Howard Hughes Holdings Inc (HHH) 2019 Q1 法說會逐字稿

Good day, everyone, and welcome to The Howard Hughes Corporation First Quarter 2019 Earnings Conference Call.

(Operator Instructions) Please also note, today's event is being recorded.

At this time, I'd like to turn the conference call over to Mr. David Striph, Executive Vice President, Investor Relations.

Sir, please go ahead.

Good morning, and welcome to The Howard Hughes Corporation's First Quarter 2019 Earnings Call.

With me today are David Weinreb, Chief Executive Officer; Grant Herlitz, President; David O'Reilly, Chief Financial Officer; and Peter Riley, General Counsel.

Before we begin, I would like to direct you to our website, www.howardhughes.com, where you can download both our first quarter earnings press release and our supplemental package.

The earnings release and supplemental package include reconciliations of non-GAAP financial measures that will be discussed today in relation to their most directly comparable GAAP financial measures.

Certain statements made today that are not in the present tense or that discuss the company's expectations are forward-looking statements within the meaning of the federal securities laws.

Although the company believes that the expectations reflected in such forward-looking statements are based upon reasonable assumptions, we can give no assurance that these expectations will be achieved.

Please see the forward-looking statement disclaimer in our first quarter earnings press release for factors that could cause material differences between forward-looking statements and actual results.

We are not under any duty to update forward-looking statements, unless required by law.

I will now turn the call over to our CEO, David Weinreb.

Thank you, Dave, and thank you all for joining us today.

Welcome to our first quarter 2019 earnings call.

Following our most recent earnings call, we asked for your feedback on what would make this time the most effective and beneficial for you.

We appreciate the comments that we received from many of you and have adjusted accordingly.

We've reduced our prepared comments substantially to be more succinct and to give you more of a color behind the numbers.

In addition, we have pre-recorded and posted on the Investor Relations tab of our website our quarterly asset deep dive, which this quarter features our Summerlin MPC.

We hope that this will make these calls more productive and allow more time for Q&A at the end.

Please listen to the deep dive at your convenience.

I would like to take a moment to thank you for your support and for you choosing to invest your capital alongside ours in this special company.

We are doing everything we can on a daily basis to attempt to minimize the discount between where the stock currently trades and the net asset value of the company.

We've increased our investor communication significantly over the past 2 years and meet with potential new investors constantly.

We have created greater transparency through our supplemental investor report and continue to improve the information quarterly.

For example, this quarter, we have broken out the Seaport District separately in greater detail than ever before.

We have sold noncore assets when the timing was right and have completed share buybacks when large blocks have become available.

We will continue to do everything in our power to reduce the gap between our share price and the underlying value of our business.

Moving to our first quarter results.

I am pleased to report that we had an outstanding start to the year and another productive quarter in creating value across the portfolio.

Both our MPCs and Operating Assets segments had a strong start to the year, which Grant will discuss in more detail in a few minutes.

In our Strategic Developments segment, we increased our stabilized NOI target by $3.1 million to $321 million and completed construction on the Las Vegas Ballpark, our baseball stadium located in the heart of Downtown Summerlin next to the practice facility for the NHL's Vegas Golden Knights.

The Ballpark is the new home of the Las Vegas Aviators, AAA baseball team which we wholly own and where we have a 20-year $80 million naming rights agreement for the stadium with the Las Vegas Convention and Visitor's Authority.

We celebrated the opening of the Ballpark with our home opener on April 9, and I'm pleased to tell you that the entire first homestand of 7 games were sold out.

We could not be more pleased with the stadium and the immediate impact we've already experienced at Downtown Summerlin.

In addition to generating significant traffic for our retail and restaurants, we expect the Ballpark to be a catalyst for additional commercial development in our downtown as well as further drive demand for our residential land.

Moving west to Ward Village in Honolulu.

We had another excellent quarter with robust sales of condominiums.

We sold a total of 330 homes during the quarter, including 314 at our newest building, Kô'ula.

The building, which will have 565 homes and launched sales in January of this year, was already 55.6% presold as of March 31 and 58.6% presold as of April 30.

An incredible pace of sales.

We anticipate beginning construction on Kô'ula later this year.

'A'ali'i, which began construction last September, was 81.1% presold as of March 31.

To date, we have sold approximately $2.6 billion worth of condominiums and are approximately 92% presold on our 6 buildings.

Interestingly, we have seen a positive shift in the makeup of our buyer demand since we first started sales of Ward Village.

With Waiea and Anaha, our first 2 buildings, between 55% and 60% of the buyers were from Hawaii with the balance being from offshore, primarily Japan and the continental United States.

On our more recent projects, we have seen that shift higher.

Overall, 67% of our buyers are local residents.

We view this as a strong indicator of our market dominance and a driver of our outsized market shares.

We talked a lot about numbers of homes, but it is important to remember that our entitlements are limited by square feet and not the number of homes.

We have a total of 9.2 million square feet of entitlements, including 1 million square feet of retail.

In our completed buildings, Waiea, Anaha and Ae'o, we have approximately 1.2 million square feet of residential space.

In the projects that are under construction, Ke Kilohana and 'A'ali'i, we have approximately 700,000 square feet of homes underway for a total of 1.9 million square feet.

You can see that we still have a long way to go with our entitlements, and our vision for Ward Village is stronger than ever.

At the Seaport District, we had a net operating loss of $4.2 million this quarter, which was primarily due to funding startup costs for the retail, food and beverage and other operating joint venture businesses.

As previously mentioned, until the district is fully open and we have a critical mass of offerings, we expect to continue to incur operating losses.

We remain cautiously optimistic about our long-term success and have not changed our NOI target for this asset in our supplemental.

With several restaurants opening in the Pier Village this summer, including Jean-Georges' new restaurant, The Fulton, opening next Tuesday, we are at an inflection point for the property as we continue its transformation into an iconic and vibrant destination for the city.

While we have full confidence in our vision, we are disappointed with the pace of leasing for the remaining office space.

We've had strong demand, but due to a variety of factors related to the companies we were in discussions with, we have not yet executed deals for the majority of the space.

We've engaged a broader group of companies and are hopeful we will execute deals with synergistic cadence in the coming quarters.

As you can see from our supplemental, our revenue at the Seaport more than doubled from Q1 last year as we have had several key openings over the last year, including the Pier 17 Rooftop and Corso Como, Cobble & Co., SJP and a number of other tenants.

You will also notice a gradual decline in revenue from Q3 last year to Q1 this year, which is a result of the summer concert series coming to an end and closing the Heineken Riverdeck.

The Seaport will continue to have much stronger sales in the warmer months and its weaker sales in the first quarter, although we expect our sales in the colder months to increase substantially once all the district's offerings are open.

Despite the recent financial results, we continue to make good progress.

The Rooftop at Pier 17 was named the Best New Concert Venue in North America for 2018 at the 30th Annual Pollstar Awards in February.

We completed our first season of the Pier 17 Winterland in March in which we attracted 28,000 skaters to New York's only outdoor rooftop ice rink.

In addition, we welcome new tenants, including Seaport News and Fellow Barber.

We also unveiled the initial lineup for our second annual summer concert series on the Rooftop and are looking forward to a great summer of concerts and additional restaurant openings.

With that, I will now turn the call over to Grant to discuss the details of our operational results.

Thank you, David.

In our MPC segment, we continued to see strong demand from homebuilders for our residential land driven by healthy fundamentals and demand drivers in the residential home sales markets in our communities, which are located in lower-cost markets with no state income tax.

Our earnings before taxes or EBT was $37.6 million, an increase of approximately 2%.

The increase was primarily due to the sale of a 20-acre superpad at Summerlin, which yielded an average gross margin of 72.1%.

With regard to the decrease in land sales revenues at Summerlin this quarter, it is primarily attributable to the fact that we had extraordinary results in Q1 '18 when we closed on 45 acres compared to 20 acres this quarter.

As David said, it is the nature of the development and sale of residential land in these large-scale communities for sales to fluctuate quarterly.

We believe that full year results are a better measurement than quarterly data.

We also believe that home sales are a leading indicator of demand from homebuilders for our land.

Home sales in the Las Vegas Valley totaled approximately 10,200 for both 2017 and 2018.

In 2018, a good portion of the sales were pushed into the first quarter as buyers were attempting to purchase before mortgage rates increased.

New home sales during the first quarter of 2018 were almost double that of 2017.

2017 was a more typical year with sales spread across the year, but with a large percentage selling during the typical spring and summer season.

The first quarter of 2019 is very similar to the first quarter of 2017.

Summerlin has had an incredible run with 6 straight years of residential land sales in excess of $100 million.

That was capped off with the record $145 million in 2018.

In addition, as I just mentioned, in 2018, Summerlin home sales, which are the driver of land sales, were 25% higher than in 2017, and 2017 was an excellent year.

Though the sentiment is very positive on Summerlin and the Las Vegas market as a whole, given the economy and the fact that 30-year mortgage rates have dropped to approximately 4%, we have received bids on all of the parcels that we have put out to market so far this year and anticipate another year of land sales similar to 2017 and 2018.

Despite a small decrease in lot sales this quarter, The Summit continues to perform extremely well, and since inception of the joint venture, we have closed on 114 lots totaling approximately $360 million, and we have 14 more under contract for approximately $54 million as of the end of the first quarter.

We are very pleased with this venture and what it has meant for Summerlin.

In Bridgeland, we continued to see robust demand for new homes, which is the underlying driver of land sales to our homebuilders.

In the first quarter of 2019, there were 136 new home sales compared to 109 in the same period of 2018, a 25% increase.

We believe that this acceleration is due to Bridgeland maturing as a community.

It is in the path of growth with excellent access via the Grand Parkway and top-notch schools and amenities.

This is a testament to our team's strength in curating a sought-after master-planned community environment and a critical reason for our continued success at Bridgeland.

In addition, the competitive MPCs in the surrounding area are basically out of land.

We are very excited about the future of this incredible community.

Turning to our Operating Asset segment.

We increased our first quarter total NOI by $3 million from $43 million in 2018 to $46 million in 2019.

This is a 9.4% increase.

The increase is largely due to the stabilization of our existing assets and the placing in service of assets completed since the first quarter of 2018.

The increases were led by the Aristocrat Technology buildings in Las Vegas, Three Hughes Landing in The Woodlands and m.flats/TEN.

M in apartments in Columbia.

As David mentioned, we increased our stabilized NOI target by approximately $3 million from $318 million in the fourth quarter of 2018 to $321 million today, not including the Seaport District.

The bulk of the increase is due to the commencement of construction of the build-to-suit at 8770 New Trails, a 180,000 square foot build-to-suit that is 100% leased to Alight Solutions in The Woodlands.

We expect total costs excluding land of approximately $46 million and a stabilized NOI of $4.4 million for a yield of approximately 10%.

The project is under construction, and we expect stabilization in 2020.

The increase in our stabilized NOI target was partially offset by moving approximately $1.9 million of projected annual stabilized NOI related to 85 South Street and our share of the Mr. C Seaport to the Seaport District segment.

To be clear, this is just a side effect of our creation of the Seaport District as a business segment and not a decline in our expectations for our Seaport District assets.

This quarter is an excellent example of how we continuously create value for our shareholders by transforming our existing land into dynamic operating assets that create additional NOI and shareholder value.

With that, I will turn the call over to David O'Reilly for our financial results.

Thank you, Grant.

I'd like to start with a quick overview of our earnings before summarizing our recent financing activity and then turn to our current leverage and liquidity metrics.

I hope that you've been able to review our 10-Q earnings release and supplemental package filed yesterday, which contain details of our financial and operational results.

Moving on to our earnings.

We completed the first quarter with GAAP earnings of $31.8 million or $0.74 per diluted share as compared to $1.5 million or $0.03 for the first quarter of 2018.

This increase was driven by the closings of condominium units at Ae'o and Ward Village, partially offset by higher operating expenses at the Seaport.

NAREIT-defined FFO was $1.58 per diluted share for the quarter as compared to $0.69 for the first quarter of 2018.

The increase again was primarily due to the increase in closings at Ae'o, partially offset by higher operating expenses at the Seaport District.

Turning to our financings.

During the quarter, we modified our 2 self-storage facilities to reduce the total commitments to $5.5 million and $5.4 million, respectively.

We've closed on an $18 million construction loan for Creekside Park West and amended the $62.5 million Woodlands Resort & Conference Center financing to extend the initial maturity date to December 30, 2021.

As of the end of the first quarter, our total consolidated debt to total assets was approximately 43.7%, and our net debt to enterprise value closed the quarter at 33%.

From a liquidity perspective, we finished the quarter with approximately $453 million of cash on hand.

As of the end of the quarter, we had 28 projects in our Strategic Development segment with anticipated total cost of $4.75 billion.

Of that amount, we have previously funded approximately $3 billion, leaving $1.76 billion in estimated remaining costs.

We expect to meet this obligation with a combination of existing construction loans, which at quarter-end had approximately $965 million of committed-but-undrawn capacity.

With anticipated loans of $294 million and $35 million for 'A'ali'i and 8770 New Trails, respectively, and with approximately $74 million of buyer deposits.

This leaves a net remaining equity requirement of almost $392 million.

We expect to fund our remaining equity commitments through a combination of our free cash flow from Operating Assets and MPC segments; net proceeds from noncore asset sales; and lastly, our existing cash balance.

Again, as of the end of the first quarter with approximately $453 million of cash on hand and net equity requirements of $392 million, we have enough cash and liquidity on hand to meet all of our current funding commitments without any additional cash being generated from MPC land sales or our operating properties.

With that, I'd like to turn the call back over to David for closing remarks.

Thank you, David.

As you can see, we had another quarter of strong results, and we continue to be thoughtful, creative and opportunistic in allocating capital in a manner that we believe best increases the value of the company for our shareholders.

And as I said in the beginning of the call, you can also be assured that we will continue to do everything in our power every day to reduce the gap between the share price and the underlying value of our business.

We appreciate your continued support.

Thank you for joining us today and please listen to our Summerlin's deep dive at your convenience.

With that, I will open up the call to Q&A.

(Operator Instructions) Our first question today comes from Craig Bibb from CJS Securities.

Another phenomenal quarter of condominium sales.

Have you decided on 1 or 2 towers per year?

We're in planning currently, but that decision won't come until really we're right upon it.

Certainly, we're going to be bringing another.

Our goal is to bring another tower to the market within the next 12 months, and we'll follow with the tower after that as soon as it's sensible to do so, but we're going to be prepared for sure because of the strong sales that we've had.

That's helpful that you guys now break out the Seaport and including the managed businesses.

Is the plan to manage these businesses long term?

Or is that a kind of an interim step?

We're still studying that.

We're going to do the smartest thing for the asset long term.

We feel good about the way we've structured the deals.

That was step 1. And over time, we'll -- we will find a way to maximize our participation in each of those deals, and we may very well seek a third party to do that for us.

Okay.

And then the Seaport loss, $7 million EBIT, $4 million NOI in the first quarter.

Is that going to step up as more managed businesses open?

I think it's fair to say, Craig, that a lot of the losses that were associated with the Seaport are preopening losses that are not capitalized as you would see with traditional real estate, and that's associated with opening some new businesses this quarter.

Given that we will be opening more restaurants and more businesses over the coming quarters, I would expect that those will continue.

Okay.

And maybe just the last question for David.

Hudson New York is getting a lot of publicity and soaking up a lot of tenants.

Is that a hurdle for the Seaport?

And is it affecting the timing of the way you're going to open things?

I don't think it's a hurdle.

I don't think we compete.

I think they did a great job.

As we understand it, their restaurants are busy.

I don't have a direct line on how their retail sales are doing.

But we feel good about our positioning in the market.

We feel great about the operators that we hand chose.

We had a lot less restaurant venues than they do.

And ultimately, our food haul is going to be a very, very dynamic finale, if you will, to the construction when we get it open, and we're still targeting the end of next year.

Our next question comes from Scott Schrier from Citi.

I wanted to ask you, start off a little bit on The Woodlands.

You had commenced construction of another building out there.

You had an increase in land sales.

We were out there in March and activity looked pretty strong.

Can you just talk about on the commercial side how you're thinking about the development pipeline in terms of what kind of pace and what the opportunities are there for further commercial development at this point?

Scott, it's Grant, and it's a good question.

Obviously, we -- every week, we get updated reports on how our leasings are doing in each of the different product types.

As we start, we're seeing tremendous demand and rent growth in our multifamily.

We're very pleased with that in every sector.

Creekside Park is leasing up very well, and our existing 3 assets are -- were increasing rental growth every week.

We've been seeing effective rents increase in those properties.

We're obviously in planning stages for more multifamily.

We expect to launch at least 1 unit -- at least 1 building this year in that.

In Bridgeland, the same goes for multifamily.

We're bringing online Lakeside Row, and I hope we will see good demand for that product as we bring that first commercial multifamily building into Bridgeland.

In terms of office, we have very little contiguous space available in any of our buildings.

We launched -- we announced obviously the Alight transaction, which is a build-to-suit, which we are very pleased that there's demand for office in that market, and we continue to see rent growth.

We continue to see great absorption.

And we're again planning to launch a building in the year.

Obviously, different factors may affect that as things progress either economically or macro.

Look at where The Woodlands is, but we're ready to launch those buildings as we see fit.

Our hospitality business is growing, and we're very pleased with that.

Even though the Houston market has a saturation of hotels, we're not seeing that in The Woodlands.

And we're seeing prices stabilize.

Our ADR had increased and occupancy increased.

The Westin -- I'm sorry, the Embassy just got received a number of awards in its class so we're very pleased.

And we are in designs on different hospitality buildings across the portfolio, but that's a very different product type and it's an expensive product to replace.

So we're very focused and disciplined on when to launch that building -- so waiting for those building.

So when we think the timing is right, we will do that.

And I think that's it for our products.

And as it relates to hospitality and any expansion we might do, we largely see that in our -- in these small cities as amenities that we need to grow our office market and apartment market.

So you'll hear that around any announcement we make over time.

Got it.

And then we're on Bridgeland.

Obviously, you had a nice ramp-up in your acreage sales.

I noticed though there was a year-on-year decline in margins, and I'm curious if that's just a function of GAAP accounting or you saw a decline on the cash margin side and as we go forward, how you're thinking about cash margins in Bridgeland?

Yes, obviously, you know that most of the -- the most financed a lot of the business so our margins are pretty stable, and we're seeing an increase -- growth in lot pricing.

We're very focused on making sure we ramp up pricing in an orderly manner.

But what's really encouraging about Bridgeland is the demand for the product.

And not only the demand for the land from homebuilders, but ultimately the demand for homes from buyers, and we're seeing that across all spectrums of pricing.

We've had a varied first quarter and we had a very good April.

Got it.

And then one more on Summerlin.

You spoke to all of the developments that you're having there.

Understanding that your year-on-year acreage sales were down because of the particularly strong quarter you had there last year, but in your press release when you show actual new home sales activity, in Summerlin, it seemed to be down year-on-year also.

Is that just a 1Q thing or a blip and nothing indicative of the housing market over there?

Well, I think that 2018 was an extraordinary year.

And in the first quarter, there was a huge demand for home sales in Summerlin as rates were moving up.

I think rates have pretty much stabilized, and we feel that 2019 is very, very similar to that of 2017.

It's a very orderly market, and we feel good about the way homes are selling in that market.

There's tremendous demand for the product from national and public homebuilders who have a great appetite to take down more product than we have available to sell to them.

So I think we are very pleased with the results and we know that driving that business will drive further demand for the commercial product.

And the opening of the Ballpark, it was a 14-month construction time with 10,000 visitors showing up on opening day, April 9, with our retail sales up in the week that they were there is proof that driving the 7-year journey to bring the Las Vegas Aviators to Downtown Summerlin is going to be well worth our time as well as driving land value and retail and home sales to make sure that our business continues to perform.

And our next question comes from Vahid Khorsand from BWS Financial.

First question.

I believe on the last call, you'd said the Ke Kilohana project would start to be delivered this quarter to the third quarter.

Can you update us on that time line?

We are still on track to deliver by the end of the second quarter.

So most of the sales would...

Some of the sales might slip into the third quarter, but only because we close a number of units over an orderly period of time to allow our customers to move in and enjoy the experience, but we are 100% sell out in the building and it's just a matter of closing those units.

And everything is on track as we originally thought there.

Okay.

So -- but most of those -- you'll recognize most of those sales in the third quarter then?

Either second or third quarter, but I would say some of that in the second and some of that in early third, most of it in the second.

Okay.

And then earlier in the call, you were just saying how the mix of ownership is becoming more local.

Does that mean that as you're planning out for the future, you're going to look more towards workforce housing or lower price per square foot units?

Well, our goal is not lower price.

Our goal is finding that sweet spot in the market that appeals to more people in that market, which is why we have created what we call the luxury micro product.

And everything is not micro, but the units are smaller than our original 2 buildings, and we're very pleased with that model.

And we're also, just to add to what David is saying, the price per foot is not nearly as relevant as the nominal dollar pricing of the unit sales.

And we're seeing really strong demand for product under $2 million.

So when we're designing these buildings and designing the unit mix, we're designing them to make sure we cater to their product.

And obviously, the smaller we can go and the higher the nominal dollar pricing is the higher the dollar pricing is per foot, but it's really a nominal pricing exercise in that market rather than a dollar per foot pricing exercise.

And then my next question, more of a general observational or that you can give on Seaport.

Were you just too optimistic in what you could do right off the bat in Seaport, and you're finding now trying to find a new pathway for it?

Or what exactly -- I mean, on the grand scheme of things, looking at it from 10,000 feet up in the air, what do you think has changed from the time you started planning Seaport?

As we look at it today, our plan is very much on track.

We have had some significant delays in the approval process that were not expected when we originally embarked on our redevelopment, but we're very pleased.

As it relates to the office space that we have, we've been very, very close to a couple of dynamic deals literally where we had leases out.

And sometimes, the luck goes your way and sometimes it doesn't, but we still are optimistic that at the end of the day, this asset will deliver as we originally expected it to.

Our next question comes from Alexander Goldfarb from Sandler O'Neill.

David, just maybe following up on the Seaport.

Office leasing, after you guys got the ESPN, you guys are pretty bullish on other office prospects.

Certainly, the floor plate would seem to appeal towards the TAMI tenants that want big flat floor plates, obviously it's a unique offering.

So as far as the weakness in the office leasing for it, was there something like were there a few tenants who decided that they took space like elsewhere, meaning they went back to more traditional space?

Or meaning, is it something in the Seaport itself that they decided, we'll go back to traditional floor plate or traditional building?

Or was it maybe just logistics of whether employees work or something else?

I don't think it's either of those things.

I think this space is a very dynamic appealing space, as evidenced by not only ESPN, but also the Nike lease.

And the tenants that came in -- or didn't sign, in several cases, 1 particular tenant needed more expansion than we could offer so that was a limiting factor.

And the other tenant, literally there were leases out and they just decided to put that project on hold for a period of time.

They could be back and they'd be an amazing fit for what our long-term goal is for the property.

So it's just got to be the right thing.

We're also pricing rents at the highest level in lower Manhattan, and we don't see any reason to change that.

But we certainly do want to sign leases.

And when we find the appropriate tenants, we'll be excited to announce them.

Okay.

And then on the -- out in Hawaii, I realize obviously, you guys are not a REIT, but it's a whole legislation discussion about maybe taxing or not or not allowing the REIT dividend deduction out there.

Does in any way the legislation that they're talking in any way impact you guys?

Or the way it's being drafted versus the way you guys are incorporated what have you, there's no impact at all?

I would say I don't believe there's an impact, and we haven't fully studied it yet.

I mean, obviously, we're a C Corp.

We actually were estate, we were a REIT for state income tax purposes at one point in time, but we dissolved our REIT for the reasons obviously discussed.

We're still researching it, but I'd say at this point, there's no effect.

Okay.

And then just finally, David, you mentioned earlier in your opening remarks about wanting to close the NAV gap.

Obviously, on prior calls we've discussed whether the Seaport is a drag on the company because clearly you guys are doing great and the other parts of the Seaport, unfortunately, is a little slower and, unfortunately, is here in New York where we all see it.

But as far as closing the NAV gap, what are you thinking about as far that you can publicly disclose that would provide some way to understand how that gap may close?

Let me try to take that.

I think the way that a gap closes is by our investors understanding that our business moves based on increasing price per acre, NOI and condo sales and obviously stabilizing the C Corp.

Those are the 4 major fundamental metrics that you need to measure our business.

And in our quarter, which was an excellent quarter in my opinion, we've done just that on at least 3 of them, okay?

The Seaport is obviously taking a lot longer, but at the end of the day, if you would -- if you understand the value of our company and you split it into its parts and to create some of the parts value based on product type, on land value and on condo sales, you get to a value that is way above where the market is trading the stock.

We can't -- we don't disclose NAV obviously because that's based on a number of different assumptions that different investors have based on different appetites for risk, but our business is solid.

Our fundamentals are strong and our investors, what we need to do every day is pushout that information to our investors in the hope that they recognize that.

To follow-up on that, Alex, I'd say look, everything is on the table with this management team and our Board, and you've seen us follow through on a number of other activities, not only to try and close the gap to NAV, but also try to drive the NAV higher on a daily basis, which is really what -- why we come to work every day.

And whether that's through a share buyback, through sale of noncore assets, through looking at joint ventures or looking at anything as it relates to all of our assets, there's no stone that we won't turn over to try to, a, drive the NAV of this company higher; and b, close that gap.

No, listen, I appreciate that.

I think everyone realizes the value certainly in The Woodlands, in Summerlin, Ae'o, what you guys have created in workforce housing in Ward Village is really remarkable and as great and stunning as it is.

So I don't know if it's purely just the Seaport and maybe that's an asset worth JV-ing as a way to sort of relieve pressure on the stock, but I think you guys have been doing a good -- you've been doing a good job on relaying the value creation.

But look, any further help that you can do is great because certainly, there is value, but there is this disconnect that I think everyone talks about.

Understood.

Our next question comes from Alex Barrón from Housing Research Center.

I was hoping you could comment on the timing you expect for, I guess, deliveries of the other 2 towers that you sold -- or you started more recently, the 'A'ali'i and Kô'ula.

'A'ali'i, Alex, 'A'ali'i will be delivered, I think, in 2021 -- first quarter of 2021.

It's in our supplemental.

And Kô'ula, we have not launched construction yet, but based on our presales, we hope to be able to launch construction later this year.

And at that point in time, we'll give guidance on when the tower will be completed.

(Operator Instructions) Our next question comes from [Martin Hirschrun] from [Hirsch Association].

Thank you for a wonderful quarter.

As a investor, I look back 5 years ago when the stock was selling at $147 and today, it's $107.

My question is I think it's very important to satisfy your investors to some degree in the form of possibly a buyback or a dividend so more institutions can buy your stock or maybe a spinoff, possibly a REIT or getting rid of some of those nonoperating assets so you could use them as a stock dividend or another form of dividend or whatever.

But waiting here for 5 years to see the stock still where it is, is very disconcerting especially considering the net asset value of the company is much higher.

So if you could comment on that, I would certainly appreciate it.

Martin, as shareholders as well, we sympathize and we share your frustration.

And all those things that you've mentioned and part of your question of alternatives that are available to the company are thoroughly debated and engaged and reviewed.

And if there were a magic bullet or a -- the perfect solution that would unlock value tomorrow, there's no doubt that we would sprint to go execute it and get it done.

I don't think it's just that simple.

I think there's more to it, but I think it's fair to say that as a board and as a management team, there's nothing that we've taken off the table or nothing that we won't evaluate to help unlock that value.

And I think Grant said it well as it relates to what our investors should focus on, but as David said, there's not a day that goes by that we're not completely focused on what we need to do to make that happen.

There's no way, notwithstanding where the stock has been that you can't see the progress, the significant progress that the company has made in growing our value over the last 5 years.

It hasn't shown up at times.

Remember last year at one point, we were at $141, which was quite a bit higher than we are now.

So there have been glimpse -- glimpses of moments when we've been more satisfied even though we were still under NAV, but just rest assured that we're spending every moment that we can focused on figuring that out, and we will figure it out.

And just to give you some understanding.

The complexity of the company is what makes it so great.

The fact that we control these small cities and are able to dominate our markets allows us the ability to continue to increase price and bring on supply at a measured pace to grow NAV in each of our communities.

The complexity causes those investors who are singularly focused on a product type to not understand or pay value to what we're able to do.

To split those assets up in any way, shape or form is a way to destroy value ultimately.

So while it might be a sugar high today, it will cost the company billions of dollars of value over the long term.

So that's the key distinction.

And I think it's -- as frustrating as it is for investors, for us, what you can look to is the ramp-up in our NOI as the measure of us creating value and the ability for us to bring on assets and returns on costs that far surpass the ability of other investors across the U.S. or real estate investors to bring assets on because they have to acquire the land at market and cannot control those cities.

That's the magic recipe we have.

Unfortunately, we're not getting recognized for it today.

And we will continue to do that, continue to drive value, continue to drive NAV growth.

And at some point, that NOI is going to be a monster NOI that you will not be able to ignore.

And that...

I certainly appreciate that, but how about just giving a very small dividend so that institutions who can only invest in dividend-paying stocks will invest.

And how much will that take out of your equity to do it?

I mean to me, it's just a very simple matter of just giving a small dividend to some of these firms that cannot invest in your company.

So we balance our need for capital based on the returns that are driven through either stock buybacks, dividends or asset growth.

And we feel as a management team that we're far better off investing our capital in the assets we know, rather than diluting the equity of our shareholders that already exist today.

We want to show you a higher return rather than a lower return.

Well, I know you bought stock back from 1 firm at $124, and today, the price is $107.

So to me, it seems that a buyback would be certainly very beneficial.

It's absolutely something that we evaluate all the time.

And ladies and gentlemen, with that, we'll conclude today's question-and-answer session.

I'd like to turn the conference call back over to management for any closing remarks.

Well, thank you again for joining us today.

We so appreciate your continued support, your interest, your questions.

You know that we're always available to answer any questions we can, and we look forward to speaking with you if not sooner, on our next quarterly call.

Bye for now.

Ladies and gentlemen, that does conclude today's conference call.

We do thank you for attending today's presentation.

You may now disconnect your lines.