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Five Point Holdings, LLC Reports Fourth Quarter and Year-End 2019 Results
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Five Point Holdings, LLC Reports Fourth Quarter and Year-End 2019 Results

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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 fourth quarter and year-end 2019 results. Emile Haddad, Chairman and CEO, said, “The end of last year marked an inflection point for our company as we had our first homesite sales in December at Valencia/Newhall. A lot has changed over the past three weeks. While we hope that the unprecedented conditions facing the country and the economy will be short-lived, we believe we are well positioned to withstand these challenges. Our balance sheet remains strong, and we have the ability to quickly adjust our land development expenditures in response to changing market conditions. We look forward to the opportunities that await us once we have weathered this storm.”

Fourth Quarter 2019 Consolidated Results

Liquidity and Capital Resources

As of December 31, 2019, total liquidity of $470.8 million was comprised of cash and cash equivalents totaling $346.8 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 December 31, 2019

Revenues. Revenues of $146.9 million for the three months ended December 31, 2019 were primarily generated from land sales at our Valencia segment.

Equity in loss from unconsolidated entities. Equity in loss from unconsolidated entities was $2.1 million for the three months ended December 31, 2019 comprised of a $1.1 million loss from our 37.5% percentage interest in the Great Park Venture and a $1.1 million loss from our 75% interest in the Gateway Commercial Venture.

Selling, general, and administrative. Selling, general, and administrative expenses were $26.0 million for the three months ended December 31, 2019.

Net income. Consolidated net income for the quarter was $15.1 million. The net income attributable to noncontrolling interests totaled $8.7 million, resulting in net income attributable to the Company of $6.4 million.

Segment Results

Valencia Segment (formerly Newhall). Total segment revenues were $140.6 million for the fourth quarter of 2019. Revenues were mainly attributable to the sale of land entitled for 711 homesites on approximately 59 acres in Valencia. Initial gross proceeds from the sale were $135.2 million representing the base purchase price. Cost of land sales was $97.1 million, or 69.4% of land sale revenues for the fourth quarter. Selling, general, and administrative expenses were $3.4 million for the three months ended December 31, 2019.

San Francisco Segment. Total segment revenues were $1.0 million for the fourth quarter of 2019. Revenues during the quarter were mostly attributable to fees generated from management agreements. Selling, general, and administrative expenses were $3.8 million for the three months ended December 31, 2019.

Great Park Segment. Total segment revenues were $45.0 million for the fourth quarter of 2019. Revenues were mainly attributable to the sale of land entitled for 69 homesites on approximately seven acres at the Great Park Neighborhoods. Initial gross proceeds from the sale were $37.9 million representing the base purchase price. The Great Park segment’s net income for the quarter was $5.5 million, which included a net loss of $0.2 million from management services and net income of $5.7 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 $1.1 million for the three months ended December 31, 2019.

Commercial Segment. Total segment revenues were $8.5 million from tenant leases at the Five Point Gateway Campus and property management services provided by us to the Gateway Commercial Venture during the fourth quarter of 2019. Segment expenses were mostly comprised of depreciation, amortization and interest expense totaling $7.7 million. Segment net loss was approximately $1.3 million, which included net income of $0.1 million from management services and a net loss of $1.4 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 $1.1 million for the three months ended December 31, 2019.

Conference Call Information

In conjunction with this release, Five Point will host a conference call today, Monday, March 16, 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 (888) 394-8218 (domestic) or (720) 452-9217 (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 8373226. The telephonic replay will be available until 11:59 p.m. Eastern Time on March 30, 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, 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,

2019

2018

2019

2018

REVENUES:

Land sales

$

139,946

$

11

$

140,020

$

133

Land sales—related party

228

233

923

900

Management services—related party

5,891

6,610

39,580

40,976

Operating properties

841

1,091

3,857

6,981

Total revenues

146,906

7,945

184,380

48,990

COSTS AND EXPENSES:

Land sales

97,113

(345

)

97,113

(165

)

Management services

5,698

3,426

28,492

23,962

Operating properties

1,077

553

5,565

5,077

Selling, general, and administrative

25,957

15,152

103,586

98,983

Total costs and expenses

129,845

18,786

234,756

127,857

OTHER INCOME:

Adjustment to payable pursuant to tax receivable agreement

1,928

Interest income

1,350

3,048

7,844

11,767

Gain on settlement of contingent consideration—related party

64,870

Miscellaneous

22

101

48

8,573

Total other income

1,372

3,149

72,762

22,268

EQUITY IN (LOSS) EARNINGS FROM UNCONSOLIDATED ENTITIES

(2,136

)

(3,531

)

2,327

(2,163

)

INCOME (LOSS) BEFORE INCOME TAX (PROVISION) BENEFIT

16,297

(11,223

)

24,713

(58,762

)

INCOME TAX PROVISION

(1,179

)

(9,183

)

(2,445

)

(9,183

)

NET INCOME (LOSS)

15,118

(20,406

)

22,268

(67,945

)

LESS NET INCOME (LOSS) ATTRIBUTABLE TO NONCONTROLLING INTERESTS

8,718

(6,103

)

13,235

(33,231

)

NET INCOME (LOSS) ATTRIBUTABLE TO THE COMPANY

$

6,400

$

(14,303

)

$

9,033

$

(34,714

)

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

Basic

$

0.09

$

(0.22

)

$

0.13

$

(0.53

)

Diluted

$

0.09

$

(0.22

)

$

0.13

$

(0.53

)

WEIGHTED AVERAGE CLASS A SHARES OUTSTANDING

Basic

66,302,138

65,790,066

66,261,968

65,002,387

Diluted

145,596,608

65,790,066

145,491,898

65,002,387

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 and diluted

79,269,524

79,112,145

79,221,176

79,859,730

FIVE POINT HOLDINGS, LLC

CONSOLIDATED BALANCE SHEETS

(In thousands, except shares)

(Unaudited)

 

December 31, 2019

December 31, 2018

ASSETS

INVENTORIES

$

1,889,761

$

1,696,084

INVESTMENT IN UNCONSOLIDATED ENTITIES

533,239

532,899

PROPERTIES AND EQUIPMENT, NET

32,312

31,677

INTANGIBLE ASSET, NET—RELATED PARTY

80,350

95,917

CASH AND CASH EQUIVALENTS

346,833

495,694

RESTRICTED CASH AND CERTIFICATES OF DEPOSIT

1,741

1,403

RELATED PARTY ASSETS

97,561

61,039

OTHER ASSETS

22,903

9,179

TOTAL

$

3,004,700

$

2,923,892

LIABILITIES AND CAPITAL

LIABILITIES:

Notes payable, net

$

616,046

$

557,004

Accounts payable and other liabilities

167,711

161,139

Related party liabilities

127,882

178,540

Deferred income tax liability, net

11,628

9,183

Payable pursuant to tax receivable agreement

172,633

169,509

Total liabilities

1,095,900

1,075,375

REDEEMABLE NONCONTROLLING INTEREST

25,000

CAPITAL:

Class A common shares; No par value; Issued and outstanding: 2019—68,788,257 shares; 2018—66,810,980 shares

Class B common shares; No par value; Issued and outstanding: 2019—79,233,544 shares; 2018—78,838,736 shares

Contributed capital

571,532

556,521

Retained earnings

42,844

33,811

Accumulated other comprehensive loss

(2,682

)

(3,306

)

Total members’ capital

611,694

587,026

Noncontrolling interests

1,272,106

1,261,491

Total capital

1,883,800

1,848,517

TOTAL

$

3,004,700

$

2,923,892

FIVE POINT HOLDINGS, LLC

SUPPLEMENTAL DATA

(In thousands)

(Unaudited)

 

Liquidity

December 31, 2019

Cash and cash equivalents

$

346,833

Borrowing capacity (1)

124,000

Total liquidity

$

470,833

(1)

As of December 31, 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

December 31, 2019

Debt (1)

$

625,000

Total capital

1,883,800

Total capitalization

$

2,508,800

Debt to total capitalization

24.9

%

(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 $102.4 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 twelve months ended December 31, 2019 and 2018.

Three Months Ended


December 31,

Twelve Months Ended


December 31,

2019

2018

2019

2018

(in thousands)

Statement of Operations Data

Revenues

Land sales

$

139,946

$

11

$

140,020

$

133

Land sales—related party

7

12

38

16

Operating properties

651

910

3,132

6,252

Total revenues

140,604

933

143,190

6,401

Costs and expenses

Land sales

97,113

(345

)

97,113

(241

)

Operating properties

1,077

553

5,565

5,077

Selling, general, and administrative

3,418

3,260

14,782

15,391

Total costs and expenses

101,608

3,468

117,460

20,227

Other income

20

102

49

7,024

Segment income (loss)

$

39,016

$

(2,433

)

$

25,779

$

(6,802

)

San Francisco

The following table summarizes the results of operations of our San Francisco segment for the three and twelve months ended December 31, 2019 and 2018.

Three Months Ended


December 31,

Twelve Months Ended


December 31,

2019

2018

2019

2018

(in thousands)

Statement of Operations Data

Revenues

Land sales—related party

$

221

$

221

$

885

$

884

Operating property

190

181

725

729

Management services—related party

569

656

2,385

4,397

Total revenues

980

1,058

3,995

6,010

Costs and expenses

Land sales

76

Management services

247

185

1,102

1,015

Selling, general, and administrative

3,790

4,768

17,873

22,979

Total costs and expenses

4,037

4,953

18,975

24,070

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

64,870

Segment (loss) income

$

(3,057

)

$

(3,895

)

$

49,890

$

(18,060

)

Great Park

The following table summarizes the results of operations of our Great Park segment for the three and twelve months ended December 31, 2019 and 2018.

Three Months Ended


December 31,

Twelve Months Ended


December 31,

2019

2018

2019

2018

(in thousands)

Statement of Operations Data

Revenues

Land sales

$

38,956

$

714

$

137,699

$

171,775

Land sales—related party

798

2,541

133,271

3,914

Management services—related party

5,226

5,282

36,873

35,090

Total revenues

44,980

8,537

307,843

210,779

Costs and expenses

Land sales

26,350

2

179,836

118,115

Management services

5,451

3,241

27,390

22,947

Selling, general, and administrative

10,685

6,165

37,436

32,322

Management fees—related party

(2,144

)

7,141

22,301

24,999

Total costs and expenses

40,342

16,549

266,963

198,383

Interest income

818

423

3,489

2,815

Segment income (loss)

$

5,456

$

(7,589

)

$

44,369

$

15,211

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, 2019 and 2018.

Three Months Ended


December 31,

Twelve Months Ended


December 31,

2019

2018

2019

2018

(in thousands)

Segment net income (loss) from operations

$

5,456

$

(7,589

)

$

44,369

$

15,211

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

(225

)

2,041

9,483

12,143

Net income (loss) of Great Park Venture

5,681

(9,630

)

34,886

3,068

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

2,130

(3,611

)

13,082

1,151

Basis difference (amortization) accretion

(3,206

)

1,349

(6,900

)

(2,057

)

Equity in (loss) earnings from the Great Park Venture

$

(1,076

)

$

(2,262

)

$

6,182

$

(906

)

Commercial

The following table summarizes the results of operations of our Commercial segment for the three and twelve months ended December 31, 2019 and 2018.

Three Months Ended


December 31,

Twelve Months Ended


December 31,

2019

2018

2019

2018

(in thousands)

Statement of Operations Data

Revenues

Rental and related income

$

6,389

$

6,256

$

25,881

$

25,501

Rental and related income—related party

2,060

1,079

8,276

1,079

Property management services—related party

96

672

322

1,489

Total revenues

8,545

8,007

34,479

28,069

Costs and expenses

Rental operating expenses

2,026

1,932

7,120

4,705

Interest

3,954

3,937

16,892

11,563

Depreciation

2,743

2,109

10,972

7,632

Amortization

1,039

1,024

4,129

4,098

Other expenses

101

25

184

258

Total costs and expenses

9,863

9,027

39,297

28,256

Segment loss

$

(1,318

)

$

(1,020

)

$

(4,818

)

$

(187

)

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 consolidated statements of operations for the three and twelve months ended December 31, 2019 and 2018.

Three Months Ended


December 31,

Twelve Months Ended


December 31,

2019

2018

2019

2018

(in thousands)

Segment net loss from operations

$

(1,318

)

$

(1,020

)

$

(4,818

)

$

(187

)

Less net income of management company attributed to the Commercial segment

96

672

322

1,489

Net loss of Gateway Commercial Venture

(1,414

)

(1,692

)

(5,140

)

(1,676

)

Equity in loss from the Gateway Commercial Venture

$

(1,060

)

$

(1,269

)

$

(3,855

)

$

(1,257

)

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