Question-and-Answer Session
Operator
(Operator Instructions) Your first question comes from the line of David Goldberg - UBS
David Goldberg - UBS
Nice quarter, first question is about the finished lots that you are purchasing and Bruce thanks for the detail on the amount that you said on the finished lots, I’m trying to get an idea of how long it takes do you think on average to bring those lots through the process, sell the homes and actually deliver them. What do you think the cash conversion cycle is on lots that you’re purchasing today.
Stuart Miller
In most instances, we’re looking at homesites that would be started on almost immediately after being taken down. In many of those cases we’re taking down homesites only as we need them. In a rare instance we might be buying a group of homesites which would generally be in the 20 to 30 range.
But in all instances the homesites would be ready to start almost immediately and when I say that, within a week, two weeks, at most a month. And then the construction cycle would be the natural construction cycle for the product in the particular division, that might range anywhere from three months to six months.
So we’re looking at a rapid turnover of that inventory.
David Goldberg - UBS
The follow-up question was if we can get a little bit more into new homes, and more specifically how we as investors can kind of evaluate what is longer-term investment and I know you commented there were no further cash obligations to you but in terms of potential cash spend do you potentially see that you might have to put or choose to put more cash in and how we could evaluate that as we look forward, the success of the investment and what the eventual return is to you.
Stuart Miller
Well let’s think about that, first of all as it relates to the Newhall investment, there will be no additional outlays. In fact embedded in the amount of money invested, was a reserve for future expenditures that are needed for the development of the Newhall properties.
So its already prefunded and that’s included in the investment that we’ve already put forth. So relative to that specific investment, I think that we can expect that there will be no outlays. There is the opportunity within that structure to look at and purchase other opportunities out there and so from an opportunistic standpoint should our partners decide along with us that there is a unique opportunity, we could make an investment in another property that is a like kind of distress investment.
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