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Five Point Holdings, LLC Class A (NYSE:FPH)
Q2 2020 Earnings Call
Aug 13, 2020, 5:00 p.m. ET

Contents:

  • Prepared Remarks
  • Questions and Answers
  • Call Participants

Prepared Remarks:


Operator

Good day, everyone. Welcome to the Five Point Holdings second-quarter 2020 conference call. [Operator instructions] As a reminder, this conference call is being recorded. Today's conference may include forward-looking statements regarding Five Point's business, financial conditions, operations, cash flow, strategy, and prospects.

Forward-looking statements represent only Five Point's estimates on the date of this conference call and are not intended to give any assurance as to the actual future results. Because forward-looking statements relate to matters that have not yet occurred, these statements are inherently subject to risks and uncertainties. Many factors could affect future results and may cause Five Point's actual results or activities to differ materially from the activities and results anticipated in forward-looking statements. These factors include those described in today's press release and Five Point's SEC filings, including those in the Risk Factors section of the most recent annual report on Form 10-K and quarterly report on Form 10-Q filed with the SEC.

Please note that Five Point assumes no obligation to update any forward-looking statements. And now, I'd like to turn the call over to Mr. Emile Haddad, chairman and CEO of Five Point. Please go ahead, sir.

Emile Haddad -- Chairman and Chief Executive Officer

Thank you very much, operator. Hello, everyone, and I hope that as we have this call, everyone on your side is healthy and safe. Our last earnings call on May 21, we shared with you that the company had implemented a COVID-19 contingency plan, which was focused on preserving our strong liquidity position. The levers that we pull on to do so are: one, an ability to shut down two-thirds of our operational expenditures on short notice; and two, that 50% of our employment-related G&A costs are discretionary.

In May, we shared that in light of the uncertainty at that time, we had shut down all land development activities, except those needed to support our existing builders. We did that, assuming the economic conditions were going to hold land acquisitions by brokers. We also shared that we have started seeing home sales go back to a pre-COVID-19 level at the Great Park, but we didn't have enough data to draw any clear conclusions. The good news is that, today, we can look back and see a very consistent sales base over the 12 weeks since our last call.

The median number of home sales in the first quarter was 10 sales per week. In the second quarter, it was 8 sales per week. And, so far, this quarter, it has been 12 sales per week. I am sure that most of you have seen the strong reporting of sales from the public builders.

We see the positive sentiment of builders reflected in the engagement we have with them on purchasing homesites in Valencia. We also see it in the continuation of construction by our existing guest builders. In addition, the feedback we are hearing is that many homebuyers, as a result of COVID-19, are making the move to lower-density communities with extensive open space and trails and close proximity to employment and major healthcare facilities, thus making our communities very attractive. On the last call, we also shared with you the sale of 70 homesites in Valencia, which is reflected in our second-quarter financials.

The sale, as reported, included a portion of the purchase price payable through seller financing that comes due in December 2020. Last week, the builder chose to payoff over 90% of the seller financing much earlier than the due date. Today, we closed the sale of the two Broadcom buildings at the Five Point Gateway Campus. We -- when we announced the sale on June 26, the Orange County business terminal reported that this sale was a new high in terms of price per square foot at $537 per square foot versus previous highs in the $400s per square foot.

Similar to other transactions, we retained the right to repurchase the buildings if the buyer decides to exit in the future. If you recall, that's how we repurchased the campus from Broadcom. Our vision of building fully integrated multi-generational communities with world-class sports and entertainment amenities, as well as excellent public schools has not only attracted homebuyers but now investors and users of commercial space, all of whom can see the accretion and value that is created by the synergy of the live, work, play, learn, and connect elements. Previously, I mentioned that I have been asked to serve on the government's task force on business and job recovery.

I am serving as a co-chair of the Finance and Infrastructure Committee and can tell you that housing has been identified as a top priority as the lack of housing supply in our markets has not changed, and if anything, has only gotten worse as a result of COVID-19. This month, we launched our new website at fivepoint.com. If you have time at home, we encourage you to explore the site. It is a good tool to understand the company's strategy and its approach to community building.

Finally, I hope that you stay healthy and that the positive trend we are seeing continues. Until the visibility of the road ahead is clearer, we will keep one foot on the accelerator and one foot on the break. Thank you.

Erik Higgins -- Chief Financial Officer and Vice President

Thanks, Emile. This is Erik. Our 10-Q was submitted on August 7, and a summary of our financial results was included in the earnings release issued earlier today. I'll start with our consolidated results, and then address each of our four segments and conclude with comments about our balance sheet and liquidity position.

The company's consolidated revenues for the second quarter totaled $24.3 million and primarily consisted of a land sale at Valencia generating $17 million and recognition of revenue generated from management services. We recognized $23.9 million in earnings from our two joint ventures, including earnings of $28 million from our 75% interest in the Gateway Commercial Venture. Total consolidated costs and expenses were approximately $34.3 million, including $11.9 million in cost of sales related to the land sale at Valencia and $16.3 million of selling, general and administrative expenses for the quarter. Net income for the quarter was approximately $14.2 million, of which $7.6 million was allocated to the noncontrolling interests, leaving $6.6 million attributable to the company.

Moving to the segments. The Valencia segment is consolidated for accounting purposes. Revenues for the Valencia segment were $17.9 million, primarily related to the closing of 70 homesites during the quarter for a base purchase price of $16.6 million. The sale generated a 30% gross margin and was structured with a 10% cash payment and a $14.9 million note due in December of 2020.

As Emile mentioned, the note was reduced by approximately $13.9 million during the third quarter prior to the maturity date. The Valencia segment income for the quarter was $1.7 million. The San Francisco segment is also consolidated for accounting purposes. The San Francisco segment's net loss for the quarter was $2.5 million, which was primarily SG&A expenses.

The Great Park segment includes operations of the Great Park Venture, the owner of the Great Park Neighborhoods as well, as management services provided by the management company to the Great Park Venture. As a reminder, we owned 37.5% of the nonlegacy percentage interest of the Great Park Venture and 100% of the management company. The Great Park Venture is an unconsolidated entity, with our investment in the venture accounted for under the equity method of accounting. For summary reporting, we include the full results of the Great Park Venture at the venture's historical basis of accounting.

The Great Park Venture is a self-funding operation with no debt. The Great Park segment revenues were $6.8 million in the second quarter, consisting primarily of revenue recognized under the management agreement. The second-quarter net loss for the Great Park segment totaled $10.2 million, consisting of $1.8 million of net income related to the management company and a loss of $12 million for the Great Park Venture operations. The company recognized a loss of $4.1 million on its investment in the Great Park Venture, which includes our share of the Great Park Venture's loss.

Our commercial segment includes operations of the Gateway Commercial Venture and management services provided by the management company to the Gateway Commercial Venture. We own 75% of the Gateway Commercial Venture and 100% of the management company. The Gateway Commercial Venture is an unconsolidated entity, with our investment in the venture accounted for under the equity method of accounting. For segment reporting, we include the full results of the Gateway Commercial Venture at the venture's historical basis of accounting.

The Commercial segment income was $37.4 million for the quarter, primarily related to the sale of 11 acres and a 189,000 square-foot building to City of Hope. The real estate was sold for $108 million. The company recognized approximately $28 million of income on its investment in the Gateway Commercial Venture. The Gateway Commercial Venture made a $75 million cash distribution to its members during the quarter, of which 5.75% share was $56.3 million.

As Emile mentioned, today, the Gateway Commercial Venture sold two buildings currently occupied by Broadcom for $355 million. We expect the venture to make a cash distribution of approximately $100 million in connection with the sale, of which 75% will be distributed to Five Point. When combining this sale with the City of Hope and excess entitlement sale, the ventures generated approximately $481 million compared to the venture's $443 million acquisition price in 2017. The venture and its members have recovered the initial investment and the venture still owns one of the four buildings on the campus and development rights for future expansion.

I'll wrap it up with a few comments related to our balance sheet and our liquidity position. As of June 30, 2020, total liquidity was approximately $339.7 million, which is comprised of cash and cash equivalents totaling $215 million, and borrowing capacity of $124.7 million under our unsecured revolving line of credit. Our balance sheet is solid with a debt-to-total-capital ratio of 25.4%. With that, I'll turn it back to the operator who will now open it up for questions.

Questions & Answers:


Operator

[Operator instructions] Our first question will come from Alan Ratner with Zelman & Associates.

Alan Ratner -- Zelman and Associates-Analyst

Hey, guys. Good afternoon. Great to hear you guys are all doing well, and congrats on all the progress, especially on the commercial side this quarter. First question on Valencia.

I believe, last quarter, you mentioned that you guys kind of were halting the land development but still had about 500 lots that were either developed or pretty close to fully developed that you could sell if demand pick back up, and it certainly seems like it has. So just curious if you can give us an update. Is development activity back on in Valencia? And do you expect to sell those 500 lots by year-end?

Emile Haddad -- Chairman and Chief Executive Officer

Hey, Alan. Glad to hear you are good as well, and thank you for your good wishes. Let me just make sure that -- I think we have numbers that might be mixed up. We have a little bit over 1,000 homesites, to be accurate 1,038 homesites in the first phase that we did the land development for.

And I think the 500 you were referencing was what I was guiding in 2019 as a potential number of homesites. If you recall, the demand was higher than we expected, and we ended up actually selling 781 homesites. And that left us with 257 homesites in terms of spending inventory. And I think the last time, when we had the call, I talked about the fact that we have had some interest from builders, notwithstanding the situation back in May.

And the good news is, today, we have multiple builders who are engaged with us. And whereas we talked about potentially selling the 257 in inventory, today, there's an interest in more than 400 homesites, which means that we will probably go beyond what's standing inventory and do some more land development to meet the demand. So those are -- that's where we are. It's actually really doing very well.

And I am happy to see that the builders are all very excited to be up in Valencia. So, the answer -- the simple answer to your question is we are going beyond what we have in standing inventory, and we will be moving forward in some more land development once we firm up these agreements with the builders.

Alan Ratner -- Zelman and Associates-Analyst

Got it. Yeah. Those numbers are matched up. I think I was just adding the 257, and I think you had given roughly another 200 or so that you mentioned you can move pretty quickly on.

So, I think we're talking the same thing here. But, in any case, just to clarify there. So, development, if I think about just from a cash flow perspective, things should be ramping back up pretty close to where they were pre-pandemic over the next quarter or two?

Emile Haddad -- Chairman and Chief Executive Officer

Well, I mean, look -- I mean, cash, we've been doing nothing, but keeping an eye on cash and liquidity since March 16. And as you can see, I mean, there's some opportunities on the cash that we were not contemplating such as the closing of the deal today. It's very hard to tell you and project forward because we are still in a very fluid market condition. And as much as we are optimistic, and we hope that things are going to stay, the four of us, the top four people are in the company every day, everybody else is remote.

And we really have a finger on the pulse real-time. So, I'm hoping that we will be back to the same market conditions, the same cash flows. But I think it would be a mistake for me to extrapolate today until we see a little bit more what's going to happen over the coming few months, especially as we head into an election season. And we all know that this is going to be a little bit of a turbulent election.

Alan Ratner -- Zelman and Associates-Analyst

Understood. Yeah. It will be interesting few months for sure. And then just on Great Park, maybe you can give us a quick update just on the next phase there.

I think we saw something about maybe you guys doing some fee building relationships there. So, I believe that's new. So, what's the update there if you can give us one?

Emile Haddad -- Chairman and Chief Executive Officer

Yeah. So, we are -- and thank you. We -- so in terms of the sales of homesites, what we do at the Great Park, and I think I went through the last time, is we measure on a weekly basis the velocity of sale and the burnout of each of the different product line. And we then start to dovetail the next type -- next sale of homesites to match the timing of when the buildout of a certain product that might be similar to something we're bringing to the market happens and, therefore, we don't create an overlap, which then starts creating downward pressure on pricing.

So, we, right now, in terms of homesite sales, we are not projecting any sales this year, but we're watching the velocity of sales. And as I said, we're seeing the higher median number of sales in the last few weeks. So, if we see that the -- actually the sales are accelerated, we have an ability to very quickly bring homesites online earlier than expected. In terms of the fee build, so here's what's happened.

We go to the builders now, and we have different multiple products, and we tell them what our price we're asking for is. And, in some cases, some builders might have a little bit of a resistance to a certain price of a -- of homesites of a certain product, and we're not going to discount our land. I mean, we've made it very clear that we are not going to be discounting our land. This is irreplaceable land.

So, if we find ourselves with a product that might not get the same type of appetite from builders, we will build it ourselves. And since we do not want to be a homebuilder, we have a very good relationship with The New Home Company. Larry has been a friend and knows this market extremely well. And as a result, he becomes our fee builder.

He doesn't have, really, the ability to buy as much as the publics can buy because of price of land that we sell at, but this gives them an ability to be in the marketplace in the market that he knows and gives us an ability to ultimately get the price per acre that we expect to get for a product that, you know, certain builders might not be as -- have the same conviction and has reason. And you're probably going to see this continue, you know, even in the Valencia because when we develop 10, 15 different product lines. And with the universe of builders shrinking with the consolidation, you know, it used to be that I used to go to 22 builders and almost every product will have somebody who would be willing to pay the price. But as you know, we don't have that number of builders today.

And some builders might say, I don't like this price, or the high-end might be concerning me or I'm worried that certain builders might press down on me. So we're willing to do that. We believe in our own product.

Alan Ratner -- Zelman and Associates-Analyst

I know I asked a bunch of questions, but maybe just -- I can hang up, and you can [Inaudible]

Emile Haddad -- Chairman and Chief Executive Officer

That's OK. That's OK.

Alan Ratner -- Zelman and Associates-Analyst

Just I'm curious how that might flow through your financials when that ultimately does come to fruition because is it just going to come in like a homebuilder P&L, revenue for the wholesales? Or is it -- or should we think about that differently?

Erik Higgins -- Chief Financial Officer and Vice President

No, it will come through just as homes we sold.

Alan Ratner -- Zelman and Associates-Analyst

Got it. OK. Perfect. Well, thanks a lot, guys.

Good luck with everything.

Erik Higgins -- Chief Financial Officer and Vice President

Stay safe.

Operator

Our next question comes from Truman Patterson with Wells Fargo.

Paul Przybylski -- Wells Fargo Securities -- Analyst

Hey, this is actually Paul Przybylski on. I guess, just kind of a bookkeeping question. First of all, how many lots do you have remaining at the Great Park?

Emile Haddad -- Chairman and Chief Executive Officer

I can give you the exact number, but I'm going to say we're probably about 4,000-ish. But as we're speaking, Lynn is going to look up for the exact number, and we'll tell you. But please -- I'm going to guess somewhere in the 4,000. But we'll get you the number.

Why don't you have another question by the time we answer that, we ,should have that numbers for you.

Paul Przybylski -- Wells Fargo Securities -- Analyst

OK. And then you mentioned the cash distribution from the Gateway sale this quarter, what type of gains are you expecting to book from that?

Erik Higgins -- Chief Financial Officer and Vice President

OK. So, on the sale that closed today, obviously, we still have to get through our accounting analysis and the transaction needs to be reviewed by our auditor. But I'd say, based on the purchase price and our initial analysis, the venture will probably recognize a, you know, $70 million to $75 million gain on our sale. And then 75% of that is Five Point.

Paul Przybylski -- Wells Fargo Securities -- Analyst

OK. That's good. And then more a theoretical question. The retail entertainment, you know, office environment has changed dramatically here over the past several months.

I guess, how do you -- I guess, look at your -- the commercial side of your business among, you know, the three projects? You know, and any kind of changes you might foresee in the future or the timing of bringing some kind of commercial projects to market?

Emile Haddad -- Chairman and Chief Executive Officer

Well, I mean, we -- way before COVID-19, we actually started pivoting more toward health-care-related commercial uses in each of the communities actually. And the City of Hope transaction was a great example of that. And then you're going to see more of that as happens. So, if anything, I would say, healthcare is going to become more in demand, both in terms of treatment as well as research.

In terms of the entertainment, obviously, things are on hold right now. We have some facilities where we're working with our partners at the City of Hope right now on doing the drive-in movie theater and working on activating some of the food and beverage as a delivery in outdoor. So, you know, we've been creative as everybody else. We don't have a big component of that.

We just look at it as an amenity. But I can tell you, I think that it is -- I said before, it will be a mistake for people to extrapolate from this moment and assume that, you know, the environment of social interaction or food and beverage and entertainment is not going to come back. As a matter of fact, I'm willing to bet that once people know that the virus is behind us, there's going to be such a huge pent-up demand for people to socialize. We're seeing it right now with people taking the risk.

But, if anything, the type of entertainment elements that we include in our communities is going to become even more of a demand. But in terms of the office, you know, we don't -- right now, we don't have anything on the drawing board for the office, except for healthcare. And I think that we'll see what happens and how employers and our employees and how consumers adjust their behavior as a result of this. And we'll see it.

But, again, the young generation is telling us something loud and clear. They're willing to take the risk because they cannot but socialize. And I think that, for that generation, the line is very blurry between social activities and work. I think, if anything, I think that the office space has become more of an interactive space.

But, again, let's wait and see what the end results looks like. But, for us, we are not making any changes, and we don't have anything that we have to really be concerned about.

Paul Przybylski -- Wells Fargo Securities -- Analyst

Perfect.

Emile Haddad -- Chairman and Chief Executive Officer

In terms of the number of homesites, we have about -- going back to your first question, we have about 4,500 homesites remaining.

Paul Przybylski -- Wells Fargo Securities -- Analyst

4,500. OK. And just quickly again, the absorption that you gave earlier in the call, those were just for Great Park, correct? Or are you actually – are those actually selling now at Valencia?

Emile Haddad -- Chairman and Chief Executive Officer

You're talking about the median numbers that I gave for sales?

Paul Przybylski -- Wells Fargo Securities -- Analyst

Yeah, the 10, 8 and 12.

Emile Haddad -- Chairman and Chief Executive Officer

Yeah, those are for the Great Park. We have not started selling homes yet in Valencia.

Paul Przybylski -- Wells Fargo Securities -- Analyst

OK. That's what I though. All right. Thank you.

I appreciate it.

Emile Haddad -- Chairman and Chief Executive Officer

Of course.

Operator

And next will be Michael Rehaut with JP Morgan. Again, go ahead sir. Your line is open for question.

Elad Hillman -- J.P. Morgan -- Analyst

OK. Sorry, sorry. Can you hear me now?

Operator

Yes, sir. We can.

Elad Hillman -- J.P. Morgan -- Analyst

Sorry. So, this is Elad coming on for Mike. So first, just congratulations on the sale of the two buildings, the Five Point Gateway Campus. I was wondering if you could provide some more details on the purchasers, the timing around the cash distributions and thought around any development plans for the last remaining building.

Emile Haddad -- Chairman and Chief Executive Officer

Yeah. About the -- you're coming in a little bit muffled, but I mean, just to make sure that I understood the question. Your question was, you wanted to get a little bit more clarity on the distribution of the cash as a result of the Broadcom closing? And you wanted to get a little bit more of a feel for additional development within the Five Point Gateway? Is that -- was that the question?

Elad Hillman -- J.P. Morgan -- Analyst

Yeah. Yeah.

Emile Haddad -- Chairman and Chief Executive Officer

OK. So, for the distribution, I think it's going to happen very quickly. I know that -- Erik, when do you expect the distribution to happen?

Erik Higgins -- Chief Financial Officer and Vice President

Probably within next month, like 30 days.

Emile Haddad -- Chairman and Chief Executive Officer

Yeah. So, this is something that's going to happen quickly. And this obviously adds to our strong liquidity, which, again, I mean, I think that every CEO in the country today, that's the No.1 thing that they're looking toward making sure that that the liquidity is in good position. In terms of the future, what we have right now, approvals for here is we have an ability to build, and we can adjust the uses.

We can build about 200,000 square feet of office, or we can build about 100,000 square feet of medical. Right now, I can tell you the thinking is to build a -- the medical. We have demand right now for all of the medical space, which will be very complementary to what we have in City of Hope. And we also can bring back entitlements from the project, the bigger project, the Great Park and enhance Gateway as we start looking ahead.

So in terms of near future, we are starting to work right now on planning of about the 95,000-square-foot facility that probably will be an outpatient surgery, spine, and imaging, and things like that, where we have a demand for that right now. And we have users who want to be there.

Elad Hillman -- J.P. Morgan -- Analyst

OK. Great. And my second question, I was just trying to understand a little bit better, you know, the sort of development plans and sales in Valencia for the second half of the year. You mentioned that there was interest from homebuilders for another 400 homesites.

You have 257 in inventory, another 230 largely completed. So, I'm just curious, like, what the hesitation is in terms of being able to potentially close more deals there in the second half of the year? You know, is it more just market uncertainty? Is it constraints from labor or anything else? Any other thoughts around Valencia?

Emile Haddad -- Chairman and Chief Executive Officer

No, we don't have any constraints from labor. And the thing that I think we look at is making sure that we structure a deal that is -- it's our price that we would like to see and puts the builders in a position to be comfortable as they execute the furlough. And, today, I mean you have builders who have more of an interest in a cash acquisition. Some builders are -- have relationships with land banks.

Others are looking for takedowns. Some are looking for some type of rolling option. And the good news for us is we can do any of those. And those are the discussions we're having right now with the different builders.

And we'll pick the builders that we feel optimize the value for the community and for us. So, you know, we're not under any pressure to do anything by year-end. And all these discussions will end up being concluded based on what makes sense for us and what makes sense for the business. So, in some cases, we will pick somebody who might say, I'm willing to pay a cash price.

In some cases, we'll be very happy to do more of a term-type of a deal, or even include some of these acquisitions in some of our relationship with land banks for those who might want the land bank. So, the answer is the safer call for us is irreplaceable land that we've worked on for two decades to get here. And we are not going to go ahead and do something that discounts that plan and disrupts the pricing structure for those who have already made a commitment from the builders' community to those because we were not doing any builders any service. And the good news is we have the cash and the liquidity to be able to do that.

Elad Hillman -- J.P. Morgan -- Analyst

Very interesting. OK. Thank you.

Emile Haddad -- Chairman and Chief Executive Officer

Sure.

Operator

[Operator instructions] Our next question will come from Steve Kim with Evercore ISI.

Steve Kim -- Evercore ISI -- Analyst

Yeah. Thanks a lot, guys. Appreciate all the colors so far. A couple of -- I've got a few scattered ones here, but just generally, to start off at a higher level, Emile, you talked about the strength of the market, I believe, being fluid was the word you used.

And, you know, as a result, you didn't want, you know, to extrapolate demand too confidently into the next few months, which is understandable. But I wanted to clarify, have you actually seen volatility in your week-to-week demand traffic, that kind of stuff? Or is it -- or has it been very steady and strong, but you're just overlaying a dose of conservatism?

Emile Haddad -- Chairman and Chief Executive Officer

No, we have not seen volatility in our markets. What I have seen is a, you know, more of a psychological reaction to numbers that are coming out on the virus and people who are talking about second wave and third wave and things like that. People are talking about, you know, economy. So, this is not feedback I'm getting from our builders or the buyers.

This is me looking and saying, if I am a buyer and I keep on hearing from people that the economy is going to be bad or that we have a second wave, I might hesitate. And you couple that with a -- we're two and a half months away from what appears to be a very polarized election. In a market like ours, where a lot of our buys are the specialty, and they have the ability to wait. I am very cautious about saying that because I've seen great five, six weeks before that, that trend might continue into the eye of the storm of what could be an overlap of the second wave with the election.

I'm a very cautious person about these things, and I watch them. That's where it's coming from, Steve.

Steve Kim -- Evercore ISI -- Analyst

Yup. Yeah, that's what I figured. Yes, sort of asymmetric risk when you're a large land holder like you guys are. So, I get it.

That makes perfect sense. I just want to make sure it was squaring with what we were seeing because we had not seen, you know, any kind of volatility, it's just been uproariously strong thus far. So, I just wanted to clarify that. Following on, can you speak to how pricing has been progressing, you know, at Great Park? Have you seen any ability to have an upward inflection in pricing recently?

Emile Haddad -- Chairman and Chief Executive Officer

You know, in all kinds, I have not -- in all kinds, I have not followed carefully price movement the way I would follow it in a more stable market. It's been more looking at what we've seen from the builders in terms of number of sales, the quality of the buyers, and their ability to qualify and close, but we haven't heard anything in terms of price decline. But I would -- I'm going to bet that it's probably more flattish in the last five, six weeks. I think builders are more focusing on making the sale rather than tied to the suppliers 3% or 4% up.

Steve Kim -- Evercore ISI -- Analyst

Yeah. OK. And then with respect to -- in Gateway, I think you -- in addition to 100 -- well, let's actually talk about 100 square feet of medical space that you say that can additionally be developed. I'm curious if -- as we think about the high valuation you got per square foot for the more recent one, I'm curious, are there certain trends in labs or other aspects of the healthcare demand such that you're going to see a particularly strong premium for new build? Just wondering whether or not there's just sort of some emerging trends there on the healthcare side such that retro fitting space is not really conducive in the same way that moving into a new space like you could offer would be.

Emile Haddad -- Chairman and Chief Executive Officer

Well, Steve, I tell you, you've heard me say that many, many -- for many years. I think what we're seeing and what we're hearing is that people who are looking at office right now, whether it's healthcare or whether it is RMV, are not only looking at a building. They're looking at what else can they provide to attract talent. And that's why we have focused for so many years on building the communities we build, where, today, if you're building a medical facility over here, you have housing, you have public education, you have open-space fields, everything else.

I think it's the synergy, as I said, of all these elements coming together, it's what's driving the premium. And I think that's what we are hearing is that when people are looking at our office building, they're not looking at the office building, they're looking at the community itself and the fact that they live in a community that has all this access. And, therefore, they can attract the talent that they want to attract the talent that they want to attract.

Steve Kim -- Evercore ISI -- Analyst

Yeah. Makes perfect sense. Sure. And then, lastly, I think you alluded to the fact that there was some remaining acreage.

And I just wanted to get some clarity around -- in addition to the 100-square-foot of medical space that you can develop, is there a certain amount of acreage that could also, at some point, be subject to future development rights?

Emile Haddad -- Chairman and Chief Executive Officer

Sure. So, let me just remind you that when we sold the land to Broadcom, we sold it with entitlements of 2 million square feet, and the first million was the first phase that Broadcom built with the idea that they're going to build another a million square feet. And that's when they were thinking this was going to be the headquarters. So obviously, we have the ability to build 2 million-plus square feet.

So far, that's only about a million square feet. So, the answer to your question is, if we decide to intensify the land that we exist within the Five Point Gateway, we can add probably 100 million square feet over here easily and build it here. So, it's something that we have the ability to do.

Steve Kim -- Evercore ISI -- Analyst

Got it. OK. That's very helpful. Great.

I think that was what I needed. OK. Thanks a lot, guys. Congrats.

Emile Haddad -- Chairman and Chief Executive Officer

Thank you, Steve. Stay healthy.

Operator

That does conclude the question-and-answer session. I'll now turn the conference back over to Mr. Haddad for any additional or closing remarks.

Emile Haddad -- Chairman and Chief Executive Officer

Well, I want to thank everyone for dialing in. I just want to make sure that we correct one number that we gave on the remaining number of homesites going. It turns out that I was right with 4,000 and Lynn was wrong with 4,500. So, it's 4,000 onsites.

Just to make sure that at least the record is clear. I hope that we will have another call when everybody is healthy. And, again, we are always available for any type of discussions you guys all might want to have after the call is over. So, appreciate you dialing in.

Please stay healthy until the next quarter. Thank you.

Operator

[Operator signoff].

Duration: 44 minutes

Call participants:

Emile Haddad -- Chairman and Chief Executive Officer

Erik Higgins -- Chief Financial Officer and Vice President

Alan Ratner -- Zelman and Associates-Analyst

Paul Przybylski -- Wells Fargo Securities -- Analyst

Elad Hillman -- J.P. Morgan -- Analyst

Steve Kim -- Evercore ISI -- Analyst

More FPH analysis

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