Fourth Quarter 2023 and Recent
Highlights
- Valencia sold 583 homesites on approximately 46 acres of land
for a purchase price of $101.8 million.
- Great Park Venture closed two commercial land sales totaling
approximately 38 acres for an aggregate purchase price of $174.2
million.
- Great Park Venture distributions and incentive compensation
payments to the Company totaled $92.0 million.
- Valencia builder sales of 31 homes during the quarter.
- Great Park builder sales of 76 homes during the quarter.
- Consolidated revenues of $118.8 million; consolidated net
income of $58.7 million.
- Cash and cash equivalents of $353.8 million as of December 31,
2023.
- Debt to total capitalization ratio of 24.0% and liquidity of
$478.8 million as of December 31, 2023.
- On January 16, 2024, exchanged $623.5 million of existing
7.875% Senior Notes due November 2025 for $100.0 million in cash
and $523.5 million in new 10.5% initial rate Senior Notes due
January 2028.
2023 Highlights
- Valencia closed the sale of 729 homesites on approximately 72
acres of land for an aggregate purchase price of $162.4
million.
- Great Park Venture recognized land sale revenue of $532.0
million from the sale of 38 acres of commercial land and 798
homesites on approximately 84 acres of land.
- Great Park Venture distributions and incentive compensation
payments to the Company totaled $195.8 million.
- Valencia builder sales of 297 homes during the year.
- Great Park builder sales of 628 homes during the year.
- Consolidated revenues of $211.7 million; consolidated net
income of $113.7 million.
- Extended the maturity date of the Company’s $125.0 million
unsecured revolving credit facility to April 2026.
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 fourth quarter and
year-end 2023 results.
Dan Hedigan, Chief Executive Officer, said, “We finished 2023
strong with consolidated net income for the quarter of $58.7
million, giving us consolidated net income for the year of $113.7
million and total cash and cash equivalents of $353.8 million as of
year-end. This week we successfully settled our senior note
exchange with a participation rate over 99%. Achieving these
results in the face of a challenging economic and interest rate
environment is a testament to our team’s focus on executing our key
operating priorities: generating revenue, right-sizing our
SG&A, and managing our capital spend. We will continue to
closely monitor the market and interest rates; however, we believe
that the ongoing housing supply shortage will help sustain strong
demand for our land.”
Consolidated Results
Liquidity and Capital Resources
As of December 31, 2023, total liquidity of $478.8 million was
comprised of cash and cash equivalents totaling $353.8 million and
borrowing availability of $125.0 million under our unsecured
revolving credit facility. Total capital was $2.0 billion,
reflecting $3.0 billion in assets and $1.0 billion in liabilities
and redeemable noncontrolling interests.
Results of Operations for the Three Months Ended December 31,
2023
Revenues. Revenues of $118.8 million for the three months
ended December 31, 2023 were primarily generated from land sales at
our Valencia segment. At Valencia we closed the sale of land
entitled for an aggregate of 583 homesites on approximately 46
acres. The fixed base purchase price of $101.8 million was paid at
closing.
Equity in earnings from unconsolidated entities. Equity
in earnings from unconsolidated entities was $24.0 million for the
three months ended December 31, 2023. The Great Park Venture
generated net income of $81.1 million during the three months ended
December 31, 2023, and our share of the net income from our 37.5%
percentage interest, adjusted for basis differences, was $25.9
million. Additionally, we recognized $1.9 million in loss from our
75% interest in the Gateway Commercial Venture.
During the three months ended December 31, 2023, the Great Park
Venture closed two commercial land sales totaling approximately 38
acres for an aggregate purchase price of $174.2 million. After
completing the land sale, the Great Park Venture made aggregate
distributions of $22.6 million to holders of Legacy Interests and
$193.1 million to holders of Percentage Interests. We received
$72.4 million for our 37.5% Percentage Interest.
Selling, general, and administrative. Selling, general,
and administrative expenses were $13.1 million for the three months
ended December 31, 2023.
Net income. Consolidated net income for the quarter was
$58.7 million. Net income attributable to noncontrolling interests
totaled $29.0 million, resulting in net income attributable to the
Company of $29.8 million. Net income attributable to noncontrolling
interests represents the portion of income 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.
Results of Operations for the Twelve Months Ended December 31,
2023
Revenues. Revenues of $211.7 million for the twelve
months ended December 31, 2023 were primarily generated from land
sales at our Valencia segment. At Valencia we closed the sale of
land entitled for an aggregate of 729 homesites on approximately 72
acres. The fixed base purchase price of $162.4 million was paid at
closing.
Equity in earnings from unconsolidated entities. Equity
in earnings from unconsolidated entities was $76.6 million for the
twelve months ended December 31, 2023. The Great Park Venture
generated net income of $250.6 million during the twelve months
ended December 31, 2023, and our share of the net income from our
37.5% percentage interest, adjusted for basis differences, was
$78.9 million. Additionally, we recognized $2.9 million in loss
from our 75% interest in the Gateway Commercial Venture.
During the twelve months ended December 31, 2023, the Great Park
Venture closed the sale of approximately 38 acres of land entitled
for commercial use for an aggregate purchase price of $174.2
million and sold 798 homesites on approximately 84 acres of land at
the Great Park Neighborhoods. For the homesite sale, the Great Park
Venture recognized $357.8 million in revenue, consisting of $214.7
million paid at closing plus $143.1 million in revenue representing
variable consideration from future price participation payments
expected to be received when homes are sold to homebuyers. The
Great Park Venture made aggregate distributions of $48.2 million to
holders of Legacy Interests and $411.2 million to holders of
Percentage Interests. We received $154.2 million for our 37.5%
Percentage Interest.
Selling, general, and administrative. Selling, general,
and administrative expenses were $51.5 million for the twelve
months ended December 31, 2023.
Net income. Consolidated net income for the year was
$113.7 million. Net income attributable to noncontrolling interests
totaled $58.3 million, resulting in net income attributable to the
Company of $55.4 million.
Conference Call
Information
In conjunction with this release, Five Point will host a
conference call on Thursday, January 18, 2024 at 5:00 p.m. Eastern
Time. Dan Hedigan, Chief Executive Officer, and Kim Tobler, 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) 451-6152 (domestic) or (201) 389-0879
(international). A telephonic replay will be available starting
approximately three 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 13743863. The
telephonic replay will be available until 11:59 p.m. Eastern Time
on January 27, 2024.
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.
Forward-looking statements include, among others, statements that
refer to: our expectations of our future home sales and/or builder
sales; the impact of inflation and interest rates; our future
revenues, costs and financial performance, including with respect
to cash generation and profitability; and future demographics and
market conditions, including housing supply levels, in the areas
where our communities are located. 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,
2023
2022
2023
2022
REVENUES:
Land sales
$
100,111
$
270
$
160,796
$
913
Land sales—related party
—
2,983
595
7,512
Management services—related party
18,109
13,075
47,621
31,433
Operating properties
539
671
2,720
2,836
Total revenues
118,759
16,999
211,732
42,694
COSTS AND EXPENSES:
Land sales
66,684
(996
)
105,651
(996
)
Management services
7,751
7,889
22,170
20,261
Operating properties
1,846
2,433
6,167
8,230
Selling, general, and administrative
13,095
13,119
51,495
54,591
Restructuring
—
—
—
19,437
Total costs and expenses
89,376
22,445
185,483
101,523
OTHER INCOME (EXPENSE):
Interest income
2,688
381
7,230
826
Miscellaneous
(1,809
)
(91
)
(776
)
245
Total other income
879
290
6,454
1,071
EQUITY IN EARNINGS FROM UNCONSOLIDATED
ENTITIES
24,041
26,167
76,595
21,513
INCOME (LOSS) BEFORE INCOME TAX
BENEFIT
54,303
21,011
109,298
(36,245
)
INCOME TAX BENEFIT
4,434
1,487
4,418
1,471
NET INCOME (LOSS)
58,737
22,498
113,716
(34,774
)
LESS NET INCOME (LOSS) ATTRIBUTABLE TO
NONCONTROLLING INTERESTS
28,981
11,221
58,322
(19,371
)
NET INCOME (LOSS) ATTRIBUTABLE TO THE
COMPANY
$
29,756
$
11,277
$
55,394
$
(15,403
)
NET INCOME (LOSS) ATTRIBUTABLE TO THE
COMPANY PER CLASS A SHARE
Basic
$
0.43
$
0.16
$
0.80
$
(0.22
)
Diluted
$
0.39
$
0.15
$
0.76
$
(0.23
)
WEIGHTED AVERAGE CLASS A SHARES
OUTSTANDING
Basic
68,919,591
68,534,163
68,826,340
68,429,271
Diluted
145,331,135
144,630,573
145,131,125
68,430,212
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
79,233,544
79,233,544
79,233,544
79,233,544
FIVE POINT HOLDINGS,
LLC
CONSOLIDATED BALANCE
SHEETS
(In thousands, except
shares)
(Unaudited)
December 31, 2023
December 31, 2022
ASSETS
INVENTORIES
$
2,213,479
$
2,239,125
INVESTMENT IN UNCONSOLIDATED ENTITIES
252,816
331,594
PROPERTIES AND EQUIPMENT, NET
29,145
30,243
INTANGIBLE ASSET, NET—RELATED PARTY
25,270
40,257
CASH AND CASH EQUIVALENTS
353,801
131,771
RESTRICTED CASH AND CERTIFICATES OF
DEPOSIT
992
992
RELATED PARTY ASSETS
83,970
97,126
OTHER ASSETS
9,815
14,676
TOTAL
$
2,969,288
$
2,885,784
LIABILITIES AND CAPITAL
LIABILITIES:
Notes payable, net
$
622,186
$
620,651
Accounts payable and other liabilities
81,649
94,426
Related party liabilities
78,074
93,086
Deferred income tax liability, net
7,067
11,506
Payable pursuant to tax receivable
agreement
173,208
173,068
Total liabilities
962,184
992,737
REDEEMABLE NONCONTROLLING INTEREST
25,000
25,000
CAPITAL:
Class A common shares; No par value;
Issued and outstanding: December 31, 2023—69,199,938 shares;
December 31, 2022—69,068,354 shares
Class B common shares; No par value;
Issued and outstanding: December 31, 2023—79,233,544 shares;
December 31, 2022—79,233,544 shares
Contributed capital
591,606
587,733
Retained earnings
88,780
33,386
Accumulated other comprehensive loss
(2,332
)
(2,988
)
Total members’ capital
678,054
618,131
Noncontrolling interests
1,304,050
1,249,916
Total capital
1,982,104
1,868,047
TOTAL
$
2,969,288
$
2,885,784
FIVE POINT HOLDINGS,
LLC
SUPPLEMENTAL DATA
(In thousands)
(Unaudited)
Liquidity
December 31, 2023
Cash and cash equivalents
$
353,801
Borrowing capacity(1)
125,000
Total liquidity
$
478,801
(1)
As of December 31, 2023, no borrowings or
letters of credit were outstanding on the Company’s $125.0 million
revolving credit facility.
Debt to Total
Capitalization and Net Debt to Total Capitalization
December 31, 2023
Debt(1)
$
625,000
Total capital
1,982,104
Total capitalization
$
2,607,104
Debt to total capitalization
24.0
%
Debt(1)
$
625,000
Less: Cash and cash equivalents
353,801
Net debt
271,199
Total capital
1,982,104
Total net capitalization
$
2,253,303
Net debt to total
capitalization(2)
12.0
%
(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 tables reconcile the results of operations of our
segments to our consolidated results for the three and twelve
months ended months ended December 31, 2023 (in thousands):
Three Months Ended December
31, 2023
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
$
100,111
$
—
$
175,556
$
—
$
275,667
$
—
$
275,667
$
(175,556
)
$
100,111
Land sales—related party
—
—
6,797
—
6,797
—
6,797
(6,797
)
—
Management services—related party(2)
—
—
17,999
110
18,109
—
18,109
—
18,109
Operating properties
374
165
—
2,153
2,692
—
2,692
(2,153
)
539
Total revenues
100,485
165
200,352
2,263
303,265
—
303,265
(184,506
)
118,759
COSTS AND EXPENSES:
Land sales
66,684
—
71,399
—
138,083
—
138,083
(71,399
)
66,684
Home sales
—
—
161
—
161
—
161
(161
)
—
Management services(2)
—
—
7,751
—
7,751
—
7,751
—
7,751
Operating properties
1,846
—
—
856
2,702
—
2,702
(856
)
1,846
Selling, general, and administrative
2,997
714
3,495
3,156
10,362
9,384
19,746
(6,651
)
13,095
Management fees—related party
—
—
28,888
—
28,888
—
28,888
(28,888
)
—
Total costs and expenses
71,527
714
111,694
4,012
187,947
9,384
197,331
(107,955
)
89,376
OTHER (EXPENSE) INCOME:
Interest income
—
13
2,318
33
2,364
2,675
5,039
(2,351
)
2,688
Interest expense
—
—
—
(702
)
(702
)
—
(702
)
702
—
Miscellaneous
(21
)
—
—
—
(21
)
(1,788
)
(1,809
)
—
(1,809
)
Total other (expense) income
(21
)
13
2,318
(669
)
1,641
887
2,528
(1,649
)
879
EQUITY IN EARNINGS FROM UNCONSOLIDATED
ENTITIES
62
—
363
—
425
—
425
23,616
24,041
SEGMENT PROFIT (LOSS)/INCOME BEFORE INCOME
TAX BENEFIT
28,999
(536
)
91,339
(2,418
)
117,384
(8,497
)
108,887
(54,584
)
54,303
INCOME TAX BENEFIT
—
—
—
—
—
4,434
4,434
—
4,434
SEGMENT PROFIT (LOSS)/NET INCOME
$
28,999
$
(536
)
$
91,339
$
(2,418
)
$
117,384
$
(4,063
)
$
113,321
$
(54,584
)
$
58,737
(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.
Twelve Months Ended December
31, 2023
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
$
160,796
$
—
$
538,612
$
—
$
699,408
$
—
$
699,408
$
(538,612
)
$
160,796
Land sales—related party
595
—
16,213
—
16,808
—
16,808
(16,213
)
595
Management services—related party(2)
—
—
47,190
431
47,621
—
47,621
—
47,621
Operating properties
2,066
654
—
8,482
11,202
—
11,202
(8,482
)
2,720
Total revenues
163,457
654
602,015
8,913
775,039
—
775,039
(563,307
)
211,732
COSTS AND EXPENSES:
Land sales
105,651
—
237,148
—
342,799
—
342,799
(237,148
)
105,651
Home sales
—
—
161
—
161
—
161
(161
)
—
Management services(2)
—
—
22,170
—
22,170
—
22,170
—
22,170
Operating properties
6,167
—
—
3,488
9,655
—
9,655
(3,488
)
6,167
Selling, general, and administrative
11,577
3,989
10,927
6,406
32,899
35,929
68,828
(17,333
)
51,495
Management fees—related party
—
—
65,395
—
65,395
—
65,395
(65,395
)
—
Total costs and expenses
123,395
3,989
335,801
9,894
473,079
35,929
509,008
(323,525
)
185,483
OTHER INCOME (EXPENSE):
Interest income
—
22
7,490
58
7,570
7,208
14,778
(7,548
)
7,230
Interest expense
—
—
—
(2,531
)
(2,531
)
—
(2,531
)
2,531
—
Miscellaneous
1,012
—
—
—
1,012
(1,788
)
(776
)
—
(776
)
Total other income (expense)
1,012
22
7,490
(2,473
)
6,051
5,420
11,471
(5,017
)
6,454
EQUITY IN EARNINGS FROM UNCONSOLIDATED
ENTITIES
562
—
1,926
—
2,488
—
2,488
74,107
76,595
SEGMENT PROFIT (LOSS)/INCOME BEFORE INCOME
TAX BENEFIT
41,636
(3,313
)
275,630
(3,454
)
310,499
(30,509
)
279,990
(170,692
)
109,298
INCOME TAX BENEFIT
—
—
—
—
—
4,418
4,418
—
4,418
SEGMENT PROFIT (LOSS)/NET INCOME
$
41,636
$
(3,313
)
$
275,630
$
(3,454
)
$
310,499
$
(26,091
)
$
284,408
$
(170,692
)
$
113,716
(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 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, 2023 (in
thousands):
Three Months Ended
December 31, 2023
Twelve Months Ended
December 31, 2023
Segment profit from operations
$
91,339
$
275,630
Less net income of management company
attributed to the Great Park segment
10,248
25,020
Net income of the Great Park Venture
81,091
250,610
The Company’s share of net income of the
Great Park Venture
30,409
93,979
Basis difference amortization, net
(4,534
)
(15,032
)
Equity in earnings from the Great Park
Venture
$
25,875
$
78,947
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, 2023
(in thousands):
Three Months Ended
December 31, 2023
Twelve Months Ended
December 31, 2023
Segment loss from operations
$
(2,418
)
$
(3,454
)
Less net income of management company
attributed to the Commercial segment
110
431
Net loss of the Gateway Commercial
Venture
(2,528
)
(3,885
)
Equity in loss from the Gateway Commercial
Venture
$
(1,896
)
$
(2,914
)
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