Five Point Holdings an owner and developer of large mixed-use, master-planned communities in California, including the Santa Clarita Valley, reported its third quarter 2020 results Tuesday.
“We are pleased to present our third quarter results where we improved our cash position by $55 million and generated consolidated net income of $36.4 million,” said Emile Haddad, Chairman and CEO. “We are seeing continued strength in our markets evidenced by the rate of sales at our Great Park Neighborhoods community, the interest from homebuilders in Valencia and the reported home price appreciation in both the Los Angeles County and Orange County markets.”
Third Quarter 2020 Consolidated Results
Liquidity and Capital Resources
As of September 30, 2020, total liquidity of $395.2 million was comprised of cash and cash equivalents totaling $270.6 million and borrowing availability of $124.7 million under our $125.0 million unsecured revolving credit facility. Total capital was $1.9 billion, reflecting $3.0 billion in assets and $1.1 billion in liabilities and redeemable noncontrolling interests.
Results of Operations for the Three Months Ended September 30, 2020
Revenues: Revenues of $8.4 million for the three months ended September 30, 2020 were primarily generated from management services.
Equity in earnings from unconsolidated entities: Equity in earnings from unconsolidated entities was $52.4 million for the three months ended September 30, 2020, comprised of a $4.2 million loss from our 37.5% percentage interest in the Great Park Venture and earnings of $56.6 million from our 75% interest in the Gateway Commercial Venture.
Selling, general, and administrative: Selling, general, and administrative expenses were $17.7 million for the three months ended September 30, 2020.
Net income: Consolidated net income for the quarter was $36.4 million. The net income attributable to noncontrolling interests totaled $19.5 million, resulting in net income attributable to the Company of $17.0 million.
Valencia Segment (formerly Newhall): Selling, general, and administrative expenses were $2.8 million for the three months ended September 30, 2020.
San Francisco Segment:Selling, general, and administrative expenses were $2.0 million for the three months ended September 30, 2020.
Great Park Segment:The Great Park segment’s net loss for the quarter was $10.2 million, which included net income of $1.8 million from management services and a net loss of $12.0 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 $4.2 million for the three months ended Sept. 30, 2020.
Commercial Segment: In August 2020, the Gateway Commercial Venture closed on the sale of two buildings, comprising a total of approximately 660,000 square feet of research and development space currently leased to a subsidiary of Broadcom Inc. for a purchase price of $355.0 million. The sale of the buildings, which had a carrying value of approximately $278.0 million, resulted in a gain of approximately $74.8 million, net of transaction costs. Concurrently, the Gateway Commercial Venture made a debt payment of $245.0 million to its lender and made total distributions to its members of approximately $107.0 million, of which approximately $80.3 million was distributed to us. Segment net income was approximately $75.6 million, which included net income of $0.1 million from management services and net income of $75.5 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 earnings from the Gateway Commercial Venture totaled $56.6 million for the three months ended September 30, 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.