Five point holdings, llc reports fourth quarter and year-end 2022 results
Irvine, calif.--(business wire)--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 fourth quarter and year-end 2022 results. dan hedigan, chief executive officer, said, “the fourth quarter was marked by taking the first step in executing on our commercial land sale strategy, with the sale of a 42 acre site at the great park. we have now demonstrated that our communities have two potential sources of meaningful land sale revenue – residential and commercial. while we are well aware that the interest rate and capital markets environment may impact our land sales in 2023, our team continues to be focused on our core priorities: generating revenue; managing our capital spend; and diligently managing our selling, general and administrative expenses. execution on these priorities should generate net positive cash flow for 2023 and provide the liquidity to allow us to capitalize on the opportunities that we expect will be available when the markets stabilize.” consolidated results liquidity and capital resources as of december 31, 2022, total liquidity of $256.8 million was comprised of cash and cash equivalents totaling $131.8 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 december 31, 2022 revenues. revenues of $17.0 million for the three months ended december 31, 2022 were primarily generated from management services. additionally, we collected $14.2 million in incentive compensation payments from our development management agreement with the great park venture. equity in earnings from unconsolidated entities. equity in earnings from unconsolidated entities was $26.2 million for the three months ended december 31, 2022. the great park venture closed the sale of 42 acres of land entitled for commercial use in the fourth quarter driving net income for the great park venture of $88.6 million. our share of the net income from our 37.5% percentage interest, adjusted for basis differences, was $26.1 million. the great park venture made aggregate distributions to its members of $157.0 million, of which we received $52.7 million for our 37.5% percentage interest. additionally, we recognized $0.2 million in loss from our 75% interest in the gateway commercial venture. the gateway commercial venture made distributions of excess cash to its members during the fourth quarter, of which we received $8.6 million from our 75% interest. selling, general, and administrative. selling, general, and administrative expenses were $13.1 million for the three months ended december 31, 2022. net income. consolidated net income for the quarter was $22.5 million. net income attributable to noncontrolling interests totaled $11.2 million, resulting in net income attributable to the company of $11.3 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. results of operations for the twelve months ended december 31, 2022 revenues. revenues of $42.7 million for the twelve months ended december 31, 2022 were primarily generated from management services in addition to profit participation revenues received from valencia homebuilders. equity in earnings from unconsolidated entities. equity in earnings from unconsolidated entities was $21.5 million for the twelve months ended december 31, 2022. the great park venture generated net income of $69.0 million. our share of the net income from our 37.5% percentage interest, adjusted for basis differences, was $20.4 million. additionally, we recognized $0.1 million in loss from our 75% interest in the gateway commercial venture and $1.2 million in earnings from our 10% interest in the valencia landbank venture. selling, general, and administrative. selling, general, and administrative expenses were $54.6 million for the twelve months ended december 31, 2022 compared to $77.1 million for 2021, a 29% reduction. net loss. consolidated net loss for the year was $34.8 million. net loss attributable to noncontrolling interests totaled $19.4 million, resulting in net loss attributable to the company of $15.4 million. conference call information in conjunction with this release, five point will host a conference call on thursday, january 19, 2023 at 5:30 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 13735390. the telephonic replay will be available until 11:59 p.m. eastern time on february 2, 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 consolidated statements of operations (in thousands, except share and per share amounts) (unaudited) three months ended december 31, twelve months ended december 31, 2022 2021 2022 2021 revenues: land sales $ 270 $ 129,413 $ 913 $ 139,500 land sales—related party 2,983 43,213 7,512 43,286 management services—related party 13,075 8,839 31,433 39,081 operating properties 671 750 2,836 2,527 total revenues 16,999 182,215 42,694 224,394 costs and expenses: land sales (996 ) 106,012 (996 ) 106,012 management services 7,889 6,759 20,261 31,459 operating properties 2,433 1,724 8,230 6,822 selling, general, and administrative 13,119 17,605 54,591 77,118 restructuring — — 19,437 — total costs and expenses 22,445 132,100 101,523 221,411 other income (expense): interest income 381 20 826 94 miscellaneous (91 ) (113 ) 245 3,720 total other income (expense) 290 (93 ) 1,071 3,814 equity in earnings (loss) from unconsolidated entities 26,167 (2,860 ) 21,513 6,188 income (loss) before income tax benefit 21,011 47,162 (36,245 ) 12,985 income tax benefit 1,487 330 1,471 325 net income (loss) 22,498 47,492 (34,774 ) 13,310 less net income (loss) attributable to noncontrolling interests 11,221 25,008 (19,371 ) 6,742 net income (loss) attributable to the company $ 11,277 $ 22,484 $ (15,403 ) $ 6,568 net income (loss) attributable to the company per class a share basic $ 0.16 $ 0.32 $ (0.22 ) $ 0.09 diluted $ 0.15 $ 0.32 $ (0.23 ) $ 0.09 weighted average class a shares outstanding basic 68,534,163 67,448,348 68,429,271 67,394,794 diluted 144,630,573 143,544,758 68,430,212 143,491,204 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 consolidated balance sheets (in thousands, except shares) (unaudited) december 31, 2022 december 31, 2021 assets inventories $ 2,239,125 $ 2,096,824 investment in unconsolidated entities 331,594 374,553 properties and equipment, net 30,243 31,466 intangible asset, net—related party 40,257 51,405 cash and cash equivalents 131,771 265,462 restricted cash and certificates of deposit 992 1,330 related party assets 97,126 101,818 other assets 14,676 20,052 total $ 2,885,784 $ 2,942,910 liabilities and capital liabilities: notes payable, net $ 620,651 $ 619,116 accounts payable and other liabilities 94,426 115,374 related party liabilities 93,086 95,918 deferred income tax liability, net 11,506 12,998 payable pursuant to tax receivable agreement 173,068 174,126 total liabilities 992,737 1,017,532 redeemable noncontrolling interest 25,000 25,000 capital: class a common shares; no par value; issued and outstanding: december 31, 2022—69,068,354 shares; december 31, 2021—70,107,552 shares class b common shares; no par value; issued and outstanding: december 31, 2022—79,233,544 shares; december 31, 2021—79,233,544 shares contributed capital 587,733 587,587 retained earnings 33,386 48,789 accumulated other comprehensive loss (2,988 ) (1,952 ) total members’ capital 618,131 634,424 noncontrolling interests 1,249,916 1,265,954 total capital 1,868,047 1,900,378 total $ 2,885,784 $ 2,942,910 five point holdings, llc supplemental data (in thousands) (unaudited) liquidity december 31, 2022 cash and cash equivalents $ 131,771 borrowing capacity(1) 125,000 total liquidity $ 256,771 (1) as of december 31, 2022, 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 december 31, 2022 debt(1) $ 625,000 total capital 1,868,047 total capitalization $ 2,493,047 debt to total capitalization 25.1 % debt(1) $ 625,000 less: cash and cash equivalents 131,771 net debt 493,229 total capital 1,868,047 total net capitalization $ 2,361,276 net debt to total capitalization(2) 20.9 % (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 tables reconcile the results of operations of our segments to our consolidated results for the three and twelve months ended december 31, 2022 (in thousands): three months ended december 31, 2022 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 $ 270 $ — $ 241,612 $ — $ 241,882 $ — $ 241,882 $ (241,612 ) $ 270 land sales—related party 2,983 — 2,770 — 5,753 — 5,753 (2,770 ) 2,983 home sales — — — — — — — — — management services—related party(2) — — 12,969 106 13,075 — 13,075 — 13,075 operating properties 509 162 — 2,147 2,818 — 2,818 (2,147 ) 671 total revenues 3,762 162 257,351 2,253 263,528 — 263,528 (246,529 ) 16,999 costs and expenses: land sales (996 ) — 140,574 — 139,578 — 139,578 (140,574 ) (996 ) home sales — — (1,092 ) — (1,092 ) — (1,092 ) 1,092 — management services(2) — — 7,889 — 7,889 — 7,889 — 7,889 operating properties 2,433 — — 822 3,255 — 3,255 (822 ) 2,433 selling, general, and administrative 3,057 1,404 2,486 1,088 8,035 8,658 16,693 (3,574 ) 13,119 management fees—related party — — 14,653 — 14,653 — 14,653 (14,653 ) — total costs and expenses 4,494 1,404 164,510 1,910 172,318 8,658 180,976 (158,531 ) 22,445 other (expense) income: interest income 1 1 828 — 830 379 1,209 (828 ) 381 interest expense — — — (535 ) (535 ) — (535 ) 535 — miscellaneous (91 ) — — — (91 ) — (91 ) — (91 ) total other (expense) income (90 ) 1 828 (535 ) 204 379 583 (293 ) 290 equity in earnings from unconsolidated entities 313 — 23 — 336 — 336 25,831 26,167 segment (loss) profit/income before income tax benefit (509 ) (1,241 ) 93,692 (192 ) 91,750 (8,279 ) 83,471 (62,460 ) 21,011 income tax benefit — — — — — 1,487 1,487 — 1,487 segment (loss) profit/net income $ (509 ) $ (1,241 ) $ 93,692 $ (192 ) $ 91,750 $ (6,792 ) $ 84,958 $ (62,460 ) $ 22,498 (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. twelve months ended december 31, 2022 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 $ 913 $ — $ 270,882 $ — $ 271,795 $ — $ 271,795 $ (270,882 ) $ 913 land sales—related party 7,512 — 12,520 — 20,032 — 20,032 (12,520 ) 7,512 home sales — — 40,475 — 40,475 — 40,475 (40,475 ) — management services—related party(2) — — 31,015 418 31,433 — 31,433 — 31,433 operating properties 2,146 690 — 8,395 11,231 — 11,231 (8,395 ) 2,836 total revenues 10,571 690 354,892 8,813 374,966 — 374,966 (332,272 ) 42,694 costs and expenses: land sales (996 ) — 155,692 — 154,696 — 154,696 (155,692 ) (996 ) home sales — — 29,692 — 29,692 — 29,692 (29,692 ) — management services(2) — — 20,261 — 20,261 — 20,261 — 20,261 operating properties 8,230 — — 2,645 10,875 — 10,875 (2,645 ) 8,230 selling, general, and administrative 13,602 4,087 18,127 4,289 40,105 36,902 77,007 (22,416 ) 54,591 restructuring — — — — — 19,437 19,437 — 19,437 management fees—related party — — 53,298 — 53,298 — 53,298 (53,298 ) — total costs and expenses 20,836 4,087 277,070 6,934 308,927 56,339 365,266 (263,743 ) 101,523 other income (expense): interest income 1 1 1,532 — 1,534 824 2,358 (1,532 ) 826 interest expense — — — (1,541 ) (1,541 ) — (1,541 ) 1,541 — loss on extinguishment of debt — — — (89 ) (89 ) — (89 ) 89 — miscellaneous 245 — — — 245 — 245 — 245 total other income (expense) 246 1 1,532 (1,630 ) 149 824 973 98 1,071 equity in earnings from unconsolidated entities 1,196 — 354 — 1,550 — 1,550 19,963 21,513 segment (loss) profit/loss before income tax benefit (8,823 ) (3,396 ) 79,708 249 67,738 (55,515 ) 12,223 (48,468 ) (36,245 ) income tax benefit — — — — — 1,471 1,471 — 1,471 segment (loss) profit/net loss $ (8,823 ) $ (3,396 ) $ 79,708 $ 249 $ 67,738 $ (54,044 ) $ 13,694 $ (48,468 ) $ (34,774 ) (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 consolidated statements of operations for the three and twelve months ended december 31, 2022 (in thousands): three months ended december 31, 2022 twelve months ended december 31, 2022 segment profit from operations $ 93,692 $ 79,708 less net income of management company attributed to the great park segment 5,080 10,754 net income of the great park venture 88,612 68,954 the company’s share of net income of the great park venture 33,230 25,858 basis difference amortization (7,152 ) (5,414 ) equity in earnings from the great park venture $ 26,078 $ 20,444 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, 2022 (in thousands): three months ended december 31, 2022 twelve months ended december 31, 2022 segment (loss) profit from operations $ (192 ) $ 249 less net income of management company attributed to the commercial segment 106 418 net loss of the gateway commercial venture (298 ) (169 ) equity in loss from the gateway commercial venture $ (224 ) $ (127 )
