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Five Point Holdings, LLC Reports Second Quarter 2020 Results

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

)

Contacts:

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

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