Q1 2021 Five Point Holdings LLC Earnings Call
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Greetings and welcome to the five point holdings, LLC first quarter, 2020 One conference call.
Currently all participants are in a listen only mode. As a reminder, this call is being recorded.
Today's conference May include forward looking statements regarding five point's business financial condition operations cash flow strategy and prospects.
Forward looking statements represent five point estimates on the date of this conference call and are not intended to give any assurance as to the actual future results because forward looking statements relate to matters that have not yet occurred. These statements are inherently subject to risks and uncertainties. Many factors could affect future results and may cause a five point actual activities or results to.
Differ materially from the activities on it.
Dissipated and forward looking statements. These factors include those described in today's press release, and five point's SEC filings, including those in a risk factors section of the most recent annual report included in form 10-K filed with S. A C.
Please note that five point assumes no obligation to update any forward looking statements and now I would like to turn the call over to Mr. A meal, how Dodd chairman and CEO.
Thank you Jenny.
Right.
Good afternoon, everyone and thank you for joining us today.
As you know by now we are not a quarterly business.
The timing of a residential land sales is driven by the velocity of home sales by all of a guest builders, we time on delivery of a specific homesites to builders to dovetail with the build out of similar products, but they are a building and selling.
The new home sites are designed to accommodate replacement for the size of type a.
All type of homes that have been sold off.
This is one of the mechanisms we used a controlled supply thus maintaining the integrity of pulp pricing and protecting our builders.
This is why our sales in each of our communities happened once or sometimes twice a year.
As such a quarterly reports do not necessarily provide an ability to monitor market conditions.
Or the performance of the company.
We used a base of home sales by other builders as a way to measure the strength of a market.
And we've used a number of cancellations as a change in buyer sentiment or difficulty a mortgage qualification.
Did that end.
At the Great Park the rate of sales has been over a two X yesterday through April as compared to the St. Peter's last year.
And a number of cancellations is very low compared to historical averages.
More specifically in the same period last year, our builders had approximately a 162 net sales after a 55 cancellations.
Versus 339 net sales after a just 16 cancellations.
As a feedback we are getting from a hardware that homebuyers are attracted to the quality of the public schools and all of a community.
Safety of our neighborhoods.
And the exceptional quality a number of amenities.
Oh, a febrile program with a new home company is doing great.
The rate on sales is approximately 300% from our underwriting and prices on above underwriting as well.
We are nearing completion of the selection of buildings for the next neighborhoods to be sold at a great blog.
And currently anticipate completing the transaction in the second quarter a this year.
The total number of on sites in this phase is expected to be approximately 850.
It makes a product like we typically sell.
And the last yeah.
After over 17 years.
Soon as the approval of a specific land for the project by the Los Angeles County Board of Supervisors.
Last week a well.
As reported the first sales of the first phase with starting price is coming in above on the rising and a growing interest list in the hundreds.
The first phase includes 12 bundled on 68 home size and a segmented into 18 products being built by five build goes.
So as you know a buyer's wouldn't be able to visit over 60 models to choose their preferred at all.
As a net zero energy and net zero greenhouse gas community. So a lot is yeah, its being pointed to as the model of an environmentally responsible community.
The wide range of market rate homes, coupled with the future a plausible range a housing and the quality of a public education.
<unk> a balance of social equity does this environmentally responsible community.
A lot of this being said about ESG These days.
And every company is looking for ways to set goals in the areas of environmental responsibility social equity and governance.
For us.
E S G as in all of a DNA.
Soon we will be publishing a at ESG report that highlights all of the environmental and socially responsible a niche does we have been pursuing for many years, a dark amazing as well as other information about our company.
We are very excited to share with you all that has been accomplished and no debt more has to come.
In San Francisco, we are seeing activity by the Navy and it's free sampling of areas within a hunters point.
The Navy recently updated the schedule showing estimated dates for the completion of its regulatory assessment clauses and for the transfer on the balance of a puzzle.
We are cautiously optimistic.
The day they reevaluate.
Uhm process that the Navy.
Must undertake will proceed now without further delays.
Does that then.
We will continue to work well does it go a San Francisco and other agencies to more clearly established a timing of these land transfers and the phasing of the project.
On our last call we share with shared with you. The day show up housing has moved up to the top of the priority list and the state of California in every city and county within it.
As one of the largest owners of entitled residential land in the states. We have started engaging with some of our public partners about ways to help with housing requirements by potentially adding more homes in our communities.
On the non residential from.
Almost three years ago, we made a decision.
Designate a significant amount about nonresidential entitle them to health care and life science focused juices.
Our partnership with the city of Hope has laid the foundation for that.
The $1 billion a cancer center is under construction at the Great blog and is anticipated to open next year.
The three markets, we have a major presence in San Francisco, Los Angeles, and Orange County.
Our non among the top markets targeted by a health care and life science companies and capital providers.
This reinforces the decision we made and we believe that with the proximity of housing public education open space and quality a number of amenities in our communities. We are positioned to be the location of choice to build a campus for these users.
Last quarter.
We talked about holding an investor meeting, which we had postponed last year due to the pandemic.
Our original thinking was to have a virtually in June.
However in light of the announcement by the states do a low for everything to be open as early as mid June we have decided to hold the meeting in person and have targeted it for a September 15th.
Bob what in all will coordinate with you shortly in order to avoid any major a time complex.
And we will confirm that age with everyone. Shortly.
Of course.
We will get those who still want a boat space virtually the option to do so.
We think that you all will be more informed by being able to see all of a communities in person.
As we commented previously the goal is to share more information in order to assist you in understanding of the real value of the company.
We believe that the photos for a company like ours with elongated assets. The best way to look at valuation is a net asset value.
We play plans a shut our calculation of the NPV of the meeting.
With approximately 23 100 remaining buildable acres on the lines yeah.
What I would call them residential land sales are in the mid $2 million per acre.
And approximately five on the buildable acres at a great Park, what I'll call them credential land sales are in the midst of $5 million per acre.
We are confident then we when we finished our investor meeting in September.
You will share our excitement about the D a value of the company.
There's a lot of noise today about the state of a case O'neill and a number of people, leaving the state.
I came together for over 35 years ago, and I have been hearing about the demise of the states since them.
Sure. The states has a lot of issues to address.
As a partner of the state and the communities in which we work.
We will always bring perspective and help any way we can.
Can you point out is the fifth largest economy in the world.
With a very diversified population.
It is the epicenter of innovation and the birthplace of many of the ideas that have changed the way the world lives and works today.
For Us we know, California.
And California knows us.
Finally, let me conclude by thanking all of our associates for all their contributions despite the soft remote working conditions, we are still operating on the it.
It appears.
That will be ending shortly and I think we are all looking forward to seeing each other as a person soon.
Now, let me turn it over to Eric who will report on our 2020, one Q1 financials and we'd be happy to take your questions. Afterwards.
Thanks Neil.
Summary of our financial results was included in the earnings release issued earlier today, and our 10 Qs It's been filed with the SEC and is available for a review on our website.
The consolidated results for the first quarter are as follows.
Revenues for the quarter were $13 2 million, which were primarily generated from management fees.
The net loss for the quarter was $21 million after a $19 5 million in SG&A expenses, and 3.6 million in losses from our own consolidated entities.
While there were no land sales during the quarter, we continued to invest in inventory, which increased by $52.5 million during the quarter, primarily related to land development expenditures and Valencia.
Our cash balance at the end of the quarter was $230 million and we had no outstandings against our 125 million unsecured revolving line of credit.
Our debt to total capital ratio was stable at 25.1% and our net debt to capitalization ratio when taking into account our cash balance was $17 five per cent.
In April the maturity dates on a $125 million revolver was extended another two years to April 2024.
Moving to the segment results the company has four reporting segments.
N C a San Francisco.
<unk> Park and commercial.
It's a segment recall the segment results for the first quarter are as follows.
The Valencia segment is a consolidated for accounting purposes. The segment loss was 4.9 million for the quarter and there were no land sales in Valencia during the quarter.
The San Francisco segment as a consolidated for accounting purposes, and recognized 94000 net income for the quarter.
It's a great Park segment includes operations of a great Park venture the owner of the Great Park neighborhoods as well as the management services provided by the management company to the Great Park venture.
We own 37, and a half a day.
37 day, a half per cent of the percentage interest a great park venture at a 100 per cent of the management company.
The operations is a great park venture are accounted for under the equity method of accounting and therefore, the assets and the liabilities at a great Park venture are not included in our consolidated financial statements.
The Great Park venture is a self funding operation with no debt and had a cash balance of approximately $155 million at the end of the quarter, which is not included in five waves consolidated cash balance.
The net loss for the Great Park segment was $10 9 million for the first quarter, which was comprised of approximately 1.6 million net income from the management company and a 12.5 billion dollar loss from a great Park venture operations.
The company's equity and loss on the Great Park venture after adjusting for a difference in investment basis was 3.9 million for the quarter.
We are currently working on on extra out of land sales at Great Park neighborhoods, which we anticipate will close later this year.
We expect a cash proceeds from these sales and the ventures existing cash balance to result in distributions to the ventures partners sufficient to clear out the remaining $45 million priority distribution to the legacy interest and to commence distribution to a five point 37 or a half per cent.
Percentage interest.
Our commercial segment includes operations of the Gateway commercial venture and management services provided by the management company to the gateway commercial venture.
We own 75 per cent of the gateway commercial venture and 100 per cent of the management company.
The operations of a gateway commercial venture are accounted for.
The assets and liabilities of the gateway commercial venture are not included in our consolidated financial statements.
Commercial segment income was 579000 for the quarter, which included approximately 99000 from the management company and 480000 from the operations of the Gateway commercial venture.
Five points equity in earnings from the Gateway commercial venture was approximately 360000.
With that I'll turn it over to Jenny our operator for questions.
Thank you.
If you would like to ask a question. Please signal by pressing star one on your telephone keypad and if you're using a speaker phone. Please make sure. Your mute function is turned off to a like a signal to reach our equipment again price star one to ask a question a little pause.
Just a moment to allow everyone an opportunity to take a couple questions.
And we'll go to our first question from Michael Rehaut of Jpmorgan.
Hi, Good afternoon. This is a lot hillman on for Mike. Thanks for taking my question. So first I was wondering if you could provide some more details on the first home sales in Valencia last week and a level of capex any tightening that youre seeing from consumers.
In.
And that.
Development and then Additionally, I was wondering if there are any production constraints in either materials or labor or is that the bill there is a pacing to be able to deliver those comps.
Thank you.
Well.
I think that the in light of the conditions were living in as it relates to the sales process and the constraints of COVID-19, and the fact that you can't really conduct sales in a normal way its all by appointment and and streamlining its really not a.
Easy to look at the process of the sales as the a list.
A litmus test all the indicators are all open interest I think that's why I want to do.
Highlight the fact that what we're hearing from builders is that they're starting to compile a very very long list of.
Interest from people and a I just talked to one of the builders about half an hour ago, and they're saying that the the challenge. They have is the logistics of making sure that that list goes through as fast as possible a Lincoln visit the models on and make decisions quickly. So if you're a question is is that a.
A high level of interest the answer is absolutely put a lot of reasons one L. A county is one of the most constrained markets in housing in the whole state and a there hasn't been really anything a significant.
Significant in terms of new product and this is probably the largest a.
Opportunity to buy homes in this in the a and the currency maybe historically because as I said.
Youre going to have an ability to go and visit <unk>.
<unk> plus models, which you know practically speaking, we'll take you probably about three days to do so there's a lot of interest with our builders that are excited and and the other indication is typically we do not see the bullet a starts especially in the beginning of a master planned community of what everybody is looking for a momentum what we typically have seen as builders try to be more.
A conservative on the pricing of homes and income at a price that might be a little bit lower than a there on the rising to just create the momentum. The fact that you have not worked for a sales over the coming above underwriting a speaks volumes at least somebody like me who's been in this business for a long time in terms of the depth of debt.
Market.
That's great and then in terms of the production side.
Oh yeah.
No we haven't heard any constrains actually the activity on site is pretty impressive.
Impressive if you go see the amount of activity what we hear from the builders is I'm sure. What you are hearing which is the a pricing up a flood burden and some of the challenges that are coming from the disruption of the supply chain as a result of the COVID-19, a but there but none of this has impacted the a.
Production and in the County, who we view as a partner has been extremely a.
Cooperative in terms of the process and everything else because everybody is looking at this as a big answer to the housing crisis that they have in L. A.
Great. Thank you and then just switching over to a great Park.
It sounds like there was even a sequential acceleration in the sales there I think you'd said last quarter.
Quarter 240 Saturday on roughly net sales in late December through mid March and then you mean day.
Yeah about 300 net sales so maybe Jay you can comment on the sequential strength.
If it is a sequentially getting better or if maybe some of that is really eating out trends and then if you're seeing from the builders there I'm looking to meet or any of the sales pace or or taking large amounts of a price increases okay.
Any comments on that.
Great sure.
So I I mean, I do not look at it as a seasonal because we look at a season well you know the same season in St. Petersburg. We also try to look at it through the filter of.
Free COVID-19 issues as well.
The you know this is not news a unique to a two hour a project because as you know the housing market in general is a one on you know we are seeing some of the strongest housing markets right now historically driven by interest rates being where they are on the mortgage side as well.
You know what I always at a few referred to as a cocoon factor, which is the day acquaintances of people with their homes.
Those are the factors that are driving.
Housing and in the fact of the matter is even before COVID-19, we had a major shortage of housing supply, which got even a more aggravated during COVID-19. So what we're seeing is really very much consistent with what the rest of the markets are seeing in terms of the strength of the housing market, but what is a probably a unique.
And it's worth highlighting is obviously everybody is watching any uptick in mortgage rates, which has an impact on southern markets ourselves on buyers in terms of their ability to qualify a not qualify or make the payments on I think the payments, we had a little bit more insulated a then.
A lot of these markets that might be sensitive to interest rates because today our buyers.
<unk> 35 per cent of them at a cash buyers.
And the other 65 per cent, they're putting on an average 35 per cent down and a medium price with a great blogs about 1.2 million. So you know that.
That's a buyer profile that is diversified in terms of the product offering and the debt.
Interest, but they are not as sensitive to movements a interest stays as as a buyer in the tertiary market would be so that's one thing that I think is worth highlighting we are.
I liked it the cancellation rate.
Because a lot of times people talk about sales, which obviously is a very important indicator of the strength of the housing market, but for somebody like me I've always watch cancellation, because I view cancellation is a leading indicator of any change in sentiment.
Or a trend mainly in the area of mortgage qualification.
One when you are as low as a cancellation rate as we're seeing today one it means that people feel good about buying debt home and and a lot of it goes back to the second part of your question because builders are pushing prices up and builders don't want to end up missing in on that opportunity a buyers I mean, but more importantly.
That means that build as a qualified buyers a qualifying and them being able to get mortgage and those are the two things that are very important for somebody like US who is not building 50 or 100 homes, we have a very long runway and trends become very important for us. So I don't know if that helps you but.
That's a that's how I see where we are it is a great spot.
Great. Thank you I just want I just want to clarify one thing there I think you mentioned net cash buyers.
35% I think last time, you mentioned they were 22%.
Hum.
So a lot.
Yeah, there are lots of information as I go through on the buyer from the builders, which was probably I'm going to say about four or five weeks ago.
We have 35 per cent of the buyers are coming in as cash.
Great. Thank you.
And well move to our next question from Stephen Kim of Evercore ISI.
Thanks, very much guys I appreciate all the info one of the things that we've been seeing a recently given the incredibly strong housing market is.
Return to.
Different kind of price discovery mechanisms I E I'm talking like auctions in some cases.
Moving to like field bids and I know a that's probably not what you are seeing at this juncture, but my question relates to whether you have a policy.
A N or intend to ever a in enforce some kind of a policy a to restrict price discovery behavior by the builders and and if you know what your thoughts are basically a round that kind of a of a.
A an approach to managing your community is a little bit more finally.
Steve Nice to hear from you as always.
The answer is no to a policy.
But we have a long memory and you know we have a yeah for many of these were a builders want to a to make sure that they do not disrupt.
A program that theres going to be a long term program, that's meant to be homeownership and not speculators.
And as such I mean, I think that we we have a relationship without a builders that doesn't require a policy by us because its them who are selling their homes a debt.
Understand very well that we we spent a lot of time a lot of money and a lot a focus to make sure that our communities are not so many of these all of a speculators I can share with you that one of the things I do a to see whether we are seeing some trends on that or not is I often enough, we'll take a drive through the commute.
In the evening.
And see if the lights out on and is a cause that a driveway or a good percentage of the homes are a dark as probably in my opinion, the best way to see if you have people who are the investors a lot, but we don't have a policy Stephen and I. Neither should we but we haven't seen it we are not seeing any of that.
And so far even in even when it was happening back in the days and all of a master plan communities. We didn't see it through the same level as you know think standalone tracks, what we're seeing.
Yeah, No. That's helpful. Yeah in a thanks for addressing the investor side of it as well one of the things that I've wondered about in this a incredibly strong housing environment, where a builders are seeing an acceleration in a.
The pace that they are able to sell at in addition to price.
Is what your thoughts are about pacing your way through a your.
Your long term community is it your view that.
A lot relative to let's say a year and a half ago.
But it would be your desire to maybe move through I'm talking specifically Valencia bottling move through the project in a more a shortened timeframe a the residential portion or even a portion of the residential portion you know accelerated on an accelerated timeline and if so how is that actually what.
Decisions are you, making with respect to infrastructure.
And the timing a you know a major cash outflows a.
A two to fund that.
Well I mean, now you're asking about the secret sauce of the company and and let me tell you a the answer all kidding aside.
We have to look at more than one constrained when we look at there's a more than one opportunity first of all in a master planned community like this especially in the beginning of it infrastructure and the speed of providing infrastructure to open up new areas.
Is is really critical because you are putting a lot of infrastructure upfront that there is a base. That's gonna help open up a lot of phases in the future as you are building a city.
And you might not have the luxury due a to put that infrastructure them at the same speed as you would like to open up more areas, but but the reality is what we tend to look at is avoid.
Voiding any cup cannibalization by the builders and therefore, we spend a lot of time as you know on making sure that we slide in as many products as possible with a segmentation and when you look at a day 168 homesites in the first phase.
Being segmented into 18 products.
You know that's a thought as you probably can go without starting to provide a product that's going to start cannibalizing another product and therefore, a destroyer destroying the long term prospects of a value creation out of the ladder our debt.
Land as a replaceable and the thing that I think it would hurt us. The most is if we if we focus so much on speed and end up discounting per acre because that's actually has a bigger impact. So you have to always optimize by finding the balance.
Having said that you know today, we feel very comfortable.
That between the Florida of pricing that exists in Valencia.
And the ceiling on price you can get we are comfortable with which typically is we hit 40% of median home price is a flawed.
And about 170% as a ceiling between the floor and ceiling, we were able to put to a slide in 18 different products.
<unk> with five builders and feel very comfortable that that's going to actually be optimal now what will happen, though is that as the market moves and as the committee established itself. We will start seeing an opportunity to push the ceiling Elizabeth more and get something more on top which if you know you've been following us for a long time.
We've done that with toll brothers, and even going back to the Dakotas, the Gaza days or a he has what we now so I was looking for somebody who is comfortable to go above above and start looking at products above and we started looking at products on the lower side that is more of a higher density as well as potentially a body.
<unk>, which is really what our focus right now is the Valencia L. A.
Is to start looking at bringing in it.
Our partners to the market and therefore absorbing some of the land by having a a an apartment program. So that's really what we tried to do I would say, where we are right now on Valencia, knowing that we have a 21000 homes ahead of us. The most important thing is lay the foundation properly and then the market will allow us to do what we do.
To do but we're going as an optimal pace I wouldn't say a they are the highest space a maximum bid.
The way, we look at these things as optimization not maximization.
So that's very helpful. Thanks for me all for that so as we look ahead over the next five years, let's say take that kind of a horizon.
In Valencia would it be your expectation that there might be a point in time, where there would need to be a net cash outflow of a meaningful net cash outflow a that would outstrip the pace a cash inflows as a about from from residential land sales in an attempt to sort of maintain a or maintain a higher level.
On a philosophy maybe than you. Initially envisioned you know such that you would need to sort of have a bulge in the a infrastructure development and the costs associated with that so that you would be generating a net significantly negative cash flow a in sometime within the next five years.
So I would say that a lot of the a infrastructure that is a global in nature, we call. It which is the infrastructure that is a is meant to open up other areas has been going and since we started a development in October of 2000 and a.
And 18, I think it wasn't a start.
All of a 70.
And so a lot of a disorder in them and that's why we want to have the investors meeting in person. So all of you can see you know with your eyes the amount of development that's been taking place.
What we have what we expect to see in Valencia, there's not really anything different than what we have seen a great part because that is the evolution of our master plan communities you put a lot of money on the ground and on the great part. We started development 2013, we bought but a lot of money in the ground.
And then we turn the corner to a positive cash flow.
And over the last you know.
A few years since I think 2017 on 16, we have made distributions of $1 billion. A that's after all the money that we invested in the projects and you've seen some of the amenities. We built so this day.
A brake parts today is a big.
Cash flow positive contributor and a lot of distributions that would be amazing as Eric highlighted we will be making us a major contributions to even retired a 400 and some 70 some million dollar legacy distribution that we've got.
We had since 2017, so Valencia is going to follow the same way for the last two years, a three years, we'd be spending a lot of money. We started having sales we started generating revenue and we expect that over the coming a couple of years, we will find that balance and then all of a sudden you're going to start seeing a major positive cash flow. That's what we expect to happen assuming.
The market stays good and we don't have a correction in the market our expectation is that well.
Well, let me say it would become a a very big contributor to a positive cash flow for the company.
I'm Gonna say sometime on the 'twenty 'twenty three 'twenty for a period, we'll start turning that corner.
That's great Yeah, I'm really looking forward to seeing some of these projects a gun. So I'm glad you got to find a deal when a person. So thanks a lot guys.
Thank you Steve.
Well go to our next question from Alan Ratner Zelman and associates.
Hey, guys. Good afternoon. Thanks for taking my question a meal. A first question last quarter. You indicated that you were starting to have some conversations with the board about crafting a strategy for a potential you build for rent a product within your communities. You know that that's a segment of the market seems to be you know all the rage. These do.
And I'm curious if you have any update there on whether it's once a year a great parking you only need a projects in terms of where that might go.
Well, we havent really a I don't have an update because we haven't had a board meeting a probably since we talked a to go into that discussion. However, having said that a we are a as I said, we are right now in the process of evaluating some pause.
Those are the a in Valencia to build apartments, and that's our starting point a he doesn't stand on what happens in Valencia is most of the people who are buyers right now.
Will gravitate to more of the lower density product.
And I think that it would be a mistake to introduce if a rent program a year.
Yes that does not your typical apartment so they ask a question as well.
Yes, we chose without a board then we have a full intention to start testing the apartment market of debt I don't think that there's anything new if you're thinking about the a single family.
These are for rent and I'm gonna find it difficult for us to really find that a way because our homes are not.
Our homes are extensive and when you start talking about a great Park for instance, with a median home price.
A million two that's typically not a home that somebody who wants to rent is looking out and even a in Valencia when you're looking at something that's going to start pushing $700000, but a home.
Might not be but low.
You and all of a small enough to know al on the way we explored everything we look at everything but I I can't tell you that I've gotten excited about a four rent program except for apartments.
Got it I appreciate your thoughts on that.
A question you know I think you did this maybe in a in a small scale on your your Valencia, a lot sales, but you know when you look at what the homebuilders are doing on lot acquisition clearly, there's a lot a lot of interest in keeping as much off balance sheet as long as possible and I know you're delivering you know effectively finished lots to builders so its not like theyre necessarily.
Sitting on the balance sheet for a while but I think you did options. Some some lots to builders in the last round I'm curious you know as you embark on the next round and a great Park whether a.
There's any conversations about doing that and in a greater scale. There and you know if kind of land banking in general a could potentially be a growth opportunity for the company.
Yeah.
As we I think we shared last a let's call that we have already put in place a land bank and.
And we have builders, who have taken advantage of our land bank.
From a Valencia, so we we have a land bank.
In Valencia, that's dedicated to land bank with a 10% participant in a 90% a of that is coming from a capital provider and a it's a program that was put together a not because necessarily of the return on the 10 per cent investments, where we have but it's another way to accommodate our builders as we speak.
Looking for was the pressure points on and as you said, we delivered a finished on sides, we pretty much to give them. The products. We've put all the amenities ahead of time and because of my previous a life experience a we always anticipated that theres going to be a point in the cycle one build a thought feeling.
On the balance sheet, especially with extensive land like Atlanta, So we put together the land bank and it's up and running and builders have taken advantage of it and we are gonna have a the same a same exact program at a great bargain. We already know of builders, who are taking advantage of the land bank to a to put a land banking.
It's a typical land bank of the build is a the landbank buys the land.
From us as a land company the land bank holds the land a and have a contract with the builder, where they build a puts up a certain amount of deposits and has a commitment to take down a certain number of home sites, a periodically and the land bank charges a somewhere between you know typically 90.
And a 5% interest.
On that and a and that's a program that's worked very well for us in Valencia and it'll be exactly the same one year is a great point.
Great. Thank you for that detail and final question on I apologize if I missed this but I believe you had estimated the the distribution from Great Park that you anticipated this year to be roughly a $100 million I just want to make sure that that's still the current estimate.
Yeah, and if you recall I said that and then I said, because it's giving me the eve a lie just not because if anything it's just because I said that because a all kinds of it I mean, it will be what will be a valuable to a certain extent nothing major will be how much a do we participate in a female.
Like we've done with the new home company, where we decided to a doing fee bolt on as I said, that's really good and we are looking right now as a repeat of that a in the next a takedown on next sales at the Great Park. So if we decide to set aside some of the distribution or something.
As a capital within the venture to because that that's a deal that was done within the venture to go ahead and take advantage of the fee build opportunity on.
Sure.
The land bank those are two things that might a might keep the cash a within the venture to a to reinvest it and that's why you know Eric was looking at a new that way, but the fact of a mother's I think that's a $100 million is still a good number and I think you should look at it as a good number.
Perfect. Thanks, a lot good luck guys.
Thank you.
And we'll go to our next question from Ken Hanson of Stifel.
Good afternoon, gentlemen, Hum.
Once again for a full disclosure I M. A C. A I'm a CFA, but a I'm representing myself as a shareholder.
On the Stifel Research Department.
Yeah.
I think it's a great idea to have that September 15th meeting a.
In person because I'm not sure that you get credit from the investment community Investor community for what you've built out there I know homeowners are giving you credit because there you're really buying the product that's there but.
I don't think unless you're on site and walks a trails and.
Interact with a low ball fields in Italy, and a hockey rink and those sorts of things that you really can appreciate how high quality of a product developed and designed a.
And that a experience on site with a little.
A little bit of help with a net asset value calculation for the rest of you know that product plus the rest of your redevelopment I think you're you'll be at a turning point for investors a realization that this is a a fantastic.
Opportunity.
One thing I'll mention because it is about the details on the product and I'm on your I'm on your a great Park site at least once a week.
And Oh visited there last week to play a beach volleyball. So one one a comment if you go there and you in an email you were saying you drive around occasionally.
You might drive around and see that the beach ball Beach volleyball courts day.
You have cables.
Nicely positioned and then chairs you'll notice at all the chairs are on the ground.
And the reason is not because when a move them over because there's a substantial chairs or that some juveniles a knock them over it's because I'm on the design of that product a was volleyball courts, three sides and a while ago a court has.
Land that descends from the surface of the court so people.
People are chasing balls, all over the place and so what they do is they put these they take the chairs you have made available a nicely and they use them as a barricade. So they don't have to go a quarter mile to get the balls out of the out of the parking lots. So just a small thing on I know you're about small things and a when.
We'll come to take the tour I don't want them to think that there's.
Thing going on its not going on so it's a simple.
Okay.
Some solution that sure people can come up with a keeps the volleyball somewhat contained would prevent us from having to chase those around in and go on to traffic and such.
So that's my only request a outside of that the the amenities are spectacular a.
Irvine is there and I don't know that people know this about her volume but is a.
Consistently annually one of the safest cities have a size and in the United States a the schools a world class a.
You definitely have a a diamond there that your polishing and I hope that the rest of the investment community can can see that when they show up on September 15th.
First of all again, it's nice to hear from you again and I truly appreciate your comments I hope that well after September as many people as they go they will all have the same excitement that you have about what we what we build over that and what we do.
And yes, you are 100% right I am about the small details because at the end of the day I am a big believer that if you pay attention to the details a people will know how much your hard you have and what whatever product you build and just to tell you that I don't only drive around because I.
Walk around a.
Probably about two years ago, I was walking around with a suit and a tie on a on a warm day and I think I might have been walking somebody to probably show them. What we're working on and I had to chase one of these walls of the sand volleyball, and and I went down and running out for it which I realize I am too old too.
On to try to spend a bit only putting aside I mean, I I was talking to some of the players over that on one of the issues that they raised was one.
A descending slope on the Diebold is running a day chasing the wolves and two the fact that they thought that there could be a need for more.
Sand volleyball courts, as such and as you know we have build a facility, but we have dedicated doesn't give it to the city. So we don't have the operational right to a to do anything over there.
But I can tell you that we are working with the city now on plans to add a I think about three additional sand courts and and deal with the issue you just highlight that in a way that doesn't they've chosen a lot of the ball so.
COVID-19 has delayed some of the thinking but I can assure you that even as a smaller as the detail you just highlighted.
It got it has my personal attention.
Fantastic and I think the rest is a project shows that so I and I think even looking at the the <unk>.
Major trees that you saved on salvage from the old days and a replanting a is a just a reflection of that attention to detail. So.
I look forward to.
To that September.
We look forward to meeting you in person as well.
Pleasure. Thank you very much.
Thanks.
And with no other questions in the queue at this time I would now like to turn the call back to Mr. Miller for any additional or closing remarks.
Well again, thank you all for a for setting a there's a time with us today.
I am glad that we are starting to look at a light at the end of the COVID-19 tunnel and hope that you know.
Next time, we talk the situation would be much more stabilized we really look forward to seeing you all a.
In September.
And as Ken said, I think that it does it'll be worth your while to come and see these things in person and be able to a took.
To get to know this company a little bit more than just financial reporting.
And lastly, as a as I look at the screen and see the amount of associates, who have taken the time to dial in and listen to a to us.
Tell the world about that off with I want to thank you all for a for everything you do over there for being on the calls a day.
Oh, Thank you very much on until next time.
Right.
Yeah.
And that does conclude the call we would like to thank you for your participation you may now disconnect.
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