Five Point Holdings, LLC Reports First Quarter 2020 Results

First Quarter 2020 and Recent Highlights

  • Rapid response to potential impacts of COVID-19 ensuring safety of associates and financial stability of the Company.
  • Company maintains liquidity of $372.4 million at March 31, 2020.
  • Closed 35 previously sold homesites at Great Park Neighborhoods with a base purchase price of $20.3 million.
  • In May 2020, closed 70 previously sold homesites at Valencia with a base purchase price of $16.5 million, including a seller secured note that is payable in December 2020.

IRVINE, Calif.--()--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 first quarter 2020 results. Emile Haddad, Chairman and CEO, said, “In these unprecedented times, we are thankful that all of our associates are healthy, comforted by the strength of our balance sheet and liquidity, encouraged by the performance of our guest builders, grateful to those who continue investing in our vision, and proud of our team.”

First Quarter 2020 Consolidated Results

Liquidity and Capital Resources

As of March 31, 2020, total liquidity of $372.4 million was comprised of cash and cash equivalents totaling $247.8 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 March 31, 2020

Revenues. Revenues of $9.2 million for the three months ended March 31, 2020 were primarily generated from management services.

Equity in loss from unconsolidated entities. Equity in loss from unconsolidated entities was $30.9 million for the three months ended March 31, 2020 comprised of a $3.5 million loss from our 37.5% percentage interest in the Great Park Venture and a $0.6 million loss from our 75% interest in the Gateway Commercial Venture. Equity in loss from unconsolidated entities also included the recognition of an other-than-temporary impairment of $26.9 million attributed to our investment in the Great Park Venture.

Selling, general, and administrative. Selling, general, and administrative expenses were $24.6 million for the three months ended March 31, 2020.

Net loss. Consolidated net loss for the quarter was $53.2 million. The net loss attributable to noncontrolling interests totaled $28.4 million, resulting in net loss attributable to the Company of $24.8 million.

Segment Results

Valencia Segment (formerly Newhall). Total segment revenues were $0.8 million for the first quarter of 2020 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 March 31, 2020.

San Francisco Segment. Total segment revenues were $1.0 million for the first quarter of 2020. Revenues during the quarter were mostly attributable to fees generated from management agreements. Selling, general, and administrative expenses were $3.6 million for the three months ended March 31, 2020.

Great Park Segment. Total segment revenues were $29.5 million for the first quarter of 2020. Revenues were mainly attributable to the sale of land entitled for 35 homesites on approximately four acres at the Great Park Neighborhoods. Initial gross proceeds from the sale were $20.3 million representing the base purchase price. The Great Park segment’s net loss for the quarter was $2.5 million, which included net income of $1.8 million from management services and a net loss of $4.3 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 $3.5 million for the three months ended March 31, 2020. During the first quarter of 2020, the Company’s equity in loss from the Great Park Venture also included the recognition of an other-than-temporary impairment of $26.9 million attributed to our investment in the Great Park Venture. The impairment was primarily a result of expected delays in both the timing of land sales to builders and distributions to us causing a decline in the fair value of our investment in the Great Park Venture.

Commercial Segment. Total segment revenues were $8.6 million from tenant leases at the Five Point Gateway Campus and property management services provided by us to the Gateway Commercial Venture during the first quarter of 2020. Segment expenses were mostly comprised of depreciation, amortization and interest expense totaling $7.5 million. Segment net loss was approximately $0.6 million, which included net income of $0.1 million from management services and a net loss of $0.7 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 $0.6 million for the three months ended March 31, 2020.

Conference Call Information

In conjunction with this release, Five Point will host a conference call today, Thursday, May 21, 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) 458-4121 (domestic) or (720) 543-0206 (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 3425685. The telephonic replay will be available until 11:59 p.m. Eastern Time on June 4, 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
March 31,

 

2020

 

 

2019

 

REVENUES:

 

 

 

Land sales

$

6

 

 

 

$

55

 

 

Land sales—related party

10

 

 

 

230

 

 

Management services—related party

8,244

 

 

 

11,063

 

 

Operating properties

960

 

 

 

1,725

 

 

Total revenues

9,220

 

 

 

13,073

 

 

COSTS AND EXPENSES:

 

 

 

Land sales

 

 

 

 

 

Management services

6,051

 

 

 

7,616

 

 

Operating properties

1,945

 

 

 

1,901

 

 

Selling, general, and administrative

24,626

 

 

 

25,773

 

 

Total costs and expenses

32,622

 

 

 

35,290

 

 

OTHER INCOME:

 

 

 

Interest income

1,006

 

 

 

2,454

 

 

Gain on settlement of contingent consideration—related party

 

 

 

64,870

 

 

Miscellaneous

88

 

 

 

10

 

 

Total other income

1,094

 

 

 

67,334

 

 

EQUITY IN (LOSS) EARNINGS FROM UNCONSOLIDATED ENTITIES

(30,911

)

 

 

8,882

 

 

(LOSS) INCOME BEFORE INCOME TAX (PROVISION) BENEFIT

(53,219

)

 

 

53,999

 

 

INCOME TAX (PROVISION) BENEFIT

 

 

 

(1,266

)

 

NET (LOSS) INCOME

(53,219

)

 

 

52,733

 

 

LESS NET (LOSS) INCOME ATTRIBUTABLE TO NONCONTROLLING INTERESTS

(28,413

)

 

 

28,925

 

 

NET (LOSS) INCOME ATTRIBUTABLE TO THE COMPANY

$

(24,806

)

 

 

$

23,808

 

 

 

 

 

 

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

 

 

 

Basic

$

(0.36

)

 

 

$

0.35

 

 

Diluted

$

(0.37

)

 

 

$

0.35

 

 

WEIGHTED AVERAGE CLASS A SHARES OUTSTANDING

 

 

 

Basic

66,649,866

 

 

 

66,210,916

 

 

Diluted

68,792,585

 

 

 

145,296,469

 

 

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

 

 

 

Basic and diluted

$

(0.00

)

 

 

$

0.00

 

 

WEIGHTED AVERAGE CLASS B SHARES OUTSTANDING

 

 

 

Basic

79,233,544

 

 

 

79,061,835

 

 

Diluted

79,233,544

 

 

 

79,275,234

 

 

FIVE POINT HOLDINGS, LLC

CONDENSED CONSOLIDATED BALANCE SHEETS

(In thousands, except shares)

(Unaudited)

 

 

March 31, 2020

 

December 31, 2019

ASSETS

 

 

 

INVENTORIES

$

1,958,901

 

 

 

$

1,889,761

 

 

INVESTMENT IN UNCONSOLIDATED ENTITIES

501,909

 

 

 

533,239

 

 

PROPERTIES AND EQUIPMENT, NET

33,071

 

 

 

32,312

 

 

INTANGIBLE ASSET, NET—RELATED PARTY

77,990

 

 

 

80,350

 

 

CASH AND CASH EQUIVALENTS

247,754

 

 

 

346,833

 

 

RESTRICTED CASH AND CERTIFICATES OF DEPOSIT

1,742

 

 

 

1,741

 

 

RELATED PARTY ASSETS

95,148

 

 

 

97,561

 

 

OTHER ASSETS

20,908

 

 

 

22,903

 

 

TOTAL

$

2,937,423

 

 

 

$

3,004,700

 

 

 

 

 

 

LIABILITIES AND CAPITAL

 

 

 

LIABILITIES:

 

 

 

Notes payable, net

$

616,430

 

 

 

$

616,046

 

 

Accounts payable and other liabilities

161,665

 

 

 

167,711

 

 

Related party liabilities

126,958

 

 

 

127,882

 

 

Deferred income tax liability, net

11,628

 

 

 

11,628

 

 

Payable pursuant to tax receivable agreement

173,248

 

 

 

172,633

 

 

Total liabilities

1,089,929

 

 

 

1,095,900

 

 

 

 

 

 

REDEEMABLE NONCONTROLLING INTEREST

25,000

 

 

 

25,000

 

 

CAPITAL:

 

 

 

Class A common shares; No par value; Issued and outstanding: 2020—69,061,898 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

569,772

 

 

 

571,532

 

 

Retained earnings

17,843

 

 

 

42,844

 

 

Accumulated other comprehensive loss

(2,671

)

 

 

(2,682

)

 

Total members’ capital

584,944

 

 

 

611,694

 

 

Noncontrolling interests

1,237,550

 

 

 

1,272,106

 

 

Total capital

1,822,494

 

 

 

1,883,800

 

 

TOTAL

$

2,937,423

 

 

 

$

3,004,700

 

 

FIVE POINT HOLDINGS, LLC

SUPPLEMENTAL DATA

(In thousands)

(Unaudited)

 

Liquidity

 

March 31, 2020

Cash and cash equivalents

$

247,754

 

Borrowing capacity (1)

124,651

 

Total liquidity

$

372,405

 

(1)

As of March 31, 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

 

March 31, 2020

Debt (1)

$

625,000

 

Total capital

1,822,494

 

Total capitalization

$

2,447,494

 

Debt to total capitalization

25.5

%

(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 $101.8 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 months ended March 31, 2020 and 2019.

 

Three Months Ended
March 31,

 

2020

 

 

2019

 

 

(in thousands)

Statement of Operations Data

 

 

 

Revenues

 

 

 

Land sales

$

6

 

 

 

$

55

 

 

Land sales—related party

10

 

 

 

9

 

 

Operating properties

780

 

 

 

1,551

 

 

Total revenues

796

 

 

 

1,615

 

 

Costs and expenses

 

 

 

Land sales

 

 

 

 

 

Operating properties

1,945

 

 

 

1,901

 

 

Selling, general, and administrative

3,733

 

 

 

3,809

 

 

Total costs and expenses

5,678

 

 

 

5,710

 

 

Other income

88

 

 

 

11

 

 

Segment loss

$

(4,794

)

 

 

$

(4,084

)

 

San Francisco

The following table summarizes the results of operations of our San Francisco segment for the three months ended March 31, 2020 and 2019.

 

Three Months Ended
March 31,

 

2020

 

 

2019

 

(in thousands)

Statement of Operations Data

 

 

 

Revenues

 

 

 

Land sales—related party

$

 

 

 

$

221

 

Operating property

180

 

 

 

174

 

Management services—related party

795

 

 

 

698

 

Total revenues

975

 

 

 

1,093

 

Costs and expenses

 

 

 

Land sales

 

 

 

 

Management services

475

 

 

 

377

 

Selling, general, and administrative

3,592

 

 

 

4,512

 

Total costs and expenses

4,067

 

 

 

4,889

 

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

 

 

 

64,870

 

Segment (loss) income

$

(3,092

)

 

 

$

61,074

 

Great Park

The following table summarizes the results of operations of our Great Park segment for the three months ended March 31, 2020 and 2019.

 

Three Months Ended
March 31,

 

2020

 

 

2019

 

(in thousands)

Statement of Operations Data

 

 

 

Revenues

 

 

 

Land sales

$

21,475

 

 

 

$

31,466

 

Land sales—related party

701

 

 

 

127,697

 

Management services—related party

7,352

 

 

 

10,396

 

Total revenues

29,528

 

 

 

169,559

 

Costs and expenses

 

 

 

Land sales

15,304

 

 

 

107,819

 

Management services

5,576

 

 

 

7,239

 

Selling, general, and administrative

11,948

 

 

 

6,575

 

Management fees—related party

153

 

 

 

8,217

 

Total costs and expenses

32,981

 

 

 

129,850

 

Interest income

911

 

 

 

559

 

Segment (loss) income

$

(2,542

)

 

 

$

40,268

 

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 months ended March 31, 2020 and 2019.

 

Three Months Ended
March 31,

 

2020

 

 

2019

 

 

(in thousands)

Segment net (loss) income from operations

$

(2,542

)

 

 

$

40,268

 

 

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

1,776

 

 

 

3,157

 

 

Net (loss) income of Great Park Venture

(4,318

)

 

 

37,111

 

 

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

(1,619

)

 

 

13,917

 

 

Basis difference amortization

(1,890

)

 

 

(4,473

)

 

Other-than-temporary investment impairment

(26,851

)

 

 

 

 

Equity in (loss) earnings from the Great Park Venture

$

(30,360

)

 

 

$

9,444

 

 

Commercial

The following table summarizes the results of operations of our Commercial segment for the three months ended March 31, 2020 and 2019.

 

Three Months Ended
March 31,

 

2020

 

 

2019

 

 

(in thousands)

Statement of Operations Data

 

 

 

Revenues

 

 

 

Rental and related income

$

6,415

 

 

 

$

6,391

 

 

Rental and related income—related party

2,061

 

 

 

1,989

 

 

Property management services—related party

97

 

 

 

(31

)

 

Total revenues

8,573

 

 

 

8,349

 

 

Costs and expenses

 

 

 

Rental operating expenses

1,636

 

 

 

1,564

 

 

Interest

3,711

 

 

 

4,331

 

 

Depreciation

2,743

 

 

 

2,177

 

 

Amortization

1,038

 

 

 

1,029

 

 

Other expenses

83

 

 

 

29

 

 

Total costs and expenses

9,211

 

 

 

9,130

 

 

Segment loss

$

(638

)

 

 

$

(781

)

 

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 condensed consolidated statements of operations for the three months ended March 31, 2020 and 2019.

 

Three Months Ended
March 31,

 

2020

 

 

2019

 

 

(in thousands)

Segment net loss from operations

$

(638

)

 

 

$

(781

)

 

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

97

 

 

 

(31

)

 

Net loss of Gateway Commercial Venture

(735

)

 

 

(750

)

 

Equity in loss from the Gateway Commercial Venture

$

(551

)

 

 

$

(562

)

 

 

Contacts

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

Contacts

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