Howard Hughes Holdings Inc (HHH) 2019 Q3 法說會逐字稿

Good day and welcome to The Howard Hughes Corporation Third Quarter 2019 Earnings Conference Call.

(Operator Instructions) Please note, this event is being recorded.

I would now like to turn the conference over to David Striph, Executive Vice President of Investor Relations.

Please go ahead.

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

With me today are Paul Layne, Chief Executive Officer; David O'Reilly, Chief Financial Officer; and Peter Riley, General Counsel.

Before we begin, I would like to direct you to our website at www.howardhughes.com, where you can download both our third 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 third quarter earnings press release and the risk factors in our SEC filings 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, Paul Layne.

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

Welcome to our third quarter 2019 earnings call and my first as CEO.

As we disclosed on October 21, we've concluded our previously announced review of strategic alternatives and embarked on a transformation plan for the company.

The plan rests on 3 pillars: a $45 million to $50 million reduction in annual overhead expenses; the sale of approximately $2 billion of noncore assets, which we currently anticipate will net approximately $600 million; and an intensified focus on growth in our core MPC assets.

We expect to rapidly transform the company to create a more focused, lean and decentralized organization with significantly reduced corporate overhead, built around our core MPCs.

We firmly believe this will bring added value to our shareholders and create a company that cannot only survive but prosper in all phases of the economic cycle.

Both David O'Reilly and I are truly excited and energized to lead this new effort, and we have made significant progress.

We have announced the relocation of our corporate headquarters from Dallas to The Woodlands.

We expect to realize significant efficiencies and cost savings from this move.

We have executed on approximately $86 million in noncore asset sales already.

These sales include $46 million for the Cottonwood Mall outside of Salt Lake City; and subsequent to the quarter end, $40 million for the sale of 658 acres of land in West Windsor, New Jersey, which David will talk about later.

We are accelerating development in our MPCs and have commenced construction of Phase 2 of Creekside Park apartments in The Woodlands.

Also, in accordance with our transformation plan, we are pleased to announce that the Board of Directors has authorized a new stock repurchase program under which the company may repurchase up to 100 million of our outstanding stock.

These actions are the initial steps in moving forward The Howard Hughes story, a story that I believe we have previously tended to complicate.

The strategy of the company is actually quite simple.

We sell residential land and condos and use those proceeds, along with our growing operating asset NOI, to fund outsized return opportunities in communities where we have unique controls, competitive advantages and mitigated risks.

Therefore, the results of land sales, condo sales and operating asset NOI for any particular period should be viewed in that light.

They create liquidity, along with our recently announced noncore asset sales that we use to focus on development in our MPCs and for share buybacks.

For this quarter, NOI is up substantially.

Land sales were down a bit due to timing, but are expected to be flat with last year, and condo sales continue to be brisk.

Now moving on to this quarter's results.

I will start off with a quick overview of some of the highlights, then speak our MPC and operating assets segment, and then David, speak about strategic developments, noncore asset sales, Seaport and our financial results for the quarter.

I am pleased to report that we had another very productive quarter, creating value across the portfolio and our core business segments.

A few highlights.

Total NOI from operating assets was up 33% over the third quarter of 2018, a significant increase.

New home sales in our MPCs, which are the driver of land sales, were up from 504 in the third quarter of 2018 to 618 this quarter, a strong 23% increase.

Robust sales at Ward Village continued with another 55 homes sold during the quarter.

In Honolulu, we celebrated the groundbreaking of our newest mixed-use project, Kô'ula, which approximately 70% presold after only 9 months of public sales.

We increased Seaport District revenues for the quarter by $8.5 million to $23.1 million, partially driven by openings of Bar Wayo, Malibu Farm and The Lookout on Pier 17.

Now moving to our Master Planned Communities.

MPC EBT decreased mainly due to lower superpad sales in Summerlin and lower equity and earnings from The Summit joint venture.

If you exclude Summerlin, MPC EBT actually increased 56.9% for all the other MPCs compared to Q3 2018.

Land sales increase in The Woodlands, the Woodland Hills and Bridgeland.

The land sales decrease in Summerlin is purely a timing issue and a quarter-over-quarter comparison issue.

In the third quarter of 2018, we closed 2 large transactions for approximately $91 million that inflated that particular quarter.

As we have always stated, land sales are volatile quarter-over-quarter, and you should look to a full year's results for comparison purposes.

We expect to have a strong fourth quarter in Summerlin, and for total land sales, they are to be on pace with the last few years.

The Summit also contributed to EBT decrease.

To date, we have closed on approximately $393 million of sales at The Summit including $18 million of custom lots and $49 million of homes this quarter compared to $12.6 million and $31 million in the third quarter of 2018.

We have 17 contracts in escrow as of the end of the third quarter worth approximately $65.2 million.

As we've mentioned last quarter, these results reflect the change in sales mix from higher-margin custom lots to more lower margin-built homes.

Due to this, we expect margins to remain lower in the coming quarters.

Also, The Summit is an ultra-high end community and sales will always be lumpy from 1 quarter to the next.

With all that said, the project has exceeded our expectations for sales since inception.

And we expect the overall gross margin generated by the project to remain unchanged from our original expectations.

The overall weighted average price per acre across our MPCs increased 9% from $527,000 to $574,000.

We saw quarter-over-quarter price increases of $195,000, $102,000 and $33,000 per acre in The Woodlands, Summerlin and Bridgeland.

The Woodlands Hills price per acre dropped $29,000 or just under 10% during the same period.

These changes are largely due to the mix of lots sold.

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

In the third quarter 2019, there were 190 new home sales compared to 117 in the same period of 2018, a 62% increase.

Year-to-date, new home sales were up 43%.

New home sales were up 7% in Summerlin for the quarter, with 322 homes sold compared to 302 last year.

Year-to-date, new home sales are down approximately 5%, with 989 homes sold in the first 9 months of 2019 compared to 1,046 in the same period last year.

As we've said last quarter, a good portion of 2018 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 '17.

We continue to expect that the balance of the year will be very similar to 2017 and 2018, which were both outstanding years.

Third-party builder sentiment continues to be very positive on Summerlin and the Las Vegas market as a whole, given the excellent economy and the fact that 30-year mortgage rates have dropped below 4%.

We received excellent bids on all of the parcels that we have put out to market so far this year, and consistent with our outlook on home sales, anticipate another strong year of land sales similar to 2017 and '18.

New home sales were up 27% and 18% quarter-over-quarter in The Woodlands and Woodland Hills.

We continue 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.

Turning to our operating asset segment.

We increased our third quarter total NOI of $14.1 million compared to the same quarter last year, a 33% improvement.

We saw increases of $7.1 million in our office portfolio, which was led by 100 Fellowship Drive, which is the MD Anderson Building; and Aristocrat Technologies build-to-suit coming online; and the further stabilization of One and Three Hughes Landing, Two Summerlin and Two Merriweather.

Hospitality NOI increased by $2.3 million, mainly due to improvements at The Woodlands Resort and Conference Center.

Lastly, the $2.5 million increase in our other category was largely based on our putting the Las Vegas ballpark into service.

At the same time, our stabilized NOI target increased from $317.1 million last quarter to $323.1 million this quarter, a $6 million improvement.

This is largely due to the start of construction of Creekside Park Apartments Phase 2 in The Woodlands, which added $4.7 million to stabilized NOI.

With that, I will turn the call over to David O'Reilly.

Thank you, Paul.

Starting with our Strategic Development segment, we had another great quarter, led by continued strong sales of condominiums at Ward Village and Honolulu.

'A'ali'i, which began construction in October, with 83% presold, and Kô'ula, which began sales in January of this year and commenced construction this quarter with 70% presold as of September 30.

This is a very strong sales base of 44 units per month and a testament to the vibrant vertical community, which offers its residents a walkable healthy lifestyle that's unique to Oahu.

To date, we've sold 2,395 homes, with total contracted revenue of approximately $2.7 billion, bringing us to just under 89% presold on our first 6 buildings.

We are extremely proud of what the team has accomplished for this asset, and we are studying how to moderately increase the pace of development.

Moving on to our noncore asset sales.

As Paul noted, as part of the first step in our transformation plan, we sold 2 noncore assets recently.

On September 16, we closed on the sale of Cottonwood Mall, a 197,000 square-foot building and a 54-acre land parcel outside of Salt Lake City, Utah.

The sales price was $46 million and resulted in a $24.1 million gain on sale.

We received a $10 million downpayment and a note for $36 million.

The note is interest-free for the first year and bears interest at 5% until it matures on December 31, 2020.

Subsequent to the quarter end, on October 29, we closed on the sale of a 658-acre parcel of land located in the West Windsor, New Jersey for $40 million.

The sale resulted in a gain, which will be reflected in the fourth quarter.

Both of these sales provide additional liquidity that can be used for new developments in our MPCs, and as Paul mentioned, our recently announced share buyback program.

At the Seaport District, we saw total revenue increase by 58% to $23.1 million this quarter compared to $14.6 million in the third quarter of '18.

This also compares favorably to last quarter, when total revenue was $12.9 million.

This is the result of existing businesses continuing to mature, along with new business ownings and the successful 2019 Summer Concert Series.

We have seen traffic increase, and it continues to grow with each new opening.

We had 2 new exciting openings this quarter.

First with David Chang's Bar Wayo in July and then Malibu Farm in August.

These will be followed by the opening of Andrew Carmellini's new restaurant next year.

For the quarter, we had net operating loss at the Seaport District of $3 million compared to a net operating loss of $3.4 million in the same quarter last year.

The loss was primarily due to funding start-up costs for the retail, food, beverage and other operating joint venture businesses.

As we've said, we expect those losses to continue until the Seaport reaches its critical mass of offerings, which will be primarily driven by the timings to completely stabilize the Jean-Georges Food Hall located in the Tin Building.

Assuming that we receive timely approvals, we expect the Tin Building to be opened in the summer of 2021.

Stabilization should occur within 12 to 18 months following the opening.

As you know, the Seaport District is part non-stabilized operating asset, part development project and part operating business.

Because we own and operate many of the businesses there, either directly, through joint ventures or through license agreements, the revenues and expenses of those individual businesses directly affect NOI.

We have increased uncertainty due to seasonality, preopening expenses and prestabilization operating losses.

As a result, there is greater uncertainty in our near-term quarterly results.

Given these factors, along with our operating experience this summer as we open several new venues, we will not provide guidance on our expected NOI yield and stabilization date for the Seaport for the next several quarters.

We will continue to provide full disclosure on the revenues, expenses, NOI and EBITDA for the Seaport.

After an in-depth review of this asset by our new leadership and after a critical mass of openings has occurred, we expect to provide updated guidance for yield expectations and stabilization.

Now a quick overview of our earnings before summarizing our recent financing activity and 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.

We completed the third quarter with GAAP earnings of $29.8 million or $0.69 per diluted share compared to $23.4 million or $0.54 per diluted share for the same period last year.

The increase was driven by the sale of Cottonwood Mall and the selling profit recognized from a sales-type lease that commenced at our 100 Fellowship Drive properties.

The increases were partially offset by a decrease in consolidated MPC earnings.

With regard to the selling profit recognized from a sales-type lease, this is a GAAP accounting treatment for the MD Anderson lease at 100 Fellowship Drive.

GAAP rules consider this transaction more akin to a sale, as the building was built to particular specifications and has limited alternate uses.

As a result, the profit this quarter is derived from the difference between the original occurring basis and the estimated fair value of the land as if we had sold it instead of entering into a lease for.

NAREIT-defined FFO was $0.91 per diluted share for the quarter as compared to $1.24 for the third quarter of 2018.

The decrease is primarily due to the decrease in MPC land sales due to fewer superpad sales in Summerlin and a slower pace of land development and custom lot sales at The Summit.

The decrease was partially offset by an increase in the operating assets as a result of placing recently completed developments in service.

Now on to our financings.

On October 24, we modified and extended our $47.9 million loan for The Outlet Collection at Riverwalk.

The total commitment was reduced to $30.9 million after a $15 million paydown.

The loan bears interest at 1-month LIBOR plus 2.5% and matures in October of 2021.

On October 17, we purchased a $99.7 million note on 250 Water Street in the Seaport District at a discount of approximately $6.5 million.

We expect to replace this with new third-party financing in the fourth quarter of 2019 --

Also, on October 17, we closed on a $250 million credit facility, secured by land and certain other collateral in The Woodlands and Bridgeland MPCs.

The loan bears interest at LIBOR plus 2.5%, with the final maturity in October 2024.

This loan refinanced The Woodlands Master Credit Facility and Bridgeland Credit Facility, with a combined principal balance of $215 million and a weighted average interest rate of LIBOR plus 2.87%.

As I've mentioned before, this facility is used to fund infrastructure costs in our MPCs that are largely reimbursed to the issuance of MUD, or municipal utility district bonds.

We currently have just over $288 million in MUD receivables.

On September 13, we closed on a $37.7 million multifamily loan for Creekside Park Apartments.

The loan bears interest at 3.52% and matures in October of 2029.

On October 6, we closed on a $30.7 million construction loan for Millennium Phase 3 Apartments.

This loan bears interest at LIBOR plus 1.75% and has an initial maturity date of August 2023 with a 1-year extension option.

On August 1, we modified a $64.6 million construction loan, of which $31.1 million related to Aristocrat and $33.5 million related to Two Summerlin.

As part of the modification, the $33.5 million Two Summerlin note was amended to bear interest at 4.25%, with an initial maturity date of October 2022 and 1 36-month extension option.

We closed on a new $38.3 million note for Aristocrat, which bears interest at 3.67% and has an initial maturity date of September 2029.

A portion of the proceeds of the new Aristocrat note were used to extinguish the original Aristocrat note.

As of the end of the third quarter, our total consolidated debt to total assets was approximately 46%, and our net debt to enterprise value closed the quarter at 31%.

From a liquidity perspective, we finished the third quarter with approximately $638 million of cash on hand.

As of September 30, we had 28 projects to be completed with anticipated total cost of $5.2 billion.

Of that amount, we have previously funded approximately $3.3 billion, leaving approximately $1.9 billion in estimated remaining costs.

We expect to meet this obligation with a combination of existing construction loans, which at quarter end had approximately $1 billion of committed but undrawn capacity, and with $81 million of existing condo buyer deposits.

This leaves approximately $806 million.

We anticipate loans of $39 million for Creekside Park Apartments Phase 2 and $317 million for Kô'ula.

In addition, we expect Kô'ula buyer deposits of approximately $97 million, which leaves approximately $353 million of remaining equity requirements.

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

Again, as of the end of the third quarter, with approximately $638 million of cash on hand and net equity requirements of $353 million, we have enough cash and liquidity to meet all of our current funding commitments without additional cash being generated from MPC land or our operating assets.

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

Thank you, David.

As you can see, we had another quarter of strong results, and we are proud of our team's efforts to have already made significant progress with the company's transformation.

We will continue to be thoughtful, creative and opportunistic in allocating capital in a manner that we believe best increases the per share value of the company for our shareholders.

Thank you for joining us today.

And with that, I will open it up for Q&A.

(Operator Instructions) Our first question today will come from Alexander Goldfarb of Sandler O'Neill.

So 2 questions for me.

First, Paul or David, on the Seaport -- yes, sort of a 2-part.

One, I mean, your comments aren't totally surprising.

But curious why you're announcing now versus on the strategic call that you guys hosted a few weeks ago.

And then two, just -- I know on that call, you guys affirmed that, hey, there's a lot of value in the Seaport but it does sound like there's a lot of heavy lifting.

And I think, David, as your comments about the stabilization period, it's definitely out many years.

So given you guys are a public company, you guys are on a quarterly business, but still, people look for annual earnings.

How is the company sort of reasoning to keep the Seaport within Howard Hughes versus seeking to offload it?

And then two, to the first point, why the decision to talk about it now versus on the strategic call a few weeks ago?

Thank you for your question.

We are committed to the completion of the Seaport.

It's a great development.

There are a number of spaces that we need to obviously complete, restaurants, finish leasing the office space.

And -- but we are there.

And we have a big -- great team of people that are working hard every day to finish that.

David, do you want to talk about...

Yes.

Alex, look.

On the call on the 21st was -- the focus of that call was on the transformation plan.

It was on announcing Paul's installment.

And given the fact that Paul was CEO for less than 24 hours when we had that call, I don't know that he was fully up to speed, nor do I think he is today, in terms of all the details and nuances of the Seaport.

And really, what we're saying is that we need a couple of quarters to fully get our arms around for Paul to impose his strategic changes and thoughts on the Seaport before we're ready to talk about stabilization date and ready to talk about stabilized yields on costs, consistent with what we do with all of our other assets.

With all that said, I'd reiterate what we said on that call about the Seaport, is that there are a handful of short-term items that we are on the threshold of crossing that will unlock meaningful amounts of value for our shareholders.

And we're committed to seeing those through.

We're going to complete the Tin Building, which is going to continue to drive traffic.

We are going to lease the remaining office space at Pier 17 and the Fulton.

We're going to open and stabilize the restaurants, including Bar Wayo and Malibu Farm that opened this quarter, and get Andrew Carmellini's installations opened at the beginning of next year.

And hopefully, we'll finalize plans for the 250 Water Street, including what we're going to do with the air rights there.

And given that there is so many near-term opportunities to unlock value, we are going to make sure that we see that through.

We are absolutely committed to the Seaport, as Paul said.

And once we do have a little bit more clarity on some of these items that I just enumerated as well as get through a whole season, including the seasonality impact of the winter and restaurants on the Pier, I think we'll be in a much better spot where we can talk about stabilized yield and stabilization date as it relates to the Seaport.

Okay.

That's helpful.

And then the second question is sort of a dual one.

In the fourth quarter, is there any severance or any sort of onetime charges we should be thinking about?

And then two, on the $45 million to $50 million of savings, is that something that you think we should be -- Jan 1, 2020, we should all reflect those savings?

Or how should we think about the -- obviously, you guys have cut a lot of -- or you're going to cut a lot of costs.

But how do we think about all the cost-cutting that you outlined kicking in to next year?

So I think that in total, what we talked about in the last call, Alex, is that there would be about $38 million to $40 million in onetime cash charges associated with the relocation, severance and retention.

And I would expect about 2/3 to 3/4 of those will hit in the fourth quarter.

So I think everyone should expect somewhere in the $26 million to $30 million range of onetime charges in Q4.

In terms of the savings and the reduction in G&A on a go-forward basis, I think that we'll realize on a run rate basis, $27 million to $32 million in the first 6 months.

I don't think we'll see all of that in the first quarter, but the vast majority of it, we should experience in the first quarter.

The remaining $10 million beyond that that we talked about on the 21st, will come in more in the 6- to 12-month time frame in the back half of the year.

Our next question today will come from Vahid Khorsand of BWS Financial.

Just looking at the Seaport, it looks like you had $1 million loss on managed businesses and then a $25,000 all-in gain on events.

Is that a function of traffic not being up to where you expected to be?

Is it fixed cost related?

If you could just kind of give some color on that?

Sure.

Look, I would say that this is not -- this doesn't have anything to do with traffic.

And in fact, I would tell you that we are pleasantly surprised and continue to remain optimistic as we've seen traffic grow at the Seaport almost every month throughout the year of 2019 as we continue to open new offerings and those offerings have translated into increased traffic.

So we've been really pleased.

I would say the losses that we've seen in the managed business are more driven by those preopening and prestabilization associated with restaurants as we bring in kitchen, train staff, hire folks and get these things ready to go prime time.

Once they've been open and running for several months, we see those losses tend to burn off and they move towards profitability.

In terms of events and sponsorship business, that is really -- it can be often a lumpy business, right?

And throughout the summer, we have a lot of events there with the Summer Concert Series.

And as the weather starts to turn in New York, we start to see those events fall off.

And then as we get into the winter, we'll see the winter skating experience reopen on the Pier in and around Thanksgiving.

So I think that the fourth quarter will be a little bit bumpy in that regard as well.

And obviously, it's a highly seasonal business.

It's highly dependent on being able to book events and being -- having a consistent event business throughout the year.

And as it continues to mature and as those free bookings continue to build up, I think we'll see more and more and stronger results from that segment of the Seaport.

And then in Ward Village, I know you have the 2 under construction.

What are the plans for a third project at this moment?

So we're in design with a number of projects in Ward Village.

And we're always thinking about when that kind of next 1, 2, 3 towers will go.

And our goal is to have those ready, but not completely locked in, if you will, as we want to be nimble and flexible as we see results of our existing towers.

So that we can better design a tower product and unit mix that meets the deepest pockets of demand on the island.

I'm cautiously optimistic that in the first quarter of next year, we'll be able to launch presales on our next tower.

It will, in all likelihood, be a front-row tower adjacent to Waiea and something that I think will be very well received by the market.

But we're not at the point yet where we're ready to pull the trigger on presales, and it probably needs another several months to bake, if you will, before we'll see that hit the market in the first quarter of next year.

Now in Ward Village, with interest rates going lower, is there like a desire to expedite it?

Or does the market of the consumer who's purchasing these condos, does that really not matter how low interest rates go?

We -- it depends on the tower.

So what we've seen in some of our front-row and higher-end product is more cash buyers, fewer dependent on the mortgage market.

And then when you get into those luxury micro units like we've seen in 'A'ali'i, and we've seen incredible success there in Kô'ula, there is a greater dependence on mortgage rates, but it still has a large percentage of cash buyers.

So it hasn't been a kind of sea of demand.

I think the demand has not been driven by lower interest rates, but it's really been driven by a great product mix, the mature -- maturation of the community, that livable, healthy, walkable lifestyle with Whole Foods, Ala Moana Beach Park and all the amenities that we have to offer that are incredibly unique to Ward Village.

And our next question today will come from Alex Barrón of Housing Research Center.

I guess I was hoping you could discuss the strategic thinking behind, I guess, owning and operating a lot of the businesses in the Seaport versus just charging rent like you do in many other of your assets.

Markets -- I mean, it's in all instances and all of our decision-making, it's about driving the highest risk-adjusted returns for our shareholders.

And the amount of capital that it takes to build out a great restaurant space and to build out a Pier in Manhattan is meaningful.

And to just get rent and maybe a percent of sales kicker, I don't know if that properly rewards us for the capital that we're investing in some of those spaces.

So by structuring the deals as we have in joint ventures, licenses or operating agreements, we're able to deliver meaningful upside to our shareholders that we wouldn't be able to achieve in a straight rental structure.

Obviously, that impacts us in terms of preopening expenses and some incremental volatility, and we appreciate that, and it's not lost on this team.

But we do think it does deliver the best results for our shareholders.

Okay.

I appreciate that.

The other question is, I like the disclosure you're giving on the new home sales for each of the MPCs.

I'm wondering if you guys would consider reporting the lot sales like you used to.

Or what's the thought process around that?

Could you repeat that?

Sorry.

I was saying that I think it's great to get the home sale by each of the MPCs, but I'm wondering whether you guys would consider also breaking down the lot sales that you guys are doing in each MPC, so it's easier to calculate the -- how much you're getting per acre and so forth.

Well, we really have been pretty thorough in our supplemental in terms of what we're disclosing in the MPCs in terms of acres sold, price per acre margin.

And we disclosed in the bottom half of Page 23, kind of the percentage of single-family detached and average lot size to help calculate that.

Given that there's oftentimes when we're selling different size of lots in different quarters, I think that the best representation to show on a quarter -- on average comparison basis is to show full acres, right?

Because the price per lock can vary pretty dramatically, whether it's 1-acre lot, or 1/8 acre lot, et cetera, and it creates, often on a quarterly basis as we report, a comparison issue.

But to really talk about the number of acres sold and price per acre, we think is -- it kind of level of playing field on a quarter-to-quarter on a year-over-year basis.

And to be able to say, for example, in Bridgeland, where we are able to sell acres at 43 -- no, over $411,000 an acre is great.

And Alex, I know you understand that business very well.

And when you look at the price per acre and this -- granted, it's quarter-to-quarter, but we have substantial increases this quarter that we're very proud of in a number of our MPCs as well as the acres sold in Houston.

So I think it's been a good story this quarter.

Okay.

And if I could ask one last one on the same topic of lot sales and MPCs.

Are you guys getting any change in the demand from the builders as far as lot sizes?

In other words, are they requesting to get more lots that are smaller sized to build more affordable homes?

Or is it pretty much the same as a year ago?

Sure, Alex.

Thank you for the question.

I think there's definitely a trend in Houston because, as you know, in Summerlin, we're selling superpads.

But in Houston, there is a trend, especially in Woodlands Hills, for slightly smaller lots, more affordable homes and on smaller lots.

And we've come up with some really outstanding designs, working with our homebuilders in Bridgeland and Woodlands Hills that have been extremely well received on these smaller lots.

Are they all single-family?

Or are they attached?

The vast majority are single-family.

We do have some attached product that have been very well received.

Ladies and gentlemen, at this time, we will conclude our question-and-answer session.

I'd like to turn the conference back over to Paul Layne, Chief Executive Officer, for any closing remarks.

Thank you very much for joining us today.

I appreciate the questions and your time, and we look forward to speaking to you next quarter, if not before.

Thank you.

The conference has now concluded.

We thank you for attending today's presentation, and you may now disconnect your lines.