Prestige Estates Projects Limited (PRESTIGE) Earnings Call Transcript & Summary

Ladies and gentlemen, good day, and welcome to Prestige Estates Limited Q2 FY '21 investor conference call hosted by Axis Capital Limited. [Operator Instructions] Please note that this conference is being recorded. I now hand the conference over to Mr. Aditya Bagul from Axis Capital. Thank you, and over to you, sir.

Thank you, Nirav. Good afternoon, ladies and gentlemen, and a warm welcome to the Q2 earnings call of Prestige Estates. Before we begin, I'd like to congratulate the management on a good set of numbers and wish them all the best for the quarters to come. From the senior management team, we have Mr. Irfan Razack, Chairman and Managing Director; Mr. Venkat Narayana, the Chief Executive Officer; and Mr. V. Sarma, Chief Financial Officer. I won't take too much of your time. I'll hand over the floor to Mr. Razack. Over to you, sir.

Yes. Hi, everyone. It's again lovely to be on the call with all of you. I will ask Venkat to please open with the opening remarks. And then I'm here in the call, most welcome to add on whenever required. Venkat, I request you now to please give the opening remarks.

Thank you, sir. Thank you, everyone, for taking time now to be in our post results conference call of Q2. Let me quickly take you through the highlights of the quarter before we get into Q&A session. So operationally, this quarter has been very good. The total presales for the quarter are at INR 1,123 crores. We have sold 1.77 million square foot. We also launched 3 projects during the quarter: Prestige Primrose Hills, Prestige Waterford and Prestige Ocean Crest, totaling to 3.95 million square foot. Collections also have been good during the quarter, totaling to INR 1,146 crores of total collection. And if you look at half year as a whole, we have done totally INR 1,584 crores of new sales and the collections are at INR 1,877 crores. And the quarter has been extremely good, even Q3, as we talk now, is something going to be a good quarter. And financially, if you look at the total revenue for the Q2, it is at INR 1,916 crores, EBITDA of INR 576 crores and PAT of INR 93 crores. Half year as a whole, if you look at the total revenue, stood at INR 3,213 crores with an EBITDA of INR 1,038 crores and PAT of INR 114 crores. In terms of turnover, the contribution for this quarter has come from various projects. The significantly higher turnover for this quarter compared to that of Q1 is because of the executions coming from Prestige Royal Gardens, Prestige Falcon City and Prestige Lakeside Habitat, which have contributed significantly for this quarter turnover. In terms of new sales composition, we had a quarter wherein the sales came across all segments of residential that is completed inventory contributed almost to 59% of the total sales. Just launched projects have contributed. Ongoing projects nearing completion also contributed. Given such stages of a construction, it is 59% completed and 41% under construction. And in terms of the value ticket size, if you look at, we sold mid income. We sold upper mid-income and luxury and large apartments in White Meadows as well as Golfshire have got great response during the quarter. And those also have contributed to higher presales number. In terms of the money that we have collected and spent during the quarter, we spent overall INR 639 crores on construction during Q2. Q1, we had -- we had spent INR 593 crores on construction. The breakup of INR 639 crores that we have spent during the quarter for construction is residential projects meant for sale and commercial projects meant for sale -- residential and commercial projects meant for sale is INR 456 crores; and in commercial CapEx, we have spent INR 130 crores. The retail CapEx, we spent around INR 34 crores; and hospitality, we spent INR 19 crores. In addition to this, we had spent towards land PDR and take buy towards acquiring the stake in BKC projects. Overall, INR 453 crores of spend in addition to the construction. Put together, construction as well as acquisition of land and others, we had an average spend of INR 1,100 crores. Total for the half year, as reported, INR 1,700 crores, approximately [ 18% ]. PAT margins, like last time also, a lot of you asked, compared to earlier quarters is slightly lower because the hospitality income is not flowing in. And retail -- and the retail, the income that is coming is right now around 40%, 45%. So given the fact that these 2 income streams are not there, the PAT margins are lower. Once these businesses are back, we will have higher PAT margins, in line with what we were reporting earlier. Now this is -- these are the operational and financial highlights for the quarter. We have a huge launch pipeline as well. We have projects coming up for launch in Hyderabad. We just launched during the quarter Prestige Tranquil, which was met with great response. We have project Prestige Windsor Park coming up for launch in Chennai. We have Bougainvillea Gardens coming up in Noida. We have a project coming up for launch in Mumbai. These are the 4 cities, apart from a large residential project launch, Prestige Smart City in Sarjapur Road, that we come up for launch during the Q4 of this fiscal. These are the major project launches in the pipeline. We hope that the rest of the 2 quarters, Q3 and Q4, will also be good and better than Q2, and we'll end this year on a high note. Now moving on to the transaction that we've been contemplating to do and the disclosure that we have made to stock exchange in terms of agreement that we have entered into. Most of you have reached out to understand in detail what are we doing. Just to give a brief of transaction, we are selling a portion of completed assets. Some of the assets, we're going to retain. Some of them, we are selling, completed assets. We are diluting up to 50% stake in select under construction commercial property, and we are selling 85% of stake in our -- all retail companies. Part of this, there are 2 hospitality assets. That is Oakwood, part of Forum Neighbourhood Mall in Whitefield; Aloft, which is part of Cessna. Two hospitality assets also are part of the transaction. So these are the nature of the assets that are part of transaction. And the total value of the transaction has already been indicated in the disclosure to stock exchange that we have made, around [ INR 9,162 crores ]. So this is about the transaction. If you have any other questions that you have, we will answer in the Q&A session. As of now, we have signed the binding term sheet. We have made applications for CCI. And we also -- because 2 of the assets, 1 completed asset, 1 under construction, which are excluded, we applied for Board of BOA for their approval, and we are in the process of obtaining other approvals as needing, required by the regulators. With this brief, we can open the forum for question and answers.

[Operator Instructions] First question is from the line of Puneet Gulati from HSBC.

Congrats on good sales. My first question is actually with respect to the transaction here. How did you choose between the assets? And why did you retain some part of the retail mall portfolio as well?

See on the mall front, basically, since retail portfolio was one big large basket, the idea was, a, to see that we sort of de-risk ourselves in the sense looking at the situation that's happening. But then I believe that retail in future will do well. But then this was a conscious decision we took. We could have done the [ REIT too ] or we could done the same deal, but I think this works out nicely. And why the percentage we've captured, it's only basically because even our investors have some comfort if we were there in the SPVs. And as we go along, a lot of relationships have to be maintained. So we have kept that stake. And then whenever they exit, we exit along with them. As of now, that's the structure and that's the way that we plan.

And for the offices, what assets -- how did you choose between the assets which were to be sold and which were to be kept? But the large ones are actually gone, right?

Basically, these are the 2 large assets. That will be Cessna Business Park and the Exora, gave us a lot of value. And these assets, they are getting aged. These are all about 10 years, 12 years of age, and then over a period of time, it would have required a lot of maintenance and other stuff. So there was this opportunity. We felt that the numbers also were right, and we believe that we've made a win-win for both the buyer and the seller. Okay, we have to monetize at some point of time or the other at some level. So this came in as a opportunity, and we seized the opportunity.

Puneet, just to add further, even after doing this transaction, we will have rental income flowing from office as well as 15% of rental income from malls. All these together, INR 270 crores of rental income. And the rental income that is part of the transaction is around INR 770 crores, INR 775 crores. If you look at under construction portfolio of ours, office as well as retail, that's, again, pretty widespread. Office, we have now new properties more relevant for current generation and up to date, [ would like to balance ] that. In Mumbai, Pune, Hyderabad, Chennai, Noida, Bangalore, across various geographies. And predominantly, if you look at what is part of the transaction is some of what -- most of it is in Bangalore. So we're building quite a bit in Bangalore, so we should be back to same level impact much more in terms of rental income if you look at our under construction upcoming projects in 4 to 5 years' time.

Okay. And you would continue to...

Capital will help us to deploy in higher-yielding assets and [ channel paths ].

Okay. Got it. Okay. That's fine. Sir, can you -- some data points here, can you give the number for the net sales for your share?

Number for?

For your share in volumes?

The transaction number?

No, no, the sales volume number. The gross number is [ 2.42 ]. Is there a net number as well or your revenue share?

No, you're talking about the operational presales number? Are we talking about rental income?

No, no, operational, the volume that you sold for example, 1.77 million square feet in this quarter, so...

That's the presales number that you are talking about, right?

Yes, yes, yes.

1.77 million. [ One is 1,123 ], which is the gross number. In that proceed, share is INR 838 crores.

Next participant is Parikshit Kandpal from HDFC Securities.

Congratulations on the transaction. So my question was related to the transaction. So what was the net attributable EBITDA of the assets, which are going on the balance sheet? So including if you can break it down between office, malls, property management and hospitality, also the FSI value considered in the under construction property.

So I'll give the broad numbers, which will help you understand. INR 9,160 crores is the total enterprise value that you can trade. [ Some are ] in disclosure to the stock exchange. The sub breakup of it is around INR 300 crores to INR 350 crores is the valuation for the hotels. And under construction office, where we are giving 50% stake in identified core assets, is around INR 600 crores. The net is INR 8,212 crores after our hotels and after under construction office. And the total rent is around INR 750 -- INR 770 crores total rent that is going with the transaction. So broadly translates to around 8.5% cap rate after even taking net operating rent up, 90% of the gross rents, INR 770 crores, 90%.

Okay. So 90%, INR 770 crores [ to 0.9 ].

Yes. So given the vacancy, insurance, property tax and all that stacking up, 90% of the total rent [ is in the gross ] and what they're getting after hotels and under construction office, our building portfolio but [ includes ] the completed CapEx.

And valuation pertaining to the property management, which is going -- you got...

[indiscernible] included in that.

Okay. Sir, second question was the Star Tech property is not considered in this enterprise valuation line?

That is not considered.

So then why in the slide in the rentals this quarter, I mean, it has -- it is not reflecting the [ raw ] per share of the [ REL ]? So it has been reduced to that extent.

No, it is there. Star Tech, 51% is our holding.

So last quarter, the rental was about [ 739 million ], and now it has been reduced to at least [ INR 670-odd crores ] in this slide -- the presentation this quarter. So if you see, the overall office rental has got reduced versus INR 730 crores last quarter. It has come down, I think, [ INR 670-odd ] crores during this quarter.

No, no. So we have reported 51% of the rent belongs to us. Maybe the segregation is because we have 2 tenants there. One is Accenture. Other is [ Rural Estate ]. One tenant is paying the rent. Other tenant's rent is just to come in. Maybe that is the adjustment that we have done. But the ownership, there is no change. Star Tech will continue [ on that investment on budget ].

Because leasable area is also adjusted. I will just see that slide. [ I mean I don't know why ] because the leasable area also has reduced to that extent of the local share, so it's exactly matching with that percentage, 51%.

No, no, no. Here, it's only leased area has been taken to the extent rent has been negative. The other portion of it that we have leased and rent has not yet come in, not part of it, that will be added back.

And just lastly on the Fin-Tech. The Prestige Fin-Tech has been removed in the rental sheet, the operating assets. So about INR 15 crores of rental has been removed versus quarter-on-quarter. So any reason why that was?

Again, I mean, these are the places where we are getting rentals. That is again yet-to-be-leased building, and that's also part of the transaction. Yet to be leased, we wanted to put it separately and [ to commence the rentals on all of that ]. That is a portion of Star Tech and Fin-Tech. We'll bring them back. Star Tech will remain. Fin-Tech is, again, part of the transaction.

Sir, what was the unutilized FSI on this transaction which has been done with the [ RELs ]? If there was any quantum of unutilized FSI, which has gone to the [ REL ]?

What do you mean by unutilized FSI? Used properties which are fully ready where the FSI is not consumed?

Yes, yes, yes.

No. See some of the properties, when we are consuming -- when we are constructing, we would have taken what are the FSI that is prevalent and growth based. Now subsequently, if there is any rule change with respect to FSI, that would definitely be available if someone got to redo those buildings -- rebuild. Maybe example, Cessna, we built it 15 years ago, the first few blocks. Subsequently, there's been FSI change. There are more FSIs available. If they were to rebuild the entire thing, considering the height and all of that, there may be room for additional FSI.

Next participant is Kunal Lakhan from CLSA India.

Firstly, I just wanted to understand that in the press release, it says that Blackstone will be purchasing stake of Prestige as well as its affiliates. So when they say affiliates, do they also mean the landowners that have stake in these assets?

So some of the landowners have tag-along rights. Their application for regulatory approvals also includes that stake also. If they want to join, they can join.

So the revenue breakup that you just gave of INR 775 crores rental income, does that -- this excludes or that includes landowner share also?

Excludes. No, no, it's just 100% what we are, Prestige, is giving. In case the landowners or any of our joint venture partners want to join in, they can subsequently do it. So that's the reason. Now we are taking permission as how the whole thing will go. But that will give us a platform for them to liquidate if they wish to. Maybe a couple of them will definitely do it, but then we don't want to mix up our transaction with theirs. So this is separate because we're a listed company. We have a whole lot of regulations to follow, and those other joint venture partners don't have these restrictions. So we have kept them aside, though we are taking the CCI permission for the whole thing. Subsequently, if they do wish to liquidate, it's their choice. They also have a tag-along or tag-along right with us. So 100% will come to us probably and nobody else.

Okay. So that's what I was clarifying. So INR 91.6 billion is basically the number attributable to our share of rental income.

Entirely will come to the company.

Yes, will come to the company, correct, correct. And second part of this question is like, although we have signed the term sheet and disclosed of up to how much stake Blackstone wants to purchase, I just wanted to understand from your side how much stake would you continue to hold in these assets. Are we looking at holding minority, majority stake? Or we are okay completely exiting with that?

As of now, we have -- as we said, we are holding 15% in all the mall assets. The office assets, we've given up our share, whatever our share is 100%. And in the under construction assets, it's 50-50. In fact, there's one more component, which still is there. We've got another piece of land, which is in the same SPV, where they have the Prestige Beta. There, there's some of that. Again, that is also part of the deal. There are certain things that we have to do. Even that also will be part of it. Maybe even that will give us some another INR 1,000 crores as we go along.

Actually, my question was in terms of how much stake do we intend to keep with us. Or are we fine with selling out the entire thing that we have?

No. That time, when [ we're with new assets ] get ready, obviously, we will be deciding what to do with it. We could tag along with them and get into a REIT when these assets get ready or we could just hold on and see that the asset gets mature and yields properly. And once the yield comes in, we'll get a better return. So it's a mix and match of both. There is no commitment that we have to sell our 50% to them at any point of time. But the commitment is that if at all they do a REIT, we also will tag along with them, and there is sort of an understanding to that effect.

So in that sense, what you're trying to say, that you will hold some stake. You'll not probably sell out the entire stake.

Possible, possible. I mean I don't want to conjecture at this time.

Sure. Sure. Sure. And sorry, another related question is that the proceeds of this, you plan to utilize towards growth? Or partly, you would also use it to reduce the debt on the other segments of the business?

No, no. See, the thing is once the transaction comes in, the money comes in, obviously, the debt that is there on these assets will disappear 100% from our books. We will not have -- because right now, under these assets, we've got some INR 5,600 crores worth of debt. That will become 0. And the surplus money that is there obviously will be a mix and match of utilizing it for growth capital, utilizing it for the -- for some commitments that we've made instead of relying 100% on debt for future CapEx projects in Mumbai, Delhi, other places, where already commitments have been made. And it will be a fair mix of equity and debt. So it will lighten up the company's debt portfolio to a large extent and also ease us out completely. And it gives us an opportunity to create more assets without becoming too debt -- too much of reliance on leverage.

Next participant is Swagato Ghosh from Franklin Templeton.

Sir, in the second quarter, how much was the commercial strata sale?

How much was the?

Commercial strata sales, if any, in the presales number that you have reported.

So negligible, I don't know whether there was any strata sale at all during this quarter. It was mostly -- it was residential. I'll just check. I don't think there's anything, no strata sale because there was no other building that we had for sale. So really nothing. Going forward...

I think [ we have ] for Golfshire, a little bit of -- and that's a negligible contribution. They closed around 2%, 2.5% of sales. Prestige Jindal City, Prestige Waterford, Prestige Finsbury Park, Prestige White Meadows, these are the ones which contributed to the sales of this quarter, all residential.

Okay. So going forward, we can expect the sale, like very negligible strata sales?

Strata sales may not happen. Let us see. It depends. And we have always been doing that mix and match, like now in Prestige Tech Cloud we have decided to sell 3 blocks. We sold off the 3 blocks completely. There's no stock available. We've got another 3 blocks in which we are going to keep it for rental. So it will be a mix and match. And as we go along, we'll probably make sure that we finish the property, and then afterwards, we lease it out and probably get a much, much better return. So it's being in the business. We'll have to see what works for us in this property and how. I think the time has come again not to consolidate. We are doing some large developments in BKC in Mumbai, in Mahalaxmi in Mumbai, in Aerocity in Delhi on the office front. So a lot of stuff is happening. In Chennai also, we are doing 2 CBD properties, which will get ready soon. So all this will add up, and hopefully, the timing will be just right when we -- when this whole COVID issue gets sort of sorted out and get stabilized. I think business also will [ set ]. Demand is also coming. It's not as though there's no demand. There are a lot of RFPs floating in the market, and the office market, for sure, will be vibrant. And okay, there is a small dip at the moment, but as you go along, there will be demand. I'm very sure about it.

Okay. That's helpful. And sir, second question is, again, related to the deal. Once the deal is concluded and assuming we realize this number, INR 9,160 crores, we'll become almost net debt free company. But I'm specifically interested in what happens to our residential segment debt because we are breaking that out in our presentation. Can we expect the residential debt -- I understand there would be growth CapEx requirements for the office segment as we are obviously ramping up our various assets. But what happens to the residential segment debt? Because we have...

Residential segment, honestly, because we do a lot of presales, we have no business to have debt within that segment. Currently, we've got about INR 2,000 crores of debt in the residential segment, all properties put together everywhere, including land, construction, everything. And if you look at the scale of our operations, this INR 2,000 crores is very, very negligible. And the good news is we are selling a lot of assets, I mean, houses which are ready, and there's a huge momentum. October has also been fairly nice. November is also sailing well. And some of our high-end properties, which were moving very slowly, those have started moving. Momentum has picked up. It's like the flavor of the season. So automatically, about INR 1,500 crores from these 2 properties only will start getting realized by latest, if not December, by March, I'm very sure that, that will also get realized. So really speaking, we'll have surplus cash even in the residential side unless we decide to buy more land or we get another opportunity. I believe even in the residential side, give me -- 3 quarters, we'll be cash surplus even there. Without requiring debt, we're not going to take this money and then go and pay off the bank. That's not the right way to do it. But whatever the surplus that will come definitely will be utilized for the CapEx. And this CapEx will give us that speed as well as will make our projects much, much more viable because there's no [ IDZ ] during road construction. Of course, it will be a small blend of debt and equity, and going forward, it will definitely help us reduce our costs.

Yes. A lot of sales are outside. [ You see the mix is the ] complete project inventory against the [ residential ] construction costs. We have around [ 2,600 ] total complete inventory. Those will be free cash flows. So -- because they're also moving fast. It'll help us in development in cash flow also and that will go [ to retire to residential later. ]

Right. Right. Okay. That's helpful. And sir, one last question. When is the [indiscernible] launch expected time line?

Q4 of this fiscal.

[Operator Instructions] Next question is from Abhishek Bhandari from Macquarie Group.

Congrats on the quarter [ results ]. So Venkat, my question is on debt in the [ sub-total ] equity, what Irfan mentioned a while ago. So it looks like we'll have almost INR 3,600 crores, INR 3,700 crores of equity. So could you just give us some ballpark how much you intend to put in offices and how much in residential and mall shopping? I know that basically is a question that would you want to accelerate your CapEx now that even you don't have -- won't have much of ready offices to work there, so you might as well accelerate your future construction.

See, there are 2, 3 aspects, Abhishek. One is for the transaction, our net debt would be in the range of INR 3,600-odd crores. That will be the combination of a portion of debt towards residential and office and retail CapEx and hospitality assets. So all put together is around INR 3,600-odd crores. Now the transaction will also give us surplus after taking more debt and security deposits before adjusting any working capital net current assets, which will happen closer to the transaction, around INR 3,700 crores to INR 4,000-odd crores, roughly, I'm just giving because we're still in the diligence phase, around INR 4,000 crores, [ I should say ]. So a portion of it will definitely go to accelerate our ongoing commercial projects. A portion of it will be used for growth given the fact that the market has got opportunities across the segment growth. Third is, as far as the remaining portion of debt is concerned, residential completed inventory is moving. At the moment, we are selling White Meadows, Golfshire. We have got [ loan segment based ]. The entire sales process are going to reduce, repay the debt [ secured ] property. So residential debt automatically will start coming down because those projects do not have construction costs and cash flows are going to be paid respectively. Now where do we look at using this money to accelerate CapEx would be primarily in assets that we're embarking on in Mumbai and some are Bangalore assets. So as you know, we have completed our transaction. We have 50% stake in a BKC project. We have done most of the design part of work, and we are in approval stage. We will commence the construction soon and get going to complete the project. That is a huge project. It's 1.8 million to 2 million square foot of leasable area, and we'll start rebuilding the central portfolio, the time [indiscernible]. In fact, we've got the place vacated fully. Now I think we've got a flat piece of land, which we can start construction moment we get the [ IODCC ], which I think is expected early next week or maybe after Diwali.

Sure. That's helpful. So when I also look at our history, we primarily are focused on large IT parks, where the demand is naturally very, very strong, given all the reasons we know. It seems like now incremental CapEx would probably be higher in non-IT area, whether in the [indiscernible] hotel or the office or the Bombay BKC or [indiscernible]. So -- and given all this uncertainty around high-cost offices because of work from home probably becoming a new normal, it's from work from office and work from home continuing forever. So what is the confidence we had that the incremental CapEx would also have similar amount of yield on cost as we enjoyed in our IT parks in the past?

No, see the [ effect ] will not -- it's not going to be permanent. But since the work itself is going to grow, the amount of demand that will happen in the IT company will be quite tremendous. Mostly, it will be a hybrid, maybe some 80% from office, 15%, 20% from home. Even that, and honestly, it's not been working so well. Now it's a necessity. It's more by force that is happening. And the demand is coming, we can feel it. There are a lot of RFPs which are floating already for large spaces and many -- even accounting firms, tech firms, are all asking for space right now. Even in Hyderabad, there's a big deal that we are looking at where they want us to do a build -- basically, they have land, they want us to build it for them, which is Google. So a lot of things are happening. And I don't think there's no question, nobody is going to shut shop or the IT -- the offices are not going to be in demand. And especially in prime locations like BKC and Mahalaxmi, there is -- the demand will be evergreen. And whatever calculations we have done, we have not done on very, very high numbers. We've done it at a very conservative number. Even at the worst-case scenario, we could get those, and I don't see any problem. And then, of course, these properties are going to get ready 3 years down the line, and 3 years down the line will be a different scenario. Obviously, we have to go by what the market is happening, plus also by our gut. And for sure, it will be much more than what we are thinking of and how we have done our business plan.

So to explain further on the BKC transaction yields that you are mentioning about. Now that we have got the stake of both the partners and we completed the acquisition, that's how -- the spend also towards acquisition between [indiscernible]. This is between 1.8 million to 2 million square foot, we have 50%. So 1 million square foot would be our at INR 300 range, which is prevailing in that area, we would earn around INR 36 crores of rent per month -- INR 3 crores of rent -- sorry, 1 million square foot at INR 300 would be [ 30 ], and we'll get around INR 360 crores of rent per annum from this asset. That is Cessna and Exora combined both. And we have overall spend, including nonrefundable deposits and the IDCs, and all put together on this particular spend of INR 1,580 crores. So even if you do a little bit of sensitivity math for 5%, 10% lower rent or increased costs, the yields are in high teens. So this is where the capital is going to get deployed to create this high-yielding asset.

[Operator Instructions] Next participant is the [indiscernible] from [indiscernible].

This is regarding the transaction. Just wanted to know, do you have any [ ballpark ] idea about the time line a vendor enters [indiscernible]? And I know it is a binding terms, but is there any chance of any change in valuation after the due diligence is done?

So this is subject to as we disclosed also saying thing that due diligence and completion of some pre-agreed cities and regulatory approvals. Right now, the business diligence is in full swing, we have done a substantial portion of it. Of course, there are some SPVs there a little bit of work needs to be completed. We are also in the process of complying with [ CPs ] and getting some consent from lenders and all that. So subject to getting all these regulatory approval, we intend to complete the transaction...

By at least December, hopefully, it should all fall in place because even the fund also wants to close it out in this year because, again, the -- as is the financial year is March, for them, the financial year is December. So I think they are also quite keen to get it over and done with this year itself. So we are targeting mid-December.

Okay. Sir, that's great. That's great. Sir, second question is on BKC. So you're waiting for [ ID ]. It's a good news that you have packaged the land. That's a big problem in [indiscernible], that's a big risk. And it's good to know that you have [indiscernible]

No, no, we've cleaned it up. The property, if you go see it today, there won't be one single house over there. It's all completely flattened out. I've got a flat piece of land to develop, and there's no rehab in that. Of course, we have a neighboring property also. That opportunity is also there, another 2 million, which will happen subsequently. But that's a rehab thing. But this first one, we always believe in taking a step at a time. This one is fully cleaned up, fully ready to start work. And I think we should break ground if not in December, by January.