Q3 2019 Earnings Call
Good day and welcome to the Howard Hughes Corporation third quarter 2019 earnings Conference call.
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I would now like to turn the conference over to David strides Executive Vice President of Investor Relations. Please go ahead.
Good morning, welcome to the Howard Hughes Corporation's third quarter 2019 earnings call.
With me today appalling Chief Executive Officer, David O'reilly, Chief Financial Officer, and Peter Riley General Counsel.
We began I would like to direct you to our website at Www Dot Howard Hughes Dot Com, where you can download both our third quarter earnings press release, and our supplemental package.
The earnings release and supplemental package include reconciliations of non-GAAP financial measures, we discussed today in relation.
To their most directly comparable GAAP financial measures.
Certain statements made today that are not in the present tense discussed the company's expectations are forward looking statements within the meaning of the federal Securities laws.
Although the company believes that the expectations reflected in such forward looking statements are based upon reasonable assumptions, we can give no assurance that these expectations will be achieved.
Please see the forward looking statement disclaimer <unk> third quarter earnings press release, and the risk factors in order to see filings for factors that could cause material differences between forward looking statements and actual results.
Well not under any duty to update forward looking statements unless required by law.
I will now turn the call over to our CEO Oh wait.
Thank you Dave.
Thank you all for joining us today.
Welcome to our third quarter 2000, Nike earnings call and my first to see.
As we disclosed on October 21st we've concluded our previously announced review of strategic alternatives and embarked on a transformation plan for the company.
Plan Ralph on three pillars.
45 to 15 million dollar reduction in annual overhead expenses.
The sale of approximately 2 billion of noncore assets.
We currently anticipate well net approximately 600 million.
And then intensified focus on growth.
In our core MPC assets.
We expect to rapidly transformed the company to create even more focused lean and de centralized organization.
With significantly reduce the corporate overhead.
Built around our core MPC.
We firmly believe this will bring added value to our shareholders and create a company that can not only survive prosper it all phases of the economic cycle.
So David O'reilly and I are truly excited and energized to lead this new effort, we have made significant progress.
We have announced the relocation of our corporate headquarters from Dallas to the World.
We expect to realize significant efficiencies and cost savings from this move.
We executed on approximately $86 million in noncore asset sales already.
The sales include 46 million for the Cottonwood mall outside of Salt Lake City.
Subsequent to the quarter end 40 million for the sale of 658 acres of land in the West Windsor, New Jersey, which David will talk about later.
We are accelerating development in our MPC.
I have commenced construction phase two Creekside park apartments in the woodlands.
Also in accordance with our transformation plan, we're pleased to announce at the board of directors have dropped right. They news stock repurchase program under which the company like repurchase up to 100 million of our outstanding stock.
These actions are the initial steps and moving forward to Howard Hughes story.
Hi, that's story that I believe.
We have previously tended.
Too complicated.
The strategy the company is actually quite simple, we sell residential land in condos and use those proceeds along with our growing operating asset in Hawaii.
On the outsized return opportunities in communities, where we have you need controls.
Additive advantages and mitigating risks.
Therefore, the results of land sales condo sales and operating asset in a wide for any particular period should be viewed in that light.
They create liquidity.
Along with our recently announced noncore asset sales.
We used to focus on development and our mpcs and per share buybacks.
Well this quarter in Hawaii is up substantially.
Land sales are down a bit due to timing, but are expected to be flat with last year.
Condo sales continue to be brisk.
Now moving onto this quarter's results.
I will start off with a quick overview of some of the highlights then speak about our MPC and operating asset segments and then David.
Speak about strategic development noncore asset sales seaport and our financial results for the core.
I am pleased to report that we had another very protective productive quarter, creating value across the portfolio and our core business segments.
A few highlights.
Total in a wide from operating assets was up 33%.
Over the third quarter 2018.
A significant increase.
Home sales in our Mpcs, which are the driver of land sales were up from 504 in the third quarter two.
Yeah I was an 18 just 618 this quarter a strong 23% increase.
Robust sales at Ward village continued with another 55 homes sold during the quarter.
In Honolulu, we celebrated the groundbreaking of our newest mixed use project.
Hello.
Which approximately 70% pre sold.
After only nine months public sales.
We increased seaport district revenues for the quarter by 8.5 billion to 23.1 billion.
Partially driven by the openings.
Our way though.
Malibu farm and to look out on pure 17.
Now moving to our Master plan communities.
MPC you'd be tea.
Decrease mainly due to lower superpad sales and several and lower equity in earnings from the summit joint venture.
If you exclude summerlin.
MPC E B T actually increased 56.9% for all the other mpcs compared to Q3 2018.
Land sales increase in the what lumps within sales and bridge loan.
The land sales decrease in someone is surely a timing issue and a quarter over quarter comparison issue in the third quarter of 2018, we closed two large transactions were approximately 91 million inflated that particular quarter.
As we have always stated land sales are volatile quarter over quarter and you should look two full years result for comparison purposes.
We expect to have a strong fourth quarter in San Juan.
And for total land sales.
They are to be on pace with the last few years.
[noise] the summit also contributed.
<unk> decreased to date, we've closed on approximately 393 million of sales at the summit, including 18 billion of custom loss and 49 million homes this quarter compared to 12.6 million at 31 million in the third quarter 2018.
We have 17 contracts in escrow.
As of the ended the third quarter.
Worth approximately 65.2 million.
As was mentioned last quarter. These results reflect the change in sales mix from higher margin custom lots to more lower margin built homes.
Due to this we expect margins to remain lower in the coming quarters.
Also the summit is an ultra high end community and sales will always be lumpy from one quarter. The next.
With all that said the project has exceeded our expectations for sales since inception, we expect the overall gross margin generated by the project to remain unchanged from our original expectations.
The overall weighted average price per acre across or Mpcs increased 9%.
527000 to 574000.
We saw a quarter over quarter price increases of 195000.
How did in 2030 3000 per acre and the woodlands.
Hello, and Brazil.
It wasn't sales price per acre dropped 29000, or just under 10%. During the same period. These changes are largely due to the mix of losses sold.
At Bridge Lynn, we continued to see robust demand for new homes.
Which is the underlying driver of land sales to our homebuilders in.
In the third quarter 2019, there were 190, new home sales compared to 117 and the same period of 2018 Ics, 62% increase.
Year to date, new home sales were 43%.
New home sales were up 7% and some of them for the quarter with 322 homes sold compared to 302 last year.
Today, New home sales were down approximately 5% with 989 homes sold the first nine months of 2019 compared to 1046 in the same period last year.
As we said last quarter a good portion of 2018 sales were pushed into the first quarter as buyers were attempting to purchase the for mortgage rates increased new home sales during the first quarter of 2018 will almost double that of 17.
We continue to expect the balance of the year will be very similar to 2017, 2018, which were both outstanding years.
Third party builder sentiment continues to be very positive on star one.
And the Las Vegas market isn't as a whole given the excellent autonomy and the fact that 30 year mortgage Reits have dropped below 4%.
We received excellent bids on all of the parcels that we have put out to market. So far this year and consistent with our outlook on home sales anticipate another strong year of land sales similar to 2017 and 18.
New home sales were up 27%.
An 18% quarter over quarter in the woodlands and woodland Hills.
We continue to see strong demand.
From homebuilders for our residential land driven by healthy fundamentals and demand drivers in the residential home sales markets in our communities, which are located in lower cost markets with no state income tax.
Turning to our operating asset segment, we increased our third quarter total in a lot of $14.1 billion compared to the same quarter last year.
33% improvement.
We saw increases of 7.1 million in our office portfolio, which was led by $100 should drive which was the MD Anderson building.
And Arista cat.
Technologies build to suits coming online.
And the further stabilization of one in three years landing.
Several and to marry weather.
Hospitality you know why increased by 2.3 billion, mainly due to improvements at the woodlands resort corporate center.
Lastly, the 2.5 million increase in our other category was largely based.
On our putting the Las Vegas ballpark into service.
At the same time or stabilized NOI target increased from 317.1 million last quarter to 323.1 million this quarter 6 million dollar improvement.
This is largely due to the start construction Creekside Park apartments phase two and the woodlands, which added 4.7 billion to stabilize in Hawaii.
With that I will turn the call over to David or what.
Thank you Paul.
Starting with our continued development segment, we had another great were led by continued strong sales of Condominiums Award village in Honolulu.
I'll eat which began construction in October with 83% preschool and cool, which began sales in January of this year and commence construction this quarter with 70% pre sold as of September Thirtyth.
This is a very strong sales pace of 44 units per month in a testament to the vibrant vertical community.
Which offers its residents walkable healthy lifestyle that you need to walk.
Today, we sold 2395 homes total contracted revenue of approximately $2.7 billion.
Bringing us to just under 89% pre sold on our first six buildings.
We're extremely proud of what the team has accomplished for this asset and we're studying how to moderately increase the pace of development.
Moving onto our noncore asset sales as Paul noted as part of the first steps in our transformation plan, we sold two noncore assets reason.
In September 16th we closed on the sale of Cottonwood Mall 197000 square foot building, a 54 acre land parcel outside of Salt Lake City, Utah.
Sales price was $46 million and resulted in a $24.1 million gain on sale.
We received a $10 million down payment in a note for $36 million.
No is interest free for the first year and bears interest at 5%. So it matures on December 31st 20 Twond.
Subsequent to the quarter ends on October 29, we closed on the sale of a 658 acre parcel of land located in the west wins or New Jersey $40 million.
The sale resulted in a gain which will be reflected in the fourth quarter.
Both of these sales provide additional liquidity there can be used for new developments that are NBC and as Paul mentioned, our recently announced share buyback program.
At the Seaport District, we started total revenue increased by 58% to $23.1 million this quarter compared to $14.6 million in the third quarter 18.
This also compares favorably to last quarter with total revenue was $12.9 million.
This is the result of existing business is continuing to mature along with new business openings and the successful 2019 Summer concert series.
We've seen traffic increase and it continues to grow each new opening we had two new exciting openings. This quarter first with David change bar, while in July and then Malibu farm in August .
These will be followed by the opening of Andrew Carmelita, New restaurant next year.
For the quarter, we had net operating loss at the Seaport district of $3 million compared to a net operating loss of $3.4 million in the same quarter last year.
Losses, primarily due to funding startup costs for the retail food beverage and other operating joint venture businesses.
As we said we expect those losses to continue so the seaport Reese's, it's critical mass of offerings, which will be primarily driven by the timing is complete and stabilize the John George was all located in the Tyndall.
Assuming that we receive timing approvals, we expect it Tim building to be opened in the summer 2021.
Equalization should occur within 12 to 18 months following the opening.
As you know the Seaport district is part of non stabilized operating at the Park development project in part operating business.
Because we own and operate many of the businesses there either directly through joint ventures or through license agreements. The revenues expenses are those individual businesses directly affect the NOI.
We have increased uncertainty due to seasonality preopening expenses and pre stabilization operating losses.
As a result, theres greater uncertainty in our near term quarterly results.
Given these factors along with their operating experience. This summer as we opened several new venues, we will not provide guidance on our expected NOI yields and stabilization date for the seaport for the next several quarters.
We will continue to provide full disclosure on the revenues expenses and Hawaii EBITDA for the seaport.
After an in depth review of this asset by our new leadership and after a critical mass of openings has occurred we expect to provide updated guidance for yield expectations and stabilization.
Now a quick overview of our earnings before summarizing our recent financing activity and our current leverage and liquidity measures.
I hope you've been able to review our 10-Q earnings release and supplemental package filed yesterday, which contains detailed our financial and operational results.
We completed the third quarter with GAAP earnings of $29.8 million or 69 cents per diluted share compared to 23.4 million or 54 cents per diluted share for the same period last year.
The increase was driven by the sale Cottonwood mall in the selling profit recognize from a sales type lease commenced at a 100 goal should drive properties.
The increases were partially offset by decrease in consolidated MGC earnings.
With regard to the selling profit recognize from a sales type lease. This is a GAAP accounting treatment for the MD Anderson weeks at 100 Baltic dry.
GAAP rules consider this transaction more akin to a sale is the building was built to particular specification and has limited alternate uses.
As a result, the profit this quarter is derived from the difference between the original carrying basis in the estimated fair value of the land as if we sold it is entering into a lease for.
Maybe to find AFFO was 91 cents per diluted share for the quarter as compared to $1.24 for the third quarter 2018. The decrease is primarily due to the decrease in MPC land sales due to fewer Super pass sales in several and a slower piece of land development in custom lots sales at the summit.
The decrease was partially offset by an increase in the operating assets as a result of placing recently completed developments in service.
Now onto our financings.
On October 24th we modified and extended our 47.9 million dollar loan the outlet collection at Riverwalk.
Total commitment was reduced to 30.9 million after a $15 million data.
The loan bears interest at one month, LIBOR plus 2.5% in matures in October of 2021.
On October 17, we purchased a 99.7 million dollar note one to 50 water Street in the Seaport district in a discount of approximately $6.5 million.
We expect to replace this with new third party financing in the fourth quarter 2019.
Also on October 17, we closed on 250 million dollar credit facility secured by land and certain other collateral in the women's in Brazil Mpcs.
The loan bears interest at LIBOR, plus 2.5% will the final maturity in October 2024.
This loan refinanced the women's Master credit facility in Britain credit facility. The combined principal balance of 215 million in a weighted average interest rate of LIBOR plus 2.87%.
As I've mentioned before this facility is used to fund infrastructure costs that are MPC, there are largely reimbursed or the issuance of month or municipal utility district bonds.
We currently have just over $288 million in mud receivables.
On September 13th we closed on a $37.7 million multifamily loan for Creekside Park apart.
The loan bears interest at 3.5 to present it matures in October 2029.
On October six because on a $30.7 million construction loan for millennium phase three apart.
This loan bears interest at LIBOR, plus 1.75% has an initial maturity date of August 2023, with a one year extension option.
On August 1st we modified the 64.6 million dollar construction loan.
All of which 31.1 million related to aristocrat and 33.5 million related to several.
As part of the modification to $33.5 million to certainly no was amended to bear interest at fourth quarter percent with initial maturity date of October 2022, and 136 month extension option.
We closed on a new $38.3 million aristocrat, which bears interest at 3.67% and has an initial maturity date of September 2029.
A portion of the proceeds of the new aristocrat no we used to extinguish the original aristocrat.
As of the ended the third quarter, our total consolidated debt to total assets was approximately 46% at our net debt to enterprise value closed the quarter 31 person.
From a liquidity perspective, we finished the third quarter with approximately $638 million of cash on hand.
As of September Thirtyth, we had 28 projects to be completed with anticipated total cost of 5.2 billion.
That amount we've previously funded approximately $3.3 billion, leaving approximately 1.9 billion in estimated remaining cost.
We expect to meet this obligation with a combination of existing construction loans, which you quarter end had approximately $1 billion committed but undrawn capacity and was $81 million of existing condo buyer deposits.
This leaves approximately $806 million.
We anticipate loans at $39 million for Creekside Park apartments phase, two and $317 million for Cotwo.
In addition, we expect pool of buyer deposits of approximately $97 million, which leaves approximately 353 million of remaining equity requirements.
We expect to fund our remaining equity commitments through a combination of our free cash flow from our operating assets and MPC segment net proceeds from noncore asset sales and lastly, our existing cash balance.
Again as of the ended the third quarter with approximately $638 million or cash on hand, and net equity requirements of 353 million, we have enough cash and liquidity to meet all of our current funding commitments without additional cash being generated from MPC land or are operating at.
Yes.
With that I'd like to turn the call back over to Paul for closing remarks.
Thank you David as you can see we had another quarter of strong results.
And we are proud of our team's efforts to have already made significant progress with the company's transformation.
We will continue to be thoughtful creative and opportunistic.
Allocating capital in a manner that we believe best increases the per share value.
Oh, the company for our shareholders.
Thank you for joining us today.
With that I will open it up for Q in AG.
Thank you.
We will now begin the question and answer session.
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At this time, we'll pause for a moment.
Number our roster.
Our first question today will come from Alexander Goldfarb of Sandler O'neil. Please go ahead.
Hey.
Good morning down there so.
So two questions for me I first.
Paul or David on the Sea Port.
Sort of a two part one.
I mean, your comments aren't totally surprising, but curious why you're announcing now versus on this strategic call that you guys hosted a few weeks ago and then too.
Just I know on that call you guys affirm that hey, there's a lot of value in the seaport, but it does sound like Theres a lot of heavy lifting and I think David is your comments about the stabilization period, it's definitely out many years. So yes, given you guys are a public company.
You guys aren't a quarterly business, but still people look you know for annual earnings.
How would how is the company you have sort of reasoning to keep the seaport with in Howard Hughes versus seeking to offload at and then two to the first point why the decision to talk about it now versus on the strategic call a few weeks ago.
Thank you for your question.
We are committed to the completion of the C. It's a great development.
There are a number of spaces that we need to obviously complete restaurants, a fish leasing the office space and.
But we are we are there and we have a big.
Great team of people that are working hard every day to up to finish that.
David you want to talk about Alex let up on the call on 21st was the focus of that call was on the transformation plan. It was on announcing Paul's installment and given the fact that Paul with CEO for less than 24 hours and we had that call I don't know that he was fully up to speed nor do I think you today.
In terms of all the detailed nuances of the seaport and really what we're saying it do we need a couple of quarters fully in our arms around for Paul to impose his strategic changes and thoughts on the seaport.
Before we are ready to talk about stabilization date and ready to talk about stabilized yields on costs consistent with what we do with all of our other assets.
With all that said.
I'd reiterate what we said on that call about to see for is that there are a handful of short term items that we are on that threshold of crossing that will unlock meaningful amounts of value for our shareholders and we're committed to seeing those through we're going to complete the 10 building, which is going to continue to drive traffic, we're going to lead to remaining office space appear 17 to Fulton.
We're going to opening stabilize the restaurants, including bar, while we're Malibu farm that opened this quarter and get Andrew Carmelita. These installations open at the beginning in next year and hopefully, we'll finalize plans for the 250 waterstreet, including what we're going to do with the air rights there and given that there is so many near term opportunities to unlock value we are going to me.
Make sure that we see that through we're absolutely committed to the seaport as Paul said and once we do have a little bit more clarity on some of these items that I, just numerated is well, let's get through a whole season, including the seasonality impact of the winter and restaurants on appear I think we'll be at a much better spot, where we can talk about stabilized yield and.
Amortization date as it relates to the sea port.
Okay that that's helpful. And then the second question is is sort of a dual one on in the fourth quarter is there any severance or any sort of onetime charges, we should be thinking about and then two on the 45 to 50 million of savings is that something that you think we should be.
Jan 120, 20, we should all reflect those savings or how does how should we think about you know the obviously you guys have cut a lot of color you're going to cut a lot of cost, but how do we think about all the cost cutting that you outlined kicking in you know to next year.
So I think that in total we talked about on the last call. Alex is that there would be about $30 million to $40 million in one time cash charges associated with the relocation severance and retention and I Wouldnt expect about two thirds to three quarters of those will head in the fourth quarter.
So I think everyone should expect somewhere in the $26 million to $30 million range of one time charges in Q4.
In terms of the savings in the reduction in Gionee on a go forward basis, I think it will realize on a run rate basis 27 to 32 million in the first six months I don't think we'll see all that in the first quarter, but the vast majority of it we should experience into first quarter, the remaining $10 million beyond that that we talked about.
On the 21st will comment more in the six to 12 month timeframe in the back half of the year.
Thank you David No problem Alex.
Our next question today will come from how many course.
Vws financial please go ahead.
Hey, good morning, Thanks for taking the question.
Just like just looking at the seaport. It looks like you had a million dollar loss on manage businesses and then at 25000. All again honest event is that assumption of traffic not being up to where you expected to be is it fixed costs related if you could just kind of give some color on.
<unk>.
Sure look I would say that this is not.
And just doesn't have anything to do a traffic and in fact I would tell you that we're pleasantly surprised and continue to remain optimistic as we've seen traffic grow at the seaport almost every month throughout the year 2019, as we continue to open new offerings in those offerings have translated into increased traffic. So we've been really pleased I would say the losses.
We've seen in a managed business are more driven by those preopening and pre stabilization associated with restaurants, as we burning kitchen trained staff hire folks and you get these things ready to go Prime time once they've been opened in running for several months, we see those losses tend to burn off and they moved towards profitability.
In terms of an event and sponsorship business that is really.
It can be often be lumpy business right and throughout the summer we have a lot of event. There was a summer concert series and as to whether starts to turn in New York, We start to see those events fall off and then as we get into the winter, we'll see the winter skating experienced reopened on the pure in and around Thanksgiving. So I think that the fourth quarter will.
Maybe a little bit bumpy in that regard as well and.
Obviously is a highly seasonal business, it's highly dependent on being able to book events and being having consistent event business throughout the year and as it continues to mature and add those three bookings continue to build up I think we'll see more and more and stronger results from that segment of this year.
And then in <unk> village I know you have to two under construction what are the plans for a third project.
So we're in design.
With a number of projects in ward village and we're always thinking about when that kind of next 123 towers will go.
And our goal is to have those ready but not.
You know completely locked in if you will as where we want to me nimble and flexible as we see results of our existing towers. So that we can better.
Zine its power product in unit mix that meet the deepest pockets of demand on the island.
Cautiously optimistic that in the first quarter next year, we'll be able to launch pre sales on our next tower. It will in all likelihood to your front row tower adjacent to Wyeth and something that I think we'll be very well received by the market, but we're not at the point, yet we're ready to pull the trigger aren't presales and it's probably needs another several months to.
The bank if you will before we'll see that hit the market in the first quarter next year.
No it and what village with interest rates going lower is there like the desire to expedited or does the market. The consumer who is purchasing these condos is that really no matter, how how low interest rates go.
Yes.
Pins on the tower.
So what we've seen in some of our front row in higher end product is more cash buyers fewer dependent on the mortgage market and then when you get into those luxury micro units like we've seen Lee we've seen incredible success, there and cool I. There is a greater dependence on mortgage rates, but it's still has a large.
Percentage of cash buyers. So it hasn't been a tendency of demand I think the demand is not been driven by lower interest rates, but it's really been driven by a great product mix to mature maturation of the community that livable healthy walkable lifestyle with whole foods Allen want to Beach Park and all the amenities that we have to offer that are incurred.
Well, you need to where village.
Okay. Thank out I'll jump back into queue.
Thank you.
Our next question today will come from Alex Barron of housing Research Center. Please go ahead.
Yeah. Thank you I guess I was hoping you could discuss the strategic thinking behind I guess owning and operating a lot of the businesses in the seaport versus just charging ramp like you do and many other of your assets.
All right.
It's an all instances and all of our decision, making its about driving the highest risk adjusted returns for our shareholders.
And the amount of capital that it takes to build out a great restaurants space and to build out appear in Manhattan.
As meaningful and to just get rent and maybe a percentage sales kicker I don't know that properly rewards as for the capital that we're investing in some of those bases.
So by structuring the deals as we have in joint ventures licenses are operating agreements were able to deliver meaningful upside to our shareholders and we wouldn't be able to achieve ministry rental structure.
Obviously that impacts us in terms of Preopening expenses, and some incremental volatility and we appreciate that and it's not lost on the seat, but we do think it does delivered the best results for our shareholders.
Okay. Appreciate that the other question is I like the disclosure, you're giving on the new home sales for each of the Mpcs I'm wondering if you guys would consider.
Reporting the lot sales like you used to or what's the thought process around that.
Our.
Now you could you repeat that sorry.
I was saying that I think it's great to get the Homesale a bike by each of the MPC, but I'm wondering whether you guys would consider also breaking down a lot sales that you guys are doing.
So it's easier to calculate the.
The how much you're getting per acre and so forth.
Well, we we've really been pretty thorough in our supplemental in terms of what we're disclosing in the mpcs in terms of acres sold price per acre margin.
And we disclosed you on the bottom half page 23 kind of the percentage of single family detached and average lot size to help calculate that.
Given that there's often times, where we're selling different size loss and different quarters. I think is the best representation to show on a quarter on average comparison basis is to show full acres right. These are price per lot can vary pretty dramatically, whether it's a wondering a lot on one acre lot et cetera.
Creates off on a quarterly basis as report a comparison issue, but it really talk about the number of acres sold and price per acre. We think is kind of leveled the playing field on a quarter to quarter to year over year basis and to be able to say for example, bridgelux, where we're able to sell acres of 43.
You know a job over 411000 acre is great and Alex I.
I know you understand that business very well, hey, when you look at that price per acre.
And as you know granted it's quarter to quarter, but we have substantial increases this quarter that we're very proud of in a number of our mpcs.
As well as the acres sold in Houston So.
I think it's been a good story this quarter.
Okay, and if I could ask one last one.
On the same topic of lots sales and Mpcs are you guys getting any change in the.
On demand from the builders as far as lot sizes. In other words are they requesting to get more lots that are smaller size to build more affordable homes or is it pretty much the same as a year ago sure. Alex. Thank you for the question I think there's definitely a trend.
In Houston, because as you know in Summerland, we're selling superpad, but in Houston, there is a trend, especially in woodland hills for slightly smaller loss.
More affordable.
Homes and on smaller lots and we come up with some really outstanding designs working with our homebuilders in bridge loans and we'll until that have been extremely well we see on these smaller loss.
Are they all single family are they attached.
The vast majority are single family, we do have some attached product.
That have been very very well received.
Okay, Great look forward seen them. Thank you.
Thank you Alex.
Ladies and gentlemen at this time, we bought conclude our question and answer session.
I'd like to turn the conference back over to Paul Wang Chief Executive Officer for any closing remarks.
Thank you very much for joining us today.
I appreciate the questions and your time and we look forward to.
Speaking to you next quarter, if not before thank you.
The conference has now concluded we thank you for attending today's presentation and you may now disconnect your lines.