Fourth Quarter 2018
- Continued land development activity at
Newhall in Los Angeles County positions the company to deliver
homesites and generate revenue in 2019.
- Company maintains strong credit
profile, including total liquidity of $619.7 million and debt to
total capitalization of 24.6% at December 31, 2018.
Recent Highlights
- Continued infrastructure development at
Candlestick. Revised operational plan on the prior mall property
underway envisions a mixed-use office and residential
community.
- Sale of 41 acres for approximately $218
million with approval to build 518 homes comprising seven different
products in the Great Park, some of which will close in phased
takedowns.
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 its fourth
quarter and full-year 2018 results. Emile Haddad, Chairman and CEO,
said, “We are pleased by the steady operational progress that we
made in 2018 and expect it to continue in 2019. Ongoing land
development activity at Valencia in Los Angeles County
continues. Despite inclement weather, we anticipate delivering
homesites and generating revenue sometime toward the end of this
year.”
“2019 is off to a great start. In San Francisco, infrastructure
development at Candlestick continues. We are no longer pursuing the
construction of a regional mall but instead are working closely
with the City on a plan that envisions an integrated office and
residential mixed-use development that encompasses lifestyle retail
and entertainment. Finally, at the Great Park, we sold 41 acres for
approximately $218 million. Separately, home buyer activity, as
reported by our guest builders, has remained consistent with normal
seasonal patterns. The combination of steady operational progress,
a healthy economy supported by seven years of consistent job
growth, and a pronounced imbalance between supply and demand in our
markets bodes well for 2019.”
Fourth Quarter 2018 Consolidated
Results
Liquidity and Capital Resources
As of December 31, 2018, total liquidity of $619.7 million
was comprised of cash and cash equivalents totaling $495.7 million
and borrowing availability of $124.0 million under our
$125.0 million unsecured revolving credit facility. Total
capital was $1.8 billion, reflecting $2.9 billion in assets and
$1.1 billion in liabilities.
Results of Operations for the Three Months Ended December 31,
2018
Revenues. Revenues of $7.9 million for the three months
ended December 31, 2018 were primarily generated from
management services.
Equity in loss from unconsolidated entities. Equity in
loss from unconsolidated entities was $3.5 million for the three
months ended December 31, 2018. The loss was primarily due to
our proportionate share of the Great Park Venture’s net loss during
the quarter of $9.6 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 $2.3
million. Equity in loss from our 75% interest in the Gateway
Commercial Venture was $1.3 million for the three months ended
December 31, 2018.
Selling, general, and administrative. Selling, general,
and administrative expenses were $15.2 million for the three months
ended December 31, 2018.
Income tax provision. Income tax provision was $9.2
million for the three months ended December 31, 2018.
Notwithstanding our consolidated net loss, the income tax provision
is the result of an increase in our valuation allowance against
deferred tax assets associated with changes contained in the Tax
Cuts and Jobs Act limiting the utilization of net operating
losses.
Net loss. Consolidated net loss for the quarter was $20.4
million. The net loss attributable to noncontrolling interests
totaled $6.1 million, resulting in a net loss attributable to the
Company of $14.3 million.
Segment Results
Newhall Segment. Total segment revenues were $0.9 million
for the fourth quarter of 2018 and were derived from agricultural
leasing and the sale of citrus crops. Selling, general, and
administrative expenses were $3.3 million for the three months
ended December 31, 2018.
San Francisco Segment. Total segment revenues were $1.1
million for the fourth quarter of 2018. Revenues during the quarter
were mostly attributable to fees generated from management
agreements. Selling, general, and administrative expenses were $4.8
million for the three months ended December 31, 2018.
Great Park Segment. Total segment revenues were $8.5
million for the fourth quarter of 2018. Revenues were mainly
attributable to management services we provide to the Great Park
Venture. The Great Park segment’s net loss for the quarter was $7.6
million, which included net loss of $9.6 million attributed to the
Great Park Venture that is not consolidated in our financial
statements. After adjusting to account for a difference in
investment basis, the Company’s equity in loss from the Great Park
Venture was $2.3 million for the three months ended
December 31, 2018.
Commercial Segment. For the three months ended
December 31, 2018, the Commercial segment recognized $8.0
million in revenues from tenant leases at the Five Point Gateway
Campus and property management services provided by us to the
Gateway Commercial Venture. Segment expenses were mostly comprised
of depreciation, amortization and interest expense totaling $7.1
million. Segment net loss was approximately $1.0 million. Our share
of equity in loss from the Gateway Commercial Venture totaled $1.3
million for the three months ended December 31, 2018.
Conference Call
Information
In conjunction with this release, Five Point will host a
conference call today, Wednesday, March 13, 2019 at 5:00 pm
Eastern Time. Emile Haddad, 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 starting approximately two hours after the end of
the call by dialing (844) 512-2921, or for international callers,
(412) 317-6671. The passcode for the live call and the replay is
13687389. The telephonic replay will be available until 11:59 p.m.
Eastern Time on March 27, 2019.
About Five Point
Five Point, headquartered in Irvine, 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 Orange
County, Newhall Ranch® in Los Angeles County, and Candlestick Point
and The San Francisco Shipyard in the City of San Francisco.
These communities are designed to include approximately 40,000
residential homes and approximately 23 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.
Source: Five Point Holdings, LLC
FIVE POINT HOLDINGS, LLC
CONSOLIDATED STATEMENTS OF OPERATIONS (In thousands)
(Unaudited) Three Months EndedDecember
31, Twelve Months EndedDecember 31, 2018
2017 2018 2017 REVENUES: Land
sales $ 11 $ 9,398 $ 133 $ 17,257 Land sales—related party 233
2,005 900 87,556 Management services—related party 6,610 6,100
40,976 22,517 Operating properties 1,091 4,760 6,981
12,101 Total revenues 7,945 22,263
48,990 139,431 COSTS AND EXPENSES: Land sales (345 )
904 (165 ) 84,659 Management services 3,426 2,913 23,962 10,791
Operating properties 553 3,143 5,077 11,450 Selling, general, and
administrative 15,152 29,762 98,983 122,367
Total costs and expenses 18,786 36,722 127,857
229,267 OTHER INCOME: Adjustment to payable pursuant
to tax receivable agreement — 105,586 1,928 105,586 Interest income
3,048 2,577 11,767 2,577 Miscellaneous 101 24 8,573
93 Total other income 3,149 108,187
22,268 108,256 EQUITY IN (LOSS) EARNINGS FROM
UNCONSOLIDATED ENTITIES (3,531 ) (11,808 ) (2,163 ) 5,776
(LOSS) INCOME BEFORE INCOME TAX (PROVISION) BENEFIT (11,223 )
81,920 (58,762 ) 24,196 INCOME TAX (PROVISION) BENEFIT (9,183 ) —
(9,183 ) — NET (LOSS) INCOME (20,406 ) 81,920 (67,945
) 24,196 LESS NET LOSS ATTRIBUTABLE TO NONCONTROLLING INTERESTS
(6,103 ) (13,407 ) (33,231 ) (49,039 ) NET (LOSS) INCOME
ATTRIBUTABLE TO THE COMPANY $ (14,303 ) $ 95,327 $ (34,714 )
$ 73,235 NET (LOSS) INCOME ATTRIBUTABLE TO THE
COMPANY PER CLASS A SHARE Basic $ (0.22 ) $ 1.50 $ (0.53 ) $ 1.33
Diluted $ (0.22 ) $ 0.56 $ (0.53 ) $ 0.18 WEIGHTED AVERAGE CLASS A
SHARES OUTSTANDING Basic 65,790,066 62,992,933 65,002,387
54,006,954 Diluted 65,790,066 144,909,451 65,002,387 133,007,828
NET (LOSS) INCOME ATTRIBUTABLE TO THE COMPANY PER CLASS B SHARE
Basic and diluted $ (0.00 ) $ 0.00 $ (0.00 ) $ 0.00 WEIGHTED
AVERAGE CLASS B SHARES OUTSTANDING Basic and diluted 79,112,145
81,463,433 79,859,730 78,821,553
FIVE POINT
HOLDINGS, LLC CONSOLIDATED BALANCE SHEETS (In
thousands, except shares) (Unaudited)
December 31, 2018 December 31, 2017 ASSETS
INVENTORIES $ 1,696,084 $ 1,425,892 INVESTMENT IN UNCONSOLIDATED
ENTITIES 532,899 530,007 PROPERTIES AND EQUIPMENT, NET 31,677
29,656 ASSETS HELD FOR SALE, NET — 4,519 INTANGIBLE ASSET,
NET—RELATED PARTY 95,917 127,593 CASH AND CASH EQUIVALENTS 495,694
848,478 RESTRICTED CASH AND CERTIFICATES OF DEPOSIT 1,403 1,467
RELATED PARTY ASSETS 61,039 3,158 OTHER ASSETS 9,179 7,585
TOTAL $ 2,923,892 $ 2,978,355
LIABILITIES AND CAPITAL LIABILITIES: Notes payable, net $
557,004 $ 560,618 Accounts payable and other liabilities 161,139
167,620 Liabilities related to assets held for sale — 5,363 Related
party liabilities 178,540 186,670 Deferred income tax liability,
net 9,183 — Payable pursuant to tax receivable agreement 169,509
152,475 Total liabilities 1,075,375 1,072,746
CAPITAL: Class A common shares; No par value; Issued and
outstanding: 2018—66,810,980 shares; 2017—62,314,850 shares Class B
common shares; No par value; Issued and outstanding:
2018—78,838,736 shares; 2017—81,463,433 shares Contributed capital
556,521 530,015 Retained earnings 33,811 57,841 Accumulated other
comprehensive loss (3,306 ) (2,455 ) Total members’ capital 587,026
585,401 Noncontrolling interests 1,261,491 1,320,208
Total capital 1,848,517 1,905,609 TOTAL $ 2,923,892
$ 2,978,355
FIVE POINT HOLDINGS,
LLC SUPPLEMENTAL DATA (In thousands)
(Unaudited)
Liquidity
December 31, 2018 Cash and cash equivalents $ 495,694
Borrowing capacity (1) 124,000 Total liquidity $ 619,694
(1)
As of December 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.
Debt to Total
Capitalization
December 31, 2018 Debt (1) $ 602,692 Total
capital 1,848,517 Total capitalization $ 2,451,209
Debt to total capitalization 24.6 %
(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, and
(ii) the Company’s related party EB-5 reimbursement
obligation of $102.7 million.
Segment Results
Newhall
The following table summarizes the results of operations of our
Newhall segment for the three months and twelve months ended
December 31, 2018 and 2017.
Three Months EndedDecember 31,
Twelve Months EndedDecember 31, 2018
2017 2018 2017 (in thousands)
Statement of Operations Data Revenues Land sales $ 11 $
9,398 $ 133 $ 17,257 Land sales—related party 12 1,784 16 2,746
Operating properties 910 4,582 6,252 11,565
Total revenues 933 15,764 6,401 31,568
Costs and expenses Land sales (345 ) 35 (241 ) 3,201
Operating properties 553 3,143 5,077 11,450 Selling, general, and
administrative 3,260 5,767 15,391 29,371
Total costs and expenses 3,468 8,945 20,227
44,022 Other income 102 27 7,024
96 Segment (loss) income $ (2,433 ) $ 6,846 $ (6,802
) $ (12,358 )
San Francisco
The following table summarizes the results of operations of our
San Francisco segment for the three months and twelve months ended
December 31, 2018 and 2017.
Three Months EndedDecember 31,
Twelve Months EndedDecember 31, 2018
2017 2018 2017 (in thousands)
Statement of Operations Data Revenues Land sales—related
party $ 221 $ 221 $ 884 $ 84,810 Operating property 181 178 729 536
Management services—related party 656 1,489 4,397
5,841 Total revenues 1,058 1,888 6,010
91,187 Costs and expenses Land sales — 869 76 81,458
Management services 185 206 1,015 709 Selling, general, and
administrative 4,768 7,516 22,979 28,288
Total costs and expenses 4,953 8,591 24,070
110,455 Segment loss $ (3,895 ) $ (6,703 ) $ (18,060
) $ (19,268 )
Great Park
The following table summarizes the results of operations of our
Great Park segment for the three months and twelve months ended
December 31, 2018 and 2017.
Three Months EndedDecember 31,
Twelve Months EndedDecember 31, 2018
2017 2018 2017 (in thousands)
Statement of Operations Data Revenues Land sales $ 714 $
11,524 $ 171,775 $ 473,234 Land sales—related party 2,541 3,994
3,914 7,700 Management services—related party 5,282 4,244
35,090 16,239 Total revenues 8,537 19,762
210,779 497,173 Costs and expenses Land sales 2
10,229 118,115 339,100 Management services 3,241 2,707 22,947
10,082 Selling, general, and administrative 6,165 8,671 32,322
27,115 Management fees—related party 7,141 76,265
24,999 80,883 Total costs and expenses 16,549 97,872
198,383 457,180 Interest income 423 2,226
2,815 2,226 Segment (loss) income $ (7,589 ) $
(75,884 ) $ 15,211 $ 42,219
The table below reconciles the Great Park segment results to the
equity in (loss) earnings from our investment in the Great Park
Venture that is reflected in the consolidated statements of
operations for the three months and twelve months ended December
31, 2018 and 2017.
Three Months EndedDecember 31,
Twelve Months EndedDecember 31, 2018
2017 2018 2017 (in thousands)
Segment net (loss) income from operations $ (7,589 ) $ (75,884 ) $
15,211 $ 42,219 Less net income of management company attributed to
the Great Park segment 2,041 1,539 12,143
6,157 Net (loss) income of Great Park Venture (9,630 )
(77,423 ) 3,068 36,062 The Company’s share of net
(loss) income of the Great Park Venture (3,611 ) (29,034 ) 1,151
13,523 Basis difference accretion (amortization) 1,349
17,072 (2,057 ) (7,763 ) Equity in (loss) earnings from
Great Park Venture $ (2,262 ) $ (11,962 ) $ (906 ) $ 5,760
Commercial
The following table summarizes the results of operations of our
Commercial segment for the three months and twelve months ended
December 31, 2018.
Three Months EndedDecember 31,
Twelve Months EndedDecember 31, 2018
2018 (in thousands) Statement of Operations
Data Revenues Rental and related income $ 7,335 $ 26,580
Property management fees 672 1,489 Total revenues
8,007 28,069 Costs and expenses Rental operating
expenses 1,932 4,705 Interest 3,937 11,563 Depreciation 2,109 7,632
Amortization 1,024 4,098 Other expenses 25 258 Total
costs and expenses 9,027 28,256 Segment loss $ (1,020
) $ (187 )
The table below reconciles the Commercial segment results to the
equity in loss from our investment in the Gateway Commercial
Venture that is reflected in the consolidated statements of
operations for the three and twelve months ended December 31,
2018.
Three Months EndedDecember
31,
Twelve Months EndedDecember 31, 2018
2018 (in thousands) Segment net loss from operations
$ (1,020 ) $ (187 ) Less net income of management company
attributed to the Commercial segment 672 1,489 Net
loss of Gateway Commercial Venture (1,692 ) (1,676 ) Equity in loss
from Gateway Commercial Venture $ (1,269 ) $ (1,257 )
View source
version on businesswire.com: https://www.businesswire.com/news/home/20190313005837/en/
Investor Relations:Bob Wetenhall,
949-349-1087bob.wetenhall@fivepoint.comorMedia:Steve Churm,
949-349-1034steve.churm@fivepoint.com
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