Q4 2021 FRP Holdings Inc Earnings Call
Good day, everyone and welcome to today's FRP Holdings incorporated earnings call. At this time, all participants are in a listen only mode.
You will have the opportunity to ask questions. During the question and answer session.
They registered to ask a question at any time by pressing star and one that star one on your Touchtone phone you may withdraw yourself from the queue by pressing star. Two. Please note. This call may be recorded it is now my pleasure to turn the conference over to Chairman and CEO John D Baker the seconds.
Welcome to FRP Holdings Conference call to review, the fourth quarter and year end results for 2021, I'm, John Baker, Chairman and CEO of FRP and on the line with me today are David <unk> Junior our President John Baker, a third are.
F O David Dovey, a third executive Vice President John Klopfenstein, Our Chief Accounting Officer, and John Milton.
Before we began let me caution you that any statements made on this call, which relate to the future are by their nature subject to risks and uncertainties that could cause actual results or events to differ materially from those indicated in such forward looking statements.
These include but are not limited to the risks listed from time to time in our SEC filings, including our annual and quarterly reports, we have no obligation to revise or update any forward looking statements other than imposed by law as a result of future events or new.
Information.
Revenues for the three months ended December 31, 2021 were $8.399 million up from $5 million 833000 in 2020.
Operating profit was 259000 versus a million <unk> 55, a year ago and net income was a loss of 592000 or six cents versus a profit of <unk> 493000, or <unk> a year ago.
Driving these results were.
First the inclusion of our mixed use project in Washington D. C. The Marin, which was completed and reach stabilization early in the year.
This accounts for the increase in revenues.
Also attributed to the Marin was 659000 in expense as the quarterly amortization of the fair value of the leases in place established when we booked this asset as part of the gain on Remeasurement upon consolidation of destroyed venture early.
In the year.
Also contributing to the higher expense was a charge of 807000 for a nonrefundable deposit of a half a million dollars in due diligence cost or a potential warehouse property, where the acquisition has recently been determined to be considered less than probably.
Paul.
The same quarter last year included a credit of 250000 per settlement of an environmental claim on our Anacostia property.
Also affecting the quarter was a decrease in interest income of 651000 due to bond maturities.
And the repayment of the preferred loan on the Marin JV upon the building's refinancing.
For the full year net income was $28 million 215000 or $3 a share.
The key items was 26 million in gain from the re measure but.
The value of the Marin upon reaching stabilization stabilization and the 8.240 million of operating profit from our mining royalties. This was offset by the 807000 in due diligence.
Is it costs mentioned earlier.
Also by 3.899 million in amortization expense of the value placed on the merits leases in place as far as the write up.
That asset upon stabilization.
Now if I may I will turn it over to David to V. A junior to walk you through our segment performance David.
Thank you John .
And good day to those on the call. This afternoon.
I'd like to offer a window on our operations today and give some detail to John's opening remarks.
Through our business segments, though our business segments are important silos in which to report and analyze the company.
Operationally, we have some overlap and synergies that can be difficult to follow using our reportable business segments.
So allow me to shine a light on the day to day at FRP.
Basically we employ a four pronged approach to our business since 2018, when we liquidated our legacy warehouse portfolio.
They would include our in house, which includes our industrial commercial and land development platform.
These properties are developed managed and owned 100% by <unk>.
The second leg of our stool is third party joint ventures.
Which is the name states of projects done in conjunction with third parties, where FRP is the major owner, but rely on third party platforms to prefer much of the day to day operations.
Of course, we have mining and royalties, which is not was not changed and the fourth leg of our stool is the lending ventures, where we are the principal capital source for residential land development activities.
So relative to our in house platform in the third quarter of 2020, we sold a newly constructed at least 94000 square foot building at our Hollander business Park, realizing a gain of three 8 million.
We're $40 per square foot.
Adjacent to that site in the fourth quarter of 2021, we.
We delivered two speculative warehouses for a total of 145540 square feet. One of these buildings totaling 66000 square feet is now fully leased with occupancy scheduled for the second quarter of this year.
Also in Q3 of 2021, we broke ground on a 101750 square foot build to suit warehouse building that will cap off the final building at Hollander business Park, we expect to complete and provide occupancy did the tenants by year end.
At the close of the year.
Ranbury business Park.
Our renovated 268000 square foot multi building warehouse bark was 100% leased and on schedule to be fully operated and this quarter. The first quarter of 2022.
Up from 87, 6% occupied over the same period last year.
To continue our pipeline of industrial building pads, we have begun seeking entitlements for the 55 acre track we purchased in late 2020, we.
We expect this process to be complete later this year and have begun the building design process in the interim to create 675000 square feet of warehouse product.
Existing land leases for the storage of trailers on site will help to offset our carrying an entitlement costs on this tract of land. We were hopeful we can begin construction here in 2023.
Finally in September of 2021, we purchased another 17 acre parcel in Perry been industrial section of Harford County, Maryland, not too distant from the Cranberry business tour.
Begun both building design and initial entitlement work on this site, which could support up to 250000 square feet of warehouse buildings, depending on market dynamics construction on this project could begin as early as Q3 'twenty two.
Completion of these two new.
New projects plus the build to suit warehouse currently under construction at Hollander.
Another 1 million square feet of warehouse product to our industrial and house platform that when added to the assets in operation as Hollander business Park in Cranberry run will total over one 4 million square feet.
Although the NOI for our in House operations was flat being $453000 for Q4 2021 versus 466000 since Q4 2020.
All of the new buildings opened at the end of this past year.
And what will be coming online in this year should provide a substantial lift for our NOI in 2022.
Relative to our mining and royalty.
<unk> maintains ownership of over 15000 acres of mining lands under lease to major aggregate companies, who pay rent royalties.
When possible, we then convert the mining land to a higher and better use.
Upon having reached the end of its useful life as an aggregate facility.
Our mining and royalty division saw total revenues for the quarter of $2 million 267000 versus 2.383 million in the same period last year.
NOI was $2.137 million a decrease of three 7% or 83000 over the same period last year. This decrease reflects the tenant temporarily shifting operations off our site in Manassas, Virginia for part of the year.
Moving on to our third party joint ventures.
Currently we maintain relationships and operate both stabilized and development projects with three distinct partners.
MRP.
Woodfield.
And St John properties as well as an investment in the Delaware statutory trust with a group called capital Square.
As of 12 31, our joint venture platform includes eight mixed use projects in various stages of development and operation.
Four are located in Washington D C.
<unk> is our joint venture partners.
These projects or dock 79, Marin, Brian Street Phase, one and verge.
<unk> will not be ready until third quarter of this year.
Thanks.
As of 12, 31, 21, 786 of the 1026 apartments and operation were leased.
This is up significantly from 2021 at the beginning of the year.
Because it was we were at 564.
Excuse me 569 units.
We also have two <unk> units.
<unk> in Greenville, South Carolina, This is where what field is our development partner.
River side opened its 200 apartments released in August and was 49% occupied at year's end.
408, Jackson will be placed in service in the third quarter of this year.
Two additional projects that make up the balance of our third party joint venture platform.
Hickory Creek with capital square and in office retail project with St. Johns thoughts.
Hickory Creek 294 units remained above 95% occupancy for the year.
While our joint venture with St. John that it includes 72000 square feet of single story office and 27150 square feet of retail remained at 46% occupied.
So to summarize.
Relative to our third party joint ventures, and mixed use developments not counting capital square.
At Hickory Creek in St. John We are currently invested in six projects totaling <unk> hundred 27 apartment units and 127000 square feet of retail.
At quarter end, only dock 79, Marin Riverside and Brian Street totaling 256 apartments were operating in.
62000 square feet of retail tenants rocky applying their respective spaces.
The remaining apartments and retail spaces will be completed and ready for occupancy over the next 12 months.
Net operating income for these assets was $2 $1 billion.
For <unk> for the fourth quarter of 2021 versus one $4 billion in the fourth quarter of 2020.
So 'twenty.
2022 should be a very telling story about the growth of our third party joint venture program.
The last leg of our operating stall as lending ventures. This is a program we provide working capital towards the entitlements in horizontal development of single family residential products and ultimately as they all do national Homebuilders.
Our current project.
In the.
Under development this year is Amber ridge.
Our total commitment for this project is $18 $5 million.
As with our Hyde Park venture.
That was completed and we sold in 2020. This investment includes a charged interest rate and a minimum preferred return of 20% above which a profit induced waterfall determines the final split of proceeds.
Entitlements at Amber Ridge are complete land development is underway and two national homebuilders are under contract to purchase all 187 lots as.
Of the year and.
34 lots had been taken down with $6 $3 million returned.
As of 12, 31 of which 1 billion 300000 of that was interest income.
As of the end of February .
Over 50, excuse me 51 lots had been taken down.
Our current lending structures.
So called Presbyterian homes, which is the new projects.
344 lot 110 acre development in Aberdeen, Maryland.
We plan to provide up to $31 1 million in funding under similar terms to previous projects entitlements are underway and are the conditions precedent to settling on the land.
No discussion today is complete without a nod to COVID-19.
We've touched a few times on the impact Covid has had on FRP and our customers.
We've been very fortunate as a company both in life and business throughout this global pandemic.
FRP has remained a healthy concern that has been able to continue to grow and prosper. Despite the significant challenges we all face.
No we are not immune to the effects of this terrible global disease, but we're getting very close to normal at FRP with our team back in the office and warm weather on the way we remain at the ready to assist our tenants navigate.
These ever changing waters and continue to grow our portfolio.
As a business and a collection of professionals, we stay on top of solid foundation financially uniquely.
Enables us to both capitalize on opportunities and make hard decisions, sometimes not to perform.
It is this mission that has proven to insulate us from much of the troubles other aerospace and is rooted in committed and focus on the fundamentals that guide, how and where we bake in and maintained investments.
Thank you and I'll now turn the call back to John .
Thank you David we'll now open the floor for any questions that any of you all may have.
At this time, if you would like to ask a question. Please press the star key followed by the one key on your Touchtone phone now you may remove yourself from the queue at any time by pricing start to again Thats star one to ask a question, we'll pause for just a moment to allow the questions to queue.
And our first question comes from Curtis Jensen with Robotics and company.
Hey, good afternoon can you hear me okay.
Hey, Dan Curtis.
I'm doing fine thanks.
Couple of things.
You have a note on your operating expenses, including that.
Nonrefundable deposit of 500000 so.
Our deposits at that size kind of the norm.
Is that where that kind of project you are looking at.
Well every project. This is David how are you.
Curtis.
This is a fairly large part of the purchase price on the land is about $7 million six I think six and a half.
Put the property under contract in early 2020, we werent going to buy it until it was we felt really comfortable and so the study period was extremely long.
And so part of the way we've gotten through some of these things is putting up deposits and then and it's been so long and we've been through so many twists and turns we decided that.
Actually if you think of it as a 10% or above.
The deposit 10% of the six and a half it would be 650000, so it's not completely out of the out of the ordinary.
The $500000 deposit that went hard was really our hedge against the possibility of something not go on go on well for this raw land purchase.
And we'd rather do it that way and be able to hopefully get to a positive conclusion, but we just aren't there yet.
So is this the is this the 130 acres that is supposed to be warehouse space and Cecil County.
Yes, Sir.
It could take up to 900000 square feet, we believe.
And what and when.
Can you identify the issues or is it still kind of a negotiation or is it dead in the water.
No. It's not it's if you look at our raw land purchase card is kind of like a great Big Buzek. This is a raw piece of land that needs water sewer has.
Dow has all sorts of normal issues that we go through its just that its.
The water situation there, it's a public private partnership between the private water company and the local town that has the wells.
And there is only certain there's only certain ways that the private utility company can can.
Charge, its ultimate user and that's.
That's regulated by the public Service Commission. So it's just it's just a myriad of steps that you have to go through it's taking an unusual amount of time, especially during the middle of Covid.
And so we can't we can't completely.
Say exactly what these costs are because somebody might say something but until you get it in writing it's no. We don't believe that is real.
We haven't been able to feel completely comfortable to move forward.
Got it but to answer your question Curtis is still under negotiation.
Not that okay.
Alright good.
On the royalties I guess the Manassas.
<unk>, that's a relatively small property with no minimums as that.
It's not a small default property, but it does not have.
A meaningful minimum.
And then Curtis.
Sure.
The pit is divided up between.
Our property and I think at one time that was to others, but now it is just.
One other and.
Based on the mining plan a.
<unk>.
Move between the two <unk>.
Property owners and says.
They.
They should be coming back.
<unk>.
This year you can make a good point.
We would never enter into a lease without a minimum today.
This was entered into 50 years ago.
It's just something we've inherited.
Yes.
Do they give you much noticed when theyre going to move.
They're going to do that kind of maneuver in them.
They give you a little.
Explanation of what their mine plans is going to be or are they just one month to the next and they decide they're going to move their equipment or whatever.
Their mine plan is.
Yeah.
For lack of a better term is sort of their business and I don't think the person operating the core I guess any thoughts.
Wish land.
So we don't we don't get any notice until.
Yes.
Got it.
And then I guess on the breakout of the like the NOI reconciliation is that.
There was a tax allocation with a positive $2 4 million undermining royalties.
But then if you look at under the segment. It's Scott So you have got.
Under this segment is like an operating profit of.
$8 2 million, but in the NOI reconciliation it looks like $8 9 million.
And im kind of figure I'm trying to figure out what the Delta is in.
And which ones closer to cash.
The cash Curtis would be the would be the NOI schedule.
Of course.
Hi.
Excludes overheads and those are real cash expenses.
Keep that in mind, but the.
The difference between the.
The $9 million number and the.
<unk>.
The $8 million <unk> number it would be other other income in this particular case, it's the it's a gain on some property sales that we had.
Okay.
I mean, I think that will.
Just about I guess last question on stabilized JV.
I Couldnt quite <unk>.
As your retail full for Q.
Was it full for Q4 at the Marin in Dock 79.
Okay.
Okay.
Go ahead David.
The Marin.
Was full.
Major tenant moved in in December .
And then we have a lease.
Executing for the remaining 24% at dock, which is which is about 35%.
Around 3500 feet, the leases executed theyre going through the planning and the been the permitting for that space that will probably be open up sometime this summer.
So.
And I guess you're allowed.
Okay.
Now its effects are effectively we're 100% leased but we're not 100% occupied.
And then are you allowed to raise rents at this point.
We are now.
Okay.
And part of your party or rent it.
On the retail as point of sales percentage right.
Yes, Sir over a certain amount.
Okay Alright.
I assume if you got the retail fall and assuming we don't cancel the baseball season.
And with the realized.
Some rent birds.
That's definitely correct control.
Jeff.
Yes.
But I hope hopefully the NOI will be up next year. If this this year.
All else being equal.
We hope so.
D. C is an interesting place to do business, especially as it relates to COVID-19 .
And obviously the weather has a lot to do with the success of these restaurants.
The baseball we've already lost two games, apparently but at least we think that the baseball season is going to be there.
Cautiously optimistic alright. Thanks.
And our next question comes from Bill Chen with Rhizome partners.
Hey, guys.
Hey, Bill Hey, Bill.
Okay.
So question is like.
Like Curtis I'll, just dive right into there.
Yes.
First question is on the.
Consolidation.
Dock.
Dock 79, Marin stabilize you guys consolidated result, and we issued the press release that had disclosed.
The GAAP gain that reflects the value creation from the development. So the question is when Brian suite stabilize which I think will be 2022, maybe differ.
One will you consolidate the financials.
Or would it become a line item.
Equity earnings.
And then the second question would be would you also issue.
Disclose the GAAP gain.
So that the market can understand the value creation from the.
From the development.
Bill, It's John Klopfenstein here.
Reason that we recorded a gain upon the consolidation of dock 79 in the Marin is because we had a provision in our joint venture agreement, which allowed us to.
First the sale of the property basically put us in control of the joint venture, even though we shared other decisions equally.
Brian Street has knows thats caused because it's the opportunity zones. So we cant we cant sell it anytime soon or don't preferred stock as I said. So at this time, we don't anticipate consolidated Bryant Street, and so there will be no gain to record on the on the on the.
Changes in that status.
I would think.
Bill in answer to your <unk>.
Second part of your question.
While we wouldn't attribute a value to it.
We would.
Be very clear what the NOI was project certainly, yes, we do what we can to make it.
Easy for shareholders to determine the value of the stabilized asset.
Got you.
We.
Certainly.
I appreciate that very much.
And then I guess just to confirm.
If I memory serves me correctly I think we are.
60% of the interest is it that what the allocation to the JV partner that falls below 50.
Consolidated Pat is that the main reason quarter.
While we are not consolidating Brian Street is that the question yeah, Yeah yeah.
Primarily because we share all decisions equally in other words, we cannot okay.
We cannot foresee any sort of transaction or any other major event without agreement with our partner, but as a percent.
Our percent is about 61%.
61% Okay.
Yes.
I'm looking at dock 79 in the Marin judicial you have seen about.
I think for dock 79, Thats, a one from 80 to 66, if I remember correctly, then put Marin went from 80 to 71, so somewhere between the nine and a 14% drop off in ownership. If you start at 61, I'm just trying to do the math of where we wind up at.
I'm, just kind of guessing based on.
The economics on.
Dachshund behind the merit.
David do you have any.
Comments on when the.
When the waterfall for Brian Street occurs.
And I guess it would.
Go ahead David.
Now we've changed them around I think the waterfall doesn't happen until the end of the.
Period.
While the end of the ozone.
The opportunities on period.
Yes for some reason it fell down below 50%, we have the right to take it back up over 50.
Okay Gotcha Gotcha.
Does that mean that we get as long as we hold our property, we get 60% of the distribution, which that will be different and documented in America.
Well I don't know why it would be different bill we get to the distributions based on whatever the ownership interest is at the time.
No I'm, just saying you are saying.
Alright, maybe maybe are standing at the end of the opportunity zone period, because generally thinking 10 years out maybe you meant something different.
Okay.
We will we would have 60% ownership until the end of 10 year period for the opportunity.
Yes until that until the crystallization would happen, which.
Correct, we would get we would get what we what we started out with until something like that happen.
Yes.
Between the two.
And in this case would be that.
The waterfall for dock 79 in the Marin was based on a.
Just coming up with a value for the building, whereas this will be a traditional waterfall based on sale proceeds.
Sure.
10 years out okay.
Thanks, Joe.
Yes.
Monitor Marseille being monetization, having a refi.
Okay got you got you.
I'm actually glad I asked that question, because that's a little bit better than I anticipated.
Okay.
Well Im looking forward to Q stabilizing Brian Street should be exciting.
Second question is on the.
Greenville.
Yes, all the publicly traded sunbelt multifamily we could report a double digit rate growth are you seeing similar results in the Greenville projects.
Okay.
Well, we have two of them as you know bill one of them is river side I will say this that it opened up in August .
And.
It is.
It was late.
At least as of last week, it was 73% leased and 67% occupied and we have not offered any discount off the face rent.
No.
And of course, we're always Jackson it doesn't even come into play until the summer, but it's been pretty good its been very very strong.
Yes.
I'm just seeing it.
The sunbelt multifamily just spin.
Absolutely I'm, sorry could you kind of I guess going back to my previous question, Brian Sri you guys disclose.
Leasing and occupancy figure as of year end 2021 can you disclose what that number is as of end of February .
I don't think we have those numbers.
In front of us.
Built on the grid.
I wanted to talk about them off the top of our ads.
Okay.
You see.
My next question.
Okay. Thank you for that my next question is on the renewal at dock, 79% of Marin.
They're in the mid to high <unk> renewal rate, which is about 10, 15% higher than normal if I remember correctly.
Do you think what do you think existing ranked is.
Sure.
Yes.
How much is that below market.
What's that.
The way I'm reading it is that people are electing to stay because they are getting.
Good deal.
Well I think theyre getting the deal that they had before.
Yes.
Yes.
A couple of things I mean, obviously COVID-19 has wreaked havoc down there as far as.
As apartments moving out moving in.
Holding rents.
Everything you can think of that benefits the tenant is.
Was there and so.
The fact that they renewed at a certain particular rate.
That didn't change you could argue both sides of that sense right that they were paying a market above market rate before but there are still willing to pay out again or or vice versa that they felt that it was low and they wanted to stay.
It's tough to draw any real conclusions with what's happening with renewables just by virtue of having to deal with the regulations that DC imposed on landlords.
And then one thing to bear in mind Bill is that the.
You can't raise rents on renewals so.
$55, 60% to 65%.
Renewable that's still 35%.
Renewals that are moving out and the people that replace them or paying.
Market rates.
So I don't know.
I don't know what percentage of our tenants are paying.
Exact same rent that they were paying on.
March one 2020, but I wouldn't bet. It's a huge portion. It's just you prefer to keep your tenants in the building because it's less expensive.
And find a new tenant.
Any answer we give you would be pure speculation.
<unk>.
But.
It's a very important question and we are focused on.
Seeing what we can do as far as raising rates now that we've got the ability to do it.
I think youre aware of this bill but are.
Leasing agents literally change the price daily based on supply and demand so.
Once once we get a trend, which surely should be by the next quarter, we will have a good feel.
Answering your question without just.
Pop and drop them off the top of our head.
No no I appreciate that.
The.
Okay.
And so on.
Onto next question on the home, they're Hollander spec building.
I'm seeing based on the reports that I see I'm seeing market rents towards that type of product in the mid $67 range is that in line with what you guys are seeing.
For the two spec buildings.
Pretty much yes, I mean, obviously as it depends on.
You kind of have to look a little bit closer underneath of the tab, but.
A lot of times it has to do with what the tenant improvements are determines what the rents are but those rents don't sound too far off.
Okay.
Thank you.
C.
On.
On the phase III pain score for the waterfront.
Now that we have inflation cost inflation.
Labor shortages.
Any thoughts on what it would cost today to kind of recreate like if you were going to build something like the Marin phase III.
Like what percent.
Higher wood costs to build phase III today.
Hard to say Bill like John says, it's just purely speculative I mean.
Rates are going to go up and down.
We've seen actually it's interesting we saw steel go down for the first time in a while on a project without one of warehouse project, where we're doing actually went backwards.
So it would certainly be higher.
Take a number we can.
It could be anywhere from 10% to 15% Board Fabs depends on when you do it.
Your bill.
There's a lot of pieces that go into the cost how big are the apartments at what.
What kind of medium income apartment percentage you have to put when theres a lot of pieces that go into making up the total project can see whether it's.
Economically feasible or not.
Hum.
Yes.
Do we need to build.
Solid caution towards affordable for phase III and phase four.
The zoning, where conventional card called inclusionary zoning that up in New York.
Sure.
Hi, Matt.
Barry.
That figure is up to 30 up year 30 to 35.
So that high here its in the 10% range here.
Would that be required on both or.
Or just one of those.
Well if they are both residential.
They are both residential but the feeling is most likely I mean, the inclusionary zoning is not going to go away if anything it's going to get.
Going to going to grow a little bit, but we just talk about what it is yet we're not we're not who's in front of the zoning Commission, yet we're not that deep into.
Pre development, we're still trying to round out what the actual threat fronts are going to look like now that the bridge is almost complete.
Gotcha.
Okay. That's helpful.
Final question.
Thoughts on macro with.
The inflationary rate interest rate.
Cost inflation.
All of that.
And perhaps just.
So would love to hear your thoughts on it in general and also how that relates to.
With regard to capital allocation.
So bill to Bill two two.
<unk>.
Just just like.
Investment projects.
You got to buy something that plywood nickel ore.
So.
Broad question, just just welcome your thoughts on that.
Bill This is John .
That's what you call a game time decision.
When you look at the cost of the building and then you look at the cost of what ratchet.
I think I.
No what's going through your mind is that if the cost of construction goes up.
The cost of any new product is going to need to have a higher rental rate and hopefully we benefit from that.
From the old ones as well as the new but.
Okay.
Free market capitalism is a funny thing and we'll just have to.
Take a look at it.
That's what we do I mean, we're going to take a look at that equation before we would ever start a building.
Yes.
Inflation is pretty is just kind of a double edged sword for for our business. It means rents are growing up and it affects cap rates.
Mining royalties and traditionally outpaced inflation so.
<unk>.
That's a good thing interest rates going up is a bad thing.
For any new financing we do.
But.
I don't think these are particularly profound insight.
Okay.
That thought.
Given that we got.
Amazing ways, when we finance costs of around the margin.
Any thoughts on if we want to go to market today inside of there.
With some type of module Jon Brian .
Cost of debt will be correct.
Okay.
Haven't really looked at it bill.
Obviously, you're starting to see rates creep up.
We also have we don't we don't overly finance these projects either so.
We have we usually get the best rates that we can but we don't we haven't really been looking because we haven't we're going to start because we got some construction loans that will start to.
Actually now we all the construction of the two construction loans that we have remaining in Virgin.
Riverside and even for a way to have several.
Oral extensions on them. So we're not not in a position where we have to go look for any bank.
But we will probably start next quarter just to take a peek out in the market and see what kind of rates we can get.
Okay.
But I'm sure like Brian Street, and is probably the furthest along or actually omit Riverside, maybe even further along right I'm Ed Im sure Youre looking at Brian Street that permanent financing solutions.
We will start looking at both.
Brian Street is a little bit more complicated because it's Scott.
Retail and substantial amount of Greenfield.
Incidentally is up 87% leased at 91000 square feet, but it takes a while to get them in it takes a while to get them, saying and Riverside doesn't have any.
Retail, so riverside will probably be a pretty easy way.
Let me see.
Okay.
Okay.
Yes.
Thank you. Thank you for the answer gentlemen, that's all my questions.
I'll, let someone else ask questions.
Yes.
Bill Thanks Bill.
Our next question comes from Stephen Farrell with Oppenheimer <unk> close.
Good afternoon.
Good afternoon Steven.
How are you.
Quick question on a follow up on.
What bill was asking with Bryant Street.
In regards to the consolidation is there any restrictions to refinancing the construction loan either prior to stabilization stabilization or just as long as it is.
Opportunity investment.
No Sir there are no restrictions.
Okay.
And what would that look like wood.
Any of the refinancing just stay with the properties or can it be and distribute it to the JV partners.
Well Theres certainly opportunity Theres, a bunch of opportunity zone restrictions.
There's a there's some.
Some preferred equity there that might want to become one of them I want to come out. So it's hard to say I think I don't know for sure, but I believe that you can do certain things as long as it get doesn't go over a certain percentage of what the original loss.
Yeah.
And you at least in a pretty nice at the properties. There is there a little bit of seasonality in the leasing compared to dock in Marin.
Yes.
Let's see.
Seasonality means the type of year January February December January and February are the worst one.
It's to lease.
Just historically the weather and people just don't want to be.
I want to be moving around them for sub races summertime.
The end of the second quarter and all of the third quarter are the two big months are the two quarters that are there.
The most opportune for.
For leasing so we're excited about <unk> coming online and hopefully July .
We were.
STREAMWAY fortunate won the first building of Brian's III came out came out in December .
And it was snowing, so it's hard to say, but generally the times are better in the spring and summer and early fall than they are now.
And at Chase, one and when.
Are you offering any concessions there.
Yes, we do it's about a 17% concession.
Coming in.
And is that.
He is the yen.
Software and you're changing prices frequently is that Dale assistant with.
Other properties in the area and is it leasing up at a similar rate to those.
Well, yes, we are we are certainly staying well within the velocity of the other places around this.
In addition to changing rates on a daily basis. It's also the different types of unit actually the algorithms are set up so that.
One route one unit it is leasing up a little bit quicker than the others, we'd like to we might look to do this.
To take a little bit of that discount away. It literally does it every day for all of the units.
But we're definitely holding we're holding up with our competition for sure.
And at.
The Marin Index 79.
What is your approach going to be for looking at raising rents versus occupancy.
Well, it's it's again.
It's an art not a size right I mean.
If you get up around 94% occupancy at 95, you wonder whether you've got you shouldnt be trying to steal a little bit more money, but that's one of the things that we really are.
Pretty good about is the group that we have <unk> does a great job and that we have leasing calls every week and literally have these discussions on a weekly basis as to what to do.
And for the renewals is there a limit in the amount of <unk>.
Increase that you can do a year over year.
No.
There is no regulations other than what we come up with our own I think somebody mentioned earlier.
You are.
Spot is usually somewhere in the $50 to 55% range, if you're doing if you're renewing higher than that and youre not renew one for adopt and if you are lower than that you were trying to renew for two Bosch. So.
<unk>.
The set point is usually somewhere around $50 to 55%.
Yeah.
And it seems like Amber Ridge, you kind of picking up some pace.
The units that are being sold.
We keep going at this current pace, how do you see that.
Payout from Enbridge.
Yes.
Well it's.
Let's see we are at we were at 34 at the end of the year that were out of the 187 gone.
And then we were at 51 at the end of February which is that first quarter of 2022, and we've got a program with boat builders to kind of take so many down on a quarterly basis.
They are running they're running a little bit ahead of schedule.
So at 2029 units or so so fourth quarter, we would we're still got we still got a lot left but the pace has definitely been more than what we thought and then speaking with both of our of the builders they seem to be very.
Proactive in moving forward.
And so we may get a few we may get more out this year than we thought.
This year was supposed to be somewhere in the 80 to 100 range. We I think we're going to we'd like to think we might get passed that we won't be out, but we're a lot will be a lot closer.
And I know you talked to that.
The warehouse deal it is.
It hasnt completely fallen through.
And if that doesn't pan out.
Do you think that changes your pipeline material.
Kind of how are you viewing.
That.
What would you look to replace it with them it doesn't go through.
Well, we want to obviously.
Plan is to maintain our pipeline we've been pretty successful what the industrial platform over the years and so we do have.
The Crouse property, which is the 55 acre site can actually take two buildings one of 675 or some other variance depending on what today is.
And then our Chelsea property it takes $2 50, which we haven't started yet.
At Hollander completely so we are we will be in the market, we don't want to get overly.
Overly full of pipeline properties because they.
We don't want to get back into having too much of an overhang there but if.
We're always looking they're not easy to find.
We've constantly got people on the street looking for us.
We've bid on more.
Where possible raw land programs in that you can imagine, but we're very diligent in kind of looking at what we believe is the appropriate finished lot cost.
And I think sometimes we may be too conservative we don't we don't know, but certainly the value has jumped up on this warehouse land over the last 18 months to two years, we don't know whether thats going to be sustainable but.
We're always looking.
And in the surrounding areas. There do you think there's more room for capacity and is there.
A lot of capacity coming on in the next year or two.
Not a lot, but a lot is a relative term.
The where we are right now we've got properties that that one is the $2 50, a sips among.
A bunch of Giants of over 1 million square feet and so we're thinking we can sneak something in because tenants. These large tenants are always looking for additional storage.
And so to answer your question, there's not a whole lot of vacancy and the markets that we're serving up and off the 95% northeast vacancy I think at the end of the year was around 3%.
It's pretty low.
Thank you for taking my questions. So I have.
Thank you for your answers.
And there are no further questions at this time I will now like to turn the floor back to John banker for any additional or closing remarks.
Well, thank you all for joining us.
Today, we appreciate your interest in the company.
2021 was an important year for us we stabilize the Marin yes.
Yes, we can.
Continued strong cash flows from our royalties.
And we made a lot of progress in running out our newest mixed use project.
Project in D C call Bryant Street.
And also Riverside in Greenville.
Looking.
For the balance of this year as David mentioned.
Oh wait Jackson in Greenville, and diverge in DC should be coming on.
Late this summer or early in the fall.
<unk>.
And.
Dave.
They will be.
Comment on.
Quickly after we've.
Made progress hopefully closeout Bryant.
We will have three new warehouses.
Hollander.
Yes.
And.
Hopefully be well on our way one of them of course is a build to suit.
There too.
Been a lot of velocity and we are optimistic about those.
So by year's end, we will have seven mix use projects four and DC two in Greenville.
And one in Richmond, as well as the three warehouses and in office retail Park in Baltimore.
This is a dramatic transformation since our warehouse sale in 2018, and yet we still have $160 million in cash to fund future growth and to provide a safety net and these crazy times.
Thanks again, we look forward to talking to you next quarter and I think a lot of the questions. You all have asked will be much clearer.
As we get into summer time.
Our late spring and seeing the velocity.
It goes on in the leasing and our ability to raise rents.
<unk>.
I'm excited about the idea of.
The opportunity to raise rents certainly all over the country theyre going up like Crazy.
At would hope DC would follow suit.
But thank you all for joining us I hope you have a great day.
And thank you everyone. This does conclude today's call you may now disconnect.
<unk>.
[music].