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What changed in Five Point Holdings, LLC's 10-K — 2023 vs 2024

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Paragraph-level year-over-year comparison of Five Point Holdings, LLC's 2023 and 2024 10-K annual filings, covering the Business, Risk Factors, Legal Proceedings, Cybersecurity, MD&A and Market Risk sections. Every new, removed and edited paragraph is highlighted side-by-side so you can see exactly what management changed in the 2024 report.

+290 added−300 removedSource: 10-K (2025-02-24) vs 10-K (2024-03-04)

Top changes in Five Point Holdings, LLC's 2024 10-K

290 paragraphs added · 300 removed · 231 edited across 8 sections

Item 1. Business

Business — how the company describes what it does

54 edited+8 added−21 removed75 unchanged
Biggest changeOur Business We are primarily engaged in the business of planning and developing our three mixed-use planned communities, and our principal source of revenue is the sale of residential and commercial land sites to homebuilders, commercial developers and commercial buyers. We may also retain a portion of the commercial and multi-family properties in our communities as income-producing assets.
Biggest changeWe may also elect to opportunistically retain a portion of the commercial and multi-family properties in our communities as income-producing assets. Our three mixed-use planned communities are owned either directly or through a joint venture.
Alvarado was appointed our Chief Operating Officer in February 2024 and has been our Chief Legal Officer, Vice President and Secretary since May 2016. From 2011 until May 2016, Mr. Alvarado served as General Counsel for the management company. Prior to joining the management company, Mr.
Michael Alvarado . Mr. Alvarado was appointed our Chief Operating Officer in February 2024 and has been our Chief Legal Officer, Vice President and Secretary since May 2016. From 2011 until May 2016, Mr. Alvarado served as General Counsel for the management company. Prior to joining the management company, Mr.
Significant factors that we believe allow us to compete effectively in this business include: • the size and scope of our mixed-use planned communities located in desirable and supply constrained California coastal markets; • the recreational and cultural amenities available within our communities; • the commercial centers in our communities; • our relationships with homebuilders; • the proximity of our communities to major metropolitan areas; • experienced and proven leadership with expertise in partnering with governmental entities; • significant discretion in timing and amount of land development expenditures; and • flexible capital structure with a conservative operating philosophy.
Significant factors that we believe allow us to compete effectively in this business include: • the size and scope of our mixed-use planned communities located in desirable and supply constrained California coastal markets; • the recreational and cultural amenities available within or nearby our communities; • the commercial centers in our communities; • our relationships with homebuilders; • the proximity of our communities to major metropolitan areas; • experienced and proven leadership with expertise in partnering with governmental entities; • significant discretion in timing and amount of land development expenditures; and • flexible capital structure with a conservative operating philosophy.
Hedigan has been our Chief Executive Officer since February 2022. Prior to his appointment, Mr. Hedigan served as President of Land Sales and Home Building for the Irvine Company from 2013 to 2021, where he oversaw the design, building and sales of new homes in the master-planned villages of the Irvine Ranch in Orange County, California. Michael Alvarado . Mr.
Hedigan has been our President and Chief Executive Officer since February 2022. Prior to his appointment, Mr. Hedigan served as President of Land Sales and Home Building for the Irvine Company from 2013 to 2021, where he oversaw the design, building and sales of new homes in the master-planned villages of the Irvine Ranch in Orange County, California.
Our company has an entity structure in which our two largest equity owners, Lennar and Castlelake, and our founder and Chairman Emeritus, Emile Haddad, separately hold, in addition to interests in our common shares, equity interests in either or both the operating company or the San Francisco Venture that can be exchanged for, at our option, either our Class A common shares or cash.
Our company has an entity structure in which our two largest equity owners, Lennar and GFFP, and our founder and Chairman Emeritus, Emile Haddad, separately hold, in addition to interests in our common shares, equity interests in either or both the operating company or the San Francisco Venture that can be exchanged for, at our option, either our Class A common shares or cash.
We conduct all of our businesses in or through the operating company, which owns, directly or indirectly, equity interests in, and controls the management of FPL, the San Francisco Venture and the management company. Class A units of the operating company that we do not own are held by affiliates of Lennar, Castlelake, and Mr.
We conduct all of our businesses in or through the operating company, which owns, directly or indirectly, equity interests in, and controls the management of FPL, the San Francisco Venture and the management company. Class A units of the operating company that we do not own are held by affiliates of Lennar, GFFP, and Mr.
While investigation and cleanup activities have been substantially completed for Great Park Neighborhoods, significant work is contemplated over the next few years for certain parcels within The San Francisco Shipyard, which will delay the transfer of such parcels to us for development.
While investigation and cleanup activities have been substantially completed for Great Park Neighborhoods, significant work is contemplated over the next several years for certain parcels within The San Francisco Shipyard, which will delay the transfer of such parcels to us for development.
Our operations relating to these segments are discussed in more detail below in the sections titled “Our Communities” and “Commercial.” Our Communities Valencia Valencia is a mixed-use planned community in Los Angeles County that spans approximately 15,000 acres and can include up to approximately 21,500 homesites, approximately 11.5 million square feet of commercial space, approximately 50 miles of trails, approximately 275 acres of community parks and approximately 10,000 acres of protected open space.
Our operations relating to these segments are discussed in more detail below in the section titled “Our Communities.” Our Communities Valencia Valencia is a mixed-use planned community in Los Angeles County that spans approximately 15,000 acres and can include up to approximately 21,500 homesites, approximately 11.5 million square feet of commercial space, approximately 50 miles of trails, approximately 275 acres of community parks and approximately 10,000 acres of protected open space.
All of our development sites and projects have 6 Table of Contents either been or continue to be investigated, remediated or reviewed (with documented EISs, FOSTs and EIRs, as applicable) in accordance with the above-described and other applicable environmental laws to determine the suitability of their proposed uses and to protect human health and the environment.
All of our development sites and projects have either been or continue to be investigated, remediated or reviewed (with documented EISs, FOSTs and EIRs, as applicable) in accordance with the above-described and other applicable environmental laws to determine the suitability of their proposed uses and to protect human health and the environment.
As a result of the foregoing, we could potentially incur material liabilities. We are also subject to a variety of other local, state, federal and other laws and regulations concerning the environment, including those governing air emissions, wastewater discharges and use and disposal of hazardous or toxic substances.
As a result of the foregoing, we could potentially incur material liabilities. 6 Table of Contents We are also subject to a variety of other local, state, federal and other laws and regulations concerning the environment, including those governing air emissions, wastewater discharges and use and disposal of hazardous or toxic substances.
In addition, you may obtain the documents that we file with the SEC from the SEC’s website at www.sec.gov. We use our investor relations website as a means of disclosing material non-public information and for complying with our disclosure obligations under Regulation FD.
In addition, you may obtain the documents that we file with the SEC from the SEC’s website at www.sec.gov. 8 Table of Contents We use our investor relations website as a means of disclosing material non-public information and for complying with our disclosure obligations under Regulation FD.
In some cases, development areas have obtained entitlements and approvals allowing homes and commercial buildings to be built and sold, and in other cases development areas require further discretionary entitlements or approvals prior to the commencement of construction. In the past, our approvals have been challenged by third parties.
In some cases, development areas have obtained entitlements and 5 Table of Contents approvals allowing homes and commercial buildings to be built and sold, and in other cases development areas require further discretionary entitlements or approvals prior to the commencement of construction. In the past, our approvals have been challenged by third parties.
Although we have general plan and zoning approvals for our communities, individual development areas within our communities are at various stages of planning and development and have received different levels of discretionary entitlements and approvals. For additional information, see “—Our Communities” below. 2 Table of Contents Horizontal development (infrastructure) .
Although we have general plan and zoning approvals for our communities, individual development areas within our communities are at various stages of planning and development and have received different levels of discretionary entitlements and approvals. For additional information, see “—Our Communities” below. Horizontal development (infrastructure) .
As of December 31, 2023, builder sales totaled 6,376 market rate homes at the Great Park Neighborhoods (including 38 homes under a fee build arrangement). The Great Park Venture reacquired the development rights equivalent to approximately one million square feet that had been previously sold with the Five Point Gateway Campus.
As of December 31, 2024, builder sales totaled 6,817 market rate homes at the Great Park Neighborhoods (including 38 homes under a fee build arrangement). The Great Park Venture reacquired the development rights equivalent to approximately one million square feet that had been previously sold with the Five Point Gateway Campus.
We continually evaluate our plans for each community and make adjustments that we deem appropriate based on changes in local economic factors and other market dynamics. Entitlements . We typically obtain all discretionary entitlements and approvals necessary to develop the infrastructure within our communities and prepare our residential and commercial lots for construction.
We continually evaluate our plans for each community and make adjustments that we deem appropriate based on changes in local economic factors and other market dynamics. 2 Table of Contents Entitlements . We typically obtain all discretionary entitlements and approvals necessary to develop the infrastructure within our communities and prepare our residential and commercial lots for construction.
Until Class A units of the operating company are exchanged or redeemed, the capital associated with Class A units of the operating company not held by us is presented within “noncontrolling interests” on our consolidated balance sheet.
Until Class A units of the operating company are exchanged or redeemed, the capital associated with Class A units of the operating company not held by us is 1 Table of Contents presented within “noncontrolling interests” on our consolidated balance sheet.
The information contained in, or that can be accessed through, our website is not incorporated by reference and is not a part of this annual report on Form 10-K. 9 Table of Contents
The information contained in, or that can be accessed through, our website is not incorporated by reference and is not a part of this annual report on Form 10-K.
McWilliams was President of Newhall Land & Farming. Kim Tobler . Mr. Tobler was appointed our Chief Financial Officer in September 2023. Mr. Tobler joined us in 2016, and prior to his appointment as Chief Financial Officer, he most recently served as our Vice President – Treasury and Tax.
McWilliams was President of Newhall Land & Farming. Kim Tobler . Mr. Tobler has been our Chief Financial Officer, Treasurer and Vice President since September 2023. Mr. Tobler joined us in 2016, and prior to his appointment as Chief Financial Officer, he most recently served as our Vice President – Treasury and Tax.
In August 2017, we acquired a 75% interest in the Gateway Commercial Venture, the entity that owns portions of the Five Point Gateway Campus.
In August 2017, we acquired a 75% interest in the Gateway Commercial Venture, the entity that previously owned portions of the Five Point Gateway Campus.
The first homesites at the Great Park Neighborhoods were sold in April 2013, and as of December 31, 2023, the Great Park Venture had sold 8,124 homesites (including 853 affordable homesites) and 153 acres of commercial land, including the Five Point Gateway Campus, allowing for development of up to approximately 3.5 million square feet of commercial office and research and development space.
The first homesites at the Great Park Neighborhoods were sold in April 2013, and as of December 31, 2024, the Great Park Venture had sold 8,683 homesites (including 853 affordable homesites) and approximately 166 acres of commercial land, including the Five Point Gateway Campus, allowing for development of up to approximately 3.6 million square feet of commercial office and research and development space.
The Class A units of the San Francisco Venture, which are owned by affiliates of Lennar and Castlelake, are intended to be economically equivalent to Class A 1 Table of Contents units of the operating company.
The Class A units of the San Francisco Venture, which are owned by affiliates of Lennar and GFFP, are intended to be economically equivalent to Class A units of the operating company.
Information about our Executive Officers The following individuals are our executive officers: Name Age Position Daniel Hedigan 70 Chief Executive Officer Michael Alvarado 58 Chief Operating Officer, Chief Legal Officer, Vice President and Secretary Greg McWilliams 72 Chief Policy Officer Kim Tobler 64 Chief Financial Officer, Treasurer and Vice President Daniel Hedigan. Mr.
Information about our Executive Officers The following individuals are our executive officers: Name Age Position Daniel Hedigan 71 President and Chief Executive Officer Michael Alvarado 59 Chief Operating Officer, Chief Legal Officer, Vice President and Secretary Greg McWilliams 73 Chief Policy Officer Kim Tobler 65 Chief Financial Officer, Treasurer and Vice President Daniel Hedigan. Mr.
Tax Classification We have elected to be treated as a corporation for U.S. federal income tax purposes. As a result, an owner of our shares will not report our items of income, gain, loss and deduction on its U.S. federal income tax return, nor will an owner of our shares receive a Schedule K-1.
As a result, an owner of our shares will not report our items of income, gain, loss and deduction on its U.S. federal income tax return, nor will an owner of our shares receive a Schedule K-1.
Based on the closing price of our Class A common shares on February 29, 2024 ($3.27), our market capitalization on a fully exchanged basis was approximately $485.0 million. (2) The operating company owns all of the outstanding Class B units of the San Francisco Venture.
Based on the closing price of our Class A common shares on February 14, 2025 ($5.88), our market capitalization on a fully exchanged basis was approximately $874.6 million. (2) The operating company owns all of the outstanding Class B units of the San Francisco Venture.
Once these primary entitlements are obtained, we continue to refine the mixed-use plan for each community by planning specific development areas and obtaining the necessary governmental approvals for a development area.
We have incurred significant costs and expenses in order to obtain the primary entitlements (general plan and zoning approvals) for our communities. Once these primary entitlements are obtained, we continue to refine the mixed-use plan for each community by planning specific development areas and obtaining the necessary governmental approvals for a development area.
The diagram below presents a simplified depiction of our current organizational structure. (1) Through a wholly owned subsidiary, we serve as sole managing general partner of the operating company, and as of December 31, 2023, we owned approximately 62.6% of the outstanding Class A units of the operating company.
(1) Through a wholly owned subsidiary, we serve as sole managing general partner of the operating company, and as of December 31, 2024, we owned approximately 62.6% of the outstanding Class A units of the operating company.
Navy and could lead to additional legal claims or government investigations, all of which could in turn further delay or impede our future development of such parcels.
These activities have delayed the remaining land transfers from the U.S. Navy and could lead to additional legal claims or government investigations, all of which could in turn further delay or impede our future development of such parcels.
Candlestick and The San Francisco Shipyard Candlestick and The San Francisco Shipyard, located on approximately 800 acres of bayfront property in the City of San Francisco, can include up to approximately 12,000 homesites, approximately 6.3 million square feet of commercial space, 3 Table of Contents approximately 100,000 square feet of community space, artist studios and approximately 355 acres of parks and open space.
As of December 31, 2024, we had sold 3,088 homesites, and builders had sold 1,599 homes to homebuyers since home sales commenced in May 2021. 3 Table of Contents Candlestick and The San Francisco Shipyard Candlestick and The San Francisco Shipyard, located on approximately 800 acres of bayfront property in the City of San Francisco, can include up to approximately 12,000 homesites, approximately 6.3 million square feet of commercial space, approximately 100,000 square feet of community space, artist studios and approximately 355 acres of parks and open space.
Department of Defense allocated $36.0 million to help fund resampling efforts at The San Francisco Shipyard. An additional $60.4 million to fund resampling efforts was approved as part of a 2019 military construction spending bill. These activities have delayed the remaining land transfers from the U.S.
Navy and other regulatory agencies to undertake additional sampling. As part of the 2018 Congressional spending bill, the U.S. Department of Defense allocated $36.0 million to help fund resampling efforts at The San Francisco Shipyard. An additional $60.4 million to fund resampling efforts was approved as part of a 2019 military construction spending bill.
Holders of legacy interests in the Great Park Venture were entitled to receive priority distributions up to an aggregate amount of $565.0 million, of which $546.9 million has been distributed as of February 29, 2024. We are the administrative member of the Great Park Venture.
Holders of legacy interests in the Great Park Venture were entitled to receive priority distributions up to an aggregate amount of $565.0 million, all of which had been distributed as of December 31, 2024, as a result of which, the legacy interests are no longer deemed to be outstanding. We are the administrative member of the Great Park Venture.
We also regularly assess our development plan and may retain a portion of the commercial and multi-family properties within our communities as income-producing assets. Vertical development (construction) . We refer to the process of building structures (buildings or houses) and preparing them for occupancy as “vertical development.” Single-family residences in our communities are built by third-party homebuilders.
We refer to the process of building structures (buildings or houses) and preparing them for occupancy as “vertical development.” Single-family residences in our communities are built by third-party homebuilders. Commercial buildings in our communities are usually built by a third-party developer or the buyer.
Once complete, the cleanup is documented in a remedial action completion report. FOST. Prior to conveyance of real property, CERCLA requires the U.S. Navy to remediate hazardous substances to a level consistent with the protection of human health and the environment. Following the completion and approval of the remedial action completion report, the U.S.
Navy to remediate hazardous substances to a level consistent with the protection of human health and the environment. Following the completion and approval of the remedial action completion report, the U.S.
Navy documents and publishes the decision in the record of decision, which responds to all comments on the proposed plan. Remedial design. The remedial design sets forth details of how the remedies identified in the record of decision will be carried out. The remedial design includes a detailed engineering design for implementing, operating and maintaining the selected cleanup alternative.
The remedial design sets forth details of how the remedies identified in the record of decision will be carried out. The remedial design includes a detailed engineering design for implementing, operating and maintaining the selected cleanup alternative. The U.S. Navy also distributes a fact sheet to the public before beginning work on the cleanup. Remedial action work plan/remedial action implementation.
We also typically obtain all discretionary entitlements and approvals that the homebuilder or commercial builder will need to build homes or commercial buildings on our lots, although we may from time to time allocate responsibility for obtaining certain discretionary entitlements to a homebuilder or commercial builder. 5 Table of Contents We have incurred significant costs and expenses over the last 10 to 15 years in order to obtain the primary entitlements (general plan and zoning approvals) for our communities.
We also typically obtain all discretionary entitlements and approvals that the homebuilder or commercial builder will need to build homes or commercial buildings on our lots, although we may from time to time allocate responsibility for obtaining certain discretionary entitlements to a homebuilder or commercial builder.
The proposed plan summarizes the findings of the remedial investigation and proposes a preferred remedial approach for each area of concern in the parcel based on the options evaluated in the feasibility study.
The proposed plan summarizes the findings of the remedial investigation and proposes a preferred remedial approach for each area of concern in the parcel based on the options evaluated in the feasibility study. This step includes a public meeting to provide the public with relevant information and an opportunity to comment on the preferred cleanup alternative. Record of decision.
Development Management Services Through the management company, we receive fees for providing development management services for Great Park Neighborhoods and for providing property management services to the Gateway Commercial Venture. Competition We compete with other residential, retail and commercial property developers in the development of properties in the Northern and Southern California markets.
Competition We compete with other residential, retail and commercial property developers in the development of properties in the Northern and Southern California markets.
Our planning and development process involves the following components: Mixed-use planning . We design all aspects of our communities, creating highly desirable places to live, work, shop and enjoy an active lifestyle. Our designs include a wide range of amenities, such as high quality public schools, parks and recreational areas, entertainment venues and walking and biking trails.
Our planning and development process for our existing communities involves the following components: Mixed-use planning . We design all aspects of our communities, creating highly desirable places to live, work, shop and enjoy an active lifestyle.
Other Properties We own approximately 16,000 acres adjacent to our Valencia community in Ventura County that are primarily used for agriculture and energy operations. We also own remnant commercial, residential and open space land in Los Angeles County that is planned to be sold or deeded to third parties as we develop our Valencia community.
Other Properties We own approximately 16,000 acres adjacent to our Valencia community in Ventura County that are primarily used for agriculture and energy operations.
The U.S. Navy also distributes a fact sheet to the public before beginning work on the cleanup. Remedial action work plan/remedial action implementation. The U.S. Navy conducts remedial action in accordance with an approved remedial action work plan, which is based on the remedial design. Remedial action completion report.
The U.S. Navy conducts remedial action in accordance with an approved remedial action work plan, which is based on the remedial design. Remedial action completion report. Once complete, the cleanup is documented in a remedial action completion report. FOST. Prior to conveyance of real property, CERCLA requires the U.S.
Commercial buildings in our communities are usually built by a third-party developer or the buyer. For commercial or multi-family properties that we retain, we may construct the building ourselves or enter into a joint venture with an established developer to construct a particular property. Community programming . Our community building efforts go beyond development and construction.
We do not currently intend to engage in vertical development and do not currently hold any commercial assets, however, for commercial or multi-family properties that we may retain in the future, we may construct the building ourselves or enter into a joint venture with an established developer to construct a particular property. Community programming .
As a result, many of the mixed-use planning, entitlement, development, sales and other activities described above may occur at the same time in different locations within a single community. Further, depending on the specific plans for each community and market conditions, we may vary the timing of certain of these activities.
In order to balance the timing of our revenues and expenditures, we typically sequence the development of individual neighborhoods or villages within our communities. As a result, many of the mixed-use planning, entitlement, development, sales and other activities described above may occur at the same time in different locations within a single community.
(collectively, “Tetra Tech”), contractors hired by the U.S. Navy, misrepresented sampling results at The San Francisco Shipyard have resulted in data reevaluation, governmental investigations, criminal proceedings, lawsuits, and a determination by the U.S. Navy and other regulatory agencies to undertake additional sampling. As part of the 2018 Congressional spending bill, the U.S.
Navy, we had previously expected the U.S. Navy to deliver this property between 2019 and 2022. However, allegations that Tetra Tech, Inc. and Tetra Tech EC, Inc. (collectively, “Tetra Tech”), contractors hired by the U.S. Navy, misrepresented sampling results at The San Francisco Shipyard have resulted in data reevaluation, governmental investigations, criminal proceedings, lawsuits, and a determination by the U.S.
Human Capital We are innovators and collaborators in the evolution of cities in coastal California, and our associates are the force behind the success of our communities. We believe in cultivating a work environment that fosters inclusion, diversity of thought, professional development and opportunities to grow and share innovative ideas across all our community elements.
We believe in cultivating a work environment that fosters accountability, professional development and opportunities to grow and share innovative ideas across all our community elements. Our associates are expected to exhibit and promote honest, ethical and respectful conduct in the workplace.
All of our associates must adhere to a code of business conduct and ethics that sets standards for appropriate behavior and participate in required training on preventing and identifying harassment and discrimination. 8 Table of Contents We believe that diversity within our employee base helps us to incorporate a wide range of perspectives into the development of our communities.
All of our associates must adhere to a code of business conduct and ethics that sets standards for appropriate behavior and participate in required training on preventing and identifying harassment and discrimination. We have designed our compensation and benefits programs to attract, retain and engage talented individuals.
At December 31, 2023, we had approximately 90 employees, all of whom were working full-time.
At December 31, 2024, women constituted approximately 48% of our workforce, ethnic and racial minorities constituted approximately 32% of our workforce, and we had approximately 88 employees, all of whom were working full-time.
Navy satisfactorily completes its finding of suitability to transfer, or “FOST,” process, which involves multiple levels of environmental and governmental investigation, analysis, review, comment and approval. Based on our discussions with the U.S. Navy, we had previously expected the U.S. Navy to deliver this property between 2019 and 2022. However, allegations that Tetra Tech, Inc. and Tetra Tech EC, Inc.
At The San Francisco Shipyard, approximately 408 acres are still owned by the U.S. Navy and will not be conveyed to us until the U.S. Navy satisfactorily completes its finding of suitability to transfer, or “FOST,” process, which involves multiple levels of environmental and governmental investigation, analysis, review, comment and approval. Based on our discussions with the U.S.
Each community is comprised of several villages or neighborhoods, each of which offers a range of housing types, sizes and prices.
Our designs include a wide range of amenities, such as high quality public schools, parks and recreational areas, entertainment venues and walking and biking trails. Each community is comprised of several villages or neighborhoods, each of which offers a range of housing types, sizes and prices.
Navy documents its findings that such remediation has occurred and that the property is suitable for transfer, consistent with all applicable laws and authorities, in a FOST. Investment Policies Investments in Real Estate or Interests in Real Estate We are a real estate development and operating company that specializes in the development and operation of mixed-use planned communities.
Navy documents its findings that such remediation has occurred and that the property is suitable for transfer, consistent with all applicable laws and authorities, in a FOST. 7 Table of Contents Human Capital We are innovators and collaborators in the evolution of cities in coastal California, and our associates are the force behind the success of our communities.
Our Segments We have organized our operations into four reportable segments, three of which are tied to our communities (our Valencia, San Francisco and Great Park segments) and one relating to our commercial operations (our Commercial segment).
Further, depending on the specific plans for each community and market conditions, we may vary the timing of certain of these activities. Our Segments We have organized our operations into three reportable segments, all of which are tied to our communities (our Valencia, San Francisco and Great Park segments).
We believe community building efforts create loyal residents that can become repeat customers within our multi-generational communities. Sequencing . In order to balance the timing of our revenues and expenditures, we typically sequence the development of individual neighborhoods or villages within our communities.
Our community building efforts go beyond development and construction. We offer numerous community programs with a goal of building a community that transcends the physical features of our development and connects neighbors through their interests. We believe community building efforts create loyal residents that can become repeat customers within our multi-generational communities. Sequencing .
The Gateway Commercial Venture owns one of the four buildings and approximately 50 acres of commercial land with additional development rights at the Five Point Gateway Campus. We do not include the Gateway Commercial Venture as a consolidated subsidiary, but rather as an equity method investee, in our consolidated financial statements.
We do not include the Gateway Commercial Venture as a consolidated subsidiary, but rather as an equity method investee, in our consolidated financial statements. Tax Classification We have elected to be treated as a corporation for U.S. federal income tax purposes.
This step includes a public meeting to provide the public with relevant information and an opportunity to comment on the preferred cleanup alternative. 7 Table of Contents Record of decision. Once the U.S. Navy, the USEPA and the State of California select and approve the remedy for the parcel, the U.S.
Once the U.S. Navy, the USEPA and the State of California select and approve the remedy for the parcel, the U.S. Navy documents and publishes the decision in the record of decision, which responds to all comments on the proposed plan. Remedial design.
We commenced horizontal development activities at Candlestick in 2015. In October 2019, we received approval from the City of San Francisco on a revised development plan for the first phase of Candlestick that is currently planned to include approximately 750,000 square feet of office space, 1,600 homes, and 300,000 square feet of lifestyle amenities centered around retail and entertainment.
We commenced horizontal development activities at Candlestick in 2015. 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.
The Five Point Gateway Campus currently includes approximately one million square feet planned for research and development, medical and office space in four buildings, which are designed to accommodate thousands of employees. In May 2020, the Gateway Commercial Venture closed on the sale of one building including approximately 11 acres of land within the campus to City of Hope.
In December 2024, the Gateway Commercial Venture sold its remaining interests in the Five Point Gateway Campus, which consisted of one of the four buildings and approximately 50 acres of commercial land on which up to an additional 189,000 square feet of commercial space can be developed.
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In addition to the mixed-use land planning we undertake for each community, we typically create the floorplans and elevations for each home, as well as the landscape design for each neighborhood, considering each neighborhood’s individual character within the context of the overall plan for the community.
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Castlelake was previously one of the two largest equity owners of our company.
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We offer numerous community programs, including music, food and art events, educational programs, gardening and cooking lessons and various holiday festivities. We plan and program all of our events with a goal of building a community that transcends the physical features of our development and connects neighbors through their interests.
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As disclosed in an Amendment No. 1 to Schedule 13D filed on October 10, 2024, affiliates of Castlelake entered into a share purchase agreement with GFFP, pursuant to which Castlelake agreed to sell its Class A and Class B common shares, as well as its equity interests in the operating company and the San Francisco Venture to GFFP.
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Throughout this process, we continually analyze each community relative to its market to determine which portions to sell, which portions to build and then sell, and which portions that we might retain as part of a portfolio of commercial and multi-family properties.
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The sale of Castlelake’s equity interests to GFFP closed on October 22, 2024. The diagram below presents a simplified depiction of our current organizational structure.
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As of December 31, 2023, we had sold 2,595 homesites, and builders had sold 1,244 homes to homebuyers since home sales commenced in May 2021.
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Our Business We are primarily engaged in the business of planning and developing our three mixed-use planned communities, and our revenues are principally generated by selling residential and commercial land sites to homebuilders, commercial developers and commercial buyers and by providing development management services.
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As currently planned, Candlestick ultimately is expected to include approximately 7,000 homes. At The San Francisco Shipyard, approximately 408 acres are still owned by the U.S. Navy and will not be conveyed to us until the U.S.
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We may elect to enter into additional joint ventures for the purposes of developing our existing communities as well as for acquiring potential new real estate assets. We may also pursue other acquisitions, investments, and growth opportunities that would allow us to capitalize on our land development and entitlement expertise.
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For additional information about the Five Point Gateway Campus commercial land sale, see “—Commercial” below. Commercial We currently expect to develop and operate certain commercial properties within our existing mixed-use planned communities.
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We also regularly assess our development plan and may retain a portion of the commercial and multi-family properties within our communities as income-producing assets, although we do not currently have any plans to do so. Vertical development (construction) .
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We may develop and operate these properties on our own, or we may choose from time to time to develop and/or operate a particular property or properties in a strategic joint venture or other financing or entity structure with a third-party.
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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 early 2026.
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Factors we consider in determining whether or not to proceed with a particular commercial investment include (1) our existing knowledge of the mixed-use planned communities we are currently developing and understanding their respective needs, (2) whether, in our judgment, a particular commercial property or investment will create additional value for our remaining land within the community, in addition to achieving desired investment returns on such property or investment on a stand-alone basis, (3) existing entitlements and our ability to change them, (4) compatibility of the physical site with our proposed uses, and (5) environmental considerations, traffic patterns and access to the site. 4 Table of Contents In August 2017, the Gateway Commercial Venture, in which we own a 75% interest, acquired the Five Point Gateway Campus, consisting of approximately 73 acres of commercial land in the Great Park Neighborhoods that the Great Park Venture previously sold to a third party.
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We also own remnant commercial, residential and open space land in Los Angeles County that is planned to be sold or deeded to third parties as we develop our Valencia community. 4 Table of Contents Development Management Services Through the management company, we receive fees for providing development management services for Great Park Neighborhoods and received fees for providing property management services to the Gateway Commercial Venture prior to the sale of its remaining interests in the Five Point Gateway Campus in December 2024.
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City of Hope operates the building as a comprehensive cancer care center and is currently constructing a hospital adjacent to the cancer care center. In August 2020, the Gateway Commercial Venture closed on the sale of two buildings to a real estate management company and operator.
Removed
Our corporate headquarters are located in the fourth building, which remains owned by the Gateway Commercial Venture. In addition to the fourth building, the Gateway Commercial Venture owns approximately 50 acres of commercial land with additional development rights at the campus.
Removed
Our goal is to create sustainable, long-term growth and value for our shareholders. We do not currently have an investment policy; however, our board of directors may adopt one in the future.
Removed
We expect to pursue our investment objectives primarily through the ownership, development, operation and disposition of our communities: (1) Valencia; (2) Candlestick and The San Francisco Shipyard; and (3) Great Park Neighborhoods. Although we currently have no definitive agreements to acquire other properties, we may do so in the future.
Removed
Our future investment or development activities will not necessarily be limited to any geographic area, product type or to a specified percentage of our assets. We may also participate with third parties in property ownership, development and operation, through joint ventures, private equity real estate funds or other types of co-ownership.
Removed
We also may acquire real estate or interests in real estate in exchange for the issuance of our Class A common shares, our preferred shares, options to purchase shares or Class A units of the operating company.
Removed
These types of investments may permit us to own interests in larger assets without unduly restricting our diversification and, therefore, provide us with flexibility in structuring our portfolio. We will limit our investment in any securities so that we do not fall within the definition of an “investment company” under the Investment Company Act of 1940, as amended.
Removed
Investments in Real Estate Mortgages We may, at the discretion of our board of directors, invest in mortgages and other types of real estate interests, but we do not currently, nor do we currently intend to, engage in these activities. If we choose to invest in mortgages, we would expect to invest in mortgages secured by real property interests.
Removed
We do not have a policy that restricts the proportion of our assets that may be invested in a type of mortgage or any single mortgage or type of mortgage loan.
Removed
Securities of, or Interests in, Persons Primarily Engaged in Real Estate Activities and Other Issuers We do not currently intend to invest in securities of other entities engaged in real estate activities or securities of other issuers, including for the purpose of exercising control over such entities. However, we may do so in the future.

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Item 1A. Risk Factors

Risk Factors — what could go wrong, per management

48 edited+10 added−4 removed180 unchanged
Biggest changeOur ability to obtain funds from tax increment financing is dependent on the value of developed property in the specific district, the collection of general property taxes from property owners in the specific district, the time it takes the tax assessor to update the tax rolls and market interest rates at the time the tax increment bonds are issued. 17 Table of Contents If we need to obtain additional financing, and such financing is not available in a timely manner or on terms substantially similar to our existing financing, it could increase our cost of capital and we may experience delays or increases in costs, and our financial condition and results of operations could be adversely affected.
Biggest changeIf we need to obtain additional financing, and such financing is not available in a timely manner or on terms substantially similar to our existing financing, it could increase our cost of capital and we may experience delays or increases in costs, and our financial condition and results of operations could be adversely affected.
The distributions that we receive from the operating company are based on our ownership interest in it, which was 62.6%, as of December 31, 2023. The operating company is treated as a partnership for U.S. federal income tax purposes and, as such, is generally not subject to U.S. federal income tax.
The distributions that we receive from the operating company are based on our ownership interest in it, which was 62.6%, as of December 31, 2024. The operating company is treated as a partnership for U.S. federal income tax purposes and, as such, is generally not subject to U.S. federal income tax.
Sanctions imposed by the United States and other countries in response to such conflicts may also adversely impact the financial markets and the global economy, and any economic countermeasures by the affected countries or others could exacerbate market and economic instability.
Sanctions or tariffs imposed by the United States and other countries in response to such conflicts or events may also adversely impact the financial markets and the global economy, and any economic countermeasures by the affected countries or others could exacerbate market and economic instability.
In addition, to the extent we cannot meet any future debt service obligations, we will risk losing some or all of our assets that are pledged to secure such obligations. We may increase leverage in executing our development plan, which could further exacerbate the risks associated with our substantial indebtedness.
In addition, to the extent we 17 Table of Contents cannot meet any future debt service obligations, we will risk losing some or all of our assets that are pledged to secure such obligations. We may increase leverage in executing our development plan, which could further exacerbate the risks associated with our substantial indebtedness.
Future changes in the insurance industry’s risk assessment approach and pricing structure could increase the cost of insuring our properties and operations or decrease the scope of insurance coverage, either of which could adversely affect our financial condition and results of operations. 14 Table of Contents Moreover, we carry several different lines of insurance, placed with several large insurance carriers.
Future changes in the insurance industry’s risk assessment approach and pricing structure could increase the cost of insuring our properties and operations or decrease the scope of insurance coverage, either of which could adversely affect our financial condition and results of operations. Moreover, we carry several different lines of insurance, placed with several large insurance carriers.
In addition, because we are a holding company and our only investment is our interest in the operating company, we will only be able to pay distributions from funds we receive from the operating company. Our board of directors has the authority to issue one or more series of preferred shares without action of our shareholders.
In addition, because we are a holding company and our only investment is our interest in the operating company, we will only be able to pay distributions from funds we receive from the operating company. Our board of directors has the authority to issue one or more series of preferred shares 19 Table of Contents without action of our shareholders.
The risk of a security breach or disruption, particularly through cyber-attacks or cyber-intrusion, including by computer hackers, foreign governments, and cyber terrorists, has generally increased as the number, intensity 20 Table of Contents and sophistication of attempted attacks and intrusions from around the world have increased.
The risk of a security breach or disruption, particularly through cyber-attacks or cyber-intrusion, including by computer hackers, foreign governments, and cyber terrorists, has generally increased as the number, intensity and sophistication of attempted attacks and intrusions from around the world have increased.
California also continues to suffer from severe budgetary constraints, which may result in the layoff or furlough of government employees, and California is regarded as more litigious and more highly regulated and taxed than many other states.
California also continues to suffer from severe budgetary constraints, which may result in the layoff or furlough of government employees, and California is regarded as more litigious and more highly regulated and taxed than 9 Table of Contents many other states.
Historically, certain of our entitlements, permits and 12 Table of Contents development approvals have been challenged by third parties, such as environmental groups. Future entitlements, permits and development approvals that we will need to obtain for development areas within our communities may be similarly challenged.
Historically, certain of our entitlements, permits and development approvals have been challenged by third parties, such as environmental groups. Future entitlements, permits and development approvals that we will need to obtain for development areas within our communities may be similarly challenged.
Under the terms of the limited partnership agreement for the operating company, the operating company is obligated to make tax distributions to its partners, including us, subject to the restrictions described below. These tax distributions are generally made on a pro-rata basis.
Under the terms of the limited partnership agreement for the operating company, the operating company is obligated to make tax distributions to its partners, including us, subject to the restrictions 14 Table of Contents described below. These tax distributions are generally made on a pro-rata basis.
The TRA provides for payments by us to such investors or their successors equal to 85% of the amount of cash savings, if any, in income tax we realize as a result of the structure of the formation transactions.
The TRA provides for payments by us to such 15 Table of Contents investors or their successors equal to 85% of the amount of cash savings, if any, in income tax we realize as a result of the structure of the formation transactions.
Among other things, we are, and are likely to continue to be, affected by litigation against governmental agencies related to environmental and similar approvals that we receive or seek to obtain or relating to historical contamination at our properties that have had prior industrial uses, such as The San Francisco Shipyard.
Among other things, we are, and are likely to continue to be, affected by litigation against governmental agencies related to 13 Table of Contents environmental and similar approvals that we receive or seek to obtain or relating to historical contamination at our properties that have had prior industrial uses, such as The San Francisco Shipyard.
Consequently, it is possible in these circumstances that the actual cash tax savings realized by us may be significantly less than the corresponding TRA payments. 16 Table of Contents We will not be able to recover payments made under the tax receivable agreement if the related tax benefits are subsequently disallowed.
Consequently, it is possible in these circumstances that the actual cash tax savings realized by us may be significantly less than the corresponding TRA payments. We will not be able to recover payments made under the tax receivable agreement if the related tax benefits are subsequently disallowed.
Accordingly, no assurance can be given as to the liquidity of any market for our Class A common shares, the ability of our shareholders to sell their Class A common shares or the price at which such shares may be sold.
Accordingly, no assurance can be given as to the liquidity of any market for our Class A common shares, the ability 18 Table of Contents of our shareholders to sell their Class A common shares or the price at which such shares may be sold.
While we currently 13 Table of Contents have and may maintain insurance policies from time to time to mitigate some or all of these risks, insurance coverage for such claims may be limited or nonexistent.
While we currently have and may maintain insurance policies from time to time to mitigate some or all of these risks, insurance coverage for such claims may be limited or nonexistent.
Competition from other real estate 11 Table of Contents developers may adversely affect our ability to attract purchasers and sell or lease residential, retail and commercial properties, attract and retain experienced real estate development personnel or obtain construction materials and labor.
Competition from other real estate developers may adversely affect our ability to attract purchasers and sell or lease residential, retail and commercial properties, attract and retain experienced real estate development personnel or obtain construction materials and labor.
Our development and construction activities entail risks that could make our projects less profitable and otherwise adversely impact our financial condition and results of operations, including: • increased construction costs, unavailability of raw materials when needed, and permitting or construction delays; • claims for construction-related injuries, as well as claims for warranty, product liability and construction defects; • labor stoppages or slowdowns and/or disputes with contractors, subcontractors or other third parties on whom we rely; • federal, state and local grants to complete certain highways, interchange, bridge projects or other public improvements may not be available; • unforeseen engineering, environmental or geological problems, including the potential impacts of climate change; • compliance with environmental planning and protection regulations and related legal proceedings, including governmental regulations intended to reduce greenhouse gas emissions or ameliorate projected climate change impacts; • liabilities, expenses or project delays, stoppages or interruptions as a result of challenges by third parties in legal proceedings; • delay or inability to acquire property, rights of way or easements; and • weather-related and geological interference, including landslides, earthquakes, floods, drought, wildfires and other events, including rising sea-levels due to climate change.
Our development and construction activities entail risks that could make our projects less profitable and otherwise adversely impact our financial condition and results of operations, including: • increased construction costs, unavailability of raw materials when needed, and permitting or construction delays; • claims for construction-related injuries, as well as claims for warranty, product liability and construction defects; • labor stoppages or slowdowns and/or disputes with contractors, subcontractors or other third parties on whom we rely; • federal, state and local grants to complete certain highways, interchange, bridge projects or other public improvements may not be available; • unforeseen engineering, environmental or geological problems, including the potential impacts of climate change; • compliance with environmental planning and protection regulations and related legal proceedings, including governmental regulations intended to reduce greenhouse gas emissions or ameliorate projected climate change impacts; • liabilities, expenses or project delays, stoppages or interruptions as a result of challenges by third parties in legal proceedings; • changes in U.S. trade policies (including the imposition of tariffs) and retaliatory responses from other countries, which could increase costs or limit the availability of materials and products used in development; • delay or inability to acquire property, rights of way or easements; and • weather-related and geological interference, including landslides, earthquakes, floods, drought, wildfires and other events, including rising sea-levels due to climate change.
As of December 31, 2023, Lennar owned Class A common shares and Class B common shares representing approximately 39% of our outstanding voting interests. One of our directors is the Executive Chairman of Lennar. Lennar is one of the nation’s largest homebuilders and has in the past purchased properties from us.
As of December 31, 2024, Lennar owned Class A common shares and Class B common shares representing approximately 39% of our outstanding voting interests. One of our directors is the Executive Chairman and Co-Chief Executive Officer of Lennar. Lennar is one of the nation’s largest homebuilders and has in the past purchased properties from us.
As of December 31, 2023, Lennar and Castlelake and their respective affiliates beneficially owned, in the aggregate, Class A common shares and Class B common shares representing approximately 39% and 17%, respectively, of the voting power of our outstanding common shares.
As of December 31, 2024, Lennar and GFFP and their respective affiliates beneficially owned, in the aggregate, Class A common shares and Class B common shares representing approximately 39% and 17%, respectively, of the voting power of our outstanding common shares.
This exchange right is currently exercisable by all holders of outstanding Class A units of the operating company. We expect that basis adjustments resulting from these transactions, if they occur, will reduce the amount of income tax we would otherwise be required to pay in the future.
After a 12 month holding period, this exchange right is exercisable by holders of outstanding Class A units of the operating company. We expect that basis adjustments resulting from these transactions, if they occur, will reduce the amount of income tax we would otherwise be required to pay in the future.
If the TRA had been terminated on December 31, 2023, we estimate that the termination payment would have been approximately $106.7 million, assuming no material changes to the relevant tax law, that the aggregate value of our properties is equal to the value implied by such per share price and that SOFR is 4.8%.
If the TRA had been terminated on December 31, 2024, we estimate that the termination payment would have been approximately $110.6 million, assuming no material changes to the relevant tax law, that the aggregate value of our properties is equal to the value implied by such per share price and that SOFR is 4.24%.
In addition, 7,582,152 Class A common shares were available for future issuance under our incentive award plan as of December 31, 2023. We cannot predict whether future issuances or sales of our Class A common shares or the availability of shares for resale in the open market will decrease the per share trading price of our Class A common shares.
In addition, 4,697,870 Class A common shares were available for future issuance under our incentive award plan as of December 31, 2024. We cannot predict whether future issuances or sales of our Class A common shares or the availability of shares for resale in the open market will decrease the per share trading price of our Class A common shares.
Risks Related to Financing and Indebtedness We may need additional capital to execute our development plan, and we may be unable to raise additional capital on favorable terms. We may need additional capital to execute our development plan with respect to vertical development.
Risks Related to Financing and Indebtedness We may need additional capital to execute our development plans, and we may be unable to raise additional capital on favorable terms. We may need additional capital to execute our development plans.
We expect that increasingly stringent environmental requirements will be imposed on developers in the future in light of growing concern from advocacy groups, government agencies and the general public over the effects of climate change on the environment.
We expect that stringent environmental requirements may continue to be imposed on developers in light of ongoing concern from advocacy groups, government agencies and the general public over the effects of climate change on the environment.
While inflation moderated somewhat in the latter half of 2023, interest rates and mortgage rates remain elevated relative to recent rate levels, which can decrease demand by homebuyers for new homes and soften demand by our guest builders for home sites.
While inflation has moderated somewhat over the last year, interest rates and mortgage rates remain elevated relative to recent rate levels, which can decrease demand by homebuyers for new homes and soften demand by our guest builders for home sites.
This type of litigation could result in substantial costs and divert our management’s attention and resources, which could have an adverse effect on our financial condition, results of operations, cash flow and per share trading price of our common shares.
This type of litigation could result in substantial costs and divert our management’s attention and resources, which could have an adverse effect on our financial condition, results of operations, cash flow and per share trading price of our common shares. Any broad market fluctuations may adversely affect the trading price of our Class A common shares.
Our communities are subject to numerous local, state, and federal laws and other statutes, ordinances, rules and regulations concerning zoning, development, building design, construction and similar matters that impose restrictive zoning and density requirements in order to limit the number of homes or commercial square feet that can eventually be built within the boundaries of a particular area, as well as governmental taxes, fees and levies on the acquisition and development of land parcels.
Risks Related to Laws and Regulations Zoning and land use laws and regulations may increase our expenses, limit the number of homes or commercial square footage that can be built or delay completion of our projects and adversely affect our financial condition and results of operations. 11 Table of Contents Our communities are subject to numerous local, state, and federal laws and other statutes, ordinances, rules and regulations concerning zoning, development, building design, construction and similar matters that impose restrictive zoning and density requirements in order to limit the number of homes or commercial square feet that can eventually be built within the boundaries of a particular area, as well as governmental taxes, fees and levies on the acquisition and development of land parcels.
Any broad market fluctuations may adversely affect the trading price of our Class A common shares. 19 Table of Contents We may issue additional Class A common shares in the future in lieu of incurring indebtedness, which may dilute existing shareholders, or we may issue securities that have rights and privileges that are more favorable than the rights and privileges accorded to holders of our Class A common shares.
We may issue additional Class A common shares in the future in lieu of incurring indebtedness, which may dilute existing shareholders, or we may issue securities that have rights and privileges that are more favorable than the rights and privileges accorded to holders of our Class A common shares.
Certain of our environmental permits and approvals have been challenged in the past by third parties, such as environmental groups. Future environmental permits and approvals that we will need to obtain for development areas within our communities may be similarly challenged. As an owner and operator of real property, we could incur liability for environmental contamination issues.
Future environmental permits and approvals that we will need to obtain for development areas within our communities may be similarly challenged. As an owner and operator of real property, we could incur liability for environmental contamination issues.
If we do so, the risks related to our indebtedness could intensify. 18 Table of Contents Future debt financings, which would rank senior to our Class A common shares upon our bankruptcy or liquidation, and future offerings of equity securities that may be senior to our Class A common shares for the purposes of liquidating or other distributions, may adversely affect the market price of our Class A common shares.
Future debt financings, which would rank senior to our Class A common shares upon our bankruptcy or liquidation, and future offerings of equity securities that may be senior to our Class A common shares for the purposes of liquidating or other distributions, may adversely affect the market price of our Class A common shares.
As a result of the time and complexity involved in obtaining approvals for our projects, we face the risk that demand for residential and commercial properties may decline, and we may be forced to sell or lease properties at prices or rates that generate lower profit margins than we anticipated or that would result in losses.
We also face the risk that demand for residential and commercial properties may decline, and we may be forced to sell or lease properties at prices or rates that generate lower profit margins than we anticipated or that would result in losses.
Failure to comply with these laws, regulations and permit requirements may result in delays, administrative, civil and criminal penalties, denial or revocation of permits or other authorizations, other liabilities and costs, the issuance of injunctions to limit or cease operations and the imposition of additional requirements for future compliance as a result of past failures.
Failure to comply with these laws, regulations and permit requirements may result in delays, administrative, civil and criminal penalties, denial or revocation of permits or other authorizations, other liabilities and costs, the issuance of injunctions to limit or cease operations and the imposition of additional requirements for future compliance as a result of past failures. 12 Table of Contents Certain of our environmental permits and approvals have been challenged in the past by third parties, such as environmental groups.
These provisions include the following: (1) there is no cumulative voting in the election of directors; (2) our board of directors is classified so that approximately one-third of the directors are elected at each annual meeting of shareholders; (3) our board of directors is authorized to issue “blank check” preferred shares to increase the number of outstanding shares without shareholder approval; (4) shareholder action by written consent is not permitted; and (5) there are advance notice requirements for nominations for election to the board of directors or for proposing matters that can be acted upon by shareholders at shareholder meetings.
These provisions include the following: (1) there is no cumulative voting in the election of directors; (2) our board of directors is classified so that approximately one-third of the directors are elected at each annual meeting of shareholders; (3) our board of directors is authorized to issue “blank check” preferred shares to increase the number of outstanding shares without shareholder approval; (4) shareholder action by written consent is not permitted; and (5) there are advance notice requirements for nominations for election to the board of directors or for proposing matters that can be acted upon by shareholders at shareholder meetings. 16 Table of Contents In addition, our operating agreement provides that Section 203 of the General Corporation Law of the State of Delaware (the “DGCL”) will be deemed to apply to us as if we were a Delaware corporation.
We may incur additional indebtedness from time to time in the future to finance working capital, capital expenditures, investments or acquisitions, or for other purposes.
We may incur additional indebtedness from time to time in the future to finance working capital, capital expenditures, investments or acquisitions, or for other purposes. If we do so, the risks related to our indebtedness could intensify.
We also had $125.0 million available to be borrowed under our revolving credit facility as of December 31, 2023. 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.
As of December 31, 2024, we had approximately $525.0 million of total indebtedness, comprised of $523.5 million of our 10.500% initial rate senior notes due January 2028 and $1.5 million of our 7.875% senior notes due November 2025. We also had $125.0 million available to be borrowed under our revolving credit facility as of December 31, 2024.
Our operating agreement contains provisions that will permit Lennar to engage in such activities and transactions. Lennar and Castlelake and their respective affiliates control approximately 56% of the voting power of our outstanding common shares and, as a result, are able to exercise significant influence over all matters requiring shareholder approval.
Lennar and GFFP and their respective affiliates control approximately 56% of the voting power of our outstanding common shares and, as a result, are able to exercise significant influence over all matters requiring shareholder approval.
As of December 31, 2023, we had outstanding 69,199,938 Class A common shares.
As of December 31, 2024, we had outstanding 69,369,234 Class A common shares.
Nonetheless, Lennar’s relationship with us could give it an advantage in bidding for properties that we own. 15 Table of Contents Lennar may also compete with us and may in the future bid for, and acquire for itself, properties that we may seek to acquire.
Nonetheless, Lennar’s relationship with us could give it an advantage in bidding for properties that we own. Lennar may also compete with us and may in the future bid for, and acquire for itself, properties that we may seek to acquire. Our operating agreement contains provisions that will permit Lennar to engage in such activities and transactions.
Our substantial indebtedness may have a material adverse effect on our business, our financial condition and results of operations and our ability to secure additional financing in the future. As of December 31, 2023, we had approximately $625.0 million of total indebtedness of our 7.875% senior notes due 2025.
Our substantial indebtedness may have a material adverse effect on our business, our financial condition and results of operations and our ability to secure additional financing in the future.
As a result, adverse market conditions may require us to write down the book value of certain real estate assets or real estate investments and some of those write-downs could be material. Any material write-downs of assets could have a material adverse effect on our financial condition and results of operations.
As a result of any such reevaluations, we may be required to write down (or impair) the book value of certain real estate assets or real estate investments and some of those write-downs could result in material reductions to our net income.
These competitive conditions could make it difficult to sell properties at desirable prices and could adversely affect our financial condition and results of operations. Fluctuations in real estate values may require us to write down the carrying value of our real estate assets or real estate investments. Our industry is subject to significant variability and fluctuations in real estate values.
Fluctuations in real estate values and changes in our development strategies may require us to write down (or impair) the carrying value of our real estate assets or real estate investments. Our industry is subject to significant variability and fluctuations in real estate values.
See “—Risks Related to Our Organization and Structure—Our substantial indebtedness may have a material adverse effect on our business, our financial condition and results of operations and our ability to secure additional financing in the future.” Our property taxes could increase due to rate increases or reassessments or the imposition of new taxes or assessments, which may adversely impact our financial condition and results of operations.
See “—Risks Related to Our Organization and Structure—Our substantial indebtedness may have a material adverse effect on our business, our financial condition and results of operations and our ability to secure additional financing in the future.” Our pursuit of new growth strategies, including new business initiatives, acquisitions, investments, dispositions, joint ventures or other growth opportunities, could disrupt our ongoing business, present risks not originally contemplated and materially adversely affect our business, financial condition and results of operations.
The valuation of our real estate assets or real estate investments is inherently subjective and based on the individual characteristics of each asset. Factors such as competitive market supply and demand for inventory, changes in laws and regulations, political and economic conditions and interest and inflation rate fluctuations subject our valuations to uncertainty.
Factors such as competitive 10 Table of Contents market supply and demand for inventory, changes in laws and regulations, political and economic conditions and interest and inflation rate fluctuations subject our valuations to uncertainty. Our valuations are made on the basis of assumptions that may not prove to reflect economic or demographic reality.
If our insurance does not fully cover losses resulting from these events, our financial condition and results of operations could be adversely affected.
We therefore have greater exposure to the risks of natural disasters, which can lead to power shortages, shortages of labor and materials, increased costs, and delays in development. If our insurance does not fully cover losses resulting from these events, our financial condition and results of operations could be adversely affected.
We therefore have greater exposure to the risks of natural disasters, which can lead to power shortages, shortages of labor and materials, increased costs, and delays in development. The occurrence of natural disasters may also negatively impact the availability of homeowners insurance and the demand for new homes in 10 Table of Contents affected areas.
The occurrence of natural disasters may also negatively impact the availability of homeowners insurance and the demand for new homes in affected areas.
Our valuations are made on the basis of assumptions that may not prove to reflect economic or demographic reality. If the real estate market deteriorates, we may reevaluate the assumptions used in our analysis.
If the real estate market deteriorates, we may reevaluate the assumptions used in our analysis.
Our communities are all located in California, which makes us susceptible to risks in that state. Our communities are all located in California.
Our existing communities are all located in California, which makes us susceptible to risks in that state. Our existing communities are all located in California, and we expect, at least for the near term, to be dependent upon our existing projects for substantial portions of our cash flow.
We have no current plans to acquire any additional properties or operations outside of California and we expect, at least for a number of years, to be dependent upon our existing projects for all of our cash flow. As a result, we are susceptible to greater risks than if we owned a larger or more geographically diverse portfolio.
As a result, we are susceptible to greater risks than if we owned a larger or more geographically diverse portfolio.
Removed
For example, we have been experiencing increases in the prices of labor and materials across all of our communities, which may adversely affect our financial condition and results of operations.
Added
For example, the wildfires that have occurred in recent years in California, along with the increasing risk of future wildfires, have resulted in increased homeowners’ insurance costs and the unavailability of private homeowners’ insurance in certain high-risk areas. We expect these issues may be exacerbated by the recent wildfires in Southern California.
Removed
Risks Related to Laws and Regulations Zoning and land use laws and regulations may increase our expenses, limit the number of homes or commercial square footage that can be built or delay completion of our projects and adversely affect our financial condition and results of operations.
Added
The valuation of our real estate assets (e.g., our Valencia, Candlestick and The San Francisco Shipyard communities) or real estate investments (e.g., our investment in the Great Park Venture) is inherently subjective and based on the individual characteristics of each asset.
Removed
For example, the distribution rights of the holders of legacy interests in the Great Park Venture and the Class B partnership interests in Five Point Communities, LP will reduce the cash available for distribution to the operating company.
Added
In addition, we may be required to reevaluate the carrying value of our real estate assets in the event that we decide to pursue alternative development strategies that would accelerate the realization of the value of such assets, including contribution of the asset into a joint venture or an accelerated sale of the asset.
Removed
In addition, our operating agreement provides that Section 203 of the General Corporation Law of the State of Delaware (the “DGCL”) will be deemed to apply to us as if we were a Delaware corporation.
Added
Any material write-downs of assets could have a material adverse effect on our financial condition and results of operations.
Added
Our growth strategy involves new potential joint ventures, acquisitions, investments and other transactions. These transactions will take time to execute and may create additional costs, expose us to additional legal and compliance risks, cause disruption to our current business and impact our operating results.
Added
Our ability to effectively pursue and manage anticipated ventures, acquisitions and investments may require significant capital and other expenditures, as well as allocation of valuable management resources, which may negatively impact our ongoing business.
Added
Our future financial performance and ability to execute on our growth strategies will depend, in part, on our ability to effectively manage any future ventures, acquisitions or investments. There are no guarantees that we will be able to do so in an effective or timely manner, or at all.
Added
These competitive conditions could make it difficult to sell properties at desirable prices and could adversely affect our financial condition and results of operations. Our property taxes could increase due to rate increases or reassessments or the imposition of new taxes or assessments, which may adversely impact our financial condition and results of operations.
Added
As a result of the time and complexity involved in obtaining approvals for our projects, we face the risk that we may not have entitled land available to sell to builders for certain periods of time.
Added
Our ability to obtain funds from tax increment financing is dependent on the value of developed property in the specific district, the collection of general property taxes from property owners in the specific district, the time it takes the tax assessor to update the tax rolls and market interest rates at the time the tax increment bonds are issued.

Item 1C. Cybersecurity

Cybersecurity — threats and controls disclosure

6 edited+2 added−0 removed10 unchanged
Biggest changeThis does not imply that we meet any particular technical standards, specifications, or requirements, only that we use the NIST CSF as a guide to help us identify, assess, and manage cybersecurity risks relevant to our business. Our program includes a cybersecurity incident response plan that consists of incident identification, classification, investigation and diagnosis, response, and recovery.
Biggest changeOur cybersecurity threat defense 20 Table of Contents approach incorporates certain guiding principles from the NIST Cybersecurity Framework (the “NIST Framework”). This does not imply that we meet any particular technical standards, specifications, or requirements, only that we use the NIST Framework as a guide to help us identify, assess, and manage cybersecurity risks relevant to our business.
The audit committee is regularly informed about (1) the results of independent and objective assessments of key components of our cybersecurity program as reported by our internal audit department and (2) material risks that could impact our operations or financial condition and the measures implemented to adequately mitigate relevant risks.
Additionally, the audit committee is regularly informed about (1) the results of independent and objective assessments of key components of our cybersecurity program as reported by our internal audit department and (2) material risks that could impact our operations or financial condition and the measures implemented to adequately mitigate relevant risks.
As part of our cybersecurity program, we have implemented various strategies and processes to manage cybersecurity risks, which include: • providing training and guidance to our employees on cybersecurity threats and emerging trends, including phishing simulations to increase awareness of potential critical security threats; • obtaining independent and objective assessments by our internal audit department; 21 Table of Contents • annual review of Service Organization Controls (“SOC”) reports from our critical third-party vendors based upon a determination of their relative importance and risk level; • implementing preventative and detective security tools; and • using both internal resources and third-party security firms to provide ongoing monitoring of both internal systems as well as activity within third-party environments.
As part of our cybersecurity program, we have implemented various strategies and processes to manage cybersecurity risks, which include: • providing training and guidance to our employees on cybersecurity threats and emerging trends, including phishing simulations to increase awareness of potential critical security threats; • obtaining independent and objective assessments by our internal audit department; • annual review of Service Organization Controls reports from our critical third-party vendors based upon a determination of their relative importance and risk level; • implementing preventative and detective security tools; and • using both internal resources and third-party security firms to provide ongoing monitoring of both internal systems as well as activity within third-party environments.
The audit committee receives periodic updates from our Vice President – Information Systems on our cybersecurity program and potential material cybersecurity threats.
The audit committee receives periodic updates from our Vice President – Information Systems on our cybersecurity program, potential material cybersecurity threats, and results of the most recent cybersecurity risk assessment.
Our process for managing cybersecurity risk is a collaborative effort that includes key members of our information technology, legal, and finance departments, as well as internal audit and third-party cybersecurity firms. Our cybersecurity program takes into consideration the identification of critical data assets, information technology systems, third party service providers, and business processes that may be susceptible to cybersecurity threats.
Our cybersecurity program takes into consideration the identification of critical data assets, information technology systems, third party service providers, and business processes that may be susceptible to cybersecurity threats.
We have implemented a cybersecurity risk management program intended to protect the security and availability of our critical systems and information. Our program incorporates certain guiding principles from the National Institute of Standards and Technology Cybersecurity Framework (“NIST CSF”).
We have implemented a cybersecurity risk management program intended to protect the security and availability of our critical systems and information. Our risk assessment process is modeled after the National Institute of Standards and Technology (“NIST”) Guide for Conducting Risk Assessments and is performed annually.
Added
We may also elect to perform assessments more often based on material changes in business activities or other factors. The results of our cybersecurity risk assessment aid in identifying potential cybersecurity risks and guiding the adoption of appropriate risk mitigation measures.
Added
Our program includes a cybersecurity incident response plan that consists of incident identification, classification, investigation and diagnosis, response, and recovery. Our process for managing cybersecurity risk is a collaborative effort that includes key members of our information technology, legal, and finance departments, as well as internal audit and third-party cybersecurity firms.

Item 2. Properties

Properties — owned and leased real estate

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Biggest changeWe are the initial developer of our three communities that are designed to include approximately 40,000 residential homes and approximately 23 million square feet of commercial space over a period of more than 10 years. The properties we are developing at our mixed-use planned communities are held as inventory in the ordinary course of the planning and development process.
Biggest changeWe are the initial developer of our three 21 Table of Contents communities that are designed to include approximately 40,000 residential homes and approximately 23 million square feet of commercial space over a period of more than 10 years.
Please review “Part I, Item 1. Business—Our Communities” for a description of each of our communities and our commercial venture.
The properties we are developing at our mixed-use planned communities are held as inventory in the ordinary course of the planning and development process. Please review “Part I, Item 1. Business—Our Communities” for a description of each of our communities and our commercial venture.

Item 3. Legal Proceedings

Legal Proceedings — active lawsuits and investigations

1 edited+0 added−0 removed3 unchanged
Biggest changePlease refer to Note 13 of our consolidated financial statements included in Part II, Item 8 of this report, which is incorporated herein by reference, for descriptions of additional legal proceedings to which we are a party. ITEM 4. Mine Safety Disclosures 22 Table of Contents Not applicable. PART II
Biggest changePlease refer to Note 13 of our consolidated financial statements included in Part II, Item 8 of this report, which is incorporated herein by reference, for descriptions of additional legal proceedings to which we are a party. ITEM 4. Mine Safety Disclosures Not applicable. PART II

Item 5. Market for Registrant's Common Equity

Market for Common Equity — stock, dividends, buybacks

4 edited+0 added−1 removed7 unchanged
Biggest changePerformance Graph The following graph compares the cumulative total return of our Class A common shares with the S&P 500 and the S&P Homebuilders Select Industry Index from December 31, 2018 through December 31, 2023.
Biggest changeThere were no repurchases of our shares during the year ended December 31, 2024. 22 Table of Contents Performance Graph The following graph compares the cumulative total return of our Class A common shares with the S&P 500 and the S&P Homebuilders Select Industry Index from December 31, 2019 through December 31, 2024.
The graph assumes $100 was invested at the market close on December 31, 2018 in our Class A common shares, the S&P 500 and the S&P Homebuilders Select Industry Index, and the reinvestment of all dividends. Recent Sale of Unregistered Securities We conduct all of our business in or through our subsidiary, the operating company.
The graph assumes $100 was invested at the market close on December 31, 2019 in our Class A common shares, the S&P 500 and the S&P Homebuilders Select Industry Index, and the reinvestment of all dividends. Recent Sale of Unregistered Securities We conduct all of our business in or through our subsidiary, the operating company.
During the year ended December 31, 2023, no redemption notices were received from Class A Unit Holders. ITEM 6. [Reserved] 23 Table of Contents
During the year ended December 31, 2024, no redemption notices were received from Class A Unit Holders. ITEM 6. [Reserved] 23 Table of Contents
As of February 29, 2024, there were 50 and 8 holders of record of our Class A and Class B common shares, respectively. Our board of directors may, from time to time, in its sole discretion, authorize our company to repurchase our outstanding shares. There were no repurchases of our shares during the year ended December 31, 2023.
As of February 14, 2025, there were 41 and 5 holders of record of our Class A and Class B common shares, respectively. Our board of directors may, from time to time, in its sole discretion, authorize our company to repurchase our outstanding shares, subject to debt covenants and other contractual restrictions.
Removed
The priority distribution rights of the holders of legacy interests in the Great Park Venture and the Class B partnership interests in FP LP will limit the cash available for distribution to the operating company until such rights are satisfied in full.

Item 7. Management's Discussion & Analysis

Management's Discussion & Analysis (MD&A) — revenue / margin commentary

115 edited+39 added−43 removed59 unchanged
Biggest changeYear Ended December 31, 2023 Valencia San Francisco Great Park Commercial Total reportable segments Corporate and unallocated Total under management Removal of unconsolidated entities (1) Total consolidated REVENUES: Land sales $ 160,796 $ — $ 538,612 $ — $ 699,408 $ — $ 699,408 $ (538,612) $ 160,796 Land sales—related party 595 — 16,213 — 16,808 — 16,808 (16,213) 595 Management services—related party (2) — — 47,190 431 47,621 — 47,621 — 47,621 Operating properties 2,066 654 — 8,482 11,202 — 11,202 (8,482) 2,720 Total revenues 163,457 654 602,015 8,913 775,039 — 775,039 (563,307) 211,732 COSTS AND EXPENSES: Land sales 105,651 — 237,148 — 342,799 — 342,799 (237,148) 105,651 Home sales — — 161 — 161 — 161 (161) — Management services (2) — — 22,170 — 22,170 — 22,170 — 22,170 Operating properties 6,167 — — 3,488 9,655 — 9,655 (3,488) 6,167 Selling, general, and administrative 11,577 3,989 10,927 6,406 32,899 35,929 68,828 (17,333) 51,495 Management fees—related party — — 65,395 — 65,395 — 65,395 (65,395) — Total costs and expenses 123,395 3,989 335,801 9,894 473,079 35,929 509,008 (323,525) 185,483 OTHER INCOME (EXPENSE): Interest income — 22 7,490 58 7,570 7,208 14,778 (7,548) 7,230 Interest expense — — — (2,531) (2,531) — (2,531) 2,531 — Miscellaneous 1,012 — — — 1,012 (1,788) (776) — (776) Total other income (expense) 1,012 22 7,490 (2,473) 6,051 5,420 11,471 (5,017) 6,454 EQUITY IN EARNINGS FROM UNCONSOLIDATED ENTITIES 562 — 1,926 — 2,488 — 2,488 74,107 76,595 SEGMENT PROFIT (LOSS)/INCOME BEFORE INCOME TAX BENEFIT 41,636 (3,313) 275,630 (3,454) 310,499 (30,509) 279,990 (170,692) 109,298 INCOME TAX BENEFIT — — — — — 4,418 4,418 — 4,418 SEGMENT PROFIT (LOSS)/NET INCOME $ 41,636 $ (3,313) $ 275,630 $ (3,454) $ 310,499 $ (26,091) $ 284,408 $ (170,692) $ 113,716 (1) Represents the removal of the Great Park Venture and Gateway Commercial Venture operating results, which are included in the Great Park segment and Commercial segment operating results at 100% of each venture’s historical basis, respectively, but are not included in our consolidated results as we account for our investment in each venture using the equity method of accounting.
Biggest change(2) For the Great Park segment, represents the revenues and expenses attributable to the management company for providing services to the Great Park Venture as applicable. 28 Table of Contents Year Ended December 31, 2023 Valencia San Francisco Great Park Total reportable segments Corporate and unallocated Total under management Removal of unconsolidated entities (1) Total consolidated REVENUES: Land sales $ 160,796 $ — $ 538,612 $ 699,408 $ — $ 699,408 $ (538,612) $ 160,796 Land sales—related party 595 — 16,213 16,808 — 16,808 (16,213) 595 Management services—related party (2) — — 47,190 47,190 431 47,621 — 47,621 Operating properties 2,066 654 — 2,720 — 2,720 — 2,720 Total revenues 163,457 654 602,015 766,126 431 766,557 (554,825) 211,732 COSTS AND EXPENSES: Land sales 105,651 — 237,148 342,799 — 342,799 (237,148) 105,651 Home sales — — 161 161 — 161 (161) — Management services (2) — — 22,170 22,170 — 22,170 — 22,170 Operating properties 6,167 — — 6,167 — 6,167 — 6,167 Selling, general, and administrative 11,577 3,989 10,927 26,493 35,929 62,422 (10,927) 51,495 Management fees—related party — — 65,395 65,395 — 65,395 (65,395) — Total costs and expenses 123,395 3,989 335,801 463,185 35,929 499,114 (313,631) 185,483 OTHER INCOME (EXPENSE): Interest income — 22 7,490 7,512 7,208 14,720 (7,490) 7,230 Interest expense — — — — — — — — Miscellaneous 1,012 — — 1,012 (1,788) (776) — (776) Total other income (expense) 1,012 22 7,490 8,524 5,420 13,944 (7,490) 6,454 EQUITY IN EARNINGS FROM UNCONSOLIDATED ENTITIES 562 — 1,926 2,488 (2,914) (426) 77,021 76,595 SEGMENT PROFIT (LOSS)/INCOME BEFORE INCOME TAX BENEFIT 41,636 (3,313) 275,630 313,953 (32,992) 280,961 (171,663) 109,298 INCOME TAX BENEFIT — — — — 4,418 4,418 — 4,418 SEGMENT PROFIT (LOSS)/NET INCOME $ 41,636 $ (3,313) $ 275,630 $ 313,953 $ (28,574) $ 285,379 $ (171,663) $ 113,716 (1) Represents the removal of the Great Park Venture operating results, which are included in the Great Park segment operating results at 100% of the venture’s historical basis but are not included in our consolidated results as we account for our investment in the venture using the equity method of accounting.
Reimbursement payments may be deferred when the related parties receive an extension on the maturity date of the associated EB-5 loan liability. The above table does not present accounts payable and other development liabilities incurred in the normal course of business.
Reimbursement payments may be further deferred when the related parties receive an extension on the maturity date of the associated EB-5 loan liability. The above table does not present accounts payable and other development liabilities incurred in the normal course of business.
The operating company directly or indirectly owns equity interests in: • Five Point Land, LLC, which owns The Newhall Land & Farming Company, a California limited partnership, the entity that is developing Valencia, our community in northern Los Angeles County, California; • The Shipyard Communities, LLC (the “San Francisco Venture”), which is developing Candlestick and The San Francisco Shipyard, our communities in the City of San Francisco, California; • Heritage Fields LLC (the “Great Park Venture”), which is developing Great Park Neighborhoods, our community in Orange County, California; • 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 • Five Point Communities, LP and Five Point Communities Management, Inc.
The operating company directly or indirectly owns equity interests in: • Five Point Land, LLC, which owns The Newhall Land & Farming Company, a California limited partnership, the entity that is developing Valencia, our community in northern Los Angeles County, California; • The Shipyard Communities, LLC (the “San Francisco Venture”), which is developing Candlestick and The San Francisco Shipyard, our communities in the City of San Francisco, California; • Heritage Fields LLC (the “Great Park Venture”), which is developing Great Park Neighborhoods, our community in Orange County, California; • 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 • Five Point Communities, LP and Five Point Communities Management, Inc.
We typically estimate the fair value of our investments using a discounted cash flow of distributions we expect to receive from the venture. Significant input assumptions used in estimating the distributions we expect to receive from the venture include revenue and development cost estimates.
We estimate the fair value of our investments using a discounted cash flow of distributions we expect to receive from the venture. Significant input assumptions used in estimating the distributions we expect to receive from the venture include revenue and development cost estimates.
Additionally, we received total distributions of $1.1 million from the Valencia Landbank Venture, which is reflected as a return of our investment (investing activity) in the statement of cash flows.
Additionally, we received total distributions of $1.0 million from the Valencia Landbank Venture, which is reflected as a return of our investment (investing activity) in the statement of cash flows.
Other than the third-party home builders and the unaffiliated land bank entity, no third-party customer accounted for more than 10% of our revenue during the year ended December 31, 2023. No third-party customer accounted for more than 10% of our revenue during the year ended December 31, 2022.
Other than the third-party home builders and the unaffiliated land bank entity, no third-party customer accounted for more than 10% of our revenue during the year ended December 31, 2023.
Please review “Structure and Formation of Our Company”, “Our Communities” and “Commercial” under Part I, Item 1 of this report for a description of our organizational structure, each of our communities and our commercial venture.
Please review “Structure and Formation of Our Company” and “Our Communities” under Part I, Item 1 of this report for a description of our organizational structure, each of our communities and our commercial venture.
Investments accounted for under the equity method of accounting are recorded at cost and adjusted for our share in the earnings (losses) of the venture and cash contributions and distributions. 38 Table of Contents We evaluate our investments in unconsolidated entities for other-than-temporary impairment by reviewing each investment for any indicators of impairment, including the fair value of such investments compared to their carrying amounts.
Investments accounted for under the equity method of accounting are recorded at cost and adjusted for our share in the earnings (losses) of the venture and cash contributions and distributions. 36 Table of Contents We evaluate our investments in unconsolidated entities for other-than-temporary impairment by reviewing each investment for any indicators of impairment, including the fair value of such investments compared to their carrying amounts.
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.
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 and access to financing sources, including our revolving credit facility.
See “Cautionary Statement Regarding Forward-Looking Statements.” Overview Our Company 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 December 31, 2023, approximately 62.6% of the operating company.
See “Cautionary Statement Regarding Forward-Looking Statements.” Overview Our Company 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 December 31, 2024, approximately 62.6% of the operating company.
(3) Prior to our acquisition of the San Francisco Venture, certain subsidiaries of the San Francisco Venture entered into EB-5 loan agreements with lenders that are authorized by the United States Citizenship and Immigration Services to raise capital from foreign nationals who seek to obtain permanent residency in the United States.
(2) Prior to our acquisition of the San Francisco Venture, certain subsidiaries of the San Francisco Venture entered into EB-5 loan agreements with lenders that are authorized by the United States Citizenship and Immigration Services to raise capital from foreign nationals who seek to obtain permanent residency in the United States.
Interests in the Great Park Venture are 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 are entitled to all other distributions.
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.
We believe that the accounting estimate related to incentive management fees is a critical accounting estimate because when changes in our estimates and assumptions occur, our estimate of the amount of incentive compensation we expect to be entitled to receive may change, resulting in a cumulative adjustment being recorded in the period of the change that may be material.
We believe that the accounting estimate related to incentive management fees is a critical accounting estimate because when changes in our estimates and assumptions occur, our estimate of the amount of incentive compensation we are entitled to receive may change, resulting in a cumulative adjustment being recorded in the period of the change that may be material.
With a focus on managing capital spend to optimize the timing and amount of spending in relation to anticipated revenues, we were able to work with our homebuilder partners to shift some of the final land development costs to the builder, and we adjusted our sales pricing accordingly.
With a focus on managing capital spend to optimize the timing and amount of spending in relation to anticipated revenues, we were able to work with our homebuilder partners to shift some of the final land development costs to the builders, and we adjusted our sales pricing accordingly.
The table below reconciles the Great Park segment results for the years ended December 31, 2023 and 2022 to the equity in earnings from our investment in the Great Park Venture that is reflected in the consolidated statements of operations for the years ended December 31, 2023 and 2022, respectively.
The table below reconciles the Great Park segment results for the years ended December 31, 2024 and 2023 to the equity in earnings from our investment in the Great Park Venture that is reflected in the consolidated statements of operations for the years ended December 31, 2024 and 2023, respectively.
Cash flows from operating activities are primarily comprised of cash inflows from land sales, management services and operating property results. Cash outflows are comprised primarily of cash outlays for horizontal development costs, net of reimbursements and recoveries, employee compensation, and SG&A costs.
Cash flows from operating activities are primarily comprised of cash inflows from land sales, management services and operating property results. Cash outflows are comprised primarily of cash outlays for horizontal development costs, net of reimbursements and recoveries, and SG&A costs.
During the year ended December 31, 2023, we received total distributions of $154.2 million from the Great Park Venture, of which $76.0 million is reflected as a return of our investment (investing activity) in the statement of cash flows with the balance 36 Table of Contents reflected as an operating activity.
During the year ended December 31, 2023, we received total distributions of $154.2 million from the Great Park Venture, of which $76.0 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.
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, 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.
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 years ended December 31, 2023 and 2022, we made tax distributions of $4.0 million and $0.4 million, respectively, to noncontrolling interests in accordance with the operating company's Limited Partnership Agreement (“LPA”). The tax distribution is treated as an advance distribution under the LPA.
During the years ended December 31, 2024 and 2023, we made tax distributions of $7.7 million and $4.0 million, respectively, to noncontrolling interests in accordance with the operating company’s Limited Partnership Agreement (“LPA”). The tax distribution is treated as an advance distribution under the LPA.
As of December 31, 2023, no funds had been drawn on and no letters of credit were outstanding on the operating company’s $125.0 million revolving credit facility.
As of December 31, 2024, no funds had been drawn on and no letters of credit were outstanding on the operating company’s $125.0 million revolving credit facility.
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.
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.
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. Home sale revenues.
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. Management fee revenues.
However, because of the relationship between the management company and the Great Park Venture, we assess 31 Table of Contents our investment in the Great Park Venture based on the financial information for the Great Park Venture in its entirety, and not just our equity interest in it.
However, because of the relationship between the management company and the Great Park Venture, we assess our investment in the Great Park Venture based on the financial information for the Great Park Venture in its entirety, and not just our equity interest in it.
In making estimates of incentive compensation we expect to be entitled to receive in exchange for providing management services, we make significant assumptions and judgments in evaluating the factors that may determine the amount of consideration we will ultimately receive. In doing so, we typically utilize cash flow projections for the community.
In making estimates of incentive compensation we are entitled to receive in exchange for providing management services, we make significant assumptions and judgments in evaluating the factors that may determine the amount of consideration we will ultimately receive. In doing so, we utilize cash flow projections for the community.
Results of Operations The following tables and related discussions on the results of operations are for the fiscal years ended December 31, 2023 and 2022.
Results of Operations The following tables and related discussions on the results of operations are for the fiscal years ended December 31, 2024 and 2023.
Net income or loss attributable to the noncontrolling interests on the consolidated statement of operations represents the portion of earnings or losses attributable to the interests in our subsidiaries held by the noncontrolling interests. 28 Table of Contents Segment Results and Financial Information The following tables reconcile the results of operations of our segments to our consolidated results for the years ended December 31, 2023 and 2022 (in thousands).
Net income attributable to the noncontrolling interests on the consolidated statement of operations represents the portion of earnings or losses attributable to the interests in our subsidiaries held by the noncontrolling interests. 27 Table of Contents Segment Results and Financial Information The following tables reconcile the results of operations of our segments to our consolidated results for the years ended December 31, 2024 and 2023 (in thousands).
Our horizontal development costs for the year ended December 31, 2023 were offset by $18.9 million in public financing reimbursements for public infrastructure development costs we incurred in Valencia and a nonrecurring $44.5 million recovery from a third party related to certain project development costs in Valencia.
Our horizontal development costs for the year ended December 31, 2023 were partially offset by $18.9 million in public financing reimbursements for public infrastructure development costs we incurred in Valencia and a nonrecurring $44.5 million recovery from a third party related to certain project development costs in Valencia . Cash Flows from Investing Activities.
Equity in earnings from the Valencia Landbank Venture of $0.6 million and $1.2 million for the years ended December 31, 2023 and 2022, respectively, was primarily a result of recognition of our pro-rata share of profits from land sold by the Valencia Landbank Venture to third-party homebuilders.
Equity in earnings from the Valencia Landbank Venture of $0.5 million and $0.6 million for the years ended December 31, 2024 and 2023, respectively, was primarily a result of recognition of our pro-rata share of profits from land sold by the Valencia Landbank Venture to third-party homebuilders.
While many of the estimates are calculated based on historical and projected trends, all estimates are subjective and change as market and economic conditions change. Incentive Management Agreement Fees Revenues from management services are recognized as the customer consumes the benefits of the performance obligation over time.
While many of the estimates are calculated based on historical and projected trends, all estimates are subjective and change as market and economic conditions change. Management Services - Related Party - Incentive Compensation Revenues from management services are recognized as the customer consumes the benefits of the performance obligation over time.
(together, the “management company”), which provide development and property management services for the Great Park Neighborhoods and the Five Point Gateway Campus. The operating company consolidates and controls the management of all of these entities, except for the Great Park Venture and the Gateway Commercial Venture.
(together, the “management company”), which provide development management services for the Great Park Neighborhoods. The operating company consolidates and controls the management of all of these entities, except for the Great Park Venture and the Gateway Commercial Venture.
We also made payments of $4.3 million and $6.5 million to reduce our related party reimbursement obligation during the years ended December 31, 2023 and 2022, respectively. We used $0.2 million and $2.7 million during the years ended December 31, 2023 and 2022, respectively, to net settle certain share-based compensation awards with employees for tax withholding purposes.
We also made payments of $4.3 million to reduce our related party reimbursement obligation during the year ended December 31, 2023. We used $0.8 million and $0.2 million during the years ended December 31, 2024 and 2023, respectively, to net settle certain share-based compensation awards with employees for tax withholding purposes.
Cost of land sales during the year ended December 31, 2023 was $105.7 million, compared to a credit of $1.0 million to cost of land sales during year ended December 31, 2022. The cost of land sales includes both actual and estimated future capitalized costs allocated based upon relative sales values.
Cost of land sales during the year ended December 31, 2024 was $90.1 million, compared to $105.7 million during year ended December 31, 2023. The cost of land sales includes both actual and estimated future capitalized costs allocated based upon relative sales values.
Changes in Capital Structure During the year ended December 31, 2023, our ownership percentage in the operating company increased slightly to 62.6%, primarily due to our issuance of shared-based compensation in the form of 0.2 million restricted Class A common shares, partially offset by our reacquisition of approximately 0.1 million restricted Class A common shares from employees for income tax withholding purposes upon vesting.
Changes in Capital Structure During the year ended December 31, 2024, our 62.6% ownership percentage in the operating company increased slightly primarily due to our issuance of shared-based compensation in the form of 0.2 million restricted Class A common shares and 0.3 million restricted share units that were settled for Class A common shares, partially offset by our reacquisition of approximately 0.3 million restricted Class A common shares from employees for income tax withholding purposes upon vesting.
Refer to Item 7, “Management’s Discussion and Analysis of Financial Condition and Results of Operations” under Part II of our annual report on Form 10-K for the fiscal year ended December 31, 2022 for financial data and related comparative discussions on results of operations for the fiscal years ended December 31, 2022 and 2021, which is incorporated herein by reference. 26 Table of Contents The Company The following table summarizes our consolidated historical results of operations for the years ended December 31, 2023 and 2022.
Refer to Item 7, “Management’s Discussion and Analysis of Financial Condition and Results of Operations” under Part II of our annual report on Form 10-K for the fiscal year ended December 31, 2023 for financial data and related comparative discussions on results of operations for the fiscal years ended December 31, 2023 and 2022, which is incorporated herein by reference.
We will continue to look to minimize our capital spend between revenue opportunities. Valencia guest homebuilders sold 297 homes during 2023, for a total of 1,244 homes sold since sales began in May 2021.
We will continue to look to minimize our capital spend between revenue opportunities. Valencia guest homebuilders sold 348 homes during 2024, for a total of 1,599 homes sold since sales began in May 2021.
The Great Park Venture sold the first homesites in April 2013 and, as of December 31, 2023, had sold 8,124 homesites (including 853 affordable homesites) and 153 acres of commercial land, including the Five Point Gateway Campus, allowing for development of up to approximately 3.5 million square feet of commercial office and research and development space for aggregate consideration of approximately $3.8 billion.
The Great Park Venture sold the first homesites in April 2013 and, as of December 31, 2024, had sold 8,683 homesites (including 853 affordable homesites) and 166 acres of commercial land, including the Five Point Gateway Campus, allowing for development of up to approximately 3.6 million square feet of commercial office and research and development space for aggregate consideration of approximately $4.4 billion.
Our operating cash flows may vary significantly each year due to the timing of land sales and the development efforts related to our mixed-use planned communities. Net cash provided by operating activities was $154.1 million for the year ended December 31, 2023, compared to $188.3 million net cash used in operating activities for the year ended December 31, 2022.
Our operating cash flows may vary significantly each year due to the timing of land sales and the development efforts related to our mixed-use planned communities. Net cash provided by operating activities was $116.0 million for the year ended December 31, 2024, compared to $154.1 million net cash provided by operating activities for the year ended December 31, 2023.
Our effective tax rate for the year ended December 31, 2023 decreased from the year ended December 31, 2022 due to the release of the valuation allowance in the current period, net of changes in permanent differences, including executive compensation subject to limitations. Net income (loss) attributable to noncontrolling interests.
Our effective tax rate for the year ended December 31, 2024 increased from the year ended December 31, 2023 due to the release of the valuation allowance in 2023, net of changes in permanent differences, including executive compensation subject to limitations. Net income attributable to noncontrolling interests.
The table below summarizes outstanding Class A units of the operating company and Class A units of the San Francisco Venture, which are redeemable on a one-for-one basis for Class A units of the operating company, at December 31, 2023 and 2022 held by us and those held by noncontrolling interest members. 2023 2022 Class A units of the operating company: Held by us 69,199,938 69,068,354 Held by noncontrolling interest members 41,363,271 41,363,271 110,563,209 110,431,625 Class A units of the San Francisco Venture held by noncontrolling interest members 37,870,273 37,870,273 148,433,482 148,301,898 At December 31, 2023, we had 79,233,544 Class B common shares outstanding that were held by the noncontrolling interest members of the operating company and the Class A unitholders of the San Francisco Venture.
The table below summarizes outstanding Class A units of the operating company and Class A units of the San Francisco Venture, which are redeemable on a one-for-one basis for Class A units of the operating company, at December 31, 2024 and 2023 held by us and those held by noncontrolling interest members. 2024 2023 Class A units of the operating company: Held by us 69,369,234 69,199,938 Held by noncontrolling interest members 41,363,271 41,363,271 110,732,505 110,563,209 Class A units of the San Francisco Venture held by noncontrolling interest members 37,870,273 37,870,273 148,602,778 148,433,482 At December 31, 2024, we had 79,233,544 Class B common shares outstanding that were held by the noncontrolling interest members of the operating company and the Class A unitholders of the San Francisco Venture.
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.
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. At The San Francisco Shipyard, approximately 408 acres are still owned by the U.S.
Net cash provided by investing activities was $77.1 million for the year ended December 31, 2023, compared to the net cash provided by investing activities of $64.0 million for the year ended December 31, 2022.
Net cash provided by investing activities was $70.1 million for the year ended December 31, 2024, compared to the net cash provided by investing activities of $77.1 million for the year ended December 31, 2023.
By the end of 2023, 12 of our initial 18 neighborhoods had sold out, and our guest homebuilders had also opened three additional neighborhoods at our newest development area. Homes in these neighborhoods consist of a wide mix of attached and detached single family homes that are attracting first time buyers along with trade-up buyers.
By the end of 2024, our guest homebuilders had sold out two of the three previously opened neighborhoods in our newest development area and opened five additional neighborhoods. Homes in these neighborhoods consist of a wide mix of attached and detached single family homes that are attracting first time buyers along with trade-up buyers.
At both December 31, 2023 and 2022, we had $1.0 million in restricted cash and certificates of deposit securing certain of our LOCs. Additionally, under our revolving credit facility, we are able to utilize undrawn capacity to support the issuance of LOCs. As of December 31, 2023, no capacity under the revolving credit facility was used to support LOCs.
Outstanding LOCs totaled $1.0 million at each of December 31, 2024 and 2023. At both December 31, 2024 and 2023, we had $1.0 million in restricted cash and certificates of deposit securing certain of our LOCs. Additionally, under our revolving credit facility, we are able to utilize undrawn capacity to support the issuance of LOCs.
The increase in total land sales revenues was attributable to the recognition of revenue from the sale of land entitled for an aggregate of 729 homesites on approximately 72 acres during the year ended December 31, 2023 compared to no land sales during the year ended December 31, 2022.
The decrease in total land sales revenues was attributable to the recognition of revenue from the sale of land entitled for an aggregate of 493 homesites on 54.4 acres during the year ended December 31, 2024 compared to the recognition of revenue from the sale of land entitled for an aggregate of 729 homesites on approximately 72 acres during the year ended December 31, 2023.
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. The aggregate purchase price was $174.2 million for the 2023 commercial land sales. The purchase price was $240.0 million for the 2022 commercial land sale.
The 798 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 aggregate purchase price was $174.2 million for the 2023 commercial land sales.
Our investment in the Valencia Landbank Venture is also reported in the Valencia segment. • Our San Francisco segment includes operating results for the Candlestick and The San Francisco Shipyard communities. • Our Great Park segment includes operating results for the Great Park Neighborhoods community as well as development management services provided by the management company for the Great Park Venture. • Our Commercial segment includes the operating results of the Gateway Commercial Venture’s ownership in the Five Point Gateway Campus as well as property management services provided by the management company for the Gateway Commercial Venture.
Our investment in the Valencia Landbank Venture is also reported in the Valencia segment. • Our San Francisco segment includes operating results for the Candlestick and The San Francisco Shipyard communities. • Our Great Park segment includes operating results for the Great Park Neighborhoods community as well as development management services provided by the management company for the Great Park Venture.
As currently planned, Candlestick ultimately is expected to include approximately 7,000 homes. 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.
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.
Other than the Great Park Venture, no related party customer accounted for more than 10% of our 37 Table of Contents revenue during the year ended December 31, 2023. Other than Lennar and the Great Park Venture, no related party customer accounted for more than 10% of our revenue during the year ended December 31, 2022.
Other than the Great Park Venture, no related party customer accounted for more than 10% of our revenue during the years ended December 31, 2024 and 2023.
Additionally, we received total distributions of $8.6 million from the Gateway Commercial Venture, of which $0.4 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. Cash Flows from Investing Activities.
Additionally, we received total distributions of $181.9 million from the Great Park Venture, of which $119.8 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 a distribution of $17.2 million from the Gateway Commercial Venture, of which $9.4 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.
We also received incentive compensation payments of $41.6 million under our development management agreement with the Great Park Venture. The payment is net of $4.9 million that we concurrently distributed to the holders of the management company's Class B units.
During the year ended December 31, 2023, we received $162.4 million from the sale of land at our Valencia segment. We also received incentive compensation payments of $41.6 million under our development management agreement with the Great Park Venture. The payment is net of $4.9 million that we concurrently distributed to the holders of the management company’s Class B units.
At the Great Park Neighborhoods, in which we have a 37.5% percentage interest and manage all aspects of the development cycle, the Great Park Venture recognized land sale revenue of $532.0 million from the sale of 38 acres of commercial land and 798 homesites on approximately 84 acres of land.
At the Great Park Neighborhoods, in which we have a 37.5% percentage interest and manage all aspects of the development cycle, the Great Park Venture recognized land sale revenue of $480.0 million from the sale of 559 homesites on 56.1 acres of land and $25.4 million from the sale of 12.8 acres of commercial land.
Summary of Cash Flows The following table outlines the primary components of net cash provided by (used in) operating, investing and financing activities (in thousands): Year Ended December 31, 2023 2022 Operating activities $ 154,123 $ (188,302) Investing activities 77,111 63,990 Financing activities (9,204) (9,717) Cash Flows from Operating Activities.
Summary of Cash Flows The following table outlines the primary components of net cash provided by (used in) operating, investing and financing activities (in thousands): Year Ended December 31, 2024 2023 Operating activities $ 115,986 $ 154,123 Investing activities 70,064 77,111 Financing activities (108,976) (9,204) Cash Flows from Operating Activities.
Navy, we had previously expected the U.S. Navy to deliver this property between 2019 and 2022. However, allegations that Tetra Tech, Inc. and Tetra Tech EC, Inc. (collectively, “Tetra Tech”), contractors hired by the U.S. Navy, misrepresented sampling results at The San Francisco Shipyard have resulted in data reevaluation, governmental investigations, criminal proceedings, lawsuits, and a determination by the U.S.
However, allegations that Tetra Tech, Inc. and Tetra Tech EC, Inc. (collectively, “Tetra Tech”), contractors hired by the U.S. Navy, misrepresented sampling results at The San Francisco Shipyard have resulted in data reevaluation, governmental investigations, criminal proceedings, lawsuits, and a determination by the U.S. Navy and other regulatory agencies to undertake additional sampling.
The Great Park Venture made distributions and related participating payments with proceeds from the land sales, of which we received approximately $195.8 million for both our ownership interests and incentive management fee compensation. Home sales by guest homebuilders totaled 628 homes in 2023, with very limited inventory available at the end of the year.
The Great Park Venture made distributions and related participating payments with proceeds from the land sales, of which we received approximately $231.0 million for both our ownership interests and incentive management fee compensation. Home sales by guest homebuilders totaled 441 homes in 2024.
During the year ended December 31, 2023, the Great Park Venture made aggregate distributions of $48.2 million to holders of legacy interests and $411.2 million to holders of percentage interests. The Company received $154.2 million for its 37.5% percentage interest.
During the year ended December 31, 2024, the Great Park Venture made aggregate distributions of $18.1 million to holders of legacy interests and $485.1 million to holders of percentage interests. The Company received $181.9 million for its 37.5% percentage interest.
We did not sell homesites directly to Lennar during the years ended December 31, 2023, 2022, and 2021 but did recognize revenues related to certain fees or profit participation associated with homes sold by Lennar to homebuyers at Valencia.
We did not sell homesites directly to Lennar during the years ended December 31, 2024, 2023, and 2022 but did recognize revenues related to certain fees or profit participation associated with homes sold by Lennar to homebuyers at Valencia. For the year ended December 31, 2023, we recognized $0.6 million of revenue from Lennar, which primarily consisted of profit participation.
Factors That May Influence our Results of Operations Fluctuations in the Economy and Market Conditions Our results of operations are subject to various risks and fluctuations in value and demand, many of which are beyond our control.
We believe that we already have the core infrastructure and personnel required to pursue these opportunities. Factors That May Influence our Results of Operations Fluctuations in the Economy and Market Conditions Our results of operations are subject to various risks and fluctuations in value and demand, many of which are beyond our control.
SG&A expenses decreased by $2.0 million, or 14.9%, to $11.6 million for the year ended December 31, 2023, from $13.6 million for the year ended December 31, 2022. The decrease was mainly attributable to a decrease in community related selling and marketing expenses and a decrease in employee related expenses. Equity in earnings from unconsolidated entity.
SG&A expenses decreased by $1.2 million, or 10.5%, to $10.4 million for the year ended December 31, 2024, from $11.6 million for the year ended December 31, 2023. The decrease was mainly attributable to a decrease in community related selling and marketing expenses and a decrease in office lease expense. Equity in earnings from unconsolidated entity.
Navy and other regulatory agencies to undertake additional sampling. As part of the 2018 Congressional spending bill, the U.S. Department of Defense allocated $36.0 million to help fund resampling efforts at The San Francisco Shipyard. An additional $60.4 million to fund resampling efforts was approved as part of a 2019 military construction spending bill.
As part of the 2018 Congressional spending bill, the U.S. Department of Defense allocated $36.0 million to help fund resampling efforts at The San Francisco Shipyard. An additional $60.4 million to fund resampling efforts was approved as part of a 2019 military construction spending bill. These activities have delayed the remaining land transfers from the U.S.
Our related party has a history of receiving maturity date extensions, however, such further extensions are not within our control and there can be no assurance that any such extensions will be obtained in the future.
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.
Operational Highlights and Outlook In 2023, we continued to focus on three main priorities: generating revenue and positive cash flow, managing our capital spend to match near-term revenue opportunities, and controlling our selling, general and administrative (“SG&A”) costs. Our execution on these priorities allowed us to have a strong year, notwithstanding the challenging economic environment.
Operational Highlights and Outlook In 2024, we continued to focus on our three main priorities: generating revenue and positive cash flow; managing our capital spend to match near-term revenue opportunities; and controlling our selling, general and administrative (“SG&A”) costs.
During the year ended December 31, 2022, we received incentive compensation payments of $14.2 million under our development management agreement with the Great Park Venture. The payment is net of $1.7 million that we concurrently distributed to the holders of the management company's Class B units.
During the year ended December 31, 2024, we received $137.9 million from the sale of land at our Valencia segment. We also received incentive compensation payments of $49.1 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.
The increase in revenues was primarily due to land sales at our Valencia segment in 2023 compared to no land sales in 2022 and an increase in management services revenue at our Great Park segment in 2023. Cost of land sales.
The increase in revenues was primarily due to an increase in management services revenue at our Great Park segment in 2024, partially offset by lower land sales at our Valencia segment in 2024 compared to 2023. 26 Table of Contents Cost of land sales.
These activities have delayed the remaining land transfers from the U.S. Navy and could lead to additional legal claims or government investigations, all of which could in turn further delay or impede our future development of such parcels.
Navy and could lead to additional legal claims or government investigations, all of which could in turn further delay or impede our future development of such parcels.
Additionally, we received total distributions of $8.6 million from the Gateway Commercial Venture, of which $8.3 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. Cash Flows from Financing Activities.
Additionally, we received total distributions of $1.1 million from the Valencia Landbank Venture, which is reflected as a return of our investment (investing activity) in the statement of cash flows. Cash Flows from Financing Activities.
During the years ended December 31, 2023 and 2022, revenues also included changes in estimates of variable consideration, including profit participation, from those amounts previously recorded by the Great Park Venture. During the years ended December 31, 2023 and 2022, the Great Park Venture recognized $21.0 million and $19.6 million in profit participation revenue, respectively. Cost of land sales.
During the years ended December 31, 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.
Prior to our acquisition, related parties assumed the EB-5 loan liabilities, and the San Francisco Venture entered into reimbursement agreements pursuant to which it agreed to reimburse the related parties for a portion of the EB-5 loan liabilities and related interest. The amounts set forth in the above table include interest based on the weighted average interest rate of 4.6%.
Prior to our acquisition, related parties assumed the EB-5 loan liabilities, and the San Francisco Venture entered into reimbursement agreements pursuant to which it agreed to 33 Table of Contents reimburse the related parties for a portion of the EB-5 loan liabilities and related interest.
We believe the pension plan is currently appropriately funded, however, declines in the value of the plan’s assets could result in increased funding requirements in the long-term.
We do not anticipate making material contributions to our pension plan over the next twelve months. We believe the pension plan is currently appropriately funded, however, declines in the value of the plan’s assets could result in increased funding requirements in the long-term.
At The San Francisco Shipyard, approximately 408 acres are still owned by the U.S. Navy and will not be conveyed to us until the U.S. Navy satisfactorily completes its finding of suitability to transfer, or “FOST,” process, which involves multiple levels of environmental and governmental investigation, analysis, review, comment and approval. Based on our discussions with the U.S.
Navy and will not be conveyed to us until the U.S. Navy satisfactorily completes its finding of suitability to transfer, or “FOST,” process, which involves multiple levels of environmental and governmental investigation, analysis, review, comment and approval. Based on our discussions with the U.S. Navy, we had previously expected the U.S. Navy to deliver this property between 2019 and 2022.
The increase was primarily due to an increase in intangible asset amortization expense at our Great Park segment. Selling, general, and administrative. SG&A expenses decreased by $3.1 million, or 5.7%, to $51.5 million for the year ended December 31, 2023, from $54.6 million for the year ended December 31, 2022.
Cost of management services increased by $1.7 million, or 7.6%, to $23.9 million for the year ended December 31, 2024, from $22.2 million for the year ended December 31, 2023. The increase was primarily due to an increase in intangible asset amortization expense at our Great Park segment. Selling, general, and administrative.
Equity in earnings for the years ended December 31, 2023 and 2022 was primarily a result of recognizing our share of the net income of the Great Park Venture generated from land sales in 2023 and land and home sales in 2022. Income taxes.
Equity in earnings for the years ended December 31, 2024 and 2023 was primarily a result of recognizing our share of the net income of the Great Park Venture generated from land sales during each period and the net income of the Gateway Commercial Venture generated from the sale of its remaining interests in the Five Point Gateway Campus.
Revenues increased by $169.0 million, to $211.7 million for the year ended December 31, 2023, from $42.7 million for the year ended December 31, 2022.
Revenues increased by $26.2 million, to $237.9 million for the year ended December 31, 2024, from $211.7 million for the year ended December 31, 2023.
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. We currently expect to have sufficient capital to fund the horizontal development of our communities in accordance with our development plan for several years.
Cash flows from our communities may occur in uneven 32 Table of Contents patterns as cash is primarily generated by land sales and reimbursements, which can occur at various points over the life cycle of our communities.
At December 31, 2023, the San Francisco Venture had outstanding guarantees benefiting a municipal agency for infrastructure and construction of certain park and open space obligations with aggregate maximum obligations of $198.3 million. Outstanding LOCs totaled $1.0 million at each of December 31, 2023 and 2022.
We had outstanding performance bonds of $375.8 million as of December 31, 2024 predominantly related to our Valencia community. At December 31, 2024, the San Francisco Venture had outstanding guarantees benefiting a municipal agency for infrastructure and construction of certain park and open space obligations with aggregate maximum obligations of $198.3 million.
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 34 Table of Contents general and administrative expenses. We budget our cash development costs on an annual basis.
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.
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.
In general, incentive compensation fees will be paid as 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.
Total land sales revenues increased by $153.0 million to $161.4 million for the year ended December 31, 2023, from $8.4 million for the year ended December 31, 2022.
Land sales and related party land sales revenues. Land sales and related party land sales revenues increased by $58.0 million to $612.8 million for the year ended December 31, 2024, from $554.8 million for the year ended December 31, 2023.
For the year ended December 31, 2023, we recognized $12.0 million in revenues attributable to the revised base fee, and as a result of changes in estimates of the amount of variable incentive compensation, we recognized $35.2 million in additional revenue.
For the years ended December 31, 2024 and 2023, we recognized $84.0 million and $35.2 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. Management services costs and expenses.
The actual commercial square footage and number of homesites are subject to change based on ultimate use and land planning.
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.
The actual commercial square footage and number of homesites are subject to change based on ultimate use and land planning.
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.

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Item 7A. Quantitative and Qualitative Disclosures About Market Risk

Market Risk — interest-rate, FX, commodity exposure

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Biggest changeAs of December 31, 2023, we had outstanding consolidated indebtedness of $622.2 million, none of which bears interest based on floating interest rates. We have not entered into any transactions using derivative financial instruments or derivative commodity instruments. 39 Table of Contents
Biggest changeAs of December 31, 2024, we had outstanding consolidated indebtedness of $525.7 million, none of which bears interest based on floating interest rates. 37 Table of Contents We have not entered into any transactions using derivative financial instruments or derivative commodity instruments. 38 Table of Contents

Other FPH 10-K year-over-year comparisons