Five Point Holdings

Greetings and welcome to the Five Point Holdings LLC third quarter 2025 conference call. As a reminder, this call is being recorded. Today's call may include forward-looking statements regarding Five Point's business, financial condition, operations, cash flow, strategy, acquisitions, and prospects. Forward-looking statements represent 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 risk and uncertainties. Many factors could affect future results and may cause Five Points actual activities or results 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 Point's SEC filings, including those in the risk factor section of Five Point's most recent annual report on Form 10-K filed with the SEC. Please note that Five Point assumes no obligation to update any forward-looking statements. Now, I would like to turn the call over to Dan Hedigan, President and Chief Executive Officer. Over to you, sir. Thank you.

Good afternoon, and thank you for joining our call. I have with me today Mike Alvarado, our Chief Operating Officer and Chief Legal Officer, Kim Tobler, our Chief Financial Officer, and Leo Key, our Senior Vice President of Finance and Reporting. Stuart Miller, our Executive Chairman, is joining us remotely. On today's call, I'll review our Q3 results, which reflect another profitable quarter for FivePoint, as we continue to build on our track record of consistent quarterly earnings. I'll also provide an update on our current operations and outline our strategic focus as we move toward the end of 2025. Then Mike will discuss the integration of Hearthstone into our platform. Finally, Kim will review the details of our financial results, address the successful refinancing of our senior notes, and discuss our outlook for the balance of the year. After our repaired marks, we'll open the line for questions. Turning to the third quarter, I'm pleased to report another profitable quarter for FivePoint. We generated consolidated net income of $55.7 million, continuing our pattern of steady earnings performance. This quarter's results were primarily driven by strong performance from our Great Park Venture, which sold 326 home sites on 26.6 acres for an aggregate base purchase price of $257.7 million. We sold a net income for the venture of $201.6 million. Our share of those earnings was 69.5 million, and the venture made distributions of 216 million, of which Five Point received 81.8 million. From a balance sheet perspective, we ended the quarter with total liquidity of 47.6 million, comprised of cash and cash equivalents of 351.1 million, and borrowing availability of 125 million under our unsecured revolving credit facility. During the quarter, we also took significant steps to strengthen our capital structure and position the company for long-term growth. We closed the acquisition of a 75% ownership interest in our new Hearthstone Residential Holdings land banking venture for $57.6 million. We issued $450 million in new 8% senior notes due 2030, and we used the proceeds from the offering, along with cash on hand, to fund the repurchase and redemption of our prior 523.5 million, 10.5% senior notes due 2028. The prior notes were due to step up to 11% coupon in November. The step down in coupon will benefit the future cash flows for the company. Additionally, Moody's upgraded our corporate credit rating and senior notes rating to B2 with a stable outlook, underscoring our financial resilience and improving credit profile. And last week, we upsized our revolving credit facility from $125 million to $217.5 million and extended the maturity by two years to July 2029. Reducing the outstanding principal on our notes while maintaining substantial liquidity to allow us to operate our business and execute on our growth strategy were important goals for us this year, and we're pleased to have been able to achieve them as planned. Let me now share our outlook on the market. Our third quarter performance was underpinned by resilient home buyer and builder demand at the Great Park, which remained solid despite continuing pressure from higher interest rates and affordability headwinds. While buyers remained somewhat cautious, the underlying imbalance between housing supply and demand in this core California market continued to support our land sale activity, and our disciplined lot sale strategies allowed us to capitalize on that environment. Looking ahead to the rest of 2025 and into 2026, we remain cautiously optimistic. We expect improvement in buyer confidence if mortgage rates ease and affordability begins to loosen. Given the structural undersupply in our markets, we believe the long-term fundamentals remain in our favor. We anticipate a gradual rebound in home sales activity as the rate environment normalizes, which we believe will result in demand from builders seeking to maintain a pipeline of home sites. On my last call, I indicated that we expected to end the year with net income consistent with our 2024 earnings, and we still believe we're on track to meet that guidance. That said, the housing landscape continues to evolve, and we are closely watching how shifting economic factors may influence buyer sentiment and buyer activity. can we provide more details on our guidance for the remainder of 2025 during his remarks? Our performance in the third quarter demonstrates the strength of our operating model and the effectiveness of our disciplined approach. As we move into the final quarter of the year, we remain focused on the same four key strategic priorities that have guided our progress throughout 2025. First, optimizing the value of our home sites within our premier master plan communities by aligning land sales with home builder demand. Even as national housing demand has moderated amid higher interest rates, our California markets remain chronically undersupplied, sustaining long-term builder interest. That said, because we don't have to sell when home sales absorption slows, optimization sometimes means moderating land sales with a goal of maintaining long-term value in these communities. Second, maintaining our lean operating structure by carefully managing fixed costs and overhead. We continue to demonstrate that growth and efficiency can go hand in hand, even as we integrate Hearthstone into our platform. Third, matching development expenditures with revenue generation, ensuring that capital deployment remains disciplined and aligned with near-term monetization. And fourth, pursuing selective growth opportunities through acquisitions, joint ventures, and strategic relationships like our Hearthstone investment, which we expect to be accretive to earnings. Let me now provide you with some updates on our communities, starting with our Great Park Neighborhoods community. At the Great Park, builders sold 187 homes during the quarter, an increase from the 112 homes sold in quarter two. We currently have six actually selling programs, with several expected to sell out by early 2026, Additional new programs are anticipated to start sales either later this year or in early 2026. I previously reported that we had completed bidding and contracting for nine new residential programs totaling 572 home sites. We closed the sale of five of those programs consisting of 326 home sites in the third quarter. Shortly following quarter end, we closed sale of another two programs consisting of 113 home sites We anticipate one other program to close later in the fourth quarter. We anticipate the final program, consisting of 59 home sites, will close in early 2026. These recently closed land sales were modified to include base purchase price paid at closing, ranging from approximately $8.5 to $11 million per acre, plus price participation rights that can allow us to capture upside in the event there is an improving market at the time of the home sales, the homes are sold to home buyers. Now let me discuss Valencia, our other active community. In Valencia, builders sold 50 homes during the quarter compared to 47 homes in the second quarter. We currently have eight actually selling programs with eight new programs anticipated open over the next few quarters. On the commercial side of our Valencia community, following the end of the quarter, we closed on a sale of a 15.8 acre industrial site. We also continue to advance regulatory approvals for our next phase of development which are expected to add approximately 8,900 home sites and 183 net acres of commercial land. These approvals will allow us to continue delivering much needed housing to one of California's most supply constrained housing markets. Turning to San Francisco, we are finalizing engineering for the next phase of infrastructure and expect to begin construction in the first half of 2026. We are very focused on optimizing product design for the San Francisco market remain engaged in discussions with potential capital sources to advance development of our candlestick and shipyard communities. As I mentioned earlier, we closed the Hearthstone acquisition in July, marking a major milestone in FivePoint's strategic evolution. I want to welcome the Hearthstone team to the FivePoint family. We're generally excited to have them join FivePoint as this acquisition gives us an established national platform providing capital solutions to homebuilders. Mike will discuss Hearthstone further in his remarks. Let me conclude by saying that we are very pleased with our progress through the first nine months of 2025. Our third quarter results reflect strong execution, continued profitability, balance sheet strength, and meaningful strategic advancement through the addition of the Hearthstone platform. Even as the broader housing market continues to adapt to interest rates and affordability challenges, Five Point remains well positioned financially, operationally and strategically to continue creating long-term value for our shareholders. With that, I'll turn it over to Mike to provide more color on how Hearthstone fits into our long-term vision.

Thanks, Dan. As Dan mentioned, the Hearthstone acquisition was not only a first step towards our growth strategy, but a meaningful one to set us up to be an institutional platform that can own, develop, and finance land at various stages in the development cycle. Immediately after the closing of this acquisition, we focused on expanding Hearthstone's capital relationships, pulling resources and communication lines together to increase the builder deal flow to Hearthstone, and enhancing its already strong operational controls. All of these efforts will be ones that we remain focused on as we work through the integration, but we are off to a strong start. First, We are engaged in meaningful discussions with capital providers to continue to expand the assets under management for the Hearthstone venture. When we first started talking with Hearthstone, they had approximately 2.6 billion of assets under management. And today we are at approximately 3 billion and growing with ongoing discussions for additional investments from new capital sources of 300 million, which could grow to over a billion dollars. As a reminder, The substantial majority of capital deployed through Hearthstone's land-making business will be provided by third-party capital sources, while Hearthstone's returns will largely be generated by recurring asset management fees. Hearthstone's current portfolio spans 16 states and approximately 33 market areas, geographically diversifying the investment base of Hearthstone's lot option program. Builders have been contacting us with an eye towards expanding their lot option financing deal flow. As I noted on our last call, it's been reported that over 70% of land pipelines for home builders are optioned rather than purchased outright, and that the public home builders buy and develop over $35 billion in land per year. We believe our venture has the opportunity to capture a meaningful portion of that market, and our recent communications with builders appear to justify that belief. Third, we have already started integrating our public company-level controls over financial and operational reporting into the Hearthstone venture, and we intend to bring technological enhancements to the platform to allow us to grow this business in an efficient and effective manner. Capital providers are selective when choosing to invest with operators, emphasizing strong risk mitigation controls over growth at an all-costs approach. Hearthstone has a proven track record of discipline underwriting and their focus on risk-managed capital deployment aligns with FivePoint's commitment to delivering strong, long-term returns for shareholders. While we intend to scale this business, we intend to do so with the same discipline that Hearthstone has done for many years and to bring the full scale of our public company platform to Hearthstone's operations. FivePoint now has two legs of the land development cycle stool. We have top tier master plan communities and supply constrained markets that will generate revenue for decades. And now we have a short term land financing program through Hearthstone that we anticipate will increase our fee based income substantially in the coming years. Next, we intend to focus on our midterm land strategy, where we will continue to take an asset or investment light approach, bringing in capital partners to acquire residential land that is neither generational in nature nor short-term that fits the typical land bank model. This mid-term land is what the home builders have traditionally held on their balance sheets as a necessary element of their inventory in key markets. As we have already reported, this is a market segment currently underserved by traditional capital providers. With the undersupply of homes and home sites in this country, particularly in the metropolitan areas that are experiencing growth, We believe the capital will be available to pursue and execute on these opportunities. In short, we are extremely excited about welcoming the Hearthstone team to FivePoint and to taking the next steps to position FivePoint to be a meaningful participant in the land development ecosystem and to generating long-term sustainable growth for our company. Now, let me turn it over to Kim to report on our financial results for the quarter.