Greetings, and welcome to the Five Point Holdings LLC Third 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 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 the matters that have not yet occurred, these statements are inherently subject to risk and uncertainties. Many factors could affect the 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 at Five Point’s SEC filings, including those in the risk factor section of the Five Point’s most recent annual report on Form 10-K filed with the SEC. Please note that Five Point’s assumes no obligation to update any forward-looking statements. Now, I would like to turn the call over to Dan Hedigan, Chief Executive Officer.

Thank you. Good afternoon, and thank you for joining our call. I have with me today Kim Tobler, our Chief Financial Officer; Mike Alvarado, our Chief Operating Officer and Chief Legal Officer, and Leo Kij, our Senior Vice President of Finance and Reporting. Stuart Miller, our Executive Chairman, is joining us remotely. On today's call, I'll update you on our Q3 results, on our team's focus during the quarter, and the steps we are taking to implement our strategic priorities. Next, Kim will give an overview of the company's financial performance and condition with some updated guidance for the rest of the year. We'll then open the line for questions to our management team. So let us begin. I’m pleased to report another very successful quarter for Five Point as we continue to build a program with consistent profitability, with a defined pathway to growth for our future. In the third quarter, we generated stronger than expected net income of $12.3 million, which is our sixth consecutive quarter reporting net income, as we remain focused on generating revenue, controlling our expenses, and managing our capital spend. Consistent with last quarter, most of our revenue and bottom line was driven by operational focus and execution in our Great Park community. This community has become both the driver of current performance, as well as our model for future growth. During the three months ended September 30th, 2024, Our management team closed two retail land sales in the Great Park, totaling 12.8 acres for an aggregate purchase price of $25.4 million. The Great Park Venture also recognized additional revenue of approximately $36 million, which is derived from our strong price and profit participation programs that benefit from housing revenue increases for builders in the Great Park. As result of these partnership revenues, Five…

Thank you, Dan. First, let me provide a little background around the improvement we experienced in our third quarter net income compared to what I shared with you last quarter. As you may recall, I had indicated that we were expecting to report a $5 million to $10 million net loss for the quarter, owing to the fact that we didn't expect any residential land sales during the quarter. While we did not have any residential land sales, as Dan mentioned in his comments, the Great Park Venture recognized approximately $36 million of price and profit participation revenue from earlier residential land sales. The home sale velocity and pricing achieved by our builders during the third quarter exceeded our earlier expectations, which increased revenues at the Great Park. This recognition of revenue at the Great Park improved our third quarter results through higher than expected equity and earnings from the venture. Therefore, for the third quarter, we reported consolidated net income of $12.3 million, which was generated primarily from $12.9 million of revenue from incentive management compensation and $12.1 million of equity [Technical Difficulty] 11.1 acre retail site with a sales price of $21.1 million and a childcare use parcel on 1.7 acres for a sales price of $4.3 million. Both sales have a profit margin of 72.5% before closing costs. You will note that at roughly $2 million per acre, the price per acre for the retail and childcare sites is significantly less than the value we have been achieving for the residential and other commercial parcels in the project, but is reflective of the market for such uses. This is consistent with, but on the higher end of similar use properties in the market and is in line with what we have been projecting. Additionally, as I mentioned…

Thank you. We will now be conducting a question-and-answer session. [Operator Instructions] And our first question comes from Alan Ratner with Zelman & Associates.

Hey, guys. Good afternoon. Congrats on the continued improvement here. It's great to see the consistency of results in quarter-to-quarter. Dan, you mentioned a few times kind of looking into the future a little bit, maybe for the next stage of growth for Five Point. And I know this is something that even going back to your IPO days, there were a lot of discussions, strategies, plans on how the company would evolve. And I'm just curious if there's anything you might be willing to share with us at this point, either specific deals or just conceptually kind of what the next pillar of growth for Five Point might look like, especially with Great Park kind of maybe not at the end of its life cycle, but certainly closer to the end than the beginning at this point.

Thanks, Alan. Appreciate the question. The one thing, if it doesn't come out, I am very optimistic that Five Point is on a good path and has a bright future. And what we have been able to execute on at the Great Park is really the model for where we look to go in the future. The one comment I would make is that, we're not looking for additional legacy, or just I’ll call, generational assets. Obviously, you know how long we have been involved at the Great Park, and we -- both Valencia and San Francisco are long-term assets. And while we have those assets, we also know that generally merchant builders are looking for an asset lighter approach. And we think that there is a real opportunity for us to use the experience we have working with partners and managing larger communities to actually build on that platform and look at other land that we can work with and can work with builders on, but that is not, as I say, a generational project. We don't need another 25,000 unit project. So I don't have anything I can point you to today, Alan, but I can tell you that we're really optimistic that there's really an opportunity for us there to grow this business. There's always going to be demand for land.

Got you. That's helpful. And Dan, again, I know there's no specifics here, but just a big picture. Would this be within California, your backyard, your area of expertise, or do you see an opportunity for Five Point to even take that approach elsewhere in the country? And would you be working primarily with Lennar in that situation? Or is this something that is open to the old universe of builders, given your experience?

So I would start to say that we would -- I think right now focus on California because that's where we're at, although we wouldn't say we wouldn't look outside of it. And we'd definitely look to work with a broad spectrum of builders, not just Lennar. And what we're looking to do is that, we would invest in future land deals in a partnership form with these builders and we'll have obviously our limited investment, but we'll also get management fees and promote for our expertise. So it's really just building on our current model and hopefully expanding that base of folks that we can work with. And once again, as you think about our company, as I look at it today, we are a land company. We're a horizontal company. We're not looking to be vertical, but we think we have a lot of expertise on that horizontal that we want to grow on.

Perfect. I appreciate that. If I could ask a second one, just kind of digging through the pricing power that you have in your communities where you're selling lots today. You mentioned rate buydowns and incentives from builders and we're seeing that obviously in our channel [indiscernible] as well that right now it's a healthy demand environment, but one where I would say it's fairly competitive from an incentive standpoint. And I'm curious as you think about what that means for land residuals and values as we kind of weigh the tight inventory situation from a lot perspective with the seemingly lack of pricing power on the home side, at least for the time being, how do you see that filtering through to land values over the next 12 to 24 months? You've got a lot of deals coming to the market. Do you still feel like you have pricing power, the ability to raise land prices, even as home prices on a net basis are pretty steady for the time being?

Well, I think first, the comment I would make is because we're in California, a lot of the pricing power we're seeing is really derived from California's acute land shortage and the time it takes to get entitled land. And once again, you actually get a snapshot of a much broader market than we're working in. In Irvine, we still have -- you're right about the builders are helping with sales. On the other hand, we still have the builders self-pricing power in Irvine. So we haven't really seen anything that would erode land, and as we are out bidding and talking to builders, we're seeing our land values hold up. And because of that, we are able to [indiscernible] acute shortage of land and home sites, we are able to get some price appreciation in our land from transaction to transaction. Now I would tell you that Irvine is always a unique piece of property, as you know. In Valencia, we don't have quite as strong a push, but once again based upon what we have going on up there, our builders are able to get some price appreciation. So we're not really seeing any downward pressure yet on land prices. And once again, I think a lot of that is just acute shortage of land. There are just very few places for builders to get entitled land that's ready to go in California.

Got it. I do have one final one and then I'll get back to you, but if I could ask it quickly. Thank you. Appreciate the time. You mentioned kind of program segmentation and product segmentation and obviously that's so important to these larger communities. Are you seeing any kind of shifts in demand from builders these days as far as prioritizing entry level versus move up or active adult or kind of attached versus detached? Any kind of trends you could point to just in terms of what you're seeing and hearing from the builders where there's greater demand or maybe less demand?

I would tell you that it's been pretty constant here, but one of the very -- a real similarity between Irvine and Valencia, they are both very family-oriented communities. And so, it's about schools, it's about family, it's about safety, and both of them have a very similar profile, especially around schools. So the product is really kind of remaining consistent. And you know, I think that the builders are always looking at maybe we'll size it a little bit differently, but we're not really seeing a big movement away from one product segment or another.

Great. I appreciate all the time. Thanks a lot.

Thank you. Our next question comes from [Andrew Acon] (ph), private investor.

Yeah, thank you very much for taking my call. I have two questions. One, I believe the City Council of San Francisco vote next week on Candlestick, and I am wondering whether you guys would be willing to break out the book value of the San Francisco venture during Hunters Point and Candlestick. It's not required under segment operating accounting rules, but I think it would be helpful as an investor to understand the book value of each one separately. And second of all, going back to your [pro-sup] (ph) from 2016, you guys mentioned that the tax basis of your land exceeded the county book value by $0.5 billion. I'm wondering, is that something that Five Point would benefit from, or is that really covered in the tax receivable agreements by the parties that have contributed the volume? Thank you very much.

Andrew, thank you for the question. I think what I'd like to do is kick that one to Kim and see if there's some more information he can share with you.

Yeah, Andrew, thank you. Just first, I'll just fix your first question about breaking out Hunters Point from Candlestick. Again, that was originally visualized. That was a single project. Everything we've done up to this point has presented it that way. You bring up a good point of something that we often think about and consider, and so we'll take that under consideration and the like. But for the time being, we don't have a way to do that right now. And because the project is so closely related to each other with respect to the requirements under the DDA, we aren't inclined to do that at this time. But I recognize your question regarding that and we will provide some additional information going forward to help investors with that. With respect to the tax basis, since that tax basis is associated with the Valencia project, where we have that additional tax basis, and that project is owned 100% by the company, therefore it will all go to the benefit of the company and isn't really reflected in the tax receivable agreement. The tax receivable agreement had more to do with built-in gains. That reduces the built-in gains that were potentially on that asset, but it's not directly related to it. Does that make sense?

Yes, that does. So you guys will be able to benefit from the additional basis in Valencia and have been [Multiple Speakers]

Yes, we have been benefiting from it.

Yes. Okay. Thank you very much, and you guys are doing a great job. Glad to see the stock moving.

Thank you, Andrew.

[Operator Instructions] And our next question comes from [Myron Kaplan] (ph), private investor. Please proceed.

Hello, guys. How are you?

Fine, Myron. How are you?

Okay. Thanks for taking the questions. So overall, things are looking up, I guess.

Well, I would say -- I'd like to say better than that. I think we're on a great path to a bright future.

Good. What I wanted to ask about this management agreement that you emphasized, is the renewal is so important that you could use it as a template for future deals and so forth. I don't quite understand its importance. I mean, I understand that maintaining it is important financially, but as far as for future deals, maybe you could elaborate.

Well, I think, once again, we're very optimistic about the program and what we've been working on here. But it's a great structure. It's a template we look at. It's been very successful here. We look at it as a really strong template as we move forward. So it's kind of a model for future deals. It won't be necessarily always the deal. But we just think it's a really good way to help you think about the company and where we're going with future deals.

All right. But nothing's contemplated as you emphasized already.

Correct.

So I guess you've got a better tranche of land for sale in Valencia coming up, we hope, starting next year.

Yes. Everything is progressing as anticipated.

And how is the selection or the realignment of the new Board of Directors, how does that affect operations?

I don't think -- we don't look at it as impacting operations at all. So we're, I think once again, we're on a great path. So we do appreciate your questions, but we're very -- we think we're just in a good spot and heading in the right direction.

And in Candlestick you're optimistic that you'll be able to have some kind of development activity begin in maybe in a year or so?

Yes, I mean once again we're very optimistic on how that is progressing with the city and county.

So that you're succeeding in rebalancing the entitlements and so forth?

Yes, it's moving in a very positive direction.

All right. Well, you guys are doing a really good job. Congratulations so far.

Thank you, Myron.

Thank you. There are no further questions at this time. I would like to turn the floor back to Dan Hedigan for closing remarks.

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

Thank you. This does conclude today's teleconference. We thank you for your participation. You may disconnect your lines at this time.