Q4 2019 Earnings Call

At the conclusion of today's presentation, we would like to open the floor for question and at that time instructions will be given as to the procedure to follow if you would like to ask a question and is now my pleasure to turn todays conference Mr. John Baker.

Chairman and CEO. Please go ahead.

Good morning, and thank you for joining our investors conference call I'm, John Baker Executive Chairman and CEO of that for P. Holdings, and with me on the line or David to be a junior our president and would be in person or John Bakers, a third our CFO, John Klopfenstein, our chief accounting.

Sure and John Milton.

Counsel as a reminder, investors are cautioned that any statements made on this call which relates to the future Oh by their nature.

<unk> risk and uncertainties that could cause actual results in a bench to differ materially for most indicated in such forward looking statements.

Risk factors disgusted I actually see filings could also cause such differences and should be considered by the investors.

Our net income for the fourth quarter of 2019 was $2.453 million or 25 cents per share versus 706000 or seven cents per share in the same period last year.

For the year Orange were 16 million 177004, dollarssixty three per share versus a $124.472 million or $12 in 32 cents per share in 2008 G.

Both years, including building sales. So obviously the warehouse sale to Blackstone in 2018 was much more significant.

Some of the highlights of this past year was the purchase of 169000 shares of our common stock at $48.51 per share an expenditure of approximately $8.2 million.

The beginning of construction or Bob Lyons Street mix use development in Washington D.C.

The investment into half Street makes use joint venture without longtime partner M. RP. This gives us yet another project in the Anacostia River front district in DC.

The investment in a joint venture in Greenville, South Carolina to build true apartment projects and an opportunity zone.

The record year in all Gi Lan checking.

And our continued strong cash position, which stands at 164 million at year end down from $188 million a year ago.

This small decline is despite $84 million and investments in new buildings and joint ventures during the year Andy 8.2.

Million dollar share repurchase discussed above.

Key reasons for the strong cash position, we're just say a little warehouse in office building during the year.

A 26 million dollar tax free Bon is the result of opportunity bond investments and of course, the interest and gain job bond portfolio.

Let me now turn it over to President David do they get into more detail about the year.

[noise], Thank you John and get they did those on the call. This morning.

Now at a good detail to the highlights provided by John in his opening remarks.

As to our asset management business segment with the disposition of our heritage property. That's 50, you know two quarry drives and 70 30 Dorsey Wright earlier, this year totaling $20.6 million.

He has nearly completed the liquidation of assets that made up the asset management business segment, just prior to the warehouse sale in May of 2018.

Leaving just the company's 33000 square foot multi tenanted home office building and Sparks Marilyn.

And the vacant lot in Jacksonville, Florida that at one time helps Florida, you industries home office, but now remains under leased to Vulcan.

In the first quarter of this year, we undertook a value add just hoping outdated industrial complex called the Cranberry run business Park in Aberdeen, Maryland.

We substantially completed an extensive 2 billion dollar rehabilitation.

Apart and are now experiencing robust leasing inquiries.

Cranberry, Ron totaling 268000 square feet was transferred from a development segment and then somebody ended the year. The project was 26.1% occupied.

Also transfer to the development segment was our recently completed 94350 square foot speculative warehouse building at 18, 162nd Street and Baltimore City Merrill.

During this quarter, we completed lease up to 100%.

And tenants have now occupies the bill.

Total revenues for this business segment were down for the quarter, 22.8% to $457000 with an operating loss of $213000.

This presents a negative variance of some $474000 over the same period last year.

Due to several mitigating factors, including a higher allocation of corporate expense.

The addition of the aforementioned cranberry run business for.

The addition of the newly completed spec warehouse at 62nd Street.

And the elimination of operating profits from the sale of the two heritage properties.

70, 30, Dorsey Wright and fit you know two Corey drives earlier this year.

And our mining royalties segment total revenues were $2.274 million versus $2.187 million in the same period last year.

Total operating profit in this segment was $2.039 million, an increase of $89000 versus the 1 billion $950000.

And the same period last year.

The reasons for this increase in revenue and operating profit is the contribution from our Fort Myers Corey.

The revenue from which now that mining has began in earnest was nearly double the minimum royalty we have been receiving until recently.

This quarter marks the seventh consecutive quarter of increases in mining royalty revenue compared to the same.

Before represents the segments best year in terms of actual performance.

With respect to ongoing and new projects in the development segment highlights would include one.

January of this year phase one of our joint venture was saying John properties consisting of four buildings.

I would like 72000 square feet of single storey office and 29900, excuse me 27900 square feet small, but at retail space in Baltimore County, Maryland is placed in service.

At year end, marking marketing efforts have resulted in the office buildings being 61.5% leased and occupied.

Retail buildings are still seeking tenants.

The project is 44% leased and occupied overall.

At completion. This project will have 329000 square feet of office and retail space.

Too.

Earlier this year, we've received on appealable rezoning from industrial to residential project in Hampstead, Marilyn known as Hampstead overlook.

Our efforts have continued before the appropriate governmental agencies seeking plan unit development entitlements for the hundred 18 acre tract and Carroll County, Maryland.

Which has been and actually ended the town of Hampstead.

We are optimistic the 202000.

Money will be the year of substantial progress towards our goal.

Project falls through a combination of 250 single family townhouse building walls.

Three.

As an update to our land development venture as Hyde Park in Baltimore County, Maryland.

Earlier this year, we received final approval of the development plan for 122 townhouses and for single family building lots.

Subsequently, we entered into a contractor sale with a homebuilder for all the watch upon receipt of record plan versus having to complete horizontal development [noise].

Then there slots.

Entitlements are now complete and settlement is scheduled for sometime in the second quarter of 20 Twond.

For the end the second quarter, we became the principal capital source in another residential development project called Ambridge located in Prince George's County, Maryland.

Our total commitment for this project is 18 and a half million dollars.

That's what's hot parks.

Investment includes a chart, 10% interest rate and a minimum preferred return to 20%.

But what's your profit induced waterfall determines the final split the proceeds.

Entitlements are currently being pursued.

And to Dashville homebuilders are under contract to purchase all of the lots after we complete the infrastructure development.

Well I phase two of our river front on the Anacostia project in Washington, D.C. now known as Mary.

Scheduled to receive its first tenant in April of 20 Twond.

This mixed use development consists of 264 apartments.

And 6900 square feet, a first floor retail.

As with Phase one we're dock 79 is this nail down this is a joint venture with mid Atlantic Realty partners or MSRP in which so far pay is the major partners.

Six at the end of 2018, we entered into a joint venture agreement with them RP develop the first phase, but mixed use residential in retail development project adjacent to the Red line Metro station in northeast Washington D.C.

Oh, there's probably an extreme.

That's a marquee could trigger $32 million in common equity and another $23 million in preferred equity to the joint venture.

Construction began in February of 2019.

The project was 46% complete at the end of the year.

The first took four buildings is scheduled for delivery in the fourth quarter of this coming year 2020, with the remaining three buildings expected to be complete in the fourth quarter 2021.

This property is located designated opportunities zone, which allows us to defer a significant tax liability associated with 2018 warehouse platform. So.

He's one will consist of 487 apartments, and 85930 square feet, a first floor and freestanding retail.

Approximately 44000 square feet on the retail is pretty late.

Hi themselves.

In December 2019, the company contributed $37.3 billion, an equity into another joint venture with them off peak for the development of a mixed use project.

It's 1800 faster.

Development is located in the Buzzard point area of Washington D.C.

Yes, and a half a mile Dan River from Dock 79 and Mary.

It lives directly between our two acre site on the Anacostia currently under lease by Vulcan and Alley fields home Stadium or do you see United Soccer team.

The 10 story structure will consist of 344 apartments, and 11246 square feet of ground floor retail.

Project is a qualified opportunities don't investment.

And we'll defer just over $10 billion and taxes associated with 2018 warehouse platform shale.

Hey.

Finally to close out 2018, we entered into two Gen joint venture agreements with would feel developed a new strategic partner to invest in two distinct development projects in Greenville, South Carolina.

What's field has vast experience developing residential a mixed use projects throughout the south Eastern Washington, D.C. [noise].

Our first joint venture called Riverside.

The 200 unit multifamily projects.

Well, Jeff RP, its contributed $6.2 billion exchanged for a 40% ownership interest.

Construction begins this quarter and is expected to be complete in the third quarter of 2021.

This is also a qualified opportunities though.

Our second joint venture with what feel there's a 227 unit multifamily development entitled.

<unk> for away Jackson.

Not to Shoeless, Joe Jackson undertakes integrating builds minor League baseball stadium.

This project will also include 4700 square feet of retail space.

That's lumpy is received a 40% ownership position in this project in exchange for $9.7 billion.

Construction is set to begin in the second quarter of 2020.

It should be complete in the second quarter 2022.

Again. This is also a qualified opportunity in basketball and along with Riverside will allow us to defer a total of $4.3 billion in Texas.

Moving onto our stabilize joint ventures business segment.

In July of 2019, we completed a partial 10 31 like kind exchange by investing $6 million for a 26.65.

Beneficial interest.

In Dallas, where statutory trust or D. S. T that owns a 294 unit garden style apartment community No New Security Creek located in Henrico County, Virginia.

This complex was constructed at 1984 and substantially renovated in 2016.

The business plan calls for third further rehabilitation departments generate generating value added rents prior to selling to project after an appropriate hold period.

We received monthly distributions from operations the Tech recordings.

We received $123000 for the year commencing in August.

Relative to dock 79.

The average occupancy for the quarter was 95.1%.

This past quarter, the retention rate was 63.08%.

At an average rental increase of 2.67%.

Net operating income for the quarter was $1.821 million.

They 7.14% increase over the same period last year.

Keeping our eyes on resident retention.

Maximizing rental rates and optimizing expenses continue severe primary focus.

The retail component of dock 79, which totals 14700 square feet remained at 76% occupied and 76% leased as of the under the core.

The remaining retail space, it's being actively marketed but we are being quite selective as to vendor use.

Well retail occupancy is expected in 20 Twond.

Dock 79, who is also a joint venture between M or paying enough, Okay, which F. R. P is the major partner was 66% ownership position.

So is the next chapter of your company continues to unfold our strategy remains the same.

We are constantly in search of opportunities to redeploy proceeds from the sales the bar heritage properties and the asset classes that allow management to exploit this knowledge and expertise.

To that end to continue to pursue raw land purchase opportunities to fuel our speculative industrial development pipeline.

We will seek out undervalued existing assets in need of repositioning first future strategic disposition.

And we will continue to search for best in class strategic partnerships with carefully reason investments.

We made significant strides in 2019 investing over $83.9 billion into business upbeat, leaving $164 billion the bank and we hope to continue the course in 20 Twond.

Thank you and I'll now turn the call back to John.

Thank you David we would now be glad to entertain any questions is any of our investors may have.

Thank you at this time, we'd like to open the floor for questions. If you would like to ask the question. Please press star key followed by the one key on your tax 10 fun now questions will be taking in which the order they received.

If you.

He would like well maybe your question. Please press star King again that star one can ask an audio question now.

Hi, My first question will be friend, Steve feral with Oppenheimer.

Hi, guys.

Just a question about the two new cloud outside opportunities and [noise].

I see that they're both the multifamily is that just sort of way see value right now under a.

Overall trend of where do you think the business will go.

I think it is absolutely both of those Steve jobs, we we think that apartment buildings yeah.

Bruce that.

One of the best opportunities did oh grow value.

Through development and.

You know, we particularly like the one Jim in Greenville, because Ah yes. It is a really growing market. There's a lot of job growth, yeah, and the demographics seem to just play out perfectly board.

The the opportunity zone aspect.

Really is a sad benefit we like to the business model of the apartments and that is the reason prior investment.

If we can you.

We'll continue to.

Develop a warehouses, where we can find either ones that we can improve.

Like the cranberry.

Ridge, one or whether it's a.

<unk> new wins that we.

By the land and develop or use existing properties that we have we have a few lots left from left over from micro asset management segment did we will eventually develop but I would say the apartments Andy.

[laughter] industrial will be the predominant investments we will make.

[laughter].

Great. Thank you.

Once again that star one to asking audio question now.

Oh I'm showing no further questions in the queue at this time.

Well. Thank you. We appreciate Everybodys are calling in this morning, and your interest in F. RP, Yeah, we look forward to talking to you a next quarter.

Thank you ladies and gentlemen. This concludes today's teleconference. You may now disconnect.

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