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PCYO Pure Cycle

Participants
Mark Harding President and CEO
Kevin McNeill Chief Financial Officer
Tucker Andersen Above All Advisors
Justin Xie Black Diamond Investors
Bill Musser New Frontier Capital
Call transcript
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Operator

Greetings. Welcome to the Pure Cycle Corporation’s Second Quarter 2021 Earnings Call. At this time, all participants are in a listen-only mode. A question-answer-session will follow the formal presentation. [Operator Instructions] Please note, this conference is being recorded. the Harding. to turn and host, now Mark CEO, will conference your over President I

begin. may You

Mark Harding

Thanks very -- I’d call. second period much. And February quarter to you ending for our all the XXXX period XX, the months like six earnings to welcome

some of who in for are presentation on those follow want to the items, our housekeeping dialed Just you but deck.

our If you purecyclewater.com. jump website at over to

you link page the where that, be follow and you earnings click front there of the with a On along to can on presentation us. can it will

or I So, reference forward-looking the satisfy with out Harbor Harbor which get presentation are presentation that that, I we sure this am will statements incorporated by familiar that statement our lawyers and and them start facts and is statements with statements. first in the with is of are the are you where this business, order all not room statements. note the Safe of Safe forward-looking contained to historical

six-month call over our the or Then you our impressive our So recently. will to who give got of to I so highlight are in the you and enterprise. the period. we and either a who had number of segments of who folks company turn about give of have over or overview quarter, give done called -- each drill conferences McNeill company the have brief we the of of new those have then of the business participated we to new I inquire going the a of the down to on earnings will one of in kind that CFO, you over a specifics some guys will am Kevin to

a a which then a I-XX where the customers, in that, three our Build-to-Rent new own Development right Land a those go Highlighting the the business through and the drill recently as down Resource company I quarters area, have we of little short own presentation. announced specifics use as and as that for Water single-family in segment rights on the one rights wholesale we of Water a -- our segment then a bit water more rental, a that segment, the will own segment, other the with part water portfolio own a corridor, you where sort can property and we in we operates area. we area is develop segment, country water complementary property is metropolitan in of we we the water are water provider large water of the as fastest-growing where water actually what and where So, water cradle segments, asset. in grave, define a area, to short Denver have for in Part

the to that to for irrigation through treated to water us supply of We structures feet We then provide our as where customers it. we an reclamation water back oil acre used XX,XXX streams, sell through the off about customers, collect service once customers. process customers that And and also we water own connection. sort either clients we surface we that then and out distributed wells, and enables the define XX,XXX that the estimated to the that that So that equivalent to connections reuse facility rights sell a develop industries. water residential of connections the of or we water diversion of we and water the irrigation gas

do you $XX,XXX margin in $XX.X our water and around numbers and XX% brick-and-mortar. we water then that’s if We the get for capacity two a supply. a get water for math build about about for the $X,XXX side $X about the going the We connection that substantial the side that We sewer the paid rounded because reuse paid and in and the fee so use get there’s $XX.X, billion that. side, very instruments fee, our for a about one-time we revenue on So connection fee for business, charges. for portfolio, of fees are connection to

supply All of our year-over-year doing that kind sewer revenue for irrigation. capacity XX% reuse has back business are And to is build Colorado takes parks of all space through its and I get that into very It and working for does and about want facility, per year our water open XX,XXX at treats another a $XX about XXX% does to the generates system. again connections on facility that we this it asset, deliver margin water collect keystone bills, wastewater when monthly And and some XXX% do of that that highlight and facility. the customers. wastewater a and we the comes of our then the estimated regulations you math out, standard that irrigation to that’s what of this connection new water operating per maintaining infrastructure reuse can combined our that revenues. we $X,XXX reclamation outdoor that sewer so govern of and reuse that about million the specific as

we So, that. do do

and deliver to Sky that our the as for well use about that back facility We storage to community industrial, and projected of coming growth our distribution Ranch allows space, directly parks sort idea for are to have they that gas where and are, oil is where dual system our open rate. bring a of as This connections customer within their from us they an customers. bit and little

a And so, customer growing have base. got we

that commercial into our of provide County are as connections we Sky number, at on service a terms down a small customer our we back our just are on at of acquired at well look we residential XX,XXX, are Although, to Albert growth. what if in which beginning that. we years is very we we rapidly quite to and But very, in doing project both areas other year-over-year capacity a Albert service are due you growing at County, as Ranch, both that the couple connections our

build it’s X,XXX and nine this, connections next over are a years. of that out the or take you say, we Ranch we the projecting projection kind a at years eight kind Sky for of just if look of So,

graphic -- assets. data illustrates kind in of in on utility Moving growth the a water that our investments our

storage So the our add service of of systems, portfolio that the all to in elements we diversion sorts infrastructure, assets continue to of terms that deliver things. that of those on both distribution and

So capacities of brick-and-mortar into this to that invest be those continue use the will to This will the segment grow. business. we capacity that XX% Utility

the a to as want segment, which segment, developer that metropolitan I over master X,XXX in plan acquired We our years Denver really us Development We of incorporates ago. acres Land second area. number right property acquired into at So the time. of about a spill the

are to commercial X,XXX side. can the that the Recession that square and good a you in confidence buy. out You but development raw we development accommodate the middle for a the that terms in always Board lot shareholders and of couple for want placed us in feet be SFEs in took but residential up depths and utility single-family to units X,XXX our in of we Great projecting land the they of to the was when of our in it acquiring commercial a courage investments, And and certainly equivalents million equate buy to making total, right, are grateful project those on

about in around so is that we bit the Utility of what X,XXX that what our as detail capacity build-out started metric Highlighting real that the that terms of build-out single-family Sky our two come successes Ranch later play But terms also years will and ago. little phase, the little is XX capacity months almost and equate And did segment into ago, bit but we XXX estate, on potential of we in in believe I single-family on connections realize this, we only real the a a first not which look to of lots the both about estate. is. revenue we that

and little product. the it’s that have our of homes shy well there residents so We to of the exceeded a has been XXX just builders now, XXX And expectations models. our got under because of over as construction mostly out as both

-- level out the affordable We area most plan is affordable, the have master community Denver master area. not in product affordable an among of I it most in metropolitan communities the here. think metropolitan the one most It’s the and entry plan if it’s the

the projecting We this out in that available be are by will first end phase the sold year. lots of this

each our the full of our its of builders should on deliveries $XX to-date. million, these about to-date and way first are recognized revenue of balance and fee production phase. We $XX.X million tap’s for have recognized $XX inch are about The three applied by total as about revenues in lot we of the our to tap builders up have million

we second XXX highlight to kind on Moving phase, second our have our a got bit of about lofts little phase. in of

So phase are first first lots half XXXX the the phase, of broke now. our these crew grading February our our of about grading about twice of we and size in out ground is first XXX there right They dirt through lots.

end crews and hope year. May then be the time -- in mobilize this we Utility about and lots the frame start deliver they we done of them will So to all later to

looking pricing first here price so at product increase has you our lot just of increase phase little a X, estimating into about bit we the for a more we about we This getting had metrics Phase are were the million. and we have mostly overall phase we substantial our in to $XX.X in break are costs lot market revenues where a into lines. our first a look lot and XX% a number because different If revenue take our did from in phase

We homogeneous. delivery square X,XXX Our feet And number have our of products. XX-foot had was to lot X,XXX standard first different this frontage, feet. either one lots, pretty detached phase are from builders. a were They or XX-foot single-family lot will anywhere square production pretty for which

townhome still will will a we those XX-foot paired XX-foot, have We have products, lots. same product. But

a duplex product. We will have

both the We alley XX-foot the loads sizing. will sizing and some XX-foot have in

of a more So it broader will much buyers. attractive be to range

here, look to projection that is cost gives than don’t look which as stacks the million so looks more land to local Ranch we really are then the convert those different have of on we which pedal million, going more math going And projection. the that and is this builder, what one have same at at the has out because at the going and we and work Community Sky this all one, we for on look We project up, and the $XX purposes, Doing both the districts revenue left filing for we the we class better residential revenues forecast lots Metropolitan filing is two $XX.X to the product into of level, how we an feel get that by to it here next then But certainly commercial it itself Ranch. illustrated balance in same it. efficiencies classes Tap Board. at six and kind look municipality, delivering commercial it like. remaining the here you -- product X,XXX, how when some cost through it reimbursable fee do but kind Authority of reimbursements a think what’s would the of X,XXX valuable at Ranch comparison in that back the utilities have about Sky phase. again this is to a is the we So necessarily of well about absorption taking by illustration this lots the balance Sky as residential from

another if $XXX you say, over, about revenue total are this we million at looking And probably $XX so million. in got

the with it you worth little of got delivery efficiencies tap there -- $XXX we call about in in So and the those that’s fees over million to can some can costs cost. of maybe X about, phase lot million $XX terms that and the us in then carry there of the $XXX next and in Phase have up million available worth margin X of

looking are of we what for Sky the and rest margins at attractive very So Ranch.

fairly years kind that stock each we analysis years of so to kind you take look a an how XX projecting of are investor give from And over can discount a of eight factor, this will that that a next is priced. that say comparison but the at the

this topic and Build-to-Rent. our want bit It’s spend discussion this Moving on to because time new I for little into us. a of exciting do on is a

really our to them going contract We to customer we this be are on going these to we your actually are to then to be them. builder those on just are homes and we portfolio be back have to our not competing are with lots. with We us, for can first hold continue saying so just are build we homebuilders and that going able lot

on why reserve to model have capitalize So appreciated nice be it’s come we if blocks they as home to see look level a inventory a prices that to how highlight in to in segment that illustration statistics see able opportunity demand kind constrained in values why for, the then in for for us the home Colorado. and And on is are for important And terms really build of And also the then This we that. because is think here inventory and building they good prices. of these we have the of we us lots us, go and of entry this the we I as try is it us. well significantly of land to allows constrained about an cost, that continue long-standing a utilities. investment this as the and on highly that home some

you If you translate we tells product to category what getting at tremendous of above started some were asking that in are statistics before for appreciation all the there’s offers today that that price this that. a X%, that headlines property, competitive fallen you out the look just listings, appreciation how all time level about roughly XX% your values, every you the there. we think were the and price I that is is And of doing you so multiple area and and a are are list the in -- these getting have number home homes about entry then demand these it statistics the lots recession, what so above seen significant -- Denver has us for less than took

of the in right looking residential Sky country think for price Denver the at is entry continues We growth. Ranch, in why The urbanized top are the to our be terms We Ranch. population among the product areas location. Sky

approved working community. got parks or commutes district space we a a school new have our them employment of We that then school years to charter that for tremendous has centers. into plan and local And really that incorporates open number a that the we to have been and with land the approved bring and investment have

model. a that side location something is this So for Sky a Ranch is about we we the how look bit deliver on perfect able look on take to at of particular like a home. capitalize this than more $XXX,XXX, to little $XXX,XXX And are vertical $XXX,XXX the for

So selling rates to investment the tap. And up -- able to the interest lot into incremental interest attractive as that’s rates of Build-to-Rent additional cost were just is do we and the the for cost. compared that the line what

$XXX,XXX cash Board. able were can’t of to financing component find this incremental It you here, year. a we our that and we this -- month a that way we have got a us then about very income single-family And the but and mortgage be with the to in add took any when home, to our costs, it at to we that metrics at vertical about got a X.XX% rental might about income consider positive connection to has statement. $X,XXX the Build-to-Rent. but So to generates you lined $XX,XXX it single-family to connection we able is for the there $X,XXX as a of for that to another we flow on look went we opportunity becomes does said if the have ultimately when our up are accretive when so the use this Utility you over so renting then And fund to and it, of on we money that have if cash do this type out have costs model, you per $XX,XXX this some what got which and

if income slide, the it and the us So a the to Build-to-Rent, take both the to sheet statement. on grow look at be you this next balance advantage able allows

cash market statement and to to are the per So accretive cash $XX,XXX then appreciate. of taking be positive a value seeing and connection going recurring flows income $XXX,XXX continue that the to flows also that

some on appreciation. you got asset So great a just home those values if show modest have depreciation you

And that. incremental. be we It so are our to of this going add portfolio for second got kind and lot reserve to filing with here the XXX have about will we

out start that dozen will with our So a will be phase. we have first in

incremental also add filing. We to were first new lots forward will we that to and roll kind our able each as three of phase

our we for are of first construction So that. actually three units under

successes we of all travel Day to we would we update of out you our second its here as the and to out an Utility in our summer kind are have inched -- on for town, this and have open we Investor then, of and our way at is like industrial only gas things more see of see do looking as and see terms of also opportunity a units construction come segments one the so continue an to and are you kind activity we build-the-rent back. and first phase, of not the that and what on that’s And where of well of water as that can some phase, try up those that and

dates circulate a come everybody. a summer will information bit So about get to there we the and bit to as that will some out more little be closer that we

oil us for in, field as into do to that oil There’s is So still to fact the and that there significant gas derisked. been operators. investment lead been attractive to a this a that’s sell want opportunity highlight and with I water gas an

of we the efficiencies do wells understanding drilled increase strong per field water of here. they usage this of and to And of are the in amount looked that have continue see to be an there’s very thousands a production in wells. So

XXX,XXX what they So do our And really, of using in of to current of capacity. is is worth well water growth about area. try stay have that this for the look metropolitan operator they ahead the each and

they think Colorado sort the they are of Colorado get come what the working I be over a residential to the community, and state relationship that distance. safe west this for But fairly that -- so requirements way and dysfunctional done be east distance can maintain they of need of into their to that framework spacing have residential setback fairly they the has new are at they oil from encroaching the a with gas. into and to get in an able will safe operating communities map going workable where So be the be that the has to there’s had to operators requirements and for setback a they expectation side

And in out that’s where so that we also find attractive part development the formation of hasn’t yet. but ourselves that of come quite

relationship So that find kind of part a and for field of in operators. ourselves I good there’s we think better a

this income rig will here go have them was and our is we do a see we wells, will statement deliver spring for as that that we you on water start forward. So so to relocated drilling and to continue additional and

Okay.

done. side highlight is to and is he’s been company of going doing Kevin I over we to financial CFO him call let working what the move we kind over the to the our results here optimizing McNeill, and he and that I to of turn this I do what really and have will am on are what So going am

Kevin McNeill

by the the afternoon. us And for am highlight go P&L. -- Great. line obviously joining on items. few going a through everybody won’t I down thanks Thanks, Mark. to welcome line for this I

ended want to XX. top the On at to the slide, show this on are to highlight three compared The are three we -- revenue, item of really The gross the margin, reimbursable. three where And is concurrent couple bottom the in few is are we slide, graph February related really major XXth those the items, I doing income. we you you how we net to of six the bigger on last months are give compared were to a and years the last section where gauge we years. --

and and development income collect filing levy year really and up on up more in interest waiving noted couple was highlight margins recognition have Cash, recognize to probable us sustained million the the so $XX pretty lines we first was maintaining are our an contingent have management that, which calls, some track current project determined of to million that did with in deferring gross truly this and what them this. mill base get gets able slide, quarter of what of $X.X in are As they with those that to we good will the items sheet. GAAP interest collectable is prior we until it’s in we first and a on this reimbursables balance changes, books now, expected, were the progressing, guidelines, we $X.X of with growing management recorded will and fee we Progressing just next I under really the they what’s were million Based going to line income in related a analysis the second other of of about actually so payment balance. and of into going reimbursables anywhere. we weren’t believe project that revenue. tax the will and from project occurring felt cash phase. But -- considered in development now along back some filing, and -- fees U.S. the with income, We our

that Highlight will the next start start just couple will items. XX-Q show payments. with of we -- quarter our the second as statement the up tomorrow morning. continue which The down milestone in income obvious slide a some development is which see of getting we obviously next but we file filing, will start you We coming -- will obviously use will in then

our XXX last water fracking this obviously six-month -- -- last for gets fee expect out growth. -- see versus X/XX land metered decline There’s revenue, about gas pointed out those the about revenue $XXX,XXX, homes some that predominantly operations. we filing can substantially built which Sky You of is ended build because to those the all permit oil There’s this Filling big lot flat XX which versus up as February the utilities is due really as being year, there, the come Mark recognized -- one two and from is usage and the year that’s earlier. additional And to year year complete, Ranch revenues the is and as are installed. down everything that’s start lots getting and sold. one later during this or then

that questions-and-answers, you questions free some Mark. out really will as back have to there’s turn or if was it. I reach and get can feel to we So the it to And any Mark to over with Obviously end you that, myself.

Mark Harding

Great.

could by to to where but doesn’t like have of all kind we be were county applications to it our have approvals was very and a -- these was designs up -- there, timelines way, say to in better about highlights and the of about that overlap little work be on set your than And earnings impact that to these how would has people bit didn’t what somebody their that started in work processing forward. work we you that just what really out feel to COVID the, the one And things will for then the that do secondly, we going with that figure they We processing like it things out these managed remotely. That do did. public how these that. to how optimistic time would get and -- were better hearings they sending of enterprise. it when phase. on And unavoidable, delay just over was I documents complex call can’t engineering couple a trying talk detailed an one first So it did our second impacts for have a

highlight. I occupancy staffing COVID the maintain if the to to levels the the here have what in would that were I company able that we that Staffing-wise rotating back So up. to have and through our been say impact one would been, we office are building be

So in our into wastewater services. team most delivering field most the the been the field, come and does working team in office consistently of our of has water,

So, over questions to it add color with let and some me a back and we the you if see can have. ahead might that, to all go moderator little turn

Operator

Thank you. [Operator Instructions] Tucker Advisors. All is with Our with first proceed Above Please from question. Andersen your question

Tucker Andersen

Hi, Mark.

Mark Harding

from good Tucker, hear to you.

Tucker Andersen

Very informative presentation.

You guys anymore. about talk on you getting you professional. questions, recognize and development? few I could A proceed don’t color commercial when you are the really how any may with

Mark Harding

Yeah.

really have that So are be commercial added doing. -- have best handles some the competing Board who we probably on one we strength what anything we of not here who of opportunities town, private would for and guys one the local developers in here

that say. well name is this Jeff career most our spent Beirne at on into They his Sheets, his really he questions Pulte wanted there. their didn’t who their never They as to both could a full always convince have so, never regret. selling and have both until got And was come and they hold value teams situation to never They management commercial as had Patrick where commercial. have of regret the is

Now, do are value you for you how balance for. value value present that a that delicate holding hold between you and there’s how

them big on so -- right been like or of they such we to we their get the a your that really a grocery to such get that stores are. And to on lot know on interstate. the listen, that’s perfect going of place. map see users We have with now saying, are you. map commercial anchors that interchange touch whether their But off be This sort box what requirements their in is the we

on just wanting So things density more really little are the all a out rooftops and of there. those they are great bit

look more second we units like later So it the if -- that that a first saw got second stage, the the we are at we we X,XXX long, probably the take phase I have that probably XXX. month. when in given up, Tucker, maybe isn’t in at looking units XXX that we per same Maybe seen. are And have later that’s which at that we put stage absorption at this get when absorption plus -- type product maybe phase per would units phase, of we five this and by

to be the might out want summer, We that don’t somebody. XXXX We start that of it be somebody take We XX then month. the start actual sometime full the a really that pad the delivering to end get to into to property those want per site would pad looking do That we and lease and be want user. for could of getting to pad So opportunities. and have summer site of sell then site. at sort us next

we we well so chain, as value value I the properties. And give commercial that of sale those you how analysis, that as present of if optimize that’s the think can both

Tucker Andersen

more That’s have perhaps the does your is, would lots remaining the great more and residential, make color. The residential follow-up you of pricing attractive I to better. develop as it that

consideration? Ranch amenities say, let’s who an for grocery at the like, residing Sky and also people have store operating is that you an and additional If some are basic

Mark Harding

we of increase actually those additional continue is. is went And do that that is on It everything homes. otherwise Build-to-Rent, value consideration. going are doing to you we the touching of we are why It to this points the to one key very going are to much because

getting $XXX,XXX time school rec the value the X%, roadway out increases the the getting a for that parks value X%, on center, But a we a value getting getting that, of for of so, us. a improvements, value there, increases charter home, almost only all up, if there, every and $XXX,XXX amenities by home commercial it if do of And getting example, for X.X times lot, not the lot that’s of increases great greater the it the but of that’s by us. operator

we So that. that’s why like

Tucker Andersen

general to that more all for balance or Build-to-Rent specific just your project couple financing mortgage up I is and financing Yeah. that want recourse if Build-to-Rent very I Yeah. is it sheet? could time. questions, has your The Is a ask financing interesting take your to don’t

Mark Harding

related It not directly units, sheet. the residential the is balance to against

Tucker Andersen

both had the rates in other area Okay. for looks particular with so what’s affecting affordability with that’s other I I for am general know including then only rates, are in costs on there? the how pressure I Sky like now development Ranch that? mortgage like builders but affordability in And is, just regard the mortgage cost it and your and happening product the things to general to in not clear, delivered question of And Denver terms

Mark Harding

with phase custom adds the at to And one concern build increase. labor and lumber very cost It these, contributing we and is that. a concern why of second well. our a in in availability market that a to took and that’s key competitive. the any the to where look because prices that as market challenging And then that And was are want density recoverability first key do phase all had the the assessed which the reimbursable. considerations foot. builders, when of it’s we were the do we lot If density square model of we product, stay looking That’s and more because they of just townhome because is adds to some per had wanted BTR we you with to the to national to in our best than that partner see come really at value, the cost then our other

us master factors So, community. forefront as ability -- keep give the planned that to the us most Denver’s in all keep affordable those

Tucker Andersen

have for the say. long-term to Thanks. I creation Keep all up us That’s value shareholders.

Mark Harding

and been thank through the one those You you of confidence your years. have for

Tucker Andersen

Yeah. work. Good

Operator

Thank you.

from your question. a Our with next question Investor. [ph], Please proceed Miller Private William is

Unidentified Analyst

you critical your of future. you land and Mark. a Why buying me is so going out aren’t what component I everything more said, about much… your told think loved for rental I mean you haven’t I but Okay, endeavors? that’s

Mark Harding

What…

Unidentified Analyst

… that’s best… so much

Mark Harding

You…

Unidentified Analyst

got your … opportunity and have ultimately best what pay the for in it’s people flow, revenue, is which you will have you recurring cash stock?

Mark Harding

Yeah.

Unidentified Analyst

to land you And got have now. more get own and it

Mark Harding

stock you, bare I am and lock with Bill.

nets our got out. -- are have We we

with. conceivable buy, you -- we for active part made pitches we as as of an can we well that will the updated. is have number of we we that properties the That growing as what on And control, well way, business growing partner that are is have can can We and which a as business. we every which number of which in we a doing fronts keep got are

who utilities, the that for the so the partner has our of buy So above I somebody, whether land, all whether growth I get land, with already zoning of I part are strategy.

about And tangible doing also you Board know so, well we my it. are to We be and active success. then want we smart. are others But and see disciplined in to I front that want as

find to because by a metric. Sky not ability we never as we know for a good have that to else are do that. with We have somebody But token, Ranch. as can combine the maybe going water we little that same our bit would it. than land We more the That’s pay buy

stay aggressive So marketplace we out are in that tuned. and

Unidentified Analyst

is competitive this time? Well, it at a marketplace very

Mark Harding

little in housing There is. being it’s of a Sky there you But around because is. a it. water of and go not are what with we a lot might lot As lot the around that it out are bit it Ranch, imagine, in would and People making a are of that there’s properties our pitches. -- different for

it folks would to, a lot be and say, say, that might at a So, we of have looking so water, be any who be looking I don’t you this might probably well, but worth advantage. have competitive might

Unidentified Analyst

actually to And getting a something catalyst what for is done? act are going as you

Mark Harding

-- have having I and to good seller. it’s a a has it it’s for a the that’s that. -- don’t mean function I question ultimately answer good right be Well, for of

don’t there’s price. no sellers So sometimes to just want They the sell. there, out

price specific that through it’s and are some with may it’s matter logistics some working buyers sometimes, unreasonable a or be of Sometimes, some specific sellers. a we

those say into all I’d So come of play. metrics

want high, folks they We then some price there’s priced, transaction. no, are be with now, they opposed I may and the pricing because in we at folks effectuate are and right that yeah, planning. know. but selling, price life are they too are to their who the to trying talked know as then estate because selling may it that But they have interested we be in they our are reasonably to way some have are selling a said, I water with water interested doing it where There of am it and not in

Unidentified Analyst

so long to get to property? of took rental Mark, what a idea the you

Mark Harding

wife Just I like a have problem problem. the that. gender I my says, am a It’s slow learner. with gender

Unidentified Analyst

so can that phase years get to we in I like this factoring now some more go going issues what and start in are Well, that speedily you to your gender will next five of years. hope overcoming the Okay. you your land, is look three to problem,

Mark Harding

Yes. Excited to do that too.

Unidentified Analyst

done. Great. Okay. Well

Mark Harding

Thanks.

Unidentified Analyst

Congratulations on all your endeavors.

Operator

you. Thank

Investors. Justin Xie is Diamond with from Black question Please question. your with next Our proceed

Justin Xie

Hey, on Mark. to I questions ask from you. segment. wanted Rental Great couple the to hear a

is the it is like First you financing all less like, process sort seems are to capital? your your the costs of capitalized than through construction? able walk me you to the me and getting, right that of could are for are And leverage Build-to-Rent sort of recycle you

Mark Harding

Yes.

great question, So -- typically that’s me so let Justin. a good -- -- a

I said balance and sheet while to -- of my do our use this. our bridging balance Board do to of said am they can’t sheet this. I while I able bit So a to be any

those say, up end under view will that I terms this money will we to do and construction. what of we in sort our is three units the use will itself doing we we So units build got of and have

is will $X say in to all I build numbers units, to three round and going million units. cost those three us up So round

And pay those We million. which CEOs house the $X million. collateralize the for we means that the one will each get will then build [ph] we is we the from for $X county, of complete, once --

million deed units So, will to do those on of $X each trust will three up that. the three to into break give the able and back of that I be bank me the take and take

if me there pay insurance And build an don’t or that. in to $XXX,XXX have costs on sale $XXX,XXX to on terms and of appraisal the price have and we the it is what so, $XXX,XXX will unit PMI we that,

there our have margins cash got then So have we debt getting to it’s the margin and that pay that we to but in by would accretive service cash directly can flow that not on that that because positive a somebody the on related flow bottomline. only good

Justin Xie

that. about to are secondly, about of So, impression, of in how most hear up Yeah. because categories? proportion properties at for end That sale thinking guess, the are sounds properties like the the Build-to-Rent percentage being Build-to-Rent value accretive seems And versus my that thinking least then, wonderful. be how in Great I you thing? you to those

Mark Harding

Great question.

okay, what you forecast them of get units going built the way attributable less strong you you going get a are sort to take Can out income I XXX that you one rental to and units. with build? you you than is how show-me you Board the XXX do XX%. and it, another you built? that’s to say if is mentality homes, this XXX say, Can the that’s of at X,XXX see out. on to manage And thing look get has Can so am And with a them give

of the X% about units. looking are You overall

Justin Xie

Yes. Right.

Mark Harding

maybe If are can we a balanced some the units side the probably dispersed if ones one, so XX% we look that I there, in looking XX where residential there next maintenance we efficiencies at scheme twos and correctly. vary I it around this so and in XXX to the may we look -- take XX% at think, we X,XXX out look or take we at may a of product, In But that well. and common contiguous through community to community. XX on a as have have want the the at it. number We a there, of rest of take leverages that’s take -- rest the blocks is

and XXX this continue more Miller in -- it to vary were to then and our Mr. will level as it. we Ranch XXX that. on somewhere three, if of maybe tolerance some I and land maybe get to say, highlighting, Sky build units do was But So up kind in around go say

be generating to seem some here. You value

keep. of will we properties capacity and other that continue be Build-to-Rent sort to a of to So XX% that to for at look maybe in continue us XX% to

Justin Xie

Got it.

or manager third of property done are property third-party manager? you is some or finding property great. Sounds terms in-house that in management, being And

Mark Harding

doing we or one So, that keep success are the is, would on you in-house combination out the of I the the doing right? ground got the in that a of reasons bid We with that for utility, system the out thing, lot utilities retail the to on development of side attribute dry of or and go not do to grade a Development, or efficiencies the really of We we are distribution to going of Development. wet together lot any work. reasons the always have the bid market going the And when first can this your one utilities Land very never is, out. a Land you where surprises. things you in being, getting when There are for everything And they you when market. the Development. is time And bid Land these comes and think our know we competitive back that come

on can loaders, they They to other right? Utility are with big get done of excavators, side. always needs you the successfully segment So for iron, the install that same talented the we the change that the the the have capable be equipment that we and thing our this very doing do orders able and have facilities guys this things is, the to work, are

that. So these of come on rather being high that than change change priced care order, up when orders dollar take the we

on-site also these that us everything. guys team that having can do ability So gives the

issue have if and so’s be overall we a our the And because there a model, they it into so business can so and intrusion doing house time. productive it be dispatched -- won’t got over them all have can over work we significant plumbing we really

have you hour if you dispatched to each XX guy each management got go agency get a have way. minutes commute out an as opposed a As to and way, and got

in fix that. you terms and XX XX-minute of of kills management that another back, You got on-site the a minutes

to that we like the are the on-site. that. already because do We we have talent resources So already and

those am maintaining will you when get we stuff and either certainly stuff directly when XXX we we you have XXX it consuming easily XXX. you units, like units, then get ourselves, of too and can so and that zero Maybe it say why Maybe that’s see. dispatched And I into becomes wrong. in between sort we on-site

can manage I the talent think that we have. we that with

Justin Xie

Got it.

are to be financing rate the loans. these just Sounds the Build-to-Rent sure or good. on these is variable rate fixed And

Mark Harding

They are rate. fixed

Justin Xie

cash acquisitions Okay. last and and your me, when thinking pipeline I there your thought then straight about pull the on cost in of like, Is acquisitions looking you the from -- And are make just balance? to think the you these put question lower for you guess, deals any to you one Fantastic. or leverage what at. when capital are

Mark Harding

We will see. It depends on the size.

Justin Xie

Got it.

Thanks Perfect. me. for you Okay. question me. talking That’s all doing. are the for with work the Love

Mark Harding

your for support. Thanks

Operator

you. Thank

Our final Capital. Please question. from your with question proceed is Musser Bill with New Frontier

Bill Musser

you How doing? Mark. are Hey,

Mark Harding

good Musser, hear Bill from to you.

Bill Musser

with Quick is question the helping the guys the Range, development in in is there so respect property any on where at landlords secondarily, that Lowry them you role development to And much something? area? now head the for forward a there move of that on of is portion

Mark Harding

working going two much of is there So, on of that XX,XXX should actively and How property developed. not looking the county be acres it conserved? the out to fronts. at You have all with landlord be is

the percentage gets certainty and what percentage, entitlements what’s then that total and And on action some work the portfolio, with of between recently conserved proper to so, they from zoning. on have they the the county some want take difference and that

can And so, that take a of bit time.

entitlements they stream authorized years take recently continuing a look look they to more are they have proactive that, a up -- property have they take the that couple than to think at years just XX going from land, there of But conservation of development, I So are and a and taking that. been three last, say, conservation guess opportunities think going they a to to portfolio. whole at have I land good on revenue in the land get I

are excited we So to see that.

itself. opportunity an with will are on depends and what utilities on consider property other us to continue bid Land may opportunity, of at time to they have on and Certainly looking the it development help Development have we going participate the there’s there. on process. that the for But We that. we when them already for If acquisitions

Bill Musser

Great. Thanks.

Operator

session. will now to and reached for of closing remarks. the end Ladies call you. I have the question-and-answer the turn Thank over gentlemen, management we

Mark Harding

close So let with this. me

there’s been of like and seeing for an helpful the things those has to had tires, quite One nothing travel here who the out that and you it. of opportunity kick haven’t

call we the for the it. you didn’t on live will lookout for something everybody to hoping website, a website. And be be here, We just look which will travel the to have But see timeframe Also but so improved in will take a this that. mid-July a opportunity up at and a probably gods align have there. new set able to for new on that us were to the webcam have have on out up

their to able moving So site that click have presence some don’t sort on the you standpoint, to we graders able of all didn’t around will to a of on the dirt well. there me and the technology a in to virtual continue question and that the hesitate activities have got anybody call. see and marketplace be queued of as If the movers, from be get going that give

side We more be little either virtual a in the conferences will active doing and conferences. in-person getting bit bit of a or probably investor more

other list, by, in opportunities send more conference, the that bit well. stop you on a and mailing notices see should as company’s to all getting be are media, So through there out we add give a active that a have bunch shout-out. investor folks in hesitate our then social as venue sending over more see will updates so say to to those us if Twitter hello us we or you And don’t a if both

for capital. to that, will with bring all I So, invested thank again in it your continued confidence and a you close your

Operator

and concludes Thank your a This conference lines and participation today’s you. you may time. your Thank great disconnect have day. for at this you