Five Point Holdings

Thank you. Thank you. Good day, everyone. Welcome to today's Five Point Holdings third quarter 2020 conference call. Currently, all participants are in a listen-only mode. As a reminder, today's program is being recorded. Today's conference may include forward-looking statements regarding Five Point's business, financial conditions, operations, cash flow, 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 the actual future results because forward-looking statements relate to matters that have not yet occurred, these statements are inherently subject to risk and uncertainties. Many factors could affect future results and may cause Five Points actual results or activities to differ materially from the activities and results anticipated in forward-looking statements. These factors include those described in today's press release and Five Points SEC filings, including those in the risk factors section of the most recent annual report on Form 10-K and quarterly report on Form 10-Q filed with the SEC. Please note that FivePoint assumes no obligation to update any forward-looking statement. Now I'd like to turn the call over to Mr. Amil Haddad, Chairman and CEO of FivePoint. Please go ahead, sir.

Thank you, Greg, and welcome, everyone. I hope that you and your loved ones are all healthy. The results of our third quarter speak to the main tenets of our strategy of maintaining a strong balance sheet and continuing to invest in our communities. This investment in the infrastructure and amenities that characterize a pipeline community is driving value by creating great places for people of all walks of life to live, work, connect with each other, and with nature. We have highlighted often the premiums that our homebuyers are paying to live close to state-of-the-art sports and entertainment facilities and to have their children enroll in our excellent public school systems. The project achieved with the sale of two of our buildings at our Gateway Campus in Irvine is a clear example of the premium put on our commercial real estate as a result of our investment in the overall community. Today, the Great Park in Irvine is being recognized as one of the premier communities in the country. Soon, our proof of concept will be seen in Valencia as families are expected to move into their new homes in 2021. The housing market is doing very well, thanks to historically low interest rates and higher demand for homes in our type of communities. Our markets in Los Angeles and Orange County have seen home price appreciation of 8.2% and 4.7% over the last 12 months, respectively, according to Zillow, and are projected to see another 8.1% and 7.4% over the next 12 months, according to the same source. Finally, before I hand it over to Eric to go over our financial results, let me give you an update on our thinking about an investor's vision that will address our view of the disconnect between the real value of the company and our share price. At the end of 2019, you'll recall that we were planning for a two-day investors meeting and two of our communities. Unfortunately, COVID-19 disrupted those plans. Our hope is that we will be able to hold a two- and in-person meeting next year so we can show you the communities. However, if the conditions don't allow for that, we plan for a virtual meeting early next year that we hope will help you understand the value of the company the way you see it every day. Now let me turn it over to Eric, who will report on our Q3 financial results, and I will take questions after that.

Thank you, Neil. Our Q10 was followed on November 6th, and the summary of our financial results is included in the earnings release issued earlier today. I'll start with our consolidated results, then I'll address each of our four segments and conclude with comments about our balance sheet in our liquidity position. The company's consolidated revenues for the third quarter totaled $8.4 million, primarily related to the recognition of revenue generated from related party management services. We recognized $52.4 million in earnings from our two unconsolidated joint ventures, including earnings of $56.6 million from our 75% interest in the Gateway commercial venture as a result of the sale of two buildings occupied by Broadcom at the Five Point Gateway campus. Total consolidated costs and expenses were approximately $24.5 million, including selling, general, and administrative expenses of $17.7 million for the quarter. Net income for the quarter was $36.4 million, of which $19.5 million was allocated to the non-controlling interests leaving approximately $17 million attributable to the company. Moving to the segment results. The Valencia segment is consolidated for accounting purposes. The segment lost in a quarter was $3.2 million, which was primarily selling general and administrative expenses. We collected $13.9 million against a land sale note related to a land sale that occurred earlier in the year. The San Francisco segment is also consolidated for accounting purposes. The San Francisco segment's net loss for the quarter was $1.8 million, which was primarily SD&A expenses. The Great Park segment includes operations of the Great Park Venture, the owner of the Great Park neighborhoods, as well as management services provided by the management company to the Great Park Venture. As a reminder, We own 37.5% of the non-legacy percentage interest of the Great Park Venture and 100% of the management company. The Great Park Venture is an unconsolidated entity with our investment in the venture accounted for under the equity method of accounting. For segment reporting, we include the full results of the Great Park Venture at the Venture's historical cost basis of accounting. The Great Park Venture is a self-funding operation with no project-level debt. The Great Park segment revenues were $8.1 million for the third quarter, consisting primarily of revenue recognized under the management agreement. The third quarter net loss for the Great Park segment totaled $10.2 million, consisting of $1.8 million of net income related to the management company and a loss of $12 million for the Great Park Venture operations. The company recognized the loss of $4.2 million on its investment in the Great Park Venture, which includes our share of the Great Park Venture's losses. Our commercial segment includes operations of the Gateway Commercial Venture and management services provided by the management company to the Gateway Commercial Venture. We own 75% of the Gateway Commercial Venture and 100% of the management company. The Gateway Commercial Venture is also an unconsolidated entity, with our investment in the venture accounting for under the equity method of accounting. For segment reporting, we include the full results of the Gateway commercial venture at the venture's historical basis of accounting. Commercial segment income was $75.6 million for the quarter, primarily related to the sale of two office buildings occupied by Broadcom at the Five Point Gateway campus. These buildings were sold for $355 million. The JV paid off $245 million in project-level debt in connection with the sale and made a cash distribution of $107 million to its members, of which Y-Point received $80.3 million. The company recognized approximately $56.6 million of income on its investment in the Gateway commercial venture. For historical purpose perspective on our 75% investment in the Gateway commercial venture, the company contributed approximately $107 million to the JV in August of 2017 in connection with the venture's acquisition of the 73-acre campus, which included four buildings totaling approximately 1 million square feet of office space. As of today, FlyPoint has received 30, I'm sorry, received $136.6 million in cash distributions from the sale of three buildings and approximately 11 acres. The venture currently owns one of the four buildings and approximately 50 acres of commercial land with additional development rights at the campus. I'll wrap it up with a few comments related to our balance sheet and liquidity position. Our cash position increased by $55.5 million for the quarter. The increase was primarily the result of $80.3 million in cash distributions from the Gateway Commercial Venture and collected $13.9 million against the land sale note offset by continued inventory expenditures of Valencia and SG&A expenses. As of September 30, 2020, total liquidity was approximately $395.2 million which was comprised of our cash balance of $270.6 million and borrowing availability of $124.7 million under our $125 million unsecured revolving credit facility. Our balance sheet is strong with the debt to total capital ratio of 25%. Let me turn it now back to the operator who will open up for questions.