, Irvine, California 92612, and if to the Holder, to the last known mailing address of the Holder contained in the records of the Company. All notices, requests or other communications provided for in this Agreement shall be made in writing either (a) by personal delivery, (b) by facsimile or electronic mail with confirmation of receipt, (c) by mailing in the United States mails, or (d) by express courier service. The notice, request, or other communication shall be deemed to be received upon personal delivery, upon confirmation of receipt of facsimile or electronic mail transmission, or upon receipt by the party entitled thereto if by United States mail or express courier service; provided , however , that if a notice, request, or other communication sent to the Company is not received during regular business hours, it shall be deemed to be received on the next succeeding business day of the Company.
6.8     Governing Law . This Agreement, the Award, and all determinations made and actions taken pursuant hereto and thereto, to the extent not governed by the laws of the United States, shall be governed by the laws of the State of Delaware and construed in accordance therewith without giving effect to principles of conflicts of laws.
6.9     Agreement Subject to the Plan . This Agreement is subject to the provisions of the Plan, including without limitation, Section 4.2 relating to terms of Performance Awards, and shall be interpreted in accordance therewith. To the extent of any inconsistency between the terms of the Plan and the terms of this Agreement, the terms of the Plan shall control. The Holder hereby acknowledges receipt of a copy of the Plan.

	
			
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6.10     Entire Agreement . The Plan is incorporated herein by reference. This Agreement and the Plan constitute the entire agreement of the parties with respect to the subject matter hereof and supersede in their entirety all prior undertakings and agreements of the Company and the Holder with respect to the subject matter hereof, and may not be modified adversely to the Holder’s interest except by means of a writing signed by the Company and the Holder.
6.11     Partial Invalidity . The invalidity or unenforceability of any particular provision of this Agreement shall not affect the other provisions hereof and this Agreement shall be construed in all respects as if such invalid or unenforceable provision was omitted.
6.12     Amendment and Waiver . The provisions of this Agreement may be amended or waived only by the written agreement of the Company and the Holder, and no course of conduct or failure or delay in enforcing the provisions of this Agreement shall affect the validity, binding effect, or enforceability of this Agreement.
6.13     Counterparts . This Agreement may be executed in two counterparts each of which shall be deemed an original and both of which together shall constitute one and the same instrument.
6.14     Section 409A . This Agreement will be interpreted in accordance with Section 409A of the Code, to the extent applicable, including without limitation any Treasury Regulations or other Department of Treasury guidance that may be issued or amended after the date hereof, and will not be amended or modified in any manner that would cause this Agreement to violate the requirements of Section 409A. If, following the date hereof, the Committee determines that the Award may be subject to Section 409A, including such Department of Treasury guidance as may be issued after the date hereof, the Committee may, in its discretion, adopt such amendments to this Agreement or adopt such other policies and procedures (including amendments, policies, and procedures with retroactive effect), or take any other actions, as the Committee determines are necessary or appropriate to (i) exempt the Award from Section 409A and/or preserve the intended tax treatment of the benefits provided with respect to the Award, or (ii) comply with the requirements of Section 409A. Notwithstanding anything to the contrary in the Plan or in this Agreement, the Holder agrees that the Holder (or the Holder’s estate or permitted beneficiary(ies)) will be solely responsible for the satisfaction of all taxes, interest, and penalties that may be imposed on the Holder or for the Holder’s account in connection with this Award (including, without limitation, any taxes, interest, and penalties under Section 409A), and neither the Company nor its Affiliates will have any obligation to reimburse, indemnify, or otherwise hold the Holder (or the Holder’s estate or permitted beneficiary(ies)) harmless from any or all of such taxes, interest, or penalties.
[Signature page follows.]

	
			
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TRI POINTE GROUP, INC.,
a Delaware corporation
By:______________________________________
Name:
Its:

Accepted this ___ day of [MONTH], [YEAR]
______________________________________

[NAME]

	

	

Attachment A
DEFINITIONS
For purpose of this Agreement, the following terms shall have the meanings set forth below:
“ Adjusted EPS ” shall mean the fully diluted earnings per share of the Company, as reported in the Company’s consolidated financial statements for the relevant periods, after such adjustments thereto as the Committee deems appropriate in its sole discretion (i) to exclude the effect of extraordinary, unusual, and/or nonrecurring items and changes in applicable accounting standards and (ii) to reflect such other factors as the Committee deems appropriate to fairly reflect earnings per share growth.
“ Change in Control Units ” in the event a Change in Control is consummated during the Performance Period but before the Vesting Date, Change in Control Units means the total number of Award Units, multiplied by the percentage in the column labeled “Percentage of Award That Vests” (which may be 0%, if applicable), as set forth in Attachment B, based on the actual Performance Level set forth in Attachment B as determined by the Cumulative EPS through the end of the Company’s last fiscal quarter ending before the closing date of the Change in Control as if the last day of such quarter were the last day of the Performance Period. The Cumulative EPS Plan shall be reduced proportionally to the number of quarters completed from the first day of the Performance Period through the end of the Company’s last fiscal quarter ending before the date of the Change in Control.
“ Cumulative EPS ” means the sum of the Adjusted EPS over the Performance Period for each period in which Adjusted EPS is measured pursuant to the above definition of Adjusted EPS.
“ Cumulative EPS Plan ” means $[] per share.
“ Good Reason ” shall be defined as that term is defined in the Holder’s offer letter, employment agreement, change in control agreement, or other similar agreement; or if there is no such definition, “Good Reason” shall mean any of the following are undertaken without the Holder’s prior written consent: (a) a material diminution in the Holder’s title, authority, duties, or responsibilities that substantially reduces the nature or character of the Holder’s position with the Company (or the highest parent entity if the Company has one or more parent entities); (b) a reduction by the Company of the Holder’s base salary as in effect immediately prior to such reduction; (c) a material reduction by the Company of the Holder’s target annual bonus as in effect immediately prior to such reduction; (d) relocation of the Holder’s principal office (defined as a relocation of the Holder’s principal office to a location that increases the Holder’s one-way commute by more than 50 miles), provided, that, for the avoidance of doubt, reasonable required travel by the Holder on the Company’s business shall not constitute a relocation; (e) a change in the Holder’s title following a Change in Control such that the Holder does not serve as [TITLE] of the surviving entity’s highest parent entity; or (f) any material breach by the Company of any provision of this Agreement. Notwithstanding the foregoing, the Holder’s resignation shall not constitute a resignation for “Good Reason” as a result of any event described in the preceding sentence unless (A) the Holder provides written notice thereof to the Company within 30 days after the first occurrence of such event; (B) to the extent correctable, the Company fails to remedy such circumstance or event within 30 days following the Company’s receipt of such written notice; and (C) the effective date of the Holder’s resignation for “Good Reason” is not later than 90 days after the initial existence of the circumstances constituting Good Reason.
“ Performance Measures ” means the Performance Measures set forth on Attachment B to this Agreement.
“ Qualifying Termination ” means (a) a Separation from Service of the Holder that occurs within 3 months prior to or within 24 months following a Change in Control, by reason of the Holder’s dismissal or discharge by the Company (or its successor-in-interest) without Cause or by the Holder for Good Reason, or (b) a Retirement after a Change in Control where the Holder provided a Retirement Notice in accordance with the Plan prior to the Change in Control.

	

	

Attachment B
PERFORMANCE MEASURES

	
			
Performance Level	The Company’s Cumulative EPS	Percentage of Award That Vests	
Maximum	[]% of Cumulative EPS Plan and above	[]%	
Target	[]% of Cumulative EPS Plan	[]%	
Threshold	[]% of Cumulative EPS Plan	[]%	
Below Threshold	Below []% of Cumulative EPS Plan	0%	
The percentage of the Award that vests if the Cumulative EPS for the Performance Period is between the “Threshold” and “Target” or “Target” and “Maximum” performance levels, as applicable, shall be determined by straight line interpolation. The Committee shall determine the portion of the Award that shall vest and become exercisable by multiplying the “Percentage of Award That Vests,” set forth above, by the number of units subject to this Agreement.

	

	

Exhibit 10.7

TRI POINTE GROUP, INC.
2013 LONG-TERM INCENTIVE PLAN
PERFORMANCE-BASED RESTRICTED STOCK UNIT AWARD AGREEMENT – TSR PERFORMANCE MEASUREMENT
(EXECUTIVE FORM)
TRI Pointe Group, Inc., a Delaware corporation (the “ Company ”), hereby grants to [NAME] (the “ Holder ”) as of [DATE] (the “ Grant Date ”), pursuant to the terms and conditions of the TRI Pointe Group, Inc. 2013 Long-Term Incentive Plan, as amended (the “ Plan ”), an award of performance-based restricted stock units (the “ Award ” and the restricted stock units granted pursuant to this Agreement, the “ Award Units ”) with respect to [###] shares of the Company’s Common Stock, par value $0.01 per share (“ Common Stock ”), upon and subject to the restrictions, terms, and conditions set forth in the Plan and this agreement (the “ Agreement ”). Capitalized terms used in this Agreement and not defined herein or set forth in Attachment A have the respective meanings given to them in the Plan.
1. Award Subject to Acceptance of Agreement . The Award shall be null and void unless the Holder accepts this Agreement by executing it in the space provided below and returning such original execution copy to the Company, or by approving this Agreement by electronic means in a manner that has been approved by the Company.
2.     Rights as a Stockholder . Each Award Unit shall represent the Holder’s right to receive one share of the Company’s Common Stock if and to the extent that such Award Unit becomes vested pursuant to the terms and conditions of this Agreement and the Plan. The Holder shall not be entitled to any privileges of ownership with respect to the shares of Common Stock subject to the Award unless and until, and only to the extent, such shares become vested pursuant to Section 3 hereof and the Holder becomes a stockholder of record with respect to such shares. As of each date on which the Company pays a cash dividend to record owners of shares of Common Stock (a “ Dividend Date ”), then the number of Award Units and shares subject to the Award shall increase by (i) the product of the total number of shares subject to the Award immediately prior to such Dividend Date multiplied by the dollar amount of the cash dividend paid per share of Common Stock by the Company on such Dividend Date, divided by (ii) the Fair Market Value of a share of Common Stock on such Dividend Date. Any such additional Award Units and shares shall be subject to the same restrictions, vesting conditions, and payment terms set forth herein as the shares to which they relate.
3.     Performance Period and Vesting .
3.1.     Performance-Based Vesting Conditions . The Award granted pursuant to this Agreement shall constitute a Performance Award (as defined in the Plan). Except as otherwise provided in this Section 3 , if and to the extent that all or a portion of the Award (as determined in accordance with the provisions of Attachment B ) shall vest on the Vesting Date as a result of the Company satisfying the Performance Measures set forth in Attachment B to this Agreement over the Performance Period, the Holder shall become vested in the Award Units, or the applicable portion thereof, if any, on the Vesting Date, provided that the Holder does not incur a Separation from Service before the Vesting Date. As used herein, (i) the term “ Performance Period ” shall mean the three-year period beginning on [DATE] and ending on [DATE] and (ii) the term “ Vesting Date ” shall mean [DATE]. If the Performance Period is shortened pursuant to Section 3.2 as a result of a Change in Control, appropriate adjustments to the performance targets, performance periods, and the determination of actual performance shall be made by the Committee in order to carry out the intent of this Agreement.
3.2.     Change in Control and Acceleration . In the event a Change in Control occurs after the first day of the Performance Period but prior to the end of the Performance Period, the Performance Period shall terminate on the closing date of the Change in Control transaction and the following provisions shall apply:
3.2.1.    If (a) the closing of the Change in Control transaction occurs on or before the 12-month anniversary of the first day of the Performance Period, (b) the Holder does not incur a Separation from Service before the date of the closing of the Change in Control transaction, and (c) the Award is not assumed in full by the acquiring or successor company or its affiliate upon the closing of the Change in Control or otherwise expressly continued in full force and effect pursuant to the terms of the Change in Control transaction, 50% of the Award Units shall vest as of the date of the closing of the Change in Control transaction.

	

	

3.2.2.    If (a) the closing of the Change in Control transaction occurs on or before the 12-month anniversary of the first day of the Performance Period and (b) the Award is assumed in full by the acquiring or successor company or its affiliate upon the closing of the Change in Control, or is otherwise expressly continued in full force and effect pursuant to the terms of the Change in Control transaction, 50% of the Award Units may become vested in accordance with the provisions of the last sentence of this Section 3.2.2 . If (i) the Holder remains in service with the Company or its successor-in-interest or an affiliate thereof through the Vesting Date, 50% of the Award Units shall become fully vested effective as of the Vesting Date or (ii) if the Holder suffers a Qualifying Termination before the Vesting Date, 50% of the Award Units shall become vested upon the later of the effective date of such Qualifying Termination and the closing of the Change in Control.
3.2.3.    If (a) the closing of the Change in Control transaction occurs after the 12-month anniversary of the first day of the Performance Period, (b) the Holder does not incur a Separation from Service before the date of the closing of the Change in Control transaction, and (c) the Award is not assumed in full by the acquiring or successor company or its affiliate upon the closing of the Change in Control or otherwise expressly continued in full force and effect pursuant to the terms of the Change in Control transaction, the Award shall vest as of the date of the closing of the Change in Control transaction, but only with respect to a number of Award Units equal to the Change in Control Units.
3.2.4.    If (a) the closing of the Change in Control transaction occurs after the 12-month anniversary of the first day of the Performance Period and (b) the Award is assumed in full by the acquiring or successor company or its affiliate upon the closing of the Change in Control, or is otherwise expressly continued in full force and effect pursuant to the terms of the Change in Control transaction, the Award Units may become vested in accordance with the provisions of the last sentence of this Section 3.2.4 , but only with respect to a number of Award Units equal to the Change in Control Units. If (i) the Holder remains in service with the Company or its successor-in-interest or an affiliate thereof through the Vesting Date, such Change in Control Units shall become fully effective as of the Vesting Date or (ii) if the Holder suffers a Qualifying Termination before the Vesting Date and the Holder remains in service with the Company or its successor-in-interest or an affiliate thereof through the date of such Qualifying Termination, the Change in Control Units shall become vested upon the later of the effective date of such Qualifying Termination and the closing of the Change in Control.
3.2.5.    The portion of the Award Units that do not vest in the event of a Change in Control pursuant to Sections 3.2.1 , 3.2.2 , 3.2.3 , or 3.2.4 (i.e., the total number of Award Units less the number of Award Units that become vested pursuant to Sections 3.2.1 , 3.2.2 , 3.2.3 , and 3.2.4 ) shall be cancelled and forfeited by the Holder for no consideration on the date of the Change in Control.
3.2.6.    As used herein, a “ Change in Control ” means (i) the acquisition, other than from the Company, by any individual, entity, or group (within the meaning of Section 13(d)(3) or 14(d)(2) of the Exchange Act ) of beneficial ownership (within the meaning of Rule 13d-3 promulgated under the Exchange Act) of 50% or more of either the then outstanding shares of Common Stock of the Company or the combined voting power of the then outstanding voting securities of the Company entitled to vote generally in the election of directors, but excluding, for this purpose, any such acquisition by the Company or any of its Subsidiaries, or any employee benefit plan (or related trust) of the Company or its Subsidiaries, or any entity with respect to which, following such acquisition, more than 50% of, respectively, the then outstanding equity of such entity and the combined voting power of the then outstanding voting equity of such entity entitled to vote generally in the election of all or substantially all of the members of such entity’s governing body is then beneficially owned, directly or indirectly, by the individuals and entities who were the beneficial owners, respectively, of the Common Stock and voting securities of the Company immediately prior to such acquisition in substantially the same proportion as their ownership, immediately prior to such acquisition, of the then outstanding shares of Common Stock of the Company or the combined voting power of the then outstanding voting securities of the Company entitled to vote generally in the election of directors, as the case may be; or (ii) the consummation of a reorganization, merger, or consolidation of the Company, in each case, with respect to which all or substantially all of the individuals and entities who were the respective beneficial owners of the Common Stock and voting securities of the Company immediately prior to such reorganization, merger,

	
			
 	2	

or consolidation do not, following such reorganization, merger, or consolidation, beneficially own, directly or indirectly, more than 50% of, respectively, the then outstanding shares of Common Stock and the combined voting power of the then outstanding voting securities entitled to vote generally in the election of directors, as the case may be, of the corporation resulting from such reorganization, merger, or consolidation; or (iii) a complete liquidation or dissolution of the Company or the sale or other disposition of all or substantially all of the assets of the Company; or (iv) individuals who at the beginning of any two-year period constitute the Board (the “ Incumbent Board ”) cease for any reason to constitute at least a majority of the Board; provided, however, that any individual who becomes a director of the Company during such two-year period and whose election, or whose nomination for election by the Company’s stockholders, to the Board was either (A) approved by a vote of at least a majority of the directors then comprising the Incumbent Board or (B) recommended by a nominating committee comprised entirely of directors who are then Incumbent Board members, shall be considered as though such individual were a member of the Incumbent Board, but excluding, for this purpose, any such individual whose initial assumption of office occurs as a result of either an actual or threatened election contest (as such terms are used in Rule 14a-11 of Regulation 14A promulgated under the Exchange Act), other actual or threatened solicitation of proxies or consents, or an actual or threatened tender offer. Notwithstanding the foregoing, (I) any bona fide primary or secondary public offering shall not constitute a Change in Control and (II) if a Change in Control constitutes a payment event with respect to any payment or benefit that provides for the deferral of compensation and is subject to Section 409A, the Change in Control transaction or event with respect to such payment or benefit must also constitute a “change in control event,” as defined in Treasury Regulation § 1.409A-3(i)(5) to the extent required by Section 409A.
3.3.     Separation from Service; Death or Disability; Failure to Satisfy Performance Measures .
3.3.1.    Except as otherwise provided in Section 3.2 and in Sections 5.9(a) and 5.9(b) of the Plan, if the Holder incurs a Separation from Service prior to the Vesting Date for any reason, then the entire Award shall be immediately forfeited by the Holder for no consideration and cancelled, effective as of the date of the Holder’s Separation from Service.
3.3.2.    If the Holder does not incur a Separation from Service before the Vesting Date, but the TSR for the Company for the Performance Period does not equal or exceed the Maximum Performance Level as set forth on Attachment B to this Agreement and the Holder thus does not become vested in 100% of the Award Units, then any Award Units in which the Holder does not become vested pursuant to the Performance Measures set forth in said Attachment B shall be immediately forfeited by the Holder for no consideration and cancelled, effective as of the last day of the Performance Period.
4.     Delivery of Certificates . Subject to Section 6 , as soon as practicable after the vesting of Award Units, in whole or in part, but in no event later than March 15 of the calendar year immediately following the year in which Award Units become vested, the Company shall (i) deliver or cause to be delivered one or more certificates issued in the Holder’s name (or such other name as is acceptable to the Company and designated in writing by the Holder), or (ii) issue in book entry form registered in the name of the Holder (or such other name as is acceptable to the Company and designated in writing by the Holder) a written or electronic notice or statement representing the number of vested shares represented by such vested Award Units. The Company shall pay all original issue or transfer taxes and all fees and expenses incident to such delivery, except as otherwise provided in Section 6 . Prior to the issuance to the Holder of the shares of Common Stock subject to the Award, the Holder shall have no direct or secured claim in any specific assets of the Company or in such shares of Common Stock, and will have the status of a general unsecured creditor of the Company.
5.     Transfer Restrictions and Investment Representation .
5.1.     Nontransferability of Award . The Award may not be transferred by the Holder other than by will or the laws of descent and distribution, pursuant to the designation of one or more beneficiaries on the form prescribed by the Company, a trust or entity established by the Holder for estate planning purposes, or a charitable organization designated by the Holder or pursuant to a qualified domestic relations order, in each case, without consideration. Except to the extent permitted by the foregoing sentence, the Award and the Award Units may not be sold, transferred, assigned, pledged, hypothecated, encumbered, or otherwise disposed of (whether by operation of law

	
			
 	3	

or otherwise) or be subject to execution, attachment, or similar process. Upon any attempt to so sell, transfer, assign, pledge, hypothecate, encumber, or otherwise dispose of the Award or the Award Units in violation of this Agreement or the Plan, the Award and the Award Units and all rights hereunder shall immediately become null and void.
5.2.     Investment Representation . The Holder hereby represents and covenants that (a) any share of Common Stock acquired upon the vesting of the Award Units will be acquired for investment and not with a view to the distribution thereof within the meaning of the Securities Act of 1933, as amended (the “ Securities Act ”), unless such acquisition has been registered under the Securities Act and any applicable state securities laws; (b) any subsequent sale of any such shares shall be made either pursuant to an effective registration statement under the Securities Act and any applicable state securities laws, or pursuant to an exemption from registration under the Securities Act and such state securities laws; and (c) if requested by the Company, the Holder shall submit a written statement, in form satisfactory to the Company, to the effect that such representation (x) is true and correct as of the date of vesting of any shares of Common Stock hereunder or (y) is true and correct as of the date of any sale of any such share, as applicable. As a further condition precedent to the delivery to the Holder of any shares of Common Stock subject to the Award, the Holder shall comply with all regulations and requirements of any regulatory authority having control of or supervision over the issuance or delivery of the shares and, in connection therewith, shall execute any documents which the Board shall in its sole discretion deem necessary or advisable.
5.3.     Additional Restrictions . If the Holder is, or becomes, a person subject to any policy of the Company providing for recoupment of performance based compensation in the event of a restatement of the Company’s financial results, then Holder agrees the Award and the Award Units (and any shares of Common Stock issued with respect thereto) will be subject to such recoupment policy. The Company may impose, and Holder agrees to be bound by, such restrictions, conditions, or limitations as the Company determines appropriate as to the timing and manner of any resales or other transfers of any Award Units (and any shares of Common Stock issued with respect thereto) as to which transferability restrictions have lapsed as provided under this Agreement, including without limitation (a) restrictions under an insider trading or other Company policy, (b) restrictions designed to delay and/or coordinate the timing and manner of sales by Holder and others following a public offering of the Company’s securities, (c) stock ownership or holding requirements, and (d) the required use of a specified brokerage firm for such resales or other transfers.
6.     Additional Terms and Conditions of Award .
6.1.     Withholding Taxes . The Company shall have the right to require, prior to the issuance or delivery of any shares of Common Stock upon the vesting of the Award Units, payment by the Holder of such Award of any federal, state, local or other taxes which may be required to be withheld or paid in connection with such Award (the “ Required Tax Payments ”). The Holder may satisfy his or her obligation to advance the Required Tax Payments by any of the following means: (1) a cash payment to the Company, (2) delivery (either actual delivery or by attestation procedures established by the Company) to the Company of previously owned whole shares of Common Stock having an aggregate Fair Market Value, determined as of the Tax Date, equal to the Required Tax Payments, (3) authorizing the Company to withhold up to the maximum required number of shares of Common Stock which would otherwise be delivered or an amount of cash which would otherwise be payable to the Holder having an aggregate Fair Market Value, determined as of the Tax Date, equal to the Required Tax Payments, or (4) any combination of (1), (2), and (3). To the extent applicable, the Holder may satisfy his or her withholding obligation only with shares that are not subject to any repurchase, forfeiture, unfulfilled vesting, or other similar requirements.
6.2.     Adjustment . In the event of any equity restructuring (within the meaning of Financial Accounting Standards Board Accounting Standards Codification Topic 718, Compensation-Stock Compensation) that causes the per share value of shares of Common Stock to change, such as a stock dividend, stock split, spinoff, rights offering, or recapitalization through an extraordinary dividend, the terms of this Award, including the number and class of securities subject hereto, shall be appropriately adjusted by the Committee. In the event of any other change in corporate capitalization, including a merger, consolidation, reorganization, or partial or complete liquidation of the Company, such equitable adjustments described in the foregoing sentence may be made as determined to be appropriate and equitable by the Committee (or, if the Company is not the surviving corporation in any such transaction, the board of directors of the surviving corporation) to prevent dilution or enlargement of rights of participants. The decision of the Committee regarding any such adjustment shall be final, binding, and conclusive.

	
			
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6.3.     Compliance with Applicable Law . The Award is subject to the condition that if the listing, registration, or qualification of the shares of Common Stock subject to the Award upon any securities exchange or under any law, or the consent or approval of any governmental body, or the taking of any other action is necessary or desirable as a condition of, or in connection with, the delivery of shares hereunder, the shares of Common Stock subject to the Award shall not be delivered, in whole or in part, unless such listing, registration, qualification, consent, approval, or other action shall have been effected or obtained, free of any conditions not acceptable to the Company. The Company agrees to use reasonable efforts to effect or obtain any such listing, registration, qualification, consent, approval, or other action.
6.4.     Award Confers No Rights to Continued Employment or Service . In no event shall the granting of the Award or its acceptance by the Holder, or any provision of this Agreement or the Plan, give or be deemed to give the Holder any right to continued employment by or service to the Company, any Subsidiary, or any affiliate of the Company or affect in any manner the right of the Company, any Subsidiary, or any affiliate of the Company to terminate the employment or service of any person at any time.
6.5.     Interpretation . Any dispute regarding the interpretation of this Agreement shall be submitted by the Holder or by the Company forthwith to the Committee for review. The resolution of such a dispute by the Committee shall be final and binding on all parties.
6.6.     Successors and Assigns . The Company may assign any of its rights under this Agreement to single or multiple assignees, and this Agreement shall inure to the benefit of the successors and assigns of the Company. Subject to the restrictions on transfer herein set forth, this Agreement shall be binding upon the Holder and his or her heirs, executors, administrators, successors, and assigns.
6.7.     Notices . All notices, requests or other communications provided for in this Agreement shall be made, if to the Company, to TRI Pointe Group, Inc., Attn: Chief Financial Officer, 19540 Jamboree Road, Suite 300, Irvine, California 92612, and if to the Holder, to the last known mailing address of the Holder contained in the records of the Company. All notices, requests or other communications provided for in this Agreement shall be made in writing either (a) by personal delivery, (b) by facsimile or electronic mail with confirmation of receipt, (c) by mailing in the United States mails, or (d) by express courier service. The notice, request, or other communication shall be deemed to be received upon personal delivery, upon confirmation of receipt of facsimile or electronic mail transmission, or upon receipt by the party entitled thereto if by United States mail or express courier service; provided , however , that if a notice, request, or other communication sent to the Company is not received during regular business hours, it shall be deemed to be received on the next succeeding business day of the Company.
6.8.     Governing Law . This Agreement, the Award, and all determinations made and actions taken pursuant hereto and thereto, to the extent not governed by the laws of the United States, shall be governed by the laws of the State of Delaware and construed in accordance therewith without giving effect to principles of conflicts of laws.
6.9.     Agreement Subject to the Plan . This Agreement is subject to the provisions of the Plan, including without limitation, Section 4.2 relating to terms of Performance Awards, and shall be interpreted in accordance therewith. To the extent of any inconsistency between the terms of the Plan and the terms of this Agreement, the terms of the Plan shall control. The Holder hereby acknowledges receipt of a copy of the Plan.
6.10.     Entire Agreement . The Plan is incorporated herein by reference. This Agreement and the Plan constitute the entire agreement of the parties with respect to the subject matter hereof and supersede in their entirety all prior undertakings and agreements of the Company and the Holder with respect to the subject matter hereof, and may not be modified adversely to the Holder’s interest except by means of a writing signed by the Company and the Holder.
6.11.     Partial Invalidity . The invalidity or unenforceability of any particular provision of this Agreement shall not affect the other provisions hereof and this Agreement shall be construed in all respects as if such invalid or unenforceable provision was omitted.

	
			
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6.12.     Amendment and Waiver . The provisions of this Agreement may be amended or waived only by the written agreement of the Company and the Holder, and no course of conduct or failure or delay in enforcing the provisions of this Agreement shall affect the validity, binding effect, or enforceability of this Agreement.
6.13.     Counterparts . This Agreement may be executed in two counterparts each of which shall be deemed an original and both of which together shall constitute one and the same instrument.
6.14.     Section 409A . This Agreement will be interpreted in accordance with Section 409A of the Code, to the extent applicable, including without limitation any Treasury Regulations or other Department of Treasury guidance that may be issued or amended after the date hereof, and will not be amended or modified in any manner that would cause this Agreement to violate the requirements of Section 409A. If, following the date hereof, the Committee determines that the Award may be subject to Section 409A, including such Department of Treasury guidance as may be issued after the date hereof, the Committee may, in its discretion, adopt such amendments to this Agreement or adopt such other policies and procedures (including amendments, policies, and procedures with retroactive effect), or take any other actions, as the Committee determines are necessary or appropriate to (i) exempt the Award from Section 409A and/or preserve the intended tax treatment of the benefits provided with respect to the Award, or (ii) comply with the requirements of Section 409A. Notwithstanding anything to the contrary in the Plan or in this Agreement, the Holder agrees that the Holder (or the Holder’s estate or permitted beneficiary(ies)) will be solely responsible for the satisfaction of all taxes, interest, and penalties that may be imposed on the Holder or for the Holder’s account in connection with this Award (including, without limitation, any taxes, interest, and penalties under Section 409A), and neither the Company nor its Affiliates will have any obligation to reimburse, indemnify, or otherwise hold the Holder (or the Holder’s estate or permitted beneficiary(ies)) harmless from any or all of such taxes, interest, or penalties.
[Signature page follows.]

	
			
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TRI POINTE GROUP, INC.,
a Delaware corporation
By:______________________________________
Name:
Its:
Accepted this ______ day of [MONTH], [YEAR].
    
[NAME]

	

	

Attachment A
DEFINITIONS
For purpose of this Agreement, the following terms shall have the meanings set forth below:
“ Beginning Average Market Value ” means, with respect to the Company, or a company in the Company’s Peer Group, the average Stock Price for each of the trading days in the 30 calendar day period ending on and including the first day of the Performance Period.
“ Change in Control Units ” in the event a Change in Control is consummated during the Performance Period but before the Vesting Date, Change in Control Units means the total number of Award Units, multiplied by the percentage in the column labeled “Percentage of Award That Vests” (which may be 0%, if applicable), as set forth in Attachment B (based on the actual Performance Level set forth in Attachment B as determined by the TSR Percentile achieved by the Company through the closing date of the Change in Control as if the closing date of the Change in Control were the last day of the Performance Period).
“ Ending Average Market Value ” means, with respect to the Company, or a company in the Company’s Peer Group, the average Stock Price for each of the trading days in the 30 calendar day period ending on and including the last day of the Performance Period.
“ Good Reason ” shall be defined as that term is defined in the Holder’s offer letter, employment agreement, change in control agreement, or other similar agreement; or if there is no such definition, “Good Reason” shall mean any of the following are undertaken without the Holder’s prior written consent: (a) a material diminution in the Holder’s title, authority, duties, or responsibilities that substantially reduces the nature or character of the Holder’s position with the Company (or the highest parent entity if the Company has one or more parent entities); (b) a reduction by the Company of the Holder’s base salary as in effect immediately prior to such reduction; (c) a material reduction by the Company of the Holder’s target annual bonus as in effect immediately prior to such reduction; (d) relocation of the Holder’s principal office (defined as a relocation of the Holder’s principal office to a location that increases the Holder’s one-way commute by more than 50 miles), provided, that, for the avoidance of doubt, reasonable required travel by the Holder on the Company’s business shall not constitute a relocation; (e) a change in the Holder’s title following a Change in Control such that the Holder does not serve as [TITLE] of the surviving entity’s highest parent entity; or (f) any material breach by the Company of any provision of this Agreement. Notwithstanding the foregoing, the Holder’s resignation shall not constitute a resignation for “Good Reason” as a result of any event described in the preceding sentence unless (A) the Holder provides written notice thereof to the Company within 30 days after the first occurrence of such event; (B) to the extent correctable, the Company fails to remedy such circumstance or event within 30 days following the Company’s receipt of such written notice; and (C) the effective date of the Holder’s resignation for “Good Reason” is not later than 90 days after the initial existence of the circumstances constituting Good Reason.
“ Performance Measures ” means the Performance Measures set forth on Attachment B to this Agreement.
“ Qualifying Termination ” means a Separation from Service of the Holder that occurs within 3 months prior to or within 24 months following a Change in Control, by reason of the Holder’s dismissal or discharge by the Company (or its successor-in-interest) without Cause or by the Holder for Good Reason, or (b) a Retirement after a Change in Control where the Holder provided a Retirement Notice in accordance with the Plan prior to the Change in Control.
“ Stock Price ” means closing price per share of the Common Stock (or of the common stock of such other company, as applicable) as reported by the New York Stock Exchange (or, if the Common Stock, or the common stock of a company in the Company’s Peer Group, is not then listed on the New York Stock Exchange, the principal national stock exchange or other trading market on which the Common Stock or such common stock is traded).
“ Total Stockholder Return ” or “ TSR ” with respect to the Company or a company in the Company’s Peer Group, as applicable, means the quotient determined pursuant to the following:

	

	

X = The Ending Average Market Value.
Y = All cash dividends for the Performance Period, assuming same day reinvestment into Common Stock (or common stock of the applicable member of the Peer Group) on the applicable ex-dividend date.
Z = The Beginning Average Market Value.
TSR shall be equitably adjusted to reflect stock dividends, stock splits, reverse stock splits, recapitalizations, spin-offs, and other corporate changes having similar effect.
“ TSR Percentile ” means the percentile rank of the TSR for the Company during the Performance Period relative to the TSR for the 12 companies listed on Attachment C (the “ Peer Group ”) during the Performance Period; provided, however, that for purposes of measuring the TSR Percentile, the Committee shall have the right to make adjustments to the Peer Group based on developments that occur during the Performance Period, such as removing from the Peer Group, retroactively to the beginning of the Performance Period, any company no longer existing as an independent entity or which has announced it is being acquired.

	
			
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Attachment B
PERFORMANCE MEASURES

	

Performance Level	 	The Company’s TSR
Percentile on Vesting Date	 	Percentage of Award That
Vests	
 	 	 	
Maximum	 	[]th TSR Percentile and above	 	[]%	
Target	 	[]th TSR Percentile	 	[]%	
Threshold	 	[]th TSR Percentile	 	[]%	
Below Threshold	 	Below []th TSR Percentile	 	0%	
The percentage of the Award that vests if the Company’s TSR Percentile at the end of the Performance Period is between the “Threshold” and “Target” or “Target” and “Maximum” performance levels, as applicable, shall be determined by straight line interpolation. The Committee shall determine the portion of the Award that shall vest and become exercisable by multiplying the “Percentage of Award That Vests,” set forth above, by the number of units subject to this Agreement.

	

	

Attachment C
PEER GROUP
Company Name
D.R. Horton, Inc.
Lennar Corp.
PulteGroup, Inc.
NVR, Inc.
Toll Brothers, Inc.
Taylor Morrison Home Corp.
KB Home
Hovnanian Enterprises, Inc
Meritage Homes Corp.
M.D.C. Holdings, Inc.
Beazer Homes USA, Inc.
M/I Homes, Inc.

	

	

Exhibit 31.1
SECTION 302 CERTIFICATION
I, Douglas F. Bauer, certify that:
		
(1)	I have reviewed this report on Form 10-Q of TRI Pointe Group, Inc.;	

(2)	Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;	

(3)	Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;	

(4)	The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:	

a.	Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;	

b.	Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;	

c.	Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and	

d.	Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and	

(5)	The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):	

a.	All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and	

a.	Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.	

		
Date: April 25, 2019	/s/ Douglas F. Bauer	
 	Douglas F. Bauer	
 	Chief Executive Officer (Principal Executive Officer)	

Exhibit 31.2
SECTION 302 CERTIFICATION
I, Michael D. Grubbs, certify that:
		
(1)	I have reviewed this report on Form 10-Q of TRI Pointe Group, Inc.;	

(2)	Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;	

(3)	Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;	

(4)	The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:	

a.	Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;	

a.	Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;	

a.	Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and	

b.	Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and	

(5)	The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):	

a.	All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and	

a.	Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.	

		
Date: April 25, 2019	/s/ Michael D. Grubbs	
 	Michael D. Grubbs	
 	Chief Financial Officer (Principal Financial Officer)	

Exhibit 32.1
CERTIFICATION PURSUANT TO
18 U.S.C. SECTION 1350,
AS ADOPTED PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002
In connection with the Report of TRI Pointe Group, Inc. (the “Company”) on Form 10-Q for the period ended March 31, 2019 as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, Douglas F. Bauer, Chief Executive Officer of the Company, certify, pursuant to 18 U.S.C. § 1350, as adopted pursuant to § 906 of the Sarbanes-Oxley Act of 2002, that:
		
1.	The Report fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934; and	
		
2.	The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.	

		
Date: April 25, 2019	/s/ Douglas F. Bauer	
 	Douglas F. Bauer	
 	Chief Executive Officer (Principal Executive Officer)	

Exhibit 32.2
CERTIFICATION PURSUANT TO
18 U.S.C. SECTION 1350,
AS ADOPTED PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002
In connection with the Report of TRI Pointe Group, Inc. (the “Company”) on Form 10-Q for the period ended March 31, 2019 as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, Michael D. Grubbs, Chief Financial Officer of the Company, certify, pursuant to 18 U.S.C. § 1350, as adopted pursuant to § 906 of the Sarbanes-Oxley Act of 2002, that:
		
1.	The Report fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934; and	
		
2.	The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.	

		
Date: April 25, 2019	/s/ Michael D. Grubbs	
 	Michael D. Grubbs	
 	Chief Financial Officer (Principal Financial Officer)