FivePoint’s IPO could raise half a billion dollars

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Five Point Holdings LLC, owner of Newhall Land Co., which developed Valencia, is going public in a stock offering that could raise half a billion dollars or more.

On April 7, the company filed documents with the federal Securities and Exchange Commission saying it will conduct an initial public offering. If the IPO is successful, the company will trade on the New York Stock Exchange under the ticker symbol FPH.

The IPO could raise nearly $522 million, according to an amended prospectus filed with the Securities and Exchange Commission April 24.

If all shares are sold at the midpoint price of $19 a share, the company, commonly known as FivePoint, will raise $421.6 million after underwriting and other expenses. Lennar Homes has an option to invest an additional $100 million in a private offering, bringing total proceeds to $521.6 million.

Lennar, FivePoint’s largest investor, owned 45 percent of the company’s shares as of Dec. 31, 2016, according to April 24 filing, which said FivePoint intends to issue between 21 million and 24 million shares of Class A stock at a price of between $18 and $20 a share.

The company was worth about $1.4 billion on Dec. 31, 2016, according to the initial filing. Based on the amended filing, if FivePoint’s stock sells for $19 per share, the company’s full value would be more than $2.6 billion.

As a standalone company, Newhall Land was listed on the NYSE from 1970 to 2004. That year, Emile Haddad, then Chief Investment Officer of Lennar Corp. a Miami-based development company, put together a joint venture that bought Newhall Land for about $1 billion, the first filing said.

In June 2008, the joint venture and a number of its subsidiaries, including Newhall Land & Farming, filed for bankruptcy under Chapter 11 of the federal bankruptcy code.

A reorganized entity, named Newhall Land Development, LLC, emerged from Chapter 11 in 2009 with all of its employees and assets, including the property on which Newhall Ranch is being developed, and free of its previous bank debt, the IPO filing said.

As part of the reorganization, the creditors selected Haddad and the existing management team to manage the communities owned by Newhall Land & Farming, including Newhall Ranch, and the current management company was formed.

FivePoint is the largest owner and developer of mixed-use, master-planned communities in coastal California, the filing said, “based on the total number of residential homesites permitted to be built under existing entitled zoning.”

In addition to Newhall Ranch, FivePoint also owns San Francisco Shipyard and Candlestick Point in San Francisco and Great Park Neighborhoods in Orange County.

Emile Haddad, chairman and CEO of FivePoint has been given credit for saving the Orange County Great Park at his office in Aliso Viejo on Wednesday, December 7, 2016. (Photo by Leonard Ortiz, Orange County Register/SCNG)

 

FivePoint has agreements with city of Irvine for Great Parks Neighborhoods and with the city and county of San Francisco for the San Francisco Shipyard and Candlestick Point that protect the company’s existing entitlements.

Locally, the company still needs state and Los Angeles County approval to begin construction on the first two of nine phases of Newhall Ranch on 15,000 acres of land it owns west of the interstate along state Route 126.

The Los Angeles County Board of Supervisors and the state’s Department of Fish and Wildlife are reviewing a revised environmental impact statement for the project, and their verdicts could come as early as this summer, the company said earlier this year.

The IPO notes that its projects 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.”

In the filing, two investment firms, Third Avenue Management LLC and Castlelake, L.P., each indicated an interest in each buying up to $25 million of FivePoint shares.

Newhall Ranch accounts for about half of the 43,000 housing units that FivePoint is developing, and 87 percent of its land.

The company is filing as an “emerging growth company,” as defined in the Jumpstart Our Business Startups Act of 2012, the JOBS Act. This status would reduce some of the company’s reporting requirements going forward, including some related to executive compensation.

Over the last seven months of 2016, Emile Haddad, FivePoint’s Chairman, President and CEO, received total compensation of $34.4 million, the filing said. This included salary of $759,615, a $10.9 million bonus and stock awards of $22.7 million. Half of the stock awards are not payable until January 2018, and are subject to Haddad remaining with FivePoint.

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