Segment Reporting

12 Months Ended

Dec. 31, 2019

SEGMENT REPORTING

The Company’s reportable segments consist of:

• Valencia (formerly Newhall)—includes the community of Valencia (formerly known as Newhall Ranch) planned for development 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 in addition to ancillary operations of operating properties.

• 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 in addition to management services provided to affiliates of a related party.

• Great Park—includes 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 December 31, 2019, 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 acquisition date. The Great Park segment derives revenues from the sale of residential and commercial land sites to homebuilders, commercial developers and commercial buyers, and management services provided by the Company to the Great Park Venture.

• Commercial—includes Five Point Gateway Campus, an office and research and development campus within the Great Park Neighborhoods, consisting of four newly constructed buildings. Two of the four buildings are leased to one tenant under a 20-year triple net lease which commenced in August 2017. The Company and a subsidiary of Lennar have entered into separate 130-month full service gross leases to occupy a portion of the other two buildings. This segment also includes property management services provided by the Management Company to the Gateway Commercial Venture, the entity that owns the Five Point Gateway Campus. As of December 31, 2019, 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.

Segment operating results and reconciliations to the Company’s consolidated balances are as follows:



	For the year ended December 31, 2019
	(in thousands)
	Valencia			San Francisco			Great Park			Commercial			Total reportable segments			Removal of Great Park Venture (1)			Removal of Gateway Commercial Venture (1)			Add investment in Great Park Venture			Add investment in Gateway Commercial Venture			Other eliminations (2)			Corporate and unallocated (3)			Total Consolidated
Revenues	$	143,190		$	3,995		$	307,843		$	34,479		$	489,507		$	(270,970	)	$	(34,157	)	$	—		$	—		$	—		$	—		$	184,380
Depreciation and amortization	286			215			15,567			15,100			31,168			—			(15,100		)	—			—			—			740			16,808
Interest income	1			—			3,489			—			3,490			(3,489		)	—			—			—			—			7,843			7,844
Interest expense	—			—			—			16,892			16,892			—			(16,892		)	—			—			—			—			—
Segment profit (loss)/net profit (loss)	25,780			49,890			44,369			(4,818		)	115,221			(34,886		)	5,140			6,182			(3,855		)	—			(65,534		)	22,268
Other significant items:
Segment assets	748,082			1,197,081			1,356,417			473,409			3,774,989			(1,196,258		)	(473,398		)	431,835			101,404			(8,310		)	374,438			3,004,700
Inventory assets and real estate related assets, net	703,587			1,186,174			870,861			451,988			3,212,610			(870,861		)	(451,988		)	—			—			—			—			1,889,761
Expenditures for long-lived assets (4)	241,410			49,421			(9,487		)	2,924			284,268			9,487			(2,924		)	—			—			—			1,808			292,639

	For the year ended December 31, 2018
	(in thousands)
	Valencia			San Francisco			Great Park			Commercial			Total reportable segments			Removal of Great Park Venture (1)			Removal of Gateway Commercial Venture (1)			Add investment in Great Park Venture			Add investment in Gateway Commercial Venture			Other eliminations (2)			Corporate and unallocated (3)			Total Consolidated
Revenues	$	6,401		$	6,010		$	210,779		$	28,069		$	251,259		$	(175,689	)	$	(26,580	)	$	—		$	—		$	—		$	—		$	48,990
Depreciation and amortization	271			287			12,456			11,730			24,744			—			(11,730		)	—			—			—			210			13,224
Interest income	1			—			2,815			—			2,816			(2,815		)	—			—			—			—			11,766			11,767
Interest expense	—			—			—			11,563			11,563			—			(11,563		)	—			—			—			—			—
Segment profit (loss)/net profit (loss)	(6,802		)	(18,060		)	15,211			(187		)	(9,838		)	(3,068		)	1,676			(906		)	(1,257		)	—			(54,552		)	(67,945		)



Other significant items:
Segment assets	596,222			1,151,372			1,303,362		479,662		3,530,618		(1,154,216		)	(478,956		)	425,653		107,246		(730		)	494,277		2,923,892
Inventory assets and real estate related assets, net	559,126			1,136,958			1,059,717		464,123		3,219,924		(1,059,717		)	(464,123		)	—		—		—			—		1,696,084
Expenditures for long-lived assets (4)	198,008			73,177			109,292		27,030		407,507		(109,292		)	(27,030		)	—		—		—			2,354		273,539

	For the year ended December 31, 2017
	(in thousands)
	Valencia			San Francisco			Great Park		Commercial		Total reportable segments		Removal of Great Park Venture (1)			Removal of Gateway Commercial Venture (1)			Add investment in Great Park Venture		Add investment in Gateway Commercial Venture		Other eliminations (2)			Corporate and unallocated (3)		Total Consolidated
Revenues	$	31,568		$	91,187		$	497,173	$	9,682	$	629,610	$	(480,934	)	$	(9,245	)	$	—	$	—	$	—		$	—	$	139,431
Depreciation and amortization	553			316			—		4,504		5,373		—			(4,504		)	—		—		—			185		1,054
Interest income	3			—			2,226		—		2,229		(2,226		)	—			—		—		—			2,574		2,577
Interest expense	—			—			—		3,628		3,628		—			(3,628		)	—		—		—			—		—
Segment profit (loss)/net profit (loss)	(12,358		)	(19,268		)	42,219		458		11,051		(36,061		)	(21		)	5,760		16		—			43,451		24,196
Other significant items:
Segment assets	444,407			1,123,266			1,578,142		456,292		3,602,107		(1,447,604		)	(456,006		)	423,492		106,516		(80,890		)	830,740		2,978,355
Inventory assets	361,943			1,063,949			1,089,513		448,795		2,964,200		(1,089,513		)	(448,795		)	—		—		—			—		1,425,892
Expenditures for long-lived assets (4)	84,024			62,188			311,932		446,072		904,216		(311,932		)	(446,072		)	—		—		—			1		146,213

(1) Represents the removal of the Great Park Venture’s and Gateway Commercial Venture’s operating results and balances that are included in the Great Park segment and Commercial segment operating results and balances, respectively, but are not included in the Company’s consolidated results and balances.

(2) Represents intersegment balances that eliminate in consolidation.

(3) Corporate and unallocated activity is primarily comprised of corporate general, and administrative expenses and income taxes. Corporate and unallocated assets consist of cash and cash equivalents, receivables, ROU assets, prepaid expenses and deferred equity and financing costs.

(4) Expenditures for long-lived inventory assets are net of cost reimbursements and include noncash project accruals and capitalized interest. For the year ended December 31, 2019, Great Park Venture’s expenditures include $127.0 million in inventory cost reimbursements.

A land banking entity represented one of the Company’s major customers during the year ended December 31, 2019 and accounted for approximately $139.9 million or 76%, respectively, of total consolidated revenues. The $139.9 million relates to revenues generated from homesites sold in Valencia. A related party of the Company has retained the option to acquire these homesites in the future from the land banking entity. Lennar and several of its affiliates represented one of the Company’s major customers for the year ended December 31, 2017 and accounted for approximately $93.4 million or 67%, respectively, of total consolidated revenues. These revenues represented land sales and management services revenues, and were reported in the Valencia and San Francisco segments. The Great Park Venture represented another of the Company’s major customers for the years ended December 31, 2019, 2018 and 2017, and accounted for approximately $36.9 million or 20%, $35.1 million or 72%, and $16.2 million or 12%, respectively, of total consolidated revenues. These revenues represented management services revenues and were reported in the Great Park segment.