Greetings, and welcome to the Five Point Holdings, LLC First Quarter 2024 Conference Call. As a reminder, this call is being recorded. Today's call may include forward-looking statements regarding Five Point's business, financial conditions, operations, cash flow, strategy and prospects.

Forward-looking statements represent Five Point's estimates on the data of this conference call and are not intended to give any assurance 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 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, Chief Executive Officer..

generating revenue and positive cash flow; controlling SG&A costs; and managing capital spend to match near-term revenue opportunities. Additionally, our entire team is focused on progressing entitlements for our next neighborhoods in Valencia and in moving Candlestick forward through rebalancing process.

Our economic and geopolitical events have impacted the financial markets during the quarter, homebuyers in our markets continue to show interest in our communities. We believe that pent-up demand will continue to be a driving force for our land sales to builders.

The underlying housing environment reflects a chronic supply shortage that is compounded by limited inventory of existing homes. Land development is a long game, and we have continuously been improving our financial condition.

Our efforts today are ensuring we are well positioned within that long game by recognizing the importance of creating and maintaining shareholder value. Now let me turn it over to Kim, who will report on our financial results and will provide some limited guidance for the remainder of the year..

First, the $100 million payment to settle our very successful senior note exchange, together with $8.3 million of accrued interest and $7.6 million of transaction costs; second, we received $24 million in equity distributions, of which $17.7 million is reflected in our statement of cash flows as a return on our investment in our operating activities; and third, we received $6.4 million incentive compensation payment from the Great Park Venture.

Now we also spent $17.4 million in development costs at Valencia and $1.7 million at San Francisco. I'd like to take a minute to emphasize the significance of the Great Park Venture in our financial results.

While we are actively selling land at both our Valencia project and the Great Park Venture, the Great Park Venture is a more mature master plan community, while Valencia is still in its early stages. To that point, in Valencia, we are still working through the development in sales in our first of nine villages.

This first village represents only about 3,600 home sites of a total of up to approximately 21,500 home sites. At our Great Park Venture, most of the major capital costs have been incurred, and our continuing capital costs generally have been or will be recovered through CFD reimbursements.

To review, in 2023, the Great Park Venture sold 798 home sites on 84 acres and sold another 37.9 acres of commercial land for total revenue of $532 million. The venture also recognized $21 million of profit participation, or PAPA.

The venture made equity distributions of $411.2 million to holders of percentage interest, of which Five Point received $154.2 million. Five Point also received $41.6 million of incentive compensation payments.

While we consult regularly with our venture partners, Five Point is the manager of the venture, and we are responsible for the day-to-day operations and direction of the development. We currently expect to maintain the current pace of sales and development for the next several years. Now for some limited guidance.

We expect the second quarter net income to be similar to or slightly higher than the first quarter. As Dan mentioned, we have already had one sale close at the Great Park this quarter in the second quarter and are expecting another one before the end of the second quarter.

For the year, we expect a total of between $75 million and $100 million of net income, with the majority of that income being recognized in the fourth quarter. We are also expecting to end the year with between $250 million to $300 million of cash.

We continue to see positive momentum and believe that we are seeing benefits from the company's focus and attention on our three main priorities. With that, I will turn the call back to the operator..

Thank you. Ladies and gentlemen, at this time, we will be conducting a question-and-answer session. [Operator Instructions] Our first question comes from the line of Alan Ratner with Zelman & Associates. Please proceed with your question..

Hey, guys. Good afternoon. Thanks for all the details so far. Appreciate it. Dan, I guess, my question is more around some of the near-term conversations you've had with builders. It sounds like you've got a number of parcels out for bidding.

And I think we're -- unfortunately, probably three months ago, we were all hopeful that the rate outlook would look a bit better than it does today. And with rates climbing higher, I certainly, the equity markets are beginning to price in some risk of a slowdown.

I'm curious if there's anything you're seeing in your communities, either on the home sale side or in terms of the conversations with builders that would suggest any of that concern or cautiousness we're seeing in the market is beginning to filter through to the housing side of things?.

Thanks, Alan. Always good to hear from you. Interesting, Alan is, and I think I mentioned in my remarks, what we're really seeing here is the chronic shortage of land and in particular, builder land, and title land, and home sites is really driving what we're seeing as we're talking to and actually actively bidding with builders.

And that shortage of housing is actually seeing extremely strong bids and active participation by multiple builders on everything we're taking to market right now.

And once again, I think it's -- I know that California is in such a unique place, there is no new home inventory or limited -- sorry, limited resale inventory and limited entitled land and lots. So we are not seeing any drop off kind of due to the current financial market. And as I say, the new homebuilders are uniquely positioned to keep sales going.

And so that is -- that's exactly what we're experiencing in the market..

Great. That's encouraging to hear. On the Great Park sale in the quarter, so if I look at the price per acre, $6.4 million, well above the sales you recorded last year, I think the average was about $4.3 million per acre and I know that's a lumpy number.

It looks like there might have been one other sale that was in a similar range back -- all the way back in 2019. But I think the average has been more in the 5s over the last few years.

So is there anything unique to this parcel that would command the premium or do you feel like this is fairly representative of broader inflation on prices that you're seeing in the community right now?.

Well, one thing I've mentioned to you, I know the sale that you're reflecting back to had a unique structure. And so you're looking at kind of the going in price. But the coming out price, we expect to be much higher. And then as to this specific sale, no, it really is reflective of the market. There's nothing unique about this.

It really is just what we're seeing in the market today..

Got it. So as we think about the next two deals you've got under contract, obviously, it's going to be maybe a little volatile, but something in the current range, I guess, is where we should think about the future sales coming in at..

Yes, absolutely..

Right. Okay. Appreciate that. Thank you very much..

Thanks, Alan..

Our next question comes from the line of Myron Kaplan, a Private Investor. Please proceed with your question..

Yeah. Hi, gentlemen. Thanks for all the color and running things well with, I guess, you would say, with the SG&A under control and so forth..

Thank you..

Thanks, Myron. Appreciate it..

I guess the one thing I wanted to ask was with this distribution of the Great Park is the legacy interest paid out in the fall at this point?.

It is not. We expect it to be paid out this year in total. So there's about $40 million left. So Myron, I'm sorry, there's only $10 million left..

$10 million left.

So that's after this last distribution?.

Yes..

So in Valencia, what's -- how can you -- if you haven't got inventory in Valencia in the end of the first village, how can you except for the mixed use? I mean you said at the end of the last call, I think that you had about 140 or 150 acres left. So how can you really do business? I mean talk about cash flow how can you close on it..

So Myron, one of the things that you're certainly right. The first group of lots we opened, we're down to a very small inventory there. But there's another area that there is ultimately going to be seven programs at, five are opened and those are actively selling, and we'll see more of those selling and closing later this year.

And so there's two more to open there. There's two more communities opening there. And then we did six communities last year. And those -- the first one [indiscernible] at the end of this year and the remainder of [indiscernible] beginning of '25.

So that inventory will -- those homes will keep selling, which is why we also -- as I mentioned, we have sites out to bid now with builders to keep that going. The 179 homes that you mentioned, those are going to lag the market, but those should be opening next year also..

If we ask where is the money, a lot of this is sort of off in the future, yes?.

Not true. I mean, again, we're actively selling in Valencia this year and next year, and then we'll be announcing more about what's following that as we get closer to it, Myron..

So just one question -- one item that you mentioned, Luna Park, I didn't understand at all. What's the situation in Luna Park, I mean….

So Luna Park was the transaction we closed early last year, probably about this time last year when I think about it. And they've been working on the models. And there was 13 programs, it was 799 home sites, 13 programs. The first one was a very small program. It's opened and sold out.

And they are now -- the next 12 are opening, they're starting to open this month, and they're going to continue opening and so we'll have all of those open sometime this year. And once again, it's -- we had Solis, which is winding down.

Now Luna is another brand new community, large community like we do at the Great Park Neighborhoods and it is in the process of opening up all of its models..

So you'll be able to sell sites?.

Yeah. Myron, we're still selling sites, yes..

So you can sell sites because it's like the builders are selling lots of homes, but you're not selling a lot of sites..

Yes. So Myron, to that point, I mean we always like to give the color on what the sales pace is of the builders. And then, we try to illustrate that we're still selling lots to them as well, that's why Dan mentioned those additional sales..

Prospective sales..

Prospective sales..

Yes. All right. Well, I guess, as you say, it's a long game. It certainly is..

Thanks, Myron..

[Operator Instructions] We have a question from the line of Ken Hansen with Stifel. Please proceed with your question..

Thanks for taking my question. Just for full disclosure on a CFA, but not representing Stifel on the call. I'm representing my own shareholder interest. I like the second priority that you've identified as the controlling of cost. And I know, Dan, when you came on Board, you had a significant reduction in employee count.

I think it was maybe a 30% reduction, something like that. And that's been helpful, I think. I'm just wondering now what you think about the size of the Board? I think it was 11 when you came on Board and maybe it's down to nine. But when you think about the ratio of Board members and employees, it seems a bit heavy -- not a bit heavy, a lot heavy.

Lunar has the same number of Board members, I think, and they have 12,000 employees. So I'm wondering if maybe just an optics thing, but maybe it's a flexibility thing as well and certainly would be a cost savings if the Board were smaller.

So could you just comment on the size of the current Board and any interest you have in making it more nimble and responsive? Thanks..

Ken, thanks for your question. The Board has been nine as long as I've been here. I don't know if it was 11 that you mentioned, but certainly it's been nine as long as I've been here. And I can tell you that the Board actually does take a look at their function and operation every year. And at this point, the Board is functioning well.

And I would -- I'd just have to defer, that's to the Board to make those types of decisions, not to me per se. But we have -- I think we have a very active Board that has been very supportive in my transition into this role..

And I know, I think Mr.

Miller is on remote, can he respond to that?.

Yeah. I don't think that would be appropriate to get into beating our Board on this call, but we appreciate the question..

Okay..

And I am on remote. I agree with Dan..

That concludes our question-and-answer session. I'd like to hand it back to Mr. Hedigan for closing remarks..

Thank you so much. On behalf of our management team, we thank you for joining us on today's call, and we look forward to speaking with you next quarter..

Ladies and gentlemen, this does conclude today's teleconference. Thank you for your participation. You may disconnect your lines at this time, and have a wonderful day..