As the COVID-19 crisis sparks increased demand and innovation in the healthcare industry, Five Point Holdings LLC is telling healthcare businesses to “Come Home to Valencia.”
Company CEO Emile Haddad told investors in a letter Tuesday, filed with the SEC, that Five Point is looking to the healthcare sector to fill commercial space in its Valencia expansion west of Interstate 5.
“At our Great Park (Irvine) and Valencia communities, we have been focused on healthcare users/strategic partners for development opportunities on our non-residential land,” Haddad wrote. He pointed to City of Hope, which will anchor a large healthcare campus in Irvine, as “just one example of a blue-chip healthcare strategic partner.”
Even before the current crisis, healthcare was one of the key industries targeted for expansion by the SCV Economic Development Corporation. As an industry sector, it’s one of the area’s biggest employers. Five Point and its previous iteration, Newhall Land, have had considerable success in luring healthcare businesses to Valencia, and Haddad said he predicts even more demand for healthcare innovation and uses in the future. Here already with a major presence are Advanced Bionics, Boston Scientific, Bioness, Quest Diagnostics and the Alfred Mann Foundation.
According to the EDC, “Santa Clarita Valley’s strong private sector presence in medical devices, especially the abundance of researchers and other skilled professionals, is an incredible asset for the area. These skilled professionals, and similarly many entrepreneurial ventures within the industry, tend to seek out communities that are viewed as being supportive and innovative environments.”
CEO Emile Haddad
As reported previously, Five Point has said it is well positioned to weather the current economic slowdown. Been there, done that.
“Our management team has been together through several market cycles,” he wrote. “During the Great Recession period of 2008-09, this same team repositioned the company’s current assets through some of the most complicated workouts. As such, it is in the DNA of the company to be prepared for unseen market shifts.”
Five Point’s long-term loans don’t come due until 2025, and “none of the company’s master-planned communities (such as Valencia) is encumbered with project debt,” the letter said.
Five Point has had most of its employees work from home since March 16, when the company implemented what Haddad called its “3-6-9 Plan.”
“It is simply a plan that assumes that revenues are going to be pushed back 3, 6, or 9 months and then assess which variable expenditures should be pushed back, accordingly. We immediately started implementing the first 3-month delay. As we monitor developments related to COVID-19, we will decide whether there is a need” for a 6- or 9-month delay. “Our hope is that this crisis will be over soon and that we will be able to go back to our original plan.”
The company has previously reported that it’s not a big problem if continued Valencia development is pushed back to the end of the year.
Five Point has scheduled an annual meeting by webcast on June 10. Shareholders will be asked to reelect former state Treasurer Kathleen Brown, former Irvine Company executive Gary Hunt and retired hedge fund manager Michael Winer to the company’s board of directors.
Luxor Capital Group LP, a New York-based hedge fund management company, continues to increase its position in Five Point; it now holds 17.7 of Class A common shares, equating to 8.2 percent of all outstanding common shares. As of Tuesday, Five Point’s biggest “owners” in terms of shares are the Florida-based developer Lennar Corp. with 39 percent, the private equity firm Castlelake LP with 17 percent, Luxor with 8.2 percent, and the equity firm Third Avenue Management LLC with 7.9 percent. Haddad owns 3 percent.
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