FPH is the largest owner and developer of mixed-use, master-planned communities in coastal California, based on the total number of residential homesites permitted to be built under existing entitled zoning. It has a long-standing relationship with homebuilding company Lennar (LEN), which, as of December 31, 2016 owned 45% of the Class A common shares of FPH. Concurrent with this IPO, LEN will purchase $100 million in additional Class A shares at the IPO price.
Its primary source of revenue is from selling homesites to homebuilders and commercial lots to commercial developers. Residential land sales typically require a cash payment upfront and include participation provisions that allow it to share in the profits realized by the homebuilders if the overall profitability of a block of homes exceeds an agreed-upon margin. Within the development lifecycle, its cash expenditures are concentrated in the title acquisition, entitlement and infrastructure development phases. If it also builds all or a portion of the homes or commercial buildings within a community, it incurs additional development costs and recognize revenue when homes or commercial properties are sold.
FPH currently has three existing communities zoned for the construction of thousands of homesites. These communities are in Los Angeles County, San Francisco County, and Orange County, each of which are supply-constrained for housing, but, have growing populations.
Newhall Ranch, in Los Angeles County, consists of approximately 15,000 acres, designed to include about 21,500 homesites and 11.5 million square feet of commercial space. The San Francisco Shipyard & Candlestick Point community is located between downtown San Francisco and the San Francisco Airport. It consists of about 800 acres of bayfront property and is designed to include 12,000 homesites and around 4.1 million square feet of commercial space. And the Great Park Neighborhoods area consists of approximately 2,100 acres in Orange County and is being built around the 1,300 Orange County Great Park, a metropolitan public park that is under construction. When completed, it will be nearly twice the size of Central Park in New York.
Looking at the financials, total revenue for FY16 increased by 11% year/year to $39.4 million. It sold no residential homesites and approximately 0.8 acres of remnant commercial acres during 2016, and it sold no residential homesites or commercial acres in 2015. In 2016 and 2015, it generated revenues primarily from the recognition of deferred revenues on prior land sales, profit participation with residential homebuilders, collection of marketing fees and activities at its operating properties. In 2016, after completing the formation transactions, it also generated revenues from providing development management services to certain related parties.
Total costs and expenses for 2016 surged 256% to $142.5 million. This was due to SG&A expense climbing by 338% to $120.7 million, driven by increases in compensation expense as a result of higher payroll expense, share based compensation, and bonuses. The ramp in expenses caused a ($96.6) million loss for the year, much wider than the ($3.8) million loss in 2015.