Q2 2021 Howard Hughes Corp Earnings Call
Good morning, and welcome to the Howard Hughes corporations second quarter 2021 earnings call. All participants will be in listen only mode should you need assistance. Please signal a conference specialist by pressing the Starkey followed by zero.
After today's presentation there'll be an opportunity to ask questions to ask a question you May Press Star then 1 on your Touchtone phone.
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Please note this event is being recorded.
I would now like to turn the call over to John Saxon Investor Relations Associate. Please go ahead.
Good morning, and welcome to the Howard Hughes Corporation second quarter 2021 earnings call with me today are David O'reilly, Chief Executive Officer, Jay Krause, President Correne, Loeffler, Chief Financial Officer, David Streit head of operations and Peter Riley General Counsel before we begin I would like to direct you to our <unk>.
Website, Www Dot Howard Hughes Dot Com, where you can download both our second quarter earnings press release, and our supplemental package.
The earnings release and supplemental package include reconciliations of non-GAAP financial measures that will be discussed today in relation to their most directly comparable GAAP financial measures.
Statements made today that are not in the present tense or that discuss the companys expectations are forward looking statements within the meaning of the federal Securities law.
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 in our second quarter earnings press release, and the risk factors in our SEC filings for factors that could cause material differences between forward looking statements and actual results we.
We are not under any duty to update forward looking statements unless required by law.
I will now turn the call over to David O'reilly.
Thank you John Good morning, everyone and thank you for joining us today on our second quarter 2021 earnings call.
I'll begin this morning's call with an overview of our quarterly performance and cover the highlights both our master planned communities on the seaport.
I'll, then hand, the call over to our head of operations, David stripe, who will speak to the results of our operating assets segment.
Jay Cross will provide updates on our development activity in ward village and finally, our CFO Correne Loeffler, who will conclude the call with a review of our financial results before we open the lines for Q&A.
Yeah.
With that let me start out by saying our positive second quarter results Mark a significant milestone for the Howard Hughes Corporation.
During this time last year COVID-19 emerged as a significant obstacle that we had to navigate for the better part of the year.
Fight the enormous challenges of the past year, our team of dedicated employees irreplaceable assets and highly sought after communities withstood the various hurdles presented by the pandemic.
I am pleased to report that all of our business segments are demonstrating great strength and resiliency and now have either surpassed or closely approaching pre pandemic levels.
Our master planned communities continued to generate strong results with the acceleration of land sales driven by robust homebuyer demand day.
Man that began to strengthen in the second half of last year and has carried into the first half of 2021.
An integral part of our strategy is our ability to sell residential land to homebuilders at higher prices over time.
Driven by the amenities created by our commercial developments that are integrated throughout our communities.
During the quarter, our commercial assets delivered strong year over year and sequential NOI growth in our operating assets segment with notable improvements across retail hospitality and the Las Vegas ballpark.
Turning to condo activity in Hawaii Ward village has continued to experience elevated sales despite being limited to a mostly virtual condo toward experience.
All 3 towers currently under construction are now 86% pre sold and on.
All progressing on time and on budget.
Finally at the Seaport, we experienced improvement with a continuation of the Greens increase rooftop events and robust restaurant activity all of which continue to drive increased foot traffic to the area.
Now taking a deeper dive into the drivers of our MPC segment.
Over the past several quarters our communities located in the Las Vegas, and Houston regions were able to capitalize on the demand from out of state migrations as homebuyers living in densely populated high cost states set a better quality of life with a focus on expansive open spaces and best in class amenities. This.
<unk> was further solidified by the latest midyear report released in July by the Robert Charles Lesser Corp, where our communities in Summerlin Enbridge Lynn ranked among the top selling masterplan communities in the country.
Summerlin was ranked as the third top selling MPC in the U S and was the top selling MPC in Nevada.
Brisbane was ranked <unk> on the National list.
While some of the pandemic driven migration trends that I just highlighted have moderated.
Regional builder inventories have been depleted and remain at or near all time lows.
Additionally, homebuilders have recently shifted to adjust in time home delivery strategy in order to combat supply chain constraints.
Which have also contributed to our reduced available supply.
Overall housing demand within our communities has remained strong and new home permits have remained elevated.
All of which point to increased homebuilder demand for land to replenish their depleted inventories.
During the quarter, our MPC has delivered tremendous results as the strength in land sales combined with earnings from our summit joint venture in Summerland helped drive the segment's earnings higher.
In addition, new home sales, a leading indicator of future land sales grew 23% year over year.
Summerlin had an all around great quarter, selling 49 acres of residential land, while also increasing its price per acre of 14% compared to the same period last year.
Builders continue to purchase more of our land to keep up with demand, which is evidenced by the closing of 3 super pad sites during the quarter.
Additionally, summerlin saw a 66% year over year increase in new home sales demonstrating the demand from homebuyers in this region remains strong.
Another significant driver to Summerlin success was derived from the earnings generated at the summit, our joint venture with discovery land.
The summit increase in earnings was due to closing of 16 units during the quarter versus 3 units during the prior year period.
Enbridge Linde land sales softened in the quarter with 25 acres of residential land sold compared to 38 acres in the prior year period.
Richard on his new home sales slowed a bit during the quarter as well as homebuilders pause the selling of blocks and began listing homes on the market in a much later stage in the construction process.
Change in sales strategy for homebuilders Enbridge Lynn that was driven by ongoing supply constraints that impacted material cost and delivery times.
We view both the decline in land sales as well as the decline in home sales this quarter as a temporary pause driven by this change in homebuilder sales strategy that meaningfully limited supply.
And was not the result of any change in underlying demand.
As builders now begin to release these partially constructed new homes to the market and return to the more traditional model of selling lots, we expected sales will rebound in the coming quarters.
The woodland Hills delivered positive results across the board with significant year over year increases in land sales, new home sales and growth in the price per acre of land sold the.
The results produced by this MPC continued to impress and have maintained an accelerated pace over the past several quarters.
Yeah.
Turning to the Seaport, we continued to experience numerous areas of improvement with the reopening of the Manhattan economy.
We have begun hosting various rooftop events, such as high school and college graduations, and most notably ESPN annual Espy Awards.
We continue to see strong demand for the future events at the rooftop, which is a great sign coming out of the pandemic.
We've also made tremendous progress with our restaurant space.
During the quarter, we increased the number of open restaurants from 2 to 7 of these openings 2 were related to concepts by acclaimed chef Andrew car Malini.
Restaurants, Carnet Maher and Mister dips.
Both of these have displayed very strong initial results.
Lastly, we relaunched our summer concert series on the rooftop at Pier 17, which was canceled last year due to the pandemic. We held our first concert in late July to a sold out crowd and have several more concerts lined up through October several of which are already sold out.
With that I'll hand, the call over to David Streit.
Thank you David.
Results from the second quarter that David just highlighted clearly display the strength of our business as the economy continues to reopen.
In particular, our operating assets segment generated robust results that I would like to touch on in more detail.
On a commercial properties delivered improved results during the quarter as the portfolio continues to inch closer to pre pandemic levels.
Our operating assets segment generated NOI of $57.9 million in the quarter.
It was a material improvement year over year and sequentially.
The results delivered in the second quarter by our retail properties were 1 of the top highlights from our portfolio of high quality assets.
Until NOI increase for the third consecutive period totaling $14.8 million in the quarter, increasing 72% year over year and 23% sequentially.
While we generally experienced improvements throughout the majority of our retail assets. The largest drivers of this impressive performance were concentrated in downtown Summerlin Ward village and the outlet collection at Riverwalk.
Specifically in downtown Summerlin, we're beginning to see activity surpassed pre pandemic levels as sales per square foot in June total $668 compared to $636 in June of 2019.
Our retail assets have continued to improve with consecutive increases in collection rates, which have been steadily improved to 80% from a low of 50% in the second quarter of last year.
Hospitality was another sector severely impacted by Covid, which caused our hotels to shut off for an extended period of time just over 1 year ago.
Our hotels have experienced a meaningful recovery and during the quarter generated $2.7 million of NOI compared to a slight loss in the prior quarter.
And a $1.8 million loss in the prior year period.
The improved occupancy at our hotels was largely driven by an increased volume of leisure travelers during may and June.
The Las Vegas ballpark had a tremendous quarter generating quarterly NOI of $3.1 million.
This was substantially higher than the $1.1 million loss reported during the prior year period due to the cancellation of the minor League baseball season in 2020.
For 2021, the season began in May and our team the Las Vegas Aviators is hosted several games at full capacity with additional games scheduled to continue through the majority of the third quarter.
The continuous lease up of our latest multifamily assets helped drive quarterly NOI to $7.4 million, a 94% increase year over year, and a 29% increase sequentially.
Just as we have seen robust demand in single family housing interest remains high for our available units at our multifamily properties.
With most of our assets leasing at or above pro forma projections, we have additional projects underway Enbridge Lynn summerlin in downtown Columbia to further capitalize on this momentum.
NOI increased 2% sequentially to $26.3 million as strong leasing velocity more than offset the tenant explorations experienced during the prior quarter.
I am pleased to report that we experienced a rapid increase in office leasing momentum during the quarter specifically in the woodlands.
Year to date, we have executed 216000 square feet of new and renewal leases with 95 per cent of that activity occurring in the second quarter.
In addition, we have nearly 300000 square feet of leases in progress predominantly concentrated in the woodlands.
This provides a strong pipeline of opportunities that could potentially close in the second half of 2021.
Furthermore, we have limited lease explorations that do not exceed 10% of our office portfolio during a given year until 2025.
With that I will hand, the call over to our President Jay Cross.
Thanks, David and good morning, everyone. As you can tell from the comments, thus far demand within our communities from both the residential and commercial perspective remains strong as such we need to ensure that our communities are equipped with the right products that residents and tenants are seeking last quarter I highlighted the commencement of 2 million square feet of construction across several app.
Asset types, including multifamily office and our condo tower, we've made great progress on the initial construction phase on these projects and while we have encountered material shortages in some instances due to supply constraint market, we do not expect any material impacts over the course of development.
This is due to our rigorous budgeting process and ongoing supply chain management.
There are a number of additional projects on the horizon as we continue to see an abundance of opportunities to diversify our product mix across the portfolio for instance, Enbridge line. We continued to experience strong demand for housing and see a need to offer additional product into the market as I mentioned during our Investor day and on last quarter's call. We plan to develop a single family.
<unk> community in Brooklyn that will accomplish 263 homes distributed across III product.
This is the first for Howard Hughes and will offer a complimentary product between single family for purchase in our multifamily offerings. The thesis is to provide tenants the flexibility of renting while still having access to many of the offerings of traditional home can provide such as 3 and 4 bedroom configurations private outdoor space and an attached garage the typical renter.
Might be an executive looking for our temporary housing solution, a single parent or young couples with the family seeking a temporary home as they saved to make a down payment for their first home.
The single family for rent project is still on the preplanning stages, and we look forward to providing additional updates in the coming quarters.
<unk>, we continue to make great strides on the development front 10 billing remains on track for completion by the end of 2021, and we look forward to having an official grand opening in the spring of 'twenty 2.
The exterior of the building is largely complete the interior is well along in the integration of omni channel capabilities for enhanced mobile ordering and delivery will establish the tin building is a 1 of a kind food home.
At $2.50 water Street, we continue to advance our plans for this site following the New York City Landmark preservation Commission's approval of our proposed design for 28 storey mixed use building. The proposal is now moving through the city's lend US review process to obtain final approvals anticipated later this year <unk>.
Additionally, we have agreed with the city on an extension to our ground leased to 99 years subject to a separate land used review process, which will also include our contribution to the seaport museum's revival improvements to the Esplanade in the opening of an important drive way around the Tin building. This separate process is also on track for our year end completion.
Shifting our attention to Hawaii at Ward village condominium sales continued to progress at elevated levels during the quarter, we contracted to sell 45 condos, which has further reduced our already limited supply of available units. The pace of continued sales has been incredible, especially when 1 considers the impacts of Hawaii Covid really.
On travel restrictions.
Last quarter, we broke ground on our latest tower in Victoria place, an average 349 units only 23 condos remain which speaks to the level of demand we are seeing in ward village.
Our other 2 towers under construction.
Lee and cooler or well sold at 87% on 81% and remain on time and on budget with completion expected in the fourth quarter of 2021 and 2022, respectively.
Finally, we sold out our third condo tower in Hawaii during the quarter with the closing of the final unit on.
For $12.9 million.
I'll now turn the call over to Craig who will review our second quarter financial performance. Thank you Jay during the second quarter, our operational teams were able to capitalize on improving market conditions and delivered improved financial performance across all of the company's business segments.
First our MPC has delivered strong results in the quarter with earnings before taxes, or EBT of $69.8 million, which.
Which is a 10% increase compared to an EBIT of $63.4 million in the prior quarter and a 66% increase compare to an EBT of $42.2 million in the prior year period.
Net operating assets generated $57.9 million of quarterly NOI, which represented a 20% increase compared to NOI of $48.4 million in the prior quarter.
And a 42% increase compared to NOI of $48 million in the prior year period.
Lastly, we sold 45 condo units in Hawaii, just 1 shy of the 46 units sold in the prior quarter and a 246% increase compared to the 13 units sold in the prior year period.
At the Seaport, we recorded a $4.4 million loss in NOI, which is only 1% lower compared to the prior quarter and 18% lower compared to the 2 on NOI loss of $3.7 million in the prior year period.
Despite the loss in NOI.
It is a meaningful improvement in visitor traffic was driven by an increase on events and strong restaurant activity.
Even with the impact of labor shortages in several of our restaurant concepts, we're still able to meet or exceed their stabilization target based on recent sales per square foot.
It demonstrates the strength of the customer demand.
We are very pleased with our quarterly performance and look forward to continuing this momentum into the second half of the year.
Taking a look at GAAP earnings for the second quarter, we reported a net income of $4.8 million or 9 cents per diluted share compared to a net loss of $34.1 million or 61 per diluted share during the prior year period.
The increase on net income from the prior year period was primarily driven by strong results generated by our MPC and operating asset segments.
Aided by our strong second quarter performance I am pleased to report that we remain on track to meet all of our previously disclosed guidance targets.
At the beginning of the air.
To reiterate our 2020, 1 guidance, we expect MPC EBT to range between $210 million to $230 million and expect operating asset NOI to range between $195 million to $205 million.
For the first half of 2021, our G&A totaled $42.1 million, representing a 31% decrease compared to $61.3 million in the prior year period.
Based on our current run rate, we expect G&A to be within our guidance range of $80 million to $85 million in 2021.
Focusing on Hawaii based on the pre salt volume Ali as well as our other sales at wire and Aha. We remain confident we can generate between $100 million to $125 million of condo profits in 2021.
Which was our original guidance for the full year. Once construction is complete at all he and the fourth quarter. We will that we will close on the assets currently under contract and begin to recognize the associated sales proceeds.
Now turning our attention to noncore asset sales and May we saw the monarch city.
229 acre land parcel outside of dollar, resulting in a book gain of $21.3 million.
Before realizing a noncash tax expense of $4.6 million.
This sales generated net proceeds of $49.9 million bring.
Bringing our total net proceeds from noncore asset sales to $263.7 million since the fourth quarter of 2019, we will continue to pursue the sale of our other noncore assets.
And we remain focused on achieving maximum value for these dispositions.
Finally, as we turn our attention to the balance sheet, we continue to maintain a robust liquidity position and a strong balance sheet.
We ended the quarter with just over $1.2 billion on liquidity debt comprised of $1.1 billion of cash and $185 million of Undrawn revolving credit facility.
Over half of our debt issuances don't mature until 2026 or later and we have ample liquidity to address our near term maturities as well as to fund our net equity requirement for our development projects.
Our strong financial position provides us the flexibility to nimbly execute on future project targeting outside risk adjusted return.
Now I'd like to turn the call back over to David for some closing remarks.
Thank you Corinne.
Before we open up the lines for Q&A I'd, just like to take a minute and reiterate a few key points.
First our business is designed to deliver perpetual cycle value creation as we sell land to homebuilders, new residents move into our communities and create a need for commercial amenities.
As we build out these amenities by constructing commercial assets. It helps drive the overall value of our land to hire we have nearly 10000 acres of raw land across the country that enables us to repeat this process for decades to come.
This model remains true for our condo developments in moored village, but on a vertical level, where we have nearly 5 million square feet of entitlements remaining.
Second our strong balance sheet leaves us well positioned to evaluate opportunities and react quickly based on current market conditions.
As Jay mentioned, we have already commenced 2 million square feet of development in the first half of 2021.
And are in the early stages of planning for additional projects.
Thanks to our enviable capital position, we're able to take decisive action by developing commercial assets at outsized risk adjusted returns driving our net asset value higher.
Third our management team is now fully established we come from unique backgrounds with diverse expertise and development finance and operations debt when mended together position us to nimbly execute and deliver superior results.
Bind with the support of our board, we're all aligned and focused on creating meaningful value for all of our stakeholders.
Lastly, we finished the first half of 2021 with strong operational and financial performance across the board. We believe our business is poised for continued growth and we are well positioned heading into the second half of 2021 as we remain on target to achieve our full year guidance.
With that I'd now like to begin the Q&A section of the call. We will answer the first few questions that have been generated by <unk> technology and will be read by John Saxon.
John can you read the first question.
Sure. Our first question is what is the risk that is likely to slow down the development of Hh see population growth employment growth lack of commercial development opportunity or anything else and what can be done by <unk>.
It's a good.
Question, and we've talked about it a number of times that our ability to execute on our development pipeline is really limited by 2 things market demand and capital.
Right now I feel like we have ample capital to be able to execute on everything that we have in the pipeline and right. Now. We also have incredible demand across our MPC is looking for new assets like single family for rent like additional multifamily and even in some instances some limited retail.
So right now, we don't see any headwinds, but what could happen well any 1 of other local economies in which we operate.
Were to slow down or we were not to see an increase in home sales and population growth could limit demand for new development.
Now, we're blessed with great net in migration to our Mdc's, we are blessed with great demand for more amenities more commercial assets that we have been able to execute and delivering on outsized risk adjusted returns.
Thanks, David next question, given the possibility possible inflationary scenario, what percentage of commercial escalation clause as CPI index type instead of a fixed rate so that the company is protected.
Thanks, I'll take this Jim.
We feel like we're well protected in in this area almost all of our retail leases have expense pass throughs of some sort.
In addition to many of them, having additional rent clauses based on sales. So we're protected on both sides. There. The majority of our office leases have pass throughs that are either based on your triple net so we feel very good in this area.
Got it thanks, Dave.
Next question, what do you think are some of the areas that <unk> Npcs can emulate from others and improve on in order to make them better.
Well look we've said.
Said in the past that we strive to be like what we have seen Irvine ranch due in Orange County.
90000 acres all owned by 1 owner controls land supply development with a thoughtful masterplan that's been executed with a long term value creation approach.
And that's really core to the strategy I think there are other great master plans across the country whether.
Whether it's stable tuner Lake Nona or.
Even the villages where there is implementing new technologies, new design and we're always looking to see where we can do better where we can learn from others and where we can push the envelope in terms of making our masterplan communities are among the best.
As I reported in our prepared remarks, we had incredible home sales on our communities with Summerlin ranking third in Brisbane ranking <unk> in the nation and continued strong demand and I think that demand is partially due to folks being higher tax coastal cities, but also largely due to the quality of the masterplan communities that we've been.
Working on and developing over the past several decades.
And that's resonating with our homebuyers, it's resonating with office tenant is resonating with consumers and we're always looking to improve on that.
Thanks, David So here's our last say question can you. Please comment on management's view of Hgh <unk> credit profile going forward and as planned on the concrete steps and timeline to improve the credit standing.
Thanks for the question I think it's a good 1 but we feel really good about where our credit rating is currently just below investment grade in fact, you saw how well we were able to execute on our recent bond deal on the first quarter that was able to set up on.
$10 maturities lower our overall cost and really strengthened the balance sheet.
Really good about that.
The balance sheet that we have with just over $1 billion that will allow us to execute on our on plan going forward.
Thanks carrying on.
Operator, we can now open up the lines for for those with Q&A on the call.
Thank you I'd like to ask a question. Please press Star then 1 at this time.
You were using a speakerphone please pick up your handset before pressing the keys.
Your question. Please press Star then 2.
Our first question today on the line comes from Alexander Goldfarb with Piper Sandler.
Hey, good morning, good morning down there.
David.
The first place. We'll go is are the homebuilders.
Yeah, a lot of questions from investors that concern on the market about pace of homebuilders to buy issues lumber appliances.
The ability for them to deliver so what is the latest and.
How should investors think about when they read some of the headlines that suggest homebuilders or are running into issues. How does that translate into your business on what you guys are seeing over the next sort of 6 to 12 months or Howard, but long your magic 8 ball provides clarity.
Yes, well my Crystal ball has been foggy for a long time Alex.
But what I'll do is I'll answer kind of what we're seeing real time now on the ground and how we think that impacts us and it varies pretty meaningfully between Summerlin and bridge loan in woodland Hills in Houston, because as you know we had different methodologies on how we sell land to homebuilders, where in summerlin, where we're selling super pads.
Homebuilders are buying those super pads now with the expectation of delivering homes on those super pads in 18 months.
And as a result, they still see long term demand and their appetite for more land with 3 super pads closing this quarter, obviously very very strong.
And while homebuilders have seen.
Supply chain issues. They have had some labor issues in some as you mentioned appliance issues. They are still shopping hard and getting through them and while it's taking them a little bit longer to deliver those homes. They are still able to deliver them and we've seen that in terms of the increase of home sales in summerlin, both sequentially and year over year.
Originally on slightly different where we're selling finished lots to homebuilders and there our homebuilder partners like.
They did everywhere else felt the crunch of lumber felt the crunch of appliances and as a result took a slightly different method as I met as I mentioned in our prepared remarks, where they were not selling a finished lot and then building the home, but building the home at least part of the way before they would sell it and it allowed them to take some of the <unk>.
Cereal risk in some of the delivery timeframe risk off the table.
As a result of that shift in methodology, there was a little bit of headwinds this quarter in terms of the number of acres sold although we still sold a great number of acres in Brooklyn, and a little bit of headwinds in terms of underlying home sales.
But I think that debt temporary shift in methodology of sales and we're starting to see it unwind already as homebuilders are going back to selling finished lots combined with what I think is a historically low supply level of land from homebuilders.
And continued demand right. The interesting thing here is that this is not a demand story. This is purely a supply story.
And with that strong demand low inventories and a little bit of the unwind of the supplies.
On strength that we've seen I feel like the next several quarters will continue to be very good for bridge Lynn similar to what we expect to be great quarters in summerlin.
Okay. So along those lines I think and apologies I don't have my notes in front of me from blocked earnings call, but I think you guys said last time, you were upping the sort of normal $200 million a year to like I think it was $2.10 to $2.30, maybe I'm off a little bit but is that still a good number that you anticipate.
As Corey mentioned in her prepared remarks, we feel great with that increased guidance range of $2.10 to $2.30.
Okay.
Memory was spot on Alex.
Thanks, Doug.
The next question is.
And don't fall off your share if I say, something if I say something positive about the seaport.
But you guys seem to have a really good response last year during COVID-19.
Your summer pods your winter pods, all that stuff was rave success, the restaurants seem to be from what youre, saying seem to be raped success. The beer garden I don't know if you have that back or not but I remember a few years ago. The beer Garden Ivy I think you sold more beer than you would.
<unk> sales in October so is there a way now that you have you are.
You had some vacancy on the historic section, obviously youre still dealing with commercial leasing is there a way that you sort of re imagining the seaport based on how you are seeing.
On new Yorkers respond to the program that you already have in place.
Yes, Alex I think the way we approach the seaport and how we think about bringing the right tenants into the historic district as well as the office space on Pier 17.
Isn't changed much from what we do on all of our Dcs, which is we're always looking to find the best fit based on consumer demand.
And some of the lessons learned.
Obviously with the closures of 10, Corso Como was not the best fit they didn't have a business plan to sustain through the pandemic.
And I think we've seen.
Throughout the pandemic and even post pandemic over the past several quarters, great resiliency of the local new Yorkers those in lower Manhattan, and those right across the river in Brooklyn that have flocked to the pier 4 the great dining outdoor Activations movie nights. The SPE Awards you name it.
And with the opening of the Tin building next spring I think we're going to have an incredible opportunity to re tenant and bring in some great activations and users into the historic Cobblestone District.
And I think they'll defer from perhaps what was envisioned several years ago, where there was more of a high end retail.
Kind of thoughts or goal to more of 1 that is in line to meet the demands of those new Yorkers that continue to come to the seaport day in day out.
Okay. Thank you David.
From.
And again, if you have a question. Please press Star then 1.
Our next question today comes from Vahid, <unk> with B Ws financial.
Good morning, Thanks for taking my question just a couple of questions. This morning first question is your SFO, a reflection of the scale and the operating business.
Well the <unk> really is a reflection of the increased NOI from our operating business. The increase on land sales in terms of MPC EBT and the profitability from condos right. It is a GAAP measure that eliminates depreciation that tries to.
Capture the results on a quarterly basis on an annual basis from really those 3 primary segments.
As you know.
Our results quarter to quarter, it can be a little lumpy as a result of the timing of condo closings and the timing of Super pad sales and our job here is not to try to.
Make it even quarter to quarter, but to drive the absolute best financial results for our shareholders and we're committed to doing that so while <unk>.
Does does represent those 3 segments, which are critically important to increasing our NAV on.
On a quarterly basis it may not be the best measure of how we performed.
Okay. Thank you and then the second question going to Ward village.
Just wanted to see if there was an update on another possible groundbreaking we're pre selling of another development for 2025 completion.
So we mentioned last quarter that we had received approval on 2 new towers, the park at Ward village and who Lana.
And we look forward to updating everyone over the next several quarters as we're hopeful that we're moving towards.
Getting those projects.
Going hopefully in short order.
Okay, and then 1 last question.
In regards to originally about the possible rental homes.
Moving from pre planning to planning.
We're planning now so maybe pre planning is a little bit.
We're debt, we're moving as fast as we can.
Okay.
What would take it from point I mean, what are the obstacles youre seeing right now to just moving forward and doing good.
But there arent any real obstacles I would anticipate within 1 or 2 quarters, we'll break ground.
The Delta from here to there Jay is largely completing the design 9 pricing strong design and pricing we've ever identified building partners.
Work with so.
Perfect. Thank you.
This concludes our question and answer session I would like to turn the call back over to David O'reilly for any closing remarks.
We appreciate everyone joining us again today and look forward to catching up with you in next quarter as well as NAREIT and hopefully we can talk to all of you soon and if theres any questions between now and then we're always here and available. Thanks again.
The conference has now concluded. Thank you for attending today's presentation you may now disconnect.