FPH Five Point Holdings LLC

Third Quarter 2020 Highlights

• Consolidated net income of $36.4 million and an increase in cash of approximately $55 million.
• Cash distributions of $80.3 million received from Gateway Commercial Venture from proceeds generated by the sale of two buildings at the Five Point Gateway Campus for a purchase price of $355 million.
• Company maintains liquidity of $395.2 million at September 30, 2020.

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 2020 results. Emile Haddad, Chairman and CEO, said, “We are pleased to present our third quarter results where we improved our cash position by $55 million and generated consolidated net income of $36.4 million. We are seeing continued strength in our markets evidenced by the rate of sales at our Great Park Neighborhoods community, the interest from homebuilders in Valencia and the reported home price appreciation in both the Los Angeles County and Orange County markets.”

Third Quarter 2020 Consolidated Results

Liquidity and Capital Resources

As of September 30, 2020, total liquidity of $395.2 million was comprised of cash and cash equivalents totaling $270.6 million and borrowing availability of $124.7 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, 2020

Revenues. Revenues of $8.4 million for the three months ended September 30, 2020 were primarily generated from management services.

Equity in earnings from unconsolidated entities. Equity in earnings from unconsolidated entities was $52.4 million for the three months ended September 30, 2020, comprised of a $4.2 million loss from our 37.5% percentage interest in the Great Park Venture and earnings of $56.6 million from our 75% interest in the Gateway Commercial Venture.

Selling, general, and administrative. Selling, general, and administrative expenses were $17.7 million for the three months ended September 30, 2020.

Net income. Consolidated net income for the quarter was $36.4 million. The net income attributable to noncontrolling interests totaled $19.5 million, resulting in net income attributable to the Company of $17.0 million.

Segment Results

Valencia Segment (formerly Newhall). Selling, general, and administrative expenses were $2.8 million for the three months ended September 30, 2020.

San Francisco Segment. Selling, general, and administrative expenses were $2.0 million for the three months ended September 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 $4.2 million for the three months ended September 30, 2020.

Commercial Segment. In August 2020, the Gateway Commercial Venture closed on the sale of two buildings, comprising a total of approximately 660,000 square feet of research and development space currently leased to a subsidiary of Broadcom Inc. for a purchase price of $355.0 million. The sale of the buildings, which had a carrying value of approximately $278.0 million, resulted in a gain of approximately $74.8 million, net of transaction costs. Concurrently, the Gateway Commercial Venture made a debt payment of $245.0 million to its lender and made total distributions to its members of approximately $107.0 million, of which approximately $80.3 million was distributed to us. Segment net income was approximately $75.6 million, which included net income of $0.1 million from management services and net income of $75.5 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 $56.6 million for the three months ended September 30, 2020.

Conference Call Information

In conjunction with this release, Five Point will host a conference call today, Tuesday, November 10, 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 (866) 248-8441 (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 2148805 The telephonic replay will be available until 11:59 p.m. Eastern Time on November 24, 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 September 30,

 

Nine Months Ended September 30,

 

2020

 

2019

 

 

2020

 

 

2019

 

REVENUES:

 

 

 

 

 

 

 

Land sales

$

42

 

 

$

9

 

 

 

$

17,076

 

 

 

$

74

 

 

Land sales—related party

2

 

 

229

 

 

 

14

 

 

 

695

 

 

Management services—related party

7,999

 

 

11,458

 

 

 

22,557

 

 

 

33,689

 

 

Operating properties

334

 

 

318

 

 

 

2,257

 

 

 

3,016

 

 

Total revenues

8,377

 

 

12,014

 

 

 

41,904

 

 

 

37,474

 

 

COSTS AND EXPENSES:

 

 

 

 

 

 

 

Land sales

—

 

 

—

 

 

 

11,861

 

 

 

—

 

 

Management services

6,120

 

 

7,699

 

 

 

16,587

 

 

 

22,794

 

 

Operating properties

764

 

 

1,388

 

 

 

4,408

 

 

 

4,488

 

 

Selling, general, and administrative

17,656

 

 

25,863

 

 

 

58,594

 

 

 

77,629

 

 

Total costs and expenses

24,540

 

 

34,950

 

 

 

91,450

 

 

 

104,911

 

 

OTHER INCOME:

 

 

 

 

 

 

 

Interest income

71

 

 

1,724

 

 

 

1,303

 

 

 

6,494

 

 

Gain on settlement of contingent consideration—related party

—

 

 

—

 

 

 

—

 

 

 

64,870

 

 

Miscellaneous

91

 

 

7

 

 

 

267

 

 

 

26

 

 

Total other income

162

 

 

1,731

 

 

 

1,570

 

 

 

71,390

 

 

EQUITY IN EARNINGS (LOSS) FROM UNCONSOLIDATED ENTITIES

52,423

 

 

(1,750

)

 

 

45,417

 

 

 

4,463

 

 

INCOME (LOSS) BEFORE INCOME TAX (PROVISION) BENEFIT

36,422

 

 

(22,955

)

 

 

(2,559

)

 

 

8,416

 

 

INCOME TAX (PROVISION) BENEFIT

—

 

 

—

 

 

 

—

 

 

 

(1,266

)

 

NET INCOME (LOSS)

36,422

 

 

(22,955

)

 

 

(2,559

)

 

 

7,150

 

 

LESS NET INCOME (LOSS) ATTRIBUTABLE TO NONCONTROLLING INTERESTS

19,458

 

 

(12,292

)

 

 

(1,349

)

 

 

4,517

 

 

NET INCOME (LOSS) ATTRIBUTABLE TO THE COMPANY

$

16,964

 

 

$

(10,663

)

 

 

$

(1,210

)

 

 

$

2,633

 

 

 

 

 

 

 

 

 

 

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

 

 

 

 

 

 

 

Basic

$

0.25

 

 

$

(0.16

)

 

 

$

(0.02

)

 

 

$

0.04

 

 

Diluted

$

0.25

 

 

$

(0.16

)

 

 

$

(0.02

)

 

 

$

0.04

 

 

WEIGHTED AVERAGE CLASS A SHARES OUTSTANDING

 

 

 

 

 

 

 

Basic

66,746,065

 

 

66,276,694

 

 

 

66,709,190

 

 

 

66,248,431

 

 

Diluted

142,866,245

 

 

66,276,694

 

 

 

68,848,283

 

 

 

145,456,670

 

 

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

 

 

 

79,204,883

 

 

Diluted

79,233,544

 

 

79,275,234

 

 

 

79,233,544

 

 

 

79,276,016

 

 

FIVE POINT HOLDINGS, LLC

CONDENSED CONSOLIDATED BALANCE SHEETS

(In thousands, except shares)

(Unaudited)

 

 

September 30, 2020

 

December 31, 2019

ASSETS

 

 

 

INVENTORIES

$

2,021,155

 

 

 

$

1,889,761

 

 

INVESTMENT IN UNCONSOLIDATED ENTITIES

441,737

 

 

 

533,239

 

 

PROPERTIES AND EQUIPMENT, NET

33,018

 

 

 

32,312

 

 

INTANGIBLE ASSET, NET—RELATED PARTY

73,269

 

 

 

80,350

 

 

CASH AND CASH EQUIVALENTS

270,580

 

 

 

346,833

 

 

RESTRICTED CASH AND CERTIFICATES OF DEPOSIT

1,330

 

 

 

1,741

 

 

RELATED PARTY ASSETS

100,478

 

 

 

97,561

 

 

OTHER ASSETS

21,357

 

 

 

22,903

 

 

TOTAL

$

2,962,924

 

 

 

$

3,004,700

 

 

 

 

 

 

LIABILITIES AND CAPITAL

 

 

 

LIABILITIES:

 

 

 

Notes payable, net

$

617,198

 

 

 

$

616,046

 

 

Accounts payable and other liabilities

138,066

 

 

 

167,711

 

 

Related party liabilities

118,897

 

 

 

127,882

 

 

Deferred income tax liability, net

11,628

 

 

 

11,628

 

 

Payable pursuant to tax receivable agreement

173,248

 

 

 

172,633

 

 

Total liabilities

1,059,037

 

 

 

1,095,900

 

 

 

 

 

 

REDEEMABLE NONCONTROLLING INTEREST

25,000

 

 

 

25,000

 

 

CAPITAL:

 

 

 

Class A common shares; No par value; Issued and outstanding: 2020—69,051,284 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

575,412

 

 

 

571,532

 

 

Retained earnings

41,439

 

 

 

42,844

 

 

Accumulated other comprehensive loss

(2,640

)

 

 

(2,682

)

 

Total members’ capital

614,211

 

 

 

611,694

 

 

Noncontrolling interests

1,264,676

 

 

 

1,272,106

 

 

Total capital

1,878,887

 

 

 

1,883,800

 

 

TOTAL

$

2,962,924

 

 

 

$

3,004,700

 

 

FIVE POINT HOLDINGS, LLC

SUPPLEMENTAL DATA

(In thousands)

(Unaudited)

 

Liquidity

 

September 30, 2020

Cash and cash equivalents

$

270,580

 

Borrowing capacity (1)

124,651

 

Total liquidity

$

395,231

 

(1) As of September 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

 

 

September 30, 2020

Debt (1)

$

625,000

 

Total capital

1,878,887

 

Total capitalization

$

2,503,887

 

Debt to total capitalization

25.0

%

(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 $94.4 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 nine months ended September 30, 2020 and 2019.

 

Three Months Ended September 30,

 

Nine Months Ended September 30,

 

2020

 

 

2019

 

 

2020

 

 

2019

 

 

(in thousands)

Statement of Operations Data

 

 

 

 

 

 

 

Revenues

 

 

 

 

 

 

 

Land sales

$

42

 

 

 

$

9

 

 

 

$

17,076

 

 

 

$

74

 

 

Land sales—related party

2

 

 

 

8

 

 

 

14

 

 

 

31

 

 

Operating properties

196

 

 

 

134

 

 

 

1,807

 

 

 

2,481

 

 

Total revenues

240

 

 

 

151

 

 

 

18,897

 

 

 

2,586

 

 

Costs and expenses

 

 

 

 

 

 

 

Land sales

—

 

 

 

—

 

 

 

11,861

 

 

 

—

 

 

Operating properties

764

 

 

 

1,388

 

 

 

4,408

 

 

 

4,488

 

 

Selling, general, and administrative

2,798

 

 

 

3,663

 

 

 

9,244

 

 

 

11,364

 

 

Total costs and expenses

3,562

 

 

 

5,051

 

 

 

25,513

 

 

 

15,852

 

 

Other income

91

 

 

 

8

 

 

 

268

 

 

 

29

 

 

Segment loss

$

(3,231

)

 

 

$

(4,892

)

 

 

$

(6,348

)

 

 

$

(13,237

)

 

San Francisco

The following table summarizes the results of operations of our San Francisco segment for the three and nine months ended September 30, 2020 and 2019.

 

Three Months Ended September 30,

 

Nine Months Ended September 30,

 

2020

 

 

2019

 

 

2020

 

 

2019

 

(in thousands)

Statement of Operations Data

 

 

 

 

 

 

 

Revenues

 

 

 

 

 

 

 

Land sales—related party

$

—

 

 

 

$

221

 

 

 

$

—

 

 

 

$

664

 

Operating property

138

 

 

 

184

 

 

 

450

 

 

 

535

 

Management services—related party

—

 

 

 

545

 

 

 

835

 

 

 

1,816

 

Total revenues

138

 

 

 

950

 

 

 

1,285

 

 

 

3,015

 

Costs and expenses

 

 

 

 

 

 

 

Management services

—

 

 

 

226

 

 

 

488

 

 

 

855

 

Selling, general, and administrative

1,967

 

 

 

4,386

 

 

 

8,184

 

 

 

14,083

 

Total costs and expenses

1,967

 

 

 

4,612

 

 

 

8,672

 

 

 

14,938

 

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

—

 

 

 

—

 

 

 

—

 

 

 

64,870

 

Segment (loss) income

$

(1,829

)

 

 

$

(3,662

)

 

 

$

(7,387

)

 

 

$

52,947

 

Great Park

The following table summarizes the results of operations of our Great Park segment for the three and nine months ended September 30, 2020 and 2019.

 

Three Months Ended September 30,

 

Nine Months Ended September 30,

 

2020

 

 

2019

 

2020

 

 

2019

 

(in thousands)

Statement of Operations Data

 

 

 

 

 

 

 

Revenues

 

 

 

 

 

 

 

Land sales

$

141

 

 

 

$

36,198

 

 

$

21,962

 

 

 

$

98,743

 

Land sales—related party

87

 

 

 

2,438

 

 

1,092

 

 

 

132,473

 

Management services—related party

7,895

 

 

 

10,814

 

 

21,424

 

 

 

31,647

 

Total revenues

8,123

 

 

 

49,450

 

 

44,478

 

 

 

262,863

 

Costs and expenses

 

 

 

 

 

 

 

Land sales

—

 

 

 

24,518

 

 

15,304

 

 

 

153,486

 

Management services

6,120

 

 

 

7,473

 

 

16,099

 

 

 

21,939

 

Selling, general, and administrative

8,840

 

 

 

9,680

 

 

29,572

 

 

 

26,751

 

Management fees—related party

3,440

 

 

 

7,825

 

 

7,633

 

 

 

24,445

 

Total costs and expenses

18,400

 

 

 

49,496

 

 

68,608

 

 

 

226,621

 

Interest income

84

 

 

 

1,016

 

 

1,210

 

 

 

2,671

 

Segment (loss) income

$

(10,193

)

 

 

$

970

 

 

$

(22,920

)

 

 

$

38,913

 

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, 2020 and 2019.

 

Three Months Ended September 30,

 

Nine Months Ended September 30,

 

2020

 

 

2019

 

 

2020

 

 

2019

 

 

(in thousands)

Segment net (loss) income from operations

$

(10,193

)

 

 

$

970

 

 

 

$

(22,920

)

 

 

$

38,913

 

 

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

1,775

 

 

 

3,340

 

 

 

5,325

 

 

 

9,708

 

 

Net (loss) income of the Great Park Venture

(11,968

)

 

 

(2,370

)

 

 

(28,245

)

 

 

29,205

 

 

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

(4,488

)

 

 

(889

)

 

 

(10,592

)

 

 

10,952

 

 

Basis difference accretion (amortization)

293

 

 

 

199

 

 

 

(1,204

)

 

 

(3,694

)

 

Other-than-temporary investment impairment

—

 

 

 

—

 

 

 

(26,851

)

 

 

—

 

 

Equity in (loss) earnings from the Great Park Venture

$

(4,195

)

 

 

$

(690

)

 

 

$

(38,647

)

 

 

$

7,258

 

 

Commercial

The following table summarizes the results of operations of our Commercial segment for the three and nine months ended September 30, 2020 and 2019.

 

Three Months Ended September 30,

 

Nine Months Ended September 30,

 

2020

 

2019

 

 

2020

 

2019

 

 

(in thousands)

Statement of Operations Data

 

 

 

 

 

 

 

Revenues

 

 

 

 

 

 

 

Rental and related income

$

2,935

 

 

$

6,388

 

 

 

$

15,797

 

 

$

19,492

 

 

Rental and related income—related party

2,224

 

 

2,186

 

 

 

6,344

 

 

6,216

 

 

Property management services—related party

104

 

 

99

 

 

 

298

 

 

226

 

 

Total revenues

5,263

 

 

8,673

 

 

 

22,439

 

 

25,934

 

 

Costs and expenses

 

 

 

 

 

 

 

Rental operating expenses

1,275

 

 

1,946

 

 

 

4,530

 

 

5,094

 

 

Interest

1,605

 

 

4,249

 

 

 

8,547

 

 

12,938

 

 

Depreciation

972

 

 

2,745

 

 

 

6,327

 

 

8,229

 

 

Amortization

23

 

 

1,032

 

 

 

2,100

 

 

3,090

 

 

Other expenses

640

 

 

14

 

 

 

812

 

 

83

 

 

Total costs and expenses

4,515

 

 

9,986

 

 

 

22,316

 

 

29,434

 

 

Other income—gain on asset sales, net

74,847

 

 

—

 

 

 

112,260

 

 

—

 

 

Segment income (loss)

$

75,595

 

 

$

(1,313

)

 

 

$

112,383

 

 

$

(3,500

)

 

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 nine months ended September 30, 2020 and 2019.

 

Three Months Ended September 30,

 

Nine Months Ended September 30,

 

2020

 

2019

 

 

2020

 

2019

 

 

(in thousands)

Segment net income (loss) from operations

$

75,595

 

 

$

(1,313

)

 

 

$

112,383

 

 

$

(3,500

)

 

Less net income of management company attributed to the Commercial segment

104

 

 

99

 

 

 

298

 

 

226

 

 

Net income (loss) of the Gateway Commercial Venture

75,491

 

 

(1,412

)

 

 

112,085

 

 

(3,726

)

 

Equity in earnings (loss) from the Gateway Commercial Venture

$

56,618

 

 

$

(1,060

)

 

 

$

84,064

 

 

$

(2,795

)

 

 

View source version on businesswire.com: https://www.businesswire.com/news/home/20201110006153/en/

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