Earnings Call Transcript - FPH Q3 2020

Operator, Operator

Good day, everyone. Welcome to today’s Five Point Holdings Third Quarter 2020 Conference Call. Currently, all participants are in a listen-only mode. As a reminder, today's program is being recorded. Today's conference may include forward-looking statements regarding Five Point's business, financial conditions, operations, cash flow, strategy, and prospects. Forward-looking statements represent only Five Point's 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 Five Point's actual results or activities 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 SEC filings, including those in the Risk Factors section of the most recent annual report on Form 10-K and quarterly report on Form 10-Q filed with the SEC. Please note that Five Point assumes no obligation to update any forward-looking statements. Now, I'd like to turn the call over to Mr. Emile Haddad, Chairman and CEO of Five Point. Please go ahead, sir.

Emile Haddad, Chairman and CEO

Thank you, Greg, and welcome, everyone. I hope that you and your loved ones are all healthy. The results of our third quarter speak to the maintenance of our strategy of maintaining a strong balance sheet and continuing to invest in our communities. This investment in the infrastructure and amenities that characterize a Five Point community is driving value by creating great places for people of all walks of life to live, work, connect with each other and with nature. We have highlighted often the premiums that our home buyers are paying to live close to state-of-the-art sports and entertainment facilities, and to have their children enrolled in our excellent public school systems. The price achieved with the sale of two of our buildings at our Gateway Campus in Irvine is a clear example of the premium put on our commercial real estate as a result of our investment in the overall community. Today, the Great Park in Irvine is being recognized as one of the premier communities in the country. Soon, our proof-of-concept will be seen in Valencia, as families are expected to move into their new homes in 2021. The housing market is doing very well, thanks to historically lower interest rates and higher demand for homes in all target communities. Our markets in Los Angeles and Orange County have seen home price appreciation of 8.2% and 4.7% over the last 12 months, respectively, according to Zillow, and are projected to see another 8.1% and 7.4% over the next 12 months, according to the same source. Finally, before I hand it over to Erik to go over our financial results, let me give you an update on our thinking about an investors event that will address our view of the disconnect between the real value of the company and our share price. At the end of 2019, you will recall that we were planning for a two-day investors meeting throughout all communities. Unfortunately, COVID-19 disrupted those plans. Our hope is that we will be able to hold a tour and in-person meeting next year so we can show you the communities. However, if the conditions don’t allow for that, we've planned for a virtual meeting early next year that we hope will help you understand the value of the company, the way you see it every day. Now, let me turn it over to Erik, who will report on our Q3 financial results, and I will take questions after that.

Erik Higgins, CFO

Thanks, Emile. Our 10-Q was filed on November 6, and a summary of our financial results is included in the earnings release issued earlier today. I'll start with our consolidated results, and I'll address each of our four segments and conclude with comments about our balance sheet and our liquidity position. The company's consolidated revenues for the third quarter totaled $8.4 million, primarily related to the recognition of revenue generated from the related party management services. We recognized $52.4 million in earnings from our two unconsolidated joint ventures, including earnings of $56.6 million from our 75% interest in the Gateway Commercial Venture, as a result of the sale of two buildings occupied by Broadcom at the Five Point Gateway Campus. Total consolidated costs and expenses were approximately $24.5 million, including selling, general and administrative expenses of $17.7 million for the quarter. Net income for the quarter was $36.4 million, of which $19.5 million was allocated to non-controlling interests, leaving approximately $17 million attributable to the company. Moving to the segment results, the Valencia segment is consolidated for accounting purposes. The segment loss for the quarter was $3.2 million, which was primarily selling, general and administrative expenses. We collected $13.9 million against a land sale note related to a land sale that occurred earlier in the year. The San Francisco segment is also consolidated for accounting purposes. The San Francisco segment’s net loss for the quarter was $1.8 million, which was primarily SG&A expenses. The Great Park segment includes operations of the Great Park Venture, the owner of the Great Park Neighborhoods, as well as management services provided by the management company to the Great Park Venture. As a reminder, we own 37.5% of the non-legacy percentage interest of the Great Park Venture and 100% of the management company. The Great Park Venture is an unconsolidated entity with our investment in the venture accounted for under the equity method of accounting. The segment reporting includes the full results of the Great Park Venture at the venture’s historical cost basis of accounting. The Great Park Venture is a self-funding operation with no project level debt. The Great Park segment revenues were $8.1 million for the third quarter, consisting primarily of revenue recognized under the management agreement. The third quarter net loss for the Great Park segment totaled $10.2 million, consisting of $1.8 million of net income related to the management company and a loss of $12 million for the Great Park Venture operations. The company recognized a loss of $4.2 million on its investment in Great Park Venture, which includes our share of the Great Park Venture’s losses. 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% of the Gateway Commercial Venture and 100% of the management company. The Gateway Commercial Venture is also an unconsolidated entity with our investment in the venture accounted for under the equity method of accounting. For segment reporting, we include the full results of the Gateway Commercial Venture at the venture’s historical basis of accounting. Commercial segment income was $75.6 million for the quarter, primarily related to the sale of two office buildings occupied by Broadcom at the Five Point Gateway Campus. These buildings were sold for $355 million. The joint venture paid off $245 million in project-level debt in connection with the sale and made a cash distribution of $107 million to its members, of which Five Point received $80.3 million. The company recognized approximately $56.6 million of income on its investment in the Gateway Commercial Venture. For historical purposes, looking at our 75% investment in the Gateway Commercial Venture, the company contributed approximately $107 million to the joint venture in August of 2017 in connection with the venture’s acquisition of the 73-acre campus, which included four buildings totaling approximately one million square feet of office space. As of today, Five Point has received approximately $136.6 million in cash distributions from the sale of three buildings and approximately 11 acres. The venture currently owns one of the four buildings and approximately 50 acres of commercial land with additional development rights at the campus. I'll wrap it up with a few comments related to our balance sheet and liquidity position. Our cash position increased by $55.5 million for the quarter. The increase is primarily the result of $80.3 million in cash distributions from the Gateway Commercial Venture and collection of $13.9 million against the land sale note, offset by continued inventory expenditures for Valencia and SG&A expenses. As of September 30, 2020, total liquidity was approximately $395.2 million, which comprises our cash balance of $270.6 million and borrowing availability of $124.7 million under our $125 million unsecured revolving credit facility. Our balance sheet is strong with a debt-to-total capital ratio of 25%. Let me turn it now back to the operator who will open up for questions.

Operator, Operator

Thank you very much. All right. And first, we'll hear from Stephen Kim, who's with Evercore ISI.

Stephen Kim, Analyst

Yes. Thanks very much, guys. Honestly, a lot has changed over the course of this interesting year, and probably no one thing has changed more than the attitude or the perspective on home price appreciation, particularly near-term home price appreciation. Obviously, I know your business, you don't run it for the quarter or even in one year, but given your unique vantage point in the industry, I was curious if you could comment on the trends you're seeing and the degree to which what you have seen thus far? And the near-term outlook, I think you talked about 7% to 8% price growth in the neighboring markets near Newhall, for example, which I think is very different from what was conceived of maybe six, nine months ago. How those changes are factoring into your thinking as to the stream of cash flows, perhaps in the future from Newhall? Or just in general, how you may be approaching the best way? What might be the best way to monetize your long-term investments in those – in the Great Park – growth remaining in Great Park, as well as in Newhall?

Emile Haddad, Chairman and CEO

Thanks, Steve, and nice to hear from you. Look, I think that to answer your question, there’s a very consistent view that we have, and we’ve always had on the uniqueness of our communities, location-wise, size-wise, and ability to look in amenities that are very unique as you have seen at the Great Park and create value that way. Coupled with the fact that we really are, in many ways, the only game in town in Los Angeles County, as well as in Orange County to a great extent. And that gives us a huge advantage in terms of supplying the end market that starts with housing and has been with a huge amount of pent-up demand. That hasn’t changed anything. I think that has been even more aggravated. What has changed though, is, as you highlighted, an attitude of a consumer to migrate more to our type of communities with open space, with trails, lower density, and with amenities. But today, people are appreciating much more than they were actually appreciating before COVID-19. So that obviously is a factor that has helped a lot at the Great Park, and we’re seeing now through the interest in our builders translate to Valencia as well. We are expecting that there’s going to be a lot of interest from the higher density in Los Angeles to be up there, so that we’re seeing. In terms of the appreciation and whether it’s short-term or long-term, look, appreciation is a function of an imbalance of supply and demand and nothing on the horizon shows us that there’s going to be an increase in the supply. If anything, as I said before, we’ll see the demand go higher, and it’s translating to some of the numbers I gave you in terms of appreciation that you’re seeing in the rear-view mirror, that is more than what I think a lot of people were speculating was going to happen in 2020. So to summarize, we have always believed that we are going to be in this unique position in these markets. And now that both of our assets have reached – the maturities have reached, we can now start monetizing it, which happens to be at a time when interest rates are low, there’s a high level of interest from consumers, and it’s only going to accelerate our thinking. Now, in terms of whether the question is, are we going to be increasing the amount of supply or not of homesites, we need to be very careful for two reasons. One, this is the beginning of a large massive bank community, as you know, there’s going to be 21,000 homes. It is extremely important for us to allow our first group of builders to make money and not have to stretch to create the last wide momentum for the community. Two, the infrastructure timeline sometimes dictates how much we can put on the market in terms of homesites. This is not flat land where we can go and do whatever we want. But the simple answer is, right now, we have demand from the vendors higher than we were projecting seven months ago. And we would be extremely careful about how much of that we want to put on the market and how much we want them hopefully by the next time we have this call, we’d be able to tell you exactly what happened.

Stephen Kim, Analyst

Yes. That’d be great. Correct me if I’m wrong, I recall that perhaps earlier this year, at the end of last year, when there was a rethinking of HPA – your longer-term HPA assumptions, I seem to recall a number around 35% or something. Can you comment on how your thinking around HPA that you’ve been embedding in your longer-term models has changed in the last 20 – last 12 months?

Emile Haddad, Chairman and CEO

Yes. I mean, look, I think that we don’t regularly do life of a deal cash flow for something that goes as long as this is, we tend to look more in terms of three years ahead – between two to four years, three years ahead, and we have not changed our assumptions. There’s no reason for us to change our assumption because we already have reported very healthy margins and when you change the assumptions up, all you’re doing is just moving the needle on the margin. So from my perspective, yes, I believe it’s going to be higher. I think the dynamic stays the same if interest rates stay as low as they are. The answer is yes, but there’s no reason for us to change those assumptions.

Stephen Kim, Analyst

Great. I recall asking earlier this year, when there seems to be a big change happening in buyer preferences, whether or not you thought that there was a potential that some of these changes, particularly as it related to the attractiveness of food and beverage and entertainment venues and things like that. At the time, you felt it would be a mistake to presume that some of the changing elevated concerns and therefore reduced preference for some of those venues would be a semi-permanent kind of situation. More recently, I’ve heard you talk about the importance you think of providing opportunities for conversation relationships. It seems like you’re sort of leaning into this idea that as we go forward here, perhaps in the next year or two, you will actually see the preference for those kinds of venues increase, relative to what they had been before. I’m curious if I’m reading what I heard correctly or if you could give any kind of update on what you think about the longer term of the durability of some of the more recent trends in customer behavior and homeowners' behavior?

Emile Haddad, Chairman and CEO

Yes. I mean, look, here’s what I was saying. As far as, look, I think I don’t want to jump to a quick conclusion that the design of the home is going to have to change because everybody’s going to be working out of their home or that the office stays obsolete because nobody’s going to want to come to an office. I said that, I still say, that we’re going to be watching the consumer’s behavior and how much of the consumer’s behavior is going to change as a result of the acceleration of some things that were going to happen anyway in the future with this COVID-19 situation. And we are doing that. I can tell you though, that I believe you asked about the short term and the long term. Obviously, short term, the communities themselves are serving the purpose because of the open space and with the type of amenities that the consumer is looking for in this environment. Long-term, I can tell you, we started thinking about even accelerating and enhancing some of our lifestyle and entertainment venues. Because I, for one, believe that once the virus is behind us and once people start to forget about the virus, I think you’re going to see something very similar to early 20s because of the amount of pent-up demand for normality, social life, and everything else. And as you remember before COVID-19, a lot of what we were focusing on was either healthcare-related on the commercial side, which we asked to do that as well as very unique lifestyle, food, beverage, and the payment that we are going to be building as basically our hub with our community. I think that long-term, I think that’s going to be even more focus on. The one area that I think we don’t have a lot of, and we will have to watch, is office space because there’s a very good chance that the office space itself is going to start changing in configurations.

Stephen Kim, Analyst

Yes. Sure. Okay, great. Thanks very much, and I appreciate it.

Operator, Operator

All right. Moving on from JPMorgan, we have Michael Rehaut.

Elad Hillman, Analyst

This is Elad Hillman on for Mike. Thanks for taking my question. So first, I was wondering if you could comment on what you saw from homebuilders on the stronger monthly sales trends at Great Park during the quarter, and also whether you saw any seasonal slowing in October?

Emile Haddad, Chairman and CEO

Elad, I’m sorry, I didn’t hear the second part. The first part is, you’re asking me about the rate of sales, I think at the Great Park. And we have seen an increase from the first quarter or so. The way I look at the year, as I looked at the first quarter, which was before the COVID-19 lockdown. At that time, we were running about 10 sales a week. I can tell you, in the last quarter – for the last 90 days, we’ve been seeing more like 12. So we’ve had a new case. And I think that’s really what’s telling us that there’s a higher demand. We hear that from our builders as well, and it’s across the board. So, I’m sorry, what was the second part of the question? I didn’t catch it.

Elad Hillman, Analyst

I was wondering about October, whether that strength has continued into October?

Emile Haddad, Chairman and CEO

Yes. We were seeing it all through loss reporting, which was last week.

Elad Hillman, Analyst

Great. That’s very helpful. And then secondly, just following up there, are you seeing builders more engaged in the market in the sense that they may be willing to pay more for your homesites at Great Park and Valencia compared to last quarter? And have you started to re-ramp any development activities for your homesites at Great Park and Valencia?

Emile Haddad, Chairman and CEO

Yes. So good questions. In the Great Park, let me start with that. We don’t intend to grow and say with another round of time sites until later next year. And therefore, we haven’t priced our land. We still see, based on everything we’ve seen in the market, that the price for land is moving up. But I can’t tell you where we’re going to be because we’re not going to be in that position until mid-next year sometime. In terms of Valencia, we have not changed our asking prices. As I said before, we would just want to make sure that our builders are comfortable that they’re going to be able to sell their sales program and have success. Because the last thing we want is to not have the right momentum with the first group of home sites. However, I can tell you that in the last probably 60 days, we’ve had a lot more engagement from builders, much more interest from builders in Valencia. I think that by the end of this year, hopefully we’ll be able to share with you all some of these deals that we have been done.

Elad Hillman, Analyst

Okay, great. Thank you.

Emile Haddad, Chairman and CEO

Thank you.

Operator, Operator

We’ll now hear from Alan Ratner, who is with Zelman and Associates.

Alan Ratner, Analyst

Hey, guys. Good afternoon, and glad to hear everyone’s doing well on your end. Emile just on that last point on Valencia, I just want to hopefully make sure I’m interpreting that right, because I believe last quarter you updated that you had about 250 standing finished lots still up to sell on Valencia, and I think another 100, 150 or so that maybe were partially developed. So, is that what you’re referring to that you’ve been talking to builders about lately and potentially could announce sell there before the end of the year, or am I thinking about that wrong?

Emile Haddad, Chairman and CEO

No, you’re not. You’re right. We have about 250 outstanding inventory and those are already in negotiation with. There’s been discussions. I also mentioned that there’s a higher demand on that Board to do some land developments for additional homesites. The expectation is that those will be all hopefully concluded either by the end of the year or shortly after the end of the year. As much as we are focusing on a year-end, we also want to make sure that we don’t force a closing at the year-end that might not be the right valuation or might create a situation that is not the right business decision. But I would tell you that I think that our goal right now and every indication shows us that we’re going to get there, that we’re going to get to somewhere between 350 and 400 home sites.

Alan Ratner, Analyst

Great. That’s very helpful. Second question, little bit of housekeeping. I think you made a comment that your development activity is resuming again. So, from a cash flow perspective, should we think about kind of the quarterly increase in inventory that you are seeing pre-COVID as a realistic guide going forward? I think it was roughly $70 million, $80 million or so a quarter is the run rate you were running at previously?

Emile Haddad, Chairman and CEO

I don’t have the numbers in front of me, and I hesitate to give it in terms of a burn rate, just because as you know, land development is not as consistent quarter-to-quarter in terms of spending. But I don’t think you should expect the same amount that we were incurring as we were gearing up for the first phase of sales. The first two years of land development in Valencia was a heavy lift and was very costly, so I don’t think it’s going to be that much. But the answer to your question is, we are starting to gear up for the land development authorities, the additional homesites we’ve been talking about. As we see how the builders do, we will start thinking about how many more homesites we want to manufacture. Just on the margin note, Valencia is not a subdivision, where you look at it as if your dollars that you’re going in are just simply going to develop homesites. We have a lot of major infrastructure that we’re doing, because it’s basically building the city and that will probably have less to do with how many homesites are going to be online and how many homesites are not going to be online, and obligations we’re going to do. But I don’t think you should expect the same amount of burn rates.

Alan Ratner, Analyst

Okay. That’s very helpful. I have two more quick ones if I could. First, on Great Park, thank you for that timeline, as far as the next kind of lot sales, should we think about that also coinciding with when you guys would expect to receive your first distribution from the joint venture?

Emile Haddad, Chairman and CEO

Well, I mean, I think that there’s a distribution – there’s a distribution that still is needed to satisfy the legacy and then – but we’re expecting that there’ll be enough sales of homesites next year, enough revenue to where we will start seeing the solutions come to Five Point past the point of such time the legacy, which, put it in perspective, that’s a major statement to be able to say that over the last few years, we’ve been able to satisfy the legacy distribution, which was about $500 plus million. Our expectations right now, Alan, is that we will see a distribution from the Great Park next year, and we’re monitoring the rate of sales. If the rate of sales keeps ongoing as well as they’re doing, that will determine when we go to market with additional homesites because that’s how we look at these things. We both fail when a community is burning out to when the replacement comes in.

Alan Ratner, Analyst

Understood. That’s helpful. And finally, obviously, you’re incredibly connected to the political landscape throughout your markets of operation in California. So, now with Election Day behind us, just curious if you can give us a little bit of an update on if anything has changed locally on the political landscape that would affect your business one way or another across either Orange County, LA County, or even up in San Francisco?

Emile Haddad, Chairman and CEO

Well, look locally, all of the results of the elections make us feel very comfortable that we’re not going to see anything here that’s going to mean anything different. The good news for us is we used to worry about these things much more a few years ago when we were in the entitlement process. As you know, we’ve crossed that hurdle, and we have entitled, but we still have to deal with a lot of issues at the local level. We’re very comfortable that our partnership with the city of Irvine, our partnership with LA County, and our partnership with San Francisco is very much on solid ground. So at the local level, all the results are good results. None of them are results that are making us rethink anything. Obviously, at the state level today, California has an even more prominent position at the federal level, with the Vice President and the Speaker of the House, and even though nothing changes there, we have great relationships with both sides of the aisle, and California becomes even more of a focus as a result of the latest election, we believe.

Alan Ratner, Analyst

Great. Appreciate that and good luck.

Emile Haddad, Chairman and CEO

Sure.

Operator, Operator

All right. Moving on from Wells Fargo, we have Truman Patterson.

Truman Patterson, Analyst

Hey, good afternoon, everyone. Last quarter, you all discussed the Great Park as being a feed builder, I believe with kind of a partnership with a new home to prove the market feasibility of some of the higher price points. Could you just give an update there? I believe it was supposed to start in 1Q, but just give an update there and do you still see the need given the rebound in the market?

Emile Haddad, Chairman and CEO

Well look, I mean the – first of all, the New Home Company is under construction and they’re moving forward. I don’t have a report of sales yet, but they’re moving forward. I think even in their own earnings call, they referenced that opportunity and how they do that as a very positive relationship. I just want to make sure that I didn’t say something that might have been misunderstood. The relationship with the New Home Company wasn’t because we couldn’t sell something or because the market was weak. We basically said that there are certain products when you develop 15 to 20 different product lines, there might be one product that might be a unique product. And as you know, we designed the products that might not be a product that is very comfortable for your big builders to build because it’s much more of a niche builder product. And as such, rather than changing the product and duplicating something that already exists, we will then go down the path of building with somebody like the New Home Company, a company that actually has done very well in this type of niche buildings. This is not because we couldn’t sell the product or because the market is weak, it’s just because we did not want to compromise the integrity of the product segmentation and mix by taking the product out that might not be as comfortable for a production builder to be embarking on.

Truman Patterson, Analyst

Okay, okay. Fair enough. And then in Valencia, I believe the homebuilders were supposed to be grand opening in January, but I know a lot of times prior to the hard grand opening they’ll have trailers and open up sales a few months ahead of time. Could you give an update there, how the homebuilder sales have trended in Valencia so far, if they’ve actually been kind of pre-selling out of trailers?

Emile Haddad, Chairman and CEO

They have not, and the grand opening was scheduled to be before March. Right now, we are on a parallel path of a physical grand opening as we are building right now, parks, amenities, and things like that to enable the builders and enable ourselves to have the typical grand opening that we have, knowing that we probably will still have some limitations even in night. So, we’re at least standing for something physical; but at the same time, we’re running a parallel strategy of a virtual grand opening. We’re making a big investment to help our builders in terms of any virtual type of selling. From our perspective, we need to make sure that the builders have an ability to sell potential buyers on the amenities and all the different things they’re going to get, that they typically see physically. But the grand opening was always scheduled for March; builders could start pre-selling and selling softly in January, but nobody has started selling yet.

Truman Patterson, Analyst

Okay, fair enough. And then I believe you put some numbers around Valencia, but I'm just hoping for a little bit of clarity, as we look out over the next year or so, 2021, what would you consider a successful year regarding lot sales that you can develop and close at both the Great Park and Valencia?

Emile Haddad, Chairman and CEO

Well, look, I mean, I think we said last year when we started, we said, if we can go out with the first group of homesites of 500 and then follow with another 250 or so. For the first year, 750 was going to be a good number for us because that would have put us in a position to say we have enough product segmentation, enough activity, but not oversupply the market. We went from 500 to 781, and we're talking about potentially another 300 to 400. Obviously, we are exceeding what we thought we're going to do, and we're doing it not because we need to or wanted to, but it’s really more driven by the demand from the builders and the diversified builders. So that's what's driving us. If you're asking me, I've always said in the first year or two or three even in Valencia, if we can do 1,000 a year that would be a good start – ramp up to about 1,500. It looks like now that we’re going to might be even more than that and that's very exciting for us, but it's not surprising because there's no supply.

Truman Patterson, Analyst

All right. Thank you for that. I appreciate it.

Operator, Operator

We'll move on to Scott Field with Bachmann.

Unidentified Analyst, Analyst

Hi, I was wondering if you guys calculate like a book value, but market value base, like the actual rough price of the building and so on, back of the envelope type of calculation, or another way of asking, what do you think the share price range is, that's fair value you mentioned earlier in the call, but clearly undervalued.

Emile Haddad, Chairman and CEO

Well, look, we have a book value of about $2 billion, and that translates to $14 a share. That’s the book value that came about as a result of a combination of different entities that had very sophisticated investors in it in each of the assets. At the time that we did the combination before the IPO, we wanted to make sure that we don't trigger property tax readjustments because California has that unique situation. New Home was deemed to be the acquirer in that combination and New Home had a very low book value because it came out of the restructuring in Chapter 11. We believe that although our stated book value is $14 per share, if you were to adjust Valencia up to market, like the other assets were exhausted, we believe at that time that we could be more in the range of about $17 and $18. So, that’s what we said at that time. The book value obviously hasn't changed, and we still stand behind that. If anything, over the last two years based on home price appreciation, as well as value creation with all the things that we’ve put in as I mentioned before, we have our own beliefs that we are understated by a lot. Do you have anything else to add to it, Erik.

Unidentified Analyst, Analyst

Just if I agree. Thank you.

Emile Haddad, Chairman and CEO

Well, we appreciate that. Thank you.

Operator, Operator

All right. And folks, it looks like we have no further questions in the queue. I'd like to turn the floor back to the management team, just for any additional or closing remarks that they have.

Emile Haddad, Chairman and CEO

Well, just in conclusion, thank you very much for dialing in. Hopefully by the time we have this call next time, we will be able to report more on the activities in Valencia. As I said from where we sit, we look at 2021 as a great year. Hopefully, assuming that the backdrop in terms of the coronavirus is behind us, because we would be in deep production in selling homes and moving families into Valencia, which is something that we've been waiting for many, many years. In the meanwhile, just stay healthy, and thanks for your interest in the company. I look forward to talking to you again. Thank you very much.

Operator, Operator

Folks, that does conclude our conference for today. We appreciate you dialing in. You may now disconnect.