First Quarter 2019 and Recent Highlights
-
Submitted a revised plan for the first phase of Candlestick that is
expected to be approved by the City of San Francisco in 2019. The
revised plan is designed to include approximately 1,600 homes, 750,000
square feet of office space, and 300,000 square feet of lifestyle
mainly centered around retail. -
Continued land development activity at Valencia (formerly Newhall) in
Los Angeles County positions the Company to deliver homesites and
generate revenue at this community in the fourth quarter of 2019. -
Received approvals to build an additional 1,056 homes at the Great
Park in Irvine. -
Company maintains strong credit profile with total liquidity of $497.3
million and debt to total capitalization of 24.0% at March 31, 2019.
IRVINE, 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 its first quarter results for 2019. Emile
Haddad, Chairman and CEO, said, “In San Francisco, we submitted our
revised plan for Candlestick and expect to receive approval from the
city before the end of the year. In Los Angeles County, despite an
unusually heavy rainy season, land development activities at Valencia
remain on schedule, and we are still anticipating delivering our first
homesites in the fourth quarter of 2019. In Irvine, at the Great Park,
we received approval to build an additional 1,056 homes. In addition,
home buyer activity has remained consistent with normal seasonal
patterns, and we are excited to report that we collected meaningful
profit participation from our guest builders this quarter. The
combination of steady operational progress, a healthy economy supported
by seven years of consistent job growth, and a pronounced imbalance
between supply and demand in our markets provides a favorable backdrop
that should benefit the company during the remainder of the year.”
First Quarter 2019 Consolidated Results
Liquidity and Capital Resources
As of March 31, 2019, total liquidity of $497.3 million was comprised of
cash and cash equivalents totaling $373.3 million and borrowing
availability of $124.0 million under our $125.0 million unsecured
revolving credit facility. Total capital was $1.9 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 March 31, 2019
Revenues. Revenues of $13.1 million for the three months ended
March 31, 2019 were primarily generated from management services.
Equity in earnings from unconsolidated entities. Equity in
earnings from unconsolidated entities was $8.9 million for the three
months ended March 31, 2019. The earnings were primarily due to our
proportionate share of the Great Park Venture’s net income during the
quarter of $37.1 million, which primarily resulted from the sale of land
entitled for an aggregate of 369 homesites on approximately 29.5 acres
at the Great Park Neighborhoods. After adjusting for amortization and
accretion of the basis difference, our equity in earnings from our 37.5%
percentage interest in the Great Park Venture was $9.4 million. Equity
in loss from our 75% interest in the Gateway Commercial Venture was $0.6
million for the three months ended March 31, 2019.
Selling, general, and administrative. Selling, general, and
administrative expenses were $25.8 million for the three months ended
March 31, 2019.
Other income. Other income for the three months ended March 31,
2019 consisted primarily of a $64.9 million gain recognized by our San
Francisco segment pertaining to the settlement of our contingent
consideration liability related to the termination of the retail joint
venture at Candlestick.
Income tax provision. Income tax provision was $1.3 million for
the three months ended March 31, 2019. The income tax provision is the
result of an increase in our valuation allowance against deferred tax
assets associated with changes contained in the Tax Cuts and Jobs Act
limiting the utilization of net operating losses.
Net income. Consolidated net income for the quarter was $52.7
million. The net income attributable to noncontrolling interests totaled
$28.9 million, resulting in net income attributable to the Company of
$23.8 million.
Segment Results
Valencia Segment (formerly Newhall). Total segment revenues were
$1.6 million for the first quarter of 2019 and were derived from
agricultural land leasing and the sale of citrus crops. Selling,
general, and administrative expenses were $3.8 million for the three
months ended March 31, 2019.
San Francisco Segment. Total segment revenues were $1.1 million
for the first quarter of 2019. Revenues during the quarter were mostly
attributable to fees generated from management agreements. Selling,
general, and administrative expenses were $4.5 million for the three
months ended March 31, 2019. As a result of the termination of the
retail joint venture at Candlestick and agreements related thereto, the
contingent consideration liability was settled, which resulted in a gain
of $64.9 million.
Great Park Segment. Total segment revenues were $169.6 million
for the first quarter of 2019. Revenues were mainly attributable to the
sale of land entitled for 369 homesites on 29.5 acres at the Great Park
Neighborhoods. Initial gross proceeds from the sale were $151.9 million
representing the base purchase price. The Great Park segment’s net
income for the quarter was $40.3 million, which included net income of
$37.1 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 earnings from
the Great Park Venture was $9.4 million for the three months ended
March 31, 2019.
Commercial Segment. For the three months ended March 31, 2019,
the Commercial segment recognized $8.3 million in revenues from tenant
leases at the Five Point Gateway Campus and property management services
provided by us to the Gateway Commercial Venture. Segment expenses were
mostly comprised of depreciation, amortization and interest expense
totaling $7.5 million. Segment net loss was approximately $0.8 million.
Our share of equity in loss from the Gateway Commercial Venture totaled
$0.6 million for the three months ended March 31, 2019.
Conference Call Information
In conjunction with this release, Five Point will host a conference call
today, Tuesday, May 7, 2019 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) 204-4368 (domestic) or (720) 543-0214 (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 1393116. The telephonic replay will be available until
11:59 p.m. Eastern Time on May 21, 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) |
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|
Three Months Ended March 31, |
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| 2019 | 2018 | |||||||
| REVENUES: | ||||||||
| Land sales | $ | 55 | $ | 49 | ||||
| Land sales—related party | 230 | 221 | ||||||
| Management services—related party | 11,063 | 11,767 | ||||||
| Operating properties | 1,725 | 2,930 | ||||||
| Total revenues | 13,073 | 14,967 | ||||||
| COSTS AND EXPENSES: | ||||||||
| Land sales | — | 38 | ||||||
| Management services | 7,616 | 7,089 | ||||||
| Operating properties | 1,901 | 2,390 | ||||||
| Selling, general, and administrative | 25,773 | 28,596 | ||||||
| Total costs and expenses | 35,290 | 38,113 | ||||||
| OTHER INCOME: | ||||||||
| Adjustment to payable pursuant to tax receivable agreement | — | 1,928 | ||||||
| Interest income | 2,454 | 2,747 | ||||||
| Gain on settlement of contingent consideration—related party | 64,870 | — | ||||||
| Miscellaneous | 10 | 7,781 | ||||||
| Total other income | 67,334 | 12,456 | ||||||
| EQUITY IN EARNINGS (LOSS) FROM UNCONSOLIDATED ENTITIES | 8,882 | (3,607 | ) | |||||
| INCOME (LOSS) BEFORE INCOME TAX (PROVISION) BENEFIT | 53,999 | (14,297 | ) | |||||
| INCOME TAX (PROVISION) BENEFIT | (1,266 | ) | — | |||||
| NET INCOME (LOSS) | 52,733 | (14,297 | ) | |||||
| LESS NET INCOME (LOSS) ATTRIBUTABLE TO NONCONTROLLING INTERESTS | 28,925 | (9,065 | ) | |||||
| NET INCOME (LOSS) ATTRIBUTABLE TO THE COMPANY | $ | 23,808 | $ | (5,232 | ) | |||
| NET INCOME (LOSS) ATTRIBUTABLE TO THE COMPANY PER CLASS A SHARE | ||||||||
| Basic | $ | 0.35 | $ | (0.08 | ) | |||
| Diluted | $ | 0.35 | $ | (0.10 | ) | |||
| WEIGHTED AVERAGE CLASS A SHARES OUTSTANDING | ||||||||
| Basic | 66,210,916 | 63,367,419 | ||||||
| Diluted | 145,296,469 | 144,812,299 | ||||||
| NET INCOME (LOSS) ATTRIBUTABLE TO THE COMPANY PER CLASS B SHARE | ||||||||
| Basic and diluted | $ | 0.00 | $ | (0.00 | ) | |||
| WEIGHTED AVERAGE CLASS B SHARES OUTSTANDING | ||||||||
| Basic | 79,061,835 | 81,420,455 | ||||||
| Diluted | 79,275,234 | 81,420,455 | ||||||
|
FIVE POINT HOLDINGS, LLC CONDENSED CONSOLIDATED BALANCE SHEETS (In thousands, except shares) (Unaudited) |
||||||||
| March 31, 2019 | December 31, 2018 | |||||||
| ASSETS | ||||||||
| INVENTORIES | $ | 1,744,337 | $ | 1,696,084 | ||||
| INVESTMENT IN UNCONSOLIDATED ENTITIES | 540,318 | 532,899 | ||||||
| PROPERTIES AND EQUIPMENT, NET | 32,551 | 31,677 | ||||||
| INTANGIBLE ASSET, NET—RELATED PARTY | 91,620 | 95,917 | ||||||
| CASH AND CASH EQUIVALENTS | 373,292 | 495,694 | ||||||
| RESTRICTED CASH AND CERTIFICATES OF DEPOSIT | 1,738 | 1,403 | ||||||
| RELATED PARTY ASSETS | 83,044 | 61,039 | ||||||
| OTHER ASSETS | 18,650 | 9,179 | ||||||
| TOTAL | $ | 2,885,550 | $ | 2,923,892 | ||||
| LIABILITIES AND CAPITAL | ||||||||
| LIABILITIES: | ||||||||
| Notes payable, net | $ | 492,171 | $ | 557,004 | ||||
| Accounts payable and other liabilities | 153,112 | 161,139 | ||||||
| Related party liabilities | 129,260 | 178,540 | ||||||
| Deferred income tax liability, net | 10,449 | 9,183 | ||||||
| Payable pursuant to tax receivable agreement | 171,205 | 169,509 | ||||||
| Total liabilities | 956,197 | 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 |
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|
Class B common shares; No par value; Issued and outstanding: 2019—79,275,234 shares; 2018—78,838,736 shares |
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| Contributed capital | 562,185 | 556,521 | ||||||
| Retained earnings | 57,619 | 33,811 | ||||||
| Accumulated other comprehensive loss | (3,320 | ) | (3,306 | ) | ||||
| Total members’ capital | 616,484 | 587,026 | ||||||
| Noncontrolling interests | 1,287,869 | 1,261,491 | ||||||
| Total capital | 1,904,353 | 1,848,517 | ||||||
| TOTAL | $ | 2,885,550 | $ | 2,923,892 | ||||
FIVE POINT HOLDINGS, LLC
SUPPLEMENTAL DATA
(In
thousands)
(Unaudited)
Liquidity
| March 31, 2019 | |||
| Cash and cash equivalents | $ | 373,292 | |
| Borrowing capacity (1) | 124,000 | ||
| Total liquidity | $ | 497,292 | |
(1) As of March 31, 2019, 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
| March 31, 2019 | ||||
| Debt (1) | $ | 602,692 | ||
| Total capital | 1,904,353 | |||
| Total capitalization | $ | 2,507,045 | ||
| Debt to total capitalization | 24.0 | % | ||
(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
Valencia (formerly Newhall)
The following table summarizes the results of operations of our Valencia
segment for the three months ended March 31, 2019 and 2018.
|
Three Months Ended March 31, |
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| 2019 | 2018 | ||||||
| (in thousands) | |||||||
| Statement of Operations Data | |||||||
| Revenues | |||||||
| Land sales | $ | 55 | $ | 49 | |||
| Land sales—related party | 9 | — | |||||
| Operating properties | 1,551 | 2,749 | |||||
| Total revenues | 1,615 | 2,798 | |||||
| Costs and expenses | |||||||
| Land sales | — | 38 | |||||
| Operating properties | 1,901 | 2,390 | |||||
| Selling, general, and administrative | 3,809 | 4,088 | |||||
| Total costs and expenses | 5,710 | 6,516 | |||||
| Other income | 11 | 6,781 | |||||
| Segment (loss) income | $ | (4,084 | ) | $ | 3,063 | ||
San Francisco
The following table summarizes the results of operations of our San
Francisco segment for the three months ended March 31, 2019 and 2018.
|
Three Months Ended March 31, |
||||||||
| 2019 | 2018 | |||||||
| (in thousands) | ||||||||
| Statement of Operations Data | ||||||||
| Revenues | ||||||||
| Land sales—related party | $ | 221 | $ | 221 | ||||
| Operating property | 174 | 181 | ||||||
| Management services—related party | 698 | 1,620 | ||||||
| Total revenues | 1,093 | 2,022 | ||||||
| Costs and expenses | ||||||||
| Management services | 377 | 399 | ||||||
| Selling, general, and administrative | 4,512 | 6,386 | ||||||
| Total costs and expenses | 4,889 | 6,785 | ||||||
|
Other income—gain on settlement of contingent consideration, related party |
64,870 | — | ||||||
| Segment income (loss) | $ | 61,074 | $ | (4,763 | ) | |||
Great Park
The following table summarizes the results of operations of our Great
Park segment for the three months ended March 31, 2019 and 2018.
|
Three Months Ended March 31, |
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| 2019 | 2018 | |||||||
| (in thousands) | ||||||||
| Statement of Operations Data | ||||||||
| Revenues | ||||||||
| Land sales | $ | 31,466 | $ | 256 | ||||
| Land sales—related party | 127,697 | 151 | ||||||
| Management services—related party | 10,396 | 10,057 | ||||||
| Total revenues | 169,559 | 10,464 | ||||||
| Costs and expenses | ||||||||
| Land sales | 107,819 | — | ||||||
| Management services | 7,239 | 6,690 | ||||||
| Selling, general, and administrative | 6,575 | 8,487 | ||||||
| Management fees—related party | 8,217 | 7,632 | ||||||
| Total costs and expenses | 129,850 | 22,809 | ||||||
| Interest income | 559 | 979 | ||||||
| Segment income (loss) | $ | 40,268 | $ | (11,366 | ) | |||
The table below reconciles the Great Park segment results to the equity
in earnings (loss) from our investment in the Great Park Venture that is
reflected in the condensed consolidated statements of operations for the
three months ended March 31, 2019 and 2018.
|
Three Months Ended March 31, |
||||||||
| 2019 | 2018 | |||||||
| (in thousands) | ||||||||
| Segment net income (loss) from operations | $ | 40,268 | $ | (11,366 | ) | |||
|
Less net income of management company attributed to the Great Park segment |
3,157 | 3,367 | ||||||
| Net income (loss) of Great Park Venture | 37,111 | (14,733 | ) | |||||
| The Company’s share of net income (loss) of the Great Park Venture | 13,917 | (5,525 | ) | |||||
| Basis difference (amortization) accretion | (4,473 | ) | 1,471 | |||||
| Equity in earnings (loss) from the Great Park Venture | $ | 9,444 | $ | (4,054 | ) | |||
Commercial
The following table summarizes the results of operations of our
Commercial segment for the three months ended March 31, 2019 and 2018.
|
Three Months Ended March 31, |
|||||||
| 2019 | 2018 | ||||||
| (in thousands) | |||||||
| Statement of Operations Data | |||||||
| Revenues | |||||||
| Rental and related income | $ | 8,380 | $ | 6,705 | |||
| Property management fees | (31 | ) | 90 | ||||
| Total revenues | 8,349 | 6,795 | |||||
| Costs and expenses | |||||||
| Rental operating expenses | 1,564 | 839 | |||||
| Interest | 4,331 | 2,282 | |||||
| Depreciation | 2,177 | 1,827 | |||||
| Amortization | 1,029 | 1,041 | |||||
| Other expenses | 29 | 120 | |||||
| Total costs and expenses | 9,130 | 6,109 | |||||
| Segment (loss) income | $ | (781 | ) | $ | 686 | ||
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 months ended March 31, 2019 and 2018.
|
Three Months Ended March 31, |
||||||
| 2019 | 2018 | |||||
| (in thousands) | ||||||
| Segment net (loss) income from operations | $ | (781 | ) | $ | 686 | |
|
Less net (loss) income of management company attributed to the Commercial segment |
(31 | ) | 90 | |||
| Net (loss) income of Gateway Commercial Venture | (750 | ) | 596 | |||
| Equity in (loss) earnings from the Gateway Commercial Venture | $ | (562 | ) | $ | 447 | |
Contacts
Investor Relations:
Bob Wetenhall, 949-349-1087
[email protected]
or
Media:
Steve
Churm, 949-349-1034
[email protected]
