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 March 31, 2026, approximately 65.4% 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 June 30, 2026, approximately 65.3% of the operating company. The operating company directly or indirectly owns equity interests in:

Previous wording

We reported a consolidated net loss of $5.0 million for the three months ended March 31, 2026, compared to net income of $60.6 million for the three months ended March 31, 2025. Our results for the quarter were primarily driven by the timing of residential land sales, as we did not complete any significant land closings during the period, and revenues were primarily generated from management services at our Great Park and Hearthstone segments. Selling, general and administrative (“SG&A”) expense totaled $14.7 million for the three months ended March 31, 2026. At March 31, 2026, we had $332.6 million in cash and $217.5 million available under our revolving credit facility, giving us total liquidity of $550.1 million.

Current wording

We reported consolidated net income of $29.9 million for the three months ended June 30, 2026, compared to net income of $8.6 million for the three months ended June 30, 2025. Our results for the quarter were primarily driven by management services revenue recognized at our Great Park and Hearthstone segments and equity in earnings from the Great Park Venture, which completed a significant land sale during the period. Selling, general and administrative (“SG&A”) expense totaled $14.3 million for the three months ended June 30, 2026. At June 30, 2026, we had $348.4 million in cash and $217.5 million available under our revolving credit facility, giving us total liquidity of $565.9 million.

Previous wording

At Valencia, our guest builders sold 90 homes during the first quarter of 2026, compared to 69 homes during the first quarter of 2025. At the Great Park Neighborhoods, guest builders sold a total of 82 homes during the first quarter of 2026, compared to 233 homes during the first quarter of 2025. While absorption has moderated compared to prior periods, we continue to see engagement from homebuyers across our communities and remain focused on managing the pace and structure of land sales to optimize long-term value.

Current wording

While market conditions remained uncertain during the second quarter of 2026, with consumer affordability and mortgage rates continuing to affect the pace of new home sales, we continued to see demand for homes and homesites at both our Great Park Neighborhoods and Valencia communities, although at a more measured pace. At Valencia, our guest builders sold 78 homes during the second quarter of 2026, compared to 90 homes during the first quarter of 2026. At the Great Park Neighborhoods, guest builders sold 56 homes during the second quarter of 2026, compared to 82 homes during the first quarter of 2026.

Previous wording

The following table summarizes our consolidated historical results of operations for the three months ended March 31, 2026 and 2025:

Current wording

The following table summarizes our consolidated historical results of operations for the three and six months ended June 30, 2026 and 2025:

Previous wording

Equity in (loss) 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.

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 loss from unconsolidated entities was $0.1 million for the three months ended March 31, 2026, a decrease from equity in earnings of $71.4 million for the three months ended March 31, 2025. Equity in loss for the three months ended March 31, 2026 was primarily a result of recognizing our share of the net loss generated by the Great Park Venture during the quarter, and equity in earnings for the three months ended March 31, 2025 was primarily a result of recognizing our share of the net income generated by the Great Park Venture from land sales during the quarter.

Current wording

Equity in earnings from unconsolidated entities was $41.0 million for the three months ended June 30, 2026, an increase from equity in earnings of $17.1 million for the three months ended June 30, 2025. Equity in earnings for the three months ended June 30, 2026 and 2025 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 loss of $5.9 million for the three months ended March 31, 2026 resulted in a $0.9 million tax benefit. Pre-tax income of $70.1 million for the three months ended March 31, 2025 resulted in a $9.5 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, 2026, 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, 2026 increased slightly as compared to our effective tax rate for the three months ended March 31, 2025 primarily due to the increase in disallowance of executive compensation expenses not deductible for tax.

Current wording

Income taxes. Pre-tax income of $36.1 million for the three months ended June 30, 2026 resulted in a $6.2 million tax provision. Pre-tax income of $9.9 million for the three months ended June 30, 2025 resulted in a $1.3 million tax provision. We assessed the realization of our net deferred tax asset and the need for a valuation allowance and determined that at June 30, 2026, 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 June 30, 2026 increased as compared to our effective tax rate for the three months ended June 30, 2025, primarily due to the increase in disallowance of executive compensation expenses not deductible for tax.

Previous wording

Net (loss) income attributable to noncontrolling interests. Until exchanged for our Class A common shares or, at our election, cash, noncontrolling interests represent interests held by other partners in the operating company and other members of the San Francisco Venture. Redeemable noncontrolling interests that contain features that may result in cash settlement include the interests held by other members in the Hearthstone Venture and its subsidiaries and Class C interests in the San Francisco Venture. Net (loss) income attributable to the noncontrolling interests on the condensed consolidated statement of operations represents the portion of earnings or losses attributable to the interests in our subsidiaries held by the noncontrolling interests.

Current wording

Net income attributable to noncontrolling interests. Until exchanged for our Class A common shares or, at our election, cash, noncontrolling interests represent interests held by other partners in the operating company and other members of the San Francisco Venture. Redeemable noncontrolling interests that contain features that may result in cash settlement include the interests held by other members in the Hearthstone Venture and its subsidiaries and Class C interests in the San Francisco Venture. Net income attributable to the noncontrolling interests on the condensed consolidated statement of operations represents the portion of earnings or losses attributable to the interests in our subsidiaries held by the noncontrolling interests.

Previous wording

Revenues. Revenues increased by $0.4 million, or 3.2%, to $13.6 million for the three months ended March 31, 2026, from $13.2 million for the three months ended March 31, 2025. The increase in revenues was primarily due to management services revenue recognized at our new Hearthstone segment, partially offset by a decrease in management services revenue at our Great Park segment during the three months ended March 31, 2026.

Current wording

Revenues. Revenues increased by $6.9 million, or 33.2%, to $27.5 million for the six months ended June 30, 2026, from $20.6 million for the six months ended June 30, 2025. The increase in revenues was primarily due to management services revenue recognized at our new Hearthstone segment, partially offset by a decrease in management services revenue at our Great Park segment during the six months ended June 30, 2026.

Previous wording

Cost of management services. Cost of management services increased by $3.8 million, or 125.2%, to $6.9 million for the three months ended March 31, 2026, from $3.1 million for the three months ended March 31, 2025. The increase was primarily due to the cost of management services recognized at our new Hearthstone segment, partially offset by a decrease in intangible asset amortization expense at our Great Park segment.

Current wording

Cost of management services. Cost of management services increased by $7.1 million, or 131.5%, to $12.5 million for the six months ended June 30, 2026, from $5.4 million for the six months ended June 30, 2025. The increase was primarily due to the cost of management services recognized at our new Hearthstone segment, partially offset by a decrease in intangible asset amortization expense at our Great Park segment.

Previous wording

The following tables reconcile the results of operations of our segments to our consolidated results for the three months ended March 31, 2026 and 2025 (in thousands):

Current wording

The following tables reconcile the results of operations of our segments to our consolidated results for the three and six months ended June 30, 2026 and 2025 (in thousands):

Previous wording

In November 2024, we received approvals from the City and County of San Francisco to (among other things) transfer approximately two million square feet of research and development and office space to Candlestick from The San Francisco Shipyard. Candlestick now has the potential to include up to approximately 2.8 million square feet of research and development and office space, approximately 7,200 homesites, and approximately 550,000 square feet of retail, hotel, entertainment and community uses. We have commenced engineering for the next phase of infrastructure at Candlestick and expect to begin construction in the first half of 2026.

Current wording

In November 2024, we received approvals from the City and County of San Francisco to (among other things) transfer approximately two million square feet of research and development and office space to Candlestick from The San Francisco Shipyard. Candlestick now has the potential to include up to approximately 2.8 million square feet of research and development and office space, approximately 7,200 homesites, and approximately 550,000 square feet of retail, hotel, entertainment and community uses. We recently recorded subdivision maps for the next phase of development at Candlestick and are scheduled to commence grading activities in the third quarter of 2026.

Previous wording

We have a 75% controlling financial interest in the Hearthstone Venture, which operates our residential asset management platform providing capital solutions to the U.S. homebuilding industry, primarily through land banking. The Hearthstone Venture’s operations include managing funds that acquire fully entitled residential land parcels and enter into option and development agreements with U.S. homebuilders. The funds then engage the homebuilders to complete the horizontal development of the land, after which the homebuilders acquire the fully developed homesites from the funds pursuant to the option agreements. The Hearthstone Venture manages these lot option programs across multiple U.S. markets, working with capital partners consisting of state employee pension plans and institutional and private equity. The Hearthstone Venture sources projects mainly from large U.S. publicly-traded homebuilders. The Hearthstone Venture receives asset management fees and under some arrangements may also receive performance fees upon achievement of stipulated investor returns. We completed our acquisition of the Hearthstone Venture on July 31, 2025. As of March 31, 2026, the Hearthstone Venture had $3.4 billion in assets under management, which consisted of approximately 30,000 lots with 12 separate homebuilders across 17 states.

Current wording

We have a 75% controlling financial interest in the Hearthstone Venture, which operates our residential asset management platform providing capital solutions to the U.S. homebuilding industry, primarily through land banking. The Hearthstone Venture’s operations include managing funds that acquire fully entitled residential land parcels and enter into option and development agreements with U.S. homebuilders. The funds then engage the homebuilders to complete the horizontal development of the land, after which the homebuilders acquire the fully developed homesites from the funds pursuant to the option agreements. The Hearthstone Venture manages these lot option programs across multiple U.S. markets, working with capital partners consisting of state employee pension plans and institutional and private equity. The Hearthstone Venture sources projects mainly from large U.S. publicly-traded homebuilders. The Hearthstone Venture receives asset management fees and under some arrangements may also receive performance fees upon achievement of stipulated investor returns. We completed our acquisition of the Hearthstone Venture on July 31, 2025. As of June 30, 2026, the Hearthstone Venture had $3.4 billion in assets under management, which consisted of approximately 31,000 lots with 12 separate homebuilders across 18 states.

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 11,800 homesites and approximately 4.1 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, 2026, had sold 9,603 homesites (including 853 affordable homesites).

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 11,800 homesites and approximately 4.1 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 June 30, 2026, had sold 9,643 homesites (including 893 affordable homesites).

Previous wording

During the three months ended March 31, 2026 and 2025, 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, 2026 and 2025, the Great Park Venture recognized $3.6 million and $2.4 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 for price participation related to a residential land sale that closed in 2023. As of December 31, 2025, substantially all of the homes related to the 2023 land sale had been sold to homebuyers.

Current wording

During the three months ended June 30, 2026 and 2025, 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 June 30, 2026 and 2025, the Great Park Venture recognized $2.4 million and $4.3 million, respectively, in profit participation revenues. During the three months ended June 30, 2025, the Great Park Venture recognized additional estimated variable consideration of $4.3 million for price participation related to a residential land sale that closed in 2023. As of December 31, 2025, substantially all of the homes related to the 2023 land sale had been sold to homebuyers.

Previous wording

Cost of land sales. The Great Park Venture closed no land sales and therefore had no cost of land sales for the three months ended March 31, 2026, compared to cost of land sales of $70.2 million for the three months ended March 31, 2025. 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 June 30, 2026 and 2025 were $37.6 million and $16.0 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. 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”). The annual fixed base fee is $13.5 million and the incentive compensation provisions of the development management agreement remain unchanged through the second renewal term. The decrease in management services related party revenue was mainly attributable to a decrease in variable incentive compensation revenue recognized during the three months ended March 31, 2026. For the three months ended March 31, 2026 and 2025, we recognized $3.5 million and $9.2 million, respectively, attributable to variable incentive compensation, which reflects changes in the estimate of the amount of incentive compensation we expected to be entitled to receive and changes in constraints on the estimate.

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”). The annual fixed base fee is $13.5 million and 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 an increase in variable incentive compensation revenue recognized during the three months ended June 30, 2026. For the three months ended June 30, 2026 and 2025, we recognized $5.8 million and $3.6 million, respectively, attributable to variable incentive compensation, which reflects changes in the estimate of the amount of incentive compensation we expected to be entitled to receive and changes in constraints on the estimate.

Previous wording

Management fees—related party. Management fees decreased by $0.7 million to $7.1 million for the three months ended March 31, 2026, from $7.9 million for the three months ended March 31, 2025. 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, 2026 that was lower than the cumulative adjustment recognized during the three months ended March 31, 2025.

Current wording

Management fees—related party. Management fees increased by $1.3 million to $9.0 million for the three months ended June 30, 2026, from $7.8 million for the three months ended June 30, 2025. 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 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 June 30, 2026 that was higher than the cumulative adjustment recognized during the three months ended June 30, 2025.

Previous wording

Land sales and related party land sales revenues. Land sales and related party land sales revenues decreased to $3.6 million for the three months ended March 31, 2026, from $285.4 million for the three months ended March 31, 2025. The decrease was primarily attributable to the recognition of revenue from the sale of residential 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 no land sales during the same period in 2026. 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.

Current wording

Land sales and related party land sales revenues. Land sales and related party land sales revenues decreased to $165.3 million for the six months ended June 30, 2026, from $357.6 million for the six months ended June 30, 2025. The decrease was primarily attributable to the recognition of revenue from the sale of 17.7 acres of commercial land planned for senior living uses at the Great Park Neighborhoods during the six months ended June 30, 2026, compared to the recognition of revenue from the sale of residential land at the Great Park Neighborhoods entitled for an aggregate of 407 homesites on 29.3 acres during the six months ended June 30, 2025. The base purchase price was $159.3 million for the 2026 land sales. For the 2025 land sales, the base purchase price was $342.6 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.

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 decreased by $1.0 million, or 31.0%, to $2.1 million for the three months ended March 31, 2026, from $3.1 million for the three months ended March 31, 2025. The decrease was mainly attributable to a decrease in intangible asset amortization expense recognized during the three months ended March 31, 2026.

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 $0.9 million, or 17.2%, to $4.5 million for the six months ended June 30, 2026, from $5.4 million for the six months ended June 30, 2025. The decrease was mainly attributable to a decrease in intangible asset amortization expense recognized during the six months ended June 30, 2026.

Previous wording

Selling, general, and administrative. SG&A expenses decreased by $1.6 million, or 58.3%, to $1.2 million for the three months ended March 31, 2026, from $2.8 million for the three months ended March 31, 2025. The decrease was mainly attributable to a decrease in marketing expenses and property maintenance expenses.

Current wording

Selling, general, and administrative. SG&A expenses decreased by $1.0 million, or 21.6%, to $3.6 million for the six months ended June 30, 2026, from $4.5 million for the six months ended June 30, 2025. The decrease was mainly attributable to a decrease in marketing expenses.

Previous wording

The table below reconciles the Great Park segment results to the equity in (loss) 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, 2026 and 2025.

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 and six months ended June 30, 2026 and 2025.

Previous wording

As of March 31, 2026, we had $332.6 million of consolidated cash and cash equivalents, compared to $425.5 million at December 31, 2025. As of March 31, 2026, no funds had been drawn on and no letters of credit were outstanding on the operating company’s $217.5 million unsecured revolving credit facility.

Current wording

As of June 30, 2026, we had $348.4 million of consolidated cash and cash equivalents, compared to $425.5 million at December 31, 2025. As of June 30, 2026, no funds had been drawn on and no letters of credit were outstanding on the operating company’s $217.5 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. Pursuant to a reimbursement deferral agreement, principal and interest payments under our related party reimbursement obligation were deferred through December 31, 2025, and during the three months ended March 31, 2026, the Company paid $40.1 million in principal and $6.2 million in accrued and current interest. Reimbursement payments may be further deferred when our related party receives an extension on the maturity date of the associated EB-5 loan liability. Our related party has a history of receiving maturity date extensions, however, further extensions are not within our control and there can be no assurance that any such extensions will be obtained in the future.

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 were deferred through December 31, 2025, and during the six months ended June 30, 2026, the Company paid $42.2 million in principal and $6.4 million in accrued and current interest. Reimbursement payments may be further deferred when our related party receives an extension on the maturity date of the associated EB-5 loan liability. Our related party has a history of receiving maturity date extensions, however, further extensions are not within our control and there can be no assurance that any such extensions will be obtained in the future.

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. At Hearthstone, we expect to make co-investment contributions to our existing and new lot option funds as we invest in growing the Hearthstone management platform over the next 12 months. We typically contribute a 1% co-investment alongside our capital partners. We expect to meet our cash requirements for at least the next 12 months with available cash, distributions from our unconsolidated entities, collection of development management fees, including incentive compensation, under our development management agreement with the Great Park Venture, asset management fees at the Hearthstone Venture, proceeds from land sales, reimbursements from public financing 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 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. At Hearthstone, we expect to make co-investment contributions to our existing and new lot option funds as we invest in growing the Hearthstone management platform over the next 12 months. We typically contribute a 1% co-investment alongside our capital partners. We expect to meet our cash requirements for at least the next 12 months with available cash, distributions from our unconsolidated entities, collection of development management fees, including incentive compensation, under our development management agreement with the Great Park Venture, asset management fees at the Hearthstone Venture, proceeds from land sales, reimbursements from public financing and access to financing sources, including our revolving credit facility.

Previous wording

We had outstanding performance bonds of $347.6 million as of March 31, 2026 predominantly related to our Valencia community.

Current wording

We had outstanding performance bonds of $484.4 million as of June 30, 2026 mostly 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. During the three months ended March 31, 2026, we made total payments of $0.7 million under the TRA. Additional TRA payments associated with California state taxes may become payable between 2027 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 for the next several years.

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. During the six months ended June 30, 2026, we made total payments of $0.7 million under the TRA. Additional TRA payments associated with California state taxes may become payable between 2027 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 for the next several years.

Previous wording

Cash Flows from Operating Activities. Net cash used in operating activities was $44.5 million for the three months ended March 31, 2026, compared to $56.7 million net cash provided by operating activities for the three months ended March 31, 2025. 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, 2026, we paid $6.2 million for accrued and current interest due under our related party reimbursement obligation.

Current wording

Cash Flows from Operating Activities. Net cash used in operating activities was $54.7 million for the six months ended June 30, 2026, compared to $14.9 million net cash used in operating activities for the six months ended June 30, 2025. 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 six months ended June 30, 2026, we paid $18.6 million for interest due on our 8.000% senior notes due October 2030, and during the six months ended June 30, 2025, we paid $27.5 million for interest due on our previously outstanding senior notes. Additionally, for the six months ended June 30, 2026, we paid $6.4 million for accrued and current interest due under our related party reimbursement obligation.

Previous wording

During the three months ended March 31, 2026, we received total distributions of $2.8 million mostly from funds managed by the Hearthstone Venture, of which $0.9 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.

Current wording

During the six months ended June 30, 2026, we received incentive compensation payments of $9.3 million under our development management agreement with the Great Park Venture. Additionally, we received a distribution of $34.4 million from the Great Park Venture, all of which is reflected as a return on our investment (operating activity) in the statement of cash flows, total distributions of $33.5 million from the Gateway Commercial Venture, of which $0.7 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 and total distributions of $5.3 million mostly from funds managed by the Hearthstone Venture, of which $1.6 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. As of June 30, 2026, the Gateway Commercial Venture had no remaining operations or activities.

Previous 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.

Current wording

During the six months ended June 30, 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

Cash Flows from Investing Activities. Net cash used in investing activities was $0.3 million for the three months ended March 31, 2026, compared to $42.5 million net cash provided by investing activities for the three months ended March 31, 2025.

Current wording

Cash Flows from Investing Activities. Net cash provided by investing activities was $32.2 million for the six months ended June 30, 2026, compared to $42.4 million net cash provided by investing activities for the six months ended June 30, 2025.

Previous wording

During the three months ended March 31, 2026, we received total distributions of $2.8 million mostly from funds managed by the Hearthstone Venture, of which $1.9 million is reflected as a return of our investment (investing activity) in the statement of cash flows. During the three months ended March 31, 2026, we co-invested $2.1 million to funds managed by the Hearthstone Venture.

Current wording

During the six months ended June 30, 2026, we received total distributions of $33.5 million from the Gateway Commercial Venture, of which $32.8 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 and total distributions of $5.3 million mostly from funds managed by the Hearthstone Venture, of which $3.7 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. As of June 30, 2026, the Gateway Commercial Venture had no remaining operations or activities. Additionally, during the six months ended June 30, 2026, we co-invested $4.1 million to funds managed by the Hearthstone Venture.

Previous 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.

Current wording

During the six months ended June 30, 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.

Previous wording

Cash Flows from Financing Activities. Net cash used in financing activities was $48.2 million for the three months ended March 31, 2026, compared to $1.8 million net cash used in financing activities for the three months ended March 31, 2025.

Current wording

Cash Flows from Financing Activities. Net cash used in financing activities was $54.7 million for the six months ended June 30, 2026, compared to $1.8 million net cash used in financing activities for the six months ended June 30, 2025.

Previous wording

For the three months ended March 31, 2026 and 2025, we used $6.1 million and $1.8 million, respectively, to net settle share-based compensation awards with employees for tax withholding purposes. We also made payments of $40.1 million to reduce our related party reimbursement obligation and $0.7 million under our tax receivable agreement during the three months ended March 31, 2026.

Current wording

During the six months ended June 30, 2026, we used $3.1 million to repurchase our Class A common shares from the open market. For the six months ended June 30, 2026 and 2025, we used $6.5 million and $1.8 million, respectively, to net settle share-based compensation awards with employees for tax withholding purposes. We also made payments of $42.2 million to reduce our related party reimbursement obligation and $0.7 million under our tax receivable agreement during the six months ended June 30, 2026.

Previous wording

During the three months ended March 31, 2026, our 65.4% ownership percentage in the operating company increased slightly primarily due to 2.4 million restricted share units that were settled for Class A common shares, partially offset by our reacquisition of approximately 1.1 million of such Class A common shares from employees for income tax withholding purposes upon vesting. The issuances and settlements resulted in the operating company issuing to us an equal number of Class A units of the operating company or retiring an equal number of Class A units of the operating company that we previously held.

Current wording

During the six months ended June 30, 2026, our 65.3% ownership percentage in the operating company increased slightly primarily due to 2.5 million restricted share units that were settled for Class A common shares, partially offset by our reacquisition of approximately 1.2 million of such Class A common shares from employees for income tax withholding purposes upon vesting and the repurchase of approximately 0.6 million Class A common shares from the open market. The issuances and settlements resulted in the operating company issuing to us an equal number of Class A units of the operating company or retiring an equal number of Class A units of the operating company that we previously held.

Previous wording

There have been no significant changes to our critical accounting estimates during the three months ended March 31, 2026 as compared to those disclosed in Item 7, “Management’s Discussion and Analysis of Financial Condition and Results of Operations,” which is presented in our Annual Report on Form 10-K for the fiscal year ended December 31, 2025.

Current wording

There have been no significant changes to our critical accounting estimates during the six months ended June 30, 2026 as compared to those disclosed in Item 7, “Management’s Discussion and Analysis of Financial Condition and Results of Operations,” which is presented in our Annual Report on Form 10-K for the fiscal year ended December 31, 2025.