FivePoint slashes workforce 29%, posts $37M loss
OC-based developer expects to pay out $19.4 million for executive management restructuring
FivePoint Holdings announced a wave of layoffs earlier this year. Now the developer of big projects in Orange County, Los Angeles and the Bay Area has cut one in three workers, according to regulatory filings..
The Irvine-based company recently disclosed that it has laid off 29 percent of its workforce since January, both to trim costs and optimize day-to-day operations, executives said during an earnings call, the San Francisco Business Times reported.
The company, which had recently purged its C-suite, vowed this spring to “do more with less.” At the end of last year, it had 160 workers, according to its SEC filing. This year’s cuts would leave it with 114.
The layoffs took place largely at the end of the first quarter, interim Chief Financial Officer Leo Kij said during the earnings call, for which it paid out $900,000 in severance benefits.
The publicly traded firm posted a net loss of $36.8 million in the quarter. It expects to see a reduction of $9 million a year to its payroll costs as a result of the layoffs, he said.
The company has an extensive pipeline of projects across California.
In Southern California, it aims to build 10,000 homes in the Great Park Neighborhoods in Irvine and 21,000 homes in FivePoint Valencia in Santa Clarita, north of Los Angeles.
In the Bay Area, FivePoints is redeveloping San Francisco’s Hunters Point Shipyard, a former Navy shipyard, and rebuilding nearby Candlestick Point, which once housed Candlestick Park.
The retrenchment has cost FivePoints millions of dollars in severance and management restructuring payments. It didn’t close any land sales during the quarter.
FivePoint reported $16.8 million in selling, general and administrative expenses. And it incurred another $19.4 million in costs related to executive management restructuring, according to the business journal.
The company expects to pay out a combined $15.5 million in future retainer payments to former President and CEO Emile Haddad and former President and Chief Operating Officer Lynn Jochim, it said.
Haddad stepped back to become a senior adviser in August 2021, and Jochim, who was appointed the company’s dual president and COO in the wake of Haddad’s transition, stepped back from those two titles early this year, also to serve in an advisory capacity.
The company named Dan Hedigan its new CEO in February.
Kij, who was brought on as the developer’s interim CFO after the resignation of predecessor Erik Higgins in January, said the company’s San Francisco projects suffered a combined $700,000 loss for the first quarter.
FivePoint is pushing ahead with its 10,000-home Great Park Neighborhoods in Irvine, with houses planted in a half dozen different neighborhoods, as well as athletic and other facilities.
Its FivePoint Valencia in the Santa Clarita Valley, formerly called Newhall Ranch, has been decades in the making. It is slated to include 21,000 homes and 11.5 million square feet of commercial space.
In the Bay Area, FivePoint has been embroiled in a legal fight related to the release of toxic pollutants at Hunters Point Shipyard, where FivePoints plans to build 3,500 homes, 4.2 million square feet of commercial space and 656,000 square feet of retail and entertainment space. The project was halted in 2018 on concerns about the environmental cleanup of the site.
Last month, a federal judge approved a $6.3 million settlement between homeowners and developers, including FivePoint.
[San Francisco Business Times] – Dana Bartholomew