Greetings, and welcome to the Five Point Holdings, LLC Fourth Quarter and Year-End 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 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 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 and 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 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 Mike Alvarado, our Chief Operating Officer and Chief Legal Officer, Kim Tobler, our Chief Financial Officer; and Leo Kij, our Senior Vice President of Finance and Reporting. Just to let you know, I'm getting over a small cold, so excuse my voice if it sounds a little different. Before I get into the business side of our call, I wanted to take a moment to express on behalf of myself and Five Point, our sadness for those affected by the devastating fires in Los Angeles. While our communities were not directly affected by the fires, our Valencia community is situated nearby the Hughes Fire near Castaic Lake that broke out yesterday, but has now been largely contained and evacuation zones never extended to our community. Although our Southern California communities are further to the North and to the South of the areas affected by the Palisades and Eaton fires, we shared the deep sense of loss that permeates all of Southern California. Like many organizations and individuals, we have been working with public officials, agencies, and industry partners to assist the families impacted by these fires as well as the courageous firefighters and first responders who worked tirelessly to protect lives and property. Although our communities were not directly impacted, we fully expect to be part of the many solutions that will build a bridge to a better future for Southern California. Begin with philanthropic contributions. We are also well aware of the significant effort it will take for the County of Los Angeles and other relevant agencies to support the rebuilding of the affected areas. Five Point will be there to support the County in its rebuilding efforts, as we expect that expedited…

Thanks, Dan. Let me briefly report where Five Point sees opportunities to grow our business. As Dan noted, with the success of 2024 and our expectations for 2025, Five Point is now in the enviable position of pursuing growth opportunities. And as much as homebuilders are following the path of growth in population and job centers, they continue to implement longer-term land acquisition strategies. These longer-term land acquisition and development projects do not lend themselves to a land-light strategy that a number of publicly traded homebuilders are now gravitating towards. This dynamic gives Five Point the opportunity to work alongside the builders in these paths of growth in a win-win scenario that allows builders to follow their land-light strategy in Five Point to play to its strength in our land development business. Our current communities fit this longer-term land profile and that is where Five Point and its management team have a unique skill set in where we have been executing for many years. This is our four business, where we bring our entitlement and land development expertise to the [indiscernible] and everything we do. These assets are once that often have value-add opportunities like we have done at The Great Park, taking in original master planned entitlement from just over 3,600 homesites to over 10,500 homesites or at our San Francisco asset where we recently extended our tax income and financing by over 30 years and modified our entitlements to allow for the shifting of 2 million square feet of R&D and life science base from one development area to another to meet market timing and demand. Because of our execution on such large-scale projects, as well as our ability to leverage our existing relationships with the public homebuilders with whom we regularly engage, we will have the opportunity…

Thank you, Mike. As Dan and Mike have shared, we finished an exciting year well and are positioned to grow in the coming years. I'm going to review our fourth quarter and annual results for our fiscal year ended December 31, 2024. And then I'd like to give you some additional background regarding the Gateway Commercial Venture sale of its remaining interest in the Five Point Gateway Campus. And then I will conclude with the trends we've seen from 2022 to 2024 with some guidance of what we are expecting in 2025. In the fourth quarter, we recognized $121 million of net income. This was made up of the following components; $137.9 million of residential land sales at our Valencia project, we are reporting a 34.7% gross margin, which results in the cost of sales of $91.1 million. We also had $21.4 million of management services revenue, $18.3 million of that, which is associated with the incentive compensation from the Great Park. Our fourth quarter SG&A was $14.2 million. And we recognized $87.5 million of equity and earnings from our unconsolidated entities, $74.6 million from The Great Park Venture and $13 million from the Gateway Commercial Venture. The equity and earnings from the Great Park Venture was attributable to net income of $217.7 million, which resulted from land sales revenue of $309.3 million and a 75% gross margin. The equity and earnings from the Gateway Commercial Venture is attributable to the sale of the remaining building and other interests that I will discuss in more detail later. Finally, we recognized $18.8 million of tax expense. Now moving to our 2024 annual results. As Dan mentioned, 2024 was more successful than 2023, and we are seeing the fruits of the focus and discipline that we have been exercising these last few…

Thank you. We will now 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. Wow, congrats on all the progress this year. It's really amazing what you guys have been able to do here in terms of the consistency now of the cash flow and the income. It's great to see. I'm happy to hear that you guys at least were not directly impacted by the fires, and I think it makes a lot of sense that your projects could be potential beneficiaries of the rebuild or at least a role in that process. I am curious, though, just in terms of – I know it's early, but you've – Dan, you flagged the challenges of insurance in the state of California in the past. I think you even mentioned one quarter or two ago having to kind of rejigger a little bit some of the attached versus detached split of your business in Valencia. And I'm just curious, based on your conversations you're having so far, whether you think that this unfortunate event would be a catalyst for further tightening of that insurance market and potentially create some challenges for you guys as well as obviously the homebuilding community within California going forward?

Well, thanks, Alan. Insurance is obviously going to be a question that's abated a lot in the State of California. And you're right, because of insurance availability, we have moved away from our builders have really moved away from large tax buildings where multiple units could be at risk to nothing more than a duplex just because the insurance market available for those products for motor courts, traditional SFD, there have not been an impact to the market at all. So the – it's critical that California has insurance, and we do think that the state is going to be carefully managing that to make sure that insurance is available. The thing that we still are very unique, we're – our master plan communities through any number of incidents in Southern California have really proved the test of time that the design the fire hardening, the fire resistance that is built into these communities has worked. And so that realization, we are hopeful will help keep us moving forward. And as you said, there's a lot of devastation, there's a lot of lost homes. We're actually in the position that we could build additional deliver additional land in our master planned communities, which have all of the most recent thinking around how do you build in California, which has a wildfire zone. Once again, there's numerous recent situations where all these new communities have held up extremely well. So right now, we think we'll be okay on the insurance side, although I do think that our product will stay to focus on individual insurance policies as opposed to large buildings.

Got it. That's helpful. Dan, appreciate that. Second, the growth opportunities here, I think, is obviously what everybody has been waiting for, for a long time and diversifying the asset base, but also kind of providing that roadmap for sustainability beyond Great Park whenever that project sells through. I know you mentioned kind of the infill opportunities, but I'd love to just drill on – if possible a little bit on San Francisco more so and just better understand the strategy there? It sounds like you guys are ready to start putting some shovels in the ground here in 2024 unless I misinterpreted that. But I'm just trying to understand how you're thinking through the initial capital outlay that's going to be required before you start getting dollars back in. I think you kind of mentioned maybe some more asset-light strategies or joint venture partners. Is it possible at all to just put some dollars to all of this so we can better understand what the outflows might look like in the near term and then when the inflows do start, how that can flow through?

Well, Alan, let me start off by being sure – if I was clear. Right now, we are – by the way, we are very, very happy with the support we got from the County of San Francisco, The City, The Mayor's office, they were very supportive in have getting us well positioned to start that project. So we actually had previously had the design for the first phase. And the first phase is infrastructure to give us flat pads. It opens up a large commercial site and then multiple residential sites for development. So when we think about that – and once again now we also have flexibility. We have flexibility to go faster in commercial, slower in commercial, faster on housing. But our initial focus is engineering this year and then early next year, assuming we have all our permits, we'll start with that first phase of infrastructure. And we're going to be focusing completely on the horizontal and from a cash perspective, we're in a position to finance the horizontal development. But then we also have lots of opportunities on how to approach the vertical. And so we haven't decided what the best answer is there. We felt that it was really important to get the rebalancing done because we think that, that gives us the best value position on that asset. So at this point, just think about it as we're going into construction in 2026 – the first phase will take at least 12 to 18 months to complete that first phase. So we'll be in the market sometime after that and seeing where that horizontal market is. We think there's a lot of opportunities up there.

Great. Very helpful. Thank you very much.

Thank you. Our next question comes from the line of Robert Heimowitz with Concise Capital. Please proceed with your question.

Hey, guys. Congrats on the results. I just wanted to ask about the notes. They're set to go to a 12% coupon at – when they were originally set to mature on 11.15%. So I'm just wondering how you think about them with – it feels like maybe some cash is leaking outside of the system with such an asset-heavy company, with so much cash? Like how do you think about addressing them? Like are you thinking of a refi or you just want to get the balance down first and then think about it?

Yes. Robert, it’s good to talk to you. This is Kim. And first of all, it goes to 11% in November of this year and then 12% the following year, just to be clear. But with that said, we're actively looking at the possibility of a refinance. I can't commit to that we'll be doing something like that, but we're watching the prices. The tenure has been not necessarily accommodating us. But I will tell you that given our financial position at this time, we think we're a better credit than the bonds reflect right now. And it would be my expectation to take advantage of that in the market, when it's appropriate to do so. And we're – we'll discuss that with our Board and other advisers and make sure that we're doing the right thing. But either way, whether we do a refinance or not, we think it's prudent to pay down the notes even with the premium that they carry today perhaps.

Okay. Thanks for the correction there. So just a quick follow-up on the new ventures. Is there any intention to put even, I don't know, even a small amount of capital into them as a way to show like alignment as a sponsor or – or how are you thinking about these growth opportunities?

This is Mike Alvarado. Yes, we would expect to have some equity investment in these ventures, probably not as large as what you see with the Great Park where we have a 37.5 percentage interest – ownership interest. But yes, we would expect to have some equity position in them.

Okay. Thanks, guys.

Thank you. Our next question comes from the line of [Andrew Acon], a Private Investor. Please proceed with your question.

Thanks guys and really good quarter. I guess my question goes back to demand, at Valencia. And we really haven't seen sales greater than 100 homes a quarter, and you appear to be selling lots, obviously, a lot quicker than that. Can you talk about like why you think the demand hasn't picked up? And also, have you guys seen any impact from Chiquita Canyon at all?

Andrew, thank you for the question. So on this question of absorption, one of the things that in a master planned community, six active programs is actually pretty small. And the – I would tell you that one of the things we really need to do there is get some of the new programs open, because I think that gives a lot more product options to people. So I agree with you that we haven't seen a lot of sales, but we haven't had a lot of availability of programs either. And once again, the programs are – you got to have the right program right for the buyers, a whole diverse group of buyers that would be going up there. So we think that with the additional homes, our programs will be opening up this year. And you're right, we're putting – we put lots out there ahead of time. But generally, it's taking about a year for a builder to close on land and to be in a position to enter the market with new product. So there's kind of the cycle that we really need to kind of get kick-started up there with a robust offering. So we're in the process of making that happen. And on your question on the landfill, we have not seen an impact. And I don't know that you have heard, but it's our understanding that the landfill has closed down as of December 31.

Yes, that's what they have on their website. Okay. And so are you talking about buying back – settling some of the debt and paying the 2% premium before November of this year?

Yes, Andrew, we're considering that. If it's – again, if we can save money by paying down the debt and paying less for the year and total interest cost, we'll consider paying the [102].

Okay. Thanks a lot guys. A lot of good quarters. Thanks a lot.

Thank you, Andrew.

Thank you. [Operator Instructions] Our next question comes from the line of [Myron Kaplan], a Private Investor. Please proceed with your question.

Hi, guys.

Hi, Myron.

Hi. Nice – well done. That's what I could say. You had a phenomenal year now.

Well, that's high praise from you, Myron.

Well, I've been believing in you and so forth. I have a question, it's a little retro is – what happened in the Hurst fire that was south of the newhall property or the Valencia property, a couple of weeks ago?

Yes, it was a South and West of us.

And the Hughes fire, this new Hughes fires to the Northwest?

It's North and East. Yes, I'm sorry. Yes. It was South and West and North and East.

Right. Okay. All right. So we talked about San Francisco, you're trying to expand Valencia, and again with the bonds because you're paying out a little over $50 million in insurance. So I guess – I just add my vote to I hope that you'll be able to find a favorable refinance, especially since the company will be so will be relatively liquid you ought to be an awfully good credit by now by the end of the year, let's say, by the middle of the year.

That's our expectation, Myron. We believe our credit profile has dramatically changed and that we can do better in the market. Right now, we need the market to understand these fire events because people are a little skittish about residential in California. But we think as it come to understand how the new communities are built and that this is actually something that needs to happen in the state to move forward.

Okay. I mean, frankly, I'm surprised, I mean, I guess, or surprised and skeptical because it seems to me that the present – the rate of sale of houses in L.A. County right now is probably heading towards zero, because people are, as you say, skittish and so forth, but I guess, hopefully, some kind of new order will emerge and they'll – you'll be able to take advantage of it?

I think we will, Myron.

Yes. As far as San Francisco is concerned, I mean – if you provide the infrastructure and you're doing the horizontal development, and somebody comes along, who wants to do the vertical, it seems to me that you ought to be able to wangle a small equity interest without a capital contribution?

Well, I'll tell you, we're looking at all those options.

Okay. Well, all right. Well, you guys got some great moment. I think it's well done and impressive. Thanks for taking a top job.

Thanks, Myron.

Thank you.

Thank you. There are no further questions at this time. I'd like to pass the call back over to Dan for any closing remarks.

Thank you. 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.

This concludes today's teleconference. You may disconnect your lines at this time. Thank you for your participation.