TOL
#This quarter, we spent $50 million on new land that is not reflective of less appetite.
It's not even reflective of less land action.
It's just when the checks were written so it's when the land closed.
In many cases, that could be land that was contracted for six months, a year in New Jersey, maybe three or four years ago.
Over the next few quarters, we anticipate more money spent on land closings because of the timing of when some larger deals will close.
We're seeing good deal flow nationwide.
City Living, our pencil is certainly a little bit sharper, but we like the market.
We, as we always talk about, we price to today's market.
We demand a minimum of 10 point gross margin higher return because of the risk associated with the business, but there's still decent deal flow in New York.
But we are certainly being a little bit more careful.
No, I don't think so.
So the venture we announced with Gibraltar was a commitment by <UNK> Brothers to invest $100 million in an institutional investor, to invest $300 million in land banking and land development opportunities that Gibraltar was identifying.
And this is an outgrowth of Gibraltar's, I'll say, previous business of buying distressed acquisition development and construction loans, foreclosing on that land, and essentially functioning as a land developer or land banker for smaller builders.
So we are encouraged by the deal flow they're seeing, and hope to have good news to report in terms of results over time as that commitment is invested and returned.
Thanks, <UNK>.
So most of the units we will sell during this year deliver very late this year or in 2017.
So they are not significantly factored into the guidance that we gave at the beginning of the year.
Most of the guidance given at the beginning of the year is based on backlog at the beginning of the year, so we'll have more to say on margins for 2017 in six months.
With respect to cost increases, we mentioned $4,300 a home, 40% of that was labor, what was 25% was lumber and the rest was a combination of different things.
What was the other part of your question, <UNK>.
On broker commissions, the percentage is not changing and the number of our buyers, who are represented by a broker, is not changing.
It varies by market.
New York City, most deals I would guess 80%, our clients are represented by a broker.
That's what happens in New York.
We fully budget for that, and we expect that.
When you have relo markets, Seattle is an example, you tend to have more outside brokers representing the client because they are new to the area and they want the comfort of a local expert working with them.
When you have local move-up markets like a Philadelphia, like a New Jersey, as examples; like for the most part in Northern Virginia, you tend to have less of the buyers represented by brokers, 50% or even less because they're local, they know the market and they know <UNK> Brothers and they come in on their own.
So that's the long of it, but the short of it is nothing has really changed.
Welcome.
<UNK>, I don't think there's anything temporarily propping the number up.
We've had a good four weeks.
And about 57% of our deposits convert to contract historically, so deposits are obviously a pretty good indicator of a current market.
You've got traffic and then you've got deposits and then you've got agreements, and we're very happy with the action of the last month.
It is generally across the board, and we're having a good late April through the first three weeks of May.
And that gives us reason to be optimistic and to feel pretty good about the business right now.
It's driven more by the more recent openings than the standing inventory.
And the number one building for us is in Hoboken, where we have sold ---+ bear with me ---+ it's a big number.
114 units we have sold in Hoboken in the last nine months.
So that is the number one driver, but our other buildings in Manhattan that are still under construction have, which are as you referenced, are the buildings that don't have standing inventory are also doing as we expected.
Thank you.
We don't even look at it that way.
But I think roughly speaking, we probably have around 3,500 lots at Shapell unsold, probably another couple hundred in backlog.
We continue to look to expand City Living.
As I mentioned on my prepared remarks, right now Philadelphia is basically out of inventory.
We're looking for new opportunities in Philadelphia.
We had two for sale condo buildings in Bethesda, Maryland, looking for more in DC proper and Arlington, <UNK>andria and Bethesda.
We continue to look in Boston, we continue to look in San Francisco.
We're going to begin to look again in Seattle.
We're going to look for in fill locations in Southern Cal, not necessarily downtown LA but there's many sub markets of Newport Beach, and Pasadena, and Santa Monica, and Beverly Hills, as examples, that certainly are perfect for City Living.
So I'm still hopeful that we're able to expand it beyond where it now is in just New York, Philadelphia, and Washington.
You're talking about land sales to other builders.
We have not seen it.
In fact, we're producing lots at the $400,000 price point of a home as quick as we can get rid of them.
If we could produce more, we could sell more.
North of $600,000, it's a little bit slower and so we're pivoting a little bit in some of our master plan communities to try and get more lots at the $400,000 and lower price and fewer at the $600,000 and up price.
You're welcome.
Thank, <UNK>.
I think for the balance of the year, we would expect on balance sheet City Living deliveries to be about 4% of total revenues in both Q3 and Q4.
And then as I gave guidance on JV income being back-end weighted to the fourth quarter, that represents a couple of our buildings owned in joint venture in City Living.
For 2017, we're going to avoid any guidance right now here, but we do produce some information in our corporate profile that you might find helpful and that should be available later today or tomorrow.
Yes, what's the second question while Greg is turning the page.
Well, we'll give guidance on that in 2017 in December.
You'll see that if you look back from ---+ I'm sorry, December 16 for 2017.
If you look back, from time to time, we have a gain on refinancing of an apartment building, we may have gain on sale of an apartment building or a sale of ancillary commercial real estate, or in the customer list of our security business.
So we've given perspective that it's recurring and it's meaningful, and we have some opportunities to deploy if we need to generate income to make it meaningful and recurring.
The development spend is $124 million for the quarter.
So for the balance of the year, the two leading markets for community count growth will be Southern California, as we've discussed, and Pennsylvania.
And again, that's not land we're buying now.
That is just when communities are ready to come on line and open, so that is not indicative of a current strategy.
We like both markets a lot, but that is a bit coincidental with when prior land buys are fully entitled and roads are in and models can open and off we go.
Beyond that, it's spread pretty well across the country and you will continue to see that.
These markets we continue to highlight nationwide that are doing well are obviously the markets that we continue to highlight for land acquisition, and therefore community count growth.
You're very welcome.
Jack, thank you very much.
Thanks, everyone, we appreciate all the support and have a great summer.
