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Share Name | Share Symbol | Market | Type |
---|---|---|---|
Five Point Holdings LLC | NYSE:FPH | NYSE | Common Stock |
Price Change | % Change | Share Price | High Price | Low Price | Open Price | Shares Traded | Last Trade | |
---|---|---|---|---|---|---|---|---|
0.02 | 0.65% | 3.08 | 3.16 | 3.0497 | 3.08 | 21,827 | 01:00:00 |
Second Quarter 2023 Highlights
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 second quarter 2023 results.
Dan Hedigan, Chief Executive Officer, said, “During the second quarter, we were able to execute effectively on our three main priorities (generating revenue, rightsizing SG&A, and managing capital spend) and to achieve results that exceeded our expectations. For the quarter, we had $50.6 million in consolidated net income and a net cash increase of $86.6 million, leaving us with a cash balance of $193.2 million at quarter end. While these results are due in part to the residential land sale market that has strengthened throughout the year, it is also a testament to the management team and our continued focus on matching our capital spend with near term revenue opportunities. Five Point has created a strong organizational base for moving the development of our communities forward and creating value for our shareholders.”
Consolidated Results
Liquidity and Capital Resources
As of June 30, 2023, total liquidity of $318.2 million was comprised of cash and cash equivalents totaling $193.2 million and borrowing availability of $125.0 million under our 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 June 30, 2023
Revenues. Revenues of $21.3 million for the three months ended June 30, 2023 were primarily generated from management services. Additionally, we collected $22.0 million in incentive compensation payments under our development management agreement with the Great Park Venture.
Equity in earnings from unconsolidated entities. Equity in earnings from unconsolidated entities was $52.1 million for the three months ended June 30, 2023. The Great Park Venture generated net income of $168.2 million during the three months ended June 30, 2023, and our share of the net income from our 37.5% percentage interest, adjusted for basis differences, was $52.3 million. Additionally, we recognized $0.5 million in loss from our 75% interest in the Gateway Commercial Venture.
During the three months ended June 30, 2023, the Great Park Venture sold 798 homesites on approximately 84 acres of land at the Great Park Neighborhoods. 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. After completing the land sale, the Great Park Venture made aggregate distributions of $25.5 million to holders of Legacy Interests and $218.0 million to holders of Percentage Interests. We received $81.8 million for our 37.5% Percentage Interest.
Selling, general, and administrative. Selling, general, and administrative expenses were $12.7 million for the three months ended June 30, 2023.
Net income. Consolidated net income for the quarter was $50.6 million. Net income attributable to noncontrolling interests totaled $27.0 million, resulting in net income attributable to the Company of $23.6 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.
Conference Call Information
In conjunction with this release, Five Point will host a conference call on Thursday, July 20, 2023 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 (877) 451-6152 (domestic) or (201) 389-0879 (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 13740212. The telephonic replay will be available until 11:59 p.m. Eastern Time on July 28, 2023.
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 June 30,
Six Months Ended June 30,
2023
2022
2023
2022
REVENUES:
Land sales
$
16
$
14
$
(9
)
$
571
Land sales—related party
(29
)
1,711
595
1,712
Management services—related party
20,774
2,703
25,010
6,250
Operating properties
588
965
1,454
1,746
Total revenues
21,349
5,393
27,050
10,279
COSTS AND EXPENSES:
Land sales
—
—
—
—
Management services
9,682
2,200
12,048
4,884
Operating properties
1,798
2,378
2,970
4,217
Selling, general, and administrative
12,710
12,651
26,462
29,442
Restructuring
—
—
—
19,437
Total costs and expenses
24,190
17,229
41,480
57,980
OTHER INCOME (EXPENSE):
Interest income
1,293
117
2,129
138
Miscellaneous
(20
)
112
(41
)
224
Total other income
1,273
229
2,088
362
EQUITY IN EARNINGS (LOSS) FROM UNCONSOLIDATED ENTITIES
52,128
643
53,176
(389
)
INCOME (LOSS) BEFORE INCOME TAX PROVISION
50,560
(10,964
)
40,834
(47,728
)
INCOME TAX PROVISION
(5
)
(8
)
(13
)
(13
)
NET INCOME (LOSS)
50,555
(10,972
)
40,821
(47,741
)
LESS NET INCOME (LOSS) ATTRIBUTABLE TO NONCONTROLLING INTERESTS
26,984
(5,861
)
21,786
(25,500
)
NET INCOME (LOSS) ATTRIBUTABLE TO THE COMPANY
$
23,571
$
(5,111
)
$
19,035
$
(22,241
)
NET INCOME (LOSS) ATTRIBUTABLE TO THE COMPANY PER CLASS A SHARE
Basic
$
0.34
$
(0.07
)
$
0.28
$
(0.32
)
Diluted
$
0.34
$
(0.07
)
$
0.27
$
(0.33
)
WEIGHTED AVERAGE CLASS A SHARES OUTSTANDING
Basic
68,811,975
68,495,523
68,758,894
68,332,460
Diluted
145,040,689
69,635,563
144,939,450
69,472,500
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
CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands, except shares)
(Unaudited)
June 30, 2023
December 31, 2022
ASSETS
INVENTORIES
$
2,254,935
$
2,239,125
INVESTMENT IN UNCONSOLIDATED ENTITIES
302,337
331,594
PROPERTIES AND EQUIPMENT, NET
29,668
30,243
INTANGIBLE ASSET, NET—RELATED PARTY
31,656
40,257
CASH AND CASH EQUIVALENTS
193,203
131,771
RESTRICTED CASH AND CERTIFICATES OF DEPOSIT
992
992
RELATED PARTY ASSETS
89,933
97,126
OTHER ASSETS
11,179
14,676
TOTAL
$
2,913,903
$
2,885,784
LIABILITIES AND CAPITAL
LIABILITIES:
Notes payable, net
$
621,419
$
620,651
Accounts payable and other liabilities
90,760
94,426
Related party liabilities
83,684
93,086
Deferred income tax liability, net
11,506
11,506
Payable pursuant to tax receivable agreement
173,208
173,068
Total liabilities
980,577
992,737
REDEEMABLE NONCONTROLLING INTEREST
25,000
25,000
CAPITAL:
Class A common shares; No par value; Issued and outstanding: June 30, 2023—69,199,938 shares; December 31, 2022—69,068,354 shares
Class B common shares; No par value; Issued and outstanding: June 30, 2023—79,233,544 shares; December 31, 2022—79,233,544 shares
Contributed capital
589,634
587,733
Retained earnings
52,421
33,386
Accumulated other comprehensive loss
(2,939
)
(2,988
)
Total members’ capital
639,116
618,131
Noncontrolling interests
1,269,210
1,249,916
Total capital
1,908,326
1,868,047
TOTAL
$
2,913,903
$
2,885,784
FIVE POINT HOLDINGS, LLC
SUPPLEMENTAL DATA
(In thousands)
(Unaudited)
Liquidity
June 30, 2023
Cash and cash equivalents
$
193,203
Borrowing capacity(1)
125,000
Total liquidity
$
318,203
(1)
As of June 30, 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
June 30, 2023
Debt(1)
$
625,000
Total capital
1,908,326
Total capitalization
$
2,533,326
Debt to total capitalization
24.7
%
Debt(1)
$
625,000
Less: Cash and cash equivalents
193,203
Net debt
431,797
Total capital
1,908,326
Total net capitalization
$
2,340,123
Net debt to total capitalization(2)
18.5
%
(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 six months ended June 30, 2023 (in thousands):
Three Months Ended June 30, 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
$
16
$
—
$
358,668
$
—
$
358,684
$
—
$
358,684
$
(358,668
)
$
16
Land sales—related party
(29
)
—
1,928
—
1,899
—
1,899
(1,928
)
(29
)
Management services—related party(2)
—
—
20,670
104
20,774
—
20,774
—
20,774
Operating properties
426
162
—
2,021
2,609
—
2,609
(2,021
)
588
Total revenues
413
162
381,266
2,125
383,966
—
383,966
(362,617
)
21,349
COSTS AND EXPENSES:
Land sales
—
—
165,749
—
165,749
—
165,749
(165,749
)
—
Management services(2)
—
—
9,682
—
9,682
—
9,682
—
9,682
Operating properties
1,798
—
—
1,019
2,817
—
2,817
(1,019
)
1,798
Selling, general, and administrative
3,394
1,049
1,815
1,033
7,291
8,267
15,558
(2,848
)
12,710
Management fees—related party
—
—
27,388
—
27,388
—
27,388
(27,388
)
—
Total costs and expenses
5,192
1,049
204,634
2,052
212,927
8,267
221,194
(197,004
)
24,190
OTHER (EXPENSE) INCOME:
Interest income
—
2
1,907
—
1,909
1,291
3,200
(1,907
)
1,293
Interest expense
—
—
—
(575
)
(575
)
—
(575
)
575
—
Miscellaneous
(20
)
—
—
—
(20
)
—
(20
)
—
(20
)
Total other (expense) income
(20
)
2
1,907
(575
)
1,314
1,291
2,605
(1,332
)
1,273
EQUITY IN EARNINGS FROM UNCONSOLIDATED ENTITIES
261
—
606
—
867
—
867
51,261
52,128
SEGMENT (LOSS) PROFIT/INCOME BEFORE INCOME TAX PROVISION
(4,538
)
(885
)
179,145
(502
)
173,220
(6,976
)
166,244
(115,684
)
50,560
INCOME TAX PROVISION
—
—
—
—
—
(5
)
(5
)
—
(5
)
SEGMENT (LOSS) PROFIT/NET INCOME
$
(4,538
)
$
(885
)
$
179,145
$
(502
)
$
173,220
$
(6,981
)
$
166,239
$
(115,684
)
$
50,555
(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.
Six Months Ended June 30, 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
$
(9
)
$
—
$
361,801
$
—
$
361,792
$
—
$
361,792
$
(361,801
)
$
(9
)
Land sales—related party
595
—
7,395
—
7,990
—
7,990
(7,395
)
595
Management services—related party(2)
—
—
24,799
211
25,010
—
25,010
—
25,010
Operating properties
1,130
324
—
4,175
5,629
—
5,629
(4,175
)
1,454
Total revenues
1,716
324
393,995
4,386
400,421
—
400,421
(373,371
)
27,050
COSTS AND EXPENSES:
Land sales
—
—
165,749
—
165,749
—
165,749
(165,749
)
—
Management services(2)
—
—
12,048
—
12,048
—
12,048
—
12,048
Operating properties
2,970
—
—
1,803
4,773
—
4,773
(1,803
)
2,970
Selling, general, and administrative
6,041
2,242
5,143
2,153
15,579
18,179
33,758
(7,296
)
26,462
Management fees—related party
—
—
31,848
—
31,848
—
31,848
(31,848
)
—
Total costs and expenses
9,011
2,242
214,788
3,956
229,997
18,179
248,176
(206,696
)
41,480
OTHER (EXPENSE) INCOME:
Interest income
—
3
3,208
—
3,211
2,126
5,337
(3,208
)
2,129
Interest expense
—
—
—
(1,108
)
(1,108
)
—
(1,108
)
1,108
—
Miscellaneous
(41
)
—
—
—
(41
)
—
(41
)
—
(41
)
Total other (expense) income
(41
)
3
3,208
(1,108
)
2,062
2,126
4,188
(2,100
)
2,088
EQUITY IN EARNINGS FROM UNCONSOLIDATED ENTITIES
359
—
1,236
—
1,595
—
1,595
51,581
53,176
SEGMENT (LOSS) PROFIT/INCOME BEFORE INCOME TAX PROVISION
(6,977
)
(1,915
)
183,651
(678
)
174,081
(16,053
)
158,028
(117,194
)
40,834
INCOME TAX PROVISION
—
—
—
—
—
(13
)
(13
)
—
(13
)
SEGMENT (LOSS) PROFIT/NET INCOME
$
(6,977
)
$
(1,915
)
$
183,651
$
(678
)
$
174,081
$
(16,066
)
$
158,015
$
(117,194
)
$
40,821
(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 condensed consolidated statements of operations for the three and six months ended June 30, 2023 (in thousands):
Three Months Ended June 30, 2023
Six Months Ended June 30, 2023
Segment profit from operations
$
179,145
$
183,651
Less net income of management company attributed to the Great Park segment
10,988
12,751
Net income of the Great Park Venture
168,157
170,900
The Company’s share of net income of the Great Park Venture
63,059
64,088
Basis difference amortization, net
(10,737
)
(10,604
)
Equity in earnings from the Great Park Venture
$
52,322
$
53,484
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 condensed consolidated statements of operations for the three and six months ended June 30, 2023 (in thousands):
Three Months Ended June 30, 2023
Six Months Ended June 30, 2023
Segment loss from operations
$
(502
)
$
(678
)
Less net income of management company attributed to the Commercial segment
104
211
Net loss of the Gateway Commercial Venture
(606
)
(889
)
Equity in loss from the Gateway Commercial Venture
$
(455
)
$
(667
)
View source version on businesswire.com: https://www.businesswire.com/news/home/20230720083825/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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