Q3 2020 Pure Cycle Corp Earnings Call
At this time all participants are in listen only mode. A question answer session will follow the formal presentation.
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I'll now turn the conference over to our host Mark <unk>, President and Chief Executive Officer. Thank you Sir you may begin.
Thank you.
Like the welcome you all to our third quarter earnings call.
Just some housekeeping issues ads as you're all aware there is a deck for this call it would be on our website.
You can find a debt pure cycle water dot com.
There's a couple of places to find that they'll be on the landing page, where you can click on the third quarter conference call or you can navigate over to the Investor page and I think it's there as well what I'll try to do it's all a go through the presentation I'll note.
The transition of the slides he can kind of walk through the presentation with me.
Much like.
Our previous calls I'm going to probably get skip over pretty quickly a lot of the history. I think most of you are familiar with the history of the company to those of you who are new to the company. A website has some pretty good tutorials on that there's a couple of good webcast on there that will give you.
So I'm listening time to get a lot of color about sort of how we got into the business somebody assets that we've acquired through the years and how we're kind of undertaking what is that we're undertaking. So yeah. You can combine that with some of the details on kind of keeping investors current <unk> the quarterly calls.
So with that I'm Gonna go in stark and as usual I'm going to get the lawyers out of the room first didn't talk about our safe Harbor statement statements that are not historical facts are contained or incorporated by reference in this presentation are forward looking statements I'm sure you're all familiar with the forward looking statements accurate results will differ.
Those contemplated and forward looking statements.
So with that page three just a brief overview kiosk, that's where a water wastewater land development company. So we have a large portfolio water and water short area here in Colorado, where you can actually own water.
So in addition to the utility function along the way we've acquired some very valuable land assets and are developing both land assets.
To provide single family.
Residential multifamily lots of commercial retail a light industrial lots to developers on Oh personal property located along the I 70 corridor, which is about four miles south of the airports or we have terrific transportation access on the property as well we also supply a lot of.
Water for oil and gas, although we haven't for quite a lot of water for oil and gas. This year, we'll talk a little bit about that a little bit of color about that later in the presentation and then we also have some mineral what state where we call like oil and gas Oh royalty revenues from the oil and gas interest that we own on properties that we yeah.
I'm going to yeah.
Slide four gives you kind of an overview of some of the water utility assets that we have a water kind of the sandbox that were in you know we're in the southeast part of the Denver Metropolitan area, some of the infrastructure and the water that we're developing.
Slide five draw your attention you know the master planned community it seemed a sky ranch.
About 930 acres, along the I 70 core door.
Just east of downtown directly south of a the Denver International Airport. If you look at the project as a whole than not and 30 acres, we should be developing something close to about 3400 single family homes and that's got to be a mix between detached paired product where you have a duplex product are attached product.
Some townhome product and that the multifamily product and then we are.
A little over 2 million square feet of commercial properties owned because we have about a half a mile frontage along the Interstate so we'll have a lot of commercial development that also is incorporated in the development plan as well one of the units up measures that we measure our water utility segment by is something we called single family equivalent. So if you just.
Look at Sky Ranch, we had about a 5000 single family equivalent connections at Sky Ranch.
So let me get into kind of the bulk of the update a slide six so kind of give you a.
Bullet point, a inventory of the lots that we have in our first phase we have 506 lots in our first phase. We've delivered finished lots of almost 400 391 of those finished lots a we completed all of the remaining work for the remaining hundred 15 lots so while.
We have not actually been paid for the remainder of the 115 lot I would say, we're probably within a million dollars of our investment of completing all of the infrastructure all of the roadways, all the landscape being for the first phase of the project.
We have about 120 folks moved into the community and we have about 255 building permits which is inclusive of that 120. So if you kind of do the math on those two we probably have about 135 homes under construction from the three builders that we have our three builders.
In this phase, our Richmond American homes, or Taylor Morrison and Kb home.
All three national home builders, all have been a terrific homebuilders to work with so we've been very very pleased with working relationship that we have with each of our homebuilders.
Both our water and our wastewater systems for this first phase have been completed our operating are delivering both water and wastewater service to families homes that are in this first phase.
For for sort of a picture illustration of how this is.
Progressed, if you go to slide seven you can kind of see quarter over quarter and just doesn't extraordinary contrast.
Progress of all of the development in the nine months. If you really just take a look at how quickly.
We're selling homes and this and that's per se. It's a it stunningly impressive for what it is that we're doing.
Couple of statistics, Yeah, we took a look at the metro associated Realtors, and Oh God I got to know from down just a yesterday that they're reporting their June contracts were up 27% problem a year ago. So I think on June 2020 is one of the Doe largest year of contracts in the Metro area.
While we've had the while we had that stay at home statewide stay at home order here in Colorado, which was in place in April and most of make yeah. We did have construction continuing we didnt have a lot of traffic or through the community, but what we saw was a lot of that was deferred to that June.
Timeframe. So all three of our builders had just an enormous June in terms of both the traffic through the model homes in the community itself as well as a sale. So both those things are remaining high through the building season. You know we are cyclical while we sell and construct helms year round, we do have a season here which is.
Really extends from about February through October <unk> here in Colorado.
Moving on to slide eight it's a kind of give you an illustration of the balance of the project a if you take a look at that graphic illustration. The first 500 home is in that neighborhood B, which is under construction and then we are at that kind of the latter stages of finishing up all of our development Pan plans.
For our second phase our second phase will include about 480 acres. So it differentiates itself from the the light blue right along the Interstate there, which is gonna be mostly commercial retail type development and then the darker blue which is gonna be more single family.
I'll have a little bit more density in there will have about 950 units in that phase will probably look at for some phases.
We're negotiating contracts with the four different developers I I won't be able to tell you, which developers are yet because we haven't finalized those contracts yet, but they are again for national developers. We showed it to eight a national developers than I had eight developers or eight homebuilders interested in the.
Project so.
I think that's a testament to the success of our team and the success of our current builders out there on really the absorption as you saw from slide six of what our how quickly our community has really.
Made a dent in the the metropolitan area for the second phase, we're looking at starting our grading I'm probably in the October November timeframe. So late fall. This year will well do some of that site work on grading some of the prep work on that to be able to start delivering those lot sometime.
In the fall a 21, so it takes about.
910 months to do some of the over like grading and the the site prep work before you start getting into a lot of the finished lot deliveries.
Moving on to kind of the next slide that'll be a little more color on how this next residential component is gonna be laid out so you've got to a variety of product mixes, which really is going to segment. The <unk> market now for a much more diverse.
Price range of single family homes that are gonna be.
Paired duplex slots townhome lots and then just some standard or single family detached lots of varying configuration. Some of them are gonna be bigger a lot. Some of them are gonna be relatively small with them Allen load product and things like that so loved the design of it I think it's going to continue the feel of community.
Out there and really carried forward all of the the good work that we've done on the first phase of this thing.
Moving on to slide 10 talk a little bit about oil and gas well I'll sort of a fertile oil and gas there's not a lot to talk about they'll have a lot of guidance for you on our industrial water demand segment still the oil and gas.
First of all oil has certainly recovered you know like to see that starting with a four would like to see it starting with five or even a six I'm sure. Some of our operators would as well, they're still pretty cautious I haven't gotten a lot of guidance from them about when they're gonna start back some of their operations, but we will continue to monitor that yes, you will see.
In the numbers, specifically they'll be a there'll be a stark absence of revenue from the sale of water to data, even though we do anticipate a setting records for revenue as well as.
Profitability. This year. So most of that's going to come from operations other than oil and gas.
Slide 11, so we'll talk a little bit about some of the numbers talk a little bit about water investments you know, we continued to add to the water infrastructure in our portfolio.
During 20, so about a 5 million dollar increase their cash and liquidity are starting to build back that problem sale and monetization of our lots. So we have about 17 million and liquid cash investments that's a bit misleading because we've got about two and a half million no collateral cash to the various governmental agencies.
While we're finishing up the infrastructure that we're going to turn over to them. This summer and then we'll get back cash back from down. So that's a you see it on the balance sheet, but it's not reported as cash so the liquidity is actually held.
Actually better than our cash position would be.
Moving onto slide 12 gives you kind of a snapshot of our operating revenues. So a year to date three quarters about 16 million an operating revenues.
Earnings per share is about 25 cents per share a and then a in our net income after tax about 6.1 million. So as you're looking at sort of the revenue to our our net income very healthy metrics for us on that which kinda proved to all the investment community some of that.
Things that we've been talking about for years on being able to acquire these highly valuable assets and then really you know the market has started to catch up with us on the value proposition of our land and water assets.
A page 13 will review some of these revenues by segment. So if you take a look at our land development the delivery of lots. So Q3, 2011, and a half million dollars, how compared to 6 million in 19, and then what I've tried to do is give you a foreshadow what what's left you know as weve incurred all the cost.
Associated with that so we've got some some dollars that you'll see an inventory. So that's going to be work in profit that's our with our work in process. So we've got about $7 million remaining and I think it's about 115 lots not 110 of the remaining hundred and 15 lots.
And I would say three quarters of those will close in.
In August from two builders, that's what our contracts calling for so you'll see some of that revenue come in on year end and then.
Fiscal year end and then the balance of those will close out by calendar year end and some of that's been actually all of that has been pulled forward and all of our builders.
Their original contrast had these extending into 2022, so we're actually getting these much much sooner than originally anticipated and I think that's a function of you know we're hitting the right segment of the market. We've got an entry level product that looks fantastic. The builders are able to deliver to homeowners.
Or is that it's been well received.
Taking a look at our water segment revenues. So you know we have two components of that we have a happy revenue, which is gonna be capital component of that and so Q3 revenues in $23.8 million compared to 1.8.
19, and then if you try and segment out what we have remaining in the first phase of Sky Ranch that first 506 slots. We have been paid for 255 tap. So we have about 251 path remaining and we're getting on average between water and sewer right around that 30000.
Dollars some more some last depending on the size of a lot than the size of the house. So again, that's gonna be another $7.5 billion of revenue that we've already made all the investments for within the community. So when you start to look at you know where we're headed with the investment that we've got on the balance sheet, you're going to see.
He probably another $14 million come in attributable to that so some very healthy.
Revenue still yet to come to balance out the the 35 million dollar investment that we got into the phase one infrastructure.
Industrial water sales have been the hardest hit from the virus related impacts and that's basically because the demand for travel and oil and gas in general. So we've had no real fracs Ah or water sales attributable to that some some some small you know deliver.
It is relative to pad construction and maintenance issues and things like that but you know will continue to monitor that that's a that's a variable delivery for us. So fortunately for us we have a fixed investment into our infrastructure and then we can dial up or dialed down that's system as appropriate and we don't have a lot of.
Or a lot of inventory that goes away I mean, we are water supplies will continue to be available for those uses a and then lastly, our oil and gas royalties. So those are a little bit stronger this year and that's mostly because we've had new wells that were developed in our mineral interest. These wells are actually develop.
In our one eight pooling interest as opposed to we have a really one square mile where we have 182 square mile pooling and then three AIDS in another pooling. This actually these wells were actually into smaller minerals segment of that so those have been healthy for us this year, we enjoy that.
Oh Slide 14, and 15 really start to get into what's in the Q itself, you've got the balance sheet. A good liquidity you know no liability you know I'm very proud of kind of Ah, our stewardship of a investor capital where.
There you know we've been able to accumulate these assets were very hawkish on our our denominator for shares outstanding you know the company has not issued share since 2010 and were very still you know we take very serious our fiduciary role for your capital and make sure that you know we're putting those out.
That is to use and you know we don't leverage this up you know, we do have leverage ability within the balance sheet and if there's an opportunity that would call for something like that an acquisition or something like that that may interest that we have the ability to do that but if anything you know this a the virus issues and the downturn.
In an economy like this you know our strong healthy balance sheet certainly has a proven a very strong stewardship for this company in our assets so were very.
I'm pleased to be able to present, the very clean balance sheet and then also very profitable income statement you take a look at that you know what for those who keep track of how our assets are performing without the accounting principles and in our favorite government taxes, you know, we do show that non-GAAP EBITDA.
Measure and you take a look at if we're at nine and a half million on 15 million of revenues. That's that you know tremendous asset potential tremendous earning potential from.
I'm very long lived assets at the company has been accumulating so we're we're continuing to.
Manage those assets were continuing to monetize those assets and bring delivery today.
Ah So that's kind of the the end of the prepared remarks, what I'd like to do is kind of turn the call over to the moderator a and then open it up to questions for folks if he'd like me to drill down on any specific color I'd be happy to do that if I can so with that I'll turn that back over to you Diego.
Thank you.
At this time will conduct our question and answer session.
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Our first question comes from Jeffrey Scott with Scott Asset management. Please state your question.
Oh, good afternoon, Imbark, I guess I'm sorry.
Thank you I had to hop off for a minute or two I hope I didn't Miss it could you talk about the the commercial development or the timing of it and kind of what your expectations are for the Oh, what's going to moving there. Thanks.
Good good ER.
Good good call. Good question, you know, Doug Doug key element of commercial you know where you're selling lots you know you might be selling.
Large lot you know couple lots to the acre that type of stuff when you're when you really get a good commercial development you sell your land in a square foot range, a one of the things that the company recognized is that it did not have.
Adequate expertise either at the managerial level or at the board level to evaluate commercial deals. So our newest board member Ah Mr., Jeff sheets are certainly brought with the him about 25 years of Denver based commercial real estate development expertise. So we're very delighted to.
Welcome into the board and his you know his recruitment was very specific to that opportunity, Jeff we really wanted to make sure that the company does capitalize on that.
If I were really to highlight one of the advantages of being debt free is the fact that we have.
The flexibility to be patient on the commercial stuff and realize you know the the significant value or the full value of that we're we've been we've been approached by a number of folks that have have an interest in the commercial development, but they've been the type of players that.
You know would buy it and then sell it to somebody else, who specialize in commercial real estate development as opposed to actually developing the commercial real property and so we would like to eliminate that middle man by bringing on someone like Jeff with some expertise to do that I would say that we're probably a maybe a year out.
From being that guy in getting that commercial real the commercial accounts that have an interest in there and that's mostly because of a trip traffic and things like that so you know as we start to balance out the rest of phase one say getting closer to that 500 unit development and really we're the only.
We were the only development and really the only interchange on the Interstate within kind of a geometry of trying to threed threed directions going west towards the Denver. The nearest commercial development is about eight miles away. If you go east farther out of date.
Longer there's some commercial activity really just mostly grocery store not a lot of other retail that's about 11 miles and then you'd have to go about 10 or 11 miles south to pick up that so triangulating ourselves. We are in an ideal position for that a commercial development and then you know I think what.
They're looking for is a little bit more density a little bit more traffic.
And then I think you'll start to see some deals go about that we are we are in the market. We are talking with participant that that might be interested in grocery kind of a kind of a strip center type deal, where you can get grocery and a couple of other things a couple onto that as well as some big box stores and.
Things like that so when we envision that we envision kind of a a full mix of retail.
Kind of the commercial side, where you'd pick up you know those those Walmart or Oh home depot, or a lows or any number of the big boxes together with you know some square footage for.
Transportation or warehouse or employment centers and things like that so that's how we kind of look at it and really are looking at it to be patient enough to stay in the game to be selling it directly to the developer on that so we're likely to deliver a finished pad site for it where we'll do what we're doing on the single family lot basis, where will the.
Well extend utilities Stewart water gas electric sewer and then you know participate in varying deep deal structures on the commercial side, probably you know not interested in going vertical on any of that stopped but you know we want to try and optimize how we're going to.
Participate with the market place on the land side and bringing all the utilities do it to the best finance that.
Oh, good really a good commercial development won't start for another year. So I.
That's my hunch, given the level of conversation that we've got I, just I think that's still about a year out.
Okay. Thanks.
[music].
Thank you. Our next question comes from Greg Melich Koski. Please go ahead your question.
Hey, Mark how are you.
Hi, how are you.
Good good good just a quick question or comment, but I do want to agree with it a mad.
You're talking about regarding the.
The denominator interest in general the handling of shareholder resources I think its.
Definitely going to strength of the company is something that you guys.
I've got a good job with in respect to that and where we stand I was just curious if maybe you could shed some light on.
In terms of.
If there are acquisitions, where I was born in the last side, obviously more of the water side.
Are there other.
Assets that you're kind of looking at trying to plug into the equation and also I guess.
Related to that if you've seen any sort of shift starting from I mean, Denver is obviously different from New York City, but.
There's been talk a virus.
Kind of affects where people are maybe looking to actually move out of the city to more suburban and rural areas and if that's something that.
You're seeing starting to come into effect in the area, where you guys operate.
I'll take the latter part of that first and then talk a little bit about you know were where our nets are out in terms of acquisitions. You know I think Greg we're probably very typical maybe even slightly weighted to.
A continued.
Suburban development model, you noted the west Denver, particularly but you know when you take a look at the bigger cities and I would not compare.
Denver as a big city compared to New York and some of the.
Larger metropolitan areas, but for Colorado being the largest city in Colorado, We look at that as an urban center and it took it to you know he ons I mean really haven't had any urban development until maybe the last 10 years, where you started to see you know significant.
Multifamily projects pop up downtown.
And you know those were those were long incoming and slow in acceptance and then you know I think you know and this is just my crystal ball, but I think you're gonna see the very same trend is that a lot of those folks and maybe they were you know young you know cohabitation dual income.
Doug said that started out because they wanted that that urban lifestyle. They wanted to be downtown they wanted to have the restaurant scene and now as they start to mature up in the millennial.
Segment that they really want to start to take a look at families in our and really we get this from our developer from our builders to is that they've got a lot of people who comes down to look because they're climbed them a walls being locked in and you know finding that you know seven 800 square feet isn't a isn't enough.
Face when you have to be there all the time and you have you know one or or multiple people working from home in so I think that a lot of our June traffic and I do you know really the traffic coming out of the rest of the summer is somewhat indicative of that very trend now I would argue that you know we're also.
So in the right price segment and you take a look at an entry level price segment for us.
You can buy house at our at our property for something starting in mid threes, and there's probably no other community in town that that happens and so you know a lot of those builders are good at what they do and they're able to plus that up a little bit but still I think most people are moving into this community with more.
Luggage is that are less than 400 less than 380000 dollar. So that I think is going to be a continuing trend and I agree I think it's gonna have more and more ramifications as we find this telecommute, we find technology platforms that continued to make it easier and easier for people to be per day.
Dr working from home and you know having four bedroom houses that you can buy it it at 380000, a level is gonna be a very high demand for folks.
Taking a look at the acquisitions you know we been in the market.
For about a year, because we've had the liquidity to do that to make pitches than we'd made pitches on a number of different types of projects I think as disciplined as you've seen us be on our denominator for shares whereas disciplined with our acquisition pricing. You know there is there is a time to risk on that sort of stuff.
And I was I was getting a little more risk gone in the January February timeframe, and you know the and while I can't be very specific because it's still an opportunity.
You know how to deal that we just couldn't quite come to terms on and was.
By the time March and April came around I was extremely happy and they were you know a little bit regret that they didn't pick our last offer and then you know we kind of cool that one down in its still active something that were good but that's it if you're looking for personality on how we're looking at acquisitions.
That's kind of the style that we're going to try and be good and tri be smart to make our money on the buy and not on what it is that we do even though I think we'll make money on the things that we can do by adding water, adding a you know infrastructure or adding a you know development and entitlements to that we are looking at both land opportunities where weekend.
Provide utility services. So you know those acquisitions would be.
Well, maybe not have water attributable to them or just maybe have the groundwater beneath the property that would be attributable to it so.
Certainly not enough to provide urban level density development.
And even if we don't become the developer if we just add utility contract and get the entitlements and then you know if it turns out that we find that debt.
Diverting our focus from other areas, which I you know I think we're demonstrating a certain ability to be disciplined about how we do the land development as well not only in how we're pricing it how we're developing it but also how we're using cash management in that side that we want to be thoughtful about that and then also some you tell us.
These are being able to be out there acquiring utilities one of the thing that that the virus did you know and put a lot of uncertainty into how quickly you.
Some of these acquisitions might absorb and so where we might have had a little bit more conservative a analysis as to how these things would absorb and they but have you know the the seller may have thought it would have absorbed a little bit faster to get a present value to be a little bit different I think some of that is going to did the virus issue.
Susan kind of slowed down and if nothing else just the uncertainty to you know how some of that forecasting goes so we want to be disciplined about it but we also want to make sure that.
You know, we do put stuff to work and we can continue to demonstrate we know what we're doing in thing. So they'll give you a flavor for some of what we're doing.
Okay. That's a that's that's helpful. I guess, just how they're kind of.
Well the question relating to the joke in terms of actual household or people living.
At the community that they can go in quarter over quarter and in terms of forward looking is there any sort of delay incorporated just through obviously things being shut down and whatever was going on March April and May.
Or is that really just more dependence on things relating to the builders and home closings.
Versus.
Literally shutdown from government perspective.
I would say well what our experience is that while we did have slower closings in April and may that those buyers that would've otherwise been closing in April and May just rushed to the site in June so we didn't lose any so it was just kind of it.
Timing difference and you may not notice it just 'cause it occurred in a quarter, but no I would not say that we've seen any.
Any decrease and traffic or contracts from if you look at this schedule instead, a quarter over quarter year over year. In fact, I would say that the virus is gonna be accelerating some of that demand and that's what our builders are preparing for it used to be that they wouldn't know.
Never develop spec homes and they always wanted to sell a home before they before they would actually start construction on it and they're pulling taps and they're pulling building permits.
In anticipation of doing spec homes right now just because they're getting a premium for being able to deliver those home. So each of the builders are I've been surprised that you know given the level of traffic and that they they not they didn't they didnt like pump the breaks they actually you know moved over to the battle the gas pedal on that.
Okay. All right. So that's helpful. Thank you for detail.
So you're.
Awareness.
Disciplined in just the way you guys generally available as a company I think is excellent.
Well, that's especially even earlier that Paul just I don't think I've ever really hurt.
You know executive at a company say well, we just didn't really have experienced here. So we waited and we brought somebody had I think that shows a great deal of humility and us pretty also from a shareholder perspective, usually get a bunch of arrogant you know what about you know.
A different approach than that so I think I.
Thank you guys are doing the right things I think you're being disciplined.
And again, just being very careful with the resources available and I think that's going to continue paying off so are they thank you and I'll jump back.
Thanks, I appreciate that you know I live with a I live with four women. So I'm very cut somebody to being told what I'm not good at.
[laughter].
Thank you just to remind her to ask a question at this time press star one on your telephone keypad.
Our next question comes from Tucker Anderson with above all advisers. Please state your question.
Hi.
Silica are good to hear from you.
Thanks for all the good news.
Participated in your last.
Equity.
A test you have a true to the disappointed your side your work.
Thanks.
Well thank you.
Yes, my only disappointment.
Here on this call, but you are about to make the next Sky Ranch acquisition see I was hopeful that I would have that on this call too, but they just didn't quite it just didn't quite pan out, but and it's you know we do have our nets out and you know while I doubt that I can find another sky Ranch I mean, you know we acquired that.
Todd.
At a scary time, which you actually helped US win thank you very much we acquired.
Yeah, we acquired that in 2000 and data we acquired it when nobody wanted land and I you know, while I think a lot of people want land today, and I want to be part of that and I'm going to be competitive for that you know I'm not gonna be.
As as Greenspan would would say irrationally exuberant and how I spend your money. So we'll be we'll be opportunistic will be optimistic, but we won't be over your rational about it yeah. A couple couple of questions first Kurt.
Me a little more.
Background on the commercial development to too.
It's a lot of commercial development going to that you envision got we've got we've got into contract was shows up.
What I would call inward facing isn't going to be commercial sure Sky ranch or is it also going to be dependent on that location, you talked about and where a lot of it be looking beyond the sky Ranch community as part of their commercial.
Area of service.
And along with that are you full we're looking to monetize.
The commercial assets or would you be amenable if it seems like a very good deal to a long term ground lease up several of those.
Yeah, I wouldn't be amenable to a long term ground lease you know, we do like that recurring revenue and we'd like to stay in the game in terms of increasing the value. The property. So as we continue to invest in the community and do what we do to making an attractive place you know those ground leases I think become attractive.
Do you because you do get some appreciation on the real estate over a period of time and you still monetize it another point in time, so I like those types of opportunities.
You know, we'll see how does play out when you take a look at you know where we pull from for commercial certainly the Interstate gives us a tremendous advantage. It gives us the ability to impact you know from from really more than five mile radius to the property and while 3500.
Single family units, you know that's a lot of density to be able to draw some of that commercial unit <unk>. Because we have good transportation access will be pulling from that sooner than the build out of our property. While I think our property will create a tremendous demand at that commercial center I think all the properties around us and.
Access that we provide there with our interchange gives us leverage for a broader a broader market segment that really will be in advance of building out our community itself. So.
Play play it both ways I think we get advantage from pulling customers from other projects and other properties miles away from our project until our project creates enough density, where we overwhelm the commercial development and and hanging in there later phase on some of that stuff, where we can still have some of that stuff in our pocket.
It can continue to add value as we add density. So that's the real play and that's what we've tried to learn from you know our new director as to how to best.
How to best look at this from a value you know where we can actually you know have that asset where we have no debt to it. So you know it didn't appreciate you can asset and while it's not monetized for all of us to kinda Mark that to the market I think we'll continue to show that and smaller transactions, where the per square foot.
But in a you know the the triple net leased type opportunities continue to demonstrate value.
And my other question is.
A little more color.
Following.
Residential developments and I wasn't sure whether you were say.
That that further developments you see price points, both above and below where you are now to the extent, there's kind of multifamily and things like that in terms of terms of.
Moving to that how you think those price points might express.
Probably have some ideas such discussions with people for the next phase.
We do we do and so.
Yes, we will have.
Detached product at a price point that'll be at.
And above will have detached product that will actually be below because there will be smaller lot sizes. So you know you may have a a 1600 square foot house on a 32 foot locker as opposed to a 2200 square foot house on a 45 foot lot as opposed to a 20.
The 700 square foot house on up 50 foot locker, so have a variety of product segmentation and then taking a look at sort of the townhome Andy attached a duplex markets again, you'll start to see some product be in a very low threes, you know maybe even starting in the <unk> the high.
On a townhome type product the that maybe.
May roll up into a you know a 310 or something like that for that type of offering as opposed to a detached product. So it really is its reaching its continuing to reach other buyer segments. In this in kind of that entry level market other than just the detached second.
But.
Sure so sounds exciting keep up the good work anchor.
Holder.
Well I look forward to getting back to those muffin tops, if the Harvard Club [laughter].
Every time.
Right.
Thank you. Our next question comes from L.E. at Night with Night Advisors. Please state your question.
Hi, Mark.
Allie good to hear from it.
Well this is very much like old home week or to hear Tucker's voice on the phone Smith Barney alumni both metrics certain this fight spine company.
[noise] sitting here listening.
Two you having said how.
Oh phase one is selling out and is ahead of schedule.
And then listening to you.
Outline.
What certainly sounds like better than expected.
Perspective demand for phase two.
It begs the question.
As to whether or not.
You would be interested in or the builders would be interested in.
Uh huh.
Even if its physically possible to accelerate.
The pace at which you move right now you're talking about greeting.
Fall 2020 locked delivery winter 21.
Any possibility of accelerating that time table.
Oh, Great question, and I'd love to be able to do that as would day. This is this will be the unintended consequence of the of the virus is well I think the private sector react very quickly.
The public sector does not and so if I were also limit any any frustration and you know I mean, I I don't want to beat up on our local governments you know there they're doing a terrific job, but working remotely for you know the the county government than some of our.
Our storm water management agencies, and things like that the turnover of deal of drops and comments far far it probably triple, whereas something may affect logistic and three months and so it hasn't been us that that's deferred death.
Do you know the November timeframe, we would've loved to have been in the ground late this summer and had fully intended to be but just it just that's that's one of the burdens that we have to bear on this.
Okay.
Understood. Thank you.
Yep.
Thank you are there no further questions at this time I'll turn it back to a mr. Harding for closing remarks. Thank you.
Well again I want to thank all of you and you know I know a number of you have been with us for a long time, you know certainly tracking as participating in all of the things that we've done with a high degree of patients to allow us to show you. How we can monetize all this stuff and show you where you know you know the VAT.
All you is in our water assets and how those can actually enhance the value of land here in the air at West and so I've been thrilled to see this thing a mature to this.
Continued cycle on you know I've got a lot of wind in our sale I've got a terrific leadership I think the company's Rightsized you know we've got a terrific management team, we've got a terrific or no construction crews that have helped us deliver this project.
Within budget and be able to pick up new tools for our tool box to be able to do more in the next phase to make our cost in our margins much higher so.
Thank you for that thank you for your patience. Thank you for your continued support.
You know we were going to try and have an investor day this summer, but with a travel the way. It is you know the folks that are here local odd do call on me and do come out and see this and you know I continue to encourage you to come out there because the darned impressive or how this thing is greening up and you know the community with people.
And it's impressive because you know with more people at home you see more more more people than you would otherwise in the community and the feedback that we've gotten from residents in the community because they see our trucks. They see your guys. Then you know were whereas disciplined at the guy that a you know.
It is.
You know laying some are laying some pipe are working on a landscaping as we are the management level and you know all the guys. If they see trash they pick it up and you know our community. The residents in the community. Our best voice you know there, they're bringing their friends out there proud of where they live they love where they live they love.
The design they love you know the maintenance of what we're doing and it's really just you know.
Being attentive to the business small things and so.
Very you know got a great team got a great Board you know got a good balance sheet that we're going to continue to protect and you know, we'll we'll look for opportunities to deliver other exciting ER ventures for you and you know continued to share that benefit to our shareholders in continuing to monetize that I I I you know lament.
You know or the market isn't quite.
Got up to where I think it should be course, I'm sure you're accustomed to every CEO in the book are telling you that there's there there there.
And he isn't fairly valued but a you know we want to we want to talk left and do more so you'll continue to see us really do all are talking through posting results than otherwise. If you all did get a question that you wanted to you.
Just don't hesitate to reach out and give me a call and.
Well look forward to continued updates so thank you all very much.
Thank you. This concludes todays call all parties may disconnect have a good day.