FPH Five Point Holdings LLC

Third Quarter 2019 and Recent Highlights

• Continued land development activity at Valencia (formerly Newhall Ranch) in Los Angeles County positions the Company to deliver homesites and generate revenue at this community in the fourth quarter of 2019.

• Company maintains ample liquidity of $454.4 million as of September 30, 2019.

 

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 third quarter results for 2019. Emile Haddad, Chairman and CEO, said, “We are looking forward to delivering homesites to builders in Valencia during the fourth quarter of 2019. With both the Great Park and Valencia producing revenue, we are excited about heading into a strong 2020.”

Third Quarter 2019 Consolidated Results

Liquidity and Capital Resources

As of September 30, 2019, total liquidity of $454.4 million was comprised of cash and cash equivalents totaling $330.4 million and borrowing availability of $124.0 million under our $125.0 million unsecured revolving credit facility. Total capital was $1.9 billion, reflecting $3.0 billion in assets and $1.1 billion in liabilities and redeemable noncontrolling interests.

Results of Operations for the Three Months Ended September 30, 2019

Revenues. Revenues of $12.0 million for the three months ended September 30, 2019 were primarily generated from management services.

Equity in loss from unconsolidated entities. Equity in loss from unconsolidated entities was $1.8 million for the three months ended September 30, 2019. The loss was primarily due to our proportionate share of the Great Park Venture’s net loss during the quarter of $2.4 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 $0.7 million. Equity in loss from our 75% interest in the Gateway Commercial Venture was $1.1 million for the three months ended September 30, 2019.

Selling, general, and administrative. Selling, general, and administrative expenses were $25.9 million for the three months ended September 30, 2019.

Net loss. Consolidated net loss for the quarter was $23.0 million. The net loss attributable to noncontrolling interests totaled $12.3 million, resulting in net loss attributable to the Company of $10.7 million.

Segment Results

Valencia Segment (formerly Newhall). Total segment revenues were $0.2 million for the third quarter of 2019 and were derived from agricultural land leasing and the sale of citrus crops. Selling, general, and administrative expenses were $3.7 million for the three months ended September 30, 2019.

San Francisco Segment. Total segment revenues were $1.0 million for the third quarter of 2019. Revenues during the quarter were mostly attributable to fees generated from management agreements. Selling, general, and administrative expenses were $4.4 million for the three months ended September 30, 2019.

Great Park Segment. Total segment revenues were $49.5 million for the third quarter of 2019. Revenues were mainly attributable to the sale of land entitled for 89 homesites on approximately five and a half acres at the Great Park Neighborhoods. Initial gross proceeds from the sale were $35.3 million representing the base purchase price. The Great Park segment’s net income for the quarter was $1.0 million, which included net loss of $2.4 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 $0.7 million for the three months ended September 30, 2019.

Commercial Segment. Total segment revenues were $8.7 million from tenant leases at the Five Point Gateway Campus and property management services provided by us to the Gateway Commercial Venture during the third quarter of 2019. Segment expenses were mostly comprised of depreciation, amortization and interest expense totaling $8.0 million. Segment net loss was approximately $1.3 million. Our share of equity in loss from the Gateway Commercial Venture totaled $1.1 million for the three months ended September 30, 2019.

Conference Call Information

In conjunction with this release, Five Point will host a conference call today, Friday, November 8, 2019 at 1:00 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 1-800-263-0877 (domestic) or 1-720-543-0197 (international). A telephonic replay will be available starting approximately two hours after the end of the call by dialing 1-844-512-2921, or for international callers, 412-317-6671. The passcode for the live call and the replay is 3326518. The telephonic replay will be available until 11:59 p.m. Eastern Time on November 22, 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 Irvine, Valencia® (formerly known as Newhall Ranch®) in Los Angeles County, and Candlestick® 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.

FIVE POINT HOLDINGS, LLC

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(In thousands, except share and per share amounts)

(Unaudited)

 

 

Three Months Ended September 30,

 

Nine Months Ended September 30,

 

2019

 

2018

 

2019

 

2018

REVENUES:

 

 

 

 

 

 

 

Land sales

$

9

 

 

$

70

 

 

$

74

 

 

$

122

 

Land sales—related party

229

 

 

225

 

 

695

 

 

667

 

Management services—related party

11,458

 

 

11,159

 

 

33,689

 

 

34,366

 

Operating properties

318

 

 

1,534

 

 

3,016

 

 

5,890

 

Total revenues

12,014

 

 

12,988

 

 

37,474

 

 

41,045

 

COSTS AND EXPENSES:

 

 

 

 

 

 

 

Land sales

—

 

 

90

 

 

—

 

 

180

 

Management services

7,699

 

 

6,684

 

 

22,794

 

 

20,536

 

Operating properties

1,388

 

 

1,027

 

 

4,488

 

 

4,524

 

Selling, general, and administrative

25,863

 

 

26,220

 

 

77,629

 

 

83,831

 

Total costs and expenses

34,950

 

 

34,021

 

 

104,911

 

 

109,071

 

OTHER INCOME:

 

 

 

 

 

 

 

Adjustment to payable pursuant to tax receivable agreement

—

 

 

—

 

 

—

 

 

1,928

 

Interest income

1,724

 

 

3,062

 

 

6,494

 

 

8,719

 

Gain on settlement of contingent consideration—related party

—

 

 

—

 

 

64,870

 

 

—

 

Miscellaneous

7

 

 

60

 

 

26

 

 

8,472

 

Total other income

1,731

 

 

3,122

 

 

71,390

 

 

19,119

 

EQUITY IN (LOSS) EARNINGS FROM UNCONSOLIDATED ENTITIES

(1,750

)

 

(4,028

)

 

4,463

 

 

1,368

 

(LOSS) INCOME BEFORE INCOME TAX (PROVISION) BENEFIT

(22,955

)

 

(21,939

)

 

8,416

 

 

(47,539

)

INCOME TAX (PROVISION) BENEFIT

—

 

 

—

 

 

(1,266

)

 

—

 

NET (LOSS) INCOME

(22,955

)

 

(21,939

)

 

7,150

 

 

(47,539

)

LESS NET (LOSS) INCOME ATTRIBUTABLE TO NONCONTROLLING INTERESTS

(12,292

)

 

(11,920

)

 

4,517

 

 

(27,128

)

NET (LOSS) INCOME ATTRIBUTABLE TO THE COMPANY

$

(10,663

)

 

$

(10,019

)

 

$

2,633

 

 

$

(20,411

)

 

 

 

 

 

 

 

 

NET (LOSS) INCOME ATTRIBUTABLE TO THE COMPANY PER CLASS A SHARE

 

 

 

 

 

 

 

Basic

$

(0.16

)

 

$

(0.15

)

 

$

0.04

 

 

$

(0.31

)

Diluted

$

(0.16

)

 

$

(0.15

)

 

$

0.04

 

 

$

(0.33

)

WEIGHTED AVERAGE CLASS A SHARES OUTSTANDING

 

 

 

 

 

 

 

Basic

66,276,694

 

 

65,740,931

 

 

66,248,431

 

 

64,736,942

 

Diluted

66,276,694

 

 

65,740,931

 

 

145,456,670

 

 

144,872,638

 

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

79,275,234

 

 

79,145,487

 

 

79,204,883

 

 

80,111,663

 

Diluted

79,275,234

 

 

79,145,487

 

 

79,276,016

 

 

80,111,663

 

FIVE POINT HOLDINGS, LLC

CONDENSED CONSOLIDATED BALANCE SHEETS

(In thousands, except shares)

(Unaudited)

 

 

September 30, 2019

 

December 31, 2018

ASSETS

 

 

 

INVENTORIES

$

1,898,029

 

 

$

1,696,084

 

INVESTMENT IN UNCONSOLIDATED ENTITIES

535,375

 

 

532,899

 

PROPERTIES AND EQUIPMENT, NET

32,096

 

 

31,677

 

INTANGIBLE ASSET, NET—RELATED PARTY

82,381

 

 

95,917

 

CASH AND CASH EQUIVALENTS

330,412

 

 

495,694

 

RESTRICTED CASH AND CERTIFICATES OF DEPOSIT

1,740

 

 

1,403

 

RELATED PARTY ASSETS

95,615

 

 

61,039

 

OTHER ASSETS

21,144

 

 

9,179

 

TOTAL

$

2,996,792

 

 

$

2,923,892

 

 

 

 

 

LIABILITIES AND CAPITAL

 

 

 

LIABILITIES:

 

 

 

Notes payable, net

$

615,663

 

 

$

557,004

 

Accounts payable and other liabilities

180,278

 

 

161,139

 

Related party liabilities

128,513

 

 

178,540

 

Deferred income tax liability, net

10,449

 

 

9,183

 

Payable pursuant to tax receivable agreement

172,633

 

 

169,509

 

Total liabilities

1,107,536

 

 

1,075,375

 

 

 

 

 

REDEEMABLE NONCONTROLLING INTEREST

25,000

 

 

—

 

CAPITAL:

 

 

 

Class A common shares; No par value; Issued and outstanding: 2019—68,746,555 shares; 2018—66,810,980 shares

 

 

 

Class B common shares; No par value; Issued and outstanding: 2019—79,275,234 shares; 2018—78,838,736 shares

 

 

 

Contributed capital

567,599

 

 

556,521

 

Retained earnings

36,444

 

 

33,811

 

Accumulated other comprehensive loss

(3,275

)

 

(3,306

)

Total members’ capital

600,768

 

 

587,026

 

Noncontrolling interests

1,263,488

 

 

1,261,491

 

Total capital

1,864,256

 

 

1,848,517

 

TOTAL

$

2,996,792

 

 

$

2,923,892

 

FIVE POINT HOLDINGS, LLC

SUPPLEMENTAL DATA

(In thousands)

(Unaudited)

 

Liquidity

 

September 30, 2019

Cash and cash equivalents

$

330,412

 

Borrowing capacity (1)

124,000

 

Total liquidity

$

454,412

 

(1) As of September 30, 2019, no amounts were 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

 

September 30, 2019

Debt (1)

$

625,000

 

Total capital

1,864,256

 

Total capitalization

$

2,489,256

 

Debt to total capitalization

25.1

%

(1) For purposes of this calculation, debt is not the same as the calculation of “Consolidated Funded Indebtedness” under the Company’s revolving credit facility and Senior Notes indenture, which would include a $102.7 million related party contractual reimbursement obligation. Prior to the second quarter of 2019, the Company presented this calculation inclusive of the reimbursement obligation.

Segment Results

Valencia (formerly Newhall)

The following table summarizes the results of operations of our Valencia segment for the three and nine months ended September 30, 2019 and 2018.

 

Three Months Ended September 30,

 

Nine Months Ended September 30,

 

2019

 

2018

 

2019

 

2018

 

(in thousands)

Statement of Operations Data

 

 

 

 

 

 

 

Revenues

 

 

 

 

 

 

 

Land sales

$

9

 

 

$

70

 

 

$

74

 

 

$

122

 

Land sales—related party

8

 

 

4

 

 

31

 

 

4

 

Operating properties

134

 

 

1,354

 

 

2,481

 

 

5,342

 

Total revenues

151

 

 

1,428

 

 

2,586

 

 

5,468

 

Costs and expenses

 

 

 

 

 

 

 

Land sales

—

 

 

14

 

 

—

 

 

104

 

Operating properties

1,388

 

 

1,027

 

 

4,488

 

 

4,524

 

Selling, general, and administrative

3,663

 

 

3,615

 

 

11,364

 

 

12,131

 

Total costs and expenses

5,051

 

 

4,656

 

 

15,852

 

 

16,759

 

Other income

8

 

 

60

 

 

29

 

 

6,922

 

Segment loss

$

(4,892

)

 

$

(3,168

)

 

$

(13,237

)

 

$

(4,369

)

San Francisco

The following table summarizes the results of operations of our San Francisco segment for the three and nine months ended September 30, 2019 and 2018.

 

Three Months Ended September 30,

 

Nine Months Ended September 30,

 

2019

 

2018

 

2019

 

2018

 

(in thousands)

Statement of Operations Data

 

 

 

 

 

 

 

Revenues

 

 

 

 

 

 

 

Land sales—related party

$

221

 

 

$

221

 

 

$

664

 

 

$

663

 

Operating property

184

 

 

180

 

 

535

 

 

548

 

Management services—related party

545

 

 

689

 

 

1,816

 

 

3,741

 

Total revenues

950

 

 

1,090

 

 

3,015

 

 

4,952

 

Costs and expenses

 

 

 

 

 

 

 

Land sales

—

 

 

76

 

 

—

 

 

76

 

Management services

226

 

 

219

 

 

855

 

 

830

 

Selling, general, and administrative

4,386

 

 

5,281

 

 

14,083

 

 

18,211

 

Total costs and expenses

4,612

 

 

5,576

 

 

14,938

 

 

19,117

 

Other income—gain on settlement of contingent consideration, related party

—

 

 

—

 

 

64,870

 

 

—

 

Segment (loss) income

$

(3,662

)

 

$

(4,486

)

 

$

52,947

 

 

$

(14,165

)

Great Park

The following table summarizes the results of operations of our Great Park segment for the three and nine months ended September 30, 2019 and 2018.

 

Three Months Ended September 30,

 

Nine Months Ended September 30,

 

2019

 

2018

 

2019

 

2018

 

(in thousands)

Statement of Operations Data

 

 

 

 

 

 

 

Revenues

 

 

 

 

 

 

 

Land sales

$

36,198

 

 

$

485

 

 

$

98,743

 

 

$

171,061

 

Land sales—related party

2,438

 

 

936

 

 

132,473

 

 

1,373

 

Management services—related party

10,814

 

 

9,833

 

 

31,647

 

 

29,808

 

Total revenues

49,450

 

 

11,254

 

 

262,863

 

 

202,242

 

Costs and expenses

 

 

 

 

 

 

 

Land sales

24,518

 

 

—

 

 

153,486

 

 

118,113

 

Management services

7,473

 

 

6,465

 

 

21,939

 

 

19,706

 

Selling, general, and administrative

9,680

 

 

9,365

 

 

26,751

 

 

26,157

 

Management fees—related party

7,825

 

 

2,594

 

 

24,445

 

 

17,858

 

Total costs and expenses

49,496

 

 

18,424

 

 

226,621

 

 

181,834

 

Interest income

1,016

 

 

505

 

 

2,671

 

 

2,392

 

Segment income (loss)

$

970

 

 

$

(6,665

)

 

$

38,913

 

 

$

22,800

 

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 condensed consolidated statements of operations for the three and nine months ended September 30, 2019 and 2018.

 

Three Months Ended September 30,

 

Nine Months Ended September 30,

 

2019

 

2018

 

2019

 

2018

 

(in thousands)

Segment net income (loss) from operations

$

970

 

 

$

(6,665

)

 

$

38,913

 

 

$

22,800

 

Less net income of management company attributed to the Great Park segment

3,340

 

 

3,368

 

 

9,708

 

 

10,102

 

Net (loss) income of Great Park Venture

(2,370

)

 

(10,033

)

 

29,205

 

 

12,698

 

The Company’s share of net (loss) income of the Great Park Venture

(889

)

 

(3,762

)

 

10,952

 

 

4,762

 

Basis difference accretion (amortization)

199

 

 

246

 

 

(3,694

)

 

(3,406

)

Equity in (loss) earnings from the Great Park Venture

$

(690

)

 

$

(3,516

)

 

$

7,258

 

 

$

1,356

 

Commercial

The following table summarizes the results of operations of our Commercial segment for the three and nine months ended September 30, 2019 and 2018.

 

Three Months Ended September 30,

 

Nine Months Ended September 30,

 

2019

 

2018

 

2019

 

2018

 

(in thousands)

Statement of Operations Data

 

 

 

 

 

 

 

Revenues

 

 

 

 

 

 

 

Rental and related income

$

6,388

 

 

$

6,299

 

 

$

19,492

 

 

$

19,245

 

Rental and related income—related party

2,186

 

 

—

 

 

6,216

 

 

—

 

Property management services—related party

99

 

 

637

 

 

226

 

 

817

 

Total revenues

8,673

 

 

6,936

 

 

25,934

 

 

20,062

 

Costs and expenses

 

 

 

 

 

 

 

Rental operating expenses

1,946

 

 

1,106

 

 

5,094

 

 

2,773

 

Interest

4,249

 

 

2,916

 

 

12,938

 

 

7,626

 

Depreciation

2,745

 

 

1,911

 

 

8,229

 

 

5,522

 

Amortization

1,032

 

 

1,017

 

 

3,090

 

 

3,075

 

Other expenses

14

 

 

32

 

 

83

 

 

233

 

Total costs and expenses

9,986

 

 

6,982

 

 

29,434

 

 

19,229

 

Segment (loss) income

$

(1,313

)

 

$

(46

)

 

$

(3,500

)

 

$

833

 

The table below reconciles the Commercial segment results to the equity in (loss) earnings from our investment in the Gateway Commercial Venture that is reflected in the condensed consolidated statements of operations for the three and nine months ended September 30, 2019 and 2018.

 

Three Months Ended September 30,

 

Nine Months Ended September 30,

 

2019

 

2018

 

2019

 

2018

 

(in thousands)

Segment net (loss) income from operations

$

(1,313

)

 

$

(46

)

 

$

(3,500

)

 

$

833

 

Less net income of management company attributed to the Commercial segment

99

 

 

637

 

 

226

 

 

817

 

Net (loss) income of Gateway Commercial Venture

(1,412

)

 

(683

)

 

(3,726

)

 

16

 

Equity in (loss) earnings from the Gateway Commercial Venture

$

(1,060

)

 

$

(512

)

 

$

(2,795

)

 

$

12

 

 

View source version on businesswire.com: https://www.businesswire.com/news/home/20191108005081/en/

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