Bill Cunningham: Well, it’s great to know that Lennar is actually building the townhouses right now, because just looking at the website–
Mark Harding: Yes, they’re very aggressively building.
Bill Cunningham: Wow, okay. That’s great, because when you look at the website and see Coming Soon, you just figure that nothing has happened yet, so–
Mark Harding: No, I think they’ve got four six-packs under–
Bill Cunningham: –that’s very positive news.
Mark Harding: Yes, yes.
Bill Cunningham: Okay, great. Thank you very much, Mark.
Mark Harding: You bet.
Operator: Thank you. Your next question is coming from Bill Miller, who is a private investor. Bill, your line is live.
Bill Miller: Hi there, Mark.
Mark Harding: Morning Bill.
Bill Miller: Happy new year. I wonder where we are with two things: one, you at one time indicated you might buy back some of the lots for the build-to-rent part of your business; and secondly, where do we think we are with the I-70 development, which can either be sometime near term, and I wondered whether you could give us any indication of how soon that might take place.
Mark Harding: In terms of the buyback and some of the other phases of the lots, we’re moving forward with Phase 2B, we’re recording our plat this month, and then we’ll get a sense from the builders. I think the builders were really hoping to wait to see how their traffic activity was going to look for the first part of the year, and so we’ve reached out to each of them and let them know, you know, as you look to your close, if you have–if your absorptions extend yourselves out a little bit farther than you would otherwise want to inventory, we will pull whatever number of lots back from that. All four of our builders have that offer, we’ve made that offer to them. They’re all under contract, so I’ve got to work with them on their cooperation, but I’m pretty confident we’re going to claw back–not claw back, we’re going to be invited back in a couple of those from some of the builders, because it’s a win-win for them.
They can not close on that lot and then we’re talking with them specifically to say, but you can still build the house on that. That’s an opportunity for them not to have to–it really is a win-win, right? They can manage their cash flows so that they actually can still show positive sales on Sky Ranch to a customer that they know and they understand, which would be us, as opposed to waiting for traffic and contracts and cancellations. This is a great opportunity for both us and them to really continue to build the portfolio, and we’re seeing extremely strong demand. Every time we finish one of these houses and we put it up, it is gobbled up. We put it out on Zillo and it’s just–you know, we get competitive people looking for rental on this stuff, so we still are very aggressive.
We still like that segment, we’re moving forward into that segment. The question would be, well, can we do more in another phase, get out of the 850 and start another phase? We can, but that puts us in a bit more exposure, where we’re actually inventorying all those land development opportunities, and we do have a balance sheet that can do that but at the end of the day, we’re also balancing that against opportunities for acquiring other land and making sure that we continue to build and grow the company, so there is balance there. Second question in terms of the land development side on the I-70 corridor, I think you’re probably referring to the Lowry project, and we continue to see a lot of pressure for entitlements. Everybody wanted more and more finished lots in the marketplace up through what was this interest rate environment, and us being able to time the market, where we’re delivering lots, not throwing 850 lots to builders for them to inventory but doing this on a cyclical basis, where they’re helping us pay for that hold cost as well, certainly is a proven delivery model for land development.
We’ll see with the weakening of housing how that cycle comes into impact Lowry’s timing and other land development in and around Sky Ranch that we’re also looking at acquiring, so we’re cognizant of all those elements. Our crystal ball isn’t any clearer than the market, probably even cloudier than some of the experts in the market, but what we try to do is make sure that we’re making informed decisions with our capital allocation plan.
Bill Miller: Well, what about buying back stock under various informed decisions?
Mark Harding: That’s a great opportunity for us, and if the market continues to frustrate that stock price, we’re there now. We’re ready to do that. Do I have an answer for you at what price do we buy stock? I don’t.
Bill Miller: Okay, well sounds good. Keep going.
