Five point holdings, llc reports fourth quarter and year-end 2021 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 2021 results. dan hedigan, chief executive officer, said, “i could not be more excited about leading the five point team. the company’s well-located and irreplaceable assets provide a solid foundation upon which we can drive shareholder value. my immediate priority is to focus on revenue enhancement, cost management and process refinement. while local market conditions remain favorable for five point and its homebuilding partners, macro-economic issues related to geopolitical events, rising inflation and higher interest rates are being closely monitored. by focusing on the things we can control, such as maintaining a strong balance sheet, optimizing our cost structure and implementing operational efficiencies, we will have the flexibility to react to changing market conditions while driving shareholder value.” consolidated results liquidity and capital resources as of december 31, 2021, total liquidity of $390.1 million was comprised of cash and cash equivalents totaling $265.5 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 $1.0 billion in liabilities and redeemable noncontrolling interests. results of operations for the three months ended december 31, 2021 revenues. revenues of $182.2 million for the three months ended december 31, 2021 primarily consisted of revenue recognized from land sales at our valencia segment. at valencia we closed the sale of land entitled for an aggregate of 643 homesites on approximately 57 acres. the base purchase price was $167.3 million, and we also recognized additional revenue of $5.1 million in the transaction price as an estimate of the amount of variable consideration from marketing fees that we expect to be entitled to receive. equity in loss from unconsolidated entities. equity in loss from unconsolidated entities was $2.9 million for the three months ended december 31, 2021. the great park venture had no land sales during the three months ended december 31, 2021 but did close the sale of eight homes under its fee build program at great park neighborhoods, generating $13.2 million in revenues. the remaining 22 homes subject to the fee building agreement are expected to close in 2022. net loss for the great park venture was $6.7 million. our share of the net loss from our 37.5% percentage interest, adjusted for basis differences, was $1.9 million. additionally, we recognized $0.2 million in earnings from our 75% interest in the gateway commercial venture and a $1.2 million loss from our 10% interest in the valencia landbank venture, which was primarily a result of intra-entity profit elimination due to the valencia landbank venture purchasing homesites at valencia. selling, general, and administrative. selling, general, and administrative expenses were $17.6 million for the three months ended december 31, 2021. net income. consolidated net income for the quarter was $47.5 million. net income attributable to noncontrolling interests totaled $25.0 million, resulting in net income attributable to the company of $22.5 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, 2021 revenues. revenues of $224.4 million for the twelve months ended december 31, 2021 primarily consisted of revenue recognized from land sales at our valencia segment. at valencia we closed the sale of land entitled for an aggregate of 643 homesites on approximately 57 acres. the base purchase price was $167.3 million, and we also recognized additional revenue of $5.1 million in the transaction price as an estimate of the amount of variable consideration from marketing fees that we expect to be entitled to receive. equity in earnings from unconsolidated entities. equity in earnings from unconsolidated entities was $6.2 million for the twelve months ended december 31, 2021. the great park venture closed the sale of land entitled for an aggregate of 887 homesites and closed the sale of 16 homes under its fee build program generating net income of $56.9 million. our share of the net income from our 37.5% percentage interest, adjusted for basis differences, was $6.4 million. additionally, we recognized $0.7 million in earnings from our 75% interest in the gateway commercial venture and a $0.9 million loss from our 10% interest in the valencia landbank venture, which was primarily a result of intra-entity profit elimination due to the valencia landbank venture purchasing homesites at valencia. selling, general, and administrative. selling, general, and administrative expenses were $77.1 million for the twelve months ended december 31, 2021. net income. consolidated net income for the year was $13.3 million. net income attributable to noncontrolling interests totaled $6.7 million, resulting in net income attributable to the company of $6.6 million. conference call information in conjunction with this release, five point will host a conference call on thursday, march 10, 2022 at 5:00 p.m. eastern time. dan hedigan, chief executive officer, and erik higgins, vice president and 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 (888) 256-1007 (domestic) or (856) 344-9299 (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 7435201. the telephonic replay will be available until 11:59 p.m. eastern time on march 24, 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® (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. 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, 2021 2020 2021 2020 revenues: land sales $ 129,413 $ 52,322 $ 139,500 $ 69,398 land sales—related party 43,213 53,205 43,286 53,219 management services—related party 8,839 5,575 39,081 28,132 operating properties 750 613 2,527 2,870 total revenues 182,215 111,715 224,394 153,619 costs and expenses: land sales 106,012 73,892 106,012 85,753 management services 6,759 3,899 31,459 20,486 operating properties 1,724 719 6,822 5,127 selling, general, and administrative 17,605 24,910 77,118 83,504 total costs and expenses 132,100 103,420 221,411 194,870 other (expense) income: interest income 20 66 94 1,369 miscellaneous (113 ) 89 3,720 356 total other (expense) income (93 ) 155 3,814 1,725 equity in (loss) earnings from unconsolidated entities (2,860 ) (3,053 ) 6,188 42,364 income before income tax benefit (provision) 47,162 5,397 12,985 2,838 income tax benefit (provision) 330 (1,744 ) 325 (1,744 ) net income 47,492 3,653 13,310 1,094 less net income attributable to noncontrolling interests 25,008 2,871 6,742 1,522 net income (loss) attributable to the company $ 22,484 $ 782 $ 6,568 $ (428 ) net income (loss) attributable to the company per class a share basic $ 0.32 $ 0.01 $ 0.09 $ (0.01 ) diluted $ 0.32 $ 0.01 $ 0.09 $ (0.01 ) weighted average class a shares outstanding basic 67,448,348 66,760,897 67,394,794 66,722,187 diluted 143,544,758 142,881,077 143,491,204 69,000,096 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, 2021 december 31, 2020 assets inventories $ 2,096,824 $ 1,990,859 investment in unconsolidated entities 374,553 442,850 properties and equipment, net 31,466 32,769 intangible asset, net—related party 51,405 71,747 cash and cash equivalents 265,462 298,144 restricted cash and certificates of deposit 1,330 1,330 related party assets 101,818 103,681 other assets 20,052 20,605 total $ 2,942,910 $ 2,961,985 liabilities and capital liabilities: notes payable, net $ 619,116 $ 617,581 accounts payable and other liabilities 115,374 135,331 related party liabilities 95,918 113,149 deferred income tax liability, net 12,998 12,578 payable pursuant to tax receivable agreement 174,126 173,248 total liabilities 1,017,532 1,051,887 redeemable noncontrolling interest 25,000 25,000 capital: class a common shares; no par value; issued and outstanding: december 31, 2021—70,107,552 shares; december 31, 2020—69,051,284 shares class b common shares; no par value; issued and outstanding: december 31, 2021—79,233,544 shares; december 31, 2020—79,233,544 shares contributed capital 587,587 578,278 retained earnings 48,789 42,221 accumulated other comprehensive loss (1,952 ) (2,833 ) total members’ capital 634,424 617,666 noncontrolling interests 1,265,954 1,267,432 total capital 1,900,378 1,885,098 total $ 2,942,910 $ 2,961,985 five point holdings, llc supplemental data (in thousands) (unaudited) liquidity december 31, 2021 cash and cash equivalents $ 265,462 borrowing capacity (1) 124,651 total liquidity $ 390,113 (1) as of december 31, 2021, 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 december 31, 2021 debt (1) $ 625,000 total capital 1,900,378 total capitalization $ 2,525,378 debt to total capitalization 24.7 % debt (1) $ 625,000 less: cash and cash equivalents 265,462 net debt 359,538 total capital 1,900,378 total net capitalization $ 2,259,916 net debt to total capitalization (2) 15.9 % (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, 2021 (in thousands): three months ended december 31, 2021 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 $ 129,413 $ — $ 341 $ — $ 129,754 $ — $ 129,754 $ (341 ) $ 129,413 land sales—related party 43,213 — 1,903 — 45,116 — 45,116 (1,903 ) 43,213 home sales — — 13,225 — 13,225 — 13,225 (13,225 ) — management services—related party(2) — — 8,737 102 8,839 — 8,839 — 8,839 operating properties 633 117 — 2,118 2,868 — 2,868 (2,118 ) 750 total revenues 173,259 117 24,206 2,220 199,802 — 199,802 (17,587 ) 182,215 costs and expenses: land sales 106,012 — — — 106,012 — 106,012 — 106,012 home sales — — 9,835 — 9,835 — 9,835 (9,835 ) — management services(2) — — 6,759 — 6,759 — 6,759 — 6,759 operating properties 1,724 — — 624 2,348 — 2,348 (624 ) 1,724 selling, general, and administrative 3,590 2,202 5,824 901 12,517 11,813 24,330 (6,725 ) 17,605 management fees—related party — — 6,576 — 6,576 — 6,576 (6,576 ) — total costs and expenses 111,326 2,202 28,994 1,525 144,047 11,813 155,860 (23,760 ) 132,100 other (expense) income: interest income — — 80 — 80 20 100 (80 ) 20 interest expense — — — (314 ) (314 ) — (314 ) 314 — miscellaneous (113 ) — — — (113 ) — (113 ) — (113 ) total other (expense) income (113 ) — 80 (314 ) (347 ) 20 (327 ) 234 (93 ) equity in loss from unconsolidated entities (1,183 ) — — — (1,183 ) — (1,183 ) (1,677 ) (2,860 ) segment profit (loss)/income before income tax benefit 60,637 (2,085 ) (4,708 ) 381 54,225 (11,793 ) 42,432 4,730 47,162 income tax benefit — — — — — 330 330 — 330 segment profit (loss)/net income $ 60,637 $ (2,085 ) $ (4,708 ) $ 381 $ 54,225 $ (11,463 ) $ 42,762 $ 4,730 $ 47,492 (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, 2021 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 $ 139,500 $ — $ 346,758 $ — $ 486,258 $ — $ 486,258 $ (346,758 ) $ 139,500 land sales—related party 43,286 — 62,797 — 106,083 — 106,083 (62,797 ) 43,286 home sales — — 26,172 — 26,172 — 26,172 (26,172 ) — management services—related party(2) — — 38,675 406 39,081 — 39,081 — 39,081 operating properties 1,979 548 — 8,475 11,002 — 11,002 (8,475 ) 2,527 total revenues 184,765 548 474,402 8,881 668,596 — 668,596 (444,202 ) 224,394 costs and expenses: land sales 106,012 — 301,247 — 407,259 — 407,259 (301,247 ) 106,012 home sales — — 20,022 — 20,022 — 20,022 (20,022 ) — management services(2) — — 31,459 — 31,459 — 31,459 — 31,459 operating properties 6,822 — — 1,889 8,711 — 8,711 (1,889 ) 6,822 selling, general, and administrative 18,340 5,190 30,658 4,473 58,661 53,588 112,249 (35,131 ) 77,118 management fees—related party — — 25,969 — 25,969 — 25,969 (25,969 ) — total costs and expenses 131,174 5,190 409,355 6,362 552,081 53,588 605,669 (384,258 ) 221,411 other income (expense): interest income — — 496 — 496 94 590 (496 ) 94 interest expense — — — (1,235 ) (1,235 ) — (1,235 ) 1,235 — miscellaneous 1,672 1,070 — — 2,742 978 3,720 — 3,720 total other income (expense) 1,672 1,070 496 (1,235 ) 2,003 1,072 3,075 739 3,814 equity in (loss) earnings from unconsolidated entities (903 ) — (1,409 ) — (2,312 ) — (2,312 ) 8,500 6,188 segment profit (loss)/income before income tax benefit 54,360 (3,572 ) 64,134 1,284 116,206 (52,516 ) 63,690 (50,705 ) 12,985 income tax benefit — — — — — 325 325 — 325 segment profit (loss)/net income $ 54,360 $ (3,572 ) $ 64,134 $ 1,284 $ 116,206 $ (52,191 ) $ 64,015 $ (50,705 ) $ 13,310 (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 (loss) 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, 2021 (in thousands): three months ended december 31, 2021 twelve months ended december 31, 2021 segment (loss) profit from operations $ (4,708 ) $ 64,134 less net income of management company attributed to the great park segment 1,978 7,216 net (loss) income of the great park venture (6,686 ) 56,918 the company’s share of net (loss) income of the great park venture (2,508 ) 21,344 basis difference accretion (amortization) 621 (14,912 ) equity in (loss) earnings from the great park venture $ (1,887 ) $ 6,432 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 consolidated statements of operations for the three and twelve months ended december 31, 2021 (in thousands): three months ended december 31, 2021 twelve months ended december 31, 2021 segment profit from operations $ 381 $ 1,284 less net income of management company attributed to the commercial segment 102 406 net income of the gateway commercial venture 279 878 equity in earnings from the gateway commercial venture $ 210 $ 659
