Five Point Holdings, LLC Reports First Quarter 2022 Results

First Quarter 2022 Highlights

• 15 active neighborhoods open for sale in Valencia.

• Builder sales of 211 homes in Valencia during the quarter.

• Builder sales of 94 homes in Great Park Neighborhoods during the quarter.

• At Great Park Neighborhoods, the “Rise” neighborhood, consisting of approximately 700 homes, as of March 31, 2022, was nearing sell out with approximately 50 homes remaining to sell. Our next neighborhood, “Solis Park,” consisting of approximately 850 homes, is planned to open for sale this summer.

• Reduced headcount by approximately 29% since the beginning of the year primarily from layoffs at the end of the quarter.

• Recognized $19.4 million in restructuring expense related to executive officer post employment compensation arrangements and severance obligations related to layoffs.

• Consolidated revenues of $4.9 million; consolidated net loss of $36.8 million.

• Debt to total capitalization ratio of 25.1% and liquidity of $328.3 million as of March 31, 2022.

Five Point Holdings, LLC (“Five Point” or the “Company”) (NYSE:FPH), an owner and developer of large mixed-use planned communities in California, today reported its first quarter 2022 results.

Dan Hedigan, Chief Executive Officer, said, “FivePoint is entering an important juncture in the evolution of the company. We have taken decisive steps during the first quarter to manage costs and to create greater efficiencies in our day-to-day operations. With continued market demand within our supply-constrained California markets, we remain focused on maximizing the value of our residential assets while also seeking to capitalize on our sizeable commercial land opportunities in order to maximize our current cash flow and strengthen our balance sheet. Our team is working hard to continue executing on our mission of transforming our unique land assets into sustainable mixed-use communities, while we keep a watchful eye on economic and market conditions.”

Consolidated Results

Liquidity and Capital Resources

As of March 31, 2022, total liquidity of $328.3 million was comprised of cash and cash equivalents totaling $203.6 million and borrowing availability of $124.7 million under our $125.0 million unsecured revolving credit facility. Total capital was $1.9 billion, reflecting $2.9 billion in assets and $1.1 billion in liabilities and redeemable noncontrolling interests.

Results of Operations for the Three Months Ended March 31, 2022

Revenues. Revenues of $4.9 million for the three months ended March 31, 2022 was primarily generated from management services.

Equity in loss from unconsolidated entities. Equity in loss from unconsolidated entities was $1.0 million for the three months ended March 31, 2022. The Great Park Venture had no land sales during the three months ended March 31, 2022 but did close the sale of nine homes under its fee build program at Great Park Neighborhoods, generating $17.2 million in revenues. The remaining 13 homes subject to the fee building agreement are expected to close during the remainder of 2022. Net loss for the Great Park Venture was $2.8 million. Our share of the net loss from our 37.5% percentage interest, adjusted for basis differences, was $1.3 million. Additionally, we recognized $0.1 million in earnings from our 75% interest in the Gateway Commercial Venture and a $0.2 million in earnings from our 10% interest in the Valencia Landbank Venture, which was primarily a result of land sales to third-party homebuilders by the Valencia Landbank Venture.

Selling, general, and administrative. Selling, general, and administrative expenses were $16.8 million for the three months ended March 31, 2022.

Restructuring. On February 9, 2022, Daniel Hedigan was appointed as our Chief Executive Officer. Preceding Mr. Hedigan’s appointment, Emile Haddad stepped down from his roles as Chairman, Chief Executive Officer and President effective as of September 30, 2021 and transitioned into a senior advisory role pursuant to a three-year advisory agreement. Mr. Haddad remains a member of the Board of Directors serving as Chairman Emeritus. Concurrent with Mr. Hedigan’s appointment, Lynn Jochim transitioned from her position as President and Chief Operating Officer into an advisory role pursuant to a three-year advisory agreement. Upon the appointment of Mr. Hedigan as our Chief Executive Officer, we accrued a related party liability of $15.6 million attributed to the advisory agreements with Mr. Haddad and Ms. Jochim and recognized approximately $3.0 million in additional restructuring costs associated with their unvested restricted share awards.

In addition to our executive management restructuring activities, we have had an approximately 29% reduction in headcount since the end of 2021. Most of the reductions were the result of company-wide layoffs that occurred at the end of the first quarter. During the three months ended March 31, 2022, we accrued $0.9 million in restructuring costs for estimated severance benefits from these layoffs.

Net loss. Consolidated net loss for the quarter was $36.8 million. Net loss attributable to noncontrolling interests totaled $19.6 million, resulting in net loss attributable to the Company of $17.1 million. Net loss attributable to noncontrolling interests represents the portion of loss allocated to related party partners and members that hold units of the operating company and the San Francisco Venture. Holders of units of the operating company and the San Francisco Venture can redeem their interests for either, at our election, our Class A common shares on a one-for-one basis or cash. In connection with any redemption or exchange, our ownership of our operating subsidiaries will increase thereby reducing the amount of income allocated to noncontrolling interests in subsequent periods.

Conference Call Information

In conjunction with this release, Five Point will host a conference call on Thursday, May 12, 2022 at 5:00 p.m. Eastern Time. Dan Hedigan, Chief Executive Officer, and Leo Kij, Interim Chief Financial Officer, will host the call. Interested investors and other parties can listen to a live Internet audio webcast of the conference call that will be available on the Five Point website at ir.fivepoint.com. The conference call can also be accessed by dialing (800) 949-2175 (domestic) or (856) 344-9283 (international). A telephonic replay will be available starting approximately two hours after the end of the call by dialing (844) 512-2921, or for international callers, (412) 317-6671. The passcode for the live call and the replay is 9718621. The telephonic replay will be available until 11:59 p.m. Eastern Time on May 26, 2022.

About Five Point

Five Point, headquartered in Irvine, California, designs and develops large mixed-use planned communities in Orange County, Los Angeles County, and San Francisco County that combine residential, commercial, retail, educational, and recreational elements with public amenities, including civic areas for parks and open space. Five Point’s communities include the Great Park Neighborhoods^® in Irvine, Valencia^® in Los Angeles County, and Candlestick^® and The San Francisco Shipyard^® in the City of San Francisco. These communities are designed to include approximately 40,000 residential homes and approximately 23 million square feet of commercial space.

Forward-Looking Statements

This press release contains forward-looking statements that are subject to risks and uncertainties. These statements concern expectations, beliefs, projections, plans and strategies, anticipated events or trends and similar expressions concerning matters that are not historical facts. When used, the words “anticipate,” “believe,” “expect,” “intend,” “may,” “might,” “plan,” “estimate,” “project,” “should,” “will,” “would,” “result” and similar expressions that do not relate solely to historical matters are intended to identify forward-looking statements. This press release may contain forward-looking statements regarding: our expectations of our future revenues, costs and financial performance; future demographics and market conditions in the areas where our communities are located; the outcome of pending litigation and its effect on our operations; the timing of our development activities; and the timing of future real estate purchases or sales. We caution you that any forward-looking statements included in this press release are based on our current views and information currently available to us. Forward-looking statements are subject to risks, trends, uncertainties and factors that are beyond our control. Some of these risks and uncertainties are described in more detail in our filings with the SEC, including our Annual Report on Form 10-K, under the heading “Risk Factors.” Should one or more of these risks or uncertainties materialize, or should underlying assumptions prove incorrect, actual results may vary materially from those anticipated, estimated or projected. We caution you therefore against relying on any of these forward-looking statements. While forward-looking statements reflect our good faith beliefs, they are not guarantees of future performance. They are based on estimates and assumptions only as of the date hereof. We undertake no obligation to update or revise any forward-looking statement to reflect changes in underlying assumptions or factors, new information, data or methods, future events or other changes, except as required by applicable law.

Segment Results

The following table reconciles the results of operations of our segments to our consolidated results for the three months ended March 31, 2022 (in thousands):

The table below reconciles the Great Park segment results to the equity in loss from our investment in the Great Park Venture that is reflected in the condensed consolidated statement of operations for the three months ended March 31, 2022 (in thousands):

The table below reconciles the Commercial segment results to the equity in earnings from our investment in the Gateway Commercial Venture that is reflected in the condensed consolidated statement of operations for the three months ended March 31, 2022 (in thousands):

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