First Quarter 2018 and Recent
Highlights
- Continued development at Newhall Ranch.
On track for land deliveries at the end of 2019.
- Milestone approvals secured for
additional commercial entitlements in San Francisco while moving
forward with infrastructure at Candlestick.
- Sale of 33 acres for $166 million with
approval to build 536 homes in the Great Park Neighborhoods.
- Company maintains strong credit
profile, including total liquidity of $902 million and debt to
total capitalization of 24.1% at March 31, 2018.
Five Point Holdings, LLC (“Five Point” or the “Company”)
(NYSE:FPH), an owner and developer of large mixed-use,
master-planned communities in California, today reported financial
results for the first quarter of 2018. Emile Haddad, Chairman and
CEO, commented that “Five Point has benefited from a strong start
to the year driven by continued operational progress. Economic
tailwinds in the form of sustained job growth and limited housing
supply in our core markets suggest that the value of our land
portfolio will steadily appreciate. Our ongoing efforts to develop
Newhall Ranch have continued. As a result, we believe that we are
positioned to generate revenues in that community sometime toward
the end of 2019. In San Francisco, the receipt of certain milestone
approvals leaves us on track to acquire another two million square
feet of commercial entitlements before the end of 2018. We continue
moving forward with infrastructure at Candlestick Point. At the
Shipyard, we are having discussions with the City of San Francisco
as it relates to the timing of land conveyance. In the Great Park
Neighborhoods, buyer demand at Cadence Park, which opened its first
phase in March, has been brisk. We have also been active since the
end of the quarter. In April, the Great Park Venture made a cash
distribution of $235 million to holders of legacy interests. In
May, the Great Park Venture completed the sale of 33 acres for $166
million, or $5 million per acre, in the Great Park Neighborhoods.
This transaction further validates our view of the residual value
of our assets. We remain firmly committed to maximizing the value
of our assets while maintaining a strong financial position.”
First Quarter 2018 Consolidated
Results
Liquidity and Capital Resources
As of March 31, 2018, total liquidity of $902 million was
comprised of cash and cash equivalents totaling $778 million and
borrowing availability of $124 million under our $125 million
unsecured revolving credit facility. Total capital was $1.9
billion, reflecting $3.0 billion in assets and $1.1 billion in
liabilities.
Results of Operations
Revenues. Revenues of $15.0 million for the three months
ended March 31, 2018 were primarily generated from management
services. Our adoption of new revenue accounting guidance on
January 1, 2018 has resulted in accelerated recognition of revenue
that reflects the impact of variable incentive compensation in our
development management agreement with the Great Park Venture.
Historically, revenue was not recognized until contingencies
related to the amount and timing of the consideration were
resolved. Under new revenue guidance, however, we will recognize
the revenue that we expect to receive over the projected contract
term and as to which a significant reversal is unlikely to
occur.
Other income. Other income for the three months ended
March 31, 2018 consisted primarily of a $6.7 million gain on
the sale of the Tournament Players Club at Valencia golf course in
our Newhall segment, in addition to interest income earned on our
cash and cash equivalents during the three-month period.
Equity in loss from unconsolidated entities. Equity in
loss from unconsolidated entities was $3.6 million for the three
months ended March 31, 2018. The loss was primarily due to our
proportionate share of the Great Park Venture's net loss during the
quarter of $14.7 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 $4.1
million. Equity in earnings from our 75% interest in the Gateway
Commercial Venture was $0.4 million for the three months ended
March 31, 2018.
Selling, general, and administrative. Selling, general,
and administrative expenses were $28.6 million for the three months
ended March 31, 2018 and were largely comprised of employee
related costs, including $3.4 million in share based compensation
expense.
Net loss. Consolidated net loss for the quarter was $14.3
million. The net loss attributable to noncontrolling interests
totaled $9.1 million, resulting in a net loss attributable to the
Company of $5.2 million.
Segment Results
Newhall Segment. We are continuing our land development
activities with a focus on Mission Village and expect to start
delivering homesites to builders in late 2019. Mission Village is
approved for up to 4,055 homesites and approximately 1.6 million
square feet of commercial development.
Total segment revenues were $2.8 million for the first quarter
of 2018 and were derived from agricultural leasing and the sale of
citrus crops. Selling, general, and administrative expenses were
$4.1 million for the three months ended March 31, 2018.
San Francisco Segment. We are continuing our land
development activities at Candlestick Point. We are also working
with the City of San Francisco to increase the total amount of
commercial entitlements at The San Francisco Shipyard and
Candlestick Point by over two million square feet. We recently
received milestone approvals for these new entitlements from
several agencies, including the Planning Commission, the
Metropolitan Transportation Authority, and the Office of Community
Investment and Infrastructure. As a result, we anticipate receiving
final approval for increased commercial square footage sometime
before the end of 2018.
Total segment revenues were $2.0 million for the first quarter
of 2018. Revenues during the quarter were mostly attributable to
fees generated from management agreements. Selling, general, and
administrative expenses were $6.4 million for the first
quarter.
Great Park Segment. A favorable operating environment has
resulted in solid sales performance at the Great Park
Neighborhoods. Parasol Park is substantially sold out, and sales at
Cadence Park, the Great Park Venture's newest neighborhood, which
opened its first phase in March, are off to a good start.
Total segment revenues were $10.5 million for the first of
quarter 2018. Revenues were mainly attributable to management
services that we provided to the Great Park Venture. The Great Park
Segment's net loss for the quarter was $11.4 million, which
included a net loss of $14.7 million attributed to the Great Park
Venture that is not consolidated in our financial statements. After
making adjustments to account for a difference in investment basis,
the Company’s equity in loss from the Great Park Venture was $4.1
million for the three months ended March 31, 2018.
Commercial Segment. For the three months ended
March 31, 2018, the commercial segment recognized $6.8 million
in revenues from a triple net lease with Broadcom and property
management services provided by us. Segment expenses were mostly
comprised of depreciation, amortization and interest expense
totaling $5.1 million. Segment net income was $0.7 million. Our
share of equity in income from the Gateway Commercial Venture
totaled $0.4 million for the three months ended March 31,
2018.
Conference Call
Information
In conjunction with this release, Five Point will host a
conference call today, Monday, May 14, 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 live Internet audio webcast of the conference call
that will be available on the Five Point website at
ir.fivepoint.com. 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 13680073. The telephonic replay will be
available until 11:59 p.m. Eastern Time on May 28, 2018.
About Five Point
Five Point, headquartered in Aliso Viejo, California,
designs and develops large mixed-use, master-planned communities in
Orange County, Los Angeles County, and San Francisco
County that combine residential, commercial, retail,
educational, and recreational elements with public amenities,
including civic areas for parks and open space. Five Point’s
communities include the Great Park Neighborhoods® in Irvine,
Newhall Ranch® near Valencia, and The San Francisco
Shipyard/Candlestick Point in the City of San Francisco. These
communities are designed 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 Annual Report on Form 10-K, 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
CONDENSED CONSOLIDATED STATEMENTS OF
OPERATIONS
(In thousands)
(Unaudited)
Three Months EndedMarch 31, 2018
2017 REVENUES: Land sales $ 49 $ 465 Land sales—related
party 221 84,271 Management services—related party 11,767 5,470
Operating properties 2,930 2,097 Total revenues
14,967 92,303 COSTS AND EXPENSES: Land sales 38
80,447 Management services 7,089 2,649 Operating properties 2,390
2,280 Selling, general, and administrative 28,596 27,198
Total costs and expenses 38,113 112,574 OTHER
INCOME: Adjustment to payable pursuant to tax receivable agreement
1,928 — Interest income 2,747 — Miscellaneous 7,781 23
Total other income 12,456 23 EQUITY IN LOSS
FROM UNCONSOLIDATED ENTITIES (3,607 ) (2,876 ) LOSS BEFORE INCOME
TAX BENEFIT (14,297 ) (23,124 ) INCOME TAX BENEFIT — —
NET LOSS (14,297 ) (23,124 ) LESS NET LOSS ATTRIBUTABLE TO
NONCONTROLLING INTERESTS (9,065 ) (15,282 ) NET LOSS ATTRIBUTABLE
TO THE COMPANY $ (5,232 ) $ (7,842 )
FIVE POINT HOLDINGS, LLC
CONDENSED CONSOLIDATED BALANCE
SHEETS
(In thousands, except shares)
(Unaudited)
March 31, 2018 December 31, 2017
ASSETS INVENTORIES $ 1,471,615 $ 1,425,892 INVESTMENT IN
UNCONSOLIDATED ENTITIES 529,467 530,007 PROPERTIES AND EQUIPMENT,
NET 29,417 29,656 ASSETS HELD FOR SALE, NET — 4,519 INTANGIBLE
ASSET, NET—RELATED PARTY 104,653 127,593 CASH AND CASH EQUIVALENTS
778,242 848,478 RESTRICTED CASH AND CERTIFICATES OF DEPOSIT 1,467
1,467 RELATED PARTY ASSETS 44,836 3,158 OTHER ASSETS 8,247
7,585 TOTAL $ 2,967,944 $ 2,978,355
LIABILITIES AND CAPITAL LIABILITIES: Notes payable, net $
561,062 $ 560,618 Accounts payable and other liabilities 164,879
167,620 Liabilities related to assets held for sale — 5,363 Related
party liabilities 177,209 186,670 Payable pursuant to tax
receivable agreement 152,855 152,475 Total
liabilities 1,056,005 1,072,746 CAPITAL: Class A
common shares; No par value; Issued and outstanding:
2018—64,268,027 shares; 2017—62,314,850 shares Class B common
shares; No par value; Issued and outstanding: 2018—81,418,003
shares; 2017—81,463,433 shares Contributed capital 535,900 530,015
Retained earnings 63,293 57,841 Accumulated other comprehensive
loss (2,474 ) (2,455 ) Total members’ capital 596,719 585,401
Noncontrolling interests 1,315,220 1,320,208 Total
capital 1,911,939 1,905,609 TOTAL $ 2,967,944
$ 2,978,355
FIVE POINT HOLDINGS, LLC
SUPPLEMENTAL DATA
(In thousands)
(Unaudited)
March 31, 2018 Cash and cash equivalents $ 778,242 Borrowing
capacity (1) 124,000 Total liquidity $ 902,242
(1) As of March 31, 2018, 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.
March 31, 2018 Debt (1) $ 607,692 Total capital
1,911,939 Total capitalization $ 2,519,631 Debt to
total capitalization 24.1 %
(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/20180514006318/en/
Five Point Holdings, LLCInvestor Relations:Bob Wetenhall,
949-349-1087bob.wetenhall@fivepoint.comorMedia:Steve Churm,
949-349-1034steve.churm@fivepoint.com
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