Good morning, and thank you for joining us today for Hovnanian Enterprises’ Fiscal 2012 Third Quarter Earnings Conference Call. An archive of the webcast will be available after the completion of the call and run for 12 months. This conference is being recorded for rebroadcast. [Operator Instructions] Management will make some opening remarks about the third quarter results and then open up the line for questions. The company will also be webcasting a slide presentation along with the opening comments from management. The slides are available on the Investors page of the company's website at www.khov.com. Those listeners who would like to follow along should log onto the website at this time. Before we begin, I would like to turn the call over to Jeff O'Keefe, Vice President of Investor Relations. Jeff, please go ahead.

Thank you. I'm just going to read a -- some forward-looking statements very quickly. All statements during this conference call that are not historical facts should be considered as forward-looking statements. Such statements involve known and unknown risks, uncertainties and other factors that may cause actual results, performance or achievements of the company to be materially different from any future results, performance or achievements expressed or implied by the forward-looking statements. Although we believe that our plans, intentions and expectations reflected in or suggested by such forward-looking statements are reasonable, we can give no assurance that such plans, intentions or expectations will be achieved. Such risks, uncertainties and other factors include, but are not limited to, changes in general and local economic and industry and business conditions and impacts of the sustained homebuilding downturn; adverse weather and other environmental conditions and natural disasters; changes in market conditions and seasonality of the company's business; changes in home prices and sales activity in the markets where the company builds homes; government regulation, including regulations concerning development of land, the homebuilding sales and customer financing processes, tax laws and the environment; fluctuations in interest rates and the availability of mortgage financing; shortages in and price fluctuations of raw materials and labor; the availability and cost of suitable land and improved lots; levels of competition; availability of financing to the company; utility shortages and outages or rate fluctuations; levels of indebtedness and restrictions on the company's operations and activities imposed by the agreements governing the company's outstanding indebtedness; the company's sources of liquidity; changes in credit ratings; availability of net operating loss carryforwards; operations through joint ventures with third parties; product liability litigation, warranty claims and claims by mortgage investors; successful identification and integration of acquisitions; significant influence of the company's controlling stockholders; changes in tax laws affecting the after-tax cost of owning a home; geopolitical risks, terrorist acts and other acts of war; and other factors described in detail in the company's annual report on Form 10-K for the year ended October 31, 2011, and the company's quarterly report on Form 10-Q for the quarterly period ended April 30, 2012. Except as otherwise required by applicable securities laws, we undertake no obligation to publicly update or revise any forward-looking statement, whether as a result of new information, future events, changed circumstances or any other reason. With that out of the way, I'll now turn the call over to Ara Hovnanian, our Chairman, President and Chief Executive Officer. Ara, go ahead.

Thanks, Jeff, and thank you all for participating in this morning's call to review the results of our third quarter and 9 months ended July 2012. Joining me today from the company are Larry Sorsby, Executive Vice President and CFO; Brad O'Connor, Vice President, Chief Accounting Officer and Corporate Controller; David Valiaveedan, Vice President of Finance and Treasurer; and Jeff O'Keefe, Vice President of Investor Relations. On Slide 3, you can see a brief summary of our third quarter results and comparisons to the prior year's third quarter. All in all, we had a solid quarter by every metric. Our net contracts increased 32% on a dollar basis, and the number of contracts were up 19%. Although we opened 22 new communities during the quarter, our community count declined slightly to 194 compared to 202 at the end of July last year. This decline was primarily due to selling through communities much more quickly than we anticipated with our solid sales pace. Compared to this year's second quarter, we had a decrease of 5 communities sequentially. The dollar value of our contract backlog and total revenues both rose more than 35% during the third quarter. Our land-related charges were significantly lower at less than $1 million. Our gross margin increased 290 basis points, and SG&A, as a percentage of sales, decreased 390 basis points. As a result, our pretax income improved dramatically, just shy of breakeven at a loss of $1.8 million compared to a pretax loss of $56 million the year before. Our net income for the third quarter was positive $34.7 million compared to a net loss of $50.9 million last year. The current year includes a $37 million reversal of state tax reserves related to previously uncertain tax positions that have effectively been settled. Slide 4 shows…

Thanks, Ara. I'll discuss the changes in our newly identified land position during the third quarter. The bottom right-hand side of Slide 14 shows that total additions during the quarter were 2,200 lots. We also walked away from about 400 newly identified lots. The net result for the third quarter was that our total lots purchased or controlled since January 2009 increased about 1,800 lots sequentially from the second quarter of 2012. An important takeaway here is that we are replenishing our land faster than we're using it. In fact, our total owned and optioned lot position increased sequentially by 674 lots in the third quarter. Turning to Slide #15. You'll see our owned and optioned land position broken out by our publicly reported segments. Based on our trailing 12-month deliveries, we own 3.9 years’ worth of land. However, if you exclude the 6,826 mothballed lots, we only own 2.3 years of land based on the delivery rate of the past 4 quarters. At the end of the third quarter, 74% of our optioned lots were newly identified lots, and 26% of our owned lots were newly identified lots. If you exclude mothballed lots, 45% of our owned lots are newly acquired. When you combine our optioned and owned land together, 45% of the total lots that we control today are newly identified lots. Excluding mothballed lots, 60% of our total lots are newly identified lots. Our investment in land option deposits was $40.6 million at July 31, 2012, with $39.4 million in cash deposits and the other $1.2 million of deposits being held by letters of credit. Additionally, we have another $4.6 million invested in predevelopment expenses. Turning to Slide 16. We show our mothballed lots of broken out by geographic segment. In total, we have 6,826 mothballed lots…

[Operator Instructions] And gentlemen, your first question today comes from the line of Michael Rehaut with JPMorgan. Jason A. Marcus - JP Morgan Chase & Co, Research Division: This is actually Jason Marcus in for Mike. The first question is regarding the dollar value of the orders versus the unit growth. I was hoping you could maybe comment on the increased spread that we saw in the third quarter, and it looks like that accelerated in August to 49% versus only 26% for the unit. Is this a trend that you think -- expect to -- that you expect to continue? Or is it perhaps more related to geographic mix or something a bit more temporary?

I think it’s a combination of geographic and product mix, with a sprinkling in of our ability to increase prices. So I think it’s all 3 of those things that are impacting it. Jason A. Marcus - JP Morgan Chase & Co, Research Division: Okay, and you expect that to continue?

Hard to predict what the mix is going to be from one quarter to the next, but that's what been causing it. We certainly hope that the price increases that we've been able to do continue.

I will say, overall, given the very low interest rates, we're definitely seeing a bias toward customers picking the larger houses. And I think the logic is, with rates so low, the incremental monthly cost is not particularly great. So if they have good credit scores, recently, we've seen a little bit more leaning toward the larger model homes than the average one that we had been experiencing. Jason A. Marcus - JP Morgan Chase & Co, Research Division: Okay. And then the next question is, I was wondering if you could talk a little bit about pricing and incentive trends as they occurred throughout the quarter. And also maybe if you could comment a bit on recent raw material costs and how that may have impacted your gross margin.

Yes. Well, net pricing, which is all we really care about, has definitely been improving in most of our market at many of our communities. Actually, there have been very few that have gone the other way. And the second part of your question is on material costs, they definitely have been creeping up, but needless to say, clear from our margins, we've been able to get price increases that have been outpacing any cost increases that we've experienced.

Your next question is from the line of Dan Oppenheim with Crédit Suisse. Michael Dahl - Crédit Suisse AG, Research Division: This is actually Mike Dahl on for Dan. Hoping to drill down into the land banking agreement a bit more. Could you talk about the composition, both geographically and by product, of the portfolio that you've already sold? Because if I look at $37 million that you received in cash, plus the $65 million of development costs, that seems to imply quite a high finished lot price.

I think your math is wrong. It's not plus $65 million of development cost. The acquisition and development cost is estimated to be $65 million on that initial phase that we did with Blackstone/GSO.

Larry, I think he's referring to the maybe the remaining land development cost.

No, I don't think so. $60 million on the remaining, Ara. So $65 million is related to the first phase of the $125 million. So we did $37.1 million was the cash proceeds. They're agreeing to fund the remaining development cost on that phase, and then in addition to that, they've agreed to fund additional land parcels for total acquisition development cost of $60 million. But to more fully answer the other part of your question is, it's broadly dispersed geographically, as well as by product type. Michael Dahl - Crédit Suisse AG, Research Division: Okay. I guess I may have some follow-ups off-line on that one. And then just strategically with this agreement, since you will be taking it down, quarterly finished lot take-downs, should we think of this as freeing up additional working capital in the meantime to go out and pursue additional lot deals? Or is this more like a near-term preservation of capital?

We’ve not changed our cash balance targets, so you should consider that it allows us to buy even more land parcels and grow even more.

Your next question is from the line of Ivy Zelman with Zelman & Associates. Ivy Lynne Zelman - Zelman & Associates, Research Division: I just have a few questions. Realizing, Larry, your backlog conversion is currently running at 63% and, versus a year ago, 77%. Can you give us an idea if that backlog conversion is sort of where you are thinking going forward? And we're seeing a lot of constraints in Texas, specifically, and other markets on labor. I'm wondering if you're seeing delays on the ability to close homes and if you can talk about what we should be using as guidance for 2013, or at least not '13 but just sort of thinking about near and intermediate term. And I think the other thing, we'd love to hear your thoughts are in Phoenix, where you operate, kind of looking specifically at sales trends there, as we've seen some slowing there, it may be greater than other markets slowing. And wondering if it's that you've ran out of lots, and do you see any reason that there's anything else going on there? Is it just a function of absorption pace was much faster and a lot of guys are kind of waiting to open new communities, more in a favorable climate or a seasonality opportunity?

Ivy, I'm going to take a shot on some of it. I'm sure Ara will take a shot at some, and then you'll probably have to remind us of the ones that we forgot to answer. In fact, refresh my memory on your very first comment. Backlog conversion rate. Backlog conversion rate is just not something we track. I mean, we have better insights into what we expect to deliver, and it's just not a metric that we've tracked historically at all because we do a bottoms-up budgeting and, every month, get new data from our divisions on what they expect to close. So I can't really comment on the change in that. I wouldn't -- although we've heard some comments from our divisions recently about some concerns about labor, none of them are indicating that it has impacted their ability to get things closed timely at this point, so I don't think it's related to that particular issue, which is what I think you were really pulsing on. Ara, you want to touch base on Phoenix?

Yes, just the other additional comment on backlog conversion. Again, as Larry said, it was not something we track, but I think what's basically happening is we are just -- with the increase in sales environment, we are selling further out ahead, and I think that translates to what you're focusing on, maybe a slightly lower backlog conversion. Phoenix, I mean, obviously, we're in the dead of summer or just finished the dead of summer, which is their slow season as they get up over 100 degrees all the time. Generally speaking, Phoenix is rock-solid, and we've been enjoying really good and steady price increasing in many of our communities there. So we haven't seen any slowing whatsoever there right now, other than the obvious summer selling season, which is typical. Ivy Lynne Zelman - Zelman & Associates, Research Division: Great. And just one other follow-up. Larry, as we talk about a little bit on the raw materials side -- and Ara you answered the question by saying you’re able to at least pass through home price appreciation to mitigate inflation of raw materials. Just looking at sort of going forward, when you're underwriting ground, what kind of assumptions do you guys use for raw material inflation or labor inflation to get to those 25% hurdle rates?

Our historical and current practice, and we've done it this way for many decades, is we're not smart enough to know what's going to happen to home prices, and we're not smart enough to know what's going to happen to raw material and labor prices, so when we underwrite a land parcel, we assume then current home prices, home paces and then current cost to construct. Historically, whenever we've seen times that we've had increases in labor or raw material cost, we've been able to offset them by having home price increases. We don't know whether that'll be the case in the future or not, but we certainly hope so.

Gentlemen, your next question is from the line of David Goldberg with UBS.

It's actually Susan for David. Just you guys noted that you have already identified 136 lots, I think it's 136, to put into the second phase of the GSO deal. I'm just wondering, how do you decide what lots to buy through that? Does that process differ at all significantly from your traditional acquisition criteria? Does GSO have any say in it? Have they put any terms around a certain geographic or sort of product standpoint?

GSO's been very flexible. They're willing to look at almost any geography and almost any product type. And our underwriting criteria have satisfied their underwriting criteria to date on the parcels that we've submitted them, with very few exceptions. So we -- the main criteria is that it be a large enough parcel to go through the extra work involved and put it into a land bank and that it has sufficient shelf life that makes sense to do it is as well.

Okay. And do you feel like there's enough so that you can -- the GSO deal's large enough to service the current growth rate that you're seeing?

I mean we have our own cash, too. We're not doing everything through GSO by any stretch. So we think this is additive to the growth we anticipated without GSO.

And then just one more question. In terms of the land that you're taking out from being mothballed, if we sort of think about the parcels that are still in there, what percentage of that, approximate, would you say is higher quality, where you could develop it over the relative near-term and generate an acceptable return on capital, versus what percent would, say, be lower quality and maybe where the profitability is still somewhat weaker?

I think, by definition, when it's mothballed, it probably means that it's not hitting a hurdle rate that makes a lot of sense from our perspective, and therefore, we've put it on the shelf. And as we've already unmothballed 58 communities, we constantly assess it and look to bring them back on when it makes sense in that particular micromarket. So we're constantly looking at that and hope to continue to bring some of that mothballed back on in the future.

As the market improves overall, I think the value and the attractiveness of everybody's mothballed lots looks a lot better. So I think, in general, the industry will see some pleasant surprises in the coming periods regarding mothballed lots.

Your next question is from the line of Joel Locker with FBN Securities.

Just as -- I guess, getting back to the direct cost, what do you expect to -- can you quantify what you think they'll be in the fourth quarter versus a year-ago fourth quarter, including labor and material?

I don't think we have clear data points that I can give you any precision on that, but I think they've inched up a little, would be my reaction. We've avoided increases, and certainly, on the branded products, we have a lot of national contracts that have helped us a lot during this period of time, and then on certain things, we've taken big increases. We talked in the past about the increases that we saw on wallboard. There's been other -- in individual markets, where we've seen increases, but I can't quantify -- I don’t know, Ara, whether you have a sense at all what it is, but we don't have any kind of way of giving you any precise answer to that other than to say maybe it's inched up a little bit.

On the whole, what we can say is we're comfortable right now that any cost increases are at least being offset by home price increases. I mean, basically, what happens is, as the markets heat up, and there’s more activity, the subcontractors try to take advantage of that by inching up the prices. Well, by definition, if it's happening in markets that are heating up, the homebuilders typically have the opportunity to raise prices in that environment too. So it's been a balance which has actually been slightly in our favor.

Right. And do you expect that trajectory to increase now that you have a higher backlog and now that it'll be even busier trying to deliver homes going forward on the labor side, and same with the material side?

Everything is relative. Putting it in perspective, the average national housing starts were at 1.6 million per year, even at this improved pace, where it's 780,000 per year, let's say, as an industry, so we're way below normal. On the other hand, it's about a 30% improvement from last year. So I think there will be pricing pressures, but it doesn't concern us too much because of the home pricing opportunities right now.

And I guess on the corporate expense going forward, do you expect that in the $12 million range, as you've kept it relatively low, even though you increased revenues? Or do you think some stock comp will start working in there, where that'll start increasing also?

Yes, we don't make any projections precisely on corporate overhead. I think, sitting in your chair, the best you can do is just assume that it's going to stay at the level that we've been running.

Your next question is from the line of Nishu Sood with Deutsche Bank.

I wanted to ask first about your gross margins. Ara, you showed that chart, very impressive-looking chart from, I think, the last 6 quarters, from in the 14% range, it’s now over 18%. Certainly one of the better charts if we did that for the whole group amongst the builders. So if we were to think about the causes of that, over the last 5 months, I mean, your legacy land communities, that's been a shrinking percentage. You've had some home price increases, obviously maybe some operating leverage -- some leverage in the gross margin line. I know you can't quantify it exactly, but I just wanted to hear your thoughts on what you think has been most important in driving the gross margin trend over the past 6 quarters.

It's really been a little bit of everything. I can't point to any one thing. But we certainly -- our continued focus on new land acquisitions has been helpful. The product mix orientation has been helpful. I think we've really done a good job on the purchasing and design sides. And our ability to get some price increases through has helped. So it's been a little bit of everything. No one particular thing.

Okay. And the next thing, just a question on the land banking arrangement. Just a point of clarification, the remaining $60 million that is going to be direct into that, is that from your balance sheet? Or is that third -- or is that land purchased in the market?

Could be either. Everything we've done to date, we owned and then sold to them, but we could do land that we identified, and then they buy it instead of us buying it. So it just depends.

Got it. And then just a real quick on the state tax reserve. I think we've seen that from some of your peers as well. I was just wondering if you could just give us a little bit more color on that. What triggered that? It’s a pretty material amount, obviously. Is there further reserves that could be reversed? Just some more details on that, please.

Primarily the passage of time is what allowed us to reverse it, and I wouldn't expect anything of substance on the state tax going forward.

Your next call is from the line of Adam Rudiger with Wells Fargo Securities.

I was wondering if you could follow up on some of your comments on closing out of communities faster and your goals of aggressively trying to open new ones. If you can provide us any guidance or thoughts on what next year's community count should look like and also tie in some of your comments about closings being more weighted to the back half of the year. If you could just -- anything you could help us to think about that would be great.

Community count is probably one of the most difficult things to project because it's a function of not only opening new communities, which can be impacted by how quickly you can get through regulatory process, but also by the pace of sales in existing communities. Are they slower than you expected, or are they faster than you expected, or are they right on target? So it's not something that we're going to provide any clarity or guidance on beyond the fact of Ara's comments already, that we're working hard to try to add to our community count as we evidenced by our activity in the land market. It's probably the best projector you have sitting in your chair as to how well or poorly we're doing in that regard.

Okay. And then if I could -- if you look at Slide 31, which is one that shows your sold and unsold homes in process by dollar amount, and compare that to your backlog, the growth rates in backlog have been in the last couple of quarters on a year-over-year basis have been a lot faster and would just suggest that your inventory -- your WIP isn't keeping in pace with that. Just -- can you -- how should we interpret that?

You should interpret it -- what we've been saying for a number of quarters now is we've been focused on trying to increase our inventory turns so that we can actually do more deliveries with the same amount of inventory or less inventory, and we've been very focused on that, and it's showing you that we've actually been achieving that.

Okay. So we shouldn't interpret that at all that there's under-spending right now on WIP?

No, you shouldn't interpret it -- that would be a complete bad assumption on your part.

Yes. It's definitely a concerted, focused effort on our part to turn our inventories more, keep WIP and inventory down while our lower revenues are growing, and it's part of our overall formula. And so far so good.

Your next question is from the line of Susan Berliner with JPMorgan. Susan Berliner - JP Morgan Chase & Co, Research Division: Just a couple of questions. One, I guess, I was wondering if you could talk about specific markets such as Texas, California, DC and Chicago and what you're seeing there.

Let's see. Texas has been just very solid. They're both -- we're only in Houston and Dallas, and they're both very solid. The DC market has been very solid. We're having, on the Maryland side, some qualification challenges in the Prince George's County area, perhaps more than some others. Overall, that market has been steady. And you mentioned one other market? What was it? Susan Berliner - JP Morgan Chase & Co, Research Division: No, California and Chicago.

Chicago has been interesting. Most of our peers are reporting a challenging environment. We happen to be in some pretty good niches in affordable housing, just more value-oriented, which seems to be making the mark there. We also have some good infill locations. So I'd say the market wouldn't tell you Chicago is doing well, but we are doing well in Chicago, and I apologize, you had…

California. Susan Berliner - JP Morgan Chase & Co, Research Division: California?

California is definitely very strong in southern and northern California, and it's one of the places we'd really like to replenish our land supply more quickly. Susan Berliner - JP Morgan Chase & Co, Research Division: Great. My other question was, I guess, for Larry. The nonrecourse mortgages went up again this quarter, and I was just wondering, is that more model homes being secured?

No, what it is, and we'll have a little detail on this in the Q, Susan. But there was a JV that had nonrecourse financing as a component of it, and we ended up buying out our partner's interest in that JV, which brought the debt along with it.

Your next question is from the line of Michael Kim with CRT Capital Group.

Where were the 200 lots that were unmothballed during the quarter located? And are you seeing any trends by geography in unmothballing land?

I think those were in a community in New Jersey.

In New Jersey? Okay. And could you describe the anticipated takedown schedule of the 620 lots from the first phase of the GSO transaction by geography and timing? I guess, of the 6 land parcels from the first phase, are any of these projects going to be taken down by phase? Or is it just going to be evenly split over 6 takedown schedules?

It is not evenly split. Each community has its own takedown schedule, and the takedown schedule was tied to our expected sales absorption pace, and our expected sales absorption pace was directly tied to what we are currently experiencing in that market. So it's trying to be kind of a just-in-time takedown of finished lots.

Generally speaking, if you looked at an overall average, it's probably somewhere around 3 lots a month, equivalent of 9 months -- 9 lots a quarter, probably is a pretty representative sampling. Some will be -- have higher absorption, some lower, but it's probably pretty typical, once they get to be developed lots.

And when do expect the first takedown to occur?

They've already occurred.

It already occurred? Okay. And just as my last question, will the land banking agreement with GSO be filed with the SEC to be shared publicly? It will not?

No.

[Operator Instructions] Your next question comes from the line of Andrew Casella with Imperial Capital.

Larry, when you talked about opportunistically addressing the balance sheet, I guess, could you just walk us through how you're thinking about that? I mean, is it a matter of putting up a few more strong quarters and then looking to address the 10 5/8% with the coupon trading in where it is? Or if you could shed any light on that, it would be helpful.

Yes, I mean, we continuously monitor what's going on in the capital market. We've been probably one of the more active issuers over the last 4 or 5 years in the homebuilding space, and we just opportunistically take advantage of opportunities that makes sense from our perspective. So we just constantly monitor the market and decide when to -- we don't have anything planned right this second. So we're just monitoring the markets, and over time, whether it's buying back debt, exchanging more stock for debt or doing some capital market transaction, we recognize that we have a ways to go to get our balance sheet back to healthier position, and we continue to take steps to do that.

Got it. And I guess just to that point, is it your view that you would like to do just something overall on a global basis? Or kind of pick off different parts of the capital structure opportunistically?

I think we need to do both over time.

Got it. Great. And then just a quick housekeeping item. What's the cash in your restricted group versus secured group of the $250 million that's -- that you have as of the quarter end?

I'm not sure any of us have that at our finger tips. You got it? Cash in the 2 different semesters [ph]?

Yes, so the cash in the peer group for the 10.65% notes is $164.8 million, and the inventory that’s -- the real property that's collateralized is 640.9. And the new group, the cash is $86.4 million, and the inventory that's collateralized at $36.5 million. And there's investments and joint ventures with a book value of $46.4 million.

Your next question is from the line of Joshua Pollard with Goldman Sachs.

First, you said you could issue 100 million shares without interrupting the NOL. Could you give us a quick reminder of what the limitations on the NOL would be if you were to exceed that level of issuance? I think there's some confusion amongst investors whether that limits your use of it for a very long time or if that's shorter. I just want to understand what's the sort of the decision factors there.

Yes, if you trigger it, you eliminate your ability to ever use a very, very, very substantial portion of it.

And frankly, we haven't focused on the technicalities of what you can do because we just have no plans of issuing 100 million shares or anywhere near that amount to trigger it. We don't feel like we have the need for that capital, so it's just not on our radar screen to focus on it.

The other question I have -- well it's actually 2 parts. One is on your gross margin improvement. You said you expect it slow. You pointed back to the early 2000s in terms of where you think normal margins are. Are you already at normal margins in your backlog? Just given the increase in prices on your orders? No?

No. I think you misunderstood. We didn't say that it was going to slow. We said it...

Improvement would slow.

Yes, well, we wouldn't keep the same trajectory. I mean, we’ve improved almost 400 basis points. That would get us -- if we did that again, that would get us over our normalized level. But I'm sorry, you had -- the second part of that question?

With our backlog, we're not going to disclose exactly what gross margins are in backlog. So we expect to continue to show some improvements as we deliver more homes from newly identified land, especially in markets where we have some ability to have some pricing increases as well. So we think there'll be modest improvements going forward, but we're not in a position to publicly give you the precise margin that is in our backlog.

My last one is, one on a regional side, you saw that, including JVs, your orders are down 12% in the Northeast, down -- or call it roughly flat in the Mid-Atlantic, where your number of communities in those areas per -- are those numbers down? And then when you look at the inventory that's at GSO, does that still count when you measure how much interest is capitalized on your income statement?

First, I'll comment on the Northeast. Frankly, of all the markets, the New Jersey market has probably bounced back the least of all the other geographies. It's not the case as you get very close to New York, and our only high-rise in our company right now is selling very nicely and very steadily overlooking New York City. But as you get you get further out, that market has definitely been on the slower side. The DC market has been more oriented to getting enough communities open at the right stage, although as I mentioned, we did have a little bit of a challenge in the recent couple of quarters in the -- on the Maryland side and the Prince George's County area, and that has slowed it down just a bit. Regarding capitalized interest, Brad or Larry?

I'll take that one. It's a great question, Josh, and we have been in discussions with our auditors, the DMT [ph], kind of working through that. There's not a firm answer yet, so I can't give you 100% clarity.

Your next question is a follow-up question from the line of Joel Locker with FBN Securities.

Just on the other expense, you had actually a $3.1 million gain. What was that from?

We sold an apartment that was built originally as a senior rent restricted kind of apartment that allowed us to get 15 years ago, maybe 20 years ago, a for-sale component of land approved, and we sold it recently, and it's a gain on that sale.

And what do you expect going forward on the interest expense actual? It's been hanging around low 20s, mid-twenties actually. I mean, is that -- inventory’s grown a little bit sequentially, but I mean, do you expect that’s still in the low $20 million, mid $20 million range for the foreseeable future?

Sitting in your chair, all you can do is kind of assume that it stays roughly the same.

And ladies and gentlemen, this does conclude the question-and-answer portion of today's call. I'd like to turn the call back over to Ara for some closing remarks.

Great. Well, thank you very much. Needless to say, we’re pleased with our quarter. We're pleased with the results on every metric, including liquidity, and we look forward to bringing you even more positive news in our next quarterly release. Thank you.

Ladies and gentlemen, thank you so much for your participation today. This does conclude our conference. Have a great day. All parties may now disconnect.