FPH - Earnings call transcript Q3 2019 | Five Point Holdings, LLC

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Operator

Greetings, and welcome to the Five Point Holdings Third Quarter 2019 Conference Call. [Operator Instructions] As a reminder, this conference 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 statements. Point These with Please release forward-looking including factors update the in Factors annual SEC. most Risk assumes note to of the described any Form report include in included those and Point's in no SEC those obligation Five filings, the recent Five section that today's XX-K filed

I'd turn of Bob Markets. to now Executive Please Wetenhall, sir. to like over call the ahead, Vice Capital President go

Bob Wetenhall

operator. I'm our Emile Chief you, and our with Higgins; Haddad; Mike Officer, our Bonner Alvarado; and Thank CEO, This morning, Legal co-COOs, Erik our Jochim. CFO, Kofi here Lynn

an review of will provide Eric overview quarterly performance. developments. then recent Emile will financial now

Emile Haddad

Great with square recognized for a approvals last will who how which our with consistent afternoon, we on continued for the thank recreation, hospitality very builders foot Angeles to of and received retail, fitness communities. quarter the homesites by us. blue-chip visits At for build-to-suit has and month entertainment, in homesites this land move high month. We those sales company. see County years facility, as another our deliver city company you with public home Irvine, community development be Great provider County, guest a busy Operationally, be milestone major remain revenues Los community will build quarter been will In nationally trends. of schedule and education. Valencia mixed-use to a the our first we in build and Good joining will and residential Anyone Angeles remain This Point the to Five start our Valencia be litigation. Irvine Valencia of after from we brand. standards a XXX,XXX for Park generating of proof-of-concept in the forward Park in be many Los we fourth biggest can seasonal activity, next

received room the Ice XXX,XXX XXX will also which and Ducks. boutique and hotel Sports for the a Park Point commercial and showcases to foot our XXX That includes square approvals adjacent retail Five mixed-use We hotel that partnership with room built be Arena, extended stay center. Anaheim

These received we as will field build which world-class development high the as be center, and home program. retail will to of existing tremendous part demand located Finally, also XXth both create of our and add and to new the Olympic street, across approvals but our facilities will National complex complement a will U.S. will house state-of-the-art Los aquatic not the Polo Angeles well sports value for neighborhoods. only team hospitality the be to Water residential be a the

phase the for mainly Candlestick. XXX,XXX feet phase approval received and we This our retail-focused for food Francisco, lifestyle of San X,XXX first homes, comprised beverage. is first In XXX,XXX at square plans feet and revised of square of on office approximately

in assets capitalize ahead, best look unique dynamic markets. country in the of a As believe we are some some we most position we to on the in of that the

sheet existing communities and complement our balance in in the millions future Our commercial of to in opportunistically space the that of square campus us Irvine. our build Point feet liquidity near afford Gateway ability Five

of factors value our We of variety seen there are our price we shareholders. have XX the acknowledge past a have our created of disconnect the assets months, stock. and big frustration During between that the for a

and sharing what's to real questions say, forthcoming, information company. be that year team, Erik? Day, for pivot I vision carriers. a more dedicated our when show In you our can More the speak ahead, any whole more value the which we the looking but I the we company. early XXXX for part will we year, have will of shed Investors will on hold the fully of be an most light answer have forward the to of are

Erik Higgins

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

Our investment was in recognition and of fees. land closed third continued horizontal venture performance final Great the the on home the quarter in first sale the development in reflects Valencia XX representing financial sites, Park The management at quarter. a of that takedown announced

equity July. $XX as the I'll $XXX results revenue revenues, some as comments then liquidity of land we method sheet third sales announced, position. account from X generated company's and at balance -- our totaled income Revenues management from million million quarter our Gateway our from its are in primarily consolidated Commercial about senior from venture and notes Park Venture previously accounting. a using our not company the closed add-on on ventures, and consolidated the services. consolidated address reflect start the in Great of conclude and commercial the reflected both our Additionally, each to XXXX recognition and The with with investment segments for then rental of for in revenues

managing $X.X $X.X loss recognized was due adjusting of our I'll Equity due in shortly. which proportionate include after share equity quarter. ventures' However, share of quarter net our venture's amortization our loss discuss from for loss the $X.X accretion $X.X Park quarter. Commercial in and for our in the we the $X.X million for million unconsolidated entities Gateway million million results, Venture's role both our operations, basis the segment We the of to loss loss Further, million approximately our difference. to and for of the X Great -- was in these the revenues the

million, million, to to costs expenses million the leaving our expenses $XX.X for administrative million general the $XX Net $XX.X quarter. $XX $XX.X was interest, $XX.X and loss million the and including for company. were -- allocated noncontrolling was consolidated attributable which of quarter approximately approximately Total selling, of

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

Moving the recognized San administrative Revenues land management primarily on marketing to to approximately operations segment Francisco. accounting sales. Park Park the Francisco as were segment the Francisco for purposes. Francisco for Selling, the prior were loss management and The consolidated San general the net provided also The quarter and million. segment was Park Venture, Great related of of Park Great Neighborhoods $X.X services management quarter. million includes the as expenses company period the $X.X for Great owner services fees segment's from San the Venture. The were San for Great and by $X million to is well

non-legacy entity reminder, of of the is the in interest Great Venture a our with XX.X% the we the own Great As Park Park venture of an company. XXX% Venture percentage accounting. method equity and accounted in under investment unconsolidated management The the for

the results historical the at For segment of the basis Great reporting, Venture Park accounting. include venture's of full we

$XX.X quarter, the sites Park -- Venture a gross proceeds The self-funding was debt. base to purchase million representing sorry, base the Great segment Park of related the the the sale operation is were which purchase million Great in price. initial Great XX revenues quarter. The $XX.X no Park were $XX.X The with closed home Great during million $XX.X I'm Park from a million, -- Venture The Venture.

$X.X receive. in $X.X the the expects comprised Park for the approximately to million to estimated variable totaled gross $X.X the approximately services The the Great Venture recognized quarter million the Great the purchase entitled on was Great base Park marketing approximately for the company Net to net from fees Venture's million Great sales the loss it be quarter, it partnership Park the provides margin $X price, of management related addition XX.X%. of income consideration million offset from In operations. for in to Venture, to for Park segment income by

the provided an entity under own accounting. company. Commercial of Gateway of management with Commercial and and venture the commercial Gateway method segment investment operations accounted Venture our is We services Venture. Gateway Our the includes equity Commercial management in of the management XX% the of Gateway company Commercial for the by XXX% unconsolidated to The Venture Venture the

Commercial million, segment for segment the -- at revenues totaled by segment company purposes Commercial comprised the of Gateway income we loss Commercial historical interest, basis. the For segment Operating loss $XX of the fees, Gateway Venture and venture's reporting, cost million the quarter. $X.X Venture depreciation offset million $X.X operations. include for related full management amortization results expenses, $X.X Commercial of for the management the $X.X were was for quarter million to million. for

few liquidity comments a and with position. balance I'll to wrap up sheet it related our the

$XXX $XXX XXXX, under total September which revolver. and of and million, was equivalents -- approximately of comprised As totaling million borrowing cash our million million $XXX our $XXX XX, capacity was liquidity cash

closed million in senior As the previously announced, $XXX add-on increasing to liquidity. our notes, on our July, XXXX company

ratio total end was quarter. the at XX.X% cap debt the to Our of

to operator questions. for With that, the I'll turn it back

Operator

[Operator question Associates. Alan first Instructions] with And from we'll take our Ratner & Zelman

Alan Ratner

the on color end this track at can before -- didn't there in economics I for we fortunately, any share phase? you you're I the those you it be this the information that, off, many that many based assuming, with very fires before us, in the obviously first great Valencia sales sales will lot year. terms at round? sounds hear lots much helpful. year. with just point? X of affect guys of of still would on be I'm provide or mean, like behind that expect So can think, weeks you to that Is of in any we're how how lots the product should And the end on that just the there type the And timeline. initial Any

Emile Haddad

not hearing Well, the And impacted feel the to we all this Nice thank and close have not therefore, new in through development all, we from requirements to standard. development higher with much Emile. Alan, are go for by we that's first buffers. fire us. have -- been is new builds different fires God There of comfortable the to more you.

color, up of guided to always home we've terms XXX In about sites.

think what I number we're is, the I share be above number. can't that that confident above I but number. going be to yet will I'm that think we

closed, products, proper than somewhere products, wide probably be about the products, pricing of -- segmentation. XX% there that haven't we to that of you be more target XX% of covering Valencia. about price that the stay recall, provides multiple can't at, will and excited for initial and offering X time And fourth economics And home terms from try we've aim least, see median yet doing, since type in be X.X. start which in X we about talk marketplace or those product I range, range quarter, to for report to the but waiting will our the we this we always of will of at why think I cover ranges. tuned as the we able been In you'll the by the

Alan Ratner

Okay.

appreciate Emile. We I are that eagerly awaiting.

question. Second

to the is raise this thinking commercial were tack-on. how the an Markets on in just being if point? the quarter down there's just you about forthcoming maybe that guys I'm Capital proactive capital? I you for kind saw You guess, the share more Commercial And curious the at And just road? the opportunity during Or could of generally, with opportunities opportunity that you're anything that side

Emile Haddad

Sure.

to equity. And X raise we were I on we asked that we capitalizing the that So really us works million. are we the we talked loans the building sure to X to position have construction use what the questions million will coming that deal were over value intend Opportunistically, balance commercial now why about based convert the done, to done. million market cash we ourselves allows build-to-suit. about now we capital as why And as And as one the going we additional to then that we giving to currently, least that we and be on, the able make be And really have is our move equity opportunities, years. raised we're reason market permanent spec. to later X in and will or the we X do $XXX that and have on going the provide. did in that are start and a feet And to quarter several or not will that our then built our said, the financing, at that square sheet others -- last And land to on $XXX have was availability between be forward. main the on have

they X more expect X or quarters commercial or So to I daylighting think you finalized. X, opportunities coming as X be the should over us get

Operator

we'll next, Evercore. go with Kim And to Stephen

Stephen Kim

to forward pretty had you. interesting questions. to on side. a general it looks looking going Yes, be I like the for it's XXXX, one Commercial year Two

we The wondering on guess, Valencia if long-term the update start you if other one could was there. with I Commercial. and I us. planning

and growth million, Park, well sanity as might throw any in help think you NOI longer-term good if shipyard? our last from Great in, that's the And the give well the NOI $XX in new I us check Park sense could as if I outlook XXXX, as still non-Gateway, assets, also, first division? to And I and a we in Great -- estimate. revenues recognized Gateways heard hall for there's if might longer-term NOI comps guess, when we of in NOI see wondering us some you

Emile Haddad

Park. look, larger a care said, office are become commercial from of and going in a We approvals our I with providers, little some discussions strategic be think get able medical, on these have catalyst that Great I hopefully, convert we'll opportunity be the some quickly very that. for to finalized deal. bit with health has we'll the a at Stephen, we of building health we care announced color you as to much these we that looking more of each give the now Sure. And the Hope as And a to so way. very of opportunities to City

speed. we the the now we've hospitality and and completed Ice facilities, -- go building to the now complex Polo and sports that also facility amount a people all commercial very we that that's the the of Arena, We why that have these house, and Water the across field we're and have high

we years. that in that we of Valencia. with it Great feet square starts is the opportunities have That returns this to good complete that's that saying, development than and So we're within same by the the million million, them But And now individually the that we're then in And going X an let giving to each strategically, mean coming us X.X developed at ability have to at opportunity think as doesn't these think do. to over we available. X, But as the look going with we growing the on the here Yes, market look what is more land keep own build portfolio. X Park, up complete expects. and we consistent the back Valencia. to thing me opportunity the expect we news And getting Commercial what be are very land. now I

those. our consistent extremely strategic building are ability talked feel exactly about enough very we an and to talked to have the very we during that opportunistic have to ability we have we to start as about we So NOI an And are very comfortable roadshow, be strategy about. we our fortunate

Stephen Kim

on that. up just So following Emile,

X of My that. is do Or first that ability modeling, you revenues be Great do that a a -- we same for And shipyard, the various if -- the So out sort said guess in And what just can guessing, particular, feet out you when could Or you that -- begin? the XXXX Is million further see -- year you the in event? Newhall? you could you Park? maybe think see case will us it so of of you to assets. of the square those our how might have assets. for with build. might maybe think than do And well, up we commercial broken that think to you have that sense X.X between give million

Emile Haddad

expect you XXXX. Yes. think I anything don't in should

we we'll I are think be is we deals in now the that have what doing have -- approvals, and right we the works.

on years part build. part these 'XX. good the all these and of the to the think to and/or for in start be of a months we'll planning take of deals to later all about And engineering of assume sometime 'XX X doing them type early XX I you opportunities part XXXX, of hope that some and

about good to runway the 'XX, be long in you seeing probably on talking we're NOI early XXXX, early time, in period. when And So there is at news is that late major keep our will in the growing point of that more growth -- 'XX start a NOI. ability

Stephen Kim

Excellent.

in their people able how Second would for your those? past, to, wondering ability of curious general we're get terms the seeing I set might had or if size to in in that electrical community. of really you've of some important you and develop related was autonomous of might you questions to pretty which And optimize we vehicles particularly the I'm build-to-rent be I -- think assets, speak unique optimized even of Valencia, multi-generational how was scale all and might seen vehicles do talked whether that. ones dramatic be you are these think of And thoughts to preferences, the given marketplace. to as changes able the on things. of choosing things, guess, to also be could the about these or engineer some and to adjust kinds single-family you for changing implications portions you've -- you the how to how I have if or got not wondering able you with front have and shift housing, your any know, the been live. are communities planning as in way a we've or over a curious some the future-proof for you to last to your projects decade, have I actually them you I'm And in prepare that

Emile Haddad

Park, on we on example products done and forward. we market existing if is that conditions Well, of you to what keep a at at working have meet good Great look the Sure. look how

have here. multi-generation we products So several over

that We a an for cooking. some deal down, have heavy of Great And wide with therefore, at we units master ethnic ability a very within the master kitchens, homes lot including X Park. have to bedroom buyer group bedroom have up, cultures,

we telling themselves We the market is with our market start big Everything are we and about -- we partnership that thing. constantly homes. the in do market to don't of the is buyers, up doing a functional, And as design we here because are in culture this know, we building our same But part us the is that what builders. in homes listening -- the actually the as you Valencia, our build in is belief. although

Our make biggest focus the right of developments can and than enough a we pricing lifestyle. sure base is that to from build view range point now of of to product do. To appeal a most wider offerings

homes, have actually know, starting XX% -- are doesn't we as bring of size able time, products our right we As said, can pushed luxury, a median more type product. a market, the to of up, communities ability our to start cycle and that builders expensive lot multiple to to building at X.X%. pricing buy price in to the for from, of point we have pushing that the have where you land, home because building I now the in up base our that's it's bigger online is The don't ability same of of to the wider opportunities prices and the start land all of buyers at foreclose the and a of the to justify be actually

Great -- both terms of terms today, to you'll to lifestyle able Park range, in size. and go come in models you that of the different visit whole about the XX cover be If

of at we very looking carefully are also But efficiency space.

of And over space more years was that the harvest fact growing things home because we're of make the the One the size is it started place. efficient. the to now to the entertainment has more trying it happened that

you If see our homes.

with we see You it room, that space. an in living the more laundry larger formal while eliminated ago will a and room -- even outdoor replaced

emission space we is when electric nature, space for its example, our of city time, looking vehicles, constantly an of have are community, net at the of looking we forward be it's a in will same first that efficiency Valencia a -- because as the will X very At the be greenhouse used and being look station. home every gas charging terms expensive. will So

vehicles, will and just X,XXX not on is the have around be going But charging the will electric that that start because We assume focused that. very stations to community, parking with within corner much the we're car we can't come autonomous designing homes realistically, are for for you there.

able realistic. But be be the to future flexibility So going too the we're in be design. we not have into our not in far Otherwise, to for to provide future.

can spend that. much off-line as we So on time

I future that know, of do, you one much helps. looking in that's some and am things and and things As I very the that but into every involved these demographics, hope of the we

Operator

Kalata All right. our Markets. question. to We'll go RBC next with Capital Chris

Chris Kalata

have question for Valencia. ground delayed first potentially you improve those just secondly, could conditions seeing improved on your on are what just chance guys guys deliveries seeing back Is at the in capitalize environment? all see there My is going been any to We then pricing on you markets? And an to [indiscernible]. you

Emile Haddad

I'm of the little the in question I market this. the performance part were heard of about bit part first question in markets was a of the that and and sorry. I our question. breaking was We the the of thought first a

Chris Kalata

if any improving markets? all Yes. capitalize chance we Valencia -- [indiscernible] seeing to could in in you the at markets price your are And environment. delays that what potentially are specific see an there's on

Emile Haddad

to all, X lack very a unique a still of We are in are demand permit. go of job ratio are from markets our high very No, jobs supply permits jobs first and job we markets of created These to creation. -- anywhere from well. of that and to performing X.X terms

demand. there's has time, that long big a on And imbalance. and been obviously, huge for going there's a So pent-up therefore,

optimizing are the rate. -- supply the So our our we well. velocity at in do performing still of What with our absorption markets very is that with look we

don't slow you're and actually you You want you're basically optimizing that too go too go means don't because fast, to not to return. pricing not and that right, therefore, want

home, in markets, absorption try get that. to to sales. product dock online sell on to per the home store of we a basis, new around and their the somewhere we X month it we that X of touches gauging about the weekly site with product. monitor bring we builders, when start So somewhere when each product's per our replacement And

So we therefore, have overlap, structure. don't a of disrupting lot start and the pricing

we right So making on we product real-time of to monitoring the time. lot the and offering a spend sure at time are that next in timing

random or behind So deceleration. a lot it's not science a acceleration Believe it or of not, there's it.

Chris Kalata

Got in And but my been the press anything progressing? second just provide it. didn't I for Understood, helpful. partnership then of Hope very could question. and on release, just how the an that's see City you update

Emile Haddad

west part in is on think and I the everybody's terms our Health like-minded the partner community should of Cancer go building mind, opinion, is big we and expect Oh, where community with a over of forward. a to small to a expanded We to world. The partnership. you we and are know, fortunate were involvement. are where you tell going we're people started and talk transaction. really Center with sorry. who great. partnership. be cancer, They if of in has to going enough here. on they'll has bigger to we that I'm transaction City I it's us are officed been started The -- And that exciting. you care They're extremely my now them, in Hope extremely And as best with important, today

that we about. great. talked itself The So transaction it's going

early of a to short that I their be improvements tenant and now with said discussions presence, want the are As to approved that are city, they target associated And other the conversion can have that. coming be to of their facility will by with (inaudible) providers the we their period. to had the before, medical part we be of within as companies on XXXX. their of start open who them hoping lot And be it by part a therefore, in universe, that result care health want

has a relationship wonderful relationship. So that been really

Operator

go we'll McGovern next, with Crédit And to Sam Suisse.

Sam McGovern

Is press that builders what's your guys about in where from letters currently when talked sort In about that certain of strong -- level you the are of it a engagement? broad-based? for Are Is intent XXXX. stage. release, think And projects? of Or visibility are there process? you level the interest at we more

Emile Haddad

Okay.

lot that between round So us is a far yes, I forth, have mean, I call and there for back builders and of I been a about first so selected and of it, Valencia, can't of right the the now XXXX. more let But more about back statement speak as little part think it's go that me your I the to would first until -- question inked. to the bit

road company if in a therefore, fact will will the ever years, a went that we happen. We Valencia discounting lot in people show, on have company factors an happen. because going that, more timing of they And said XXXX, were understand a us often up people I our of public the fact of it point the had that about going market over from tied ability the When been would the been that over operation very that lot more visibility see totally market in the the assets that to is biggest give basically lot We and I've view. for to Valencia The upfront premature the of was an revenue. of of had were has believe and that Valencia the for -- public litigation XX of offerings. heard will and I happen questioning terms ever it to go

can we next We're occupied to about Today, there. have it's go can going year. going commercial building you over homes say to Today, Today, happening. start see it today. you're talking

able major the the it's largest providing a California. say, supply, has community that's opportunities L.A. a residential us, market no we largest to virtually in to that for have So step and in forward in now market County, be

And enabling up for a the financial it revenue unconsolidated up is I because of up actually to thing the Unfortunately, is lot in has line, of therefore, also, it's Park, a that a us. of venture. now It's show not now Great the only see Valencia it think this and It revenue on an generates to because major confused a company the of that it unfortunately, reporting and shows that's of being doesn't up revenue. start lot numbers. line. to the lot So skews our top people going provider all a is

positive The are asked today, point a back questions expect lot we're of shifting and of And thing the been that we liquidity major the position to cap, XX% of flow liquidity market that best land in for debt the market company. balance think, we company. on we And from industry. for will a a us, a great ask sheets, a And going is the have other more one are That's to this and I in statement is of a a to company going forward. cash be capital. view. whether we sort With we that come saying of about

a something have have which more those, market a I we're matured for on consistent that out commercial recognizing the basis, becomes of We opportunities revenue to from the now know quarterly revenue looks that land company. enough, is start going that and always

start this frustration going lines. in to you to about read of that of lot the trying are not value between a the to So all we are talking us and have them all to XXXX things real converging that people the have company of enable

Sam McGovern

and this actually next the other to about year which source how And cash from foreshadowed we or going do the around term. and flows? vertical with opportunities next over be But cash forward? going the going other out flow uses have uses flow? are sources How did sort to of think summer. helpful. should the and two you Obviously, and of about cash there uses the sort we was be looking Is sort all Or market and it generated about debt tap you're question, the sources healthcare I the and incredibly campus think you That's to think and commercial at. going my there the of that

Emile Haddad

I And been fact show think Well, think funded now saying the the very you that and about we a that for for are we've I look, while. numbers development, consistent been land I've that. fully

We the we position, more commercial last million. our on the also with capital because funded start provide not fully $XXX this opportunities. But quarter raised really to when we our ourselves were were about very wasn't to truth but capitalizing telling clear

are we as shape a all we cash the point we from today, that of ahead to I flow of in believe us. think self-generating view great sit capitalize on opportunities

we're confident I cash and conditions very use say Now And to something going want That's we for enough raise have want am want and that But today that I opportunity to to something result, our to years, our it. own at least go business visibility is absolutely that to to everything that and to great the not generation of changing, and and as I look short ahead to cash market capital the a take are comes me to we board. do. positioned a at I as of three well consider. say don't for capitalize consider we up, want

Sam McGovern

the of you of then And do it. NOI. commercial a question. level to sort With achieves got just that Okay, regards sort of stabilized, consistent that, more think assets. When last

Emile Haddad

we the feet million We it's that we Well, tenant point because about is said, of build forward NOI -- everybody's coming will of deals, XX when these that, a that stabilization in. we we the built fitness tenant. square stabilized over Point opportunities to situation NOI The mean, already -- have X build and of the that From good feet Five facility a we square you we basically I can that example. Gateway is have of say have years. issue of over have X a doing a -- And know as NOI commercial Today, tenant. We million feet. I the already million nature stabilized that the growing have this and done, view, is how once with significantly. just we're I start go square look, memory. years can the several building is building, to a already X start be we growing mean, as I refresh think NOI, our we a

and a anything So question stable about we're want building your from -- we're And many we're In lot not traditional stabilization is ways, part have of our therefore, of be enough to communities. now if stack a the here, people sense. fortunate to dollar minute, growing the stabilization question the a the of NOI amount the over NOI, us. finished And you will I the terms buildings. that that, NOI of at we of in actually of if be should think your expect ahead years several

Operator

Instructions] JPMorgan. Michael with Rehaut [Operator to Next we'll go

Elad Hillman

This Mike. is Elad for on

you're from in you're the question, to interest seeing builders? private wanted The understand of versus in versus public a I And just interest change if mix private levels seeing first and public? the

Emile Haddad

from to I the think our I'm in decades lot two obviously, public. Well, shifted say, Back have the going private the in markets that a look, even landscape, over last, the two the or I our were markets, two one private, most Today, them say, public. have of would or and privates. one most them were publics are probably there 'XXs, you to late of in

our of many interest with have mix to itself, publics. makeup that like privates, our lot. because But land the two from more that just privates would the such We or market definitely because building build of and interest always the more think publics. seeing communities balance we're of the capacity pricing sheet I the definitely, helps our buy we're communities. land to not The and a So seeing say, think the is I have from I one

Elad Hillman

helpful. the And on there just that's Okay, up land prices. following

those relationship where been So even prices San Francisco, and and from this given land negative. the prices? privates a California actions to way that impact the maybe mitigate price What be prices impact lead business? could more involved? And then in fact in home about we the year get How you home turning California? to the could between a thinking would the home especially strong there's that land the deceleration appreciation And are take could your should in impacts? pretty how that How in

Emile Haddad

not Look, San we're homes Point Francisco. not selling in selling Five is

residential not the of San point exposed from Francisco view. in to we're issues of any a So

that has home selling. ratio the site been our XX% in The As or builders -- selling have XX%, we been and XX%. of between be LA it actually the a a it market, probably price -- of the of home XX% here finished around is relates In value. to expect the -- have more we to market been a ratio consistent

as price land Somewhere in the appreciation, of that range, because which said, of the nature we that's translation home pricing. I we're residual translates And seeing to typical. -- still

Operator

And next we'll go to Paul Przybylski Fargo. Wells with

Paul Przybylski

you there their many do target? you per X been the of be at earlier potential meeting Or guess, I have or builders this have and How half year first second the month or question. for that XXXX? slowing could have Park at that, all? cadence your Anything lots left any year is absorptions in Novel left cadence from impact last

Emile Haddad

said, I as we're seasonal absorption. seeing, we're seeing consistent still Well,

As seasonal you bit of the a we little still know, have side. on fluctuation

consistent So to with pretty be. were much we are, we're expected and we where

many sites to of how many terms In see how home just -- I'm are still up looking remaining.

to XXX almost this new our that's next be year, and have sometime we X/X We opening the of will and built and remaining neighborhood, homes by will into of cadence absorbed. about is. time committee. the that be will which what middle the sold, in be And a have And we the dovetail out of next

Paul Przybylski

to either for guess, much the how Great of them how the as with and on then then their guess think take I of Park, to the us that -- what and or you And that lot with volume to at might a a could take Ranch left sell-through on, Irvine respect hazard demand runway, might or pricing? do a availability respect home Okay. has you long update

Emile Haddad

Sure.

So what we know Irvine what we exactly have been Company. And projecting. seeing are the don't what's we obviously, happening and in

that And to bigger market know, to out you the market last get shifted Company the share, running apartments Irvine we few not our -- better, we So right because a now lot they're as in years. starting but because has residential. a performing are research shows we're of for-sale

on we our that expect now, based of next So as beyond. year numbers and right

in We majority I now, on will coming like of think of that right bigger to the couple -- market be based within the our going be years. we're the market looks share it the And market. the projections

Operator

Company. next, John go And with we'll Robotti to & Moran

John Moran

of on a Newhall. Just questions couple

recall, or feel for -- land I -- guess, being, Or... lot Will it on, it's units -- of there? terms values and infrastructure so results sold. to in you're a cloudy? be it's is will you be that first can you starting us the that Or next like maybe something? the The do that the doing the about, because X,XXX will I you're quarter creation will X,XXX work value revealing units in you're with be or XXX first units something opportunity going the the fourth But tell reported year --

Emile Haddad

right. No, we we're those to these. be to anxious Valencia. And very I value think, be results get have deals very Not, will revealing. more the will and of be, Yes, reported visibility -- the to able and done you're give clear

The first home and we're that's working what on, village is X,XXX sites, on infrastructure.

And on demand. it, monitoring We so first, we call developing going forward. keep now we on obviously, have XXX the and keep developed, market or

you're going too we there. to in think we're But report, over our I So see when not infrastructure. be far margins ahead able the to

going the one be we have others hopefully, alone. enable pricing to it's And real it's -- over that extrapolate able the that in asset to to and going see to from that, You're there. you value

John Moran

the a there outside to And see commercial building market adjacency what Newhall. first to commercial there? enough is How related there -- might does Valencia what's second, soon there the to already of you're we now? And deal in

Emile Haddad

not of but we're and do amenity only homeowners. a of also major Commercial going called basically standard Yes. that to be lifestyle we've all, Great is And the similarity a a which I of freeway. our for over a be investment, loan the done as and first as look there create we at the Park, in you new of mean, Valencia, all is have if lot over there'll across what at city, the the seen brand-new to there value Newhall to what terms

and will helpful that food lot a very and believe beverage, hospitality expanded for validating creating be an going and commercial. of the our brings We people a an experience. to to We million entertainment that in and for be Six of terms area by to which traffic that, about are year over X hugging capitalize we're traffic be there, going able Mountain, on Magic Flags

and And In are would I there in we go terms more our we start our that biggest once start and that and has forward, the talking motion we'll a on that timing, about as been thinking our able opportunities. side, be planning year obviously, to we'll XXXX our be finalizing thoughts focus, will unfolds. of say know and where XXXX year residential over the commercial hopefully,

John Moran

Okay. one Last Gateway. just is at

of that City that I'm and you're measure or what you years announced XX,XXX you profitable? say relative would wondering that look be might I not how know you know the interesting I deal whether Hope, numbers property bought You when given what And Or was don't putting with we it close? I just to that to mean, paid? X foot for it? can land this significantly might those And square know, ago, facility. like in

Emile Haddad

Yes.

So in the it terms of we're to in close expecting first timing, of quarter XXXX.

you, we're you to market. to But the one terms happy a versus hate excite the I what significant going think I transaction, In is us. can draw profitability, means on and with of definition it's to tell that I very

John Moran

profitable? But

Emile Haddad

profile. it's Yes,

John Moran

them there. get was ... not words, I It deal mean, made it's in just other a in to

Emile Haddad

section. profitable here. But more is importantly, It's very a excited a profitable a that it's they're we're profitable transaction, transaction. it Well, but

John Moran

end of cover what's all. Okay. anything color you distribution? And that the $XXX-odd the development? any is around at joint vertical was what that? be going about -- in the That's that, Great -- million Park think -- at related Venture. it then to Whether Or to quarter, say that I quarter, still there's Or there's there Can last cash? for be

Emile Haddad

is Park of excess a cash. Sure. self-funding Great Well, look, has and the lot

on some venture for future we in the we distributions reserve development. have expect the think should of I top

Valencia I the both be will of as opportunities there going financial going sheet that's that you the seeing keep asset you develop that, should one able But expect performance as hopefully, more, on we forward. to cash as to in well you'll start be seeing well. seeing more, that think as we a I for balance lot of start deal, distribution to start happen So think what's that

John Moran

half or XXXX that we'll Point So in half? is it for generate Five possible of first cash XXXX, second

Emile Haddad

in expect distribution to the start have first say half Five distributions two distributions. off, meaning or because Well, whether just second the it's pipelines, a to want year have and of I we distribution seeing in partners we we're the will the XXXX. us, commit the I to half expecting burn about to with Point don't timing priority who the of

Operator

Nate Redleaf we'll with Luxor. go next, to And

Nate Redleaf

to as the Just stuff? on site either additional start you you are approvals I final city much have lots phase guess, how point a structure. there approvals of the to Or relates that, to you related delivering before San work guys Do from need final, do you -- the to first commercial you there ground to city? do it can ground of And need with the of out then, or residential come the Francisco come from the project. the can where out start

Emile Haddad

because about And the the that counties. on reengineering The side The as yes, of more be final working mall. that is, our will way of for approval. where yes, less rethinking them. get is and to risk a lot regional technical the of us, not cities received turns that city question answer to things by we thing we approval and so is then working to that outlet the Nate, the will a engineering we business we a approval year and on discretionary have XXXX discretionary a answer be approvals it's in the to start that define important into most have more approval, site,

that development as the approval. we But mixed-use got more

with you more and this to things forward At lot did as who with like call, approval expressed of I more of in of interest be vertical we hopefully, responded, we'll the the And expect we And go approvals. expect But to us respond to said last do going in And that got XXXX. partner. don't be timing the with we've we about XXXX, that be people week, have inquiries discussions share deal you having a not And an should sometime one we're I fully is phase. with last we have that talking since think engineering that. that that on able had XXXX, when part start XXXX want least later will going partner. probably until vertical, expect in in that. So a before a we of can I terms that to not and to

Operator

question-and-answer this today's conference. interest That on session. Point. behalf and thank does And you Five concludes for time conclude We of today's your

disconnect. now may You

Five Point (FPH) 11 Nov 192019 Q3 Earnings call transcript