Second Quarter 2020 and Recent
Highlights
- Closed 70 previously sold homesites at Valencia with a base
purchase price of $16.6 million, including a seller secured note
that is payable in December 2020.
- $56.3 million distribution received from Gateway Commercial
Venture from proceeds generated by the sale of approximately 11
acres of land and an approximately 189,000 square foot building to
City of Hope.
- Company maintains liquidity of $339.7 million at June 30,
2020.
- Subsequent to the end of the second quarter, the Gateway
Commercial Venture closed on the sale of two buildings at the Five
Point Gateway Campus for a purchase price of $355 million.
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 second
quarter 2020 results. Emile Haddad, Chairman and CEO, said, “While
we remain cautious about current market conditions, our strong
balance sheet and liquidity position give us confidence, and we are
encouraged by the positive sentiment of homebuilders and the
consistent pace of home sales at our Great Park Neighborhoods
community. The recent commercial sales at the Five Point Gateway
Campus are strong evidence of the value we are creating within our
communities.”
Second Quarter 2020 Consolidated
Results
Liquidity and Capital Resources
As of June 30, 2020, total liquidity of $339.7 million was
comprised of cash and cash equivalents totaling $215.1 million and
borrowing availability of $124.7 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 and redeemable noncontrolling interests.
Results of Operations for the Three Months Ended June 30,
2020
Revenues. Revenues of $24.3 million for the three months
ended June 30, 2020 were primarily generated from land sales at our
Valencia segment.
Equity in earnings from unconsolidated entities. Equity
in earnings from unconsolidated entities was $23.9 million for the
three months ended June 30, 2020, comprised of a $4.1 million loss
from our 37.5% percentage interest in the Great Park Venture and
earnings of $28.0 million from our 75% interest in the Gateway
Commercial Venture.
Selling, general, and administrative. Selling, general,
and administrative expenses were $16.3 million for the three months
ended June 30, 2020.
Net income. Consolidated net income for the quarter was
$14.2 million. The net income attributable to noncontrolling
interests totaled $7.6 million, resulting in net income
attributable to the Company of $6.6 million.
Segment Results
Valencia Segment (formerly Newhall). Total segment
revenues were $17.9 million for the second quarter of 2020.
Revenues were mainly attributable to the sale of land entitled for
70 homesites on approximately seven acres in Valencia. The base
purchase price was $16.6 million and the gross margin was
approximately 30%. Selling, general, and administrative expenses
were $2.7 million for the three months ended June 30, 2020.
San Francisco Segment. Selling, general, and
administrative expenses were $2.6 million for the three months
ended June 30, 2020.
Great Park Segment. The Great Park segment’s net loss for
the quarter was $10.2 million, which included net income of $1.8
million from management services and a net loss of $12.0 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
$4.1 million for the three months ended June 30, 2020.
Commercial Segment. In May 2020, the Gateway Commercial
Venture closed on the sale of approximately 11 acres of land and an
approximately 189,000 square foot building to City of Hope for a
purchase price of $108.0 million. The sale of this land and
building, which had a carrying value of approximately $67.5
million, resulted in a gain of approximately $37.4 million, net of
transaction costs. Concurrently, the Gateway Commercial Venture
made a debt payment of $30.0 million to its lender and made total
distributions to its members of approximately $75.0 million, of
which approximately $56.3 million was distributed to us. Segment
net income was approximately $37.4 million, which included net
income of $0.1 million from management services and net income of
$37.3 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
earnings from the Gateway Commercial Venture totaled $28.0 million
for the three months ended June 30, 2020.
Conference Call
Information
In conjunction with this release, Five Point will host a
conference call today, Thursday, August 13, 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 (800) 437-2398
(domestic) or (720) 452-9102 (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
6656122. The telephonic replay will be available until 11:59 p.m.
Eastern Time on August 27, 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 and our Quarterly Reports on Form
10-Q, 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 June
30,
Six Months Ended June
30,
2020
2019
2020
2019
REVENUES:
Land sales
$
17,028
$
10
$
17,034
$
65
Land sales—related party
2
236
12
466
Management services—related party
6,314
11,168
14,558
22,231
Operating properties
963
973
1,923
2,698
Total revenues
24,307
12,387
33,527
25,460
COSTS AND EXPENSES:
Land sales
11,861
—
11,861
—
Management services
4,416
7,479
10,467
15,095
Operating properties
1,699
1,199
3,644
3,100
Selling, general, and administrative
16,312
25,993
40,938
51,766
Total costs and expenses
34,288
34,671
66,910
69,961
OTHER INCOME:
Interest income
226
2,316
1,232
4,770
Gain on settlement of contingent
consideration—related party
—
—
—
64,870
Miscellaneous
88
9
176
19
Total other income
314
2,325
1,408
69,659
EQUITY IN EARNINGS (LOSS) FROM
UNCONSOLIDATED ENTITIES
23,905
(2,669
)
(7,006
)
6,213
INCOME (LOSS) BEFORE INCOME TAX
(PROVISION) BENEFIT
14,238
(22,628
)
(38,981
)
31,371
INCOME TAX (PROVISION) BENEFIT
—
—
—
(1,266
)
NET INCOME (LOSS)
14,238
(22,628
)
(38,981
)
30,105
LESS NET INCOME (LOSS) ATTRIBUTABLE TO
NONCONTROLLING INTERESTS
7,606
(12,116
)
(20,807
)
16,809
NET INCOME (LOSS) ATTRIBUTABLE TO THE
COMPANY
$
6,632
$
(10,512
)
$
(18,174
)
$
13,296
NET INCOME (LOSS) ATTRIBUTABLE TO THE
COMPANY PER CLASS A SHARE
Basic
$
0.10
$
(0.16
)
$
(0.27
)
$
0.19
Diluted
$
0.10
$
(0.16
)
$
(0.27
)
$
0.18
WEIGHTED AVERAGE CLASS A SHARES
OUTSTANDING
Basic
66,731,233
66,256,961
66,690,550
66,234,066
Diluted
142,851,412
66,256,961
68,854,356
145,403,189
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
79,233,544
79,275,234
79,233,544
79,169,124
Diluted
79,233,544
79,275,234
79,233,544
79,275,824
FIVE POINT HOLDINGS,
LLC
CONDENSED CONSOLIDATED BALANCE
SHEETS
(In thousands, except
shares)
(Unaudited)
June 30, 2020
December 31, 2019
ASSETS
INVENTORIES
$
1,978,879
$
1,889,761
INVESTMENT IN UNCONSOLIDATED ENTITIES
469,564
533,239
PROPERTIES AND EQUIPMENT, NET
33,274
32,312
INTANGIBLE ASSET, NET—RELATED PARTY
75,629
80,350
CASH AND CASH EQUIVALENTS
215,085
346,833
RESTRICTED CASH AND CERTIFICATES OF
DEPOSIT
1,742
1,741
RELATED PARTY ASSETS
97,373
97,561
OTHER ASSETS
36,757
22,903
TOTAL
$
2,908,303
$
3,004,700
LIABILITIES AND CAPITAL
LIABILITIES:
Notes payable, net
$
616,814
$
616,046
Accounts payable and other liabilities
122,262
167,711
Related party liabilities
119,759
127,882
Deferred income tax liability, net
11,628
11,628
Payable pursuant to tax receivable
agreement
173,248
172,633
Total liabilities
1,043,711
1,095,900
REDEEMABLE NONCONTROLLING INTEREST
25,000
25,000
CAPITAL:
Class A common shares; No par value;
Issued and outstanding: 2020—69,056,591 shares; 2019—68,788,257
shares
Class B common shares; No par value;
Issued and outstanding: 2020—79,233,544 shares; 2019—79,233,544
shares
Contributed capital
572,587
571,532
Retained earnings
24,475
42,844
Accumulated other comprehensive loss
(2,656
)
(2,682
)
Total members’ capital
594,406
611,694
Noncontrolling interests
1,245,186
1,272,106
Total capital
1,839,592
1,883,800
TOTAL
$
2,908,303
$
3,004,700
FIVE POINT HOLDINGS,
LLC
SUPPLEMENTAL DATA
(In thousands)
(Unaudited)
Liquidity
June 30, 2020
Cash and cash equivalents
$
215,085
Borrowing capacity (1)
124,651
Total liquidity
$
339,736
(1)
As of June 30, 2020, no amounts were drawn
on the Company’s $125.0 million revolving credit facility; however,
letters of credit of approximately $0.3 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
June 30, 2020
Debt (1)
$
625,000
Total capital
1,839,592
Total capitalization
$
2,464,592
Debt to total capitalization
25.4
%
(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 $95.0 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 six months ended June 30, 2020
and 2019.
Three Months Ended June
30,
Six Months Ended June
30,
2020
2019
2020
2019
(in thousands)
Statement of Operations Data
Revenues
Land sales
$
17,028
$
10
$
17,034
$
65
Land sales—related party
2
14
12
23
Operating properties
831
796
1,611
2,347
Total revenues
17,861
820
18,657
2,435
Costs and expenses
Land sales
11,861
—
11,861
—
Operating properties
1,699
1,199
3,644
3,100
Selling, general, and administrative
2,713
3,892
6,446
7,701
Total costs and expenses
16,273
5,091
21,951
10,801
Other income
89
10
177
21
Segment income (loss)
$
1,677
$
(4,261
)
$
(3,117
)
$
(8,345
)
San Francisco
The following table summarizes the results of operations of our
San Francisco segment for the three and six months ended June 30,
2020 and 2019.
Three Months Ended June
30,
Six Months Ended June
30,
2020
2019
2020
2019
(in thousands)
Statement of Operations Data
Revenues
Land sales—related party
$
—
$
222
$
—
$
443
Operating property
132
177
312
351
Management services—related party
40
573
835
1,271
Total revenues
172
972
1,147
2,065
Costs and expenses
Management services
13
252
488
629
Selling, general, and administrative
2,625
5,185
6,217
9,697
Total costs and expenses
2,638
5,437
6,705
10,326
Other income—gain on settlement of
contingent consideration, related party
—
—
—
64,870
Segment (loss) income
$
(2,466
)
$
(4,465
)
$
(5,558
)
$
56,609
Great Park
The following table summarizes the results of operations of our
Great Park segment for the three and six months ended June 30, 2020
and 2019.
Three Months Ended June
30,
Six Months Ended June
30,
2020
2019
2020
2019
(in thousands)
Statement of Operations Data
Revenues
Land sales
$
346
$
31,079
$
21,821
$
62,545
Land sales—related party
304
2,338
1,005
130,035
Management services—related party
6,177
10,437
13,529
20,833
Total revenues
6,827
43,854
36,355
213,413
Costs and expenses
Land sales
—
21,149
15,304
128,968
Management services
4,403
7,227
9,979
14,466
Selling, general, and administrative
8,784
10,496
20,732
17,071
Management fees—related party
4,040
8,403
4,193
16,620
Total costs and expenses
17,227
47,275
50,208
177,125
Interest income
215
1,096
1,126
1,655
Segment (loss) income
$
(10,185
)
$
(2,325
)
$
(12,727
)
$
37,943
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 six months ended June 30, 2020 and
2019.
Three Months Ended June
30,
Six Months Ended June
30,
2020
2019
2020
2019
(in thousands)
Segment net (loss) income from
operations
$
(10,185
)
$
(2,325
)
$
(12,727
)
$
37,943
Less net income of management company
attributed to the Great Park segment
1,774
3,211
3,550
6,368
Net (loss) income of Great Park
Venture
(11,959
)
(5,536
)
(16,277
)
31,575
The Company’s share of net (loss) income
of the Great Park Venture
(4,485
)
(2,076
)
(6,104
)
11,841
Basis difference accretion
(amortization)
393
580
(1,497
)
(3,893
)
Other-than-temporary investment
impairment
—
—
(26,851
)
—
Equity in (loss) earnings from the Great
Park Venture
$
(4,092
)
$
(1,496
)
$
(34,452
)
$
7,948
Commercial
The following table summarizes the results of operations of our
Commercial segment for the three and six months ended June 30, 2020
and 2019.
Three Months Ended June
30,
Six Months Ended June
30,
2020
2019
2020
2019
(in thousands)
Statement of Operations Data
Revenues
Rental and related income
$
6,447
$
6,713
$
12,862
$
13,104
Rental and related income—related
party
2,059
2,041
4,120
4,030
Property management services—related
party
97
158
194
127
Total revenues
8,603
8,912
17,176
17,261
Costs and expenses
Rental operating expenses
1,619
1,584
3,255
3,148
Interest
3,231
4,358
6,942
8,689
Depreciation
2,612
3,307
5,355
5,484
Amortization
1,038
1,029
2,077
2,058
Other expenses
90
40
172
69
Total costs and expenses
8,590
10,318
17,801
19,448
Other income—gain on asset sale, net
37,413
—
37,413
—
Segment income (loss)
$
37,426
$
(1,406
)
$
36,788
$
(2,187
)
The table below reconciles the Commercial segment results to the
equity in earnings (loss) from our investment in the Gateway
Commercial Venture that is reflected in the condensed consolidated
statements of operations for the three and six months ended June
30, 2020 and 2019.
Three Months Ended June
30,
Six Months Ended June
30,
2020
2019
2020
2019
(in thousands)
Segment net income (loss) from
operations
$
37,426
$
(1,406
)
$
36,788
$
(2,187
)
Less net income of management company
attributed to the Commercial segment
97
158
194
127
Net income (loss) of Gateway Commercial
Venture
37,329
(1,564
)
36,594
(2,314
)
Equity in earnings (loss) from the Gateway
Commercial Venture
$
27,997
$
(1,173
)
$
27,446
$
(1,735
)
View source
version on businesswire.com: https://www.businesswire.com/news/home/20200813005774/en/
Investor Relations: Bob Wetenhall, 949-349-1087
bob.wetenhall@fivepoint.com or Media: Steve Churm, 949-349-1034
steve.churm@fivepoint.com
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