Five Point Holdings, which laid off a fifth of its workforce five months ago, lost $11 million in the second quarter without closing any land sales in Irvine.
The Irvine-based developer of the 10,500-home Great Park Neighborhoods in Orange County and FivePoint Valencia in Santa Clarita, cut expenses by 34 percent compared to the same period last year, the Orange County Business Journal reported.
The company known as FivePoint acknowledged challenges in the housing market caused by inflation and rising interest rates, but said it will move ahead with land sales expected to close later this year.
Builders sold 37 homes at Great Park Neighborhoods during the second quarter, down from 94 homes in the first quarter.
Dan Hedigan, CEO of FivePoint, attributed the slip to a limited inventory of homes for sale at its two for-sale communities. They include Rise, which has 22 homes remaining to be sold, and the just-sold Solis Park subdivision, both in Irvine, according to the Business Journal.
The slump comes five months after Hedigan, appointed CEO in early April, laid off 31 workers while saying he aimed “to do more with less.”
In the C-suite shakeup last spring, Hedigan replaced FivePoint founder Emile Haddad, who had stepped aside as chief executive and executive chairman last fall and took the title of chairman emeritus. The company also lost its president and chief operating officer, as well as its chief financial officer.
FivePoint, a spinoff of Lennar Corp., is building Great Park Neighborhoods, envisioned two decades ago as the “Central Park of the West Coast.” The project is redeveloping the former 4,700-acre El Toro air base into a public park with plans for a master community to include more than 10,000 homes.
The company is also moving forward on developing FivePoint Valencia in the Santa Clarita Valley. Formerly called Newhall Ranch, the 12,000-acre project calls for 21,000 new homes in north Los Angeles County.
During his second earnings call as CEO, Hedigan discussed how the company aims to “continue our work on development plans for the 23 million square feet of planned commercial opportunities in our three communities, with an active focus on Great Park and Valencia.”
FivePoint is working with brokerage CBRE Group to determine how to sell “large contiguous blocks of land” for commercial developers for a variety of uses, he said.
Last month, the company unveiled the first phase of its partnership with City of Hope, which paid FivePoint $108 million last year for the office building and land for its new Irvine campus. The Duarte-based cancer center broke ground last week on a $1 billion hospital in Orange County.
Heddigan said Great Park Neighborhoods counts some 200 acres of land available for commercial development, “and industrial properties today in parts of Southern California are going between $5 million and $7 million an acre.”
— Dana Bartholomew
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