Five Point Holdings, LLC Q2 FY2026 earnings call

• Strategic Transformation

  • Core long-term objective: Unlock value from California legacy assets while building a more diversified, predictable earnings base
  • Initial priorities (simplify business, cut overhead, strengthen balance sheet) are largely complete; debt-to-capital ratio currently stands at 16.2%, providing substantial financial flexibility
  • Current strategic focus: Expand into lower-capital, recurring-revenue national land banking and asset management via Hearthstone, creating two complementary business lines: high-value legacy California land development and a scalable national asset management platform
  • Five Point is positioned to capitalize on two key industry trends: the persistent national housing shortage, and large builders' shift to capital-efficient land-light operating models paired with institutional investor demand for residential development exposure

• Great Park Neighborhoods (California)

  • Closed a 17.7-acre land sale for a senior living retirement community for $159.3 million ($9 million per acre), demonstrating the flexible value of the community's land portfolio
  • Currently has 14 active homebuilder selling programs, with 5 more planned to open by the end of 2026
  • Builders are in due diligence/contract for 5 new residential programs covering ~28.5 acres, with sales expected to close in FY2026
  • Completed a land exchange with the city that converted 100 acres of commercial zoned land to residential, which will be monetized over coming quarters

• Valencia (California)

  • Builders sold 78 homes in Q2 2026, down from 90 in Q1 2026, reflecting moderated sequential demand
  • Has 12 active builder selling programs, with 5 new programs planned to open by end-2026; over 3,000 homesites sold since 2019 out of the total long-term master plan
  • Documentation is being finalized for 26 residential land sales, though market conditions may impact closing timing
  • Entitlements for Encharta South and Valencia Commerce Center are secured, with infrastructure planning and permitting ongoing for new phases; regulatory approvals are advancing for 3 additional villages, which will bring total entitled homesites to over 10,000 upon completion

• Candlestick (San Francisco, California)

  • Full entitlements are in place for up to 2.8 million sq ft of R&D/tech office space, ~7,200 homes, and ~550,000 sq ft of retail/hotel/community use
  • Subdivision maps for the next development phase were recorded in June 2026, with grading activities set to begin in Q3 2026
  • Positioned to benefit from AI-driven demand for large campus space in San Francisco, strengthening residential fundamentals, and limited supply of large-scale mixed-use projects near Silicon Valley
  • Management has begun outreach to potential large anchor users to support the project's rebirth as a mixed-use bayfront community

• Balance Sheet & Cash Flow

  • Ended Q2 with $348.4 million in cash and $217.5 million in revolving credit availability, for total liquidity of $565.9 million
  • Received $79.6 million in total distributions and incentive compensation from joint ventures in the quarter
  • Repurchased ~623,000 Class A shares for $3.1 million in Q2, and management continues to view share repurchases as attractive at current price levels

Five Point operates two core business segments: legacy master-planned communities and the Hearthstone national asset management/land banking platform.

1. Legacy Master-Planned Communities: This segment drove Q2 2026 performance primarily through the Great Park Venture, which recognized $159.3 million in revenue from the sale of 17.7 acres of commercial land, with a 76.5% gross margin. Total equity earnings from unconsolidated joint ventures (dominated by legacy community ventures) were $41 million, with $39.7 million coming from the Great Park Venture. The segment generated $9.1 million in management revenue from the Great Park Venture plus $5.8 million in incentive compensation from the venture, accounting for ~72% of total Q2 management services revenue. During the quarter, the segment received $67.5 million in total distributions and incentive payments from joint ventures.
2. Hearthstone Asset Management: This segment generated $5.6 million in management services revenue in Q2 2026, accounting for ~28% of total Q2 management services revenue. Total fee-paying assets under management remained unchanged at $2.8 billion, with total AUM flat at $3.4 billion. The segment incurred $3.2 million in associated operating costs for the quarter.

• Management maintains prior full-year 2026 consolidated net income guidance of approximately $100 million, with no upward or downward revision at this time.
• Management expects the majority of remaining 2026 land sales to close in the fourth quarter, though interest rate and housing affordability conditions may impact the timing of expected transactions.
• No changes to long-term growth guidance for the Hearthstone asset management platform were announced, with AUM stable quarter-over-quarter.

• Current housing market conditions are described as choppy and uncertain, with elevated interest rates and housing affordability issues potentially delaying the closing of expected land sales in legacy California communities.
• Sequential home sales have moderated at the Valencia community, which may slow the pace of future land sales to builders.
• Development projects at Candlestick and future phases of Valencia depend on ongoing regulatory approval processes and favorable market demand to support monetization.
• Data center development, a potential new demand stream for Five Point's commercial land, faces regulatory and implementation challenges in California that may delay or prevent projects from moving forward.

Q: Analyst Alan Ratner asked whether the increased commentary around potential land sale timing changes reflects a deliberate decision to slow sales in response to slowing home absorption, rather than pushing sales just to hit volume targets. / A: Management explained they are balancing ongoing builder interest in Five Point's unique entitled California land with a core priority of optimizing long-term land value. They noted home sales are slower than 12 months ago, but builders remain engaged and committed to moving forward. Management is willing to adjust transaction structure to support deals, but will not compromise on land value to accelerate sales.

Q: Ratner asked if Five Point has observed increased builder walkaways or term change requests on Hearthstone land bank deals, following a trend of declining lot counts and terminated options across the public builder sector, and what impact this would have on Hearthstone's financial performance. / A: CFO Kim Tobler responded that Hearthstone continues to see strong deal flow from builder partners, and has not observed a general trend of builders requesting term changes or walking away from existing deals. This resilience is attributed to Hearthstone's strong historical underwriting standards and the structure of its transactions, and the platform continues to perform as expected.

Q: Ratner asked if Five Point has evaluated data center development as a potential use for its commercial land, given strong national demand, and what the outlook is for this opportunity across the company's asset base. / A: COO Mike Alvarado confirmed data center demand has been a topic of discussion across all three of Five Point's California communities, with the most activity in the Los Angeles area. He noted that while California municipalities are supportive in principle, data center projects are difficult to execute and require long lead times. Five Point's extensive experience delivering large infrastructure projects for its master-planned communities positions it well to pursue these opportunities, which the company will continue evaluating.