Q4 2023 Five Point Holdings LLC Earnings Call
Speaker Change: [music].
Greetings and welcome to the five point holdings, LLC fourth quarter and year end 2023 conference call.
As a reminder, this call is being recorded.
Today's call May include forward looking statements regarding five point's business financial condition.
Operations cash flow strategy and prospects.
Forward looking statements represent five point's estimates on the date of this conference call and are not intended to give any assurance as to 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 five point's actual activities or results to differ materially from the activities and results anticipated in forward looking statements.
These factors include those described in today's press release, and five Point's a P C filings, including those in the risk factors section of the five Point's. Most recent annual report on Form 10-K filed with the SEC.
Please note that five point assumes no obligation to update any forward looking statements.
Now I would like to turn the call over to Dan Hedican Chief Executive Officer. Please go ahead.
Dan Hedican: Thank you and good.
Dan Hedican: Good afternoon, and thank you for joining our call I'm going to start off by telling you that I have picked up the cold that seems to be going around so a lot of people. So I don't sound like myself. That's the reason I have with me today, Kim Tobler, our Chief Financial Officer, Mike Alvarado, Our Chief Legal Officer, and Lee <unk>, Our senior Vice President of Finance report.
Dan Hedican: <unk>.
Dan Hedican: Eric Miller, our executive Chairman is joining us remotely.
Eric Miller: In my remarks, I'll update you on our Q4 and year end results.
Eric Miller: On our team's focus during the quarter and on the steps, we're taking to implement our strategic priorities.
Eric Miller: Next Ken will give an overview of the company's financial performance and condition well.
Eric Miller: Well then open the line for questions to our management team.
Eric Miller: Yes.
Eric Miller: So let's begin.
Eric Miller: First let me congratulate our team on a very strong quarter a year.
Eric Miller: We started the year, but are still somewhat uncertain about the market and are reluctant to make commitments to acquire additional homesites.
Eric Miller: And we finished the year with capital markets, making it more difficult for commercial developers to pursue new speculative development projects.
Eric Miller: Despite those headwinds we ended the year strongly with consolidated net income of $58 7 million in the fourth quarter.
Eric Miller: Resulting net income for the year of $113 7 million.
Eric Miller: We're able to accomplish these results by continuing to focus on our three main priorities.
Revenue and positive cash flow.
Eric Miller: Controlling SG&A costs and probably most importantly, this past year managing capital spend to match near term revenue opportunities.
Eric Miller: Second I'd like to take a moment to note that this is the most consolidated net income that's five point is generated.
Eric Miller: Single year since its formation.
Eric Miller: We also ended the year with $353 8 million in cash and <unk>.
Eric Miller: $0 drawn on our $125 million revolver for total liquidity of $478 eight.
Eric Miller: $8 million.
Eric Miller: In addition to executing on our operating priorities.
We also initiated an exchange offer for our 625 million 7.8, 75% senior notes due November 2025 for new 10, 5% initial rate senior notes due January of 2028.
Eric Miller: I'm happy to announce it on Tuesday of this week, we successfully settled Woodbury, what's the participation rate over 99%.
Eric Miller: As part of the exchange reduced our outstanding debt by $100 million.
Eric Miller: And which will reduce our cash balance which will be reflected in our first quarter.
Eric Miller: Release.
Eric Miller: This exchange strengthens our balance sheet and provides us additional time to monetize our land development investments and prepare the company for growth.
Eric Miller: Jim will cover more details regarding this exchange during his comments.
Jim: Since I arrived at five points, they've been working on a number of initiatives underlying our three main operating priorities.
Jim: In particular, we are focused on our government government relationships assisting local agencies to deliver badly needed housing in a supply constrained markets in a manner that maintains the attractive our communities to today's consumer and with product offerings at several different pricing levels.
We have re engaged with the builders drawing on my deep relationships with them in order to drive higher land residual by allowing them to design and build more efficient housing products.
Jim: If you've heard me speak to this in the past and we have seen this come to fruition and our more recent land sales.
Finally, we spent considerable time to enter 2022 and beginning of 2023 analyzing the different commercial uses it could be developed on a commercial land holdings at a time and residential was lagging.
Jim: Allowing us to pursue industrial land sale transactions, they were able to close in Q4.
Jim: Despite the challenges that most commercial mark itself in the second half of 2023.
Jim: The work, we have done and continue to do regarding our commercial land allow us to be able to toggle back and forth between residential and commercial land sales at current market conditions dictate.
Jim: Our focus on these initiatives allowed us to have a strong year notwithstanding the changing economic climate, we experienced in 2023.
Jim: We intend to stay the course in 2024.
Jim: Building on the successes, we have achieved to date.
To that end, while we do not expect to have the same record breaking earnings in 2024 that we hadn't twenty-three we do expect to be cash flow positive and generate substantial earnings which will strengthen our balance sheet to prepare the company for the future.
Jim: Yes.
Jim: Let's now move to our market update.
Jim: The macroeconomic environment for most of 2023 was challenging for new home sales a dominant team being the impact of higher interest rates on the homebuyer well.
Jim: It was a year when home affordability was tested the man was constrained by the ability of the homebuyer to purchase.
Jim: In that environment homebuilders assistant stabilizing demand by offering mortgage products with reduced interest rates allowed new home sales to continue even at the resale market slowed.
At the end of the third quarter, the market was expecting rates to stay at elevated levels for longer than originally anticipated. However.
Jim: However, as we entered the fourth quarter the fed signaled that we might be closer to the end of the tightening cycle, we might see lower race in 'twenty 'twenty four.
Jim: Yeah, and sales reports from builder support improvement in new home sales as interest rates moderated and home buyers have more confidence in moving forward with a new home purchase.
Jim: This has led to improvement in homebuilder confidence, which we expect will translate into greater builder demand for residential land in our communities.
Jim: Yes.
Jim: California's housing dynamics are still very favorable in new home sales. The housing shortage is a driving force with production constrained by availability of land labor and materials.
Jim: Owned and rental occupancy to remain extremely tight clearly signaling that more homes are needed.
Jim: Against this backdrop, we feel good about our position in the California market with entitled an Irreplaceable land at Great Park in Irvine, well, let Shan North Los Angeles County, and a candle stick at hunters point in San Francisco.
Jim: And we still have strong interest from homebuilders for pipeline in these key California markets.
Jim: On the commercial side of our business south of markets have slowed for speculative commercial development, but we are still seeing interest from from the user market as users have limited options, if they want to design own and control their own facilities, a long term basis.
Jim: We expect this user interest will continue to support demand and this preferred asset class.
Jim: We also believe that the retail housing needs assessment or somebody who may not know it is rena.
Jim: A process that is ongoing in California will give us an opportunity to add more entitled housing units, thereby creating options to consider multifamily our for sale housing on our remaining commercial sites.
Jim: The most likely outcome being a combination of commercial and residential uses on these sites.
Jim: We're actually studying these options to be sure we are maximizing both land value and shareholder value.
Jim: Let me pivot now and provide you with some updates on our communities.
Jim: Starting first with the Great Park neighborhoods.
Jim: During the fourth quarter builders are Great Park community sold 76 homes.
Jim: That number which is low by comparison to more recent quarters was driven by very limited inventory at solar Park are only actually selling neighborhood in Great Park <unk>.
Jim: Despite the limited inventory, we're encouraged by the substantial interest in traffic in the communities.
For me the ongoing appeal of our homes to prospective buyers.
Jim: We believe the builder share our sentiment as we are actively engaged with multiple builders on new land up land sale opportunities at the Great Park.
Jim: Our next major neighborhood Luna Park will debut with 798 homes across 13 collections.
Jim: Checked it opened in phases from March through December of this year.
Jim: Yes.
Jim: In the first half of the year in Great Park, we anticipate closing two land sales totaling 187 home sites and approximately 24 acres.
Jim: As I mentioned earlier the remains strong homebuilder interest in acquiring homes sites at Great Park.
Jim: We anticipate putting additional homesites out to market during the year, which could close either this year or next.
Jim: Moving to our commercial land during the fourth quarter, we closed on two commercial land sales totaling approximately 38 acres of land for aggregate purchase price of $174 $2 million.
Jim: This was the balance of the 80 acres, we had taken the market to initiate our commercial land sales program at Great Park.
Jim: They initially entered into these land sale agreements early in 2023 before the capital markets started adjusting throughout the year.
Jim: I could have a golfer's avoid at closing on new land acquisitions, if many if not most markets we were able to close these transactions.
Jim: Ultimate closing price reflected the increased borrowing costs and higher financial returns of institutional developers expect on spec development projects in this market, but are still strong frager values by even recent historic measures.
Jim: As we move forward into 'twenty 'twenty, four will look to bring additional commercial and to the market focusing on users all using our flexible zoning to evaluate the opportunity for commercial and our residential land use us on these sites, which provides the highest land values.
Jim: Oh, there's been a reduction in spec building and relevant southern California markets, which has slowed the pace and pricing of offers for commercial land our location in the heart of Orange County has supported continued interest in our peripheral land for various uses and we do not anticipate that changing in 2024.
Jim: Now moving to Valencia.
Jim: Our other active community during the fourth quarter to build yourself 31, new homes.
Jim: As of year end 202 homes from our initial offering of 1200 and 68 homes have been sold was only 66 homes remaining which is 5% of that initial offering.
Jim: And our newest Valencia development area. We now have three new neighborhoods open with four more still to be opened.
Jim: Continued strong demand in Valencia, These new offerings will augment our current lineup and we anticipate that these all of these will result in an increased pace of sales.
Jim: The others remain engaged with us and Fletcher during the fourth quarter, we sold 583 home sites dispersed across six programs and approximately 46 cumulative 10 acres.
Jim: $401 $8 million.
Jim: Further <unk> of our.
Our our priority to minimize capital spend with with this land sale, we shifted some of the final horizontal development cost of builder. So the final consideration payable loss reflects the fact that the builder would take on these development costs.
Jim: As we move forward with monetizing our eventual landholdings, we're well positioned to expand on our capital management strategy, both by tying our capital expenditures in near term revenue events and.
By structuring land sales with our homebuilder partners to where practical shift Atlanta proven cost to the builders.
Jim: We also continue to market a prime 35 acre mixed use site in the community.
Jim: While we are still marketing for commercial uses with adjustments to the commercial market driven by changes interest rates, we expect a fast returns for developers.
Jim: Also studying residential options for this site, but our home building partners. We expect to have more to report on this later in the year.
Jim: Turning now to our communities in San Francisco with the passage of state legislation that allows for the extension of the existing tax increment financing program for Candlestick and hunters point shipyard, we're now focusing our attention on working with the city and county of San Francisco to progress the rebalancing of the underlying entitlements.
Jim: Recall that one of the main priorities of the rebalancing is to establish candlestick as a standalone project.
Jim: Separate from but complementary to the ultimate development of the shipyard site, which will be developed once the Navy has completed its remediation activities.
Jim: Our timing to commence development of canvas tickets dependent on completing processing of approvals through various city and county agencies.
Jim: With the state's legislation benefiting the public financing program and believe that we are building momentum to move forward with the Standalone development Candlestick.
Jim: Candlestick will be the first phase of this larger mixed use community located on the irreplaceable land along the San Francisco Bay.
Jim: In closing 2023 was a year of both progress a redirection for five points.
Jim: With great uncertainty in January around the direction of interest rates and finishing with a positive view around interest rates and economic growth.
Jim: Against this backdrop in 2020 three we had a record year of earnings despite the market volatility.
Five point has positive momentum and we remain optimistic about our communities and our future.
Jim: I was looking ahead to 2024 opportunities remained strong as we build on successes in our core strategies.
Jim: As I noted earlier, we are positive about our liquidity and balance sheet, we are well positioned to harvest opportunities that present themselves in this ever changing environment.
Jim: The underlying housing environment, such a chronic supply shortage as well as a growing pent up demand for housing it's been held back by materially higher interest rates.
Jim: As I noted last quarter land development is a long game and we have continuously been improving our financial condition with each passing with each passing quarter, we're better positioned to bring our unique brand offerings to market.
Jim: They're not making any more land and there will never be an abundance of entitled land in California.
Jim: Our efforts today are ensuring we are well positioned with that long game, well, while recognizing the importance of focusing on creating and maintaining shareholder value.
Jim: Now, let me turn it over to Kim who will report on our financial results provide some limited guidance for next year.
Kim Tobler: Thank you Dan.
Kim Tobler: A summary of our financial results was included in the earnings release issued earlier today and as Dan mentioned, we reported consolidated net income of $58 $7 million for the quarter and $113 $7 million for the year since.
Kim Tobler: Since the guidance, we gave for the second half of the year was $50 million to $70 million.
Kim Tobler: I wanted to note that we are reporting $72 $9 million and consolidated net income for the second half of the year.
Kim Tobler: Slightly higher than we had anticipated and that contributed to our record full year earnings for the company.
Kim Tobler: Now going to review the sources of revenue, our SG&A and other costs the impacts of our equity and earnings for our unconsolidated entities. Our development spend our recent senior note exchange and liquidity for the quarter and for the full year.
Kim Tobler: In the course of the discussion I will give some high level guidance and we'll finish with an outlook for 2024.
Kim Tobler: First revenue.
Kim Tobler: In Q4, we recognized $100.1 million in land sales revenue, which was primarily generated by the $101.8 million sale of 46 acres of land entitled for 583 home sites to a single homebuilder at our Valencia community, we recognized a 34 point.
<unk> percent gross margin on that sale.
Kim Tobler: For the full year, we recognized 161 $4 million in land sales revenue, which was primarily generated by the sale of 72 acres of land entitled for 729, Homesites to three different homebuilders at our Valencia community.
Kim Tobler: In addition, we recognized $18 $1 million of management services revenue for the quarter, which was comprised of $3 $1 million in base fee payments and $15 million in incentive compensation revenue.
Kim Tobler: And for and for the year of $47 $6 million, which was comprised of $12 $4 million in base fee payments and $35 $2 million in incentive compensation revenue.
Kim Tobler: The Great Park venture made an incentive compensation payment to five point during the quarter of $19 $5 million and for the full year of five point received incentive compensation payments of $41.6 million.
Kim Tobler: Our selling general and administrative expenses remained stable throughout the year SG&A was $13 $1 million for the quarter and $51.5 million for the year, we generally expect to stay in that range in the coming year.
Kim Tobler: The cost of management services for the quarter was $7 $8 million, which included $5 $8 million of intangible amortization expense.
Kim Tobler: For the year, it was $22 $2 million and included $15 million of intangible amortization expense.
Kim Tobler: We also reported $1.8 million of other expense during the quarter associated with third party costs incurred for our senior note exchange transaction I will discuss the exchange more in a moment. However, I want to note here that the exchange will be accounted for as a modification of our existing debt.
Kim Tobler: As opposed to an extinguishment, therefore third party transaction costs will be expensed as incurred in the fourth quarter of 2023 and in the first quarter of 'twenty 'twenty four we estimate additional third party transaction costs of approximately $6 million will be incurred.
Kim Tobler: In the first quarter.
Kim Tobler: Now, let me turn to the contributions from our unconsolidated investments.
Kim Tobler: Equity in earnings from our unconsolidated entities for the quarter was $24 million, which included 37, 5% or 37, 5% share of the Great Park Venture's quarterly net income of $81 1 million or $34 million for us partly offset by.
Kim Tobler: The basis difference amortization of $4 $5 million and our share of a net loss from the gateway venture of $1 $9 million.
For the year, we recognized equity in earnings of $76 $6 million, which included our 37, 5% share of the great part ventures annual net income of $256 million or <unk> $94 million for five point, partially offset by basis difference.
Amortization of $15 million and our share of a net loss from the great gateway venture of $2 $9 million.
Kim Tobler: Given its significance to our performance I'd like to give a little more detail about the great part ventures contribution to our earnings this quarter and this year.
Kim Tobler: During the fourth quarter the venture closed the sale of two commercial land parcels to two separate developers totaling approximately 38 acres for a combined sales price of $174 $2 million or $4 $6 million per acre.
Kim Tobler: On a blended basis for both sales the venture recognized a 59, 7% gross margin on those sales.
Kim Tobler: Additionally, the venture recognized $7 $5 million of profit participation revenue during the fourth quarter for.
Kim Tobler: For the full year of the venture recognized a total of $532 million of sales revenue from residential and commercial land sales and $21 million of profit participation revenue.
Kim Tobler: In the fourth quarter, the Great Park venture made an equity distributions to 5.4 $72 $4 million for the full year five point received equity distributions totaling $154 $2 million at year end the venture had a cash balance of 61.
Dollars.
Kim Tobler: Now, let's turn to our development spend at our two active projects.
Kim Tobler: And Valencia during the quarter, we added $13 $5 million of development costs, and $5 $2 million of capitalized interest to inventory offset by $1 $2 million of Cfd reimbursements for a net addition of $17 $4 million before cost of.
Kim Tobler: Sales inventory relief.
Kim Tobler: For the year, Valencia added $76 $5 million of development costs and $29 million of capitalized interests to envisage to inventory offset by $44 $5 million of recoveries and $18 $9 million of CFT reimbursements for <unk>.
Kim Tobler: A net addition of 34 30.
Kim Tobler: $34 million before cost of sales inventory relief for.
Kim Tobler: For 2024, we were expecting a little higher development spend and a little more than half of the Cfd reimbursements, we received in 2023.
Kim Tobler: During the quarter.
Kim Tobler: Now, let me turn to the Great Park venture.
Kim Tobler: During the quarter the Great Park venture added $26 million of development costs, and $11 $1 million of capitalized interest to inventory offset by $6 $8 million of CFT reimbursements for a net addition of $24 $9 million before cost of sales inventory really.
Kim Tobler: <unk>.
Kim Tobler: For the year, the venture added $86 $3 million of development costs, and $23 $3 million of capitalized interest to inventory offset by $89 $9 million of Cfd reimbursements for a net addition of $19 $8 million before cost of.
Kim Tobler: Sales inventory relief.
Kim Tobler: For 2024, we are expecting the development spend to exceed $100 million with approximately a third less cfd reimbursements than what was received in 2023.
Kim Tobler: Now, let me discuss the senior note exchange.
As Dan mentioned this Tuesday, we successfully settled our senior note exchange, which helped us to proactively address our senior notes that were slated to mature in November of 2025.
Kim Tobler: We would like to thank our bondholders for continuing to have confidence in the company and electing to extend their relationship with US through January 2028, 90, 976% of our bondholders elected to participate in the exchange, which provided for $100 million cash payment and $523 5 million.
Kim Tobler: Of new 10.5% initial rate senior notes with the following terms.
Kim Tobler: We will be paying a coupon of 10, 5% from the settlement date through November 15, 2025, then the coupon will move to 11% until November 15 of 2026.
Kim Tobler: Finally, the coupon of 12% until the notes mature in January on January 15th 2028.
Kim Tobler: Notes have a call premium schedule of 104 through November 15 2024.
Kim Tobler: Then 102 through November 15, 2025, and 100 thereafter through the maturity.
Kim Tobler: A copy of the indenture for the new notes was on the 8-K, we filed on Tuesday.
Kim Tobler: There are still $1.5 million of the old 707, eight senior notes outstanding debt will mature on November 15th 2025.
Kim Tobler: For the first two years, our interest payments will be approximately $6 million more a year than what we've paid historically.
Kim Tobler: Now, let me turn to our liquidity I'd like to emphasize Dan's earlier comments about our liquidity at year end, we had cash and cash equivalents of $353 $8 million and $125 million of available borrowing capacity under our revolving credit facility, giving.
Kim Tobler: This total liquidity of $478 $8 million, our debt to total capitalization was 24%.
Kim Tobler: Following the close of the exchange, we still have significant liquidity and our debt to total capitalization ratio has dropped to approximately 21% we have adequate liquidity to thoughtfully continue the development of our three projects and prepare five point for growth.
Speaker Change: Now, let me conclude I'd.
Speaker Change: I'd like to give some limited guidance relative to 2024.
Speaker Change: We remain committed to our three priorities that is generating revenue and positive cash flow controlling SG&A costs and managing capital spend to match near term revenue opportunities for the full year 2024, we currently expect to generate earnings and positive cash flow from what we can see.
Speaker Change: See right now if the two sales that Dan described occur in the first quarter. It should put us on that path. After adjusting for all of the exchange related payments. After the first quarter, we will be able to give further guidance as to how we expect the year to develop we are actively managing everything we can control.
Speaker Change: Role and are not letting the business run us.
With that I'll turn the call back to Camilla and look forward to your questions.
Camilla: Thank you.
Camilla: We'll now be conducting a question and answer session.
Camilla: If you'd like to ask a question. Please press star one on your telephone keypad.
Camilla: A confirmation tone will indicate that your line's open.
Camilla: Your line is in the question queue.
Camilla: You May press Star two if you would like to remove your question from the queue.
Camilla: For participants using speaker equipment, it may be necessary to pick up your handset before pressing the starkey.
Camilla: One moment, please pull for questions.
Speaker Change: Thank you.
Speaker Change: First question will come from the line of Alan Ratner with Zelman <unk> Associates. Please proceed with your question.
Alan Ratner: Hey, guys. Good afternoon, congrats on all of the progress you've made this year. It was a busy one for you guys, but certainly entering 'twenty for a much stronger financial shape.
Alan Ratner: <unk> 23, so congrats on all the great work there.
Speaker Change: First Dan.
Dan Hedican: You ran through a lot of detail, which I. Appreciate can you just reiterate what I think you mentioned, there's two sale of expected and I think in the first quarter can you can you just repeat what the sale are expected or was it the 35 acres in Valencia that you were referring to.
Speaker Change: Now the two sales in the first quarter Alan first of all how are you doing Alan actually it's good it's good to hear from you, but those first two sales are in the Great Park, It's 100 and set 87 homesites on approximately 23 acres.
Speaker Change: Got it okay.
Speaker Change: So David.
Speaker Change: And so youre, referring to the cash flow and the profitability is specific to that.
Speaker Change: That transaction occurring.
Speaker Change: Yeah, so the guidance.
Got it.
Speaker Change:
Speaker Change: Second question I don't know, if you'll be able to help us with this but there's been a lot of moving pieces in and especially in Valencia in Great Park over the last year or two with land transactions and maybe some rezoning our thoughts of rezoning is it possible to provide a snapshot of where you sit in both of those projects today in terms of kind of lock.
Speaker Change: Still yet to be sold both in the residential and the commercial arena.
Speaker Change: In Illinois, when they ask you to kind of repeat that you're seeing in Valencia, and which areas are you focused on in Valencia. It our mission village builders, where frankly.
Speaker Change: Now that the project as a whole just in terms of our current lot counts obviously, the one fee is still much earlier on but just trying to figure out kind of what the runway is ahead of us for both of those projects.
Speaker Change: Well so there's the overall Valencia and I can I think we're currently saying is about 17000 lots up in Valencia is at.
Speaker Change: What I would tell you what what's are ready and available Theres about 131 acres at mission village is still available for sale.
Speaker Change: When you get past that we're still land planning those other things and so I would I would defer that to a future discussion everybody's anxious to get that information I'm getting a lot of requests for that and so internally. We are trying to figure out the best way to do it but right now what.
Speaker Change: Velar Bowl.
Speaker Change: In the near term is 131 acres in in mission village.
Speaker Change: Okay. That's helpful.
Speaker Change: It does not include the commercial site that you that you referenced earlier I know that would include that's in its entirety that includes that 34 acres got it okay.
Speaker Change: Okay, and again that could that.
Speaker Change: And that could become residential or could stay commercial where we're trying to figure out what's the best value per acre we can get.
Speaker Change: Yeah.
Speaker Change: Got it Okay. That's really helpful. Thank you and then do you have a similar number in Great Park just in terms of kind of what's that are on the ground ready to go I know you mentioned that the first quarter sales is that the entirety of it.
Speaker Change: No I mean from a standpoint of great parking.
Speaker Change: Great Park has a very specific entitlement for lots of about 10500, including all the affordable.
Speaker Change: And I think right now we probably have sold.
Speaker Change: Sold to builders and obviously they've been sold to homeowners, but I think we're about.
Speaker Change: We have about 2000 I think left to go I think we're about.
Speaker Change: Yeah, I think I'm doing the math I think we're probably about 7000 lots sold we have 9500 market rate lots of probably about we're probably right around 7000 lots sold but I think the thing that we.
Speaker Change: We need to understand about the great Park is that we really do have flexible zoning on our commercial land and the city of Irvine is pushing hard in their arena process. So we have.
Speaker Change: I think once again, it's always about what's going to return the most to the land and so we do have we do have.
Speaker Change: A real opportunity for.
Speaker Change: The real opportunity for having additional residential units in the Great Park, and then but that's something once again, we're studying and as we think you know you talk about that.
Speaker Change: The lots of our closing in the first quarter, we have other land ready to sell this year.
Speaker Change: That's entitled and ready to go and you know in mass graded so.
Speaker Change: We have a pipeline there once again, it's always about really trying to make sure. We're maximizing the value as we go through there, but I think that.
Speaker Change: Rina.
We'll be talking about it this year, we're spending a lot of time with the city of Irvine, but I think rina will give us an opportunity to look at additional residential opportunities. There. So that that 10500 number that we've always kind of looked at is our cap. We think there is a true opportunity this year to see that move but will once again, its all about land value.
Speaker Change: Got it that's really helpful guys I appreciate all the detail and best of luck in the upcoming year. Thanks again.
Okay.
Speaker Change: Thank you.
Speaker Change: Ladies and gentlemen, as a reminder, if you would like to ask a question. Please press star one on your telephone keypad.
Speaker Change: One moment, please while we pull for more questions.
Thank you.
Speaker Change: Our next question comes from the line of Myron Kaplan with a private Investor. Please proceed with your question.
Myron Kaplan: Yes, Hi, gentlemen.
Myron Kaplan: Thank you Hi, Myron my call.
Myron Kaplan: Yeah.
Myron Kaplan: He really righted the ship.
Myron Kaplan: Sure.
Myron Kaplan: And the last two years.
Myron Kaplan: When the stock was kicked out of them.
Myron Kaplan: Morgan Stanley Index.
Myron Kaplan: And then you are subjected to.
Myron Kaplan: Viral.
Myron Kaplan: Rumors.
Myron Kaplan: And then in bankruptcy.
Myron Kaplan: This is IV.
Myron Kaplan: Put that issue behind you and you're done.
Absolutely sure.
Myron Kaplan: Knowing that you can ship shows.
Myron Kaplan: Sure.
Myron Kaplan: That's helpful.
Myron Kaplan: A question about the <unk>.
Myron Kaplan: Change offer.
Myron Kaplan: Is that you mentioned in the in the.
Myron Kaplan: Papers.
Myron Kaplan: What are the important ways.
Myron Kaplan: That the company in which the company has released from what you can see sure.
Myron Kaplan: Overly restrictive.
Myron Kaplan: It gives you.
Myron Kaplan: You have more freedom.
Okay.
Myron Kaplan: Yeah, Byron can you just clarify that I'm I'm I'm I'm just not following what's your what's your question yourself.
Myron Kaplan: Somewhere in the exchange offer I believe that the management felt you were.
Myron Kaplan: You were able to be able to.
Myron Kaplan: I guess the third.
Myron Kaplan: You were able to be released from some.
Myron Kaplan: Overly restrictive covenants.
Speaker Change: No I mean, no. There's we werent release of any overly restricted covenants, we didn't add any restricted covenants and the old notes had a covenant strip.
Speaker Change: Just to be clear with the new with the new.
Speaker Change: Notes that we did add a covenant that we will not make dividend payments or buyback stock while its outstanding we're investing in the company. So that's that's what we're doing there, but that's that was the only thing we added other than what was what was already exist.
Okay.
The other thing I wanted to ask you.
Speaker Change: Yes.
Referred already to.
Speaker Change: So they just drive Californias drive for affordable housing.
Speaker Change: I believe that there soon.
Speaker Change: Fall a referendum on the ballot for $10 billion bond for affordable housing.
Speaker Change: Sure.
Possibly help you deliver.
Speaker Change: Re entitled properties too.
Speaker Change: For such a program.
Speaker Change: What I would tell you my areas anything that the state does to improve the ability to provide.
Speaker Change: Low income housing will ultimately provide some benefit to us in some way, we're having to explore how that will occur.
And so but I wouldn't say that that's going to be a boon when we have already accounted for what it takes for us to do that and most of that kind of governmental assistance would be on the margins.
Speaker Change: Yeah, yes.
Speaker Change: The one question I had technically.
Speaker Change: Reimbursement.
Speaker Change: C R P C.
Speaker Change: CFT C F.
Speaker Change: Why will.
Speaker Change: Reimbursement go to go.
Speaker Change: This year.
Speaker Change: Oh, only because we have fewer costs that we have available to request at this time.
Speaker Change: Uh huh.
Speaker Change: I see.
Speaker Change: Okay.
Speaker Change: All I can say is that.
Speaker Change: Specter of shareholder value is way up in the blue given.
Speaker Change: Quality of.
Speaker Change: And.
Speaker Change: Yeah absolutely.
Speaker Change:
Speaker Change: Absolutely.
Thank you very much thanks Myron thank you.
Speaker Change: Yes.
Speaker Change: Okay.
Speaker Change: Yeah.
Speaker Change: Thank you.
Speaker Change: We have reached the end of our question and answer session I would like to turn the floor back over to CEO, Dan Halligan for closing comments.
Dan Halligan: Thank you.
Dan Halligan: On behalf of our management team. We thank you for joining us on today's call and we look forward to speaking to you next quarter.
Speaker Change: Thank you ladies and gentlemen, this does conclude today's teleconference. You may disconnect. Your lines at this time. Thank you for your participation.
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Speaker Change: Yeah.
Speaker Change: Okay.