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Investing.com -- Moody’s Ratings has upgraded Five Point Holdings, LLC’s corporate family rating to B2 from B3, while maintaining a stable outlook for the company.
The ratings agency also assigned a B2 rating to Five Point Operating Company, LP’s proposed $450 million senior unsecured notes due 2030.
The upgrade reflects improved debt leverage metrics resulting from a 28% reduction in debt since year-end 2023. Moody’s expects leverage to remain around 16% debt/book capitalization through 2026.
Proceeds from the proposed notes and cash on hand will be used to fully redeem Five Point Operating Company’s existing $1.5 million senior unsecured notes due 2025 and $523.5 million senior unsecured notes due 2028. Upon completion, the ratings on these notes will be withdrawn.
The transaction reduces Five Point’s refinancing risk and extends its maturity profile. The company’s only maturity over the next five years is $100 million of its senior unsecured revolving credit facility expiring in July 2027.
Despite the upgrade, Five Point’s B2 rating remains constrained by its limited scale, with just $200 million in annual revenue and significant dependence on the Great Park Venture development in Irvine, CA.
Key credit strengths include low debt leverage and no near-term maturities. Distributions from unconsolidated entities are expected to cover the company’s annual cash interest payments of approximately $40 million, down from $55 million paid in 2024.
Five Point maintains good liquidity with $457 million cash on hand as of June 30, 2025, and full access to a $125 million senior unsecured revolving credit facility. The company’s unencumbered land portfolio had a book value of $2.4 billion as of June 30, 2025.
Moody’s indicated that a ratings upgrade could occur if Five Point increases scale and diversification while maintaining conservative financial policies, with debt/book capitalization sustained below 25%. Conversely, a downgrade might happen if debt/book capitalization exceeds 30% or if operating performance deteriorates.
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