Greetings, and welcome to the Five Point Holdings LLC Fourth Quarter 2021 Conference Call. As a reminder, this call is being recorded. Today's conference may include forward-looking statements regarding Five Point's business, financial condition, operations, cash flow, strategy 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 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 our most recent annual report included in Form 10-K filed with the SEC. Please note that Five Point assumes no obligation to update any forward-looking statements. Now I'd like to turn the call over to Dan Hedigan, Chief Executive Officer.

Thank you. Good afternoon, everyone, and thank you for joining. This is Dan Hedigan, as I'm sure you know, I joined Five Point on February 9 as Chief Executive Officer. I'm joined here today by our management team, Erik Higgins, our Chief Financial Officer; Leo Key, our Interim Chief Financial Officer; Mike Alvarado, our Chief Legal Officer; and also by Stuart Miller, our Executive Chairman. Let me begin by thanking our Board for this opportunity to lead Five Point. I'd like to thank the entire Five Point team for their support during this time of transition and change. I could not be more excited by this opportunity to lead Five Point and to work to maximize return on these incredible communities. I'm very pleased to update you on the progress of the company through the fourth quarter and the year for 2021. I will also review some of the changes that have taken place and share some thoughts about our strategy going forward. Then Erik will give an overview of the company's financial performance and conditions. We will then open the line for questions to our management team. 2021 has been a year of progress and transition for Five Point. While extraordinary work has been done to bring Five Point to its current maturity, a new start and some new approaches will help build on a strong foundation and drive maximum shareholder value. In this regard, I want to thank Amil Haddad and Lynn Jochim for their inspired leadership. I look forward to working with both of them as vital consultants for our future. Additionally, I'd like to thank Erik Higgins, as this will be his last earnings call with the company. Erik has been a consistent source of stability and high integrity for the company and has gone through…

Thanks, Dan. As so many of our financial results was included in the earnings release issued earlier today. I'll begin with our results for the fourth quarter and conclude with a summary of our annual results. As Dan mentioned, while the macroeconomic environment is uncertain, the economic fundamentals in our markets continue to be favorable for strong demand for housing and a persistent undersupply of entitled homesites. Our financial results in the fourth quarter reflect this strength as the company sold 643 homesites in Valencia. For the fourth quarter, total consolidated revenues were $182.2 million. Net income was $47.5 million, of which $25 million was attributed to the non-controlling interest and $22.5 million was attributable to the company. Our cash position increased by $74.3 million, and we had no borrowings under our $125 million corporate line of credit. Debt to total capitalization at the end of the year was stable at 24.7%. Net debt to total capitalization at the end of the year taking into account our cash balance of $265 million was 15.9%. The company has four reporting segments: Valencia, San Francisco, Great Park and Commercial. Segment results for the fourth quarter are as follows. The Valencia segment is consolidated for accounting purposes. Total revenues for the Valencia segment were $173.3 million for the fourth quarter. We sold 643 homesites with a base purchase price of $167.3 million and we recognized $5.1 million in marketing fee revenue, which we expect to collect as homes are sold. 123 of the 643 homesites generating revenue of $43 million were sold to the Valencia Land Bank venture in which Five Point owns a 10% equity interest. Five Point contributed $3.6 million to the land bank in the fourth quarter. The land sales at Valencia had a gross margin of 32.5%. Cost of…

[Operator Instructions] And our first question today will come from Alan Ratner with Zelman and Associates.

Dan, great to hear you on the call. Welcome aboard. And Erik, good luck in the next endeavors. It's been great working with you these last few years. So thank you for the detail, and Dan, I know it's probably a bit of an unfair question because you've only been in the seat for a month, but you kind of walked through the high-level areas of focus, the revenue enhancement, the cost management. And I'm just curious, if you're willing or able to put some kind of rough number targets behind any of those, recognizing that the SG&A has been on the decline, but it sounds like you have more aggressive expectations there, and certainly, land sales have taken off in Valencia. But can you give us any quantified targets at this point yet or at least talk high level of where you see those numbers going?

Alan, in the 30 days, I've tried to cover a lot of territory. And certainly, the land site is pretty easy to meet my head around. But I have not been able to quantify that yet. I think there's a lot of opportunity there based on a lot of past experience I have, but I haven't been able to quantify it. I mean, it's a good question. It's one I'm thinking about every day, but just not ready yet.

Understood. Yes. I appreciate that and kind of what I was expecting, but just figured I throw it out there. Second, just maybe focusing on Valencia a little bit. So it looks like things are obviously off to a great start there. And I think the lot sale this quarter was a bit greater than was communicated on last quarter's call. If I heard it correctly, I think you're expecting the next round of lot sales to only be about 350 homesites in the fourth quarter. That seems to be well below kind of what the project is absorbing based on your closings over the last year. And obviously, I'm sure the demand in the market is insatiable right now for more lots. So I'm curious what's driving that, that reduction in expectation for lot sales? And what -- how we should think about the longer term, what the right annual number is there?

I think trying to get it on the cadence on sales is something that I also want to look at. But I think what I have been looking at up there is that we've actually sold 1,866 lots to builders. If we include kind of this quarter sales, we're -500 or so of those have been absorbed. And so we want to make sure that those are absorbed and can be priced -- the homes can be priced up for everyone's benefit before we put more product out there. And then there's also just this whole balancing lot deliveries and absorption kind of capital going out the door. So it started off with a big push, and there's a lot of capital we get it going. So off a big push. And now we really want to try to get it. So like you say, kind of an annual cadence that we can kind of manage kind of more in a just in time for both land and homes. And so that's -- the number is lower and it's later, but we want to have -- we won't have all the builders catch up. There still is that supply chain challenge on the builder, cycle times are a little bit longer. And the last thing we want to do is have lots overhanging so we can't really maximize the value of them.

Got it. So just to be clear on that, though, Dan, when you're saying you want the builders to catch up. It's not a situation where there's actual inventory of homes sitting on the market there. It's more just they can't get the homes built at the rate perhaps that you had sold the lots over the last year or two, so kind of giving them some opportunity to catch up there. Is that correct?

That's correct. There is no standing inventory. It is truly just the construction process and cycle time.

[Operator Instructions] Our next question will come from Patrick Clavin. [Operator Instructions] And our next question comes from Chris Reynolds with Neuberger Berman.

Dan, I know your time with the company has been brief, but I'm wondering if you can comment about the price of the stock and the substantial discount that currently exists compared to the stated book value? I know you have a very complicated financial structure. But can you provide some observations about why you believe that discount exists? And what the actions could be to attempt to narrow that discount over time?

Chris, thanks for the question, but I am not in a position where I can do that. I appreciate the question. I appreciate why you're asking it. But my 30 days doesn't give me any opportunity to really answer that with meaningful information.

[Operator Instructions] And that does conclude the question-and-answer session. I'll now turn the conference back over to you.

Thank you so much. Really appreciate it. Thanks, everyone, for listening in. So long.

Well, thank you. And that does conclude conference. We do thank you for your participation. Have an excellent day.