Five Point Holdings, LLC

Previous wording

We conduct all of our business in or through our operating company, Five Point Operating Company, LP (the “operating company”). We are, through a wholly owned subsidiary, the sole managing general partner and owned, as of September 30, 2024, approximately 62.6% of the operating company. The operating company directly or indirectly owns equity interests in:

Current wording

We conduct all of our business in or through our operating company, Five Point Operating Company, LP (the “operating company”). We are, through a wholly owned subsidiary, the sole managing general partner and owned, as of March 31, 2025, approximately 62.8% of the operating company. The operating company directly or indirectly owns equity interests in:

Previous wording

•Five Point Office Venture Holdings I, LLC (the “Gateway Commercial Venture”), which owns portions of the Five Point Gateway Campus, a commercial office, research and development and medical campus located within the Great Park Neighborhoods; and

Current wording

•Five Point Office Venture Holdings I, LLC (the “Gateway Commercial Venture”), which previously owned portions of the Five Point Gateway Campus, a commercial office, research and development and medical campus located within the Great Park Neighborhoods; and

Previous wording

•Five Point Communities, LP and Five Point Communities Management, Inc. (together, the “management company”), which provide development and property management services for the Great Park Neighborhoods and the Five Point Gateway Campus.

Current wording

•Five Point Communities, LP and Five Point Communities Management, Inc. (together, the “management company”), which provide development management services for the Great Park Neighborhoods.

Previous wording

We generated consolidated net income of $12.3 million for the three months ended September 30, 2024, compared to net income of $14.2 million for the three months ended September 30, 2023. Our net income for the quarter was largely driven by incentive compensation revenue recognized, and equity in earnings from, the Great Park Venture. We also continued to focus on execution of our three main priorities: generating revenue and positive cash flow; controlling our selling, general and administrative (“SG&A”) costs; and managing our capital spend to match near-term revenue opportunities. SG&A expenses totaled $11.9 million for each of the three months ended September 30, 2024 and 2023. At September 30, 2024, we had $224.5 million in cash and $125.0 million available under our revolving credit facility, giving us total liquidity of $349.5 million.

Current wording

We generated consolidated net income of $60.6 million for the three months ended March 31, 2025, compared to net income of $6.1 million for the three months ended March 31, 2024. Our net income for the quarter was largely driven by incentive compensation revenue recognized and equity in earnings from the Great Park Venture. We also continued to focus on execution of key operating priorities, including generating revenue and positive cash flow, controlling our selling, general and administrative (“SG&A”) costs, and managing our capital spend to match near-term revenue opportunities. SG&A expenses totaled $14.8 million and $12.9 million for the three months ended March 31, 2025 and 2024, respectively. At March 31, 2025, we had $528.3 million in cash and $125.0 million available under our revolving credit facility, giving us total liquidity of $653.3 million.

Previous wording

Although the Federal Reserve announced a meaningful rate cut during the third quarter of 2024, mortgage rates generally remained elevated. Notwithstanding the challenging rate environment, we continued to see sustained demand for land from homebuilders at both of our active communities in Valencia and the Great Park Neighborhoods. The Great Park Venture, in which we have a 37.5% percentage interest and manage all aspects of the development cycle, closed two retail use commercial land sales totaling 12.8 acres at the Great Park Neighborhoods in the third quarter of 2024 for an aggregate gross purchase price of $25.4 million. We received $49.4 million in distributions and related payments from the Great Park Venture for both our ownership interests and incentive management fee compensation. We also extended the term of our development management agreement with the Great Park Venture through December 31, 2026, pursuant to which we increased the base management fee while maintaining incentive compensation at existing levels. We believe that the development management joint venture model we have utilized with the Great Park Venture can be extended to new communities and development projects.

Current wording

During the first quarter of 2025, mortgage rates remained elevated and have increased more recently as economic uncertainty has resulted from shifting trade and tariff policies. During the quarter, however, we continued to see sustained demand for land from homebuilders at both our Great Park Neighborhoods and Valencia communities. The Great Park Venture, in which we have a 37.5% percentage interest and manage all aspects of the development cycle, closed sales to three different builders consisting of 325 homesites totaling 23.6 acres at the Great Park Neighborhoods in the first quarter of 2025 for an aggregate purchase price of $278.9 million. We received $143.3 million in distributions and related payments from the Great Park Venture for both our ownership interests and incentive management fee compensation.

Previous wording

At Valencia, guest builders sold 89 homes during the third quarter of 2024, compared to 84 homes during the second quarter of 2024, increasing total homes sold to 1,525 since sales began in May 2021. At the Great Park Neighborhoods, guest builders sold a total of 166 homes during the third quarter of 2024, compared to 63 homes during the second quarter of 2024. During the third quarter of 2024, homebuilders opened 10 new collections at the Great Park Neighborhoods that were well received by homebuyers leading to the increase in home sales in the third quarter compared to the second quarter of 2024. We expect demand in our chronically undersupplied housing markets to remain strong and to drive a strong finish to the year. While we did not have any scheduled residential land sale closing in the third quarter of 2024, we expect to close residential land sales in the fourth quarter of 2024 at both the Great Park Neighborhoods and Valencia.

Current wording

At Valencia, our guest builders sold 69 homes during the first quarter of 2025, compared to 74 homes during the fourth quarter of 2024, increasing total homes sold to 1,668 since sales began in May 2021. At the Great Park Neighborhoods, guest builders sold a total of 233 homes during the first quarter of 2025, compared to 143 homes during the fourth quarter of 2024. The collections that opened in the second half of 2024 at the Great Park Neighborhoods continue to be well received by homebuyers leading to the increase in home sales in the first quarter of 2025 compared to the fourth quarter of 2024. Despite the potential impacts of tariff and trade policies, we expect demand in our chronically undersupplied housing markets to remain steady and to support planned homesite sales to builders over the remainder of the year.

Previous wording

The following table summarizes our consolidated historical results of operations for the three and nine months ended September 30, 2024 and 2023.

Current wording

The following table summarizes our consolidated historical results of operations for the three months ended March 31, 2025 and 2024:

Previous wording

Revenues. Revenues decreased by $48.9 million, or 74.2%, to $17.0 million for the three months ended September 30, 2024, from $65.9 million for the three months ended September 30, 2023. The decrease in revenues was primarily due to land sales at our Valencia segment during the three months ended September 30, 2023 compared to no land sales during the same period in 2024, partially offset by an increase in management services revenue at our Great Park segment during the three months ended September 30, 2024.

Current wording

Revenues. Revenues increased by $3.2 million, or 32.4%, to $13.2 million for the three months ended March 31, 2025, from $9.9 million for the three months ended March 31, 2024. The increase in revenues was primarily due to an increase in management services revenue at our Great Park segment during the three months ended March 31, 2025.

Previous wording

Cost of management services. Cost of management services increased by $1.9 million, or 79.5%, to $4.3 million for the three months ended September 30, 2024, from $2.4 million for the three months ended September 30, 2023. The increase was primarily due to an increase in intangible asset amortization expense at our Great Park segment.

Current wording

Cost of management services. Cost of management services decreased by $0.8 million, or 21.4%, to $3.1 million for the three months ended March 31, 2025, from $3.9 million for the three months ended March 31, 2024. The decrease was primarily due to a decrease in intangible asset amortization expense at our Great Park segment.

Previous wording

Equity in earnings from unconsolidated entities. Our consolidated results reflect our share in the earnings or losses of our interests in our unconsolidated entities, including the Great Park Venture and the Gateway Commercial Venture, within equity in earnings from unconsolidated entities on our condensed consolidated statement of operations. Our segment results for the Great Park segment and the Commercial segment present the results of the Great Park Venture and the Gateway Commercial Venture at the book basis of the ventures within the respective segments.

Current wording

Equity in earnings from unconsolidated entities. Our consolidated results reflect our share in the earnings or losses of our interests in our unconsolidated entities, including the Great Park Venture and the Gateway Commercial Venture, within equity in earnings from unconsolidated entities on our condensed consolidated statement of operations. Our segment results for the Great Park segment present the results of the Great Park Venture at the book basis of the venture within the segment.

Previous wording

Equity in earnings from unconsolidated entities was $45.1 million for the nine months ended September 30, 2024, a decrease from earnings of $52.6 million for the nine months ended September 30, 2023. Equity in earnings for the nine months ended September 30, 2024 and 2023 was primarily a result of recognizing our share of the net income generated by the Great Park Venture from land sales during each period.

Current wording

Equity in earnings from unconsolidated entities was $71.4 million for the three months ended March 31, 2025, an increase from equity in earnings of $17.6 million for the three months ended March 31, 2024. Equity in earnings for the three months ended March 31, 2025 and 2024 was primarily a result of recognizing our share of the net income generated by the Great Park Venture from land sales during each quarter.

Previous wording

Income taxes. Pre-tax income of $14.2 million for the three months ended September 30, 2024 resulted in a $1.9 million tax provision. Pre-tax income of $14.2 million for the three months ended September 30, 2023 resulted in no tax provision (after application of a decrease in our valuation allowance of $1.9 million) other than a small tax provision incurred by one of our consolidated subsidiary corporations. We assessed the realization of our net deferred tax asset and the need for a valuation allowance and determined that at September 30, 2024, it was more likely than not that the net deferred tax asset would be realizable, and we had no valuation allowance recorded. Our effective tax rate for the three months ended September 30, 2024 was substantially similar to our effective tax rate, before changes in valuation allowance, for the three months ended September 30, 2023.

Current wording

Income taxes. Pre-tax income of $70.1 million for the three months ended March 31, 2025 resulted in a $9.5 million tax provision. Pre-tax income of $7.0 million for the three months ended March 31, 2024 resulted in a $1.0 million tax provision. We assessed the realization of our net deferred tax asset and the need for a valuation allowance and determined that at March 31, 2025, it was more likely than not that the net deferred tax asset would be realizable, and we had no valuation allowance recorded. Our effective tax rate for the three months ended March 31, 2025 was substantially similar to our effective tax rate for the three months ended March 31, 2024.

Previous wording

Our four reportable operating segments include our three community segments, Valencia, San Francisco and Great Park, and our Commercial segment:

Current wording

Our reportable operating segments include our three community segments, Valencia, San Francisco and Great Park:

Previous wording

The following tables reconcile the results of operations of our segments to our consolidated results for the three and nine months ended September 30, 2024 and 2023 (in thousands):

Current wording

The following tables reconcile the results of operations of our segments to our consolidated results for the three months ended March 31, 2025 and 2024 (in thousands):

Previous wording

Our Valencia property consists of approximately 15,000 acres in northern Los Angeles County and can include up to approximately 21,500 homesites and approximately 11.5 million square feet of commercial space. The actual commercial square footage and number of homesites are subject to change based on ultimate use and land planning. The current communities under development in Valencia complement the neighboring communities that were previously developed by us. We began selling homesites in the first development area at Valencia in 2019.

Current wording

Our Valencia property consists of approximately 15,000 acres in northern Los Angeles County and can include up to approximately 21,500 homesites and approximately 11.5 million square feet of commercial space. The actual commercial square footage and number of homesites are subject to change based on ultimate use and land planning. The current communities under development in Valencia complement the neighboring communities that were previously developed by us. We began selling homesites in the first development area at Valencia in 2019, and as of March 31, 2025 we had sold 3,088 homesites.

Previous wording

Our development at Candlestick and The San Francisco Shipyard is not subject to San Francisco’s Proposition M growth control measure, which imposes annual limitations on office development and is applicable to all other developers with projects in the city. This means the full amount of permitted commercial square footage at Candlestick and The San Francisco Shipyard can be constructed as we determine, including all at once, even though Proposition M may delay new office developments elsewhere in San Francisco. In 2018, our disposition and development agreement with the City of San Francisco was amended to increase the total amount of commercial use at Candlestick and The San Francisco Shipyard by over two million square feet and to increase our total commercial space to approximately 6.3 million square feet.

Current wording

Our development at Candlestick and The San Francisco Shipyard is not subject to San Francisco’s Proposition M growth control measure, which imposes annual limitations on office development and is applicable to all other developers with projects in the city. This means the full amount of permitted commercial square footage at Candlestick and The San Francisco Shipyard can be constructed as we determine, including all at once, even though Proposition M may delay new office developments elsewhere in San Francisco.

Previous wording

Great Park Neighborhoods consists of approximately 2,100 acres in Orange County and is being built around the approximately 1,300 acre Orange County Great Park, a metropolitan public park that is under construction. Great Park Neighborhoods can include up to approximately 10,500 homesites and approximately 4.9 million square feet of commercial space. The actual commercial square footage and number of homesites are subject to change based on ultimate use and land planning.

Current wording

Great Park Neighborhoods consists of approximately 2,100 acres in Orange County and is being built around the approximately 1,300 acre Orange County Great Park, a metropolitan public park that is under construction. Great Park Neighborhoods can include up to approximately 10,500 homesites and approximately 4.9 million square feet of commercial space. The actual commercial square footage and number of homesites are subject to change based on ultimate use and land planning. The Great Park Venture sold the first homesites in April 2013 and as of March 31, 2025 had sold 9,008 homesites (including 853 affordable homesites).

Previous wording

Interests in the Great Park Venture were previously either “percentage interests” or “legacy interests.” Holders of the legacy interests were entitled to receive priority distributions in an aggregate amount equal to $476.0 million and up to an additional $89.0 million from participation in subsequent distributions. The holders of percentage interests were entitled to all other distributions. During the nine months ended September 30, 2024, the Great Park Venture made aggregate distributions of $18.1 million to holders of legacy interests and $229.9 million to holders of percentage interests. We received $86.2 million for our 37.5% percentage interest. As of December 31, 2021, the Great Park Venture had fully satisfied the $476.0 million priority distribution rights, and with the distributions to the holders of legacy interests during the nine months ended September 30, 2024, the Great Park Venture fully satisfied the $89.0 million maximum participating legacy interest distribution rights, as a result of which, the legacy interests are no longer deemed to be outstanding.

Current wording

During the three months ended March 31, 2025, the Great Park Venture made aggregate distributions of $300.9 million to holders of percentage interests, of which we received $112.9 million for our 37.5% percentage interest.

Previous wording

Land sales and related party land sales revenues. Land sales and related party land sales revenues decreased to $293.6 million for the nine months ended September 30, 2024, from $372.5 million for the nine months ended September 30, 2023. The decrease was primarily attributable to the recognition of revenue from the sale of 12.8 acres of commercial land planned for retail uses and land entitled for an aggregate of 187 homesites on 23.9 acres at the Great Park Neighborhoods during the nine months ended September 30, 2024, compared to the recognition of revenue from the sale of land at the Great Park Neighborhoods entitled for an aggregate of 798 homesites on approximately 84 acres during the nine months ended September 30, 2023. The base purchase price was $25.4 million and $170.7 million for the 2024 commercial land sales and homesite land sales, respectively. Revenue recognized of $357.8 million for the 2023 land sale consisted of $214.7 million paid at closing, plus $143.1 million in estimated variable consideration from future price participation payments expected to be received when homes are sold to homebuyers. The 798 homesites were sold to an unaffiliated land banking entity whereby a related party retained the option to acquire the homesites in the future from the land bank entity.

Current wording

Land sales and related party land sales revenues. Land sales and related party land sales revenues increased to $285.4 million for the three months ended March 31, 2025, from $92.7 million for the three months ended March 31, 2024. The increase was primarily attributable to the recognition of revenue from the sale of land at the Great Park Neighborhoods entitled for an aggregate of 325 homesites on 23.6 acres during the three months ended March 31, 2025, compared to the recognition of revenue from the sale of land at the Great Park Neighborhoods entitled for an aggregate of 82 homesites on 11.6 acres during the three months ended March 31, 2024. For the 2025 land sales, the base purchase price was $278.9 million, and 197 of the homesites were sold to an unaffiliated land banking entity whereby Lennar retained the option to acquire the homesites in the future from the land bank entity. The base purchase price was $74.6 million for the 2024 land sales.

Previous wording

During the three months ended September 30, 2024 and 2023, revenues also included changes in estimates of variable consideration, including profit participation and price participation, from those amounts previously recorded by the Great Park Venture. During the three months ended September 30, 2024 and 2023, the Great Park Venture recognized $6.0 million and $2.8 million, respectively, in profit participation revenues received from homebuilders. During the three months ended September 30, 2024, the Great Park Venture recognized additional estimated variable consideration of $30.0 million related to prior period land sales for future price participation payments expected to be received when homes are sold to homebuyers. The increase in estimated variable consideration reflects updated pricing and absorption assumptions used to calculate expected price participation payments.

Current wording

During the three months ended March 31, 2025 and 2024, revenues also included changes in estimates of variable consideration, including profit participation and price participation, from those amounts previously recorded by the Great Park Venture. During the three months ended March 31, 2025 and 2024, the Great Park Venture recognized $2.4 million and $17.6 million, respectively, in profit participation revenues. During the three months ended March 31, 2025, the Great Park Venture recognized additional estimated variable consideration of $4.0 million related to prior period land sales for future price participation payments expected to be received when homes are sold to homebuyers. The increase in estimated variable consideration reflects updated pricing and absorption assumptions used to calculate expected price participation payments.

Previous wording

Cost of land sales. Cost of land sales for the nine months ended September 30, 2024 was $67.1 million, compared to $165.7 million for the nine months ended September 30, 2023. The cost of land sales includes both actual and estimated future capitalized costs allocated based upon relative sales values. Since this method requires the Great Park Venture to estimate future development costs and the expected sales prices for future land sales, the profit margin on subsequent parcels sold will be affected by both changes in the estimated total revenues, as well as any changes in the estimated total cost of the project.

Current wording

Cost of land sales. Cost of land sales for the three months ended March 31, 2025 and 2024 were $70.2 million and $30.0 million, respectively. The cost of land sales includes both actual and estimated future capitalized costs allocated based upon relative sales values. Since this method requires the Great Park Venture to estimate future development costs and the expected sales prices for future land sales, the profit margin on subsequent parcels sold will be affected by both changes in the estimated total revenues, as well as any changes in the estimated total cost of the project.

Previous wording

Management fee revenues. Management fee revenues are revenues generated by the management company from development management services provided to the Great Park Venture. The increase in management services related party revenue was mainly attributable to an increase in variable incentive compensation revenue recognized during the three months ended September 30, 2024. For the three months ended September 30, 2024 and 2023, we recognized $12.9 million and $1.4 million, respectively, attributable to variable incentive compensation, mostly as a result of changes in estimates of the amount of variable incentive compensation we expect to receive.

Current wording

Management fee revenues. Management fee revenues are revenues generated by the management company from development management services provided to the Great Park Venture. In September 2024, the development management agreement with the Great Park Venture was renewed by mutual agreement of the parties through December 31, 2026 (the “second renewal term”). In connection with the extension under the second renewal term, the annual fixed base fee was increased to $13.5 million beginning in 2025, which reflects an increase from the $12.0 million annual fixed base fee for 2024. The incentive compensation provisions of the development management agreement remain unchanged through the second renewal term. The increase in management services related party revenue was mainly attributable to the increase in the annual fixed base fee and an increase in variable incentive compensation revenue recognized during the three months ended March 31, 2025. For the three months ended March 31, 2025 and 2024, we recognized $9.2 million and $5.6 million, respectively, attributable to variable incentive compensation, mostly as a result of changes in estimates of the amount of variable incentive compensation we expect to receive.

Previous wording

Management services costs and expenses. Included within management services costs and expenses are general and administrative costs and expenses incurred by the management company’s project team that is managing the development of the Great Park Neighborhoods. We also include amortization expense related to the intangible asset attributable to the incentive compensation provisions of the development management agreement with the Great Park Venture within management services costs and expenses. Corporate and non-project team salaries and overhead are not allocated to management services costs and expenses or to our reportable segments and are reported in selling, general, and administrative costs in the condensed consolidated statements of operations. Management services costs and expenses increased by $1.9 million, or 79.5%, to $4.3 million for the three months ended September 30, 2024, from $2.4 million for the three months ended September 30, 2023. The increase was mainly attributable to an increase in intangible asset amortization expense recognized during the three months ended September 30, 2024.

Current wording

Management services costs and expenses. Included within management services costs and expenses are general and administrative costs and expenses incurred by the management company’s project team that is managing the development of the Great Park Neighborhoods. We also include amortization expense related to the intangible asset attributable to the incentive compensation provisions of the development management agreement with the Great Park Venture within management services costs and expenses. Corporate and non-project team salaries and overhead are not allocated to management services costs and expenses or to our reportable segments and are reported in selling, general, and administrative costs in the condensed consolidated statements of operations. Management services costs and expenses decreased by $0.8 million, or 21.4%, to $3.1 million for the three months ended March 31, 2025, from $3.9 million for the three months ended March 31, 2024. The decrease was mainly attributable to a decrease in intangible asset amortization expense recognized during the three months ended March 31, 2025.

Previous wording

Management fees—related party. Management fees increased by $14.1 million to $18.8 million for the three months ended September 30, 2024, from $4.7 million for the three months ended September 30, 2023. Management fees incurred by the Great Park Venture are comprised of base development management fees and incentive compensation fees. In general, incentive compensation fees will be paid based on a percentage of distributions made to holders of the Great Park Venture’s membership interests. When payments are deemed probable of being made, the Great Park Venture recognizes the expense ratably over the period services are expected to be provided. When estimates of the amount of incentive compensation probable of being paid change, the Great Park Venture records a cumulative adjustment in the period in which the estimate changes. The increase in management fees—related party was mainly attributable to a change in the estimate of the amount of incentive compensation fees probable of being paid that resulted in a cumulative adjustment recognized during the three months ended September 30, 2024.

Current wording

Management fees—related party. Management fees decreased by $0.3 million to $7.9 million for the three months ended March 31, 2025, from $8.2 million for the three months ended March 31, 2024. Management fees incurred by the Great Park Venture are comprised of base development management fees and incentive compensation fees. In general, incentive compensation fees will be paid based on a percentage of distributions made to holders of the Great Park Venture’s membership interests. When payments are deemed probable of being made, the Great Park Venture recognizes the expense ratably over the period services are expected to be provided. When estimates of the amount of incentive compensation probable of being paid change, the Great Park Venture records a cumulative adjustment in the period in which the estimate changes. The decrease in management fees—related party was mainly attributable to changes in the estimate of the amount of incentive compensation fees probable of being paid that resulted in a cumulative adjustment recognized during the three months ended March 31, 2025 that was lower than the cumulative adjustment recognized during the three months ended March 31, 2024, partially offset by the increase in base development management fees that began in 2025.

Previous wording

The table below reconciles the Great Park segment results to the equity in earnings from our investment in the Great Park Venture that is reflected in the condensed consolidated statements of operations for the three and nine months ended September 30, 2024 and 2023.

Current wording

The table below reconciles the Great Park segment results to the equity in earnings from our investment in the Great Park Venture that is reflected in the condensed consolidated statements of operations for the three months ended March 31, 2025 and 2024.

Previous wording

As of September 30, 2024, we had $224.5 million of consolidated cash and cash equivalents, compared to $353.8 million at December 31, 2023. As of September 30, 2024, no funds had been drawn on and no letters of credit were outstanding on the operating company’s $125.0 million unsecured revolving credit facility.

Current wording

As of March 31, 2025, we had $528.3 million of consolidated cash and cash equivalents, compared to $430.9 million at December 31, 2024. As of March 31, 2025, no funds had been drawn on and no letters of credit were outstanding on the operating company’s $125.0 million unsecured revolving credit facility.

Previous wording

Our short-term cash needs consist primarily of general and administrative expenses and development expenditures at Valencia and the Candlestick and The San Francisco Shipyard communities, interest payments under our senior notes and payments under a related party reimbursement obligation. In January 2024, we exchanged $623.5 million of our existing 7.875% senior notes due November 2025 for $100.0 million in cash and $523.5 million in new 10.500% initial rate senior notes due January 2028. The new senior notes due January 2028 will accrue interest at a rate of 10.500% until November 2025, at a rate of 11.000% from November 2025 to November 2026, and at a rate of 12.000% from November 2026 through the maturity date. Pursuant to a reimbursement deferral agreement, principal and interest payments under our related party reimbursement obligation are deferred through October 31, 2024.

Current wording

Our short-term cash needs consist primarily of general and administrative expenses and development expenditures at Valencia and the Candlestick and The San Francisco Shipyard communities, interest payments under our senior notes and payments under a related party reimbursement obligation. Pursuant to a reimbursement deferral agreement, principal and interest payments under our related party reimbursement obligation are deferred through April 30, 2025.

Previous wording

The development stages of our communities continue to require significant cash outlays on both a short-term and long-term basis, and we expect to invest significant amounts on continued horizontal development at Valencia over the next 12 months. We manage our development activities and expenditures to coincide with projected demand for our residential and commercial land with the objective of maintaining an appropriate level of liquidity. We expect to meet our cash requirements for at least the next 12 months with available cash, distributions from our unconsolidated entities, collection of management fees under our development management agreement with the Great Park Venture, proceeds from land sales, reimbursements from public financing in Valencia and access to financing sources, including our revolving credit facility.

Current wording

The development stages of our communities continue to require significant cash outlays on both a short-term and long-term basis, and we expect to invest significant amounts on continued horizontal development at Valencia over the next 12 months. We manage our development activities and expenditures to coincide with projected demand for our residential and commercial land with the objective of maintaining an appropriate level of liquidity. We expect to meet our cash requirements for at least the next 12 months with available cash, distributions from our unconsolidated entities, collection of management fees, including incentive compensation, under our development management agreement with the Great Park Venture, proceeds from land sales, reimbursements from public financing and access to financing sources, including our revolving credit facility.

Previous wording

Our long-term cash needs relate primarily to future horizontal development expenditures and investments in or vertical construction costs for properties that we may acquire or develop for an income-producing portfolio, along with debt service and general and administrative expenses. We budget our cash development costs on an annual basis. Budgeted amounts are subject to change due to delays or accelerations in construction or regulatory approvals, changes in inflation rates and other increases (or decreases) in costs. We may also modify our development plans or change the sequencing of our communities in response to changing economic conditions, consumer preferences and other factors, which could have a material impact on the timing and amount of our development costs. Budgeted amounts are expected to be funded through a combination of available cash, cash flows from our communities and reimbursements from public financing, including community facilities districts, tax increment financing and local, state and federal grants. Cash flows from our communities may occur in uneven patterns as cash is primarily generated by land sales and reimbursements, which can occur at various points over the life cycle of our communities.

Current wording

Our long-term cash needs relate primarily to future horizontal development expenditures and new investments and acquisitions, along with debt service and general and administrative expenses. We budget our cash development costs on an annual basis. Budgeted amounts are subject to change due to delays or accelerations in construction or regulatory approvals, changes in inflation rates and other increases (or decreases) in costs. We may also modify our development plans or change the sequencing of our communities in response to changing economic conditions, consumer preferences and other factors, which could have a material impact on the timing and amount of our development costs. Budgeted amounts are expected to be funded through a combination of available cash, cash flows from land sales at our communities and reimbursements from public financing, including community facilities districts, tax increment financing and local, state and federal grants. Cash flows from our communities may occur in uneven patterns as cash is primarily generated by land sales and reimbursements, which can occur at various points over the life cycle of our communities.

Previous wording

We currently expect to have sufficient capital to fund the horizontal development of our communities in accordance with our development plan for several years. The level of capital expenditures in any given year may vary due to, among other things, the number of communities or neighborhoods under development and the number of planned deliveries, which may vary based on market conditions. We may seek to raise additional capital by accessing the debt or equity capital markets or with one or more revolving or term loan facilities or other public or private financing alternatives, including entering into joint ventures. These financings may not be available on attractive terms, or at all.

Current wording

We currently expect to have sufficient capital to fund the horizontal development of our communities in accordance with our development plan and to pursue our growth strategies for several years. The level of capital expenditures in any given year may vary due to, among other things, the number of communities or neighborhoods under development and the number of planned deliveries, which may vary based on market conditions. We may seek to raise additional capital by accessing the debt or equity capital markets or with one or more revolving or term loan facilities or other public or private financing alternatives, including entering into joint ventures. These financings may not be available on attractive terms, or at all.

Previous wording

We had outstanding performance bonds of $367.0 million as of September 30, 2024 predominantly related to our Valencia community.

Current wording

We had outstanding performance bonds of $376.1 million as of March 31, 2025 predominantly related to our Valencia community.

Previous wording

We are a party to a tax receivable agreement (“TRA”) with current and former holders of Class A units of the operating company and the holders of Class A units of the San Francisco Venture. The TRA provides for payments by us to such investors or their successors in aggregate amounts equal to 85% of the cash savings, if any, in income tax that we realize as a result of certain tax attributes. We expect the TRA payments to be substantial. However, the actual amount and timing of any payments under the TRA will vary depending upon a number of factors, including the timing of exchanges of Class A units of the operating company or Class A units of the San Francisco Venture, the price of our Class A common shares at the time of such exchanges, the extent to which such exchanges are taxable and our ability to use the potential tax benefits, which will depend on the amount and timing of our taxable income and the rate at which we pay income tax. As of September 30, 2024, there were no amounts currently payable under the TRA. However, as a result of California Senate Bill 167 signed into law on June 27, 2024, which, in part, suspends the usage of California net operating loss deductions for tax years 2024 through 2026, TRA payments associated with the accelerated California taxes may become payable starting in 2026 through 2028. The majority of TRA payments, however, are expected to begin after 2028.

Current wording

We are a party to a tax receivable agreement (“TRA”) with current and former holders of Class A units of the operating company and the holders of Class A units of the San Francisco Venture. The TRA provides for payments by us to such investors or their successors in aggregate amounts equal to 85% of the cash savings, if any, in income tax that we realize as a result of certain tax attributes. We expect the TRA payments to be substantial. However, the actual amount and timing of any payments under the TRA will vary depending upon a number of factors, including the timing of exchanges of Class A units of the operating company or Class A units of the San Francisco Venture, the price of our Class A common shares at the time of such exchanges, the extent to which such exchanges are taxable and our ability to use the potential tax benefits, which will depend on the amount and timing of our taxable income and the rate at which we pay income tax. As of March 31, 2025, there were no amounts expected to be payable in 2025 under the TRA. However, TRA payments associated with California state taxes may become payable between 2026 and 2028 as a result of the passage in June 2024 of California Senate Bill 167, which, in part, suspends the usage of California net operating loss deductions for tax years 2024 through 2026. The majority of TRA payments, however, are not expected to begin until after 2028.

Previous wording

The following table outlines the primary components of net cash (used in) provided by operating, investing and financing activities (in thousands):

Current wording

The following table outlines the primary components of net cash provided by (used in) operating, investing and financing activities (in thousands):

Previous wording

Cash Flows from Operating Activities. Net cash used in operating activities was $67.6 million for the nine months ended September 30, 2024, compared to $65.1 million net cash provided by operating activities for the nine months ended September 30, 2023.

Current wording

Cash Flows from Operating Activities. Net cash provided by operating activities was $56.7 million for the three months ended March 31, 2025, compared to $26.4 million net cash used in operating activities for the three months ended March 31, 2024.

Previous wording

During the nine months ended September 30, 2023, we received $60.6 million from the sale of land at our Valencia segment. We also received incentive compensation payments of $22.0 million under our development management agreement with the Great Park Venture. The payment is net of $2.6 million that we concurrently distributed to the holders of the management company’s Class B units. Additionally, we received total distributions of $81.8 million from the Great Park Venture, of which $52.7 million is reflected as a return on our investment (operating activity) in the statement of cash flows with the balance reflected as an investing activity.

Current wording

During the three months ended March 31, 2025, we received incentive compensation payments of $30.4 million under our development management agreement with the Great Park Venture. Additionally, we received total distributions of $112.9 million from the Great Park Venture, of which $70.9 million is reflected as a return on our investment (operating activity) in the statement of cash flows with the balance reflected as an investing activity.

Previous wording

During the nine months ended September 30, 2024, we received incentive compensation payments of $23.2 million under our development management agreement with the Great Park Venture. The payment is net of $1.8 million that we concurrently distributed to the holders of the management company’s Class B units. As of September 30, 2024, the holders of the management company’s Class B units had no further distribution rights. Additionally, we received total distributions of $86.2 million from the Great Park Venture, of which $45.2 million is reflected as a return on our investment (operating activity) in the statement of cash flows with the balance reflected as an investing activity.

Current wording

During the three months ended March 31, 2024, we received incentive compensation payments of $6.4 million under our development management agreement with the Great Park Venture. Additionally, we received total distributions of $23.9 million from the Great Park Venture, of which $17.7 million is reflected as a return on our investment (operating activity) in the statement of cash flows with the balance reflected as an investing activity.

Previous wording

Major components of operating cash used in both periods consist of our continued investment in horizontal development at our communities and SG&A costs. During the nine months ended September 30, 2024, we paid $8.3 million for interest accrued through the settlement date on our existing 7.875% senior notes due November 2025 that were exchanged. The exchange of $523.5 million of our existing senior notes for new senior notes was accounted for as a debt modification under ASC 470-50. Under debt modification accounting, third party costs are expensed as incurred and reported as operating cash flows. Included in operating cash outflows during the nine months ended September 30, 2024 is $7.7 million in third party transaction and advisory costs incurred in connection with the senior notes exchange. During the nine months ended September 30, 2024, an additional $18.2 million was paid for interest due on our existing 7.875% senior notes and new 10.500% initial rate senior notes. During the nine months ended September 30, 2023, $24.6 million was paid for interest due on our existing 7.875% senior notes. Our horizontal development costs for the nine months ended September 30, 2023 were partially offset by $17.7 million in public financing reimbursements for public infrastructure development costs we incurred in Valencia anda nonrecurring $44.5 million recovery from a third party related to certain project development costs in Valencia.

Current wording

Major components of operating cash used in both periods consist of our continued investment in horizontal development at our communities and SG&A costs. During the three months ended March 31, 2024, we paid $8.3 million for interest accrued through the settlement date on our existing 7.875% senior notes due November 2025 that were exchanged. The exchange of $523.5 million of our existing senior notes for new senior notes was accounted for as a debt modification under ASC 470-50. Under debt modification accounting, third party costs are expensed as incurred and reported as operating cash flows. Included in operating cash outflows during the three months ended March 31, 2024 is $7.6 million in third party transaction and advisory costs incurred in connection with the senior notes exchange.

Previous wording

Cash Flows from Investing Activities. Net cash provided by investing activities was $41.2 million for the nine months ended September 30, 2024, compared to $29.9 million net cash provided by investing activities for the nine months ended September 30, 2023.

Current wording

Cash Flows from Investing Activities. Net cash provided by investing activities was $42.5 million for the three months ended March 31, 2025, compared to $6.2 million net cash provided by investing activities for the three months ended March 31, 2024.

Previous wording

During the nine months ended September 30, 2024, we received total distributions of $86.2 million from the Great Park Venture, of which $41.0 million is reflected as a return of our investment (investing activity) in the statement of cash flows with the balance reflected as an operating activity. During the nine months ended September 30, 2023, we received total distributions of $81.8 million from the Great Park Venture, of which $29.0 million is reflected as a return of our investment (investing activity) in the statement of cash flows with the balance reflected as an operating activity. Additionally, for the nine months ended September 30, 2024 and 2023, we received a distribution of $0.9 million and $0.9 million, respectively, from the Valencia Landbank Venture, which is reflected as a return of our investment (investing activity) in the statement of cash flows.

Current wording

During the three months ended March 31, 2025, we received total distributions of $112.9 million from the Great Park Venture, of which $42.0 million is reflected as a return of our investment (investing activity) in the statement of cash flows with the balance reflected as an operating activity. During the three months ended March 31, 2024, we received total distributions of $23.9 million from the Great Park Venture, of which $6.2 million is reflected as a return of our investment (investing activity) in the statement of cash flows with the balance reflected as an operating activity.

Previous wording

Cash Flows from Financing Activities. Net cash used in financing activities was $102.9 million for the nine months ended September 30, 2024, compared to $8.5 million net cash used in financing activities for the nine months ended September 30, 2023.

Current wording

Cash Flows from Financing Activities. Net cash used in financing activities was $1.8 million for the three months ended March 31, 2025, compared to $100.9 million net cash used in financing activities for the three months ended March 31, 2024.