Q2 2023 FRP Holdings Inc Earnings Call
Okay.
Good day, everyone and welcome to today's FRP Holdings earnings Conference call.
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It is now my pleasure to turn today's program over to John Baker, Sir. Please go ahead.
Hi, Good morning, I'm, John Baker, and the third Chief Financial Officer, and Treasurer of FRP Holdings and with me today are David <unk> Junior our President John Baker, and second our chairman and CEO .
John Milton our executive Vice President and General Counsel, John Klopfenstein, Our Chief Accounting Officer, and David Pavilion, and third our executive Vice President.
As a reminder, 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 opposed to by law as a result of future events or new information.
To supplement the financial results presented in accordance with gaps FRP present, certain non-GAAP financial measures with the meaning of regulation G promulgated by the Securities and Exchange Commission.
non-GAAP financial measure referenced in this call is net operating income or NOI.
If RFP uses this non-GAAP financial measure to analyze its operations and to monitor assess and identified meaningful trends in its operating and financial performance.
Measure is not and should not be viewed as a substitute for GAAP financial measures dragging.
Dragon sounds GAAP to net income.
Please refer to the segment titled non-GAAP Financial measures on page 12, and 13 of our most recent earnings release.
Now for our financial highlights from the second quarter.
Net income for the second quarter was 598006 <unk> per share versus 657000 or seven cents per share in the same period last year.
Second quarter of 2023, and when compared to the previous year. It was impacted primarily by an increase of 2.281 million and equity and loss of joint ventures from two projects in lease up and increase in management company expense of 235000, due to new hires and recruiting costs as well as an increase in interest expense of 390.
Offset by an increase in interest income by 2.005 million.
First quarter Pro rata NOI for all segments was seven are in 610000 versus $6 six.
$6 million.
550000 in the same period last year for an increase of 16, 3%.
Net income for the first six months of 2023.
$1 million 160000, or 12 cents per share versus 1.329 million or <unk> 14 per share in the same period last year.
The first six months of 2023 compared to the same period in 2022 were impacted by an increase in equity and loss of joint ventures of $4 $3 million as we lease up the verge in faraway Jackson.
An increase in management company indirect expense of 300000 in interest and interesting and increase in interest expense of 658000 offset by an increase in interest income of $3 million $489000.
The first six months of 2022 were also positively impacted by a $733000 gain from property sales, which we did not repeat in the first six months of 2023.
Revenue operating profit and NOI are all experiencing stronger growth this quarter and for the year to date compared to the second.
Second quarter of 2022, we grew revenue by 11, 21% operating profit by 33, 9% Pro rata NOI by 16, 3%.
For the first six months compared to last year. These metrics grew by 13, 5% 63, 9% and 24, 5% respectively.
And yet net income has been more or less flat.
The situation is not new to the company, but the product of development in lease up when activity in Washington Joint ventures are at their highest and have a negative impact financially on our net income.
This was a situation during previous lease ups and it is quite literally the cost of doing business, we count ourselves very fortunate that we have a shareholder base that understands the situation.
And as patient, while we transition these products into stabilization in income production.
I'll now turn the call over to David for his report David.
Yeah.
Thank you John and good morning, good morning to those on the call.
As I have done for the last few quarters I'd like to provide you with a perspective on the results of the company from an operational standpoint.
We report our business segments in this and designated silos, which are important in analyzing the company. However, operationally, we have overlap and synergies that are difficult to following using the business segments as reported.
So employing a day to day look at F. R P, which we call our real estate operations, let me offer the following.
Our real estate operations consist of a four pronged approach that has been the core of our business programming since mid 2018, when we liquidated our legacy warehouse portfolio.
One in house, which happens to be the same as our reported asset management business segment includes our industrial commercial and land development platform. These properties are developed managed and owned 100% by F. Okay too.
Two mining and royalties three.
Third party joint ventures, which is the name implies a projects developed in conjunction with third parties or FRP is the major owner, but relies on seasoned and respected third party operating partners to perform the lion's share of entitlements construction and day to day operations.
And for lending ventures, which we are the principal capital source for residential land development activities.
Relative to our in house or asset management platform occupancy at our three buildings at Hollander business Park since the beginning of the year as well as rent growth on renewals of Cranberry have produced a healthy lift to our NOI.
As of last month, our buildings in Hollander totaling 247000 square feet are fully occupied helping to lift second quarter NOI for our in house properties to $834000 versus 681000 in the same period last year. This represents a 23.8.
Percent increase.
Our industrial pipeline is strong with three projects in the queue.
17 acre parcel in the Peri men industrial section of Harford County, Maryland, not too distant from our other assets in Aberdeen received its building permit this week for our planned 259000 square foot warehouse building, which base by current Mark based upon current market conditions, we plan to commence construction.
And this is mark.
Pre development activities on our 170 acre tract in northeast, Maryland are ongoing and pending favorable market conditions, we could break out ground as early as mid 2024 on a 900000 square foot distribution facility a dislocation.
Finally, our 55 acre tract of land in Aberdeen, Maryland adjacent to the Cranberry run business Park is being designed with multiple options to deliver several buildings or a single large distribution center.
These include 600 to 700000 square feet under roof, depending on final design and market dynamics.
<unk> land leases for the storage of trailers onsite helped to offset our carrying entitlement costs in this property.
Depending on market demand.
It could very well begin construction here in 2020, five or 'twenty 'twenty six complete.
Completion of these three aforementioned development projects will add over 1.9 billion square feet of additional warehouse products through our industrial properties that when added to the assets already in operation will create over 2.35 billion square feet.
Relative to mining and royalty is John third stated in his opening remarks, our mining and royalty division saw revenues for the quarter of 3 million to $164000 versus 2 billion $883000 in the same period last year.
This is record revenue any quarter in the mining and royalty segment for the second quarter in a row NOI was $3.125 million an increase of 14% over the same period last year.
Moving on to our third party joint ventures currently we operate both underdevelopment and stabilized projects with four distinct partners M. R. P C.
<unk> investment company.
Woodfield and St John properties the.
The difference between under development and stabilize being a sustained occupancy level of 90% for a minimum of 90 days.
As of 630, our JV platform includes six or excuse me seven mixed use projects six mixed use residential projects totaling 108 1827 apartments.
And the 198000 square feet of retail.
And one mixed use office projects totaling 72000 square feet of single story office, and 27950 square feet of retail.
Or mixed use residential projects are located in Washington D C, where MRP is our joint venture partner.
Our neighboring projects Dock 79 in Marin along the Anacostia River, where our partners include MRP Realty and most recently Stewart investment company remained healthy with Occupancies of 95, four and 94, 3% respectfully at quarter's end with all retail fully leased.
Quarterly renewal success rates consist of a dock 79 is 65.31% and Marin at 39, 6% with rental rent rate increases of $3, seven 4% and 6.6% respectfully.
Brian Street, a multi building transit oriented mixed use project located on the word lawn and northeast contains three residential buildings as well as the movie theater anchored retail building at a flexible outdoor platform fully leased to a unique entertainment concept called Metro bar.
At the end of the second quarter, Brian streets, three residential towers.
Totaling 478 residue dental units were 93%.
93, 2% occupied and its retail components were 95, 9% leased and 79% occupied.
67.25% of expiring residential tenants renewed their lease.
With a combined average rental rate renewal increase of 2.86% for the quarter.
Our food Hall, Brian Street market opened in March and has seen early success with eight of our installs leased in the first four tenants have opened for business a grand opening for the Brian Street market is planned for the fourth quarter. This year.
The Alamo Drafthouse theater and entertainment venue continues to see greater revenues that have been enhanced by blockbuster films, such as mission impossible impossible Oppenheimer and Barbie.
Our fourth and newest VIX used residential project in the district verge.
Received its final certificate of occupancy in the first quarter and is showing strong performance at 68, 6% leased and 43, 3% occupied.
A significant boost in leasing over the first quarter was nearly half or 45% retail spoken for as of the end of June and.
In terms of velocity, we gained occupancy of 22 units per month on average during the second quarter had barge.
Moving on our two projects in Greenville, South Carolina with Woodfield development is our development partner are saying great success.
Riverside and its 200 apartments was 95.5% occupied and renewed 61, 76% of expiring leases with rental rate increases of 11.96%.
For the second quarter.
Huawei Jackson was placed in service during the fourth quarter 'twenty, two and a quarter. Then it's 227 apartments were 85, 9% leased and 76, 2% occupied.
Another strong performer and lease up 408 demonstrated a significant boost in occupancy over the second quarter, averaging 29 units per month it's.
It's retail component is fully leased and targeting an opening date in the fourth quarter. This year.
Relative to the six Aframax and mixed use residential joint venture projects Frp's share of NOI was 3.290 million $250.
It's 3.049 million $948 in the same quarter last year.
7.9% increase.
The last or seven mixed use project that makes up our third party JV Division.
This is undertaken with St. John's properties, a pioneer in flex and office development and former national developer of the year.
With St. John we are developing windlass run in Baltimore County, Maryland that include 72080 square feet of single story office.
And 27950 square feet of retail.
This project is now 62.79% leased and 48% occupied overall due to an increase in lease space over the second quarter as a result of a new 12000 square foot office lease.
NOI for this past quarter for this asset was $109213 versus 102400 over the same period last year or a six 7% increase.
Blending ventures, the last leg of our operating store.
This is a program, where we provide working capital toward the entitlement in horizontal development of single family residential projects and ultimately a sale to national homebuilders.
The first of our two current projects is Amber ridge.
P G County, Maryland, with a total commitment to this project of $18.5 million.
The investment includes a charged 10% interest rate and a minimum preferred return of 20, 20% above which a profit induced waterfall determines the final split of proceeds.
All but 23 of the 187 lots have been taken down.
As of June 30, and $19 $6 million of principal interested profits has been returned as of the end of the quarter.
Final 23 units, providing additional profits are on track to be taken down by year end.
Our other current lending venture is called Presbyterian homes, which is a 344 lot 110 acre residential development project in Aberdeen, Maryland.
We have committed $31 $1 billion in funding under similar terms.
As Amber Ridge and National Homebuilder is under contract to purchase all of the lots, which include 100, 222, Townhomes and 122 single family dwellings.
Zahnow construction has begun and we expect the first lots to be taken down in Q4 this year.
In closing, we're pleased with the Companys performance this quarter.
Be remiss not to mention the headwinds facing us in Washington D. C. The volume of new apartment again Thats being delivered is significant we will present, a challenge for our leasing times that could impact our rental rate expectations.
Actually a rising interest rate environment presents challenges for construction material pricing and availability as well as affordable plantings in terms.
On a positive note competitive developers, who may not be buttressed by a balance sheet like ours might not be able to obtain or have the available capital to construct projects like our upcoming 259000 square foot warehouse facility at Chelsea Road.
We have flourished in a constantly changing environment due a nose ballpark.
Strength of our financial foundation, and the consistent efforts of our talented teams. We look forward to building upon our successes and finding new ways to exploit our skills in the marketplace.
You and I'll now turn the call back to job.
Thank you David at.
At this point, we're happy to open the call up to any questions you might have.
Thank you.
At this time, if you would like to ask a question. Please press star one on your telephone keypad.
If you would like to remove yourself from the queue at any time, you May press star two.
Once again that is star one to ask a question.
And our first question will come from Curtis Jensen with <unk>. Your line is open.
[music].
Alright, well move next to Stephen Farrell with Oppenheimer. Your line is open.
Good morning, how are you.
Good morning, Steven.
First question and regarding your comments about in construction.
Construction loans and what is the sensitivity of rental rates in relation to construction loans.
Yeah.
Adult quite understand your question sticking with Jamba and other words with.
Development on the sidelines, how do you see the restriction of new supply affecting rental rates.
Well, obviously they are all of the construction loans out there or.
Floating right so.
For example year over year. These kids lose interest rates have gone up for us between three and a half and 4%.
The market's going to dictate what the rental rates, we've talked about our rental rates are actually done pretty well in favor pretty well over the last 12 months, whether they're already there through trade outs and leased ops I think were the big the big pull is going to come from Steven is our buildings are done and so we do.
Don't have to worry about what's happened with the increased construction cost and material pricing because that's behind us.
So I think that's probably the big issue in and tried to get out.
Start a new building with these kind of interest rates is going to be it's going to be very very difficult.
Okay.
And.
What level do you think it does make sense either in.
From a rent level and increase in rental rates or a cost perspective.
Well again these rental rates are really not subject to anything to do anything other than the market. There is a lot of competition in D. C are especially with a lot of the new units coming on so that drives your your rental rates are.
We look at the rental rate market for all of the competition every day until we raise and lower prices depending on the type of unit. The location of units so that kind of that kind of does its own thing interest rates, we can't control.
Only thing we can do is decide not to start something but if interest rates continue to go up obviously, they do have an impact on our operating cash flow.
David what would you say the interest rate on a typical construction loan would be today.
Well for example, the three that we have Oh, Brian Street at seven 4% as of June .
At the end of June .
That's probably the biggest we have another one at seven two and another one at seven four so they're they've literally Don from the threes up to the Sevens and they usually run on a sofa and average 30 day sofa and anywhere from two in a quarter or two to 50 basis points, but anything coming out today.
Day.
The new.
Loans are the.
Basis points are in the mid to high threes. So it's another whole another interest rate point with the new stuff rather than the existing.
Yeah, I think you'd have to see.
Sustained.
Uh huh.
Really high increases in.
And rental rates and ordered in.
Just by taking on that kind of construction want to build.
You do.
Yes.
For example, our Riverside property in South Carolina, we got almost a 12% increase in our rental rates.
For the second you know for the for all the tenants coming due in the second quarter, that's a dramatic increase.
But you need you're going to need some as John says some sustained then that'd be that high but you do need to have some pretty strong rent growth to be able to support these kind of interest rates.
And.
Longer term maybe and.
Two to three years down the road.
At.
Restricting the supply in development being on the sidelines would be.
And beneficial to properties like Brian Street in Gist.
Rental rates in general do you think and did you have a similar view.
I think that'll definitely helps.
He can answer that.
Well, it's interesting Steven you're absolutely right, we do there's going to be a slow down in deliveries in 'twenty five and 26 because of that it takes you know racing two years to build these things.
The fascinating thing that's happened throughout the country is that.
You know during COVID-19. They there wasn't a whole lot of construction. So it got ramped up in the late in the year and early in 2021, which has led to a lot of units coming online over the last six to nine months, causing a record number of units available in the market now.
So as the project lease up you know then then there's going to be the whole thing is going to change and we think 25 and 26 could be great years for for rental rate increases.
And then maybe I missed this in the call do you have.
An updated timeline for development.
The phase I of the Stewart deal I know you just said now you need either big rent increases or a.
Reduction in the rates and the construction loan.
Do you foresee pushing it back.
Farther and maybe between <unk> and 'twenty, four and 'twenty 'twenty four 'twenty five.
Thoughts on that.
We're still what the plan right now Stephen as we're going through the entitlement process, which takes a while.
We want to get it ready, which could probably should probably be some time here in this quarter or the beginning of the fourth quarter and then we'll take a look at the all of the all of the metrics right part of our deal and we usually don't go into these things without guaranteed maximum prices from our contractors.
And we have everything lined up not to mention the fact that a good construction loans, so I would doubt unless something changes dramatically that we would consider starting that.
In 'twenty three not to mention the fact, starting something in the winter in Washington is not very favorable from an efficiency standpoint. So.
Probability says, we wouldn't get into that probably until sometime in 'twenty four.
You know again, if the market conditions dictate.
And turning to industrial and we have starts are down and we're starting to see some pressure on rents are in the country. It is it a similar a supply and demand dynamics around Baltimore.
Are we not not so much the development is somewhat restricted for example, where our Chelsea property is which is the one that I mentioned earlier, which is getting literally ready to start this week, there's a moratorium on all new construction in the area.
So we're like that not only did or is it tough for certain people to spend that kind of money to build a building.
They're not accepting any permit applications. So we're like the only game in town, starting literally now and it'll come on a year from now and we're excited about that market because it's the the vacancies are very low and the rental rates have done very very well I mean, the vacancies are still well below that.
Pre pandemic norms, it's it's it's.
A very tight market.
Yeah.
And.
With the timing of the phase one of Stewart being pushed back do you envision using cash to Opportunistically invest in additional industrial properties are just developing the pipeline.
We're always looking for value add Stephen for example, our Cranberry run business Park was that which we've enjoyed some really strong results in that property over the last wherever the last several quarters.
Always in the market for value add stuff for sure and if something comes along and it works and we've kind of it's not so it doesn't require so much rehabilitation of refurbishment and the numbers work, we would absolutely consider it.
And have you seen any opportunities and and non development and properties or maybe the seller might needing liquidity or anything of that nature.
We haven't yet we're very particular.
And who we do business with.
We've got a pretty strong.
A team of folks and MRP and wood field.
St John .
So we don't have we were very careful in as to being out in the market and looking for other <unk>.
Platforms that would be in a joint venture.
The type of business, that's that would be a tough one we're always looking and we look at properties every day.
In certain areas are obviously throughout the north South East North Carolina, South Carolina, We've got our eye on obviously, because we've got projects in South Carolina.
Carolina, but so yeah. We're always we're looking in the banks that we've been dealing with and the lenders no.
Who we are and the fact that you know that.
Were fairly strong from a balance sheet standpoint, and we're good boots on the ground operators you know so many of these people will develop properties before and you know when they were there's a lot of fee developers out there that would build them and sell them and move on to the next one but you know we've historically been pretty strong in managing these.
Asset so we bring a lot of we think we bring a lot to the table with our joint venture partners for sure.
That's good thank you for taking my questions.
Thank you Louis.
Yeah.
Once again that is star one to ask a question.
Yes.
And next we have Curtis Jensen with Goodbody. Your line is open.
Hey, good morning.
Curtis.
Oh I got cut off earlier, so it was my fault, but I.
Apologize if I'm redundant here.
I have a couple of questions and the first one is sort of about presentation.
Specifically when they go from the text your techs disclosure in the press.
Kind of like the tables and.
It seems to it may even get a little cloudier when I think about the GAAP accounting for all this but like just take an example, Brian Street.
As Brian Street considered stabilized at this point, it's been 90 days about 90%.
No sorry, it has not reached it yet.
It's going to probably make it next quarter.
Okay I have to be we still got you know just because it's it there it's least gotta be occupied and the residential is not.
Not quite there for 90 days, which is what kind of the mark that we put on it to put on it and the retail.
It's still having people move in but it was close.
So as the when I when I go to the table and I see the development segment and I see like the three month's results.
Revenue was 467000.
Yes.
Is that Brian streets lease your portion of Bryant Street or is there something else or as Brian Street.
These revenue disclosed somewhere else.
Good morning, Kurt This is John Klopfenstein, our unconsolidated joint ventures, which includes Bryant Street the Verde.
River side, all the Greenville.
Jackson, they're they're all unconsolidated suffered from a GAAP perspective on our income statements. They don't run through revenue or expense. They all run through that one line on the income statement that you find on the on the main page called equity and loss of joint ventures, but.
But we are going to be filing our 10-Q today and in the footnote about our about our joint ventures, you'll find a breakdown of each of the each of those.
Venture's income statements showing the revenue and expense.
Okay. So when I go into the tables in your press release, you May see development segment, that's not going to include Riverside or Bryant Street.
Or anything like that anything thats, not like somewhere between development and stabilized and not and not it.
It does not.
And it won't include it it won't be included in stabilized joint ventures, and revenue and expense either in the future once it stabilizes because.
Those are our revenues there are there are joint venture partners revenue. So you'll you'll have to refer to the table and talking to the table then talking about in the footnotes.
Okay.
I guess for GAAP for GAAP purposes, It will continue to be.
Show, an equity and loss of joint or equity and joint ventures.
That's exactly right it will always be there.
Alright, so the only the only two things in your tables.
That are considered stabilized joint ventures, or the merit and Doc.
So that's been consistent over time.
That's correct yes.
<unk> is not reflected in that table.
And the revenues and expenses because of the GAAP treatment is required.
Yeah.
Alright, I just hope you I mean it is it is I understand how you disclose it is led by Brian streets of mixed use joint venture.
Between FRP and MRP, but it's not.
[laughter] not disclose the same way, it's not if I were a first time reader I'd say, okay, I'm gonna look under joint ventures.
And then I go to the table, so that stabilized joint venture but.
<unk>.
No I've been around the <unk>.
It's a little bit confusing to me and I've been around the company for seven years.
I guess the one.
Feedback, we will see if we can improve that disclosure in the future to two.
They only say it because the NOI from your.
You know our multifamily and mixed use is gonna, becoming bigger and bigger and bigger.
The next couple of years.
And then of course, you've got a whole another stream of income coming on in asset management.
So I I S.
From a.
A place of trying to analyze the company I mean I have to go from kind of.
Book value asset values development.
Kind of assets too.
Income, earning.
Income producing properties.
And it's going to be harder to dissect all of this is if there is some more disclosure about.
Yeah.
About about that I think is.
Anyway, I don't want to hold us up on that but on the <unk>.
<unk>.
Again, I apologize if I'm being redundant here.
Consistent with their heads and beds philosophy are you having to offer a lot of incentives to get people over there.
Unusual incentives or is it just kind of.
Yeah.
You're pretty happy with it.
We're actually pretty happy with it right now.
I said, we've been moving a lot of people in and then we actually did a temporary.
Temporary program with a group called place maker, which takes on SaaS.
Absolutely takes it on 27 units as of June one and then they lease them.
A master lease effectively that way.
So.
We're really and so that's 27 units that we would not have been able to get occupied that quick because they interestingly enough that they rent these spaces to professionals and that kind of thing for.
30, a minimum of 30 days and in fact, when they moved in in June one they took all 27 units.
We have them for a year and we're wondering and that's a.
We we kind of do a 60 40 split we get 60% of the revenues and I get 40, and the price is leasing up so quick where we're wondering if that was a great idea or not but now things are going very well at the borrowers, but look we are giving at one one to one and a half months.
Concessions, which is not overly.
Overly panel paint all but once just like we did with coda and that kind of thing.
When you open these things up in December .
The the early months of the year and the late months of the year are not the best bonds to be opening up for lease.
And how do we come in and now that we've come into the summer into the fall. The rents are getting we're getting a little stronger as you could see so.
But yeah, we're so far we're pretty happy with it one of the concrete plants has come down.
Stuart.
So we're looking to animate that that area just to the right a verge and of course, you've got the.
Soccer Stadium behind this there's a lot of really good things going on over there. So we're pretty happy with it as of <unk>. So far so good.
Would you would you and maybe this is jumping the gun a little.
<unk> talked about in analyst day in October would you anticipate sort of a mini proper.
Property tour again.
You know just anecdotally.
Some of it.
Yeah.
Yeah for.
For sure.
Circling back to Brian Street for a second did I hear there is still a construction loan on that or are you leaning toward.
Yeah.
Yeah.
Mortgage.
It can it can it can a mortgage kind of come in under a 7.4 or whatever I heard David say is on the construction loan.
They well our permanent financing cat does they usually come in about 150 basis points or more less than a.
You know then the construction loan, but we've still got some some wood to chop It Bryant Street.
Obviously the units we showed average for the 487 units the average renewal rate for the three buildings.
Averaged about 286%. They went from 1.8, all way up to four 2%, but so the residential side is is starting to come into its own where we feel.
The success of that project is really going to be as it continues to mature is in the retail.
And Alamo for as I mentioned, our Alamo has done their sales are way up over last year, which was I guess people still like the Barbie magazine movies, but they've done very well so we're happy there.
Are inline retail we have some new leases they take a while to move it to move the tenants in.
And so the animation of that are.
That place is not there yet so.
So it's not the greatest a project right now both from a you know from a lending standpoint, and just from a from a as you walk around it still needs to mature a little bit more.
So we'll take a look at it at the beginning of 'twenty four and see how things go I mean, we do have a we are looking at different options right. Now we just haven't made a decision.
Is there.
Is there anything going on across the Street I know there was a site across the street from Brian Street that.
Was there was potential for development is there is there any.
Movement, there or is it is it sort of.
Status quo is it an industrial site. It is it is this a couple of industrial type buildings are actually one of them has a basketball court on the roof, but it's owned by a development entity.
Believe theyre going through the entitlement process and trying to figure out what they want to do and that takes a while as you know.
We've been doing it down there since the laws I won't I'm embarrassed to say how long we've been doing that so it takes a while but like I said, that's Ah Stewart property, we're going through the entitlement process. It takes time.
And then if you see something that says you may want to change the use or whatever then that adds more time for example, our dock in Marin.
We still have two more phases down there in phase three and four where we're going through a modification of that project, that's going to take us about a year to change the use from office.
In hotel to residential so it takes a while but yes to answer your question there are some <unk>.
Development pre development activity there.
Across the street.
I'll wrap up with one more question.
Fundamental lending ventures is that.
You know as division there to kind of strictly limited to homebuilders and is there is there a point when you say, let's wind it down or is this going to be an open ended.
Opportunistic lending.
Vehicle with its you know where you've got dedicated personnel and.
Do you see it.
Yeah Curtis.
This was a great great way to put money to use with the <unk>.
Our partner that David is that a relationship with for a long time going back and when we had.
Post sale a lot of cash on our balance sheet and no plans for it and.
Money market rates were roughly zero.
This was a good way to get.
A good return on our money in.
Our market and product type that we where.
We're comfortable with I think going forward.
As we plan to put more and more money into.
Our own income producing properties will.
It will be less likely to do lending venture.
Okay I agree I mean, I thought it was a pretty pretty interesting.
They did deploy capital.
Youre getting good returns it might be interesting if you have a page on that in your analyst day presentation to kind of summarize.
The ins and outs of cash.
Cash and the returns on that it would be.
Interesting absolutely.
Again, I guess it was an interesting to take advantage of.
Homebuilders, who wanted to stay asset light.
And didn't want to commit and pet option.
Sort of used to options to develop properties.
Another way of thinking about it.
Well there are some other ways too.
Tangible advantages of that is that when the world knows that we're looking for property, whether its residential or industrial.
It just gives us the ability to cast a wider net.
For example, the property that we found at Chelsea, where the buildings are going to go those are two smaller properties that we put together.
People know that we are.
Active land developers.
We've been doing it since the company opened in 1988.
So it kind of keeps us out there in the market and that's another advantage that this brings but we have been very very selective.
Now on the choosing these properties and we really don't we usually don't even get involved on last weekend by them right by them wholesale in and not even do that until the entitlements are there. So the risk is obviously is the investing capital but we.
We obviously don't have any loans and we certainly don't borrow money on these but so far they've been very very advantageous with IRR is 20% or above so.
But we are as John said, we were going to take a look at it and see where the money is best spent.
If it spent at all and or just invested at least the returns right now on the <unk>.
Cash investments I think are pretty good right now.
Well I'll.
I'll, just say keep up keep up the good work.
Look forward to seeing you guys in October and.
I don't know why anybody would give their money to a private equity.
Real estate.
Group when they can give it to you guys.
Well tell everyone that [laughter]. Thank you card is that's a very costly.
Have a good.
And as a reminder, that is star one to ask a question.
All right and we have no further questions in queue. So I would like to turn the floor back over to our speakers for any additional or closing remarks.
Yeah.
Yeah.
Uh huh.
Thank you all for your maintained interest in the company and just like to offer a quick reminder.
As Curtis referenced we are holding an investor day on October 11th 2023 in Washington, D C and our dock 79 property.
<unk> will feature presentations from our executive management team and for information on the event and to RSVP. Please email investor day.
At FRP D E V dot com or check the Investor Relations section of our company's website.
Thank you.
Yes.
Thank you ladies and gentlemen, this does conclude today's presentation. We appreciate your participation and you may disconnect at any time.
Yeah.
Okay.
Yeah.
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Yeah.
Yeah.
Yeah.
Yeah.