Third Quarter 2022 Highlights
- Valencia builder sales of 166 homes during the quarter.
- Great Park Venture closed the sale of 61 homesites generating
proceeds of $23.9 million.
- Great Park builder sales of 82 homes during the quarter.
- Great Park Venture commenced marketing of commercial land.
- Consolidated selling, general and administrative costs down 42%
from third quarter 2021.
- Consolidated revenues of $15.4 million; consolidated net loss
of $9.5 million.
- Debt to total capitalization ratio of 25.3% and liquidity of
$211.0 million as of September 30, 2022.
Five Point Holdings, LLC (“Five Point” or the “Company”)
(NYSE:FPH), an owner and developer of large mixed-use planned
communities in California, today reported its third quarter 2022
results.
Dan Hedigan, Chief Executive Officer, said, “While the third
quarter was a difficult one for our primary residential land sale
business, our team performed well, limiting our cash spend and
minimizing our loss for the quarter. We are maintaining our focus
on managing costs and overhead with our ‘do more with less’
strategy. Although home builder demand for land has been impacted
by the Federal Reserve raising interest rates at the most
aggressive pace since the early 1980s, there remains a significant
shortage of housing in California, and Five Point has some of the
best entitled parcels in the state. While home builders are
rebalancing their pricing and sales velocity assumptions as they
look at their future land needs, we are continuing to work with the
home builder community to sell land at market prices, balancing
current market conditions with the scarcity of entitled land
inventory in our markets. We are also continuing to move forward
with our unique commercial land offerings at the Great Park and
Valencia.”
Consolidated Results
Liquidity and Capital Resources
As of September 30, 2022, total liquidity of $211.0 million was
comprised of cash and cash equivalents totaling $86.4 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 $1.0 billion in
liabilities and redeemable noncontrolling interests.
Results of Operations for the Three Months Ended September 30,
2022
Revenues. Revenues of $15.4 million for the three months
ended September 30, 2022 were primarily generated from management
services.
Equity in loss from unconsolidated entities. Equity in
loss from unconsolidated entities was $4.3 million for the three
months ended September 30, 2022. Net loss for the Great Park
Venture was $18.3 million. Our share of the net loss from our 37.5%
percentage interest, adjusted for basis differences, was $4.5
million. Additionally, we recognized $0.1 million in loss from our
75% interest in the Gateway Commercial Venture and $0.4 million in
earnings from our 10% interest in the Valencia Landbank
Venture.
Selling, general, and administrative. Selling, general,
and administrative expenses were $12.0 million for the three months
ended September 30, 2022.
Net loss. Consolidated net loss for the quarter was $9.5
million. Net loss attributable to noncontrolling interests totaled
$5.1 million, resulting in net loss attributable to the Company of
$4.4 million. Net loss attributable to noncontrolling interests
represents the portion of loss allocated to related party partners
and members that hold units of the operating company and the San
Francisco Venture. Holders of units of the operating company and
the San Francisco Venture can redeem their interests for either, at
our election, our Class A common shares on a one-for-one basis or
cash. In connection with any redemption or exchange, our ownership
of our operating subsidiaries will increase thereby reducing the
amount of income allocated to noncontrolling interests in
subsequent periods.
Conference Call
Information
In conjunction with this release, Five Point will host a
conference call on Thursday, October 27, 2022 at 5:00 p.m. Eastern
Time. Dan Hedigan, Chief Executive Officer, and Leo Kij, Interim
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) 204-4368 (domestic) or (856) 344-9221
(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 3213669. The
telephonic replay will be available until 11:59 p.m. Eastern Time
on November 10, 2022.
About Five Point
Five Point, headquartered in Irvine, California, designs and
develops large mixed-use 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® 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
September 30,
Nine Months Ended
September 30,
2022
2021
2022
2021
REVENUES:
Land sales
$
72
$
10,000
$
643
$
10,087
Land sales—related party
2,817
17
4,529
73
Management services—related party
12,108
10,156
18,358
30,242
Operating properties
419
522
2,165
1,777
Total revenues
15,416
20,695
25,695
42,179
COSTS AND EXPENSES:
Land sales
—
—
—
—
Management services
7,488
8,075
12,372
24,700
Operating properties
1,580
2,095
5,797
5,098
Selling, general, and administrative
12,030
20,757
41,472
59,513
Restructuring
—
—
19,437
—
Total costs and expenses
21,098
30,927
79,078
89,311
OTHER INCOME:
Interest income
307
21
445
74
Miscellaneous
112
1,516
336
3,833
Total other income
419
1,537
781
3,907
EQUITY IN (LOSS) EARNINGS FROM
UNCONSOLIDATED ENTITIES
(4,265
)
485
(4,654
)
9,048
LOSS BEFORE INCOME TAX PROVISION
(9,528
)
(8,210
)
(57,256
)
(34,177
)
INCOME TAX PROVISION
(3
)
—
(16
)
(5
)
NET LOSS
(9,531
)
(8,210
)
(57,272
)
(34,182
)
LESS NET LOSS ATTRIBUTABLE TO
NONCONTROLLING INTERESTS
(5,092
)
(4,362
)
(30,592
)
(18,266
)
NET LOSS ATTRIBUTABLE TO THE COMPANY
$
(4,439
)
$
(3,848
)
$
(26,680
)
$
(15,916
)
NET LOSS ATTRIBUTABLE TO THE COMPANY PER
CLASS A SHARE
Basic
$
(0.06
)
$
(0.06
)
$
(0.39
)
$
(0.23
)
Diluted
$
(0.07
)
$
(0.06
)
$
(0.39
)
$
(0.23
)
WEIGHTED AVERAGE CLASS A SHARES
OUTSTANDING
Basic
68,514,843
67,429,394
68,393,923
67,376,746
Diluted
68,879,642
67,429,394
68,758,722
67,376,746
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
79,233,544
79,233,544
79,233,544
79,233,544
FIVE POINT HOLDINGS,
LLC
CONDENSED CONSOLIDATED BALANCE
SHEETS
(In thousands, except
shares)
(Unaudited)
September 30, 2022
December 31, 2021
ASSETS
INVENTORIES
$
2,229,525
$
2,096,824
INVESTMENT IN UNCONSOLIDATED ENTITIES
367,486
374,553
PROPERTIES AND EQUIPMENT, NET
30,558
31,466
INTANGIBLE ASSET, NET—RELATED PARTY
45,969
51,405
CASH AND CASH EQUIVALENTS
86,379
265,462
RESTRICTED CASH AND CERTIFICATES OF
DEPOSIT
1,330
1,330
RELATED PARTY ASSETS
104,887
101,818
OTHER ASSETS
18,959
20,052
TOTAL
$
2,885,093
$
2,942,910
LIABILITIES AND CAPITAL
LIABILITIES:
Notes payable, net
$
620,267
$
619,116
Accounts payable and other liabilities
107,364
115,374
Related party liabilities
99,913
95,918
Deferred income tax liability, net
12,998
12,998
Payable pursuant to tax receivable
agreement
173,068
174,126
Total liabilities
1,013,610
1,017,532
REDEEMABLE NONCONTROLLING INTEREST
25,000
25,000
CAPITAL:
Class A common shares; No par value;
Issued and outstanding: September 30, 2022—69,068,354 shares;
December 31, 2021—70,107,552 shares
Class B common shares; No par value;
Issued and outstanding: September 30, 2022—79,233,544 shares;
December 31, 2021—79,233,544 shares
Contributed capital
586,954
587,587
Retained earnings
22,109
48,789
Accumulated other comprehensive loss
(1,917
)
(1,952
)
Total members’ capital
607,146
634,424
Noncontrolling interests
1,239,337
1,265,954
Total capital
1,846,483
1,900,378
TOTAL
$
2,885,093
$
2,942,910
FIVE POINT HOLDINGS, LLC
SUPPLEMENTAL DATA
(In thousands)
(Unaudited)
Liquidity
September 30, 2022
Cash and cash equivalents
$
86,379
Borrowing capacity (1)
124,651
Total liquidity
$
211,030
(1)
As of September 30, 2022, no amounts were
drawn on the Company’s $125.0 million revolving credit facility;
however, letters of credit of approximately $0.3 million were
issued and outstanding under the revolving credit facility, thus
reducing the available capacity by the outstanding letters of
credit amount.
Debt to Total
Capitalization and Net Debt to Total Capitalization
September 30, 2022
Debt (1)
$
625,000
Total capital
1,846,483
Total capitalization
$
2,471,483
Debt to total capitalization
25.3
%
Debt (1)
$
625,000
Less: Cash and cash equivalents
86,379
Net debt
538,621
Total capital
1,846,483
Total net capitalization
$
2,385,104
Net debt to total capitalization
(2)
22.6
%
(1)
For purposes of this calculation, debt is
the amount due on the Company’s notes payable before offsetting for
capitalized deferred financing costs.
(2)
Net debt to total capitalization is a
non-GAAP financial measure defined as net debt (debt less cash and
cash equivalents) divided by total net capitalization (net debt
plus total capital). The Company believes the ratio of net debt to
total capitalization is a relevant and a useful financial measure
to investors in understanding the leverage employed in the
Company’s operations. However, because net debt to total
capitalization is not calculated in accordance with GAAP, this
financial measure should not be considered in isolation or as an
alternative to financial measures prescribed by GAAP. Rather, this
non-GAAP financial measure should be used to supplement the
Company's GAAP results.
Segment Results
The following table reconciles the results of operations of our
segments to our consolidated results for the three and nine months
ended September 30, 2022 (in thousands):
Three Months Ended September
30, 2022
Valencia
San Francisco
Great Park
Commercial
Total reportable
segments
Corporate and
unallocated
Total under management
Removal of unconsolidated
entities(1)
Total consolidated
REVENUES:
Land sales
$
72
$
—
$
28,678
$
—
$
28,750
$
—
$
28,750
$
(28,678
)
$
72
Land sales—related party
2,817
—
6,517
—
9,334
—
9,334
(6,517
)
2,817
Management services—related party(2)
—
—
12,000
108
12,108
—
12,108
—
12,108
Operating properties
193
226
—
2,189
2,608
—
2,608
(2,189
)
419
Total revenues
3,082
226
47,195
2,297
52,800
—
52,800
(37,384
)
15,416
COSTS AND EXPENSES:
Land sales
—
—
15,105
—
15,105
—
15,105
(15,105
)
—
Management services(2)
—
—
7,488
—
7,488
—
7,488
—
7,488
Operating properties
1,580
—
—
754
2,334
—
2,334
(754
)
1,580
Selling, general, and administrative
2,519
898
3,655
1,076
8,148
8,613
16,761
(4,731
)
12,030
Management fees—related party
—
—
35,294
—
35,294
—
35,294
(35,294
)
—
Total costs and expenses
4,099
898
61,542
1,830
68,369
8,613
76,982
(55,884
)
21,098
OTHER INCOME (EXPENSE):
Interest income
—
—
460
—
460
307
767
(460
)
307
Interest expense
—
—
—
(386
)
(386
)
—
(386
)
386
—
Loss on extinguishment of debt
—
—
—
(89
)
(89
)
—
(89
)
89
—
Miscellaneous
112
—
—
—
112
—
112
—
112
Total other income (expense)
112
—
460
(475
)
97
307
404
15
419
EQUITY IN EARNINGS (LOSS) FROM
UNCONSOLIDATED ENTITIES
362
—
96
—
458
—
458
(4,723
)
(4,265
)
SEGMENT LOSS/LOSS BEFORE INCOME TAX
PROVISION
(543
)
(672
)
(13,791
)
(8
)
(15,014
)
(8,306
)
(23,320
)
13,792
(9,528
)
INCOME TAX PROVISION
—
—
—
—
—
(3
)
(3
)
—
(3
)
SEGMENT LOSS/NET LOSS
$
(543
)
$
(672
)
$
(13,791
)
$
(8
)
$
(15,014
)
$
(8,309
)
$
(23,323
)
$
13,792
$
(9,531
)
(1)
Represents the removal of the Great Park
Venture and Gateway Commercial Venture operating results, which are
included in the Great Park segment and Commercial segment operating
results at 100% of each venture’s historical basis, respectively,
but are not included in our consolidated results as we account for
our investment in each venture using the equity method of
accounting.
(2)
For the Great Park and Commercial
segments, represents the revenues and expenses attributable to the
management company for providing services to the Great Park Venture
and the Gateway Commercial Venture, as applicable.
Nine Months Ended September
30, 2022
Valencia
San Francisco
Great Park
Commercial
Total reportable
segments
Corporate and
unallocated
Total under management
Removal of unconsolidated
entities(1)
Total consolidated
REVENUES:
Land sales
$
643
$
—
$
29,270
$
—
$
29,913
$
—
$
29,913
$
(29,270
)
$
643
Land sales—related party
4,529
—
9,750
—
14,279
—
14,279
(9,750
)
4,529
Home sales
—
—
40,475
—
40,475
—
40,475
(40,475
)
—
Management services—related party(2)
—
—
18,046
312
18,358
—
18,358
—
18,358
Operating properties
1,637
528
—
6,248
8,413
—
8,413
(6,248
)
2,165
Total revenues
6,809
528
97,541
6,560
111,438
—
111,438
(85,743
)
25,695
COSTS AND EXPENSES:
Land sales
—
—
15,118
—
15,118
—
15,118
(15,118
)
—
Home sales
—
—
30,784
—
30,784
—
30,784
(30,784
)
—
Management services(2)
—
—
12,372
—
12,372
—
12,372
—
12,372
Operating properties
5,797
—
—
1,823
7,620
—
7,620
(1,823
)
5,797
Selling, general, and administrative
10,545
2,683
15,641
3,201
32,070
28,244
60,314
(18,842
)
41,472
Restructuring
—
—
—
—
—
19,437
19,437
—
19,437
Management fees—related party
—
—
38,645
—
38,645
—
38,645
(38,645
)
—
Total costs and expenses
16,342
2,683
112,560
5,024
136,609
47,681
184,290
(105,212
)
79,078
OTHER INCOME (EXPENSE):
Interest income
—
—
704
—
704
445
1,149
(704
)
445
Interest expense
—
—
—
(1,006
)
(1,006
)
—
(1,006
)
1,006
—
Loss on extinguishment of debt
—
—
—
(89
)
(89
)
—
(89
)
89
—
Miscellaneous
336
—
—
—
336
—
336
—
336
Total other income (expense)
336
—
704
(1,095
)
(55
)
445
390
391
781
EQUITY IN EARNINGS (LOSS) FROM
UNCONSOLIDATED ENTITIES
883
—
331
—
1,214
—
1,214
(5,868
)
(4,654
)
SEGMENT (LOSS) PROFIT/LOSS BEFORE INCOME
TAX PROVISION
(8,314
)
(2,155
)
(13,984
)
441
(24,012
)
(47,236
)
(71,248
)
13,992
(57,256
)
INCOME TAX PROVISION
—
—
—
—
—
(16
)
(16
)
—
(16
)
SEGMENT (LOSS) PROFIT/NET LOSS
$
(8,314
)
$
(2,155
)
$
(13,984
)
$
441
$
(24,012
)
$
(47,252
)
$
(71,264
)
$
13,992
$
(57,272
)
(1) Represents the removal of the Great Park Venture and Gateway
Commercial Venture operating results, which are included in the
Great Park segment and Commercial segment operating results at 100%
of each venture’s historical basis, respectively, but are not
included in our consolidated results as we account for our
investments in each venture using the equity method of
accounting.
(2) For the Great Park and Commercial segments, represents the
revenues and expenses attributable to the management company for
providing services to the Great Park Venture and the Gateway
Commercial Venture, as applicable.
The table below reconciles the Great Park segment results to the
equity in loss 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, 2022 (in
thousands):
Three Months Ended September
30, 2022
Nine Months Ended September
30, 2022
Segment loss from operations
$
(13,791
)
$
(13,984
)
Less net income of management company
attributed to the Great Park segment
4,512
5,674
Net loss of the Great Park Venture
(18,303
)
(19,658
)
The Company’s share of net loss of the
Great Park Venture
(6,864
)
(7,372
)
Basis difference accretion
2,324
1,738
Equity in loss from the Great Park
Venture
$
(4,540
)
$
(5,634
)
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, 2022 (in thousands):
Three Months Ended September
30, 2022
Nine Months Ended September
30, 2022
Segment (loss) profit from operations
$
(8
)
$
441
Less net income of management company
attributed to the Commercial segment
108
312
Net (loss) income of the Gateway
Commercial Venture
(116
)
129
Equity in (loss) earnings from the Gateway
Commercial Venture
$
(87
)
$
97
View source
version on businesswire.com: https://www.businesswire.com/news/home/20221027005328/en/
Investor Relations: Leo Kij, 949-349-1029 Leo.Kij@fivepoint.com
or Media: Eric Morgan, 949-349-1088 Eric.Morgan@fivepoint.com
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