Five point holdings, llc reports first quarter 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 first quarter 2022 results. dan hedigan, chief executive officer, said, “fivepoint is entering an important juncture in the evolution of the company. we have taken decisive steps during the first quarter to manage costs and to create greater efficiencies in our day-to-day operations. with continued market demand within our supply-constrained california markets, we remain focused on maximizing the value of our residential assets while also seeking to capitalize on our sizeable commercial land opportunities in order to maximize our current cash flow and strengthen our balance sheet. our team is working hard to continue executing on our mission of transforming our unique land assets into sustainable mixed-use communities, while we keep a watchful eye on economic and market conditions.” consolidated results liquidity and capital resources as of march 31, 2022, total liquidity of $328.3 million was comprised of cash and cash equivalents totaling $203.6 million and borrowing availability of $124.7 million under our $125.0 million unsecured revolving credit facility. total capital was $1.9 billion, reflecting $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, 2022 revenues. revenues of $4.9 million for the three months ended march 31, 2022 was primarily generated from management services. equity in loss from unconsolidated entities. equity in loss from unconsolidated entities was $1.0 million for the three months ended march 31, 2022. the great park venture had no land sales during the three months ended march 31, 2022 but did close the sale of nine homes under its fee build program at great park neighborhoods, generating $17.2 million in revenues. the remaining 13 homes subject to the fee building agreement are expected to close during the remainder of 2022. net loss for the great park venture was $2.8 million. our share of the net loss from our 37.5% percentage interest, adjusted for basis differences, was $1.3 million. additionally, we recognized $0.1 million in earnings from our 75% interest in the gateway commercial venture and a $0.2 million in earnings from our 10% interest in the valencia landbank venture, which was primarily a result of land sales to third-party homebuilders by the valencia landbank venture. selling, general, and administrative. selling, general, and administrative expenses were $16.8 million for the three months ended march 31, 2022. restructuring. on february 9, 2022, daniel hedigan was appointed as our chief executive officer. preceding mr. hedigan’s appointment, emile haddad stepped down from his roles as chairman, chief executive officer and president effective as of september 30, 2021 and transitioned into a senior advisory role pursuant to a three-year advisory agreement. mr. haddad remains a member of the board of directors serving as chairman emeritus. concurrent with mr. hedigan’s appointment, lynn jochim transitioned from her position as president and chief operating officer into an advisory role pursuant to a three-year advisory agreement. upon the appointment of mr. hedigan as our chief executive officer, we accrued a related party liability of $15.6 million attributed to the advisory agreements with mr. haddad and ms. jochim and recognized approximately $3.0 million in additional restructuring costs associated with their unvested restricted share awards. in addition to our executive management restructuring activities, we have had an approximately 29% reduction in headcount since the end of 2021. most of the reductions were the result of company-wide layoffs that occurred at the end of the first quarter. during the three months ended march 31, 2022, we accrued $0.9 million in restructuring costs for estimated severance benefits from these layoffs. net loss. consolidated net loss for the quarter was $36.8 million. net loss attributable to noncontrolling interests totaled $19.6 million, resulting in net loss attributable to the company of $17.1 million. net loss attributable to noncontrolling interests represents the portion of loss 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, may 12, 2022 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 (800) 949-2175 (domestic) or (856) 344-9283 (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 9718621. the telephonic replay will be available until 11:59 p.m. eastern time on may 26, 2022. 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 march 31, 2022 2021 revenues: land sales $ 557 $ 22 land sales—related party 1 19 management services—related party 3,547 12,439 operating properties 781 700 total revenues 4,886 13,180 costs and expenses: land sales — — management services 2,684 10,777 operating properties 1,839 1,585 selling, general, and administrative 16,791 19,538 restructuring 19,437 — total costs and expenses 40,751 31,900 other income: interest income 21 27 miscellaneous 112 1,204 total other income 133 1,231 equity in loss from unconsolidated entities (1,032 ) (3,556 ) loss before income tax (provision) benefit (36,764 ) (21,045 ) income tax (provision) benefit (5 ) — net loss (36,769 ) (21,045 ) less net loss attributable to noncontrolling interests (19,639 ) (11,266 ) net loss attributable to the company $ (17,130 ) $ (9,779 ) net loss attributable to the company per class a share basic $ (0.25 ) $ (0.14 ) diluted $ (0.25 ) $ (0.14 ) weighted average class a shares outstanding basic 68,167,586 67,288,860 diluted 70,050,872 67,288,860 net loss attributable to the company per class b share basic and diluted $ (0.00 ) $ (0.00 ) weighted average class b shares outstanding basic and diluted 79,233,544 79,233,544 five point holdings, llc condensed consolidated balance sheets (in thousands, except shares) (unaudited) march 31, 2022 december 31, 2021 assets inventories $ 2,144,757 $ 2,096,824 investment in unconsolidated entities 373,022 374,553 properties and equipment, net 31,143 31,466 intangible asset, net—related party 51,405 51,405 cash and cash equivalents 203,647 265,462 restricted cash and certificates of deposit 1,330 1,330 related party assets 98,409 101,818 other assets 19,629 20,052 total $ 2,923,342 $ 2,942,910 liabilities and capital liabilities: notes payable, net $ 619,500 $ 619,116 accounts payable and other liabilities 121,608 115,374 related party liabilities 105,556 95,918 deferred income tax liability, net 12,998 12,998 payable pursuant to tax receivable agreement 173,068 174,126 total liabilities 1,032,730 1,017,532 redeemable noncontrolling interest 25,000 25,000 capital: class a common shares; no par value; issued and outstanding: march 31, 2022—69,068,354 shares; december 31, 2021—70,107,552 shares class b common shares; no par value; issued and outstanding: march 31, 2022—79,233,544 shares; december 31, 2021—79,233,544 shares contributed capital 585,606 587,587 retained earnings 31,659 48,789 accumulated other comprehensive loss (1,933 ) (1,952 ) total members’ capital 615,332 634,424 noncontrolling interests 1,250,280 1,265,954 total capital 1,865,612 1,900,378 total $ 2,923,342 $ 2,942,910 five point holdings, llc supplemental data (in thousands) (unaudited) liquidity march 31, 2022 cash and cash equivalents $ 203,647 borrowing capacity (1) 124,651 total liquidity $ 328,298 (1) as of march 31, 2022, no amounts were drawn on the company’s $125.0 million revolving credit facility; however, letters of credit of approximately $0.3 million were issued and outstanding under the revolving credit facility, thus reducing the available capacity by the outstanding letters of credit amount. debt to total capitalization and net debt to total capitalization march 31, 2022 debt (1) $ 625,000 total capital 1,865,612 total capitalization $ 2,490,612 debt to total capitalization 25.1 % debt (1) $ 625,000 less: cash and cash equivalents 203,647 net debt 421,353 total capital 1,865,612 total net capitalization $ 2,286,965 net debt to total capitalization (2) 18.4 % (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 months ended march 31, 2022 (in thousands): 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 $ 557 $ — $ 330 $ — $ 887 $ — $ 887 $ (330 ) $ 557 land sales—related party 1 — 1,489 — 1,490 — 1,490 (1,489 ) 1 home sales — — 17,161 — 17,161 — 17,161 (17,161 ) — management services—related party(2) — — 3,444 103 3,547 — 3,547 — 3,547 operating properties 601 180 — 1,938 2,719 — 2,719 (1,938 ) 781 total revenues 1,159 180 22,424 2,041 25,804 — 25,804 (20,918 ) 4,886 costs and expenses: land sales — — — — — — — — — home sales — — 12,902 — 12,902 — 12,902 (12,902 ) — management services(2) — — 2,684 — 2,684 — 2,684 — 2,684 operating properties 1,839 — — 440 2,279 — 2,279 (440 ) 1,839 selling, general, and administrative 4,444 849 7,561 1,079 13,933 11,498 25,431 (8,640 ) 16,791 restructuring — — — — — 19,437 19,437 — 19,437 management fees—related party — — 1,503 — 1,503 — 1,503 (1,503 ) — total costs and expenses 6,283 849 24,650 1,519 33,301 30,935 64,236 (23,485 ) 40,751 other income (expense): interest income — — 155 — 155 21 176 (155 ) 21 interest expense — — — (307 ) (307 ) — (307 ) 307 — miscellaneous 112 — — — 112 — 112 — 112 total other income (expense) 112 — 155 (307 ) (40 ) 21 (19 ) 152 133 equity in earnings (loss) from unconsolidated entities 185 — — — 185 — 185 (1,217 ) (1,032 ) segment (loss) profit/loss before income tax provision (4,827 ) (669 ) (2,071 ) 215 (7,352 ) (30,914 ) (38,266 ) 1,502 (36,764 ) income tax provision — — — — — (5 ) (5 ) — (5 ) segment (loss) profit/net loss $ (4,827 ) $ (669 ) $ (2,071 ) $ 215 $ (7,352 ) $ (30,919 ) $ (38,271 ) $ 1,502 $ (36,769 ) (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. the table below reconciles the great park segment results to the equity in loss from our investment in the great park venture that is reflected in the condensed consolidated statement of operations for the three months ended march 31, 2022 (in thousands): segment loss from operations $ (2,071 ) less net income of management company attributed to the great park segment 760 net loss of the great park venture (2,831 ) the company’s share of net loss of the great park venture (1,062 ) basis difference amortization (239 ) equity in loss from the great park venture $ (1,301 ) the table below reconciles the commercial segment results to the equity in earnings from our investment in the gateway commercial venture that is reflected in the condensed consolidated statement of operations for the three months ended march 31, 2022 (in thousands): segment profit from operations $ 215 less net income of management company attributed to the commercial segment 103 net income of the gateway commercial venture 112 equity in earnings from the gateway commercial venture $ 84
