Five Point(FPH) - 2025 Q2 - Quarterly Report

PART I. FINANCIAL INFORMATION This section presents the unaudited condensed consolidated financial statements and management's discussion and analysis for Five Point Holdings, LLC ITEM 1. Financial Statements Presents unaudited condensed consolidated financial statements for Five Point Holdings, LLC, covering balance sheets, income, capital, and cash flows, with detailed notes Unaudited Condensed Consolidated Balance Sheets The balance sheet shows an increase in total assets and total capital from December 31, 2024, to June 30, 2025, primarily driven by an increase in inventories and cash, while liabilities also saw a slight increase | ASSETS/LIABILITIES AND CAPITAL | June 30, 2025 (in thousands) | December 31, 2024 (in thousands) | | :----------------------------- | :--------------------------- | :------------------------------- | | ASSETS: | | | | INVENTORIES | $2,400,597 | $2,298,080 | | CASH AND CASH EQUIVALENTS | $456,640 | $430,875 | | TOTAL ASSETS | $3,158,817 | $3,076,417 | | LIABILITIES: | | | | Notes payable, net | $527,462 | $525,737 | | Total liabilities | $908,685 | $896,320 | | CAPITAL: | | | | Total members' capital | $779,392 | $749,436 | | Noncontrolling interests | $1,445,740 | $1,405,661 | | Total capital | $2,225,132 | $2,155,097 | | TOTAL LIABILITIES AND CAPITAL | $3,158,817 | $3,076,417 | Unaudited Condensed Consolidated Statements of Operations The company experienced a significant decrease in total revenues for both the three and six months ended June 30, 2025, compared to the prior year, primarily due to lower management services revenue. However, net income attributable to the company increased for the six-month period, driven by higher equity in earnings from unconsolidated entities | Metric (in thousands) | 3 Months Ended June 30, 2025 | 3 Months Ended June 30, 2024 | 6 Months Ended June 30, 2025 | 6 Months Ended June 30, 2024 | | :-------------------- | :--------------------------- | :--------------------------- | :--------------------------- | :--------------------------- | | Total revenues | $7,473 | $51,192 | $20,630 | $61,127 | | Total costs and expenses | $19,689 | $25,379 | $39,002 | $43,181 | | Equity in earnings from unconsolidated entities | $17,145 | $15,498 | $88,584 | $33,084 | | Net income attributable to the Company | $3,320 | $14,722 | $26,604 | $17,048 | | Basic EPS (Class A) | $0.05 | $0.21 | $0.38 | $0.25 | | Diluted EPS (Class A) | $0.05 | $0.21 | $0.36 | $0.24 | Unaudited Condensed Consolidated Statements of Comprehensive Income Comprehensive income attributable to the company decreased for the three months ended June 30, 2025, but increased for the six months ended June 30, 2025, reflecting changes in net income and other comprehensive income components, primarily related to actuarial adjustments | Metric (in thousands) | 3 Months Ended June 30, 2025 | 3 Months Ended June 30, 2024 | 6 Months Ended June 30, 2025 | 6 Months Ended June 30, 2024 | | :-------------------- | :--------------------------- | :--------------------------- | :--------------------------- | :--------------------------- | | NET INCOME | $8,576 | $38,227 | $69,162 | $44,310 | | OTHER COMPREHENSIVE INCOME—Net of tax | $9 | $11 | $21 | $23 | | COMPREHENSIVE INCOME ATTRIBUTABLE TO THE COMPANY | $3,325 | $14,728 | $26,616 | $17,061 | Unaudited Condensed Consolidated Statements of Capital The statements of capital show an increase in total capital from December 31, 2024, to June 30, 2025, primarily due to net income and share-based compensation, partially offset by reacquisition of share-based awards for tax withholding purposes | Capital Component (in thousands) | Balance - Dec 31, 2024 | Net Income | Share-based Compensation | Reacquisition of Share-based Compensation | Issuance of Share-based Compensation | Settlement of Restricted Share Units | Other Comprehensive Income | Adjustment to TRA Liability | Adjustment of Noncontrolling Interest | Balance - June 30, 2025 | | :------------------------------- | :--------------------- | :--------- | :----------------------- | :---------------------------------------- | :----------------------------------- | :---------------------------------- | :------------------------- | :-------------------------- | :------------------------------------ | :---------------------- | | Contributed Capital | $593,827 | — | $2,934 | $(1,776) | — | — | — | $(306) | $2,491 | $597,170 | | Retained Earnings | $157,077 | $26,604 | — | — | — | — | — | — | — | $183,681 | | Accumulated Other Comprehensive Loss | $(1,468) | — | — | — | — | — | $12 | — | $(3) | $(1,459) | | Total Members' Capital | $749,436 | $26,604 | $2,934 | $(1,776) | — | — | $12 | $(306) | $2,488 | $779,392 | | Noncontrolling Interests | $1,405,661 | $42,558 | — | — | — | — | $9 | — | $(2,488) | $1,445,740 | | Total Capital | $2,155,097 | $69,162 | $2,934 | $(1,776) | — | — | $21 | $(306) | — | $2,225,132 | Unaudited Condensed Consolidated Statements of Cash Flows Net cash used in operating activities significantly decreased for the six months ended June 30, 2025, compared to the prior year, while net cash provided by investing activities substantially increased. Financing activities used less cash in 2025 due to no major debt repayments | Cash Flow Activity (in thousands) | 6 Months Ended June 30, 2025 | 6 Months Ended June 30, 2024 | | :-------------------------------- | :--------------------------- | :--------------------------- | | Net cash used in operating activities | $(14,902) | $(49,659) | | Net cash provided by investing activities | $42,443 | $14,522 | | Net cash used in financing activities | $(1,776) | $(101,277) | | NET INCREASE (DECREASE) IN CASH, CASH EQUIVALENTS, AND RESTRICTED CASH | $25,765 | $(136,414) | | CASH, CASH EQUIVALENTS, AND RESTRICTED CASH—End of period | $457,632 | $218,379 | Notes to Unaudited Condensed Consolidated Financial Statements These notes provide detailed explanations of the company's business, significant accounting policies, financial instrument fair values, and specific transactions, including revenue disaggregation, investments in unconsolidated entities, related party transactions, debt, commitments, and earnings per share calculations Note 1. BUSINESS AND ORGANIZATION Five Point Holdings, LLC operates as an owner and developer of mixed-use planned communities in California through its operating company, with a complex organizational structure involving various equity interests and noncontrolling interests - Five Point Holdings, LLC is a Delaware limited liability company that owns and develops mixed-use planned communities in California[31] - The Holding Company conducts all operations through Five Point Operating Company, LP, and its subsidiaries[31] - As of June 30, 2025, the Company owned approximately 62.8% of the outstanding Class A Common Units of the Operating Company[36] Note 2. BASIS OF PRESENTATION The financial statements are unaudited and prepared in accordance with U.S. GAAP for interim financial information, consolidating entities where the Holding Company has a controlling interest or is the primary beneficiary of VIEs, with recent accounting pronouncements adopted or evaluated - The condensed consolidated financial statements are unaudited and prepared in accordance with U.S. GAAP for interim financial information[39] - The Company adopted ASU 2023-07, Segment Reporting, retrospectively for the current year interim condensed consolidated financial statements[43] - The Company is evaluating the effect of ASU 2023-09 (Income Taxes) and ASU 2024-03 (Expense Disaggregation Disclosures) on its financial statement disclosures[44][45] Note 3. REVENUES Consolidated revenues significantly decreased for both the three and six months ended June 30, 2025, compared to 2024, primarily due to a reduction in management services—related party revenue, with contract assets also seeing a net decrease | Revenue Source (in thousands) | 3 Months Ended June 30, 2025 | 3 Months Ended June 30, 2024 | 6 Months Ended June 30, 2025 | 6 Months Ended June 30, 2024 | | :---------------------------- | :--------------------------- | :--------------------------- | :--------------------------- | :--------------------------- | | Land sales | $(16) | $307 | $82 | $842 | | Management services—related party | $6,959 | $50,279 | $19,510 | $59,005 | | Total revenues | $7,473 | $51,192 | $20,630 | $61,127 | - The net decrease in contract assets for the six months ended June 30, 2025, was $18.4 million, primarily from receiving $30.4 million in incentive compensation payments from the Great Park Venture[48] Note 4. INVESTMENT IN UNCONSOLIDATED ENTITIES The company holds equity method investments in Great Park Venture, Gateway Commercial Venture, and Valencia Landbank Venture, with Great Park Venture significantly contributing to equity in earnings due to increased land sales - The Operating Company owned 37.5% of the Great Park Venture's Percentage Interests as of June 30, 2025[51] Great Park Venture | Great Park Venture (in thousands) | 6 Months Ended June 30, 2025 | 6 Months Ended June 30, 2024 | | :-------------------------------- | :--------------------------- | :--------------------------- | | Land sale and related party land sale revenues | $357,645 | $232,081 | | Net income of Great Park Venture | $254,657 | $98,061 | | Equity in earnings from Great Park Venture | $87,546 | $33,130 | - The Gateway Commercial Venture sold its remaining interests in the Five Point Gateway Campus for $88.5 million during the year ended December 31, 2024[59] Gateway Commercial Venture | Gateway Commercial Venture (in thousands) | 6 Months Ended June 30, 2025 | 6 Months Ended June 30, 2024 | | :-------------------------------------- | :--------------------------- | :--------------------------- | | Rental revenues | $0 | $4,773 | | Net income (loss) of Gateway Commercial Venture | $816 | $(406) | | Equity in earnings (loss) from Gateway Commercial Venture | $613 | $(305) | Note 5. NONCONTROLLING INTERESTS Noncontrolling interests primarily represent equity interests in the Operating Company and San Francisco Venture, which can be exchanged for Class A common shares or cash, with the San Francisco Venture having redeemable Class C units - Noncontrolling interests represent interests held by other partners in the Operating Company and members of the San Francisco Venture[64] - Holders of Class A Common Units of the Operating Company may exchange their units for Class A common shares or cash after a 12-month holding period[65] - The San Francisco Venture has 25.0 million Class C units outstanding, included in redeemable noncontrolling interest, with a maximum redemption/liquidation amount of $25.0 million[72] Note 6. CONSOLIDATED VARIABLE INTEREST ENTITY The Holding Company conducts operations through the Operating Company, a consolidated Variable Interest Entity (VIE), which also consolidates other VIEs like the San Francisco Venture, where the Company is the primary beneficiary - The Holding Company conducts all operations through the Operating Company, a consolidated VIE[73] - The San Francisco Venture is consolidated as a VIE because the Operating Company has unilateral power over its significant economic activities and receives 99% of distributions[74] - As of June 30, 2025, the San Francisco Venture had total combined assets of $1.46 billion and total combined liabilities of $74.5 million[75] Note 7. INTANGIBLE ASSET, NET—RELATED PARTY The intangible asset, representing incentive compensation from the Great Park Venture, decreased in net book value due to amortization, with a lower amortization expense in the current period - The intangible asset relates to the contract value of incentive compensation provisions of the A&R DMA with the Great Park Venture[83] Intangible Asset | Intangible Asset (in thousands) | June 30, 2025 | December 31, 2024 | | :------------------------------ | :------------ | :---------------- | | Gross carrying amount | $129,705 | $129,705 | | Accumulated amortization | $(122,375) | $(120,668) | | Net book value | $7,330 | $9,037 | - Amortization expense was $1.7 million for the six months ended June 30, 2025, a decrease from $11.5 million in the prior year[84] Note 8. RELATED PARTY TRANSACTIONS Related party assets, mainly contract assets from the Great Park Venture, decreased, while the development management agreement was renewed, and significant incentive compensation payments were received Related Party Balances | Related Party (in thousands) | June 30, 2025 | December 31, 2024 | | :--------------------------- | :------------ | :---------------- | | Related Party Assets: | | | | Contract assets | $82,603 | $100,793 | | Total Related Party Assets | $83,473 | $101,670 | | Related Party Liabilities: | | | | Reimbursement obligation | $63,397 | $62,057 | | Total Related Party Liabilities | $64,512 | $63,297 | - The development management agreement with the Great Park Venture was renewed through December 31, 2026, with incentive compensation provisions remaining unchanged[86] - Incentive compensation payments of $30.4 million were received from the Great Park Venture during the six months ended June 30, 2025[87] Note 9. NOTES PAYABLE, NET Notes payable, net, remained stable at approximately $527.5 million, primarily consisting of 10.500% New Senior Notes due 2028, with a $125.0 million unsecured revolving credit facility available Notes Payable | Notes Payable (in thousands) | June 30, 2025 | December 31, 2024 | | :--------------------------- | :------------ | :---------------- | | 10.500% initial rate New Senior Notes due 2028 | $523,494 | $523,494 | | 7.875% Senior Notes due 2025 | $1,500 | $1,500 | | Notes payable, net | $527,462 | $525,737 | - The Operating Company has a $125.0 million unsecured revolving credit facility, with no borrowings or letters of credit outstanding as of June 30, 2025[92] Note 10. TAX RECEIVABLE AGREEMENT The company's Tax Receivable Agreement (TRA) liability was $173.8 million as of June 30, 2025, with no TRA payments made during the current or prior six-month periods - The Company's condensed consolidated balance sheets included liabilities of $173.8 million and $173.4 million for payments expected to be made under the TRA as of June 30, 2025, and December 31, 2024, respectively[93] - No TRA payments were made during the six months ended June 30, 2025 or 2024[93] Note 11. COMMITMENTS AND CONTINGENCIES The company faces various contractual obligations, including increased performance bonds and significant guarantees for the San Francisco Venture, alongside ongoing litigation related to alleged contamination Operating Lease | Operating Lease (in thousands) | June 30, 2025 | December 31, 2024 | | :----------------------------- | :------------ | :---------------- | | Operating lease right-of-use assets | $11,554 | $12,973 | | Operating lease liabilities | $9,889 | $10,980 | - Outstanding performance bonds increased to $390.8 million as of June 30, 2025, from $375.8 million at December 31, 2024[95] - The San Francisco Venture has outstanding guarantees of $198.3 million for infrastructure and park obligations[97] - The company entered into an agreement to acquire a controlling interest in Hearthstone Residential Holdings, LLC for $56.25 million, expected to close in Q3 2025[98] - The company is a defendant in the Bayview Action litigation concerning alleged toxic radiological waste at The San Francisco Shipyard[100] Note 12. SUPPLEMENTAL CASH FLOW INFORMATION Supplemental cash flow details show increased cash paid for interest and income taxes, along with noncash lease expenses and a significant noncash exchange of Senior Notes in the prior year Supplemental Cash Flow | Supplemental Cash Flow (in thousands) | 6 Months Ended June 30, 2025 | 6 Months Ended June 30, 2024 | | :------------------------------------ | :--------------------------- | :--------------------------- | | Cash paid for interest | $27,543 | $26,549 | | Cash paid for income taxes | $3,873 | $0 | | Noncash lease expense | $1,419 | $1,383 | | Senior Notes due 2025 exchanged for New Senior Notes due 2028 | $0 | $523,500 | Cash, Cash Equivalents, and Restricted Cash | Cash, Cash Equivalents, and Restricted Cash (in thousands) | June 30, 2025 | June 30, 2024 | | :------------------------------------------------------- | :------------ | :------------ | | Cash and cash equivalents | $456,640 | $217,387 | | Restricted cash and certificates of deposit | $992 | $992 | | Total cash, cash equivalents, and restricted cash | $457,632 | $218,379 | Note 13. SEGMENT REPORTING The company operates through three reportable segments—Valencia, San Francisco, and Great Park—all focused on mixed-use community development in California, with Great Park generating the majority of segment revenues and profit - The company's reportable segments are Valencia, San Francisco, and Great Park, all focused on mixed-use planned communities in California[105][106][107] Segment Revenues | Segment (in thousands) | 6 Months Ended June 30, 2025 Revenues | 6 Months Ended June 30, 2024 Revenues | | :--------------------- | :------------------------------------ | :------------------------------------ | | Valencia | $774 | $1,786 | | San Francisco | $346 | $336 | | Great Park | $377,155 | $290,845 | | Total reportable segments | $378,275 | $292,967 | Segment Assets | Segment Assets (in thousands) | June 30, 2025 | December 31, 2024 | | :---------------------------- | :------------ | :---------------- | | Valencia | $982,694 | $914,583 | | San Francisco | $1,455,327 | $1,424,819 | | Great Park | $552,261 | $670,906 | | Total reportable segments | $2,990,282 | $3,010,308 | Note 14. SHARE-BASED COMPENSATION Share-based compensation expense increased for both the three and six months ended June 30, 2025, with a higher cost for reacquiring vested restricted Class A common shares for tax withholding Share-Based Awards | Share-Based Awards (in thousands) | Nonvested at Jan 1, 2025 | Granted | Forfeited | Vested | Nonvested at June 30, 2025 | | :-------------------------------- | :----------------------- | :------ | :-------- | :----- | :------------------------- | | Share-Based Awards | 6,403 | 2,186 | — | (757) | 7,832 | - Share-based compensation expense was $2.9 million for the six months ended June 30, 2025, up from $1.8 million in the prior year[127] - The company reacquired $1.8 million of vested restricted Class A common shares for tax withholding purposes during the six months ended June 30, 2025, compared to $0.8 million in 2024[128] Note 15. EMPLOYEE BENEFIT PLANS The company's frozen defined benefit Retirement Plan generated a net periodic benefit of $(42) thousand for the six months ended June 30, 2025, primarily due to expected return on plan assets offsetting interest costs and actuarial loss amortization - The Newhall Land and Farming Company Retirement Plan is a frozen defined benefit plan[129] Net Periodic Benefit | Net Periodic Benefit (in thousands) | 3 Months Ended June 30, 2025 | 3 Months Ended June 30, 2024 | 6 Months Ended June 30, 2025 | 6 Months Ended June 30, 2024 | | :---------------------------------- | :--------------------------- | :--------------------------- | :--------------------------- | :--------------------------- | | Interest cost | $168 | $193 | $336 | $384 | | Expected return on plan assets | $(201) | $(229) | $(403) | $(458) | | Amortization of net actuarial loss | $12 | $13 | $25 | $27 | | Net periodic benefit | $(21) | $(23) | $(42) | $(47) | Note 16. INCOME TAXES The company recorded a higher income tax provision for the six months ended June 30, 2025, corresponding to increased pre-tax income. The effective tax rate remains consistent, primarily influenced by non-deductible executive compensation and pass-through income/losses to partners - The Holding Company is treated as a corporation for U.S. federal, state, and local tax purposes, while most subsidiaries are pass-through entities[131] Income Tax | Income Tax (in thousands) | 3 Months Ended June 30, 2025 | 3 Months Ended June 30, 2024 | 6 Months Ended June 30, 2025 | 6 Months Ended June 30, 2024 | | :------------------------ | :--------------------------- | :--------------------------- | :--------------------------- | :--------------------------- | | Pre-tax income | $9,917 | $44,092 | $80,025 | $51,129 | | Income tax provision | $(1,341) | $(5,865) | $(10,863) | $(6,819) | - The effective tax rates for both periods differ from the 21% federal statutory rate due to disallowance of executive compensation and pass-through income/losses[133] Note 17. FINANCIAL INSTRUMENTS AND FAIR VALUE MEASUREMENTS AND DISCLOSURES Most financial instruments' carrying amounts approximated fair values, except for notes payable, which had an estimated fair value of $534.8 million at June 30, 2025, slightly above its carrying value - The carrying amount of most financial instruments approximated their fair value at June 30, 2025, and December 31, 2024[135] - The estimated fair value of notes payable, net, was $534.8 million at June 30, 2025, compared to a carrying value of $527.5 million[136] Note 18. EARNINGS PER SHARE The company uses the two-class method for EPS calculation, with basic and diluted EPS for Class A common shares at $0.05 and $0.05 for the three months, and $0.38 and $0.36 for the six months ended June 30, 2025 - The company uses the two-class method for earnings per share computation, allocating net income between Class A and Class B common shares and participating securities[137] EPS (Class A) | EPS (Class A) | 3 Months Ended June 30, 2025 | 3 Months Ended June 30, 2024 | 6 Months Ended June 30, 2025 | 6 Months Ended June 30, 2024 | | :-------------- | :--------------------------- | :--------------------------- | :--------------------------- | :--------------------------- | | Basic | $0.05 | $0.21 | $0.38 | $0.25 | | Diluted | $0.05 | $0.21 | $0.36 | $0.24 | - No distributions on common shares were declared for the three and six months ended June 30, 2025 or 2024[138] Note 19. ACCUMULATED OTHER COMPREHENSIVE LOSS Accumulated other comprehensive loss attributable to the company remained stable at $1.5 million, primarily consisting of unamortized defined benefit pension plan net actuarial losses, with minimal reclassifications to net income - Accumulated other comprehensive loss attributable to the Company totaled $1.5 million at June 30, 2025, and December 31, 2024[142] - This loss primarily consists of unamortized defined benefit pension plan net actuarial losses[142] - Reclassifications from accumulated other comprehensive loss to net income were approximately $12,000 for the six months ended June 30, 2025[142] ITEM 2. Management's Discussion and Analysis of Financial Condition and Results of Operations Management discusses the company's financial performance, operational highlights, and liquidity, noting decreased revenues but increased net income for the six-month period, driven by equity in earnings from unconsolidated entities, and ongoing strategic growth Overview Five Point Holdings, LLC conducts all business through its operating company, which directly or indirectly owns equity interests in various development entities across California, consolidating some and accounting for others using the equity method - The company conducts all business through Five Point Operating Company, LP, in which it owns approximately 62.8%[144] - The operating company consolidates and controls Valencia, San Francisco Venture, and the management company, but accounts for Great Park Venture and Gateway Commercial Venture using the equity method[144][145] Operational Highlights The company reported consolidated net income of $8.6 million for Q2 2025, maintaining strong liquidity with $456.6 million in cash, and is pursuing strategic growth including a land sale at Great Park and the acquisition of Hearthstone Venture - Consolidated net income was $8.6 million for the three months ended June 30, 2025, primarily from incentive compensation and equity in earnings from Great Park Venture[146] - As of June 30, 2025, the company had $456.6 million in cash and $125.0 million available under its revolving credit facility, totaling $581.6 million in liquidity[146] - The Great Park Venture closed a sale of 82 homesites for $63.6 million in Q2 2025 and had 572 homesites under contract[148] - The company entered into a definitive agreement to acquire a controlling interest in Hearthstone Residential Holdings, LLC for $56.25 million, expected to close in Q3 2025[150] Results of Operations The company experienced significant revenue declines for both the three and six months ended June 30, 2025, primarily due to decreased management services revenue, but saw substantially increased equity in earnings from unconsolidated entities Three Months Ended June 30, 2025 and 2024 For the three months ended June 30, 2025, total revenues decreased by 85.4% to $7.5 million, mainly due to lower management services revenue, while equity in earnings from unconsolidated entities increased to $17.1 million - Revenues decreased by $43.7 million, or 85.4%, to $7.5 million for the three months ended June 30, 2025, primarily due to a decrease in management services revenue at the Great Park segment[154] - Cost of management services decreased by $9.0 million, or 79.4%, to $2.3 million, mainly due to lower intangible asset amortization[155] - Equity in earnings from unconsolidated entities increased to $17.1 million for the three months ended June 30, 2025, from $15.5 million in the prior year, driven by Great Park Venture land sales[158] Six Months Ended June 30, 2025 and 2024 For the six months ended June 30, 2025, total revenues decreased by 66.3% to $20.6 million, primarily due to lower management services revenue, but equity in earnings from unconsolidated entities significantly increased to $88.6 million - Revenues decreased by $40.5 million, or 66.3%, to $20.6 million for the six months ended June 30, 2025, primarily due to a decrease in management services revenue at the Great Park segment[161] - Cost of management services decreased by $9.8 million, or 64.6%, to $5.4 million, mainly due to lower intangible asset amortization[162] - Equity in earnings from unconsolidated entities increased to $88.6 million for the six months ended June 30, 2025, from $33.1 million in the prior year, driven by Great Park Venture land sales[165] Segment Results and Financial Information The company's three reportable segments—Valencia, San Francisco, and Great Park—show varied performance. The Great Park segment generated the majority of segment revenues and profit, driven by land sales and management fees, despite a decrease in variable incentive compensation. The San Francisco segment is progressing with approvals and engineering for future development, while Valencia is balancing revenue opportunities with market conditions Valencia Segment The Valencia segment, encompassing approximately 15,000 acres, has sold 3,088 homesites as of June 30, 2025. The company is actively working on commercial and residential land sales for the second half of 2025, balancing revenue opportunities with current market conditions - The Valencia property consists of approximately 15,000 acres with potential for up to 21,500 homesites and 11.5 million square feet of commercial space[181] - As of June 30, 2025, 3,088 homesites have been sold in Valencia[181] - The company expects to close a commercial sale in Valencia in the second half of 2025 and is working on two residential land sales[149] San Francisco Segment The San Francisco segment, including Candlestick and The San Francisco Shipyard, has received approvals to transfer approximately two million square feet of R&D and office space to Candlestick, with construction for the next infrastructure phase expected in early 2026. Development at this segment is not subject to Proposition M growth control. However, land transfers from the U.S. Navy are delayed due to ongoing environmental retesting and litigation - Candlestick and The San Francisco Shipyard can include up to approximately 12,000 homesites and 6.3 million square feet of commercial space[182] - Approvals were received in November 2024 to transfer approximately two million square feet of R&D and office space to Candlestick[183] - Development at Candlestick and The San Francisco Shipyard is not subject to San Francisco's Proposition M growth control measure[184] - Land transfers from the U.S. Navy are delayed due to allegations of misrepresented sampling results by contractors and ongoing retesting efforts[185] Great Park Segment The Great Park segment, where the company holds a 37.5% interest in the Great Park Venture and manages development, saw land sales and related party land sales revenues increase to $357.6 million for the six months ended June 30, 2025. Management fee revenues decreased due to lower variable incentive compensation, despite an increase in the annual fixed base fee. The Great Park Venture distributed $300.9 million to percentage interest holders, with the company receiving $112.9 million - The company has a 37.5% percentage interest in the Great Park Venture and performs development management services for Great Park Neighborhoods[187] - Land sales and related party land sales revenues increased to $357.6 million for the six months ended June 30, 2025, from $232.1 million in the prior year[198] - Management fee revenues decreased due to lower variable incentive compensation, despite an increase in the annual fixed base fee to $13.5 million in 2025[194][201] - The Great Park Venture made aggregate distributions of $300.9 million, of which the company received $112.9 million for its 37.5% interest[189] Liquidity and Capital Resources The company maintains strong liquidity with $456.6 million in cash and $125.0 million available under its revolving credit facility as of June 30, 2025. Short-term cash needs include general and administrative expenses, development expenditures, and interest payments. Long-term needs relate to future development and investments, expected to be funded through available cash, distributions, land sales, and public financing. The company also has significant performance bonds and guarantees outstanding - As of June 30, 2025, the company had $456.6 million of consolidated cash and cash equivalents and $125.0 million available under its revolving credit facility, totaling $581.6 million in liquidity[207] - Short-term cash needs include general and administrative expenses, development expenditures at Valencia and San Francisco, interest payments, and a related party reimbursement obligation deferred through December 31, 2025[208] - The company expects to fund cash requirements for at least the next 12 months through available cash, distributions from unconsolidated entities, management fees, land sales, reimbursements from public financing, and its revolving credit facility[209] - Outstanding performance bonds totaled $390.8 million, and the San Francisco Venture had $198.3 million in outstanding guarantees for infrastructure and park obligations as of June 30, 2025[212][213] Summary of Cash Flows Net cash used in operating activities significantly decreased to $14.9 million for the six months ended June 30, 2025, from $49.7 million in the prior year, primarily due to higher incentive compensation payments and distributions from the Great Park Venture. Net cash provided by investing activities increased to $42.4 million, while net cash used in financing activities decreased substantially due to no major debt repayments in 2025 Cash Flow Activity | Cash Flow Activity (in thousands) | 6 Months Ended June 30, 2025 | 6 Months Ended June 30, 2024 | | :-------------------------------- | :--------------------------- | :--------------------------- | | Operating activities | $(14,902) | $(49,659) | | Investing activities | $42,443 | $14,522 | | Financing activities | $(1,776) | $(101,277) | - Received $30.4 million in incentive compensation payments and $112.9 million in total distributions from the Great Park Venture during the six months ended June 30, 2025[217] - Cash used in financing activities decreased significantly due to no $100.0 million debt repayment made in 2025, unlike 2024[223] Changes in Capital Structure The company's ownership in the operating company slightly increased to 62.8% due to share-based compensation issuances and settlements, partially offset by reacquisition of shares for tax withholding. The capital structure includes Class A and Class B common shares, with Class B shares convertible to Class A under specific conditions - The company's ownership interest in the Operating Company slightly increased to 62.8% during the six months ended June 30, 2025[224] - This change was primarily due to the issuance of restricted Class A common shares and settlement of restricted share units, partially offset by reacquisition of shares for tax withholding[224] Units Outstanding | Units Outstanding | June 30, 2025 | December 31, 2024 | | :---------------- | :------------ | :---------------- | | Class A units of the operating company: Held by us | 69,861,335 | 69,369,234 | | Class A units of the operating company: Held by noncontrolling interest members | 41,363,271 | 41,363,271 | | Class A units of the San Francisco Venture held by noncontrolling interest members | 37,870,273 | 37,870,273 | Critical Accounting Estimates There have been no significant changes to the company's critical accounting estimates during the six months ended June 30, 2025, compared to those disclosed in the Annual Report on Form 10-K for December 31, 2024 - No significant changes to critical accounting estimates occurred during the six months ended June 30, 2025[227] ITEM 3. Quantitative and Qualitative Disclosures About Market Risk The company's primary market risk stems from its fixed-rate indebtedness, totaling $527.5 million as of June 30, 2025. It does not currently use derivative financial instruments to manage market risk but may consider swap arrangements for floating-rate debt in the future - The company's primary market risk results from its indebtedness, which bears interest at fixed rates[228] - As of June 30, 2025, outstanding consolidated net indebtedness was $527.5 million, all bearing fixed interest rates[229] - The company has not entered into any transactions using derivative financial instruments[229] ITEM 4. Controls and Procedures Management, with the participation of the CEO and CFO, concluded that the company's disclosure controls and procedures were effective as of June 30, 2025. There were no material changes in internal control over financial reporting during the period Evaluation of Disclosure Controls and Procedures The Certifying Officers concluded that the company's disclosure controls and procedures were effective as of June 30, 2025, ensuring timely and accurate reporting of required information - The Certifying Officers concluded that the company's disclosure controls and procedures were effective as of June 30, 2025[230] Changes in Internal Control Over Financial Reporting No material changes in internal control over financial reporting were identified during the period covered by this report - There were no changes in internal control over financial reporting that materially affected, or are reasonably likely to materially affect, the company's internal control over financial reporting[231] PART II. OTHER INFORMATION This section provides additional information on legal proceedings, risk factors, equity sales, defaults, mine safety, other disclosures, and exhibits ITEM 1. Legal Proceedings Disclosures regarding legal proceedings are incorporated by reference from Note 11 to the condensed consolidated financial statements - Legal proceedings disclosures are incorporated by reference from Note 11 of the financial statements[234] ITEM 1A. Risk Factors There have been no material changes to the risk factors previously disclosed in the Annual Report on Form 10-K for the year ended December 31, 2024 - No material changes in risk factors from those disclosed in the Annual Report on Form 10-K for the year ended December 31, 2024[235] ITEM 2. Unregistered Sales of Equity Securities and Use of Proceeds There were no unregistered sales of equity securities or use of proceeds to report - None to report[236] ITEM 3. Defaults Upon Senior Securities There were no defaults upon senior securities to report - None to report[236] ITEM 4. Mine Safety Disclosures This item is not applicable to the company - Not Applicable[236] ITEM 5. Other Information There is no other information to report under this item - None to report[236] ITEM 6. Exhibits This section lists all exhibits filed with the Form 10-Q, including the Contribution and Purchase Agreement for Hearthstone Residential Holdings, LLC, certifications of principal officers, and Inline XBRL documents - Includes the Contribution and Purchase Agreement for Hearthstone Residential Holdings, LLC (Exhibit 10.1)[237] - Certifications of Principal Executive Officer and Principal Financial Officer (Exhibits 31.1, 31.2, 32.1, 32.2)[237] - Inline XBRL Instance Document and Taxonomy Extension Documents (Exhibits 101.INS, 101.SCH, 101.CAL, 101.DEF, 101.LAB, 101.PRE, 104)[237] Signatures The report is duly signed on behalf of Five Point Holdings, LLC by Daniel Hedigan, President and Chief Executive Officer, and Kim Tobler, Chief Financial Officer, Treasurer and Vice President, on July 24, 2025 - Signed by Daniel Hedigan, President and Chief Executive Officer, and Kim Tobler, Chief Financial Officer, Treasurer and Vice President[240] - Date of signature: July 24, 2025[240]