J Darrin Gross
If you're willing, I'd like to ask you. Lissette Calderon, What is the BIGGEST RISK?
Lissette Calderon
Well, I think in today's world, probably the biggest risk you have is uncertainty. And how do you underwrite uncertainty? You know what happens next? How do you underwrite whether it's Harris insurance numbers, construction costs, what does that uncertainly look like, and what, how do you underwrite that? So, you know, how do we do it? You know, we really can't avoid it because, you know, we're developers. So of course, our job is, you know, we really think about a how do we minimize it? So we make sure that, you know, every project, you know, is built, oftentimes, by the same team, the same architect, the same project, and, you know, same contractor, and so forth. And then, you know, we enter into a guaranteed maximum price contract, so ahead of time, we already know what that number is going to look like. Of course, we're building contingencies. So we minimize those uncertainties, so that that's, that's always the hard part, and then in terms of, you know, transferring the risk, and then the insurance, and that's probably how you get to a little bit of the avoiding the risk. You know, especially in South Florida, one of the things that people always talk about is kind of like sea level rise, flood level and how does climate play into what we're doing? Well, I can't move our projects out of South Florida because they're in South Florida, you know, the, you know, number of our projects. So in terms of transferring the risk, you know, we think about Master policies. Our projects are on master policies. So again, we're looking at the risk, kind of throughout the entire portfolio, not just on one independent portfolio and that that has been, you know, very effective for us in terms of mitigating our insurance expenses. Because really, the two biggest uncontrollables that we have as operators are real estate taxes and insurance. So real estate taxes, we've really been able to address that in Florida through, you know, kind of this statutory. Uh, you know, or an instance now that live local, and, you know, we're really able to address that and work with that. And then, from an insurance standpoint, it's always, you know, the next big challenge. And the way insurance numbers, you know, have gone up historically, and we've been able to mitigate that through the master policy and, you know, and how do we avoid, to the extent possible, avoiding is we build really well, you know. So we've got the flood panels, and we build that the right elevations, and we put in, you know, kind of the right, you know, glazing and glass and everything that Mills meets or exceeds the South Florida building codes. And then, you know, we try to go into neighborhoods that we know make sense from a you know, kind of climate standpoint. So Isla pad is up on a ridge. And so we really take into account a lot of these things, and we think about it. And, you know, it's always very exciting to us, you know, after, you know, a big storm, you know, where you'll see kind of flooding on the streets, and some of these pictures that go nationally, our areas, you know, are immediately dry right after the storm, so it's, you know, and I guess that's how we probably avoid it. We build in great locations, and we build a great product, you know, how do we minimize it? We get into, like, you know, guaranteed maximum price, and really kind of understand what the uncertainty and really try to mitigate that uncertainty. And then, terms of transferring, it's, you know, we look at master policies and how we put those in place.
