Five Point to acquire controlling stake in Hearthstone venture

IRVINE, Calif. - Five Point Holdings, LLC (NYSE:FPH), which has delivered an impressive 83% return to investors over the past year according to InvestingPro data, announced today it has entered into a definitive agreement to acquire a 75% controlling interest in a newly formed entity that will include substantially all of Hearthstone, Inc.’s business operations.

The new entity, Hearthstone Residential Holdings, LLC, will continue to provide capital solutions to the U.S. homebuilding industry. Entities affiliated with Hearthstone’s Founder and CEO Mark Porath will retain the remaining 25% ownership stake. Five Point Holdings approaches this acquisition from a position of financial strength, with InvestingPro data showing the company maintains a healthy current ratio of 69.3 and operates with moderate debt levels.

Founded in 1992, Hearthstone manages over $2.6 billion in assets and has funded more than 173,000 homes and lots totaling approximately $21 billion in investments across about 750 transactions. The company offers land banking programs, joint venture financing, and advisory services to homebuilders and financial institutions.

"This acquisition will create new revenue streams for Five Point, while connecting us to a broader network of capital providers and strengthening our relationships with builder partners," said Dan Hedigan, President and CEO of Five Point.

The existing Hearthstone management team will continue to lead the venture, which aims to expand access to flexible, off-balance sheet capital for homebuilders pursuing land-light strategies.

"Our builder clients will experience continuity in service—with the added advantage of expanded resources, enhanced capital solutions, and increased capacity," said Porath.

The transaction is expected to close by the end of the third quarter, subject to customary closing conditions, according to the company’s press release statement.

Five Point Holdings designs and develops large mixed-use planned communities in California, including projects in Orange County, Los Angeles County, and San Francisco County. The company currently trades at an attractive P/E ratio of 4.32 and appears undervalued according to InvestingPro Fair Value metrics. For deeper insights into FPH’s valuation and growth potential, investors can access the comprehensive Pro Research Report, available exclusively to InvestingPro subscribers.

In other recent news, Five Point Holdings LLC reported strong financial results for the first quarter of 2025. The company achieved a net income of $60.6 million, surpassing its guidance by $10 million. Additionally, Five Point reported significant land sales revenue totaling $278.9 million and maintained a gross margin of 75%. The company also ended the quarter with a total liquidity of $653.3 million, including $528.3 million in cash and cash equivalents. Five Point Holdings received an upgrade in its credit rating from S&P, moving from B- to B, with a stable outlook. The firm anticipates close to $200 million in net income for the full year 2025 and plans to expand its active selling programs. The company is exploring strategic partnerships and potential refinancing of senior notes later in the year. These developments reflect Five Point’s strategic focus and operational efficiency in the supply-constrained California real estate market.

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