Good morning, and welcome to Taylor Morrison's Third Quarter 2016 Earnings Conference Call. At this time, all participants are in a listen-only mode. Later we will conduct a question-and-answer session, and instructions will be given at that time. As a reminder this conference call is being recorded. I would now like to introduce Mr. Jason Lenderman, Vice President, Investor Relations and Treasury.

Thank you, Paula, and welcome everyone to Taylor Morrison's third quarter 2016 earnings conference call. With me today are Sheryl Palmer, President and Chief Executive Officer; and Dave Cone, Executive Vice President and Chief Financial Officer. Sheryl will begin the call with an overview of our business performance and our strategic priorities. Dave will take you through a financial review of our results along with our guidance for the next quarter and for the full year. Then Sheryl will conclude with the outlook for the business after which we will be happy to take your questions. Before I turn the call over to Sheryl, let me remind you that today's call, including the question-and-answer session includes forward-looking statements that are subject to the Safe Harbor statement for forward-looking information that you will find in today's news release. These statements are subject to risks and uncertainties that could cause actual results to differ materially from our expectations and projections. These risks and uncertainties include, but are not limited to those factors identified in the release and in our filings with the Securities and Exchange Commission, and we do not undertake any obligation to update our forward-looking statements. Now, let me turn the call over to Sheryl Palmer.

Thank you, Jason, and good morning everyone. We appreciate you joining us today as we share our 2016 third quarter results. I'd like to open by expressing my sincerest appreciation to the Taylor Morrison teams for their continued focus on our strategic priorities and for their unrelenting efforts to help us achieve another strong quarter. It's because of the dedication of our people that we are able to consistently deliver on our commitments and produce a positive experience for all of our stakeholders. The housing recovery continues at its measured pace with an evident upward trajectory. Our belief in this recovery remains intact despite external factors that may at times produce short-term choppiness in individual markets. We continue to take a longer-term view on evaluating the industry as we feel strongly that this approach keeps us focused on the right thing and produces the long-term results we should all expect. Taylor Morrison is well-positioned to mature with the cycle and drive efficiencies from our strategic foundation. We spent the majority of 2015 and the first half of 2016 focusing on our growth strategy and reshaping our geographical footprint to expand our reach and put us in areas where we could capitalize on various economic and demographic tailwinds. While we wrap up our successful integration work related to these geographic penetrations and the acquisitions that fueled them, we turned our concentrated attention towards optimizing our operational model to maximize efficiencies and generate accretive returns in each market, while achieving appropriate scale in our newer businesses. Our optimism is primarily fueled by household formations outpacing production starts, yielding a fundamental demand/supply disconnect. The supply side constraint is evidenced by less than five months of inventory for both new and existing homes, which is about 10% lower than this time last year. Permits…

Thanks, Sheryl, and hello everyone. For the third quarter, net income was $58.3 million and $0.49 in earnings per share. Our year-over-year growth and net income was 28% and 32% for EPS. GAAP home closings gross margin including capitalized interest was 18.9%, which was 50 basis points higher year-over-year and ahead of our expectations as there was a slight shift in some of our closings till the fourth quarter. Relative to the third quarter of last year, the year-over-year margin rate was higher primarily due to overall rate improvements as well as some mixed benefit and lower capitalized interest per unit due to our decision to partially pay down and refinance some of our debt last year. Moving to mortgage operations, we generated $13.8 million of revenue during the quarter representing a 22% increase over the prior year. Gross profit was $5.9 million, while our capture rate increased by 100 basis points year-over-year coming in at 81%. Land sales were more significant this quarter as we discussed in our last call, we were able to capitalize on certain market conditions relative to our long-term held assets. These assets represent legacy land that we have held for either appreciation or tax reasons. In some cases, we have brought these assets to market as active communities. However, we have some legacy positions that we believe are not core to our strategy and represent selling opportunities. July 2016 marked a key day for us as the tax holding period expired and we are now able to utilize these assets fully without any reduction to our prior tax benefits. For the third quarter we sold and closed just under 1,500 lots of generating the margin of $19 million. The level of land sales in the related margins in the third quarter are above historical…

Thank you, Dave. Let's take this opportunity to discuss a few of our markets and convey what we're seeing on the ground. I'll move from west to east. Our three businesses in California continue to experience healthy demand and good overall customer interest in our communities as evidenced by traffic and free qualification metrics. Consistent with what we've mentioned on prior calls, we are still contending the challenges related to municipality delays across these three markets. Dave mentioned this as being one of the hurdles for our JVs, but this rings true with many of our communities in the state. These delays have created an unexpected choppiness to our community openings, which have subsequently affected our basis. Plant isn't quite competitive in California for some time now, but we remain focused on our strategy at pursuing core locations. As a result, we explore different deal structures and acquisition strategies that balance the security and consistency provided by large master plan communities with opportunistic infill plays that yield the ability to garner outsized returns. This flexibility let us to our current JVs in southern California, and we will continue to be creative in ways to feed our land pipeline. Phoenix has been one of our most consistent divisions within the entire portfolio. It continues to operate at a high level with volumes continuing to be up year-over-year driving great results for the company. Sales are strong, but labor remains an issue, and we anticipate that it will be an even greater constricting factor as we approach year end. The tightening of trade availability as we progressed through the fourth quarter will likely be present in most markets around the country. Our central area continues to show signs of improvement as the Houston area normalizes, and in some ways begins to move…

Thank you. We will now begin the question-and-answer session. [Operator Instructions] And our first question comes from Stephen East from Wells Fargo. Please go ahead.

Thank you. Congratulations Sheryl and Dave on the very nice quarter.

Thank you, Stephen.

Sheryl, the last part that you talked about, and one, I completely agree with you on the baby boomers and the demand that's getting created there. As you look at your business today and maybe over the next three to five years, when do you see a shift in becoming more barbell-approached -- more upright [ph] now, it's pretty even, one-third, one-third, one-third, do you see that shifting? And then if you look at the competitive dynamics of the active adult or age-targeted, what do you see going on there both with your competitors and with the land situation?

Okay, Stephen, I think I got a couple of questions in there. But as far as when I expect that really to shift, I think the balanced approach we've taken, it can certainly move a few percentage points year-to-year, but I like the makeup of the portfolio. When I look at the entry-level buyer, that first-time buyer, let's start there for a second. I feel really good about us operating with about a third of our portfolio. You know it's interesting about that group is everyone talks about the first-time buyer. And when we look at it to come up with that third, Stephen, we really look at the millennials, the affordable buyer, and the first-time buyers because it's actually three very different buckets. And so our strategies about how we serve each of those distinct groups, because there's a little bit of overlap between them but not as much as you might think. So somewhere around a third of our population makes sense to us. As far as the baby boomer, when I look at the next many years, five to eight years, I think they're going to continue to be a significant part of the buying population when I look at the financial security of their balance sheet, and when I look at the impact they're going to have on our business. We've talked about over the last many quarters what a sophisticated buyer they are, and how they generally generate the highest margins across our portfolio because of the dollars they'll spend on lot premiums, on options, and really making sure they want at this point in their life. And then when I look at that last third, a pretty good makeup of our first-time move up, second time movers from luxury and some urban. I think that continues to make sense. So all in all, I'm really good with the waiting of the portfolio, and don't anticipate significant shift from year-to-year over the next few years.

Okay, thanks. And then your gross margin beat guidance pretty easily. I was hoping maybe you could give a little bit more detail about what was going on, and then for the fourth quarter your guidance implies it dropping back down. So I just want to try to understand what's going on there, maybe what your gross margin and backlog look like last quarter versus this quarter or however you want to slice and dice that?

Sure, Stephen. As far as this quarter, where we beat our guidance, it's a couple of things. One, as I said in the prepared remarks, it was mixed, it really skewed it where we saw some higher margin houses close more this quarter than we anticipated. At the time of the call, we haven't closed that first month of the period yet, so we are kind of relying on the backlog on the previous month. And a lot of it really comes down to timing of when we can get the houses complete, and we did see that shift a bit. I think the second part of that was really around our incentives. As you know, we've been kind of marching down the path of selling through some of our older finished specs. So we come up with an estimate on what we think those incentives are going to be. And I'd say on that one, we've been consistently probably conservative on what we expected the incentives to be. So we've done a little bit better there. When you look at the full year, we're holding our margin because it truly is really a mixed shift between the quarters. And when you look on a sequential basis it is going to drop a little bit, but staying with our expectations for the year.

All right. Thanks a lot.

Thanks, Stephen.

Our next question comes from Ivy Zelman from Zelman & Associates. Please go ahead.

Good morning, congratulations. Let's hope the market appreciates your strong results.

Thanks, Ivy.

I have a lot of questions, but I'll behave myself or try to.

Okay, really?

I think people are just so freaked out about everything, which they have every right to be concerned given the Tuesday election coming, and the economy late in the cycle, and zero to 2% growth, there's so many issues. And one of the things about your company with your strong performance and your continued success in driving the diverse performance you have geographically, operationally. You still have a really low return. And what we think about returns on equity is really what drives valuation, which drives performance. And so I can see the land sales, it's a pretty significant land sales, and I'm thinking like, we have 9% ROE for you this year, 10% next year. And I think that that is really what's challenging. You've got all this land that you're not monetizing in a way to drive returns. And when I listened to you, and it sounds exciting, I think when people are so focused on gross margin they're just so worried because they're like, oh my god, all these cost pressures, and these guys, they're punching above normal. What can you tell us about what you can do to really openly drive returns higher to justify being confident that we can see valuation improvement.

Okay, fair question, Ivy. So let me hit it from a few places, and Dave will weigh in. When I look at where we are in this point in the cycle, and our maturation as a public company, we've been on a journey. And certainly if you kind of go back to where we were from our Canadian operations in selling the Canadian business, to really demonstrate our focus on the U.S., it's really kind of where we are at this point. So if I look at the overall cycle, you look at gross margins are probably hitting an inflection point. And if you think about prior cycles, they generally will settle in somewhere around that 20%. We've been growing at a fairly significant pace, but moderating compared to where we were early in the cycle for a couple of reasons. As you know, land has gone expensive; there are structural differences in the labor environment we haven't seen in prior cycles. So today I talked a lot of about optimizing our operations because I think that's key once we got to the geographic diversification we were seeking. It's about making sure that each business in the portfolio and the collective business is as efficient as possible. It's making sure that we balance or optimize pace and price, and that's going to be a slightly different decision in each market that we do business. I think I've always discussed our focus on growth on the bottom line as compared to the growth -- the hyper focus the Street has seen around the gross margin, and which has always been a little bit odd to me. But all in all, it's not going to be one of those things. It's a sign of the maturity we had to go through to get here. It's getting our new divisions up to scale. It's about operational execution. It's about our disciplined overheads. It's around our structure, around our land acquisition strategy, and having the highest performing balance sheet with the right people to drive it. I think the combination of all those things are going to get us to the place where you're going to be quite pleased.

Yes, and I would just add a lot of Sheryl said, this was kind of a two-year transformation for us, starting with the sale at Canada. We knew that we were going to invest some of that money into new markets. And as you know, we didn't necessarily expect to do three acquisitions in that sort of time, which was five markets, two of which were in Atlanta. And when you go into these markets, for us, it's now really about creating scale. And once we're able to create scale there that's going to enhance that long-term return, and that takes time. It's faster than going organic, but even M&A takes a bit of time. And then we are squarely focused on looking for ways to enhance the overall operations. And we touched on a few in the prepared remarks between construction enhancements, things we're doing on the procurement, and obviously on the sales pipeline, that to try to enhance pace to some degree. So when you put those all together, in time here, we think in the relatively near future we're going to be able to drive returns. Our overall focus is to be accretive year-over-year, and that's the direction that we're marching down.

Well, it sounds like you have a lot of tools in the toolbox to drive returns higher, and it's very exciting to hear that, especially when we looked at your SG&A this quarter, and recognizing you're really not getting the leverage yet off of the acquisitions, and you have work to do there. So with respect to the forward look I think that giving us some guidance as you think about your '17 outlook, and sort of helping us. The focus should be on returns, and not on gross margin.

We agree. At the end of the day, like I said, we're going to be return-focused. That's our primary metric. And SG&A was higher this quarter. And a lot of that is due to the rate pressure as we build to scale on those new markets. Our ASP came in a little bit lower, so mixed plate of factor there, coupled with our closings were a bit below our midpoint, so we weren't getting that top line leverage that we were hoping, in addition to the investments that we're making. As you look at SG&A longer term or maybe just for a second -- this year, it's going to put us in the mid 10% range. As we look out next year we do think we're going to be able to drive that leverage year-over-year going forward. A little bit early for us to give you some exact guidance. We're actually going through our planning process right now, but we're going to be able to update you here in the fourth quarter.

Great. Well, I'll get back in queue. Congratulations guys, thank you.

Thanks Ivy.

Our next question comes from Michael Rehaut from JPMorgan. Please go ahead.

Hi, thanks. Good morning everyone.

Good morning.

First question, maybe just to follow on the previous -- and appreciate obviously at this point in time, it's tough to talk more concretely I guess about 2017 per se. But as you look at the different levers for both gross margins and SG&A, if you want to look more holistically in terms of how to get to the operating margin, obviously improving returns is either going to be driven by better margins, more volume, or a combination thereof. But just focusing on the margin, where would you say over the next two to three years you have more opportunity, is it more in the SG&A side or do you still see things, particularly as you have your land bank right now, and you have a good sense of your basis, that you might also have some opportunity to drive the gross margin as well.

Sure, Michael. I'd start with we're focused on being a accretive on EBT as a percentage of the total revenue and that's going to come through a mix of both margin and SG&A. I think if we break it apart, looking into next year, we're going to benefit from the anniversary of the purchase accounting. Some of the drag that we are completed spec sales as we're trying to push those out. Of course we're going to have the pressure of higher land basis and then of course other factors such as pricing and the cost environment. Those are always going to wait out there. But as we build scale in our new markets and we continue to grow our business given our land bank, there's going to be opportunity to leverage that SG&A line. That's something that we think we're going to be a little bit more consistent on is driving that SG&A line that leverage kind of year-over-year. Well, we'll see that start in 2017. It will get probably better there in 2018 on the longer term again as we get to that scale, and there're other things that we have, you know, we do have the ability to sell some land like we did this year be at not at the margins that we probably saw here in the third quarter, but there's other opportunities to monetize the assets which is really the name of the game or what we're trying to do. So when you put all that together again it gets back to you driving that EBT line making sure we're accretive year-over-year.

I don't think there's a silver bullet here, Michael, as Dave said, I think it's a combination of a lot of effort and initiatives across the business starting with operational execution, and discipline overhead, and the gross margin line and the structure around our land acquisition, and paste and price. So, I think we have all the things set up in our arsenal to do it. And actually feel really good about the position of our land bank and where we're going in to the results that they'll garner.

And probably lastly, I think we do have the confidence that we can get there and that's why we're making a couple of these key investments here this year to get a jumpstart kind of for next year.

Great and I appreciate that. I guess secondly, if you could in terms of regional color. Perhaps if you give us an overview of which market this quarter performed on the better side of the scale or above expectations? Which markets more in line or if there are any markets that you see more as the challenge at this point?

Yes, I think pretty similar to what I said in my prepared comments, Michael, we actually felt pretty darn good about our markets across the portfolio. I think when I look at sales -- let me start with sales and kind of absorption. Almost across the board we saw improvement in sales rate. As I look across really all the markets there is a couple of exceptions. As I mentioned, in Houston we saw, this last month we saw accretion year-over-year. So we're seeing all markets trend the right way. I think if there's a market that we've seen some recent improvement in performance, it's Chicago. I know we've talked a lot about Chicago. When I look at the pace from Q3 15 to Q3 16 it's still nothing to write home about, but we're seeing improvement and it's trending in the right direction. So without being redundant, I actually like I said, feel pretty good about on the status of each of the markets.

Great, thank you.

Thank you.

Our next question comes from Nishu Sood from Deutsche Bank. Please go ahead.

Thanks. First of I wanted to ask on specs, and so Sheryl, you mentioned obviously the operational efficiency efforts, especially trying to get rid of some of the aged specs. And obviously in terms of considering specs radicals, you have to consider the difficulty in labor and extended construction time and obviously the strong demand you've had recently. How should we think about your spec strategy going forward here? The strong demand and the difficulty in labor would seem to argue that having some specs on the ground or even may be some elevated specs will probably help to manage through that; but on the other hand, the operational efficiency initiatives would argue the other way. So how are you thinking about that and how should we expect to think about that you're managing that going forward?

Yes, it's a good question because it's going to continue to evolve, right. When I think about an issue you know, when we started down this path and communicated with everybody that we really wanted to tighten our specs, it wasn't really a holistic change. We had been running somewhere around 1.5 completed specs per community. I think what we really wanted to do for the organization was make sure that our approach to the specs we picked was spot on that we were selecting the most normal lot with our best selling plan and we were putting the right specifications in that allowed us the greatest opportunity to sell those in sequence. I like specs. They're a friend. They do a lot of good for the -- like you said, the labor, the consistency in our production cycle. What you don't like is for specs to sit around once they've been completed. So by reducing and putting a goal in front of the organization to get that closer to one really made a lot of sense to you know sharpen our approach on specs. As I look at moving into the end of the year and coming into the spring selling season you're exactly right, you should expect to see that number pick up just a bit for us. But you know I think what's really most important when I look at the business is that those decisions have to be made market by market actually community by community multi families going to impact the overall carry on specs. And let me give you a couple of examples, and I was spending some time just digging through the results. One of the areas I looked at was the market like Phoenix, if I look at Phoenix today the market is carrying something around 2700 total inventory homes and about 1600 of those are finished. We are the largest builder in this market by market share and we only have just over 50 specs or less than 2% of the total. So here's the market where we're playing very differently. The market is very, very tight from a labor stand point and what's most critical to us is that we deliver the houses that we have in backlog. So we came into 2016 with a very strong backlog we're going to go into 2017 with a very strong backlog. And we're just playing a very different game and so when I look at our discounts in the market we actually disconnect from the market fairly significantly. So that's just an example where the labor market is so tight that we're going to change our game based on what the market needs and demands are.

And just to expand on that, you know, we're going to choose our words very carefully because it really is around the competed aged finished specs not the overall specs strategy but we were a little bit longer on some of these aged specs finished specs but that wasn't in every market it was a handful of markets. And what we found is if you sell it within the first 90 days after the home is complete we're going to hold margins pretty consistent with our to-be-built margin once it gets past 90 days that margins seems to slide down. So it's really the focus making sure we don't get in a situation where we have aged completed specs, one because of the margin pressure and then two they're costly to maintain. So what we're really focused on as Sheryl said is getting a good life with a commonly selected floor plan with commonly selected options, trying to hit it kind of middle of the fairway with the goal of hopefully selling it before its complete but if not selling it within 90 days of completion. That gives us the best opportunity to maximize our margins.

Got it. Appreciate the color. Also wanted to ask on the SG&A side, you've been pretty clear about the investments that are going into the business and some of the other factors that have affected SG&A. just thinking about it I think its six quarters in a row now where you've had negative leverage on SG&A. Dave, in your commentary you mentioned the investments the additional profits from the investments to revenues will cover the costs in '17 but you shouldn't really expect to see the benefits in '18. I know you're not giving guidance, but I just wanted to make sure that we are understanding that correctly. Does that mean that we should not expect to see leverage on SG&A in '17 but perhaps in '18? Just wanted to make sure we understood what you're trying to get across with that.

So I'll give you some direction, but again you know we have some work to do on that. When we're looking at planning for next year, I can see what we have in backlog to get this kind through the first quarter little bit beyond that, but we are still setting our plans for the back half. So, it's hard to give you an exact answer, but I would tell you that we're driving towards levering -- driving some leverage on the SG&A line next year. I don't think it's going to be significant but potentially we can drive some leverage, but like I said we just need a little bit more time to go through our full-year plan and we will give you an update in the Q4 call.

Okay, sounds good. Thanks.

And our next question comes from Alvaro Lacayo from Gabelli & Company. Please go ahead.

Good morning. Just on the absorptions I guess, is the guidance for full year ending community count on the low end just because that's the function of higher absorption and sales pace or is there something else going on.

That's right.

That's right. Okay, great. And then just on the acquired businesses has that been driving the improved sales base at all, or how are the acquired businesses been doing from a pace standpoint?

Yes, fair question. From the acquired business when I look at Atlanta, I would tell you Atlanta is generally accretive to our sales pace. When I look at the scale, and obviously that's the largest scale business that we have, when I look at Chicago, and as I said, we were seeing some improvement but certainly not at the pace that we'd like to see and I would tell you the others are pretty much in line with the company pace.

And then on the land span it seems like that that also the number has come down from the last quarter just wondering if that brings up capital for other uses and if that would have an impact on the share repurchase pace going forward.

Yes, we are little bit under what we had anticipated which was about 1 billion and that's more a function of the land market. So and that's just as we look here to the fourth quarter that money could be spending -- just could to be spent in '17. So, overall capital philosophy stays somewhat the same. We're going to continue to keep the share repurchase as an option and we're going to do that when the price is compelling for us to jump into the market.

Okay. Thank you.

And our next question comes from Jack Micenko from SFG. Please go ahead.

Hi, good morning. We've heard a lot about SG&A leverage Dave, I am wondering if you could actually size the amount of investment for us or so to speak to some level of steady-state G&A expenses. What is the drag on the top line number from these investments?

It's a couple million dollars as what we're spending, and it's a mix between what's in G&A and what's selling a little bit more probably in selling this quarter, but we're running somewhere on a G&A about 30 million a quarter give or take some of that's going to be impacted by things such as certain employee costs or professional fees, but it's really give or take 30 million a quarter.

Okay. And then you talked about labors and I guess municipality issues in the fourth quarter making those maybe even just worse given that the for the industry is. But you took your delivery guidance up. I mean what's in the backlog, I think you had some deliveries pushed out as well, what's in the backlog that gives you confidence that you're going to get these homes delivered in the fourth quarter?

Well, I think when we look at where we are from a productions point we feel pretty good about our capacity delivers. So that the main driver allowing the midpoint of guidance. We have a couple of markets that maybe are little bit more challenging and we took into consideration but we knew -- after getting hit last year with some of the labor challenges we were just little more proactive this year, kind of setting up our fourth quarter now there always carries a certain amount of risk that you know a lot of house that get closed in December, but it's really just our visibility into our production schedule that's given us that confidence.

Yes, I mean, there is still a lot of work to do. There is no doubt about it and absent anything significant that changes the environment, weather, weather hurricane that's the best knowledge we have today. It's generally a production issue not a sales issue at this point but like I said there is a lot of work to do across most of the markets, and as Dave said, we started in markets like Phoenix, we saw this coming and we started out the case in January with a different cadence to put more houses in the ground and feed it to the trade base and working with our trade across the portfolio to help them be as efficient as possible.

All right. Thank you.

Thank you.

And the next question comes from Jay McCanless from Wedbush. Please go ahead.

Hi, good morning, everyone. First question could you repeat, how much is left on the buyback after the end of the quarter?

We have $57 million.

Okay. Then the other question on land sales, I know you guys don't want to give guidance for '17, but could you maybe talk about what from a dollar perspective you've identified that you want to sell just so we -- land sales was such a big contributor to earnings this quarter, maybe give us a sense of what you guys did and how we should think about the cadence of land sales going into next year?

Yes, when -- it is probably the hardest thing for us to forecast because we do have an approach when we underwrite certain deals that might include potentially selling some land at a later date plus we have our long-term strategic held assets that we have there too that the market just needs to be ready for that. Typically we're probably $40 million to $50 million a year obviously not at the margin that we saw in the third quarter, that's generally our typical run rate, but like I said it's really hard for us to predict for '17.

We tend to be pretty opportunistic around land sales. I mean it's always part of the business being that we are developers as well as home builder, but there is something that absolutely dependent on pricing, we'll decide if we are going to sale or not. So today at this point outside of quarter in advance, it's pretty tough.

It comes down to obviously best use of cash, so in some of our longer positions were approached by other home builders and if the offer compelling and it's more creative that we can do from a return perspective obviously in the short term it's something that we are going to be open to listening to their proposal.

Okay. It sounds good. Thank you.

Thanks.

Our next question comes from Alex Barron from Housing Research. Please go ahead.

Thanks. I think lot of the questions had been already answered, but I guess I was interested in the lot of your product in Southern California along the coast seems to be to be pretty high-priced and I was wondering if you could comment on who is the target buyer and are your absorptions and margin similar to company average?

Yes, actually even at the price point, I think you'd surprised to the absorption that we are seeing there. There is usually a lot of discussion around the international buyer and that's a pretty robust part of the Southern California business, the Asian buyer. If I look at 2016 we look at the closing of year to date, it's probably something around 40% of our buyers have an Asian and Asian surnames, I think what's interesting is about 21% of our closed buyers have paid cash for their homes. And about 54% of those cash buyers also have an Asian surname. The average sales price and this is with our JV as something around the $1 million. And when I look at our Irvine communities as well as -- I mean they are probably the most affected by the international buyer. But that buyer still is very much in the market and having a very positive impact and a high percentage of them are using cash or high percentage of cash down. If I look at our coastal properties I can give you quick anecdote, we just opened a new series in our Sea Summit project our Indigo model it's the highest price point. We opened that at the end of July, and those homes range somewhere around $2 million to $2.25 million based and we've sold about one a week, and those generally have carried a loss premium somewhere between $1 million to $1.5 million in addition to the $2 million base price. So, it continues to be a very robust business. So with that, I think we are done for the day. I want to thank everyone joining us on this morning's call, and wish you a great day.

Thank you. Ladies and gentlemen, this concludes today's conference. Thank you for participating, and you may now disconnect.