FPH - Earnings call transcript Q1 2019 | Five Point Holdings, LLC

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Operator

Greetings, and welcome to the Five Point Holdings First Quarter 2019 Conference Call. [Operator instructions] As a reminder, this conference call is being recorded. Today's conference call may include forward-looking statements regarding Five Point's business, financial condition, operations, cash flows, strategy and prospects.

Forward-looking statements represent only Five Point's estimates on the date of this conference call and are not intended to give any assurance as to actual future results. Because forward-looking statements relate to matters that have not yet occurred, these statements are inherently subject to risks and uncertainties. statements. future results may the to results in affect actual Five activities could anticipated or activities differ forward-looking factors results cause and Point's and Many materially from press These with release including factors the in Factors annual SEC. most Risk of the described Form report include in included those and Point's in SEC those Five filings, the recent section today's XX-K filed any Five Point assumes forward-looking update statements. that to note Please obligation no I'd Mr. to now turn to like over it Wetenhall, EVP Markets. Bob Capital of sir. ahead, go Please

Bob Wetenhall

afternoon. good and Welcome

new story, owner that developer in the investors Five Point of communities highlight For want to to I mixed-use is and California. an large

Our communities an CEO, as for of XX,XXX and performance. will residential Jochim. recent commercial Emile then our Higgins; developments I'm Chief Haddad; Emile, Erik leverage XXXX. liquidity communities With Mike Francisco to now review homes our feet Los XXXX more quarter in first County. square San who as well off will going CFO, and Bonner our hand Angeles, Erik million position are Kofi of planned Officer, our overview remainder it of co-COOs, as space and Lynn Legal for and as well are and provide to Alvarado; today than Orange XX in financial the expectations me

Emile Haddad

with Great in Park Irvine. Thanks, In this of environment at healthy started lot Bob. first XXXX a momentum. a buying quarter, we've home seen

village the a building Anaheim sports adjacent and is quality the at retail Great village in that at community year designed estimated offerings, X greatly that first-class park. our to both Anaheim next and We new park -- million Great focused of sports The experience. opening entertainment ice lifestyle from also Arena Park The to sports and beverage economic that sheets and vibrant sports range built square in four to neighborhoods. visitors hotel food the players Five provide ice the the to has the over and different on other stadiums Ducks mixed-use ice the to a are every Park ice This Park visitor park XXX,XXX center serves people Ducks frequent parents sports an surrounding our feet is Ducks experience and professional-level and will park. for to is participated and who expect offers facility. facility Great Great enhanced fields much a training in grand as a $XXX facility the The and attract Park include also is Point approximately becoming This enhance of million to the the homes which a we generations abilities. community catering wide lifestyle of

X schools public of in state-of-the-art And systems the provide best Our country. Point their season at high in lower and the the our the starts enroll the one children XX,XXX-seat Live to Nation. May on Amphitheater with XX, opportunity school concert residents Five education summer

acts Paisley, of We people Band, Santana Zac Georgia Florida as enjoy of and by Brown such flight thousands numerous top expect hundreds Brad Line. performances to

XX,XXX the commercial of million by approximately homesites X,XXX X.X for homes, which for uses, of X,XXX an city approval X.X recent are of feet approved out now sale. remain homes commercial the With approximately additional square and square of future available feet we million and space

of the seeing realization already the cycle. are virtuous We

economy the X,XXX Newhall, commercial of approximately Valencia referred is evidence future square brand, all the as is to it it receive the of our distinction their sales expecting phases neighborhood. feet buildout receiving created include from much to meaningful Valencia, revised incremental million completed, make continuation by phase which submitted the Great Neighborhoods As our each of is fourth in In XXXX County, at to the the already The This which Valencia, first X in homes value communities reported the of whole of are is easier homesites previously and recent city its the builders city, the space. component Park of of testament to the a a of the projects. open Francisco. being development. Los of count. planned of is At net The we home are County jobs. we team experience while major the first of of enhances approvals greenhouse is in development village on for Point providing to to the organizations clearly the the by end early remain permanent Candlestick supply Los San community our to to almost in in population the Angeles and wet best housing, is establishing a we a quarter Five model Mission policymakers will previously, vision as gas residents and already profit celebrated and Francisco, fact When plan year. very of Los well-needed already and completed, understand economic that our of we XX,XXX the our the is Angeles of we the and contributor Valencia participation singular job year. community. deliver San to despite first the community is developing schedule Angeles large-scale and of of will as in and XX,XXX the our X.X double

X,XXX on continue. XXX,XXX uses, The XXX,XXX first lifestyle beverage. phase square entertainment grading The of of is installation and comprised -- square food focus infrastructure office and a feet feet and of of with beverage activities space; homes; approximately and

only partnership our counties we which and of As get in our communities stronger. cities state will build forward, California the with the and move

granted. the state people and California; population bachelor the in local low-income patents Great of Our engineering The output economic is economy global rooted is the the and and a It and innovation, its climate jobs, of of gateway California in in long-term number expected the to X,XXX state over employed of and and the economic Britain. technology, in and stand-alone fall degrees in is billion to and a in in leadership belief is strategy XXX,XXX world, in our XX of in fighting largest with are in bracket. almost earmarked communities and change. number science leading generate fifth tax buildup our activity revenues generate $X.X who $XX for people that on billion into homes approximately is ahead -- is basis Asia;

some to answer. allow are Qualified interested cities The assets employers and approach Our can significant a counties lifestyle major biggest and development. the unique seeking. in the creating health the us schools, state's some and the We in. benefit for being Park the largest to in cities proximity close in the in STEM our younger centers of visits education for with tens see from to interests an best the square counties very urban our these cost universities; are thousands we Irvine our what and mixed-use located Anyone and candidates and high we employment areas families. of in retail. with provide availability to in build attracting starting with which stands are office proximity Limited millions provide prominence, areas major of ability of of of the lifestyle close feet that of of that country; wide of our hardship develop communities and the Great brand are for talents. a housing home largest challenge holding who is today who care parks, Large the believe some the align neighborhood to mixed they entertainment, offerings, workers range

evident in will same the Candlestick. Valencia be soon, And and in

And Now will turn who answer we over results. will your be Erik, financial happy to let questions me afterwards. about it our to talk

Erik Higgins

Thanks, summary Emile. earlier afternoon. the our A included issued this results earnings financial of in was release

investment and Valencia, Candlestick. million reflect generated Park quarter Neighborhoods for termination of $X.X revenues Equity million the the general million retail land income Great venture quarter We sales was million the were entities recognized adjusting after in quarter. unconsolidated reflects to recognition the first our due the the and share revenue $XX.X $XX two of Consolidated Park Our the quarter for at of the and Great earnings services. for the $XXX,XXX in the for accretion joint related expenses of financial the of to of of at Great and in difference. million income our quarter. share basis net Selling, from $XX.X previously our was proportionate the primarily Venture, totaled continued in loss management the income administrative $X.X Venture's Park Offsetting the approximately from our $XXX,XXX quarter. performance the first for impact announced amortization the Gateway for Commercial Venture's

X-K on promissory $XX.X in the As in Candlestick repaid million outstanding our the at filed terminated, interest we previously by was venture note held Macerich. joint retail the February, outstanding of principal and and reported

the settlement be related balance development consideration company. In million to parcels convey Net to the $XX.X attributable for to the was $XX.X obligation our which mall income from million, were carried released retail to released property the in of were line representing obligations. of also our was on was we contingent quarter the we item by party the the which gain venture. intended certain from million project the liabilities result, sheet. liability previously leaving a $XX.X a We of allocated million, noncontrolling recognized As $XX.X interests, of on return, developed

the primarily expenses Valencia $X.X in $X.X year. Significant were were The is on $X.X the quarter energy to loss related Valencia a purposes. accounting this later the Moving development segment we Valencia The Revenues land The the operations. the prepare the $X.X homebuilders segment the to segment results. Selling, general land related first expenses for million, which million for energy million. phase quarter for community agriculture of and for sales was continued is the as -- and ag and operations first quarter. for to consolidated million. on administrative operating segment expenditures totaled were to

and and consolidated $X.X Selling, Moving were Francisco Francisco were Revenue sales. the related to services prior San purposes. on administrative $X were from and recognized for expenses million San San for million The segment period is accounting also marketing to primarily fees general the land management segment for Francisco. quarter.

resulted the $XX.X the includes the quarter as as well provided management Venture, the Neighborhoods; to retail Park The I Great Great management at As Venture. earlier, million Francisco company of San segment the venture owner of Candlestick services Park the by net for Park termination $XX.X Great discussed was operations segment's the the a gain. of The Great in Park income joint million.

own of and distributions Park reminder, management from the As the XXX% company. a of the nonlegacy Great Venture we XX.X%

accounted in investment is financial Venture the under in included therefore, results of the operations consolidated assets, statements. not our Great and Great of the of are the Our Park equity Venture method Park for and liabilities accounting,

Park Park The a million segment the revenues the representing basis Venture the historical venture's results gross Great include homesites were first the to at accounting. self-funding we of reporting, Great segment the is no For Great operation acres. which million of with Venture. full Park Venture $XXX.X proceeds $XXX.X Park on the was were the of sale debt. in Great closed $XXX.X approximately from million, XXX related quarter, Venture Initial The purchase base price. Park XX.X Great

price, million partnership services for from Great to for its the segment recognized from expect the X Venture. during we income of Venture to approximately the $X.X Park basis $X.X adjusting entitled Net Five profit the -- sorry. Approximately Park homebuilders in that purchase margin fees million the for addition The also provides management approximately recognized and the for participation in of these quarter, million In base quarter. receive. which approximately Great $X.X an XX.X%. income for million we related gross million variable revenues Great $X.X the marketing The $XX.X estimated I'm through in balance to difference, investment company consideration was the to approximately Great the Venture the to increase recognized Point Park After in quarter. for Park sales in was it totaled be

the and Commercial Commercial segment services Commercial and the of accounting, Commercial the of operations Commercial Commercial Venture under The of Venture. of of statements. operations Venture the the to and and management Gateway equity Gateway provided for included Gateway liabilities company. management XXX% includes Venture We management Gateway are Gateway the accounted company XX% not the of financial the results assets, by our therefore, consolidated operations Our of own in the Venture method are

totaled adoption. X, $X.X venture's new upon at Francisco of proceeds January are entitled a right-of-use $X.X liabilities termination XXX. For of the may the of the Class of with million segment in interest, and units loss in space liquidity position. with with up units of no $XXX,XXX. lease project, of entitled new historical depreciation redeemed leased to Commercial to C Lennar million include voting affiliate segment Gateway Macerich $XX the exchange and amortization units the capital the reporting, Five Francisco expenses, of Concurrently, be Mello-Roos related of report results were we a Class an accounting basis the adoption consolidated the comments revenues to units balance redeemable up lease resulted will few San as community quarter. Francisco the a San consolidated to from our segment There received Commercial was Irvine, C the any quarter we in of ownership district Venture the ASC for redeemable loss for class the form Operating receive wrap of other the million. of $XXX,XXX. we retail $XX company. sheet. our attributed Valencia. Commercial adopted operating to We in accounting. venture. balance holders any These and was The they for million C interest the receive contribution I'll are full not Point's interest share rights and of assets it we to the million. mostly guidance a recognition XX from On distribution lease a maximum noncontrolling on impact Class office operating sheet in facilities not our new was in corporate The San and XX%

approximately totaling XXXX, in billion million cash comprised capital million revolving billion which in and was and unsecured $XXX under noncontrolling our availability total at $XXX was of borrowing equivalents Finally, $X reflecting March credit liabilities cash $XXX was and million $XXX billion, redeemable of facility. XX, liquidity interests. Total million, assets $X.X and $X.X

have to quarter, deliver at positioned ratio debt-to-capitalization XX% well Our from our later capital XXXX plan XX.X% year-end. first of in at homesites end our investing of and to We're this year. our continue was able implement enough at down the to Valencia the communities being

Let it to turn questions. will open back it me operator, the now who for up

Operator

we our from And Scott first [Operator have of question instructions] Citi. Schrier

Scott Schrier

afternoon. Good

months different call, were you in yet So it two environment housing, on a your guys particularly California, was optimistic. in ago,

I'm strong-margin Great with in your have few months California a over curious good really later ramp-up particularly whether with saw the getting how we seeing, from with Valencia interest reporting Park. their respect the so that You seems housing perspective, activity pace, sales conversation year. lot It past more changed to a builders nice things a of starts in had as you're your ready was it land some builders for in the absorption

just So I environment. want a demand of sense to the get

Emile Haddad

is Yes, Scott. Emile. This

talked. markets. I little time the environment are optimistic right. And last very mainly You're we because, different a think, different I in bit mean was we the we were

themselves demand, We have I high were very a markets markets micro And little have unique. the that fundamentals think supply. our in

made we closer any are having the we not having but have high And In interest. getting a of we from a made, level level yet, to demand being interest. deals we're offers seeing very there's of discussions. terms In builders, of very Valencia high are but

round -- of have builders really see terms activity up Park, In performing And participation been the we're Great in well. first in very comments, come sales, been month-over-month. the from of builders they've the the as Sales is to been starting from we the our on encouraging. have which said profit very going very

talked the since our environment that, I has and has only So deeper. gotten time, markets would in gotten interest we the say the better last

Scott Schrier

year. will curious or from come but this this still -- or to perspective? like from we to the implications a in about amount it's on spoke your indication last a on could then how cost time that it release Los there later online and is you're think online produce development Great. schedule County impacted about back if this should weather year? potentially whether seems some cost And how you're any schedule. as one, coming in magnitude later that some you lots things, weather, or be the Any press Angeles of also I'm and it's And

Emile Haddad

Sure.

is no. costs, answer of terms the In

seen change. We not cost have any

We very are We're have our our several, we pricing said on have locked before, with the -- comfortable the managing are so situations, these costs. expertise contracts in we for still I team has schedule. and really and phases, actually, as proven in we

In able XXX over of to terms the quarter the something of fourth we that number said looking be north by that homesites deliveries, and going to we of for XXX, are are comfortable in we this year. deliver I'm

Operator

[Operator Przybylski, our next Paul question instructions] We from Fargo. now Wells have

Paul Przybylski

been how see when iterations bit a typically the the back little a And approval? the for something has to submitted. it city go to happens? Candlestick. that It's that this typically, take does to get how you does I here before gears like plan Switching get through many guess, to long nice you final

Emile Haddad

I'm sorry. the Could hear you I couldn't question? repeat question. the

Paul Przybylski

Yes. On I a many city your Candlestick, through How times you submitted or before iterations will approval, go the guess? with final you've receive that plan.

Emile Haddad

I and get go as This comfortable this is our And already a give not more very have going we're submitting a entitlements. you we We there's we to year. have first and get into Well, an master phase. we're so to mean approvals visibility we in doing just the entitlement, ability all are is timing And the will XXXX. that our this the process said, through. we products as that I to for as plan brand-new what

Paul Przybylski

you have how much the Mission invested would amount you pad to to Okay. an invest you that And have And more expect super get going Newhall. for back Village? to Do far finished. so

Emile Haddad

a spent, for money what's far. bracket up Maybe give you of have so we've I don't transpired I can number. feel look but how can a the Erik much

Our grading operation completed. is

is grading mass completed. Our

close street our the starting infrastructure and in pipes getting and now improvements. putting ground to are We

the of a grading can you So how in now terms right get costs some already is will spent many we if I see so spent. phase terms Yes. bulk of the far. And we of but of in in infrastructure, dollars are we've numbers

yes. -- think I

think the So to $XXX spent and somewhere sorry. we're I'm $XXX before: million ahead, between Go question answer have -- I operator. been million probably already.

Operator

Thomas another & of Zelman We have Associates. question do from Maguire

Thomas Maguire

here. and could Park, together, Great the just any the cash to we to on strong lifestyle coming about think side work there cash for a really company see on but the I all results see to touch on investment to on updates wanted Just there? great on when flow we flow Five or Are can how second. there thoughts Point the distributions And

Emile Haddad

Yes.

still satisfied distributions are same of position the maintaining Point. in legacy next should by terms should distributions start be and by part The of seeing priority in to Five We year. the early Five we year, to XXXX next Point capital

Thomas Maguire

Got the on homesite approvals and before land just And more there the it. on talk new you at maybe bit density, those, a Park, other of Awesome. any just Great homes? sale incremental planned any are the about just if then little can details

Emile Haddad

we -- homes. is X,XXX approval the No. for I mean

land demand. the to have to products our on. those And homesites decision will before, said we go. be And market on as driven and still by have plot We X,XXX densities I it are --

of decide So number. going products market the into will on, segmentation what said, of as be we be the what is I And the will based those the looking for. will total bucket

Operator

Deutsche Nishu question Bank. have ahead. Please of another go from We Sood the

Tim Daley

Nishu. on Daley for Tim actually it's Hi,

of for that agreement. books officially liability now off is Candlestick the conclusion So with the Macerich consideration contingent the the

curious just was with back these this this Macerich guess need you of of submit guess, Or end I waiting for? as, plan I would of help at the you bit City kind kind to Like the -- us them? did deal was a approvals fully approvals? something the forth kind the new of that of this Just the conclusion planning understand and Or the before could if there? you looking start agreement would

Emile Haddad

were because came on We Sure. actually area to terms area going why the the potentially actually until wait started of Macerich before come first to where actually We supposed outlet that are the Well, move anticipation is, conclusion, had agreement to the is in And unwinding we had the and Candlestick the a is, answer new the was until be. that a we of yes. can We with came wait able unwinding starting in came that. started the of agreement to that's phase planning the we answer the we to do of agreement. we the to our yes. to in we the and to to anything be to but conclusion to move model phase We submit that quickly and City very couldn't we get conclusion jump-start, forward.

Tim Daley

the And All the you detail San kind timings income Emile. could Can general are is of right. Thanks a I and assets -- kind from payouts the the guess Obviously, of of help Erik. guess will bit I that, -- magnitude. -- interest in that a Class just Francisco but come understand generating then I revenue question these when the this from of for bit the the guess million, next $XX the mentioned us that guess for Venture. occur total C Maybe there? more you the that total I

Erik Higgins

C So the $XX of of is the proceeds. redemption repayment Class million units of CFD the source the

that homes need And order you Francisco. for out so in San to in have happen, to

bonds are property bonds. from and taxes those developed the are homes the the sold ultimately then homes as So service new

proceeds as to these of bond Class come until redeem will the redeemed. the all are proceeds XX% units units of go So C in,

to redeem the Class C So be XX% would $XX of $XX the necessary million units. of million proceeds

so on future have And development homes into after happen that'll the and well we site.

Tim Daley

put that time. kind quarterly for should or this of Or the the year? Was a for in million so of just that just should that. if one expect expense us again help more a could understand good rest Is is movement we the was year? the And then -- on expect or that any bit quarter. that more $XX rate run that the guys the All down for up And was-- number? you SG&A thanks for up right, thanks

Erik Higgins

rate. No, that's run a good pretty

Tim Daley

thank Great, you.

Operator

Markets. from go will next We comes Mike RBC of take Please now the line Capital of our Eisen question ahead. instructions] [Operator

Mike Eisen

Good afternoon. you Thank questions. the for guys taking

value we on look Just per some sold last Great and Park. start on to in solid price what at land what in the just there. want off sale that compares wanted there's land how what than the seeing what's to compare of was market year, higher a strong if the to the you're appreciation that the If surrounding and I to sense, acre could, I were get expecting. you driving such value land you really

Emile Haddad

is Mike. -- to talking are and And Thanks, that's it bar, before. starting what what amenities the see higher care, acre we to sports and I through in about the because about actually value. with terms health builders that into than of when to were I see data I sports coming see is able value. that people will Yes, built And premium, being and we now, translate And numbers. are that, we in flowing what price with and in of entertainment all we're facilities, it's per believe that sales schools, the about today seeing premium whether was the completed starting be it's talking think the to a being talked incremental are their

Mike Eisen

in sales market exceeding it have think comparable, we market? of sense Is what any the with How surrounding in you growing or the are appreciating are the guys about area should that? you do land at? And line or

Emile Haddad

ourselves. is sales. homebuilding of or arm. the there Irvine lot land the lot a Company the market Yes, Company difficult know, fee themselves doing you They're not selling and Irvine disclosing Irvine only it's and of not developers, are at very two And least a as building in their building with because,

tell have, data one I have we're have know All lot, some don't value anything seeing us is achieve per really sales home our areas us. a I that to I right and rate about the but start can a to our conscious you the is compare. than higher around helps that no, don't that that's benefits prices very of we that -- that neighbor And I getting So point. in acre.

Mike Eisen

going that And Understood new just the and the sneak just are in I being appreciate one process that. of Francisco the on. can if I plans think housekeeping San that's on When more basis developing? help you of can an to the submitted was relative acreage in guys land that overall approved, or magnitude will us ultimately plan this be the that you frame

Emile Haddad

mean, did Yes. you between see what an lifestyle Kofi He first I that. try can phase might we have that describing the is I number created envisioning acreage phase balance know and first phase, the line. we is I'm But can first the proving we we the on I on can up we start get that phase, first in retail actually second. the while has that to concept office if, the with so housing, the that are for area. a

looking housing have for hearing at. in for don't office X,XXX And square to homes; if have is look opportunity I we with So from people a beverage. a who and and that and food we be And lifestyle, we believe space in that. of that, Francisco San on will of feet good-size XXX,XXX are somebody office; this acreage. somebody interested keep XXX,XXX square feet lifestyle entertainment, mainly

Bob have get can and with I a number follow you want, acreage that I it. give want you once not that's we quote to you If up accurate. don't

Operator

are further now remarks. the closing Thank turn would you. Please at It Mr. you appears there time. or to to Wetenhall, conference additional like ahead, go for any back no sir. questions this I

Bob Wetenhall

chatting everybody. afternoon. everyone with We Have look call. forward a great during the Thanks, conference next to

Emile Haddad

Thank you.

Operator

you for gentlemen, and participation. Thank is the over. now your Ladies conference

disconnect. You may now

Five Point (FPH) 11 May 192019 Q1 Earnings call transcript