Company Quick10K Filing
Five Point
Price1.00 EPS-17,255,000
Shares-0 P/E-0
MCap-0 P/FCF0
Net Debt284 EBIT19
TEV284 TEV/EBIT15
TTM 2019-09-30, in MM, except price, ratios
10-Q 2020-03-31 Filed 2020-05-11
10-K 2019-12-31 Filed 2020-03-13
10-Q 2019-09-30 Filed 2019-11-08
10-Q 2019-06-30 Filed 2019-08-09
10-Q 2019-03-31 Filed 2019-05-08
10-K 2018-12-31 Filed 2019-03-14
10-Q 2018-09-30 Filed 2018-11-14
10-Q 2018-06-30 Filed 2018-08-14
10-Q 2018-03-31 Filed 2018-05-15
10-K 2017-12-31 Filed 2018-03-30
10-Q 2017-09-30 Filed 2017-11-13
10-Q 2017-06-30 Filed 2017-08-14
10-Q 2017-03-31 Filed 2017-06-22
8-K 2020-06-26 Other Events
8-K 2020-06-10
8-K 2020-05-28
8-K 2020-05-21
8-K 2020-04-28
8-K 2020-03-16
8-K 2020-02-19
8-K 2020-01-13
8-K 2019-11-08
8-K 2019-08-08
8-K 2019-07-26
8-K 2019-07-23
8-K 2019-06-06
8-K 2019-05-10
8-K 2019-05-07
8-K 2019-03-13
8-K 2019-02-18
8-K 2019-02-13
8-K 2018-11-13
8-K 2018-08-13
8-K 2018-08-10
8-K 2018-05-14
8-K 2018-04-19
8-K 2018-03-29

FPH 10Q Quarterly Report

Part I. Financial Information
Item 1. Financial Statements
Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations
Item 3. Quantitative and Qualitative Disclosures About Market Risk
Item 4. Controls and Procedures
Part II. Other Information
Item 1. Legal Proceedings
Item 1A. Risk Factors
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds
Item 3. Defaults Upon Senior Securities
Item 4. Mine Safety Disclosures
Item 5. Other Information
Item 6. Exhibits
EX-31.1 fph-33120x10qxexhx311.htm
EX-31.2 fph-33120x10qxexhx312.htm
EX-32.1 fph-33120x10qxexhx321.htm
EX-32.2 fph-33120x10qxexhx322.htm

Five Point Earnings 2020-03-31

Balance SheetIncome StatementCash Flow
3.02.41.81.20.60.02017201820192020
Assets, Equity
0.10.10.0-0.0-0.1-0.12017201820192020
Rev, G Profit, Net Income
0.50.40.30.10.0-0.12017201820192020
Ops, Inv, Fin

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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form 10-Q
(Mark One)
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended March 31, 2020
OR
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from to
Commission File Number 001-38088
Five Point Holdings, LLC
(Exact name of registrant as specified in its charter)
Delaware
27-0599397
(State or other jurisdiction of incorporation or organization)
(I.R.S. Employer Identification No.)
15131 Alton Parkway
4th Floor
Irvine
California
92618
(Address of Principal Executive Offices)
(Zip code)
(949) 349-1000
(Registrant’s telephone number, including area code)
Not Applicable
(Former name, former address, and former fiscal year, if changed since last report)
Securities registered pursuant to Section 12(b) of the Act:
Title of each classTrading Symbol(s)Name of each exchange on which registered
Class A common sharesFPHNew York Stock Exchange
Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes No
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes No
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act. (Check one):
Large accelerated filer
Accelerated filer
Non-accelerated filer
Smaller reporting company
Emerging growth company
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes No
As of April 30, 2020, 69,056,591 Class A common shares and 79,233,544 Class B common shares were outstanding.




FIVE POINT HOLDINGS, LLC

TABLE OF CONTENTS

FORM 10-Q

Page
PART I. FINANCIAL INFORMATION
ITEM 1.
ITEM 2.
ITEM 3.
ITEM 4.
PART II. OTHER INFORMATION
ITEM 1.
ITEM 1A.
ITEM 2.
ITEM 3.
ITEM 4.
ITEM 5.
ITEM 6.




CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING STATEMENTS
This report contains forward-looking statements that are subject to risks and uncertainties. These statements concern expectations, beliefs, projections, plans and strategies, anticipated events or trends and similar expressions concerning matters that are not historical facts. When used, the words “anticipate,” “believe,” “expect,” “intend,” “may,” “might,” “plan,” “estimate,” “project,” “should,” “will,” “would,” “result” and similar expressions that do not relate solely to historical matters are intended to identify forward-looking statements. This report may contain forward-looking statements regarding: our expectations of our future revenues, costs and financial performance; future demographics and market conditions in the areas where our communities are located; the outcome of pending litigation and its effect on our operations; the timing of our development activities; and the timing of future real estate purchases or sales, including anticipated deliveries of homesites and anticipated amenities in our communities.
We caution you that any forward-looking statements presented in this report are based on our current views and information currently available to us. Forward-looking statements are subject to risks, trends, uncertainties and factors that are beyond our control. We believe these risks and uncertainties include, but are not limited to, the following:
uncertainties and risks related to public health issues such as a major epidemic or pandemic, including the recent outbreak of COVID-19;
risks associated with the real estate industry;
downturns in economic conditions or demographic changes at the national, regional or local levels, particularly in the areas where our properties are located;
uncertainty and risks related to zoning and land use laws and regulations, including environmental planning and protection laws;
risks associated with development and construction projects;
adverse developments in the economic, political, competitive or regulatory climate of California;
loss of key personnel;
uncertainties and risks related to adverse weather conditions, natural disasters and climate change;
fluctuations in interest rates;
the availability of cash for distribution and debt service and exposure to risk of default under debt obligations;
exposure to liability relating to environmental and health and safety matters;
exposure to litigation or other claims;
insufficient amounts of insurance or exposure to events that are either uninsured or underinsured;
intense competition in the real estate market and our ability to sell properties at desirable prices;
fluctuations in real estate values;
changes in property taxes;
risks associated with our trademarks, trade names and service marks;
conflicts of interest with our directors;
general volatility of the capital and credit markets and the price of our Class A common shares; and
risks associated with public or private financing or the unavailability thereof.
Please see Part I, Item 1A, “Risk Factors” in our Annual Report on Form 10-K for the year ended December 31, 2019 for a more detailed discussion of these and other risks.
Should one or more of these risks or uncertainties materialize, or should underlying assumptions prove incorrect, actual results may vary materially from those anticipated, estimated or projected. We caution you therefore against relying on any of these forward-looking statements.
While forward-looking statements reflect our good faith beliefs, they are not guarantees of future performance. They are based on estimates and assumptions only as of the date of this report. We undertake no obligation to update or revise any forward-looking statement to reflect changes in underlying assumptions or factors, new information, data or methods, future events or other changes, except as required by applicable law.


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PART I. FINANCIAL INFORMATION

ITEM 1. Financial Statements

FIVE POINT HOLDINGS, LLC
CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands, except shares)
(Unaudited)

March 31, 2020December 31, 2019
ASSETS
INVENTORIES
$1,958,901  $1,889,761  
INVESTMENT IN UNCONSOLIDATED ENTITIES
501,909  533,239  
PROPERTIES AND EQUIPMENT, NET
33,071  32,312  
INTANGIBLE ASSET, NET—RELATED PARTY
77,990  80,350  
CASH AND CASH EQUIVALENTS
247,754  346,833  
RESTRICTED CASH AND CERTIFICATES OF DEPOSIT
1,742  1,741  
RELATED PARTY ASSETS
95,148  97,561  
OTHER ASSETS
20,908  22,903  
TOTAL
$2,937,423  $3,004,700  
LIABILITIES AND CAPITAL
LIABILITIES:
Notes payable, net
$616,430  $616,046  
Accounts payable and other liabilities
161,665  167,711  
Related party liabilities
126,958  127,882  
Deferred income tax liability, net
11,628  11,628  
Payable pursuant to tax receivable agreement
173,248  172,633  
Total liabilities
1,089,929  1,095,900  
COMMITMENTS AND CONTINGENT LIABILITIES (Note 12)
REDEEMABLE NONCONTROLLING INTEREST
25,000  25,000  
CAPITAL:
Class A common shares; No par value; Issued and outstanding: 2020—69,061,898 shares; 2019—68,788,257 shares
Class B common shares; No par value; Issued and outstanding: 2020—79,233,544 shares; 2019—79,233,544 shares
Contributed capital
569,772  571,532  
Retained earnings
17,843  42,844  
Accumulated other comprehensive loss
(2,671) (2,682) 
Total members’ capital
584,944  611,694  
Noncontrolling interests
1,237,550  1,272,106  
Total capital
1,822,494  1,883,800  
TOTAL
$2,937,423  $3,004,700  

See accompanying notes to unaudited condensed consolidated financial statements.

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FIVE POINT HOLDINGS, LLC
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands, except share and per share amounts)
(Unaudited)

Three Months Ended
March 31,
20202019
REVENUES:
Land sales
$6  $55  
Land sales—related party
10  230  
Management services—related party
8,244  11,063  
Operating properties
960  1,725  
Total revenues
9,220  13,073  
COSTS AND EXPENSES:
Land sales
    
Management services
6,051  7,616  
Operating properties
1,945  1,901  
Selling, general, and administrative
24,626  25,773  
Total costs and expenses
32,622  35,290  
OTHER INCOME:
Interest income
1,006  2,454  
Gain on settlement of contingent consideration—related party
  64,870  
Miscellaneous
88  10  
Total other income
1,094  67,334  
EQUITY IN (LOSS) EARNINGS FROM UNCONSOLIDATED ENTITIES
(30,911) 8,882  
(LOSS) INCOME BEFORE INCOME TAX (PROVISION) BENEFIT
(53,219) 53,999  
INCOME TAX (PROVISION) BENEFIT
  (1,266) 
NET (LOSS) INCOME
(53,219) 52,733  
LESS NET (LOSS) INCOME ATTRIBUTABLE TO NONCONTROLLING INTERESTS
(28,413) 28,925  
NET (LOSS) INCOME ATTRIBUTABLE TO THE COMPANY
$(24,806) $23,808  
NET (LOSS) INCOME ATTRIBUTABLE TO THE COMPANY PER CLASS A SHARE
Basic
$(0.36) $0.35  
Diluted
$(0.37) $0.35  
WEIGHTED AVERAGE CLASS A SHARES OUTSTANDING
Basic
66,649,866  66,210,916  
Diluted
68,792,585  145,296,469  
NET (LOSS) INCOME ATTRIBUTABLE TO THE COMPANY PER CLASS B SHARE
Basic and diluted
$(0.00) $0.00  
WEIGHTED AVERAGE CLASS B SHARES OUTSTANDING
Basic
79,233,544  79,061,835  
Diluted
79,233,544  79,275,234  
See accompanying notes to unaudited condensed consolidated financial statements.

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FIVE POINT HOLDINGS, LLC
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)
(In thousands)
(Unaudited)

Three Months Ended
March 31,
20202019
NET (LOSS) INCOME
$(53,219) $52,733  
OTHER COMPREHENSIVE INCOME:
Reclassification of actuarial loss on defined benefit pension plan included in net (loss) income
24  35  
Other comprehensive income before taxes
24  35  
INCOME TAX PROVISION RELATED TO OTHER COMPREHENSIVE INCOME
    
OTHER COMPREHENSIVE INCOME—Net of tax
24  35  
COMPREHENSIVE (LOSS) INCOME
(53,195) 52,768  
LESS COMPREHENSIVE (LOSS) INCOME ATTRIBUTABLE TO NONCONTROLLING INTERESTS
(28,404) 28,938  
COMPREHENSIVE (LOSS) INCOME ATTRIBUTABLE TO THE COMPANY
$(24,791) $23,830  

See accompanying notes to unaudited condensed consolidated financial statements.


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FIVE POINT HOLDINGS, LLC
CONDENSED CONSOLIDATED STATEMENTS OF CAPITAL
(In thousands, except share amounts)
(Unaudited)

Class A
Common
Shares
Class B
Common
Shares
Contributed
Capital
Retained
Earnings
Accumulated
Other
Comprehensive
Loss
Total
Members’
Capital
Noncontrolling
Interests
Total
Capital
BALANCE - December 31, 201968,788,257  79,233,544  $571,532  $42,844  $(2,682) $611,694  $1,272,106  $1,883,800  
Adoption of new accounting standards at unconsolidated entities
—  —  —  (195) —  (195) (224) (419) 
Net loss
—  —  —  (24,806) —  (24,806) (28,413) (53,219) 
Share-based compensation expense
—  —  3,012  —  —  3,012  —  3,012  
Reacquisition of share-based compensation awards for tax-withholding purposes
(436,675) —  (5,521) —  —  (5,521) —  (5,521) 
Settlement of restricted share units for Class A common shares
335,078  —  —  —  —  —  —  —  
Issuance of share-based compensation awards, net of forfeitures
375,238  —  —  —  —  —  —  —  
Other comprehensive income—net of tax of $0
—  —  —  —  15  15  9  24  
Tax distribution to noncontrolling interest
—  —  —  —  —  —  (4,568) (4,568) 
Adjustment to liability recognized under tax receivable agreement—net of tax of $0
—  —  (615) —  —  (615) —  (615) 
Adjustment of noncontrolling interest in the Operating Company
—  —  1,364  —  (4) 1,360  (1,360) —  
BALANCE - March 31, 202069,061,898  79,233,544  $569,772  $17,843  $(2,671) $584,944  $1,237,550  $1,822,494  
BALANCE - December 31, 201866,810,980  78,838,736  $556,521  $33,811  $(3,306) $587,026  $1,261,491  $1,848,517  
Net income
—  —  —  23,808  —  23,808  28,925  52,733  
Share-based compensation expense
—  —  3,316  —  —  3,316  —  3,316  
Reacquisition of share-based compensation awards for tax-withholding purposes
(296,392) —  (4,099) —  —  (4,099) —  (4,099) 
Settlement of restricted share units for Class A common shares
337,799  —  —  —  —  —  —  —  
Issuance of share-based compensation awards, net of forfeitures
1,894,168  —  —  —  —  —  —  —  
Other comprehensive income—net of tax of $0
—  —  —  —  22  22  13  35  
Contribution from noncontrolling interest and related sale of Class B common shares
—  436,498  3  —  —  3  5,544  5,547  
Adjustment to liability recognized under tax receivable agreement—net of tax of $0
—  —  (1,696) —  —  (1,696) —  (1,696) 
Adjustment of noncontrolling interest in the Operating Company
—  —  8,140  —  (36) 8,104  (8,104) —  
BALANCE - March 31, 201968,746,555  79,275,234  $562,185  $57,619  $(3,320) $616,484  $1,287,869  $1,904,353  

See accompanying notes to unaudited condensed consolidated financial statements.

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FIVE POINT HOLDINGS, LLC
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands)
(Unaudited)
Three Months Ended
March 31,
20202019
CASH FLOWS FROM OPERATING ACTIVITIES:
Net (loss) income
$(53,219) $52,733  
Adjustments to reconcile net (loss) income to net cash used in operating activities:
Equity in loss (earnings) from unconsolidated entities
30,911  (8,882) 
Deferred income taxes
  1,266  
Depreciation and amortization
3,711  5,578  
Gain on settlement of contingent consideration—related party
  (64,870) 
Share-based compensation
3,012  3,316  
Changes in operating assets and liabilities:
Inventories
(68,672) (47,863) 
Related party assets
167  (3,588) 
Other assets
1,411  1,394  
Accounts payable and other liabilities
(6,403) (19,417) 
Related party liabilities
(344) (3,319) 
Net cash used in operating activities
(89,426) (83,652) 
CASH FLOWS FROM INVESTING ACTIVITIES:
Distribution from indirect Legacy Interest in Great Park Venture—related party
1,721    
Distribution from Gateway Commercial Venture
  1,463  
Purchase of properties and equipment
(704) (1,196) 
Net cash provided by investing activities
1,017  267  
CASH FLOWS FROM FINANCING ACTIVITIES:
Related party reimbursement obligation
(580)   
Principal payment on Macerich note
  (65,130) 
Reacquisition of share-based compensation awards for tax-withholding purposes
(5,521) (4,099) 
Proceeds of Class B common share offering
  3  
Tax distribution to noncontrolling interest
(4,568)   
Contribution from noncontrolling interest
  5,544  
Proceeds from issuance of redeemable noncontrolling interest
  25,000  
Net cash used in financing activities
(10,669) (38,682) 
NET DECREASE IN CASH, CASH EQUIVALENTS, AND RESTRICTED CASH
(99,078) (122,067) 
CASH, CASH EQUIVALENTS, AND RESTRICTED CASH—Beginning of period
348,574  497,097  
CASH, CASH EQUIVALENTS, AND RESTRICTED CASH—End of period
$249,496  $375,030  

SUPPLEMENTAL CASH FLOW INFORMATION (Note 13)
See accompanying notes to unaudited condensed consolidated financial statements.

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FIVE POINT HOLDINGS, LLC

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
1. BUSINESS AND ORGANIZATION
Five Point Holdings, LLC, a Delaware limited liability company (the “Holding Company” and, together with its consolidated subsidiaries, the “Company”), is an owner and developer of mixed-use, master-planned communities in California. The Holding Company owns all of its assets and conducts all of its operations through Five Point Operating Company, LP, a Delaware limited partnership (the “Operating Company”), and its subsidiaries.
The Company has two classes of shares outstanding: Class A common shares and Class B common shares. Holders of Class A common shares and holders of Class B common shares are entitled to one vote for each share held of record on all matters submitted to a vote of shareholders, and are both entitled to receive distributions at the same time. However, the distributions paid to holders of our Class B common shares are in an amount per share equal to 0.0003 multiplied by the amount paid per Class A common share.
The diagram below presents a simplified depiction of the Company’s current organizational structure as of March 31, 2020:
fph-20200331_g1.jpg
(1) A wholly owned subsidiary of the Holding Company serves as the sole managing general partner of the Operating Company. As of March 31, 2020, the Company owned approximately 62.5% of the outstanding Class A Common Units of the Operating Company. After a one year holding period, a holder of Class A Common Units of the Operating Company can exchange the units for, at the Company’s option, either Class A common shares of the Holding Company, on a one-for-one basis, or cash equal to the fair market value of such shares. Assuming the exchange of all outstanding Class A Common Units of the Operating Company and all outstanding Class A units of The Shipyard Communities, LLC, a Delaware limited liability company (the “San Francisco Venture”) (see (2) below), that are not held by the Company, based on the closing price of the Company’s Class A common shares on April 30, 2020 ($5.64), the equity market capitalization of the Company was approximately $836.5 million.

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(2) The Operating Company owns all of the outstanding Class B units of the San Francisco Venture, the entity developing the Candlestick and The San Francisco Shipyard communities. The Class A units of the San Francisco Venture, which the Operating Company does not own, are intended to be economically equivalent to Class A Common Units of the Operating Company. As the holder of all outstanding Class B units, the Operating Company is entitled to receive 99% of available cash from the San Francisco Venture after the holders of Class A units in the San Francisco Venture have received distributions equivalent to the distributions, if any, paid on Class A Common Units of the Operating Company. Class A units of the San Francisco Venture can be exchanged, on a one-for-one basis, for Class A Common Units of the Operating Company (See Note 5).
(3) Together, the Operating Company, Five Point Communities, LP, a Delaware limited partnership (“FP LP”), and Five Point Communities Management, Inc., a Delaware corporation (“FP Inc.” and together with FP LP, the “Management Company”) own 100% of Five Point Land, LLC, a Delaware limited liability company (“FPL”), the entity developing Valencia (formerly known as Newhall Ranch), a master-planned community located in northern Los Angeles County, California. The Operating Company has a controlling interest in the Management Company.
(4) Interests in Heritage Fields LLC, a Delaware limited liability company (the “Great Park Venture”), are either “Percentage Interests” or “Legacy Interests.” Holders of the Legacy Interests are entitled to receive priority distributions in an amount up to $565.0 million, of which $431.3 million had been distributed as of April 30, 2020. The Company owns a 37.5% Percentage Interest in the Great Park Venture and serves as its administrative member. However, management of the Great Park Venture is vested in the four voting members, who have a total of five votes. Major decisions generally require the approval of at least 75% of the votes of the voting members. The Company has two votes, and the other three voting members each have one vote, so the Company is unable to approve any major decision without the consent or approval of at least two of the other voting members. The Company does not include the Great Park Venture as a consolidated subsidiary, but rather as an equity method investee, in its consolidated financial statements.
(5) The Company owns a 75% interest in Five Point Office Venture Holdings I, LLC, a Delaware limited liability company (the “Gateway Commercial Venture”). The Gateway Commercial Venture owns approximately 73 acres of commercial land in the Great Park Neighborhoods, on which four buildings have been newly constructed with an aggregate of approximately one million square feet of research and development and office space (the “Five Point Gateway Campus”). The Company manages the Gateway Commercial Venture, however, the manager’s authority is limited. Major decisions by the Gateway Commercial Venture generally require unanimous approval by an executive committee composed of two people designated by the Company and two people designated by another investor. Some decisions require approval by all of the members of the Gateway Commercial Venture. The Company does not include the Gateway Commercial Venture as a consolidated subsidiary, but rather as an equity method investee, in its consolidated financial statements.

2. BASIS OF PRESENTATION
Principles of consolidation—The accompanying condensed consolidated financial statements include the accounts of the Holding Company and the accounts of all subsidiaries in which the Holding Company has a controlling interest and the consolidated accounts of variable interest entities (“VIEs”) in which the Holding Company is deemed to be the primary beneficiary. All intercompany transactions and balances have been eliminated in consolidation.
Unaudited interim financial information—The accompanying condensed consolidated financial statements are unaudited and have been prepared in accordance with U.S. generally accepted accounting principles (“U.S. GAAP”) for interim financial information, the instructions to Form 10-Q and Article 10 of Regulation S-X. Accordingly, they do not include all of the information and notes required by U.S. GAAP for complete financial statements. These condensed consolidated financial statements should be read in conjunction with the Company’s Annual Report on Form 10-K for the year ended December 31, 2019. In the opinion of management, all adjustments (including normal recurring adjustments) considered necessary for a fair presentation have been included. Operating results for the three months ended March 31, 2020 are not necessarily indicative of the results that may be expected for the full year.

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Use of estimates—The preparation of financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, disclosure of contingent assets and liabilities at the date of the financial statements, and the reported amounts of revenues and expenses during the reporting periods. Management evaluates its estimates on an ongoing basis and makes revisions to these estimates and related disclosures as experience develops or new information becomes known. Actual results could differ from those estimates.
The efforts that have been implemented at the national, state and local levels to combat and mitigate a rapid spread of a global coronavirus (COVID-19) pandemic have severely impacted daily activities and the economies of California and the United States. At this time, the Company is limiting development activities at the Company’s communities. While the Company is closely monitoring government guidelines and developments in the response to the COVID-19 outbreak, the extent to which COVID-19 impacts the Company’s results will depend on future developments, including the extent and duration of precautionary measures to slow the outbreak and impacts on employment and other economic conditions affecting the Company’s business. Due to the uncertainties associated with COVID-19, the Company’s estimates of the impacts to its future results of operations, financial condition or cash flows may materially change.
Miscellaneous other incomeMiscellaneous other income consisted of the following (in thousands):
Three Months Ended March 31,
20202019
Net periodic pension benefit$88  $10  
Total miscellaneous other income$88  $10  

Recently adopted accounting pronouncements—In June 2016, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) No. 2016-13, Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments (“ASU No. 2016-13”) which amends the guidance on the impairment of financial instruments, including most debt instruments, trade receivables, contract assets, and loans. ASU No. 2016-13 adds to U.S. GAAP an impairment model known as the current expected credit loss model, or CECL, that is based on expected losses rather than incurred losses. Under the new guidance, an entity recognizes as an allowance its estimate of expected credit losses for instruments measured at amortized cost, resulting in a net presentation of the amount expected to be collected on the financial asset. The Company and its unconsolidated entities adopted ASU No. 2016-13 on January 1, 2020 using a modified retrospective approach with no material impact on the Company’s consolidated financial statements.
Under the new guidance, the Company performs a credit loss assessment for new financial assets obtained on a pooling basis by financial asset type (i.e. contract assets, trade receivables, investments, etc.) and estimates an allowance of expected credit loss. Factors considered in the estimation of expected credit loss include, but are not limited to, historical loss experience, third-party default rates on similar financial assets, credit-rating agency ratings and qualitative macroeconomic conditions. The Company continually monitors its credit loss exposure by evaluating changes in economic conditions or significant events and how that may impact current credit loss estimates. At March 31, 2020, there was no material allowance for credit loss.

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3. REVENUES
The following tables present the Company’s consolidated revenues disaggregated by revenue source and reporting segment (see Note 14) (in thousands):
Three Months Ended March 31, 2020
Valencia San FranciscoGreat ParkCommercialTotal
Land sales$16  $  $  $  $16  
Management services  795  7,352  97  8,244  
Operating properties493  180      673  
509  975  7,352  97  8,933  
Operating properties leasing revenues287        287  
$796  $975  $7,352  $97  $9,220  

Three Months Ended March 31, 2019
Valencia San FranciscoGreat ParkCommercialTotal
Land sales$64  $221  $  $  $285  
Management services  698  10,396  (31) 11,063  
Operating properties1,253  174      1,427  
1,317  1,093  10,396  (31) 12,775  
Operating properties leasing revenues298        298  
$1,615  $1,093  $10,396  $(31) $13,073  

The opening and closing balances of the Company’s contract assets for the three months ended March 31, 2020 were $73.0 million ($68.1 million related party, see Note 8) and $75.7 million ($70.5 million related party, see Note 8), respectively. The opening and closing balances of the Company’s contract assets for the three months ended March 31, 2019 were $50.6 million ($49.8 million related party) and $57.3 million ($55.5 million related party), respectively. The increase of $2.7 million and $6.7 million for the three months ended March 31, 2020 and 2019, respectively, between the opening and closing balances of the Company’s contract assets primarily result from a timing difference between the Company’s recognition of revenue earned for the performance of management services and no contractual payments due from the customer during the period.
The opening and closing balances of the Company’s receivables from contracts with customers and contract liabilities for the three months ended March 31, 2020 and 2019 were insignificant.
The Company, through the Management Company, has a development management agreement, as amended and restated (“A&R DMA”), with the Great Park Venture. The A&R DMA has an original term commencing on December 29, 2010 and ending on December 31, 2021, with options to renew upon mutual agreement for three additional years and then two additional years. Consideration in the form of contingent incentive compensation from the A&R DMA is recognized as revenue and a contract asset as services are provided over the expected contract term, with contractual payments payable in connection with, and as a percentage of, distributions made to the members of the Great Park Venture. As of March 31, 2020, the aggregate amount of the estimated transaction price allocated to the Company’s partially unsatisfied performance obligations associated with the A&R DMA was $24.0 million. Subject to changes in the estimated transaction price and constraints on the transaction price, the Company will recognize this revenue ratably as services are provided over the remaining expected contract term.

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4. INVESTMENT IN UNCONSOLIDATED ENTITIES
Great Park Venture
The Great Park Venture has two classes of interests—“Percentage Interests” and “Legacy Interests.” Legacy Interest holders are entitled to receive priority distributions in an aggregate amount equal to $476.0 million and up to an additional $89.0 million from subsequent distributions of cash depending on the performance of the Great Park Venture. The holders of the Percentage Interests will receive all other distributions. The Operating Company owns 37.5% of the Great Park Venture’s Percentage Interests as of March 31, 2020. The Great Park Venture has made distributions to the holders of Legacy Interests in the aggregate amount of $431.3 million  as of March 31, 2020.
The Great Park Venture is the owner of Great Park Neighborhoods, a mixed-use, master-planned community located in Orange County, California. The Company, through the Management Company, manages the planning, development and sale of the Great Park Neighborhoods and supervises the day-to-day affairs of the Great Park Venture. The Great Park Venture is managed by an executive committee of representatives appointed by only the holders of Percentage Interests. The Company does not control the actions of the executive committee.
At each reporting period, and when events and circumstances dictate, the Company evaluates its equity method investment in the Great Park Venture for impairment. This evaluation focuses on the recoverability of the carrying value based upon the discounted value of distributions the Company expects to receive from the Great Park Venture. This evaluation is performed at the investment level and is separate and apart from impairment evaluations on long-lived assets, such as the Company’s consolidated inventory balances, that focus on recoverability with undiscounted cash flows. The Company evaluates the investment as a whole and does not evaluate the underlying assets of the Great Park Venture for impairment. If the Great Park Venture records an impairment charge against its assets, the Company will recognize its share of the loss, adjusted for basis differences. During the three months ended March 31, 2020 and 2019, the Great Park Venture did not recognize any impairment losses on its long-lived assets.
At March 31, 2020, the Company determined that an other-than-temporary impairment existed for the Company’s investment in the Great Park Venture as the estimated fair value of the investment was less than the carrying value. This was the result of a delay in the projected distributions from Great Park Venture to the Company. In determining that the impairment was other-than-temporary, the Company concluded that it was uncertain if a near term recovery of value that was lost as a result of delays to expected land sales from the impacts of the COVID-19 pandemic would occur. As a result, the Company recognized a $26.9 million impairment charge included in equity in loss from unconsolidated entities on the condensed consolidated statement of operations during the three months ended March 31, 2020.
Below are the most significant unobservable inputs used in the Company’s discounted cash flow model to determine the estimated fair value (level 3) of the Company’s investment in the Great Park Venture at March 31, 2020:
Unobservable inputsRange
Annual home price appreciation
0% - 7%
Annual horizontal development cost appreciation
0% - 3%
Average annual absorption of homesites (market rate homesites)
900
2020 home price range
$640,000 - $1,300,000
Unlevered discount rate
9%
The cost of the Company’s investment in the Great Park Venture, adjusted for impairments, is higher than the Company’s underlying equity in the carrying value of net assets of the Great Park Venture (basis difference). The Company’s earnings from the equity method investment are adjusted by amortization and accretion of the basis differences as the assets (mainly inventory) and liabilities that gave rise to the basis difference are sold, settled or amortized.

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Table of Contents
During the three months ended March 31, 2020 and 2019, the Great Park Venture recognized $0.7 million and $127.7 million, respectively, in land sale revenues to a related party of the Company. The following table summarizes the statements of operations of the Great Park Venture for the three months ended March 31, 2020 and 2019 and reconciles the Company’s share to the amount recognized as equity in (loss) earnings (in thousands):
Three Months Ended March 31,
20202019
Land sale revenues
$22,176  $159,163  
Cost of land sales
(15,304) (107,819) 
Other costs and expenses
(11,190) (14,233)