EX-99.1 2 d722969dex991.htm EX-99.1 EX-99.1

Exhibit 99.1

Five Point Holdings, LLC Reports Fourth Quarter and Full-Year 2018 Results

Fourth Quarter 2018

 

 

Continued land development activity at Newhall in Los Angeles County positions the company to deliver homesites and generate revenue in 2019.

 

 

Company maintains strong credit profile, including total liquidity of $619.7 million and debt to total capitalization of 24.6% at December 31, 2018.

Recent Highlights

 

 

Continued infrastructure development at Candlestick. Revised operational plan on the prior mall property underway envisions a mixed-use office and residential community.

 

 

Sale of 41 acres for approximately $218 million with approval to build 518 homes comprising seven different products in the Great Park, some of which will close in phased takedowns.

Irvine, CA, March 13, 2019 (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 fourth quarter and full-year 2018 results. Emile Haddad, Chairman and CEO, said, “We are pleased by the steady operational progress that we made in 2018 and expect it to continue in 2019. Ongoing land development activity at Valencia in Los Angeles County continues. Despite inclement weather, we anticipate delivering homesites and generating revenue sometime toward the end of this year.”

“2019 is off to a great start. In San Francisco, infrastructure development at Candlestick continues. We are no longer pursuing the construction of a regional mall but instead are working closely with the City on a plan that envisions an integrated office and residential mixed-use development that encompasses lifestyle retail and entertainment. Finally, at the Great Park, we sold 41 acres for approximately $218 million. Separately, home buyer activity, as reported by our guest builders, has remained consistent with normal seasonal patterns. 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 bodes well for 2019.”

Fourth Quarter 2018 Consolidated Results

Liquidity and Capital Resources

As of December 31, 2018, total liquidity of $619.7 million was comprised of cash and cash equivalents totaling $495.7 million and borrowing availability of $124.0 million under our $125.0 million unsecured revolving credit facility. Total capital was $1.8 billion, reflecting $2.9 billion in assets and $1.1 billion in liabilities.

Results of Operations for the Three Months Ended December 31, 2018

Revenues. Revenues of $7.9 million for the three months ended December 31, 2018 were primarily generated from management services.

Equity in loss from unconsolidated entities. Equity in loss from unconsolidated entities was $3.5 million for the three months ended December 31, 2018. The loss was primarily due to our proportionate share of the Great Park Venture’s net loss during the quarter of $9.6 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 $2.3 million. Equity in loss from our 75% interest in the Gateway Commercial Venture was $1.3 million for the three months ended December 31, 2018.

Selling, general, and administrative. Selling, general, and administrative expenses were $15.2 million for the three months ended December 31, 2018.

Income tax provision. Income tax provision was $9.2 million for the three months ended December 31, 2018. Notwithstanding our consolidated net loss, 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.

 

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Net loss. Consolidated net loss for the quarter was $20.4 million. The net loss attributable to noncontrolling interests totaled $6.1 million, resulting in a net loss attributable to the Company of $14.3 million.

Segment Results

Newhall Segment. Total segment revenues were $0.9 million for the fourth quarter of 2018 and were derived from agricultural leasing and the sale of citrus crops. Selling, general, and administrative expenses were $3.3 million for the three months ended December 31, 2018.

San Francisco Segment. Total segment revenues were $1.1 million for the fourth quarter of 2018. Revenues during the quarter were mostly attributable to fees generated from management agreements. Selling, general, and administrative expenses were $4.8 million for the three months ended December 31, 2018.

Great Park Segment. Total segment revenues were $8.5 million for the fourth 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 $7.6 million, which included net loss of $9.6 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 $2.3 million for the three months ended December 31, 2018.

Commercial Segment. For the three months ended December 31, 2018, the Commercial segment recognized $8.0 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 $7.1 million. Segment net loss was approximately $1.0 million. Our share of equity in loss from the Gateway Commercial Venture totaled $1.3 million for the three months ended December 31, 2018.

Conference Call Information

In conjunction with this release, Five Point will host a conference call today, Wednesday, March 13, 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 (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 13687389. The telephonic replay will be available until 11:59 p.m. Eastern Time on March 27, 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 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

 

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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.

Investor Relations:

Bob Wetenhall, 949-349-1087

bob.wetenhall@fivepoint.com

or

Media:

Steve Churm, 949-349-1034

steve.churm@fivepoint.com

Source: Five Point Holdings, LLC

 

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FIVE POINT HOLDINGS, LLC

CONSOLIDATED STATEMENTS OF OPERATIONS

(In thousands)

(Unaudited)

 

     Three Months Ended
December 31,
    Twelve Months Ended
December 31,
 
     2018     2017     2018     2017  

REVENUES:

        

Land sales

   $ 11     $ 9,398     $ 133     $ 17,257  

Land sales—related party

     233       2,005       900       87,556  

Management services—related party

     6,610       6,100       40,976       22,517  

Operating properties

     1,091       4,760       6,981       12,101  
  

 

 

   

 

 

   

 

 

   

 

 

 

Total revenues

     7,945       22,263       48,990       139,431  
  

 

 

   

 

 

   

 

 

   

 

 

 

COSTS AND EXPENSES:

        

Land sales

     (345     904       (165     84,659  

Management services

     3,426       2,913       23,962       10,791  

Operating properties

     553       3,143       5,077       11,450  

Selling, general, and administrative

     15,152       29,762       98,983       122,367  
  

 

 

   

 

 

   

 

 

   

 

 

 

Total costs and expenses

     18,786       36,722       127,857       229,267  
  

 

 

   

 

 

   

 

 

   

 

 

 

OTHER INCOME:

        

Adjustment to payable pursuant to tax receivable agreement

     —         105,586       1,928       105,586  

Interest income

     3,048       2,577       11,767       2,577  

Miscellaneous

     101       24       8,573       93  
  

 

 

   

 

 

   

 

 

   

 

 

 

Total other income

     3,149       108,187       22,268       108,256  
  

 

 

   

 

 

   

 

 

   

 

 

 

EQUITY IN (LOSS) EARNINGS FROM UNCONSOLIDATED ENTITIES

     (3,531     (11,808     (2,163     5,776  
  

 

 

   

 

 

   

 

 

   

 

 

 

(LOSS) INCOME BEFORE INCOME TAX (PROVISION) BENEFIT

     (11,223     81,920       (58,762     24,196  

INCOME TAX (PROVISION) BENEFIT

     (9,183     —         (9,183     —    
  

 

 

   

 

 

   

 

 

   

 

 

 

NET (LOSS) INCOME

     (20,406     81,920       (67,945     24,196  

LESS NET LOSS ATTRIBUTABLE TO NONCONTROLLING INTERESTS

     (6,103     (13,407     (33,231     (49,039
  

 

 

   

 

 

   

 

 

   

 

 

 

NET (LOSS) INCOME ATTRIBUTABLE TO THE COMPANY

   $ (14,303   $ 95,327     $ (34,714   $ 73,235  
  

 

 

   

 

 

   

 

 

   

 

 

 

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

        

Basic

   $ (0.22   $ 1.50     $ (0.53   $ 1.33  

Diluted

   $ (0.22   $ 0.56     $ (0.53   $ 0.18  

WEIGHTED AVERAGE CLASS A SHARES OUTSTANDING

        

Basic

     65,790,066       62,992,933       65,002,387       54,006,954  

Diluted

     65,790,066       144,909,451       65,002,387       133,007,828  

NET (LOSS) INCOME 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

     79,112,145       81,463,433       79,859,730       78,821,553  

 

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FIVE POINT HOLDINGS, LLC

CONSOLIDATED BALANCE SHEETS

(In thousands, except shares)

(Unaudited)

 

     December 31, 2018     December 31, 2017  

ASSETS

    

INVENTORIES

   $ 1,696,084     $ 1,425,892  

INVESTMENT IN UNCONSOLIDATED ENTITIES

     532,899       530,007  

PROPERTIES AND EQUIPMENT, NET

     31,677       29,656  

ASSETS HELD FOR SALE, NET

     —         4,519  

INTANGIBLE ASSET, NET—RELATED PARTY

     95,917       127,593  

CASH AND CASH EQUIVALENTS

     495,694       848,478  

RESTRICTED CASH AND CERTIFICATES OF DEPOSIT

     1,403       1,467  

RELATED PARTY ASSETS

     61,039       3,158  

OTHER ASSETS

     9,179       7,585  
  

 

 

   

 

 

 

TOTAL

   $ 2,923,892     $ 2,978,355  
  

 

 

   

 

 

 

LIABILITIES AND CAPITAL

    

LIABILITIES:

    

Notes payable, net

   $ 557,004     $ 560,618  

Accounts payable and other liabilities

     161,139       167,620  

Liabilities related to assets held for sale

     —         5,363  

Related party liabilities

     178,540       186,670  

Deferred income tax liability, net

     9,183       —    

Payable pursuant to tax receivable agreement

     169,509       152,475  
  

 

 

   

 

 

 

Total liabilities

     1,075,375       1,072,746  
  

 

 

   

 

 

 

CAPITAL:

    

Class A common shares; No par value; Issued and outstanding: 2018—66,810,980 shares; 2017—62,314,850 shares

    

Class B common shares; No par value; Issued and outstanding: 2018—78,838,736 shares; 2017—81,463,433 shares

    

Contributed capital

     556,521       530,015  

Retained earnings

     33,811       57,841  

Accumulated other comprehensive loss

     (3,306     (2,455
  

 

 

   

 

 

 

Total members’ capital

     587,026       585,401  

Noncontrolling interests

     1,261,491       1,320,208  
  

 

 

   

 

 

 

Total capital

     1,848,517       1,905,609  
  

 

 

   

 

 

 

TOTAL

   $ 2,923,892     $ 2,978,355  
  

 

 

   

 

 

 

 

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FIVE POINT HOLDINGS, LLC

SUPPLEMENTAL DATA

(In thousands)

(Unaudited)

Liquidity

 

                        
     December 31, 2018  

Cash and cash equivalents

   $ 495,694  

Borrowing capacity (1)

     124,000  
  

 

 

 

Total liquidity

   $ 619,694  
  

 

 

 

 

(1)

As of December 31, 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

 

                        
     December 31, 2018  

Debt (1)

   $ 602,692  
  

 

 

 

Total capital

     1,848,517  
  

 

 

 

Total capitalization

   $ 2,451,209  
  

 

 

 

Debt to total capitalization

     24.6
  

 

 

 

 

(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.

 

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Segment Results

Newhall

The following table summarizes the results of operations of our Newhall segment for the three months and twelve months ended December 31, 2018 and 2017.

 

                                                                                           
     Three Months Ended
December 31,
     Twelve Months Ended
December 31,
 
     2018      2017      2018      2017  
     (in thousands)  

Statement of Operations Data

           

Revenues

           

Land sales

   $ 11      $ 9,398      $ 133      $ 17,257  

Land sales—related party

     12        1,784        16        2,746  

Operating properties

     910        4,582        6,252        11,565  
  

 

 

    

 

 

    

 

 

    

 

 

 

Total revenues

     933        15,764        6,401        31,568  
  

 

 

    

 

 

    

 

 

    

 

 

 

Costs and expenses

           

Land sales

     (345      35        (241      3,201  

Operating properties

     553        3,143        5,077        11,450  

Selling, general, and administrative

     3,260        5,767        15,391        29,371  
  

 

 

    

 

 

    

 

 

    

 

 

 

Total costs and expenses

     3,468        8,945        20,227        44,022  
  

 

 

    

 

 

    

 

 

    

 

 

 

Other income

     102        27        7,024        96  
  

 

 

    

 

 

    

 

 

    

 

 

 

Segment (loss) income

   $ (2,433    $ 6,846      $ (6,802    $ (12,358
  

 

 

    

 

 

    

 

 

    

 

 

 

San Francisco

The following table summarizes the results of operations of our San Francisco segment for the three months and twelve months ended December 31, 2018 and 2017.

 

                                                                                                   
     Three Months Ended
December 31,
     Twelve Months Ended
December 31,
 
     2018      2017      2018      2017  
     (in thousands)  

Statement of Operations Data

           

Revenues

           

Land sales—related party

   $ 221      $ 221      $ 884      $ 84,810  

Operating property

     181        178        729        536  

Management services—related party

     656        1,489        4,397        5,841  
  

 

 

    

 

 

    

 

 

    

 

 

 

Total revenues

     1,058        1,888        6,010        91,187  
  

 

 

    

 

 

    

 

 

    

 

 

 

Costs and expenses

           

Land sales

     —          869        76        81,458  

Management services

     185        206        1,015        709  

Selling, general, and administrative

     4,768        7,516        22,979        28,288  
  

 

 

    

 

 

    

 

 

    

 

 

 

Total costs and expenses

     4,953        8,591        24,070        110,455  
  

 

 

    

 

 

    

 

 

    

 

 

 

Segment loss

   $ (3,895    $ (6,703    $ (18,060    $ (19,268
  

 

 

    

 

 

    

 

 

    

 

 

 

 

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Great Park

The following table summarizes the results of operations of our Great Park segment for the three months and twelve months ended December 31, 2018 and 2017.

 

                                                                                                   
     Three Months Ended
December 31,
     Twelve Months Ended
December 31,
 
     2018      2017      2018      2017  
     (in thousands)  

Statement of Operations Data

           

Revenues

           

Land sales

   $ 714      $ 11,524      $ 171,775      $ 473,234  

Land sales—related party

     2,541        3,994        3,914        7,700  

Management services—related party

     5,282        4,244        35,090        16,239  
  

 

 

    

 

 

    

 

 

    

 

 

 

Total revenues

     8,537        19,762        210,779        497,173  
  

 

 

    

 

 

    

 

 

    

 

 

 

Costs and expenses

           

Land sales

     2        10,229        118,115        339,100  

Management services

     3,241        2,707        22,947        10,082  

Selling, general, and administrative

     6,165        8,671        32,322        27,115  

Management fees—related party

     7,141        76,265        24,999        80,883  
  

 

 

    

 

 

    

 

 

    

 

 

 

Total costs and expenses

     16,549        97,872        198,383        457,180  
  

 

 

    

 

 

    

 

 

    

 

 

 

Interest income

     423        2,226        2,815        2,226  
  

 

 

    

 

 

    

 

 

    

 

 

 

Segment (loss) income

   $ (7,589    $ (75,884    $ 15,211      $ 42,219  
  

 

 

    

 

 

    

 

 

    

 

 

 

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 months and twelve months ended December 31, 2018 and 2017.

 

                                                                                                   
     Three Months Ended
December 31,
     Twelve Months Ended
December 31,
 
     2018      2017      2018      2017  
     (in thousands)  

Segment net (loss) income from operations

   $ (7,589    $ (75,884    $ 15,211      $ 42,219  

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

     2,041        1,539        12,143        6,157  
  

 

 

    

 

 

    

 

 

    

 

 

 

Net (loss) income of Great Park Venture

     (9,630      (77,423      3,068        36,062  
  

 

 

    

 

 

    

 

 

    

 

 

 

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

     (3,611      (29,034      1,151        13,523  

Basis difference accretion (amortization)

     1,349        17,072        (2,057      (7,763
  

 

 

    

 

 

    

 

 

    

 

 

 

Equity in (loss) earnings from Great Park Venture

   $ (2,262    $ (11,962    $ (906    $ 5,760  
  

 

 

    

 

 

    

 

 

    

 

 

 

 

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Commercial

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

 

     Three Months Ended
December 31,
     Twelve Months Ended
December 31,
 
     2018      2018  
     (in thousands)  

Statement of Operations Data

     

Revenues

     

Rental and related income

   $ 7,335      $ 26,580  

Property management fees

     672        1,489  
  

 

 

    

 

 

 

Total revenues

     8,007        28,069  
  

 

 

    

 

 

 

Costs and expenses

     

Rental operating expenses

     1,932        4,705  

Interest

     3,937        11,563  

Depreciation

     2,109        7,632  

Amortization

     1,024        4,098  

Other expenses

     25        258  
  

 

 

    

 

 

 

Total costs and expenses

     9,027        28,256  
  

 

 

    

 

 

 

Segment loss

   $ (1,020    $ (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, 2018.

 

     Three Months Ended
December 31,
     Twelve Months Ended
December 31,
 
     2018      2018  
     (in thousands)  

Segment net loss from operations

   $ (1,020    $ (187

Less net income of management company attributed to the Commercial segment

     672        1,489  
  

 

 

    

 

 

 

Net loss of Gateway Commercial Venture

     (1,692      (1,676
  

 

 

    

 

 

 

Equity in loss from Gateway Commercial Venture

   $ (1,269    $ (1,257
  

 

 

    

 

 

 

 

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