Five Point Holdings, LLC Reports Fourth Quarter and Year-End 2021 Results

Fourth Quarter 2021 Highlights

In Valencia, closed the sale of 643 homesites for an aggregate purchase price of $167.3 million.
Builder sales of 147 homes in Valencia.
Builder sales of 64 homes in Great Park Neighborhoods (including 3 homes under a fee build arrangement).
Consolidated revenues of $182.2 million; consolidated net income of $47.5 million.

2021 Highlights

Great Park Venture closed the sale of 887 homesites and 16 homes for an aggregate purchase price of $419.5 million.
Great Park Venture distributions and incentive compensation payments to the Company totaled $98.3 million.
Builder sales of 655 homes in Great Park Neighborhoods (including 37 homes under a fee build arrangement), representing an 11% increase compared to 2020.
Valencia homesite closings totaled 643 for an aggregate purchase price of $167.3 million, bringing the total homesites sold and closed to 1,866 since sales commenced in December 2019.
Builder sales of 346 homes in Valencia since sales commenced in May 2021.
Extended the maturity date of the Company’s $125 million unsecured revolving line of credit to April 2024.
Consolidated revenues of $224.4 million; consolidated net income of $13.3 million.
Debt to total capitalization ratio of 24.7% and liquidity of $390.1 million as of December 31, 2021.

Five Point Holdings, LLC (“Five Point” or the “Company”) (NYSE:FPH), an owner and developer of large mixed-use planned communities in California, today reported its fourth quarter and year-end 2021 results.

Dan Hedigan, Chief Executive Officer, said, “I could not be more excited about leading the Five Point team. The Company’s well-located and irreplaceable assets provide a solid foundation upon which we can drive shareholder value. My immediate priority is to focus on revenue enhancement, cost management and process refinement. While local market conditions remain favorable for Five Point and its homebuilding partners, macro-economic issues related to geopolitical events, rising inflation and higher interest rates are being closely monitored. By focusing on the things we can control, such as maintaining a strong balance sheet, optimizing our cost structure and implementing operational efficiencies, we will have the flexibility to react to changing market conditions while driving shareholder value.”

Consolidated Results

Liquidity and Capital Resources

As of December 31, 2021, total liquidity of $390.1 million was comprised of cash and cash equivalents totaling $265.5 million and borrowing availability of $124.7 million under our $125.0 million unsecured revolving credit facility. Total capital was $1.9 billion, reflecting $2.9 billion in assets and $1.0 billion in liabilities and redeemable noncontrolling interests.

Results of Operations for the Three Months Ended December 31, 2021

Revenues. Revenues of $182.2 million for the three months ended December 31, 2021 primarily consisted of revenue recognized from land sales at our Valencia segment. At Valencia we closed the sale of land entitled for an aggregate of 643 homesites on approximately 57 acres. The base purchase price was $167.3 million, and we also recognized additional revenue of $5.1 million in the transaction price as an estimate of the amount of variable consideration from marketing fees that we expect to be entitled to receive.

Equity in loss from unconsolidated entities. Equity in loss from unconsolidated entities was $2.9 million for the three months ended December 31, 2021. The Great Park Venture had no land sales during the three months ended December 31, 2021 but did close the sale of eight homes under its fee build program at Great Park Neighborhoods, generating $13.2 million in revenues. The remaining 22 homes subject to the fee building agreement are expected to close in 2022. Net loss for the Great Park Venture was $6.7 million. Our share of the net loss from our 37.5% percentage interest, adjusted for basis differences, was $1.9 million. Additionally, we recognized $0.2 million in earnings from our 75% interest in the Gateway Commercial Venture and a $1.2 million loss from our 10% interest in the Valencia Landbank Venture, which was primarily a result of intra-entity profit elimination due to the Valencia Landbank Venture purchasing homesites at Valencia.

Selling, general, and administrative. Selling, general, and administrative expenses were $17.6 million for the three months ended December 31, 2021.

Net income. Consolidated net income for the quarter was $47.5 million. Net income attributable to noncontrolling interests totaled $25.0 million, resulting in net income attributable to the Company of $22.5 million. Net income attributable to noncontrolling interests represents the portion of income allocated to related party partners and members that hold units of the operating company and the San Francisco Venture. Holders of units of the operating company and the San Francisco Venture can redeem their interests for either, at our election, our Class A common shares on a one-for-one basis or cash. In connection with any redemption or exchange, our ownership of our operating subsidiaries will increase thereby reducing the amount of income allocated to noncontrolling interests in subsequent periods.

Results of Operations for the Twelve Months Ended December 31, 2021

Revenues. Revenues of $224.4 million for the twelve months ended December 31, 2021 primarily consisted of revenue recognized from land sales at our Valencia segment. At Valencia we closed the sale of land entitled for an aggregate of 643 homesites on approximately 57 acres. The base purchase price was $167.3 million, and we also recognized additional revenue of $5.1 million in the transaction price as an estimate of the amount of variable consideration from marketing fees that we expect to be entitled to receive.

Equity in earnings from unconsolidated entities. Equity in earnings from unconsolidated entities was $6.2 million for the twelve months ended December 31, 2021. The Great Park Venture closed the sale of land entitled for an aggregate of 887 homesites and closed the sale of 16 homes under its fee build program generating net income of $56.9 million. Our share of the net income from our 37.5% percentage interest, adjusted for basis differences, was $6.4 million. Additionally, we recognized $0.7 million in earnings from our 75% interest in the Gateway Commercial Venture and a $0.9 million loss from our 10% interest in the Valencia Landbank Venture, which was primarily a result of intra-entity profit elimination due to the Valencia Landbank Venture purchasing homesites at Valencia.

Selling, general, and administrative. Selling, general, and administrative expenses were $77.1 million for the twelve months ended December 31, 2021.

Net income. Consolidated net income for the year was $13.3 million. Net income attributable to noncontrolling interests totaled $6.7 million, resulting in net income attributable to the Company of $6.6 million.

Conference Call Information

In conjunction with this release, Five Point will host a conference call on Thursday, March 10, 2022 at 5:00 p.m. Eastern Time. Dan Hedigan, 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) 256-1007 (domestic) or (856) 344-9299 (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 7435201. The telephonic replay will be available until 11:59 p.m. Eastern Time on March 24, 2022.

About Five Point

Five Point, headquartered in Irvine, California, designs and develops large mixed-use 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,

2021

2020

2021

2020

REVENUES:

Land sales

129,413

52,322

139,500

69,398

Land sales—related party

43,213

53,205

43,286

53,219

Management services—related party

8,839

5,575

39,081

28,132

Operating properties

750

613

2,527

2,870

Total revenues

182,215

111,715

224,394

153,619

COSTS AND EXPENSES:

Land sales

106,012

73,892

106,012

85,753

Management services

6,759

3,899

31,459

20,486

Operating properties

1,724

719

6,822

5,127

Selling, general, and administrative

17,605

24,910

77,118

83,504

Total costs and expenses

132,100

103,420

221,411

194,870

OTHER (EXPENSE) INCOME:

Interest income

1,369

Miscellaneous

(113

)

3,720

356

Total other (expense) income

(93

)

155

3,814

1,725

EQUITY IN (LOSS) EARNINGS FROM UNCONSOLIDATED ENTITIES

(2,860

)

(3,053

)

6,188

42,364

INCOME BEFORE INCOME TAX BENEFIT (PROVISION)

47,162

5,397

12,985

2,838

INCOME TAX BENEFIT (PROVISION)

330

(1,744

)

325

(1,744

)

NET INCOME

47,492

3,653

13,310

1,094

LESS NET INCOME ATTRIBUTABLE TO NONCONTROLLING INTERESTS

25,008

2,871

6,742

1,522

NET INCOME (LOSS) ATTRIBUTABLE TO THE COMPANY

22,484

782

6,568

(428

)

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

Basic

0.32

0.01

0.09

(0.01

)

Diluted

0.32

0.01

0.09

(0.01

)

WEIGHTED AVERAGE CLASS A SHARES OUTSTANDING

Basic

67,448,348

66,760,897

67,394,794

66,722,187

Diluted

143,544,758

142,881,077

143,491,204

69,000,096

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

Basic and diluted

0.00

(0.00

)

WEIGHTED AVERAGE CLASS B SHARES OUTSTANDING

Basic and diluted

79,233,544

FIVE POINT HOLDINGS, LLC

CONSOLIDATED BALANCE SHEETS

(In thousands, except shares)

(Unaudited)

December 31, 2021

December 31, 2020

ASSETS

INVENTORIES

2,096,824

1,990,859

INVESTMENT IN UNCONSOLIDATED ENTITIES

374,553

442,850

PROPERTIES AND EQUIPMENT, NET

31,466

32,769

INTANGIBLE ASSET, NET—RELATED PARTY

51,405

71,747

CASH AND CASH EQUIVALENTS

265,462

298,144

RESTRICTED CASH AND CERTIFICATES OF DEPOSIT

1,330

RELATED PARTY ASSETS

101,818

103,681

OTHER ASSETS

20,052

20,605

TOTAL

2,942,910

2,961,985

LIABILITIES AND CAPITAL

LIABILITIES:

Notes payable, net

619,116

617,581

Accounts payable and other liabilities

115,374

135,331

Related party liabilities

95,918

113,149

Deferred income tax liability, net

12,998

12,578

Payable pursuant to tax receivable agreement

174,126

173,248

Total liabilities

1,017,532

1,051,887

REDEEMABLE NONCONTROLLING INTEREST

25,000

CAPITAL:

Class A common shares; No par value; Issued and outstanding: December 31, 2021—70,107,552 shares; December 31, 2020—69,051,284 shares

Class B common shares; No par value; Issued and outstanding: December 31, 2021—79,233,544 shares; December 31, 2020—79,233,544 shares

Contributed capital

587,587

578,278

Retained earnings

48,789

42,221

Accumulated other comprehensive loss

(1,952

)

(2,833

)

Total members’ capital

634,424

617,666

Noncontrolling interests

1,265,954

1,267,432

Total capital

1,900,378

1,885,098

TOTAL

2,942,910

2,961,985

FIVE POINT HOLDINGS, LLC

SUPPLEMENTAL DATA

(In thousands)

(Unaudited)

Liquidity

December 31, 2021

Cash and cash equivalents

265,462

Borrowing capacity (1)

124,651

Total liquidity

390,113

(1)

As of December 31, 2021, no amounts were drawn on the Company’s $125.0 million revolving credit facility; however, letters of credit of approximately $0.3 million were issued and outstanding under the revolving credit facility, thus reducing the available capacity by the outstanding letters of credit amount.

Debt to Total Capitalization and Net Debt to Total Capitalization

December 31, 2021

Debt (1)

625,000

Total capital

1,900,378

Total capitalization

2,525,378

Debt to total capitalization

24.7

Debt (1)

625,000

Less: Cash and cash equivalents

265,462

Net debt

359,538

Total capital

1,900,378

Total net capitalization

2,259,916

Net debt to total capitalization (2)

15.9

(1)

For purposes of this calculation, debt is the amount due on the Company’s notes payable before offsetting for capitalized deferred financing costs.

(2)

Net debt to total capitalization is a non-GAAP financial measure defined as net debt (debt less cash and cash equivalents) divided by total net capitalization (net debt plus total capital). The Company believes the ratio of net debt to total capitalization is a relevant and a useful financial measure to investors in understanding the leverage employed in the Company’s operations. However, because net debt to total capitalization is not calculated in accordance with GAAP, this financial measure should not be considered in isolation or as an alternative to financial measures prescribed by GAAP. Rather, this non-GAAP financial measure should be used to supplement the Company's GAAP results.

Segment Results

The following tables reconcile the results of operations of our segments to our consolidated results for the three and twelve months ended December 31, 2021 (in thousands):

Three Months Ended December 31, 2021

Valencia

San Francisco

Great Park

Commercial

Total reportable segments

Corporate and unallocated

Total under management

Removal of unconsolidated entities(1)

Total consolidated

REVENUES:

Land sales

129,413

—

341

—

129,754

—

129,754

(341

)

129,413

Land sales—related party

43,213

—

1,903

—

45,116

—

45,116

(1,903

)

43,213

Home sales

—

13,225

—

13,225

—

13,225

(13,225

)

—

Management services—related party(2)

—

8,737

102

8,839

—

8,839

—

8,839

Operating properties

633

117

—

2,118

2,868

—

2,868

(2,118

)

750

Total revenues

173,259

117

24,206

2,220

199,802

—

199,802

(17,587

)

182,215

COSTS AND EXPENSES:

Land sales

106,012

—

106,012

—

106,012

—

106,012

Home sales

—

9,835

—

9,835

—

9,835

(9,835

)

—

Management services(2)

—

6,759

—

6,759

—

6,759

—

6,759

Operating properties

1,724

—

624

2,348

—

2,348

(624

)

1,724

Selling, general, and administrative

3,590

2,202

5,824

901

12,517

11,813

24,330

(6,725

)

17,605

Management fees—related party

—

6,576

—

6,576

—

6,576

(6,576

)

—

Total costs and expenses

111,326

2,202

28,994

1,525

144,047

11,813

155,860

(23,760

)

132,100

OTHER (EXPENSE) INCOME:

Interest income

—

100

(80

)

Interest expense

—

(314

)

(314

)

—

(314

)

314

—

Miscellaneous

(113

)

—

(113

)

—

(113

)

—

(113

)

Total other (expense) income

(113

)

—

(314

)

(347

)

(327

)

234

(93

)

EQUITY IN LOSS FROM UNCONSOLIDATED ENTITIES

(1,183

)

—

(1,183

)

—

(1,183

)

(1,677

)

(2,860

)

SEGMENT PROFIT (LOSS)/INCOME BEFORE INCOME TAX BENEFIT

60,637

(2,085

)

(4,708

)

381

54,225

(11,793

)

42,432

4,730

47,162

INCOME TAX BENEFIT

—

330

—

330

SEGMENT PROFIT (LOSS)/NET INCOME

60,637

(2,085

)

(4,708

)

381

54,225

(11,463

)

42,762

4,730

47,492

(1)

Represents the removal of the Great Park Venture and Gateway Commercial Venture operating results, which are included in the Great Park segment and Commercial segment operating results at 100% of each venture’s historical basis, respectively, but are not included in our consolidated results as we account for our investment in each venture using the equity method of accounting.

(2)

For the Great Park and Commercial segments, represents the revenues and expenses attributable to the management company for providing services to the Great Park Venture and the Gateway Commercial Venture, as applicable.

Twelve Months Ended December 31, 2021

Valencia

San Francisco

Great Park

Commercial

Total reportable segments

Corporate and unallocated

Total under management

Removal of unconsolidated entities(1)

Total consolidated

REVENUES:

Land sales

139,500

—

346,758

—

486,258

—

486,258

(346,758

)

139,500

Land sales—related party

43,286

—

62,797

—

106,083

—

106,083

(62,797

)

43,286

Home sales

—

26,172

—

26,172

—

26,172

(26,172

)

—

Management services—related party(2)

—

38,675

406

39,081

—

39,081

—

39,081

Operating properties

1,979

548

—

8,475

11,002

—

11,002

(8,475

)

2,527

Total revenues

184,765

548

474,402

8,881

668,596

—

668,596

(444,202

)

224,394

COSTS AND EXPENSES:

Land sales

106,012

—

301,247

—

407,259

—

407,259

(301,247

)

106,012

Home sales

—

20,022

—

20,022

—

20,022

(20,022

)

—

Management services(2)

—

31,459

—

31,459

—

31,459

—

31,459

Operating properties

6,822

—

1,889

8,711

—

8,711

(1,889

)

6,822

Selling, general, and administrative

18,340

5,190

30,658

4,473

58,661

53,588

112,249

(35,131

)

77,118

Management fees—related party

—

25,969

—

25,969

—

25,969

(25,969

)

—

Total costs and expenses

131,174

5,190

409,355

6,362

552,081

53,588

605,669

(384,258

)

221,411

OTHER INCOME (EXPENSE):

Interest income

—

496

—

496

590

(496

)

Interest expense

—

(1,235

)

(1,235

)

—

(1,235

)

1,235

—

Miscellaneous

1,672

1,070

—

2,742

978

3,720

—

3,720

Total other income (expense)

1,672

1,070

496

(1,235

)

2,003

1,072

3,075

739

3,814

EQUITY IN (LOSS) EARNINGS FROM UNCONSOLIDATED ENTITIES

(903

)

—

(1,409

)

—

(2,312

)

—

(2,312

)

8,500

6,188

SEGMENT PROFIT (LOSS)/INCOME BEFORE INCOME TAX BENEFIT

54,360

(3,572

)

64,134

1,284

116,206

(52,516

)

63,690

(50,705

)

12,985

INCOME TAX BENEFIT

—

325

—

325

SEGMENT PROFIT (LOSS)/NET INCOME

54,360

(3,572

)

64,134

1,284

116,206

(52,191

)

64,015

(50,705

)

13,310

(1)

Represents the removal of the Great Park Venture and Gateway Commercial Venture operating results, which are included in the Great Park segment and Commercial segment operating results at 100% of each venture’s historical basis, respectively, but are not included in our consolidated results as we account for our investments in each venture using the equity method of accounting.

(2)

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, 2021 (in thousands):

Three Months Ended December 31, 2021

Twelve Months Ended December 31, 2021

Segment (loss) profit from operations

(4,708

)

64,134

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

1,978

7,216

Net (loss) income of the Great Park Venture

(6,686

)

56,918

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

(2,508

)

21,344

Basis difference accretion (amortization)

621

(14,912

)

Equity in (loss) earnings from the Great Park Venture

(1,887

)

6,432

The table below reconciles the Commercial segment results to the equity in earnings 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, 2021 (in thousands):

Three Months Ended December 31, 2021

Twelve Months Ended December 31, 2021

Segment profit from operations

381

1,284

Less net income of management company attributed to the Commercial segment

102

406

Net income of the Gateway Commercial Venture

279

878

Equity in earnings from the Gateway Commercial Venture