PCYO Pure Cycle Corp

 

Pure Cycle announced today that its wholly owned subsidiary PCY Holdings, LLC (“PCY Holdings”), a Colorado limited liability company, entered into a contract for the Purchase and Sale of Real Estate (the “Purchase and Sale Contract”) with Lennar Colorado, LLC (“Lennar”). The Purchase and Sale Contract with Lennar provides that, upon the terms and subject to the conditions set forth in the Purchase and Sale Contract, PCY Holdings will sell, and the Builder will purchase, a certain number of platted residential lots at the Sky Ranch property, located in unincorporated Arapahoe County, Colorado, approximately four miles south of the Denver International Airport.

The closing of the transaction contemplated by the Purchase and Sale Contract is subject to customary closing conditions, including, among others, Lennar’s completion to its satisfaction of a title review and other due diligence of the property, the accuracy of the representations and warranties made by PCY Holdings contained in the Purchase and Sale Contract, and a commitment by the title company to issue to the Builder a title policy, subject to certain conditions. Lennar will have a 30-day due diligence period. Within seven business days of the execution of the Purchase and Sale Contract, Lennar is obligated to make earnest money deposits after the due diligence period and final approval of the entitlements for the property. If the Purchase and Sale Contract is terminated prior to the expiration of the due diligence period, then the earnest money deposit must be refunded to Lennar. Otherwise, the earnest money deposit or deposits will be applied to the payment of the purchase price of the lots at closing in accordance with a takedown schedule or be paid to PCY Holdings, subject to certain conditions. The purchase price for townhome lots will be $40,000 and the purchase price for 45’ single family lots will be $87,000.Pursuant to the Purchase and Sale Contract, PCY Holdings must use commercially reasonable efforts to obtain final approval of the entitlements for the property on or before nine months after the expiration of the due diligence period, but PCY Holdings will have the right to extend the date for obtaining final approval of the entitlements for up to six months after the initial nine-month period.

PCY Holdings has made customary representations and warranties in the Purchase and Sale Contract for a transaction of this nature. Certain of PCY Holdings’ representations and warranties are subject to knowledge and other similar qualifications and will survive for 12 months after each closing of a takedown of lots. The assertions embodied in the representations and warranties were made solely for purposes of the Purchase and Sale Contract between PCY Holdings and Lennar and may be subject to important qualifications and limitations agreed to by the parties in connection with the negotiated terms. Pure Cycle’s shareholders are not third-party beneficiaries under the Purchase and Sale Contract and should not rely on the representations and warranties or any descriptions thereof as characterizations of the actual state of facts or conditions of PCY Holdings or any of its affiliates.

The agreement with Lennar follows a Lot Development Agreement format under which payments are due upon satisfaction of certain milestones including platted lot delivery, completion of wet utilities, and the final payment due upon delivery of completed, ready-to build, finished lots.