Exhibit 99.1

LOGO

Shea Homes Reports Third Quarter 2014 Results

Walnut, California, November 5, 2014

Shea Homes, one of America’s largest private homebuilders, today reported results for the third quarter ended September 30, 2014.

Three Months Ended September 30, 2014 Highlights and Comparisons to Three Months Ended September 30, 2013

•

Net income attributable to Shea Homes was $33.7 million compared to $25.8 million, a 31% increase

•

Home sales orders were 460 compared to 434, a 6% increase

•

Active selling communities averaged 66 compared to 61

•

Home sales per community were 7.0, or 2.3 per month, compared to 7.1, or 2.4 per month, a 1% decrease

•

Cancellation rate was 17.6% compared to 16.7%

•

Backlog units were 1,198 compared to 1,124, a 7% increase

•

Backlog sales value was $703.0 million compared to $563.5 million, a 25% increase

•

Average selling price in backlog was $587,000 compared to $501,000, a 17% increase

•

Total revenues were $284.5 million compared to $238.3 million, a 19% increase

•

House revenues were $279.0 million* compared to $234.9 million*, a 19% increase

•

Homes closed were 482 compared to 493, a 2% decrease

•

Average selling price of homes closed was $579,000 compared to $477,000, a 21% increase

•

Gross margin was 23.9% compared to 23.4%

•

House gross margin was 24.3%* compared to 23.8%*

•

SG&A expenses were $31.9 million (11.2% of revenues) compared to $28.4 million (11.9% of revenues)

•

Income tax expense was $6.1 million compared to $1.3 million

•

Adjusted EBITDA was $54.2 million* compared to $43.6 million*

•

Cash and restricted cash at September 30, 2014 were $139.8 million compared to $145.4 million at September 30, 2013

Nine Months Ended September 30, 2014 Highlights and Comparisons to Nine Months Ended September 30, 2013

•

Net income attributable to Shea Homes was $73.8 million compared to $52.2 million, a 41% increase

•

Home sales orders were 1,618 compared to 1,467, a 10% increase

•

Active selling communities averaged 63 compared to 57

•

Home sales per community were 25.7, or 2.9 per month, for both periods

•

Cancellation rate was 14.9% compared to 13.9%

•

Total revenues were $720.7 million compared to $590.6 million, a 22% increase

•

House revenues were $707.9 million* compared to $578.8 million*, a 22% increase

•

Homes closed were 1,270 compared to 1,255, a 1% increase

•

Average selling price of homes closed was $557,000 compared to $461,000, a 21% increase

•

Gross margin was 24.0% compared to 23.0%

•

House gross margin was 24.3%* compared to 23.2%*

•

SG&A expenses were $89.8 million (12.5% of revenues) compared to $77.4 million (13.1% of revenues)

•

Income tax expense was $16.6 million compared to $1.7 million

•

Adjusted EBITDA was $135.7 million* compared to $100.3 million*

*	See “Reconciliation of Non-GAAP Financial Measures” beginning on page 9

Page 1

For the 2014 third quarter, new home sales orders were 460 compared to 434 in the 2013 third quarter, a 6% increase, primarily due to an increase in active selling communities in our Southern California and San Diego segments, which were partially offset by a decrease in active selling communities in our Northern California and Mountain West segments. For the 2014 third quarter, home sales per community were 2.3 per month compared to 2.4 per month in the 2013 third quarter, a 1% decrease, which was primarily attributable to a slower sales pace in our South West segment, and in particular, Arizona. At September 30, 2014, our backlog was 1,198 homes compared to 1,124 at September 30, 2013, a 7% increase driven in large part by the higher level of sales during the third quarter. For the 2014 third quarter, the Company’s cancellation rate was 17.6% compared to 16.7% in the 2013 third quarter.

For the 2014 third quarter, net income attributable to Shea Homes was $33.7 million compared to $25.8 million in the 2013 third quarter, primarily due to a $12.0 million increase in gross margin (from higher revenues and an improved gross margin percentage), a $2.2 million improvement in our reinsurance transaction results, and a $0.9 million increase in income from unconsolidated joint ventures. These improvements were partially offset by a $3.5 million increase in selling, general and administrative expense and a $4.8 million increase in income tax expense.

For the 2014 third quarter, total revenues were $284.5 million compared to $238.3 million in the 2013 third quarter, a 19% increase, and house revenues were $279.0 million* for the 2014 third quarter compared to $234.9 million* in the 2013 third quarter, a 19% increase. The increase in house revenues was primarily due to a 21% increase in average selling price to $579,000, a result of general home price increases in most of our segments, and a greater percentage of deliveries from our Southern California segment, which delivers more expensive homes, which were partially offset by a 2% decrease in homes closed from 493 homes in the 2013 third quarter compared to 482 homes in the 2014 third quarter.

For the 2014 third quarter, total gross margin was 23.9% compared to 23.4% in the 2013 third quarter, a 50 basis point (bp) increase, and house gross margin was 24.3%* for the 2014 third quarter compared to 23.8%* in the 2013 third quarter, a 50 bp increase. For both of the 2014 and 2013 third quarters, house gross margin excluding interest was 30.1%*.

For the 2014 third quarter, SG&A expenses were $31.9 million (11.2% of revenues) compared to $28.4 million (11.9% of revenues) in the 2013 third quarter. The $3.5 million increase was primarily due to higher volume related costs, such as advertising and model costs, and higher compensation expense. However, our SG&A rate was lower as we continue to leverage our fixed overhead costs over a larger revenue base.

For the 2014 third quarter, interest incurred was $17.1 million compared to $16.8 million in the 2013 third quarter, while interest expense for the 2014 third quarter was $0.2 million versus $0.1 million in the 2013 third quarter.

For the 2014 third quarter, net operating cash flows were $53.0 million compared to $(16.3) million in the 2013 third quarter. This improvement in operating cash flow was primarily due to lower land acquisition and land development spending, and increased cash receipts from home closings, partially offset by increased house construction costs. For the 2014 third quarter, land acquisition and land development costs were $57.8 million compared to $85.5 million in the 2013 third quarter; and cash receipts from home closings were $279.6 million for the 2014 third quarter compared to $234.9 million in the 2013 third quarter.

For the nine months ended September 30, 2014, net income attributable to Shea Homes was $73.8 million compared to $52.2 million in the nine months ended September 30, 2013, primarily due to a $37.2 million increase in gross margin (from higher revenues and an improved gross margin percentage), a $4.5 million decrease in interest expense, a $4.6 million improvement in our reinsurance transaction results, and a $2.9 million increase in income from unconsolidated joint ventures. These improvements were partially offset by a $12.4 million increase in SG&A expense and a $14.9 million increase in income tax expense.

For the nine months ended September 30, 2014, net operating cash flows were $(68.1) million compared to $(124.4) million in the nine months ended September 30, 2013. This decrease in cash used in operating activities was primarily due to increased cash receipts from home closings, partially offset by increased land acquisitions, land development and house construction costs. For the nine months ended September 30, 2014, land acquisition and land development spending was $274.3 million compared to $241.6 million in the nine months ended September 30, 2013; and cash receipts from home closings were $708.8 million for the nine months ended September 30, 2014 compared to $578.8 million in the nine months ended September 30, 2013.

Page 2

In January 2014, we acquired property from a related party under common control for $4.4 million cash, assumption of a $1.3 million net liability and estimated future revenue participation payments of $19.6 million. The $25.3 million of consideration was recorded as an equity distribution to our owners and, accordingly, resulted in a reduction in our total equity.

Earnings Conference Call

A conference call to discuss the Company’s 2014 third quarter results will be held at 1:00 p.m., Eastern time, November 6, 2014. The call will be broadcast live over the internet and can be accessed through the Company’s website at http://www.sheahomes.com/investor. The call will also be accessible by dialing (877) 474-9506 (domestic) or (857) 244-7559 (international); Passcode 15665368. The audio transmission with the slide presentation will be available on our website for replay 2 to 3 hours following the live broadcast. A replay of the presentation will be available by the end of the day and for 31 days thereafter.

About Shea Homes Limited Partnership

Shea Homes is one of the largest private homebuilders in the nation. Since its founding in 1968, Shea Homes has closed over 93,000 homes. Shea Homes builds homes with quality craftsmanship and designs that fit varied lifestyles and budgets. Over the past several years, Shea Homes has been recognized as a leader in customer satisfaction with a reputation for design, quality and service. For more about Shea Homes and its communities, visit www.sheahomes.com.

The preceding summary of the financial results of Shea Homes Limited Partnership and its subsidiaries does not purport to be complete and is qualified in its entirety by reference to the consolidated financial statements of Shea Homes Limited Partnership and its subsidiaries, available on our website at: http://www.sheahomes.com/investor.

This news release contains forward-looking statements and information relating to Shea Homes Limited Partnership and its subsidiaries, such as the strength or weakness of the housing market, which are based on the beliefs of, as well as assumptions made by, and information currently available to, our management. Words such as “anticipate,” “believe,” “estimate,” “expect,” “intend,” “plan,” “anticipate,” “appear” and “project” and similar expressions, as they relate to Shea Homes Limited Partnership and its subsidiaries are intended to identify forward-looking statements. These statements reflect our management’s current views with respect to future events, are not guarantees of future performance and involve risks and uncertainties that are difficult to predict. Further, certain forward-looking statements are based upon assumptions of future events that may not prove to be accurate. Such statements involve known and unknown risks, uncertainties, assumptions and other factors many of which are out of Shea Homes Limited Partnership’s and its subsidiaries’ control and are difficult to forecast and that may cause actual results to differ materially from those that may be described or implied. Such factors include but are not limited to: changes in employment levels; changes in the availability of financing for homebuyers; changes in interest rates; changes in consumer confidence; changes in levels of new and existing homes for sale; changes in demographic trends; changes in housing demand; changes in home prices; elimination or reduction of the tax benefits associated with owning a home; litigation risks associated with home warranty and construction defect and other claims; and various other factors, both referenced and not referenced above, and included in the Company’s filings with the Securities and Exchange Commission, including the Company’s Annual Report on Form 10-K and Quarterly Reports on Form 10-Q. Should one or more of these risks or uncertainties materialize, or should underlying assumptions prove incorrect, actual results, performance or achievements may vary materially from those described as anticipated, believed, estimated, expected, intended, planned or projected. Except as required by law, Shea Homes Limited Partnership and its subsidiaries neither intend nor assume any obligation to revise or update these forward-looking statements, which speak only as of their dates. Shea Homes Limited Partnership and its subsidiaries nonetheless reserve the right to make such updates from time to time by press release, periodic report or other method of public disclosure without the need for specific reference to this press release. No such update shall be deemed to indicate that other statements not addressed by such update remain correct or create an obligation to provide any other updates.

Contact: Andrew Parnes, CFO @ 909-594-0954 or andy.parnes@sheahomes.com

Page 3

KEY OPERATIONAL AND FINANCIAL DATA

(dollars in thousands)


	At or For the Three Months Ended September 30,								At or For the Nine Months Ended September 30,
	2014			2013			Change		2014			2013			Change
	(unaudited)			(unaudited)					(unaudited)			(unaudited)
Operating Data:
Revenues	$	284,489		$	238,309			19%	$	720,687		$	590,579			22%
Gross margin %		23.9	%		23.4	%		50 bp’s		24.0	%		23.0	%		100 bp’s
Homebuilding revenues^(a)*	$	284,370		$	238,079			19%	$	720,225		$	589,892			22%
Homebuilding gross margin %^(a)*		23.8	%		23.4	%		40 bp’s		24.0	%		22.9	%		110 bp’s
House revenues *	$	279,044		$	234,938			19%	$	707,898		$	578,817			22%
House gross margin*	$	67,757		$	55,905			21%	$	171,891		$	134,063			28%
House gross margin % *		24.3	%		23.8	%		50 bp’s		24.3	%		23.2	%		110 bp’s
Adjusted house gross margin % excluding interest in cost of sales *		30.1	%		30.1	%		—		30.5	%		30.0	%		50 bp’s
SG&A expenses	$	31,915		$	28,388			12%	$	89,793		$	77,425			16%
SG&A % of total revenues		11.2	%		11.9	%		(70) bp’s		12.5	%		13.1	%		(60) bp’s
Net income attributable to Shea Homes	$	33,749		$	25,824			31%	$	73,754		$	52,196			41%
Adjusted EBITDA ^(b)*	$	54,153		$	43,632			24%	$	135,677		$	100,341			35%
Interest incurred	$	17,112		$	16,780			2%	$	51,092		$	50,322			2%
Interest capitalized to inventory	$	16,068		$	15,925			1%	$	48,091		$	43,874			10%
Interest capitalized to investments in joint ventures	$	884		$	710			25%	$	2,565		$	1,473			74%
Interest expense	$	160		$	145			10%	$	436		$	4,975			-91%
Interest in cost of sales^(c)	$	17,228		$	15,110			14%	$	45,136		$	40,014			13%
Other Data ^(d):
Home sales orders (units)		460			434			6%		1,618			1,467			10%
Homes closed (units)		482			493			-2%		1,270			1,255			1%
Average selling price	$	579		$	477			21%	$	557		$	461			21%
Average active selling communities		66			61			8%		63			57			11%
Home sales orders per community		7.0			7.1			-1%		25.7			25.7			0%
Cancellation rate		17.6	%		16.7	%				14.9	%		13.9	%
Backlog at end of period (units)		1,198			1,124			7%
Backlog at end of period (est. sales value)	$	703,046		$	563,513			25%
Backlog at end of period (est. average selling price)	$	587		$	501			17%
Lots owned or controlled (units)		19,216			18,992			1%
Homes under construction (units)^(e)		1,253			1,122			12%

(a)

Homebuilding revenue and gross margin include house, land and other homebuilding activities.

(b)

See page 10 for a definition of Adjusted EBITDA and a reconciliation of Adjusted EBITDA to net income.

(c)

As previously capitalized to house and land.

(d)

Represents consolidated activity only; excludes unconsolidated joint ventures.

(e)

Homes under construction includes completed homes.

*	See “Reconciliation of Non-GAAP Financial Measures” beginning on page 9.

Page 4

CONDENSED CONSOLIDATED BALANCE SHEETS

(dollars in thousands)


	September 30,		December 31,
	2014		2013
	(unaudited)		(audited)
Assets
Cash and cash equivalents	$	139,282	$	206,205
Restricted cash		494		1,189
Accounts and other receivables, net		145,957		147,499
Receivables from related parties, net		23,152		32,350
Inventory		1,178,108		1,013,272
Investments in unconsolidated joint ventures		58,436		47,748
Other assets, net		58,216		57,070

Total assets	$	1,603,645	$	1,505,333

Liabilities and equity
Liabilities:
Notes payable	$	761,740	$	751,708
Other liabilities		346,701		308,168

Total liabilities		1,108,441		1,059,876
Total equity		495,204		445,457

Total liabilities and equity	$	1,603,645	$	1,505,333

CONDENSED CONSOLIDATED STATEMENTS OF INCOME

(dollars in thousands)


	Three Months Ended						Nine Months Ended
	September 30,						September 30,
	2014			2013			2014			2013
	(unaudited)			(unaudited)			(unaudited)			(unaudited)
Revenues	$	284,489		$	238,309		$	720,687		$	590,579
Cost of sales		(216,595	)		(182,461	)		(547,663	)		(454,769	)

Gross margin		67,894			55,848			173,024			135,810
Selling, general and administrative expenses		(31,915	)		(28,388	)		(89,793	)		(77,425	)
Interest expense		(160	)		(145	)		(436	)		(4,975	)
Other income, net		3,965			(208	)		7,489			486

Income before income taxes		39,784			27,107			90,284			53,896
Income tax expense		(6,053	)		(1,281	)		(16,555	)		(1,701	)

Net income		33,731			25,826			73,729			52,195
Less: Net loss (income) attributable to non-controlling interests		18			(2	)		25			1

Net income attributable to Shea Homes	$	33,749		$	25,824		$	73,754		$	52,196

Page 5

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(dollars in thousands)


	Three Months Ended						Nine Months Ended
	September 30,						September 30,
	2014			2013			2014			2013
	(unaudited)			(unaudited)			(unaudited)			(unaudited)
Operating activities
Net income	$	33,731		$	25,826		$	73,729		$	52,195
Adjustments to reconcile net income to net cash provided by (used in) operating activities:
Gain on reinsurance transaction		(4,001	)		(1,758	)		(6,175	)		(1,599	)
Depreciation and amortization expense		3,253			2,748			8,088			7,312
Distribution of earnings from unconsolidated joint ventures		4,125			—			9,425			6,000
Other operating activities, net		(1,172	)		(99	)		(4,671	)		(718	)
Changes in operating assets and liabilities:
Inventory		(14,192	)		(54,022	)		(169,983	)		(212,623	)
Payables and other liabilities		25,055			7,937			20,433			17,726
Other operating assets		6,228			3,085			1,032			7,258

Net cash provided by (used in) operating activities		53,027			(16,283	)		(68,122	)		(124,449	)
Investing activities
Proceeds from sale of investments		70			85			174			3,163
Net collections on promissory notes from related parties		1,126			2,606			9,215			3,037
Distributions from (investments in) unconsolidated joint ventures, net		2,552			(466	)		(2,426	)		(16,316	)
Other investing activities, net		—			500			—			—

Net cash provided by (used in) investing activities		3,748			2,725			6,963			(10,116	)
Financing activities
Net decrease in notes payable		(916	)		(1,241	)		(2,339	)		(1,993	)
Contributions from owners		—			—			945			—
Distributions to owners		—			—			(4,385	)		—
Other financing activities, net		15			—			15			—

Net cash provided by (used in) financing activities		(901	)		(1,241	)		(5,764	)		(1,993	)

Net increase (decrease) in cash and cash equivalents		55,874			(14,799	)		(66,923	)		(136,558	)
Cash and cash equivalents at beginning of period		83,408			157,997			206,205			279,756

Cash and cash equivalents at end of period	$	139,282		$	143,198		$	139,282		$	143,198

Page 6

SEGMENT OPERATING DATA

(dollars in thousands)

(unaudited)


	Three Months Ended September 30,								Nine Months Ended September 30,
	2014				2013				2014				2013
	Homes Closed		Avg. Selling Price		Homes Closed		Avg. Selling Price		Homes Closed		Avg. Selling Price		Homes Closed		Avg. Selling Price
Homes closed:
Southern California		146	$	818		48	$	830		311	$	841		179	$	748
San Diego		49		537		85		477		137		523		176		463
Northern California		86		676		138		513		252		640		315		481
Mountain West		83		440		98		450		200		459		229		442
South West		118		327		116		322		370		329		333		315
East		—		—		8		285		—		—		23		252

Total consolidated		482	$	579		493	$	477		1,270	$	557		1,255	$	461

Southern California		15	$	380		—	$	—		65	$	378		36	$	280
Northern California		12		532		3		572		34		518		12		552
Mountain West		28		354		21		346		51		385		34		371
East		15		281		18		261		46		275		38		256

Total unconsolidated joint ventures		70	$	375		42	$	326		196	$	380		120	$	325

Total		552	$	553		535	$	465		1,466	$	534		1,375	$	449


	Three Months Ended September 30,								Nine Months Ended September 30,
	2014				2013				2014				2013
	Home Sales Orders		Avg. Active Selling Communities		Home Sales Orders		Avg. Active Selling Communities		Home Sales Orders		Avg. Active Selling Communities		Home Sales Orders		Avg. Active Selling Communities
Home sales orders:
Southern California		101		11		107		7		407		10		211		5
San Diego		60		10		33		7		211		9		198		7
Northern California		82		13		84		14		301		14		305		13
Mountain West		102		13		72		15		340		12		306		15
South West		111		17		135		17		342		17		438		16
East		4		2		3		1		17		1		9		1

Total consolidated		460		66		434		61		1,618		63		1,467		57

Southern California		21		4		22		2		96		4		35		2
Northern California		11		4		11		4		40		4		33		3
Mountain West		38		5		25		5		78		5		59		5
East		33		3		19		2		99		3		61		2

Total unconsolidated joint ventures		103		16		77		13		313		16		188		12

Total		563		82		511		74		1,931		79		1,655		69

Page 7

SEGMENT OPERATING DATA (continued)

(unaudited)


	September 30,
	2014						2013
	Backlog Units		Estimated Backlog Sales Value		Estimated Avg. Selling Price		Backlog Units		Estimated Backlog Sales Value		Estimated Avg. Selling Price
Backlog:
Southern California		256	$	199,871	$	781		155	$	120,173	$	775
San Diego		174		114,712		659		129		67,494		523
Northern California		193		140,058		726		231		139,286		603
Mountain West		347		173,741		501		289		133,650		462
South West		211		67,918		322		318		102,163		321
East		17		6,746		397		2		747		374

Total consolidated		1,198	$	703,046	$	587		1,124	$	563,513	$	501

Southern California		57	$	27,197	$	477		26	$	9,077	$	349
Northern California		29		16,340		563		31		16,430		530
Mountain West		50		21,221		424		36		14,258		396
East		103		31,398		305		59		16,271		276

Total unconsolidated joint ventures		239	$	96,156	$	402		152	$	56,036	$	369

Total		1,437	$	799,202	$	556		1,276	$	619,549	$	486


	September 30,
	2014		2013
Lots owned or controlled:
Southern California		1,799		1,982
San Diego		572		687
Northern California		4,046		3,239
Mountain West		9,731		10,075
South West		2,303		2,242
East		765		767

Total consolidated		19,216		18,992
Unconsolidated joint ventures		4,963		4,733

Total		24,179		23,725

Lots by ownership type:
Owned for homebuilding		6,481		6,581
Owned and held for sale		3,442		3,435
Optioned or subject to contract for homebuilding		6,259		5,942
Optioned or subject to contract held for sale		3,034		3,034
Joint venture		4,963		4,733

Total		24,179		23,725

Page 8

RECONCILIATION OF NON-GAAP FINANCIAL MEASURES

(in thousands)

(unaudited)

In this earnings release, we utilize certain financial measures that, in each case, are not recognized under GAAP. We present these measures because we believe they and similar measures are useful to investors in evaluating a company’s operating performance and financing structure and, in certain cases, because they could be used to determine compliance with contractual covenants or as one measure of the Company’s ability to service debt and obtain financing. We also believe these measures facilitate the comparison of our operating performance and financing structure with other companies in our industry. Because these measures are not calculated in accordance with GAAP, they may not be comparable to other similarly titled measures of other companies and should not be considered in isolation or as a substitute for, or superior to, financial measures prepared in accordance with GAAP.

The following table reconciles revenues, cost of sales and gross margins, as reported and prepared in accordance with GAAP, to the non-GAAP measures house revenues, house cost of sales, house gross margin and house gross margin percentage, which exclude land sales and other transactions, and to adjusted house revenues, adjusted house cost of sales, adjusted house gross margin and adjusted house gross margin percentage, which add back interest in cost of sales.


	Three Months Ended September 30, 2014												Three Months Ended September 30, 2013
	Revenue			Cost of Sales			Gross Margin $			Gross Margin %			Revenue			Cost of Sales			Gross Margin $			Gross Margin %
Total	$	284,489		$	(216,595	)	$	67,894			23.9	%	$	238,309		$	(182,461	)	$	55,848			23.4	%
Less: Other		(119	)		—			(119	)		—			(230	)		—			(230	)		—

Homebuilding		284,370			(216,595	)		67,775			23.8	%		238,079			(182,461	)		55,618			23.4	%
Less: Land		(3,892	)		2,929			(963	)		24.7	%		(2,750	)		2,271			(479	)		17.4	%
Less: Other homebuilding		(1,434	)		2,379			945			—			(391	)		1,157			766			—

House	$	279,044		$	(211,287	)	$	67,757			24.3	%	$	234,938		$	(179,033	)	$	55,905			23.8	%

Add: Interest in house cost of sales ^(a)		—			16,256			16,256			—			—			14,733			14,733			—

Adjusted house excluding interest in cost of sales	$	279,044		$	(195,031	)	$	84,013			30.1	%	$	234,938		$	(164,300	)	$	70,638			30.1	%


	Nine Months Ended September 30, 2014												Nine Months Ended September 30, 2013
	Revenue			Cost of Sales			Gross Margin $			Gross Margin %			Revenue			Cost of Sales			Gross Margin $			Gross Margin %
Total	$	720,687		$	(547,663	)	$	173,024			24.0	%	$	590,579		$	(454,769	)	$	135,810			23.0	%
Less: Other		(462	)		—			(462	)		—			(687	)		—			(687	)		—

Homebuilding		720,225			(547,663	)		172,562			24.0	%		589,892			(454,769	)		135,123			22.9	%
Less: Land		(8,831	)		6,272			(2,559	)		29.0	%		(9,891	)		5,525			(4,366	)		44.1	%
Less: Other homebuilding		(3,496	)		5,384			1,888			—			(1,184	)		4,490			3,306			—

House	$	707,898		$	(536,007	)	$	171,891			24.3	%	$	578,817		$	(444,754	)	$	134,063			23.2	%

Add: Interest in house cost of sales ^(a)		—			43,678			43,678			—			—			39,447			39,447			—

Adjusted house excluding interest in cost of sales	$	707,898		$	(492,329	)	$	215,569			30.5	%	$	578,817		$	(405,307	)	$	173,510			30.0	%

(a)	Interest incurred is generally capitalized to inventory, then expensed in cost of sales as related units close.

Page 9

RECONCILIATION OF NON-GAAP FINANCIAL MEASURES (continued)

(in thousands)

(unaudited)

The following table calculates the non-GAAP measures of EBITDA and Adjusted EBITDA and reconciles those amounts to net income as reported and prepared in accordance with GAAP. Adjusted EBITDA means net income, plus distributions of earnings from joint ventures and non-guarantor subsidiaries, before (a) income taxes, (b) depreciation and amortization, (c) expensing of previously capitalized interest included in costs of sales and in equity in income (loss) from joint ventures, (d) interest expense, (e) impairment charges and project write-offs and abandonments, (f) realized gain on sale of investments, (g) deferred gain recognition from the amortization of deferred gain resulting from a series of novation and reinsurance transactions entered into by Partners Insurance Company, a wholly-owned subsidiary (“PIC Transaction”), and (h) income (loss) from joint ventures and non-guarantor subsidiaries. Other companies may calculate Adjusted EBITDA (or similarly titled measures) differently.


	Three Months Ended September 30,						Nine Months Ended September 30,
	2014			2013			2014			2013
Net income	$	33,731		$	25,826		$	73,729		$	52,195
Adjustments:
Income tax expense (benefit)		6,053			1,281			16,555			1,701
Depreciation and amortization expense		3,253			2,748			8,088			7,312
Interest in cost of sales		17,228			15,110			45,136			40,014
Interest in equity in income (loss) from joint ventures		106			244			497			829
Interest expense		160			145			436			4,975

EBITDA		60,531			45,354			144,441			107,026
Adjustments:
Project write-offs and abandonments		192			389			662			582
Realized gain on sale of investments		—			(5	)		—			(15	)
Deferred gain recognition from PIC Transaction		(4,001	)		(1,757	)		(6,175	)		(1,598	)
Income from joint ventures and non-guarantor subsidiaries		(3,384	)		(349	)		(8,561	)		(6,022	)
Distributions of earnings from joint ventures and non-guarantor subsidiaries		811			—			5,293			367
Other		4			—			17			1

Adjusted EBITDA	$	54,153		$	43,632		$	135,677		$	100,341

Page 10

Shea Homes Limited Partnership 8-K