Five Point Holdings, LLC, an owner and developer of large mixed-use, master-planned communities in California, including Valencia Segment (formerly Newhall), reported Thursday its first quarter 2020 results.
Emile Haddad, Chairman and CEO, said, “In these unprecedented times, we are thankful that all of our associates are healthy, comforted by the strength of our balance sheet and liquidity, encouraged by the performance of our guest builders, grateful to those who continue investing in our vision, and proud of our team.”
First Quarter 2020 Consolidated Results
Liquidity and Capital Resources
As of March 31, 2020, total liquidity of $372.4 million was comprised of cash and cash equivalents totaling $247.8 million and borrowing availability of $124.7 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 and redeemable noncontrolling interests.
Results of Operations for the Three Months Ended March 31, 2020
Revenues. Revenues of $9.2 million for the three months ended March 31, 2020 were primarily generated from management services.
Equity in loss from unconsolidated entities. Equity in loss from unconsolidated entities was $30.9 million for the three months ended March 31, 2020 comprised of a $3.5 million loss from our 37.5% percentage interest in the Great Park Venture and a $0.6 million loss from our 75% interest in the Gateway Commercial Venture. Equity in loss from unconsolidated entities also included the recognition of an other-than-temporary impairment of $26.9 million attributed to our investment in the Great Park Venture.
Selling, general, and administrative. Selling, general, and administrative expenses were $24.6 million for the three months ended March 31, 2020.
Net loss. Consolidated net loss for the quarter was $53.2 million. The net loss attributable to noncontrolling interests totaled $28.4 million, resulting in net loss attributable to the Company of $24.8 million.
Valencia Segment (formerly Newhall). Total segment revenues were $0.8 million for the first quarter of 2020 and were derived from agricultural land leasing and the sale of citrus crops. Selling, general, and administrative expenses were $3.7 million for the three months ended March 31, 2020.
San Francisco Segment. Total segment revenues were $1.0 million for the first quarter of 2020. Revenues during the quarter were mostly attributable to fees generated from management agreements. Selling, general, and administrative expenses were $3.6 million for the three months ended March 31, 2020.
Great Park Segment. Total segment revenues were $29.5 million for the first quarter of 2020. Revenues were mainly attributable to the sale of land entitled for 35 homesites on approximately four acres at the Great Park Neighborhoods. Initial gross proceeds from the sale were $20.3 million representing the base purchase price. The Great Park segment’s net loss for the quarter was $2.5 million, which included net income of $1.8 million from management services and a net loss of $4.3 million attributed to the Great Park Venture. We do not include the Great Park Venture as a consolidated subsidiary in our consolidated financial statements, but rather account for it as an equity method investee. After adjusting to account for a difference in investment basis, the Company’s equity in loss from the Great Park Venture was $3.5 million for the three months ended March 31, 2020. During the first quarter of 2020, the Company’s equity in loss from the Great Park Venture also included the recognition of an other-than-temporary impairment of $26.9 million attributed to our investment in the Great Park Venture. The impairment was primarily a result of expected delays in both the timing of land sales to builders and distributions to us causing a decline in the fair value of our investment in the Great Park Venture.
Commercial Segment. Total segment revenues were $8.6 million from tenant leases at the Five Point Gateway Campus and property management services provided by us to the Gateway Commercial Venture during the first quarter of 2020. Segment expenses were mostly comprised of depreciation, amortization and interest expense totaling $7.5 million. Segment net loss was approximately $0.6 million, which included net income of $0.1 million from management services and a net loss of $0.7 million attributed to the Gateway Commercial Venture. We do not include the Gateway Commercial Venture as a consolidated subsidiary in our consolidated financial statements, but rather account for it as an equity method investee. Our share of equity in loss from the Gateway Commercial Venture totaled $0.6 million for the three months ended March 31, 2020.
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.
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 and our Quarterly Reports on Form 10-Q, 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.