Five Point Holdings, LLC Announces Third Quarter 2018 Results
Third Quarter 2018 and Recent Highlights
-
Continued land development activity at Newhall in Los Angeles County,
Candlestick Point in San Francisco, and the Great Park Neighborhoods
in Orange County.
-
Consistent home buyer demand at the Great Park Neighborhoods.
-
Company maintains strong credit profile, including total liquidity of
$718.9 million and debt to total capitalization of 24.4% at
September 30, 2018.
ALISO VIEJO, Calif.--(BUSINESS WIRE)--
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 financial results for the third quarter of
2018. Emile Haddad, Chairman and CEO, said, “Consistent job growth
during the past six years and limited new residential construction
activity in San Francisco, Los Angeles, and Orange County have resulted
in pent-up demand in California’s primary housing markets. We think the
persistence of this dynamic will benefit our communities in contrast
with choppier demand trends in the national housing market.
Operationally, our ongoing efforts to develop Newhall in Los Angeles
County remain on track, and we continue to believe that we are
positioned to generate revenue in that community sometime toward the end
of 2019. In San Francisco, we are continuing to build infrastructure at
Candlestick Point, consistent with our prior comments that this will be
our main area of focus while the Navy continues retesting at Hunters
Point. In the Great Park Neighborhoods, home buyer activity remains
consistent with prior trends. From our perspective, a pronounced
imbalance between levels of supply and demand across our markets is
likely to persist into next year.”
Third Quarter 2018 Consolidated Results
Liquidity and Capital Resources
As of September 30, 2018, total liquidity of $718.9 million was
comprised of cash and cash equivalents totaling $594.9 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.
Results of Operations for the Three Months Ended September 30, 2018
Revenues. Revenues of $13.0 million for the three months ended
September 30, 2018 were primarily generated from management services.
Our adoption of new revenue accounting guidance on January 1, 2018 has
resulted in accelerated recognition of revenue from variable incentive
compensation in our development management agreement with the Great Park
Venture.
Equity in loss from unconsolidated entities. Equity in loss from
unconsolidated entities was $4.0 million for the three months ended
September 30, 2018. The loss was primarily due to our proportionate
share of the Great Park Venture’s net loss during the quarter of $10.0
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 $3.5 million. Equity in loss from our 75%
interest in the Gateway Commercial Venture was $0.5 million for the
three months ended September 30, 2018.
Selling, general, and administrative. Selling, general, and
administrative expenses were $26.2 million for the three months ended
September 30, 2018.
Net loss. Consolidated net loss for the quarter was $21.9
million. The net loss attributable to noncontrolling interests totaled
$11.9 million, resulting in a net loss attributable to the Company of
$10.0 million.
Segment Results
Newhall Segment. Total segment revenues were $1.4 million for the
third quarter of 2018 and were derived from agricultural leasing and the
sale of citrus crops. Selling, general, and administrative expenses were
$3.6 million for the three months ended September 30, 2018.
San Francisco Segment. Total segment revenues were $1.1 million
for the third quarter of 2018. Revenues during the quarter were mostly
attributable to fees generated from management agreements. Selling,
general, and administrative expenses were $5.3 million for the three
months ended September 30, 2018.
Great Park Segment. Total segment revenues were $11.3 million for
the third quarter of 2018. Revenues were mainly attributable to
management services we provide to the Great Park Venture. The Great Park
segment’s net loss for the quarter was $6.7 million, which included net
loss of $10.0 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 $3.5 million for the three months ended
September 30, 2018.
Commercial Segment. For the three months ended September 30,
2018, the Commercial segment recognized $6.9 million in revenues from
rental income at the Five Point Gateway Campus and property management
services provided by us at the Five Point Gateway Campus. Segment
expenses were mostly comprised of depreciation, amortization and
interest expense totaling $5.8 million. Segment net loss was
approximately $46,000. Our share of equity in loss from the Gateway
Commercial Venture totaled $0.5 million for the three months ended
September 30, 2018.
Conference Call Information
In conjunction with this release, Five Point will host a conference call
today, Tuesday, November 13, 2018 at 5:00 p.m. 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 (877) 425-9470
(domestic) or (201) 389-0878 (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 13684857. The
telephonic replay will be available until 11:59 p.m. Eastern Time on
November 27, 2018.
About Five Point
Five Point, headquartered in Aliso Viejo, 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 Orange
County, Newhall Ranch® in Los Angeles County, and Candlestick Point 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) (Unaudited) |
| | | |
|
| | Three Months Ended
September 30, | | Nine Months Ended
September 30, |
| | 2018 |
| 2017 | | 2018 |
| 2017 |
|
REVENUES:
| | | | | | | | |
|
Land sales
| |
$
|
70
| | |
$
|
2,655
| | |
$
|
122
| | |
$
|
7,859
| |
|
Land sales—related party
| |
225
| | |
693
| | |
667
| | |
85,551
| |
|
Management services—related party
| |
11,159
| | |
5,466
| | |
34,366
| | |
16,417
| |
|
Operating properties
| |
1,534
|
| |
2,805
|
| |
5,890
|
| |
7,341
|
|
|
Total revenues
| |
12,988
|
| |
11,619
|
| |
41,045
|
| |
117,168
|
|
|
COSTS AND EXPENSES:
| | | | | | | | |
|
Land sales
| |
90
| | |
1,641
| | |
180
| | |
83,755
| |
|
Management services
| |
6,684
| | |
2,572
| | |
20,536
| | |
7,878
| |
|
Operating properties
| |
1,027
| | |
3,115
| | |
4,524
| | |
8,307
| |
|
Selling, general, and administrative
| |
26,220
|
| |
37,450
|
| |
83,831
|
| |
92,605
|
|
|
Total costs and expenses
| |
34,021
|
| |
44,778
|
| |
109,071
|
| |
192,545
|
|
|
OTHER INCOME:
| | | | | | | | |
|
Adjustment to payable pursuant to tax receivable agreement
| |
—
| | |
—
| | |
1,928
| | |
—
| |
|
Interest income
| |
3,062
| | |
—
| | |
8,719
| | |
—
| |
|
Miscellaneous
| |
60
|
| |
23
|
| |
8,472
|
| |
69
|
|
|
Total other income
| |
3,122
|
| |
23
|
| |
19,119
|
| |
69
|
|
|
EQUITY IN (LOSS) EARNINGS FROM UNCONSOLIDATED ENTITIES
| |
(4,028
|
)
| |
22,825
|
| |
1,368
|
| |
17,584
|
|
|
LOSS BEFORE INCOME TAX BENEFIT
| |
(21,939
|
)
| |
(10,311
|
)
| |
(47,539
|
)
| |
(57,724
|
)
|
|
INCOME TAX BENEFIT
| |
—
|
| |
—
|
| |
—
|
| |
—
|
|
|
NET LOSS
| |
(21,939
|
)
| |
(10,311
|
)
| |
(47,539
|
)
| |
(57,724
|
)
|
|
LESS NET LOSS ATTRIBUTABLE TO NONCONTROLLING INTERESTS
| |
(11,920
|
)
| |
(5,844
|
)
| |
(27,128
|
)
| |
(35,632
|
)
|
|
NET LOSS ATTRIBUTABLE TO THE COMPANY
| |
$
|
(10,019
|
)
| |
$
|
(4,467
|
)
| |
$
|
(20,411
|
)
| |
$
|
(22,092
|
)
|
| | | | | | | |
|
|
NET LOSS ATTRIBUTABLE TO THE COMPANY PER CLASS A SHARE
| | | | | | | | |
|
Basic
| |
$
|
(0.15
|
)
| |
$
|
(0.07
|
)
| |
$
|
(0.31
|
)
| |
$
|
(0.45
|
)
|
|
Diluted
| |
$
|
(0.15
|
)
| |
$
|
(0.07
|
)
| |
$
|
(0.33
|
)
| |
$
|
(0.45
|
)
|
|
WEIGHTED AVERAGE CLASS A SHARES OUTSTANDING
| | | | | | | | |
|
Basic
| |
65,740,931
| | |
62,946,348
| | |
64,736,942
| | |
51,024,766
| |
|
Diluted
| |
65,740,931
| | |
62,946,348
| | |
144,872,638
| | |
51,024,766
| |
|
NET 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
| |
79,145,487
| | |
81,463,433
| | |
80,111,663
| | |
77,944,525
| |
| | | | | | | | | | | |
|
|
| |
| |
FIVE POINT HOLDINGS, LLC CONDENSED CONSOLIDATED BALANCE SHEETS (In thousands, except shares) (Unaudited) |
| | | |
|
| | September 30, 2018 | | December 31, 2017 |
| ASSETS | | | | |
|
INVENTORIES
| |
$
|
1,628,113
| | |
$
|
1,425,892
| |
|
INVESTMENT IN UNCONSOLIDATED ENTITIES
| |
542,880
| | |
530,007
| |
|
PROPERTIES AND EQUIPMENT, NET
| |
29,869
| | |
29,656
| |
|
ASSETS HELD FOR SALE, NET
| |
—
| | |
4,519
| |
|
INTANGIBLE ASSET, NET—RELATED PARTY
| |
97,212
| | |
127,593
| |
|
CASH AND CASH EQUIVALENTS
| |
594,908
| | |
848,478
| |
|
RESTRICTED CASH AND CERTIFICATES OF DEPOSIT
| |
1,403
| | |
1,467
| |
|
RELATED PARTY ASSETS
| |
55,049
| | |
3,158
| |
|
OTHER ASSETS
| |
9,433
|
| |
7,585
|
|
|
TOTAL
| |
$
|
2,958,867
|
| |
$
|
2,978,355
|
|
| LIABILITIES AND CAPITAL | | | | |
|
LIABILITIES:
| | | | |
|
Notes payable, net
| |
$
|
556,707
| | |
$
|
560,618
| |
|
Accounts payable and other liabilities
| |
186,488
| | |
167,620
| |
|
Liabilities related to assets held for sale
| |
—
| | |
5,363
| |
|
Related party liabilities
| |
178,675
| | |
186,670
| |
|
Payable pursuant to tax receivable agreement
| |
168,027
|
| |
152,475
|
|
|
Total liabilities
| |
1,089,897
|
| |
1,072,746
|
|
|
CAPITAL:
| | | | |
|
Class A common shares; No par value; Issued and outstanding:
2018—66,504,137 shares; 2017—62,314,850 shares
| | | | |
|
Class B common shares; No par value; Issued and outstanding:
2018—79,145,487 shares; 2017—81,463,433 shares
| | | | |
|
Contributed capital
| |
551,905
| | |
530,015
| |
|
Retained earnings
| |
48,114
| | |
57,841
| |
|
Accumulated other comprehensive loss
| |
(2,530
|
)
| |
(2,455
|
)
|
|
Total members’ capital
| |
597,489
| | |
585,401
| |
|
Noncontrolling interests
| |
1,271,481
|
| |
1,320,208
|
|
|
Total capital
| |
1,868,970
|
| |
1,905,609
|
|
|
TOTAL
| |
$
|
2,958,867
|
| |
$
|
2,978,355
|
|
| | | | | | | |
|
|
| |
|
|
|
|
| | |
| | FIVE POINT HOLDINGS, LLC SUPPLEMENTAL DATA (In thousands) (Unaudited) |
| | |
|
| | Liquidity | | | | | | | |
| | | | | | | | September 30, 2018 |
| |
Cash and cash equivalents
| | | | | |
$
|
594,908
| |
| |
Borrowing capacity (1)
| | | | | |
124,000
|
|
| |
Total liquidity
| | | | | |
$
|
718,908
|
|
| | | | | | | | | |
|
(1)
| |
As of September 30, 2018, no funds have been 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, 2018 |
| |
Debt (1)
| | | | | |
$
|
602,692
|
|
| |
Total capital
| | | | | |
1,868,970
|
|
| |
Total capitalization
| | | | | |
$
|
2,471,662
|
|
| |
Debt to total capitalization
| | | | | |
24.4
|
%
|
| | | | | | | | |
|
(1)
| |
For purposes of this calculation, debt consists of (i) the
outstanding principal on the Company’s 7.875% senior notes due
2025 of $500.0 million, and (ii) the Company’s related party EB-5
reimbursement obligation of $102.7 million.
|
| | | | | | | | |
|
Segment Results
Newhall
The following table summarizes the results of operations of our Newhall
segment for the three months and nine months ended September 30, 2018
and 2017.
|
| |
| |
| | Three Months Ended
September 30, | | Nine Months Ended
September 30, |
| | 2018 |
| 2017 | | 2018 |
| 2017 |
| | (in thousands) |
| Statement of Operations Data | | | | | | | | |
|
Revenues
| | | | | | | | |
|
Land sales
| |
$
|
70
| | |
$
|
2,655
| | |
$
|
122
| | |
$
|
7,859
| |
|
Land sales—related party
| |
4
| | |
109
| | |
4
| | |
962
| |
|
Operating properties
| |
1,354
|
| |
2,501
|
| |
5,342
|
| |
6,983
|
|
| Total revenues | |
1,428
|
| |
5,265
|
| |
5,468
|
| |
15,804
|
|
|
Costs and expenses
| | | | | | | | |
|
Land sales
| |
14
| | |
1,197
| | |
104
| | |
3,166
| |
|
Operating properties
| |
1,027
| | |
3,115
| | |
4,524
| | |
8,307
| |
|
Selling, general, and administrative
| |
3,615
|
| |
7,045
|
| |
12,131
|
| |
23,604
|
|
| Total costs and expenses | |
4,656
|
| |
11,357
|
| |
16,759
|
| |
35,077
|
|
|
Other income
| |
60
|
| |
23
|
| |
6,922
|
| |
69
|
|
|
Segment loss
| |
$
|
(3,168
|
)
| |
$
|
(6,069
|
)
| |
$
|
(4,369
|
)
| |
$
|
(19,204
|
)
|
| | | | | | | | | | | | | | | |
|
San Francisco
The following table summarizes the results of operations of our San
Francisco segment for the three months and nine months ended
September 30, 2018 and 2017.
|
| |
| |
| | Three Months Ended
September 30, | | Nine Months Ended
September 30, |
| | 2018 |
| 2017 | | 2018 |
| 2017 |
| | (in thousands) |
| Statement of Operations Data | | | | | | | | |
|
Revenues
| | | | | | | | |
|
Land sales—related party
| |
$
|
221
| | |
$
|
584
| | |
$
|
663
| | |
$
|
84,589
| |
|
Operating property
| |
180
| | |
304
| | |
548
| | |
358
| |
|
Management services—related party
| |
689
|
| |
1,467
|
| |
3,741
|
| |
4,352
|
|
| Total revenues | |
1,090
|
| |
2,355
|
| |
4,952
|
| |
89,299
|
|
|
Costs and expenses
| | | | | | | | |
|
Land sales
| |
76
| | |
444
| | |
76
| | |
80,589
| |
|
Management services
| |
219
| | |
183
| | |
830
| | |
503
| |
|
Selling, general, and administrative
| |
5,281
|
| |
7,266
|
| |
18,211
|
| |
20,772
|
|
| Total costs and expenses | |
5,576
|
| |
7,893
|
| |
19,117
|
| |
101,864
|
|
|
Segment loss
| |
$
|
(4,486
|
)
| |
$
|
(5,538
|
)
| |
$
|
(14,165
|
)
| |
$
|
(12,565
|
)
|
| | | | | | | | | | | | | | | |
|
Great Park
The following table summarizes the results of operations of our Great
Park segment for the three months and nine months ended September 30,
2018 and 2017.
|
| |
| |
| | Three Months Ended
September 30, | | Nine Months Ended
September 30, |
| | 2018 |
| 2017 | | 2018 |
| 2017 |
| | (in thousands) |
| Statement of Operations Data | | | | | | | | |
|
Revenues
| | | | | | | | |
|
Land sales
| |
$
|
485
| | |
$
|
457,516
| | |
$
|
171,061
| | |
$
|
461,710
|
|
Land sales—related party
| |
936
| | |
720
| | |
1,373
| | |
3,706
|
|
Management services—related party
| |
9,833
|
| |
3,929
|
| |
29,808
|
| |
11,995
|
| Total revenues | |
11,254
|
| |
462,165
|
| |
202,242
|
| |
477,411
|
|
Costs and expenses
| | | | | | | | |
|
Land sales
| |
—
| | |
325,678
| | |
118,113
| | |
328,871
|
|
Management services
| |
6,465
| | |
2,389
| | |
19,706
| | |
7,375
|
|
Selling, general, and administrative
| |
9,365
| | |
6,364
| | |
26,157
| | |
18,444
|
|
Management fees—related party
| |
2,594
|
| |
1,539
|
| |
17,858
|
| |
4,618
|
| Total costs and expenses | |
18,424
|
| |
335,970
|
| |
181,834
|
| |
359,308
|
|
Interest income
| |
505
|
| |
—
|
| |
2,392
|
| |
—
|
|
Segment (loss) income
| |
$
|
(6,665
|
)
| |
$
|
126,195
|
| |
$
|
22,800
|
| |
$
|
118,103
|
| | | | | | | | | | | | | | |
|
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 and nine months ended September 30, 2018 and 2017.
|
| |
| |
| | Three Months Ended
September 30, | | Nine Months Ended
September 30, |
| | 2018 |
| 2017 | | 2018 |
| 2017 |
| | (in thousands) |
|
Segment net (loss) income from operations
| |
$
|
(6,665
|
)
| |
$
|
126,195
| | |
$
|
22,800
| | |
$
|
118,103
| |
|
Less net income of management company attributed to the Great Park
segment
| |
3,368
|
| |
1,574
|
| |
10,102
|
| |
4,618
|
|
| Net (loss) income of Great Park Venture | |
(10,033
|
)
| |
124,621
|
| |
12,698
|
| |
113,485
|
|
|
The Company’s share of net (loss) income of the Great Park Venture
| |
(3,762
|
)
| |
46,733
| | |
4,762
| | |
42,557
| |
|
Basis difference accretion (amortization)
| |
246
|
| |
(23,770
|
)
| |
(3,406
|
)
| |
(24,835
|
)
|
|
Equity in (loss) earnings from the Great Park Venture
| |
$
|
(3,516
|
)
| |
$
|
22,963
|
| |
$
|
1,356
|
| |
$
|
17,722
|
|
| | | | | | | | | | | | | | | |
|
Commercial
The following table summarizes the results of operations of our
Commercial segment for the three months and nine months ended
September 30, 2018.
|
| |
| |
| | Three Months Ended
September 30, | | Nine Months Ended
September 30, |
| | 2018 | | 2018 |
| | (in thousands) |
| Statement of Operations Data | | | | |
|
Revenues
| | | | |
|
Rental and related income
| |
$
|
6,299
| | |
$
|
19,245
|
|
Property management fees
| |
637
|
| |
817
|
| Total revenues | |
6,936
|
| |
20,062
|
|
Costs and expenses
| | | | |
|
Rental operating expenses
| |
1,106
| | |
2,773
|
|
Other expenses
| |
5,876
|
| |
16,456
|
| Total costs and expenses | |
6,982
|
| |
19,229
|
|
Segment (loss) income
| |
$
|
(46
|
)
| |
$
|
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, 2018.
|
| |
| |
| | Three Months Ended
September 30, | | Nine Months Ended
September 30, |
| | 2018 | | 2018 |
| | (in thousands) |
|
Segment net (loss) income from operations
| |
$
|
(46
|
)
| |
$
|
833
|
|
Less net income of management company attributed to the Commercial
segment
| |
637
|
| |
817
|
| Net (loss) income of Gateway Commercial Venture | |
(683
|
)
| |
16
|
|
Equity in (loss) earnings from the Gateway Commercial Venture
| |
$
|
(512
|
)
| |
$
|
12
|
View source version on businesswire.com: https://www.businesswire.com/news/home/20181113006173/en/
Five Point Holdings, LLC
Investor Relations:
Bob Wetenhall,
949-349-1087
[email protected]
or
Media:
Steve
Churm, 949-349-1034
[email protected]
Source: Five Point Holdings, LLC
