FPH Five Point Holdings LLC

Fourth Quarter 2019

• Sold 781 homesites at Valencia (formerly Newhall Ranch) in the fourth quarter of 2019 and closed on 711 of these homesites generating proceeds from the closed homesites of approximately $135 million.
• Company maintains ample liquidity of $470.8 million at December 31, 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 fourth quarter and year-end 2019 results. Emile Haddad, Chairman and CEO, said, “The end of last year marked an inflection point for our company as we had our first homesite sales in December at Valencia/Newhall. A lot has changed over the past three weeks. While we hope that the unprecedented conditions facing the country and the economy will be short-lived, we believe we are well positioned to withstand these challenges. Our balance sheet remains strong, and we have the ability to quickly adjust our land development expenditures in response to changing market conditions. We look forward to the opportunities that await us once we have weathered this storm.”

Fourth Quarter 2019 Consolidated Results

Liquidity and Capital Resources

As of December 31, 2019, total liquidity of $470.8 million was comprised of cash and cash equivalents totaling $346.8 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 December 31, 2019

Revenues. Revenues of $146.9 million for the three months ended December 31, 2019 were primarily generated from land sales at our Valencia segment.

Equity in loss from unconsolidated entities. Equity in loss from unconsolidated entities was $2.1 million for the three months ended December 31, 2019 comprised of a $1.1 million loss from our 37.5% percentage interest in the Great Park Venture and a $1.1 million loss from our 75% interest in the Gateway Commercial Venture.

Selling, general, and administrative. Selling, general, and administrative expenses were $26.0 million for the three months ended December 31, 2019.

Net income. Consolidated net income for the quarter was $15.1 million. The net income attributable to noncontrolling interests totaled $8.7 million, resulting in net income attributable to the Company of $6.4 million.

Segment Results

Valencia Segment (formerly Newhall). Total segment revenues were $140.6 million for the fourth quarter of 2019. Revenues were mainly attributable to the sale of land entitled for 711 homesites on approximately 59 acres in Valencia. Initial gross proceeds from the sale were $135.2 million representing the base purchase price. Cost of land sales was $97.1 million, or 69.4% of land sale revenues for the fourth quarter. Selling, general, and administrative expenses were $3.4 million for the three months ended December 31, 2019.

San Francisco Segment. Total segment revenues were $1.0 million for the fourth quarter of 2019. Revenues during the quarter were mostly attributable to fees generated from management agreements. Selling, general, and administrative expenses were $3.8 million for the three months ended December 31, 2019.

Great Park Segment. Total segment revenues were $45.0 million for the fourth quarter of 2019. Revenues were mainly attributable to the sale of land entitled for 69 homesites on approximately seven acres at the Great Park Neighborhoods. Initial gross proceeds from the sale were $37.9 million representing the base purchase price. The Great Park segment’s net income for the quarter was $5.5 million, which included a net loss of $0.2 million from management services and net income of $5.7 million attributed to the Great Park Venture. We do not include the Great Park Venture as a consolidated subsidiary in our consolidated financial statements, but rather account for it as an equity method investee. After adjusting to account for a difference in investment basis, the Company’s equity in loss from the Great Park Venture was $1.1 million for the three months ended December 31, 2019.

Commercial Segment. Total segment revenues were $8.5 million from tenant leases at the Five Point Gateway Campus and property management services provided by us to the Gateway Commercial Venture during the fourth quarter of 2019. Segment expenses were mostly comprised of depreciation, amortization and interest expense totaling $7.7 million. Segment net loss was approximately $1.3 million, which included net income of $0.1 million from management services and a net loss of $1.4 million attributed to the Gateway Commercial Venture. We do not include the Gateway Commercial Venture as a consolidated subsidiary in our consolidated financial statements, but rather account for it as an equity method investee. Our share of equity in loss from the Gateway Commercial Venture totaled $1.1 million for the three months ended December 31, 2019.

Conference Call Information

In conjunction with this release, Five Point will host a conference call today, Monday, March 16, 2020 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 (888) 394-8218 (domestic) or (720) 452-9217 (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 8373226. The telephonic replay will be available until 11:59 p.m. Eastern Time on March 30, 2020.

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

CONSOLIDATED STATEMENTS OF OPERATIONS

(In thousands, except share and per share amounts)

(Unaudited)

 

 

Three Months Ended December 31,

 

Twelve Months Ended December 31,

 

2019

 

2018

 

2019

 

2018

REVENUES:

 

 

 

 

 

 

 

Land sales

$

139,946

 

 

$

11

 

 

$

140,020

 

 

$

133

 

Land sales—related party

228

 

 

233

 

 

923

 

 

900

 

Management services—related party

5,891

 

 

6,610

 

 

39,580

 

 

40,976

 

Operating properties

841

 

 

1,091

 

 

3,857

 

 

6,981

 

Total revenues

146,906

 

 

7,945

 

 

184,380

 

 

48,990

 

COSTS AND EXPENSES:

 

 

 

 

 

 

 

Land sales

97,113

 

 

(345

)

 

97,113

 

 

(165

)

Management services

5,698

 

 

3,426

 

 

28,492

 

 

23,962

 

Operating properties

1,077

 

 

553

 

 

5,565

 

 

5,077

 

Selling, general, and administrative

25,957

 

 

15,152

 

 

103,586

 

 

98,983

 

Total costs and expenses

129,845

 

 

18,786

 

 

234,756

 

 

127,857

 

OTHER INCOME:

 

 

 

 

 

 

 

Adjustment to payable pursuant to tax receivable agreement

—

 

 

—

 

 

—

 

 

1,928

 

Interest income

1,350

 

 

3,048

 

 

7,844

 

 

11,767

 

Gain on settlement of contingent consideration—related party

—

 

 

—

 

 

64,870

 

 

—

 

Miscellaneous

22

 

 

101

 

 

48

 

 

8,573

 

Total other income

1,372

 

 

3,149

 

 

72,762

 

 

22,268

 

EQUITY IN (LOSS) EARNINGS FROM UNCONSOLIDATED ENTITIES

(2,136

)

 

(3,531

)

 

2,327

 

 

(2,163

)

INCOME (LOSS) BEFORE INCOME TAX (PROVISION) BENEFIT

16,297

 

 

(11,223

)

 

24,713

 

 

(58,762

)

INCOME TAX PROVISION

(1,179

)

 

(9,183

)

 

(2,445

)

 

(9,183

)

NET INCOME (LOSS)

15,118

 

 

(20,406

)

 

22,268

 

 

(67,945

)

LESS NET INCOME (LOSS) ATTRIBUTABLE TO NONCONTROLLING INTERESTS

8,718

 

 

(6,103

)

 

13,235

 

 

(33,231

)

NET INCOME (LOSS) ATTRIBUTABLE TO THE COMPANY

$

6,400

 

 

$

(14,303

)

 

$

9,033

 

 

$

(34,714

)

 

 

 

 

 

 

 

 

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

 

 

 

 

 

 

 

Basic

$

0.09

 

 

$

(0.22

)

 

$

0.13

 

 

$

(0.53

)

Diluted

$

0.09

 

 

$

(0.22

)

 

$

0.13

 

 

$

(0.53

)

WEIGHTED AVERAGE CLASS A SHARES OUTSTANDING

 

 

 

 

 

 

 

Basic

66,302,138

 

 

65,790,066

 

 

66,261,968

 

 

65,002,387

 

Diluted

145,596,608

 

 

65,790,066

 

 

145,491,898

 

 

65,002,387

 

NET INCOME (LOSS) 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

79,269,524

79,112,145

79,221,176

79,859,730

FIVE POINT HOLDINGS, LLC

CONSOLIDATED BALANCE SHEETS

(In thousands, except shares)

(Unaudited)

 

 

December 31, 2019

 

December 31, 2018

ASSETS

 

 

 

INVENTORIES

$

1,889,761

 

 

$

1,696,084

 

INVESTMENT IN UNCONSOLIDATED ENTITIES

533,239

 

 

532,899

 

PROPERTIES AND EQUIPMENT, NET

32,312

 

 

31,677

 

INTANGIBLE ASSET, NET—RELATED PARTY

80,350

 

 

95,917

 

CASH AND CASH EQUIVALENTS

346,833

 

 

495,694

 

RESTRICTED CASH AND CERTIFICATES OF DEPOSIT

1,741

 

 

1,403

 

RELATED PARTY ASSETS

97,561

 

 

61,039

 

OTHER ASSETS

22,903

 

 

9,179

 

TOTAL

$

3,004,700

 

 

$

2,923,892

 

 

 

 

 

LIABILITIES AND CAPITAL

 

 

 

LIABILITIES:

 

 

 

Notes payable, net

$

616,046

 

 

$

557,004

 

Accounts payable and other liabilities

167,711

 

 

161,139

 

Related party liabilities

127,882

 

 

178,540

 

Deferred income tax liability, net

11,628

 

 

9,183

 

Payable pursuant to tax receivable agreement

172,633

 

 

169,509

 

Total liabilities

1,095,900

 

 

1,075,375

 

 

 

 

 

REDEEMABLE NONCONTROLLING INTEREST

25,000

 

 

—

 

CAPITAL:

 

 

 

Class A common shares; No par value; Issued and outstanding: 2019—68,788,257 shares; 2018—66,810,980 shares

 

 

 

Class B common shares; No par value; Issued and outstanding: 2019—79,233,544 shares; 2018—78,838,736 shares

 

 

 

Contributed capital

571,532

 

 

556,521

 

Retained earnings

42,844

 

 

33,811

 

Accumulated other comprehensive loss

(2,682

)

 

(3,306

)

Total members’ capital

611,694

 

 

587,026

 

Noncontrolling interests

1,272,106

 

 

1,261,491

 

Total capital

1,883,800

 

 

1,848,517

 

TOTAL

$

3,004,700

 

 

$

2,923,892

 

FIVE POINT HOLDINGS, LLC

SUPPLEMENTAL DATA

(In thousands)

(Unaudited)

 

Liquidity

 

December 31, 2019

Cash and cash equivalents

$

346,833

 

Borrowing capacity (1)

124,000

 

Total liquidity

$

470,833

 

(1)

As of December 31, 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

 

December 31, 2019

Debt (1)

$

625,000

 

Total capital

1,883,800

 

Total capitalization

$

2,508,800

 

Debt to total capitalization

24.9

%

(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 $102.4 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 twelve months ended December 31, 2019 and 2018.

 

Three Months Ended December 31,

 

Twelve Months Ended December 31,

 

2019

 

2018

 

2019

 

2018

 

(in thousands)

Statement of Operations Data

 

 

 

 

 

 

 

Revenues

 

 

 

 

 

 

 

Land sales

$

139,946

 

 

$

11

 

 

$

140,020

 

 

$

133

 

Land sales—related party

7

 

 

12

 

 

38

 

 

16

 

Operating properties

651

 

 

910

 

 

3,132

 

 

6,252

 

Total revenues

140,604

 

 

933

 

 

143,190

 

 

6,401

 

Costs and expenses

 

 

 

 

 

 

 

Land sales

97,113

 

 

(345

)

 

97,113

 

 

(241

)

Operating properties

1,077

 

 

553

 

 

5,565

 

 

5,077

 

Selling, general, and administrative

3,418

 

 

3,260

 

 

14,782

 

 

15,391

 

Total costs and expenses

101,608

 

 

3,468

 

 

117,460

 

 

20,227

 

Other income

20

 

 

102

 

 

49

 

 

7,024

 

Segment income (loss)

$

39,016

 

 

$

(2,433

)

 

$

25,779

 

 

$

(6,802

)

San Francisco

The following table summarizes the results of operations of our San Francisco segment for the three and twelve months ended December 31, 2019 and 2018.

 

Three Months Ended December 31,

 

Twelve Months Ended December 31,

 

2019

 

2018

 

2019

 

2018

 

(in thousands)

Statement of Operations Data

 

 

 

 

 

 

 

Revenues

 

 

 

 

 

 

 

Land sales—related party

$

221

 

 

$

221

 

 

$

885

 

 

$

884

 

Operating property

190

 

 

181

 

 

725

 

 

729

 

Management services—related party

569

 

 

656

 

 

2,385

 

 

4,397

 

Total revenues

980

 

 

1,058

 

 

3,995

 

 

6,010

 

Costs and expenses

 

 

 

 

 

 

 

Land sales

—

 

 

—

 

 

—

 

 

76

 

Management services

247

 

 

185

 

 

1,102

 

 

1,015

 

Selling, general, and administrative

3,790

 

 

4,768

 

 

17,873

 

 

22,979

 

Total costs and expenses

4,037

 

 

4,953

 

 

18,975

 

 

24,070

 

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

—

 

 

—

 

 

64,870

 

 

—

 

Segment (loss) income

$

(3,057

)

 

$

(3,895

)

 

$

49,890

 

 

$

(18,060

)

Great Park

The following table summarizes the results of operations of our Great Park segment for the three and twelve months ended December 31, 2019 and 2018.

 

Three Months Ended December 31,

 

Twelve Months Ended December 31,

 

2019

 

2018

 

2019

 

2018

 

(in thousands)

Statement of Operations Data

 

 

 

 

 

 

 

Revenues

 

 

 

 

 

 

 

Land sales

$

38,956

 

 

$

714

 

 

$

137,699

 

 

$

171,775

 

Land sales—related party

798

 

 

2,541

 

 

133,271

 

 

3,914

 

Management services—related party

5,226

 

 

5,282

 

 

36,873

 

 

35,090

 

Total revenues

44,980

 

 

8,537

 

 

307,843

 

 

210,779

 

Costs and expenses

 

 

 

 

 

 

 

Land sales

26,350

 

 

2

 

 

179,836

 

 

118,115

 

Management services

5,451

 

 

3,241

 

 

27,390

 

 

22,947

 

Selling, general, and administrative

10,685

 

 

6,165

 

 

37,436

 

 

32,322

 

Management fees—related party

(2,144

)

 

7,141

 

 

22,301

 

 

24,999

 

Total costs and expenses

40,342

 

 

16,549

 

 

266,963

 

 

198,383

 

Interest income

818

 

 

423

 

 

3,489

 

 

2,815

 

Segment income (loss)

$

5,456

 

 

$

(7,589

)

 

$

44,369

 

 

$

15,211

 

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 and twelve months ended December 31, 2019 and 2018.

 

Three Months Ended December 31,

 

Twelve Months Ended December 31,

 

2019

 

2018

 

2019

 

2018

 

(in thousands)

Segment net income (loss) from operations

$

5,456

 

 

$

(7,589

)

 

$

44,369

 

 

$

15,211

 

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

(225

)

 

2,041

 

 

9,483

 

 

12,143

 

Net income (loss) of Great Park Venture

5,681

 

 

(9,630

)

 

34,886

 

 

3,068

 

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

2,130

 

 

(3,611

)

 

13,082

 

 

1,151

 

Basis difference (amortization) accretion

(3,206

)

 

1,349

 

 

(6,900

)

 

(2,057

)

Equity in (loss) earnings from the Great Park Venture

$

(1,076

)

 

$

(2,262

)

 

$

6,182

 

 

$

(906

)

Commercial

The following table summarizes the results of operations of our Commercial segment for the three and twelve months ended December 31, 2019 and 2018.

 

Three Months Ended December 31,

 

Twelve Months Ended December 31,

 

2019

 

2018

 

2019

 

2018

 

(in thousands)

Statement of Operations Data

 

 

 

 

 

 

 

Revenues

 

 

 

 

 

 

 

Rental and related income

$

6,389

 

 

$

6,256

 

 

$

25,881

 

 

$

25,501

 

Rental and related income—related party

2,060

 

 

1,079

 

 

8,276

 

 

1,079

 

Property management services—related party

96

 

 

672

 

 

322

 

 

1,489

 

Total revenues

8,545

 

 

8,007

 

 

34,479

 

 

28,069

 

Costs and expenses

 

 

 

 

 

 

 

Rental operating expenses

2,026

 

 

1,932

 

 

7,120

 

 

4,705

 

Interest

3,954

 

 

3,937

 

 

16,892

 

 

11,563

 

Depreciation

2,743

 

 

2,109

 

 

10,972

 

 

7,632

 

Amortization

1,039

 

 

1,024

 

 

4,129

 

 

4,098

 

Other expenses

101

 

 

25

 

 

184

 

 

258

 

Total costs and expenses

9,863

 

 

9,027

 

 

39,297

 

 

28,256

 

Segment loss

$

(1,318

)

 

$

(1,020

)

 

$

(4,818

)

 

$

(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, 2019 and 2018.

 

Three Months Ended December 31,

 

Twelve Months Ended December 31,

 

2019

 

2018

 

2019

 

2018

 

(in thousands)

Segment net loss from operations

$

(1,318

)

 

$

(1,020

)

 

$

(4,818

)

 

$

(187

)

Less net income of management company attributed to the Commercial segment

96

 

 

672

 

 

322

 

 

1,489

 

Net loss of Gateway Commercial Venture

(1,414

)

 

(1,692

)

 

(5,140

)

 

(1,676

)

Equity in loss from the Gateway Commercial Venture

$

(1,060

)

 

$

(1,269

)

 

$

(3,855

)

 

$

(1,257

)

 

View source version on businesswire.com: https://www.businesswire.com/news/home/20200316005820/en/

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