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 results for 2019. Emile Haddad, Chairman and CEO, said, “We are looking forward to delivering homesites to builders in Valencia during the fourth quarter of 2019. With both the Great Park and Valencia producing revenue, we are excited about heading into a strong 2020.”
Third Quarter 2019 Consolidated Results
Liquidity and Capital Resources
As of September 30, 2019, total liquidity of $454.4 million was comprised of cash and cash equivalents totaling $330.4 million and borrowing availability of $124.0 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, 2019
Revenues. Revenues of $12.0 million for the three months ended September 30, 2019 were primarily generated from management services.
Equity in loss from unconsolidated entities. Equity in loss from unconsolidated entities was $1.8 million for the three months ended September 30, 2019. The loss was primarily due to our proportionate share of the Great Park Venture’s net loss during the quarter of $2.4 million. After adjusting for amortization and accretion of the basis difference, our equity in loss from our 37.5% percentage interest in the Great Park Venture was $0.7 million. Equity in loss from our 75% interest in the Gateway Commercial Venture was $1.1 million for the three months ended September 30, 2019.
Selling, general, and administrative. Selling, general, and administrative expenses were $25.9 million for the three months ended September 30, 2019.
Net loss. Consolidated net loss for the quarter was $23.0 million. The net loss attributable to noncontrolling interests totaled $12.3 million, resulting in net loss attributable to the Company of $10.7 million.
Segment Results
Valencia Segment (formerly Newhall). Total segment revenues were $0.2 million for the third quarter of 2019 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 September 30, 2019.
San Francisco Segment. Total segment revenues were $1.0 million for the third quarter of 2019. Revenues during the quarter were mostly attributable to fees generated from management agreements. Selling, general, and administrative expenses were $4.4 million for the three months ended September 30, 2019.
Great Park Segment. Total segment revenues were $49.5 million for the third quarter of 2019. Revenues were mainly attributable to the sale of land entitled for 89 homesites on approximately five and a half acres at the Great Park Neighborhoods. Initial gross proceeds from the sale were $35.3 million representing the base purchase price. The Great Park segment’s net income for the quarter was $1.0 million, which included net loss of $2.4 million attributed to the Great Park Venture that is not consolidated in our financial statements. After adjusting to account for a difference in investment basis, the Company’s equity in loss from the Great Park Venture was $0.7 million for the three months ended September 30, 2019.
Commercial Segment. Total segment revenues were $8.7 million from tenant leases at the Five Point Gateway Campus and property management services provided by us to the Gateway Commercial Venture during the third quarter of 2019. Segment expenses were mostly comprised of depreciation, amortization and interest expense totaling $8.0 million. Segment net loss was approximately $1.3 million. Our share of equity in loss from the Gateway Commercial Venture totaled $1.1 million for the three months ended September 30, 2019.
Conference Call Information
In conjunction with this release, Five Point will host a conference call today, Friday, November 8, 2019 at 1:00 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 1-800-263-0877 (domestic) or 1-720-543-0197 (international). A telephonic replay will be available starting approximately two hours after the end of the call by dialing 1-844-512-2921, or for international callers, 412-317-6671. The passcode for the live call and the replay is 3326518. The telephonic replay will be available until 11:59 p.m. Eastern Time on November 22, 2019.
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, 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
| Nine Months Ended
| ||||||||||||||
2019 | 2018 | 2019 | 2018 | ||||||||||||
REVENUES: | |||||||||||||||
Land sales | $ | 9 | $ | 70 | $ | 74 | $ | 122 | |||||||
Land sales—related party | 229 | 225 | 695 | 667 | |||||||||||
Management services—related party | 11,458 | 11,159 | 33,689 | 34,366 | |||||||||||
Operating properties | 318 | 1,534 | 3,016 | 5,890 | |||||||||||
Total revenues | 12,014 | 12,988 | 37,474 | 41,045 | |||||||||||
COSTS AND EXPENSES: | |||||||||||||||
Land sales | — | 90 | — | 180 | |||||||||||
Management services | 7,699 | 6,684 | 22,794 | 20,536 | |||||||||||
Operating properties | 1,388 | 1,027 | 4,488 | 4,524 | |||||||||||
Selling, general, and administrative | 25,863 | 26,220 | 77,629 | 83,831 | |||||||||||
Total costs and expenses | 34,950 | 34,021 | 104,911 | 109,071 | |||||||||||
OTHER INCOME: | |||||||||||||||
Adjustment to payable pursuant to tax receivable agreement | — | — | — | 1,928 | |||||||||||
Interest income | 1,724 | 3,062 | 6,494 | 8,719 | |||||||||||
Gain on settlement of contingent consideration—related party | — | — | 64,870 | — | |||||||||||
Miscellaneous | 7 | 60 | 26 | 8,472 | |||||||||||
Total other income | 1,731 | 3,122 | 71,390 | 19,119 | |||||||||||
EQUITY IN (LOSS) EARNINGS FROM UNCONSOLIDATED ENTITIES | (1,750 | ) | (4,028 | ) | 4,463 | 1,368 | |||||||||
(LOSS) INCOME BEFORE INCOME TAX (PROVISION) BENEFIT | (22,955 | ) | (21,939 | ) | 8,416 | (47,539 | ) | ||||||||
INCOME TAX (PROVISION) BENEFIT | — | — | (1,266 | ) | — | ||||||||||
NET (LOSS) INCOME | (22,955 | ) | (21,939 | ) | 7,150 | (47,539 | ) | ||||||||
LESS NET (LOSS) INCOME ATTRIBUTABLE TO NONCONTROLLING INTERESTS | (12,292 | ) | (11,920 | ) | 4,517 | (27,128 | ) | ||||||||
NET (LOSS) INCOME ATTRIBUTABLE TO THE COMPANY | $ | (10,663 | ) | $ | (10,019 | ) | $ | 2,633 | $ | (20,411 | ) | ||||
NET (LOSS) INCOME ATTRIBUTABLE TO THE COMPANY PER CLASS A SHARE | |||||||||||||||
Basic | $ | (0.16 | ) | $ | (0.15 | ) | $ | 0.04 | $ | (0.31 | ) | ||||
Diluted | $ | (0.16 | ) | $ | (0.15 | ) | $ | 0.04 | $ | (0.33 | ) | ||||
WEIGHTED AVERAGE CLASS A SHARES OUTSTANDING | |||||||||||||||
Basic | 66,276,694 | 65,740,931 | 66,248,431 | 64,736,942 | |||||||||||
Diluted | 66,276,694 | 65,740,931 | 145,456,670 | 144,872,638 | |||||||||||
NET (LOSS) INCOME 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 | 79,275,234 | 79,145,487 | 79,204,883 | 80,111,663 | |||||||||||
Diluted | 79,275,234 | 79,145,487 | 79,276,016 | 80,111,663 | |||||||||||
FIVE POINT HOLDINGS, LLC CONDENSED CONSOLIDATED BALANCE SHEETS (In thousands, except shares) (Unaudited) | |||||||
September 30, 2019 | December 31, 2018 | ||||||
ASSETS | |||||||
INVENTORIES | $ | 1,898,029 | $ | 1,696,084 | |||
INVESTMENT IN UNCONSOLIDATED ENTITIES | 535,375 | 532,899 | |||||
PROPERTIES AND EQUIPMENT, NET | 32,096 | 31,677 | |||||
INTANGIBLE ASSET, NET—RELATED PARTY | 82,381 | 95,917 | |||||
CASH AND CASH EQUIVALENTS | 330,412 | 495,694 | |||||
RESTRICTED CASH AND CERTIFICATES OF DEPOSIT | 1,740 | 1,403 | |||||
RELATED PARTY ASSETS | 95,615 | 61,039 | |||||
OTHER ASSETS | 21,144 | 9,179 | |||||
TOTAL | $ | 2,996,792 | $ | 2,923,892 | |||
LIABILITIES AND CAPITAL | |||||||
LIABILITIES: | |||||||
Notes payable, net | $ | 615,663 | $ | 557,004 | |||
Accounts payable and other liabilities | 180,278 | 161,139 | |||||
Related party liabilities | 128,513 | 178,540 | |||||
Deferred income tax liability, net | 10,449 | 9,183 | |||||
Payable pursuant to tax receivable agreement | 172,633 | 169,509 | |||||
Total liabilities | 1,107,536 | 1,075,375 | |||||
REDEEMABLE NONCONTROLLING INTEREST | 25,000 | — | |||||
CAPITAL: | |||||||
Class A common shares; No par value; Issued and outstanding: 2019—68,746,555 shares; 2018—66,810,980 shares | |||||||
Class B common shares; No par value; Issued and outstanding: 2019—79,275,234 shares; 2018—78,838,736 shares | |||||||
Contributed capital | 567,599 | 556,521 | |||||
Retained earnings | 36,444 | 33,811 | |||||
Accumulated other comprehensive loss | (3,275 | ) | (3,306 | ) | |||
Total members’ capital | 600,768 | 587,026 | |||||
Noncontrolling interests | 1,263,488 | 1,261,491 | |||||
Total capital | 1,864,256 | 1,848,517 | |||||
TOTAL | $ | 2,996,792 | $ | 2,923,892 | |||
FIVE POINT HOLDINGS, LLC SUPPLEMENTAL DATA (In thousands) (Unaudited) | |||
Liquidity | |||
September 30, 2019 | |||
Cash and cash equivalents | $ | 330,412 | |
Borrowing capacity (1) | 124,000 | ||
Total liquidity | $ | 454,412 | |
(1) As of September 30, 2019, no amounts were drawn on the Company’s $125.0 million revolving credit facility; however, letters of credit of $1.0 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, 2019 | |||
Debt (1) | $ | 625,000 | |
Total capital | 1,864,256 | ||
Total capitalization | $ | 2,489,256 | |
Debt to total capitalization | 25.1 | % | |
(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 $102.7 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, 2019 and 2018.
Three Months Ended
| Nine Months Ended
| ||||||||||||||
2019 | 2018 | 2019 | 2018 | ||||||||||||
(in thousands) | |||||||||||||||
Statement of Operations Data | |||||||||||||||
Revenues | |||||||||||||||
Land sales | $ | 9 | $ | 70 | $ | 74 | $ | 122 | |||||||
Land sales—related party | 8 | 4 | 31 | 4 | |||||||||||
Operating properties | 134 | 1,354 | 2,481 | 5,342 | |||||||||||
Total revenues | 151 | 1,428 | 2,586 | 5,468 | |||||||||||
Costs and expenses | |||||||||||||||
Land sales | — | 14 | — | 104 | |||||||||||
Operating properties | 1,388 | 1,027 | 4,488 | 4,524 | |||||||||||
Selling, general, and administrative | 3,663 | 3,615 | 11,364 | 12,131 | |||||||||||
Total costs and expenses | 5,051 | 4,656 | 15,852 | 16,759 | |||||||||||
Other income | 8 | 60 | 29 | 6,922 | |||||||||||
Segment loss | $ | (4,892 | ) | $ | (3,168 | ) | $ | (13,237 | ) | $ | (4,369 | ) | |||
San Francisco
The following table summarizes the results of operations of our San Francisco segment for the three and nine months ended September 30, 2019 and 2018.
Three Months Ended
| Nine Months Ended
| ||||||||||||||
2019 | 2018 | 2019 | 2018 | ||||||||||||
(in thousands) | |||||||||||||||
Statement of Operations Data | |||||||||||||||
Revenues | |||||||||||||||
Land sales—related party | $ | 221 | $ | 221 | $ | 664 | $ | 663 | |||||||
Operating property | 184 | 180 | 535 | 548 | |||||||||||
Management services—related party | 545 | 689 | 1,816 | 3,741 | |||||||||||
Total revenues | 950 | 1,090 | 3,015 | 4,952 | |||||||||||
Costs and expenses | |||||||||||||||
Land sales | — | 76 | — | 76 | |||||||||||
Management services | 226 | 219 | 855 | 830 | |||||||||||
Selling, general, and administrative | 4,386 | 5,281 | 14,083 | 18,211 | |||||||||||
Total costs and expenses | 4,612 | 5,576 | 14,938 | 19,117 | |||||||||||
Other income—gain on settlement of contingent consideration, related party | — | — | 64,870 | — | |||||||||||
Segment (loss) income | $ | (3,662 | ) | $ | (4,486 | ) | $ | 52,947 | $ | (14,165 | ) | ||||
Great Park
The following table summarizes the results of operations of our Great Park segment for the three and nine months ended September 30, 2019 and 2018.
Three Months Ended
| Nine Months Ended
| ||||||||||||||
2019 | 2018 | 2019 | 2018 | ||||||||||||
(in thousands) | |||||||||||||||
Statement of Operations Data | |||||||||||||||
Revenues | |||||||||||||||
Land sales | $ | 36,198 | $ | 485 | $ | 98,743 | $ | 171,061 | |||||||
Land sales—related party | 2,438 | 936 | 132,473 | 1,373 | |||||||||||
Management services—related party | 10,814 | 9,833 | 31,647 | 29,808 | |||||||||||
Total revenues | 49,450 | 11,254 | 262,863 | 202,242 | |||||||||||
Costs and expenses | |||||||||||||||
Land sales | 24,518 | — | 153,486 | 118,113 | |||||||||||
Management services | 7,473 | 6,465 | 21,939 | 19,706 | |||||||||||
Selling, general, and administrative | 9,680 | 9,365 | 26,751 | 26,157 | |||||||||||
Management fees—related party | 7,825 | 2,594 | 24,445 | 17,858 | |||||||||||
Total costs and expenses | 49,496 | 18,424 | 226,621 | 181,834 | |||||||||||
Interest income | 1,016 | 505 | 2,671 | 2,392 | |||||||||||
Segment income (loss) | $ | 970 | $ | (6,665 | ) | $ | 38,913 | $ | 22,800 | ||||||
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, 2019 and 2018.
Three Months Ended
| Nine Months Ended
| ||||||||||||||
2019 | 2018 | 2019 | 2018 | ||||||||||||
(in thousands) | |||||||||||||||
Segment net income (loss) from operations | $ | 970 | $ | (6,665 | ) | $ | 38,913 | $ | 22,800 | ||||||
Less net income of management company attributed to the Great Park segment | 3,340 | 3,368 | 9,708 | 10,102 | |||||||||||
Net (loss) income of Great Park Venture | (2,370 | ) | (10,033 | ) | 29,205 | 12,698 | |||||||||
The Company’s share of net (loss) income of the Great Park Venture | (889 | ) | (3,762 | ) | 10,952 | 4,762 | |||||||||
Basis difference accretion (amortization) | 199 | 246 | (3,694 | ) | (3,406 | ) | |||||||||
Equity in (loss) earnings from the Great Park Venture | $ | (690 | ) | $ | (3,516 | ) | $ | 7,258 | $ | 1,356 | |||||
Commercial
The following table summarizes the results of operations of our Commercial segment for the three and nine months ended September 30, 2019 and 2018.
Three Months Ended
| Nine Months Ended
| ||||||||||||||
2019 | 2018 | 2019 | 2018 | ||||||||||||
(in thousands) | |||||||||||||||
Statement of Operations Data | |||||||||||||||
Revenues | |||||||||||||||
Rental and related income | $ | 6,388 | $ | 6,299 | $ | 19,492 | $ | 19,245 | |||||||
Rental and related income—related party | 2,186 | — | 6,216 | — | |||||||||||
Property management services—related party | 99 | 637 | 226 | 817 | |||||||||||
Total revenues | 8,673 | 6,936 | 25,934 | 20,062 | |||||||||||
Costs and expenses | |||||||||||||||
Rental operating expenses | 1,946 | 1,106 | 5,094 | 2,773 | |||||||||||
Interest | 4,249 | 2,916 | 12,938 | 7,626 | |||||||||||
Depreciation | 2,745 | 1,911 | 8,229 | 5,522 | |||||||||||
Amortization | 1,032 | 1,017 | 3,090 | 3,075 | |||||||||||
Other expenses | 14 | 32 | 83 | 233 | |||||||||||
Total costs and expenses | 9,986 | 6,982 | 29,434 | 19,229 | |||||||||||
Segment (loss) income | $ | (1,313 | ) | $ | (46 | ) | $ | (3,500 | ) | $ | 833 | ||||
The table below reconciles the Commercial segment results to the equity in (loss) earnings 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, 2019 and 2018.
Three Months Ended
| Nine Months Ended
| ||||||||||||||
2019 | 2018 | 2019 | 2018 | ||||||||||||
(in thousands) | |||||||||||||||
Segment net (loss) income from operations | $ | (1,313 | ) | $ | (46 | ) | $ | (3,500 | ) | $ | 833 | ||||
Less net income of management company attributed to the Commercial segment | 99 | 637 | 226 | 817 | |||||||||||
Net (loss) income of Gateway Commercial Venture | (1,412 | ) | (683 | ) | (3,726 | ) | 16 | ||||||||
Equity in (loss) earnings from the Gateway Commercial Venture | $ | (1,060 | ) | $ | (512 | ) | $ | (2,795 | ) | $ | 12 | ||||
View source version on businesswire.com: https://www.businesswire.com/news/home/20191108005081/en/
Contacts:
Bob Wetenhall, 949-349-1087
bob.wetenhall@fivepoint.com
or
Media:
Steve Churm, 949-349-1034
steve.churm@fivepoint.com
