Q1 2024 FRP Holdings Inc Earnings Call
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Operator: Please stand by. We're about to begin. Good morning, everyone. Welcome to today's FRP Holdings first quarter 2020 earnings conference call.
Good morning, everyone and welcome to today's FRP Holdings first quarter 2024 earnings Conference call. At this time all participants are in a listen only mode. Later, you will have the opportunity to ask questions. During the question and answer session. You may registered to ask a question at any time by pressing star one on your telephone.
Operator: At this time, all participants are in a listen-only mode. Later, you will have the opportunity to ask questions during the question and answer session. You may register to ask a question at any time by pressing star one on your telephone keypad. You may withdraw yourself from the queue at any time by pressing star two.
Operator: Pat you may withdraw yourself from the queue at any time by pressing star two.
Operator: Also today's call is being recorded and I will be standing by if anyone should need any assistance and now at this time I'll turn things over to our host Mr. John baked into third Chief Executive Officer. Mr. Baker. Please go ahead.
Operator: Also, today's call is being recorded, and I will be standing by if anyone should need any assistance. And now, at this time, I'll turn things over to our host, Mr. John Baker III, chief executive officer. Mr. Baker, please go ahead.
John Daniel Baker: Good morning. I'm John Baker III, Chief Executive Officer of FRP Holdings Inc., and with me today are David deVilliers Jr., our President, and John Baker II, our Chairman. David deVilliers III, our Chief Operating Officer, John Milton, our Executive Vice President and General Counsel, and John Klopfenstein, our Chief Accounting Officer. As a reminder, any statements on this call that relate to the future are, by their nature, subject to risks and uncertainties that could cause actual results and events that are materially different from those indicated in such forward-looking statements. These risks and uncertainties are listed in our SEC filing. We have no obligation to revise or update any forward-looking statements, unless as imposed by law as a result of future events or new information.
Speaker Change: Good morning, John begun the third Chief Executive Officer of FRP Holdings, Inc. And with me today are David Devillier a junior.
John Daniel Baker: Supplementing the financial results presented in accordance with generally accepted accounting principles, FRP presents certain non-GAAP financial measures within the meaning of Regulation G promulgated by the Securities and Exchange Commission. The non-GAAP financial measure referenced in this call is Net Operating Income, or NOI. FRP uses this non-GAAP financial measure to analyze its operations and to monitor, assess, and identify meaningful trends and its operating and financial performance. This measure is not and should not be viewed as a substitute for GAAP financial measures.
John Daniel Baker: Yeah.
John Daniel Baker: John Baker, the second our chairman Dave.
John Daniel Baker: To reconcile Net Operating Income to Gap Net Income, please refer to the segment titled Non-Gap Financial Measures on pages 9 and 10 of our most recent earnings report. Any reference to cap rates, asset values, per share values, or the analysis of the estimated value of our assets, net of debt, and liabilities is for illustrative purposes only, as a reflection of how management views its various assets for purposes of informing management decisions, and do not necessarily reflect the price that would be obtained upon the sale of the asset or the associated costs or tax liability.
John Daniel Baker: David <unk>, the third our Chief operating Officer, John Milton, Our Executive Vice President and General Counsel, and Jon Kaufman Steen, our Chief Accounting Officer.
John Daniel Baker: 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.
John Daniel Baker: And if a materially.
John Daniel Baker: Indicated in such forward looking statements.
John Daniel Baker: These risks and uncertainties are listed in our SEC filings.
John Daniel Baker: We have no obligation to revise or update any forward looking statement.
John Daniel Baker: Except as imposed by law.
John Daniel Baker: As a result of future events or new information.
John Daniel Baker: To supplement the financial results presented in accordance with generally accepted accounting principles.
John Daniel Baker: FRP present, certain non-GAAP financial measures within the meaning of regulation G promulgated by the Securities and Exchange Commission.
John Daniel Baker: The non-GAAP financial measure referenced in this call is net operating income or NOI.
John Daniel Baker: FRP uses this non-GAAP financial measure to analyze its operations and to monitor assess and identify meaningful trends.
John Daniel Baker: And its operating and financial performance.
John Daniel Baker: A measure is not and should not be viewed as a substitute for GAAP financial metrics.
John Daniel Baker: Reconciling net operating income to GAAP net income.
John Daniel Baker: Please refer to the segment titled non-GAAP financial measures on pages, nine and 10 of our most recent earnings release.
John Daniel Baker: Any reference to cap rate asset values per share values.
John Daniel Baker: The analysis of the estimated value of our assets net of debt and liabilities are for illustrative purposes only.
John Daniel Baker: As a reflection of how management views it as various assets for purposes of informing management decisions.
John Daniel Baker: And do not necessarily reflect the price it would be obtained upon the sale of that would be asset or the associated costs or tax liability.
John Daniel Baker: Now for our financial highlights from the first quarter. Net income for the first quarter was $1.3 million, or $0.07 per share, versus $565,000, or $0.03 per share, in the same period last year. This 130% increase in net income over the same period last year was driven by a $95,000 decrease in interest expense and a $400,000 increase in interest income. Additionally, a $600,000 decrease in equity and loss of joint ventures due to the lease-up of The Verge, as well as a slight increase in revenue and operating profit from better multifamily and industrial and commercial segment results.
John Daniel Baker: Now for our financial highlights from the first quarter.
John Daniel Baker: Net income for the first quarter was $1 $3 million or seven cents per share versus $565000 or <unk> <unk> per share in the same period last year.
John Daniel Baker: This 130% increase in net income over the same period last year was driven by $95000 decrease in interest expense and a 400000 dollar increase in interest income.
John Daniel Baker: $600000 decrease in equity and loss of joint ventures due to the lease up of the verge.
John Daniel Baker: As well as a slight increase in revenue and operating profit from better multifamily and industrial and commercial segment results.
John Daniel Baker: Offset by decreased royalties from the mining royalty segment and increased losses in the development side.
John Daniel Baker: Offset by decreased royalties from the mining royalty segment and increased losses in the development sector, Pro Rata Net Operating Income for the first quarter increased from $6.99 million last year to $8.53 million in the first quarter of 2024. This increase in NOI was primarily due to a 92% increase in multifamily NOI, as well as a 36% increase in industrial and commercial NOI compared to the first quarter of last year. This increase in multifamily NOI was driven partly by improved results at DOC79 and the Marin compared to last year, but mostly by the addition of two assets to this segment due to 408 Jackson in Greenville and Bryant Street in Washington, D.C. Achieving stabilization.
John Daniel Baker: Pro rata net and net operating income for the first quarter was increased 22%.
John Daniel Baker: From $6 $99 million last year to $8 five $3 million in the first quarter of 2024.
John Daniel Baker: This increase in NOI was primarily due to a 92% increase in multifamily NOI as well as at 36% increase in industrial and commercial NOI compared to the first quarter last year.
John Daniel Baker: This increase in multifamily NOI was driven partly by improved results at dock 79, and the mayor and compared to last year, but mostly by the addition of two assets in this segment due.
John Daniel Baker: Due to 408 Jackson in Greenville, and Brian Street in Washington D C achieved.
John Daniel Baker: Achieving stabilization.
John Daniel Baker: Yesterday we posted on our website a brief slideshow of financial highlights for the first quarter. For those who have not yet seen it, we are now publishing an estimated value of our assets net of debt and liabilities. The sum of the parts analysis yielded a per share value in the range of $32.89 to $36.59 per share.
John Daniel Baker: Yesterday, we posted to our website a slide show financial highlights for the first quarter.
John Daniel Baker: For those who have not yet seen it we are now publishing an estimated value of our assets net of debt and liabilities.
John Daniel Baker: The sum of the parts analysis yielded a per share value in the range of $32.89 to $36 59 per share.
John Daniel Baker: Before I turn the call over to you, I want to congratulate David deVilliers III on his promotion yesterday to Chief Operating Officer. David, or D3 as he's known among his colleagues, is an invaluable member of our management team, which is not surprising because he studied at the feet of a master. David, on a personal level, if you'll indulge me, I just want to say how proud we are to have you as a member of the team.
Speaker Change: Before I turn the call over I want to congratulate David Devillier. The third on his promotion yesterday to Chief operating officer, David or D. Three years, he's known amongst colleagues as an invaluable member of our management team.
John Daniel Baker: It is not surprising because he studied at the feet of a master.
John Daniel Baker: David on a personal level, if you'll indulge me I just want to say how proud we are to have you as a member of the team.
John Daniel Baker: And we look forward to working with you in this new capacity as we start the next chapter in this company's history. I will now turn the call over to our new COO, David deVilliers III, for his report.
Speaker Change: And we look forward to working with you in this new capacity as we start the next chapter in our company's history I will now turn the call over to our new C. O O David Devillier as a third for his report David.
David H. deVilliers: John, thank you for those kind words. I'm humbled and look forward to filling this role. Allow me to provide an operational perspective on the first quarter results of the company. Starting with our commercial and industrial segment, this segment consists of nine buildings totaling nearly 550,000 square feet, which are predominantly warehouses, and all located in Maryland. At quarter end, the buildings were 95.6% occupied. Total revenues and NOI for the quarter totaled $1.45 million and $1.16 million, respectively, an increase of 36%. 47% over the same period last year.
Speaker Change: John Thank you for those kind words.
David H. deVilliers: I'm humbled and.
David H. deVilliers: Look forward to filling this role.
David H. deVilliers: Allow me to provide an operational perspective on our first quarter results of the company.
David H. deVilliers: Starting with our commercial and industrial segment. This segment consists of nine buildings totaling nearly 550000 square feet, which are predominantly warehouses and all located in Maryland.
David H. deVilliers: At quarter end the buildings were 95, 6% occupied.
David H. deVilliers: Total revenues and NOI for the quarter totaled 1.45 million and 1.16 million respectively.
David H. deVilliers: An increase of 36% and 47% over the same period last year.
David H. deVilliers: Moving on to the results of our mining and royalty business segment, this division consists of 16 mining locations predominantly located in Florida and Georgia, with one mine in Virginia. Total revenues in NOI for the quarter totaled $2.96 million and $2.76 million, respectively, a decrease of 10% and 12% over the same period last year. The primary reason for the decrease is due to a reduction of royalties at our Manassas quarry to resolve a calendar year 2023 $842,000 overpayment by our tenant who overestimated a portion of production tons which is shared with other properties.
David H. deVilliers: Moving on to the results of our mining and royalty business segment. This division consists of 16 mining locations predominantly located in Florida and Georgia.
David H. deVilliers: One mine in Virginia.
David H. deVilliers: Total revenues and NOI for the quarter totaled $2 96 million and $2 $76 million, respectively, a decrease of 10% and 12% over the same period last year the.
David H. deVilliers: The primary reason for the decrease is due to a reduction in royalties at our Manassas quarry to resolve the calendar year 2023, $842000 overpayment by our tenant who overestimated a portion of production tonnes, which is shared with other property owners.
David H. deVilliers: As to our multi-family segment, this business segment consists of 1,483 apartments and over 117,000 square feet of retail space located in Washington, D.C., and South Carolina. At quarter end, the apartments and retail space were 94% and 79% occupied, respectively. Total revenues in NOI for the quarter were $11.62 million and $6.8 million, respectively. FRP's share of revenues in NOI for the quarter totaled $6.66 million and $3.8 million, respectively.
David H. deVilliers: As to our multifamily segment. This business segment consists of 1483 apartments.
David H. deVilliers: Over 117000 square feet of retail located in Washington, D C and South Carolina.
David H. deVilliers: At quarter end, the apartments, and retail space, where 94% and 79% occupied.
David H. deVilliers: Total revenues and NOI for the quarter were $11 2 million and $6 8 million respectively.
David H. deVilliers: Pharr P share of revenues and NOI for the quarter totaled $6, six 6 million and $3 8 million respectively.
David H. deVilliers: This is a significant increase over prior quarters due to our Bryan Street and 408 Jackson joint ventures being included in this segment as of January 1st, 2024. As a same-store comparison, FRP shares of revenues in NOI for the quarter totaled $3.35 million and $2.09 million, respectively, an increase of 2% and 4% over the same period last year. Now on to the development segment; this segment is where we acquire, entitlement, develop, and create new income-producing assets that are transferred into our commercial, industrial, and multifamily business segments upon reaching certain completion and occupancy benchmarks.
David H. deVilliers: This is a significant increase over prior quarters due to our Brian Street and formally Jackson Joint ventures being included in this segment as of January 1st 2024.
David H. deVilliers: As the same store comparison FRP shares of revenues and NOI for the quarter totaled 335 million and two point over 9 million, respectively, an increase of 2% and 4% over the same period last year.
David H. deVilliers: Now on to the development segment.
David H. deVilliers: This segment is where we acquire entitle develop and create new income producing assets that are transferred into our commercial industrial and multifamily business segments upon reaching certain completion and occupancy benchmarks.
David H. deVilliers: This segment uses capital to entitle and develop lands. Funder Vertical Construction Endeavor, with the goal of turning our non-NOI producing assets into NOI producing assets. The segment also lends funds to strategic partners and ventures to prepare and develop land for sale to national home builders in exchange for interest and or profit sharing. In terms of our commercial industrial development pipeline, our 259,000 square foot state-of-the-art Class A warehouse building located in the Perryman Industrial Sector of Harford County, Maryland, is well under construction and expected to be delivered in Q4 of this year. We have entered into two new joint venture agreements with BBX Logistics.
David H. deVilliers: The segment uses capital to entitle.
David H. deVilliers: And develop lands and fund our vertical construction endeavors with the goal of turning our non NOI producing assets into NOI producing assets.
David H. deVilliers: The segment also lens funds to strategic partners in ventures to prepare and develop lands for sale to national Homebuilders and exchange for interest and or profit sharing.
David H. deVilliers: Yeah.
David H. deVilliers: In terms of our commercial industrial development pipeline.
David H. deVilliers: Our 259000 square foot state of the art class a warehouse building located in the Permian industrial sector of Harford County, Maryland is well under construction and expected to be delivered in Q4 of this year.
David H. deVilliers: We have entered into two new joint venture agreements with BB acts logistics.
David H. deVilliers: The first provides for the construction of a 200,000 square foot warehouse building in Lakeland, Florida. The site is centrally located along the I-4 corridor between Tampa and Orlando. Permits for the development should be in hand during Q1 of 2025. The second project provides for the construction of some 180,000 square feet of warehouse product in two buildings in Broward County, Florida. The site is minutes from Port Everglades and the Fort Lauderdale-Hollywood International Airport, with frontage on I-595, accessing the Florida Turnpike and I-95.
David H. deVilliers: The first provides for the construction of a 200000 square foot warehouse building in Lakeland, Florida to say the centrally located along the I four corridor between Tampa and Orlando permits.
David H. deVilliers: Permits for the development should be in hand during Q1 of 2025.
David H. deVilliers: The second provides for the construction of some.
David H. deVilliers: 180000 square feet of warehouse product and two buildings in Broward County, Florida.
David H. deVilliers: Site is minutes from Port Everglades, and the Fort Lauderdale Hollywood International Airport with frontage on I find 95, accessing the Florida Turnpike and <unk> 95 permits maybe in hand by the first quarter of 2025 as well.
David H. deVilliers: Permits may be in hand by the first quarter of 2025 as well. In Cecil County, Maryland, along the I-95 Corridor, we are in the middle of pre-development activities on 170 acres of industrial land that will support a 900,000 square foot distribution center. We look to secure permits in Q2 of 2025. Finally, we are studying multiple conceptual designs for our 55-acre track in Hartford County, Maryland.
David H. deVilliers: And Cecil County, Maryland, along the I 95 corridor, we are in the middle of pre development activities on 170 acres of industrial land that will support a 900000 square foot distribution center, we'd look to secure permits in Q2 of 2025.
David H. deVilliers: Finally, we are studying multiple conceptual designs for 55 acre track in Hartford County, Maryland.
David H. deVilliers: Our various configurations should yield between 625,000 to 650,000 square feet of industrial product consisting of multiple buildings. Existing land leases for the storage of trailers on-site help to offset our carrying and entitlement costs until we are ready to build, which could be as early as 2025, pending favorable market conditions. Completion of these industrial commercial development projects will add over 2.1 million square feet of additional industrial commercial product to our industrial platform, growing the business segment from 550,000 square feet to over 2.7 million square feet.
David H. deVilliers: Our various configurations should yield between 625000 to 650000 square feet of industrial product consisting of multiple buildings.
David H. deVilliers: Existing land leases for the storage of trailers onsite helped to offset our carrying an entitlement costs until we are ready to build which could be as early as 2025 pending favorable market conditions.
David H. deVilliers: Completion of these industrial commercial development projects will add over two 1 million square feet of additional industrial commercial product to our industrial platform.
David H. deVilliers: Growing the business segment from 550000 square feet to over $2 7 million square feet.
David H. deVilliers: As to our multi-family development pipeline, we have our newest project in the district known as VIRG. Quarter End, the 344 residential units were 91.6% occupied, with 45% of its 8,536 square feet of retail spoken. Total revenues and NOI for the quarter were just under $2,987,000, respectively.
David H. deVilliers: As to our multifamily development pipeline, we have our newest project in the district known as Birch.
David H. deVilliers: At quarter end. The 344 residential units were 91, 6% occupied with 45% of its 8536 square feet of retail is spoken for.
David H. deVilliers: Total revenues and NOI for the quarter were just under $2 million and $987000 respectively.
David H. deVilliers: FRP's share of revenue in NOI for the quarter totaled $1.22 million and just over $605,000, respectively. Although our emphasis is on the industrial assets at this time, we will keep an eye on market conditions and their impact on four multifamily projects that reside in our development segment. These projects represent over 1,200 apartments and 58,000 square feet of retail. Turning to our principal capital source strategy, or lending ventures, I have the following updates on our two current projects. Amber Ridge in Prince George's County, Maryland, consisting of 187 lots, is completely sold out.
David H. deVilliers: FRP share of revenue and NOI for the quarter totaled one point to $2 million and just over 605000, respectively.
David H. deVilliers: Although our emphasis is on the industrial assets at this time, we will keep watch on market conditions and their impact one four multifamily projects that reside in our development segment. These projects represent over 1200 apartments.
David H. deVilliers: 58000 square feet of retail.
David H. deVilliers: Yes.
David H. deVilliers: Final development activities to get off bonds are ongoing, and upon completion of this project, interest income and profits are expected to total $3.8 million, a 20% profit on funds drawn. Our second lending venture, Presbyterian Homes or Aberdeen Overlook, consists of 344 lots located on 110 acres in Aberdeen, Maryland. We have committed $31.1 million in funding. $23.1 million was drawn as of quarter end, and over $5.8 million in payments were received to date.
David H. deVilliers: Turning to our principal capital source strategy or lending ventures I have the following updates to our two current projects.
David H. deVilliers: Amber or Red Ridge in Prince George's County, Maryland, consisting of 187 launch is completely sold out.
David H. deVilliers: Final development activities to get off bonds are ongoing and upon completion of this project intra.
David H. deVilliers: Interest income and profits are expected to total $3 8, million% to 20% profit on funds drawn.
David H. deVilliers: Our second lending venture Presbyterian homes, or Aberdeen overlook consists of 344 lots located on 110 acres in Aberdeen, Maryland.
David H. deVilliers: We have committed $31 1 million in funding.
David H. deVilliers: $23 1 million was drawn as of quarter end and over $5 $8 million in payments were received to date and.
David H. deVilliers: The National Home Builder is under contract to purchase all the finished building lots, and we expect to receive a minimum 20% profit on funds drawn. We also continue to develop Hampstead Trade Center, which consists of 255 lots located in Hampstead, Maryland, and to explore Second Life residential build-out options for our quarries in the South. The knowledge gained through our lending ventures has offered management a unique opportunity to leverage this development expertise and apply it to our mining land. We can potentially scale this strategy while creating a second life for our mother.
David H. deVilliers: National Homebuilder is under contract to purchase all the finished building lots and we expect to receive a minimum 20% profit on funds drawn.
David H. deVilliers: We also continue to entitle Hampshire Trade Center, which consists of 255 lots located in Hampstead, Maryland.
David H. deVilliers: And to explore second life residential build out options for inquiries in the south.
David H. deVilliers: <unk> gained through our lending ventures is offered management a unique opportunity to leverage this development expertise apply it to our mining lands and potentially scale. This strategy, while creating a second life for our mining plans.
David H. deVilliers: In closing, we remain pleased with the company's performance. I'm excited about the growth potential being created in our development sector. Interest rates.
Speaker Change: In closing we remain.
David H. deVilliers: I'm pleased with the company's performance and excited about the growth potential of being created in our development segment.
David H. deVilliers: Interest rates inflationary pressures on expenses and construction costs and existing supply and deliveries will continue to create headwinds and enhanced scrutiny for new development starts. We do continue to move forward and seek entitlements for our development pipeline with several permits expected in 2020.
David H. deVilliers: Inflationary pressures on expenses and construction costs and existing supply and deliveries will continue to create headwinds and enhance scrutiny for new development starts. However, we do continue to move forward and seek entitlements for our development pipeline, with several permits expected in 2025. Upon receipt of these permits, management will remain patient, calculated, and cautious in pulling the trigger on vertical construction.
David H. deVilliers: Five upon receipt of these permits management will remain patient calculated and cautious and pulling the trigger on vertical construction.
John Daniel Baker: Thank you, and I'll now turn the call back to John.
David H. deVilliers: Thank you and I'll now turn the call back to John.
John Daniel Baker: Yeah.
John: Thank you David.
John Daniel Baker: Not to put too fine a point on it, but the market conditions as described by David have for some time led us to believe that our best path forward in the immediate future lies in industrial development. Returns are currently better than most multifamily projects and are less capital-intensive and less reliant on debt. Industrial development has always been our core competence, and we are excited to move forward on the projects we have in the queue.
John: Not to put too fine a point on it but the market conditions as described by David have for some time lead us to believe that our best path forward in the immediate future lies in industrial development.
John Daniel Baker: The returns are currently better than most multifamily projects.
John Daniel Baker: Less capital intensive and less reliant on that.
John Daniel Baker: Industrial development development has always been our core competency and we are excited to move forward on the projects we have in the queue.
John Daniel Baker: Market and economic conditions will need to remain favorable, but the five industrial projects David described represent an estimated $191 million in capex for the company, which we have underwritten at a six to seven percent return on the return, excuse me, six to 7% NOI yield on cost. This ability to pivot between asset classes is one of our strengths as a company. The economy remains strong, but margins have tightened, costs have gone up, and it requires real skill and the right assets to execute on projects that are accretive to investors.
John Daniel Baker: Market and economic conditions will need to remain favorable but the five industrial projects. David described represent an estimated $191 million in capex for the company.
John Daniel Baker: Which we have underwritten at a 6% to 7%.
John Daniel Baker: Return.
John Daniel Baker: Excuse me, 6% to 7% NOI yield on cost.
John Daniel Baker: This ability to pivot between asset classes, it's one of our strengths as a company.
John Daniel Baker: The economy remains strong but margins have tightened costs have gone up.
John Daniel Baker: And it requires real skill and the right assets to execute on projects that are accretive to investors.
John Daniel Baker: We believe we are in an excellent position to do just that because we have a strong balance sheet combined with expertise across a number of asset classes and a nimble and energetic management and operation. Before we open it up to questions, I want to take a moment to acknowledge our Chairman, John Baker II, who retired as CEO yesterday. This company was wildly fortunate to have John Baker at the helm for both of his tenures as CEO.
John Daniel Baker: We believe we are in an excellent position to do just that because we have a strong balance sheet combined with expertise across a number of asset classes from.
John Daniel Baker: From a nimble and energetic management and operations team.
John Daniel Baker: Yeah.
John Daniel Baker: First time around, he helped guide the company through the worst financial crisis of any of our lifetimes. Second, during his second tenure, he helped engineer the sale of our warehouse assets in 2018, which was not only a significant liquidity event but sparked a massive transformation in the direction of the company, of which he oversaw. His career in the aggregates industry is legendary, and he's universally respected among his peers, of which there are very few
Speaker Change: Before we open it up to questions I wanted to take a moment to acknowledge our chairman John Baker, The second who retired as CEO yesterday.
John Daniel Baker: This company was wildly fortunate to have John Baker at the helm for both his 10 years as CEO.
John Daniel Baker: The first time around he helped guide the company through the worst financial crisis or any of our lifetimes.
John Daniel Baker: And then second tenure Ehealth engineer the sale of our warehouses assets in 2018, which was not only a significant liquidity event, but sparking massive transformation in the direction of the company of which he oversaw.
John Daniel Baker: His career in the aggregates industry this legendary.
John Daniel Baker: Universally respected among its peers of which there are very few.
John Daniel Baker: He also happens to be the greatest man I've ever known. His retirement leaves huge shoes to fill, and I'm incredibly humbled by the opportunity to continue his legacy. We're now happy to answer any questions that you might have. Thank you, Mr. Baker. Ladies and gentlemen, at this time, if you do have a question...
John Daniel Baker: He also happens to be the greatest man I've ever known.
John Daniel Baker: His retirement leaves huge shoes to fill and I'm incredibly humbled by the opportunity to continue his legacy.
John Daniel Baker: We're now happy to answer any questions that you might have.
Operator: Thank you, Mr. Baker. Ladies and gentlemen, at this time, if you do have a question, please press star 1 on your telephone keypad. You may remove yourself from the queue at any time by pressing star 2. Once again, that is star 1 to ask a question, and we'll pause for just a moment to allow questions to be answered. And we'll go first this morning to Stephen Farrell of Oppenheimer Close.
Speaker Change: Thank you Mr Baker, ladies and gentlemen at this time if you do have a question. Please press star one on your telephone keypad, you may remove yourself from the queue at any time by pressing star to once again that is star one to ask a question and we'll pause for just a moment to allow questions to queue.
Operator: And we'll go first this morning, too Stephen Farrell of Oppenheimer close.
Stephen Farrell: Good morning. Congratulations to you both. Thank you, Stephen.
Stephen Farrell: Good morning, congratulations to bulk.
Stephen Farrell: I had a quick question. You mentioned financing a portion of the industrial costs with debt. And do you know how you would do that? Would you mortgage some of the existing properties? Or would it be a construction loan or corporate level debt?
Stephen Farrell: Thank you Steven.
Stephen Farrell: I had a quick question you mentioned financing a portion of the industrial cost with debt and do you know how you would do that with your mortgage 70 existing properties or would it be a construction loan or corporate level debt.
Stephen Farrell: Yeah.
John Daniel Baker: David, do you want to take this? Sure.
Stephen Farrell: David do you want to take that.
John Daniel Baker: Sure.
David H. deVilliers: The two projects that we would look to finance would be construction debt, and those would be the two southern Florida assets.
David: Two projects that we would look to finance it would be construction debt and those would be the two southern Florida assets.
David H. deVilliers: Okay.
David H. deVilliers: Okay.
David H. deVilliers: And those are smaller in square footage compared to the
Speaker Change: And those are smaller in square footage compared to the other two correct.
David H. deVilliers: Yeah, compared to the two Baltimore projects that we have.
David: Oh, yeah compared to the two Baltimore projects that we have.
David H. deVilliers: Yes.
David H. deVilliers: How much would a similar LTV be as your residential, about 50%?
David H. deVilliers: And how.
David H. deVilliers: How much.
David H. deVilliers: Similar L T V.
David H. deVilliers: As your residential about 50%.
David H. deVilliers: We would test the I mean, we would test the market. We'd have to see where, you know, SOFR rates, you know, the spreads, we would just have to see where the credit markets are, you know, kind of Q1 2025, and just see what makes sense. But I would, I think you're correct. I think the range is somewhere in that 50 to 55%. That would be my guess.
David H. deVilliers: We would test the I mean, we would test the market.
David H. deVilliers: We'd have to see where.
David H. deVilliers: So for rates you know the spreads we would just have to see where the credit markets are.
David H. deVilliers: Q1 2025.
David H. deVilliers:
David H. deVilliers: And just see what makes sense.
David H. deVilliers: But I would I think youre correct I think the range is somewhere in that 50% to 55%.
David H. deVilliers:
David H. deVilliers: That would be my guess.
David H. deVilliers: And how is phase one with Stuart affected by the undertaking of these development projects in the next 18 months? How should we think about the timeline for development there?
David H. deVilliers: And how is phase one with Stuart effected by the undertaking.
David H. deVilliers: Government projects in the next 18 months, how should we think about the timeline for development there.
David H. deVilliers: You know, Stuart, you know, again, Stuart, we're looking to secure permits, we'd look to secure them, in Q1 2025. And at that time, you know, we got to see what the wash in the market at buzzer point is at that time. A lot of supply is coming on time, and it just may not be the right time to pull the trigger there, but our balance sheet is pretty strong. We have a partner in all three of these projects, and If Market Conditions Warrant it, we certainly could do these projects, but we've got to make sure that the market is right for them.
David H. deVilliers: Stuart.
David H. deVilliers: [inaudible]
David H. deVilliers: Again, Stuart we're looking to secure permits we'd look to secure them.
David H. deVilliers: Q1, 2025 and at that time, we got to see what the wash in market at Buzzard point is at that time.
David H. deVilliers: A lot of supply is coming on time.
David H. deVilliers: And it just may not be the right time to pull the trigger there.
David H. deVilliers:
David H. deVilliers: Yes.
David H. deVilliers: But our balance sheet is pretty strong we have a partner at all three of these projects.
David H. deVilliers: And if market conditions warrant.
David H. deVilliers: We certainly could do.
David H. deVilliers: We can do these projects.
David H. deVilliers: But we got to make sure that the market is right for it.
Lee: It's Lee.
Speaker Change: Of course.
David H. deVilliers: Yes.
David H. deVilliers: The appetite to move forward on Stewart as things currently stand in the D.C. market is not there on our end, and it's not there on Stewart's end. If you recall...
David H. deVilliers: Alright, the appetite to move forward on Stewart as things currently stand at the D. C market is not there on our end and it's not there on the Stewart and if you recall.
David H. deVilliers: This land has been in their family for a very long time, and it's a huge opportunity for them. They don't need to move forward on it, and they're not going to until, you know, everything lines up perfectly, and all signs point to yes. Unknown Speaker When you first announced that, Sorry, when you first announced the deal, there was kind of a four-year development timeframe for like one building or phase every four years. So that's, there's nothing sort of hard line of, you know, this development has to start by X date, nothing that can't be extended.
David H. deVilliers: This land has been in.
David H. deVilliers: And their family for a very long time, and it's a huge opportunity for them.
Speaker Change: Theyre not.
David H. deVilliers: They don't need.
David H. deVilliers: To move forward on it and they're not going to until.
David H. deVilliers: Everything lines up perfectly and all signs point to yes.
Speaker Change: They're not.
David H. deVilliers: <unk> announced that.
Speaker Change: Sorry right.
David H. deVilliers: The deal there was kind of the.
David H. deVilliers: Four year development time frame break one building phase every four years.
David H. deVilliers: There's nothing sort of.
David H. deVilliers: And there is no hard line of.
David H. deVilliers: This development has to start by X date.
David H. deVilliers: David, the third, was the architect of the contract and agreement between the Stewarts and us and MRP. And he crafted an agreement that is really beautiful because everybody's incentives are aligned in the same direction. We do not execute on the purchase of that land until they say yes, and they're not going to say yes if the underlying value of the land is, you know, Page PAGE of NUMPAGES www.verbalink.com Page PAGE of NUMPAGES. And so, the market's got to be right in order for them to achieve full value for their land, and the market has to be right in order for us to move forward, It's just not going to happen until it's the right time for it to happen.
David H. deVilliers: Nothing that can't be extended Dave.
David H. deVilliers: David.
David H. deVilliers: The third.
David H. deVilliers: Was the architect of the contract an agreement between.
David H. deVilliers: Stewart's in an Austin MRP.
David H. deVilliers: Hey crafted an agreement that is really beautiful because everybody.
David H. deVilliers: Incentives are aligned in the same direction, we do not execute on the purchase of that land until.
David H. deVilliers: They say, yes, and they're not going to say, yes.
David H. deVilliers: Yes.
David H. deVilliers: And the underlying value of the land is.
David H. deVilliers: This depressed.
David H. deVilliers: So the market's got to be right in order for them to achieve full value for their land and the market has to be right in order for us to move forward.
David H. deVilliers: It would seem to want to execute this property and so.
David H. deVilliers: We are complete our incentives are completely aligned with the stewards.
David H. deVilliers: It's just not going to happen until.
David H. deVilliers: It's the right time for it to happen.
David H. deVilliers: Thank you. And maybe I missed this. Was there any comment on rents for the Marin, Dock, and Brine Street?
Speaker Change: Thank you and maybe I missed this was there any comment.
David H. deVilliers: Rents for the Marin in.
David H. deVilliers: Brian Street.
David H. deVilliers: Yeah.
Speaker Change: We did not.
David H. deVilliers: Report on any of those.
Speaker Change: As it relates to rent what.
David H. deVilliers: Just wanted to just average.
David H. deVilliers: Yeah.
David H. deVilliers: We did not report on any of those, as relates to rent. What [inaudible] Okay, um, at Dock and Marin, our renewals for the quarter were pretty strong. They were up, I'll call it two and a half percent on both of those assets.
David H. deVilliers: Okay.
David H. deVilliers: You know at dock and Marin our renewals for the quarter were pretty strong.
David H. deVilliers: They were up call it two 5%.
David H. deVilliers: When both of those assets.
David H. deVilliers: Our South Carolina assets, 408 Jackson and Riverside renewals, were also strong. Renewals at 408 Jackson were about 3.5%, and the trade-outs were 7.3%. Riverside was 1.6% on renewals, and trade-outs were pretty flat. Brian Street, very strong.
David H. deVilliers: Our South Carolina assets, formerly Jackson in Riverside.
David H. deVilliers: Renewals were also strong.
David H. deVilliers: Renewals at four O a Jackson, we're about three 5% and the trade outs were seven 3%.
David H. deVilliers: Riverside was one 6% on renewals and trade outs were pretty flat.
David H. deVilliers: And Brian Street very strong.
David H. deVilliers: At COTA, renewals were 8.2% and trade-outs were 9.7%. Chase Renewals were 4% and trade-outs were 7%. Verge was relatively flat. It's a new project. It hasn't reached any kind of occupancy and moved into our multifamily segment, but I'm excited about where things are going there.
David H. deVilliers: At coda.
David H. deVilliers: Renewals were eight 2% and tradeoffs were nine 7% and chase renewals were 4% and trade outs were 7%.
David H. deVilliers: At verge was relatively flat that's a new project. It hasnt reached kind of occupancy and moved into our multifamily segment.
David H. deVilliers:
David H. deVilliers: But excited where.
David H. deVilliers: Where things are going there.
Stephen Farrell: Great, that's all I have. Thank you. Thank you. And just a reminder, ladies and gentlemen,
Speaker Change: Alright, that's all I had thank you.
Stephen Farrell: Yeah.
Operator: Thank you. And just a reminder, ladies and gentlemen, call Star One, please, for any further questions today. And gentlemen, it appears we have no further questions this morning. Mr. Baker, I'd like to turn things back to you for any closing comments.
Speaker Change: Thank you and just a reminder, ladies and gentlemen star one please for any further questions today.
Operator: And gentlemen, it appears we have no further questions. This morning, Mr. Baker I'd like to turn things back to you for any closing comments.
Operator: Yeah.
John Daniel Baker: Thank you all, and we appreciate your continued investment and interest in the company.
John Daniel Baker: Thank you all and we appreciate your continued investment and interest in the company.
Operator: Thank you, Mr. Baker. Ladies and gentlemen, that will conclude today's FRP Holdings first quarter 2024 earnings conference call. We'd like to thank you all so much for joining us and wish you all a great day. Goodbye.
Speaker Change: Thank you Mr. Baker, ladies and gentlemen that will conclude today's FRP holdings first quarter 2024 earnings conference call.
Operator: Thank you all so much for joining us and wish you all a great day Goodbye.
Operator: Yeah.
Operator: Okay.
Operator: [music].
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Operator: Yes.
Operator: Okay.
Operator: Yeah.
Operator: Yes.
Operator: Hum.