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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 September 30, 2021
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.)
2000 FivePoint
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 class Trading Symbol(s) Name of each exchange on which registered
Class A common shares FPH New 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 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 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.
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 October 31, 2021, 70,107,552 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.
1
1
2
3
4
6
7
ITEM 2.
26
ITEM 3.
42
ITEM 4.
42
PART II. OTHER INFORMATION
ITEM 1.
43
ITEM 1A.
43
ITEM 2.
43
ITEM 3.
43
ITEM 4.
43
ITEM 5.
43
ITEM 6.
44
45



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 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, 2020, as well as other risks and uncertainties detailed from time to time in our subsequent Quarterly Reports on Form 10-Q and other filings with the Securities and Exchange Commission, 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.

Table of Contents
PART I. FINANCIAL INFORMATION

ITEM 1.    Financial Statements

FIVE POINT HOLDINGS, LLC
CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands, except shares)
(Unaudited)
September 30, 2021 December 31, 2020
ASSETS
INVENTORIES
$ 2,167,291  $ 1,990,859 
INVESTMENT IN UNCONSOLIDATED ENTITIES
374,441  442,850 
PROPERTIES AND EQUIPMENT, NET
31,785  32,769 
INTANGIBLE ASSET, NET—RELATED PARTY
56,259  71,747 
CASH AND CASH EQUIVALENTS
191,134  298,144 
RESTRICTED CASH AND CERTIFICATES OF DEPOSIT
1,330  1,330 
RELATED PARTY ASSETS
96,659  103,681 
OTHER ASSETS
17,376  20,605 
TOTAL
$ 2,936,275  $ 2,961,985 
LIABILITIES AND CAPITAL
LIABILITIES:
Notes payable, net
$ 618,732  $ 617,581 
Accounts payable and other liabilities
158,197  135,331 
Related party liabilities
99,796  113,149 
Deferred income tax liability, net
12,578  12,578 
Payable pursuant to tax receivable agreement
174,126  173,248 
Total liabilities
1,063,429  1,051,887 
COMMITMENTS AND CONTINGENT LIABILITIES (Note 11)
REDEEMABLE NONCONTROLLING INTEREST
25,000  25,000 
CAPITAL:
Class A common shares; No par value; Issued and outstanding: September 30, 2021—70,107,552 shares; December 31, 2020—69,051,284 shares
Class B common shares; No par value; Issued and outstanding: September 30, 2021—79,233,544 shares; December 31, 2020—79,233,544 shares
Contributed capital
583,890  578,278 
Retained earnings
26,305  42,221 
Accumulated other comprehensive loss
(2,797) (2,833)
Total members’ capital
607,398  617,666 
Noncontrolling interests
1,240,448  1,267,432 
Total capital
1,847,846  1,885,098 
TOTAL
$ 2,936,275  $ 2,961,985 

See accompanying notes to unaudited condensed consolidated financial statements.

1
FIVE POINT HOLDINGS, LLC
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands, except share and per share amounts)
(Unaudited)
Three Months Ended
September 30, 		Nine Months Ended
September 30,
2021 2020 2021 2020
REVENUES:
Land sales
$ 10,000  $ 42  $ 10,087  $ 17,076 
Land sales—related party
17  2  73  14 
Management services—related party
10,156  7,999  30,242  22,557 
Operating properties
522  334  1,777  2,257 
Total revenues
20,695  8,377  42,179  41,904 
COSTS AND EXPENSES:
Land sales
—  —  —  11,861 
Management services
8,075  6,120  24,700  16,587 
Operating properties
2,095  764  5,098  4,408 
Selling, general, and administrative
20,757  17,656  59,513  58,594 
Total costs and expenses
30,927  24,540  89,311  91,450 
OTHER INCOME:
Interest income
21  71  74  1,303 
Miscellaneous
1,516  91  3,833  267 
Total other income
1,537  162  3,907  1,570 
EQUITY IN EARNINGS FROM UNCONSOLIDATED ENTITIES 485  52,423  9,048  45,417 
(LOSS) INCOME BEFORE INCOME TAX BENEFIT (PROVISION) (8,210) 36,422  (34,177) (2,559)
INCOME TAX BENEFIT (PROVISION) —  —  (5) — 
NET (LOSS) INCOME (8,210) 36,422  (34,182) (2,559)
LESS NET (LOSS) INCOME ATTRIBUTABLE TO NONCONTROLLING INTERESTS (4,362) 19,458  (18,266) (1,349)
NET (LOSS) INCOME ATTRIBUTABLE TO THE COMPANY $ (3,848) $ 16,964  $ (15,916) $ (1,210)
NET (LOSS) INCOME ATTRIBUTABLE TO THE COMPANY PER CLASS A SHARE
Basic
$ (0.06) $ 0.25  $ (0.23) $ (0.02)
Diluted
$ (0.06) $ 0.25  $ (0.23) $ (0.02)
WEIGHTED AVERAGE CLASS A SHARES OUTSTANDING
Basic
67,429,394  66,746,065  67,376,746  66,709,190 
Diluted
67,429,394  142,866,245  67,376,746  68,848,283 
NET (LOSS) INCOME ATTRIBUTABLE TO THE COMPANY PER CLASS B SHARE
Basic and diluted
$ (0.00) $ 0.00  $ (0.00) $ (0.00)
WEIGHTED AVERAGE CLASS B SHARES OUTSTANDING
Basic and diluted 79,233,544  79,233,544  79,233,544  79,233,544 

See accompanying notes to unaudited condensed consolidated financial statements.

2
FIVE POINT HOLDINGS, LLC
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE (LOSS) INCOME
(In thousands)
(Unaudited)
Three Months Ended
September 30, 		Nine Months Ended
September 30,
2021 2020 2021 2020
NET (LOSS) INCOME $ (8,210) $ 36,422  $ (34,182) $ (2,559)
OTHER COMPREHENSIVE INCOME:
Reclassification of actuarial loss on defined benefit pension plan included in net (loss) income 27  25  83  73 
Other comprehensive income before taxes
27  25  83  73 
INCOME TAX PROVISION RELATED TO OTHER COMPREHENSIVE INCOME
—  —  —  — 
OTHER COMPREHENSIVE INCOME—Net of tax
27  25  83  73 
COMPREHENSIVE (LOSS) INCOME (8,183) 36,447  (34,099) (2,486)
LESS COMPREHENSIVE (LOSS) INCOME ATTRIBUTABLE TO NONCONTROLLING INTERESTS (4,352) 19,467  (18,235) (1,322)
COMPREHENSIVE (LOSS) INCOME ATTRIBUTABLE TO THE COMPANY $ (3,831) $ 16,980  $ (15,864) $ (1,164)

See accompanying notes to unaudited condensed consolidated financial statements.


3
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 - June 30, 2021 68,758,347  79,233,544  $ 577,949  $ 30,153  $ (2,793) $ 605,309  $ 1,251,604  $ 1,856,913 
Net loss —  —  —  (3,848) —  (3,848) (4,362) (8,210)
Share-based compensation expense
—  —  1,762  —  —  1,762  —  1,762 
Issuance of share-based compensation awards, net of forfeitures
1,349,205  —  —  —  —  —  —  — 
Other comprehensive income—net of tax of $0
—  —  —  —  17  17  10  27 
Tax distributions to noncontrolling interests —  —  —  —  —  —  (1,246) (1,246)
Adjustment to liability recognized under tax receivable agreement—net of tax of $0
—  —  (1,400) —  —  (1,400) —  (1,400)
Adjustment of noncontrolling interest in the Operating Company
—  —  5,579  —  (21) 5,558  (5,558) — 
BALANCE - September 30, 2021 70,107,552  79,233,544  $ 583,890  $ 26,305  $ (2,797) $ 607,398  $ 1,240,448  $ 1,847,846 
BALANCE - June 30, 2020 69,056,591  79,233,544  $ 572,587  $ 24,475  $ (2,656) $ 594,406  $ 1,245,186  $ 1,839,592 
Net income —  —  —  16,964  —  16,964  19,458  36,422 
Share-based compensation expense
—  —  2,848  —  —  2,848  —  2,848 
Issuance of share-based compensation awards, net of forfeitures
(5,307) —  —  —  —  —  —  — 
Other comprehensive income—net of tax of $0
—  —  —  —  16  16  9  25 
Adjustment of noncontrolling interest in the Operating Company
—  —  (23) —  —  (23) 23  — 
BALANCE - September 30, 2020 69,051,284  79,233,544  $ 575,412  $ 41,439  $ (2,640) $ 614,211  $ 1,264,676  $ 1,878,887 


See accompanying notes to unaudited condensed consolidated financial statements.

4
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, 2020 69,051,284  79,233,544  $ 578,278  $ 42,221  $ (2,833) $ 617,666  $ 1,267,432  $ 1,885,098 
Net loss
—  —  —  (15,916) —  (15,916) (18,266) (34,182)
Share-based compensation expense
—  —  4,201  —  —  4,201  —  4,201 
Reacquisition of share-based compensation awards for tax-withholding purposes
(324,905) —  (2,047) —  —  (2,047) —  (2,047)
Issuance of share-based compensation awards, net of forfeitures
1,381,173  —  —  —  —  —  —  — 
Other comprehensive income—net of tax of $0
—  —  —  —  52  52  31  83 
Tax distributions to noncontrolling interests —  —  —  —  —  —  (4,429) (4,429)
Adjustment to liability recognized under tax receivable agreement—net of tax of $0
—  —  (878) —  —  (878) —  (878)
Adjustment of noncontrolling interest in the Operating Company
—  —  4,336  —  (16) 4,320  (4,320) — 
BALANCE - September 30, 2021 70,107,552  79,233,544  $ 583,890  $ 26,305  $ (2,797) $ 607,398  $ 1,240,448  $ 1,847,846 
BALANCE - December 31, 2019 68,788,257  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 —  —  —  (1,210) —  (1,210) (1,349) (2,559)
Share-based compensation expense
—  —  8,696  —  —  8,696  —  8,696 
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
364,624  —  —  —  —  —  —  — 
Other comprehensive income—net of tax of $0
—  —  —  —  46  46  27  73 
Tax distributions to noncontrolling interests —  —  —  —  —  —  (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
—  —  1,320  —  (4) 1,316  (1,316) — 
BALANCE - September 30, 2020 69,051,284  79,233,544  $ 575,412  $ 41,439  $ (2,640) $ 614,211  $ 1,264,676  $ 1,878,887 

See accompanying notes to unaudited condensed consolidated financial statements.

5
FIVE POINT HOLDINGS, LLC
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands)
(Unaudited)
Nine Months Ended
September 30,
2021 2020
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss $ (34,182) $ (2,559)
Adjustments to reconcile net loss to net cash used in operating activities:
Equity in earnings from unconsolidated entities (9,048) (45,417)
Return on investment from Gateway Commercial Venture —  78,968 
Depreciation and amortization 19,713  11,219 
Gain on distribution from indirect Legacy Interest in Great Park Venture—related party (978) — 
Share-based compensation 4,201  8,696 
Changes in operating assets and liabilities:
Inventories (175,022) (129,990)
Related party assets 5,334  (6,227)
Other assets 2,046  (218)
Accounts payable and other liabilities 23,128  (29,191)
Related party liabilities 2,507  (994)
Net cash used in operating activities (162,301) (115,713)
CASH FLOWS FROM INVESTING ACTIVITIES:
Return of investment from Great Park Venture 76,623  — 
Return of investment from Valencia Landbank Venture 932  — 
Return of investment from Gateway Commercial Venture —  57,532 
Contribution to Valencia Landbank Venture (125) — 
Distribution from indirect Legacy Interest in Great Park Venture—related party 1,020  1,721 
Purchase of properties and equipment (137) (2,124)
Net cash provided by investing activities 78,313  57,129 
CASH FLOWS FROM FINANCING ACTIVITIES:
Payment of financing costs (686) — 
Related party reimbursement obligation (15,860) (7,991)
Reacquisition of share-based compensation awards for tax-withholding purposes (2,047) (5,521)
Tax distributions to noncontrolling interests (4,429) (4,568)
Net cash used in financing activities (23,022) (18,080)
NET DECREASE IN CASH, CASH EQUIVALENTS, AND RESTRICTED CASH (107,010) (76,664)
CASH, CASH EQUIVALENTS, AND RESTRICTED CASH—Beginning of period 299,474  348,574 
CASH, CASH EQUIVALENTS, AND RESTRICTED CASH—End of period $ 192,464  $ 271,910 
SUPPLEMENTAL CASH FLOW INFORMATION (Note 12)
See accompanying notes to unaudited condensed consolidated financial statements.

6
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 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 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 Company presents noncontrolling interests on the Company’s consolidated balance sheet and classifies such interests within capital but separate from the Company’s Class A and Class B members’ capital. Noncontrolling interests represent equity interests in the Company’s consolidated subsidiaries held by partners in the Operating Company, excluding the Holding Company, and members in The Shipyard Communities, LLC (the “San Francisco Venture”), excluding the Operating Company (see Note 5).
The diagram below presents a simplified depiction of the Company’s current organizational structure as of September 30, 2021:
FPH-20210930_G1.JPG
(1) A wholly owned subsidiary of the Holding Company serves as the sole managing general partner of the Operating Company. As of September 30, 2021, the Company owned approximately 62.9% 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. Until Class A Common Units of the Operating Company are exchanged or redeemed, the capital associated with Class A Common Units of the Operating Company not held by the Holding Company is presented within "noncontrolling interests" on the Company’s consolidated balance sheet. Assuming the exchange of all outstanding Class A Common Units of the Operating Company and all outstanding Class A units of 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 October 29, 2021 ($7.36), the equity market capitalization of the Company was approximately $1.1 billion.

7
(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 of the San Francisco Venture, 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). Until exchanged or redeemed through the Operating Company, the capital associated with Class A units of the San Francisco Venture is presented within "noncontrolling interests" on the Company’s consolidated balance sheet.
(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 mixed-use 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 up to an amount equal to $565.0 million, of which $482.3 million had been distributed as of October 31, 2021 (See Note 4). 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 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, 2020. In the opinion of management, all adjustments (including normal recurring adjustments) considered necessary for a fair presentation have been included. Operating results and cash flows for the three and nine months ended September 30, 2021 are not necessarily indicative of the operating results and cash flows that may be expected for the fourth quarter or for the full year.
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.

8
Miscellaneous other income—Miscellaneous other income consisted of the following (in thousands):
Three Months Ended September 30, Nine Months Ended September 30,
2021 2020 2021 2020
Net periodic pension benefit $ 134  $ 91  $ 403  $ 267 
Other
1,382  —  1,382  — 
Other—related party
—  —  2,048  — 
Total miscellaneous other income $ 1,516  $ 91  $ 3,833  $ 267 
3.    REVENUES
The following tables present the Company’s consolidated revenues disaggregated by revenue source and reporting segment (in thousands):
Three Months Ended September 30, 2021 Nine Months Ended September 30, 2021
Valencia San Francisco
Great Park(1)
Commercial(1)
Total Valencia San Francisco
Great Park(1)
Commercial(1)
Total
Land sales and land sales—related party
$ 10,017  $ —  $ —  $ —  $ 10,017  $ 10,160  $ —  $ —  $ —  $ 10,160 
Management services—related party
—  —  10,054  102  10,156  —  —  29,938  304  30,242 
Operating properties 77  —  —  —  77  541  —  —  —  541 
10,094  —  10,054  102  20,250  10,701  —  29,938  304  40,943 
Operating properties leasing revenues 304  141  —  —  445  805  431  —  —  1,236 
$ 10,398  $ 141  $ 10,054  $ 102  $ 20,695  $ 11,506  $ 431  $ 29,938  $ 304  $ 42,179 

Three Months Ended September 30, 2020 Nine Months Ended September 30, 2020
Valencia San Francisco
Great Park(1)
Commercial(1)
Total Valencia San Francisco
Great Park(1)
Commercial(1)
Total
Land sales and land sales—related party
$ 44  $ —  $ —  $ —  $ 44  $ 17,090  $ —  $ —  $ —  $ 17,090 
Management services—related party
—  —  7,895  104  7,999  —  835  21,424  298  22,557 
Operating properties (116) 138  —  —  22  915  450  —  —  1,365 
(72) 138  7,895  104  8,065  18,005  1,285  21,424  298  41,012 
Operating properties leasing revenues 312  —  —  —  312  892  —  —  —  892 
$ 240  $ 138  $ 7,895  $ 104  $ 8,377  $ 18,897  $ 1,285  $ 21,424  $ 298  $ 41,904 
(1) The tables above do not include revenues of the Great Park Venture and the Gateway Commercial Venture, which are included in the Company’s reporting segment totals (see Notes 4 and 13).
The Company, through the Management Company, has an amended and restated development management agreement (“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, although contractual payments are due in connection with distributions made to the members of the Great Park Venture. During the nine months ended September 30, 2021, the Great Park Venture made distributions to holders of Percentage Interests and Legacy Interests that resulted in the Company receiving incentive compensation payments of $21.3 million (see Note 8). As of September 30, 2021, the aggregate amount of the constrained transaction price allocated to the Company’s partially unsatisfied performance obligations associated with the A&R DMA was $5.4 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.
The opening and closing balances of the Company’s contract assets for the nine months ended September 30, 2021 were $85.1 million ($78.1 million related party, see Note 8) and $77.7 million ($72.5 million related party, see Note 8), respectively. The opening and closing balances of the Company’s contract assets for the nine months ended September 30, 2020 were $73.0 million

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($68.1 million related party) and $80.7 million ($75.2 million related party), respectively. The decrease of $7.4 million for the nine months ended September 30, 2021 between the opening and closing balances of the Company’s contract assets primarily resulted from a timing difference between when payments are made and the Company’s recognition of revenue earned for the performance of management services in the period. Offsetting the timing difference was a reduction of $21.3 million from the receipt of incentive compensation payments from the Great Park Venture. The increase of $7.7 million for the nine months ended September 30, 2020 between the opening and closing balances of the Company’s contract assets primarily resulted 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.
Land sales and land sales—related party revenues for the nine months ended September 30, 2020 included $14.9 million that was recognized as a receivable upon completion of the performance obligation. The receivable was in the form of a promissory note that was substantially collected in July 2020 with the balance received in December 2020. The opening and closing balances of the Company’s other receivables from contracts with customers and contract liabilities for the nine months ended September 30, 2021 and 2020 were insignificant.
4.    INVESTMENT IN UNCONSOLIDATED ENTITIES
Great Park Venture
The Great Park Venture has two classes of interests—“Percentage Interests” and “Legacy Interests.” The Operating Company owned 37.5% of the Great Park Venture’s Percentage Interests as of September 30, 2021. Legacy Interest holders 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 of cash depending on the performance of the Great Park Venture. The holders of the Percentage Interests will receive all other distributions.
During the nine months ended September 30, 2021, the Great Park Venture made aggregate distributions of $51.0 million to holders of Legacy Interests and $204.3 million to holders of Percentage Interests. The Company received $76.6 million for its 37.5% Percentage Interest. With the distributions to the holders of Legacy Interests during the nine months ended September 30, 2021, the Great Park Venture fully satisfied the $476.0 million priority distribution rights and reduced the remaining maximum participating Legacy Interest distribution rights to $82.7 million.
The Great Park Venture is the owner of Great Park Neighborhoods, a mixed-use planned community located in Orange County, California. The Company, through the A&R DMA, manages the planning, development and sale of land at the Great Park Neighborhoods and supervises the day-to-day affairs of the Great Park Venture. The Great Park Venture is governed by an executive committee of representatives appointed by only the holders of Percentage Interests. The Company serves as the administrative member but does not control the actions of the executive committee. The Company accounts for its investment in the Great Park Venture using the equity method.
The carrying value of the Company’s investment in the Great Park Venture is higher than the Company’s underlying share of equity in the carrying value of net assets of the Great Park Venture, resulting in a basis difference. The Company’s earnings or losses 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.
During the nine months ended September 30, 2021, the Great Park Venture recognized $60.9 million in land sale revenues to related parties of the Company and $346.4 million in land sale revenues to third parties. Land sale revenues to third parties included $236.6 million in revenues from homesites sold to an unaffiliated land banking entity whereby a related party of the Company retained the option to acquire these homesites in the future from the land bank entity. Land sales to related parties included $57.4 million in sales to an entity in which the Great Park Venture holds a 10% interest (the “Great Park Landbank Venture”). The Great Park Landbank Venture is a land banking entity that was formed in June 2021. The Great Park Venture made an initial contribution of $4.6 million for its interest and accounts for the investment under the equity method of accounting. During the nine months ended September 30, 2020, the Great Park Venture recognized $1.1 million in land sale revenues to related parties of the Company and $22.0 million in land sale revenues to third parties.

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The following table summarizes the statements of operations of the Great Park Venture for the nine months ended September 30, 2021 and 2020 (in thousands):
Nine Months Ended September 30,
2021 2020
Land sale and related party land sale revenues $ 407,311  $ 23,054 
Home sale revenues 12,947  $ — 
Cost of land sales
(301,247) (15,304)
Cost of home sales (10,187) — 
Other costs and expenses
(45,220) (35,995)
Net income (loss) of Great Park Venture $ 63,604  $ (28,245)
The Company’s share of net income (loss) $ 23,852  $ (10,592)
Basis difference amortization (15,533) (1,204)
Other-than-temporary investment impairment
—  (26,851)
Equity in earnings (loss) from Great Park Venture $ 8,319  $ (38,647)
In March 2020, the Company determined that an other-than-temporary impairment existed for the Company’s investment in the Great Park Venture and recognized a $26.9 million impairment charge that is included in equity in loss from unconsolidated entities on the condensed consolidated statement of operations during the nine months ended September 30, 2020. During the nine months ended September 30, 2021 and 2020, the Great Park Venture did not recognize any impairment losses on its long-lived assets.
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 the time the other-than-temporary impairment was recognized:
Unobservable inputs Range
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 following table summarizes the balance sheet data of the Great Park Venture and the Company’s investment balance as of September 30, 2021 and December 31, 2020 (in thousands):
September 30, 2021 December 31, 2020
Inventories
$ 681,563  $ 916,127 
Cash and cash equivalents
152,737  128,850 
Receivable and other assets
33,704  24,449 
Total assets
$ 868,004  $ 1,069,426 
Accounts payable and other liabilities
$ 130,207  $ 139,929 
Redeemable Legacy Interests
82,719  133,695 
Capital (Percentage Interest)
655,078  795,802 
Total liabilities and capital
$ 868,004  $ 1,069,426 
The Company’s share of capital in Great Park Venture
$ 245,655  $ 298,426 
Unamortized basis difference
77,506  93,039 
The Company’s investment in the Great Park Venture
$ 323,161  $ 391,465 


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Gateway Commercial Venture
The Company owned a 75% interest in the Gateway Commercial Venture as of September 30, 2021. The Gateway Commercial Venture is governed by an executive committee in which the Company is entitled to appoint two individuals. One of the other members of the Gateway Commercial Venture is also entitled to appoint two individuals to the executive committee. The unanimous approval of the executive committee is required for certain matters, which limits the Company’s ability to control the Gateway Commercial Venture, however, the Company is able to exercise significant influence and therefore accounts for its investment in the Gateway Commercial Venture using the equity method. The Company is the manager of the Gateway Commercial Venture, with responsibility to manage and administer its day-to-day affairs and implement a business plan approved by the executive committee.
The Gateway Commercial Venture owns one commercial office building and approximately 50 acres of commercial land with additional development rights at a 73 acre office, medical, research and development campus located within the Great Park Neighborhoods (the “Five Point Gateway Campus”). The Five Point Gateway Campus consists of four buildings totaling approximately one million square feet. Prior to May 2020, the Gateway Commercial Venture owned and operated all four buildings.
In August 2020, the Gateway Commercial Venture closed on the sale of two buildings at the Five Point Gateway Campus, comprising a total of approximately 660,000 square feet of research and development space for a purchase price of $355.0 million. The sale of the buildings, which had a total carrying value of approximately $278.0 million, resulted in a gain of approximately $74.8 million, net of transaction costs. Concurrently, the Gateway Commercial Venture, using net proceeds generated from the sale, made a debt payment of $245.0 million to its lender and a distribution of $107.0 million to its members, of which approximately $80.3 million was distributed to the Company.
In May 2020, the Gateway Commercial Venture closed on the sale of approximately 11 acres of land and an approximately 189,000 square foot building for a purchase price of $108.0 million. The sale of this land and building, which had a carrying value of approximately $67.5 million, resulted in a gain of approximately $37.4 million, net of transaction costs. Concurrently, the Gateway Commercial Venture, using net proceeds generated from the sale, made a debt payment of $30.0 million to its lender and a distribution of $75.0 million to its members, of which approximately $56.3 million was distributed to the Company.
The Company and a subsidiary of Lennar Corporation (“Lennar”) lease portions of the fourth building, which remains under the ownership of the Gateway Commercial Venture, and during the nine months ended September 30, 2021 and 2020, the Gateway Commercial Venture recognized $6.4 million and $6.3 million, respectively, in rental revenues from those leasing arrangements.
The following table summarizes the statements of operations of the Gateway Commercial Venture for the nine months ended September 30, 2021 and 2020 (in thousands):
Nine Months Ended September 30,
2021 2020
Rental revenues $ 6,357  $ 22,141 
Rental operating and other expenses (1,884) (5,342)
Depreciation and amortization (2,953) (8,427)
Gain on asset sale, net —  112,260 
Interest expense (921) (8,547)
Net income of Gateway Commercial Venture $ 599  $ 112,085 
Equity in earnings from Gateway Commercial Venture $ 449  $ 84,064 

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The following table summarizes the balance sheet data of the Gateway Commercial Venture and the Company’s investment balance as of September 30, 2021 and December 31, 2020 (in thousands):
September 30, 2021 December 31, 2020
Real estate and related intangible assets, net $ 87,504  $ 90,276 
Other assets 17,231  14,446 
Total assets $ 104,735  $ 104,722 
Notes payable, net $ 29,351  $ 29,381 
Other liabilities 9,734  10,290 
Members’ capital 65,650  65,051 
Total liabilities and capital $ 104,735  $ 104,722 
The Company’s investment in the Gateway Commercial Venture $ 49,237  $ 48,788 
The debt of the Gateway Commercial Venture is non-recourse to the Company other than in the case of customary “bad act” exceptions or bankruptcy or insolvency events.
Valencia Landbank Venture
As of September 30, 2021, the Company owned a 10% interest in the Valencia Landbank Venture, an entity organized in December 2020 for the purpose of taking assignment from homebuilders of purchase and sale agreements for the purchase of residential lots within the Valencia community. The Valencia Landbank Venture concurrently enters into option and development agreements with homebuilders pursuant to which the homebuilders retain the option to purchase the land to construct and sell homes. The Company does not have a controlling financial interest in the Valencia Landbank Venture, however, the Company has the ability to significantly influence the Valencia Landbank Venture’s operating and financial policies, and most major decisions require the Company’s approval in addition to the approval of the Valencia Landbank Venture’s other unaffiliated member, and therefore the Company accounts for its investment in the Valencia Landbank Venture using the equity method. At September 30, 2021 and December 31, 2020, the Company’s investment in the Valencia Landbank Venture was $2.0 million and $2.6 million, respectively, and the Company recognized $0.3 million in equity in earnings for the nine months ended September 30, 2021.
5.    NONCONTROLLING INTERESTS
The Operating Company
The Holding Company’s wholly owned subsidiary is the managing general partner of the Operating Company, and at September 30, 2021, the Holding Company and its wholly owned subsidiary owned approximately 62.9% of the outstanding Class A Common Units and 100% of the outstanding Class B Common Units of the Operating Company. The Holding Company consolidates the financial results of the Operating Company and its subsidiaries and records a noncontrolling interest for the remaining 37.1% of the outstanding Class A Common Units of the Operating Company.
After a 12 month holding period, holders of Class A Common Units of the Operating Company may exchange their units for, at the Company’s option, either (i) Class A common shares on a one-for-one basis (subject to adjustment in the event of share splits, distributions of shares, warrants or share rights, specified extraordinary distributions and similar events), or (ii) cash in an amount equal to the market value of such shares at the time of exchange. In either situation, an equal number of that holder’s Class B common shares will automatically convert into Class A common shares, at a ratio of 0.0003 Class A common shares for each Class B common share. This exchange right is currently exercisable by all holders of outstanding Class A Common Units of the Operating Company.
With each exchange of Class A Common Units of the Operating Company for Class A common shares, the Holding Company’s percentage ownership interest in the Operating Company and its share of the Operating Company’s cash distributions and profits and losses will increase. Additionally, other issuances of common shares of the Holding Company or common units of the Operating Company result in changes to the noncontrolling interest percentage. As a result, such equity transactions result in an adjustment between members’ capital and the noncontrolling interest in the Company’s consolidated balance sheet and statement of capital to account for the changes in the noncontrolling interest ownership percentage as well as any change in total net assets of the Company.
During the nine months ended September 30, 2021 and 2020, the Holding Company’s ownership interest in the Operating Company changed as a result of net equity transactions related to the Company’s share-based compensation plan.

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The terms of the Operating Company's Limited Partnership Agreement (“LPA”) provide for the payment of certain tax distributions to the Operating Company's partners and management partner in an amount equal to the estimated income tax liabilities resulting from taxable income or gain allocated to those parties. The tax distribution provisions in the LPA were included in the Operating Company's governing documents adopted prior to the Company’s initial public offering and were designed to provide funds necessary to pay tax liabilities for income that might be allocated, but not paid, to the partners and the management partner. The management partner is an entity controlled by the Company’s Chairman Emeritus of the Board of Directors and former Chief Executive Officer, Emile Haddad.
Tax distributions to the partners of the Operating Company for the three and nine months ended September 30, 2021 and 2020, were as follows (in thousands):
Three Months Ended September 30, Nine Months Ended September 30,
2021 2020 2021 2020
Management partner $ 1,246  $ —  $ 2,932  $ 4,568 
Other partners (excluding the Holding Company) —  —  1,497  — 
Total tax distributions $ 1,246  $ —  $ 4,429  $ 4,568 
Generally, tax distributions are treated as advance distributions under the LPA and are taken into account when determining the amounts otherwise distributable under the LPA.
The San Francisco Venture
 
The San Francisco Venture has three classes of units—Class A, Class B and Class C units. The Operating Company owns all of the outstanding Class B units of the San Francisco Venture. All of the outstanding Class A units are owned by affiliates of Lennar and affiliates of Castlelake, LP. The Class A units of the San Francisco Venture are intended to be substantially economically equivalent to the Class A Common Units of the Operating Company. The Class A units of the San Francisco Venture represent noncontrolling interests to the Operating Company.
Holders of Class A units of the San Francisco Venture can redeem their units at any time and receive Class A Common Units of the Operating Company on a one-for-one basis (subject to adjustment in the event of share splits, distributions of shares, warrants or share rights, specified extraordinary distributions and similar events). If a holder requests a redemption of Class A units of the San Francisco Venture that would result in the Holding Company’s ownership of the Operating Company falling below 50.1%, the Holding Company has the option of satisfying the redemption with Class A common shares instead. The Company also has the option, at any time, to acquire outstanding Class A units of the San Francisco Venture in exchange for Class A Common Units of the Operating Company. The 12 month holding period for any Class A Common Units of the Operating Company issued in exchange for Class A units of the San Francisco Venture is calculated by including the period that such Class A units of the San Francisco Venture were owned. This exchange right is currently exercisable by all holders of outstanding Class A units of the San Francisco Venture.
Redeemable Noncontrolling Interest
In 2019, the San Francisco Venture issued 25.0 million new Class C units to an affiliate of Lennar in exchange for a contribution of $25.0 million to the San Francisco Venture. Provided that Lennar completes the construction of a certain number of new homes in Candlestick as contemplated under purchase and sale agreements with the Company, the San Francisco Venture is required to redeem the Class C units if and when the Company receives reimbursements from the Mello-Roos communities facilities district formed for the development, in an aggregate amount equal to 50% of any reimbursements received up to a maximum amount of $25.0 million. The San Francisco Venture also maintains the ability to redeem the then outstanding balance of Class C units for cash at any time. Upon a liquidation of the San Francisco Venture, the holders of Class C Units are entitled to a liquidation preference. The maximum amount payable by the San Francisco Venture pursuant to redemptions or liquidation of the Class C units is $25.0 million. The holders of Class C units are not entitled to receive any other forms of distributions and are not entitled to any voting rights. In connection with the issuance of the Class C units, the San Francisco Venture agreed to spend $25.0 million on the development of infrastructure and/or parking facilities at the Company’s Candlestick development. At September 30, 2021 and December 31, 2020, $25.0 million of Class C units were outstanding and included in redeemable noncontrolling interest on the condensed consolidated balance sheets.
6.    CONSOLIDATED VARIABLE INTEREST ENTITY
The Holding Company conducts all of its operations through the Operating Company, a consolidated VIE, and as a result, substantially all of the Company’s assets and liabilities represent the assets and liabilities of the Operating Company, other than items attributed to income taxes and the payable pursuant to a tax receivable agreement (“TRA”). The Operating Company has investments in, and consolidates the assets and liabilities of, the San Francisco Venture, FP LP and FPL, all of which have also been determined to be VIEs.

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The San Francisco Venture is a VIE as the other members of the venture, individually or as a group, are not able to exercise kick-out rights or substantive participating rights. The Company applied the variable interest model and determined that it is the primary beneficiary of the San Francisco Venture and, accordingly, the San Francisco Venture is consolidated in its results. In making that determination, the Company evaluated that the Operating Company has unilateral and unconditional power to make decisions in regards to the activities that significantly impact the economics of the VIE, which are the development of properties, marketing and sale of properties, acquisition of land and other real estate properties and obtaining land ownership or ground lease for the underlying properties to be developed. The Company is determined to have more-than-insignificant economic benefit from the San Francisco Venture because, excluding Class C units, the Operating Company can prevent or cause the San Francisco Venture from making distributions on its units, and the Operating Company would receive 99% of any such distributions made (assuming no distributions had been paid on the Class A Common Units of the Operating Company). In addition, the San Francisco Venture is only allowed to make a capital call on the Operating Company and not any other interest holders, which could be a significant financial risk to the Operating Company.
As of September 30, 2021, the San Francisco Venture had total combined assets of $1.3 billion, primarily comprised of $1.26 billion of inventories, $1.7 million in related party assets and total combined liabilities of $80.4 million including $73.1 million in related party liabilities.
As of December 31, 2020, the San Francisco Venture had total combined assets of $1.2 billion, primarily comprised of $1.22 billion of inventories, $2.8 million in related party assets and total combined liabilities of $97.9 million including $89.0 million in related party liabilities.
Those assets are owned by, and those liabilities are obligations of, the San Francisco Venture, not the Company. The San Francisco Venture’s operating subsidiaries are not guarantors of the Company’s obligations, and the assets held by the San Francisco Venture may only be used as collateral for the San Francisco Venture’s obligations. The creditors of the San Francisco Venture do not have recourse to the assets of the Operating Company, as the VIE’s primary beneficiary, or of the Holding Company.
The Company and the other members do not generally have an obligation to make capital contributions to the San Francisco Venture. In addition, there are no liquidity arrangements or agreements to fund capital or purchase assets that could require the Company to provide financial support to the San Francisco Venture. The Company does not guarantee any debt of the San Francisco Venture. However, the Operating Company has guaranteed the performance of payment by the San Francisco Venture in accordance with the redemption terms of the Class C units of the San Francisco Venture (see Note 5).
FP LP and FPL are VIEs because the other partners or members have disproportionately fewer voting rights, and substantially all of the activities of the entities are conducted on behalf of the other partners or members and their related parties. The Operating Company, or a wholly owned subsidiary of the Operating Company, is the primary beneficiary of FP LP and FPL.
As of September 30, 2021, FP LP and FPL had combined assets of $1.1 billion, primarily comprised of $907.1 million of inventories, $56.3 million of intangibles, $75.7 million in related party assets, and total combined liabilities of $123.2 million, including $114.8 million in accounts payable and other liabilities and $8.4 million in related party liabilities.
As of December 31, 2020, FP LP and FPL had combined assets of $1.0 billion, primarily comprised of $767.3 million of inventories, $71.7 million of intangibles, $80.0 million in related party assets and total combined liabilities of $108.9 million, including $99.9 million in accounts payable and other liabilities and $9.0 million in related party liabilities.
The Company evaluates its primary beneficiary designation on an ongoing basis and assesses the appropriateness of the VIE’s status when events have occurred that would trigger such an analysis. During the nine months ended September 30, 2021 and 2020, there were no VIEs that were deconsolidated.
7.    INTANGIBLE ASSET, NET—RELATED PARTY
The intangible asset relates to the contract value of the incentive compensation provisions of the A&R DMA with the Great Park Venture. The intangible asset will be amortized over the expected contract period based on the pattern in which the economic benefits are expected to be received.
The carrying amount and accumulated amortization of the intangible asset as of September 30, 2021 and December 31, 2020 were as follows (in thousands):
September 30, 2021 December 31, 2020
Gross carrying amount $ 129,705  $ 129,705 
Accumulated amortization (73,446) (57,958)
Net book value $ 56,259  $ 71,747 


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Intangible asset amortization expense, as a result of revenue recognition attributable to incentive compensation, was $4.9 million and $15.5 million for the three and nine months ended September 30, 2021, respectively, and $2.4 million and $7.1 million for the three and nine months ended September 30, 2020, respectively. Amortization expense is included in the cost of management services in the accompanying condensed consolidated statements of operations and is included in the Great Park segment.
8.     RELATED PARTY TRANSACTIONS
Related party assets and liabilities included in the Company’s condensed consolidated balance sheets as of September 30, 2021 and December 31, 2020 consisted of the following (in thousands):
September 30, 2021 December 31, 2020
Related Party Assets:
Contract assets (see Note 3)
$ 72,525  $ 78,055 
Operating lease right-of-use asset (corporate office lease at Five Point Gateway Campus) 19,274  20,919 
Other
4,860  4,707 
$ 96,659  $ 103,681 
Related Party Liabilities:
Reimbursement obligation
$ 73,091  $ 88,951 
Payable to holders of Management Company’s Class B interests
8,365  9,000 
Operating lease liability (corporate office lease at Five Point Gateway Campus) 14,254  15,176 
Other
4,086  22 
$ 99,796  $ 113,149 
Development Management Agreement with the Great Park Venture (Incentive Compensation Contract Asset)
In 2010, the Great Park Venture, the Company’s equity method investee, engaged the Management Company under a development management agreement to provide management services to the Great Park Venture. The compensation structure in place as per the A&R DMA consists of a base fee and incentive compensation. The base fee consists of a fixed annual fee and a variable fee equal to general and administrative costs incurred by the Management Company on behalf of the Great Park Venture. Incentive compensation is characterized as “Legacy Incentive Compensation” and “Non-Legacy Incentive Compensation.” Legacy Incentive Compensation consists of a maximum of $9.0 million of incentive compensation payments attributed to contingent payments made under a cash flow participation agreement to which the Great Park Venture is a party. Holders of the Management Company’s Class B interests are entitled to receive all distributions from the Management Company that are attributable to any Legacy Incentive Compensation received by the Management Company. Non-Legacy Incentive Compensation is 9% of distributions available to be made by the Great Park Venture to holders of Percentage Interests of the Great Park Venture. During the nine months ended September 30, 2021, the Great Park Venture made a Legacy Incentive Compensation payment to the Company of $0.6 million and a Non-Legacy Incentive Compensation payment of $20.7 million. Upon receiving the Legacy Incentive Compensation payment, the Company distributed the $0.6 million in proceeds to the holders of the Management Company's Class B interests.
At September 30, 2021 and December 31, 2020, included in contract assets in the table above is $69.1 million and $74.8 million, respectively, attributed to Legacy and Non-Legacy Incentive Compensation revenue recognized but not yet due (see Note 3). Management fee revenues under the A&R DMA are included in management services—related party in the accompanying condensed consolidated statements of operations and are included in the Great Park segment. Management fee revenues under the A&R DMA were $10.1 million and $29.9 million for the three and nine months ended September 30, 2021, respectively, and $7.9 million and $21.4 million for the three and nine months ended September 30, 2020, respectively.
Indirect Legacy Interest in Great Park Venture
In 2018, the Company purchased an indirect interest in rights to certain Legacy Interests in the Great Park Venture through an equity method investment. At December 31, 2020, the carrying value of the purchased interests was $0.1 million and is included in other related party assets in the table above. During the nine months ended September 30, 2021, the Company received a cash distribution of $1.0 million which was in excess of the carrying value of the interests resulting in a miscellaneous other—related party gain of $978 thousand. After receiving the distribution, the Company’s indirect Legacy Interest has no additional distribution rights in the Great Park Venture.

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Employment Transition Agreement and Advisory Agreement with Emile Haddad
On August 23, 2021, the Company and the Company’s then Chairman, Chief Executive Officer and President, Emile Haddad, entered into an employment transition agreement and an advisory agreement pursuant to which, effective as of September 30, 2021 (the “Transition Date”), Mr. Haddad stepped down from his roles as Chairman, Chief Executive Officer and President and transitioned to a senior advisor to the Company. Mr. Haddad will remain a member of the Board of Directors, and as the Company’s founder, the Board elected him as Chairman Emeritus. Under the terms of the employment transition agreement, Mr. Haddad received his regular compensation through the Transition Date. The employment transition agreement also provides that Mr. Haddad will be paid a pro-rated 2021 annual cash bonus of $3.8 million for services he provided as an employee of the Company through September 30, 2021. The bonus is expected to be paid in early 2022. Additionally, Mr. Haddad was granted 396,825 restricted share awards that vest in three equal amounts on January 15, 2022, January 15, 2023 and January 15, 2024, subject to his continued service to the Company as a senior advisor. All compensation expense to Mr. Haddad for the three and nine months ended September 30, 2021 is included in selling, general and administrative expenses on the accompanying condensed consolidated statements of operations. At September 30, 2021, included in other related party liabilities in the table above is the $3.8 million cash bonus due to Mr. Haddad.
The advisory agreement has an initial term of three years. Mr. Haddad will receive an annual retainer of $5.0 million, and his existing unvested equity awards will continue to vest in accordance with their terms, subject to continued service as an advisor and/or member of the Board. In the event of an involuntary termination of the advisory agreement by the Company other than for cause, by Mr. Haddad for good reason, following Mr. Haddad’s death or disability, or upon a change in control of the Company, Mr. Haddad will remain eligible to receive the remaining payments under the advisory agreement for its then-current term (or, in the case of death or disability, for a period of 12 months (but in no event beyond the then-current term)), and his equity awards will accelerate (or remain eligible to vest, in the case of his performance-based equity awards).
9.    NOTES PAYABLE, NET
At September 30, 2021 and December 31, 2020, notes payable consisted of the following (in thousands):
September 30, 2021 December 31, 2020
7.875% Senior Notes due 2025
$ 625,000  $ 625,000 
Unamortized debt issuance costs and discount
(6,268) (7,419)
$ 618,732  $ 617,581 
Revolving Credit Facility
In April 2021, the Operating Company entered into the third amendment to its $125.0 million unsecured revolving credit facility which, among other things, (i) extended the maturity date of the revolving credit facility from April 2022 to April 2024, with one option to extend the maturity date by an additional year, subject to the satisfaction of certain conditions including the approval of the administrative agent and lenders and (ii) amended the revolving credit facility to include customary provisions to provide for the eventual replacement of LIBOR as a benchmark interest rate. Any borrowings under the revolving credit facility continue to bear interest at LIBOR plus a margin ranging from 1.75% to 2.00% based on the Company’s leverage ratio. As of September 30, 2021, no funds had been drawn on the Operating Company’s revolving credit facility. However, letters of credit of $0.3 million were issued and outstanding under the revolving credit facility, thus reducing the available capacity to $124.7 million.
10.    TAX RECEIVABLE AGREEMENT
The Company is a party to a TRA with all of the holders of Class A Common Units of the Operating Company, all the holders of Class A units of the San Francisco Venture, and prior holders of Class A Common Units of the Operating Company and prior holders of Class A units of the San Francisco Venture that have exchanged their holdings for Class A common shares (as parties to the TRA, the “TRA Parties”). At September 30, 2021 and December 31, 2020, the Company’s condensed consolidated balance sheets included a liability of $174.1 million and $173.2 million, respectively, for payments expected to be made under certain components of the TRA which the Company deems to be probable and estimable. No TRA payments were made during the nine months ended September 30, 2021 and 2020.

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11.    COMMITMENTS AND CONTINGENCIES
The Company is subject to the usual obligations associated with entering into contracts for the purchase, development and sale of real estate, which the Company does in the routine conduct of its business. The operations of the Company are conducted through the Operating Company and its subsidiaries, and in some cases, the Holding Company will guarantee the payment by or performance of the Operating Company or its subsidiaries. The Company has operating leases for its corporate office and other facilities and the Holding Company is a guarantor to some of these lease agreements. Operating lease right-of-use assets are included in other assets or related party assets, and operating lease liabilities are included in accounts payable and other liabilities or related party liabilities on the condensed consolidated balance sheets and were as follows as of September 30, 2021 and December 31, 2020 (in thousands):
September 30, 2021 December 31, 2020
Operating lease right-of-use assets ($19,274 and $20,919 related party, respectively)
$ 24,923  $ 28,276 
Operating lease liabilities ($14,254 and $15,176 related party, respectively)
$ 20,889  $ 23,831 
In addition to operating lease payment guarantees, the Holding Company had other contractual payment guarantees as of September 30, 2021 totaling $18.6 million.
Performance and Completion Bonding Agreements
In the ordinary course of business and as a part of the entitlement and development process, the Company is required to provide performance bonds to ensure completion of certain development obligations. The Company had outstanding performance bonds of $281.0 million and $229.6 million as of September 30, 2021 and December 31, 2020, respectively.
Candlestick and The San Francisco Shipyard Disposition and Development Agreement
The San Francisco Venture is a party to a disposition and development agreement with the Successor to the Redevelopment Agency of the City and County of San Francisco (the “San Francisco Agency”) in which the San Francisco Agency has agreed to convey portions of Candlestick and The San Francisco Shipyard to the San Francisco Venture for development. The San Francisco Venture has agreed to reimburse the San Francisco Agency for reasonable costs and expenses actually incurred and paid by the San Francisco Agency in performing its obligations under the disposition and development agreement. The San Francisco Agency can also earn a return of certain profits generated from the development and sale of Candlestick and The San Francisco Shipyard if certain thresholds are met.
At each of September 30, 2021 and December 31, 2020, the Company had outstanding guarantees benefiting the San Francisco Agency for infrastructure and construction of certain park and open space obligations with aggregate maximum obligations of $198.3 million.
Letters of Credit
At each of September 30, 2021 and December 31, 2020, the Company had outstanding letters of credit totaling $1.3 million. These letters of credit were issued to secure various development and financial obligations. At each of September 30, 2021 and December 31, 2020, the Company had restricted cash and certificates of deposit of $1.0 million pledged as collateral under certain of the letters of credit agreements.
Legal Proceedings
Hunters Point Litigation
In May 2018, residents of the Bayview Hunters Point neighborhood in San Francisco filed a putative class action in San Francisco Superior Court naming Tetra Tech, Inc. and Tetra Tech EC, Inc., an independent contractor hired by the U.S. Navy to conduct testing and remediation of toxic radiological waste at The San Francisco Shipyard (“Tetra Tech”), Lennar and the Company as defendants. The plaintiffs allege that, among other things, Tetra Tech fraudulently misrepresented its test results and remediation efforts. The plaintiffs are seeking damages against Tetra Tech and the Company and have requested an injunction to prevent the Company and Lennar from undertaking any development activities at The San Francisco Shipyard.
Since July 2018, a number of lawsuits have been filed in San Francisco Superior Court on behalf of homeowners in The San Francisco Shipyard, which name Tetra Tech, Lennar and the Company, among others, as defendants. The plaintiffs allege that environmental contamination issues at The San Francisco Shipyard were not properly disclosed to them before they purchased their homes. They also allege that Tetra Tech and other defendants (not including the Company) have created a nuisance at The San Francisco Shipyard under California law. They seek damages as well as certain declaratory relief.

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All of these cases have been removed to the U.S. District Court for the Northern District of California. The Company believes that it has meritorious defenses to the allegations in all of these cases and may have insurance and indemnification rights against third parties, including related parties, with respect to these claims. Given the preliminary nature of these claims, the Company cannot predict the outcome of these matters.
Other
Other than the actions outlined above, the Company is also a party to various other claims, legal actions, and complaints arising in the ordinary course of business, the disposition of which, in the Company’s opinion, will not have a material adverse effect on the Company’s consolidated financial statements.
As a significant land owner and developer of unimproved land it is possible that environmental contamination conditions could exist that would require the Company to take corrective action. In the opinion of the Company, such corrective actions, if any, would not have a material adverse effect on the Company’s condensed consolidated financial statements.
12.    SUPPLEMENTAL CASH FLOW INFORMATION
Supplemental cash flow information for the nine months ended September 30, 2021 and 2020 were as follows (in thousands):
Nine Months Ended September 30,
2021 2020
SUPPLEMENTAL CASH FLOW INFORMATION:
Cash paid for interest, all of which was capitalized to inventories $ 27,177  $ 27,734 
NONCASH INVESTING AND FINANCING ACTIVITIES:
Adjustment to liability recognized under TRA $ 878  $ 615 
Cash paid for income taxes $ 775  $ — 
Purchase of properties and equipment in accounts payable $ —  $ 14 

The following table provides a reconciliation of cash, cash equivalents, and restricted cash reported within the condensed consolidated balance sheets that sum to the total of the same such amounts shown in the condensed consolidated statements of cash flows for the nine months ended September 30, 2021 and 2020 (in thousands):
September 30, 2021 September 30, 2020
Cash and cash equivalents $ 191,134  $ 270,580 
Restricted cash and certificates of deposit 1,330  1,330 
Total cash, cash equivalents, and restricted cash shown in the condensed consolidated statements of cash flows $ 192,464  $ 271,910 
Amounts included in restricted cash and certificates of deposit represent amounts held as collateral on open letters of credit related to development obligations or because of other contractual obligations of the Company that require the restriction.
13.    SEGMENT REPORTING
The Company’s reportable segments consist of:
• Valencia (formerly Newhall)—includes the community of Valencia (formerly known as Newhall Ranch) being developed in northern Los Angeles County, California. The Valencia segment derives revenues from the sale of residential and commercial land sites to homebuilders, commercial developers and commercial buyers. The Company’s investment in the Valencia Landbank Venture is also reported in the Valencia segment.
• San Francisco—includes the Candlestick and The San Francisco Shipyard communities located on bayfront property in the City of San Francisco, California. The San Francisco segment derives revenues from the sale of residential and commercial land sites to homebuilders, commercial developers and commercial buyers.
• Great Park—includes the Great Park Neighborhoods being developed adjacent to and around the Orange County Great Park, a metropolitan park under construction in Orange County, California. This segment also includes management services provided by the Management Company to the Great Park Venture, the owner of the Great Park Neighborhoods. As of September 30, 2021, the Company had a 37.5% Percentage Interest in the Great Park Venture and accounted for the investment under the equity method. The reported segment information for the Great Park segment includes the results of 100% of the Great Park Venture at the historical basis of the venture, which did not apply push down accounting at

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acquisition date. The Great Park segment derives revenues at the Great Park Neighborhoods from sales of residential and commercial land sites to homebuilders, commercial developers and commercial buyers, sales of homes constructed and marketed under a fee build arrangement, and management services provided by the Company to the Great Park Venture.
• Commercial—includes the operations of the Gateway Commercial Venture, which owns an approximately 189,000 square foot office building at the Five Point Gateway Campus. The Five Point Gateway Campus is an office, medical and research and development campus located within the Great Park Neighborhoods and consists of four buildings and surrounding land. The Company and a subsidiary of Lennar lease portions of the building owned by the Gateway Commercial Venture. The Gateway Commercial Venture also owns approximately 50 acres of the surrounding commercial land with additional development rights at the campus. This segment also includes property management services provided by the Management Company to the Gateway Commercial Venture. As of September 30, 2021, the Company had a 75% interest in the Gateway Commercial Venture and accounted for the investment under the equity method. The reported segment information for the Commercial segment includes the results of 100% of the Gateway Commercial Venture at the historical basis of the venture.
     Segment operating results and reconciliations to the Company’s consolidated balances are as follows (in thousands):
Revenues Profit (Loss) Revenues Profit (Loss)
Three Months Ended September 30, Nine Months Ended September 30,
2021 2020 2021 2020 2021 2020 2021 2020
Valencia
$ 10,398  $ 240  $ 4,751  $ (3,231) $ 11,506  $ 18,897  $ (6,277) $ (6,348)
San Francisco
141  138  (785) (1,829) 431  1,285  (1,487) (7,387)
Great Park
92,486  8,123  8,957  (10,193) 450,196  44,478  68,842  (22,920)
Commercial
2,210  5,263  48  75,595  6,661  22,439  903  112,383 
Total reportable segments 105,235  13,764  12,971  60,342  468,794  87,099  61,981  75,728 
Reconciling items:
Removal of results of unconsolidated entities—
Great Park Venture (1) (82,432) (228) (6,978) 11,968  (420,258) (23,054) (63,604) 28,245 
Gateway Commercial Venture (1) (2,108) (5,159) 54  (75,491) (6,357) (22,141) (599) (112,085)
Add equity in earnings (losses) from unconsolidated entities—
Great Park Venture —  —  367  (4,195) —  —  8,319  (38,647)
Gateway Commercial Venture —  —  (41) 56,618  —  —  449  84,064 
Corporate and unallocated (2)
—  —  (14,583) (12,820) —  —  (40,728) (39,864)
Total consolidated balances
$ 20,695  $ 8,377  $ (8,210) $ 36,422  $ 42,179  $ 41,904  $ (34,182) $ (2,559)

(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 the Company’s consolidated results and balances as the Company accounts for its investment in each venture using the equity method of accounting.
(2) Corporate and unallocated activity is primarily comprised of corporate general, and administrative expenses.

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Segment assets and reconciliations to the Company’s consolidated balances are as follows (in thousands):
September 30, 2021 December 31, 2020
Valencia
$ 951,741  $ 814,913 
San Francisco
1,266,168  1,231,586 
Great Park
996,595  1,236,217 
Commercial
104,769  104,722 
Total reportable segments 3,319,273  3,387,438 
Reconciling items:
Removal of unconsolidated balances of Great Park Venture (1)
(868,004) (1,069,426)
Removal of unconsolidated balances of Gateway Commercial Venture (1)
(104,735) (104,722)
Other eliminations (2)
(2,747) (22,121)
Add investment balance in Great Park Venture
323,161  391,465 
Add investment balance in Gateway Commercial Venture
49,237  48,788 
Corporate and unallocated (3)
220,090  330,563 
Total consolidated balances
$ 2,936,275  $ 2,961,985 

(1) Represents the removal of the Great Park Venture and Gateway Commercial Venture balances, which are included in the Great Park segment and Commercial segment balances at 100% of each venture’s historical basis, respectively, but are not included in the Company’s consolidated balances as the Company accounts for its investment in each venture using the equity method of accounting.
(2) Represents intersegment balances that eliminate in consolidation.
(3) Corporate and unallocated assets consist of cash and cash equivalents, receivables, right-of-use assets, and prepaid expenses.
14.     SHARE-BASED COMPENSATION
The following table summarizes share-based equity compensation activity for the nine months ended September 30, 2021:
Share-Based Awards
(in thousands) 		Weighted-
Average Grant
Date Fair Value
Nonvested at January 1, 2021
2,275  $ 7.35 
Granted
1,425  $ 7.93 
Forfeited
(44) $ 3.00 
Vested
(997) $ 10.94 
Nonvested at September 30, 2021
2,659  $ 6.38 

Share-based compensation expense was $1.8 million and $4.2 million for the three and nine months ended September 30, 2021, respectively, and $2.8 million and $8.7 million for the three and nine months ended September 30, 2020, respectively. Share-based compensation expense is included in selling, general, and administrative expenses in the accompanying condensed consolidated statements of operations. The estimated fair value at vesting of share based awards that vested during the nine months ended September 30, 2021 was $6.4 million.
In January 2021 and 2020, the Company reacquired vested restricted share units (“RSUs”) and restricted Class A common shares for $2.0 million and $5.5 million, respectively, for the purpose of settling tax withholding obligations of employees. The reacquisition cost is based on the fair value of the Company’s Class A common shares on the date the tax obligation is incurred.
15.    EMPLOYEE BENEFIT PLANS
Retirement Plan—The Newhall Land and Farming Company Retirement Plan (the “Retirement Plan”) is a defined benefit plan that is funded by the Company and qualified under the Employee Retirement Income Security Act. The Retirement Plan was frozen in 2004.

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The components of net periodic benefit for the three and nine months ended September 30, 2021 and 2020, are as follows (in thousands):
Three Months Ended September 30, Nine Months Ended September 30,
2021 2020 2021 2020
Net periodic benefit:
Interest cost
$ 128  $ 164  $ 384  $ 492 
Expected return on plan assets
(289) (280) (870) (832)
Amortization of net actuarial loss
27  25  83  73 
Net periodic benefit
$ (134) $ (91) $ (403) $ (267)
Net periodic benefit does not include a service cost component as a result of the Retirement Plan being frozen. All other components of net periodic benefit are included in other income on the condensed consolidated statements of operations.
16.    INCOME TAXES
Upon formation, the Holding Company elected to be treated as a corporation for U.S. federal, state, and local tax purposes. All operations are carried on through the Holding Company’s subsidiaries, the majority of which are pass-through entities that are generally not subject to federal or state income taxation, as all of the taxable income, gains, losses, deductions, and credits are passed through to the partners. The Holding Company is responsible for income taxes on its allocable share of the Operating Company’s income or gain.
During the three months ended September 30, 2021, the Company recorded no provision or benefit for income taxes (after application of an increase in the Company’s valuation allowance) on pre-tax loss of $8.2 million. In the three months ended September 30, 2020, the Company recorded no provision or benefit for income taxes (after application of a decrease in the Company’s valuation allowance) on pre-tax income of $36.4 million. Other than a small income tax provision attributed to one of the Company’s consolidated subsidiary corporations, during the nine months ended September 30, 2021, the Company recorded no provision or benefit for income taxes (after application of an increase in the Company’s valuation allowance) on pre-tax loss of $34.2 million. In the nine months ended September 30, 2020, the Company recorded no provision or benefit for income taxes (after application of a decrease in the Company’s valuation allowance) on pre-tax loss of $2.6 million. The effective tax rates for the nine months ended September 30, 2021 and 2020, differ from the 21% federal statutory rate and applicable state statutory rates primarily due to the Company’s valuation allowance on its book losses, disallowance of executive compensation expenses not deductible for tax, and to the pre-tax portion of income and losses that are passed through to the other partners of the Operating Company and the San Francisco Venture.
Largely due to a history of book losses, the Company continues to record a valuation allowance against its federal and state net deferred tax assets.
17.    FINANCIAL INSTRUMENTS AND FAIR VALUE MEASUREMENTS AND DISCLOSURES
ASC Topic 820, Fair Value Measurement, emphasizes that a fair value measurement should be determined based on the assumptions that market participants would use in pricing the asset or liability. As a basis for considering market participant assumptions in fair value measurements, the guidance establishes a fair value hierarchy that distinguishes between market participant assumptions based on market data obtained from sources independent of the reporting entity and the reporting entity’s own assumptions about market participant assumptions. The following hierarchy classifies the inputs used to determine fair value into three levels:
Level 1—Quoted prices for identical instruments in active markets
Level 2—Quoted prices for similar instruments in active markets or inputs, other than quoted prices, that are observable for the instrument either directly or indirectly
Level 3—Significant inputs to the valuation model are unobservable
At each reporting period, the Company evaluates the fair value of its financial instruments compared to carrying values. Other than the Company’s notes payable, net, the carrying amount of the Company’s financial instruments, which includes cash and cash equivalents, restricted cash and certificates of deposit, certain related party assets and liabilities, and accounts payable and other liabilities, approximated the Company’s estimates of fair value at both September 30, 2021 and December 31, 2020.
The fair value of the Company’s notes payable, net, are estimated based on quoted market prices or discounting the expected cash flows based on rates available to the Company (level 2). At September 30, 2021, the estimated fair value of notes payable, net was $654.2 million compared to a carrying value of $618.7 million. At December 31, 2020, the estimated fair value of notes payable, net was $663.9 million compared to a carrying value of $617.6 million. During the three and nine months ended September 30, 2021

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and 2020, the Company had no assets that were measured at fair value on a nonrecurring basis, other than a valuation adjustment to the Company’s investment in the Great Park Venture in March 2020 (see Note 4).
18.    EARNINGS PER SHARE
The Company uses the two-class method in its computation of earnings per share. The Company’s Class A common shares and Class B common shares are entitled to receive distributions at different rates, with each Class B common share receiving 0.03% of the distributions paid on each Class A common share. Under the two-class method, the Company’s net income available to common shareholders is allocated between the two classes of common shares on a fully-distributed basis and reflects residual net income after amounts attributed to noncontrolling interests. In the event of a net loss, the Company determined that both classes share in the Company’s losses, and they share in the losses using the same mechanism as the distributions. The Company also has restricted share awards and performance restricted share awards (see Note 14) that have a right to non-forfeitable dividends while unvested and are contemplated as participating when the Company is in a net income position. These awards participate in distributions on a basis equivalent to other Class A common shares but do not participate in losses.
No distributions on common shares were declared for the three and nine months ended September 30, 2021 or 2020.
Diluted income (loss) per share calculations for both Class A common shares and Class B common shares contemplate adjustments to the numerator and the denominator under the if-converted method for the convertible Class B common shares, the exchangeable Class A units of the San Francisco Venture and the exchangeable Class A Common Units of the Operating Company. The Company uses the treasury stock method or the two-class method when evaluating dilution for RSUs, restricted shares, and performance restricted shares. The more dilutive of the two methods is included in the calculation for diluted income (loss) per share.

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The following table summarizes the basic and diluted (loss) earnings per share calculations for the three and nine months ended September 30, 2021 and 2020 (in thousands, except shares and per share amounts):    
Three Months Ended September 30, Nine Months Ended September 30,
2021 2020 2021 2020
Numerator:
Net (loss) income attributable to the Company $ (3,848) $ 16,964  $ (15,916) $ (1,210)
Adjustments to net (loss) income attributable to the Company 73  —  205  40 
Net (loss) income attributable to common shareholders $ (3,775) $ 16,964  $ (15,711) $ (1,170)
Numerator—basic common shares:
Net (loss) income attributable to common shareholders $ (3,775) $ 16,964  $ (15,711) $ (1,170)
Less: net income allocated to participating securities
—  567  —  — 
Allocation of basic net (loss) income among common shareholders $ (3,775) $ 16,397  $ (15,711) $ (1,170)
Numerator for basic net (loss) income available to Class A common shareholders $ (3,774) $ 16,392  $ (15,706) $ (1,170)
Numerator for basic net (loss) income available to Class B common shareholders $ (1) $ 5  $ (5) $ — 
Numerator—diluted common shares:
Net (loss) income attributable to common shareholders $ (3,775) $ 16,964  $ (15,711) $ (1,170)
Reallocation of income (loss) upon assumed exchange of dilutive potential securities —  18,693  —  (46)
Less: net income allocated to participating securities
—  567  —  — 
Allocation of diluted net (loss) income among common shareholders $ (3,775) $ 35,090  $ (15,711) $ (1,216)
Numerator for diluted net (loss) income available to Class A common shareholders $ (3,774) $ 35,085  $ (15,706) $ (1,216)
Numerator for diluted net (loss) income available to Class B common shareholders $ (1) $ 5  $ (5) $ — 
Denominator:
Basic weighted average Class A common shares outstanding
67,429,394  66,746,065  67,376,746  66,709,190 
Diluted weighted average Class A common shares outstanding
67,429,394  142,866,245  67,376,746  68,848,283 
Basic and diluted weighted average Class B common shares outstanding 79,233,544  79,233,544  79,233,544  79,233,544 
Basic (loss) earnings per share:
Class A common shares
$ (0.06) $ 0.25  $ (0.23) $ (0.02)
Class B common shares
$ (0.00) $ 0.00  $ (0.00) $ (0.00)
Diluted (loss) earnings per share:
Class A common shares
$ (0.06) $ 0.25  $ (0.23) $ (0.02)
Class B common shares
$ (0.00) $ 0.00  $ (0.00) $ (0.00)
Anti-dilutive potential Performance RSUs
322,366  338,813  322,366  338,813 
Anti-dilutive potential Restricted Shares (weighted average)
918,657  —  822,975  1,717,022 
Anti-dilutive potential Performance Restricted Shares (weighted average)
644,734  —  649,072  701,039 
Anti-dilutive potential Class A common shares from exchanges (weighted average) 79,257,314  3,137,134  79,257,314  76,120,180 


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19.    ACCUMULATED OTHER COMPREHENSIVE LOSS
Accumulated other comprehensive loss attributable to the Company consists of unamortized defined benefit pension plan net actuarial losses that totaled $2.8 million and $2.8 million at September 30, 2021 and December 31, 2020, respectively, net of tax benefits of $0.7 million and $0.7 million, respectively. At September 30, 2021 and December 31, 2020, the Company held a full valuation allowance related to the accumulated tax benefits. Accumulated other comprehensive loss of $1.7 million and $1.8 million is included in noncontrolling interests at September 30, 2021 and December 31, 2020, respectively. Net actuarial gains or losses are re-determined annually or upon remeasurement events and principally arise from changes in the rate used to discount benefit obligations and differences between expected and actual returns on plan assets. Reclassifications from accumulated other comprehensive loss to net loss related to amortization of net actuarial losses were approximately $52,000 and $46,000, net of taxes, for the nine months ended September 30, 2021 and 2020, respectively, and are included in other miscellaneous income in the accompanying condensed consolidated statements of operations.

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ITEM 2.    Management’s Discussion and Analysis of Financial Condition and Results of Operations
Forward-Looking Statements
The following discussion contains management’s discussion and analysis of our financial condition and results of operations and should be read in conjunction with our unaudited condensed consolidated financial statements and related notes included under Part I, Item 1 of this report and our audited consolidated financial statements included in our Annual Report on Form 10-K for the fiscal year ended December 31, 2020. “Us,” “we,” and “our” refer to Five Point Holdings, LLC, together with its consolidated subsidiaries. This discussion contains forward-looking statements and involves numerous risks and uncertainties, including but not limited to those described in the “Risk Factors” section of our Annual Report on Form 10-K for the fiscal year ended December 31, 2020, as well as other risks and uncertainties detailed from time to time in our subsequent Quarterly Reports on Form 10-Q and other filings with the Securities and Exchange Commission. Actual results could differ materially from those set forth in any forward-looking statements. See “Cautionary Statement Regarding Forward-Looking Statements.”
Overview
We conduct all of our business in or through our operating company, Five Point Operating Company, LP (the “operating company”). We are, through a wholly owned subsidiary, the sole managing general partner and owned, as of September 30, 2021, approximately 62.9% of the operating company. 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 (formerly known as Newhall Ranch), 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 and medical campus located within the Great Park Neighborhoods; and
•Five Point Communities, LP and Five Point Communities Management, Inc. (together, the “management company”), which provide development and property management services for the Great Park Neighborhoods and the Five Point Gateway Campus.
The operating company consolidates and controls the management of all of these entities except for the Great Park Venture and the Gateway Commercial Venture. The operating company owns a 37.5% percentage interest in the Great Park Venture and a 75% interest in the Gateway Commercial Venture and accounts for its interest in both using the equity method.
Changes to Board and Executive Positions
Effective as of September 30, 2021, our founder, Emile Haddad, stepped down from his roles as Chairman, Chief Executive Officer and President. Mr. Haddad will remain as a member of the Board of Directors, and as the company founder, the Board elected him as Chairman Emeritus. Along with these changes, the Board of Directors named Stuart Miller as Executive Chairman and named Lynn Jochim as President of the Company in addition to retaining her position as Chief Operating Officer.
Given his value to the Company going forward, the Company has engaged Mr. Haddad as a senior advisor under an agreement with an initial term of three years. In his role as a senior advisor, Mr. Haddad will focus on enhancing our communities to stay true to the Company’s vision and will maintain critical relationships at the state and local level, as well as focusing on new ventures and initiatives the Company may consider pursuing in order to enhance shareholder value.
Operational Highlights
In the third quarter of 2021, the Great Park Venture sold and closed escrow on 113 homesites and eight homes at the Great Park Neighborhoods for an aggregate gross purchase price of $78.0 million.
We continue to see a strong demand for new homes in our markets. We believe that the lack of supply of entitled land for new housing to meet that demand positions our communities for a continued steady pace of home sales and builder land sales. At Great Park Neighborhoods 135 homes were sold during the third quarter and 591 year-to-date as compared to 410 sold during the first nine months of 2020. At Valencia, 11 of our first 18 neighborhoods are open for sale, and 199 homes had been sold through the end of the third quarter since sales commenced in May 2021. In the third quarter of 2021, the first homebuyers in Valencia’s first phase moved into their new homes.
Investments in infrastructure and amenities at both Valencia and the Great Park Neighborhoods continued during the first half of 2021 to support the homebuilders in these communities and to put us in position for future land sales. We will continue to monitor

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Table of Contents
market conditions and will manage our development activities and expenditures to coincide with projected demand for homesites by our guest homebuilders.
In response to the COVID-19 pandemic, we took immediate steps to protect the health and well-being of our associates and to preserve the financial strength of the Company. The substantial majority of our associates are still working remotely with access to necessary systems and resources to ensure business continuity. We will transition our associates back to our offices when we believe it is appropriate after taking into account all federal, state and local laws, rules and regulations.
Results of Operations
The timing of our land sale revenues is influenced by several factors, including the sequencing of the planning and development process and market conditions at our communities. As a result, we have historically experienced, and expect to continue to experience, variability in results of operations between comparable periods.
The following table summarizes our consolidated historical results of operations for the three and nine months ended September 30, 2021 and 2020.
Three Months Ended
September 30, 		Nine Months Ended
September 30,
2021 2020 2021 2020
(in thousands)
Statement of Operations Data
Revenues
Land sales
$ 10,000  $ 42  $ 10,087  $ 17,076 
Land sales—related party
17  2  73  14 
Management services—related party
10,156  7,999  30,242  22,557 
Operating properties
522  334  1,777  2,257 
Total revenues
20,695  8,377  42,179  41,904 
Costs and expenses
Land sales
—  —  —  11,861 
Management services
8,075  6,120  24,700  16,587 
Operating properties
2,095  764  5,098  4,408 
Selling, general, and administrative
20,757  17,656  59,513  58,594 
Total costs and expenses
30,927  24,540  89,311  91,450 
Other income
Interest income
21  71  74  1,303 
Miscellaneous
1,516  91  3,833  267 
Total other income
1,537  162  3,907  1,570 
Equity in earnings from unconsolidated entities 485  52,423  9,048  45,417 
(Loss) income before income tax benefit (provision) (8,210) 36,422  (34,177) (2,559)
Income tax benefit (provision) —  —  (5) — 
Net (loss) income (8,210) 36,422  (34,182) (2,559)
Less net (loss) income attributable to noncontrolling interests (4,362) 19,458  (18,266) (1,349)
Net (loss) income attributable to the company $ (3,848) $ 16,964  $ (15,916) $ (1,210)

Three Months Ended September 30, 2021 and 2020
Revenues. Revenues increased by $12.3 million, or 147.0%, to $20.7 million for the three months ended September 30, 2021, from $8.4 million for the three months ended September 30, 2020. The increase in revenue during the three months ended September 30, 2021 was primarily due to land sales revenues recognized at our Valencia segment (formerly Newhall) from variable consideration received in addition to an increase in management services revenue at our Great Park segment.
Cost of management services. Cost of management services increased by $2.0 million, or 31.9%, to $8.1 million for the three months ended September 30, 2021, from $6.1 million for the three months ended September 30, 2020. The increase was primarily due to an increase in intangible asset amortization expense at our Great Park segment.

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Selling, general, and administrative. Selling, general, and administrative expenses increased by $3.1 million, or 17.6%, to $20.8 million for the three months ended September 30, 2021, from $17.7 million for the three months ended September 30, 2020. The increase was mainly attributable to an increase in selling and marketing expenses at our Valencia segment.
Equity in earnings from unconsolidated entities. Our consolidated results reflect our share in the earnings or losses of our interests in our unconsolidated entities, including the Great Park Venture and the Gateway Commercial Venture, within equity in earnings from unconsolidated entities on our consolidated statement of operations. Our segment results for the Great Park segment and the Commercial segment present the results of the Great Park Venture and the Gateway Commercial Venture at the book basis of the ventures within the respective segments.
Equity in earnings from unconsolidated entities decreased to $0.5 million for the three months ended September 30, 2021, from earnings of $52.4 million for the three months ended September 30, 2020. Equity in earnings for the three months ended September 30, 2021 was primarily a result of recognizing our share of the net income of the Great Park Venture generated from land and home sales during the quarter. For the three months ended September 30, 2020, our equity in earnings was primarily due to our share of the gain from the sale of two buildings by the Gateway Commercial Venture.
Income taxes. Pre-tax loss of $8.2 million for the three months ended September 30, 2021 resulted in no tax benefit (after application of an increase in the Company’s valuation allowance of $0.8 million). We assessed the realization of our net deferred tax asset and the need for a valuation allowance and determined that at September 30, 2021, it was more likely than not that the net deferred tax asset was not realizable and resulted in a net deferred tax liability after application of the valuation allowance. Pre-tax income for the three months ended September 30, 2020 of $36.4 million resulted in no tax provision (after application of a decrease in the Company’s valuation allowance of $5.0 million). Our effective tax rate, before changes in valuation allowance, for the three months ended September 30, 2021 was substantially similar to our effective tax rate, before changes in valuation allowance, for the three months ended September 30, 2020.
Net (loss) income attributable to noncontrolling interests. Until exchanged for our class A common shares or, at our election, cash, noncontrolling interests represent interests held by other partners in the operating company and members of the San Francisco Venture. Net (loss) income attributable to the noncontrolling interests on the consolidated statement of operations represents the portion of losses or income attributable to the interests in our subsidiaries held by the noncontrolling interests.
Nine Months Ended September 30, 2021 and 2020
Revenues. Revenues increased by $0.3 million, or 0.7%, to $42.2 million for the nine months ended September 30, 2021, from $41.9 million for the nine months ended September 30, 2020. The increase in revenue was primarily due to an increase in management services revenue at our Great Park segment offset by a decrease in land sales revenues recognized at our Valencia segment (formerly Newhall) during the nine months ended September 30, 2021.
Cost of land sales. The lower cost of land sales for the nine months ended September 30, 2021 was due to the closing of land sales at our Valencia segment during the nine months ended September 30, 2020, compared to no land sales closed during the same period in 2021.
Cost of management services. Cost of management services increased by $8.1 million, or 48.9%, to $24.7 million for the nine months ended September 30, 2021, from $16.6 million for the nine months ended September 30, 2020. The increase was primarily due to an increase in intangible asset amortization expense at our Great Park segment.
Selling, general, and administrative. Selling, general, and administrative expenses increased by $0.9 million, or 1.6%, to $59.5 million for the nine months ended September 30, 2021, from $58.6 million for the nine months ended September 30, 2020. The increase was mainly attributable to an increase in selling and marketing costs at our Valencia segment offset by a decrease in share-based compensation expense.
Equity in earnings from unconsolidated entities. Equity in earnings from unconsolidated entities decreased to $9.0 million for the nine months ended September 30, 2021, from earnings of $45.4 million for the nine months ended September 30, 2020. Equity in earnings for the nine months ended September 30, 2021 was primarily a result of recognizing our share of the net income of the Great Park Venture generated from land and home sales during the period. At the end of the first quarter of 2020, we recognized an other-than-temporary impairment of $26.9 million attributed to our investment in the Great Park Venture that is included in equity in earnings from unconsolidated entities in our condensed consolidated statement of operations. The impairment was primarily a result of expected delays in both the timing of land sales to builders and distributions to us causing a decline in the fair value of our investment in the Great Park Venture. In determining that the impairment was other-than-temporary, we 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. Offsetting the impairment loss for the nine months ended September 30, 2020, was our share of the gain from the sale of three buildings and land by the Gateway Commercial Venture.

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Income taxes. Other than a small tax provision incurred by one of our consolidated subsidiary corporations, pre-tax loss of $34.2 million for the nine months ended September 30, 2021 resulted in no tax benefit (after application of an increase in the Company’s valuation allowance of $3.4 million). We assessed the realization of our net deferred tax asset and the need for a valuation allowance and determined that at September 30, 2021, it was more likely than not that the net deferred tax asset was not realizable and resulted in a net deferred tax liability after application of the valuation allowance. Pre-tax loss for the nine months ended September 30, 2020 of $2.6 million resulted in no tax provision (after application of a decrease in the Company’s valuation allowance of $0.3 million). Our effective tax rate, before changes in valuation allowance, for the nine months ended September 30, 2021 was substantially similar to our effective tax rate, before changes in valuation allowance, for the nine months ended September 30, 2020.
Net loss attributable to noncontrolling interests. Until exchanged for our class A common shares or, at our election, cash, noncontrolling interests represent interests held by other partners in the operating company and members of the San Francisco Venture. Net loss attributable to the noncontrolling interests on the consolidated statement of operations represents the portion of losses attributable to the interests in our subsidiaries held by the noncontrolling interests.

Segment Results and Financial Information
Our four reportable operating segments include our three community segments, Valencia, San Francisco and Great Park, and our Commercial segment:
•Our Valencia segment (formerly Newhall) includes operating results related to the Valencia community and agricultural operations in Los Angeles and Ventura Counties, California. 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, as well as results attributable to the development management services that we previously provided to affiliates of Lennar Corporation (“Lennar”) in the San Francisco Bay Area. Our management agreement with Lennar with respect to the Concord community was terminated in early 2020.
•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.

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The following tables reconcile the results of operations of our segments to our consolidated results for the three and nine months ended September 30, 2021 and 2020 (in thousands):
Three Months Ended September 30, 2021
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 $ 10,000  $ —  $ 66,950  $ —  $ 76,950  $ —  $ 76,950  $ (66,950) $ 10,000 
Land sales—related party 17  —  2,535  —  2,552  —  2,552  (2,535) 17 
Home sales —  —  12,947  —  12,947  —  12,947  (12,947) — 
Management services—related party(2)
—  —  10,054  102  10,156  —  10,156  —  10,156 
Operating properties 381  141  —  2,108  2,630  —  2,630  (2,108) 522 
Total revenues 10,398  141  92,486  2,210  105,235  —  105,235  (84,540) 20,695 
COSTS AND EXPENSES:
Land sales —  —  49,827  —  49,827  —  49,827  (49,827) — 
Home sales —  —  10,187  —  10,187  —  10,187  (10,187) — 
Management services(2)
—  —  8,075  —  8,075  —  8,075  —  8,075 
Operating properties 2,095  —  —  596  2,691  —  2,691  (596) 2,095 
Selling, general, and administrative 5,227  926  8,630  1,255  16,038  14,604  30,642  (9,885) 20,757 
Management fees—related party —  —  6,893  —  6,893  —  6,893  (6,893) — 
Total costs and expenses 7,322  926  83,612  1,851  93,711  14,604  108,315  (77,388) 30,927 
OTHER INCOME (EXPENSE):
Interest income —  —  83  —  83  21  104  (83) 21 
Interest expense —  —  —  (311) (311) —  (311) 311  — 
Miscellaneous 1,516  —  —  —  1,516  —  1,516  —  1,516 
Total other income (expense) 1,516  —  83  (311) 1,288  21  1,309  228  1,537 
EQUITY IN EARNINGS FROM UNCONSOLIDATED ENTITIES 159  —  —  —  159  —  159  326  485 
SEGMENT PROFIT (LOSS)/LOSS BEFORE INCOME TAX BENEFIT 4,751  (785) 8,957  48  12,971  (14,583) (1,612) (6,598) (8,210)
INCOME TAX BENEFIT —  —  —  —  —  —  —  —  — 
SEGMENT PROFIT (LOSS)/NET LOSS $ 4,751  $ (785) $ 8,957  $ 48  $ 12,971  $ (14,583) $ (1,612) $ (6,598) $ (8,210)
(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.
(2) For the Great Park and Commercial segments, represents the revenues and expenses attributable to the management company for providing services to the Great Park Venture and the Gateway Commercial Venture, as applicable.

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Three Months Ended September 30, 2020
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 $ 42  $ —  $ 141  $ —  $ 183  $ —  $ 183  $ (141) $ 42 
Land sales—related party 2  —  87  —  89  —  89  (87) 2 
Management services—related party(2)
—  —  7,895  104  7,999  —  7,999  —  7,999 
Operating properties 196  138  —  5,159  5,493  —  5,493  (5,159) 334 
Total revenues 240  138  8,123  5,263  13,764  —  13,764  (5,387) 8,377 
COSTS AND EXPENSES:
Land sales —  —  —  —  —  —  —  —  — 
Management services(2)
—  —  6,120  —  6,120  —  6,120  —  6,120 
Operating properties 764  —  —  1,275  2,039  —  2,039  (1,275) 764 
Selling, general, and administrative 2,798  1,967  8,840  1,161  14,766  12,891  27,657  (10,001) 17,656 
Management fees—related party —  —  3,440  —  3,440  —  3,440  (3,440) — 
Total costs and expenses 3,562  1,967  18,400  2,436  26,365  12,891  39,256  (14,716) 24,540 
OTHER INCOME (EXPENSE):
Interest income —  —  84  —  84  71  155  (84) 71 
Interest expense —  —  —  (1,605) (1,605) —  (1,605) 1,605  — 
Loss on extinguishment of debt —  —  —  (474) (474) —  (474) 474  — 
Gain on asset sale, net —  —  —  74,847  74,847  —  74,847  (74,847) — 
Miscellaneous 91  —  —  —  91  —  91  —  91 
Total other income (expense) 91  —  84  72,768  72,943  71  73,014  (72,852) 162 
EQUITY IN EARNINGS FROM UNCONSOLIDATED ENTITIES —  —  —  —  —  —  —  52,423  52,423 
SEGMENT (LOSS) PROFIT/INCOME BEFORE INCOME TAX PROVISION (3,231) (1,829) (10,193) 75,595  60,342  (12,820) 47,522  (11,100) 36,422 
INCOME TAX PROVISION —  —  —  —  —  —  —  —  — 
SEGMENT (LOSS) PROFIT/NET INCOME $ (3,231) $ (1,829) $ (10,193) $ 75,595  $ 60,342  $ (12,820) $ 47,522  $ (11,100) $ 36,422 
(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.
(2) For the Great Park and Commercial segments, represents the revenues and expenses attributable to the management company for providing services to the Great Park Venture and the Gateway Commercial Venture, as applicable.


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Nine Months Ended September 30, 2021
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 $ 10,087  $ —  $ 346,417  $ —  $ 356,504  $ —  $ 356,504  $ (346,417) $ 10,087 
Land sales—related party 73  —  60,894  —  60,967  —  60,967  (60,894) 73 
Home sales —  —  12,947  —  12,947  —  12,947  (12,947) — 
Management services—related party(2)
—  —  29,938  304  30,242  —  30,242  —  30,242 
Operating properties 1,346  431  —  6,357  8,134  —  8,134  (6,357) 1,777 
Total revenues 11,506  431  450,196  6,661  468,794  —  468,794  (426,615) 42,179 
COSTS AND EXPENSES:
Land sales —  —  301,247  —  301,247  —  301,247  (301,247) — 
Home sales —  —  10,187  —  10,187  —  10,187  (10,187) — 
Management services(2)
—  —  24,700  —  24,700  —  24,700  —  24,700 
Operating properties 5,098  —  —  1,265  6,363  —  6,363  (1,265) 5,098 
Selling, general, and administrative 14,750  2,988  24,834  3,572  46,144  41,775  87,919  (28,406) 59,513 
Management fees—related party —  —  19,393  —  19,393  —  19,393  (19,393) — 
Total costs and expenses 19,848  2,988  380,361  4,837  408,034  41,775  449,809  (360,498) 89,311 
OTHER INCOME (EXPENSE):
Interest income —  —  416  —  416  74  490  (416) 74 
Interest expense —  —  —  (921) (921) —  (921) 921  — 
Miscellaneous—related party —  1,070  —  —  1,070  978  2,048  —  2,048 
Miscellaneous 1,785  —  —  —  1,785  —  1,785  —  1,785 
Total other income (expense) 1,785  1,070  416  (921) 2,350  1,052  3,402  505  3,907 
EQUITY IN EARNINGS (LOSS) FROM UNCONSOLIDATED ENTITIES 280  —  (1,409) —  (1,129) —  (1,129) 10,177  9,048 
SEGMENT (LOSS) PROFIT/LOSS BEFORE INCOME TAX PROVISION (6,277) (1,487) 68,842  903  61,981  (40,723) 21,258  (55,435) (34,177)
INCOME TAX PROVISION —  —  —  —  —  (5) (5) —  (5)
SEGMENT (LOSS) PROFIT/NET LOSS $ (6,277) $ (1,487) $ 68,842  $ 903  $ 61,981  $ (40,728) $ 21,253  $ (55,435) $ (34,182)
(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.
(2) For the Great Park and Commercial segments, represents the revenues and expenses attributable to the management company for providing services to the Great Park Venture and the Gateway Commercial Venture, as applicable.

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Nine Months Ended September 30, 2020
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 $ 17,076  $ —  $ 21,962  $ —  $ 39,038  $ —  $ 39,038  $ (21,962) $ 17,076 
Land sales—related party 14  —  1,092  —  1,106  —  1,106  (1,092) 14 
Management services—related party(2)
—  835  21,424  298  22,557  —  22,557  —  22,557 
Operating properties 1,807  450  —  22,141  24,398  —  24,398  (22,141) 2,257 
Total revenues 18,897  1,285  44,478  22,439  87,099  —  87,099  (45,195) 41,904 
COSTS AND EXPENSES:
Land sales 11,861  —  15,304  —  27,165  —  27,165  (15,304) 11,861 
Management services(2)
—  488  16,099  —  16,587  —  16,587  —  16,587 
Operating properties 4,408  —  —  4,530  8,938  —  8,938  (4,530) 4,408 
Selling, general, and administrative 9,244  8,184  29,572  8,765  55,765  41,166  96,931  (38,337) 58,594 
Management fees—related party —  —  7,633  —  7,633  —  7,633  (7,633) — 
Total costs and expenses 25,513  8,672  68,608  13,295  116,088  41,166  157,254  (65,804) 91,450 
OTHER INCOME (EXPENSE):
Interest income 1  —  1,210  —  1,211  1,302  2,513  (1,210) 1,303 
Interest expense —  —  —  (8,547) (8,547) —  (8,547) 8,547  — 
Loss on extinguishment of debt —  —  —  (474) (474) —  (474) 474  — 
Gain on asset sale, net —  —  —  112,260  112,260  —  112,260  (112,260) — 
Miscellaneous 267  —  —  —  267  —  267  —  267 
Total other income (expense) 268  —  1,210  103,239  104,717  1,302  106,019  (104,449) 1,570 
EQUITY IN EARNINGS FROM UNCONSOLIDATED ENTITIES —  —  —  —  —  —  —  45,417  45,417 
SEGMENT (LOSS) PROFIT/LOSS BEFORE INCOME TAX BENEFIT (6,348) (7,387) (22,920) 112,383  75,728  (39,864) 35,864  (38,423) (2,559)
INCOME TAX BENEFIT —  —  —  —  —  —  —  —  — 
SEGMENT (LOSS) PROFIT/NET LOSS $ (6,348) $ (7,387) $ (22,920) $ 112,383  $ 75,728  $ (39,864) $ 35,864  $ (38,423) $ (2,559)
(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.
(2) For the Great Park and Commercial segments, represents the revenues and expenses attributable to the management company for providing services to the Great Park Venture and the Gateway Commercial Venture, as applicable.
Valencia Segment (formerly Newhall)
Our Valencia property consists of approximately 15,000 acres in northern Los Angeles County and is designed to include approximately 21,500 homesites and approximately 11.5 million square feet of commercial space. Valencia is the continuation of our community where already today approximately 20,000 households reside and approximately 60,000 people work. We began selling homesites in the first development area at Valencia in 2019.
Three Months Ended September 30, 2021 and 2020
Revenues. Revenues were $10.4 million for the three months ended September 30, 2021 compared to $0.2 million for the three months ended September 30, 2020. During the three months ended September 30, 2021, we recognized $10.0 million in land sale revenues associated with the receipt of $10.0 million in cash consideration from a customer that acquired commercial property from us in 2011. The payment was contingent on the customer obtaining certain land use approvals for the property.
Selling, general, and administrative. Selling, general, and administrative expenses increased by $2.4 million, or 86.8%, to $5.2 million for the three months ended September 30, 2021, from $2.8 million for the three months ended September 30, 2020. The increase was mainly attributable to an increase in community related selling and marketing expenses in preparation for and in support of builder model home openings at the first development area in Valencia.

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Nine Months Ended September 30, 2021 and 2020
Revenues. Revenues decreased by $7.4 million, or 39.1%, to $11.5 million for the nine months ended September 30, 2021, from $18.9 million for the nine months ended September 30, 2020. The decrease was primarily attributable to the recognition of revenue from the sale of land entitled for an aggregate of 70 homesites on approximately seven acres during the nine months ended September 30, 2020 compared to no land sales closed during the same period in 2021. The reduction in revenues from land sales closings was offset by our recognition of $10.0 million from a customer that acquired commercial property from us in 2011. The payment was contingent on the customer obtaining certain land use approvals for the property.
Cost of land sales. Cost of land sales for the nine months ended September 30, 2020 was $11.9 million, or 69.4% of total land sales revenues, compared to no cost of land sales recognized during the same period in 2021. The cost of land sales includes both actual and estimated future capitalized costs allocated based upon relative sales values. Since this method requires us 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.
Selling, general, and administrative. Selling, general, and administrative expenses increased by $5.5 million, or 59.6%, to $14.8 million for the nine months ended September 30, 2021, from $9.2 million for the nine months ended September 30, 2020. The increase was mainly attributable to an increase in community related selling and marketing expenses in preparation for and in support of builder model home openings at the first development area in Valencia.
San Francisco Segment
Located almost equidistant between downtown San Francisco and the San Francisco International Airport, Candlestick and The San Francisco Shipyard consist of approximately 800 acres of bayfront property in the City of San Francisco. Candlestick and The San Francisco Shipyard are designed to include approximately 12,000 homesites and approximately 6.3 million square feet of commercial space.
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. 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. This means the full amount of permitted commercial square footage at Candlestick and The San Francisco Shipyard can be constructed as we determine, including all at once, even though Proposition M may delay new office developments elsewhere in San Francisco. In 2018, our disposition and development agreement with the City of San Francisco was amended to increase the total amount of commercial use at Candlestick and The San Francisco Shipyard by over two million square feet, most of which we anticipate will be for office use, and increases our total commercial space to approximately 6.3 million square feet.
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, 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. 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. 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. Our development plans were designed with the flexibility to adjust for potential land transfer delays, and we have the ability to shift the phasing of our development activities to account for potential delays caused by U.S. Navy retesting, but there can be no assurance that these matters and other related matters that may arise in the future will not materially impact our development plans.
We have been, and may in the future be, named as a defendant in lawsuits seeking damages and other relief arising out of alleged contamination at The San Francisco Shipyard and Tetra Tech’s alleged misrepresentations of related sampling work. See Note 11 to our condensed consolidated financial statements included under Part I, Item 1 of this report. Given the preliminary nature of the claims to date, we cannot predict the outcome of these matters.

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Three Months Ended September 30, 2021 and 2020
Selling, general, and administrative. Selling, general, and administrative expenses decreased by $1.0 million, or 52.9%, to $0.9 million for the three months ended September 30, 2021, from $2.0 million for the three months ended September 30, 2020. The decrease was mainly attributable to a decrease in employee related expenses as a result of reallocations of human capital resources among our projects.
Nine Months Ended September 30, 2021 and 2020
Management services—related party revenues. The decrease in management services—related party revenues was due to the termination in early 2020 of our management agreement with Lennar with respect to the Concord community. In addition, in 2021, we amended certain other related party agreements, which resulted in recognition of a miscellaneous other income—related party gain of $1.1 million during the nine months ended September 30, 2021.
Selling, general, and administrative. Selling, general, and administrative expenses decreased by $5.2 million, or 63.5%, to $3.0 million for the nine months ended September 30, 2021, from $8.2 million for the nine months ended September 30, 2020. The decrease was mainly attributable to a decrease in employee related expenses as a result of a reduction in employee headcount in addition to reallocations of human capital resources among our projects.
Great Park Segment
We have a 37.5% percentage interest in the Great Park Venture, and we account for our investment using the equity method of accounting. We have a controlling interest in the management company, an entity which performs development management services at Great Park Neighborhoods. We do not include the Great Park Venture as a consolidated subsidiary in our consolidated financial statements. 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. As a result, our Great Park segment consists of the operations of both the Great Park Venture and the development management services provided by the management company at the Great Park Venture.
Great Park Neighborhoods consists of approximately 2,100 acres in Orange County and is being built around the approximately 1,300 acre Orange County Great Park, a metropolitan public park that is under construction. Great Park Neighborhoods is designed to include approximately 10,500 homesites and approximately 4.9 million square feet of commercial space.
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. During the nine months ended September 30, 2021, the Great Park Venture made aggregate distributions of $51.0 million to holders of legacy interests and $204.3 million to holders of percentage interests. The Company received $76.6 million for its 37.5% percentage interest. With the distributions to the holders of legacy interests, the Great Park Venture fully satisfied the $476.0 million priority distribution rights and reduced the remaining maximum participating legacy interest distribution rights to $82.7 million. The remaining $82.7 million legacy interest will be paid on a pro rata basis, with approximately 10% of future distributions paid to the holders of legacy interests and approximately 90% of such distributions paid to the holders of the percentage interests, until such time as the remaining balance has been fully paid.
Three Months Ended September 30, 2021 and 2020
Land sales and related party land sales revenues. Land sales and related party land sales revenues increased to $69.5 million for the three months ended September 30, 2021, from $0.2 million for the three months ended September 30, 2020. The increase was primarily attributable to the recognition of revenue from the sale of land at the Great Park Neighborhoods entitled for an aggregate of 113 homesites on approximately 13 acres during the three months ended September 30, 2021, compared to no land sales during the same period in 2020. The base purchase price was $65.1 million for the 2021 land sales. The Great Park Venture also recognized $1.4 million in the transaction price as an estimate of the amount of variable consideration from marketing fees that it expects to be entitled to receive.
During the three months ended September 30, 2021 and 2020, segment land sales and related party land sales revenues also included changes in estimates of variable land sale consideration, including profit participation, from those amounts previously recorded by the Great Park Venture.
Cost of Land Sales. Cost of land sales for the three months ended September 30, 2021 was $49.8 million, or 71.7% of total land sales revenues. The cost of land sales includes both actual and estimated future capitalized costs allocated based upon relative sales values. Since this method requires the Great Park Venture to estimate future development costs and the expected sales prices for future land sales, the profit margin on subsequent parcels sold will be affected by both changes in the estimated total revenues, as well as any changes in the estimated total cost of the project.

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Home Sale Revenues. The Great Park Venture has a fee build agreement with an unrelated third party (“Fee Builder”) that the Great Park Venture contracted to build and act as a sales agent for 38 homesites within the Great Park Neighborhoods. The Fee Builder initially incurs all costs to build, market and sell the residential homes, and the Great Park Venture reimburses the Fee Builder as construction progresses and pays the Fee Builder certain fees during the construction phase of the homes and when homes are sold to homebuyers. During the three months ended September 30, 2021, the Great Park Venture closed the sales of eight homes to homebuyers generating $12.9 million in home sale revenues.
Cost of Home Sales. Cost of home sales includes an allocation of land basis for each home sold in addition to home construction costs the Great Park Venture reimburses to the Fee Builder and fees paid to the Fee Builder for the services provided. During the three months ended September 30, 2021, the Great Park Venture recognized $10.2 million in cost of home sales.
Management fee revenues. Management fee revenues are revenues generated by the management company from development management services provided to the Great Park Venture. The management company receives a base management fee, reimbursement for certain defined project team costs and the right to receive certain variable incentive compensation. The increase in management services related party revenue was mainly attributable to changes in estimates of the amount of variable consideration pertaining to the incentive compensation.
Management services costs and expenses. Included within management services costs and expenses are general and administrative costs and expenses incurred directly by the management company’s project team that is managing the development of the Great Park Neighborhoods. We also include amortization expense related to the intangible asset attributable to the incentive compensation provisions of the development management agreement with the Great Park Venture within management services costs and expenses. Corporate and non-project team salaries and overhead are not allocated to management services costs and expenses or to our reportable segments and are reported in selling, general, and administrative costs in the condensed consolidated statements of operations. Management services costs and expenses increased by $2.0 million, or 31.9%, to $8.1 million for the three months ended September 30, 2021, from $6.1 million for the three months ended September 30, 2020. The increase was mainly attributable to increased intangible asset amortization expense.
Selling, general, and administrative. Selling, general, and administrative expenses decreased by $0.2 million, or 2.4%, to $8.6 million for the three months ended September 30, 2021, from $8.8 million for the three months ended September 30, 2020.
Management fees—related party. Management fees increased by $3.5 million, or 100.4%, to $6.9 million for the three months ended September 30, 2021, from $3.4 million for the three months ended September 30, 2020. Management fees incurred by the Great Park Venture are comprised of base development management fees and incentive compensation fees. In general, incentive compensation fees will be paid based on a percentage of distributions made to holders of the Great Park Venture’s percentage interests. When payments are deemed probable of being made, the Great Park Venture recognizes the expense ratably over the period services are expected to be provided. When estimates of the amount of incentive compensation probable of being paid change, the Great Park Venture records a cumulative adjustment in the period in which the estimate changes. The increase in management fees—related party was mainly attributable to changes in estimates of the amount of incentive compensation probable of being paid.
Nine Months Ended September 30, 2021 and 2020
Land sales and related party land sales revenues. Revenues increased by $384.3 million to $407.3 million for the nine months ended September 30, 2021, from $23.1 million for the nine months ended September 30, 2020. The increase was primarily attributable to the recognition of revenue from the sale of land at the Great Park Neighborhoods entitled for an aggregate of 887 homesites on approximately 72 acres during the nine months ended September 30, 2021, compared to the recognition of revenue from the sale of land entitled for an aggregate of 35 homesites on approximately four acres during the nine months ended September 30, 2020. The base purchase price was $393.3 million for the 2021 sales. The Great Park Venture also recognized $9.1 million in the transaction price as an estimate of the amount of variable consideration from marketing fees that it expects to be entitled to receive. The base purchase price was $20.3 million for the 2020 sales. The Great Park Venture also recognized $0.5 million in the transaction price as an estimate of the amount of variable consideration from marketing fees that it expects to be entitled to receive for the 2020 sales. In 2021, 117 of the homesites sold were purchased by the Great Park Landbank Venture, in which the Great Park Venture owns a 10% equity interest. Revenues associated with these closings are reported as land sales—related party. When the Great Park Venture sells land to the Great Park Landbank Venture, it eliminates its pro-rata share of the intra-entity profits generated from the sale through earnings (loss) from unconsolidated entities until the land is sold by the Great Park Landbank Venture to third party homebuilders. Additionally, in 2021, 572 of the 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.
During the nine months ended September 30, 2021 and 2020, segment land sales and related party land sales revenues also included changes in estimates of variable land sale consideration, including profit participation, from those amounts previously recorded by the Great Park Venture.

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Cost of Land Sales. Cost of land sales for the nine months ended September 30, 2021 was $301.2 million, or 74.0% of total land sales revenues. The cost of land sales includes both actual and estimated future capitalized costs allocated based upon relative sales values. Since this method requires the Great Park Venture to estimate future development costs and the expected sales prices for future land sales, the profit margin on subsequent parcels sold will be affected by both changes in the estimated total revenues, as well as any changes in the estimated total cost of the project.
Home Sale Revenues. The Great Park Venture has a fee build agreement with an unrelated third party Fee Builder that the Great Park Venture contracted to build and act as a sales agent for 38 homesites within the Great Park Neighborhoods. The Fee Builder initially incurs all costs to build, market and sell the residential homes, and the Great Park Venture reimburses the Fee Builder as construction progresses and pays the Fee Builder certain fees during the construction phase of the homes and when homes are sold to homebuyers. During the nine months ended September 30, 2021, the Great Park Venture closed the sales of eight homes to homebuyers generating $12.9 million in home sale revenues.
Cost of Home Sales. Cost of home sales includes an allocation of land basis for each home sold in addition to home construction costs the Great Park Venture reimburses to the Fee Builder and fees paid to the Fee Builder for the services provided. During the nine months ended September 30, 2021, the Great Park Venture recognized $10.2 million in cost of home sales.
Management fee revenues. Management fee revenues are revenues generated by the management company from development management services provided to the Great Park Venture. The management company receives a base management fee, reimbursement for certain defined project team costs and the right to receive certain variable incentive compensation. The increase in management services related party revenue was mainly attributable to changes in estimates of the amount of variable consideration pertaining to the incentive compensation.
Management services costs and expenses. Included within management services costs and expenses are general and administrative costs and expenses incurred directly by the management company’s project team that is managing the development of the Great Park Neighborhoods. We also include amortization expense related to the intangible asset attributable to the incentive compensation provisions of the development management agreement with the Great Park Venture within management services costs and expenses. Corporate and non-project team salaries and overhead are not allocated to management services costs and expenses or to our reportable segments and are reported in selling, general, and administrative costs in the condensed consolidated statements of operations. Management services costs and expenses increased by $8.6 million, or 53.4%, to $24.7 million for the nine months ended September 30, 2021, from $16.1 million for the nine months ended September 30, 2020. The increase was mainly attributable to increased intangible asset amortization expense.
Selling, general, and administrative. Selling, general, and administrative expenses decreased by $4.7 million, or 16.0%, to $24.8 million for the nine months ended September 30, 2021, from $29.6 million for the nine months ended September 30, 2020. The lower expense during the nine months ended September 30, 2021 was mainly attributable to a decrease in marketing expenses incurred at the Great Park Neighborhoods.
Management fees—related party. Management fees increased by $11.8 million, or 154.1%, to $19.4 million for the nine months ended September 30, 2021, from $7.6 million for the nine months ended September 30, 2020. Management fees incurred by the Great Park Venture are comprised of base development management fees and incentive compensation fees. In general, incentive compensation fees will be paid based on a percentage of distributions made to holders of the Great Park Venture’s percentage interests. When payments are deemed probable of being made, the Great Park Venture recognizes the expense ratably over the period services are expected to be provided. When estimates of the amount of incentive compensation probable of being paid change, the Great Park Venture records a cumulative adjustment in the period in which the estimate changes. The increase in management fees—related party was mainly attributable to changes in estimates of the amount of incentive compensation probable of being paid.

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The table below reconciles the Great Park segment results to the equity in earnings (loss) from our investment in the Great Park Venture that is reflected in the condensed consolidated statements of operations for the three and nine months ended September 30, 2021 and 2020.
Three Months Ended
September 30, 		Nine Months Ended
September 30,
2021 2020 2021 2020
(in thousands)
Segment net income (loss) from operations $ 8,957  $ (10,193) $ 68,842  $ (22,920)
Less net income of management company attributed to the Great Park segment
1,979  1,775  5,238  5,325 
Net income (loss) of the Great Park Venture 6,978  (11,968) 63,604  (28,245)
The Company’s share of net income (loss) of the Great Park Venture 2,617  (4,488) 23,852  (10,592)
Basis difference (amortization) accretion (2,250) 293  (15,533) (1,204)
Other-than-temporary investment impairment
—  —  —  (26,851)
Equity in earnings (loss) from the Great Park Venture $ 367  $ (4,195) $ 8,319  $ (38,647)

Commercial Segment
We have a 75% interest in the Gateway Commercial Venture that is held through a wholly owned subsidiary of the operating company, and we serve as the manager of 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 us and two people designated by another investor. Some decisions require approval by all of the members of the Gateway Commercial Venture. We do not include the Gateway Commercial Venture as a consolidated subsidiary in our consolidated financial statements. However, as a result of our 75% economic interest and our role as manager, we assess our investment in the Gateway Commercial Venture based on the financial information of the Gateway Commercial Venture in its entirety, and we include the Gateway Commercial Venture’s financial results within the Commercial segment. Additionally, the management company has been engaged by the Gateway Commercial Venture to provide property management services to the Five Point Gateway Campus. We include the management company’s results of operations related to these property management services within the Commercial segment.
The Five Point Gateway Campus is a commercial campus consisting of approximately 73 acres of land in the Great Park Neighborhoods acquired by the Gateway Commercial Venture in 2017. 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 2020, the Gateway Commercial Venture sold three of the buildings and approximately 11 acres of land at the campus, generating $463.0 million in gross proceeds. 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.
Three Months Ended September 30, 2021 and 2020
Revenues. Revenues decreased by $3.1 million, or 58.0%, to $2.2 million for the three months ended September 30, 2021, from $5.3 million for the three months ended September 30, 2020. The decrease in revenues was mainly attributable to the Gateway Commercial Venture no longer receiving rental income from the buildings that were sold in 2020.
Other income. In August 2020, the Gateway Commercial Venture closed on the sale of two buildings, comprising a total of approximately 660,000 square feet of research and development space for a purchase price of $355.0 million. The sale of the buildings, which had a carrying value of approximately $278.0 million, resulted in a gain of approximately $74.8 million, net of transaction costs. Concurrently, the Gateway Commercial Venture made a debt payment of $245.0 million to its lender and made total distributions to its members of approximately $107.0 million, of which approximately $80.3 million was distributed to us.
Costs and expenses and interest expense. As a result of the Gateway Commercial Venture’s asset dispositions and related debt repayments in 2020, cost and expenses, including interest, depreciation, and amortization expenses, were lower in the three months ended September 30, 2021, compared to the same period in 2020.

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Nine Months Ended September 30, 2021 and 2020
Revenues. Revenues decreased by $15.8 million, or 70.3%, to $6.7 million for the nine months ended September 30, 2021, from $22.4 million for the nine months ended September 30, 2020. The decrease in revenues was mainly attributable to the Gateway Commercial Venture no longer receiving rental income from the buildings that were sold in 2020.
Other income. In May 2020, the Gateway Commercial Venture closed on the sale of approximately 11 acres of land and an approximately 189,000 square foot building for a purchase price of $108.0 million. The sale of this land and building, which had a carrying value of approximately $67.5 million, resulted in a gain of approximately $37.4 million, net of transaction costs. Concurrently, the Gateway Commercial Venture made a debt payment of $30.0 million to its lender and made total distributions to its members of approximately $75.0 million, of which approximately $56.3 million was distributed to us.
In August 2020, the Gateway Commercial Venture closed on the sale of two buildings, comprising a total of approximately 660,000 square feet of research and development space for a purchase price of $355.0 million. The sale of the buildings, which had a carrying value of approximately $278.0 million, resulted in a gain of approximately $74.8 million, net of transaction costs. Concurrently, the Gateway Commercial Venture made a debt payment of $245.0 million to its lender and made total distributions to its members of approximately $107.0 million, of which approximately $80.3 million was distributed to us.
Costs and expenses and interest expense. As a result of the Gateway Commercial Venture’s asset dispositions and related debt repayments in 2020, cost and expenses, including interest, depreciation, and amortization expenses, were lower in the nine months ended September 30, 2021, compared to the same period in 2020.
The table below reconciles the Commercial segment results to the equity in earnings from our investment in the Gateway Commercial Venture that is reflected in the condensed consolidated statements of operations for the three and nine months ended September 30, 2021 and 2020.
Three Months Ended
September 30, 		Nine Months Ended
September 30,
2021 2020 2021 2020
(in thousands)
Segment net income from operations $ 48  $ 75,595  $ 903  $ 112,383 
Less net income of management company attributed to the Commercial segment
102  104  304  298 
Net (loss) income of the Gateway Commercial Venture (54) 75,491  599  112,085 
Equity in (loss) earnings from the Gateway Commercial Venture $ (41) $ 56,618  $ 449  $ 84,064 

Liquidity and Capital Resources
As of September 30, 2021, we had $191.1 million of consolidated cash and cash equivalents compared to $298.1 million at December 31, 2020. As of September 30, 2021, no funds had been drawn on the operating company’s $125.0 million unsecured revolving credit facility. However, letters of credit of $0.3 million are issued and outstanding under the revolving credit facility, thus reducing the available capacity to $124.7 million. In April 2021, we entered into the third amendment to our unsecured revolving credit facility, which extended the maturity date of the revolving credit facility from April 2022 to April 2024, with one option to extend the maturity date by an additional year, subject to the satisfaction of certain conditions, including the approval of the administrative agent and lenders.
Our short-term cash needs consist primarily of general and administrative expenses and development expenditures at Valencia and the Candlestick and The San Francisco Shipyard communities, interest payments under our senior notes and payments under a related party reimbursement obligation. The development stages of our communities continue to require significant cash outlays on both a short-term and long-term basis, and we expect to invest significant amounts on continued horizontal development at Valencia over the next 12 months. We manage our development activities and expenditures to coincide with projected demand for homesites by our guest builders with the objective of maintaining an appropriate level of liquidity. We expect to meet our cash requirements for at least the next 12 months with available cash, in addition to proceeds from land sales in Valencia, distributions from our unconsolidated entities and collection of management fees under our management agreement with the Great Park Venture.

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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 our income-producing portfolio. We budget our cash development costs on an annual basis. Budgeted amounts are subject to change due to delays or accelerations in construction or regulatory approvals, changes in inflation rates and other increases (or decreases) in costs. We may also modify our development plans or change the sequencing of our communities in response to changing economic conditions, consumer preferences and other factors, which could have a material impact on the timing and amount of our development costs. Budgeted amounts are expected to be funded through a combination of available cash, cash flows from our communities and reimbursements from public financing, including community facilities districts, tax increment financing and local, state and federal grants. Cash flows from our communities may occur in uneven patterns as cash is primarily generated by land sales, 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. The level of capital expenditures in any given year may vary due to, among other things, the number of communities or neighborhoods under development and the number of planned deliveries, which may vary based on market conditions. We may seek to raise additional capital by accessing the debt or equity capital markets or with one or more revolving or term loan facilities or other public or private financing alternatives. These financings may not be available on attractive terms, or at all.
Contractual Obligations and Commitments
Our contractual obligations have not changed materially from those reported in our Annual Report on Form 10-K for the fiscal year ended December 31, 2020, however, $10.0 million in related party reimbursement obligations that were previously due in 2021 were deferred to 2022.
We are committed under various letters of credit (“LOCs”) to perform certain development activities and provide certain guarantees in the normal course of business. Outstanding LOCs totaled $1.3 million at both September 30, 2021 and December 31, 2020. At both September 30, 2021 and December 31, 2020, 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 September 30, 2021, we were using approximately $0.3 million in capacity under the revolving credit facility to support LOCs. In the ordinary course of business and as a part of the entitlement and development process, we are required to provide performance bonds to ensure completion of certain development obligations. We had outstanding performance bonds of $281.0 million as of September 30, 2021.
At September 30, 2021, 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.
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):
Nine Months Ended September 30,
2021 2020
Operating activities
$ (162,301) $ (115,713)
Investing activities
78,313  57,129 
Financing activities
(23,022) (18,080)
Cash Flows from Operating Activities. Net cash used in operating activities increased by $46.6 million for the nine months ended September 30, 2021 compared to the nine months ended September 30, 2020. Major components of operating cash used in both periods consist of our continued investment in horizontal development at our communities and selling, general, and administrative costs including $24.6 million in each of the nine months ended September 30, 2021 and 2020 for interest due on our senior notes.
During the nine months ended September 30, 2021, we received incentive compensation payments of $20.7 million under our development management agreement with the Great Park Venture. The payment is net of $0.6 million that we concurrently distributed to the holders of the management company's class B units. Additionally, we received $10.0 million in contingent consideration associated with a commercial land sale that closed in 2011. During the nine months ended September 30, 2020, we received a total distribution of $136.5 million from the Gateway Commercial Venture, of which $79.0 million is reflected as a return on our investment in the statement of cash flows with the balance reflected as an investing activity, and collected $13.9 million in principal on a note receivable from a home builder in connection with a land sale at Valencia that closed in the second quarter of 2020.

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Cash Flows from Investing Activities. Net cash from investing activities increased by $21.2 million for the nine months ended September 30, 2021 compared to net cash from investing activities for the nine months ended September 30, 2020.
During the nine months ended September 30, 2021, we received a distribution of $76.6 million from the Great Park Venture, which is reflected as a return of our investment in the statement of cash flows. Additionally, we received a distribution of $1.0 million from our indirect legacy interest in the Great Park Venture. For the nine months ended September 30, 2020, we received a total distribution of $136.5 million from the Gateway Commercial Venture, of which $57.5 million is reflected as a return of our investment in the statement of cash flows with the balance reflected as an operating activity. For the nine months ended September 30, 2020, we also received a distribution of $1.7 million from our indirect legacy interest in the Great Park Venture. In both periods, the distributions were offset by our purchases of property and equipment.
Cash Flows from Financing Activities. Net cash used in financing activities was $23.0 million for the nine months ended September 30, 2021 compared to $18.1 million net cash used in financing activities for the nine months ended September 30, 2020.
We used $2.0 million and $5.5 million during the nine months ended September 30, 2021 and 2020, respectively, to net settle share-based compensation awards with employees for tax withholding purposes. For the nine months ended September 30, 2021 and 2020, in accordance with the operating company's Limited Partnership Agreement, we made noncontrolling interest tax distributions of $4.4 million (net of amounts distributable to us as a partner of the operating company) and $4.6 million, respectively. We also made payments of $15.9 million and $8.0 million to reduce our related party reimbursement obligation during the nine months ended September 30, 2021 and 2020, respectively.
Changes in Capital Structure
During the nine months ended September 30, 2021, our ownership percentage in the operating company increased to 62.9%, primarily due to our issuance of shared-based compensation in the form of 1.4 million restricted Class A common shares offset by our reacquisition of approximately 0.3 million restricted Class A common shares from employees for income tax withholding purposes. The issuances and settlements resulted in the operating company issuing to us an equal number of Class A units of the operating company or retiring an equal number of Class A units of the operating company that we previously held.
The table below summarizes outstanding Class A units of the operating company and Class A units of the San Francisco Venture (redeemable on a one-for-one basis for Class A units of the operating company) held by us and held by noncontrolling interest members at September 30, 2021 and December 31, 2020.
September 30, 2021 December 31, 2020
Class A units of the operating company:
Held by us 70,107,552  69,051,284 
Held by noncontrolling interest members 41,363,271  41,363,271 
111,470,823  110,414,555 
Class A units of the San Francisco Venture held by noncontrolling interest members 37,870,273  37,870,273 
149,341,096  148,284,828 
At September 30, 2021, 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 Class B common shares will automatically convert to Class A common shares at a ratio of 0.0003 Class A common shares for each Class B common share. The conversions will occur when the holders of Class A units of the operating company, including Class A units that have been issued upon redemption of Class A units of the San Francisco Venture, are redeemed at our election for our Class A common shares or cash.
Critical Accounting Policies and Estimates
There have been no significant changes to our critical accounting policies and estimates during the nine months ended September 30, 2021 as compared to those disclosed in our Annual Report on Form 10-K for the fiscal year ended December 31, 2020.
Off-Balance Sheet Arrangements
We had no material off-balance sheet arrangements as of September 30, 2021.
Seasonality
Our business and results of operations are not materially impacted by seasonality.

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ITEM 3.    Quantitative and Qualitative Disclosures About Market Risk
Market risk is the risk of loss from adverse changes in market prices and interest rates. Our future earnings, cash flows and fair values relative to financial instruments are dependent upon prevailing market interest rates. Our primary market risk results from our indebtedness, which bears interest at fixed rates. Although we do not currently do so, we may in the future manage our market risk on floating rate debt by entering into swap arrangements to in effect fix the rate on all or a portion of the debt for varying periods up to maturity. This would, in turn, reduce the risks of variability of cash flows created by floating rate debt and mitigate the risk of increases in interest rates. Our objective when undertaking such arrangements would be to reduce our floating rate exposure, as we do not plan to enter into hedging arrangements for speculative purposes.
As of September 30, 2021, we had outstanding consolidated net indebtedness of $618.7 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.
ITEM 4.    Controls and Procedures
Evaluation of Disclosure Controls and Procedures
Our management, with the supervision and participation of our President and Chief Operating Officer and our Vice President and Chief Financial Officer (the “Certifying Officers”), has evaluated the effectiveness of the design and operation of our disclosure controls and procedures as of September 30, 2021. Our disclosure controls and procedures are designed to ensure that information required to be disclosed in the reports we file or submit under the Securities Exchange Act of 1934, as amended (the “Exchange Act”), is recorded, processed, summarized and reported within the time periods specified in the Securities and Exchange Commission rules and forms and that such information is accumulated and communicated to management, including our Certifying Officers and our Board of Directors, as appropriate to allow timely decisions regarding required disclosure. Based upon that evaluation, the Certifying Officers concluded that our disclosure controls and procedures were effective as of September 30, 2021.
Changes in Internal Control Over Financial Reporting
There were no changes in our internal control over financial reporting identified in management’s evaluation pursuant to Rules 13a-15(d) or 15d-15(d) of the Exchange Act during the period covered by this report on Form 10-Q that materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

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PART II. OTHER INFORMATION
ITEM 1.    Legal Proceedings
For disclosures of legal proceedings, see Note 11 to our condensed consolidated financial statements included under Part I, Item 1 of this report, which is incorporated herein by reference.
ITEM 1A.     Risk Factors
In addition to the other information set forth in this report, you should carefully consider the factors discussed in “Part I, Item 1A, Risk Factors” in our Annual Report on Form 10-K for the year ended December 31, 2020, which could materially affect our business, financial condition and results of operations. There have been no material changes in our risk factors from those disclosed in our Annual Report on Form 10-K for the year ended December 31, 2020. The risks described in our Annual Report on Form 10-K are not the only risks facing our company. Additional risks and uncertainties not currently known to us or that we currently deem to be immaterial may also materially adversely affect our business, financial condition and results of operations.
ITEM 2.     Unregistered Sales of Equity Securities and Use of Proceeds
None
ITEM 3.     Defaults Upon Senior Securities
None
ITEM 4.    Mine Safety Disclosures
Not Applicable
ITEM 5.     Other Information
None

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ITEM 6.     Exhibits
Exhibit Exhibit Description
10.1+*
10.2+*
31.1*
31.2*
32.1*
32.2*
101.INS
Inline XBRL Instance Document - the instance document does not appear in the Interactive Data File because XBRL tags are embedded within the Inline XBRL document.
101.SCH
Inline XBRL Taxonomy Extension Schema Document.
101.CAL
Inline XBRL Taxonomy Extension Calculation Linkbase Document.
101.DEF
Inline XBRL Taxonomy Extension Definition Linkbase Document.
101.LAB
Inline XBRL Taxonomy Extension Label Linkbase Document.
101.PRE
Inline XBRL Taxonomy Extension Presentation Linkbase Document.
104
Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101).
+    Management contract or compensatory plan or arrangement
*    Filed herewith

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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.
FIVE POINT HOLDINGS, LLC
By:
/s/ Lynn Jochim
Lynn Jochim
President and Chief Operating Officer
(Principal Executive Officer)
By:
/s/ Erik Higgins
Erik Higgins
Chief Financial Officer and Vice President
(Principal Financial Officer and
Principal Accounting Officer)


Date: November 4, 2021

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EXHIBIT 10.1
EMPLOYMENT TRANSITION AGREEMENT
This Employment Transition Agreement (the “Agreement”) is entered into by and among Emile Haddad (“Executive”), Five Point Operating Company, LP, a Delaware limited partnership (the “Company”), Five Point Communities Management, Inc. (“FPCM”), and Five Point Holdings, LLC, the parent company of the Company and FPCM (“FPH,” and together with the Company and FPCM, the “Company Parties”), effective as of August 23, 2021 (the “Effective Date”). Executive, the Company, FPCM and FPH are sometimes referred to herein individually as a “Party” and collectively as the “Parties.”

RECITALS
A.    Executive is the Chief Executive Officer (“CEO”), President and Chairman of the Board of Directors (the “Board”) of FPH. Executive is also the founder and an employee of FPCM.

B.    The Company Parties and Executive have agreed that Executive will be resigning his positions as CEO, President and Chairman of FPH and leaving his employment at FPCM, and will be elected as Chairman Emeritus of the Company, in recognition of his status as a founder of and for his service to FPH and so that Executive can spend more time and attention advising the Company Parties on new ventures and initiatives the Company Parties may consider pursuing within its existing communities.

C.    The Company, through its subsidiary, FPCM, desires to continue to employ Executive, and Executive desires to continue employment with the Company, through September 30, 2021 (the “Transition Date”), on the terms and conditions set forth in this Agreement.

AGREEMENT
NOW, THEREFORE, in consideration of the mutual agreements set forth herein and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the Parties hereby agree as follows:
1.Employment Period.
(a)Employment Period; At-Will Employment. During the period (the “Employment Period”) commencing on the Effective Date and ending on the Transition Date, Executive shall continue to be employed by FPCM. The Company Parties and Executive acknowledge that Executive’s employment is and shall continue to be at-will, as defined under applicable law, and that Executive’s employment with the Company Parties at any time for any or no reason, with or without notice. If Executive’s employment terminates for any reason, Executive shall not be entitled to any payments, benefits, awards or compensation other than as provided in this Agreement (it being understood that the foregoing shall not be construed to limit the rights of Executive and his related parties (including, without limitation, The Haddad Living Trust U/A dated May 2, 2007 (and amended April 12, 2012 and as further amended from time to


time)) in respect of his vested equity and equity-based awards, vested employee benefits or under the Tax Receivable Agreement by and among FPH, the Company and certain other parties dated as of May 2, 2016, as amended from time to time (the “TRA”)). Executive’s employment under this Agreement shall be terminated immediately on the death of Executive.
(b)Duties and Responsibilities. During the Employment Period, Executive will continue to serve the Company Parties as an employee in the role of Chairman and Chief Executive Officer, reporting to the Board.
(c)Compensation During Employment Period. As compensation for the services to be rendered by Executive to the Company Parties during the Employment Period, Executive shall be paid the compensation and benefits:
(i)Base Salary. For the period commencing on the Effective Date and ending on the Transition Date, FPCM shall continue to pay to Executive his base salary in the same amount as currently paid to him (as of immediately prior to the date hereof) and payable in accordance with FPCM’s usual pay practices.
(ii)Annual Bonus. Subject to his continued employment through the Transition Date (except as provided in Section 2(b) below), Executive shall receive a prorated annual cash bonus for fiscal year 2021, equal to $3,750,000 (reflecting $5,000,000 multiplied by a pro-ration factor of 75%).
(iii)Fiscal 2021 Equity Award. On September 15, 2021, Executive shall be granted a restricted stock award under the Equity Plan (as defined below) pursuant to the form attached as Exhibit A.
(iv)Benefits. Executive shall be entitled to participate in benefits under the Company Parties’ benefit plans and arrangements, including, without limitation, any employee benefit plan or arrangement made available in the future by the Company Parties to their senior employees, subject to and on a basis consistent with the terms, conditions and overall administration of such plans and arrangements.
(v)Expenses. The Company Parties shall reimburse Executive for reasonable out-of-pocket business expenses incurred in connection with the performance of his duties hereunder, subject to the Company’s existing policies and procedures for reimbursement of business-related expenses. In addition, the Companies Parties shall, within 30 days of the receipt of reasonable documentation related thereto, reimburse Executive for up to $15,000 in legal fees and expenses incurred by him in connection with the negotiation and execution of this Agreement, the Advisory Agreement and any related documents or arrangements.
(vi)Vacation or Paid Time Off. Executive shall be entitled to such periods of vacation or paid time off (“PTO”) each year as provided from time to time under FPCM’s vacation or PTO policy.
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(vii)Equity Awards. During the Employment Period, Executive’s equity awards granted by FPH (including the awards granted pursuant to Section 1(c)(iii) above) shall continue to vest in accordance with the terms of the award agreements and the FPH Amended and Restated 2016 Incentive Award Plan (the “Equity Plan”) pursuant to which such equity awards were issued (the “Equity Plan Documents”). In addition, notwithstanding anything to the contrary in the Equity Plan Documents, from and after the Transition Date (A) Executive’s unvested equity awards shall continue to vest pursuant to the terms of the Advisory Agreement in accordance with the terms of such Equity Plan Documents (as modified by the Advisory Agreement), (B) all references to Executive’s “employment” in such Equity Plan Documents shall instead be references to Executive’s and/or his affiliate’s “service” under the Advisory Agreement and all references to Executive’s “termination of employment” shall instead be references to Executive’s and/or his affiliate’s “termination of service” as a senior advisor pursuant to the Advisory Agreement (and similar and correlative terms will have like meanings), (C) the references to “Section 13.2(d)” of the Equity Plan in Executive’s Restricted Share Agreement dated January 15, 2019 and Executive’s Restricted Share Agreement dated January 15, 2020 shall each be construed as a reference to Section 12.2(d) of the Equity Plan, and (D) the terms “Cause” and “Good Reason” for purposes of the Equity Plan Documents with Executive shall have the meanings given to such terms in the Advisory Agreement. The Equity Plan Documents governing Executive’s equity awards are hereby amended to be consistent with the foregoing.
2.Transition Date Matters.
(a)Resignations. Executive hereby agrees that, effective as of the Transition Date, he hereby resigns his positions of Chairman, President and Chief Executive Officer of each of the Company Parties (and any of their affiliates) (and any other titles or officer positions he may hold) of the Company Parties (and any of their respective affiliates and subsidiaries), including, without limitation, his position as a member of the “Executive Committee” of any joint venture to which the Company Parties (and any of their respective affiliates or subsidiaries) are a party, and shall be appointed as Chairman Emeritus of the Board. Executive shall continue to serve as a member of the Board in accordance with the organizational documents of FPH. Executive acknowledges that he shall not receive any additional compensation for his service as a Director or Chairman Emeritus, including under any non-employee director compensation program of FPH, and that his only compensation following the Transition Date shall be the amounts payable under the Advisory Agreement, provided that following the expiration or termination of the Advisory Agreement, Executive will be compensated as a non-employee director of FPH so long as he remains a Director of FPH (including pro-rated compensation for any period of service that follows the termination of the Advisory Agreement and precedes the next regularly scheduled date on which cash or equity-based compensation would otherwise be provided to non-employee directors of FPH) and under the same terms and conditions as are applicable to non-employee directors of FPH. Executive and FPH shall execute any additional documentation necessary to effectuate the foregoing.
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(b)Compensation Through Transition Date. On the Transition Date, the Company Parties will issue to Executive his final paycheck, reflecting (i) his earned but unpaid base salary through the Transition Date, and (ii) all accrued, unused vacation pay or PTO due Executive through the Transition Date. In addition, as a result of his cessation of employment, Executive shall be entitled to receive all benefits, including continuation and conversion rights, provided upon cessation of employment under the Company Parties’ employee benefit plans and policies in accordance with the terms of such plans and policies. The amounts described in this Section 2(b) and Section 2(d) below are referred to as the “Accrued Obligations.”
(c)Fiscal Year 2021 Bonus. Executive shall remain eligible to receive a prorated annual bonus (as provided in Section 1(c)(ii) above) for fiscal year 2021 on the same terms and conditions as are applicable to the executive officers of FPCM (except as set forth below), which bonus will be paid at the same time as annual bonuses are paid to the executive officers of FPCM generally, but in all events prior to March 15, 2022. Such pro-rated bonus will be payable to Executive regardless of whether he is employed or otherwise providing services to the Company Parties on the payment date.
(d)Expense Reimbursements. The Company Parties will reimburse Executive for any and all reasonable and necessary business expenses incurred by Executive in connection with the performance of his job duties prior to the Transition Date, which expenses shall be submitted by Executive promptly following the Transition Date and paid by the Company Parties in accordance with the Company’s existing policies and procedures.
(e)Benefits. Executive’s entitlement to health benefits from the Company Parties, and eligibility to participate in the Company Parties’ health benefit plans, shall cease on the last day of the calendar month during which the Transition Date occurs, except to the extent Executive elects to and is eligible to receive continued healthcare coverage pursuant to the provisions of the Consolidated Omnibus Budget Reconciliation Act of 1985, as amended (“COBRA”), for himself and any covered dependents. Executive’s entitlement to other benefits from the Company Parties, and eligibility to participate in the Company Parties’ other benefit plans and programs, shall cease on the Transition Date.
(f)Advisory Services Following Transition Date. Following the Transition Date, Executive and/or his affiliate shall continue to serve as a senior advisor to the Company Parties pursuant to the terms and conditions of the Advisory Agreement of even date herewith (the “Advisory Agreement”).
(g)Severance Matters. For the avoidance of doubt, the Parties acknowledge and agree that neither the execution of this Agreement nor Executive’s cessation of employment on the Transition Date will result in any payments or other obligations from the Company Parties or any of their affiliates pursuant to FPH’s Senior Management Severance and Change in Control Plan (the “Severance Plan”), and that, from and after the Transition Date, Executive will no longer be a “Participant” in the Severance Plan. In addition, the Parties acknowledge and agree that neither the execution of this Agreement nor Executive’s cessation of employment on the Transition Date will result in any accelerated vesting of any of Executive’s equity awards. However, notwithstanding anything herein to the contrary, if Executive’s employment ceases
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prior to September 30, 2021 as a result of (x) Executive’s termination of employment by FPCM without Cause, or (y) Executive’s death, (i) Executive shall be entitled to all payments and benefits (including continued vesting and, if applicable, the grant of the restricted shares due under Section 1(c)(iii) above) due to him hereunder as if his employment with FPCM had continued in accordance with the terms hereof through the Transition Date, and (ii) Executive shall be entitled to payment and benefits (including accelerated vesting) under the Advisory Agreement as if he commenced services under the Advisory Agreement (which, solely for this purpose of giving effect to this provision, shall be deemed to become effective as of immediately prior to such termination) and his services had ceased due to a termination of his employment by FPCM without Cause or his death, as applicable, one (1) day thereafter.
3.Warranty. Executive acknowledges that, other than the compensation set forth in Sections 1(d) and 2 above paid to him as provided therein, he has or will have received all wages, accrued but unused vacation pay or paid time off, and other compensation or benefits due to him as a result of his employment with and termination of employment with the Company Parties.
4.Indemnification and D&O Coverage. Following the Transition Date, Executive will continue to be indemnified (including provisions regarding advancement of fees and expenses) on a basis that is no less favorable than the basis on which other current directors and officers of the Companies Parties are indemnified for so long as he is potentially subject to any claim or action related to his service on the Board or as a director or officer (or in a comparable capacity) of any of the Company Parties or their affiliates. In addition, Executive will be the beneficiary of a directors and officers liability insurance that is no less favorable to Executive than the more protective of (i) the directors and officers’ liability insurance policy in effect as of immediately prior to the Effective Date and (ii) the directors and officers’ liability insurance policy in effect from time to time hereafter for senior executives and directors of the Companies Parties.
5.    Mutual Releases.
(a)    Release By Executive. In consideration of the agreements and promises set forth herein, including the payments and benefits which Executive is eligible to receive under this Agreement and the Advisory Agreement, Executive, on behalf of himself and his executors, heirs, administrators, representatives and assigns, hereby agrees to release and forever discharge the Company Parties and all predecessors, successors and their parent corporations, affiliates, related, and/or subsidiary entities, and all of their past and present investors, directors, stockholders, officers, general or limited partners, employees, attorneys, agents and representatives, and the employee benefit plans in which Executive is or has been a participant by virtue of his employment with or service to the Company Parties or any affiliate (collectively, the “Company Releasees”), from any and all claims, debts, demands, accounts, judgments, rights, causes of action, equitable relief, damages, costs, charges, complaints, obligations, promises, agreements, controversies, suits, expenses, compensation, responsibility and liability of every kind and character whatsoever (including attorneys’ fees and costs), whether in law or equity, known or unknown, asserted or unasserted, suspected or unsuspected (collectively, “Claims”), which Executive has or may have had against such entities based on any events or
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circumstances arising or occurring on or prior to the date hereof or on or prior to the date hereof, arising directly or indirectly out of, relating to, or in any other way involving in any manner whatsoever Executive’s employment by or service to the Company Parties or any affiliate. Notwithstanding the generality of the foregoing, Executive does not release any claim which, by law, may not be released, including the following claims: (i) Claims for unemployment compensation or any state disability insurance benefits pursuant to the terms of applicable state law; (ii) Claims for workers’ compensation insurance benefits under the terms of any worker’s compensation insurance policy or fund of the Company Parties or their affiliates or Claims for vested benefits under any employee benefit plan of the Companies Parties or their affiliates; (iii) Claims for indemnity under any written indemnification agreement provided by the Company to Executive, or under the bylaws of any Company Party, as provided for by California law (including California Labor Code Section 2802) or Delaware law or under any applicable insurance policy with respect to Executive’s liability as an employee, director or officer (or in a comparable capacity) of the Company Parties or their affiliates; (iv) Claims for Executive’s right to bring to the attention of the Equal Employment Opportunity Commission or the California Department of Fair Employment and Housing or any other federal, state or local government agency claims of discrimination, or from participating in an investigation or proceeding conducted by the Equal Employment Opportunity Commission or any other federal, state or local government agency; provided, however, that Executive does release his right to secure any damages for alleged discriminatory treatment; (v) Claims Executive may have as a unitholder in the Company or under the TRA; (vi) any Claim related to its right to enforce this Agreement or the Advisory Agreement or any other agreement referenced herein or therein and (vii) Executive’s right to communicate or cooperate with any government agency.
(b)    Release By Company Parties. In consideration of Executive complying with the terms and conditions of this Agreement, each of the Company Parties hereby waive, on behalf of itself and its representatives and assigns, predecessors, successors and their parent corporations, affiliates, related, and/or subsidiary entities, and all of their past and present investors, directors, stockholders, officers, general or limited partners, employees, attorneys, agents and representatives, and the employee benefit plans in which Executive is or has been a participant by virtue of his employment with or service to the Company Parties or any affiliate their right to any Claims it might have against Executive, his family members, representatives, successors and affiliates, related, and/or subsidiary entities (including, without limitation, trusts for the benefit of Executive and his family members), and all of their past and present investors, directors, stockholders, officers, general or limited partners, employees, attorneys, agents and representatives based upon any act or omission arising on or before the date it signs this Agreement; provided, however, that no Company Party releases (i) any Claim related to its right to enforce this Agreement or the Advisory Agreement or any other agreement referenced herein or therein, (ii) any Claims arising out of or in any way relating to Executive’s breach of fiduciary duty, willful misconduct, fraud, embezzlement or illegal conduct, and (iii) Claims that cannot be released as a matter of law.
        (c)    Release of Unknown Claims. EACH OF EXECUTIVE AND EACH COMPANY PARTY ACKNOWLEDGES THAT HE OR IT HAS BEEN ADVISED OF AND
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ARE FAMILIAR WITH THE PROVISIONS OF CALIFORNIA CIVIL CODE SECTION 1542, WHICH PROVIDES AS FOLLOWS:
    “A GENERAL RELEASE DOES NOT EXTEND TO CLAIMS THAT THE CREDITOR OR RELEASING PARTY DOES NOT KNOW OR SUSPECT TO EXIST IN HIS OR HER FAVOR AT THE TIME OF EXECUTING THE RELEASE, AND THAT, IF KNOWN BY HIM OR HER, WOULD HAVE MATERIALLY, AFFECTED HIS OR HER SETTLEMENT WITH THE DEBTOR OR RELEASED PARTY.”
    BEING AWARE OF SAID CODE SECTION, EXECUTIVE AND EACH COMPANY PARTY HEREBY EXPRESSLY WAIVES ANY RIGHTS HE OR IT MAY HAVE THEREUNDER, AS WELL AS UNDER ANY OTHER STATUTES OR COMMON LAW PRINCIPLES OF SIMILAR EFFECT.
6.Assignment; No Third Party Beneficiaries.
(a)    Assignment. This Agreement and the rights and duties hereunder are personal to Executive and shall not be assigned, delegated, transferred, pledged or sold by Executive without the prior written consent of the Company Parties. Executive hereby acknowledges and agrees that the Company Parties may assign, delegate, transfer, pledge or sell this Agreement and the rights and duties hereunder to any third party (a) that acquires all or substantially all of the assets of the assets of any Company Party or (b) that is the surviving or acquiring corporation in connection with a merger, consolidation or other acquisition involving any Company Party. This Agreement shall inure to the benefit of and be enforceable by the Parties, and their respective heirs, personal representatives, successors and assigns.
(b)    No Third-Party Beneficiaries. Except as provided in Section 6(a) above, (i) nothing contained in this Agreement shall create a contractual relationship with or a contractual cause of action in favor of a third party against any Party and (ii) Executive’s services under this Agreement are being performed solely for the benefit of the Company Parties, and no other party or entity shall have any contractual claim against Executive because of this Agreement or the performance or nonperformance of Services hereunder.
7.Governing Law; Venue. Any dispute, controversy, or claim of whatever nature arising out of or relating to this Agreement or breach thereof shall be governed by and interpreted under the laws of the State of California, without regard to conflict of law principles. Any suit brought hereon shall be brought in the state or federal courts sitting in Orange County, California, the Parties hereby waiving any claim or defense that such forum is not convenient or proper. Each Party hereby agrees that any such court shall have in person jurisdiction over it and consents to service of process in any manner authorized by California law.
8.Entire Agreement. This Agreement, together with the Advisory Agreement and the other agreements referenced herein and therein (including, without limitation, the Equity Plan Documents, as modified herein, and the TRA), constitutes the complete and final agreement of the Parties and supersedes any prior agreements between them, whether written or oral, with respect to the subject matter hereof, including, without limitation, any offer letter between
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Executive and any Company Party. Executive hereby agrees that as of the Effective Date any other such agreement or understanding is hereby terminated and shall be of no further force or effect. No waiver, alteration, or modification of any of the provisions of this Agreement shall be binding unless in writing and signed by duly authorized representatives of the Parties.
9.Severability. The invalidity or unenforceability of any provision of this Agreement, or any terms thereof, shall not affect the validity of this Agreement as a whole, which shall at all times remain in full force and effect.
10.Notices. All notices required or permitted to be given by one Party to the other under this Agreement shall be sufficient if sent by either certified mail return receipt requested, nationally recognized courier, email or hand delivery to the Company, at its principal executive offices, and to Executive, at his address on the payroll records of the Company, or to such other address as the Party to receive the notice has designated by notice to the other Party. All notices shall be effective (a) when delivered personally, (b) when transmitted by telecopy, electronic or digital transmission with receipt confirmed, (c) the business day when delivered by a nationally recognized courier, or (d) upon receipt if sent by certified or registered mail.
11.Execution in Counterparts. This Agreement may be executed by facsimile and in several counterparts, each of which shall be deemed to be an original, but all of which together will constitute one and the same Agreement.
12.Advice of Legal Counsel. Executive and Company Parties each hereby acknowledges that Executive has been represented by Moulton | Moore | Stella as his legal counsel and Company Parties have been represented by Latham & Watkins prior to executing this Agreement. This Agreement is the product of negotiation and preparation by and among the Parties and their respective attorneys. Neither this Agreement nor any provision thereof shall be deemed prepared or drafted by one Party or another, or its attorneys, and shall not be construed more strongly against any Party.
13.Withholding and Other Deductions; Right to Seek Independent Advice. All compensation payable to Executive hereunder shall be subject to such deductions as the Company is from time to time required to make pursuant to law, governmental regulation or order. Executive acknowledges and agrees that no Company Party nor counsel for the Company Parties has provided any legal or tax advice to Executive and that Executive is free to, and is hereby advised to, consult with a legal or tax advisor of his choosing.
14.Survival. The covenants, agreements, representations and warranties contained in or made in this Agreement shall survive the Transition Date or any termination of this Agreement.
15.Waiver. The failure of either party hereto at any time to enforce performance by the other party of any provision of this Agreement shall in no way affect such party’s rights thereafter to enforce the same, nor shall the waiver by either party of any breach of any provision hereof be deemed to be a waiver by such party of any other breach of the same or any other provision hereof.
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16.Section 409A. To the extent applicable, this Agreement shall be interpreted in accordance with the applicable exemptions from Section 409A of the Internal Revenue Code (the “Code”). To the extent that any provision of this Agreement is ambiguous as to its compliance with Section 409A of the Code, the provision shall be read in such a manner that no payments payable under this Agreement shall be subject to an “additional tax” as defined in Section 409A(a)(1)(B) of the Code. Each series of installment payments made under this Agreement is hereby designated as a series of “separate payments” within the meaning of Section 409A of the Code. Any reimbursement of expenses or in-kind benefits payable under this Agreement shall be made in accordance with Treasury Regulation Section 1.409A-3(i)(1)(iv) and shall be paid on or before the last day of Executive’s taxable year following the taxable year in which Executive incurred the expenses. The amount of expenses reimbursed or in-kind benefits payable during any taxable year of Executive’s will not affect the amount eligible for reimbursement or in-kind benefits payable in any other taxable year of Executive’s, and Executive’s right to reimbursement for such amounts shall not be subject to liquidation or exchange for any other benefit.
[Signature Page Follows]

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IN WITNESS WHEREOF, the Parties have executed this Agreement as of the date first set forth above.

COMPANY

FIVE POINT OPERATING COMPANY, LP, a Delaware limited partnership

By:     /s/ Lynn Jochim ______________
Name:     Lynn Jochim                
Title:     Chief Operating Officer        



FPH

FIVE POINT HOLDINGS, LLC, a Delaware limited liability company

By:     /s/ Lynn Jochim ______________
Name:     Lynn Jochim                
Title:     Chief Operating Officer        



FPCM

FIVE POINT COMMUNITIES MANAGEMENT, INC., a Delaware corporation

By:     /s/ Lynn Jochim ______________
Name:     Lynn Jochim                
Title:     Chief Operating Officer        


EXECUTIVE
/s/ Emile Haddad
___________________________________
Emile Haddad, an individual

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EXHIBIT A

RESTRICTED STOCK AWARD AGREEMENT

[Attached]


FIVE POINT HOLDINGS, LLC
AMENDED AND RESTATED 2016 INCENTIVE AWARD PLAN
RESTRICTED SHARE AGREEMENT

This Restricted Share Agreement (this “Agreement”) is made and entered into as of the date of grant set forth below (the “Date of Grant”) by and between Five Point Holdings, LLC, a Delaware limited liability company (the “Company”), and the individual named below (the “Grantee”). Capitalized terms not defined herein shall have the meaning ascribed to them in the Five Point Holdings, LLC Amended and Restated 2016 Incentive Award Plan (the “Plan”). Where the context permits, references to the Company shall include any successor to the Company.

Name of Grantee:    Emile Haddad

Number of Restricted Shares: 396,825

Date of Grant:    September 15, 2021

1.Grant of Restricted Shares. The Company hereby grants to the Grantee the total number of Restricted Shares set forth above as Number of Restricted Shares (the “Restricted Shares”), subject to all of the terms and conditions of this Agreement and the Plan. The Restricted Shares will not be evidenced by certificates. The Restricted Shares will be issued in book entry form, registered in the name of the Grantee, and the Share ledger of the Company shall indicate the restrictive legend described in Section 6 hereof until the restrictions on such Restricted Shares shall have lapsed.

2.Restrictions; Lapse of Restrictions.

(a)Unless and until, and then only to the extent, the restrictions on transfer of the Restricted Shares lapse as provided in Section 3 hereof, or as otherwise provided in the Plan, no transfer of the Restricted Shares or the Grantee’s rights with respect to the Restricted Shares, whether voluntary or involuntary, by operation of law or otherwise, shall be permitted. Unless the Administrator determines otherwise, upon any attempt to transfer a Restricted Share or any rights in respect of a Restricted Share in contravention of the preceding sentence, such Restricted Share, and all of the rights related thereto, shall be immediately forfeited by the Grantee and transferred to, and reacquired by, the Company without consideration of any kind.

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(b)The restrictions on transfer set forth in subsection (a) above shall lapse as the Restricted Shares become vested in accordance with Section 3 hereof. Upon each lapse of restrictions relating to Restricted Shares, the Secretary of the Company shall cause the Share ledger of the Company to indicate that the restrictive legend described in Section 6 hereof no longer applies to such Restricted Shares.

3.Vesting.

(a)Subject to the remaining provisions of this Section 3, one-third (1/3rd) of the Restricted Shares shall vest on each of January 15, 2022, 2023 and 2024 (provided that, if the number of Restricted Shares is not a whole multiple of three (3), the number of Restricted Shares vesting on January 15, 2022 and 2023 shall be rounded down to the next whole number, and the remaining Restricted Shares shall vest on January 15, 2024).

(b)Except as set forth in subsection (c) below, upon termination of the Grantee’s employment or service with the Company and its Affiliates, any Restricted Shares that shall not already have vested shall be immediately forfeited by the Grantee.

    (c)    Notwithstanding anything to the contrary in this Agreement, the Restricted Shares shall be eligible to vest on an accelerated basis as set forth in that certain Advisory Agreement dated August 23, 2021 between the Grantee and Five Point Operating Company, LP (the “Advisory Agreement”), and any such accelerated vesting in the Advisory Agreement shall apply to the Restricted Shares. The terms “Cause” and “Good Reason” for purposes of this Agreement shall have the meanings given to such terms in the Advisory Agreement.

4.Rights as a Shareholder. Subject to the restrictions set forth in the Plan and this Agreement, the Grantee shall possess all incidents of ownership with respect to the Restricted Shares, including the right to receive distributions with respect to the Restricted Shares and to vote the Restricted Shares. With respect to Restricted Shares that are still subject to the restrictions set forth in Section 2 hereof, property that the Grantee is entitled to receive with respect to such Restricted Shares by reason of an event described in Section 12.2(a) of the Plan (other than cash distributions received) shall be subject to the restrictions imposed on such Restricted Shares.

5.Transfer of Unvested Shares Upon Forfeiture. The Grantee hereby authorizes and directs the Secretary of the Company, or such other person designated by the Company, to take such steps as may be necessary to cause the transfer to the Company of any Restricted Shares that are forfeited by the Grantee.

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6.Legend on Certificates. The Grantee agrees that any book entry made in respect of Restricted Shares (including Shares received as a result of stock distributions, stock splits or other forms of recapitalization) prior to the lapse of any outstanding restrictions relating thereto shall be subject to the following legend (in addition to any other legend or legends required under applicable federal and state securities laws):

THESE SHARES ARE SUBJECT TO CERTAIN RESTRICTIONS UPON TRANSFER AND RIGHTS OF FORFEITURE (THE “RESTRICTIONS”) AS SET FORTH IN THE FIVE POINT HOLDINGS, LLC AMENDED AND RESTATED 2016 INCENTIVE AWARD PLAN AND AN AGREEMENT ENTERED INTO BETWEEN THE REGISTERED OWNER AND FIVE POINT HOLDINGS, LLC, COPIES OF WHICH ARE ON FILE WITH THE SECRETARY OF THE COMPANY. ANY ATTEMPT TO DISPOSE OF THESE SHARES IN CONTRAVENTION OF THE RESTRICTIONS, INCLUDING BY WAY OF SALE, ASSIGNMENT, TRANSFER, ALIENATION, PLEDGE, HYPOTHECATION OR OTHERWISE, SHALL BE NULL AND VOID AND WITHOUT EFFECT.

7.Incorporation of Plan. The Plan is hereby incorporated by reference and made a part hereof, and the Restricted Shares and this Agreement shall be subject to all of the terms and conditions of the Plan. In the event of any conflict between the provisions of this Agreement and the provisions of the Plan, the provisions of the Plan shall govern.

8.Authority of the Administrator. The Administrator shall have full authority to interpret and construe the terms of the Plan and this Agreement. The determination of the Administrator as to any such matter of interpretation or construction shall be final, binding and conclusive.

9.Governing Law. This Agreement shall be construed and administered in accordance with the laws of the State of Delaware without reference to its principles of conflicts of law.

10.Binding on Successors. The terms of this Agreement shall be binding upon the Grantee and upon the Grantee’s heirs, executors, administrators, personal representatives, transferees, assignees and successors in interest, and upon the Company and its successors and assignees.

11.Necessary Acts. The Grantee hereby agrees to perform all acts, and to execute and deliver any documents that may be reasonably necessary to carry out the provisions of this
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Agreement, including but not limited to all acts and documents related to compliance with federal and/or state securities and/or tax laws.

12.Entire Agreement. This Agreement and the Plan contain the entire agreement and understanding among the parties as to the subject matter hereof, and supersede any other agreements or representations, oral or otherwise, express or implied, with respect to the subject matter hereof.

13.Headings. Headings are used solely for the convenience of the parties and shall not be part of and shall not be deemed to be a limitation upon or descriptive of the contents of this Agreement.

14.Counterparts; Electronic Signature. This Agreement may be executed in any number of counterparts, each of which shall be deemed to be an original and all of which together shall be deemed to be one and the same instrument. The Grantee’s electronic signature of this Agreement shall have the same validity and effect as a signature affixed by the Grantee’s hand.

15.Notices. Any notice provided hereunder must be in writing and mailed or delivered either (i) to the Company at the physical address listed below or (ii) to the Grantee at the Grantee’s physical address on file with the Company. Any such notice shall be deemed effective (1) upon delivery if delivered in person, (2) on the next business day if transmitted by national overnight courier (such as FedEx or UPS) and (3) on the fourth business day following mailing by first class mail.

Five Point Holdings, LLC
2000 FivePoint, 4th Floor
Irvine, California 92618
Attention: Chief Legal Officer
Either party hereto may change such party’s address for notices by notice duly given pursuant hereto.

16.Amendment. No amendment or modification hereof shall be valid unless it shall be in writing and signed by both of the parties hereto.

17.Acceptance. The Grantee hereby acknowledges receipt of a copy of the Plan and this Agreement. The Grantee has read and understand the terms and provision thereof, and
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accepts the Restricted Shares subject to all the terms and conditions of the Plan and this Agreement.

18.Failure to Enforce Not a Waiver. The failure of either party hereto to enforce at any time any provision of this Agreement shall in no way be construed to be a waiver of such provision or of any other provision hereof.

19.Agreement Not a Contract for Services. Neither the Plan, the granting of the Restricted Shares, this Agreement nor any other action taken pursuant to the Plan shall constitute or be evidence of any agreement or understanding, express or implied, that the Grantee has a right to continue to provide services as an officer, director, employee, consultant or advisor of the Company or any Affiliate for any period of time or at any specific rate of compensation, or shall interfere with or restrict in any way the rights of the Company and its Affiliates, which are hereby expressly reserved, to discharge the Grantee at any time for any reason whatsoever, with or without Cause.

20.Severability. If one or more of the provisions of this Agreement shall be held invalid, illegal or unenforceable in any respect, the validity, legality and enforceability of the remaining provisions shall not in any way be affected or impaired thereby and the invalid, illegal or unenforceable provisions shall be deemed null and void; provided, however, to the extent permissible by law, any provisions which could be deemed null and void shall first be construed, interpreted or revised retroactively to permit this Agreement to be construed so as to foster the intent of this Agreement and the Plan and to avoid any such finding of invalidity, illegality or unenforceability.

21.Taxes. The Company shall require a cash payment by or on behalf of the Grantee in satisfaction of the amount of tax to be withheld from the Grantee in respect of the vesting of the Restricted Shares (or, if the Grantee makes an election under Section 83(b) of the Code, upon grant of the Restricted Shares) or alternatively, if the Grantee requests, the Administrator in its sole discretion may but shall not be required to reduce the number of Restricted Shares that otherwise would become unrestricted Shares held by the Grantee or reduce other compensation payable to the Grantee in such amount as equals the sums to be withheld from Grantee pursuant to federal, state or local tax law in respect of the vesting of the Restricted Shares (in the case of withheld Shares, measured at their Fair Market Value on the date of required withholding).

THE GRANTEE ACKNOWLEDGES THAT IT IS THE GRANTEE’S SOLE RESPONSIBILITY AND NOT THE COMPANY’S TO FILE TIMELY ANY ELECTION UNDER SECTION 83(b) OF THE CODE, EVEN IF THE GRANTEE REQUESTS THE COMPANY OR ITS REPRESENTATIVE TO MAKE THIS FILING ON THE GRANTEE’S BEHALF.
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22.Section 409A Compliance. The intent of the parties is that payments and benefits under this Agreement comply with Section 409A of the Code, to the extent subject thereto, and accordingly, to the maximum extent permitted, this Agreement shall be interpreted and administered to be in compliance therewith. Notwithstanding anything contained herein to the contrary, the Grantee shall not be considered to have terminated employment with the Company for purposes of any payments under this Agreement which are subject to Section 409A of the Code until the Grantee would be considered to have incurred a “separation from service” from the Company within the meaning of Section 409A of the Code. Each amount to be paid or benefit to be provided under this Agreement shall be construed as a separate identified payment for purposes of Section 409A of the Code. Without limiting the foregoing and notwithstanding anything contained herein to the contrary, to the extent required in order to avoid accelerated taxation and/or tax penalties under Section 409A of the Code, amounts that would otherwise be payable and benefits that would otherwise be provided pursuant to this Agreement or any other arrangement between the Grantee and the Company during the six-month period immediately following the Grantee’s separation from service shall instead be paid on the first business day after the date that is six months following the Grantee’s separation from service (or, if earlier, the Grantee’s date of death). The Company makes no representation that any or all of the payments described in this Agreement will be exempt from or comply with Section 409A of the Code and makes no undertaking to preclude Section 409A of the Code from applying to any such payment.

[Signature Page Follows]


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IN WITNESS WHEREOF, the parties hereto have executed and delivered this Agreement on the day and year first above written.


FIVE POINT HOLDINGS, LLC



By:     Name: Erik Higgins
Title:    Chief Financial Officer, Vice President and Treasurer



GRANTEE

___________________________________
Emile Haddad, an individual


EXHIBIT 10.2

ADVISORY AGREEMENT

THIS ADVISORY AGREEMENT (the “Agreement”) is dated for reference purposes as of August 23, 2021, by and between Five Point Operating Company, LP, a Delaware limited partnership (the “Company”), and Emile Haddad, an individual (the “Advisor”).
RECITALS

A.    Advisor is the Chief Executive Officer (“CEO”), President and Chairman of the Board of Directors (the “Board”) of Five Point Holdings, LLC (“FPH”), the parent company of the Company. Advisor is also the founder and an employee of the Company’s subsidiary, Five Point Communities Management, Inc. (“FPCM”).

B.    Through certain subsidiaries or joint ventures, the Company owns and develops some of the largest mixed-use, planned communities in California, including projects in San Francisco, Los Angeles and Orange Counties (individually, a “Project” and collectively, the “Projects”).

C.    The Company and Advisor have announced that Advisor has been elected as Chairman Emeritus of the Company in recognition of his status as a founder of and for his service to FPH and has resigned his positions as CEO, President and Chairman of FPH. As of the “Effective Date” (defined below), Advisor will be leaving his employment at FPCM, so that Advisor can spend more time and attention advising the Company and its affiliates on new ventures and initiatives the Company and its affiliates may consider pursuing within its existing communities.

D.    Given Advisor’s knowledge of the Projects and the markets in which they are located, his expertise in entitling, planning, developing and operating communities of this size and scale, and his relationships with business and community leaders in the state and local communities, the Company desires to engage Advisor as an advisor to the Company and the Board of Directors of FPH (the “Board”) following the resignation and cessation of service described above, pursuant to the terms and conditions set forth in this Agreement. The Company and Advisor are sometimes referred to herein individually as a “Party” and collectively as the “Parties.”

AGREEMENT

NOW, THEREFORE, in consideration of the mutual agreements set forth herein and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the Parties hereby agree as follows:
1.Effectiveness. This Agreement shall become effective (the “Effective Date”) as of immediately following the date the Advisor’s resignation and cessation of service of the Advisor as CEO and President is effective, which is determined to be as of September 30, 2021,


unless it otherwise becomes effective as provided in Section 2(g) of the Transition Agreement (as defined below).
2.Services and Compensation.
(a)During the term of this Agreement, the Advisor shall serve as a senior advisor to the Company and shall perform such services as are mutually agreed upon between the Advisor, on the one hand, and the Company on the other hand (through the Board and the executive management team of the Company and FPH), which services may include (among other things) assessing new ventures and initiatives the Company and its affiliates have been or will be considering within its communities, and reviewing and assessing the business plans and strategy of the Company and its affiliates (collectively, the “Services”). The Parties hereby agree that the Services provided hereunder do not include “lobbying” as that term is defined under state law (including the Political Reform Act, Gov. Code Section 81000 et seq.) or local law (including any municipal code of any County or City). Neither Advisor nor the Company shall classify payments made to Advisor hereunder as payments made to lobbyists or lobbying firms on any lobby disclosure reports filed by Advisor or the Company. If a question arises regarding lobbying activities, the Company and Advisor agree to discuss immediately and take appropriate action, including amendments to this Agreement and compensation paid or payable to Advisor to conform to applicable law. Advisor shall provide the Services at such locations as Advisor determines are appropriate; provided that Advisor agrees to make himself reasonably available for meetings at the Company’s headquarters if required in connection with the Services as provided in Section 2(b) below.
(b)In connection with the Advisor’s Services to the Company, the Advisor agrees to: (i) devote his efforts to the performance of Services as may be reasonably necessary to perform his duties hereunder; (ii) be available for consultation on a regular basis on reasonable prior notice; and (iii) be available to attend meetings with the officers of the Company and the Board at the Company’s headquarters on reasonable prior notice. The Advisor agrees to perform the Services and any other obligations or activities hereunder in accordance with: (i) the terms of this Agreement; (ii) all applicable laws, statutes, rules, regulations, ordinances and other pronouncements having the binding effect of law of any applicable government authority, court, tribunal, arbitrator, agency, legislative body or commission; and (iii) all Company written policies, written procedures and written guidance memoranda provided to the Advisor in connection with the Advisor’s performance under this Agreement. During the term of this Agreement, the Company shall provide the Advisor with use of office space at the Company’s headquarters, as well as administrative support from his executive assistant, as of the date hereof, or any successor executive assistant (if his executive assistant as the date is no longer employed by the Company and its affiliates). In performing the Services, the Advisor will solely report to the Board, the Executive Chairman of the Board and/or the President of FPH.
(c)In consideration for the performance of the Services during the term of this Agreement, the Company shall pay to the Advisor a cash retainer upon the terms and conditions set forth on Exhibit A attached hereto and Advisor shall continue to vest in his

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outstanding equity awards as set forth on Exhibit A attached hereto in accordance with their terms (as modified by the Transition Agreement and this Agreement).
(d)The Company shall reimburse the Advisor for reasonable expenses, such as travel, lodging, and meal expenses, incurred by the Advisor at the Company’s request or with the Company’s approval, consistent with the Company’s generally applicable policies for non-employee directors or as otherwise agreed by the Executive Chairman of the Board or the President of FPH, in each case, within thirty (30) days after submission of reasonably detailed supporting documentation.
(e)Advisor acknowledges and agrees that, except as provided in this Section 2 or Section 4 below, or in the Employment Transition Agreement, dated as of the date hereof, between the Parties (the “Transition Agreement”), no other amounts, fees, bonuses, equity awards, benefits or other form of compensation, whether monetary or otherwise, shall become due and owing from the Company to Advisor resulting from Advisor’s performance of the Services, unless set forth in writing and signed by the Executive Chairman of the Board.
3.Business Opportunities. The Parties hereby acknowledge that the provisions set forth in Section 5.18 of the Second Amended and Restated Limited Liability Company Agreement of FPH (Business Opportunities and Non-Employee Directors), as currently in effect, are expressly incorporated herein by reference and shall apply to the Company, Advisor (as a Non-Employee Director, as defined therein) and their respective affiliates in the same manner as other members of the Board. The Parties shall be subject to, and hereby agree to comply with, all rights and obligations of such provisions as if the same were set forth herein.
4.Term and Termination.
(a)The term of this Agreement shall commence on the Effective Date and shall continue in effect until the date (“Termination Date”) which is the first to occur of the following: (i) the third (3rd) anniversary of the Effective Date (the “Natural Expiration Date”), (ii) the thirtieth (30th) calendar day after a Party receives a written notice from the other Party terminating this Agreement, which termination may be with or without Cause and with or without Good Reason, or (iii) the date of a Change in Control.
(b)The term of this Agreement may be extended beyond the Natural Expiration Date by mutual written consent of the Parties for a period of two (2) years (the “Extended Natural Expiration Date”), in which case all terms and conditions of this Agreement shall continue in full force and effect.
(c)Upon such termination all rights and duties of the Parties toward each other shall cease except that:
(i)If the Company terminates this Agreement without Cause or Advisor terminates this Agreement for Good Reason prior to the Natural Expiration Date (or, if the term of this Agreement has been extended by the Parties pursuant to Section 4(b), the Extended Natural Expiration Date), (A) Advisor shall be paid, on or prior to the effective date of

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termination, all amounts that would otherwise be paid to the Advisor if the Advisor continued to provide the Services through the Natural Expiration Date (or, if the term of this Agreement has been extended by the Parties pursuant to Section 4(b), the Extended Natural Expiration Date) and unpaid expenses, if any, payable to Advisor in accordance with the provisions of Section 2(d) hereof, and (B) notwithstanding anything to the contrary contained in the Equity Plan Documents (as defined in Exhibit A), (1) with respect to the equity awards granted to Advisor pursuant to that certain Performance-Based Restricted Share and Restricted Share Unit Agreement dated as of January 15, 2019 (the “Performance Equity Agreement”), Advisor shall remain eligible to vest in such equity awards accordance with the vesting schedule applicable to such awards under the Performance Equity Agreement as if Advisor’s service had continued through the date on which the performance metrics are measured, and (2) with respect to any equity awards the vesting of which is time-based (including, for the avoidance of doubt, the award described in Section 1(c)(iii) of the Transition Agreement, the “Time-Based Equity Awards”), Advisor shall vest in such awards effective as of the termination of this Agreement;
(ii)If the Company terminates this Agreement for Cause or Advisor terminates this Agreement without Good Reason prior to the Natural Expiration Date (or, if the term of this Agreement has been extended by the Parties pursuant to Section 4(b) below, the Extended Natural Expiration Date), (A) Advisor shall be paid, within thirty (30) days after the effective date of termination, all amounts owing to the Advisor for Services completed prior to and including the Termination Date and unpaid expenses, if any, payable to Advisor in accordance with the provisions of Section 2(d) hereof, and (B) notwithstanding anything to the contrary contained in the Equity Plan Documents, all of Advisor’s unvested equity awards shall terminate;
(iii)If Advisor’s services under this Agreement cease as a result of Advisor’s death or Disability prior to the Natural Expiration Date (or, if the term of this Agreement has been extended by the Parties pursuant to Section 4(b), the Extended Natural Expiration Date), (A) Advisor shall be paid, within thirty (30) days after the effective date of cessation, all amounts that would otherwise be paid to the Advisor if the Advisor continued to provide the Services through the earlier of (1) the date that is twelve (12) months following the date the Advisor’s cessation of services occurs or (2) the Natural Expiration Date (or, if the term of this Agreement has been extended by the Parties pursuant to Section 4(b), the Extended Natural Expiration Date), and unpaid expenses, if any, payable to Advisor in accordance with the provisions of Section 2(d) hereof, and (B) notwithstanding anything to the contrary contained in the Equity Plan Documents, (1) with respect to the equity awards granted to Advisor pursuant to the Performance Equity Agreement, Advisor shall remain eligible to vest in accordance with the vesting schedule applicable to such awards under the Performance Equity Agreement as if Advisor’s service had continued through the date on which the performance metrics are measured, and (2) with respect to any Time-Based Equity Awards, Advisor shall vest in such awards effective as of the termination of this Agreement;
(iv)If this Agreement terminates as a result of a Change in Control prior to the Natural Expiration Date (or, if the term of this Agreement has been extended by the Parties pursuant to Section 4(b), the Extended Natural Expiration Date), (A) Advisor shall be

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paid, on or prior to the effective date of the Change in Control, all amounts that would otherwise be paid to the Advisor if the Advisor continued to provide the Services through the Natural Expiration Date (or, if the term of this Agreement has been extended by the Parties pursuant to Section 4(b), the Extended Natural Expiration Date) and unpaid expenses, if any, payable to Advisor in accordance with the provisions of Section 2(d) hereof, and (B) notwithstanding anything to the contrary contained in the Equity Plan Documents, (1) with respect to the equity awards granted to Advisor pursuant to the Performance Equity Agreement, such equity awards shall vest immediately prior to the Change in Control as provided in Section 3(d) of the Performance Equity Agreement as if such equity awards were not assumed or substituted for in the Change in Control transaction, without regard to any such assumption or substitution, and (2) with respect to any Time-Based Equity Awards, Advisor shall vest in such awards effective as of the termination of this Agreement;
(v)For purposes hereof, (A) “Cause” shall mean (1) Advisor’s willful and continued failure substantially to perform the Services under this Agreement (other than any such failure resulting from Advisor’s incapacity due to physical or mental illness), after a written demand for substantial performance is delivered to Advisor by the Company, which demand specifically identifies the manner in which the Company believes that Advisor has not substantially performed the Services, unless Advisor corrects the circumstances constituting Cause within thirty (30) days following the date such written demand is delivered to Advisor; (2) Advisor’s engaging in any material act of dishonesty, fraud, embezzlement or misrepresentation that was or is likely to be demonstrably and materially injurious to the Company or any affiliate of the Company; (3) Advisor’s knowing violation of any federal or state law or regulation applicable to the Company’s (or any affiliate’s) business that was or is likely to be demonstrably and materially injurious to the Company; or (4) Advisor’s conviction of, or plea of nolo contendere to, any felony or crime of moral turpitude; (B) “Good Reason” shall mean (1) any action or inaction that constitutes a material breach by the Company or any of its affiliates of its obligations to the Advisor under this Agreement (including, without limitation, any (x) reduction in the amount payable, or failure to provide any vesting or other benefit, hereunder, (y) reporting requirement that is inconsistent with Section 2(b) above, or (z) imposition of a requirement inconsistent with the last sentence of Section 2(a) above) or the Transition Agreement, or (2) the occurrence of both of the following: (x) the termination of the employment of Lynn Jochim by the Company and its affiliates by the Company and its affiliates without Cause (as defined in the Equity Plan (as defined below)) or by the executive for Good Reason (as defined in the Equity Plan), and (y) the failure of FPH to nominate Stuart Miller to the Board when he is willing to serve unless Cause exists or the failure of the shareholders of FPH to elect Stuart Miller to the Board when he is willing to serve unless Cause exists (and for the avoidance of doubt, in no event will a termination of employment or service by Lynn Jochim or Stuart Miller by reason of death or disability constitute a qualifying termination for purposes of clause (x) or (y), respectively), provided, in each case, that the Advisor provides written notice to the Company of Advisor’s intention to terminate this Agreement for Good Reason within ninety (90) days of any such action or inaction, which notice specifically identifies the circumstances constituting Good Reason, the Company fails to eliminate the conditions constituting Good Reason within thirty (30) days after receipt of such written notice, and Advisor terminates this Agreement within thirty (30) days following the expiration of such cure period; (C) “Disability” shall mean a

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condition such that Advisor would be considered disabled for the purposes of Section 409A of the Internal Revenue Code of 1986, as amended; and (D) “Change in Control” shall have the meaning given to such term in the FPH Amended and Restated 2016 Incentive Award Plan (the “Equity Plan”);
(vi)In the event of termination of this Agreement for Cause, the Parties acknowledge and agree that the Parties, or any of them, shall be entitled to the rights and remedies under this Agreement, in addition to any other right or remedy to which they are entitled at law or in equity; and
(d)Sections 2(c) and 2(d) (with respect to payments Advisor is owed as provided in Section 4(c) above) and Sections 3 through 15 hereof shall survive termination of this Agreement.
5.Confidentiality. Advisor acknowledges and understands that all information relating in any way to the Company or its business or affairs, whether written or oral, obtained by Advisor in connection with the Services and any information regarding the nature and extent of the Services (“Confidential Information”), shall, unless otherwise specified by the Company in writing, be deemed confidential. Advisor further acknowledges and understands that Advisor’s unauthorized disclosure of any Confidential Information would be extremely prejudicial to the Company. Therefore, Advisor shall not disclose to any person or entity any Confidential Information unless such disclosure is authorized in writing by the Company. If Advisor discloses or threatens to disclose Confidential Information in violation of his obligations under this Section 5(a), the Company shall be entitled to seek temporary or permanent injunctive relief prohibiting the disclosure of such Confidential Information. If Advisor is served with any subpoena or other legal process seeking the compelled disclosure of the Company’s Confidential Information, Advisor shall notify the Company within twenty-four (24) hours after Advisor’s receipt of such legal process. The Company may, in its sole and absolute discretion and at the Company’s sole expense, contest the disclosure of such Confidential Information sought under such legal process. Only after a final order of a court of competent jurisdiction requiring the disclosure of such Confidential Information may Advisor disclose such Confidential Information as required by law. This prohibition of disclosure of Confidential Information shall survive the termination of this Agreement.
6.Independent Contractor. The Advisor expressly acknowledges and agrees that he is solely an independent contractor and the Advisor shall not be construed to be an employee of the Company. The Advisor shall have no authority to act on behalf of or to enter into any contract, incur any liability or make any representation on behalf of the Company. The Company shall not be obligated to (a) pay on the account of the Advisor, any unemployment tax or other taxes required under the law to be paid with respect to employees, (b) withhold any monies from the fees of the Advisor for income tax purposes or (c) provide the Advisor with any benefits, including without limitation health, welfare, pension, retirement, or any kind of insurance benefits, including workers’ compensation insurance. The Advisor acknowledges and agrees that the Advisor is obligated to report as income all compensation received by the Advisor pursuant to this Agreement, and to pay all self-employment and other taxes thereon.

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7.Assignment; No Third Party Beneficiaries.
(a)Assignment. This Agreement and the rights and duties hereunder are personal to the Advisor and shall not be assigned, delegated, transferred, pledged or sold by the Advisor without the prior written consent of the Company; provided that the Advisor may without the written consent of the Company assign any or all of his rights and/obligations hereunder to any limited liability company if (i) he is (and remains) the sole owner of such limited liability company, and (ii) as a condition to such assignment such limited liability company agrees to provide that the Services provided hereunder will be provided personally by Emile Haddad. In the event of any such assignment of this Agreement, references herein to the Advisor shall be deemed to refer to such limited liability entity, mutatis mutandis; provided, however, that (w) (I) the references to Advisor in the definition of Cause shall refer to actions or omissions by Emile Haddad and/or any such limited liability entity, (II) the references to Advisor in the definition of Disability shall continue to refer to Emile Haddad, (III) the references to Advisor’s death shall continue to refer to Emile Haddad, and (IV) references to Advisor’s role as a member of the Board shall continue to refer to Emile Haddad, (x) unless the Board otherwise consents, and subject to Section 10.3 of the Equity Plan, no such assignment shall be an assignment of the equity awards held by Advisor, which shall remain in Emile Haddad’s name (it being understood that Advisor’s continued Services shall constitute continued service for purposes of Emile Haddad’s equity awards referenced herein as if Emile Haddad continued to directly provide the Services), (y) any ordinary income arising as a result of the vesting or distribution of the equity awards held by Advisor will be reported as recognized by Emile Haddad on the applicable tax reporting form, subject to any applicable tax withholding, and (z) Emile Haddad will remain responsible for paying to the Company or one of its affiliates any amount of any applicable withholding taxes required to be withheld with respect to the vesting or distribution of any of the equity awards granted to him by FPH to the extent that any such withholding taxes are not otherwise satisfied by any such limited liability entity.
(b) The Advisor hereby acknowledges and agrees that the Company may assign, delegate, transfer, pledge or sell this Agreement and the rights and duties hereunder to any third party (a) that acquires all or substantially all of the assets of the Company or FPH or (b) that is the surviving or acquiring corporation in connection with a merger, consolidation or other acquisition involving the Company or FPH. This Agreement shall inure to the benefit of and be enforceable by the Parties, and their respective heirs, personal representatives, successors and assigns.
(c)No Third-Party Beneficiaries. Except as provided in Section 7(a) above, (i) nothing contained in this Agreement shall create a contractual relationship with or a contractual cause of action in favor of a third party against either the Company or Advisor and (ii) Advisor’s services under this Agreement are being performed solely for the Company’s benefit, and no other party or entity shall have any contractual claim against Advisor because of this Agreement or the performance or nonperformance of Services hereunder.
8.Indemnification; Limitation on Liabilities.

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(a)The Advisor shall continue to have (i) any rights to indemnification (including advancement of fees and expenses) the Advisor may have from the Company or its affiliates under Delaware or California law as a result of the service by Advisor on the Board prior to, on and after the Effective Date or pursuant to the terms of the indemnification agreement between the Advisor and the Company (or any of its affiliates), and (ii) the benefits of coverage under one or more directors and officers’ liability insurance policies, in each case, on a basis that is not less favorable than that which is provided to currently serving directors and officers of FPH, the Company and FPCM.
(b)To the fullest extent permitted by law, the Company shall indemnify, defend, protect and hold harmless Advisor and his affiliates (collectively the “Advisor Indemnified Parties”), from any and all losses, costs, expenses, reasonable attorneys’ fees and other costs of defense incurred in defending against any claim(s) or in enforcing this indemnity and defense obligation, liabilities, claims, court costs, demands, debts, causes of action, fines, judgments and penalties (individually, a “Liability” and collectively, “Liabilities”), which may arise from or relate to the performance of the Services or the Projects but in any event excluding any Liability to the extent arising from or relating to the fraud, gross negligence or willful misconduct of Advisor or his affiliates.
(c)To the fullest extent permitted by law, Advisor shall indemnify, defend, protect and hold harmless the Company and its affiliates (collectively the “Five Point Indemnified Parties”), from any and all Liabilities to the extent arising from or relating to the fraud or willful misconduct of Advisor or his affiliates.
(d)LIMITATION OF LIABILITY. TO THE MAXIMUM EXTENT PERMITTED BY APPLICABLE LAW, IN NO EVENT WILL THE PARTIES BE LIABLE HEREUNDER FOR ANY LOST PROFITS OR LOST BUSINESS OR FOR ANY CONSEQUENTIAL, INCIDENTAL, SPECIAL OR INDIRECT DAMAGES OF ANY KIND, WHETHER ARISING IN CONTRACT, TORT OR OTHERWISE, AND REGARDLESS OF WHETHER THE PARTIES HAVE BEEN NOTIFIED OF THE POSSIBILITY OF SUCH DAMAGES.
9.Governing Law; Venue. Any dispute, controversy, or claim of whatever nature arising out of or relating to this Agreement or breach thereof shall be governed by and interpreted under the laws of the State of California, without regard to conflict of law principles. Any suit brought hereon shall be brought in the state or federal courts sitting in Orange County, California, the Parties hereby waiving any claim or defense that such forum is not convenient or proper. Each Party hereby agrees that any such court shall have in person jurisdiction over it and consents to service of process in any manner authorized by California law.
10.Entire Agreement. This Agreement, together with the Transition Agreement, the Equity Plan Documents and the other agreements referenced herein and therein, constitutes the complete and final agreement of the Parties and supersedes any prior agreements between them, whether written or oral, with respect to the subject matter hereof. The Advisor hereby agrees that as of the Effective Date any other such agreement or understanding is hereby terminated and shall be of no further force or effect. No waiver, alteration, or modification of any of the

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provisions of this Agreement shall be binding unless in writing and signed by duly authorized representatives of the Parties.
11.Severability. The invalidity or unenforceability of any provision of this Agreement, or any terms thereof, shall not affect the validity of this Agreement as a whole, which shall at all times remain in full force and effect.
12.Notices. All notices required or permitted to be given by one Party to the other under this Agreement shall be sufficient if sent by either certified mail return receipt requested, nationally recognized courier, email or hand delivery to the Company, at its principal executive offices, and to the Advisor, at his address on the payroll records of the Company, or to such other address as the Party to receive the notice has designated by notice to the other Party. All notices shall be effective (a) when delivered personally, (b) when transmitted by telecopy, electronic or digital transmission with receipt confirmed, (c) the business day when delivered by a nationally recognized courier, or (d) upon receipt if sent by certified or registered mail.
13.Execution in Counterparts. This Agreement may be executed by facsimile and in several counterparts, each of which shall be deemed to be an original, but all of which together will constitute one and the same Agreement.
14.    Advice of Legal Counsel. Advisor and Company each hereby acknowledges that Advisor has been represented by Moulton | Moore | Stella as his legal counsel and Company has been represented by Latham & Watkins prior to executing this Agreement. This Agreement is the product of negotiation and preparation by and among the Parties and their respective attorneys. Neither this Agreement nor any provision thereof shall be deemed prepared or drafted by one Party or another, or its attorneys, and shall not be construed more strongly against any Party.
15.    Section 409A. To the extent applicable, this Agreement shall be interpreted in accordance with the applicable exemptions from Section 409A of the Internal Revenue Code (the “Code”). To the extent that any provision of the Agreement is ambiguous as to its compliance with Section 409A of the Code, the provision shall be read in such a manner that no payments payable under this Agreement shall be subject to an “additional tax” as defined in Section 409A(a)(1)(B) of the Code. Each series of installment payments made under this Agreement is hereby designated as a series of “separate payments” within the meaning of Section 409A of the Code. Any reimbursement of expenses or in-kind benefits payable under this Agreement shall be made in accordance with Treasury Regulation Section 1.409A-3(i)(1)(iv) and shall be paid on or before the last day of Advisor’s taxable year following the taxable year in which Advisor incurred the expenses. The amount of expenses reimbursed or in-kind benefits payable during any taxable year of Advisor’s will not affect the amount eligible for reimbursement or in-kind benefits payable in any other taxable year of Advisor’s, and Advisor’s right to reimbursement for such amounts shall not be subject to liquidation or exchange for any other benefit.
[Signature Page Follows]


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IN WITNESS WHEREOF, the Parties have executed this Agreement as of the date first set forth above.

COMPANY

FIVE POINT OPERATING COMPANY, LP, a Delaware limited partnership

By: /s/ Lynn Jochim    ______________________________
Name:     Lynn Jochim            
Title:    Chief Operating Officer    



ADVISOR

/s/ Emile Haddad _______________________________
Emile Haddad, an individual




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EXHIBIT A

FEE SUMMARY:

Annual Retainer:
Annual retainer in the amount of Five Million Dollars ($5,000,000.00), which shall be payable monthly as provided below.

Manner & Timing of Payment of
Compensation:
The annual retainer will be paid in monthly installments of Four Hundred Sixteen Thousand Six Hundred Sixty-six Dollars and Sixty-six Cents ($416,666.66) per month, payable in advance on the first day of each month during the term (or extended term) of this Agreement, provided that the payment for the first month (or partial month, if applicable) of the term of this Agreement shall be due and payable within fifteen days of the mutual execution and delivery of this Agreement. The monthly retainer shall be prorated for any partial month during the term of this Agreement.

Submission of Invoices:
Mail/Deliver Hard Copy to:
Five Point Operating Company
Attention: Accounts Payable
2000 FivePoint, 4th Floor
Irvine, CA 92618

EQUITY AWARD SUMMARY:

Equity Awards:
During the term of this Agreement, Advisor’s equity awards granted by FPH (including, for the avoidance of doubt, the award described in Section 1(c)(iii) of the Transition Agreement) shall continue to vest in accordance with the terms of the award agreements and the Equity Plan (the “Equity Plan Documents”) pursuant to which such equity awards were issued. In addition, notwithstanding anything to the contrary in the Equity Plan Documents, from and after the Effective Date (A) except as modified

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herein, Advisor’s unvested equity awards shall continue to vest during the term of his services pursuant to this Agreement in accordance with the terms of the Equity Plan Documents, subject to accelerated vesting during the term of this Agreement as provided in Section 4 above, (B) all references to Advisor’s “employment” in the Equity Plan Documents shall instead be references to Advisor’s “service” under this Agreement and all references to Advisor’s “termination of employment” shall instead be references to Advisor’s “termination of service” as a senior advisor pursuant to this Agreement (and similar and correlative terms will have like meanings), and (c) the terms “Cause” and “Good Reason” for purposes of the Equity Plan Documents with Advisor shall have the meanings given to such terms in this Agreement. The Equity Plan Documents governing Executive’s equity awards are hereby amended to be consistent with the foregoing.

For the avoidance of doubt, the Parties acknowledge and agree that neither the execution of this Agreement nor Advisor’s termination of employment on the Effective Date will result in any accelerated vesting of any of Advisor’s equity awards.


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Exhibit 31.1
CERTIFICATION PURSUANT TO
RULES 13a14(a) AND 15d14(a) UNDER THE SECURITIES EXCHANGE ACT OF 1934,
AS ADOPTED PURSUANT TO SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002
I, Lynn Jochim, certify that:
1.    I have reviewed this quarterly report on Form 10-Q of Five Point Holdings, LLC;
2.    Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
3.    Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
4.    The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a15(e) and 15d15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
(a)Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
(b)Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
(c)Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
(d)Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and
5.    The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):
(a)All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
(b)Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.
Date: November 4, 2021 /s/ Lynn Jochim
Lynn Jochim
President and Chief Operating Officer
(Principal Executive Officer)



Exhibit 31.2
CERTIFICATION PURSUANT TO
RULES 13a14(a) AND 15d14(a) UNDER THE SECURITIES EXCHANGE ACT OF 1934,
AS ADOPTED PURSUANT TO SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002
I, Erik Higgins, certify that:
1.    I have reviewed this quarterly report on Form 10-Q of Five Point Holdings, LLC;
2.    Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
3.    Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
4.    The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a15(e) and 15d15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
(a)Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
(b)Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
(c)Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
(d)Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and
5.    The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):
(a)All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
(b)Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.
Date: November 4, 2021
/s/ Erik Higgins
Erik Higgins
Chief Financial Officer and Vice President
(Principal Financial and Accounting Officer)



Exhibit 32.1
CERTIFICATION PURSUANT TO
18 U.S.C. SECTION 1350, AS ADOPTED PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002
In connection with the Quarterly Report of Five Point Holdings, LLC (the “Company”) on Form 10-Q for the period ended September 30, 2021 as filed with the Securities and Exchange Commission on the date hereof (the “Report”), the undersigned certifies, pursuant to 18 U.S.C. § 1350, as adopted pursuant to § 906 of the Sarbanes-Oxley Act of 2002, that to the best of her knowledge:
(1) The Report fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934; and
 
(2) The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.
Date: November 4, 2021 /s/ Lynn Jochim
Lynn Jochim
President and Chief Operating Officer
(Principal Executive Officer)
 
 A signed original of this written statement as required by Section 906 has been provided to the Company and will be retained by the Company and furnished to the Securities and Exchange Commission or its staff upon request.
 


Exhibit 32.2
CERTIFICATION PURSUANT TO
18 U.S.C. SECTION 1350, AS ADOPTED PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002
In connection with the Quarterly Report of Five Point Holdings, LLC (the “Company”) on Form 10-Q for the period ended September 30, 2021 as filed with the Securities and Exchange Commission on the date hereof (the “Report”), the undersigned certifies, pursuant to 18 U.S.C. § 1350, as adopted pursuant to § 906 of the Sarbanes-Oxley Act of 2002, that to the best of his knowledge:
(1) The Report fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934; and
 
(2) The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.
Date: November 4, 2021 /s/ Erik Higgins
Erik Higgins
Chief Financial Officer and Vice President
(Principal Financial and Accounting Officer)
 
 A signed original of this written statement as required by Section 906 has been provided to the Company and will be retained by the Company and furnished to the Securities and Exchange Commission or its staff upon request.