Q1 2021 FRP Holdings Inc Earnings Call
Excuse me everyone. We now have all of our speakers in conference. Please be aware of to each of your line is in a listen only mode. At the conclusion of today's presentation. We will open the floor for questions instructions will be given as to the procedure to follow if you would like to ask a question at that time I would now like to turn the conference over to Mr. John Baker of the third. Please go ahead Sir.
Hi, good morning, I am.
John Baker of the third Chief Financial Officer, and Treasurer of FRP Holdings, and with me today are <unk>.
David Diveley, a junior our president John Milton, Our executive Vice President and General Counsel, John Klopfenstein, Our Chief Accounting Officer, and David <unk>, The third our executive Vice President.
Before we begin.
Let me remind you that any statements on this call, which relate to the future are by their nature.
Subject to risks and uncertainties that could cause actual results and events to differ materially from those indicated in such forward looking statements. These risks and uncertainties are listed in our SEC filings, we have no obligation to revise or update any forward looking statements, except as imposed by law as a result of the future event.
For information.
You are of course used to hearing the voice of the of different and.
More experienced maybe more capable John Baker, our chairman and CEO had a.
The scheduling conflict and I drew the short straw of having to fill is very big shoes.
This will be old news to anyone who attended our annual meeting yesterday, but during the quarter ended March 31 2021.
We had two important accomplishments in our riverfront on the Anacostia project first.
First we secured of $92 million refinancing of dock 79 as.
As well as a permanent refinancing of the Marin for $88 million.
These are 12 year interest only loans at three point of 3%.
And we will significantly lower our debt service at dock 79.
In addition to paying off the construction loan at the Marin as well as the mezzanine financing we provided to the project.
Secondly, the Marin achieved stabilization in March meaning 90% of the individual apartments for leased and occupied.
As a result of that the company is now considered for accounting purposes to have control of the partnership without any transfer of consideration and is required to write up the value of the assets and liabilities to their fair market value.
Previously the Marin joint venture was accounted for under the equity method and prior periods are still reflected using that method.
Starting in April all of the <unk> revenues and expenses are reported in the corresponding categories in the consolidated statement of income.
Including the amounts attributable to the attributable to the company and our partner MRP Realty the.
Amount of new income attributable to our partners is clearly identified as non controlling interest.
Because of the increased depreciation and amortization attributable to the company as a result of consolidating the marriage of results into our income statement. The impact on net income going forward may in fact, the negative but the positive impact on our NOI and cash flow will be significant.
Now, let me turn to financial highlights.
Net income for the first quarter was 28.373 million or $3 <unk> per share versus $1 million 618000 or 16%.
<unk> 16 per share in the same period last year.
The Lions share of this increase is a result of the stabilization of the Marin and subsequent fair right up excuse me write up to fair value, which resulted in a gain of $51 $1 million on the remeasurement of the investment and the mayor of real estate partnership.
Which is included in income before taxes.
This gain on Remeasurement is mitigated by $10 $3 million provision for taxes, and a $13 million.
Attributable to Noncontrolling interest.
Additionally, we were positively impacted by the decrease in expenses.
During the same period last year of professional fees were $260000 higher primarily because of environmental claims on our Anacostia property, which we settled at the end of last year.
We also had stock compensation expenses of $202000 compared to 601000 this quarter.
Last year due to the timing of stock grants.
Finally, the <unk>.
This quarter our loss on joint ventures increased $993000. This is primarily due to a $248000 increase loss at the Marin prior to stabilization and a 663 increase loss at Bryant Street.
At this point last year of the Marin was not in service and we hadn't yet started leasing efforts that Brian Street.
Aggregates royalties income this quarter increased by $5 95 per cent compared to the same period last year.
The $2 $315 million in revenue this quarter is the best first quarter in revenue in the segments history.
This is the third quarter in a row for royalties during the pandemic have exceeded those prior.
And with royalty revenue of $9 6 million over the last 12 months. This is also the first time, we have surpassed the $9 $5 million revenue threshold and any consecutive 12 month period.
On a big picture level. This is also of the closest.
Sometime that we as a nation has been two of major national infrastructure Bill.
The parties have submitted infrastructure plans, albeit very different ones.
Hopefully they can do what Congress is designed to do and come up with the compromised. Besides I can live with.
Any kind of infrastructure Bill in addition to being sorely needed.
Of course positively impact this segment.
We still retain high levels of liquidity relative to our size with roughly $160 million in cash and bonds as well as the $20 million line of credit.
While we are busier than ever in terms of sourcing deals sort of redeploy our cash the substantial capital cushion is more precious to us than it has ever been.
With vaccination numbers on the rise of path back to a quote unquote normal world is still starting to slowly starting to materialize, but we are not out of the woods by any stretch we remain extremely optimistic about our projects under development, but our liquidity allows us the luxury of that optimism.
We will continue to be opportunistic with our share buybacks. This past quarter. We purchased 6000 for shares at an average cost of $43 95 per share.
Now if I could turn things over to David The Valley Junior to walk you through our segments in more detail David.
Thank you John and good morning to those on the call today I will now offer some details of the highlights provided by John in his opening remarks.
As for our asset management segment with the final disposition of two heritage properties. In 2019, we completed the liquidation of a little over 4 million square feet of warehouse assets that made up of this business segment, leaving just the company's 33000 square foot multi tenanted home office building in Sparks.
Maryland, and the vacant lot in Jacksonville, Florida that at one time housed Florida Rock Industries' home office debt remains under leased the Vulcan materials until 2026.
We are constantly seeking value add purchase opportunities and will continue to construct spec of the pipe.
Building upon our land inventory one available.
In early 2019, we added an asset to this business segment through the purchase of the Cranberry run business Park in Aberdeen, Maryland.
268000 square foot multi building warehouse park that was the dire need of rehabilitation.
We completed an extensive renovation of the park and associated holdings late last year and as of March 31st of the asset was 87, 6% occupied.
Total revenues for this business segment for the quarter were up nine 2% over the same period last year.
$712000 with an operating profit of $17000 up 148000 from a loss of <unk>.
$131000 of the same period last year increased revenues and profit for this quarter were mainly attributable to the stronger occupancies of the cranberry wrong.
I won't give any further detail on the mining at the royalty segment, because John took care of of that in his opening remarks.
Right, an amazing program that the morning of the royalty segment is on.
With respect to ongoing of new projects in the development segment.
We have many highlights for board at quarter's end of phase one of our joint venture with John St. John properties, consisting of four buildings totaling 72080 square feet of single story office from 27950 square feet of small Bay retail space, The Baltimore County, Maryland.
The remainder as it was at the end of 2020 being 46, 7% leased overall.
This asset class of office and retail has been devastated by the pandemic of the tenants that were most of the kept current with the rental payments.
Sue after the sale of our 94000 square foot warehouse in the third quarter of last year, we were encouraged by the velocity of it.
The market and began construction of two speculative shell warehouse buildings totaling 145750 square feet at the Hollander business Park near the Port of Baltimore.
The predecessor of these are state of the art class a concrete wall buildings with 28 32 foot clear ceiling Heights Delta Baltimore City Green building standards.
Leasing efforts are ongoing and we expect to complete these buildings in the third quarter of this year.
Next we continue with the <unk> the entitlement process of Hampstead overlook our 118 acre development track in Hampstead, Maryland.
On Sept plan approved at the end of last year calls for 160 for single and 91 Townhome units. We are currently seeking preliminary planned review from local agencies as the next step in the development process. We are optimistic that 2021 will be the year of substantial progress towards the school.
Next is an update to our lending Bachelor of activities all of the entitlements for completed in 2020 at our Hyde Park project in Baltimore County, Maryland, and a homebuilder purchased all of 126 residential lots of prior to our initiating any infrastructure development activities.
All principal and accrued interest has been repaid and part of the profits have been received additional profits are expected in the second or third quarter of this year, which is quicker than expected due to the strong demand for housing.
Solving and an overall internal rate of return on our initial $3 5 million dollar of investment of over 27%.
For over $1 million.
Relative to our other lending venture.
Also of residential development project called the Amber Ridge located in Prince George's County, Maryland.
Our total commitment for this project is $18 $5 million.
As with our Hyde Park venture the investment includes a charge of 10% of interest rate and a minimum preferred return of 20% above which a profit induced waterfall determines the final split of proceeds similar to the Hyde Park.
Entitlements are complete land development has commenced and two national homebuilders are under contract to purchase all of 187 lots after completion of the infrastructure development.
The first set of finished lots of due to be delivered to the purchasers in the third quarter of this year.
At the end of 2018, we entered into our third joint venture project with MRP to develop the first phase of the mixed use residential and retail development zone.
As Brian strength, which is adjacent to the Red line Metro station in northeast, Washington D C.
Cause of transit oriented development immediate access the public transportation options as the critical feature to the design and marketing of this project.
The first building named Coda was placed in service from January one of this year.
Received final certificates of occupancy on April one.
For all of its 150 for apartments are leasing team has done a herculean job of leasing during the period from January through March and at the end of the quarter of the building was 35, 7% leased.
As the weather has gotten warmer and project completion is on the horizon, the 94% of the quarters in the traffic has picked up and as of yesterday.
<unk> was 57, 1% leased and 34, 4% occupied.
Not unexpectedly we are keeping a watchful eye on the completion of construction and the delivering of such a large project during the pandemic, but we are certainly courage encouraged for the recent velocity.
In total phase one will consist of 487 apartments, and three buildings and 86100 square feet of first floor and freestanding retail.
Approximately 51% excuse me 51000 square feet of the retail is now pre leased this property is located in the designated the opportunity zone, which allows us to defer a significant tax liability.
In December of 2019, the company entered into its for joint venture with MRP for the development of another mixed use project known as 1800 half Street and in August of this past year.
We began construction of the development is located in the Buzzard point area of Washington D C less than half a mile downriver from dock 79 and married it lies directly between our two acres on the Anacostia currently under leased the Vulcan materials and the Audi field the home stadium of the DC United.
Soccer franchise.
10 story structure will have 340 for apartments, and 11246 square feet with Graham for retail is scheduled for completion in the third quarter of 2022.
At quarter's end 1800 half Street was 16% complete.
This project is also located in an opportunity zone.
In the waning hours of 2019, we entered into two joint venture agreements with Woodfield development of new strategic partner to invest in two distinct projects in Greenville, South Carolina.
What fuel has vast experience developing residential and mixed use projects throughout the southeast in Washington D C.
The first joint venture called Riverside is the 200 unit apartment project construction began in the first quarter of 2020 is on scheduled to be complete in the third quarter of this year.
The second JV with Woodfield is the 227.
The unit multifamily development entitled Point for OE Jackson.
Not to Shoeless, Joe Jackson, and adjacent to Greenville Minor League Baseball Stadium.
This project will also include 4700 square feet of retail space construction began in may of 'twenty 'twenty should be complete in the third quarter of 2022.
FRP has invested $15 $9 million of capital gains funds for 40% ownership interest in these two south Carolina projects, which are both opportunity zone investments, which will allow us at the FERC. The total of $4 $3 billion in federal taxes.
The closeout 2020 in November we completed the purchase of of 55 acre tract of land in Aberdeen, Maryland, adjacent the Cranberry run business center for 10 of them.
$5 million. This project will be known as Cranberry run business Center phase two.
The support up to 675000 square feet of warehouse products and a robust distribution market.
This purchase will.
And our industrial land holdings to allow us to continue the industrial development program beyond the remaining building lot of Hollander business Park in Baltimore City.
We are currently petitioning for annexation to bring all parcels that make up the assemblage and do the same municipal boundaries. This process will take the rest of this year and we will begin the design process from here.
Existing land leases for the storage of trailers on site will help to offset our carrying an entitlement costs.
We were hopeful we can begin construction here in late 2022 for early 'twenty three.
Just last month.
In April we entered into a build to suit long term lease agreement for 101750 square foot warehouse building on the last remaining building a lot the Hollander business Park we.
We expect to begin construction in the third quarter this year and to deliver the project of the tenant in the fourth quarter of 2022.
Moving on to our stabilized joint ventures business segment.
In July of 19, we completed the partial 10 31 like kind exchange by investing $6 million for of 26.6% beneficial interest in of statutory excuse me, Delaware statutory trust for D. S T.
Owns of 294 unit.
Arden style apartment community.
Known as Hickory Creek located in Henrik Go County.
The complex was constructed in the 1980 for substantially renovated in 2016 the.
Business plan calls for further rehabilitation of departments generating value added rents prior to selling the project. After the appropriate hold period, we continued to see receive monthly distributions from operations of the tech recruiting.
In the first quarter of 2021 distributions were $84000 equal two of $5 six 5% per annum on our investment.
Occupancy average to above 95 per cent for the year and the first quarter with the collection rate and 12, COVID-19 payment plans, representing less than three per cent of revenues.
To round out the quarter phase two of our riverfront on the Anacostia project in Washington D. C known as Marin reached stabilization or 90% occupancy of its 264 of apartment units in March of this year.
It was the result of this milestone will join dock 79, and Hickory Creek, and our stabilized joint ventures business segment.
At quarter end 92, eight per cent of the apartments released the 92.0 for percent of occupied.
Relative to the 6900 square feet of first for retail 100 per cent of the spaces leased with occupancy is currently scheduled for the third and fourth quarter of this year.
Asthma Dock 79, this is a joint venture with MRP.
Or mid Atlantic Realty partners in which FRP is the majority partner.
Of particular note. This building received its final certificate of occupancy at the end of March 'twenty, 'twenty and reached stabilization of 90% in less than 12 months of significant feet on the zone, but during the pandemic that's something else.
Relative to dock 79.
It's 305 apartments for 94, 1% leased and occupied as of the end of this quarter and the rich.
Tension rate was 60% similar to what it was last quarter brand. However was flat to the government imposed restrictions on rent increases due to COVID-19 net.
Net operating income for the quarter was 153 million down $278000 over the same period last year due to the aforementioned government imposed rent freeze and lower traffic through our three restaurants and parking facilities.
All in all dock 79 fared quite well over the past year. Despite the significant interruptions, we all experience those.
Seriously impacted by COVID-19 with shutdowns reduced capacity canceled stadium events and general uncertainty our three retail tenants of dock 79, which total approximately 10 of half.
In square feet of the total of 14000 square feet of retail space seem to be holding their own and looking forward the warmer weather and a battle of you better utilization of the outdoor spaces.
In early April remaining retail space became leased and we look forward to full occupancy.
In 2021.
Dock 79 was our first joint venture with MRP.
And which we are the majority partner with 66% of ownership position.
We've touched a few times on the impact of COVID-19 has had on that book FRP.
Spring is upon us and the baseball is back at National Stadium, and the vaccines are being widely received the.
These are strong signals for us personally and as the business that new life, New energy and new opportunities are on the horizon.
However, make no mistake, we are not immune to the effects of this terrible global disease that is monopolize the world's attention throughout the past year.
F R P of significantly adjusted its operations with.
Good in fact of employees and contractors held the hands of tenants paralyzed by new government regulations, preventing their opening for business and the.
West of this the cartons of life and enterprise of many terms of.
All the while we are immensely grateful that as the business and a collection of professionals. We stand at the top a solid financial foundation that uniquely enables us to progress as an organization with a steadfast Michigan that followed closely sort of insulate us from the troubles other space.
You and I will now turn call back to John.
Thank you David now are we're happy at this point the open up the call for any questions that you might have.
Thank you at this time, we will open the floor for questions. If you would like to ask a question. Please press the star key followed by the one key on your Touchtone from now.
<unk> will be taken in the order in which they are received.
Any time, you would like to remove yourself from the questioning queue Press star two and again to ask a question. Please press star one.
And we will take our first question. This comes from Kevin with the Mr Capital.
Hello.
Yes. Your line is open book.
Hi, guys. Congratulations on the first quarter just had some questions on the language.
The last paragraph Theres, some pretty bold language I think the wording was substantially more multifamily.
So you guys could just touch upon are you guys.
Pivoting the ship to become multifamily mainly.
The other doubling or so in the portfolio of next couple of years, just some color there would be great. Thank you.
Yeah. Thank you Kevin.
What we meant by substantially more multifamily.
Uh huh.
Kevin Nemo and meeting your line getting a little feedback.
What we meant by substantially more multifamily is just sort of our development pipeline is.
As you know.
By our definition of substantially more more of multifamily you know the field.
Look at where the company was a year ago, we had one.
Multifamily building now we have two and then.
This year, we'll have.
Our.
The first project in Greenville, and then for.
For buildings that.
Bryant Street.
Two more projects coming on.
After that it's a.
It's just definitely a huge period of.
The transition for us.
As you know several of multifamily projects under development start to come online in the next.
24 months, so that that's where the substantially more multifamily line came from.
Awesome. Thank you that was my question.
Thank you Ian.
And we will take our next question. This comes from Curtis Jensen with robots <unk> company.
Hey, Good morning can you hear me.
Yes, Sir good morning Curtis.
Couple of questions one on the Marin.
Given the change of control it is FRP share stay at 80% of.
Of the joint venture.
They need to David do you want to yes, yes.
Curtis Theres the program. There's a promote there there is a process that requires us to go through a kind of of monetization.
<unk>, which will then upon the.
The agreed upon value that comes through.
Various sources not the least of which are the appraisals there'll be a waterfall program that will reduce our ownership of little bit like it did in dock 79.
But just as the.
We went from I think of some 77% to 66 per cent of dock, we're not quite ready yet.
Net into the negotiations with them, but yes that will happen.
And then as well.
Would you anticipate maybe.
Disclosing the appraisal and of 10-Q.
When the when the process is completed we must we I'm sure we will.
Alright.
Could you ever in your of ballpark of what the construction costs were for the building I mean.
The the construction of the the total project was about a $113 million.
And the construction contract with $71 million.
Okay.
I mean, what are you seeing in terms of.
Cost inflation of around materials labor any I mean anything.
And availability of such.
That is.
The troubling you or.
Status quo.
All of the above.
Curtis I mean, everyone.
We all know that the construction pricing has been pretty substantial here over the last.
Nine months or even a year because of the closing of for example, the clothing of lumber Mills in Canada.
As demand for residential has skyrocketed so there's.
You know theres been a lot of increases we've seen an increase in lumber go actually the two.
Two to threefold, it's come back a little bit, but it's out there I mean relative to our projects.
Our projects all of the the.
The buying has taken place and we're in pretty good shape. There. So now we're going to we're dealing in some instances.
In some instances with deliveries, but not necessarily cost increases because we got we're past that.
Alright, and then just kind of a hypothetical.
The administration is talking about changes to the.
Tax laws, including potentially changes.
Changes to the 10 31.
Which I assume would have some impact to the real estate industry commercial real estate industry broadly in your new folks I mean.
With such a thing kind of impact of your potential sale of decisions and kind of I mean as management started thinking about this at all would you for example.
Reexamine the idea of converting to a REIT or with such a thing even makes sense I mean, I realize I'm dealing in hypotheticals here, but any color on that of thoughts.
I think it's a little early to tell.
Curtis I mean.
A lot of the projects that we have ongoing right now or opportunity zone projects, where you have to hold the hold of the projects for a minimum of at least through 2026.
Yeah. So.
Not a whole lot, we can do there and theyre all kind of grandfathered within the program that they're on.
So.
We're very opportunistic in our programming these days and we look at each project the.
And we try to make the best of of every project, we do as it relates to two construction price pricing efficiency.
The quality of the program.
And Thats. The primary goal is we get these complete then we'll take a look out of them.
Thank you Curtis I think.
We've.
Been hearing about the the depth now of the 10 31 like kind of exchange for going on 2040 years 40 years now.
If it happens.
It happens, but I think we.
I've always been for rollout tend to let the tax.
Tail wag the dog so to speak so.
It will just sort of wait and see.
Makes sense. Thank you.
Thank you.
And we'll take our next question from Bill Chen with Rhizome partners.
Hey, guys.
Hey, Bill.
Hi.
A question on the the Marin.
The 10 million or so in taxes tax provision is that of tap is that of cash provision or is that a GAAP.
The deferred tax liability of <unk>.
Non cash.
Gotcha.
And the.
Broken Hill.
I know that's kind of been in the asset that Hasnt really.
Ben on kind of center, but given everything that's happening in Florida, and the net migration to Florida.
Is there a timeline for the for the development of that asset in the next say three years or are we beyond that.
I think it would be beyond that of.
You know.
Brooksville for <unk>.
Happened in the last real estate boom, and when Hernando County, King, Nevada Heart of places there.
There was and then it wasn't and I think we for a long time, we've been happy to get the mining royalties there and.
It was sort of.
One day, but not today and you are correct.
You know that our thinking on that has somewhat changed is.
The people at.
Then moving to Florida for a long time, but they've really been moving to Florida in the last year and.
So we have started to.
Just put out feelers and decent market studies on that.
Debt.
Market and piece of property.
Yeah.
The way more than than we had in the years previously so nothing concrete but.
It's definitely.
Become more front and center in our thinking then.
Than say a year or so ago.
Yes.
There.
And can you remind me what has been zone for <unk>.
<unk> zone for.
Lots of Eddie or we've got to take that through entitlement process.
Okay.
It is zone for residential we have of D. R. I in place and I think itself the.
Zone for.
A couple of golf courses.
But.
Yep.
Sort of beyond preliminary stuff.
We'd have to build all of the infrastructure and everything like that.
Gotcha.
I'll just add John it's kind of a master plan.
Kind of as much of the bubble diagram debt that has pods of different types of uses.
Just about you know what.
You can't really call the planned unit development, but it's a massive concept plans that it takes it takes over just about every type of that asset class.
Hum.
And.
The little bit of background and I'm no stranger to investing in Master plan communities.
I think someone once told me that it early on it's literally just a sketch on the napkin and as high as the grass you get more granular.
Bob.
If I remember correctly, I think of 4000 acres or.
So if.
Any.
A few on like how many of them.
Lots of like like if we would see put up for in the air and just say like is that is that like a 10000 community kind of site potentially or.
But.
Something some ballpark would be helpful in terms of cash.
Standing what the potential value of maybe.
I don't think we'd have enough there to know the bill I mean at one time we were.
It was substantial but we are we aren't really far enough along to get into that.
Okay.
Gotcha.
Hum.
And my last question.
We'll be on the.
On the reconversion.
The couple of weeks did a lot of work back in 2017 2018 to convert.
FRP into of Reed.
I look forward.
About a year of two from now.
With the Brian Sri coming online the 1800 cap of coming online and some of the project of Greenville coming online.
I kind of back into what I think the the NOI in the <unk> could potentially be from some of those projects.
It seems like it makes sense in 2020.
Like late 2000 <unk> or.
For 2003 to two kind of.
Not revisit or maybe that's a timing because that actually will be cash flow to distribute to shareholders and then thoughts on that.
Sorry, it was the.
The question on is whether or not we're thinking of becoming a REIT as.
We add more multifamily.
Yes.
The multifamily stabilize and get leased up.
Yes, probably not I think.
One of the issues that we ran into.
Every time, we looked at are a REIT conversion was.
Our mining royalty income is considered a.
Non readable income.
For whatever.
Arcane tax reasons, but.
And I believe the only a quarter of your income can be non readable.
So.
That was back when we were generating a lot of income from our warehouses and had lower mining royalty income and obviously that's.
The situation of slipped substantially so.
I think that.
We'll obviously continue to explore.
The whatever.
Whatever options make the most.
The sense of when we would never rule anything out but.
I would say.
Don't hold your breath on her reelection.
Yes.
Okay.
Thank you for the explanation I was not aware of the 25% rule and now that you mentioned that it makes a lot of sense why the.
The company was moving forward back in that 2017 timeline, because the warehouse was if I remember correctly about $21 million of NOI and the.
But the royalty or a smaller portion back then so.
Thank you for the full given that explanation.
I have no further questions. Thank you. Thank you for your time and great execution.
Thanks, Bill Thanks Bill.
Thank you and we'll take our next question. This comes from John day share with Pinnacle value.
Oh good morning, Thanks for taking my question.
Back to the 10 31 exchange discussion I realize youre kind of in a wait and see.
Position with the rest of us, but can you remind us which of the current properties you have.
Were acquired with some element of 10 31 exchange embedded in it.
The the warehouse, we judge the property, we just acquired around our warehouse the crouse property.
Is a 10 31.
And I don't recall, David can you recall the any of the other properties that are 10 31 Hickory Creek as it was part of the 10 31 until it right all of our statutory trust.
Yeah.
And that's that's about it.
Windlass run.
I don't think of it or the.
Oh, Hi, dark handset yeah.
That was part of it.
Okay.
I was at <unk> 33.
But the amps debt as part of the $10 33, and then as John Milton mentioned the.
The property that we bought at Crouse.
Around 31.
Okay great.
So just to recap.
The cross property in Hickory Creek, where the only 10 31 exchange properties in the current portfolio.
In Hampstead are the 118 acre of residential development project, we'd have to get back with you all of that.
Yeah.
And it doesn't seem like a 10 31 exchanges or the.
An overwhelming portion of the current portfolio.
That's correct.
Okay. Thank you very much.
Yes, Sir.
Thank you and again, ladies and gentlemen to ask a question. Please press star one we'll take our next question from Stephen <unk> with Oppenheimer.
Yeah.
Hey, guys.
Good morning, Steven.
Good morning.
You mentioned the.
The 57% leased on the coda, which is up pretty significantly since.
Since the end of the quarter and you mentioned the chat and the increase.
What type of competition are you seeing in the surrounding area.
The Brian Street.
Well theres competition kind of everywhere throughout the area Stephen I think the thing that we think we believe that we have.
A little bit of a pub and advantages because the especially as time goes on is we are literally at the at current we are right at the the entrance to the Red line.
There and we're also of adjacent to the bike trail.
And we also because of its size and critical mass you can create a real sense of place.
At Bryant Street.
You watch the the annual presentation or more importantly, we will invite you and everyone on the call to visit.
Our revamped website www dot FRP the E V Dot com and you can see by looking at the pictures that.
We create the sense of place within the worst thing.
For buildings and so we have a lot of exterior of lot of outside activities inactivated areas, which a lot of places don't have but we think that's going to bode really well for us as we move forward.
And in the surrounding area of that area. There are you seeing sort of a lull in construction.
New projects coming online around the net.
The three buildings, we're gonna be completed can you give any color on that.
The next three buildings are within months of being completed.
Actually you know that.
So we're close to being completed from a construction standpoint, there's cranes in the air everywhere.
Has been for a while in D. C. So it's really kind of the hard to say, but once again.
We have our our property management group of <unk>.
A great job through its software program literally looking for every apartment that comes on line and how its been leasing we've actually reduced the discount that we were given.
By a handful of months and all over the last several weeks so.
The accident, because sometimes competition really helps you know.
You're no longer of pioneering area, you're just becoming part of the city. So it's not in some instances of it actually can help.
We again, we believe because of the retail component that we have that that's really going to benefit our our apartments.
And as the check that the code of website and the actually after I started seeing ads and Inc.
I've seen ads on Google search and across banners on other websites.
Is the overall advertising strategy.
For the property.
Yes, Stephen having spoken to our.
The property manager.
I think the three active campaigns.
It's people who have.
Either live or of toward.
Some of the.
Surrounding competition.
There is site re targeting people have visited.
And of the code is website and then search re targeting people of.
Search keywords related to the coda and Brian Street.
And what type of return are you expecting from the online advertising you said you reduced the discount and so I'm guessing you're seeing strong demand and how do you quantify any return from online advertising.
Thank you.
In terms of like a cost per acquisition is that what youre looking for just yet.
Yeah kind of hit rate you generate.
Thank you <unk>.
For the <unk>.
<unk>, our our online advertising.
Advertising it's.
50 $657 per acquisition.
The little bit higher than Facebook advertising, which is the.
And $42, but.
I think that the.
The the streaming is a little more effective and certainly more effective than like print advertising, but I mean to give you an idea.
So you can put out like 18000.
Commercial views and you get.
From 19.
Of those people walking onto the property sell.
It's kind of.
You got it.
Put yourself out there to generate any kind of traction.
Great. Thank you and the it was mentioned earlier on the call of debt.
The increase our labor costs and raw materials does that change the development of the Aberdeen property at on the future of you're looking.
Acquisitions of add ons would it be more brownfield and existing developments.
We look at we look at all does that all developments.
We have a tremendous amount of people out in the street that debt.
Or kind of looking for us.
And so we just look at each one as it comes along and I think location is probably the single most important piece of it the number one number two from a value add standpoint, it's kind of the pounds for the.
<unk> per foot.
The we're not going to pay too much going in.
We're also not going to we also look to buy land since we've been doing it for embarrassed to say almost 40 years.
Pretty good.
Picking parcels that we feel are properly priced.
And then we'll let the market decide what and when and how we're going to build the buildings.
Moving on what they are going forward.
Great. Thank you for that that's Oh, yeah.
Thank you Steven.
Thank you.
And at this time, we have no further questions I would now like to turn the call back to Mr. Baker for any closing the final remarks.
Since there are no further questions. We just like the thank everyone for their <unk>.
Continued interest in the company.
<unk>.
Thank you ladies and gentlemen. This concludes today's conference. We thank you for your attendance and participation you may now disconnect.
Okay.
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No.
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