Robert Wetenhall - EVP, Capital Markets Emile Haddad - Chairman, President, & CEO Erik Higgins - CFO & VP Kofi Bonner - Co-Chief Operating Officer.

Mike Eisen - RBC Capital Markets Steven Kim - Evercore ISI Thomas Maguire - Zelman & Associates Paul Przybylski - Wells Fargo.

Greetings, and welcome to the Five Point Holdings Third Quarter Conference Call. [Operator Instructions]. As a reminder, this conference call is being recorded. Today’s conference call may include forward-looking statements regarding Five Point’s business, financial conditions, operations, cash flows, strategies 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 actual future results. Because forward-looking statements relate to matters that have not yet occurred, these statements are inherently subject to risks and uncertainties.

Many factors could affect future results and may cause Five Point’s 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 Factors section of the 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.

With that, I’d like to turn the call over to Bob Wetenhall, EVP of Capital Markets. Please go ahead.

Welcome and good afternoon. For investors new to the story, I want to highlight that Five Point is an owner and developer of large mixed-use communities in California. Our communities are planned for more than 40,000 residential homes and 23 million square feet of commercial space in Los Angeles, San Francisco and Orange County.

I’m joined this afternoon by CEO, Emile Haddad; CFO, Erik Higgins; Chief Legal Officer, Mike Alvarado; and our co-COOs, Kofi Bonner and Lynn Jochim. I’m now going to hand it off to Emile, who will provide an overview of market conditions in our communities as well as a recap of third quarter results.

Erik will then discuss our third quarter financial performance and liquidity..

Thanks Bob. Good afternoon and thank you for joining us. The third quarter was yet another step in advancing our long term strategy of unlocking the value of our irreplaceable assets in three of the most dynamic markets in the country.

We continued our land development activities at Newhall in Los Angeles County, where we are positioned to generate revenue in that community sometimes towards the end of 2019.

In San Francisco, we have continued building infrastructure at Candlestick Point consistent with our prior comments that this would be our main area of focus during the next few years. In the Great Park neighborhoods where we have several buildings selling homes, Home buyer activity remains consistent with prior trends.

We have also not changed our plans to deliver another 500 home sites by the end of the year. Six years of consistent job growth in San Francisco, Los Angeles and Orange County combined with limited new residential construction activity have resulted in pent up demand for housing in the primary markets in California where we operate.

We expect this dynamic to persist in the future. The future supply of housing will most likely be constrained by the limited amount of land available for development in California’s primary markets, as well as the lengthy approval process required for operating entitlements.

Several publications have highlighted a shift in national housing demand reportedly driven by an increase in interest rates and reduced affordability.

As stated before, we have not seen a change in the trend in our markets; nonetheless, we will continue to continue to closely monitor the home buyer activity at the Great Park neighborhood as well as the outlook for our other communities. If things change, we will update you on the next earnings call.

With that, now let me turn it over to Erik, and we will be happy to take your questions afterwards..

Thanks, Emile. A summary of our financial results was included in the earnings release issued earlier this afternoon.

As we’ve discussed on previous calls, our consolidated financial results for the next few quarters will reflect our continued investment in planning and development activities at Newhall and Candlestick as we prepare these communities for land sales.

As a reminder, our Newhall and San Francisco communities are consolidated on our financial statements, while the Great Park Venture and the Gateway Commercial Venture are unconsolidated entities that are accounted for using the equity method of accounting.

Revenues for the third quarter of 2018 totaled $13 million and were primarily generated from $11.2 million in management fees. The management fee revenue was offset by $6.7 million in management services expense for the quarter.

For our unconsolidated investments, which include our 37.5% in investment in a Great Park venture, and our 75% investment in the Gateway Commercial Venture, we recognize the loss of $4 million, which was primarily due to our proportionate share of the Great Park Ventures loss of $10 million for the quarter.

While there were no land sales for the Great Park Venture in the third quarter, significant progress has been made developing the next neighborhoods, where we expect land deliveries to occur by the end of the year. Our corporate and divisional SG&A was $26 million for the quarter, while interest income was $3.1 million.

As a result, the net loss for the quarter was $21.9 million. Our third quarter operating results by segment are as follows; the Newhall segment recognized the loss of $3.2 million. The San Francisco segment recognized the loss of $4.5 million.

The Great Parks segment, which includes the operations of the Great Park Venture and the development management services provided by the management company recognized the loss of $6.7 million.

The Commercial Segment, which includes the operations of the Gateway Commercial Venture as well as the management services provided by the management company, recognized the loss of $46,000 for the quarter.

Now let me address our strong liquidity and leverage position, which provides the company with significant financial and operational flexibility and enables us to accelerate or pull back on expenditures depending on market conditions.

Our cash position at the end of the quarter was $595 million, which is an $84 million decrease and is primarily the result of inventory expenditures at Newhall and SG&A. We had no outstanding borrowings under our 125 million corporate revolver, which results in liquidity of $719 million. We expect land sales at Newhall to begin in late 2019.

In the meantime, we expect to meet our cash requirements with available cash and collection of management fees under our various management agreements. Total book Capital at September 30th was $1.9 billion and our debt to total capital ratio remained at approximately 24%. Let me turn it back to the operator now, who will open it up for questions..

[Operator Instructions]. Our first question is from Scott Schrier with Citi. Please go ahead..

Hi, good afternoon. Thanks for taking my questions. First question, here in the press release you call out that you’re seeing Great Park home buyer activity is consistent year-on- year which is definitely a little different than what we’ve been hearing from builders in general.

So, I’m curious if you can kind of elaborate on that what you’re seeing is that obviously, I was out there, I saw the attractiveness of the community. Is it that what you think is just keeping the demand there or are there changes from homebuyers in terms of price point perspective or from a price point perspective I should say..

Hi, Scott. Look, I think as I said we haven’t seen a change in the trend a the Great Park. I think from our perspective, it doesn’t mean that it’s immune, and I by no means I wouldn’t say that. But I can tell you that we haven’t seen the change in trend, and I think that it could be attributed to a combination of things.

One is, we are in markets that have had a very big supply demand deficiency, and it has been compounding over the years. So you have a dynamic over here that I think is driving a different market strong job growth, no availability of product and massive plan communities in general tend to perform better than subdivisions.

And we are fortunate enough to be in a market, where we share the market with the Irvine Company, which has a track record of protecting the value in the market. And as you as you saw we now are starting to get the benefit of the investments we’ve been making in the amenities at the Great Park.

So I think that the combination of things has so far allowed us to see performance that’s consistent with previous trends and we have not seen a shift yet..

Great. Thanks for that Emil. Second question on Newhall, I think you mentioned late nineteen for deliveries.

I was just reading some reports on that the potential damage for these fires and I’m thinking from a labor perspective, have you taken that into consideration, and does that give incremental headwinds whether it’s for wages or anything from a labor perspective, to keeping Newhall on track?.

So let me let me differentiate between the labor of building homes and the labor of land development, which is really where we are focused. Our operation is basically locked and loaded in contracts with our long term contracts, with our grading contractors and our infrastructure. So we are not going to be exposed to any change in labor conditions.

Our cost is protected accordingly because we get the benefit of the size and therefore we have protections in terms of the cost. So we are not going to be exposed to any shift in labor conditions as it relates to land development.

I can’t comment as to whether any of that might or might not have an impact on our guest builders in 2020 and beyond as they build. Although, I think that there is going to be a lot of work at Newhall that will attract a concentration of labor. But I don’t want to comment on something that I am not actually involved in yet..

Great. Thanks for that. And good luck..

Good. Thank you..

Our next question is from Mike Eisen with RBC Capital Markets. Please go ahead..

Good afternoon. Thank you for taking the questions. Just wanted to start following up on the Great Park commentary. It seems that demand continuing to be strong and you guys are on pace to make another land delivery before the year ends.

Thinking of the broader context of the slowdown we’ve seen some of the commentary from home builders about their land spend initiatives into 2019 and slowing demand trends.

Have you guys started having conversations into 2019 and are you hearing anything different from your home builder customers than you would have heard maybe six to nine months ago?.

We have started discussions about 2019. We also have started discussions obviously about end of 2018.

And I can tell you Mike that I think we’re getting a little bit of a mixed message from the builders, some builders are telling us that they will have more of an interest in things that might close early 2019 rather than year end, and that might be driven by year end issues.

You have some builders who are a little bit more hesitant, but I can tell you most of the builders that we have spoken to are very excited about new home and view that as a huge now benefit because there hasn’t been any real supply and therefore a lot of them have not had an ability to have an operation in L.A.

County and we can give them a big book of business. So those discussions have been great, and I can tell you, because we are talking about selling home sites at the Great Park by the end of the year, we obviously are in more advanced discussions and the feedback has been very positive..

Understood. That’s helpful. And then transitioning gears up to San Francisco.

I was hoping you could give us some color around the development on the Candlestick side of things where you are today and as you look over the next 12 to 18 months? And then if you have any developments around the shipyard side of the operation, what's going on with the Navy? That would be extremely helpful?.

Of course, I’m going to have Kofi who is closer to the uses of the Navy, address the Navy, but the issues on Hunter's point. But as we stated before our focus for the next several years is going to be on Candlestick which is not subject to any of the testing or navy activity.

We are going forward with infrastructure and that that is ongoing as we speak. And we are working on refining the thought process around what goes in the area of Candlestick in terms of a plan that meets the demands of the future and not be building for something that might be obsolete. Those discussions are ongoing.

Infrastructure is moving forward and we expect that sometime by the next quarter or two that we’ll be able to finalize our plans and start moving forward with execution on Candlestick which will take place for the next probably five to six years. Now, let me have Kofi address the issue of where is testing with the Navy right now..

Thanks, Emile and good afternoon. The Navy has had a series of public meetings in the community and has recently stated that their approved plan for retesting the shipyard will be release before the end of this year. So obviously we’re monitoring that. We’re very interested in what's happening there. But it doesn't have an impact on our business plan..

Understood. Thanks and good luck..

Our next question is from Michael Rehaut with JPMorgan. Please go ahead..

Hi. This is [Indiscernible] on for Mike. I just had a couple quick one. So first just backward, going little backward to last quarter, the additional 2 million square feet to commercial space has approved by the board last quarter for San Francisco.

Some of that limited to Candlestick versus shipyard or can you do it on either one?.

No. I think that it has some constraints as to where it goes, but we have a partnership with the city of San Francisco that has allowed us to have a lot of flexibility and the city obviously is interested in seeing things go forward.

So I would say that if we determine when we finish our plan that we need more of that square footage to go one place or another we will be able to get that done..

Thanks.

And do you had any update on JV with Macerich and what’s the plan are around that?.

We’re still talking to them. Nothing has changed from the last quarter and we’re still looking at what’s the right plan for that area and what’s – how this structure look going forward..

Okay. Thank you..

Our next question is from Steven Kim with Evercore ISI. Please go ahead..

Yes. Thanks very much guys. Couple of quick ones here, I guess first of all, regarding shipyard obviously what’s happen there has been pretty unfair and I was curious as to whether or not you thought there was any opportunity to recover damages either to litigation or some other means.

Whether this is something you look into? Whether its a violable alternative?.

Obviously, we will not discuss any of litigation strategies of ours publicly. I’m going to not be able to answer that question. But I can tell you we’re working very closely on the constructive side of the equation. We’re working very closely with the city and the navy and the homeowners and every stakeholder over there..

Yes. Make sense. And then in Newhall you obviously still on track here for land sales at the end of the year in September 2019 that is, and obviously there’s a lot of questions about the direction of the housing market and particularly in California.

So I guess, obviously in your business long-term planning and scenario analysis I would imagine is super important part of what you’re doing.

What I’m wondering is, if you can give us a sense for how fully formed is the various alternative strategies maybe? So you have a certain plan which you articulated in terms of the initial sales out of that project.

Are there fully formed alternatives that you are sort of going to be able to shift to if market conditions you assess, let’s say six months from now are meaningfully different from what you see today?.

Yes. The answer is yes. And I think the difference between us and for instance a home builder is that we don't carry inventory per say, we just process raw material.

And two-thirds of our expenditure on an annual basis for the next several years is variable cost, which mean that we have an ability; if we see a shift in the market and we believe that putting money in the ground to generate revenue a few months later is not a viable strategy.

We can within 30 days shut out the machine and two-thirds of our expenditure for that year will turn into dry powder to whatever the storm [ph] looks like. So that’s the big advantages we have. And as Eric said, we have a very strong balance sheet.

We have a lot of liquidity and when you have two-thirds of your expenditure you have an ability to control it and you don't -- you're not sitting on any inventory. I think that that gives us a lot of control over shift in strategy as a result of a change in market condition..

That makes lot of sense. Thank you very much for that. Last question if I could.

The builder partners who you had historically worked with, can you talk about the advantages or disadvantages in your eyes to working with a more limited selection of builder partners versus a broader array of partners and if you are heading in a particular direction over the last year or so as you – or rather as you go forward over the next year or so, if you're sort of looking more narrow or maybe broaden your array of partners?.

Sure. So we’ve had now guest builders who have repeat guest builders at the Great Park, which is really only place so far that we’ve had activities with builders. And we typically will approach our guest builders who are being with us for a while first and see if they have an interest in continuing.

And so far almost every one of them has move from one neighborhood to another. We are not running auctions anymore because good news for us I think we put ourselves in a position to where we have a lot of relationships, there’s a lot of demand.

And we sit down with our builders who as I have been guest builders with us and talk about a negotiated deal. And that’s our approach nowadays and I think it to be our approach going forward..

Got it. Thanks very much, Emile..

Sure..

Our next question is from Thomas Maguire with Zelman & Associates. Please go ahead..

Hey, guys. One quick one.

Just wanted to touch on some high level thoughts and maybe if you could just talk about the pipeline beyond the projects we haven’t focused right now? And I know you may not have specific yet, but anything in the pipeline or thought the new opportunities moving forward and just maybe what we could do with dry powder at one point in time?.

Look, the good thing for us is that we have a big book of business already. We have a lot of land that we owned that we’d be working on for a long time and its now at a maturity level where we can start getting value out of it.

So our biggest focus is going to be maximizing the value of our own assets and then building out commercial portfolio which is only going to go up in value as these communities built. So that’s really our primary focus.

Non-organic growth is going to come from probably public-private partnerships and repurposing of space in our areas that we are very comfortable with. The [Indiscernible] deal that where we got selected to be the partner over there. It’s a good example of that and we are moving forward with that process.

We have a couple other opportunities that I'm not at liberty to talk about but those could be other opportunities that would be similar in nature. That's what you’re going to see from us. We don't need to make another deal.

We have a lot of land and we have an ability to generate a lot of revenue going forward out of our own assets, but if something comes up across that is actually fitting within our own strategy and our strength we would look at it..

Thanks..

Sure..

Our next question is from Paul Przybylski with Wells Fargo. Please go ahead..

Thank you. I mean, I guess you mentioned that Great Park had been pretty consistent overly.

I was wondering if we could switch gears over the past quarter, so what have demand and pricing trends been in the communities that are adjacent to Newhall? And then as your first sale comes closer what does that competitor supplied pipeline look like late next year and any projects – projects that may are coming for market..

So, the first part of your question is what’s been the trend in the neighborhood communities that are selling. Now there isn’t really a large universe of communities over there that I can look at. Lennar [ph] has I think one or two products or something like that those building. So I really don’t thing that we have enough data to guide us.

In terms of the LA market itself we have now over the last five years generated half million jobs again 50,000 permits. Our home price appreciation has being in a double-digit in LA County.

And more importantly our discussions with the builders have really reinforce for us, the fact that there’s going to be a lot of demand for home sites and housing in our markets. But we don’t really have competition per say, there’s a couple of community that I would not really look at as competition for us.

That’s the benefits we have, but at the same time I don't have data to compare again..

Okay.

And as you been developing that project for a couple of quarters, now your development cost compared to budget, that’s a pretty difficult demography, has there been any surprises with respect to development?.

Not at all. We’re right on target. Our contracts with the contractors have a protection in them. We have been developing in that market for long time. And I can tell you there’s one thing I never worry about when we are developing land unless we have surprises that we can think of like slides and things like that.

But our cost is always been under control and we’re right on target..

All right. Thank you. Appreciate it..

There are no further questions registered at this time. This concludes today’s teleconference. You may disconnect your lines at this time. Thank you for your participation and have a pleasant day..