Greetings, and welcome to the Pure Cycle Corporation Year-End 2024 earnings call. At this time, all participants are on a listen-only mode, and a question-and-answer session will follow the formal presentation. If anyone should require operator assistance during the conference, please press star zero on your telephone keypad. Please note, this conference is being recorded. I will now turn the conference over to your host, Mr. Mark Harding, President and Chief Executive Officer of Pure Cycle Corporation. Sir, you may begin.
Thanks very much. Good morning, and I'd like to welcome you all to our 2024 fiscal year-end earnings call. We do have a slide deck for this call, so it is on our website. If you go to purecyclecorp.com, it's on the landing page. You can click there, and then we will note through the transition of the slides, and if you have any technical difficulties, you can probably get it there, and then you can also get it on the investor page for the PDF version of it, so with that, let me get started. First, I want to talk about our forward-looking statements. I think most of you are familiar with forward-looking statements. The meaning as defined by the Securities and Exchange Act, these are statements that are forecasts and planned statements, so you cannot rely on anything I say in the call.
But anyway, you're familiar with forward-looking statements. I want to talk a little bit about our continuing leadership team. I have the privilege of getting to work with some outstanding people here at Pure Cycle, and they're really responsible for the key drivers of what it is that we're doing. With me in the room today is Marc Spezialy , as well as Cyrena Finnegan , who's our controller. And then we also have the privilege of having one of our board members, Dan Kozlowski, join us this morning, so welcome, Dan. But Scott Lehman, who heads up our engineering department, as well as Dirk Lashnits, who heads up all of our land development. An outstanding leadership team that continues to exemplify professionalism in each of their disciplines. In addition to a great management team, we have a great board of directors.
We continue to punch above our weight class with our board, and with the addition of our newest board member, who I think some of you remember I introduced in our last call, but Susan Heitmann , who's a 30-year veteran, retired KPMG partner, so she's provided terrific insights in some of the SEC reporting mechanisms that we do, so we welcome her as well. I'm going to do something a little bit different on this call. I'm going to jump directly into the financials. If you've got great financials, you want to talk about them upfront, and so we've had an outstanding year this year, and so we want to really highlight our financials, and I'll talk a little bit about the company for those that are new to the company.
I think most of the folks that join the call are going to be a little bit familiar with the company, but for those of you that are new or that joined the call on a replay, you get a bit of an overview of at least how we describe the company and how we think about it, and then something very new for us is to give you a little bit of foreshadow as to what we think is going to happen in the future, so a little bit of all three of those elements. Let me dive right in and talk a little bit about our fourth quarter results. We've had a record fourth quarter results here. If you take a look at how we perform, typically our fourth quarter is our best quarter.
And it's really not so much that we are seasonal, but as we work on delivering lots, just because we operate in Denver, you do have some seasonality on the delivery of some of those lots. And the pavement and asphalt and concrete don't work so well in the winter, but they do deliver in the spring and summer. And so that's a large measure of how we time our projects out to make sure that we can time that with the building season here and make sure that we get a lot of those lot deliveries from our land development segment. But taking a look at that, we generated about $12.5 million in the Q4, and that was really a function of delivering Phase II-B lots, which was about 197 lots. We retained 17 of those lots that we're going to hold for our BTR segment.
And then just a record quarter in terms of gross profit. Let me translate that a little bit in terms of each of the metrics that we take a look at. Revenue for the year, $28.7 million. Again, that's another record year for us. Gross profit about $20 million, which is terrific gross margins, really benefiting from our historic acquisition of both our land and our water rights there. So we've got 69%, close to 70% gross margin on those. And then net income, where we earned $16 million or $11.6 million and about $0.48 per share. So terrific metrics for the company. Taking a look at that on a year-over-year basis, if you compare that where we are for the last trailing three years, clearly another great year.
Last year was a bit of an anomaly just because of the delay that we were looking at because interest rates rose so rapidly there in the first part of 2023 that some of our home builder partners were looking for us to really work with them on the inventory of our lots. So that's a bit of a gap on that. But I think you're going to see that this is more typical performance for the company as we roll forward. Again, taking a look at the other metrics that we've got, net income, earnings per share, continuing to really put up outstanding results for these legacy assets. And really, I think the company's hit a tipping point where we've reached critical mass in these investments at Sky Ranch. And not only in the land side, but how we really monetize bringing the water utility online.
And a lot of that, we make these upfront investments, and then we continue to add connections to utilize that capacity. And so that's been a great performance for us. So we're really proud of the year, proud of kind of how this is rolling out for shareholder value and being able to demonstrate our execution of the business model. Take a little bit more on the financial performance. This is a dissection of this thing by each of our segments. So you take a look at our water utility segment, and we had a record year in the water utility segment. I think the largest driver in this segment is going to be our oil and gas opportunities where we're providing water to our industrial customers. We had a very, very strong year there.
As you can see, it was a record year for us in oil and gas at a little over $5.5 million. Some of that on the tap fee revenue came in, and then our recurring revenue from our existing customers. As we keep developing Sky Ranch, we keep developing other portions of our service areas as we continue to add our customers. You're seeing great customer growth. We have a 21% growth rate in our CAGR for our utility customers. We're still averaging about $1,500 per connection per year for our reuse or our recurring revenue customers from our utility model. Taking a look at one of the things that we've been benchmarking ourselves on, and some of the things that we look at is how are we performing by segment compared to our peers.
And so when you take a look at our numbers and our sector performance in the water utility, we benchmark our performance against some of the best-in-class water companies out there. And so you take a look, these are some of the comparisons where we take a look at how American Water, and they're probably the largest public water utility company, and York Water, and Global Water Resources, really how our margins compare to some of these that are performing in that sector. And you can see we're very, very competitive in that. The real takeaway from this comparison is we're really only using 5% of our utility assets.
And so when you take a look at how we're doing and doing that on a return on asset with only 5% of that asset in production, it really tells a very strong story about how our assets are really delivering value to our shareholders. If I take a look at really the strongest performer in that segment for 2024, it will be our oil and gas operations. And this kind of just gives you an illustration by quarter how those revenues came in. But it was a pretty strong year throughout the quarter. I'd say it was stronger in the first three quarters than in the fourth quarter, which is really atypical because that summer is where you have a lot of that demand. And we've still looked for continued performance from this segment.
The most interesting thing about our oil and gas deliveries is our excess capacity doesn't really take away any water service from other customers. Denver's water-constrained, I think we've all talked a lot about that, and that water-constrained market provides an opportunity for us having excess capacity that we can divert some of that for use by the oil and gas industry. They are looking at continuing to expand. I think they've been focusing on merely 200 well permits on the Lowry Range, which is going to be within our service area, and so there's going to be continued strong performance in the oil and gas segment for several years to come, and so we continue to look forward to making that water available to those customers and making sure that we keep up with that demand.
Taking a look at our land development segment. Here's a little bit of color on that land development segment, where, excuse me. Again, we delivered our finished lots for Phase II-B, so 194 lots on the for-sale side, 17 single-family rental reserve lots on there. So we're about 92% complete there. And really what this is illustrating for you is kind of how we've been performing in that land development segment through the years. And really bringing online, we've developed a total of about 1,200 lots in total. We've got about 700 residents now out at Sky Ranch, and we've got about 700 lots currently under production. So you're seeing an acceleration of our land development segment, and you're going to see how that really monetizes that asset.
And as most master plan communities go, they develop on a bell curve format where you start out relatively slow because you've got a lot of investment coming out of the ground. You continue to add units to that, and then you really start to accelerate that development as you've got more and more traction in there. So you'll continue to see results in that side. Again, another sector performance, how we stack up some of the other land developers and people that do similar types of activities. And I think what this is really going to illustrate for everyone is the value of our acquisition. We ended up acquiring Sky Ranch at the bottom of the market. We would have been at really historic lows for land acquisition and land trading.
And the most interesting thing there is when you compare us to other developers, whether that's Green Brick or the Howard Hughes Company or Forestar, our basis in the land continues to drive shareholder value here. And the most interesting thing about it is that, and I'll illustrate this later in the presentation, we're still just getting started with developing Sky Ranch. When you look at the totality of the residential and the commercial lots there, we're really only about 15% in our development cycle for the land business. So much, much more to come, and I think we're very excited about those opportunities. Want to highlight a little bit about our most recent segment who you've heard me talk a lot about is our single-family rentals. We continue to invest in those. We continue to grow those.
Our annual revenue associated with those is now starting to reach $500,000. We're very early on in that phase. We've got kind of that proof of concept model here where we've got about 14 units completed in that segment, and we're really moving towards going up to about 200 units in there, and again, terrific margins in our single-family rental segment. If you want to compare that to some of the best in class on the single-family rental to American Homes 4 Rent and Invitation Homes, again, we're very competitive with our gross margins in those, and so when you take a look at a small company like us and how we're executing on our performance side, I think where we compare ourselves to is those that are doing it well.
And we are proud that we're competitive with their rates and charges and how they perform on their asset price. So with that, I'm going to kind of give you a little bit of an overview. And maybe for those that are new to the company or for those that are familiar with the company, how do I talk about the company to somebody that's new? Give you kind of an overview of some of the more metrics that we really focus on and how we introduce the company to others. So a little bit, as you know, we operate in three different business segments, which are all complementary. These are vertically integrated segments where we have water in a water short area. We own about 30,000 acre-feet of water that can serve about 60,000 connections.
And the important component there is how we generate revenue from that water utility segment. We get paid from two different fee instruments. We get a tap fee, which is a large capital fee that's amortized in the cost of the house. And those tap fees continue to grow in the metropolitan area. A lot of these tap fees when we started Sky Ranch were around $30,000, and I think that average is now closer to $40,000. And then we get that recurring revenue from the customer connections, and we operate and maintain those water and wastewater systems. That is complementary to the land development because you can't develop land without having that water utility.
The combination of developing the water utility together with the land is a unique opportunity for us because it allows us to manage those high capital costs, those big investments that you're making, and making sure that we understand with as best a knowledge as we can what we need to do, when we need to do it, and how fast we need to do it. When we are able to understand the land development segment as well as we do bringing those units online, it also allows us to make sure that we have sufficient capacity in our water and our wastewater segment. Finally, moving into the single-family rentals, we're adding tremendous value in the communities that we're building.
One of the things that we saw was just an enormous appreciation in home values and then ultimately the lots that we're delivering to our home builders. Without competing with our home builders, because we're really not looking to do that, we want to be able to benefit from those investments that we're making on the utility side as well as those investments that we're making on the land development side, and then bring single-family rental units online. There's a growing and ever-appreciating market for single-family rentals for folks that just choose to rent. Our rentals are on average around $2,800-$3,000 a month. They're brand new homes, so we've got a high retention rate on our rental customers. It's really a terrific segment for us because it allows us to carry forward the equity appreciation that we have buying the land, right?
So we've got a very low basis in the land cost as well as the low basis and the legacy asset that we have in the water system. So it's a terrific segment for us and one that continues to grow. Let me drill down a little bit more into the water segment and talk a little bit about kind of why we're so excited about that. When you take a look at the overall segment, it's about $65 million on the balance sheet. And the important drivers here are going to be what we have booked these assets for. We've been working on these assets for more than 30 years, particularly the acquisition of the water rights portfolio. And these are recorded at book value. You all know that GAAP allows you to just record that at cost.
Having an asset that can serve 60,000 connections and the ability to generate more than $2 billion in top-line revenue with a 50% margin that you've got booked at $14 million really understates the asset. We continue to invest into that water system capacity so that we can provide water to our one-time customers, which are our oil and gas customers, and making sure that they have sufficient supplies when they need those supplies. That's kind of where you see that $40 million investment and then also in our wastewater system. If you look at some of that system capacity, this year we were a little bit better. We used a little bit more than 50% of our developed capacity, but it does tell you that we still have plenty left and the ability to continue to meet the demands of this oil and gas customers.
And then as we add new connections at Sky Ranch when we're delivering lots, we have that capacity ready and available for those customers. Taking a look at just the build-out portion of the tap fee portfolio, again, we're just getting started. Just about 2% of that capacity of the 60,000 connections. So we're very excited about how we continue to grow this water utility segment. Let's talk a little bit about land development, how we positioned ourselves for the land development. We did buy this land, right? We bought it in 2010 and were very patient about that, but bought it at the real bottom of the market. Our cost basis in the land is around $4 million. And total lot sales to date are close to $80 million.
And again, our gross margins in this area, just because the land basis is so attractive in that, we continue to maintain very attractive gross margins in our land dev business. I want to highlight kind of what we've got going on. You've heard me talk about Phase I, which was our initial entry into the market, and that was about 500 lots. And then Phase II was about 880 lots. And so we divided the Phase II up into four sub-phases and really did this so that we can make sure that we deliver just-in-time inventory to our home builders. And really how our business model executes is as important as the value of the lots that we're delivering. And our segment here, Sky Ranch, is really tapping into in the Denver area an entry-level house. And so in Denver, an entry-level house is anything less than $500,000.
And the odd thing about it is, when we took a look at this in 2010, just before the downturn in the recession for it, approximately 50% of all home starts in the Denver area were in that entry-level space. And that number has really eroded down to less than 4%. And so we're one of those communities where home builders can come in, they can build an affordable product, and really attract that bulk of the buyer market. Delivered Phase II-A, and we've got about all 229 of those homes are fully built and occupied. The fiscal year-end for 2024 delivered the 211 lots from Phase II-B. We've got Phase II-C under construction, so we're midway on that where we've done the grading and we're doing the utility work concurrently.
And then we've also, just because of the level of demand that we have from our builders, we've also started Phase II-D. And so adding, we really have about 500 lots under production. And then we'll have the 211 lots from Phase II-B where home builders are going to be pulling taps and building permits for that. So when you look at it, we really have as many lots under production as we have homes existing out there. So we're going to be doubling that over the next 18 months. Taking a look at some of the ultimate build-out projections for Sky Ranch, we divide that up into our residential component as well as our commercial component. So we have zoning for around 3,200 single-family equivalents and about 1,800 single-family equivalents in the commercial side. The total that we've got developed for the residential is about 22%.
We've yet to start the commercial, and when you take a look at the project as a whole, we're really only about 18% complete on that, and so that kind of gives you that perspective of, well, is 2024 a trend or is 2024 an anomaly? And I think just because of the dynamic of how we're bringing this project online, you're really likely to see much more consistent results coming out as a result of the velocity and the inertia that we've got in Sky Ranch. Talk a little bit about single-family rentals, a little bit of the market on that. It's maximizing our land development opportunities, and because we're bringing value to the community and value to each of these homes, we want to continue to do that. We want to benefit from that.
It's a great asset for us because it provides us that valuable recurring revenue for the market and you all to get your arms around. It leverages some of that market demand and it provides an enormously high return on investment, so we're very excited about how we're continuing to take a look at this. One of the things that is unique about it is, and really one where nobody can compete with us in terms of these single-family rentals, is we are carrying forward a lot of that equity that we have from the lot ownership as well as the utility system, and so when we partner with our home builder partners to build our single-family rentals, we're coming in building a house at $350,000, and when that house is delivered, it's worth anywhere from $500-$550. So we've got a tremendous equity in each of those houses.
And so the nice part about it is it's a tax-advantaged way for that asset to grow on the balance sheet. And so not only are we delivering that, but the fair market value of the 14 homes that we've got is about a 50% equity margin in there already. And so you'll likely see that continue. We get to rent those houses out at their fair market value, and we continue to benefit from that segment. This will give you a snapshot. I think this is a slide you've seen before, but it gives you a snapshot about how many of these homes are coming online. If you look at that first phase, we've got that first line, we've got 14 homes occupied, 17 homes in this next phase. II-B, we'll have another 40 homes and 26 homes. So rapidly growing from 14 to 100 homes.
We've proved this concept out. The board's given us an enthusiastic green light to accelerate the development of this. And working with our home builder partners, we've got the best delivery of home construction that we could have. As they're building homes right next to us, they're going to deliver homes for us. And so these are proven modeled homes that they have that they've built thousands of times. And so again, it's a great opportunity for both them and us where they've pre-sold these homes, and we are happy to work with them on delivery of them. Want to talk about balance sheet. As you know, we're very conscientious of our liquidity and have just a terrific balance sheet, great cash position, as well as a liquid note receivable from our CAB.
So I think this is building into a record liquidity, almost $57 million of cash and note receivables. And really, the receivables, as you've heard me talk about, are that investment that we've made into the roads, curbs, and gutters, and we get reimbursed from that from the tax base that we create at Sky Ranch. And we did have a subsequent event to that. We'll talk a little bit about it, and some of you probably already started the press on that, but again, continued high performance and very conservative balance sheet protection. So one of the things I want to do, this is going to be new for us, is to give you kind of a framework for how this is going to move forward.
While I've been a bit conservative in the past about giving some guidance, I think we have the opportunity to tell you how we look at it and how it's going to roll forward in the future. And so what we want to do is kind of illustrate not only how we've done the last couple of years, but also how we think next year is going to go because we have a lot more predictability to these segments. And while we had a record year this year, we do continue to look for that to continue. And so we look for revenues to continue to increase modestly, but we're looking at delivering excellent results from our land development segment as well as our water segment, and then continuing to build into that single-family rental segment.
Some of those are going to be still a bit new, but really going to continue to grow in value. Not only are we growing the top line, but we're growing the bottom line. As you can see, we're forecasting higher margins for next year. We want to continue to improve our margins as well as continue to deliver top-line results. Taking a look at that net income, again, delivering better margins off both the water segment as well as the land development segment and continuing with the single-family rentals and then continued return to the shareholders. These earnings and the value of these acquisitions that we have will continue to benefit the shareholders. Want to take a look at kind of how we look at the company.
What we do is we certainly continue to keep our eye on execution, which is the current year. We take a look at what we're doing over the next short term. So if you take a look at that, what's our three to five-year horizon? And then also be mindful of how we build this thing out. So I want to give you kind of why we're so optimistic about this opportunity. And so in the short term, our customer growth looks to grow to about 2,500 accounts, consistent tap sales. Our tap fees are continuing to increase on an inflationary basis. So you've got asset protection on that and the ability to continue to grow on that. And then when we look at what we look to build out, just from what is already in the book on this thing is the 5,000 single-family connections at Sky Ranch.
We both have residential and commercial connections. Commercial connections are more valuable than the residential connections, and so the high value of our asset is still yet to come. We continue to improve our operational efficiencies as each of our segments grow, and then we continue to build that value. So we're going to expand our system both on the Lowry Ranch as well as in unincorporated Arapahoe County parcels. If you take a look at the land development outlook, again, we have bulk of the infrastructure already invested. A lot of the heavy offsite infrastructures, some of the big major roadways, the drainage ways are all in and working and delivering results for the community. We still are working on interchange. So we're going to upgrade our interchange in there to give us additional capacity.
And we have bond capacity within the Sky Ranch CAB to be able to finance that and are looking to really initiate that in the next two years. And that's going to unlock just a continuation of development of the commercial as well as the residential out there. And then just build up. We are at the real meat of the stage. If you look at the bell curve on delivery of the land development, we're kind of moving into that thick part of the top portion of the bell curve. So we're really looking at delivering strong value in that land development segment. And then single-family rentals, again, expanding. You saw in the next 18 - 24 months, we'll be moving from 14 homes up to 100 homes. Terrific margins in that, terrific efficiencies and giving us scale in that side.
And then ultimately, on the long-term side, we look to be in that 8%-10%. So I might stretch that 200 homes and put that into the 250-300-home side of it, but we'll continue to add to that portfolio and deliver results there. Consistent, what I want to do is kind of recap how did we do. I mean, if you look at this on a retrospective basis, how did we do in Phase I? When you look at kind of a post-mortem of the first 500 lots, we had entered the market on that. We were a new builder, a new player. And so our entry-level lot prices really were attractive, right? They were attractive for us to be able to entice our customer base. We were looking for national home builder partners on this. And so we did price those lots very competitively.
This is an average lot cost of about $73,000. When we make those investments on roads, curbs, and gutters, we've had a little bit higher reimbursables upfront, so there was about a $55,000 per lot reimbursable on that, and then there's non-reimbursable, so there's improvements that you make that are on the lot themselves that you sell privately. That was about $28 million. I'm sorry, $28,000 per lot, and then as you've seen, we do finance that reimbursable component, so we just did get another repayment on that, so we're making a good return on that as well, so when you take a look at this, total land values, we made about $110,000 per lot, and then the average tap fee at about $30,000, so on average, in our first phase, we made about $140,000 per lot on that.
You want to take a look at how that dissects out in the utility segments. This kind of gives you an illustration of how our tap fees compare to other water providers in the area, and as you can see, we're very competitive for our tap fees. In fact, we're right on that. There's probably a little bit of wiggle room for us on the tap fees. We want to be consistent with these tap fees. We want to be competitive with these tap fees. We look to our neighbors, City of Aurora, and being competitive with Aurora tap fees as well as the overall market, and you can see tap fees are approaching $60,000 in some of these market segments, so the cost of water continues to grow in the metro area, and really, it's a function of the scarcity value.
The takeaway from this is we've only developed 2% of the assets. So we've still got 98% of that asset to go off these 60,000 connections. Taking a look at kind of the land development, we were at that original lot cost of about $73,000. And as we work through Phase II, our lot pricing for Phase II-D is now about $125,000. So on a comparison basis, on the same lot that we had on Phase I and the same lot that we had on Phase II-D, in that four-year period, we're seeing maybe as much as a 50% increase in that lot cost or in that lot price. So how's II-D going to look? How's the delivery of this next phase of lots going to be looking compared to our first phase? Lot revenues are significantly higher. Reimbursables are consistent, a little bit inflationary up.
The non-reimbursable components are going to be consistent. So the total land value in that is about $175,000 per lot. Tap fees have increased a bit, so getting a little bit more margin on that. So as opposed to $140,000, we're looking at about $215,000. Again, this is an opportunity for us to continue to develop entry-level homes, and our builder partners continue to do very well with these entry-level pricing mechanisms. So it's a win-win both for us as well as for our home builder partners. A little bit on the single-family rentals. We've got about 200 of those planned. We're building them. Again, as I mentioned, with a strong equity component as we deliver each and one of these because we're carrying forward the land basis as well as our water basis in it. And each unit contributes about $33,000 in recurring revenue per year.
So, you're going to see a strong acceleration of our recurring revenue associated with that. And we're only 7% complete on what we're planning on that. And so when you look at this, when we're looking at each of these individual components, we're really just getting started. We have 2% of our water asset in production, about 18% of our land development segment in business, and 7% of our rentals. And we're really executing well on each of these. So we're very proud of these opportunities. If you look at that same comparison on how we look at things concurrently with year-over-year execution, how we look at next year's performance, and then maybe what we're looking at on the short term, this will give you kind of a view of how those are going to translate into results. So, 2024, a record year, 2025, we're looking at, again, exceeding that.
But then within a short period of time, and this is going to be that kind of three to five-year window, if you take a look at that, how that's going to translate into the company's performance. We're just being at 18% of our land development business. We're starting to bring on our commercial, and we're going to see some high values attributable to that. And so this is kind of a foreshadow of where those revenues are likely to go in a very short period of time and very exciting results here. Even more compelling. And so doing the math, and this is kind of what the company has in its portfolio. Doing the math on that short term, 2028, as well as the build-up of Sky Ranch, what does it look like when we build out Sky Ranch?
I mean, what kind of opportunity does Sky Ranch present for us in terms of building this company, building the asset side as well as the recurring revenue? And really, we've structured this out so that we get tremendous recurring revenue, both from the water utility as well as from the single-family rental. And why we're so excited about that? If you look at the build-out of the 5,000 single-family connections at Sky Ranch, we'll move from where we're at today at $2.5 million in recurring revenue to $15 million in recurring revenue. $15 million in recurring revenue. And that number really is just still only utilizing roughly 15% of the water asset and that inventory of maybe $100 million worth of the single-family rental segment business. So again, tremendous growth potential here. And then how does that translate in terms of asset growth?
When we build that system and when we add all those and the cash component to it, we move from where we're at today at roughly $150 million asset growth almost to $700 million, almost three times our market cap just by executing what we have at Sky Ranch alone. That's a bit of how we look at the business when you look at just doing the numbers on that and how that's baked into the acquisition of the land value as well as the acquisition of the water utility segment, just tremendous opportunities for the company. Very excited about how that's going to roll out for us. Want to talk a little bit about a couple of things that happened subsequent to our year-end, one that I think you're familiar with. We did have another refinancing of our 2019 bonds.
And so the big takeaway here is, in large measure, how we manage the community, how we're delivering results in the community, the appreciation of the homes in the community. We got one of those very, very rare and very coveted investment-grade ratings for our refinanced bonds here. And so we're very proud of that, working with our banking partners, D.A. Davidson, to take this out to the market segment. And what that enabled us to do is the initial 500 lots were able to deliver us another $10 million of proceeds to continue to pay down that reimbursable bond or reimbursable on our balance sheet through these bond activities. Another subsequent event, we did have another land and water acquisition. And so this will kind of give you a proximity.
We bought another 400 acres, which happens to be right next to where our farm and water acquisitions that we acquired back in 2018, and the interesting part about this is the red lines here illustrate where we've developed our pipeline infrastructure to connect these wells. The two yellow stars on there are the new wells that we got, and these are already on our pipeline, so the cost of interconnecting these are almost just insignificant, which makes it for a great consolidation on that. Not only did we get the land, we got the water and very valuable mineral interests. This is actually up in Weld County, which is where the bulk of the oil and gas activity is occurring. We have tremendous activity in the Southern Wattenberg Field. This is in the namesake Wattenberg Field.
So happy with this acquisition and really working with our neighboring landowners to make sure that as they take a look at transitioning in their family planning, that we have an opportunity to get those calls. So again, our preference is for more real estate land acquisitions in and around where we are with Sky Ranch, and we continue to work with our neighboring landowners to make sure that they understand what our business model is and our interest level. But again, this is kind of demonstrating how we look at continuing to grow the asset base. Just a little bit on our stock repurchase. We continue to reinvest in ourselves through our repurchase program. And so we're going to be continuing to be in the market on a progressive basis.
As you can see on some of these forecasts and doing the math on this thing, us trading at $9, $10, $12 a share is a bargain, and so we think it's a bargain. We're going to continue to buy those shares. We don't want to compete with you, but we do appreciate the value of what we're building and want to make sure that that's another way that we can return shareholder value, so with that, I'm going to turn it back to Ali and see if we've got any questions that we can drill down on.
Thank you, sir. Ladies and gentlemen, at this time, we will be conducting our question- and- answer session. If you would like to ask a question, please press star one on your telephone keypad. A confirmation tone will indicate your line is in the question queue. And you may press star two if you would like to remove your question from the queue. For participants using speaker equipment, it may be necessary to pick up your handset before pressing the s tar keys. One moment, please, while we poll for questions. Thank you. Our first question is coming from Elliott Knight with Knight Advisors. Your line is live.
Good morning, Mark.
Good morning, Elliott.
One of the growing water consumers are data centers. And have you had any interest? I think you have the largest undedicated water supply in the Denver area, at least at one time. I believe that was true. And so I would think if data centers are going to be built, they might have come to you. Anything going on in that area? And if a data center was built, could it operate on non-potable water as opposed to potable water?
So good question. I'm not sure about the latter part of that on the non-potable water. I know the bulk of the water demand that they have is basically from the cooling side of it. And I think scaling would make an issue about that's a good question. I don't know if it could operate independently of a potable versus a non-potable segment. But you're right. There's two critical components when you're taking a look at a data center. One is energy, and the second is water. And so we have significant capacity in both of those. Sky Ranch has built out utilities there, both gas and electric. And then we have built out water there. And so we have a commercial area within the development, which happens to be right along the interstate. Now, these are largely vacant buildings.
They have a very skeletal staff for them, so they don't have to have great transportation access, and so I'm not so sure that the real estate value is as important as the other two components of it. We have reached out to some folks that do do data centers, and we have let them know that we're available to explore those types of opportunities. We haven't had a lot of traction there yet, but we have recognized that when they do their diligence, some of the key things on their diligence is water, and so that would be a great opportunity for us to have a very strong water customer. I will tell you, I'm not dying for a large water customer because I already have a large water customer in our industrial customers, right?
They pay that high dollar value because they're not buying a tap, and they pay that high consumption rate. And I'm selling a ton of that excess capacity to oil and gas who's paying for that. And so whether I substitute a data center or add a data center into that component, I'd love to have that. But I will tell you that we continue to grow our demand segment through the industrial sector as well.
Good. Thank you very much. And this has been a great presentation. Very helpful. Looking forward. Thank you.
Thank you. Our next question is coming from Bill Miller, who is a private investor. Sir, your line is live.
Mark, good morning.
Good morning.
Great quarter, great year. Outlook is terrific, and so I'll go to the old question because you say you're repurchasing common stock, but when I look at the year-end 2023 versus year-end 2024, we have now more shares outstanding than we did in 2023, so I'm not sure how to read that, but maybe you can reconcile it, particularly given the fact that your recurring revenue is going to be so high. Borrowing, not that you need to, would make great sense and borrow money from the banks, so I'm sure they'd be very willing to lend it to you and get going. This is ridiculous. The valuation is just way under what it should be, and you've outlined why it should be a great deal higher, so why not take advantage of it?
Fair question. Yeah. No, fair question. We do, and my answer has not changed. We do feel very strongly that we're undervalued, and we do that and back that up by a share repurchase. We still are balancing out, keeping some dry powder so that we can pursue these acquisitions, and we did have a very nice, very strategic acquisition where it was important for us to be able to act on that, and we usually have to act on a very quick basis, so that transaction came available and closed within, say, 75 days, and we want to make sure that we have that flexibility to do that, Bill. That doesn't necessarily consume all of our balance sheet, but as we continue to deliver three phases at once, that's a capital-intensive program.
We are reinvesting and making sure that we can accelerate the development of Sky Ranch and maintain that inventory for home builders. And the reason we're so sought after from the home builder market is what our business model is. There are fewer and fewer people in the marketplace that either have the desire or the capacity to be a horizontal developer. And it does require significant capital expenditures. And we put that to work, and we get that back very quickly. But there's a lot of velocity to that money. And so we want to make sure that we protect that as well. Do we want to leverage ourselves a little bit to kind of continue to go after our stock purchase program? We're going to continue to go after it. We really are.
We're going to be acquiring that not just through this phase of authorization, excuse me, but continuing, and you're going to see that if that doesn't translate, we're going to be continuing to be more aggressive, so I know it's like my wife. Can't you do it faster? Yes, we could do it faster, but we're also making sure that we keep those other opportunities as competitive as repurchasing the stock in the program, so those are very, very well-deserved observation and maybe well-deserved input in terms of going after a little bit more aggressively.
But Mark, last year, your authorization was how many shares or how many dollars and how many shares or how many dollars did you actually buy last year ending in August?
59,000 shares. Yeah. I mean, so we're buying about 50,000, 60,000 shares a year. And yes, I will concede the point we could be more aggressive on that and may be more aggressive on that. What we're trying to do is be anti-dilutive so that, as you point out, that we're not the incentive stock program that we have where we issue shares to our employees and management and board of directors that we're repurchasing an equal amount. And we're not quite there, but we're looking to be there.
So what's preventing you from doing it? You made the first acquisition.
No, it's absolutely liquidity, Bill. We want to make sure that we maintain that liquidity for reinvesting in the business and delivering the top-line results that we did this last year, and I do not want to compromise that.
I agree with you. Do you have a line of credit, Mark?
Yes, we do.
Okay. Well, isn't that a source of liquidity if it comes down to making a big acquisition or doing something extraordinary?
All those are opportunities, Bill. And I appreciate that. And my direction will be to continue to be aggressive but conservative.
Okay. Well, I'm not going to win that argument. I haven't won it for about 10 years. So why would I think now would be the time? Well, I hope it all works out.
Thank you. Our next question is coming from John Rosenberg with Loughlin Water Partners. Sir, your line is live.
Yes. Hi. Good morning, Mark.
Good morning, John.
Well, thank you for the presentation. And I will say that my questions have, in large part, been answered by the prior people on the call, by the prior investors. I was going to ask you about data centers. And as always, I wanted to talk about the share repurchase as well. I will not reiterate about the share repurchase. You don't deserve that this morning. You've done a wonderful job. However, going back to the data center, and I have one more question after that. Have you guys actually? I realize it's a tremendous lift to actually build a data center, and that would not be something that the company nor its shareholders would really want to do. But I just would like to emphasize that there might be some opportunities for you. You have the water. You have the land. You have open land.
You have sunlight as well for a solar farm. And it might really pencil out for you guys as opposed to selling another 100 or so lots. I mean, I think these things generally take up anywhere from 10-30 acres, depending on their size. I don't know if you have any thoughts on that, but I just wanted to add that.
Yeah. So a couple of the key areas for that, and you brought up a really good point, the renewable component. We do have 300 days of sunshine a year. When you take a look at data center opportunities and space requirements and water requirements, it's a good fit for a large land area. We just happen to have a large land area in our service area. We have the Lowry Ranch, and that's an opportunity perhaps for pursuing something in partnership with the state where they can get leases on the renewable solar farms. They do have some solar farms on the Lowry Ranch out there. We certainly have the water system capable for that. These don't have a strong need for terrific access.
So, putting them at a high real estate value next to the interstate isn't exactly the best use of land for both the development as well as the data center. But having land, water, and power are the key attributes. And so those are some of the types of things that I think we'd like to move along in the process. You're right. We're probably not going to be a partner with the development of the data center. That's not our business model. But I'd certainly love to help facilitate something like that. And there's many ways that those can generate exciting opportunities both for the landowner as well as the service providers on that.
Okay, well, thank you. That's a thoughtful answer. My next question involves, you mentioned, you're about two years out from redeveloping or enhancing your interchange with I-70. And you have, I believe, a couple hundred residents right now at Sky Ranch. Do you think that any of the big box stores like a supermarket or large retailers, the commercial entities, are kind of waiting for that to go ahead and start to plunk down a store on your property and serve the community?
It certainly will continue to enhance the commercial value. We have about 700 residents out there. So we're rapidly approaching. And I'd love to say I knew what the magic number was for these retailers. They do share a bit of that. And I think that number continues to be around that 1,500 resident mark. And so having 700.
I see. Thank you. That's helpful.
Yeah. Having 700 living there and having 700 lots under production gives us a tremendous amount of confidence that by that short-term range, that 3-5 years range, that we're going to be seeing that commercial land come into production.
Okay. Great. Thank you. Well, thank you very much. I would just also like to add, just for the record, in agreement with one of the prior callers, if you could get that share count down, you talk about the stock being undervalued. If we could see the share count going down, that actually would be a great signal for public buyers. So I just wanted to add that.
Yeah. I get it.
Otherwise, thank you very much. Great quarter and very excited about your.
Thank you. One of the things, and I guess let me weigh in here. We have a great opportunity here having one of our board members, Dan Kozlowski, with us. And maybe it'd be helpful for he can maybe add a different perspective on kind of the performance of the company, some of the assets. And Dan, I don't know if you want to weigh in and just give your insights on some of this and certainly give you an opportunity to address our shareholders.
Yes. Hello. My name is Dan Kozlowski. I've served on the board for four years now. I represent the largest shareholder, which is Plaisance Capital LP. So, they have invested with me and in this Pure Cycle through my firm. And just to wind it, it would be helpful, I think, maybe to give my perspective. I've had a front-row seat to the progress over the last four years. There's a lot of things we can talk about. But just for perspective, I've known Mark for over 10 years now, a decade. I sat down with him in probably the 2013- 2014 timeframe. He showed me the water portfolio, and he showed me really the brilliant distressed purchase of land that he made in the 2010- 2011 time period. We know it's just the returns off that are extraordinary.
I still don't think it's well appreciated, the competitive advantage we have with the low basis. But it was immediately obvious to me. I mean, the share price was probably in the $3 range at the time and progressed great. But over the last four years, five years, I've sort of sat in amazement in board meetings and conference calls that the share price has not tracked the underlying progress of the company. I mean, we're a wholly different business than we were five years ago. And by that, I just mean much stronger. I mean, we've gone from sort of growing up, from kind of moving forward, put in a child analogy, from a toddler to a teenager to now an adult. And the company is much more muscular than it was.
For whatever reason, and there are reasons, market structure, passive, etc., that might have gotten in the way a little bit of this. Overall, it's shocking to me that the progress is nothing more appreciated. However, I think today's numbers that were put up, the 2024 year is a point of inflection from a Wall Street perspective because we were high on potential, and then we've executed on a lot of that potential, proving out the business model, proving out the water utility mechanism for monetizing our massive water portfolio. As Mark pointed out, I mean, we're in the top of the second inning here, and yet we put up pretty good numbers. Our ROE is going up closer to 10%, which in isolation, it's not Apple today.
But you got to remember, that's on a very limited fraction of our asset base that is what I would call active earning assets. So there's a lot more to come. So with that said, I mean, another factor that's sort of surprising is I would argue that Pure Cycle's asset base is one of the pound for pound. I mean, we're a small company, but one of the great inflation-protected assets out there. And with the bout of inflation that the country and the world has endured over the last 4-5 years, it doesn't make any sense given if you look carefully at what we have. Water most likely has appreciated, generally speaking, above the high rate of inflation. The land values, Mark laid that out very nicely, $75,000-$125,000. Land in Colorado and the I-70 corridor, it's just getting started.
So that's another surprising factor is that the market hasn't appreciated that even in a conservative view, this is a heck of an asset to own from a fundamental basis in an inflationary environment, which we may be in for a while. We're in the better end of that. I think we're inflation plus. So those are a few things that go through my mind. I'll just touch on the buyback concept. We went from a couple of years ago, not buying back shares, to buying some back. To this year, we bought more back. I fully appreciate we'd love to see that share count over time begin to decline year-over-year. But we've moved the needle a lot from an internal perspective of how to think about it.
But we need to be fair there in terms of our number one goal. When I say our because I'm on the board, it was to put up the kind of numbers that we put up right here. That was the focus. The focus was to generate value in the core business. And for a couple of years, it was COVID and then the rising interest rate environment and some of these external and almost chaos in the market, right? We stayed focused on the business. And it was kind of an internal marker.
We said, "Well, let's show people the earnings power of our asset base and all the progress we made." And while we did pick up the buyback, and it continues to grow each year, we're now at a point where a lot of things are at our disposal, back to the point that we're much more muscular than we were three or four years ago. We've got recurring revenue starting to scale. Some of the things we highlight, single-family rentals, for example. I mean, we have 14 homes. So that's not in and of itself. It seems small. But what I think a lot of investors like to see is something proven out that then has a long runway that you can pour it on. And the move from 14 to 140, you can pencil out. And it probably won't stop there. There'll be other opportunities.
So all of this conspires to what we think is position Pure Cycle for more recurring revenue, more opportunities. And it's not been lost in our partners, homebuilders who've done extraordinarily well. In Phase I, that project had to be one of their most profitable projects in their portfolio during that time period. Everyone who's done business with us has come out in a great form. And that's something we're proud of. And it's helping us in negotiations going forward. There's people in the area who've watched us carefully, again, grow up from, and they started to see that we're here, we're open for business. We have the scarce resource that is needed for growth in Colorado and in the I-70 corridor, the water. And now we have development expertise that's been proven and is generating returns, and I think will generate increasing returns going forward.
So that's a little bit of my perspective. But I can ask some questions to Mark too, just in how he thinks about the world. One of the things that I think people should appreciate about Mark is he may be one of the foremost experts on water in the West and certainly in Colorado. He's been at this for 30 years. He knows every pipeline, every ditch, every inch of this geographic area. And he's added a lot of value to the water portfolio. And if you look at our balance sheet, balance sheets by nature are convoluted in terms of when you buy something, you keep it on the books at that price. And then if you ever monetize it, of course, you get market value for it.
But when I look at the balance sheet, I see the water assets on there to a certain number, which is certainly low versus probably fair market and even the land, as we talked about. So our balance sheet is more, again, I use the word muscular, much more muscular than it appears at first glance. And that's a little bit of the point we're trying to get through. And at the end of the day, Mark and I talked and with the rest of the board, it's like, "Well, let's put up the numbers. Let's put up record earnings in a quarter, in a year, and keep it going." And that's, I think, why this is such a point of inflection for long-term shareholders like myself and others on the call. So yeah. So maybe Mark, as you think about it, Sky Ranch is going well.
How do you think about land development projects? If you compare your expectations in the first project, the first phase, the returns, the cash flows versus what it'll look like as you get in quarter two, you get over the midway point, you get to the back half, how do those return metrics kind of play out in your view?
Good question. As we entered the market for land development, we had not been in that space introducing ourselves. I would say I'm fairly familiar with the water utility space. But as we entered the land development space, we wanted to partner with all the national home builders, right? We were really looking for a high-caliber portfolio of home builders. And in doing that, the land was well positioned in the I-70 corridor. Being along the interstate was what we knew that the land itself had tremendous opportunity.
But we were the next project in the growth of the metropolitan area. It was inevitable. We can only grow one direction in the Denver area. We can only grow to the east. This had great transportation access, but could we execute? There was an unknown from the Richmond and the Taylor Morrison and KB and Pulte and the big home builders, whether or not this isn't an easy business. It is, as you heard me talk about, I'm protecting the liquidity. There is a high velocity of money, and you've got to invest that money. You've got to get those roads in. You've got to get the utilities in, all that sort of stuff. And so we wanted to make sure that they did well in that first phase. Our pricing was entry-level pricing for them to make sure that they got a high value in there.
I think they all did well. You might be right. This might be one of their more valuable projects in that first phase. Not only are they doing well in the first phase, they're doing well in the second phase. Us being able to deliver a finished lot, not forcing the home builders to have to put that investment in there is a tremendous value for them. I mean, we're a dying breed in that just because of the velocity of the money and how that capital flows. I hear the opportunity for us to continue to reinvest in the share purchase. What we're really looking for is making sure that the market understands that opportunity on the annual revenue and converting those lots, converting those taps, converting those single-family homes into productive assets for shareholder return.
So there's multiple shots on goal here where we're really looking to partner with all of the high performers in this industry to deliver those results. So that's how we look at it.
Yeah. And I think on that too is, from my perspective, when you start, there's other successful projects in our area. But we were somewhat pioneers and had to be careful as you're moving east and proving out the locale. By the speed limit, we're only 16 mi from downtown. And so at 60 mph , you're there in 16 minutes. We sort of were key in developing the I-70 corridor. And you see it just to the west of us, the big industrial players of today, Amazon warehouses, etc. The logistical epicenter of Denver has shifted from I-25 to I-70 to really E-470 and I-70. And we're right there. We're right there. And as the job growth, we talked about Anschutz Medical Campus, one of the elite medical facilities in the world, is really close to us.
DIA, which is Denver International Airport, which is the largest, fastest growing airport, maybe in the world, certainly the top three. I mean, it's huge. It's the fourth largest in the United States, hub for United, hub for Southwest. That's 4 mi away from us. So the logistical epicenter, i.e., job growth, is right next to us. And again, we're still pretty close to downtown. So from a timing perspective, Denver congestion from the south and the north is quite large now. And from our area, it's closer than it looks. So yeah. So I think as you get to the back half, my question was around, so we develop it, we get Phase I done, we have to entice builders to come in. They have huge margins on it, and they're happy partners.
As we move to Phase II, Phase III, now it's a collective effort, and we've proven out the community. There's been a lot of small things that don't come up in a press release or a conference call, the building of a school, very efficient, building of a school on site. So one of the newer schools in the area is the Sky Ranch Academy. That was something Mark really did an expert job of bringing that together and not really costing us much capital. And it's probably the single greatest value add to a community is having a school. Kids can walk with their backpacks to the facility. So this is a reason why the lots are so much more valuable in Phase II, in Phase III, and other phases than they were in Phase I.
So, in the cash flows, once you have to wind it up, and then you begin to monetize it. And I think this is, again, point of inflection. We are starting to see the monetization as the project matures. Pound for pound is quite attractive. Critical mass is kind of the word I like to use. I think we're hitting that critical mass at Sky Ranch in a lot of different ways, integrating our water portfolio. On the water expertise, Mark, can you talk a little bit about this under? I think it's underappreciated, what you bring to the table and then how you've added value to the water portfolio? I mean, certainly since inception, but more recently, the last five years. If you do a look back years ago, I think the overall water rights portfolio was smaller. It's bigger now. It's grown materially.
Maybe you can update us on those. You've made some very strategic, again, small, small from the sense of people on the outside looking at it, but very small, but very powerful acquisitions up in Weld County that have increased the overall value of the water portfolio, the blended portfolio. Can you talk a little bit about that, your perspective, what you're proud of, and how the future might look in the water acquisition front?
So good question. And you're right. We continue to build that water portfolio and really leverage our ability to kind of develop water supplies in all areas. And water isn't just single-dimensional. Not all water is treated the same. You have renewable water components, which are surface water supplies. And Colorado is blessed to have Mother Nature store our water for us for six months of the year.
But she has a sense of humor, and she gives it to us in 45 days. And so the elements of the water assets that we have that are hard to get your arms around and appreciate without being so in-depth into water are storage, our ability to store water at Lowry. And we have literally maybe 30,000 acre-feet of water storage rights out at Lowry and two reservoirs, which are probably the most valuable reservoir sites in the metropolitan area. And that's because, one, we're on the Eastern Plains. And by being on the Eastern Plains, it's flat. And you don't have a lot of relief out there.
And we do have some fortunate sites that have relief on the Lowry Ranch that we have really engineered and put a lot of effort into over the last few years to make sure that that asset develops and continues to build in our portfolio. You mentioned a couple of the water rights that we're acquiring up in Weld County. And again, that's another renewable surface water component that is available when there's a lot of water in a wet year. But there's some climate issues associated with that. And we need to be prepared for the variability of water as a water community. And so Colorado is probably tip of the sword on being able to understand the importance of that and plan for being able to use all your supplies, renewable water supplies, groundwater supplies.
And then most importantly, and this is something that we're very proud of, is how we manage our wastewater and our reuse supplies where we're bringing and where we built one of the leading water reclamation facilities in the country. There's probably one of five facilities in the country that is a zero-discharge water reclamation. So 100%, 100% of what goes into that plant comes back out as usable water supply. And we use that. We use that, store that in a reservoir, treat that, bring it back into an irrigation system where we have our demands met for irrigation, and we get to sell that water multiple times. And so when you look at it, it's hard to get that sense of value that we're creating in it.
But by the same token, we're doing cutting-edge stuff on the water utility side between a combination of our groundwater supplies, our surface water supplies, our storage supplies, and our reuse supplies. We're building that water utility in probably one of the most advanced ways that water utilities take a look at it. And we're doing it on the front end. We're not having to retrofit some of this stuff where it's harder and harder for water utilities to capitalize on some of these things. And so only being at 2% of that asset is frustrating. We will continue to see some acceleration of that, but those are going to continue to pay dividends in perpetuity. The thing that's most exciting that I often refer to about the water business is in 100 years, we're going to be doing the same thing that we're doing with this asset, right?
It's an absolute essential asset for our daily lives and in the business community and in the primary businesses that we focus on, whether that's land development, whether that's single-family rental. It's a component that won't be obsoleted. It won't be out of style. The technology won't inundate it. So we continue to look at that dividend opportunity and continue to look at the opportunity to develop this asset for centuries. So that's an exciting component of it. And we'll continue to make those investments concurrent with the growing that system.
Yeah. And to add to that, I think the water in the west, the general shortage, in some ways, it's the whole world had cheap water. Two-thirds of the earth or more is water. So there's water, but the cheap water that was available for the last century, that's kind of gone. There's no more cheap water.
By cheap water, we just mean market price of water today versus where it could go. It needs to go higher. You've got a fixed supply in the west, and you've got growing demand. People are moving to the whole mountain region. Denver is the capital of the mountain region, and it's a growing city that's going to be a monster of a municipality in the decades to come. DIA, Anschutz. I mean, it has all of the key attributes. The gating factor to growth, residential for affordable housing, entry-level, new build, it's water. We have it. It's coming. You can see it's coming. You see the numbers we put up. It's not just out there somewhere. We just showed you. It's here. The demand for our lots is high. The single-family rental business, it could grow forever alongside that.
So we have opportunities. Two other things just to touch on there. The conservation efforts that Pure Cycle has employed for the public good, for the good of this whole water shortage that the state's grappling with, the region's grappling with. Mark's done some really interesting things to use that water as efficiently as possible, the recycling that he just talked about. I mean, we're on the cutting edge of that. And I think that's really appreciated by our neighbors, by our partners. So we're a high-quality water provider. And then we've got the deep reservoir of inventory of water rights and wet water building. So those are some things I think about. Another question, Mark, on the land development side. Interest rates have moved considerably over the last 24 months, 36 months. Historically, people have held land, land speculators, maybe east of Denver.
How does that look and feel to you in terms of people's carrying costs to hold that land? And obviously, it's more costly for someone to hold land when the opportunity costs are 7%-11% in some different types of fixed income. Has that shaken loose or changed the attitude of some of the folks that might want to be more interested in selling land or co-developing or moving quicker given the higher interest rates? Higher interest rates obviously have a, well, should in theory, have somewhat of a mitigating effect on mortgage rates, etc. But another powerful part is that the opportunities in front of us should increase here as those carrying costs have risen considerably for our neighbors.
I think that's true. It's hard to gauge motivations by each individual seller and some of the attractive portions of where we're at in the Denver metropolitan area, whether that's the I-70 corridor or specifically in Arapahoe County. There's some large land assemblages. And some of those land assemblages have been held by homestead families. And so each year ticks along, and it gets older. The family patriarchs get older. The interest level of what they want to do and the opportunity cost, as you mentioned, about what they can do with that change. And so much like the strategic opportunity that we saw with the farm acquisition this quarter, we want to be well-positioned for that. And so some of that capital that we keep on our balance sheet is really so that we can be very strategic, disciplined, and opportunistic.
Sometimes it just has to be there, and it has to be available, and we want to make sure that we get that call, that we respond to those opportunities, and that we can incentivize some of those folks by being a good buyer, being a ready buyer.
Okay. Yeah. So as I think about this, just to close on my end, I cut my teeth 25 years ago in the business. And I was at Janus Capital. At the time, we were one of the largest shareholders of Berkshire Hathaway. And so, Kim and Doc and Warren Buffett , thinking about investing. And to me, this is just a classic old-school, not sort of modern algo-driven, passive-driven deal, but a true investment where there's scarce supply. There's obviously scaling demand of the scarce asset that we own, water. And time is our friend here. And speaking back to the inflationary protection plus, and it's really interesting. And we're creating value now on the income statement, as you saw in 2024. You saw this quarter. You'll see it in 2025 and beyond, as Mark laid out.
But I think what's underappreciated is the value, kind of the value creation and appreciation of our assets on the balance sheet. So while we're going to flow through income and cash flow going forward consistently, don't miss the fact that the value of our water portfolio, which Mark continues to curate and scale, is probably appreciating at a much greater rate than inflation. And that'll lead to future monetizations, of course. But it's pretty real, in my view, having had a box seat to this for five years and been involved for 10. So I think just to close, one of the best lines I've heard on Pure Cycle is that Pure Cycle is water looking for land development, co-development opportunities. And the water is a solution for a lot of, whether it be municipalities or, again, neighbors of ours who are looking to create value.
And so we're water, looking for land. And most of our peers who have land are land, in need of water. And that's a good setup. That's a good setup. So we hope to continue to be a positive force in helping Colorado grow, doing responsible things with our water, and creating value, and helping Colorado with their affordability constructs and challenges. We're the best new-build entry-level housing development and housing development company in the area. And that should be coming our way. So I'll close on that. And maybe I'll add one more thing. You're right about it. I mean, these numbers, as we've put forth, are going to happen. The share buyback becomes increasingly attractive. I think it speaks to how many attractive opportunities that we are considering going forward. Our patience.
But don't take that past patience for anything other than we wanted to show the numbers and show the power of the business model that Mark manages with his team and the board. Our Chairman, Patrick Beirne , does an extraordinary job leading the board. And all in, it's not lost on us that the value disconnects. So stay tuned. More to come.
Thanks, Dan. And again, really appreciate the strength and the caliber of our board and their engagement with the company. They bring a tremendous value to the company. And we're the beneficiary of that. So while we're probably running long on our call, we're going to go ahead and wrap this up. If you didn't get a chance to weigh in on this thing or you're listening to this on a rebroadcast or replay and have something that piqued your interest or you want to drill down on some specifics, don't hesitate to give me a call. If you guys are new to the story and want to do some diligence on it, come out and see us. It shows much better than it presents.
We'll probably have another investor day every summer so that you get the opportunity to understand why everybody wants to move out to Denver and why everybody wants to move out to Sky Ranch.
So anyway, I want to thank you all. Again, we are very proud of this year, of the continuing development of the assets that we have. And we're very optimistic about what's ahead of us. So thank you all for your attention and for your loyalty and then for your investor confidence. So with that, I'll turn it back out and close the call.
Thank you. This does conclude today's conference. You may disconnect your lines at this time. Have a wonderful day. Thank you for your participation.
Thanks, Ali.