Five Point Holdings

Greetings and welcome to the Five Point Holdings second quarter 2026 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 Thank you for watching. These factors include those described in today's press release and Five Points SEC filings, including those in the Risk Factors section of Five Points' most recent annual report on Form 10-K, filed with the SEC. Please note that Five Points 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.

Thank you. Good afternoon, and thank you for joining us. I have with me today Mike Alvarado, our Chief Operating Officer and Chief Legal Officer, Kim Tobler, our Chief Financial Officer, and Leo Kij, our Senior Vice President of Finance and Reporting. Today I'll review our second quarter results, discuss the progress we've made in executing our strategy, and share why we believe FivePoint is becoming a stronger, more diversified company that is positioned to create long-term shareholder value. Mike will then discuss our operational highlights in more detail, after which Kim will review our financial results, we'll then open the line for questions. Over the past several years, our objective has been straightforward. Unlock the substantial value embedded in our California assets while building a business capable of generating more consistent and predictable earnings over time. During the second quarter, we continue to make meaningful progress on both fronts. Our legacy master plan communities remain among the highest quality residential land assets in California. At the same time, our investment in the Hearthstone Venture represents an important evolution for FivePoint, expanding our capabilities beyond land development into land banking and asset management. Together, these businesses provide multiple avenues for creating value and position us to participate more broadly in the home building ecosystem. For the second quarter, FivePoint generated a net income of $29.9 million, driven in large part by the Great Park Venture's sale of 17.7 acres A commercial land plan for a senior living retirement community for $159.3 million which represents a land value of $9 million per acre. This transaction is another reminder of the significant value embedded within our master plan communities which continues to provide opportunities to develop additional products that are complementary to our traditional residential and commercial uses. During the quarter, who received $79.6 million in distributions and incentive compensation payments from our various joint ventures. And from a balance sheet perspective, we ended the quarter with total liquidity of $565.9 million, including $348.4 million of cash and cash equivalents. Turning to our operating environment, notwithstanding market conditions that remain somewhat choppy and complicated, We're seeing continued support for land values in our active communities. Given the scarcity of entitled land in Southern California and the exceptional locations of both Great Park and Valencia, we're still engaged with builders who continue to pursue buying home sites in these communities, which Mike will address in more detail in his remarks. We remain highly confident in the long-term value of these communities and our ability to sell land and grow returns over time. Additionally, our balance sheet strength gives us the flexibility to work collaboratively with builders to structure transactions in a way to optimize land values through varying market cycles. While our California communities remain an important source of future value creation, they no longer represent the entirety of our growth story. When I became CEO, our initial priorities were to simplify the business, reduce overhead, strengthen the balance sheet, and continue executing against our long-term land development strategy. We made substantial progress in each of those areas. Today, our debt-to-capital ratio stands at just 16.2%, providing us with considerable financial flexibility. With that foundation in place, our attention shifted towards building a business with more recurring revenue, lower capital intensity and broader growth opportunities. That strategic focus led us to Hearthstone, which represents the first step in the evolution of our business beyond our three core communities. Through Hearthstone, we now participate in land banking and capital solutions for builders across the country while generating recurring management and investment income, adding to the management fees and incentive compensation already earned through our Great Park Venture. Unlike traditional land development, these activities require significantly less balance sheet capital, but still benefit from Five Point's community development expertise. We believe this creates a highly complementary business model. Our California communities continue to generate long-term value through land development and modernization. A hearthstone expands our reach nationally through feed-based management services and strategic capital deployment. Importantly, these two businesses reinforce one another. Our experience developing some of the country's most complex master plan communities gives us unique expertise in underwriting land, Our long-term outlook for the housing market remains constructive. The United States continues to face a significant housing shortage. Industry's largest builders increasingly rely on capital-efficient land-light operating models. At the same time, institutional investors continue seeking opportunities to deploy capital into residential land and development projects. We believe that we are uniquely positioned at the intersection of those two trends. Looking ahead, our objective is to continue transforming FivePoint into a company with two highly complementary value drivers, a portfolio of well-positioned master plan communities, and an increasingly scalable national residential asset management platform. As recurring fee-based income becomes a larger contributor to our earnings mix over time, we believe our business will become more diversified, more predictable, and less dependent on the timing of individual land sales. With long-standing relationships across the home building industry, partnerships with leading institutional capital providers, and the capabilities we've developed over decades of land development, we are well positioned to expand this platform and create meaningful long-term value for our shareholders. Let me now provide an outlook for the rest of the year. We have great confidence in the value of our land and supply-constrained California markets. Accordingly, even in the currently evolving market conditions, we're not going to update or alter our prior guidance of approximately $100 million in consolidated net income at this time. Although market conditions remain uncertain, we currently believe our land will sell as expected, with the caveat that interest rates and affordability factors could affect timing. We currently expect our remaining land sales activity will occur in the fourth quarter. We'll have more to report on our Q3 earnings call as we finalize our land sale discussions with builders. Let me now conclude with an operational update. During the quarter, our teams continue to execute against our development plans, advance infrastructure improvements, and prepare future phases for eventual delivery. Maintain the development momentum during periods of slower home sales activity positions us to respond efficiently as demand strengthens and all our builder partners move quickly when they're ready to commit additional capital. Ultimately, our primary operational objective has not changed, which is to optimize the long-term value of these extraordinary assets. We believe that requires the patience, disciplined capital allocation, and long-term perspective that we have consistently demonstrated. With that, I'd like to turn the call over to Mike who will provide more detail on our operations this quarter.

Let me start by providing you with some updates on our communities, starting with the Great Park neighborhoods. At the Great Park, the second quarter highlighted the depth and flexibility of this community. As Dan mentioned, during the quarter, the Great Park Venture closed a sale of approximately 17.7 acres of land planned for a senior living retirement community for a purchase price of approximately $159 million. While this retirement community will be the first in our master plans here in California, We continue to see steady engagement from the homebuyers and continue builder interest in the community. We currently have 14 actively selling programs in the Great Park neighborhoods with five additional programs planned to open later this year. As Dan mentioned, we have builders in various stages of due diligence and contracts on five new residential programs totaling approximately 28.5 acres. With that said, while we currently expect to execute and close these deals, these sales this fiscal year, market conditions could alter the timing. As a reminder, Some of these home sites are located on land that we acquired from the city as part of the land exchange transaction we recently completed with them, which was the same transaction that allowed us to convert approximately 100 acres from commercial land into residential land. We will continue to monetize this converted residential land in the quarters and years ahead. Next, we'll discuss Valencia, our other active community. During the second quarter, builders sold 78 homes in Valencia, compared to 90 homes in the first quarter. Although sales moderated sequentially, we continue to see homebuyer engagement at our first village, and we remain focused on pacing development and land sales in a way that aligns with builder demand and broader market conditions. We currently have 12 builder programs open and actively selling, and we anticipate five new programs will open over the remainder of the year. We are also currently finalizing documentation for residential land sales in 26, although market conditions could alter the timing here as well. As of the end of the second quarter, we have sold over 3,000 homesites at Valencia since commencing homesite sales in 2019. That is still only a portion of the long-term opportunity in this master plan community. Valencia is designed to deliver much-needed housing supply into a market that remains chronically undersupplied. We also continue to advance the next phases of development in Valencia. As we discussed on our last call, the entitlement approvals we secured for Encharta South and Valencia Commerce Center significantly enhanced the long-term value and development potential of this community. Our teams continue to work through infrastructure plans, ministerial permits, and other development steps necessary to bring those next villages forward. We also continue to advance our regulatory approvals for three additional villages. Upon approval, these villages, together with our existing entitlements, would bring our total to more than 10,000 entitled home sites. Turning to San Francisco. At San Francisco, we continue to advance the next phase of development at Candlestick. As a reminder, the approvals we received in 2024 and 2025 provide the ability to include up to approximately 2.8 million square feet of research and development and technology-oriented office space. Approximately 7,200 homes and approximately 550,000 square feet of space for retail, hotel, entertainment, and other community uses. In June, we recorded our subdivision maps for the next phase of development, and we are preparing to initiate grading activities in the third quarter. We believe our timing at Candlestick could not be better for a number of reasons. First, the AI and technology boom is creating renewed demand for office space Thank you for joining us. 4. Residential fundamentals are strengthening, with rents and home values moving higher while new housing supply remains highly constrained.