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Five Point Holdings, LLC Reports Second Quarter 2020 Results

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/

Contacts

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