FPH Five Point Holdings LLC

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 )

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Investor Relations:Bob Wetenhall, 949-349-1087bob.wetenhall@fivepoint.comorMedia:Steve Churm, 949-349-1034steve.churm@fivepoint.com