How is the absorption rate calculated for Epcon Communities projects?
Epcon_Communities Franchise · 2025 FDDAnswer from 2025 FDD Document
from all of the available data from the sources identified above and identifies the average, median, minimum and maximum settlement price3 of detached Units closed across all franchisee projects.
The absorption rate is the pace of closings per month on the sales of Units in a project. Any project that closed detached Units in 2024 is used in calculating the following absorption rates. The absorption rate is calculated by dividing the total number of detached unit closings in a project by the number of months a project was actively selling Units during 20244 . The total number of months that a project was actively selling is defined by the number of months starting from the month of first home closing(s) through to the month of the project's final home closing(s). Projects that did not have a selling period lasting the full 12 months of the year either sold all of the available Units within the past year, or the projects commenced selling and closing Units at some point during the year. This data for each project's absorption rate per month was then used to calculate the information presented in the tables below for all franchisee projects.
Source: Item 19 — FINANCIAL PERFORMANCE REPRESENTATION (FDD pages 69–79)
What This Means (2025 FDD)
According to Epcon Communities' 2025 Franchise Disclosure Document, the absorption rate is a key metric used to evaluate the pace at which properties are selling within a specific project. For both franchisee and corporate projects, the absorption rate is defined as the pace of closings per month on the sales of Units in a project. This rate helps Epcon Communities and its franchisees understand how quickly homes are being sold.
To calculate the absorption rate, Epcon Communities divides the total number of detached unit closings in a project by the number of months the project was actively selling Units during 2024. The period during which a project is considered actively selling is defined as the time from the month of the first home closing to the month of the project's final home closing. This method accounts for projects that may not have been selling for the entire year, either because they sold out quickly or started sales mid-year. This calculation is performed for each project to determine its individual absorption rate.
This data is then used to compile the information presented in Item 19, which includes average, median, minimum, and maximum absorption rates across all projects. For franchisee projects, data is collected monthly through closing reports submitted by franchisees or by searching county property records. For corporate projects, the data is collected directly from Epcon's corporate affiliates. Understanding the absorption rate is crucial for franchisees as it directly impacts revenue projections and inventory management. A higher absorption rate generally indicates a more successful and profitable project, while a lower rate may require adjustments to sales strategies or pricing.