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Howard Hughes Corp (HHC) Q4 2022 Earnings Call Transcript

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Howard Hughes Corp (NYSE:HHC) Q4 2022 Earnings Conference Call February 28, 2023 10:00 AM ET

Company Participants

Eric Holcomb - SVP, IR

David O'Reilly - CEO & Director

David Striph - EVP & Head, Operations

Jay Cross - President

Carlos Olea - CFO

Conference Call Participants

Anthony Paolone - JPMorgan Chase & Co.

Alexander Goldfarb - Piper Sandler & Co.

John Kim - BMO Capital Markets

Hamed Khorsand - BWS Financial

Alex Barrón - Housing Research Center

Operator

Good morning, and invited to The Howard Hughes Corporation Fourth Quarter 2022 Earnings Conference Call. [Operator Instructions].

I would now for illustration to move nan convention complete to Eric Holcomb, Senior Vice President of Investor Relations. Please spell ahead.

Eric Holcomb

Good morning, and invited to The Howard Hughes Corporation's Fourth Quarter 2022 Earnings Call. With maine coming are David O'Reilly, Chief Executive Officer; Jay Cross, President; Carlos Olea, Chief Financial Officer; Dave Striph, Head of Operations; and Peter Riley, General Counsel.

Before we begin, I would for illustration to nonstop you to our website, howardhughes.com, wherever you tin download some our 4th fourth net property merchandise and our supplemental package. The net merchandise and supplemental package see reconciliations of non-GAAP financial measures that will beryllium discussed coming successful narration to their astir straight comparable GAAP financial measures. Certain statements made coming that are not successful nan coming tense aliases that talk nan company's expectations are forward-looking statements wrong nan meaning of nan national securities laws. Although nan institution believes that nan expectations reflected successful specified forward-looking statements are based upon reasonable assumptions, we tin springiness nary assurance that these expectations will beryllium achieved. Please spot nan forward-looking connection disclaimer successful our 4th fourth net property merchandise and nan consequence factors successful our SEC filings for factors that could origin worldly differences betwixt forward-looking statements and existent results. We are not nether any work to update forward-looking statements unless required by law.

I will now move nan telephone complete to our CEO, David O'Reilly.

David O'Reilly

Thank you, Eric, and bully morning, everyone. Welcome to our 4th fourth net call. On our telephone today, I'm going to statesman pinch a recap of our outstanding twelvemonth and screen nan conception highlights for our Master Planned Communities successful nan Seaport. Dave Striph will screen nan capacity of our operating assets, followed by remarks from Jay Cross who will supply updates connected our improvement projects successful Ward Village. Finally, Carlos Olea will supply a reappraisal of our financial results earlier we unfastened nan lines up for Q&A.

I americium pleased to study that our 4th fourth results were coagulated and capped disconnected different exceptional twelvemonth for HHC. Considering 2022 was a twelvemonth headlined by rising ostentation and falling caller location sales, our results were thing short of outstanding and demonstrated nan resiliency of our unsocial portfolio of assets, which proceed to beryllium its expertise to withstand periods of economical uncertainty. Highlights of nan twelvemonth included beardown MPC EBT of $283 million, aided by grounds residential value per acre and builder value information revenue.

Our operating assets delivered grounds NOI of $239 million, a 6% summation complete 2021. At Ward Village, we proceed to acquisition an exceptional gait of condo sales, contracting to waste a grounds number of units and delivering $677 cardinal successful nett gross pinch beardown gross margins. And astatine nan Seaport, ft postulation roseate astir 50% year-over-year, importantly expanding gross and reducing NOI losses earlier nan effect of nan equity losses from nan Tin Building.

With these operating results generating important rate travel arsenic good arsenic our beardown equilibrium sheet, we were capable to proceed nan deployment of sizeable superior into projects that we judge will unlock important worth complete nan agelong term. In 2022, we delivered 6 caller projects, including a residential condominium, 388,000 quadrate feet of agency and unit abstraction and 830 multifamily units. The completed operating assets person projected stabilized NOI of $25 cardinal and implied output connected costs of 7%. Further, we commenced building connected our eighth condo task arsenic good arsenic 233,000 quadrate feet of agency and our first single-family for rent project. We presently estimate these operating assets will present mixed NOI of $12 cardinal pinch a 6.7% output connected costs astatine stabilization.

Digging into our MPC segment. In nan 4th quarter, we continued to present beardown results, generating $77 cardinal of EBT pinch coagulated onshore income and a 51% summation successful residential value per acre. We besides benefited from grounds builder value information gross of $20 cardinal arsenic location prices successful our communities stay strong. Ultimately, nan results of nan 4th contributed to afloat twelvemonth MPC EBT of $283 million, which reflected an 11% simplification compared to our grounds results successful 2021.

When excluding equity and net from The Summit, which declined $61 cardinal year-over-year arsenic a consequence of its tremendous past occurrence and existent deficiency of inventory, MPC EBT accrued $27 cardinal compared to 2021. This maturation was yet driven by beardown onshore sales, a 32% summation successful value per acre sold and grounds afloat twelvemonth builder value information gross of $72 million.

In our Houston region, Bridgeland delivered different outstanding 4th pinch much than 60 residential acres sold astatine an mean value of $555,000 per acre. We besides closed connected nan waste of 2 commercialized sites totaling astir 85 acres, which generated much than $21 cardinal of revenue. With continued beardown builder value participation, Bridgeland reported astir $43 cardinal of EBT successful nan quarter. This capacity capped disconnected a awesome twelvemonth for Bridgeland, headlined by an summation successful acres sold, grounds mean value per acre of $544,000 and nan highest builder value information gross successful nan MPC's history.

In The Woodlands, we commenced residential batch income astatine 'A'ali'i, which encompasses 25 waterfront tons connected Lake Woodlands. These civilization batch closings which generated $22 cardinal of gross successful nan 4th fourth included much than 7 acres sold for a grounds $3 cardinal per acre. In The Woodland Hills, we knowledgeable a 50% simplification successful residential acres sold, partially offset by a 12% summation successful value per acre. For nan year, we sold 62 residential acres astatine a grounds mean value per acre of $382,000 and besides benefited from our first commercialized onshore waste and beardown builder value information revenue.

Out westbound successful Summerlin, we closed connected nan waste of 2 superpad sites, totaling 24 acres during nan quarter. Although this represented a important year-over-year simplification erstwhile compared to nan monolithic 216-acre superpad waste that closed successful nan anterior year, we achieved a caller grounds value per acre of astir $1.3 cardinal and further maturation successful builder value information revenue. As antecedently mentioned, we knowledgeable a important $61 cardinal simplification successful equity net from The Summit during nan year. This highly successful associated task pinch Discovery Land has constricted tons remaining successful inventory pending nan upcoming improvement of Phase II, which will see different 54 acres of onshore for 28 civilization location sites and commence income later this year.

Finally, successful nan Phoenix West Valley, we celebrated our charismatic groundbreaking of Teravalis successful precocious October pinch much than 200 cardinal stakeholders successful attendance. We proceed to activity diligently successful Floreo, nan community's first village, wide grading and trading nan infrastructure needed for much than 1,000 residential lots. To facilitate this development, nan Floreo associated task closed connected a $165 cardinal in installments installation that will money horizontal improvement investments successful this village. We presently expect batch income will commence successful nan 2nd half of this year.

Looking astatine caller location income crossed each regions. As expected, we knowledgeable a further simplification successful nan 4th pinch a full of 251 homes sold. For nan year, homebuilders successful our MPC sold 1,574 homes, representing a 43% simplification compared to nan grounds income successful 2021. The simplification was mostly attributable to Summerlin, which saw a 51% decline. In Houston, little location income were besides recorded successful Bridgeland and The Woodland Hills, but a overmuch little magnitude of 21% and 38%, respectively.

To promote accrued income successful nan caller year, galore of our homebuilder partners are expanding incentives and offering reduced liking rates to location buyers. This is having a affirmative effect connected income postulation passim our communities and has resulted successful accrued location income and reduced cancellation rates connected existing inventory. While it remains very early, we're cautiously optimistic fixed nan accrued gait of income successful our MPCs and markets frankincense acold successful 2023.

With respect to early onshore sales, Carlos will talk our 2023 guidance successful a minute, but we do expect to spot a simplification successful acres sold successful nan short word arsenic we proceed our subject of only trading onshore to meet nan underlying demand. Long term, galore of our homebuilders are eager to acquisition further onshore to meet request successful nan years up pinch batch inventories successful Houston, Las Vegas and Phoenix remaining astatine adjacent historical lows. However, for correct now, galore builders are successful a wait-and-see mode, which we expect will subside arsenic we advancement passim this year. As a result, we expect onshore income this twelvemonth will diminution to a much normalized level seen anterior to nan pandemic.

Shifting to nan Seaport. We posted a beardown twelvemonth pinch a astir 50% summation successful ft postulation compared to nan anterior year. At Pier 17, this summation was peculiarly evident during our Summer Concert series, which included 60 shows much than immoderate erstwhile twelvemonth pinch complete 180,000 tickets sold aliases much than 90% of summons inventory. The occurrence of this year's performance bid was truthful unthinkable that nan rooftop was precocious named nan #1 Top Outdoor Music Venue successful New York City by Red Bull and nan #3 Top Worldwide Club by The occurrence we knowledgeable astatine nan Seaport this twelvemonth was not constricted to nan rooftop. During nan year, each of our managed restaurants saw accrued request arsenic locals and visitors return to nan Seaport. We besides had an summation successful backstage events, astir notably successful nan summer, and we leased nan remaining disposable abstraction successful nan Fulton Market Building to Alexander Wang nether a 15-year agreement.

The item of nan twelvemonth was without a uncertainty nan expansive opening of nan Tin Building. This 54,000 quadrate ft one-of-a-kind marketplace, curated successful business pinch Jean-Georges, has been met pinch important accolades from visitors successful nan media. Although we encountered immoderate labor-related challenges ramping up, which yet contributed to reduced hours of operations and important equity losses successful nan 4th quarter, we achieved 7-day per week operations successful December. We afloat expect nan accrued operating hours and full-scale operations will thief to amended capacity for this venue going forward.

Overall, nan Seaport generated afloat twelvemonth gross of $88 million, a 61% summation compared to 2021. Excluding equity losses generated astatine nan Tin Building since its opening, Seaport NOI losses improved $8 cardinal aliases 44% year-over-year. This betterment highlights nan entreaty of this iconic neighborhood, which is firmly establishing itself arsenic a premier eating and intermezo destination successful New York City.

I'll now manus nan telephone backmost complete to Dave Striph.

David Striph

Thank you, David. In nan 4th quarter, our operating assets continued their coagulated performance, exceeding our expectations and delivering $55 cardinal of NOI, including nan publication from unconsolidated ventures. For nan afloat year, we generated a grounds NOI of $239 million, which represented a 6% summation comparative to 2021. Excluding our divested hospitality and unit assets, NOI accrued 9% year-over-year. Most important summation was seen successful our multifamily portfolio, which generated 4th fourth NOI of $11 cardinal and afloat twelvemonth NOI of $46 million. For nan year, this represented a beardown 39% increase, chiefly driven by nan accelerated lease-up of caller properties successful The Woodlands and Downtown Columbia.

Our results were besides favorably impacted by beardown 12% blended in-place rent maturation crossed nan portfolio. Our assets bid immoderate of nan highest rents successful their markets, and astatine year-end our stabilized properties were 95% leased, which is simply a testament to nan value of our merchandise and our highly amenitized locations.

With beardown request successful our markets, we proceed to create best-in-class assets, including Starling astatine Bridgeland, which was placed into work precocious successful nan 3rd 4th and is already 35% leased arsenic of year-end. Similarly, successful nan 4th quarter, we completed and began leasing units astatine Marlow successful Downtown Columbia, which is precocious named by arsenic nan champion spot to rent successful America. With further multifamily projects nether building successful Bridgeland and Summerlin, we expect meaningful incremental NOI maturation successful nan coming years arsenic these caller projects are completed and move towards stabilization.

In office, we produced 4th fourth NOI of $28 cardinal and afloat twelvemonth NOI of $111 million. For nan quarter, this reflected a 7% year-over-year reduction, which was chiefly nan consequence of immoderate tenant vacancies, which occurred earlier successful 2022 successful The Woodlands and Downtown Columbia. These reductions were partially offset by beardown lease-up and nan expiration of rent abatements astatine 6100 Merriweather and 9950 Woodloch Forest. For nan afloat year, agency NOI was up slightly, benefiting from abatement expirations and caller leasing momentum passim nan portfolio. These were mostly offset by nan aforementioned tenant vacancies earlier successful nan year.

During 2022, we executed astir 510,000 quadrate feet of caller aliases expanded agency leases, including 253,000 quadrate feet successful The Woodlands, 155,000 quadrate feet successful Downtown Columbia and 102,000 quadrate feet successful Summerlin. We expect to use from this leasing momentum later successful 2023 and into 2024 and beyond arsenic agency build-outs get completed and free rent periods pain off. Overall, nan beardown leasing capacity is simply a testament to our world-class and amenity-rich agency assets, which proceed to spot elevated request arsenic employers proceed to bring their labor backmost into nan office. With a beardown attraction connected a formation to value successful today's market, we expect to spot continued beardown leasing momentum successful nan twelvemonth ahead.

In retail, NOI was $13 cardinal successful nan 4th quarter, which reflected a 6% simplification compared to nan anterior twelvemonth chiefly related to accrued operating expenses and reduced unit quadrate footage successful Hawaii arsenic a consequence of nan decommissioning of Center to hole for nan improvement of nan Park Ward Village Condominiums. For nan afloat year, unit NOI was $52 cardinal aliases a humble simplification of 2% compared to 2021. This simplification was chiefly owed to onetime rent payments astatine Ward Village during nan anterior year, which were associated pinch nan betterment from nan COVID-19 pandemic. Overall, nan remainder of our unit portfolio performed good pinch improved occupancy and leasing percentages successful each of our markets.

Finally, our stock of NOI from unconsolidated ventures accrued 18% successful nan 4th fourth and 75% for nan afloat year. This betterment is almost wholly from nan absence of nett operating losses astatine nan 110 North Wacker agency building, which was sold during nan first 4th of 2022.

I will now move nan telephone complete to our President, Jay Cross.

Jay Cross

Thanks, Dave, and bully morning, everyone. In nan 4th quarter, we continued to beforehand our improvement pipeline pinch nan completion of 3 agency and multifamily projects including 1700 Pavilion, a 266,000 quadrate ft agency building successful Downtown Summerlin, which is already 50% leased; Marlow, a 472-unit multifamily improvement successful Downtown Columbia which includes 33,000 quadrate feet of crushed level unit space; and Creekside Medical Plaza, a 33,000 quadrate ft aesculapian agency building present successful The Woodlands. All of these projects, which were completed connected clip and connected budget, are designated arsenic greenish buildings and are projected to supply much than $18 cardinal of incremental NOI upon stabilization.

We besides proceed to make bully advancement connected our different projects nether building including Tanager Echo, a 294-unit multifamily analyzable successful downtown Summerlin expected to beryllium completed successful nan 2nd 4th of this year; Wingspan, our 263-unit single-family for rent improvement successful Bridgeland; and nan caller South Lake aesculapian agency building successful Downtown Columbia, which started building during nan 3rd quarter. We expect Wingspan and nan South Lake aesculapian agency building will beryllium completed successful early '24.

In nan 4th quarter, we commenced building connected nan Summerlin South office, a 147,000 quadrate ft 3-story agency building, which we expect will beryllium completed later this twelvemonth aliases early '24. We proceed to spot beardown request for agency products successful nan Las Vegas Valley, and we judge this caller improvement will nicely complement our Class A portfolio successful Downtown Summerlin. Overall, 2022 was an fantabulous twelvemonth from a improvement standpoint pinch nan completion of 6 projects encompassing 388,000 quadrate feet of agency and unit abstraction and 830 multifamily units. Combined pinch our 4 projects underway, each of these projects are expected to lend incremental yearly NOI of astir $43 cardinal to nan institution upon stabilization.

Looking quickly astatine nan Seaport. We continued tract activity astatine 250 Water Street during nan 4th quarter, but we paused building efforts owed to a third-party suit which challenged nan Landmark Preservation Commission support of nan project. In January, nan tribunal ruled successful favour of nan petitioners and voided nan Landmark's approval, requiring america to cease each building work. We powerfully disagree pinch nan court's determination and subsequently revenge an appeal. A petition for a enactment of nan corridor was granted, which allowed instauration activity to proceed and pending a afloat proceeding scheduled for this week. We'll support you apprised arsenic much accusation becomes available.

Shifting complete to Ward Village. We had different tremendous year, closing connected 607 condo units which generated $677 cardinal of nett revenue. The mostly of these income are related to nan completion of Ko'ula, our sixth condo tower, wherever we closed 549 units for $620 cardinal successful nett revenue. 151 of these units were closed successful nan 4th quarter, contributing $207 cardinal of nett revenue. At year-end, Ko'ula was 97% sold. Also successful nan 4th quarter, we sold nan past remaining condo portion astatine Waiea and 7 units astatine 'A'ali'i, generating mixed nett gross of $11 million. At nan extremity of nan year, 'A'ali'i was 96% sold.

On nan building front, we are making awesome headway astatine Victoria Place arsenic good arsenic nan Park Ward Village, which commenced building precocious successful 2022. Victoria Place is 100% presold, and we are connected way to present nan building successful early 2024. Park Ward Village ended nan twelvemonth 92% presold and we expect to complete this building successful 2025. Finally, pinch respect to presales, we proceed to acquisition a accelerated gait of income astatine our 2 caller condo buildings launched during 2022. Ulana, nan community's ninth task consisting of 696 units of afloat dedicated workforce housing, wherever we are 97% presold pinch only 20 units remaining astatine year-end. In early January, we started building connected Ulana and besides closed connected $264 cardinal building indebtedness for nan project. Ward Village's tenth condo task consisting of 329 units launched presales successful precocious September. This building ended nan twelvemonth remarkably 73% presold.

Overall, successful 2022, we had a grounds twelvemonth contracting to waste 1,055 condo units pinch a income worth of much than $1.1 billion. Our projects nether building and successful presales accounted for 961 of these units which are secured by nonrefundable deposits. This represents important revenue, which is simply a meaningful publication to HHC's bottommost statement upon their completion and supply incremental backing to beforehand caller improvement projects successful nan future.

I would now for illustration to manus nan telephone complete to our CFO, Carlos Olea, who will reappraisal our financial results.

Carlos Olea

Thank you, Jay, and bully morning, everyone. In nan 4th quarter, we continued our beardown performance, which contributed to favorable afloat twelvemonth results which exceeded our guidance expectations. In summary, our MPCs produced $77 cardinal of EBT successful nan 4th fourth contempt continued marketplace headwinds, resulting successful afloat twelvemonth EBT of $283 million. This consequence for 2022 was only 11% little than our grounds results successful 2021 and was astatine nan precocious extremity of our astir caller guidance, which anticipated a 10% to 17% year-over-year reduction.

Our operating assets delivered $55 cardinal of NOI during nan 4th fourth pinch grounds afloat twelvemonth NOI of $239 million. Compared to 2021, this represented a 6% increase, which compares favorably to our astir caller guidance which contemplated a 3% to 5% increase. When excluding divested assets, operating plus NOI accrued 9% year-over-year.

At Ward Village, we generated $62 cardinal of condo profit successful nan quarter, which contributed to afloat twelvemonth condo profit of $196 cardinal and wide gross margins of 29%. This besides exceeded our guidance expectations, which projected gross margins ranging from 26.5% to 27.5%. At nan Seaport, we recorded year-over-year NOI betterment of 11% successful nan 4th fourth and 44% successful 2022 erstwhile excluding losses from unconsolidated ventures of nan Tin Building. As expected, this caller plus expansive opening successful precocious September resulted successful sizable equity losses from nan 4th quarter, but we expect important betterment going guardant arsenic this plus operates astatine afloat capacity and starts to move towards stabilization.

Lastly, we reported afloat twelvemonth G&A of $82 million, which came successful astatine nan little extremity of our $80 cardinal to $90 cardinal guidance range. This represents much than a 30% simplification compared to our pre-transformation G&A tally complaint of astir $120 cardinal successful 2019. Overall, we are very pleased pinch our capacity successful 2022. Looking forward, we stay very affirmative astir nan semipermanent outlook for our businesses, but we do expect immoderate near-term challenges successful 2023 arsenic a consequence of ongoing marketplace headwinds.

In our MPC segment, we expect nan existent soft lodging marketplace and reduced caller location income will effect homebuilder request for caller residential acreage. As a result, we expect MPC EBT will diminution 25% to 35% compared to 2022. Although this is simply a sizable simplification from nan outsized levels of net knowledgeable successful caller years, this EBT levels stay favorable and are comparable to much normal MPC net generated during 2017 and 2018. In operating assets, we expect nan momentum passim our multifamily portfolio to thrust NOI maturation going forward.

In office, however, we expect a humble year-over-year NOI simplification chiefly owed to a nonaccomplishment of immoderate agency tenants during 2022. Although we had tremendous occurrence leasing much than 500,000 quadrate feet of vacant agency abstraction crossed our portfolio during 2022, agency build-out times and renewal periods included successful galore of those caller leases will limit NOI maturation until later successful 2023 and into 2024. Overall, excluding nan publication from divested assets successful 2022, we task operating plus NOI will beryllium down 2% to up 2% year-over-year.

After different successful twelvemonth of condo closings astatine Ward Village during 2022, we expect reduced condo income and profit successful nan adjacent word arsenic our adjacent tower, Victoria Place, is not expected to beryllium delivered until early 2024. In 2023, condo income will beryllium driven by closings of remaining units astatine 'A'ali'i and Ko'ula, which are 96% and 97% sold, respectively. As a result, condo income successful 2023 are expected to scope betwixt $45 cardinal and $55 cardinal pinch a gross separator betwixt 25% and 28%. Condo income are expected to materially summation successful 2024 pinch Victoria Place closings expected to make astir $775 cardinal successful revenue. And finally, successful 2023, we expect rate G&A to scope betwixt $80 cardinal and $85 million, which excludes anticipated noncash banal compensation of astir $5 million.

Looking astatine plus dispositions. During nan 4th quarter, we sold 2 unit properties, including Lake Woodlands Crossing for $23 cardinal and Creekside Village Green for $28 million. Total nett proceeds were $39 million, pinch Lake Woodlands Crossing now taxable to a 99-year crushed lease pinch HHC. With a mixed ground of only $23 million, this disposition has generated a $26 cardinal summation during nan 4th quarter. Together pinch nan waste of nan Outlet Collection astatine Riverwalk arsenic good arsenic our liking successful 110 North Wacker earlier successful nan year, full nett proceeds from plus income successful 2022 were $216 million.

Turning to our equilibrium sheet. We ended nan twelvemonth pinch $627 cardinal of cash, which leaves america good positioned to deploy superior into our improvement pipeline. At nan extremity of nan 4th quarter, nan remaining equity publication needed to money our existent projects was $266 million. From a indebtedness perspective, we person $4.7 cardinal outstanding astatine nan extremity of nan twelvemonth pinch only $228 cardinal of maturities successful nan adjacent 2 years and astir 87% owed successful 2026 aliases later.

During nan 4th quarter, we closed to astir $1 cardinal successful financings, including $575 cardinal of imperishable debt, $219 cardinal of building loans for our latest developments and a $200 cardinal entree indebtedness for horizontal improvement successful Bridgeland. This tremendous financing accomplishment not only extended our weighted mean indebtedness maturity to 6 years, but it besides resulted successful 100% of our indebtedness being fixed, capped aliases swapped to a fixed rate, which importantly mitigates our consequence successful this rising complaint environment.

With that, I would now for illustration to move nan telephone backmost complete to David.

David O'Reilly

Thank you, Carlos. Before we unfastened up nan lines for Q&A, I conscionable want to reiterate nan exceptional capacity of our assets successful 2022. Looking guardant for 2023, we do not person a condo building that closes and truthful we'll spot reduced sales. And while we whitethorn brushwood immoderate marketplace challenges successful nan short term, we judge that our unsocial business exemplary has historically achieved outsized returns passim various marketplace cycles.

We person an exceptional portfolio of assets pinch a robust pipeline of caller improvement up of us, which good positions nan institution for nett plus worth maturation successful nan years ahead. As nan attractiveness of our communities continues to go much and much apparent, it is nary mishap that successful 2022, The Woodlands is erstwhile again classed nan champion spot to unrecorded successful America. Summerlin was classed successful nan apical 10 trading MPCs successful nan country, and Columbia was rated nan champion spot to rent champion placed for jobs and safest metropolis successful America. The accolades for our communities and our company's beardown results proceed to speak to nan occurrence of HHC. And pinch nan continued improvement successful our pipeline, we cognize nan champion is yet to come.

Now let's commencement nan Q&A information of nan call. We'll statesman by answering a fewer questions that person been generated by Safe Technology, which will beryllium publication by Eric Holcomb, Eric, first question?

Question-and-Answer Session

A - Eric Holcomb

Thanks, David. The first mobility coming is, will you beryllium considering a dividend astatine immoderate constituent successful nan future? Carlos, do you want to return that one?

Carlos Olea

Thank you, Eric, and bully morning, everyone. Well, 1 of nan biggest benefits of HHC is our self-funding business model, wherever we tin harvest free rate travel to money our improvement pipeline without nan request to raise capital. And we intend to proceed to do this going guardant because we judge that nan champion usage of our rate is to put successful caller developments that create nan largest risk-adjusted returns, aliases for illustration we did towards nan extremity of 2021 and early 2022, to bargain backmost our banal erstwhile we spot it arsenic a important discount to intrinsic value, expanding our NAV. At immoderate point, if free rate travel exceeded nan improvement needs and banal buybacks didn't make sense, we could see a dividend, but we do not person immoderate plans to instrumentality nan dividend arsenic of now.

Eric Holcomb

Thanks, Carlos. Second mobility is, tin you please springiness an overview of nan h2o rumor successful Arizona? According to h2o authorities successful Buckeye and Arizona State University, Buckeye is 1 of nan apical 3 cities that will person nan largest h2o cuts by 2026. David, do you want to return this question?

David O'Reilly

Sure. And it's a awesome mobility and 1 we've been answering for a while. Look, issues of h2o guidance are inherent successful godforsaken environments. Clearly, Phoenix, Arizona, arsenic is Summerlin successful Nevada are godforsaken environments, and we thoroughly investigated nan entree of h2o for Teravalis starring into our acquisition successful 2021. We relied powerfully connected our outer experts arsenic good arsenic our acquisition successful Summerlin, wherever complete nan past 10 years, nan organization has doubled but nan per capita usage has decreased truthful overmuch that nan wide usage coming of h2o successful Las Vegas is little than what it was 10 years ago. Shifting to Teravalis, improvement successful Floreo, our first colony which is astir 3,000 acres and 7,000 homes, is moving up arsenic planned. Floreo has already secured a 100-year certificate of assured h2o proviso from nan State of Arizona and that afloat improvement will return astir 10 years to 12 years to complete. The equilibrium of Teravalis is divided into 9 phases. In nan first 5 phases, we person been awarded an study of assured h2o supply, which is nan past measurement really earlier receiving a 100-year certificate that Floreo has. Look, we're going to proceed to support nan preamble of modern exertion and invention by collaborating pinch local, authorities and organization leaders to make judge that we're executing this successful nan correct way. We are semipermanent investors. We're going to ain and unrecorded successful these communities. Our labor unrecorded successful these communities. Their kids are going to spell to schoolhouse successful these communities. We are perfectly committed to making judge that we protect nan precious resources that we request to spot nan occurrence of each of these communities. So it has our afloat attention, and we're incredibly assured that we're going to beryllium capable to execute nan measurement we outlaid it erstwhile we acquired that land.

Eric Holcomb

Thanks, David. Third mobility coming is, tin you springiness an update connected indebtedness compliance? Are location immoderate properties still successful method default aliases astir to be? Carlos?

Carlos Olea

Thank you, Eric. So astatine year-end, we had 3 properties that did not meet nan indebtedness work sum ratios. These are 1 Hughes landing, 2 Hughes Landing and None of them person a worldly effect connected our liquidity aliases our expertise to run nan assets because nan noncompliance triggers a rate drop, which simply intends that we tin still usage each nan rate flows for nan cognition of nan asset. They simply cannot beryllium truthful to corporate, and they don't really person immoderate different restrictions. Further, we expect that for Waterway Square, lawsuit of nary compliance will beryllium cured by nan 2nd 4th of this twelvemonth because it has to do pinch an hold that had pre-rent. And arsenic that burns off, it will get backmost into compliance, While nan instances successful 1 and 2 Hughes Landing are related to tenant vacates that we person progressive prospects for.

Eric Holcomb

All right. I person different 1 for you, Carlos. Number four, does operating successful a higher liking complaint situation changed nan decisions connected circumstantial projects? An illustration would beryllium for an agency aliases flat building that was planned a twelvemonth agone that mightiness not make consciousness anymore.

Carlos Olea

Sure. Thanks, Eric. Well, erstwhile it comes to improvement projects, higher liking rates get capitalized to nan ground of nan asset, and they're not really 1 of nan main components of costs for a project. Where they do person an effect connected our weighted mean costs of capital, which successful move has an effect connected our superior allocation decisions. So internally, we meet each 2 weeks. We person a Capital Allocation Committee that meets each 2 weeks. It's a very rigorous process that we return very, very seriously, and we measure each of nan projects sloppy of wherever they were initially brought up, approved aliases thought of, and we allocate superior appropriately to nan projects that execute nan highest risk-adjusted returns.

Eric Holcomb

All right. Thanks, Carlos. And our past mobility from coming is please springiness specifications connected nan plus income successful The Woodlands. How does nan institution determine what to waste and what to keep? Generally doesn't nan institution for illustration to person a monopoly connected commercialized properties and its MPCs? David?

David O'Reilly

Yes, absolutely. It's a awesome question. And I deliberation I'd reply it by going backmost to nan translator scheme successful precocious 2019 that we announced erstwhile we shifted nan company. And we said that we were going to attraction connected those areas of assets wherever we had a competitory advantage. And nan mobility references a monopoly connected commercialized properties. Well, it's not a monopoly, but we do person outsized power and we do person outsized ownership of nan office-based multifamily abstraction wrong our communities. And those assets we intend to keep. The translator plan, we said that we were committed to keeping nan downtown metropolis halfway unit that impacts nan measurement a organization feels and operates. But those one-off portion centers that we developed passim nan communities we didn't spot it having a competitory advantage and truthful deemed a noncore. Both Creekside Village Green and Lake Woodland Crossings are a cleanable illustration of those noncore, extracurricular of nan metropolis halfway unit portion centers, wherever we were capable to create these assets astatine unthinkable yields and waste them generating a $26 cardinal gain. That's a tremendous profit creation opportunity for our shareholders and 1 that we should execute connected each time that tin proceed to adhd free rate travel to nan bottommost statement that tin accelerate different developments.

Eric Holcomb

All right. Thanks, David. Gary, we'll move to nan unrecorded Q&A now.

Operator

[Operator Instructions]. Our first mobility is from Anthony Paolone pinch JPMorgan.

Anthony Paolone

Maybe I'll commencement wherever you conscionable near disconnected connected nan disposition and wide superior allocation side. Any thoughts aliases plans for plus income successful 2023? And past besides conscionable thoughts astir stock buybacks aliases different superior uses for this year?

David O'Reilly

Tony, acknowledgment for nan question. It's David. We don't person thing planned, but we're ever evaluating imaginable plus income of those benignant of noncore portion retail, aliases really, we don't person thing near extracurricular of our MPCs now that we've completed each of those noncore dispositions. So we'll possibly spot a one-off waste of immoderate of those smaller unit centers. It's each going to dangle connected wherever nan pricing is and wherever we spot nan marketplace situation and what nan usage of that superior could be. We still consciousness very beardown that our improvement pipeline tin make outsized risk-adjusted returns, and we spot nan immense mostly of our superior allocation strategy going there. We're ever going to beryllium connected nan lookout for those times wherever nan stock value drops beneath intrinsic value. And if those opportunities arise, superior could get allocated there. But it's reliable to opportunity that this formulaic aliases programmatic successful position of really we allocate capital. We person to beryllium nimble and set based connected nan -- what are immoderate beautiful move marketplace situation correct now.

Anthony Paolone

Okay. And past I conjecture 1 follow-up connected nan superior side. Just nan thought process astir starting an agency building successful Las Vegas connected spec. Just you person different 1 that's successful lease-up. And conscionable really you thought astir utilizing that superior location and conscionable nan request for space?

Jay Cross

This is Jay Cross. I'll return that one. 1700 is -- proceed to lease very good and 1700 and 1 and 2 Summerlin are possibly nan champion agency buildings successful nan Vegas market. They're mid-rise buildings, which is not a emblematic Vegas product, and truthful we felt that we were missing a conception of nan marketplace by not having a 3-story simpler agency product. And that's what we're building connected Spec successful what we telephone Village 15, which is southbound of nan Downtown. If we didn't commencement something, we wouldn't person immoderate merchandise disposable for different 2 aliases 3 years successful nan Class A sector. And we consciousness it was important that fixed Las Vegas' intrinsic strength, that we person merchandise that keeps america successful nan marketplace. So it's only conscionable coming retired of nan ground, but we're very optimistic that we're going to do good pinch this building.

Anthony Paolone

Okay. And past conscionable successful position of nan MPCs, I cognize operation plays a large domiciled successful position of pricing and what you do quarter-to-quarter. But arsenic we deliberation astir your guidance for 2023, for illustration what type of conscionable much macro backdrop does that assume? Like I'm trying to conscionable put it into discourse of conscionable a U.S. lodging marketplace that started disconnected connected a beautiful muted ft present this year.

David O'Reilly

Yes. It's been an different mates of quarters successful nan U.S. lodging market, Tony. And I would show you that arsenic Carlos mentioned successful his prepared remarks, we really felt for illustration nan past respective years person been -- we've seen outsized results. We've seen unthinkable results nan past 2 years particularly coming retired of nan pandemic. And erstwhile we thought astir guidance this twelvemonth and wherever we saw pinch underlying location sales, we wanted to support our subject of only trading onshore to support up pinch underlying sales. And from what we spot correct now, and arsenic I said earlier, it's a quickly changing marketplace environment, we spot location income benignant of reverting backmost to a 2017 aliases '18 level wrong our MPCs. And therefore, our guidance is astatine an MPC EBT level that's accordant pinch those years, which, from our perspective, we're very bully years. And we're really cautiously optimistic that we'll beryllium capable to execute those results this year. Clearly, arsenic I mentioned successful my remarks, location income successful nan 4th fourth came down beautiful meaningfully to astir 250 homes. And what we've seen successful January and February already has exceeded that quarter. So we're starting to spot a humble uptick early successful 2023. I don't cognize that we've seen capable information yet to telephone it a trend. But I deliberation we're beautiful pleased pinch nan results truthful acold and hopeful that they'll continue.

Anthony Paolone

Okay. And past conscionable past mobility connected nan MPCs and pinch regards to Teravalis and Floreo. What do you person assumed for this twelvemonth from, I guess, for Floreo?

David O'Reilly

Well, we're assuming that we're going to statement adjacent to 1,000 tons during nan twelvemonth 2023. But we won't beryllium capable to adjacent those tons until we decorativeness each of nan infrastructure associated pinch them. So we spot very humble publication successful that guidance successful 2023 from Florida.

Operator

Next mobility is from Alexander Goldfarb pinch Piper Sandler.

Alexander Goldfarb

So David, 2 questions here. First, conscionable going backmost to Anthony's mobility connected nan location income and going backmost to trend. I deliberation you guys said that MPC EBIT would beryllium down 25% to 35%, which if we return this year, that benignant of implies a 220 tally rate. I deliberation historically, you guys are astatine 180 to 200 truthful it'd still beryllium supra nan historic. My mobility is, is this a lawsuit wherever because nan worth per acre is going up, you're trading benignant of less acres but astatine higher value points? And that's why intuitively, we would deliberation that onshore income will spell down more, but it's because nan worth per acre has gone up that you could waste less acres but still gain more? I'm conscionable trying to rationalize wherever is nan location marketplace coming versus a fewer years ago.

David O'Reilly

Yes, it's a awesome point, Alex, and 1 that I astir apt should person stressed earlier, that compared to '18 aliases '19 we tin make nan aforesaid aliases greater MPC EBT pinch less acres because our value per acre continues to accelerate higher arsenic nan request for our Master Planned Communities continues to grow. And I deliberation that is portion of why we consciousness bully that we'll beryllium capable to execute these results. We said during nan prepared remarks that successful Summerlin, this past quarter, we were adjacent to $1.3 cardinal per acre, which is an all-time high. And it was a infinitesimal successful clip that I don't cognize we'll perpetuate for nan adjacent respective years. It's awesome ungraded that we person left, and we deliberation we're going to waste it astatine a awesome value per acre, but I don't cognize that we'll beryllium capable to consistently execute those results for nan adjacent year.

Alexander Goldfarb

Okay. And past nan 2nd mobility is conscionable going backmost to nan Arizona h2o issue. Obviously, it's been successful nan press. You said astir a 100-year certificate that you're trying to spell for. I deliberation you besides mentioned thing astir you person nan h2o authorities aliases buildable outlook for nan adjacent 10 years. Then successful nan media, there's besides stories astir really agriculture is really nan bigger personification of water, not needfully housing. So conscionable putting it each together because location nan headlines that look scary, but obviously, you guys presumably person done a tremendous magnitude of owed diligence politically, geologically, et cetera. How should we really deliberation astir what's going connected here? And are nan headlines that we spot successful nan media, are those new? Or this is ever nan lawsuit whenever you effort to create successful a h2o -- desert-type environment, and therefore, these headlines are really thing new? And truthful far, everything that you're seeing and moreover nan governor's statements are each fundamentally according to what you would person primitively underwrote?

David O'Reilly

Look, I would show you that nan politician statements and nan media attraction that has been connected nan is accordant pinch what our knowing was going into nan acquisition. There's nary caller accusation that's travel up complete nan past respective months that changes our view. We had done our work. We had a awesome thought of really overmuch h2o location was and really overmuch h2o location wasn't. I would show you that fixed nan continuation of nan drought crossed nan country, that this is an rumor that continues to summation traction and momentum but 1 that we've been focused connected since I've been astatine Howard Hughes because it's been an rumor successful Nevada successful nan Las Vegas Valley. And we've seen what those efforts -- nan results of what awesome collaboration crossed developer city, state, section authorities and a attraction connected conservation tin drive. And we're highly assured that we tin spot that aforesaid benignant of result successful Phoenix West Valley because we seen already awesome collaboration from nan Mayor of Buckeye, from Governor Ducey from nan Mayor successful position of driving awesome outcomes that are allowing those that want to unrecorded successful Phoenix West Valley nan opportunity to guardant that affordable location that they can't find successful galore different cities successful this country.

Operator

The adjacent mobility is from John Kim pinch BMO Capital Markets.

John Kim

On guidance, I was wondering if you could supply guidance connected liking disbursal fixed your indebtedness is mostly fixed aliases swapped for astir of this year.

David O'Reilly

So I deliberation nan guidance that we provided successful position of NOI, MPC EBT, condo profitability and G&A is astir each we're going to provide, which is what we've historically done. I deliberation our liking calculation for nan guardant years are beautiful straightforward. They're connected a statement point by statement point elaborate ground wrong our supplemental. And I deliberation astir of our investors and analysts person an opportunity to get to a number that's very adjacent beautiful easily.

John Kim

Okay. You do person a $650 cardinal of swaps that expire this September. What's your strategy arsenic acold arsenic what you do upon exploration? And is this nan only switch you person expiring this year?

Carlos Olea

Yes. John, this is Carlos. That is nan largest switch that we person expiring this year, nan only switch actually. And we're already looking astatine alternatives correct now for really we're going to screen nan consequence for those rate flows erstwhile that switch expires.

John Kim

You mentioned besides your capitalized liking argumentation successful reply to different question. What are you expecting arsenic acold arsenic capitalized liking successful '23?

David O'Reilly

Capitalized liking successful '23 will beryllium mostly limited connected really galore caller developments we commencement beyond what's been announced today. I mean, those that person been announced coming person assigned individual building loans wherever we do capitalize liking into those buildings. Those are shown successful nan full costs of our expected walk successful those buildings. So erstwhile we denote a caller improvement project, we show you what nan full task costs is. And wrong that full task costs includes nan capitalized liking that we expect to put into that plus complete nan improvement period. That's a number that tin alteration if caller projects are added and proceed to grow. But I deliberation that nan full capitalized liking for nan improvement pipeline, strategical improvement conception is beautiful straightforward.

John Kim

Okay. Moving to operating assets. David, I was funny connected your comments connected retaining agency wrong your MPCs. And you person been outperforming nan section markets, but reflective of marketplace conditions, leases coming down, what's going to beryllium nan catalyst for occupancy to prime up? And if you could supply immoderate colour connected what leasing activity was successful nan 4th fourth versus nan afloat year.

David O'Reilly

Yes. So look, I would show you that what we've seen passim 2022, and we don't spot it slowing down, has been a meaningful formation to quality. As employers are trying to incentivize labor to get backmost to nan office, they're focused connected really bringing their labor backmost to amenity-rich awesome locations that make it easier to get backmost to nan office. And we've seen occupancy and benignant of assemblage power wrong our agency higher than what astir nationalist reports person been. And I deliberation that's mostly because we person awesome amenitized buildings. We person very short commutes for those that unrecorded and activity successful The Woodlands. In general, for nan afloat year, we did 253,000 quadrate feet of caller agency leases successful The Woodlands, complete 150,000 successful Colombia and complete 100,000 successful Summerlin. And I deliberation that is suggestive of what we're seeing, employers' formation to value to amenity-rich, awesome located buildings arsenic good arsenic meaningful out-of-state relocations into our Master Planned Communities. Of nan 90,000 to 100,000 quadrate feet of leases that we've done correct present successful our office building, astatine 9950 Woodloch Forest, we've done California cosmetic institution firm relocations, we've done state and fibre relocations, we've done a Northeast-based crypto institution travel into our building. It has been different than nan accepted lipid and state users that we've seen successful nan Houston market. And I deliberation our comfortability and our optimism pinch our agency portfolio is driven by nan value of buildings we person that are successful immoderate of nan champion communities successful America that proceed to pull some residents and employers that are leaving those higher-tax, little business-friendly states looking for a caller home.

John Kim

You don't person overmuch expirations this year. It seems beautiful modest. Do you expect occupancy to trough successful '23?

David O'Reilly

I deliberation that we're going to spot a operation of hopefully affirmative caller leasing. But location are ever those things that spell bump successful nan mediate of nan night, whether those are tenant bankruptcies aliases downsizes aliases things that you don't needfully anticipate. Look, I deliberation that for nan year, we should spot affirmative summation successful occupancy passim our agency portfolio. I don't cognize that, that affirmative summation successful occupancy and nett absorption that we're projecting and that we're moving connected real-time will needfully construe to accrued NOI successful '23 fixed nan build-out times and free rent periods associated pinch those caller leases. But agelong term, I deliberation those leases create unthinkable worth because location are nett effective rents that are importantly higher than nan yields fixed nan costs ground of these assets.

John Kim

Okay. My last mobility is connected Seaport and nan Tin Building. You mentioned Tin Building is now connected a 7-day operating week. But tin you talk nan pressures of labour costs and if that extends retired erstwhile you deliberation some nan Tin Building would beryllium profitable?

David O'Reilly

So look, clearly, it's very difficult to thrust free rate travel and profitability of a building that you can't unfastened 7 days a week. And it wasn't until December that we were really capable to get there. And accordant pinch really we've opened different restaurants pinch Jean-Georges George and awesome restauranteurs, we want to make judge for those first respective months that we're unfastened and running, that we're delivering unthinkable service, unthinkable value of nutrient and unthinkable experiences. And arsenic a result, we intentionally overstaff to make judge that we get it right. And past erstwhile we deed that point, which were I judge we're achieving now, and I deliberation nan squad has done an unthinkable job, we're going to beryllium capable to pare backmost that overhead, that labour cost, get it backmost into statement pinch what we expected going successful and hopefully minimize nan losses for nan adjacent fewer quarters and past hopefully get towards profitability successful nan backmost half of this year. Clearly, inflationary pressures connected not conscionable labour but nutrient arsenic good is -- wounded our expertise to thrust profit early connected successful this opening. But rightsizing nan labor, rightsizing nan recipes, rightsizing each of nan experiences wrong nan Tin Building, we deliberation tin let america to move nan area beautiful quickly because nan gross that we're generating there, nan ft postulation that we're generating location has been thing short of exceptional. And pinch that overmuch measurement going done that building each day, we're going to beryllium capable to move that area and push towards a overmuch amended results for our shareholders this year.

Operator

The adjacent mobility is from Hamed Khorsand pinch BWS Financial.

Hamed Khorsand

So first mobility I had was, could you conscionable specify your -- fixed that you're saying you're a self-funding business, what that would entail this twelvemonth fixed nan smaller financial footprint you're expected to person pinch EBTs this year?

Carlos Olea

Hamed, convey you for nan question. Well, arsenic we besides talked astir our Capital Allocation Committee. So we are ever looking and matching our sources for rate travel pinch our improvement pipeline. So what we mightiness spot is not a alteration successful nan model. It's that we will proceed to lucifer nan free rate flows that we harvest from NOI, onshore income and nan fewer condominium income that we will person this twelvemonth and return that and look astatine our pipeline and lucifer retired nan inflows pinch nan outflows.

Hamed Khorsand

I understand that. But are you going to beryllium having a smaller magnitude of projects this twelvemonth because you're going to person little rate flow? Or are you going to beryllium into indebtedness to support nan flywheel going arsenic acold arsenic projects are concerned?

David O'Reilly

No. Yes, I mean, we're not going to spot arsenic overmuch caller improvement this twelvemonth than we person successful past years because we're not closing nan condo this year, and truthful nan free rate travel is lower. Our occupation is to lucifer money that nett free rate travel that comes successful into nan uses connected nan different side, whether that's stock buybacks aliases caller developments. In years that we person outsized free rate flow, we tin commencement much projects. The years that we person little free rate flow, we're going to commencement little projects. And -- but location are years wherever there's free rate travel that doesn't not needfully get utilized wholly because there's conscionable not capable awesome projects aliases we conscionable can't get them retired of nan -- disconnected nan readying stages and into nan ungraded accelerated enough. Look, we look astatine our unfunded costs of our existing improvement pipeline and nan rate that we person connected nan books that tin much than money that and time off america an capable cushion today. And past arsenic that free rate travel comes in, we'll beryllium capable to commencement a fistful of caller projects this year. We deliberation we person nan opportunity to do immoderate awesome projects that will not conscionable create worth connected nan projects unsocial but will beryllium incredibly additive to nan wide Master Planned Communities that they're built in. And those are nan unsocial opportunities that we'll execute connected nan share

Hamed Khorsand

Okay. And my different mobility was, could you conscionable talk astir nan competitory scenery pinch these tenant losses? I deliberation it's nan first clip you've talked astir tenant losses since COVID. What's driving that? And really are you staying competitory successful your MPCs?

David O'Reilly

Well, I would show you that our buildings, and we ain nan mostly of nan buildings wrong our MPCs, proceed to outperform nan regions. And I deliberation they do that because we connection nan value of life astatine truthful galore labor and employers are looking for, that those out-of-state migrations that I talked astir that person travel into The Woodlands and Columbia and Summerlin are leasing up that space. We saw bully leasing momentum this year. I quoted earlier nan number of quadrate feet that we leased successful each of our markets. Those were, I think, very beardown results fixed nan macro situation and nan displacement of much folks hybrid and much activity from home. I consciousness awesome that our communities and our assets will proceed to outperform arsenic they person for nan past decade.

Operator

The adjacent mobility is from Alex Barron pinch Housing Research Center.

Alex Barrón

I was conscionable hoping you could supply a small spot much clarity connected nan timing of nan adjacent mates of condo building closings. I deliberation erstwhile you said early 2024, is that first 4th aliases not necessarily? And past what follows aft that? Is location different 1 successful 2024? Or is it going to beryllium until 2025?

David O'Reilly

So our adjacent condo transportation is going to beryllium Victoria Place, and that will beryllium early 2024. I'm going to hedge connected 1Q, 2Q, and I cognize it makes it really difficult to exemplary for you all. But for us, we person to adjacent it, we person to adjacent it right, and we person to present a awesome acquisition for our caller residents coming in. So whether that intends nan extremity of March aliases early April, I'm much focused connected doing it correct than hitting immoderate peculiar quarter. Especially fixed nan number of units successful that building, it's not arsenic if we adjacent them each connected 1 day. We'll abstraction them retired successful blocks complete nan people of what would beryllium astir apt astatine slightest a month. And arsenic a result, we whitethorn spot immoderate successful 1Q and immoderate successful 2Q. But sitting present today, I deliberation it's a small excessively difficult pinch complete a twelvemonth to spell to opportunity precisely what time we'll beryllium closing those units. As we get closer, we tin supply much item there. We won't spot different closing successful 2024, but we do expect successful 2025 pinch nan building aft Victoria Place, which is nan Park Ward Village. And past we person a beautiful bully runway pinch Park and past and Ulana that we should spot a building a twelvemonth for nan foreseeable future.

Operator

This concludes our question-and-answer session. I would for illustration to move nan convention backmost complete to David O'Reilly for immoderate closing remarks.

David O'Reilly

We admit each of you joining america coming and getting immoderate awesome questions and fleshing retired immoderate of these details. We dream to spot a batch of you astatine nan upcoming investor conferences we person arsenic good arsenic our Investor Day pinch a fewer different of our peers successful Hawaii. And if there's immoderate different questions aliases follow-up, we're ever available. Thank you again. .

Operator

The convention has now concluded. Thank you for attending today's presentation. You whitethorn now disconnect.

Editor: Naga



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