Fourth Quarter 2017 and Recent
Highlights
- Cash and cash equivalents of
$848.5 million at December 31, 2017.
- No outstanding cash borrowings under
$125 million revolving credit facility.
- Issued $500 million of 7.875% unsecured
senior notes due 2025.
- Tax Receivable Agreement liability was
reduced by $105.6 million as a result of the recent tax reform
legislation.
Five Point Holdings, LLC (“Five Point” or "the Company")
(NYSE:FPH), an owner and developer of mixed-use master-planned
communities in California, today reported fourth quarter 2017
financial results.
“2017 was a transformational year for Five Point in which we
became a public company with sufficient liquidity to fund the
company’s land development needs while also making significant
progress at our communities,” said Emile Haddad, Chairman and CEO
of Five Point. “The combination of vibrant job growth and limited
housing supply in our core markets bodes well for our land
portfolio heading into 2018. Buyer demand at the Great Park
Neighborhoods in Irvine remains strong and we continue to move
forward with our development program at Newhall Ranch in Los
Angeles County. In San Francisco, our design and development
program for residential, retail, and commercial uses continues to
be refined with a focus on the Candlestick portion of the
community. We remain committed to maintaining a strong balance
sheet while pursuing our twin goals of investing in long-term land
assets that can generate substantial free cash flow while
developing a commercial portfolio of income producing
properties.”
Fourth Quarter 2017 Consolidated
Results
Liquidity and Capital Resources
As of December 31, 2017, we had $848.5 million of cash and cash
equivalents and no cash borrowings under our operating company’s
$125 million unsecured revolving credit facility. Total
capital of Five Point was $1.9 billion as of December 31,
2017, reflecting $3.0 billion in assets and $1.1 billion
in liabilities.
In November 2017, the Operating Company issued $500.0 million of
7.875% unsecured senior notes due 2025 in a private placement. We
intend to use the net proceeds of the offering for general
corporate purposes, which may include funding development
activities at our communities.
Results of operations
Revenues. Revenues were $22.3 million for the three
months ended December 31, 2017 primarily generated from the sale of
remnant parcels in Sacramento and Los Angeles County in addition to
management services revenue and collection of various builder fees
attributable to previous land sales. There were no land sales at
Newhall Ranch or The San Francisco Shipyard and Candlestick Park
during the fourth quarter 2017.
Other income. For the three months ended December 31,
2017, the Company recognized $105.6 million of other income
resulting from an adjustment to reduce the payable pursuant to our
tax receivable agreement, primarily as a result of the Tax Cuts and
Jobs Act of 2017's reduction in the corporate tax rate.
Equity in loss from unconsolidated entities. Equity in
loss from unconsolidated entities was $11.8 million for the three
months ended December 31, 2017. The loss was primarily due to our
proportionate share of the Great Park Venture's net loss during the
quarter of $77.4 million. After adjusting for amortization and
accretion of the basis difference, our equity in loss from our
37.5% percentage interest in the Great Park Venture was $12.0
million. Equity in earnings from our 75% interest in the Gateway
Commercial Venture was $0.2 million for the three months ended
December 31, 2017.
Selling, general, and administrative. Selling, general,
and administrative expenses were $29.7 million for the three months
ended December 31, 2017 and were largely comprised of employee
related costs, including $4.5 million in share based compensation
expense.
Net income (loss). Consolidated net income for the
quarter was $81.9 million primarily due to the adjustment to the
payable associated with the tax receivable agreement. The net loss
attributable to Non-Controlling Interests totaled $13.4 million. As
a result, net income attributable to the company was $95.3
million.
Segment Results
Newhall Segment – We are continuing land development
activities and expect to start deliveries in Mission Village in
late 2019. Mission Village is approved for up to 4,055 homesites
and approximately 1.6 million square feet of commercial
development. Although we entered into a settlement with key
national and state environmental and Native American organizations
in September 2017, we are still involved in related lawsuits with
two local environmental groups that did not join the settlement
regarding the approvals and permits that have been issued for
development areas within Newhall Ranch.
Total revenues were $15.8 million for the fourth quarter
2017. In October 2017, we sold the remaining 153 residential
homesites on approximately 24 acres at our property in Sacramento,
California for gross proceeds of $7.2 million. Additional land sale
revenues in the period represent recognition of deferred revenue,
and collection of various builder fees related to prior period land
sales. Selling, general, and administrative expenses were
$5.7 million for the fourth quarter.
San Francisco Segment – We are continuing our land
development activities at Candlestick and Hunter’s Point. We are
working with the City of San Francisco to increase the total amount
of commercial square footage entitlement at Shipyard/Candlestick by
over 2 million square feet. We currently expect to receive
approval for the increased entitlement in 2018.
Total revenues were $1.9 million for the fourth quarter
2017. Revenues during the quarter are mostly attributable to fees
generated from our management agreements in which we provide
certain management services to ventures in which Lennar is an
investor. There were no land sales at The San Francisco Shipyard
and Candlestick Point during the three months ended December 31,
2017. Selling, general, and administrative expenses were
$7.5 million for the fourth quarter.
Great Park Segment – As of December 31, 2017, based on
reports we receive from third party homebuilders, the percentage of
homes sold in Parasol Park, the only active development area within
the Great Park Neighborhoods was 78%. As of March 2018, Parasol
Park is now more than 90% sold out, and the Great Park Venture
opened a new development area in early March where we previously
delivered 1,007 homesites to eight builders.
Total segment revenues were $19.8 million for the fourth quarter
2017, partially resulting from the recognition of deferred land
sale revenues from prior period land sales in addition to the
collection of builder marketing fees that were also recognized. The
Great Park segment's net loss for the quarter was $75.9 million,
mostly attributable to the Great Park Venture’s recognition and
accrual of incentive compensation management fee expense for
services provided by the Great Park Venture’s managers.
We do not consolidate the financial results of the Great Park
Venture but instead account for our 37.5% percentage interest using
the equity method. After taking into account the investment basis
difference adjustment, the Company’s investment in the Great Park
Venture decreased by $12.0 million for the three months ended
December 31, 2017.
Commercial Segment – For the three months ended December
31, 2017, our commercial segment recognized $6.3 million in
revenues from the triple net lease with Broadcom and our property
management services. Expenses were mostly comprised of
depreciation, amortization and interest expense totaling
$4.5 million. Our segment net income was $0.6 million and
our share of equity in income from the Gateway Commercial Venture
totaled $0.2 million for the three months ended December 31,
2017.
Corporate Developments
On March 21, 2018, we appointed Lynn Jochim, formerly our
Executive Vice President, and Kofi Bonner, formerly our Regional
President-Northern California, to be our Co-Chief Operating
Officers, and we appointed Greg McWilliams, formerly our Regional
President-Southern California, to be our Chief Policy Officer.
Conference Call
Information
In conjunction with this release, Five Point will host a
conference call today, Thursday, March 29, 2018 at 5:00 pm Eastern
Time. Emile Haddad, Chairman, President and Chief Executive
Officer, and Erik Higgins, Vice President and Chief Financial
Officer, will host the call. Interested investors and other parties
can listen to a webcast of the live conference call by logging onto
the Investor Relations section of the Company’s website at
ir.fivepoint.com. The online replay will be available on the same
website immediately following the call. The conference call can
also be accessed by dialing (877) 425-9470 (domestic) or (201)
389-0878 (international). A telephonic replay will be available
approximately two hours after the call by dialing (844) 512-2921,
or for international callers, (412) 317-6671. The passcode for the
live call and the replay is 13677847. The replay will be available
until 11:59 p.m. Eastern Time on April 12, 2018.
About FivePoint
FivePoint, headquartered in Aliso Viejo, California, designs and
develops mixed-use, master-planned communities in coastal
California. FivePoint is developing vibrant and sustainable
communities in Orange County, Los Angeles County, and San Francisco
County that will offer homes, commercial, retail, educational, and
recreational elements as well as civic areas, parks, and open
spaces. FivePoint’s three communities are: Great Park
Neighborhoods® in Irvine, Newhall Ranch® near Valencia in Los
Angeles County, and The San Francisco Shipyard/Candlestick Point in
the City of San Francisco. The communities are planned to include
approximately 40,000 residential homes and approximately
21 million square feet of commercial space.
Forward-Looking
Statements
This press release contains forward-looking statements that are
subject to risks and uncertainties. These statements concern
expectations, beliefs, projections, plans and strategies,
anticipated events or trends and similar expressions concerning
matters that are not historical facts. When used, the words
“anticipate,” “believe,” “expect,” “intend,” “may,” “might,”
“plan,” “estimate,” “project,” “should,” “will,” “would,” “result”
and similar expressions that do not relate solely to historical
matters are intended to identify forward-looking statements. This
press release may contain forward-looking statements regarding: our
expectations of our future revenues, costs and financial
performance; future demographics and market conditions in the areas
where our communities are located; the outcome of pending
litigation and its effect on our operations; the timing of our
development activities; and the timing of future real estate
purchases or sales. We caution you that any forward-looking
statements included in this press release are based on our current
views and information currently available to us. Forward-looking
statements are subject to risks, trends, uncertainties and factors
that are beyond our control. Some of these risks and uncertainties
are described in more detail in our filings with the SEC, including
our quarterly reports on Form 10-Q, under the heading “Risk
Factors.” Should one or more of these risks or uncertainties
materialize, or should underlying assumptions prove incorrect,
actual results may vary materially from those anticipated,
estimated or projected. We caution you therefore against relying on
any of these forward-looking statements. While forward-looking
statements reflect our good faith beliefs, they are not guarantees
of future performance. They are based on estimates and assumptions
only as of the date hereof. We undertake no obligation to update or
revise any forward-looking statement to reflect changes in
underlying assumptions or factors, new information, data or
methods, future events or other changes, except as required by
applicable law.
FIVE POINT HOLDINGS, LLC
SELECTED CONDENSED CONSOLIDATED
STATEMENTS OF OPERATIONS
(In thousands)
(Unaudited)
Three Months EndedDecember 31, Twelve
Months EndedDecember 31, 2017
2016 2017 2016 REVENUES: Land
sales $ 9,398 $ 4,820 $ 17,257 $ 9,561 Land sales—related party
2,005 549 87,556 2,512 Management services—related party 6,100
7,956 22,517 16,856 Operating properties 4,760 3,204
12,101 10,439 Total revenues 22,263 16,529
139,431 39,368 COSTS AND EXPENSES: Land sales
904 1,199 84,659 356 Management services 2,913 5,174 10,791 9,122
Operating properties 3,143 2,845 11,450 10,656 Selling, general,
and administrative 29,738 25,899 122,274 120,667 Management
fees—related party — — — 1,716 Total
costs and expenses 36,698 35,117 229,174
142,517 OTHER INCOME: Adjustment to payable pursuant to tax
receivable agreement 105,586 — 105,586 — Interest income 2,577
— 2,577 — Total other income 108,163
— 108,163 — EQUITY IN (LOSS) EARNINGS
FROM UNCONSOLIDATED ENTITIES (11,808 ) (877 ) 5,776 (1,356 )
INCOME (LOSS) BEFORE INCOME TAX BENEFIT 81,920 (19,465 ) 24,196
(104,505 ) INCOME TAX BENEFIT — 3,432 — 7,888
NET INCOME (LOSS) 81,920 (16,033 ) 24,196 (96,617 ) LESS NET
LOSS ATTRIBUTABLE TO NONCONTROLLING INTERESTS (13,407 ) (12,946 )
(49,039 ) (63,351 ) NET INCOME (LOSS) ATTRIBUTABLE TO THE COMPANY $
95,327 $ (3,087 ) $ 73,235 $ (33,266 )
FIVE POINT HOLDINGS, LLC
CONDENSED CONSOLIDATED BALANCE
SHEETS
(In thousands, except shares)
(Unaudited)
December 31, 2017 2016
ASSETS INVENTORIES $ 1,425,892 $ 1,360,451 INVESTMENT IN
UNCONSOLIDATED ENTITIES 530,007 417,732 PROPERTIES AND EQUIPMENT,
NET 29,656 34,409 ASSETS HELD FOR SALE, NET 4,519 — INTANGIBLE
ASSET, NET—RELATED PARTY 127,593 127,593 CASH AND CASH EQUIVALENTS
848,478 62,304 RESTRICTED CASH AND CERTIFICATES OF DEPOSIT 1,467
2,343 MARKETABLE SECURITIES—HELD TO MATURITY — 20,577 RELATED PARTY
ASSETS 3,158 82,411 OTHER ASSETS 7,585 6,762 TOTAL $
2,978,355 $ 2,114,582
LIABILITIES AND CAPITAL
LIABILITIES: Notes payable, net $ 560,618 $ 69,387 Accounts payable
and other liabilities 167,620 114,080 Liabilities related to assets
held for sale 5,363 — Related party liabilities 186,670 221,157
Payable pursuant to tax receivable agreement 152,475 201,845
Total liabilities 1,072,746 606,469 CAPITAL:
Class A common shares; No par value; Issued and outstanding:
2017—62,314,850 shares; 2016—37,426,008 shares Class B common
shares; No par value; Issued and outstanding: 2017—81,463,433
shares; 2016—74,320,576 shares Contributed capital 530,015 260,779
Retained earnings (accumulated deficit) 57,841 (15,394 )
Accumulated other comprehensive loss (2,455 ) (2,469 ) Total
members’ capital 585,401 242,916 Noncontrolling interests 1,320,208
1,265,197 Total capital 1,905,609 1,508,113
TOTAL $ 2,978,355 $ 2,114,582
FIVE POINT HOLDINGS, LLC
SUPPLEMENTAL DATA
(In thousands)
(Unaudited)
December 31, 2017 Cash and cash equivalents $ 848,478
Borrowing capacity (1) 124,000 Total liquidity $ 972,478 (1)
As of December 31, 2017, no funds have been drawn on
the Company's $125.0 million Revolving Credit Facility; however,
letters of credit of $1.0 million are issued and outstanding under
the Revolving Credit Facility, thus reducing the available capacity
by the outstanding letters of credit amount.
December 31, 2017 Debt (1) $ 607,692 Total capital 1,905,609
Total capitalization $ 2,513,301 Debt to total capitalization 24.2%
(1) For purposes of this calculation, debt
consists of (i) the outstanding principal on the Company's 7.875%
senior notes due 2025 of $500.0 million, (ii) a settlement note
with an outstanding principal of $5.0 million, and (iii) the
Company's related party EB-5 reimbursement obligation of $102.7
million.
View source
version on businesswire.com: https://www.businesswire.com/news/home/20180329006199/en/
Five Point Holdings, LLCInvestor Relations:Bob Wetenhall,
949-349-1087bob.wetenhall@fivepoint.comorMedia:Steve Churm,
949-349-1034steve.churm@fivepoint.com
Five Point (NYSE:FPH)
Historical Stock Chart
From Aug 2024 to Sep 2024
Five Point (NYSE:FPH)
Historical Stock Chart
From Sep 2023 to Sep 2024