Form 8-K/A - Current report: [Amend]

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 8-K/A

CURRENT REPORT

Pursuant to Section 13 or 15(d)

of the Securities Exchange Act of 1934

Date of Report (Date of Earliest Event Reported): January 17, 2024 (January 16, 2024)

Hilton Grand Vacations Inc.

(Exact Name of Registrant as Specified in its Charter)

Delaware

001-37794

81-2545345

(State or Other Jurisdiction

of Incorporation)

(Commission

File Number)

(IRS Employer

Identification No.)

6355 MetroWest Boulevard, Suite 180

Orlando, Florida

32835

(Address of principal executive offices)

(Zip Code)

(407) 613-3100

(Registrant’s Telephone Number, Including Area Code)

Not Applicable

(Former Name or Former Address, if Changed Since Last Report)

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

☐	Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

☐	Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

☐	Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

☐	Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

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

Title of each class

Trading
Symbol(s)

Name of each exchange

on which registered

Common Stock, $0.01 par value per share

HGV

New York Stock Exchange

Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (17 CFR §230.405) or Rule 12b-2 of the Securities Exchange Act of 1934 (17 CFR §240.12b-2).

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. ☐

Explanatory Note

On January 17, 2024, Hilton Grand Vacations Inc. (“HGV” or the “Company”) filed a Current Report on Form 8-K (the “Original Form 8-K”) to report the completion of the previously announced acquisition of Bluegreen Vacations Holding Corporation., a Florida corporation (“BVH”) and its subsidiaries, pursuant to the Agreement and Plan of Merger, dated as of November 5, 2023, as amended (the “Merger Agreement”), by and among HGV, BVH and Heat Merger Sub, Inc., a Florida corporation and an indirect wholly-owned subsidiary of HGV (“Merger Sub”). Pursuant to the Merger Agreement, Merger Sub merged with and into BVH (the “Merger”), with BVH continuing as the surviving entity after the Merger as an indirect wholly-owned subsidiary of HGV.

As permitted under Item 9.01 of Form 8-K, this Amendment No. 1 to the Current Report on Form 8-K amends and supplements the Original Form 8-K solely to provide the historical financial statements and the pro forma financial information required under Item 9.01 of Form 8-K within 71 calendar days after the date on which the Original Form 8-K was required to be filed.

Item 9.01 Financial Statements and Exhibits.

(a) Financial Statements of Business Acquired.

The financial statements of BVH required to be filed pursuant to Rule 3-05 of Regulation S-X are filed as Exhibits 99.1 and 99.2 to this Current Report on Form 8-K/A and incorporated by reference herein.

(b) Pro Forma Financial Information.

The pro forma financial information of the Company required to be filed in connection with the acquisition and disposition described in Item 2.01 in the Original Form 8-K is filed as Exhibit 99.3 to this Current Report on Form 8-K/A and incorporated by reference herein.


Exhibit No.		Description

23.1		Consent of Ernst & Young LLP.

99.1		Unaudited Condensed Consolidated Financial Statements of Bluegreen Vacations Holding Corporation as of and for the nine months ended September 30, 2023.

99.2		Audited Condensed Consolidated Financial Statements of Bluegreen Vacations Holding Corporation as of and for the years ended December 31, 2022 and 2021.

99.3		Unaudited Pro Forma Condensed Combined Financial Information of the Company.

104		Cover Page Interactive Data File (embedded within the Inline XBRL document).

SIGNATURE

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


HILTON GRAND VACATIONS INC.

By:		/s/ Dan Mathewes
		Dan Mathewes
		Senior Executive Vice President, Chief Financial Officer

Date: March 4, 2024

Exhibit 23.1

Consent of Independent Registered Public Accounting Firm

We consent to the incorporation by reference in the following Registration Statements of Hilton Grand Vacations Inc.:

(1)

Registration Statement (Form S-3 No. 333-259461) of Hilton Grand Vacations Inc.,

(2)

Registration Statement (Form S-8 No. 333-225146) pertaining to the Hilton Resorts Corporation 2017 Executive Deferred Compensation Plan,

(3)

Registration Statement (Form S-8 No. 333-261668) pertaining to the Hilton Grand Vacations Inc. Executive Deferred Compensation Plan,

(4)

Registration Statement (Form S-8 No. 333-215265) pertaining to the Hilton Grand Vacations Inc. 2017 Omnibus Incentive Plan and the Hilton Grand Vacations Inc. 2017 Stock Plan for Non-Employee Directors,

(5)

Registration Statement (Form S-8 No. 333-218056) pertaining to the Hilton Grand Vacations Inc. Employee Stock Purchase Plan, and

(6)

Registration Statement (Form S-8 No. 333-272492) pertaining to the Hilton Grand Vacations Inc. 2023 Omnibus Incentive Plan;

of our report dated March 13, 2023, with respect to the consolidated financial statements of Bluegreen Vacations Holding Corporation, appearing in this Amendment to the Current Report on Form 8-K of Hilton Grand Vacations Inc.

/s/ Ernst & Young LLP

Boca Raton, Florida

March 4, 2024

Exhibit 99.1

BLUEGREEN VACATIONS HOLDING CORPORATION

CONSOLIDATED BALANCE SHEETS (UNAUDITED)

(In thousands, except share and per share data)


	September 30, 2023			December 31, 2022
ASSETS
Cash and cash equivalents	$	134,881		$	175,683
Restricted cash ($25,845 and $19,461 in VIEs at September 30, 2023 and December 31, 2022, respectively)		55,304			50,845
Notes receivable		908,612			763,801
Less: Allowance for loan losses		(232,360	)		(211,311	)

Notes receivable, net ($439,783 and $354,403 in VIEs at September 30, 2023 and December 31, 2022, respectively)		676,252			552,490
Vacation ownership interest (“VOI”) inventory		449,889			389,864
Property and equipment, net		88,496			85,915
Intangible assets		61,293			61,293
Operating lease assets		20,401			22,963
Prepaid expenses		17,717			23,833
Other assets		35,699			35,499

Total assets	$	1,539,932		$	1,398,385

LIABILITIES AND EQUITY
Liabilities
Accounts payable	$	25,797		$	21,389
Deferred income		18,877			15,675
Accrued liabilities and other		122,451			110,048
Receivable-backed notes payable—recourse		14,633			20,841
Receivable-backed notes payable—non-recourse (in VIEs)		560,491			440,781
Note payable to BBX Capital, Inc.		35,000			50,000
Note payable and other borrowings		169,164			218,738
Junior subordinated debentures		136,892			136,011
Operating lease liabilities		24,891			27,716
Deferred income taxes		125,991			113,193

Total liabilities		1,234,187			1,154,392

Commitments and Contingencies—See Note 9
Equity
Preferred stock of $0.01 par value; authorized 10,000,000 shares					—
Class A Common Stock of $0.01 par value; authorized 30,000,000 shares; issued and outstanding 12,204,198 in 2023 and 12,165,825 in 2022		122			122
Class B Common Stock of $0.01 par value; authorized 4,000,000 shares; issued and outstanding 3,664,117 in 2023 and 2022		37			37
Additional paid-in capital		51,443			46,821
Accumulated earnings		168,526			124,680

Total Bluegreen Vacations Holding Corporation equity		220,128			171,660
Non-controlling interest		85,617			72,333

Total equity		305,745			243,993

Total liabilities and equity	$	1,539,932		$	1,398,385

See accompanying Condensed Notes to Consolidated Financial Statements—Unaudited

BLUEGREEN VACATIONS HOLDING CORPORATION

CONSOLIDATED STATEMENTS OF OPERATIONS

AND COMPREHENSIVE INCOME (UNAUDITED)

(In thousands, except per share data)


	For the Three Months Ended September 30,						For the Nine Months Ended September 30,
	2023			2022			2023			2022
Revenue:
Gross sales of VOIs	$	192,213		$	185,902		$	520,758		$	472,295
Provision for loan losses		(32,880	)		(30,684	)		(87,451	)		(73,789	)

Sales of VOIs		159,333			155,218			433,307			398,506
Fee-based sales commission revenue		15,694			14,241			41,266			57,174
Other fee-based services revenue		36,642			34,559			105,987			98,553
Cost reimbursements		23,292			20,719			70,960			54,950
Interest income		32,976			25,803			92,762			71,506
Other income, net		—			296			3,278			774

Total revenues		267,937			250,836			747,560			681,463

Costs and Expenses:
Cost of VOIs sold		20,184			14,805			52,902			44,868
Cost of other fee-based services		15,022			15,377			46,269			41,732
Cost reimbursements		23,292			20,719			70,961			54,951
Interest expense		19,458			10,822			53,670			28,935
Selling, general and administrative expenses		156,581			152,881			436,067			421,339
Other expense, net		63			—			—			—

Total costs and expenses		234,600			214,604			659,869			591,825
Income before income taxes		33,337			36,232			87,691			89,638
Provision for income taxes		(7,840	)		(8,586	)		(20,338	)		(20,948	)

Net income		25,497			27,646			67,353			68,690
Less: Income attributable to noncontrolling interest		4,840			4,682			13,284			11,954

Net income attributable to shareholders	$	20,657		$	22,964		$	54,069		$	56,736

Comprehensive income attributable to shareholders	$	20,657		$	22,964		$	54,069		$	56,736

Basic earnings per share ⁽¹⁾	$	1.30		$	1.20		$	3.41		$	2.83

Diluted earnings per share ⁽¹⁾	$	1.25		$	1.19		$	3.31		$	2.81

Basic weighted average number of common shares outstanding		15,869			19,101			15,865			20,029

Diluted weighted average number of common and common equivalent shares outstanding		16,479			19,232			16,353			20,191

Cash dividend declared per Class A and B common share	$	0.20		$	0.15		$	0.60		$	0.30

(1)	Basic and diluted EPS are calculated the same for both Class A and B common shares.

See accompanying Condensed Notes to Consolidated Financial Statements—Unaudited.

BLUEGREEN VACATIONS HOLDING CORPORATION

CONSOLIDATED STATEMENTS OF EQUITY (UNAUDITED)

(In thousands)


	Shares of Common Stock Outstanding Class						Common Stock Class					Additional Paid-in Capital			Accumulated Earnings			Total Shareholders’ Equity			Non- Controlling Interests		Total Equity
	A			B			A			B		Additional Paid-in Capital			Accumulated Earnings			Total Shareholders’ Equity			Non- Controlling Interests		Total Equity
Balance, December 31, 2022		12,166			3,664		$	122		$	37	$	46,821		$	124,680		$	171,660		$	72,333	$	243,993
Dividends		—			—			—			—		—			(3,408	)		(3,408	)		—		(3,408	)
Share-based compensation		—			—			—			—		1,457			—			1,457			—		1,457
Issuance of common stock on vesting of restricted stock awards		38			—			—			—		(8	)		—			(8	)		—		(8	)
Net income		—			—			—			—		—			11,499			11,499			3,906		15,405

Balance, March 31, 2023		12,204			3,664		$	122		$	37	$	48,270		$	132,771		$	181,200		$	76,239	$	257,439

Dividends		—			—			—			—		—			(3,407	)		(3,407	)		—		(3,407	)
Share-based compensation		—			—			—			—		1,579			—			1,579			—		1,579
Net income		—			—			—			—		—			21,913			21,913			4,538		26,451

Balance, June 30, 2023		12,204			3,664		$	122		$	37	$	49,849		$	151,277		$	201,285		$	80,777	$	282,062

Dividends		—			—			—			—		—			(3,408	)		(3,408	)		—		(3,408	)
Share-based compensation		—			—			—			—		1,594			—			1,594			—		1,594
Net income		—			—			—			—		—			20,657			20,657			4,840		25,497

Balance, September 30, 2023		12,204			3,664		$	122		$	37	$	51,443		$	168,526		$	220,128		$	85,617	$	305,745


	Shares of Common Stock Outstanding Class						Common Stock Class					Additional Paid-in Capital			Accumulated Earnings			Total Shareholders’ Equity			Non- Controlling Interests		Total Equity
	A			B			A			B		Additional Paid-in Capital			Accumulated Earnings			Total Shareholders’ Equity			Non- Controlling Interests		Total Equity
Balance, December 31, 2021		17,118			3,665		$	171		$	37	$	173,909		$	69,316		$	243,433		$	60,367	$	303,800
Conversion of common stock from Class B to Class A		1			(1	)		—			—		—			—			—			—		—
Share-based compensation		—			—			—			—		745			—			745			—		745
Purchase and retirement of common stock		(152	)		—			(2	)		—		(4,700	)		—			(4,702	)		—		(4,702	)
Net income		—			—			—			—		—			15,988			15,988			3,220		19,208

Balance, March 31, 2022		16,967			3,664		$	169		$	37	$	169,954		$	85,304		$	255,464		$	63,587	$	319,051

Dividends		—			—			—			—		—			(3,128	)		(3,128	)		—		(3,128	)
Share-based compensation		—			—			—			—		817			—			817			—		817
Purchase and retirement of common stock		(917	)		—			(9	)		—		(26,113	)		—			(26,122	)		—		(26,122	)
Net income		—			—			—			—		—			17,784			17,784			4,052		21,836

Balance, June 30, 2022		16,050			3,664		$	160		$	37	$	144,658		$	99,960		$	244,815		$	67,639	$	312,454

Dividends		—			—			—			—		—			(2,930	)		(2,930	)		—		(2,930	)
Share-based compensation		—			—			—			—		836			—			836			—		836
Purchase and retirement of common stock		(843	)		—			(8	)		—		(23,605	)		—			(23,613	)		—		(23,613	)
Net income		—			—			—			—		—			22,964			22,964			4,682		27,646

Balance, September 30, 2022		15,207			3,664		$	152		$	37	$	121,889		$	119,994		$	242,072		$	72,321	$	314,393

See accompanying Condensed Notes to Consolidated Financial Statements—Unaudited.

BLUEGREEN VACATIONS HOLDING CORPORATION

CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)

(In thousands)


	For the Nine Months Ended September 30,
	2023			2022
Operating activities:
Net income	$	67,353		$	68,690
Adjustment to reconcile net income to net cash provided by operating activities:
Provision for loan losses		87,451			73,789
Depreciation and amortization		15,152			15,576
Share-based compensation expense		4,631			2,398
Gain on repayment of note payable to BBX Capital, Inc.		(930	)		—
Loss on disposal of property and equipment		67			22
Increase in deferred income tax liability		12,798			13,116
Changes in operating assets and liabilities:
Notes receivable		(211,213	)		(149,877	)
VOI inventory		(60,834	)		8,987
Prepaids expense and other assets		5,419			15,341
Accounts payable, accrued liabilities and other, and deferred income		19,749			20,692

Net cash (used in) provided by operating activities	$	(60,357	)	$	68,734

Investing activities:
Purchases of property and equipment		(13,513	)		(9,459	)

Net cash used in investing activities	$	(13,513	)	$	(9,459	)

Financing activities:
Repayments of notes payable and other borrowings	$	(448,129	)	$	(231,668	)
Proceeds from notes payable and other borrowings		501,782			259,806
Payments for debt issuance costs		(5,895	)		(5,802	)
Issuance of common stock on vesting of restricted stock awards		(8	)		—
Purchase and retirement of common stock		—			(54,437	)
Dividends paid on common stock		(10,223	)		(6,058	)

Net cash provided by (used in) financing activities	$	37,527		$	(38,159	)

Net (decrease) increase in cash, cash equivalents, and restricted cash		(36,343	)		21,116
Cash, cash equivalents and restricted cash at beginning of period		226,528			183,079

Cash, cash equivalents and restricted cash at end of period	$	190,185		$	204,195

Supplemental cash flow information:
Interest paid on borrowings, net of amounts capitalized	$	46,996		$	24,579
Income taxes paid		6,126			5,425
Supplemental schedule of non-cash investing activities:
Transfer of property and equipment to inventory	$	—		$	1,501
Reconciliation of cash, cash equivalents and restricted cash:
Cash and cash equivalents		134,881			162,667
Restricted cash		55,304			41,528

Total cash, cash equivalents and restricted cash	$	190,185		$	204,195

See accompanying Condensed Notes to Consolidated Financial Statements—Unaudited

BLUEGREEN VACATIONS HOLDING CORPORATION

CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—UNAUDITED

1. Organization and Basis of Financial Statement Presentation

Bluegreen Vacations Holding Corporation is a Florida-based holding company which owns 100% of Bluegreen Vacations Corporation (“Bluegreen”). Bluegreen Vacations Holding Corporation as a standalone entity without its subsidiaries is sometimes referred to herein as “BVH”. Unless stated to the contrary or the context otherwise requires, Bluegreen Vacations Holding Corporation with its subsidiaries, including Bluegreen, is referred to herein as the “Company”, “we”, “us” or “our”. The Company has prepared the accompanying unaudited consolidated financial statements in accordance with generally accepted accounting principles in the United States of America (“GAAP”) for interim financial information. Accordingly, they do not include all of the information and footnotes required by GAAP for complete financial statements.

In the Company’s opinion, the financial information furnished herein reflects all adjustments consisting of normal recurring items necessary for a fair presentation of its financial position, results of operations, and cash flows for the interim periods reported in this Quarterly Report on Form 10-Q. The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the amounts reported and, accordingly, actual results could differ from those estimates. The accompanying financial statements should be read in conjunction with the Company’s audited consolidated financial statements and notes thereto as of and for the year ended December 31, 2022, included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2022, filed with the Securities and Exchange Commission (the “SEC”) on March 13, 2023 (the “2022 Annual Report on Form 10-K”).

Our Business

Bluegreen is a leading vacation ownership company that markets and sells vacation ownership interests (“VOIs”) and manages resorts in popular leisure and urban destinations. Bluegreen’s resorts are primarily located in high-volume, “drive-to” vacation locations, including Orlando, Panama City Beach, Las Vegas, the Smoky Mountains, Myrtle Beach, Charleston, the Branson, Missouri area, Nashville and New Orleans, among others. Bluegreen also earns fees for providing management services to the Bluegreen Vacation Club (the “Vacation Club”) and homeowners’ associations (“HOAs”), mortgage servicing, VOI title services, reservation services, and construction design and development services. In addition, Bluegreen provides financing to qualified VOI purchasers, which generates significant interest income.

On November 5, 2023, the Company entered into a merger agreement with Hilton Grand Vacations Inc. (“HGV”) pursuant to which HGV has agreed to acquire the Company in an all-cash transaction. Subject to the terms and conditions of the merger agreement, upon the consummation of the transaction, HGV will acquire all of the shares of the Company’s Class A Common Stock and Class B Common Stock for $75.00 per share, representing a total enterprise value of approximately $1.5 billion, inclusive of net debt. Closing of the transaction is subject to the approval of the Company’s stockholders and other customary closing conditions, including regulatory approvals. Subject to the satisfaction of the closing conditions, the transaction is expected to close during the first quarter of 2024.

Principles of Consolidation and Basis of Presentation

The Company’s unaudited consolidated financial statements include the accounts of its wholly owned subsidiaries, entities in which the Company or its consolidated subsidiaries hold controlling financial interests, including Bluegreen/Big Cedar Vacations LLC (a joint venture in which Bluegreen is deemed to hold a controlling financial interest based on its 51% equity interest, its active role as the day-to-day manager of its activities, and Bluegreen’s majority voting control of its management committee (“Bluegreen/Big Cedar Vacations”)), and any variable interest entities (“VIEs”) of which the Company or one of its consolidated

subsidiaries is deemed the primary beneficiary. All significant inter-company accounts and transactions have been eliminated in consolidation.

Use of Estimates

The Company’s financial statements are prepared in conformity with GAAP, which requires it to make estimates based on assumptions about current and, for some estimates, future economic and market conditions which affect reported amounts and related disclosures in its financial statements. Although the Company’s estimates are based on current and expected future conditions, as applicable, actual conditions could differ from its expectations, which could materially affect its results of operations and financial position. In particular, a number of estimates have been and may continue to be affected by adverse trends affecting general economic conditions, including rising interest rates, inflation and decreases in discretionary spending. The severity, magnitude and duration, as well as the economic consequences of these factors are uncertain, subject to change and difficult to predict. As a result, accounting estimates and assumptions may change over time. Such changes could result in, among other adjustments, incremental loan losses on notes receivable, a decrease in the carrying amount of tax assets, or an increase in other obligations as of the time of a relevant measurement event. On an ongoing basis, management evaluates its estimates, including those that relate to the estimated future sales value of VOI inventory; the recognition of revenue; the allowance for loan losses; the recovery of the carrying value of VOI inventories; the fair value of assets measured at, or compared to, fair value on a non-recurring basis; the estimate of contingent liabilities related to litigation and other claims and assessments; and deferred income taxes. Management bases its estimates on historical experience and on various other assumptions that it believes to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources. Actual results may differ materially from these estimates under different assumptions and conditions.

2. New Accounting Pronouncements

Recently Adopted Accounting Pronouncements

In March 2022, the FASB issued ASU 2022-02, “Financial Instruments—Credit Losses (Topic 326)—Troubled Debt Restructurings and Vintage Disclosures” (“ASU-2022-02”), which eliminates the recognition and measurement guidance applicable to troubled debt restructurings for creditors and enhances disclosure requirements with respect to loan modifications for borrowers experiencing financial difficulty. ASU 2022-02 also requires disclosure of current-period gross write-offs by year of origination to be presented in the vintage disclosures for VOI notes receivable. This update is effective for fiscal years beginning after December 15, 2022, including interim periods within those fiscal years. The Company adopted ASU 2022-02 as of January 1, 2023. The adoption of this standard did not have a material effect on the Company’s financial statements or disclosures other than disclosure related to changes in vintage disclosures relating to VOI notes receivable.

In March 2020, the FASB issued ASU 2020-04, “Reference Rate Reform (Topic 848): Facilitation of the Effect of Reference Rate Reform on Financial Reporting” (“ASU 2020-04”), which provides relief for companies preparing for the discontinuation of LIBOR in response to the Financial Conduct Authority (the regulatory authority over LIBOR) plan for a phase out of regulatory oversight of LIBOR interest rate indices to allow for an orderly transition to an alternate reference rate. The Company adopted this standard effective January 1, 2023. The adoption of this standard did not have a material effect on the Company’s financial statements or disclosures.

3. Revenue from Contracts with Customers

The table below sets forth the Company’s disaggregated revenue by category from contracts with customers (in thousands):


	For the Three Months Ended September 30,				For the Nine Months Ended September 30,
	2023		2022		2023		2022
Sales of VOIs ⁽¹⁾	$	159,333	$	155,218	$	433,307	$	398,506
Fee-based sales commission revenue ⁽¹⁾		15,694		14,241		41,266		57,174
Resort and club management revenue ⁽²⁾		29,454		28,073		87,721		81,098
Cost reimbursements ⁽²⁾		23,292		20,719		70,960		54,950
Title fees and other ⁽¹⁾		4,333		3,699		10,685		10,216
Other revenue ⁽²⁾		2,855		2,787		7,581		7,239

Revenue from customers		234,961		224,737		651,520		609,183
Interest income ⁽³⁾		32,976		25,803		92,762		71,506
Other income, net		—		296		3,278		774

Total revenue	$	267,937	$	250,836	$	747,560	$	681,463

(1)	Included in the Company’s sales of VOIs and financing segment described in Note 14.

(2)	Included in the Company’s resort operations and club management segment described in Note 14.

(3)

Interest income of $31.4 million and $25.5 million for the three months ended September 30, 2023 and 2022, respectively, and $88.6 million and $71.0 million for the nine months ended September 30, 2023 and 2022, respectively, are included in the Company’s sales of VOIs and financing segment described in Note 14.

As of September 30, 2023 and December 31, 2022, the Company had commission receivables, net of an allowance, of $8.6 million and $10.3 million, respectively, related to sales of VOIs owned by third-parties, which are included in other assets in the unaudited consolidated balance sheets.

Contract liabilities include payments received or due in advance of satisfying performance obligations, including points awarded to customers as an incentive for the purchase of VOIs that may be redeemed in the future, advance deposits on owner programs for future services, and deferred revenue on prepaid vacation packages for future stays at the Company’s resorts or nearby hotels. Both points incentives and owner programs are recognized upon redemption, and deferred revenue for vacation packages is recognized net of sales and marketing expenses upon customer stays. Contract liabilities are included in deferred income in the Company’s unaudited consolidated balance sheets.

The following table sets forth the Company’s contract liabilities as of September 30, 2023 and December 31, 2022 (in thousands):


	September 30, 2023		December 31, 2022
Point incentives	$	3,919	$	3,944
Owner programs		2,243		2,149
Deferred revenue vacation packages		1,119		1,136

	$	7,281	$	7,229

4. Notes Receivable

The table below provides information relating to the Company’s notes receivable and its allowance for loan losses (dollars in thousands):


	As of
	September 30, 2023			December 31, 2022
Notes receivable secured by VOIs:
VOI notes receivable—non-securitized	$	319,544		$	279,888
VOI notes receivable—securitized		589,068			483,913

Gross VOI notes receivable		908,612			763,801
Allowance for loan losses—non-securitized		(83,075	)		(81,801	)
Allowance for loan losses—securitized		(149,285	)		(129,510	)

Allowance for loan losses		(232,360	)		(211,311	)
VOI notes receivable, net	$	676,252		$	552,490

Allowance as a % of Gross VOI notes receivable		26	%		28	%

The weighted-average interest rate charged on the Company’s notes receivable secured by VOIs was 15.2% and 15.3% at September 30, 2023 and December 31, 2022, respectively. All of the Company’s VOI notes receivable bear interest at fixed rates. The Company’s VOI notes receivable are primarily secured by VOI inventory located in Florida, Missouri, South Carolina, Tennessee, Nevada and Virginia.

Allowance for Loan Losses

The activity in the Company’s allowance for loan losses was as follows (in thousands):


	For the Nine Months Ended September 30,
	2023			2022
Balance, beginning of period	$	211,311		$	163,107
Provision for loan losses		87,451			73,789
Less: Write-offs of uncollectible receivables		(66,402	)		(41,015	)

Balance, end of period	$	232,360		$	195,881

The table below represents the gross write-offs of financing receivables by year of origination (in thousands):


	For the Nine Months Ended
	September 30, 2023
2023	$	2,292
2022		26,245
2021		18,973
2020		6,099
2019		4,970
Prior		7,823

Total	$	66,402

does not believe that there are significant concentrations of credit risk with any borrower or groups of borrowers. In estimating loan losses, the Company does not use a single primary indicator of credit quality but instead evaluates its VOI notes receivable based upon a static pool analysis that incorporates the aging of the respective receivables, default trends and prepayment rates by origination year, as well as the FICO scores of the borrowers. The Company records the difference between its VOI notes receivable and the variable consideration included in the transaction price for the sale of the related VOI as an allowance for loan losses and records the VOI notes receivable net of the allowance.

Adverse changes in economic conditions, including rising interest rates and inflationary trends, have had and may continue to have an adverse impact on the collectability of our VOI notes receivable and we are continuing to evaluate the impact they may have on our default and/or delinquency rates. Our estimates may not prove to be correct and our allowance for loan losses may not prove to be adequate.

Additional information about the Company’s VOI notes receivable by year of origination is as follows as of September 30, 2023 (in thousands):

Year of Origination

2023

2022

2021

2020

2019

2018 and
Prior

Total

701+

255,245

147,944

61,523

24,079

31,528

47,732

568,051

601-700

95,081

88,474

45,156

18,094

18,430

37,047

302,282

<601 ⁽¹⁾

7,966

5,516

2,241

1,627

2,245

3,502

23,097

Other

2,055

2,531

1,339

2,407

6,757

15,182

Total by FICO score

358,385

243,989

111,451

45,139

54,610

95,038

908,612

(1)	Includes VOI notes receivable attributable to borrowers without a FICO score (who are primarily foreign borrowers).

Additional information about the Company’s VOI notes receivable by year of origination is as follows as of December 31, 2022 (in thousands):


	Year of Origination
	2022		2021		2020		2019		2018		2017 and Prior		Total
701+	$	208,052	$	88,445	$	34,927	$	43,765	$	28,001	$	43,228	$	446,418
601-700		111,796		63,483		25,003		25,613		18,609		35,890		280,394
<601 ⁽¹⁾		8,844		3,181		2,222		2,876		1,818		3,595		22,536
Other		663		3,501		1,352		2,579		2,504		3,854		14,453

Total by FICO score	$	329,355	$	158,610	$	63,504	$	74,833	$	50,932	$	86,567	$	763,801

(1)	Includes VOI notes receivable attributable to borrowers without a FICO score (who are primarily foreign borrowers).

The percentage of gross notes receivable outstanding by FICO score of the borrower at the time of origination were as follows:


	As of
	September 30, 2023			December 31, 2022
FICO Score
700+		63	%		59	%
601-699		34			38
<600		2			2
No Score ⁽¹⁾		1			1

Total		100	%		100	%

(1)	Primarily foreign borrowers.

The Company’s notes receivable are carried at amortized cost less an allowance for loan losses. Interest income is suspended, and previously accrued but unpaid interest income is reversed, on all delinquent notes receivable when principal or interest payments are more than 90 days contractually past due and not resumed until such loans are less than 90 days past due. As of September 30, 2023 and December 31, 2022, $28.7 million and $24.2 million, respectively, of our VOI notes receivable were more than 90 days past due, and accordingly, consistent with our policy, were not accruing interest income. After approximately 127 days, VOI notes receivable are generally written off against the allowance for loan losses. Accrued interest was $7.3 million and $5.8 million as of September 30, 2023 and December 31, 2022, respectively, and is included within other assets in the Company’s unaudited consolidated balance sheets herein.

The following table shows the delinquency status of the Company’s VOI notes receivable as of September 30, 2023 and December 31, 2022 (in thousands):


	As of
	September 30, 2023		December 31, 2022
Current	$	855,913	$	721,736
31-60 days		13,525		9,612
61-90 days		10,469		8,243
Over 91 days		28,705		24,210

Total	$	908,612	$	763,801

5. Variable Interest Entities

The Company sells VOI notes receivable through special purpose finance entities. These transactions are generally structured as non-recourse to Bluegreen and are designed to provide liquidity and to transfer the economic risks and benefits of the notes receivable to third parties. In a securitization, various classes of debt securities are issued by the special purpose finance entities and are generally collateralized by a single tranche of transferred assets, which consist of VOI notes receivable.

Under the terms of certain VOI notes receivable sales, the Company has the right to repurchase or substitute a limited amount of defaulted notes for new notes at the outstanding principal balance plus accrued interest. Voluntary repurchases and substitutions of defaulted notes for the nine months ended September 30, 2023 and 2022 were $20.8 million and $7.0 million, respectively. The Company’s maximum exposure to loss relating to its non-recourse securitization entities is the difference between the outstanding VOI notes receivable and the notes payable, plus cash reserves and any additional residual interest in future cash flows from collateral.

The assets and liabilities of the Company’s consolidated VIEs were as follows (in thousands):


	As of
	September 30, 2023		December 31, 2022

Restricted cash	$	25,845	$	19,461
Securitized notes receivable, net		439,783		354,403
Receivable backed notes payable—non-recourse		560,491		440,781

The restricted cash and the securitized notes receivable balances disclosed in the table above are restricted to satisfy obligations of the VIEs.

6. VOI Inventory

The Company’s VOI inventory consisted of the following (in thousands):


	As of
	September 30, 2023		December 31, 2022
Completed VOI units	$	264,783	$	317,492
Construction-in-progress		112,795		8,537
Real estate held for future development		72,311		63,835

Total	$	449,889	$	389,864

Construction-in-progress consists primarily of renovation and expansion activity at resorts in Orlando, Florida, Panama City Beach, Florida, Pigeon Forge, Tennessee, and Vail, Colorado.

In April 2023, Bluegreen/Big Cedar Vacations purchased a resort close to Branson, Missouri for $7.1 million, including transaction costs. The transaction was accounted for as an asset acquisition with the purchase price allocated to VOI inventory in the Company’s unaudited consolidated balance sheet as of September 30, 2023.

In May 2023, the Company purchased the property and other assets of a resort located in Nashville, Tennessee for approximately $53.6 million, including transaction costs. The transaction was accounted for as an asset acquisition. Of the purchase price, $51.6 million was allocated to VOI inventory and $2.0 million was allocated to certain property and equipment in the Company’s unaudited consolidated balance sheet as of September 30, 2023.

In November 2023, Bluegreen/Big Cedar Vacations purchased a resort in Stone County, Missouri for $12.6 million, including transaction costs. The transaction was accounted for as an asset acquisition with the purchase price to be allocated to VOI inventory in the Company’s unaudited consolidated balance sheet.

7. Debt

Lines-of-Credit and Notes Payable

Financial data related to our lines of credit and notes payable (other than receivable-backed notes payable, which are discussed below) as of September 30, 2023 and December 31, 2022, were as follows (dollars in thousands):


	As of
	September 30, 2023								December 31, 2022
	Balance			Interest Rate			Carrying Amount of Pledged Assets		Balance			Interest Rate			Carrying Amount of Pledged Assets
Panama City Beach Acquisition Loan	$	53,500			7.56	%	$	85,533	$	54,500			6.16	%	$	77,334
Fifth Third Syndicated LOC		25,000			7.13	%		26,762		70,000			5.92	%		68,413
Fifth Third Syndicated Term Loan		92,500			7.13	%		99,019		96,250			5.40	%		94,068
Unamortized debt issuance costs		(1,836	)							(2,012	)

Total	$	169,164					$	211,314	$	218,738					$	239,815

Panama City Beach Acquisition Loan. In October 2022, Bluegreen purchased the property and other assets of a resort located in Panama City Beach, Florida for approximately $78.0 million. In connection with this acquisition, Bluegreen entered into a non-revolving acquisition loan (the “Panama City Beach Acquisition Loan”) with National Bank of Arizona (“NBA”) for the acquisition and renovation of the resort. In September 2023, the Panama City Beach Acquisition Loan was amended to reduce the maximum advances from $96.6 million to $87.6 million, and reduce the advance rate on future renovation costs from 70% to 55%. Advances may be made during a 36-month advance period. Approximately $54.5 million was advanced at closing for the acquisition of the resort. The remainder of the purchase price was paid in cash. Principal payments will be effected through release payments from sales of the completed VOIs, subject to a minimum amortization schedule, with the remaining balance due at maturity in October 2027. Borrowings under the Panama City Beach Acquisition Loan bear interest at an annual rate equal to one-month term SOFR plus 2.25%, subject to a floor of 2.40%. Recourse is limited to 22.5% of the principal and interest outstanding, with decreases based on achieving certain milestones and subject to certain exceptions.

Other than as described above, there were no new debt issuances or significant changes related to the above listed facilities during the nine months ended September 30, 2023. See Note 10 to the Company’s Consolidated Financial Statements included in its 2022 Annual Report on Form 10-K for additional information regarding the lines-of-credit and notes payable facilities listed above.

Receivable-Backed Notes Payable

Financial data related to our receivable-backed notes payable facilities as of September 30, 2023 and December 31, 2022 were as follows (dollars in thousands):


	As of
	September 30, 2023								December 31, 2022
	Debt Balance			Interest Rate			Principal Balance of Pledged/ Secured Receivables		Debt Balance			Interest Rate			Principal Balance of Pledged/ Secured Receivables
Receivable-backed notes payable—recourse:
Liberty Bank Facility ⁽¹⁾	$	5,000			8.00	%	$	7,321	$	5,000			6.50	%	$	8,470
NBA Receivables Facility ⁽²⁾		5,855			7.32	%		8,148		10,000			6.62	%		13,664
Pacific Western Facility ⁽³⁾		3,778			7.83	%		7,321		5,841			6.82	%		10,171

Total		14,633						22,790		20,841						32,305
Receivable-backed notes payable—non-recourse:
Liberty Bank Facility ⁽¹⁾	$	12,589			8.00	%	$	18,432	$	4,907			6.50	%	$	8,312
NBA Receivables Facility ⁽²⁾		33,176			7.32	%		46,171		20,866			6.62	%		28,512
Syndicated Warehouse Facility		78,377			7.06	%		89,558		104,953			5.87	%		125,486
Quorum Purchase Facility		9,897			4.95 - 5.10	%		11,513		14,007			4.95-5.10	%		16,302
2015 Term Securitization		—			3.02	%		—		7,925			3.02	%		8,516
2016 Term Securitization		10,639			3.35	%		11,122		16,061			3.35	%		16,714
2017 Term Securitization		19,417			3.12	%		20,920		26,521			3.12	%		28,612
2018 Term Securitization		28,959			4.02	%		31,389		39,326			4.02	%		43,163
2020 Term Securitization		56,875			2.60	%		63,656		69,240			2.60	%		77,183
2022 Term Securitization		117,298			4.60	%		130,745		142,106			4.60	%		160,000
2023 Term Securitization		202,368			6.32	%		230,111		—			—			—
Unamortized debt issuance costs and discounts ⁽⁴⁾		(9,104	)							(5,131	)

Total		560,491						653,617		440,781						512,800

Total receivable-backed debt	$	575,124					$	676,407	$	461,622					$	545,105

(1)	Recourse on the Liberty Bank Facility is generally limited to $5.0 million, subject to certain exceptions.

(2)	Recourse on the NBA Receivables Facility is generally limited to the greater of 15% of the outstanding borrowings and $5.0 million, subject to certain exceptions.

(3)	Recourse on the Pacific Western Facility prior to the repayment was generally limited to $7.5 million, subject to certain exceptions.

(4)	This amount includes unamortized discounts of $2.2 million on the 2023 Term Securitization as of September 30, 2023.

Pacific Western Facility. In October 2023, we repaid the Pacific Western Facility and the facility has been terminated.

NBA Receivables Facility. On July 28, 2023, Bluegreen/Big Cedar Vacations amended the NBA Receivables Facility to extend the revolving advance period from September 2023 to July 2026 and the maturity date from March 2028 to January 2031. In addition, pursuant to the Amended NBA Receivables Facility, the interest rate on all new advances made under the facility will be one month term SOFR plus 1.75% (with an interest rate floor of 2.50%) with prior advances at SOFR plus 2.25% (with an interest rate floor of 3.00%). The Amended NBA

Receivables Facility provides for advances at a rate of 80% on eligible receivables pledged under the facility, subject to eligible collateral and specified terms and conditions, during the revolving credit period. The maximum borrowings allowed under the facility is $70.0 million. Subject to the terms of the Amended NBA Receivables Facility, principal and interest payments received on pledged receivables are applied to principal and interest due under the facility, with the remaining outstanding balance being due by maturity. In addition, recourse to Bluegreen/Big Cedar Vacations is limited to the greater of 15% of the outstanding borrowings and $5 million.

2023 Term Securitization. In June 2023, Bluegreen completed a private offering and sale of $214.6 million of VOI receivable-backed notes (the “2023 Term Securitization”). The 2023 Term Securitization consisted of the issuance of three tranches of VOI receivable-backed notes (collectively, the “Notes”) with a weighted average coupon rate of approximately 6.32% and a maturity date in November 2038. The gross advance rate for this transaction was 85.5%. The amount of the VOI receivables sold to BXG Receivables Note Trust 2023-A (the “Trust”) in the transaction was approximately $251.0 million. The gross proceeds of such sales to the Trust were $212.2 million. A portion of the proceeds were used to: repay all amounts outstanding under Bluegreen’s existing VOI receivable-backed notes purchase facility (approximately $181.6 million); capitalize a reserve fund; and pay fees and expenses associated with the transaction. The remainder of the gross proceeds from the 2023 Term Securitization were used for general corporate purposes. The purchase facility allows for maximum outstanding receivable-backed borrowings of $250.0 million on a revolving basis through September 30, 2025, subject to eligible collateral and the other terms and conditions of the facility.

Subject to performance of the collateral, Bluegreen will receive any excess cash flows generated by the receivables transferred under the 2023 Term Securitization (excess meaning after payments of customary fees, interest and principal under the 2023 Term Securitization) on a pro-rata basis as borrowers make payments on their VOI loans.

While ownership of the VOI receivables included in the 2023 Term Securitization is transferred and sold for legal purposes, the transfer of these receivables is accounted for as a secured borrowing for financial accounting purposes. Accordingly, no gain or loss was recognized as a result of this transaction.

Except as described above, there were no new debt issuances or significant changes related to the above listed facilities during the nine months ended September 30, 2023. See Note 10 to the Company’s Consolidated Financial Statements included in its 2022 Annual Report on Form 10-K for additional information regarding the receivable-backed notes payable facilities listed above.

Junior Subordinated Debentures

Financial data relating to the Company’s junior subordinated debentures as of September 30, 2023 and December 31, 2022 was as follows (dollars in thousands):


	September 30, 2023						December 31, 2022
	Carrying Amounts			Interest Rate ⁽¹⁾			Carrying Amounts			Interest Rate ⁽¹⁾			Maturity Years ⁽²⁾
Woodbridge - Levitt Capital Trusts I - IV	$	66,302			9.34 - 9.43	%	$	66,302			7.47 - 8.21	%		2035 - 2036
Bluegreen Statutory Trusts I - VI		104,595			10.39 - 10.48	%		104,595			8.52 - 9.26	%		2035 - 2037
Unamortized debt issuance costs		(861	)					(914	)
Unamortized purchase discount		(33,144	)					(33,972	)

Total junior subordinated debentures	$	136,892					$	136,011

(1)	As of September 30, 2023, the junior subordinated debentures bore interest at three-month SOFR (subject to quarterly adjustment) plus 0.26% and a margin of 3.80% to 4.90%.

(2)	As of September 30, 2023 and December 31, 2022, all of the junior subordinated debentures were eligible for redemption by the Company.

Availability

As of September 30, 2023, the Company was in compliance with its financial debt covenants under its debt instruments. As of September 30, 2023, the Company had availability of approximately $480.3 million under its receivable-backed purchase and credit facilities, inventory lines of credit and corporate credit facility, subject to eligible collateral and the terms of the facilities, as applicable.

8. Fair Value of Financial Instruments

ASC 820 Fair Value Measurement (Topic 820) defines fair value as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date (exit price). The inputs used to measure fair value are classified into the following hierarchy:


Level 1:		Unadjusted quoted prices in active markets for identical assets or liabilities
Level 2:		Unadjusted quoted prices in active markets for similar assets or liabilities, or unadjusted quoted prices for identical or similar assets or liabilities in markets that are not active, or inputs other than quoted prices that are observable for the asset or liability
Level 3:		Unobservable inputs for the asset or liability

The carrying amounts of financial instruments included in the unaudited consolidated financial statements and their estimated fair values were as follows (in thousands):


	As of September 30, 2023				As of December 31, 2022
	Carrying Amount		Estimated Fair Value		Carrying Amount		Estimated Fair Value
Cash and cash equivalents	$	134,881	$	134,881	$	175,683	$	175,683
Restricted cash		55,304		55,304		50,845		50,845
Notes receivable, net		676,252		859,606		552,490		720,171
Note payable to BBX Capital, Inc.		35,000		33,250		50,000		46,635
Receivable-backed notes payable		575,124		560,372		461,622		451,500
Lines-of-credit, notes payable		169,164		167,261		218,738		215,400
Junior subordinated debentures		136,892		136,500		136,011		102,000

Cash and cash equivalents. The amounts reported in the unaudited consolidated balance sheets for cash and cash equivalents approximate fair value due to their short maturity of 90 days or less.

Restricted cash. The amounts reported in the unaudited consolidated balance sheets for restricted cash approximate fair value due to their short maturity of 90 days or less.

Notes receivable, net. The fair value of the Company’s notes receivable is estimated using Level 3 inputs and is based on estimated future cash flows considering contractual payments and estimates of prepayments and defaults, discounted at a market rate.

Note Payable to BBX Capital. The fair value of the note payable to BBX Capital was determined using Level 3 inputs by discounting the net cash outflows estimated to be used to repay the debt.

Lines-of-credit, notes payable. The amounts reported in the Company’s unaudited consolidated balance sheets for lines of credit, notes payable approximate fair value for indebtedness that provides for variable interest rates. The fair value of the Company’s fixed-rate, receivable-backed notes payable was determined using Level 3 inputs by discounting the net cash outflows estimated to be used to repay the debt. These obligations are to be satisfied using the proceeds from the consumer loans that secure the obligations.

The fair value of the Company’s fixed-rate receivable-backed notes payable was determined using Level 3 inputs by discounting the net cash outflows estimated to be used to repay the debt. These obligations are to be satisfied using the proceeds from the customer loans that secure the obligations.

Junior subordinated debentures. The fair value of the Company’s junior subordinated debentures is estimated using Level 3 inputs based on the contractual cash flows discounted at a market rate or based on market price quotes from the over-the-counter bond market.

9. Commitments and Contingencies

Litigation Matters

In the ordinary course of business, the Company and its subsidiaries are parties to lawsuits as plaintiff or defendant involving its operations and activities, including the purchase, sale, marketing, or financing of VOIs. Additionally, from time to time in the ordinary course of business, the Company is involved in disputes with existing and former employees, vendors, taxing jurisdictions, and other individuals and entities, and it also receives individual consumer complaints as well as complaints received through regulatory and consumer agencies, including Offices of State Attorneys General. The Company takes these matters seriously and attempts to resolve any such issues as they arise.

Reserves are accrued for matters in which management believes it is probable that a loss will be incurred and the amount of such loss can be reasonably estimated. Management does not believe that the aggregate liability relating to known contingencies in excess of the aggregate amounts accrued will have a material impact on the Company’s results of operations or financial condition. However, litigation is inherently uncertain and the actual costs of resolving legal claims, including awards of damages, may be substantially higher than the amounts accrued for these claims and may have a material adverse impact on the Company’s results of operations or financial condition.

Management is not at this time able to estimate a range of reasonably possible losses with respect to matters in which it is reasonably possible that a loss will occur. In certain matters, management is unable to estimate the loss or reasonable range of loss until additional developments provide information sufficient to support an assessment of the loss or range of loss. Frequently in these matters, the claims are broad and the plaintiffs have not quantified or factually supported their claim.

Litigation

The following is a description of material legal proceedings pending against the Company or its subsidiaries or which were pending during the three months ended September 30, 2023:

On January 7, 2019, Shehan Wijesinha filed a purported class action lawsuit alleging violations of the Telephone Consumer Protection Act (the “TCPA”). It is alleged that Bluegreen’s wholly owned subsidiary Bluegreen Vacations Unlimited Inc. (“BVU”) called plaintiff’s cell phone for telemarketing purposes using an automated dialing system, and that plaintiff did not give BVU his express written consent to do so. Plaintiffs seek certification of a class comprised of other persons in the United States who received similar calls from or on behalf of BVU without the person’s consent. Plaintiff seeks monetary damages, attorneys’ fees and injunctive relief. Bluegreen believes the lawsuit is without merit and intends to vigorously defend the action. On July 15, 2019, the court entered an order staying this case pending a ruling from the Federal Communications Commission (“FCC”) clarifying the definition of an automatic telephone dialing system under the TCPA and the decision of the Eleventh Circuit in a separate action brought against a VOI company by a plaintiff alleging violations of the TCPA. On January 7, 2020, the Eleventh Circuit issued a ruling consistent with BVU’s position, and on June 26, 2020, the FCC also issued a favorable ruling. The case was stayed pending the United States Supreme Court’s decision in Facebook, Inc. v. Duguid. On April 1, 2021, the Supreme Court issued a decision in the Facebook case which was favorable to Bluegreen’s position that an automatic telephone dialing system was not used in this case. Bluegreen believes the ruling disposes of the plaintiff’s claim and filed a Notice of Supplemental Authority advising the court of the ruling.

On July 18, 2019, Eddie Boyd, and Connie Boyd, Shaundre and Kimberly Laskey, and others similarly situated filed an action alleging that BVU and co-defendants violated the Missouri Merchandise Practices Act for allegedly making false statements and misrepresentations with respect to the sale of VOIs. Plaintiffs’ claims include a purported class action allegation that BVU’s charging of an administrative processing fee constitutes the unauthorized practice of law, and also that Bluegreen and its outside counsel engaged in abuse of process by filing a lawsuit against plaintiffs’ counsel (The Montgomery Law Firm). Plaintiffs seek monetary damages, attorneys’ fees and injunctive relief. On August 31, 2020, the court certified a class regarding the unauthorized practice of law claim, but dismissed the claims regarding abuse of process. On January 11, 2021, the Court issued an order that the class members are not entitled to rescission of their contracts because they failed to plead fraud in the inducement. Plaintiffs filed a third amended petition to add Resort Title Agency, Inc. (a wholly owned subsidiary of Bluegreen) as a defendant. On July 29, 2022, Resort Title Agency, Inc. removed the case to the United States District Court for the Western District of Missouri, where the case is currently pending. Bluegreen has filed an opposition to the Plaintiffs’ Motion to Modify the Class Definition or Class Certification and has also moved for Summary Judgment against Plaintiffs. Bluegreen continues to vigorously defend the action.

On March 15, 2018, BVU entered into an Agreement for Purchase and Sale of Assets with T. Park Central, LLC, O. Park Central, LLC, and New York Urban Ownership Management, LLC, (collectively “New York Urban”) (“Purchase and Sale Agreement”), which provided for the purchase of The Manhattan Club inventory over a number of years and the management contract for The Manhattan Club Association, Inc. On October 7, 2019, New York Urban initiated arbitration proceedings against BVU alleging that The Manhattan Club Association, Inc. (of which BVU was a member) was obligated to pay an increased management fee to a New York Urban affiliate and that this higher amount would be the benchmark for BVU’s purchase of the management contract under the parties’ Purchase and Sale Agreement. New York Urban also sought damages in the arbitration proceedings in excess of $10.0 million for promissory estoppel and tortious interference. On November 19, 2019, the parties participated in mediation but did not resolve the matter. On November 20, 2019, New York Urban sent a letter to BVU advising that it was: (1) withdrawing its arbitration demand; (2) notifying the Board that it was not seeking to execute the proposed amendment to the Management Agreement that was originally sent to Bluegreen on April 24, 2019; and (3) not going to pay itself a management fee for the 2020 operating year in an amount exceeding the 2019 operating year (i.e., $6.5 million). On November 21, 2019, BVU sent New York Urban a Notice of Termination of the Purchase and Sale Agreement. On November 25, 2019, New York Urban sent its own Notice of Termination and a separate letter containing an offer to compromise if BVU resigned its position on the Board and permitted New York Urban to enforce its rights to the collateral. On November 29, 2019, BVU accepted the offer and on December 18, 2019, BVU provided New York Urban with resignations of its members on the Board of Directors.

On April 2, 2021, New York Urban initiated new arbitration proceedings against BVU, alleging it is owed over $70.0 million for periodic inventory closings that have not occurred since the Purchase and Sale Agreement was terminated or that will not occur because of the termination. New York Urban also seeks over $50.0 million because, due to the Purchase and Sale Agreement’s termination, the closing on the management contract will not occur. BVU believes it has strong defenses to these claims. The arbitration hearing has commenced and is ongoing. BVU continues to vigorously defend against New York Urban’s claims.

On August 30, 2020, over 100 VOI owners at The Manhattan Club (“TMC”) sued BVU and certain unaffiliated entities (the “Non-Bluegreen Defendants”). The complaint includes claims arising out of alleged misrepresentations made during the sale of VOIs at TMC and certain post-sale operational practices, including allegedly charging owners excessive annual maintenance fees and implementing reservation policies that restrict the ability of VOI owners to use their points to access the resort while allowing the general public to make reservations. The plaintiffs assert in the complaint that Bluegreen acquired operational control of TMC from the Non-Bluegreen Defendants in 2018 and assumed joint liability for any prior wrongdoing by them. Bluegreen believes this assertion to be erroneous and that the claims against BVU are without merit. On September 27, 2021, the court granted Bluegreen’s motion to dismiss without prejudice and the Court declined to exercise supplemental jurisdiction over the remaining state law claims. Plaintiffs have amended their complaint. BVU filed a motion to dismiss the amended complaint on December 29, 2021, which remains pending.

On September 14, 2021, Tamarah and Emmanuel Louis, individually and on behalf of all others similarly situated, filed a purported class action lawsuit against BVU alleging it violated the Military Lending Act (“MLA”). The complaint alleges that BVU did not make any inquiry before offering financing to the plaintiffs as to whether they were members of the United States Military and allege other claims related to certain disclosures mandated by the MLA. BVU filed a motion to dismiss the complaint, and plaintiffs then filed an amended complaint on December 3, 2021. The District Court granted BVU’s motion to dismiss. An appeal of the District Court’s dismissal by the plaintiffs is pending before the Eleventh Circuit Court of Appeals. BVU continues to vigorously defend this action on appeal.

On February 8, 2023, Denise Mecke, a former Missouri sales associate, filed a lawsuit in the United States District Court for the Western District of Missouri alleging various statutory and tort claims against Bluegreen, BVU and nine current and former associates related to her termination from employment. Her initial demand letter sought $7.0 million in damages. On March 31, 2023, defendants filed a motion to compel arbitration and dismiss the complaint, or, in the alternative, to stay this action. On October 12, 2023, the Court granted Bluegreen’s motion to compel arbitration and dismiss the complaint.

Commencing in 2015, it came to Bluegreen’s attention that its collection efforts with respect to its VOI notes receivable were being impacted by a then emerging, industry-wide trend involving the receipt of “cease and desist” letters from exit firms and their attorneys purporting to represent certain VOI owners. Following receipt of these letters, Bluegreen is unable to contact the owners unless allowed by law. Bluegreen believes these exit firms have encouraged such owners to become delinquent and ultimately default on their obligations and that such actions and its inability to contact the owners have been a material factor in the increase in its annual default rates. Bluegreen’s average annual default rates have increased from 6.9% in 2015 to 10.5% in 2023. Bluegreen also estimates that approximately 9.1% of the total delinquencies on its VOI notes receivable as of September 30, 2023 related to VOI notes receivable are subject to this issue. Bluegreen has in a number of cases pursued, and Bluegreen may in the future pursue, legal action against the VOI owners, and as described below, against the exit firms.

On November 13, 2020, Bluegreen filed a lawsuit against timeshare exit firm, Carlsbad Law Group, LLP, and certain of its associated law firms and affiliates. On December 30, 2020, Bluegreen filed a lawsuit against timeshare exit firm, The Molfetta Law Firm, and certain of its associated law firms, affiliates, and cohorts, including Timeshare Termination (“TTT”). In both of these actions, Bluegreen makes substantially the same claims against the timeshare exit firms and its associated law firms and affiliates as those made in its action against The Montgomery Law Firm described in the 2022 Annual Report on Form 10-K. In June 2021, counsel for TTT moved to withdraw, citing TTT’s insolvency. On October 1, 2021, the principals of TTT filed for Chapter 11 Bankruptcy Protection, which matter has since been converted to a Chapter 7 Bankruptcy. The principals of TTT have consented to entry of an injunction in the U.S. District Court for the Southern District of Florida as part of an agreement with Bluegreen. In addition, Bluegreen has reached a settlement with all remaining, non-bankrupt defendants in the Molfetta action. In the Carlsbad action, settlement has been reached with certain defendants, including Carlsbad Law Group, LLC. Bluegreen’s remaining claims in that case, which seek an injunction and disgorgement of profits against Pandora Marketing, LLC d/b/a Timeshare Compliance et al, proceeded to trial in August 2023 and Bluegreen received a favorable verdict for an immaterial amount.

Other Commitments, Contingencies and Guarantees

$4.0 million in January of each year, commencing in 2020. As of September 30, 2023 and December 31, 2022, one such annual payment remained and $3.9 million and $3.8 million, respectively, were included in accrued liabilities and other in the unaudited consolidated balance sheets for such payment.

During the nine months ended September 30, 2023 and 2022, VOI sales to prospects and leads generated by the agreement with Bass Pro accounted for approximately 16% and 18%, respectively, of Bluegreen’s VOI sales volume.

In lieu of paying maintenance fees for unsold VOI inventory, Bluegreen may enter into subsidy agreements with certain HOAs. During the nine months ended September 30, 2023 and 2022, Bluegreen made subsidy payments under these agreements of $18.7 million and $10.3 million, respectively, which are included in cost of other fee-based services in the Company’s unaudited consolidated statements of operations and comprehensive income for such periods. As of September 30, 2023 and December 31, 2022, Bluegreen had $7.7 million and $0.6 million, respectively, accrued for such subsidies, which is included in accrued liabilities and other in the unaudited consolidated balance sheets as of such dates.

10. Equity

Share Repurchases

During the nine months ended September 30, 2023, the Company did not repurchase any shares of common stock under its share repurchase program. During the three and nine months ended September 30, 2022, the Company repurchased and retired approximately 843,000 and 1,912,000 shares of Class A Common Stock, respectively, for an aggregate purchase price of $23.6 million and $54.4 million, respectively. The excess of cost over par value of the repurchased shares is recorded to additional paid in capital. As of September 30, 2023, $8.3 million remained available for the repurchase of shares under the share repurchase program.

Restricted Stock and Stock Option Plans

The Bluegreen Vacations Holding Corporation 2021 Incentive Plan (the “2021 Plan”) provides for the issuance of up to 2,000,000 shares of the Company’s Class A Common Stock pursuant to restricted stock awards and options which may be granted. During the nine months ended September 30, 2023, the Company granted restricted stock awards of 318,811 shares to certain executive officers and employees under the 2021 Plan, of which 150,000 restricted shares are scheduled to cliff vest in January 2027 and 168,811 restricted shares are scheduled to vest ratably over 4 years, in each case subject to the terms and conditions of the 2021 Plan and the applicable award agreement. There were 208,035 shares of restricted stock granted to officers and employees under the 2021 Plan during the nine months ended September 30, 2022. As of September 30, 2023, 791,862 shares remained available for grant under the 2021 Plan.

Restricted Stock Activity

The Company accounts for compensation cost for unvested time-based service condition restricted stock awards based on the fair value of the award on the measurement date, which is generally the grant date. The cost is recognized on a straight-line basis over the requisite service period of the award, with forfeitures recognized as incurred. The table below sets forth information regarding the Company’s unvested restricted stock award activity for the nine months ended September 30, 2023 and 2022:


	Nine Months Ended September 30,
	2023					2022
	Unvested Restricted Stock			Per Share Weighted Average Grant Date Fair Value		Unvested Restricted Stock			Per Share Weighted Average Grant Date Fair Value
Unvested balance outstanding, beginning of period		889,327		$	22.06		460,470		$	20.72
Granted		318,811			27.99		208,035			29.80
Vested		(38,670	)		29.80		—			—
Forfeited		—			—		(2,500	)		20.72

Unvested balance outstanding, end of period		1,169,468		$	23.42		666,005		$	23.56

Available for grant		791,862					1,333,995

The table below sets forth information regarding the restricted stock awards granted during the nine months ended September 30, 2023 and September 30, 2022.

Plan Name

Grant
Date

Number
of
Awards
Granted

Per Share
Weighted
Average
Grant Date
Fair Value

Requisite
Service
Period

Vesting
Date

2021 Incentive Plan

1/19/2022

208,035

29.80

4 years

⁽¹

⁾

2021 Incentive Plan

1/18/2023

318,811

27.99

4 years

⁽²

⁾

(1)	154,679 of the shares granted are scheduled to vest ratably in annual installments over 4 years and 53,356 of the shares granted are scheduled to cliff vest in January 2026, in each case subject to the terms and conditions of the 2021 Plan and the applicable award agreement.

(2)	150,000 of the shares are scheduled to cliff vest in January 2027 and 168,811 of the shares are scheduled to vest ratably over 4 years, in each case subject to the terms and conditions of the 2021 Plan and the applicable award agreement.

The aggregate grant date fair value of the awards granted in January 2023 was $8.9 million. As of September 30, 2023, there was $19.5 million of unrecognized share-based compensation with a remaining weighted average period of 3.74 years. Restricted stock compensation expense is included in selling general and administrative expenses in the Company’s unaudited consolidated statements of operations and comprehensive income.

Restricted stock compensation was $1.6 million and $4.6 million during the three and nine months ended September 30, 2023, respectively, and $0.8 million and $2.4 million during the three and nine months ended September 30, 2022, respectively. No tax benefits have been recognized on restricted stock awards.

11. Income Taxes

The Company and its subsidiaries file a consolidated U.S. federal income tax return and income tax returns in various state and foreign jurisdictions. With certain exceptions, the Company is no longer subject to U.S. federal, state and local, or non-U.S. income tax examinations by tax authorities for years before 2018.

The Company’s effective income tax rate was approximately 28% and 27% during the three months ended September 30, 2023 and 2022, respectively, and 27% during both the nine months ended September 30, 2023 and 2022, respectively. Effective income tax rates for interim periods are based upon the Company’s then current estimated annual rate. The effective income tax rate varies based upon the estimate of taxable earnings as well as on the mix of taxable earnings in the various states in which the Company and its subsidiaries operate. As such, the Company’s effective tax rates for the 2023 and 2022 periods reflect an estimate of its annual taxable earnings, state taxes, non-deductible items and changes in valuation allowance on deferred tax assets for each respective year.

In April 2023, the Company received notice that its U.S. federal income tax return for the year ended December 31, 2020 was selected for examination. In addition, certain of the Company’s state filings are under routine examination. While there is no assurance as to the results of these audits, the Company does not currently anticipate any material adjustments in connection with these examinations.

As of September 30, 2023, the Company did not have any significant amounts accrued for interest and penalties or recorded for uncertain tax positions.

12. Earnings Per Share

The following table presents the calculation of the Company’s basic and diluted earnings per share (“EPS”):


	For the Three Months Ended September 30,				For the Nine Months Ended September 30,
(In thousands, except per share amounts)	2023		2022		2023		2022
Basic EPS:
Numerator:
Net income attributable to shareholders	$	20,657	$	22,964	$	54,069	$	56,736
Denominator:
Weighted average shares outstanding		15,869		19,101		15,865		20,029

Basic EPS	$	1.30	$	1.20	$	3.41	$	2.83


Diluted EPS
Numerator:
Net income attributable to shareholders	$	20,657	$	22,964	$	54,069	$	56,736
Denominator:
Basic - Weighted average shares outstanding		15,869		19,101		15,865		20,029
Dilutive effect of restricted stock rewards		610		131		488		162

Diluted weighted average number of common shares outstanding		16,479		19,232		16,353		20,191

Diluted EPS	$	1.25	$	1.19	$	3.31	$	2.81

During the three and nine months ended September 30, 2023, 610,263 and 487,802, respectively, of weighted average shares of unvested restricted stock awards outstanding were included in the computation of diluted earnings per share as the shares were dilutive. During the three and nine months ended September 30, 2022, 130,776 and 162,579, respectively, of weighted average shares of unvested restricted stock awards outstanding were included in the computation of diluted earnings per share as the shares were dilutive.

13. Related Party Transactions

Company and son of Mr. Alan Levan, and Seth M. Wise, a director of the Company. Together, they may be deemed to beneficially own shares of the Company’s Class A Common Stock and Class B Common Stock representing approximately 81% of the Company’s total voting power. Further, in connection with the spin-off of BBX Capital during September 2020, Mr. Jarett Levan became the Chief Executive Officer and President and a director of BBX Capital, Mr. Alan Levan became the Chairman of the Board of BBX Capital, Mr. Abdo became Vice Chairman of BBX Capital and Mr. Wise became Executive Vice President and a director of BBX Capital. Mr. Alan Levan, Mr. Abdo, Mr. Jarett Levan and Mr. Wise may also be deemed to control BBX Capital through their ownership of BBX Capital’s Class A Common Stock and Class B Common Stock. Each also receives compensation from BBX Capital.

During each of the three and nine months ended September 30, 2023 and September 30, 2022, the Company recognized expense paid to the Abdo Companies, Inc. of $38,000 and $114,000 respectively, in exchange for certain management services. John E. Abdo, the Company’s Vice Chairman, is the principal shareholder and Chief Executive Officer of Abdo Companies, Inc.

The Company reimburses BBX Capital for advisory, risk management, administrative and other services. During each of the three and nine months ended September 30, 2023 and September 30, 2022, the Company reimbursed BBX Capital $0.3 million and $1.3 million, respectively, for such services. The Company had $0.2 million in accrued expenses for the services described above as of both September 30, 2023 and December 31, 2022.

In connection with its spin-off of BBX Capital, the Company issued a $75.0 million note payable to BBX Capital, of which $35.0 million and $50.0 million remained outstanding as of September 30, 2023 and December 31, 2022, respectively. See the 2022 Annual Report on Form 10-K for a description of the of terms of BVH’s note payable to BBX Capital.

14. Segment Reporting

Operating segments are defined as components of an enterprise about which separate financial information is available that is regularly reviewed by the chief operating decision maker (“CODM”) in assessing performance and deciding how to allocate resources. Reportable segments consist of one or more operating segments with similar economic characteristics, products and services, production processes, type of customer, distribution system or regulatory environment.

The Company reports its results through two reportable segments: (i) Sales of VOIs and Financing; and (ii) Resort Operations and Club Management.

The Sales of VOIs and Financing segment includes the Company’s marketing and sales activities related to the VOIs that are owned by the Company, VOIs it acquires under just-in-time and secondary market inventory arrangements, and sales of VOIs through fee-for-service arrangements with third-party developers, as well as consumer financing activities in connection with sales of VOIs owned by the Company, and title services operations.

The Resort Operations and Club Management segment includes management services activities for the Vacation Club and for a majority of the HOAs of the resorts within the Vacation Club. The Company also provides reservation services, services to owners and billing and collections services to the Vacation Club and certain HOAs, which are included in the resort operations and club management segment. Additionally, this segment includes revenue from the Traveler Plus program, food and beverage and other retail operations, rental services activities, and management of construction activities for certain fee-based developer clients.

debt secured by VOI notes receivable), and depreciation and amortization (“Adjusted EBITDA”) to evaluate the reporting segments’ performance. See Management’s Discussion and Analysis of Financial Condition and Results of Operations for information regarding Adjusted EBITDA, including our definition of Adjusted EBITDA.

The presentation and allocation of results of operations may not reflect the actual economic costs of the segments as standalone businesses. Due to the nature of the Company’s business, assets are not allocated to a particular segment, and therefore management does not evaluate the balance sheet by segment. If a different basis of allocation were utilized, the relative contributions of the segments might differ but the relative trends in the segments’ operating results would, in management’s view, likely not be impacted.

The table below sets forth the Company’s revenue for its reportable segments for the three and nine months ended September 30, 2023 and 2022 (in thousands):


	Three Months Ended September 30,						Nine Months Ended September 30,
	2023			2022			2023			2022
Revenues:
Sales of VOIs and financing	$	211,681		$	199,794		$	576,859		$	540,475
Resort operations and club management		32,309			30,860			95,302			88,337
Cost reimbursements ⁽¹⁾		23,292			20,719			70,960			54,950

Total segment revenues		267,282			251,373			743,121			683,762
Corporate and other		1,569			594			7,397			1,265
Eliminations		(914	)		(1,131	)		(2,958	)		(3,564	)

Total revenues	$	267,937		$	250,836		$	747,560		$	681,463

(1)	Cost reimbursement revenue and expense net to zero and are excluded from the computation of Adjusted EBITDA below.

The table below sets forth the Company’s Adjusted EBITDA for its reportable segments reconciled to net income for the three and nine months ended September 30, 2023 and 2022 (in thousands):


	Three Months Ended September 30,						Nine Months Ended September 30,
	2023			2022			2023			2022

Net income attributable to shareholders	$	20,657		$	22,964		$	54,069		$	56,736
Non-controlling interest		4,840			4,682			13,284			11,954

Net income (loss) from continuing operations		25,497			27,646			67,353			68,690
Add: Depreciation and amortization		2,019			1,844			6,276			5,522
Less: Interest income (other than interest earned on VOI notes receivable)		(1,569	)		(298	)		(4,119	)		(491	)
Add: Interest expense - corporate		10,245			6,053			29,854			16,656
Add: Provision for income taxes		7,840			8,586			20,338			20,948
Sale of vacant land and other assets		3			—			(2,887	)		—
Add: General and administrative expenses ⁽¹⁾		25,549			22,313			77,915			69,871
Less: Other income, net		63			(296	)		(3,278	)		(774	)

Segment Adjusted EBITDA ⁽²⁾		69,647			65,848			191,452			180,422

Sales of VOIs and financing		47,006			43,953			123,100			117,053
Resort operations and club management		22,641			21,895			68,352			63,369

Segment Adjusted EBITDA ⁽²⁾	$	69,647		$	65,848		$	191,452		$	180,422

(1)

Included in general and administrative expenses is $1.6 million and $4.6 million of share-based compensation, for the three months and nine months ended September 30, 2023, respectively, and $0.8 million and $2.4 million of share-based compensation, for the three and nine months ended September 30, 2022, respectively.

(2)	See Management’s Discussion and Analysis of Financial Condition and Results of Operations for information regarding Adjusted EBITDA, including our definition of Adjusted EBITDA.

15. Subsequent Events

Subsequent events have been evaluated through the date the financial statements were issued. As of such date, there were no subsequent events identified that required recognition or disclosure other than as disclosed in the footnotes herein.

Exhibit 99.2

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the Shareholders and the Board of Directors of Bluegreen Vacations Holding Corporation

Opinion on the Financial Statements

We have audited the accompanying consolidated balance sheets of Bluegreen Vacations Holding Corporation (the Company) as of December 31, 2022 and 2021, the related consolidated statements of operations and comprehensive income, equity and cash flows for the years then ended, and the related notes (collectively referred to as the “consolidated financial statements”). In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of the Company at December 31, 2022 and 2021, and the results of its operations and its cash flows for the years then ended, in conformity with U.S. generally accepted accounting principles.

Basis for Opinion

These financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on the Company’s financial statements based on our audits. We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audit in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. Our audit included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audit also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audit provides a reasonable basis for our opinion.

Critical Audit Matter

The critical audit matter communicated below is a matter arising from the current period audit of the financial statements that was communicated or required to be communicated to the audit committee and that: (1) relates to accounts or disclosures that are material to the financial statements and (2) involved our especially challenging, subjective or complex judgments. The communication of the critical audit matter does not alter in any way our opinion on the consolidated financial statements, taken as a whole, and we are not, by communicating the critical audit matter below, providing a separate opinion on the critical audit matter or on the account or disclosures to which it relates.


		*Allowance for Loan Losses*

Description of the Matter		As of December 31, 2022, the Company’s allowance for loan losses was $211 million. As discussed in Note 2 to the consolidated financial statements, for sales of vacation ownership interests (“VOIs”) for which the Company provides financing, the Company records an estimate of variable consideration for expected loan losses as a reduction of the transaction price. The Company’s estimates of variable consideration are based on an estimate of future loan losses that are the result of its static pool analysis, which relies on historical payment data for similar VOI notes receivable and tracks uncollectible loans for each period’s sales over the entire life of the VOI notes receivable. The Company also considers whether historical economic conditions are comparable to then current economic conditions. Auditing the Company’s allowance for loan losses was challenging because significant audit effort is required as the static pool analyses are complex and contain a significant volume of data. Furthermore, the allowance for loan losses was sensitive to management’s assumptions regarding future loan losses.

How We Addressed the Matter in Our Audit		We obtained an understanding, evaluated the design and tested the operating effectiveness of controls over the Company’s allowance for loan losses process. For example, we tested controls over management’s review of the static pool analyses, including the significant inputs to the analyses and assumptions regarding future loan losses. To test the allowance for loan losses, we performed audit procedures that included, among others, assessing the methodologies used, evaluating the assumptions regarding future loan losses as discussed above, and testing the completeness and accuracy of the static pool analyses, including the significant inputs to the analyses. For example, we agreed inputs to the static pool analyses to historical data and source documentation. We also compared the assumptions regarding future loan losses to the Company’s historical and current loan loss data and performed a retrospective review of prior analyses. We involved real estate subject matter resources because the static pool analyses are unique to companies in the real estate time-sharing industry.

/s/ Ernst & Young LLP

We have served as the Company’s auditor since 2021.

Boca Raton, Florida

March 13, 2023

BLUEGREEN VACATIONS HOLDING CORPORATION

CONSOLIDATED BALANCE SHEETS

(In thousands, except share and per share data)


	As of December 31,
	2022			2021
ASSETS
Cash and cash equivalents	$	175,683		$	140,225
Restricted cash ($19,461 and $15,956 in VIEs at December 31, 2022 and 2021, respectively)		50,845			42,854
Notes receivable		763,801			609,429
Less: Allowance for loan loss		(211,311	)		(163,107	)

Notes receivable, net ($354,403 and $248,873 in VIEs at December 31, 2022 and 2021, respectively)		552,490			446,322
Vacation ownership interest (“VOI”) inventory		389,864			334,605
Property and equipment, net		85,915			87,852
Intangible assets, net		61,293			61,348
Operating lease assets		22,963			33,467
Prepaid expenses		23,833			25,855
Other assets		35,499			37,984

Total assets	$	1,398,385		$	1,210,512

LIABILITIES AND EQUITY
Liabilities
Accounts payable	$	21,389		$	14,614
Deferred income		15,675			13,690
Accrued liabilities and other		110,048			100,131
Receivable-backed notes payable—recourse		20,841			22,500
Receivable-backed notes payable—non-recourse (in VIEs)		440,781			340,154
Note payable to BBX Capital, Inc.		50,000			50,000
Other notes payable and borrowings		218,738			97,125
Junior subordinated debentures		136,011			134,940
Operating lease liabilities		27,716			37,870
Deferred income taxes		113,193			95,688

Total liabilities		1,154,392			906,712

Commitments and contingencies (See Note 12)
Equity
Preferred Stock of $0.01 par value; authorized 10,000,000 shares		—			—
Class A Common Stock of $0.01 par value; authorized 30,000,000 shares; issued and outstanding 12,165,825 in 2022 and 17,118,392 in 2021		122			171
Class B Common Stock of $0.01 par value; authorized 4,000,000 shares; issued and outstanding 3,664,117 in 2022 and 3,664,412 in 2021		37			37
Additional paid-in capital		46,821			173,909
Accumulated earnings		124,680			69,316

Total Bluegreen Vacations Holding Corporation equity		171,660			243,433
Non-controlling interests		72,333			60,367

Total equity		243,993			303,800

Total liabilities and equity	$	1,398,385		$	1,210,512

See accompanying notes to consolidated financial statements.

BLUEGREEN VACATIONS HOLDING CORPORATION

CONSOLIDATED STATEMENTS OF OPERATIONS

AND COMPREHENSIVE INCOME

(In thousands, except per share data)


	For the Years Ended December 31,
	2022			2021
Revenue:
Gross sales of VOIs	$	636,156		$	426,556
Provision for loan losses		(100,431	)		(72,788	)

Sales of VOIs		535,725			353,768
Fee-based sales commission revenue		72,647			128,321
Other fee-based services revenue		131,910			123,454
Cost reimbursements		77,394			69,066
Interest income		99,739			81,691
Other income, net		2,014			813

Total revenues		919,429			757,113

Costs and Expenses:
Cost of VOIs sold		58,665			29,504
Cost of other fee-based services		58,447			58,812
Cost reimbursements		77,394			69,066
Interest expense		42,953			35,329
Selling, general and administrative expenses		574,532			465,806
Other expense, net		—			—

Total costs and expenses		811,991			658,517
Income before income taxes		107,438			98,596
Provision for income taxes		(26,187	)		(26,664	)

Income from continuing operations		81,251			71,932

Discontinued operations
Benefit for income taxes		—			900

Net income from discontinued operations		—			900

Net income		81,251			72,832
Less: Income attributable to noncontrolling interests—continuing operations		16,866			14,102
Less: Loss attributable to noncontrolling interests—discontinued operations		—			—

Net income attributable to shareholders	$	64,385		$	58,730

Basic earnings per share from continuing operations	$	3.26		$	2.79
Basic earnings per share from discontinued operations		—			0.04

Basic earnings per share ⁽¹⁾	$	3.26		$	2.83

Diluted earnings per share from continuing operations	$	3.24		$	2.79
Diluted earnings per share from discontinued operations		—			0.04

Diluted earnings per share⁽¹⁾	$	3.24		$	2.83

Cash dividends declared per Class A and B common shares	$	0.45		$	—

Net income	$	81,251			72,832
Other comprehensive loss, net of tax:
Foreign currency translation adjustments		—			—
Unrealized loss on securities available for sale		—			—

Other comprehensive income, net		—			—

Comprehensive income, net of tax		81,251			72,832
Less: Comprehensive income attributable to noncontrolling interests		16,866			14,102

Comprehensive income attributable to shareholders	$	64,385		$	58,730

(1)	Basic and Diluted EPS are calculated the same for both Class A and B common shares.

See accompanying notes to consolidated financial statements.

BLUEGREEN VACATIONS HOLDING CORPORATION

CONSOLIDATED STATEMENTS OF EQUITY

(In thousands)


	Shares of Common Stock Outstanding Class						Common Stock Class					Additional Paid-in Capital			Accumulated Earnings			Accumulated Other Comprehensive Income		Total Shareholders’ Equity			Non-Controlling Interests			Total Equity
	A			B			A			B		Additional Paid-in Capital			Accumulated Earnings			Accumulated Other Comprehensive Income		Total Shareholders’ Equity			Non-Controlling Interests			Total Equity
Balance, December 31, 2020		15,624			3,694		$	156		$	37	$	177,104		$	10,586		$	—	$	187,883		$	74,847		$	262,730
Distributions to noncontrolling interests		—			—			—			—		—			—			—		—			(4,900	)		(4,900	)
Bluegreen Vacations Corporation short-form merger		2,666			—			27			—		23,032			—			—		23,059			(23,682	)		(623	)
Conversion of common stock from Class B to Class A		10			(10	)		—			—		—			—			—		—			—			—
Share-based compensation		—			—			—			—		1,036			—			—		1,036			—			1,036
Purchase and retirement of common stock		(1,182	)		(19	)		(12	)		—		(27,263	)		—			—		(27,275	)		—			(27,275	)
Net income		—			—			—			—		—			58,730			—		58,730			14,102			72,832

Balance, December 31, 2021		17,118			3,665		$	171		$	37	$	173,909		$	69,316		$	—	$	243,433		$	60,367		$	303,800

Distributions to noncontrolling interests		—			—			—			—		—			—			—		—			(4,900	)		(4,900	)
Dividends to shareholders		—			—			—			—		—			(9,021	)		—		(9,021	)		—			(9,021	)
Tender offer		(3,041	)		—			(30	)		—		(76,054	)		—			—		(76,084	)		—			(76,084	)
Conversion of common stock from Class B to Class A		1			(1	)		—			—		—			—			—		—			—			—
Share-based compensation		—			—			—			—		3,384			—			—		3,384			—			3,384
Purchase and retirement of common stock		(1,912	)		—			(19	)		—		(54,418	)		—			—		(54,437	)		—			(54,437	)
Net income		—			—			—			—		—			64,385			—		64,385			16,866			81,251

Balance, December 31, 2022		12,166			3,664		$	122		$	37	$	46,821		$	124,680		$	—	$	171,660		$	72,333		$	243,993

See accompanying notes to consolidated financial statements.

BLUEGREEN VACATIONS HOLDING CORPORATION

CONSOLIDATED STATEMENTS OF CASH FLOWS

(In thousands)


	For the Years Ended December 31,
	2022			2021
Operating activities:
Net income	$	81,251		$	72,832
Adjustment to reconcile net income to net cash provided by operating activities:
Provision for loan losses		100,431			72,788
Depreciation, amortization and accretion, net		20,931			19,981
Share-based compensation expense		3,384			1,036
Net losses on sales of real estate and property and equipment		286			225
Increase in deferred income tax liability		17,505			10,374
Changes in operating assets and liabilities:
Notes receivable		(206,599	)		(109,761	)
VOI inventory		(54,344	)		12,517
Prepaids expense and other assets		5,235			(14,100	)
Accounts payable, accrued liabilities and other, and deferred income		19,027			11,074

Net cash (used in) provided by operating activities	$	(12,893	)	$	76,966

Investing activities:
Purchases of property and equipment		(15,098	)		(13,598	)

Net cash used in investing activities	$	(15,098	)	$	(13,598	)
Financing activities:
Repayments of notes payable, line of credit facilities and other borrowings	$	(264,077	)	$	(211,027	)
Proceeds from notes payable and other borrowings		486,575			111,054
Redemption of junior subordinated debentures		—			(4,186	)
Payments for debt issuance costs		(6,616	)		(436	)
Merger consideration		—			(623	)
Purchase and retirement of common stock		(54,437	)		(27,275	)
Dividends paid on common stock		(9,021	)		—
Distributions to noncontrolling interests		(4,900	)		(4,900	)
Tender offer		(76,084	)		—

Net cash provided by (used in) financing activities	$	71,440		$	(137,393	)

Net increase (decrease) in cash, cash equivalents and restricted cash		43,449			(74,025	)
Cash, cash equivalents and restricted cash at beginning of period		183,079			257,104

Cash, cash equivalents and restricted cash at end of period	$	226,528		$	183,079

Supplemental cash flow information:
Interest paid on borrowings, net of amounts capitalized	$	36,004		$	31,754
Income taxes refunded		—			—
Income taxes paid		5,312			19,068
Supplemental disclosure of non-cash investing activities:
Transfer of property and equipment to VOI inventory		1,501			—
Reconciliation of cash, cash equivalents and restricted cash:
Cash and cash equivalents		175,683			140,225
Restricted cash		50,845			42,854

Total cash, cash equivalents, and restricted cash	$	226,528		$	183,079

See accompanying notes to consolidated financial statements.

BLUEGREEN VACATIONS HOLDING CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

1. Organization

Our Business

On September 30, 2020, the Company completed its spin-off of BBX Capital, Inc. (“BBX Capital”). BBX Capital was a wholly owned subsidiary of the Company prior to the spin off and became a separate public company as a result of the spin-off. BBX Capital holds all of the historical business and investments of the Company other than the Company’s investment in Bluegreen. Bluegreen is a leading vacation ownership company that markets and sells VOIs and manages resorts in popular leisure and urban destinations. As a result of the spin-off, all of the Company’s operations and activities relate to the operations and activities of Bluegreen. BBX Capital and its subsidiaries are presented as discontinued operations in the Company’s financial statements.

In connection with the spin-off, the Company’s name was changed from BBX Capital Corporation to Bluegreen Vacations Holding Corporation. The Company also issued a $75.0 million note payable to BBX Capital (of which $50 million remained outstanding at December 31, 2022) that accrues interest at a rate of 6% per annum and requires payments of interest on a quarterly basis. Under the terms of the note, the Company has the option in its discretion to defer interest payments under the note, with interest on the entire outstanding balance thereafter to accrue at a cumulative, compounded rate of 8% per annum until such time as the Company is current on all accrued payments under the note, including deferred interest. All remaining outstanding amounts under the note will become due and payable in September 2025 or earlier upon the occurrence of certain events.

Prior to May 5, 2021, the Company owned approximately 93% of Bluegreen’s outstanding common stock. On May 5, 2021, the Company acquired all of the approximately 7% of the outstanding shares of Bluegreen’s common stock not previously owned by the Company through a statutory short-form merger under Florida law. In connection with the merger, Bluegreen’s shareholders (other than the Company) received 0.51 shares of the Company’s Class A Common Stock for each share of Bluegreen’s common stock that they held at the effective time of the merger (subject to rounding up of fractional shares). The Company issued approximately 2.66 million shares of its Class A Common Stock in connection with the merger. As a result of the completion of the merger, Bluegreen became a wholly owned subsidiary of the Company and its common stock was no longer publicly traded.

In July 2020, the Company effected a one-for-five reverse split of its Class A Common Stock and Class B Common Stock. Share and per share amounts set forth herein have been retroactively adjusted to reflect the one-for-five reverse stock split as if it had occurred as of January 1, 2020.

Bluegreen is a leading vacation ownership company that markets and sells vacation ownership interests (“VOIs”) and manages resorts in popular leisure and urban destinations. Bluegreen’s resorts are primarily located in high-volume, “drive-to” vacation locations, including Orlando, Las Vegas, the Smoky Mountains, Myrtle Beach, Charleston, the Branson, Missouri area and New Orleans, among others. The resorts in which Bluegreen markets, sells, and manages VOIs were either developed or acquired by Bluegreen, or were developed and are owned by third parties. Bluegreen earns fees for providing sales and marketing services to third party developers. Bluegreen also earns fees for providing management services to the Bluegreen Vacation Club (“Vacation Club”) and homeowners’ associations (“HOAs”), mortgage servicing, VOI title services, reservation services, and construction design and development services. In addition, Bluegreen provides financing to qualified VOI purchasers, which generates significant interest income.

2. Basis of Presentation and Recently Issued Accounting Pronouncements

Principles of Consolidation and Basis of Presentation

The Company’s consolidated financial statements are prepared in conformity with accounting principles generally accepted in the United States of America (“GAAP”) and include the accounts of its wholly-owned subsidiaries, other entities in which the Company or its consolidated subsidiaries hold controlling financial interests, and any variable interest entities (“VIEs) in which the Company or one of its consolidated subsidiaries deemed the primary beneficiary of the VIE. All significant inter-company accounts and transactions have been eliminated in consolidation.

Use of Estimates

The Company’s financial statements are prepared in conformity with GAAP, which requires it to make estimates based on assumptions about current and, for some estimates, future economic and market conditions which affect reported amounts and related disclosures in its financial statements. Although the Company’s current estimates are based on current and expected future conditions, as applicable, actual conditions could differ from its expectations, which could materially affect its results of operations and financial position. In particular, a number of estimates have been and may continue to be affected by adverse trends affecting general economic conditions, including rising interest rates and inflation. The severity, magnitude and duration, as well as the economic consequences of these factors are uncertain, subject to change and difficult to predict. As a result, accounting estimates and assumptions may change over time. Such changes could result in, among other adjustments, incremental credit losses on notes receivable, a decrease in the carrying amount of tax assets, or an increase in other obligations as of the time of a relevant measurement event. On an ongoing basis, management evaluates its estimates, including those that relate to the estimated future sales value of inventory; the recognition of revenue; the allowance for loan losses; the recovery of the carrying value of VOI inventories; the fair value of assets measured at, or compared to, fair value on a non-recurring basis; the estimate of contingent liabilities related to litigation and other claims and assessments; and deferred income taxes. Management bases its estimates on historical experience and on various other assumptions that it believes to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources. Actual results may differ materially from these estimates under different assumptions and conditions.

Significant Accounting Policies

Cash and Cash Equivalents

Cash in excess of the Company’s immediate operating requirements are generally invested in cash equivalents, such as short-term time deposits and money market instruments, with original maturities at the date of purchase of three months or less. Cash and cash equivalents are maintained at various financial institutions. These financial institutions are located throughout the United States and in Aruba. However, a significant portion of the Company’s unrestricted cash is maintained with a single bank and, accordingly, the Company is subject to credit risk. Periodic evaluations of the relative credit standing of financial institutions maintaining the Company’s deposits are performed to evaluate and, if necessary, take actions in an attempt to mitigate credit risk.

Restricted Cash

Restricted cash consists primarily of customer deposits held in escrow accounts and cash collected on pledged/secured notes receivable not yet remitted to lenders.

Revenue Recognition

Sales of VOIs. Revenue is recognized for sales of VOIs after control of the VOI is deemed transferred to the customer, which is when the legal rescission period has expired on a binding executed VOI sales agreement and

the collectability of the note receivable from the buyer, if any, is probable. Transfer of control of the VOI to the buyer is deemed to occur when the legal rescission period expires as the risk and rewards associated with VOI ownership are transferred to the buyer at that time. The Company records customer deposits from contracts within the legal rescission period in restricted cash and escrow deposits in its consolidated balance sheets as such amounts are refundable until the legal rescission period has expired. In cases where construction and development of developed resorts has not been completed, the Company defers all of the revenue and associated expenses for the sales of VOIs until construction is complete and the resort may be occupied. Our contracts with customers may include multiple performance obligations. For such arrangements, where applicable, we allocate revenue to each performance obligation based on its relative standalone selling price.

The Company generally offers qualified purchasers financing for up to 90% of the purchase price of VOIs. The typical financing provides for a term of ten years and a fixed interest rate, is fully amortizing in equal installments and may be prepaid without penalty. For sales of VOIs for which it provides financing, the Company reduces the transaction price for expected loan losses, which it considers to be variable consideration. The Company’s estimates of the variable consideration are based on the results of its static pool analysis, which relies on historical payment data for similar VOI notes receivable. Policies regarding the estimation of variable consideration on notes receivable are discussed in further detail under “Notes Receivable” below. VOI Sales where no financing was provided do not have any significant payment terms.

Fee-based sales commission revenue. The Company enters into arrangements with third-party developers to sell VOIs through its sales and marketing platform for which it earns a commission. Commission revenue is recognized to the extent that, it is probable that a significant reversal of such revenue will not occur and the related consumer rescission period has expired. Commission revenue is recognized as the third-party developer receives and consumes the benefits of these services.

Other fee-based services revenue and cost reimbursements. Revenue in connection with other fee-based services (which are described below) is recognized as follows:

•

Resort and club management revenue is recognized as services are rendered. These services provided to the resort HOAs are comprised of day-to-day services to operate the resort, including management, housekeeping, and maintenance, as well as certain accounting and administrative functions. Management services provided to the Vacation Club include managing the reservation system and providing owner, billing and collection services. Our management contracts are typically structured as cost-plus with an initial term of three years and automatic one year renewals. The Company believes these services to be a series of distinct goods and services to be accounted for as a single performance obligation over time and recognize revenue as the customer receives the benefits of its services. The Company allocates variable consideration to the distinct good or service within the series, such that revenue from management fees and cost reimbursements is recognized in each period as the uncertainty with respect to such variable consideration is resolved.

•

Cost reimbursements are received for performing day to day management services, based on agreements with the HOAs. These costs primarily consist of payroll and payroll related costs for management of the HOAs and other services provided where we are the employer. Cost reimbursements are based upon actual expenses and are billed to the HOA on a monthly basis. The Company recognizes cost reimbursements when they incur the related reimbursable costs as the HOA receives and consumes the benefits of the management services.

•

Resort title fee revenue is recognized when escrow amounts are released and title documents are completed.

•

Rental revenue is recognized on a daily basis which is consistent with the period for which the customer benefits from such service.

•

Mortgage servicing revenue is recognized as services are rendered.

Fees received in advance are generally included in deferred income in the Company’s consolidated balance sheets until such time as the related service is rendered and revenue is recognized as stated above.

Under timeshare accounting rules, rental operations, including accommodations provided through the use of the sampler program, are accounted for as incidental operations whereby incremental carrying costs in excess of incremental revenue are expensed as incurred. Revenue from the sampler program is deferred and recognized as guests complete stays at the resorts. During each of the years presented, the Company’s aggregate rental and sampler operating profit was less than the aggregate carrying cost of its VOI inventory. Accordingly, it recorded such profit as a reduction to the carrying cost of VOI inventory, which is included in cost of other fee-based services in the Company’s consolidated statements of operations and comprehensive income for each year.

Interest Income. The Company provides financing for a significant portion of sales of its owned VOIs. It recognizes interest income from financing VOI sales on the accrual method as earned based on the outstanding principal balance, interest rate and terms stated in each individual financing agreement. See “Notes Receivable” below for further discussion of the policies applicable to VOI notes receivable.

Notes Receivable

The Company’s notes receivable are carried at amortized cost less an allowance for loan losses. Interest income is suspended, and previously accrued but unpaid interest income is reversed, on all delinquent notes receivable when principal or interest payments are more than 90 days contractually past due and not resumed until such loans are less than 90 days past due. As of December 31, 2022 and 2021, $24.2 million and $16.3 million, respectively, of VOI notes receivable were more than 90 days past due, and accordingly, consistent with the Company’s policy, were not accruing interest income. After approximately 127 days, VOI notes receivable are generally written off against the allowance for loan loss.

To the extent the Company determines that it is probable that a significant reversal of cumulative revenue recognized may occur, it records an estimate of variable consideration as a reduction to the transaction price of the sales of VOIs until the uncertainty associated with the variable consideration is resolved. Variable consideration which has not been included within transaction price is presented as an allowance for loan loss. Estimates of the variable consideration are based on the results of its static pool analysis, which relies on historical payment data for similar VOI notes receivable and tracks uncollectibles for each period’s sales over the entire life of the notes. The Company also considers whether historical economic conditions are comparable to then current economic conditions, as well as variations in underwriting standards. Revisions to estimate of variable consideration from the sale of VOIs impacts the loan loss reserve and can increase or decrease revenue. The Company reviews its estimate of variable consideration on at least a quarterly basis. Loan origination costs are deferred and recognized over the life of the related notes receivable.

VOI Inventory

VOI inventory consists of completed VOIs, VOIs under construction and land held for future VOI development. Completed VOI inventory is carried at the lower of (i) cost, including costs of improvements and amenities incurred subsequent to acquisition, capitalized interest, real estate taxes and other costs incurred during construction, or (ii) estimated fair market value, less costs to sell. VOI inventory and cost of sales are accounted for under timeshare accounting rules, which require the use of a specific method of the relative sales value method for relieving VOI inventory and recording cost of sales. Under the relative sales value method required by timeshare accounting rules, cost of sales is calculated as a percentage of net sales using a cost-of-sales percentage—the ratio of total estimated development costs to total estimated VOI revenue, including the estimated incremental revenue from the resale of VOI inventory repossessed, generally as a result of the default of the related note receivable. In addition, pursuant to timeshare accounting rules, the Company does not relieve inventory for VOI cost of sales related to anticipated loan losses. Accordingly, no adjustment is made when inventory is reacquired upon default of the related receivable. Changes in estimates within the relative sales

value calculation are accounted for as VOI inventory true-ups and are included in Cost of VOI sales in the Company’s consolidated statements of operations and comprehensive income to retrospectively adjust the margin previously recognized subject to those estimates.

Property and Equipment

Property and equipment is recorded at acquisition cost. The Company records depreciation and amortization in a manner that recognizes the cost of its depreciable assets over their estimated useful lives using the straight-line method. Leasehold improvements are amortized over the shorter of the terms of the underlying leases or the estimated useful lives of the improvements.

The Company capitalizes the costs of software developed for internal use in accordance with the guidance for accounting for costs of computer software developed or obtained for internal use. Capitalization of software developed for internal use commences during the development phase of the project and ends when the asset is ready for its intended use. Software developed or obtained for internal use is generally amortized on a straight-line basis over 3 to 5 years and included within property and equipment on the Company’s consolidated balance sheet. Capitalized costs of software developed for internal use for the years ended December 31, 2022 and 2021 were $2.0 million, and $3.0 million, respectively. Costs of internal development time and the costs of software under cloud computing arrangements that are service contracts are capitalized and included in prepaid expenses on the Company’s consolidated balance sheet. Costs of these service contracts are amortized over the life of the contract and included in selling, general and administrative expenses in the Company’s consolidated statement of operations and comprehensive income. Unamortized capital costs of software service contracts totaled $1.0 million and $1.4 million as of December 31, 2022 and 2021, respectively. Amortization expense from these service contracts for both the years ended December 31, 2022 and 2021 was $0.5 million and $0.4 million, respectively.

Intangible Assets

Intangible assets consist primarily of indefinite-lived management contracts recognized upon the consolidation of Bluegreen in November 2009 upon the acquisition of a controlling interest in Bluegreen at that time. Management contracts are reviewed for impairment when events or changes in circumstances indicate that the related carrying amounts may not be recoverable. The Company did not record any impairment charges during the years ended December 31, 2022 or 2021.

Impairment of Long-Lived Assets

The Company evaluates the recoverability of the carrying amounts of its long-lived assets under the guidelines of ASC 360, Property, Plant and Equipment (“ASC 360”), which provides guidance relating to the accounting for the impairment or disposal of long-lived assets. The Company reviews the carrying amounts of the Company’s long-lived assets for possible impairment whenever events or changes in circumstances indicate that the carrying amount of such assets may not be recoverable. The Company assesses impairment by comparing the undiscounted cash flows of the assets to their carrying amounts. If estimated cash flows are insufficient to recover the investment, an impairment loss is recognized to write-down the carrying value of the asset to the estimated fair value.

Deferred Financing Costs

Deferred financing costs are comprised of costs incurred in connection with obtaining financing from third-party lenders and are presented in the consolidated balance sheets as other assets or as a direct deduction from the carrying value of the associated debt liability. These costs are capitalized and amortized using the effective yield method to interest expense over the terms of the related financing arrangements. As of December 31, 2022 and 2021, unamortized deferred financing costs totaled $13.3 million and $10.7 million, respectively. Interest expense from the amortization of deferred financing costs for the years ended December 31, 2022 and 2021 was $3.1 million and $3.3 million, respectively.

Advertising Expense

The Company expenses advertising costs, which are primarily marketing costs, as incurred. Advertising expense was $195.0 million and $151.5 million for the years ended December 31, 2022 and 2021, respectively, and is included in selling, general and administrative expenses in the accompanying consolidated statements of operations and comprehensive income.

Bluegreen has entered into marketing arrangements with various third parties. Bluegreen has an exclusive marketing agreement through 2024 with Bass Pro that provides the Company with the right to market and sell vacation packages at kiosks in each of Bass Pro’s retail locations and through other means. For the years ended December 31, 2022 and 2021, sales of VOIs to prospects and leads generated by Bluegreen’s marketing agreement with Bass Pro accounted for approximately 17% and 19%, respectively, of total VOI sales volume. There can be no guarantee that Bluegreen will be able to maintain this agreement in accordance with its terms or extend or renew this agreement on similar terms, or at all. See Note 12: Commitments and Contingencies for a description of the revised terms of Bluegreen’s marketing agreement with Bass Pro.

Income Taxes

Income tax expense is recognized at applicable U.S. tax rates. Certain revenue and expense items may be recognized in one period for financial statement purposes and in a different period for income tax purposes. The tax effects of such differences are reported as deferred income taxes. Valuation allowances are recorded in periods in which it is determined that the realization of deferred tax assets does not meet the more likely than not recognition threshold.

Noncontrolling Interests

Noncontrolling interests reflect third parties’ ownership interests in entities that are consolidated in the Company’s financial statements but are less than 100% owned by the Company. Noncontrolling interests are recognized as equity in the Company’s consolidated balance sheet and presented separately from the equity attributable to its shareholders. The amounts of consolidated net income and comprehensive income attributable to the Company’s shareholders and noncontrolling interests are separately presented in the Company’s consolidated statements of operations and comprehensive income.

Earnings Per Share

Basic earnings per share (“EPS”) is calculated by dividing the earnings available to common shareholders by the weighted average number of Class A and Class B common shares outstanding for the period. Diluted earnings per share is computed in the same manner as basic earnings per share but also reflects potential dilution that could occur if restricted stock awards issued by the Company were vested. Restricted stock awards, if dilutive, are considered in the weighted average number of dilutive common shares outstanding. As discussed in Note 14 Common Stock, the Company has two classes of common stock. The Company has not presented earnings per share under the two-class method because the earnings per share are the same for both Class A and Class B Common Stock since they are entitled to and participate in earnings in the same manner.

Stock-Based Compensation

Compensation cost for unvested restricted stock awards is based on the fair value of the award on the measurement date, which is generally the grant date, and is recognized on a straight-line basis over the requisite service period of the award, which is generally four to ten years for unvested restricted stock awards with forfeitures recognized as incurred. The fair value of unvested restricted stock awards is generally determined based on the market price of the Company’s common stock on the grant date.

Accounting Standards Not Yet Adopted

The FASB has issued the following accounting pronouncement and guidance relevant to the Company’s operations which had not yet been adopted as of December 31, 2022:

In March 2020, the FASB issued ASU 2020-04, “Reference Rate Reform (Topic 848): Facilitation of the Effect of Reference Rate Reform on Financial Reporting” (“ASU 2020-04”), which provides optional expedients and exceptions for applying U.S. GAAP to contracts, hedging relationships, and other transactions affected by the discontinuation of LIBOR in response to the Financial Conduct Authority (the regulatory authority over LIBOR) plan for a phase out of regulatory oversight of LIBOR interest rate indices after 2021 to allow for an orderly transition to an alternate reference rate. The Alternative Reference Rates Committee (“ARRC”) has proposed that the Secured Overnight Financing Rate (“SOFR”) is the rate that represents best practice as the alternative to LIBOR for promissory notes or other contracts that are currently indexed to LIBOR. The ARRC has proposed a market transition plan to SOFR from LIBOR and organizations are currently working on transition plans as it relates to derivatives and cash markets indexed to LIBOR. Although the Company’s VOIs notes receivable from its borrowers are not indexed to LIBOR, as of December 31, 2022, the Company had $170.9 million of LIBOR indexed junior subordinated debentures and $30.9 million of LIBOR indexed receivable-backed notes payable. The Company expects that replacements for LIBOR will be determined as the Company renews or amends its existing debt instruments. The Company will continue to evaluate the adoption of the optional expedients and exceptions provided as circumstances evolve.

3. Revenue From Contracts with Customers

The table below sets forth the Company’s disaggregated revenue by category from contracts with customers (in thousands):


	For the Years Ended December 31,
	2022		2021
Sales of VOIs ⁽¹⁾	$	535,725	$	353,768
Fee-based sales commission revenue ⁽¹⁾		72,647		128,321
Resort and club management revenue ⁽²⁾		108,892		103,214
Cost reimbursements ⁽²⁾		77,394		69,066
Administrative fees and other ⁽¹⁾		13,662		12,203
Other revenue ⁽²⁾		9,356		8,037

Revenue from customers		817,676		674,609
Interest income ⁽³⁾		99,739		81,691
Other income, net		2,014		813

Total revenue	$	919,429	$	757,113

(1)	Included in the Company’s sales of VOIs and financing segment described in Note 17.

(2)	Included in the Company’s resort operations and club management segment described in Note 17.

(3)	Interest income of $98.0 million and $81.3 million is included in the Company’s sales of VOIs and financing segment described in Note 17 for 2022 and 2021 respectively.

As of December 31, 2022 and 2021, the Company had commission receivables, net of an allowance, of $10.3 million and $17.4 million, respectively, related to sales of third-party VOIs, which are included in other assets on the consolidated balance sheets. Commission receivables relate to contracts with customers including amounts associated with the Company’s contractual right to consideration for completed performance obligations and are settled when the related cash is received. Commission receivables are recorded when the right to consideration becomes unconditional and is only contingent on the passage of time.

Contract liabilities include payments received or due in advance of satisfying performance obligations, including points awarded to customers as an incentive for the purchase of VOIs that may be redeemed in the future, advance deposits on owner programs for future services, and deferred revenue on prepaid vacation packages for future stays at the Company’s resorts or nearby hotels. Both points incentives and owner programs are recognized upon redemption, and deferred revenue for vacation packages are recognized net of sales of marketing expenses upon customer stays. Contract liabilities are included in deferred income in the Company’s consolidated balance sheets.

The following table sets forth the Company’s contract liabilities as of December 31, 2022 and 2021 (in thousands):


	As of December 31,
	2022		2021
Point incentives	$	3,944	$	2,676
Owner programs		2,149		2,159
Deferred Revenue vacation packages		1,136		1,274

	$	7,229	$	6,109

4. Notes Receivable

The table below provides information relating to the Company’s notes receivable and its allowance for loan losses (dollars in thousands):


	As of December 31,
	2022			2021
Notes receivable secured by VOIs:
VOI notes receivable - non-securitized	$	279,888		$	275,163
VOI notes receivable - securitized		483,913			334,266

Gross VOI notes receivable		763,801			609,429
Allowance for loan losses - non-securitized		(81,801	)		(77,714	)
Allowance for loan losses - securitized		(129,510	)		(85,393	)

Allowance for loan losses		(211,311	)		(163,107	)

VOI notes receivable, net	$	552,490		$	446,322

Allowance as a % of Gross VOI notes receivable		28	%		27	%

The weighted-average interest rate charged on the Company’s notes receivable secured by VOIs was 15.3% at both December 31, 2022 and 2021. All of the Company’s VOI loans bear interest at fixed rates. The Company’s VOI notes receivable are primarily secured by VOIs located in Florida, Missouri, South Carolina, Tennessee, Nevada and Virginia.

Future principal payments due to the Company from notes receivable as of December 31, 2022 are as follows (in thousands):


2023	$	77,248
2024		75,853
2025		80,781
2026		83,319
2027		85,842
Thereafter		360,758

Total	$	763,801

Allowance for Loan Losses

The activity in the Company’s allowance for loan losses was as follows (in thousands):


	For the Year Ended December 31,
	2022			2021
Balance, beginning of period	$	163,107		$	142,044
Provision for loan losses		100,431			72,788
Less: Write-offs of uncollectible receivables		(52,227	)		(51,725	)

Balance, end of period	$	211,311		$	163,107

The Company monitors the credit quality of its receivables on an ongoing basis. The Company holds large amounts of homogeneous VOI notes receivable and assesses uncollectibility based on pools of receivables as it does not believe that there are significant concentrations of credit risk with any borrower or groups of borrowers. In estimating loan losses, the Company does not use a single primary indicator of credit quality but instead evaluate our VOI notes receivable based upon a static pool analysis that incorporates the aging of the respective receivables, default trends and prepayment rates by origination year, as well as the FICO scores of the borrowers. The Company records the difference between its VOI notes receivable and the variable consideration included in the transaction price for the sale of the related VOI as an allowance for loan losses and records the VOI notes receivables net of the allowance.

Adverse changes in economic conditions, including rising interest rates and inflationary trends, have had and may continue to have, an adverse impact on the collectability of our VOI notes receivable and we are continuing to evaluate the impact they may have on our default and/or delinquency rates. Our estimates may not prove to be correct and our allowance for loan losses may not prove to be adequate.

Additional information about the Company’s VOI notes receivable by year of origination is as follows as of December 31, 2022 (in thousands):


	Year of Origination
	2022		2021		2020		2019		2018		2017 and Prior		Total
FICO Score of Borrower
701+	$	208,052	$	88,445	$	34,927	$	43,765	$	28,001	$	43,228	$	446,418
601-700		111,796		63,483		25,003		25,613		18,609		35,890		280,394
<601⁽¹⁾		8,844		3,181		2,222		2,876		1,818		3,595		22,536
Other		663		3,501		1,352		2,579		2,504		3,854		14,453

Total	$	329,355	$	158,610	$	63,504	$	74,833	$	50,932	$	86,567	$	763,801

(1)	Includes VOI notes receivable attributable to borrowers without a FICO score (who are primarily foreign borrowers)

Additional information about the Company’s VOI notes receivable by year of origination is as follows as of December 31, 2021 (in thousands):


	Year of Origination
	2021		2020		2019		2018		2017		2016 and Prior		Total
FICO Score of Borrower
701+	$	129,960	$	49,102	$	60,037	$	39,760	$	26,711	$	40,872	$	346,442
601-700		82,664		34,185		34,072		25,732		18,132		37,777		232,562
<601⁽¹⁾		4,623		3,149		3,690		2,473		1,551		4,175		19,661
Other		2,279		996		1,201		1,876		1,429		2,983		10,764

Total	$	219,526	$	87,432	$	99,000	$	69,841	$	47,823	$	85,807	$	609,429

(1)	Includes VOI notes receivable attributable to borrowers without a FICO score (who are primarily foreign borrowers).

The percentage of gross notes receivable outstanding by FICO score of the borrower at the time of origination were as follows:


	As of December 31,
	2022			2021
FICO Score
701+		59	%		58	%
601-700		38			39
<601		2			2
No Score ⁽¹⁾		1			1

Total		100	%		100	%

(1)	Includes VOI notes receivable attributable to borrowers without a FICO score (who are primarily foreign borrowers).

The Company’s notes receivable are carried at amortized cost less allowance for loan losses. Interest income is suspended, and previously accrued but unpaid interest income is reversed, on all delinquent notes receivable when principal or interest payments are more than 90 days contractually past due and not resumed until such loans are less than 90 days past due. As of December 31, 2022 and 2021, $24.2 million and $16.3 million, respectively, of our VOI notes receivable were more than 90 days past due, and accordingly, consistent with our policy, were not accruing interest income. After approximately 127 days past due, VOI notes receivable are generally written off against the allowance for loan loss. Accrued interest was $5.8 million and $4.4 million as of December 31, 2022 and 2021, respectively, and is included within other assets in the Company’s consolidated balance sheets herein.

The following shows the delinquency status of the Company’s VOI notes receivable as of December 31, 2022 and 2021 (in thousands):


	As of December 31,
	2022		2021
Current	$	721,736	$	581,719
31-60 days		9,612		6,290
61-90 days		8,243		5,084
Over 91 days		24,210		16,336

Total	$	763,801	$	609,429

5. Variable Interest Entities

In these securitizations, the Company generally retains a portion of the securities and continues to service the securitized notes receivable for a fee pursuant to servicing agreements negotiated with third parties based on market conditions at the time of the securitization. Under these arrangements, the cash payments received from obligors on the receivables sold are generally applied monthly to pay fees to service providers, make interest and principal payments to investors, and fund required reserves, if any, with the remaining balance of such cash retained by the Company; however, to the extent the portfolio of receivables fails to satisfy specified performance criteria (as may occur due to, among other things, an increase in default rates or credit loss severity) or other trigger events occur, the funds received from obligors are required to be distributed on an accelerated basis to investors. Depending on the circumstances and the transaction, the application of the accelerated payment formula may be permanent or temporary until the trigger event is cured. As of December 31, 2022 and 2021, Bluegreen was in compliance with all material terms under its securitization transactions, and no trigger events had occurred.

In accordance with applicable accounting guidance for the consolidation of VIEs, the Company analyzes its variable interests, which may consist of loans, servicing rights, guarantees, and equity investments, to determine if an entity in which it has a variable interest is a VIE. The analysis includes a review of both quantitative and qualitative factors. The Company bases its quantitative analysis on the forecasted cash flows of the entity, and it bases its qualitative analysis on the structure of the entity, including its decision-making ability and authority with respect to the entity, and relevant financial agreements. The Company also uses its qualitative analysis to determine if it must consolidate a VIE as the primary beneficiary. In accordance with applicable accounting guidance, the Company has determined these securitization entities to be VIEs of which it is the primary beneficiary and, therefore, the Company consolidates the entities into its financial statements.

Under the terms of certain VOI notes receivable sales, the Company has the right to repurchase or substitute a limited amount of defaulted notes for new notes at the outstanding principal balance plus accrued interest. Voluntary repurchases and substitutions of defaulted notes during 2022 and 2021 were $11.4 million and $14.6 million, respectively. The Company’s maximum exposure to loss relating to its non-recourse securitization entities is the difference between the outstanding VOI notes receivable and the notes payable, plus cash reserves and any additional residual interest in future cash flows from collateral.

The assets and liabilities of the Company’s consolidated VIEs are as follows (in thousands):


	As of December 31,
	2022		2021
Restricted cash	$	19,461	$	15,956
Securitized notes receivable, net	$	354,403	$	248,873
Receivable backed notes payable—non-recourse	$	440,781	$	340,154

The restricted cash and the securitized notes receivable balances disclosed in the table above are restricted to satisfy obligations of the VIEs.

6. VOI Inventory

The Company’s VOI inventory consists of the following (in thousands):


	As of December 31,
	2022		2021
Completed VOI units	$	317,492	$	255,223
Construction-in-progress		8,537		10,313
Real estate held for future development		63,835		69,069

	$	389,864	$	334,605

Construction-in-progress consists primarily of additional VOI units being developed at The Cliffs at Long Creek in Ridgedale, Missouri.

In July 2022, the Company purchased 46 one-bedroom units at a resort in Vail, Colorado for $18.6 million. The transaction was accounted for as an asset acquisition with the purchase price allocated to VOI inventory in the Company’s consolidated balance sheet.

In October 2022, the Company purchased the property and other assets of a resort located in Panama City Beach, Florida for approximately $78.0 million. The transaction was accounted for as an asset acquisition with the purchase price allocated $74.2 million to VOI inventory and $4.2 million to certain property and equipment, See Note 8 Property and equipment in the Company’s consolidated balance sheet.

7. Leases

The Company is the lessee under various operating leases for certain sales offices, call centers, office space, equipment and vehicles. Some leases include one or more options to renew, at the Company’s discretion, for renewal terms of one year or more. Certain of the Company’s lease agreements include rental payments based on a percentage of sales generated at the location, and others include rental payments adjusted periodically for inflation. The Company’s lease agreements do not contain residual value guarantees or restrictive covenants which the Company believes to be material.

The Company recognizes operating lease assets and operating lease liabilities associated with lease agreements with an initial term of 12 months or greater, while lease agreements with an initial term of 12 months or less are not recorded in the Company’s consolidated balance sheets. The Company generally does not include lease payments associated with renewal options, including those that are exercisable at its discretion, in the measurement of its operating lease assets and liabilities as it is not reasonably certain that such options will be exercised. The table below sets forth information regarding the Company’s lease agreements with an initial term of greater than 12 months (dollars in thousands):


	As of December 31,
	2022			2021
Operating Lease Asset	$	22,963		$	33,467
Operating Lease Liability		27,716			37,870
Weighted Average Lease Term (in years) ⁽¹⁾		2.42			3.3
Weighted Average Discount Rate ⁽²⁾		3.76	%		3.43	%

(1)	The Company’s weighted average lease term excludes two real estate leases that expire in December 2034 and May 2056.

(2)

As most of the Company’s leases do not provide an implicit rate, the Company uses its incremental borrowing rate based on the information available at commencement date in determining the present value of future lease payments. To estimate incremental borrowing rates, the Company considers various factors, including the rates applicable to the Company’s recently issued debt and credit facilities and prevailing financial market conditions.

The Company generally recognizes lease costs associated with its operating leases on a straight-line basis over the lease term, while variable lease payments that do not depend on an index or rate are recognized as variable lease costs in the period in which the obligation for those payments is incurred. The table below sets forth information regarding the Company’s lease costs, which are included as selling, general and administrative expenses in the Company’s consolidated statements of operations and comprehensive income for the periods presented (in thousands):


	For the years ended December 31,
	2022		2021
Fixed rental costs	$	7,597	$	7,834
Short-term lease costs		1,619		1,314
Variable lease costs		2,775		2,363

Total operating lease costs	$	11,991	$	11,511

The table below sets forth information regarding the future minimum lease payments of the Company’s operating lease liabilities (in thousands):


As of December 31,	Operating Lease Liabilities
2023	$	5,781
2024		3,388
2025		2,331
2026		1,967
2027		1,846
After 2027		21,977

Total lease payments	$	37,290
Less: Interest		9,574

Total operating lease liabilities	$	27,716

Included in the Company’s consolidated statement of cash flows under operating activities for the years ended December 31, 2022 and 2021 was $7.8 million and $4.5 million, respectively, of cash paid for amounts included in the measurement of lease liabilities. During the years ended December 31, 2022 and 2021, the Company obtained $1.1 million and $6.2 million, respectively, of operating lease assets in exchange for new operating lease liabilities. The decrease in right-of-use assets and operating lease liabilities in 2022 as compared to 2021 was primarily due to one-time costs of $4.9 million for the termination of certain leases in connection with a reorganization of certain of the Company’s retail marketing operations in December 2022. Such costs are included in accrued liabilities in the Company’s consolidated balance sheet as of December 31, 2022.

8. Property and Equipment

Property and equipment consist of the following (dollars in thousands):

As of December 31,

Useful
Lives

2022

2021

Land, buildings and building improvements

3-31 years

79,393

74,436

Computer hardware and software

1-5 years

71,551

67,937

Furniture, fixtures and equipment

3-14 years

22,817

21,816

Leasehold improvements

3-14 years

11,409

11,353

Transportation and equipment

5 years

669

680

185,839

176,222

Accumulated depreciation and amortization

(99,924

)

(88,370

)

Total

85,915

87,852

Depreciation and amortization expense related to the Company’s property and equipment was $15.8 million and $15.6 million for the years ended December 31, 2022 and 2021, respectively.

9. Intangible Assets

Intangible assets and related amortization expense were as follows (in thousands):


	As of December 31,
Class	2022			2021
Intangible assets:
Management agreements	$	61,708		$	61,708
Accumulated amortization		(415	)		(360	)

Total intangible assets	$	61,293		$	61,348

As of December 31, 2022, management contracts that were amortizing are fully amortized.

10. Debt

Contractual minimum principal payments required on the Company’s debt, net of unamortized discount, by type, for each of the five years subsequent to December 31, 2022 and thereafter are shown below (in thousands):


	Notes payable and other borrowings			Note payable to BBX Capital, Inc.		Recourse receivable- backed notes payable			Non-recourse receivable- backed notes payable			Junior subordinated debentures			Total
2023	$	16,000		$	—	$	—		$	—		$	—		$	16,000
2024		25,000			—		—			—			—			25,000
2025		25,000			50,000		4,630			—			—			79,630
2026		8,500			—		17,778			104,953			—			131,231
2027		146,250			—		14,105			—			—			160,355
Thereafter		—			—		10,101			315,186			170,897			496,184
Unamortized debt issuance costs		(2,012	)		—		—			(5,131	)		(914	)		(8,057	)
Adjustment ⁽¹⁾		—			—		(25,773	)		25,773			—			—
Purchase accounting adjustment		—			—		—			—			(33,972	)		(33,972	)

Total	$	218,738		$	50,000	$	20,841		$	440,781		$	136,011		$	866,371

(1)	Represents the non-recourse balances of the Liberty Bank Facility, NBA Receivables Facility, and the Pacific Western Facility as described below.

The minimum contractual payments set forth in the table above may differ from actual payments due to the timing of principal payments required upon (1) the sale of real estate assets that serve as collateral on certain debt, (2) cash collections of pledged or transferred notes receivable and (3) prepayments.

Lines-of-Credit and Notes Payable

Financial data related to our lines of credit and notes payable (other than receivable-backed notes payable, which are discussed below) as of December 31, 2022 and 2021 were as follows (dollars in thousands):


	As of December 31,
	2022								2021
	Balance			Interest Rate			Carrying Amount of Pledged Assets		Balance			Interest Rate			Carrying Amount of Pledged Assets
Panama City Beach Acquisition Loan	$	54,500			6.16	%	$	77,334	$	—			—		$	—
Fifth Third Syndicated LOC		70,000			5.92	%		68,413		10,000			2.25	%		21,243
Fifth Third Syndicated Term		96,250			5.40	%		94,068		88,125			2.25	%		187,207
Unamortized debt issuance costs		(2,012	)					—		(1,000	)					—

Total	$	218,738					$	239,815	$	97,125					$	208,450

Fifth Third Syndicated Line-of-Credit and Fifth Third Syndicated Term Loan. Bluegreen has a corporate credit facility which at December 31, 2021 included a $100.0 million term loan (the “Fifth Third Syndicated Loan”) with quarterly amortization requirements and a $125.0 million revolving line of credit (the “Fifth Third Syndicated LOC”). In February 2022, Bluegreen amended and increased the facility to $300.0 million. The amended facility includes a $100.0 million term loan with quarterly amortization requirements and a $200.0 million revolving line of credit. Accordingly, the amendment and restatement increased the revolving line of credit by $75.0 million. Borrowings generally bear interest at a rate of term SOFR plus 1.75-2.50% and a 0.05%-0.10% credit spread adjustment, depending on Bluegreen’s leverage ratio (as compared to LIBOR plus 2.00%-2.50% with a 0.25% LIBOR floor under the terms of the facility prior to the amendment). The amendment also extended the maturity date from October 2024 to February 2027. Borrowings are collateralized by certain VOI inventory, sales center buildings, management fees, short-term receivables and cash flows from residual interests relating to certain term securitizations.

Panama City Beach Acquisition Loan. In October 2022, Bluegreen purchased the property and other assets of a resort located in Panama City Beach, Florida for approximately $78.0 million. In connection with the acquisition, Bluegreen entered into a non-revolving acquisition loan (the “Panama City Beach Acquisition Loan”) with National Bank of Arizona (“NBA”) for the acquisition and renovation of the resort. The Panama City Beach Acquisition Loan provides for advances of up to $96.6 million, provided, however, that the total advances may not exceed 70% of the acquisition and renovation costs. Advances may be made during a 36-month advance period. Approximately $54.5 million was advanced at closing for the acquisition of the resort. Principal payments will be effected through release payments from sales of the completed VOIs, subject to a minimum amortization schedule, with the remaining balance due at maturity in October 2027. Borrowings under the Panama City Beach Acquisition Loan bear interest at an annual rate equal to one-month term SOFR plus 2.25%, subject to a floor of 2.40%. Recourse is limited to 30% of the principal and interest outstanding with decreases based on achieving certain milestones, subject to certain exceptions.

Receivable-Backed Notes Payable

Financial data related to our receivable-backed notes payable facilities were as follows (dollars in thousands):


	As of December 31,
	2022								2021
	Debt Balance			Interest Rate			Principal Balance of Pledged/ Secured Receivables		Debt Balance			Interest Rate			Principal Balance of Pledged/ Secured Receivables
Receivable-backed notes payable—recourse:
Liberty Bank Facility ⁽¹⁾	$	5,000			6.50	%	$	8,470	$	5,000			3.00	%	$	7,198
NBA Receivables Facility ⁽²⁾		10,000			6.62	%		13,664		10,000			3.00	%		15,396
Pacific Western Facility ⁽³⁾		5,841			6.82	%		10,171		7,500			3.00	%		11,265

Total		20,841						32,305		22,500						33,859
Receivable-backed notes payable—non-recourse:
Liberty Bank Facility ⁽¹⁾	$	4,907			6.50	%	$	8,312	$	17,965			3.00	%	$	25,864
NBA Receivables Facility ⁽²⁾		20,866			6.62	%		28,512		18,910			3.00	%		29,114
Pacific Western Facility ⁽³⁾		—			—			—		16,906			3.00	%		25,394
Syndicated Warehouse Facility		104,953			5.87	%		125,486		42,994			2.50	%		53,623
Quorum Purchase Facility		14,007			4.95-5.10	%		16,302		19,425			4.95-5.10	%		22,690
2013 Term Securitization		—			—			—		6,023			3.20	%		6,965
2015 Term Securitization		7,925			3.02	%		8,516		14,163			3.02	%		15,009
2016 Term Securitization		16,061			3.35	%		16,714		24,727			3.35	%		27,166
2017 Term Securitization		26,521			3.12	%		28,612		37,430			3.12	%		42,452
2018 Term Securitization		39,326			4.02	%		43,163		53,919			4.02	%		61,269
2020 Term Securitization		69,240			2.60	%		77,183		91,922			2.60	%		105,023
2022 Term Securitization		142,106			4.60	%		160,000		—			—			—
Unamortized debt issuance costs		(5,131	)							(4,230	)					—

Total		440,781						512,800		340,154						414,569

Total receivable-backed debt	$	461,622					$	545,105	$	362,654					$	448,428

(1)	Recourse on the Liberty Bank Facility is generally limited to $5.0 million subject to certain exceptions.

(2)	Recourse on the NBA Receivables Facility is generally limited to $10.0 million subject to certain exceptions.

(3)	Recourse on the Pacific Western Facility is generally limited to $7.5 million subject to certain exceptions.

Liberty Bank Facility. Bluegreen has a $40.0 million revolving VOI notes receivable hypothecation facility (the “Liberty Bank Facility”) with Liberty Bank which provides for advances on eligible receivables pledged under the Liberty Bank Facility, subject to specified terms and conditions, during the revolving credit period. The revolving credit period expires in June 2024 and the facility matures in June 2026. Advance rates under the facility with respect to Qualified Timeshare Loans is 85% of the unpaid principal balance of the Qualified Timeshare Loans. The advance rate is 70% of the unpaid principal balance of Non-Conforming Qualified Timeshare Loans. The interest rate on borrowings incurred is the Prime Rate minus 0.50% with a floor of 3.00%. Recourse to Bluegreen under the facility is limited to $5.0 million, with certain exceptions set forth in the facility. Subject to the terms of the facility, principal and interest due under the Liberty Bank Facility are paid as cash is collected on the pledged receivables, with the remaining balance being due by maturity.

NBA Receivables Facility. Bluegreen/Big Cedar Vacations has a $70.0 million revolving VOI notes receivable hypothecation facility (the “NBA Receivables Facility”) with National Bank of Arizona (“NBA”). The revolving advance period expires in September 2023 and the facility matures in March 2028. The interest rate on advances made under the facility is the one-month LIBOR plus 2.25% (with an interest rate floor of 3.00%). The NBA Receivables Facility provides for advances at a rate of 80% on eligible receivables pledged under the facility, subject to eligible collateral and specified terms and conditions, during the revolving credit period. Recourse to Bluegreen/Big Cedar under the facility is limited to $10.0 million as of December 31, 2022. Subject to the terms of the facility, principal and interest payments received on pledged receivables are applied to principal and interest due under the facility, with the remaining outstanding balance being due by maturity.

Pacific Western Facility. Bluegreen has a $50.0 million revolving VOI notes receivable hypothecation facility (the “Pacific Western Facility”) with Pacific Western Bank, which provides for advances on eligible VOI notes receivable pledged under the facility, subject to specified terms and conditions, during a revolving credit period. The revolving advance period expires in September 2024 and the facility matures in September 2027. The Pacific Western Facility provides for eligible “A” VOI notes receivable be funded at an 85% advance rate. The Pacific Western Facility also allows for eligible “B” VOI notes receivable to be funded at a 65% advance rate. In December 2022, the facility was amended to decrease the interest rate on borrowings under the facility to one-month term SOFR plus 2.50% with a floor of 2.75% (a decrease from one-month LIBOR plus 2.50% to 2.75% prior to the amendment). Recourse to Bluegreen under the facility is limited to $7.5 million at December 31, 2022. Subject to the terms of the facility, principal and interest payments received on pledged receivables are applied to principal and interest due under the facility, with the remaining balance being due by maturity.

Syndicated Warehouse Facility. Bluegreen has an $80.0 million VOI notes receivable purchase facility (the “Syndicated Warehouse Facility”). In September 2022, Bluegreen amended and restated the facility to increase the maximum outstanding financings from $80.0 million to up to $250.0 million and extend the advance period from December 2022 to September 2025. The amended and restated facility provides for an advance rate of up to 88% (an increase from 80% prior to the amendment and restatement) with respect to VOI receivables securing amounts financed. Borrowings under the facility bear interest until the expiration of the revolving advance period at a rate equal to one-month term SOFR plus 1.75% (a decrease from one-month LIBOR or commercial paper rate plus 2.25% prior to the amendment and restatement) and thereafter at a rate equal to one-month term SOFR plus 2.75% (a decrease from one-month LIBOR or commercial paper rate plus 3.25% prior to the amendment and restatement). While ownership of the VOI notes receivable included in the facility is transferred and sold for legal purposes, the transfer of these VOI notes receivable is accounted for as a secured borrowing for financial reporting purposes. The facility is nonrecourse.

Quorum Purchase Facility. Bluegreen/Big Cedar Vacations has a $50.0 million VOI notes receivable purchase facility (the “Quorum Purchase Facility”) with Quorum Federal Credit Union (“Quorum”). The Quorum Purchase Facility’s advance period expired in October 2022 and the facility matures in December 2034. Of the amounts outstanding under the Quorum Purchase Facility at December 31, 2022, $7.5 million bears interest at a rate per annum of 4.95% and $6.5 million bears interest at a fixed rate of 5.10%. While ownership of the VOI notes receivable included in the Quorum Purchase Facility is transferred and sold for legal purposes, the transfer of these VOI notes receivable is accounted for as a secured borrowing for financial reporting purposes. The facility is nonrecourse.

2022 Term Securitization. In April 2022, Bluegreen completed a private offering and sale of $172.0 million of VOI receivable-backed notes (the “2022 Term Securitization”). The 2022 Term Securitization consisted of the issuance of three tranches of VOI receivable-backed notes (collectively, the “Notes”) as follows: $71.0 million of Class A Notes, $56.5 million of Class B Notes, and $44.5 million of Class C Notes. The interest rates on the Class A Notes, Class B Notes and Class C Notes are 4.12%, 4.61% and 5.35%, respectively, which blends to an overall weighted average note interest rate of approximately 4.60%. The gross advance rate for this transaction was 88.3%. The Notes mature in September 2037.

Approximately $194.7 million of VOI receivables were sold to BXG Receivables Note Trust 2022-A (the “Trust”) in the transaction. The gross proceeds of such sales to the Trust were $171.9 million. A portion of the proceeds were used to: repay $53.2 million under the Syndicated Warehouse Facility, representing all amounts outstanding under the facility at that time; repay $11.0 million under the Liberty Bank Facility; repay $16.1 million under the Pacific Western Bank Facility; capitalize a reserve fund; and pay fees and expenses associated with the transaction. Prior to the closing of the 2022 Term Securitization, Bluegreen, as servicer, funded $4.9 million in connection with the servicer redemption of the notes related to the 2013 Term Securitization, and certain of the VOI notes in such trust were sold to the Trust in connection with the 2022 Term Securitization. The remainder of the gross proceeds from the 2022 Term Securitization were used for general corporate purposes.

Subject to performance of the collateral, Bluegreen will receive any excess cash flows generated by the receivables transferred under the 2022 Term Securitization (excess meaning after payments of customary fees, interest and principal under the 2022 Term Securitization) on a pro-rata basis as borrowers make payments on their VOI loans.

While ownership of the VOI receivables included in the 2022 Term Securitization is transferred and sold for legal purposes, the transfer of these receivables is accounted for as a secured borrowing for financial accounting purposes. Accordingly, no gain or loss was recognized as a result of the transaction. In connection with the 2022 Term Securitization, we repaid in full the 2013 Term Securitization notes payable during April 2022.

Other Non-Recourse Receivable-Backed Notes Payable. In addition to the above described facilities, Bluegreen has a number of other nonrecourse receivable-backed notes payable facilities, as set forth in the table above. During 2022 and 2021, Bluegreen repaid $92.9 million and $57.9 million, respectively, under these additional receivable-backed notes payable facilities.

Junior Subordinated Debentures

Woodbridge Holdings Corporation (“Woodbridge”), the wholly owned subsidiary of the Company through which the Company holds its investment in Bluegreen, and Bluegreen have each formed statutory business trusts (collectively, the “Trusts”), each of which issued trust preferred securities as part of a larger pooled trust securities offering which was not registered under the Securities Act of 1933 and invested the proceeds thereof in its junior subordinated debentures. The Trusts are variable interest entities in which Woodbridge and Bluegreen are not the primary beneficiaries. Accordingly, the Company and its subsidiaries do not consolidate the operations of the Trusts; instead, the beneficial interests in the Trusts are accounted for under the equity method of accounting. The maximum exposure to loss as a result of Woodbridge and Bluegreen’s involvement with the Trusts is limited to the carrying amount of the equity method investment. Included in other assets in the Company’s balance sheets as of December 31, 2022 and 2021 was $2.1 million and $2.0 million, respectively, of equity in the Trusts. Interest on the junior subordinated debentures and distributions on the trust preferred securities are payable quarterly in arrears at the same interest rate.

Financial data relating to the Company’s junior subordinated debentures was as follows (dollars in thousands):


	December 31, 2022						December 31, 2021
	Carrying Amounts			Effective Interest Rates ⁽¹⁾			Carrying Amounts			Effective Interest Rates ⁽¹⁾			Maturity Years ⁽²⁾
Woodbridge - Levitt Capital Trusts I - IV	$	66,302			7.47 - 8.21	%	$	66,302			3.93 - 4.07	%		2035 - 2036
Bluegreen Statutory Trusts I - VI		104,595			8.52 - 9.26	%		104,595			4.93 - 5.12	%		2035 - 2037
Unamortized debt issuance costs		(914	)					(985	)
Unamortized purchase discount		(33,972	)					(34,972	)

Total junior subordinated debentures	$	136,011					$	134,940

⁽¹⁾	The junior subordinated debentures bear interest at three-month LIBOR (subject to quarterly adjustment) plus a spread ranging from 3.80% to 4.85%.

⁽²⁾	As of December 31, 2022 and 2021, all of the junior subordinated debentures were eligible for redemption by the Company.

During February 2021, Bluegreen purchased BST II trust preferred securities having a par value of $6.1 million for approximately $4.0 million and delivered such securities to the trust in exchange for the cancellation of $6.1 million of Bluegreen’s junior subordinated debentures held by BST II.

Availability

As of December 31, 2022, the Company was in compliance with all financial debt covenants under its debt instruments. As of December 31, 2022, the Company had availability of approximately $430.5 million under its receivable-backed purchase and credit facilities, inventory renovation loans and corporate credit line, subject to eligible collateral and the terms of the facilities, as applicable.

Note payable to BBX Capital, Inc.

In September 2020, the Company spun-off its subsidiary, BBX Capital. As a result of the spin-off, BBX Capital became a separate publicly traded company. In connection with the spin off, the Company issued a $75.0 million note payable to BBX Capital that accrues interest at a rate of 6% per annum and requires payments of interest on a quarterly basis. Under the terms of the note, the Company has the option in its discretion to defer interest payments under the note, with interest on the outstanding balance thereafter to accrue at a compounded rate of 8% per annum until such time as all accrued payments under the note are brought current, including deferred interest. In December 2021, the Company repaid $25.0 million of the note payable to BBX Capital, leaving a remaining balance as of both December 31, 2022 and 2021 of $50.0 million. All outstanding amounts under the note will become due and payable in September 2025 or earlier upon the occurrence of certain events. As of both December 31, 2022 and 2021, there was no accrued interest payable in connection with this note payable.

11. Fair Value of Financial Instruments

ASC 820 Fair Value Measurements (Topic 820) defines fair value as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date (exit price). The inputs used to measure fair value are classified into the following hierarchy:


Level 1:		Unadjusted quoted prices in active markets for identical assets or liabilities

Level 2:		Unadjusted quoted prices in active markets for similar assets or liabilities, or unadjusted quoted prices for identical or similar assets or liabilities in markets that are not active, or inputs other than quoted prices that are observable for the asset or liability

Level 3:		Unobservable inputs for the asset or liability

The carrying amounts of financial instruments included in the consolidated financial statements and their estimated fair values are as follows (in thousands):


	As of December 31, 2022				As of December 31, 2021
	Carrying Amount		Estimated Fair Value		Carrying Amount		Estimated Fair Value
Cash and cash equivalents	$	175,683	$	175,683	$	140,225	$	140,225
Restricted cash		50,845		50,845		42,854		42,854
Notes receivable, net		552,490		720,171		446,322		607,881
Note payable to BBX Capital, Inc.		50,000		46,635		50,000		50,340
Receivable-backed notes payable		461,622		451,500		362,654		367,900
Lines-of-credit and notes payable		218,738		215,400		97,125		95,400
Junior subordinated debentures		136,011		102,000		134,940		133,500

Cash and cash equivalents. The amounts reported in the consolidated balance sheets for cash and cash equivalents approximate fair value due to their short maturity of 90 days or less.

Restricted cash. The amounts reported in the consolidated balance sheets for restricted cash approximate fair value.

Note Payable to BBX Capital, Inc. The fair value of the note payable to BBX Capital, Inc was determined using Level 3 inputs by discounting the net cash outflows estimated to be used to repay the debt.

Lines-of-credit and notes payable. The amounts reported in the Company’s consolidated balance sheets for lines of credit and notes payable, approximate fair value for indebtedness that provides for variable interest rates. The fair value of the Company’s fixed-rate notes payable was determined using Level 3 inputs by discounting the net cash outflows estimated to be used to repay the debt. These obligations are to be satisfied using the proceeds from the consumer loans that secure the obligations.

Receivable-backed notes payable. The amounts reported in the Company’s consolidated balance sheets for receivable-backed notes payable, approximate fair value for indebtedness that provides for variable interest rates. The fair value of the Company’s fixed-rate receivable-backed notes payable was determined using Level 3 inputs by discounting the net cash outflows estimated to be used to repay the debt. These obligations are to be satisfied using the proceeds from the consumer loans that secure the obligations.

12. Commitments and Contingencies

Litigation Matters

In the ordinary course of business, the Company and its subsidiaries are parties to lawsuits as plaintiff or defendant involving its operations and activities including the purchase, sale, marketing, or financing of VOIs. Additionally, from time to time in the ordinary course of business, the Company is involved in disputes with existing and former employees, vendors, taxing jurisdictions, and other individuals and entities, and it also receives individual consumer complaints as well as complaints received through regulatory and consumer agencies, including Offices of State Attorneys General. The Company takes these matters seriously and attempts to resolve any such issues as they arise.

Litigation

The following is a description of certain material legal proceedings pending against the Company or its subsidiaries or which were pending during the year ended December 31, 2022:

On June 28, 2018, Melissa S. Landon, Edward P. Landon, Shane Auxier and Mu Hpare, individually and on behalf of all others similarly situated, filed a purported class action lawsuit against Bluegreen and its wholly owned subsidiary Bluegreen Vacations Unlimited, Inc. (“BVU”) asserting claims for alleged violations of the Wisconsin Timeshare Act, Wisconsin law prohibiting illegal referral selling, and Wisconsin law prohibiting illegal attorney’s fee provisions. Plaintiffs sought certification of a class consisting of all persons who, in Wisconsin, purchased from Bluegreen one or more VOIs within six years prior to the filing of this lawsuit. Plaintiffs sought statutory damages, attorneys’ fees and injunctive relief. Bluegreen moved to dismiss the case, and on November 27, 2019, the Court issued a ruling granting the motion in part. Plaintiffs moved for class certification, and on November 5, 2021, the Court entered an order denying Plaintiff’s Motion. During June 2022, the parties settled the litigation and the lawsuit has been dismissed with prejudice.

On January 7, 2019, Shehan Wijesinha filed a purported class action lawsuit alleging violations of the Telephone Consumer Protection Act (the “TCPA”). It is alleged that BVU called plaintiff’s cell phone for telemarketing purposes using an automated dialing system, and that plaintiff did not give BVU his express written consent to do so. Plaintiffs seek certification of a class comprised of other persons in the United States who received similar calls from or on behalf of BVU without the person’s consent. Plaintiff seeks monetary damages, attorneys’ fees and injunctive relief. Bluegreen believes the lawsuit is without merit and intends to vigorously defend the action. On July 15, 2019, the court entered an order staying this case pending a ruling from the Federal Communications Commission (“FCC”) clarifying the definition of an automatic telephone dialing system under the TCPA and the decision of the Eleventh Circuit in a separate action brought against a VOI company by a plaintiff alleging violations of the TCPA. On January 7, 2020, the Eleventh Circuit issued a ruling consistent with BVU’s position, and on June 26, 2020, the FCC also issued a favorable ruling. The case was stayed pending the United States Supreme Court’s decision in Facebook, Inc. v. Duguid. On April 1, 2021, the Supreme Court issued a decision in the Facebook case which was favorable to Bluegreen’s position that an automatic telephone dialing system was not used in this case. Bluegreen believes the ruling disposes of the plaintiff’s claim and filed a Notice of Supplemental Authority advising the court of the ruling.

On July 18, 2019, Eddie Boyd, and Connie Boyd, Shaundre and Kimberly Laskey, and others similarly situated filed an action alleging that BVU and co-defendants violated the Missouri Merchandise Practices Act for allegedly making false statements and misrepresentations with respect to the sale of VOIs. Plaintiffs’ claims include a purported class action allegation that BVU’s charging of an administrative processing fee constitutes the unauthorized practice of law, and also that Bluegreen and its outside counsel engaged in abuse of process by filing a lawsuit against plaintiffs’ counsel (The Montgomery Law Firm). Plaintiffs seek monetary damages, attorneys’ fees and injunctive relief. On August 31, 2020, the court certified a class regarding the unauthorized practice of law claim, but dismissed the claims regarding abuse of process. On January 11, 2021, the Court issued an order that the class members are not entitled to rescission of their contracts because they failed to plead fraud in the inducement. Plaintiffs filed a third amended petition to add Resort Title Agency, Inc. (a wholly owned subsidiary of Bluegreen) as a defendant. On July 29, 2022, Resort Title Agency, Inc. removed the case to the United States District Court for the Western District of Missouri, where the case is currently pending. Bluegreen believes the lawsuit is without merit and is vigorously defending the action.

On July 14, 2020, Kenneth Johansen, individually and on behalf of all others similarly situated, filed a purported class action against BVU for alleged violations of the TCPA. Specifically, the named plaintiff alleges that he received numerous telemarketing calls from BVU while he was on the National Do Not Call Registry. Bluegreen filed a motion to dismiss, and plaintiff in response filed an amended complaint on September 18, 2020. On February 18, 2021, plaintiff filed a motion for class certification seeking to certify a class of thousands of individual proposed class members. On April 15, 2021, a court-ordered mediation was conducted at which time

the parties were not able to resolve the lawsuit. On September 30, 2021, the court entered an order denying plaintiff’s motion for class certification. The plaintiffs have appealed the order to the Eleventh Circuit. The Eleventh Circuit affirmed the District Court’s order denying plaintiff’s motion for class certification.

On April 2, 2021, New York Urban initiated new arbitration proceedings against BVU, alleging it is owed over $70.0 million for periodic inventory closings that have not occurred since the Purchase and Sale Agreement was terminated or that will not occur because of the termination. New York Urban also seeks over $50.0 million because, due to the Purchase and Sale Agreement’s termination, the closing on the management contract will not occur. BVU believes this new claim is without merit. The arbitration hearing has commenced and is ongoing. BVU continues to vigorously defend against New York Urban’s claims.

On September 14, 2021, Tamarah and Emmanuel Louis, individually and on behalf of all others similarly situated, filed a purported class action lawsuit against BVU alleging it violated the Military Lending Act (“MLA”). The complaint alleges that BVU did not make any inquiry before offering financing to the plaintiffs as to whether they were members of the United States Military and allege other claims related to certain disclosures mandated by the MLA. BVU filed a motion to dismiss the complaint, and plaintiffs then filed an amended complaint on December 3, 2021. The District Court granted BVU’s motion to dismiss. An appeal of the District Court’s dismissal has been initiated by the plaintiffs. BVU continues to vigorously defend this action.

Commencing in 2015, it came to Bluegreen’s attention that its collection efforts with respect to its VOI notes receivable were being impacted by a then emerging, industry-wide trend involving the receipt of “cease and desist” letters from exit firms and their attorneys purporting to represent certain VOI owners. Following receipt of these letters, Bluegreen is unable to contact the owners unless allowed by law. Bluegreen believes these exit firms have encouraged such owners to become delinquent and ultimately default on their obligations and that such actions and its inability to contact the owners have been a material factor in the increase in its annual default rates. Bluegreen’s average annual default rates have increased from 6.9% in 2015 to 8.3% in 2022. Bluegreen also estimates that approximately 6.1% of the total delinquencies on its VOI notes receivable as of December 31, 2021 related to VOI notes receivable are subject to this issue. Bluegreen has in a number of cases pursued, and Bluegreen may in the future pursue, legal action against the VOI owners, and as described below, against the exit firms.

On November 13, 2019, Bluegreen filed a lawsuit against timeshare exit firm The Montgomery Law Firm and certain of its affiliates. In the complaint, Bluegreen alleged that through various forms of deceptive advertising, as well as inappropriate direct contact with VOI owners, such firm and its affiliates made false statements about Bluegreen and provided misleading information to the VOI owners and encouraged nonpayment by consumers. Bluegreen believes the consumers are paying fees to the firm and its affiliates in exchange for illusory services. Bluegreen has asserted claims under the Lanham Act, as well as tortious interference with contractual relations, civil conspiracy to commit tortious interference and other claims. Defendants’ motion to dismiss was denied. In January 2022, Bluegreen entered into a settlement with several of the defendants, which includes an immaterial monetary payment and a stipulated injunction. In September 2022, Bluegreen entered into settlements with other defendants, including The Montgomery Law Firm. On October 18, 2022, pursuant to stipulation of the parties, the Court dismissed the action in light of the settlements.

On November 13, 2020, Bluegreen filed a lawsuit against timeshare exit firm, Carlsbad Law Group, LLP, and certain of its associated law firms and affiliates. On December 30, 2020, Bluegreen filed a lawsuit against timeshare exit firm, The Molfetta Law Firm, and certain of its associated law firms, affiliates, and cohorts, including Timeshare Termination (“TTT”). In both of these actions, Bluegreen makes substantially the same claims against the timeshare exit firms and its associated law firms and affiliates as those made in its action against The Montgomery Law Firm described above. In June 2021, counsel for TTT moved to withdraw, citing TTT’s insolvency. On October 1, 2021, the principals of TTT filed for Chapter 11 Bankruptcy Protection. Bluegreen is pursuing its damages as a claim in that action. Discovery is ongoing with respect to the non-bankrupt defendants. TTT has consented to entry of an injunction against it in the Bankruptcy proceeding as part of an agreement with Bluegreen. Discovery is ongoing with respect to the non-bankrupt defendants.

Other Commitments, Contingencies and Guarantees

The Company, indirectly through Bluegreen and BVU, has an exclusive marketing agreement through 2024 with Bass Pro, a nationally-recognized retailer of fishing, marine, hunting, camping and sports gear, that provides the Company with the right to market and sell vacation packages at kiosks in each of Bass Pro’s retail locations and through other means. As of December 31, 2022, Bluegreen had sales and marketing operations at a total of 129 Bass Pro Shops and Cabela’s Stores. In December 2022, Bluegreen reorganized certain of its marketing operations, including the elimination of lower performing marketing programs and transitioned its kiosks at certain lower volume Cabela’s stores to an unmanned, virtual format as of January 1, 2023. Pursuant to a settlement agreement Bluegreen entered into with Bass Pro and its affiliates during June 2019, Bluegreen paid Bass Pro $20.0 million and agreed to, among other things, make five annual payments to Bass Pro of $4.0 million in January of each year, commencing in 2020. Bluegreen made annual payments of $4.0 million to Bass Pro in January 2021, December 2021 (as payment of the amount owed in January 2022), and December 2022 (as payment of the amount owed in January 2023). As of December 31, 2022 and 2021, $3.8 million and $7.3 million, respectively, was included in accrued liabilities and other in the Company’s consolidated balance sheets for the remaining payments required by the settlement agreement.

During the years ended December 31, 2022 and 2021, VOI sales to prospects and leads generated by the agreement with Bass Pro accounted for approximately 17% and 19%, respectively, of Bluegreen’s VOI sales volume. Subject to the terms and conditions of the settlement agreement, in lieu of the previous commission arrangement, Bluegreen agreed to pay Bass Pro a fixed annual fee of $70,000 for each Bass Pro and Cabela’s retail store that it is accessing (excluding sales at retail stores which are designated to provide tours to Bluegreen/Big Cedar Vacations, or “Bluegreen/Big Cedar feeder stores”), plus $32.00 per net vacation package sold (less cancellations or refunds within 45 days of sale). Bluegreen also agreed to contribute to the Wonders of Wildlife Foundation $5.00 per net package sold (less certain cancellations and refunds within 45 days of sale), subject to an annual minimum of $700,000. Bluegreen will generally be required to pay the fixed annual fee with respect to at least 59 Bass Pro retail stores and at least 60 Cabela’s retail stores. During the years ended December 31, 2022 and 2021, Bluegreen incurred $8.3 million and $7.4 million, respectively, relating to this fixed fee which is included in selling, general and administrative expenses in the Company’s consolidated statements of operations and comprehensive income. In December 2022, Bluegreen paid $8.3 million for the 2023 fixed fee, which is included in prepaid expenses in the Company’s consolidated balance sheet as of December 31, 2022. Notwithstanding the foregoing, the minimum number of Bass Pro and Cabela’s retail stores for purposes of the fixed annual fee may be reduced under certain circumstances set forth in the agreement, including as a result of a reduction of traffic in the stores in excess of 25% year-over-year. As of December 31, 2022, Bluegreen had sales and marketing operations at a total of 129 Bass Pro and Cabela’s stores. On January 1, 2023, Bluegreen transitioned its marketing operations at certain Cabela’s stores to an unmanned, virtual format.

In lieu of paying maintenance fees for unsold VOI inventory, Bluegreen may enter into subsidy agreements with certain HOAs. During the years ended December 31, 2022 and 2021, Bluegreen made subsidy payments related to such subsidies of $27.5 million and $24.9 million, respectively, which are included within cost of other fee-based services in the Company’s consolidated statements of operations and comprehensive income. As of December 31, 2022 and 2021, the Company had $0.6 million and $0.2 million, respectively, accrued for such subsidies, which is included in accrued liabilities and other in the Company’s consolidated balance sheets.

13. Income Taxes

The Company’s provision for income taxes from continuing operations consists of the following (in thousands):


	Year Ended December 31,
	2022		2021
Federal:
Current	$	6,483	$	13,690
Deferred		12,964		6,752

	$	19,447	$	20,442

State and Other:
Current	$	2,199	$	2,509
Deferred		4,541		3,713

		6,740		6,222

Total	$	26,187	$	26,664

The difference between the Company’s provision for income taxes from continuing operations and the results of applying the federal statutory tax rate to income before provision for income taxes relates to (in thousands):


	Year Ended December 31,
	2022			2021
Income tax provision at expected federal income tax rate ⁽¹⁾	$	22,562		$	20,530
Increase (decrease) resulting from:
Provision for state taxes, net of federal effect		5,325			4,915
Taxes related to noncontrolling interests in subsidiaries not consolidated for income tax purposes		(3,542	)		(2,781	)
Non-deductible items		2,083			3,945
Other - net		(241	)		55

Provision for income taxes	$	26,187		$	26,664

(1)	Expected tax is computed based upon income before taxes from continuing operations.

The Company’s deferred income taxes from continuing operations consist of the following components (in thousands):


	As of December 31,
	2022			2021
Deferred tax assets:
Book reserves for loan losses and inventory costs under timeshare accounting rules	$	37,180		$	25,162
Federal and State NOL and tax credit carryforward		88,640			88,722
Real estate valuation		5,402			5,421
Expenses recognized for books and deferred for tax		968			2,645
Other		5,208			3,570

Total gross deferred tax assets		137,398			125,520
Valuation allowance		(80,797	)		(80,815	)

Total deferred tax assets		56,601			44,705

Deferred tax liabilities:
Installment sales treatment of notes		142,254			112,059
Intangible assets		14,179			14,152
Junior subordinated debentures		7,874			8,131
Property and equipment		4,681			5,239
Other		806			812

Total gross deferred tax liabilities		169,794			140,393

Net deferred tax liability	$	113,193		$	95,688

Valuation Allowance on Deferred Tax Assets

The Company evaluates its deferred tax assets to determine if valuation allowances are required. In the evaluation, management considers net operating loss (“NOL”) carryback availability, expectations of sufficient future taxable income, trends in earnings, existence of taxable income in recent years, the future reversal of temporary differences, and available tax planning strategies that could be implemented, if required. Valuation

allowances are established based on the consideration of all available evidence using a more likely than not standard. As of December 31, 2022, the Company established a valuation allowance of $80.8 million relating to the deferred tax asset of $88.6 million for federal and state NOL and tax credit carryforwards, as the Company’s ability to utilize a portion of these carryforwards to reduce future tax liability income is subject to significant limitations. The table below sets forth information regarding the federal and state NOL and tax credit carryforwards and the applicable valuation allowance as of December 31, 2022 (in thousands):


	Federal and State NOL and Credit Carryforward		Gross Deferred Tax Asset		Valuation Allowance		Net Deferred Tax Asset		Year Expires
Non-Florida State NOLs	$	224,543	$	10,263	$	3,735	$	6,528		2023-2042
Federal NOL SRLY Limitation		210,330		44,169		44,169		—		2026-2034
Florida NOL SRLY Limitation		702,433		30,521		30,521		—		2026-2034
Other Federal tax credits-SRLY Limitation		2,371		2,371		2,371		—		2025-2031
Federal NOL Section 382 Limitation		5,520		1,159		—		1,159		2027-2028
Florida NOL Section 382 Limitation		3,589		156		—		156		2027-2028

Total			$	88,639	$	80,796	$	7,843

The Company evaluated all positive and negative evidence available as of the reporting date, including tax planning strategies, the ability to file a consolidated return with its subsidiaries, the expected future reversal of existing taxable temporary differences, and expected future taxable income exclusive of reversing temporary differences and carry forwards. Based on this evaluation, the Company has determined that it is more likely than not that it will be able to realize $7.8 million of the deferred tax asset that is attributed to the Company’s federal and state NOL and credit carryforwards.

As of December 31, 2022, Bluegreen had non-Florida state NOL carryforwards of $224.5 million which expire from 2023 through 2042. These NOLs can only be utilized against Bluegreen’s (or its subsidiary’s) income allocable to the state in which the NOL was generated. A valuation allowance is maintained for those state NOLs where the NOL is not more likely than not realizable.

As of December 31, 2022, the Company had federal and Florida NOL carryforwards and federal tax credit carryforwards that can only be utilized if the separate entity that generated them has separate company taxable income (the “SRLY Limitation”). These carryforwards cannot be utilized against most of the Company’s subsidiaries’ taxable income, including Bluegreen. As such, a full valuation allowance has been established for these carryforwards.

In addition, as a result of the Company’s merger with Woodbridge in September 2009, the Company experienced a “change of ownership” as that term is defined in the Internal Revenue Code. This change of ownership resulted in a significant limitation on the amount of the Company’s pre-merger NOLs that can be utilized by the Company annually (the “Section 382 limitation”). The federal and Florida annual limit is approximately $788,000 and $513,000, respectively. As a result, the amounts in the table represent the NOLs that more likely than not can be utilized before expiration.

Other

The Coronavirus Aid, Relief, and Economic Securities Act (“CARES Act”) was signed into law on March 27, 2020 in response to the COVID-19 pandemic. The Company has taken advantage of the deferral of the employer portion of the tax withholding amounts and the employee retention tax credits provided for in the CARES Act. During the year ended December 31, 2021, the Company recorded a tax withholding deferral of $4.3 million. The remaining tax withholding liability deferred under the CARES Act was repaid during 2022.

The Company evaluates its tax positions based upon guidelines of ASC 740, which clarifies the accounting for uncertainty in tax positions. Based on an evaluation of uncertain tax provisions, the Company is required to measure tax benefits based on the largest amount of benefit that is greater than 50% likely of being realized upon settlement. There were no unrecognized tax benefits at December 31, 2022 or 2021, and as of December 31, 2022, the Company did not recognize any interest or penalties related to ASC 740-10.

The Company is no longer subject to federal or Florida income tax examinations by tax authorities for tax years before 2018. Several of the Company’s subsidiaries are no longer subject to income tax examinations in certain state, local, and non-U.S. jurisdictions for tax years before 2018.

Certain of the Company’s state income tax filings are under routine examination. While there is no assurance as to the results of these audits, the Company does not currently anticipate any material adjustments in connection with these examinations.

14. Equity

Common Stock

The Company’s Articles of Incorporation authorize the Company to issue both Class A Common Stock, par value $0.01 per share, and Class B Common Stock, par value $0.01 per share. Under Florida law and the Company’s Articles of Incorporation, holders of Class A Common Stock and Class B Common Stock vote together as a single class on most matters presented to a vote of the Company’s shareholders. On such matters, holders of Class A Common Stock are entitled to one vote for each share held, with all holders of Class A Common Stock possessing in the aggregate 22% of the total voting power, while holders of Class B Common Stock possess the remaining 78% of the total voting power. If the number of shares of Class B Common Stock outstanding decreases to 360,000 shares, the Class A Common Stock’s aggregate voting power will increase to 40%, and the Class B Common Stock will have the remaining 60%. If the number of shares of Class B Common Stock outstanding decreases to 280,000 shares, the Class A Common Stock’s aggregate voting power will increase to 53%, and the Class B Common Stock will have the remaining 47%. These relative voting percentages will remain fixed unless the number of shares of Class B Common Stock outstanding decreases to 100,000 shares or less, at which time the fixed voting percentages will be eliminated, and holders of Class A Common Stock and holders of Class B Common Stock would then each be entitled to one vote per share held. Each share of Class B Common Stock is convertible into one share of Class A Common Stock at any time at the option of the holder. The percentage of total votes held by the Company’s Class A and Class B Common Stock was 78% and 22%, respectively, at December 31, 2022. Other than as described above, rights of Class A and Class B Common stock participate equally in terms of dividends, liquidations, preference and all other rights and features.

Share Repurchase Program

In August 2021, the Company’s board of directors approved a share repurchase program which authorizes the repurchase of the Company’s Class A Common Stock and Class B Common Stock at an aggregate cost of up to $40.0 million. In March 2022, the Company’s board of directors approved a $50.0 million increase in the aggregate cost of the Company’s Class A Common Stock and Class B Common Stock that may be repurchased under the share repurchase program. The Company repurchased and retired 1,911,980 shares of Class A Common Stock under the share repurchase program during the year ended December 31, 2022 for an aggregate purchase price of $54.4 million. The Company repurchased and retired 1,182,339 shares of Class A Common Stock and 18,996 shares of Class B Common Stock under the share repurchase program during the year ended December 31, 2021 for an aggregate purchase price of $27.3 million. The excess of cost over par value of the repurchased shares is recorded to additional paid in capital. As of December 31, 2022, $8.3 million remained available for the repurchase of shares under the Company’s share repurchase program.

Cash Tender Offer

In December 2022, the Company completed a cash tender offer pursuant to which it purchased and retired 3,040,882 shares of its Class A Common Stock at a purchase price of $25.00 per share, or an aggregate purchase price of $76.0 million, excluding fees and expenses related to the tender offer. These shares were repurchased outside of the Company’s share repurchase program.

Restricted Stock and Stock Option Plans

At the Company’s Annual Meeting of Shareholders held on July 21, 2021, the Company’s shareholders approved the Bluegreen Vacations Holding Corporation 2021 Incentive Plan (the “2021 Plan”), which allows for the issuance of up to 2,000,000 shares of the Company’s Class A Common Stock pursuant to restricted stock awards and options which may be granted under the 2021 Plan. The 2021 Plan also permits for the grant of performance-based cash awards. As of December 31,2022, 913,974 restricted shares of the Company’s Class A Common Stock have been granted to certain executive officers and employees under the 2021 Plan, of which 7,969 shares were forfeited during 2021 and 16,678 were forfeited during 2022. As of December 31, 2022, 1,110,673 shares of Class A Common Stock remained available for grant under the 2021 Plan.

Restricted Stock Activity


	As of December 31,
	2022					2021
	Unvested Restricted Stock			Weighted Average Grant Date Fair Value		Unvested Restricted Stock			Weighted Average Grant Date Fair Value
Unvested balance outstanding, beginning of period		460,470		$	20.72		—		$	—
Granted		445,535			23.34		468,439			20.72
Vested		—			—		—			—
Forfeited		(16,678	)		19.36		(7,969	)		20.72

Unvested balance outstanding, end of period		889,327		$	22.06		460,470		$	20.72

Available for grant		1,110,673					1,539,530

The table below sets forth information regarding the restricted stock awards granted during the years ended December 31, 2022 and 2021:

Plan Name

Grant Date

Number
of
Awards
Granted

Per Share
Weighted
Average
Grant Date
Fair Value

Requisite

Service Period

Vesting Date

2021 Incentive Plan

6/3/2021

468,439

20.72

4 years; 10 years

(1)

2021 Incentive Plan

1/19/2022

208,035

29.80

4 years

(2)

2021 Incentive Plan

10/19/2022

237,500

17.69

5 years

Cliff vest October 2027

(1)	275,939 of the shares granted are scheduled to cliff vest in June 2025 and 192,500 of the shares granted are scheduled to cliff vest in June 2031, in each case subject to the terms and conditions of the 2021 Plan and the applicable award agreement.

(2)	154,679 of the shares granted are scheduled to vest ratably in annual installments over 4 years and 53,356 of the shares granted are scheduled to cliff vest in January 2026, in each case subject to the terms and conditions of the 2021 Plan and the applicable award agreement.

The aggregate grant date fair value of the awards granted in October 2022, January 2022 and June 2021 was $4.2 million, $6.2 million and $9.7 million, respectively. As of December 31, 2022, there was $15.2 million of unrecognized share-based compensation with a remaining weighted average amortization period of 4.54 years. The Company recognized restricted stock compensation expense included in selling general and administrative expenses in the Company’s consolidated statements of operations and comprehensive income related to its restricted stock awards of approximately $3.4 million and $1.0 million during the years ended December 31, 2022 and 2021, respectively. No tax benefits were recognized on restricted stock compensation expense for these awards.

See Note 21, Subsequent Events, for information regarding restricted stock awards granted by the Company during January 2023.

15. Employee Benefit Plans and Incentive Compensation Programs

The Company’s Employee Retirement Plans are Internal Revenue Code Section 401(k) Retirement Savings Plans. Generally, all U.S.-based employees at least 18 years of age with at least three months of employment are eligible to participate in the Company’s 401(k) plans. The Company’s 401(k) plan provides for an annual employer matching contribution equal to 100% of each participant’s contributions not exceeding 3% of each participant’s compensation, plus 50% of the participant’s contributions in excess of 3% but not in excess of 5% of the participant’s compensation. Further, the Company may make additional discretionary matching contributions to its plan not to exceed 4% of each participant’s compensation. For the years ended December 31, 2022 and 2021, the Company recorded expense for contributions to the 401(k) plan totaling $7.7 million and $6.7 million, respectively.

16. Related Party Transactions

The Company may be deemed to be controlled by Alan B. Levan, Chairman, Chief Executive Officer and President of the Company, John E. Abdo, Vice Chairman of the Company, Jarett S. Levan, a director of the Company and son of Mr. Alan Levan, and Seth M. Wise, a director of the Company. Together, they may be deemed to beneficially own shares of the Company’s Class A Common Stock and Class B Common Stock representing approximately 81% of the Company’s total voting power. Further, in connection with the spin-off of BBX Capital during September 2020, Mr. Jarett Levan became the Chief Executive Officer and President and a director of BBX Capital, Mr. Alan Levan became the Chairman of the Board of BBX Capital, Mr. John E. Abdo became Vice Chairman of BBX Capital and Seth M. Wise became Executive Vice President and director of BBX Capital. Mr. Alan Levan, Mr. Abdo, Mr. Jarett Levan and Mr. Wise may also be deemed to control BBX Capital through their ownership of BBX Capital’s Class A Common Stock and Class B Common Stock. Mr. Alan Levan and Mr. Abdo also receive compensation from BBX Capital.

See “Our Business” under Note 1 above for information regarding the statutory short-form merger effected on May 5, 2021, pursuant to which the Company acquired all of the approximately 7% of the outstanding shares of Bluegreen’s common stock that the Company did not previously own and Bluegreen became a wholly owned subsidiary of the Company.

The Company reimburses BBX Capital for advisory, risk management, administrative and other services. The Company reimbursed BBX Capital $2.0 million and $1.2 million during the years ended December 31, 2022 and 2021, respectively, for such services. Further, BBX Capital reimbursed the Company $0.1 million during the year ended December 31, 2021 with no such reimbursements during the year ended December 31, 2022. The Company had $0.2 million and $0.1 million in accrued expenses as of December 31, 2022, and 2021, respectively, for the services described above.

During each of the years ended December 31, 2022 and 2021, the Company paid the Abdo Companies, Inc. $153,000 for certain management services. John E. Abdo, the Company’s Vice Chairman, is the principal shareholder and Chief Executive Officer of Abdo Companies, Inc.

In connection with its spin-off of BBX Capital during September 2020, the Company issued a $75.0 million note payable to BBX Capital (of which $50.0 million remained outstanding at December 31, 2022 and 2021). See Note 10 for a description of the of terms of BVH’s note payable to BBX Capital.

17. Segment Reporting

The Company reports its results through two reportable segments: (1) Sales of VOIs and Financing, and (ii) Resort Operations and Club Management.

The Sales of VOIs and Financing segment includes the Company’s marketing and sales activities related to the VOIs that are owned by the Company, VOIs acquired under just-in-time and secondary market inventory arrangements, or sales of VOIs through fee-for-service arrangements with third-party developers, as well as consumer financing activities in connection with sales of VOIs owned by the Company, and title services operations.

The Resort Operations and Club Management segment includes management services activities for the Vacation Club and for a majority of the HOAs of the resorts within the Vacation Club. The Company also provides reservation services, services to owners and billing and collections services to the Vacation Club and certain HOAs. Additionally, this segment includes revenue from the Traveler Plus program, food and beverage and other retail operations, rental services activities, and management of construction activities for certain fee-based developer clients.

The information provided for segment reporting is obtained from internal reports utilized by management. The CODM primarily uses adjusted earnings, or net income, before taking into account income taxes, interest income (excluding interest earned on VOI notes receivable), interest expense (excluding interest expense incurred on debt secured by VOI notes receivable), and depreciation and amortization (“Adjusted EBITDA”) to evaluate the reporting segments’ performance. See Management’s Discussion and Analysis of Financial Condition and Results of Operations for information regarding Adjusted EBITDA, including the definition of Adjusted EBITDA.

The table below sets forth the Company’s revenue for its reportable segments for the years ended December 31 2022 and 2021 (in thousands):


	Year Ended December 31,
Revenues:	2022			2021
Sales of VOIs and financing	$	724,748		$	580,619
Resort operations and club management		118,248			111,251
Cost reimbursements ⁽¹⁾		77,394			69,066

Total segment revenues		920,390			760,936
Corporate and other		3,724			1,401
Eliminations		(4,685	)		(5,224	)

Total revenues	$	919,429		$	757,113

⁽¹⁾	Cost reimbursement revenue and expense net to zero and are excluded from the computation of adjusted EBITDA below.

The table below sets forth the Company’s Adjusted EBITDA for its reportable segments reconciled to net income for the years ended December 31, 2022 and 2021 (in thousands):


	Year Ended December 31,
	2022			2021
Net income attributable to shareholders	$	64,385		$	58,730
Non-controlling interests		16,866			14,102
Discontinued operations, net of taxes		—			(900	)

Net income from continuing operations		81,251			71,932
Add: Depreciation and amortization		7,949			6,726
Less: Interest income (other than interest earned on VOI notes receivable)		(1,710	)		(368	)
Add: Interest expense - corporate		25,042			19,842
Add: Provision for income taxes		26,187			26,664
Loss on asset held for sale		275			220
Add: Severance and other		1,600			2,403
Add: Retail marketing reorganization		5,040			—
Add: General and administrative ⁽¹⁾		99,505			90,606
Add: Other (income) expense, net		(2,014	)		(1,033	)

Segment Adjusted EBITDA ⁽²⁾		243,125			216,992

Sales of VOIs and financing		159,304			138,078
Resort operations and club management		83,821			78,914

Segment Adjusted EBITDA ⁽²⁾	$	243,125		$	216,992

(1)	Included in general and administrative expenses for the years ended December 31, 2022 and 2021 is $3.4 million and $1.0 million, respectively, of share-based compensation.

(2)	See Management’s Discussion and Analysis of Financial Condition and Results of Operations for information regarding Adjusted EBITDA, including the definition of Adjusted EBITDA.

18. Earnings Per Share

The following table presents the calculation of the Company’s basic and diluted earnings per share (“EPS”):


	For The Years Ended December 31,
(in thousands, except per share amounts)	2022		2021
Numerator:
Income from continuing operations	$	81,251	$	71,932
Less: net income attributable to noncontrolling interests - continuing operations		16,866		14,102

Income from continuing operations available to shareholders before discontinued operations	$	64,385	$	57,830

Discontinued operations
Discontinued operations		—		900
Less: loss attributable to noncontrolling interests - discontinued operations		—		—

Income from discontinued operations available to shareholders		—		900

Net income attributable to shareholders	$	64,385	$	58,730

Denominator:
Basic - weighted average number of common share outstanding		19,720		20,735

Basic - weighted average number of common share outstanding		19,720		20,735
Dilutive effect of restricted stock awards		168		24

Diluted weighted average number of common shares outstanding		19,888		20,759

Basic EPS:
Continuing operations	$	3.26	$	2.79
Discontinued operations		—		0.04

Basic EPS:	$	3.26	$	2.83

Diluted EPS:
Continuing operations	$	3.24	$	2.79
Discontinued operations		—		0.04

Diluted EPS:	$	3.24	$	2.83

During the years ended December 31, 2022 and 2021, 168,000 and 24,000, respectively, of weighted average shares of unvested restricted stock awards outstanding were included in the computation of diluted earnings per share as the shares were dilutive. Additionally, shares of Class A Common Stock and Class B Common Stock are both entitled to participate in cash distributions in the same manner.

19. Noncontrolling Interests

As of December 31, 2022 and 2021, noncontrolling interests in the Company’s consolidated balance sheets consisted of Bluegreen’s 51% equity interest in Bluegreen / Big Cedar Vacations, LLC, a joint venture in which Bluegreen is deemed to hold a controlling financial interest based on Bluegreen’s 51% equity interest, Bluegreen’s active role as the day-to day manager of its activities, and Bluegreen’s majority voting control of its management committee.

In addition, prior to May 5, 2021, BVH owned approximately 93% of Bluegreen’s common stock. As described in greater detail under “Our Business” in Note 1 above, on May 5, 2021, BVH acquired all of the approximately 7% of the outstanding shares of Bluegreen’s common stock that the Company did not previously own pursuant to a statutory short-form merger.

Income attributable to noncontrolling interests from continuing operations consisted of the following (in thousands):


	For the Years Ended December 31,
	2022		2021
Bluegreen ⁽¹⁾	$	—	$	861
Bluegreen/Big Cedar Vacations ⁽²⁾		16,866		13,241

Net income attributable to noncontrolling interest - continuing operations	$	16,866	$	14,102

(1)	Prior to May 5, 2021, BVH owned approximately 93% of Bluegreen’s outstanding common stock. As a result of the merger effected on May 5, 2021, Bluegreen is now a wholly owned subsidiary of BVH.

(2)	Bluegreen owns 51% of Bluegreen/Big Cedar Vacations.

20. Subsequent Events

On February 15, 2023, the Company’s board of directors declared a quarterly cash dividend of $0.20 per share on its Class A and Class B Common Stock, which totaled $3.2 million in the aggregate and is payable on March 20, 2023 to shareholders of record as of the close of trading on March 6, 2023.

In addition, on January 18, 2023, the Company granted 318,811 restricted shares of the Company’s Class A Common Stock to certain executive and non-executive employees under the Company’s 2021 Plan, of which 150,000 restricted shares are scheduled to cliff vest in January 2027 and 168,811 restricted shares are scheduled to vest ratably over 4 years in each case, subject to the terms and conditions of the 2021 Plan and the applicable award agreement. The aggregate fair value of the awards granted was $8.9 million.

Exhibit 99.3

UNAUDITED PRO FORMA CONDENSED COMBINED FINANCIAL INFORMATION OF HGV AND BVH

On January 17, 2024 (the “Merger Date”), Hilton Grand Vacations Inc. (“HGV”) and Heat Merger Sub, Inc., an indirect wholly-owned subsidiary of HGV (“Merger Sub”), completed the previously announced acquisition of Bluegreen Vacations Holding Corporation (“BVH”), pursuant to an Agreement and Plan of Merger (the “Merger Agreement”), whereby, upon the terms and subject to the conditions set forth in the Merger Agreement and in accordance with applicable law, Merger Sub merged with and into BVH (the “Merger”), with BVH continuing as the surviving entity, and an indirect wholly-owned subsidiary of HGV after the Merger. Each share of Class A common stock and Class B common stock of BVH issued and outstanding immediately prior to the effective time of the Merger (including shares subject to BVH restricted stock awards outstanding at the effective time of the Merger) was canceled and converted into and exchanged for the right to receive $75.00 in cash.

In connection with the Merger, HGV, Hilton Grand Vacations Parent LLC, a Delaware limited liability company (“Holdings”), Hilton Grand Vacations Borrower LLC, a Delaware limited liability company (the “Borrower” or “Issuer”), and certain subsidiaries of the Borrower (the “Subsidiary Guarantors”), entered into Amendment No. 4 to the Credit Agreement (the “Amendment”), which amended the Credit Agreement, dated as of August 2, 2021, by and among the Company, Holdings, the Borrower, the guarantors from time to time party thereto, the lenders from time to time party thereto and Bank of America, N.A., as administrative agent and collateral agent (the “Credit Agreement”), pursuant to which, among other things, the Borrower incurred $900.0 million of incremental term loans (the “New Term Loans”).

The New Term Loans bear interest, at the Borrower’s option, at a rate equal to a margin (which (x) in the case of Base Rate (as defined below) borrowings, is equal to 1.75% per annum and (y) in the case of Term SOFR (as defined below) borrowings, is equal to 2.75% per annum) over either (a) a base rate (the “Base Rate”) determined by reference to the highest of (1) the administrative agent’s prime lending rate, (2) the federal funds effective rate plus 0.50% and (3) Term SOFR for a one-month interest period plus 1.00% or (b) a SOFR rate (“Term SOFR”) determined by reference to the forward-looking term SOFR rate published by CME Group Benchmark Administration Limited for the interest period relevant to such borrowing. The New Term Loans mature on January 17, 2031; refer to Note 5.

Also in connection with the Merger, the Issuer, Hilton Grand Vacations Borrower Inc. (the “Co-Issuer” and, together with the Issuer, the “Issuers”), HGV, Holdings, the Subsidiary Guarantors (and, together with the Company and HGV Intermediate Parent, the “Guarantors”) and Wilmington Trust, National Association, as trustee (the “Trustee”) and notes collateral agent (the “Notes Collateral Agent”), entered into an indenture (the “Indenture”) in connection with the issuance and sale of $900 million aggregate principal amount of 6.625% senior secured notes due 2032 (the “Notes”) to Deutsche Bank Securities, Inc. and certain other initial purchasers (collectively, the “Initial Purchasers”); refer to Note 5. The New Term Loans and the Notes are sometime referred to herein as the “Financing”.

The unaudited pro forma condensed combined financial information combines HGV and BVH within the unaudited pro forma condensed combined statement of operations and the unaudited pro forma condensed combined balance sheet. The unaudited pro forma condensed combined statement of operations of HGV and BVH for the year ended December 31, 2022 and the nine months ended September 30, 2023 combine the historical consolidated statements of operations of HGV and BVH, giving effect to the Merger, New Term Loans and Notes (collectively the “Transactions”) as if they had been completed on January 1, 2022. The unaudited pro forma condensed combined balance sheet as of September 30, 2023, combines the historical consolidated balance sheets of HGV and BVH, giving effect to the Transactions as if they had been completed on September 30, 2023.

The unaudited pro forma adjustments are based upon currently available information, estimates and assumptions that HGV’s management believes are reasonable as of the date hereof. The unaudited pro forma condensed combined financial information should be read in conjunction with the accompanying notes. The unaudited pro forma condensed combined financial information is for informational purposes only, is not intended to represent or to be indicative of actual results of operations or financial position of HGV or BVH had the Transactions been completed on the dates assumed, and should not be taken as indicative of future consolidated results of operations or financial position. The actual results may differ significantly from those reflected in the unaudited pro forma condensed combined statement of operations for a number of reasons, including, but not limited to, differences between the assumptions used to prepare the unaudited pro forma statements of operations and actual amounts.

In addition, the unaudited pro forma condensed combined financial information should be read in conjunction with:

•

HGV’s audited consolidated financial statements and related notes as of and for the year ended December 31, 2022, and unaudited condensed consolidated financial statements and related notes as of and for the nine months ended September 30, 2023, which are set forth in HGV’s Annual Report on Form 10-K for the year ended December 31, 2022, as filed with the U.S. Securities and Exchange Commission (the “SEC”) on March 1, 2023, and the Company’s Quarterly Report on Form 10-Q for the quarter ended September 30, 2023, as filed with the SEC on November 6, 2023, respectively; and

•

BVH’s audited consolidated financial statements and related notes as of and for the year ended December 31, 2022, and unaudited condensed consolidated financial statements and related notes as of and for the nine months ended September 30, 2023, which are included as Exhibits 99.1 and 99.2 to the Current Report on Form 8-K/A of which this Exhibit 99.3 forms a part.

The historical financial statements have been adjusted in the accompanying unaudited pro forma condensed combined financial information to give effect to pro forma events that are applicable to business combination accounting as required under generally accepted accounting principles in the United States (GAAP). The unaudited pro forma condensed combined financial information contained herein does not include integration costs or benefits from synergies that may result from the Transactions.

The unaudited pro forma condensed combined financial information has been prepared using the acquisition method of accounting in accordance with GAAP, with HGV considered the acquirer of BVH. Accordingly, consideration paid or exchanged by HGV to complete the Transactions will generally be allocated to assets, liabilities and noncontrolling interests of BVH based on their estimated fair values as of the date of completion of the Transactions. The acquisition method of accounting is dependent upon certain valuation assumptions, including those related to the preliminary purchase price allocation of the assets acquired, liabilities assumed and noncontrolling interests of BVH based on management’s best estimates of fair value. The actual purchase price allocation may vary based on final analyses of the fair value of the acquired assets, assumed liabilities, and noncontrolling interests, which is expected to be completed no later than 12 months after the date of completion of the Transactions. These changes may result in material adjustments to these unaudited pro forma condensed combined financial statements.

In an effort to present the unaudited pro forma condensed combined financial statements in a manner that we believe is clear and most useful to the potential users of these unaudited pro forma condensed combined financial statements, we have presented the values contained herein in millions (unless otherwise stated). Because BVH presents its historical financial statements in thousands, some amounts may not match BVH’s historical financial statements, due to rounding (refer to Note 4 of the unaudited pro forma condensed combined financial information).

UNAUDITED PRO FORMA CONDENSED COMBINED BALANCE SHEET

AS OF SEPTEMBER 30, 2023

(in millions)


					Pro Forma Adjustments
			BVH
			Historical, as		Financing				Merger
	HGV		Reclassified		Adjustments				Adjustments					Pro Forma
	Historical		(Note 4)		(Note 5)				(Note 6)					Combined
Assets
Cash and cash equivalents	$	227	$	135	$	1,764	(a	)	$	(1,591	)	(a	)	$	535
Restricted cash		308		55		—				—					363
Accounts receivable, net of allowance for doubtful accounts		441		19		—				—					460
Timeshare financing receivables, net		1,821		677		—				240		(b	)		2,738
Inventory		1,308		450		—				40		(c	)		1,798
Property and equipment, net		789		88		—				33		(c	)		910
Operating lease right-of-use assets, net		62		20		—				(3	)	(c	)		79
Investments in unconsolidated affiliates		74		4		—				—					78
Goodwill		1,416		—		—				534		(c	)		1,950
Intangible assets, net		1,186		61		—				599		(c	)		1,846
Other assets		377		68		—				(40	)	(d	)		405

Total Assets	$	8,009	$	1,577	$	1,764			$	(188	)			$	11,162

Liabilities and Equity
Accounts payable, accrued expenses and other	$	942	$	146	$	—			$	74		(e	)	$	1,162
Advanced deposits		185		2		—				—					187
Debt, net		2,730		356		1,764	(a	)		(254	)	(f	)		4,596
Non-recourse debt, net		1,038		560		—				38		(c	)		1,636
Operating lease liabilities		80		25		—				(6	)	(c	)		99
Deferred revenues		229		56		—				—					285
Deferred income tax liabilities		657		126		—				191		(g	)		974

Total Liabilities		5,861		1,271		1,764				43					8,939

Equity
Preferred stock		—		—		—				—					—
Common stock		1		—		—				—		(h	)		1
Additional paid-in capital		1,535		51		—				(51	)	(h	)		1,535
Accumulated retained earnings		588		169		—				(243	)	(i	)		514
Accumulated other comprehensive loss		24		—		—				—					24

Total Equity of the Company		2,148		220		—				(294	)				2,074

Noncontrolling interests		—		86		—				63		(c	)		149

Total Equity		2,148		306		—				(231	)				2,223

Total Liabilities and Equity	$	8,009	$	1,577	$	1,764			$	(188	)			$	11,162

See accompanying notes to unaudited pro forma financial information.

UNAUDITED PRO FORMA CONDENSED COMBINED STATEMENT OF OPERATIONS

FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2023

(in millions)


							Pro Forma Adjustments
				BVH
				Historical, as			Financing					Merger
	HGV			Reclassified			Adjustments					Adjustments					Pro Forma
	Historical			(Note 4)			(Note 5)					(Note 6)					Combined
Revenues
Sales of VOIs, net	$	1,040		$	427		$	—				$	—				$	1,467
Sales, marketing, brand and other fees		501			85			—					—					586
Financing		225			93			—					(10	)	(aa	)		308
Resort and club management		402			83			—					—					485
Rental and ancillary services		502			32			—					—					534
Cost reimbursements		289			71			—					—					360

Total revenues		2,959			791			—					(10	)				3,740

Expenses
Cost of VOI sales		141			53			—					—					194
Sales and marketing		971			369			—					—					1,340
Financing		73			26			—					—					99
Resort and club management		129			24			—					—					153
Rental and ancillary services		460			43			—					—					503
General and administrative		130			74			—					(1	)				203
Acquisition and integration-related expense		42			—			—					—					42
Depreciation and amortization		156			12			—					32		(cc	)		200
License fee expense		101			4			—					—					105
Impairment expense		3			—			—					—					3
Cost reimbursements		289			71			—					—					360

Total operating expenses		2,495			676			—					31					3,202
Interest expense		(133	)		(30	)		(105	)	(b	)		26		(dd	)		(242	)
Equity in earnings from unconsolidated affiliates		7			—			—					—					7
Other (loss) gain, net		3			3			—					—					6

Income before income tax expense		341			88			(105	)				(15	)				309
Income tax expense		(96	)		(20	)		26		(c	)		4		(ee	)		(86	)

Net income	$	245		$	68		$	(79	)			$	(11	)			$	223
Net income attributable to noncontrolling interests		—			(13	)		—					—					(13	)

Net income attributable to the Company	$	245		$	55		$	(79	)			$	(11	)			$	210

Earnings per share
Basic	$	2.21		$	3.41										(ff	)	$	1.89
Diluted	$	2.18		$	3.31										(ff	)	$	1.87

See accompanying notes to unaudited pro forma financial information.

UNAUDITED PRO FORMA CONDENSED COMBINED STATEMENT OF OPERATIONS

FOR THE YEAR ENDED DECEMBER 31, 2022

(in millions)


							Pro Forma Adjustments
	HGV Historical			BVH Historical, as Reclassified (Note 4)			Financing Adjustments (Note 5)					Merger Adjustments (Note 6)					Pro Forma Combined
Revenues
Sales of VOIs, net	$	1,491		$	529		$	—				$	—				$	2,020
Sales, marketing, brand and other fees		620			142			—					—					762
Financing		267			100			—					(11	)	(aa	)		356
Resort and club management		534			103			—					—					637
Rental and ancillary services		626			31			—					—					657
Cost reimbursements		297			77			—					—					374

Total revenues		3,835			982			—					(11	)				4,806

Expenses
Cost of VOI sales		274			59			—					—					333
Sales and marketing		1,146			490			—					—					1,636
Financing		103			20			—					—					123
Resort and club management		161			31			—					—					192
Rental and ancillary services		579			54			—					—					633
General and administrative		212			96			—					—					308
Acquisition and integration-related expense		67			—			—					76		(bb	)		143
Depreciation and amortization		244			16			—					43		(cc	)		303
License fee expense		124			6			—					—					130
Impairment expense		17			—			—					—					17
Cost reimbursements		297			77			—					—					374

Total operating expenses		3,224			849			—					119					4,192
Interest expense		(142	)		(25	)		(139	)	(b	)		22		(dd	)		(284	)
Equity in earnings from unconsolidated affiliates		13			—			—					—					13
Other (loss) gain, net		(1	)		—			—					—					(1	)

Income before income tax expense		481			108			(139	)				(108	)				342
Income tax expense		(129	)		(26	)		35		(c	)		10		(ee	)		(110	)

Net income	$	352		$	82		$	(104	)			$	(98	)			$	232
Net income attributable to noncontrolling interests		—			(17	)		—					—					(17	)

Net income attributable to the Company	$	352		$	65		$	(104	)			$	(98	)			$	215

Earnings per share
Basic	$	2.98		$	3.26										(ff	)	$	1.82
Diluted	$	2.93		$	3.24										(ff	)	$	1.80

See accompanying notes to unaudited pro forma financial information.

NOTES TO THE UNAUDITED PRO FORMA CONDENSED COMBINED FINANCIAL INFORMATION

Note 1 – Description of the Transactions and Basis of Pro Forma Presentation

On November 5, 2023, HGV and BVH entered into the Merger Agreement. Pursuant to the terms of the Merger Agreement, each existing share of BVH common stock issued and outstanding was exchanged for the right to receive $75.00 (the “Merger Consideration”). All BVH equity awards outstanding as of the Merger Date immediately vested and any performance conditions were deemed satisfied, such that the holders of such awards were also eligible to receive the Merger Consideration. Additionally, certain of BVH historical debt was repaid by HGV in connection with the Transactions; refer to Note 2.

Certain reclassifications have been made in order to align the historical presentation of BVH to HGV. Refer to Note 4 for these reclassification adjustments.

The unaudited pro forma condensed combined financial information was prepared using the acquisition method of accounting and HGV is considered the accounting acquirer. The acquisition method of accounting, based on the Financial Accounting Standards Board’s (“FASB”) Accounting Standards Codification (“ASC”) Topic 805, Business Combinations (“ASC 805”), uses the fair value concepts defined in ASC Topic 820, Fair Value Measurement (“ASC 820”). Fair value measurements can be highly subjective, and it is possible the application of reasonable judgment could result in alternative estimates using the same facts and circumstances. ASC 805 requires that assets acquired, liabilities assumed and noncontrolling interests in a business combination be recognized at fair value as of the Merger Date, with any excess purchase price allocated to goodwill; refer to Note 3.

The estimated fair values of the acquired assets, assumed liabilities and noncontrolling interests as of the Merger Date are based on estimates and assumptions of HGV. HGV will continue to finalize the valuations of the assets acquired, liabilities assumed and noncontrolling interests which are recorded upon (and, if necessary, after) the closing of the Transactions. The fair value allocation consists of preliminary estimates and analyses and is subject to change upon the finalization of the valuation analyses, and that change may be material.

For the purposes of preparing the unaudited pro forma condensed combined financial information, HGV has conducted a preliminary review of BVH’s accounting policies to identify significant differences, however, review is ongoing. Accordingly, HGV may identify additional differences in accounting policies or financial statement classification that may require adjustments to or reclassification of BVH’s results of operations, assets or liabilities to conform to HGV’s accounting policies and classifications. As a result, differences may be identified that, when conformed, could have a material impact on the unaudited pro forma condensed combined financial statements.

Note 2 – Consideration Transferred

The following table presents the preliminary estimate of the fair value of the consideration transferred for the Transactions:


(in millions, except share and per share amounts)
Number of Class A Shares issued and outstanding as of the Merger Date		12,504,138
Number of Class B Shares issued and outstanding as of the Merger Date		3,664,117
Number of Class A shares deliverable as equity awards as of the Merger Date		869,530

Total shares and related equity awards outstanding as of the Merger Date		17,037,785
Cash consideration to shareholders and equity award holders per share	$	75.00

Purchase price	$	1,278
Repayment of BVH Debt⁽¹⁾		285
Payment of Seller Transaction Fees⁽²⁾		28

Total Consideration Transferred	$	1,591

(1)	Reflects the balance of BVH’s debt repaid by HGV. Refer to Note 6 below for more information about debt repayment.

(2)	Reflects transaction-related expenses incurred by BVH but paid by HGV.

NOTES TO THE UNAUDITED PRO FORMA CONDENSED COMBINED FINANCIAL INFORMATION

Note 3 – Preliminary Fair Values of Assets Acquired and Liabilities Assumed

The following table presents our preliminary estimates of fair values of the assets that we acquired, the liabilities that we assumed and noncontrolling interests as of Merger Date. Our preliminary estimates are based on the information that was available as of the date of this filing. As discussed in Note 1 herein, the preliminary estimated allocation will be subject to further refinement, as new information becomes available, and may result in material changes. These changes, as discussed in Note 6 herein, will primarily relate to the allocation of consideration transferred and the fair value assigned to all tangible and intangible assets and liabilities acquired and identified. The final purchase price and goodwill could differ significantly from the current estimate, which could materially impact these unaudited pro forma condensed combined financial statements.


(in millions)
Assets acquired
Cash and cash equivalents	$	135
Restricted cash		55
Accounts receivable		19
Timeshare financing receivables		917
Inventory		490
Property and equipment		121
Operating lease right-of-use assets		17
Investments in unconsolidated affiliates		4
Intangible assets		660
Other assets		28

Total assets acquired	$	2,446

Liabilities assumed
Accounts payable, accrued expenses and other	$	146
Advanced deposits		2
Debt		102
Non-recourse debt		598
Operating lease liabilities		19
Deferred revenues		56
Deferred income tax liabilities		317

Total liabilities assumed	$	1,240

Net assets acquired	$	1,206
Total consideration transferred	$	1,591

Noncontrolling interests	$	149

Goodwill	$	534

The following shows a breakdown of the preliminary fair value of Intangible assets and the estimated useful lives:


(in millions, except useful lives)	Useful life		Fair value
Bass Pro marketing agreement		20	$	117
Trade names		7 to 8		30
Management contracts		16 to 19		436
Club member relationships		9 to 11		34
Other contract-related intangible assets		11 to 12		43

Total intangible assets acquired			$	660

Each intangible asset was valued utilizing forms of the income approach, with the trade name being valued utilizing a relief-from-royalty method and the other intangible assets utilizing multi-period excess earnings methods. The key assumptions in the relief-from-royalty method include the projection period, royalty rate, and discount rate. The key assumptions in the multi-period excess earnings method include the projection period, revenue from existing contracts/relationships, contributory asset charges, and discount rate.

NOTES TO THE UNAUDITED PRO FORMA CONDENSED COMBINED FINANCIAL INFORMATION

Note 4 – Reclassification Adjustments

The tables below represent the reclassification adjustments for certain financial statement line items, as reported by BVH under GAAP, to align with the expected presentation of the combined company, post-Transactions. Those balances not specifically referenced below have been presented within the equivalent HGV caption. In addition, the tables below include certain presentation only adjustments relating to the alignment of accounting policies. Some amounts may not match the BVH historical financial statements due to rounding.

BVH

BALANCE SHEET

RECLASSIFICATION ADJUSTMENTS


	As of
(in millions)	September 30, 2023
Accounts receivable, net of allowance for doubtful accounts, as reported	$	—
Other assets		19

Accounts receivable, net of allowance for doubtful accounts, as reclassified	$	19
Investments in unconsolidated affiliates, as reported	$	—
Other assets		4

Investments in unconsolidated affiliates, as reclassified	$	4
Other assets, as reported	$	36
Accounts receivable, net of allowance for doubtful accounts		(19	)
Investments in unconsolidated affiliates		(4	)
Deferred income		37
Prepaid expenses		18

Other assets, as reclassified	$	68
Accounts payable, accrued expenses and other, as reported	$	—
Accounts payable		26
Accrued liabilities and other		120

Accounts payable, accrued expenses and other, as reclassified	$	146
Accrued liabilities and other, as reported	$	122
Accounts payable, accrued expenses and other		(120	)
Advanced deposits		(2	)

Accrued liabilities and other, as reclassified	$	—
Advanced deposits, as reported	$	—
Accrued liabilities and other		2

Advanced deposits, as reclassified	$	2
Debt, net, as reported	$	—
Receivable-backed notes payable - recourse		15
Note payable to BBX Capital, Inc.		35
Note payable and other borrowings		169
Junior subordinated debentures		137

Debt, net, as reclassified	$	356

NOTES TO THE UNAUDITED PRO FORMA CONDENSED COMBINED FINANCIAL INFORMATION

BVH

STATEMENT OF OPERATIONS

RECLASSIFICATION ADJUSTMENTS


(in millions)	9 Months Ended September 30, 2023			Year Ended December 31, 2022
Sales of VOIs, as reported	$	433		$	536
Selling, general and administrative expenses		(6	)		(7	)

Sales of VOIs, net, as reclassified	$	427		$	529
Sales, marketing, brand and other fees, as reported	$	—		$	—
Fee-based sales commission revenue		41			73
Other fee-based services revenue		13			16
Other income, net		—			1
Cost of other fee-based services		2			9
Selling, general and administrative expenses		29			43

Sales, marketing, brand and other fees, as reclassified	$	85		$	142
Fee-based sales commission revenue, as reported	$	41		$	73
Sales, marketing, brand and other fees		(41	)		(73	)

Fee-based sales commission revenue, as reclassified	$	—		$	—
Other fee-based services, as reported	$	107		$	132
Sales, marketing, brand and other fees		(13	)		(16	)
Resort and club management		(83	)		(103	)
Rental and ancillary services		(11	)		(13	)

Other fee-based services, as reclassified	$	—		$	—
Rental and ancillary services, as reported	$	—		$	—
Other fee-based services revenue		11			13
Cost of other fee-based services		16			11
Selling, general and administrative expenses		5			7

Rental and ancillary services, as reclassified	$	32		$	31
Other income, net, as reported	$	3		$	2
Sales, marketing, brand and other fees		—			(2	)
Other gain (loss), net		(3	)		—

Other income, net, as reclassified	$	—		$	—
Cost of other fee-based services, as reported	$	46		$	58
Sales, marketing, brand and other fees		2			9
Rental and ancillary services		16			11
Sales and marketing expense		3			8
Resort and club management expense		(24	)		(31	)
Rental and ancillary services expense		(43	)		(54	)
Depreciation and amortization		—			(1	)

Cost of other fee-based services, as reclassified	$	—		$	—
Sales and marketing, as reported	$	—		$	—
Cost of other fee-based services		(3	)		(8	)
Selling, general and administrative expenses		372			498

Sales and marketing, as reclassified	$	369		$	490

NOTES TO THE UNAUDITED PRO FORMA CONDENSED COMBINED FINANCIAL INFORMATION

BVH

STATEMENT OF OPERATIONS

RECLASSIFICATION ADJUSTMENTS


(in millions)	9 Months Ended September 30, 2023			Year Ended December 31, 2022
Financing expense, as reported	$	—		$	—
Interest expense		24			18
Selling, general and administrative expenses		2			2

Financing expense, as reclassified	$	26		$	20
Depreciation and amortization, as reported	$	—		$	—
Cost of other fee-based services		—			1
Selling, general and administrative expenses		12			15

Depreciation and amortization, as reclassified	$	12		$	16
Interest expense, as reported	$	54		$	43
Financing expense		(24	)		(18	)

Interest expense, as reclassified	$	30		$	25
Selling, general and administrative, as reported	$	436		$	575
Sales of VOIs, net		(6	)		(7	)
Sales, marketing, brand and other fees		29			43
Rental and ancillary services		5			7
Sales and marketing expense		(372	)		(498	)
Financing expense		(2	)		(2	)
General and administrative		(74	)		(97	)
Depreciation and amortization		(12	)		(15	)
Licensing fee expense		(4	)		(6	)

Selling, general and administrative, as reclassified	$	—		$	—

NOTES TO THE UNAUDITED PRO FORMA CONDENSED COMBINED FINANCIAL INFORMATION

Note 5 – Financing Adjustments

In connection with the Merger, the Issuer obtained the $900 million New Term Loans and issued the $900 million Notes. The Financing is depicted in the unaudited pro forma condensed combined statements of operation as if outstanding for the respective period.

HGV used the entire net proceeds from the Financing to finance the Merger and repay certain of BVH’s debt facilities. This repayment is included in consideration transferred; refer to Note 2.

Reflects the Notes and New Term Loan Facility obtained by the Issuer, net of debt issuance costs and original issue discount on the New Term Loan Facility of 99.75, as follows:


(in millions)	As of September 30, 2023
Notes and New Term Loan Facility	$	1,800
Less: Debt issuance costs and debt discount		(36	)

Total	$	1,764

Reflects interest expense and related amortization of financing costs related to the Notes and the New Term Loan Facility, as follows:


(in millions)	9 Months Ended September 30, 2023			Year Ended December 31, 2022
Interest expense on the Notes and New Term Loan Facility	$	(101	)	$	(134	)
Amortization of debt issuance costs and debt discount	$	(4	)	$	(5	)

Total	$	(105	)	$	(139	)

Interest on the New Term Loan Facility is based on a variable benchmark rate. A 1/8 of a percentage point increase or decrease in the benchmark rate would result in a change in incremental annual interest expense of approximately $1 million.

Reflects the income tax effect of the unaudited pro forma financing adjustments, based on a blended foreign, federal, and state statutory rate of approximately 25%. The effective tax rate of the combined company could be significantly different than what is presented in these unaudited pro forma condensed combined financial statements depending on post-Merger activities, including legal entity restructuring, repatriation decisions, and the geographical mix of taxable income.

Note 6 – Merger Adjustments

Pro Forma Balance Sheet Adjustments

Reflects the consideration transferred to acquire BVH; refer to Note 2.

Reflects the fair value adjustment to Timeshare financing receivables, net using the income approach. Subsequent to the Merger, the Timeshare financing receivables acquired from BVH will fall within the scope of ASC Topic 326, Financial Instruments – Credit Losses (“ASC 326” or “CECL”). ASC 326 requires that for purchased financial assets with credit deterioration (“PCD”), a CECL allowance is recognized at the closing of the Merger with an offsetting adjustment to the amortized cost basis for any PCD loans acquired from the BVH loan portfolio. CECL also requires an additional allowance for non-PCD loans from the BVH portfolio which will be recognized through the income statement of HGV following the closing of the Merger. HGV is continuing to evaluate the loan detail of the acquired BVH timeshare financing receivables as well as the change in credit environment and credit quality since origination of those assets; this evaluation impacts the determination of which acquired timeshare financing receivables have experienced credit deterioration and are considered PCD. The impact of this analysis on our unaudited pro forma condensed combined financial statements could be material.

NOTES TO THE UNAUDITED PRO FORMA CONDENSED COMBINED FINANCIAL INFORMATION

Reflects the preliminary fair value adjustments to acquired assets and assumed liabilities and to recognize goodwill; refer to Note 3 for preliminary fair values.

Reflects the following fair value adjustments to Other assets:


(in millions)	As of September 30, 2023
Eliminate Bluegreen’s unamortized deferred issuance costs on extinguished debt	$	(1	)
Eliminate Bluegreen’s deferred incremental costs to obtain a contract		(39	)

Total adjustments to Other assets	$	(40	)

Reflects unrecorded transaction costs, net of tax.

Reflects the following adjustments to Debt, net:


(in millions)	As of September 30, 2023
Eliminate Bluegreen historical debt extinguished in connection with the Merger, net of debt issuance costs⁽¹⁾	$	(242	)
Adjust assumed debt to its Merger Date fair value	$	(12	)

Total adjustments to Debt, net	$	(254	)

(1)	Includes the outstanding balance of BVH’s Fifth Third Syndicated LOC, Fifth Third Syndicated Term Loan, Bluegreen Statutory Trust VI, and Note Payable to BBX Capital, Inc.

Record an increase to deferred tax liabilities based on the blended foreign, federal, and state statutory rate of approximately 25% multiplied by the fair value adjustments related to the assets acquired and liabilities assumed. These estimates are subject to further review by management of HGV and BVH, which may result in material adjustments to deferred taxes with an offsetting adjustment to Goodwill.

Reflects adjustment to eliminate BVH’s historical Common stock and Additional paid-in-capital.

Reflects the following adjustments to Accumulated retained earnings:


(in millions)	As of September 30, 2023
Eliminate Bluegreen’s Accumulated retained earnings	$	(169	)
Record HGV’s estimated transaction costs, expected to be incurred in connection with the Merger, net of tax		(74	)

Net adjustments to Accumulated retained earnings	$	(243	)

Pro Forma Income Statement Adjustments

aa.

Reflects amortization of the non-credit purchase premium adjustment to Timeshare financing receivables, net. HGV is continuing to evaluate the loan detail of the acquired BVH timeshare financing receivables as well as the change in credit environment and credit quality since origination of those assets; this evaluation impacts the determination of which acquired timeshare financing receivables have experienced more-than-insignificant credit deterioration and are considered PCD. The impact of this analysis on our unaudited pro forma condensed combined financial statements could be material.

bb.

Reflects unrecorded transaction costs.

cc.

Reflects the following adjustments to depreciation and amortization expense, related to the recognition of property and equipment and intangible assets at fair value, and is based on the useful life of such assets:

NOTES TO THE UNAUDITED PRO FORMA CONDENSED COMBINED FINANCIAL INFORMATION


(in millions)	9 Months Ended September 30, 2023			Year Ended December 31, 2022
New tangible asset depreciation	$	8		$	10
New intangible asset amortization	$	30		$	41
Elimination of historical Bluegreen depreciation	$	(6	)	$	(8	)

Net adjustment to Depreciation and amortization	$	32		$	43

The preliminary estimates of fair value and corresponding useful lives of our tangible and intangible assets are still being finalized. Accordingly, a 10% change in the valuation of these assets would cause a corresponding increase or decrease in the balance of goodwill and would increase or decrease the annual depreciation and amortization expense by $5 million.

dd.

Reflects the following adjustments to Interest expense, to reflect the elimination of interest expense related to the extinguishment of certain BVH historical indebtedness, as described within Note 2. Additionally, reflects the corresponding impacts of the fair value adjustment to the historical BVH debt assumed by HGV:


(in millions)	9 Months Ended September 30, 2023		Year Ended December 31, 2022
Amortization associated with decrease in assumed Bluegreen debt fair value, amortized over the remaining weighted average life	$	9	$	9
Elimination of historical interest and amortization of deferred issuance costs on Bluegreen debt extinguished		17		13

Net adjustment to Interest expense	$	26	$	22

ee.

Reflects the income tax effect of the unaudited pro forma adjustments, based on a blended foreign, federal, and state statutory rate of approximately 25%. The effective tax rate of the combined company could be significantly different than what is presented in these unaudited pro forma condensed combined financial statements depending on post-Merger activities, including legal entity restructuring, repatriation decisions, and the geographical mix of taxable income.

ff.

No additional shares were issued in connection with the Merger. Accordingly, the computation of basic and diluted earnings per share for the combined company is as follows:


(in millions, except per share amounts)	9 Months Ended September 30, 2023		Year Ended December 31, 2022
Pro forma net income attributable to the Company	$	210	$	215

Weighted-average shares outstanding
Weighted-average shares outstanding - basic		111.0		118.0
Weighted-average shares outstanding - diluted		112.6		119.6
Pro forma earnings per share - basic	$	1.89	$	1.82
Pro forma earnings per share - diluted	$	1.87	$	1.80

Document and Entity Information	Jan. 16, 2024
Cover [Abstract]
Amendment Flag	true
Entity Central Index Key	0001674168
Document Type	8-K/A
Document Period End Date	Jan. 16, 2024
Entity Registrant Name	Hilton Grand Vacations Inc.
Entity Incorporation State Country Code	DE
Entity File Number	001-37794
Entity Tax Identification Number	81-2545345
Entity Address, Address Line One	6355 MetroWest Boulevard
Entity Address, Address Line Two	Suite 180
Entity Address, City or Town	Orlando
Entity Address, State or Province	FL
Entity Address, Postal Zip Code	32835
City Area Code	(407)
Local Phone Number	613-3100
Written Communications	false
Soliciting Material	false
Pre Commencement Tender Offer	false
Pre Commencement Issuer Tender Offer	false
Security 12b Title	Common Stock, $0.01 par value per share
Trading Symbol	HGV
Security Exchange Name	NYSE
Entity Emerging Growth Company	false
Amendment Description	On January 17, 2024, Hilton Grand Vacations Inc. (“HGV” or the “Company”) filed a Current Report on Form 8-K (the “Original Form 8-K”) to report the completion of the previously announced acquisition of Bluegreen Vacations Holding Corporation., a Florida corporation (“BVH”) and its subsidiaries, pursuant to the Agreement and Plan of Merger, dated as of November 5, 2023, as amended (the “Merger Agreement”), by and among HGV, BVH and Heat Merger Sub, Inc., a Florida corporation and an indirect wholly-owned subsidiary of HGV (“Merger Sub”). Pursuant to the Merger Agreement, Merger Sub merged with and into BVH (the “Merger”), with BVH continuing as the surviving entity after the Merger as an indirect wholly-owned subsidiary of HGV. As permitted under Item 9.01 of Form 8-K, this Amendment No. 1 to the Current Report on Form 8-K amends and supplements the Original Form 8-K solely to provide the historical financial statements and the pro forma financial information required under Item 9.01 of Form 8-K within 71 calendar days after the date on which the Original Form 8-K was required to be filed.

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