Q2 2024 FRP Holdings Inc Earnings Call

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Operator: Please stand by. Your program is about to begin. If you need assistance during your conference call today, please press star zero. Good day, everyone, and welcome to today's FRP Holdings Inc. second quarter 2024 earnings conference call.

Speaker Change: Please stand by. Your program is about to begin. If you need assistance during your conference today, please press star zero.

Speaker Change: Good day, everyone, and welcome to today's FRP Holdings Incorporated second quarter 2024 earnings conference call.

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 1 on your telephone keypad. Please note this call is being recorded. I will be standing by if you should need any assistance. It is now my pleasure to turn the conference over to CEO John Baker III. Please go ahead.

Speaker Change: At this time, all participants are in a listen-only mode.

Speaker Change: Later, you will have the opportunity to ask questions during the question and answer session.

Speaker Change: You may register to ask a question at any time by pressing star 1 on your telephone keypad.

Speaker Change: Please note this call is being recorded.

Speaker Change: I will be standing by if you should need any assistance. It is now my pleasure to turn the conference over to CEO John Baker III. Please go ahead.

John Baker: Thank you, Angela, and good afternoon. I'm John Baker, the third 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, Chief Operating Officer, Matt McNulty, Chief Financial Officer, and John Milton, Executive Vice President and General Counsel. 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 to differ materially from those indicated in such forward-looking statements. These risks and uncertainties are listed in our SEC file. We have no obligation to revise or update any forward-looking statements accepted and posed by law as a result of future events or new information.

Speaker Change: Thank you, Angela, and good afternoon. I'm John Baker III, Chief Executive Officer of FRP Holdings, Inc.

Speaker Change: And with me today are David deVilliers Jr., our President, John Baker II, our Chairman.

Speaker Change: David deVilliers III, Chief Operating Officer, Matt McNulty, Chief Financial Officer, and John Milton, Executive Vice President and General Counsel.

Speaker Change: As a reminder.

Speaker Change: 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.

Speaker Change: These risks and uncertainties are listed in our SEC filings.

We have no obligation to revise or update any forward-looking statements accepted and posed by law as a result of future events or new information.

John Baker: To supplement the financial results presented in accordance with generally accepted accounting principles, FRP presents certain non-GAAP financial measures. Then, the meeting of Regulation G promulgated by the Securities and Exchange Commission.

Speaker Change: To supplement 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.

John Baker: The non-GAAP financial measure referenced in this call is Net Operating Income and Pro Rata Net Operating Income. FRP uses this non-GAAP financial measure to analyze its operations and to Monitor, Assess, and Identify Meaningful Trends in its Operating and Financial Performance. This measure is not and should not be viewed as a substitute for GAAP financial measures.

Speaker Change: The non-GAAP financial measure referenced in this call is Net Operating Income.

Speaker Change: Pro Rata Net Operating Income

Speaker Change: FRP uses this non-GAAP financial measure to analyze its operations.

Monitor, Assess, and Identify Meaningful Trends in its Operating and Financial Performance

Speaker Change: This measure is not and should not be viewed as a substitute for GAAP financial measures.

John Baker: To reconcile NOI to GAAP net income, please refer to the segment titled Non-GAAP Financial Measures on pages 9 and 10 of our most recent earnings release. Any reference to cap rates, asset values, or per share values? or the analysis of the estimated value of our assets, net of debt and liabilities, for illustrated 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 an asset or the associated costs or tax liability.

Speaker Change: To reconcile NOI to GAAP net income, please refer to the segment titled non-GAAP Financial Measures on pages 9 and 10 of our most recent earnings release.

Speaker Change: 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, are for illustrated purposes only, as a reflection of how management views its various assets.

Speaker Change: For purposes of informing management decisions and do not necessarily reflect the price Would be obtained upon the sale of an asset or the associated costs or tax liability

John Baker: Now, for our financial highlights from the second quarter. Despite revenues and operating profit remaining largely flat, net income for the second quarter increased 242%. $2 million, or $0.11 per share, versus $598,000 or $0.03 per share in the same period last year. For the first six months, net income saw a 188% increase to $3.3 million, or 18 cents per share, versus $1.2 million for the first six months of last year. This increase was driven partly by the improved performance during lease-ups of our most recent multi-family development in D.C.

Now, for our financial highlights from the second quarter.

Speaker Change: Despite revenues and operating profit remaining largely flat, net income for the second quarter increased 242 percent,

Speaker Change: to $2,000,000 or $0.11 per share versus $598,000 or $0.03 per share in the same period last year.

Speaker Change: For the first six months, net income saw a 188% increase to $3.3 million, or 18 cents per share, versus $1.2 million for the first six months of last year.

This increase was driven partly by the improved performance during lease-ups of our most recent multi-family development in D.C., the Verge.

John Baker: The Verge, which drove down our equity and losses in joint ventures by $891,000 compared to the second quarter last year and $1.6 million compared to the first six months of last year. The primary driver for the improvement in net income was the performance of our most recent lending venture, Aberdeen Overlook. In the second quarter, Aberdeen Overlook generated $1.5 million in investment income compared to $560,000 in the second quarter last year from a previous lending venture project.

Speaker Change: Which drove down our equity and loss in joint ventures by $891,000 compared to the second quarter last year, and $1.6 million compared to the first six months of last year.

Speaker Change: The primary driver for the improvement in net income was the performance of our most recent lending venture, Aberdeen Overlook.

In the second quarter, Aberdeen Overlook generated $1.5 million in investment income compared to $560,000 in the second quarter last year from a previous lending venture project.

John Baker: Year-to-date, the project has generated $2.1 million in investment income compared to $614,000 from a previous project through the first six months of last year. By providing a developer we know and trust with the money required to develop land for national homebuilders who are desperate for lots.

Speaker Change: Year-to-date, the project has generated $2.1 million in investment income compared to $614,000 from a previous project through the first six months of last year.

By providing a developer we know and trust with the money required to develop land for national home builders that are desperate for lots.

John Baker: These projects, while not part of our core business strategy in the long term, have generated returns for our cash, while in excess of treasuries, without tapping into the time and energy of our management and employees. Over the last three years, we have grown ProRata NOI at a compound annual growth rate of 21.6%. We maintain that pace in the second quarter and the first six months of this year.

Speaker Change: These projects, while not part of our core business strategy in the long term, have generated returns for our cash, while in excess of treasuries, without tapping into the time and energy of our management and employees.

Speaker Change: Over the last three years, we have grown ProRata NOI at a compound annual growth rate of 21.6%.

Speaker Change: We maintain that pace in the second quarter and the first six months of this year.

John Baker: ProRat NOI for the second quarter was $9.2 million, a 22% improvement over the second quarter of 2023. For the first six months, per RETA NOI, $17.8 million, a 22% increase over the same period last year. Primary drivers of this growth are the multifamily segment and the industrial and commercial segment, as our mining royalty NOI is more or less flat compared to last year. Multifamily Pro Rata NOI increased by 84% this quarter compared to 2023 and 88% for the first six months compared to the same period last year.

Speaker Change: ProRat NOI for the second quarter was $9.2 million, a 22% improvement over the second quarter of 2023.

Speaker Change: For the first six months, per RETA NOI, the $17.8 million, a 22% increase over the same period last year.

Speaker Change: Primary drivers of this growth are the multifamily segment and the industrial and commercial segment, as our mining royalty NOI is more or less flat compared to last year.

Speaker Change: Multifamily pro rata NOI increased by 84% this quarter compared to 2023 and 88% for the first six months compared to the same period last year.

John Baker: This growth is a result of the transfer to the multifamily segment of our 408 Jackson asset in Greenville and Bryan Street in D.C. from the development segment upon the stabilization of these assets when they reached 90% occupancy for 90 days. Same store NOI for Dock 79 and the Marin and Riverside was basically flat in the first six months compared to last year. NOI for Bryant Street and 408 Jackson, compared to the second quarter last year when these projects were part of the development segment, increased by 37.6% and 292%, respectively.

Speaker Change: This growth is a result of the transfer to the multifamily segment of our 408 Jackson asset in Greenville and Bryan Street in D.C.

Speaker Change: From the development segment upon the stabilization of these assets when they reached 90% occupancy for 90 days.

Speaker Change: Same store NOI for Dock 79 and the Marin and Riverside is basically flat in the first six months compared to last year.

Speaker Change: NOI for Bryant Street and 408 Jackson compared to the second quarter last year when these projects

Speaker Change: Part of the development segment increased by 37.6% and 292% respectively.

John Baker: For the first six months, these projects increased 27.9% and 867% compared to the same period last year. These increases in NOI were the drivers from the multifamily segment for the improvement we saw in overall pro rata NOI. The transfer of the Verge to this segment upon stabilization in the third quarter of this year should only improve this segment's performance on an NOI basis. Industrial and commercial NOI increased by 41% in the second quarter to $1.19 million and by 44% in the first six months to $2.3 million compared to the same period last year.

Speaker Change: For the first six months, these projects increased 27.9% and 867% compared to the same period last year.

Speaker Change: These increases in NOI were the drivers from the multifamily segment for the improvement we saw in overall pro-rata NOI.

Speaker Change: The transfer of the verge to this segment upon stabilization in the third quarter of this year should only improve this segment's performance on an NOI basis.

Speaker Change: Industrial and commercial NOI increased by 41% in the second quarter to 1.19 million dollars and by 44% in the first six months to 2.3 million compared to the same periods last year.

David deVilliers III: These increases are the result of having burned through the renovation concession periods at two buildings at our Hollander Business Park. These assets are now generating real cash as opposed to the unrealized revenues that we recognized in the early phases of occupancy from straight-lining rents for gap purposes. Yesterday, we posted on our website a brief slideshow of financial highlights for the second quarter. For those who have not seen it, we are now publishing, for illustrative purposes, an estimated value of our real estate assets, net of debt, and liabilities.

Speaker Change: These increases are the result of having burned through the rent abatement concession periods at two buildings at our Hollander Business Park.

Speaker Change: These assets are now generating real cash as opposed to the unrealized revenues that we recognized in the early phases of Occupancy from straight-lining rents for gap purposes.

Speaker Change: Yesterday, we posted to our website a brief slideshow of financial highlights for the second quarter.

Speaker Change: For those who have not seen it, we are now publishing, for illustrative purposes, an estimated value of our real estate assets, net of debt, and liabilities. Our analysis yielded a per share value in the range of $31.90 to $37.87.

David deVilliers III: Our analysis yielded a per share value in the range of $31.90 to $37.87. We provide this information to reflect how management views its various assets for the purposes of informing management decisions and do not necessarily reflect the price that would be obtained upon sale of the asset or the associated costs or tax liability. I will now turn the call over to our Chief Operating Officer, David deVilliers III, for his report.

Speaker Change: We provide this information to reflect how management views its various assets for the purposes of informing management decisions and do not necessarily reflect price that would be obtained upon sale of the asset or the associated costs or tax liability.

Speaker Change: I will now turn the call over to our Chief Operating Officer, David deVilliers III, for his report. David.

David deVilliers III: Thank you, John. And good day to those on the call. Allow me to provide an operational perspective on the second 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 mainly warehouses in the state of Maryland. At quarter end, 95.6% of the buildings were occupied. Total revenues in NOI for the quarter totaled $1.4 million and $1.2 million, respectively, an increase of 2% and 41% over the same period last year. The large variance between revenue growth and NOI growth is due to several tenants beginning their lease term with a rent abatement period. Gap requires the entire lease term to be straight-lined when calculating revenue.

Speaker Change: Thank you John and good day to those on the call. Allow me to provide an operational perspective on the second quarter results of the company.

Speaker Change: Starting with our commercial and industrial segment.

Speaker Change: This segment consists of nine buildings totaling nearly 550,000 square feet.

Speaker Change: which are mainly warehouses in the state of Maryland.

Speaker Change: At quarter end, 95.6% of the buildings were occupied.

Speaker Change: Total revenues in NOI for the quarter totaled $1.4 million and $1.2 million respectively.

Speaker Change: An increase of 2% and 41% over the same period last year.

Speaker Change: The large variance between revenue growth and NOI growth is due to several tenants beginning their lease term with rent abatement periods.

Speaker Change: Gap requires the entire lease term to be straight-lined when calculating revenues.

David deVilliers III: As a result, GAT revenues are higher during the first half of the lease term than what is being received, and the variance is more pronounced during a rent abatement period. As stated above, NOI is a non-GAAP financial measure, so NOI calculations back out the straight-lining effect.

Speaker Change: As a result, GAT revenues are higher during the first half of the lease term than what is being received, and the variance is more pronounced during a rent abatement period.

Speaker Change: As stated above, NOI is a non-GAAP financial measure. NOI calculations back out the straight-lining effects. As a result, 2023 NOI reflected the reduced rental payments.

David deVilliers III: As a result, 2023 NOI reflected the reduced rental pain, and 2024 NOI reflected the full lease payment. This is why we saw a 41% NOI growth compared to a 2% revenue growth this quarter over the same period last year. 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.

Speaker Change: and 2024 NOI reflected the full lease payments. This is why we saw a 41% NOI growth compared to a 2% revenue growth this quarter over the same period last year.

Speaker Change: Moving on to the results of our mining and royalty business segment.

Speaker Change: This division consists of 16 mining locations, predominantly located in Florida and Georgia, with one mine in Virginia.

David deVilliers III: Total revenues and NOI for the quarter totaled $3.2 million and $3 million, respectively, a decrease of 1% and 3% over the same period last year. These decreases were primarily the result of a $277,000 reduction in royalties to resolve a 2023 overpayment by our tenant at our Manassas quarry, which overestimated our portion of production tons, which is shared with other property owners. The outstanding balance of this overpayment credit is $53,000, which we expect will be exhausted in the first month of the third quarter of this year. As to our multi-family thing,

Speaker Change: Total revenues and NOI for the quarter totaled $3.2 million and $3 million respectively.

Speaker Change: A decrease of 1% and 3% over the same period last year.

Speaker Change: These decreases were primarily the result of a $277,000 reduction in royalties to resolve a 2023 overpayment by our tenant at our Manassas quarry.

Speaker Change: which overestimated our portion of production tons which is shared with other property owners.

Speaker Change: The outstanding balance of this overpayment credit is $53,000, which we expect will be exhausted in the first month of the third quarter of this year.

David deVilliers III: This business segment consists of 1,483 apartments and over 117 retail spaces located in Washington, D.C. and South Carolina. At quarter end, the apartments were 92.6% occupied, and the retail space was 75.6% occupied. Total revenues and NOI for the quarter were $11.9 million and $7 million, respectively.

Speaker Change: As to our multi-family segment...

Speaker Change: This business segment consists of 1,483 apartments.

Speaker Change: and over 117,000.

Speaker Change: Located in Washington, D.C. and South Carolina.

Speaker Change: At quarter end, the apartments were 92.6% occupied and the retail space was 75.6% occupied.

Speaker Change: Total revenues and NOI for the quarter were $11.9 million and $7 million dollars respectively.

David deVilliers III: FRP's share of revenues and NOI for the quarter totaled $6.9 million and $4 million, respectively. This is a significant increase over prior quarters due to our Bryant Street and 408 Jackson joint ventures being included in this segment as of January 1st, 2024 and adding $3.5 million of revenue and $1.9 million of NOI this quarter. As a same-store comparison, which only includes Dock, Marin, and Riverside, FRP's share of revenues in NOI for the quarter totaled $3.4 million and $2.1 million, respectively, a decrease of 0.9% and 3.7% over the same period last year. This is primarily the result of the average vacancy and average expenses increasing by 1%.

Operator: David deVilliers, David deVilliers, John David deVilliers Please stand by, your program is about to begin. If you need assistance during your conference today, please press star zero.

Speaker Change: FRP's share of revenues in NOI for the quarter totaled $6.9 million and $4 million, respectively.

Speaker Change: This is a significant increase over prior quarters due to our Bryant Street and 408 Jackson joint ventures being included in this segment as of January 1st, 2024, and adding $3.5 million of revenue.

Speaker Change: and 1.9 million dollars of NOI this quarter.

Speaker Change: as a same-store comparison.

Speaker Change: which only includes Dock, Marin, and Riverside. FRP's share of revenues in NOI for the quarter totaled $3.4 million and $2.1 million, respectively.

Operator: Good day everyone and welcome to today's FRP Holdings Incorporated 2nd 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 register to ask a question at any time by pressing star one on your telephone keypad. Please note this call is being recorded. I will be standing by if you should need any assistance.

Speaker Change: A decrease of 0.9% and 3.7% over the same period last year.

Speaker Change: This is primarily the result of the average vacancy and average expenses increasing by one percent.

David deVilliers III: Unless rental overage payments from our retail tenants increase this quarter as compared to 2023. An abundance of supply in the D.C. market will continue to put pressure on vacancies and revenue growth in the foreseeable future. Rising real estate taxes and insurance premiums may also remain a headwind for NOI growth, which increased over 5.25% from a same store perspective this quarter compared to 2023. However, management continues to be diligent in tenant retention and rental rates in the market.

Speaker Change: and less rental overage payments from our retail tenants this quarter as compared to 2023.

John Baker III: It is now my pleasure to turn the conference over to CEO John Baker III. Please go ahead. Thank you Angela and good afternoon. I'm John Baker III Chief Executive Officer of FRP Holdings Inc. And with me today are David deVilliers Jr. Our President, John Baker II, our Chairman, David deVilliers III, our Chief Operating Officer, Matt McNulty, our Chief Financial Officer, and John Milton, our Executive Vice President and General Counsel. 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.

Speaker Change: An abundance of supply in the D.C. market will continue to put pressure on vacancies and revenue growth in the foreseeable future.

Speaker Change: Rising real estate taxes and insurance premiums may also remain a headwind for NOI growth.

Speaker Change: which increased over 5.25% from a same store perspective this quarter compared to 2023.

Speaker Change: Management continues to be diligent in tenant retention and rental rates in the market. We are pleased to have renewal success rates over 60% with all renewal rental rates showing positive growth and a majority of our trade-out rental rates being positive as well.

David deVilliers III: We are pleased to have renewal success rates over 60% with all renewal rental rates showing positive growth, and a majority of our trade-out rental rates being positive as well. Now, on to the development section. This segment is where we acquire, title, develop, and create new income-producing assets that are transferred into our Commercial, Industrial, and Multi-Family Business Segments upon reaching certain completion and occupancy benchmarks.

Speaker Change: Now, on to the development segment.

Speaker Change: 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.

John Baker III: These risks and uncertainties are listed in our SEC filings. We have no obligation to revise or update any forward-looking statements, except as imposed by law as a result of future events or new information. To supplement the financial results presented in accordance with generally accepted accounting principles, FRP presents certain non-GAAP financial measures within the meeting of regulation G promulgated by the Securities and Exchange Commission. The non-GAAP financial measure reference in this call is net operating income and pro-RADA net operating income.

Speaker Change: Upon reaching certain completion and occupancy benchmarks,

David deVilliers III: The segment uses capital to entitle and develop land. We fund our vertical construction endeavors with the goal of turning our non-NOI-producing assets into NOI-producing assets. This segment also lends funds to prepare and develop land for sale to National Home Builders in exchange for principal and interest payments and profit sharing. In terms of our commercial industrial development pipeline, The 258,000 square foot state-of-the-art Class A warehouse building, and the Perryman Industrial Sector of Hartford County, Maryland, is nearing completion and is expected to be delivered on or before November 1st of this year. Upon shell completion, this asset will be moved to the industrial commercial segment, and will impact NOI negatively until it is occupied and stabilized.

Speaker Change: The segment uses capital to entitle and develop lands.

Speaker Change: and fund our vertical construction endeavors with the goal of turning our non-NOI-producing assets into NOI-producing assets.

Speaker Change: The segment also lends funds to prepare and develop land for sale to national homebuilders in exchange for principal and interest payments and profit sharing.

John Baker III: FRP uses this non-GAAP financial measure to analyze its operations and a monitor assess and identify meaningful trends in its operating financial performance. This measure is not and should not be viewed as a substitute for GAAP financial measures. To reconcile and know why to GAAP net income, please refer to the segment titled non-GAAP financial measures on pages 9-10 of our most recent earnings release. Any reference to cap rates, asset values for share values, or the analysis of the estimated value of our assets, net of debt and liabilities, or for illustrated purposes only, as a reflection of how management uses various assets, for purposes of informing management decisions and do not necessarily reflect the price, it would be obtained upon the sale of an asset, or the associated costs or tax liability.

Speaker Change: In terms of our commercial industrial development pipeline, our 258,000 square foot state-of-the-art Class A warehouse building

Speaker Change: and the Perryman Industrial Sector of Hartford County, Maryland is nearing completion and is expected to be delivered on or before November 1st of this year.

Speaker Change: Upon shell completion, this asset will be moved to the industrial-commercial segment and will impact NOI negatively until it is occupied and stabilized.

David deVilliers III: Operating expenses being passed through to the customers. Our 200,000 square foot Class A warehouse building in Lakeland, Florida, located along the I-4 corridor between Tampa and Orlando, is where FRP intends to be a 90% partner with BBX Logistics and as well into the entitlement stage. Permits for the development should be in hand on or before Q1 2025. FRP and BBX also closed on land that will support two Class A warehouse buildings in Broward County, Florida, totaling over 182,000 square feet. This 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.

Speaker Change: with the operating expenses being passed through to the tenants.

Speaker Change: Our 200,000 square foot Class A warehouse building in Lakeland, Florida, located along the I-4 corridor between Tampa and Orlando, is where FRP intends to be a 90% partner with BBX Logistics.

John Baker III: Now, for our financial highlights from the second quarter, despite revenues and operating profit remaining largely flat, net income for the second quarter increased 242% to $2 million, or 11 cents per share versus $598,000, or $3 cents per share in the same period last year. For the first six months, net income saw a 188% increase to $3.3 million, or 18 cents per share versus $1.2 million for the first six months of last year.

Speaker Change: and as well into the entitlement stage.

Speaker Change: Permits for the development should be in hand on or before Q1 2025.

Speaker Change: FRP and BBX also closed on land that will support two Class A warehouse buildings in Broward County Florida totaling over 182,000 square feet.

Speaker Change: 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.

John Baker III: This increase was driven partly by the approved performance string lease-ups of our most recent multi-family development in DC, the Verge, which drove down our equity and loss in joint ventures by $891,000 compared to the second quarter last year, and $1.6 million compared to the first six months of last year. The primary driver for the improvement net income was the performance of our most recent lending venture, Aberdeen Overlook, and the second quarter, Aberdeen Overlook generated $1.5 million in investment income compared to $560,000 in the second quarter last year from a previous lending venture, lending venture project.

David deVilliers III: The entitlement process is now underway, and permits may be in hand by Q1 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 2025. Finally, we are in the initial permitting stage for a 55-acre tract in Hartford County, Maryland.

Speaker Change: The entitlement process is now underway and permits may be in hand by Q1 2025 as well.

Speaker Change: 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.

Speaker Change: We look to secure permits in Q2 of 2025.

Speaker Change: Finally, we are in the initial permitting stage for a 55-acre tract in Harford County, Maryland.

David deVilliers III: The intent is to obtain a permit for four buildings totaling some 635,000 square feet of industrial product. Existing land leases for the storage of trailers on site helped offset our carrying and entitlement costs until we were 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. Over the next 3-5 years, we will focus on the permitting, construction, and lease up of the Perryman, Lakeland, Fort Lauderdale, and 212,000 sq. ft. building in Harford County.

Speaker Change: The intent is to obtain a permit for four buildings totaling some 635,000 square feet of industrial product.

John Baker III: Year to date, the project has generated $2.1 million in investment income compared to $614,000 from a previous project to the first six months of last year. By providing a developer, we know trust with the money required to develop land for national home builders that are desperate for lots. These projects will not part of our core business strategy in the long term, have generated returns for our cash, while in excess of treasuries without tapping into the time and energy of our management and employees.

Speaker Change: 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.

Speaker Change: Completion of these industrial commercial development projects will add over 2.1 million square feet of additional industrial commercial product to our industrial platform.

John Baker III: Over the last three years, we have grown pro-red at NOI at a compound annual growth rate of 21.6%. We maintain that pace in the second quarter and the first six months of this year. Pro-red at NOI for the second quarter was $9.2 million, a 22% improvement over the second quarter of 2023. For the first six months, Pro-red at NOI was $17.8 million, a 22% increase over the same period last year. Primary drivers of this growth with a multi-family segment and the industrial and commercial segment as our mining royalty NOI is more or less flat compared to last year.

Speaker Change: Growing the business segment from 550,000 square feet to over 2.7 million square feet.

Speaker Change: Over the next three to five years, we will focus on the permitting, construction, and lease up of the Perryman, Lakeland, Fort Lauderdale, and 212,000 square foot building in Harford County.

David deVilliers III: These four buildings represent over 850,000 square feet of new industrial commercial product, with a total project cost estimated at $142 million and six to 7% return on cost expert expectations upon stabilization. These projects represent some 8.5 million to 10 million and potential NOI. As to our multifamily development pipeline, The Verge, our 344 residential unit project located in the district, was 90.7% occupied at quarter end. Total revenues in NOI for the quarter were $2 million and $1.16 million dollars, respectively. FRP's share of revenues in NOI for the quarter totaled $1.3 million and $710,000, respectively.

Speaker Change: These four buildings represent over 850,000 square feet of new industrial commercial product with a total project cost estimated at 142 million dollars.

Speaker Change: With 6% to 7% return on cost expectations upon stabilization, these projects represent some $8.5 million to $10 million in potential NOI.

John Baker III: Multi-family pro-red at NOI increased by 84% this quarter compared to 2023 and 88% for the first six months compared to the same period last year. This growth is a result of the transfer to the multi-family segment of our 408 Jackson asset and Greenville and Bryan Street and DC from the development segment upon the stabilization of these assets when they reach 90% occupancy for 90 days. Same-store NOI for Docs M.D.9 and the Marin and Riverside was basically flat in the first six months compared to last year.

Speaker Change: As to our multifamily development pipeline, The Verge, our 344 residential unit project located in the district, was 90.7% occupied at quarter end.

Speaker Change: Total revenues in NOI for the quarter were $2,000,000 and $1.16 million dollars respectively.

Speaker Change: FRP share of revenues in NOI for the quarter totaled $1.3 million and $710,000 respectively.

John Baker III: NOI for Bryant Street and 418 Jackson compared to the second quarter last year when these projects were part of the development segment increased by 37.6% and 292% respectively. For the first six months these projects increased 27.9% and 867% compared to the same period last year. These increases in NOI were the drivers from the multi-family segment for the improvement we saw in overall pro-rata NOI. The transfer of the birch this segment upon stabilization in the third quarter this year should only improve the segments performance on an NOI basis.

David deVilliers III: While our development focus is currently weighted toward our industrial assets, we continue to watch market conditions and their impact on four multifamily projects in our development segment pipeline, located in Washington, D.C., Greenville, South Carolina, and Estero, Florida. 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.

Speaker Change: While our development focus is currently weighted toward our industrial assets.

Speaker Change: We continue to watch market conditions and their impact on four multifamily projects in our development segment pipeline located in Washington DC Greenville, South Carolina and Estero, Florida

Speaker Change: These projects represent over 1,200 apartments and 58,000 square feet of retail.

David deVilliers III: Development activities to get off bonds are ongoing, and upon completion of this project, interest income and profits are expected to total $3.9 million. 21% Return 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. 24.6 million was drawn as of quarter end, and over $12.7 million in preferred interest and principled payment have been received to date.

Speaker Change: Turning to our principal capital source strategy or lending ventures, I have the following updates to our two current projects.

Speaker Change: Amber Ridge in Prince George's County Maryland consisting of 187 lots is completely sold out.

John Baker III: Industrial and commercial NOI increased by 41% and the second quarter to 1.19 million dollars and by 44% in the first six months to 2.3 million compared to the same periods last year. These increases are the result of having burnt through the renautative and concession periods at two buildings at our Hollanger Business Park. These assets are now generating real cash as opposed to the unrealized revenues that we recognize in the early phases of occupancy from straight lining rents for gap purposes.

Speaker Change: File development activities to get off bonds are ongoing, and upon completion of this project interest income and profits are expected to total $3.9 million, a 21% profit on funds drawn.

Speaker Change: Our second lending venture, Presbyterian Homes or Aberdeen Overlook, consists of 344 lots located on 110 acres in Aberdeen, Maryland.

John Baker III: Yesterday we posted to our website a brief slideshow of financial highlights for the second quarter. For those who have not seen it we are not publishing for illustrative purposes and estimated value of our real estate assets and of debt liabilities. Our analysis yielded a per share value in the range of $31.90 to $37.87. We provide this information and reflect how management views its various assets for the purposes of informing management decisions do not necessarily reflect price would be obtained upon sale of the asset or the associated costs or tax liability.

Speaker Change: We have committed $31.1 million dollars in funding, $24.6 million was drawn as of quarter end, and over $12.7 million dollars in preferred interest and principled payments have been received to date.

David deVilliers III: A national home builder is under contract to purchase all the finished building lots by Q4 2020. 78 of the 344 lots were closed upon, and we expect to generate at least a 20% internal rate of return on funds drawn upon completion of the project. In closing, we are pleased with the entitlement progress being made on several industrial land assets, particularly on our Lakeland and Fort Lauderdale projects in Florida. The renewal and trade-out rent growth within our multifamily assets is encouraging and a key indicator of where we are on the supply and demand curve.

Speaker Change: A National Home Builder is under contract to purchase all the finished building lots by Q4 2027.

Speaker Change: 78 of the 344 lots were closed upon and we expect to generate at least a 20% internal rate of return on funds drawn upon completion of the project.

Speaker Change: In closing, we are pleased with the entitlement progress being made on several industrial land assets, particularly on our Lakeland and Fort Lauderdale projects in Florida.

David deVilliers III: I will now turn the call over to our chief operating officer David DeVille of the third for his report. Thank you John and good day to those on the call allow me to provide an operational perspective on the second 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 mainly warehouses in the state of Maryland. A quarter end 95.6% of the buildings were occupied total revenues in NOI for the quarter total 1.4 million and 1.2 million dollars respectively an increase of 2% and 41% over the same period last year.

Speaker Change: The renewal and trade-out rent growth within our multifamily assets is encouraging and a key indicator of where we are on the supply and demand curve.

David deVilliers III: Interest rates and construction costs have appeared to stabilize. Interest rate spreads have eased, and although new supply of apartments in the D.C. waterfront sub-market remains a headwind for rent growth, absorption and demand for apartments and warehouse space remain a bright spot. As we look ahead, our focus remains on the margin between revenue and expense growth at our existing assets. We have a fundamentally sound capital stack with sensible construction financing terms and hyper-focused development, leasing, and property management.

Speaker Change: Interest rates and construction costs have appeared to stabilize.

Speaker Change: Interest rate spreads have eased and although new supply of apartments in the DC waterfront sub market remains a headwind for rent growth, absorption and demand for apartments and warehouse space remain a bright spot.

Speaker Change: As we look ahead, our focus remains on the margin between revenue and expense growth at our existing assets.

Speaker Change: Having a fundamentally sound capital stack with sensible construction financing terms and hyper-focused development, leasing, and property management teams.

David deVilliers III: The large variance between revenue growth and NOI growth is due to several tenants beginning their lease term with rent abatement periods. GAT requires the entire lease term to be straight lined when calculating revenues. As a result GAT revenues are higher during the first half of the lease term than what is being received and the variance is more pronounced during a rent abatement period. As stated above, NOI is a non-GAP financial measure, NOI calculations back out the straight lining effects.

David deVilliers III: With several permits expected in 2025, our efforts in the 10-year term of entitlement, Vertical Due Diligence. Through our cautious, patient, and thorough vertical due diligence process, we will make informed and calculated decisions to wait or pull the trigger on vertical construction. Thank you, and I'll now turn the call back to Jeff.

Speaker Change: With several permits expected in 2025, our efforts in the technical

Speaker Change: entitlements to vertical due diligence

Speaker Change: Through our cautious, patient, and thorough vertical due diligence process, we will make informed and calculated decisions to wait or pull the trigger on vertical construction.

Speaker Change: Thank you, and I'll now turn the call back to John .

David deVilliers III: As a result, 2023 NOI reflected the reduced rental payments, and 2024 NOI reflected the full of these payments. This is why we saw a 41% NOI growth compared to a 2% revenue growth, this quarter over the same period last year.

John Baker: As we have said on several occasions, and you just heard in David's report, we are maintaining our strategy of focusing on industrial development and expanding our footprint on a square footage and regional basis. In July, we closed on the purchase of the land for our industrial joint venture in Broward County, Florida, for a total purchase price of $24.5 million. We also closed on the land for our other industrial, JV, in Lakeland, Florida, last quarter for a total purchase price of $2.8 million.

John: Thank you, David.

John: As we have said on several occasions, and you just heard in David's report,

John: We are maintaining our strategy of focusing on industrial development and expanding our footprint on a square footage and regional basis. In July , we closed on the purchase of the land for our industrial joint venture in Broward County, Florida, for a total purchase price of $24.5 million.

David deVilliers III: 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 and NOI for the quarter totaled $3.2 million and $3 million respectively. A decrease of 1% and 3% over the same period last year. These decreases were primarily the result of a $277,000 reduction and royalties to resolve a 2023 overpayment by our tenant at our Minasas Quarry, which overestimated our portion of production tons, which is shared with other property owners. The outstanding balance of this overpayment credit is $53,000, which we expect will be exhausted in the first month of the third quarter of this year.

John: We also closed on the land for our other industrial JV in Lakeland, Florida last quarter for a total purchase price of $2.8 million. We expect to start construction on both projects on or before March of 2025.

John Baker: We expect to start construction on both projects on or before March of 2025. We are nearly finished with the shell construction of our 258,000 square foot industrial asset in Perryman, Maryland, with completion expected in the fourth quarter. These three projects, totaling 649,000 square feet of new Class A industrial space, represent an estimated $118 million in total CapEx and $72 million of equity capital, of which we account for $66.8 million. We've underwritten these assets at a 67% NOI yield on costs, but we expect to outperform these conservative assumptions. I will now open the call up for any questions that you might have.

Speaker Change: We are nearly finished with shell construction of our 258,000 square foot industrial asset in Perryman, Maryland with completion expected in the fourth quarter.

Speaker Change: These three projects, totaling 649,000 square feet of new Class A industrial space, represent an estimated $118 million in total CapEx.

Speaker Change: and $72 million of equity capital, of which we account for $66.8 million.

Speaker Change: We have underwritten these assets at a 6-7% NOI yield on costs, but expect to outperform these conservative assumptions. I will now open the call up for any questions that you might have.

Operator: At this time, if you would like to ask 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. We will pause for a moment to allow questions to queue. We'll take our first question from Stephen Farrell on Oppenheimer Close. Please go ahead. Good afternoon.

David deVilliers III: As to our multi-family segment, this business segment consists of 1,483 apartments and over 117,000 located in Washington, D.C, and South Carolina. At quarter end, the apartments were 92.6% occupied and the retail space was 75.6% occupied. Total revenues and NOI for the quarter were $11.9 million and $7 million respectively. FRP share of revenues and NOI for the quarter totaled $6.9 million and $4 million respectively. This is a significant increase over prior quarters due to our Bryant Street and 408 Jackson joint ventures being included in this segment as of January 1st, 2024, and adding $3.5 million of revenue and $1.9 million of NOI this quarter.

Speaker Change: At this time, if you would like to ask a question, please press star 1 on your telephone keypad.

Speaker Change: You may remove yourself from the queue at any time by pressing star 2.

Speaker Change: Once again, that is Star 1 to ask a question. We will pause for a moment to allow questions to queue.

Speaker Change: We'll take our first question from Stephen Farrell with Oppenheimer Close. Please go ahead.

Stephen Farrell: Good afternoon.

Stephen Farrell: Just a quick question about the two Florida developments. The expected CapEx, $57 million and $28 million, does that include the purchase of land? Yes, yes. Is there any particular reason why there's such a big discrepancy in the cost per square foot between the two?

Speaker Change: Thanks, Stephen.

Stephen Farrell: It's just a quick question with the two Florida developments.

Stephen Farrell: The expected CapEx, $57 million and $28 million, does that include the purchase of land?

Speaker Change: Yes. Yes.

Speaker Change: Is there any particular reason why there is such a big discrepancy in the cost per square foot between the two?

John Baker: Yes, in Lakeland, Florida. Rental rates, let's say, range from, you know, 750 to 950. In Broward County, Fort Lauderdale, rental rates range from, you know, 1850 and are coming up against $20 a square foot triple net. In that well-heeled Broward County, Florida market, land is just more expensive, and rental rates are a heck of a lot higher. So that's the driving difference.

Speaker Change: Yes, in Lakeland, Florida.

David deVilliers III: As a same-store comparison, which only includes Doc Maren and Riverside, FRP share of revenues and NOI for the quarter total $3.4 million and $2.1 million respectively. A decrease of 0.9% and 3.7% over the same period last year. This is primarily the result of the average vacancy and average expenses increasing by 1% and less rental overage payments from our retail tenants this quarter as compared to 2023.

Speaker Change: Rental rates, let's say, range from, you know...

Speaker Change: 750 to 950

Speaker Change: In the Broward County, Fort Lauderdale site, rental rates range from

Speaker Change: you know 1850 and

Speaker Change: and are coming up against $20 a square foot triple net. You know, and that well-heeled Broward County, Florida market.

Speaker Change: land is is just more expensive and and rental rates are a heck a lot higher so that's that's the driving difference

Stephen Farrell: And even if I look at excluding the land, though, it looks like the construction cost to develop is that 100 in 80 per square foot versus 125. Is it? Are there any construction related costs that are different?

David deVilliers III: And a abundance of supply in the DC market will continue to put pressure on vacancies and revenue growth in the foreseeable future. Reising real estate taxes and insurance premiums may also remain a headwind for NOI growth, which increased over 5.25% from the same store perspective this quarter compared to 2023. Management continues to be diligent in tenant retention and rental rates in the market. We are pleased to have renewal success rates over 60% with all renewal rental rates showing positive growth and a majority of our trade out rental rates being positive as well.

Speaker Change: And even if I look at excluding the land though, it looks like the construction cost to develop is about a hundred and

Speaker Change: 80 per square foot versus 125. Is there any construction related costs that are different?

John Baker: Um, a couple, you know; the Lakeland building is a single building. It's a single 200,000 square foot building. You know, there's just the efficiencies when you build a single building versus two, which is why we're going to build two 90,000 square foot buildings on the Fort Lauderdale site. And Fort Lauderdale, you know, there's some interesting, you know, site development costs. There are nuances to all these things; they may look the same, but there's always nuances that can move the costs around a little bit, particularly when it comes to the land development side of them.

Speaker Change: A couple, you know, the Lakeland building is a single building. It's a single 200,000 square foot building. You know, there's just the efficiencies when you build a single building versus two.

David deVilliers III: Now on to the development segment. This segment is where we acquire and title, develop and create new income-producing assets that are transferred into our commercial industrial and multi-family business segments. Upon reaching certain completion and occupancy benchmarks, the segment uses capital to entitle and develop lands and fund our vertical construction endeavors with the goal of turning our non-NOI-producing assets into NOI-producing assets.

Speaker Change: And Fort Lauderdale, you know, there's some interesting, you know, site development costs. There are nuances to all these things. They may look the same, but there's always nuances that can move the cost around a little bit, particularly when it comes to the land development side of them.

Stephen Farrell: Okay, thank you. And for the Chelsea project, is there a lease in place when construction is finished?

Speaker Change: Okay, thank you. For the Chelsea project, is there a lease in place for when construction is finished?

John Baker: No, there is not.

Stephen Farrell: Do you anticipate having any issues filling that space?

Speaker Change: No, there is not.

David deVilliers III: The segment also lands funds to prepare and develop lands for sale to national home builders in exchange for principal and interest payments and profit sharing. In terms of our commercial industrial development pipeline, our 258,000 square foot state-of-the-art Class A warehouse building, and the Pairman industrial sector of Hartford County, Maryland, is nearing completion and is expected to be delivered on or before November 1st of this year. Upon shell completion, this asset will be moved to the industrial commercial segment and will impact NOI negatively until it is occupied and stabilized with the operating expenses being passed through to the tenants.

Speaker Change: Do you anticipate having any issue filling that space?

John Baker: No, not at this time. I mean, the market, you know; there's still a good demand. We feel we have a good product. You know, typically, it's rare for us to get, you know, buildings pre-leased before we really deliver them. This building really gets kind of put on the market in Q4 this year. And once we put it on the market and people can drive to it, the pavement's in, and they can walk in it, that's typically when we start seeing a lot of activity. We've had some inquiries, but no paper is being traded at this time.

Speaker Change: You know typically it's

Speaker Change: It's rare for us to get buildings pre-leased before we really deliver them. This building really gets kind of put on the market Q4 of this year.

Speaker Change: And once we put it on the market and people can drive to it, pavings in, and they can walk in it, that's typically when we start seeing a lot of activity. We've had some, you know, inquiries, but no paper traded at this time.

Stephen Farrell: Okay, that's good. And just a quick question on Doc79 and Marin in the new chart on the second page of your release. It looks like renewal rates at the dock were kind of outpacing Marin, which or the percentage increase, which has not happened recently. Is there any color you can provide on that?

David deVilliers III: Our 200,000 square foot class A warehouse building in Lakeland, Florida located along the I-4 corridor between Tampa and Orlando is where FRP intends to be a 90% partner with BBX logistics and as well into the entitlement stage, permits for the development should be in hand on or before Q1 2025. FRP and BBX also closed on land that will support two Class A warehouse buildings in Broward County, Florida, tolling over 182,000 square feet.

Speaker Change: Okay, that's good. And just a quick question on DOC 79 and Marin in the new chart on the second page of your release.

Speaker Change: It looks like renewal rates at the dock were kind of outpacing Marin, which

Speaker Change: The percentage increase, which has not happened recently. Is there any color you can provide on that?

John Baker: You know, I think that Doc for a while may have had some effects of barrenness, and now things are even out, and we're able to push rents at Dockmore these days. You know, Doc also has, you know, just lower rental rates to begin with. Page 1 of 1. We'll have to see, you know, if it continues. I, you know, I'd love it if Doc starts seeing effective rents the same as Marin's. I don't know if we'll get there, but that's kind of where we are right now.

Speaker Change: You know, I think that, Doc...

David deVilliers III: 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. The entitlement process is now underway and permits may be in hand by Q1 2025 as well. In Cecil County, Maryland, along the I-95 corridor, we are in the middle of pre-development activities, 170 acres of industrial land, that will support a 900,000 square foot distribution center. We look to secure permits in Q2 of 2025.

Speaker Change: And now things are evening out and we're able to push rents at dock more these these days.

Doc: Doc also has...

Speaker Change: More attractive.

Speaker Change: We'll have to see, you know, if it continues. I, you know, I'd love it if Doc started seeing effective rents the same as Maren's. I don't know if we'll get there, but...

John Baker: Yeah, I think, Stephen, I think they've pretty consistently pushed high renal growth at Marin and last year at Dock, we were trying to maintain occupancy, and you didn't see the kind of Unknown Speaker, Unknown Attendee, FRP Holdings Inc.

Stephen Farrell: That's kind of where we are right now.

David deVilliers III: Finally, we are in the initial permitting stage for a 55 acre tract in Hartford County, The intent is to obtain permits for four buildings tolling some 635,000 square feet of industrial product. Existing land leases for the storage of trailers on site helped offset our carrying and entitlement costs until we were 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.

Stephen Farrell: Yeah, I think, Stephen, I think they've pretty consistently pushed high renewal growth at Marin and last year at DOC we were trying to maintain occupancy and you didn't see the kind of...

Dr. Slank: rent growth on renewals that you had previously, and I think this is probably Dr. Slank catch-up.

Stephen Farrell: That's good. That's all I have. Thank you very much.

Stephen Farrell: That's good. That's all I have. Thank you very much.

Operator: As a reminder, if you'd like to ask a question today, please press star 1. We'll go next to Bill Chen from Rhizome Partners. Please go ahead. Hello, Mr. Chen, your line is open. Please go ahead.

Speaker Change: As a reminder, if you'd like to ask a question today, please press star 1.

Speaker Change: Hello, Mr. Chen, your line is open. Please go ahead.

Bill Chen: Good afternoon, guys. Hey, Bill.

David deVilliers III: Over the next three to five years, we will focus on the permitting, construction and lease up of the Pyraman, Lakeland, Fort Lauderdale and 212,000 square foot building in Hartford County. These four buildings represent over 850,000 square feet of new industrial commercial product with a total project cost estimated at $142 million. With 6 to 7% return on cost expectations upon stabilization, these projects represent some 8.5 million to 10 million in potential NOI.

Mr. Chen: Good afternoon, guys.

Bill Chen: Hey, I'm good to connect with you guys. I have a few questions and may jump around a little bit. Just a first quick question. On the ProRata NOI for Doc79 Marron, the effects of that JV transaction, that's beyond, right? There's no such thing as a like for like number. Correct Okay, gotcha. I guess I think the drop in the NOI is due to slightly lower occupancy and maybe expenses have grown faster. Is that is that the read?

Mr. Chen: Hey, Bill.

Mr. Chen: Hey, good to connect with you guys. I have a few questions and may jump around a little bit. Just a first quick question.

Speaker Change: On the ProRata NOI for Doc79 Marin, the effects of that JV transaction, that's beyond, right? There's no, these are like-for-like numbers.

Speaker Change: Correct.

Speaker Change: Okay, got you. I guess, I guess like the drop in the NOI is due to a slightly lower occupancy, maybe expenses have grown faster. Is that, is that the read?

John Baker: It is for Q2 alone, you know, Bill, year to date, they're even Q2 is really the first quarter where we saw erosion.

David deVilliers III: As to our multi-family development pipeline, the Verge, our 344 residential unit project located in the district, was 90.7% occupied a quarter end. Total revenues and NOI for the quarter were 2 million and 1.16 million dollars respectively. FRP share of revenues and NOI for the quarter totaled 1.3 million and $710,000 respectively. While our development focus is currently weighted toward our industrial assets, we continue to watch market conditions and their impact on four multi-family projects in our development segment pipeline, located in Washington, D.C., Greenville, South Carolina and Estero, Florida.

Speaker Change: It is for Q2 alone, you know, Bill, year to date.

Speaker Change: They're even. Q2 is really the first quarter where we saw erosion.

John Baker: When you say erosion, are you talking occupancy or are you talking NOI? Like just, I want to know which metric you're talking about.

Speaker Change: Okay.

Rose: When you say Rose, are you talking occupancy or are you talking NOI? I just want to know which metric you're talking about.

John Baker: Both. So, you know, Q2 of 2024 compared to Q2 2023, we see around a three and a half percent decrease in NOI. Um, And from a occupancy standpoint, the average occupancy in Q2 2024 was about 1% lower compared to Q2 2023.

Speaker Change: Both. So, you know, Q2 of 2024 compared to Q2 2023, we saw...

David deVilliers III: These projects represent over 1,200 apartments and 58,000 square feet of retail.

Speaker Change: You know, around a three and a half percent decrease in NOI, and from an occupancy standpoint, the average occupancy.

Speaker Change: 1% lower compared to Q2 2023.

David deVilliers III: Turning to our principal capital source strategy or lending ventures, I have the following updates to our two current projects. Amber Ridge and Prince George's County, Maryland, consisting of 187 lots, is completely sold out. Filed development activities to get off bonds are ongoing and upon completion of this project, interest income and profits are expected to total $3.9 million, a 21% profit on funds drawn.

John Baker: That's you. That's you. Okay, the good thing is that the renewal rent growth is, you know, kind of better than what we're seeing in the sunbelt. You know, generally, what we've been seeing is

Speaker Change: Okay, the, well, I mean, you're, you know, the good thing is the, the renewal rent growth is, you know,

Speaker Change: Kind of better than what we're seeing in the Sunbelt, you know, generally what we've been seeing is

Speaker Change: Yeah, healthier rent trends in the D.C. metro area. You know, I see that that's just the renewal. Is it do you have do you know, like what the.

David deVilliers III: Our second lending venture, Presbyterian in Aberdeen, Maryland. We have committed 31.1 million dollars in funding. 24.6 million was drawn as of quarter end and over $12.7 million in preferred interest and principal payments have been received today. A National Home Builder is under contract to purchase all the finished building lots by Q4 2027. 78 of the 344 lots were closed upon and we expect to generate at least a 20% internal rate of return and fund strong upon completion of the project.

Speaker Change: Unknown Speaker The new lease, I don't think you guys ever published that in the past, like what we see in some of the bigger REITs is the renewals are usually positive, and then the new leases tend to be slightly negative, like, is that what you're seeing as well? Transcribed by https://otter.ai

John Baker: So at Dock and Riverside, we had positive trade outs. Unknown Speaker And at Marin, it was, the trade out was

Speaker Change: So, at Dock and Riverside, we had positive trade-outs?

Speaker Change: And at Marin, it was, the trade-out was negative, just under 2%, about 1.8% in the negative.

Bill Chen: Jumping over to the warehouses. You know, can we assume Chelsea's gonna get about $9 a net square foot? Is that a reasonable assumption?

Speaker Change: Jumping over to the warehouses, you know, can we assume Chelsea's gonna get about $9 net a square foot? Is that a reasonable assumption?

David deVilliers III: In closing, we are pleased with the entitlement progress being made on several industrial land assets, particularly on our Lakeland and Fort Lauderdale projects in Florida. The renewal and trade-out rent growth within our multifamily assets is encouraging and a key indicator of where we are on the supply and demand curve. Interst rates and construction costs have appeared to stabilize. Interst rates spreads have eased and all those new supply of apartments in the DC waterfront sub-market remains ahead when for rent growth. Absorption and demand for apartments and warehouse space remain a bright spot.

John Baker: You know, I, um, a couple of things. I would say that we are out in the market at $10 for Chelsea. Where we land is going to be, you know, It's going to be an equation of how many improvements they want and plant the term and what type of annual escalations we get. That average rate, you know, across that term is even better. But we're kind of looking at that year one rate. We're out in the market right now for $10.

Speaker Change: You know, I, um, a couple things.

Speaker Change: I would say that we are

Speaker Change: Out in the market at $10 for Chelsea.

Speaker Change: you know, where we land is going to be, you know...

Speaker Change: It's going to be an equation of how many improvements they want and the length of term.

Speaker Change: What type of annual escalations we get? That average rate, you know across that term is is even better But we're kind of looking at that year one rate. We're out in the market right now at $10

Bill Chen: ...that knows of care.

Bill Chen: That's helpful. And what's the market vacancy rate in that sub-market right now?

David deVilliers III: As we look ahead, our focus remains on the margin between revenue and expense growth at our existing assets. Having a fundamentally sound capital stack with sensible construction financing terms and hyper-focused development, leasing and property management teams. With several permits expected in 2025, our efforts in the technical development entitlements to vertical due diligence. Through our cautious, patient, and thorough vertical due diligence process, we will make informed and calculated decisions to wait or pull the trigger on vertical construction.

Speaker Change: And I also care.

Speaker Change: That's helpful. And what's the market vacancy in that sub-market right now?

John Baker: For our product type, I'd say it's... don't hold me to this exact number, but I think we're probably looking at 5%.

Speaker Change: For our product type, I'd say it's...

Speaker Change: Don't hold me to this exact number, but I'd say we're probably looking at 5%.

Bill Chen: 5% okay, so so so I mean it's not it's not too like before but you know still very healthy the I think in one of the earlier, Unknown Attendee, FRP Holdings Inc, Unknown Attendee, FRP Holdings Inc, Unknown Attendee, Apply that kind of to the 20 acres you have in Florida and Georgia, like, you know, if my memory serves me correctly, that's what you guys said, or might have disclosed that and any any update on any potential sites or targets where we may, you know, we historically have thought of these parcels as multi-decade assets when the land will be available to be monetized, right? Like, any update on.., on any near-term monetization or just just, And by near term, I mean like within five years, right, of turning them into potentially home building lots, etc. Like any commentary on that would be helpful.

Speaker Change: The

Speaker Change: filings, you have mentioned, I don't know if it's an earnings call or filings, you have mentioned that you learned a lot from the, the company learned a lot from the lending venture, and you're exploring ways to potentially

John Baker III: Thank you, and I'll now turn the call back to John. Thank you, David.

John Baker III: As we have said on several occasions and you just heard in David's report, we are maintaining our strategy at focusing on industrial development and expanding our footprint on a square footage and regional basis. July, we closed on the purchase of the land for our industrial joint venture in Broward County, Florida, for a total purchase price of $24.5 million. We also closed on the land for our other industrial J.V, and Lake on Florida last quarter for a total purchase price of $2.8 million.

Speaker Change: apply that kind of to the 20 acres you have in Florida and Georgia like you know if my memory serves me correctly that's what you guys said

John Baker III: We expect to start construction on both projects on or before March of 2025. We are nearly finished with shell construction of our 258,000 square foot industrial asset in Perryman, Maryland, with completion expected in the fourth quarter. These three projects totaling 649,000 square feet of new Class A industrial space represent an estimated $118 million in total CAPEX and $72 million of equity capital, of which we account for $66.8 million. We have underwritten these assets at a 67% NOI yield-on-cost but expect outperform these conservative assumptions.

Speaker Change: Or might have disclosed that and any any update on any potential

Speaker Change: sites or targets where we may, you know, we historically have thought of these parcels as multi-decade assets when the land will be available to be monetized, right? Like any update on

Speaker Change: any near-term monetization or just just

Speaker Change: And by near term, I mean, like, within five years, right, of turning them into potentially home building lots, et cetera, like, any commentary on that would be helpful.

Bill Chen: Bill Chen, Unknown Attendee, FRP Holdings Inc., Unknown Attendee, FRP Holdings Inc., Unknown

Bill Chen: Bill.

David: Go ahead, David.

John Baker: Bill, I was going to say, you know, at one of our quarries in Fort Myers, Lee County.

David: Bill, I was going to say, you know, at one of our quarries in Fort Myers.

John Baker: They purchased land from us to put a major road through it called Alico Road. You know, that's going to cause, You know, that's going to cause probably some of the mining operations to stop there, you know, because you can't exactly bring, you know, large aggregate vehicles across a major highway. You know, and when stuff like that comes up. You know, we look at it to see if there's a second life, to see if we can do something with it.

David: Lee County purchased land from us to put a major road through it, called Alico Road. You know, that's going to cause...

Operator: I will now open the call up for any questions that you might have. At this time if you would like to ask 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 One to ask a question. We will pause for a moment to allow questions to cue.

David: You know, that's going to cause probably some of the mining operations to stop there, you know, because you can't exactly bring, you know, large aggregate vehicles across a major highway.

David: You know, and when stuff like that comes up.

Stephen Farrell: We'll take our first question from Stephen Farrell with Oppenheimer Close. Please go ahead. Good afternoon. I say then. It's just a quick question with the two Florida development. The expected cap back 57 million and 28 million. Does that include the purchase of land? Yes. Is there any particular reason why there's such a big discrepancy in the cost per square foot between the two? Yes. In Lakeland, Florida, Reynolds rates, let's say range from 750 to 950.

Speaker Change: We look at it to see if there's a second life, to see if we can do something with it. I don't think that's something near term. A lot has to happen for a major road to be built.

John Baker: Unknown Speaker You know, near term, I don't think that's something near term. You know, a lot has to happen for a major road to be built. You know, water, sewer zoning, but that's the type of stuff that we're just keeping an eye on, you know, and if there's a way to squeeze some dollars out of property that otherwise is going to sit vacant, you know, that's what we're going to do.

David: Water, sewer and zoning. But that's the type of stuff that we're just we're keeping an eye on You know, and if there's a way to squeeze some dollars out of property that that otherwise is going to sit vacant You know, that's that's what we're going to do

John Baker: Yeah, Bill, just to take you back on David said Vulcan is going to get every bit of limestone out of Fort Myers that there is to get prior to Alico Road being built. It's just too valuable to them.

David: Yeah, Bill, just to take you back on what...

Bill: David said Vulcan is going to get

Bill: Every bit of limestone out of Fort Myers that there is to get.

John Baker: And so they are hustling to get that, to get it mined so that they can get to the other side of the road and continue mining in the second phase of that. Those are, you know, I wouldn't say they're top of mind, but we certainly revisit them often and continue to talk internally about, you know, what development will look like there. But particularly that site, you know, you're going to need it.

Speaker Change: Prior to Alico Road being built, it's just too valuable to them and so that they are hustling to get that

Stephen Farrell: In the Broward County Fort Lauderdale site, Reynolds rates range from 1850 and are coming up against $20 a square foot triple net. You know, and that well-heeled Broward County Florida market land is just more expensive and Reynolds rates are a heck a lot higher. So that's the driving difference. And even if I look at excluding the land though, it looks like the construction cost to develop is about 180 per square foot versus 125.

Speaker Change: to get it mined so that they can get to the other side of the road and continue mining in like the second, the second phase of that. But

David: Those are, you know, I wouldn't say they're top of mind, but we certainly revisit them often and continue to

David: To talk internally about you know what development will look like there, but

David: Particularly that site, you know, you're going to need.

John Baker: You're going to need to bring in some utilities with that road to make it happen, until that road is built. It won't be possible to develop it. We are going to make sure that, you know, We're ready to develop that stuff as soon as it's capable of being developed.

David: You're going to need to bring in some utilities with that road to make it happen until that road's built.

Stephen Farrell: Is there any construction related costs that are different? A couple, you know, the Lakeland building is a single building. It's a single 200,000 square foot building. You know, there's just the efficiencies when you build a single building versus two, which is the we're going to build two 90,000 square foot buildings in the Fort Lauderdale site. And Fort Lauderdale, you know, there's some interesting site development costs. There are nuances to all these things. They may look the same, but there's always nuances that can move the costs around a little bit, particularly when it comes to the land development side of them.

David: It's not going to be possible to develop it, but we are going to make sure that

Speaker Change: We're ready to develop that stuff as soon as possible.

Speaker Change: It's capable of being developed.

Bill Chen: It, you know, I remember it was a time when the bridge, the Frederick Douglass Bridge, was needed to be built in the old one demo. And I thought, man, that's going to take at least 1520 years, but that happened, like, in a much shorter timeframe than I thought. But you know, is a legal road is that, you know, building legal growth is that, three years at five years at ten years? Like, help me understand, like, what kind of timeframe will we call them now?

Speaker Change: You know, I remember it was a time when, you know, the bridge, the Frederick Douglass Bridge was needed to be built in the old one demo. And I thought, I thought, man, that's going to take at least 15, 20 years, but

Speaker Change: That happened in a much shorter time frame than I thought. You know, is a legal road...

Speaker Change: is that, you know, building a legal growth, is that, is that a three year, is that a five year, is that a ten year, or like...

Stephen Farrell: Okay, thank you. For the Chelsea project, is there a lease in place for when construction is finished? No, there is not. Do you anticipate having any issue filling that space? No, not at this time. I mean, the market, you know, there's still a good demand. We feel we have a good product. You know, typically it's, it's rare for us to get, you know, buildings pre-leased before we really deliver them. This building really gets kind of put on the market Q4 this year.

Speaker Change: Like, help me understand, like, what kind of time frame will we call them now?

John Baker: Yeah, probably like 2027 or 2028.

Bill Chen: Okay, all right, because in New York, when we say we're going to do something, we're like 30 years later. So, it's only certain that we're on the same page there. Okay, that's helpful. It's a priority for the county.

Speaker Change: Yeah, probably like 2027, 2028, something like that. Okay, all right. Because in New York, when we say we're going to do something, we mean like 30 years later.

Speaker Change: It's only sure that we're on the same page there. Okay, that's helpful. It's a priority for the county. That road is going to open up a lot.

John Baker: a lot for them, and it's I would say it's almost, it's probably the county's top priority.

David: a lot for them and it's, I would say it's almost, it's probably the county's top priority.

Bill Chen: It is, am I thinking too, too, like, you know, too fast here because I've driven past? Unknown Speaker Late Louisa years ago; this is like eight years ago. And if I remember correctly, that's right by Disney, where all these subdivisions are going up, like, like, like, is there any potential for that being sold to some, you know, home to a home developer in the near term, meaning like five, 10 years for those lots?

Speaker Change: Don't you? Don't you? That's helpful. It is, am I thinking too, too like, you know, too fast here because I've driven past

Stephen Farrell: And once we put it on the market, people can drive to it, paving's in, they can walk in it. That's typically when we start seeing a lot of activity. We've had some, you know, inquiries, but no paper traded at this, time. Okay, that's good.

Speaker Change: late Louisa years ago, this is like eight years ago. And if I remember correctly, that's like right by Disney, where all these subdivisions are going up, like, like, like, is there any potential that being?

Stephen Farrell: And just a quick question on Doc 79 and Marin in the new chart on the second page of your release. It looks like renewal rates at the doc were kind of outpacing Marin which, or the percentage increase, which has not happened recently. Is there any color you can provide on that? You know, I think that Doc for a while may have, you know, had some effects of Marin and now things are evening out and we're able to push rents at Doc more these days. You know, Doc also has, you know, just lower rental rates to begin with.

David: Sold to some, you know, home developer in the near term, meaning like 5-10 years for those lots.

John Baker: No, I think First of all, CEMEX is going to have to start mining, which hasn't happened yet. I think they'd have to mine a pretty meaningful portion of the property, just to get the kind of scale you'd want to develop it, which, We're going to be making good money while they're doing that, and, uh... God, that place is going to be, you know, the proverbial Even when we can go about developing the first phase of it, and it's, it is within kind of this overall concept plan in Lake County called Wellness Way.

Speaker Change: No, I think

Speaker Change: First of all, CEMEX is going to have to...

Speaker Change: to start mining, which hasn't happened yet.

Speaker Change: and

Speaker Change: I think they'd have to mine a pretty meaningful portion of the property just to get the kind of scale you'd want to develop it, which we're going to be making good money while they're doing that.

Speaker Change: God, that place is going to be, you know, the proverbial hole in the donut.

Speaker Change: Even when we can go about developing the first phase of it and it's it is within kind of the this overall concept plan in

John Baker: Everybody knows developments are coming there. It's just going to be a little bit before we do, but I think that, whatever you do, however long you have to wait, the demand for land down there is well exceeding inflation. So I don't think we're losing any money by sitting tight, and we're going to be generating income as CENTAX finds it. Just be patient.

Stephen Farrell: More attractive. We'll have to see, you know, if it continues. I'd, you know, I'd love it if Doc starts seeing effective rents the same as Marin's. I don't know if we'll get there, but that's kind of where we are right now. Yeah, I think it's even pretty consistently pushed high rental growth at Marin and last year at Doc, we were trying to maintain occupancy and you didn't see the kind of rent growth on renewals that you had previously. And I think this is probably Doc just letting catch up.

Stephen Farrell: That's good.

Speaker Change: in Lake County called Wellness Way. Everybody knows development's coming there. It's just going to be a little bit before we do, but I think that whatever...

Speaker Change: However long you have to wait, the demand for land down there is well exceeding inflation. So I don't think we're losing any money by sitting tight. We're going to be generating income as CEMAC finds it.

Speaker Change: Just be patient.

Bill Chen: Well, I mean, you know, it's not a badge. It's not a bad thing to let everything else appreciate and get built out, right? Like, you know, you're holding a donut.

Speaker Change: Well, I mean, you know, it's not a bad...

Stephen Farrell: That's all I have. Thank you very much.

Speaker Change: Unknown Speaker Not a bad thing to let everything else appreciate and get built out, right, like you're already, you're a hole in the donut. So that's, is there a reason why that

Bill Chen: So that's, is there a reason why that CMEX, I mean, it's unbelievable because, you know, it was eight years ago when I drove across there, actually, maybe nine now, but, you know, CMEX still hasn't started. Like, what's the timeline when they may start mining that?

Operator: As a reminder, if you'd like to ask a question today, please press star one.

Bill Chin: We'll go next to Bill Chin with Ryzone Partners. Please go ahead. Hello, Mr. Chin, your line is open.

Speaker Change: CMEX, I mean, it's unbelievable because, you know, it's, it was eight years ago when I drove across there, actually, maybe nine now, but, you know, CMEX still hasn't started, like, what's, any timeline when they may start mining that?

Bill Chin: Please go ahead. Good afternoon, guys. Hey, Bill. Hey. Good to connect with you guys. I have a few questions and may jump around a little bit. Just a first quick question. On the pro-router NLI for Doc 79 Marin, the effects of that JV transaction, that's beyond, right? There's no, these are like for like numbers. Correct. Okay, got you. I guess, I guess like the drop in the NLI is due to slightly lower occupancy, maybe expenses grown faster?

Speaker Change: I don't know.

John Baker: I don't know. They know they own it or at least have a lease on it. And I think kind of the biggest barrier to them getting in there and mining was they were required to extend some county roads at their expense. That was part of getting permits, and they do have other assets in that area. And so Maybe the Unknown Speaker 0 Not as if they were immediately running out of reserves, and they could, you know, supply their The ReadyMix operations with what they already had. Unknown Speaker 26. Thank you.

Speaker Change: They

Speaker Change: They know they own it or at least have a lease on it and I think kind of the biggest

Speaker Change: Portal to them.

Speaker Change: Getting in there and mining was, they were required to

Speaker Change: Extend some county roads at their expense. That was part of getting permits and They do have other assets in that that area and so

Speaker Change: Maybe the

Bill Chin: Is that the read? It is for Q2 alone. You know, Bill, you're the date. They're even. Q2 is really the first quarter where we saw erosion. When you say erosion, are you talking occupancy or are you talking NLI, just one of those which measure the top? Both. So, you know, Q2 of 2024 compared to Q2 2023, we solved, you know, around a 3.5% decrease in NLI, and from a occupancy standpoint, the average occupancy in Q2 2024 was about a 1% lower compared to Q2 2023.

Speaker Change: It's not as if they were immediately running out of reserves and they could, you know, supply their

Speaker Change: The ReadyMix operations with what they already had.

David deVilliers: David DeVilliers.

John Baker: They will mine it eventually, and I know that, and we are happy to collect the minimum royalty payments in the meantime. Mm-hmm. Mm-hmm. Unknown Speaker That's another, another, product where the price is exceeding inflation. So again, I don't think we're losing any money by them not mining it.

David deVilliers: same

Speaker Change: They will mine it eventually, I know that, and we are happy to collect the minimum royalty payments in the meantime.

Speaker Change: Mm-hmm, mm-hmm.

Speaker Change: That's another, uh, another.

Speaker Change: product that the price is exceeding the Inflation so again, I don't I don't think we're losing any money by them not mining it

Speaker Change: Mm-hmm, mm-hmm, mm-hmm.

Bill Chen: The site in Jacksonville, I know I'm jumping around a little bit, but you know, I just have all these thoughts in my head. The site in Jacksonville, that's now a vacant lot. Could that potentially be a warehouse?

Speaker Change: The

Speaker Change: The site in Jacksonville, I know I'm jumping around a little bit, but you know, I just have all these thoughts in my head. The site in Jacksonville, that's now a vacant site.

Bill Chen: I don't know about a warehouse, but I think it could be, it could definitely be like equipment storage. Yeah, it's, you know, nothing we have to worry about, like, immediately, but I think, you know, there's Page PAGE of NUMPAGES www.verbalink.com Transcripts provided by Transcription Outsourcing a year or six months out. I think that's when we'll start exploring, Unknown Speaker, Unknown Attendee, FRP Holdings Inc. Okay.

Speaker Change: Could that potentially be a warehouse?

Speaker Change: I don't know about a warehouse, but I think it could definitely be like equipment storage.

Bill Chin: Okay, well, you know, the good thing is the renewal of rent growth is, you know, kind of better than what we're seeing in the thumbnail, you know, generally what we would say is, you know, healthier rent trends in the DC metro area. You know, I see that that's just the renewal. Is it, do you know like what the, the new lease, I don't think you guys ever published that in the past, like what we see in some of the bigger reads is the renewals are usually positive and then the new lease is going to be slightly negative.

Speaker Change: Yeah, it's, you know, nothing we have to worry about like immediately but I think, you know, there's

Speaker Change: 2 or 3 years left on that lease, as we kind of get to...

Speaker Change: A year or six months out, I think that's something we'll start exploring.

Speaker Change: Unknown Speaker Kind of its next phase. But it'll, it will not sit there vacant.

Bill Chen: Okay, gotcha. And like, how big of a... How many how many square feet could be built on that side?

Speaker Change: Okay, and like how big of a, how many square foot could be built on that site?

Bill Chin: Like is that what you're seeing as well. So at Doc and Riverside, we had positive tradeouts and at Marin, it was, the tradeout was, was negative just under 2% about 1.8% in the negative. Yeah, that's so full. Jumping over to the, to the warehouses. You know, can we assume Chelsea's going to get about 9 dollars that the square foot is, is that, is that a reasonable assumption? You know, I, a couple of things, I would say that we are out in the market at 10 dollars for Chelsea.

John Baker: Um, I don't know about viability as a future industrial asset. I would think equipment storage, at least for the time being, is its best. Oh, gotcha. That's useful.

Speaker Change: I don't know about

Speaker Change: It's...

Speaker Change: Viability is a future industrial asset. It would- I think equipment storage, at least for the time being, is its best use.

Bill Chen: That's you. Thank you.

Bill Chen: And I don't think I have more questions, but I just kind of want to leave the management team with a thought. I've been tracking the company for nine years, since 2015, 2014, 2015, so maybe 10 years now. And I, you know, track the cash flow, track the NOI, and I think that the management team and the board should start thinking about initiating a dividend. I know there are a lot of projects in the pipeline.

Speaker Change: That's you.

Speaker Change: And I don't think I have more questions, but I just kind of want to leave.

Speaker Change: the management team with a thought. I've been tracking the company, I've been a shareholder for nine years since 2015, 2014, 2015, so maybe 10 years now. And I, you know, track the cash flow, track the NOI.

Speaker Change: And I think that the, you know, the management team and the board should start thinking about initiating a dividend. I know there's a lot of projects in the pipeline.

Bill Chin: You know, where we land is going to be, you know, it's going to be equation of how many improvements they want and plant the term and what type of annual escalations we get. Hopefully that average rate, you know, across that term is even better. But we're kind of looking at that year one rate. We're out in the market right now at 10 dollars. Then that's okay. That's helpful. And what's, what's the market they can see in that, some market right now?

Bill Chen: I know you guys do a great, you know, great job putting that capital to work. But I think that I also know that because I've been a shareholder for nine, 10 years, and I know your intentions, but that's not necessarily the case for the casual shareholder or prospective shareholder. And I think they're, you know, I know you guys went out and hired a really good IR team. I know that you guys are trying to increase visibility.

Speaker Change: I know you guys do a great, you know, a great job putting that capital to work.

Speaker Change: But I think that I also know that because I've been a shareholder for nine, ten years, and I know your intentions, but that's not necessarily the case for

Speaker Change: the casual shareholder or prospective shareholder. And I think they're, you know,

Speaker Change: I know you guys went out and hired a really good IR team. I know that you guys are trying to increase visibility.

Bill Chen: So in today's environment, when you could get, you know, 4% in the two-year treasury, 5% in the six-month treasury, and then the, you know, mid-American trade is paying almost a 4% yield, I think that competitively, the company could be helped by initiating a 1% dividend because most of the capital could still be allocated. And that would be, you know, maybe, I did some math before jumping on the call.

Speaker Change: So in today's environment, when you could get.

Bill Chin: For our product type, I'd say it's, don't hold me to this exact number, but I think we're probably going to 5%. Okay, so, so, I mean, it's not, it's not too, like before, but, you know, so very healthy. The, I think in one of the earlier filings, you have mentioned, I have a little bit of earnings call or filings, you have mentioned that you learned a lot from the, the company learned a lot from the landing venture.

Speaker Change: You know, 4% in the 2-year Treasury, 5% in the 6-month Treasury, and then the, you know, Mid-America trade is paying almost a 4% yield.

Speaker Change: I think that there is competitively, you know, the company could be helped by initiating a 1% dividend, because most of the capital could still be allocated and that would be, you know,

Unknown Speaker: Unknown Speaker Maybe, you know, just $5 million a year. I did some math before jumping on the call. I think we're going to be running at, you know, over $40 million of NOI once Chelsea gets leased, once Verge gets, you know, consolidated.

Bill Chen: I think we're going to be running at, you know, over $40 million of NOI once Chelsea gets leased, once Verge gets, you know, consolidated. And, you know, a lot of these assets don't have debt on them. Debt service is very minimal.

Bill Chin: And you, you're exploring ways to potentially apply that kind of to the 20 acres you have in Florida and Georgia, like, you know, my memory starts to be correctly. That's what you guys said or might have disclosed that. And any, any update on any potential sites or targets where we may, you know, we, we, we, we, so he has thought of these parcels as multi decade assets when the land will be available to be monetized, right?

Bill Chen: And there's still a lot of cash on the balance sheet. So I think that initiating a 1% dividend would be good. It will bring, I think, more important than anything else is that it signals to the casual shareholder and the prospective shareholder that there is an intention to return, you know, return some of the capital to shareholders eventually. And I think if you start at 1%, you could easily have that dividend grow 10% a year or even 15% a year. And it will still be very, very affordable because the NOI is growing so quickly, and you're starting off at a very low base with a very low amount.

Speaker Change: And, you know, a lot of these assets don't have debt on their debt service is very minimal. And there's still a lot of cash on the balance sheet. So I think that initiating 1% dividend will be will be good. It will bring I think I think more important than anything else is signals.

Speaker Change: It signals to the casual shareholder and the perspective shareholder that

Speaker Change: that there is an intention to return, you know...

Speaker Change: to return some of the capital to shareholders eventually and I think if you start at 1%

Speaker Change: You could have that dividend easily grow 10% a year or even 15% a year, and it will still be very, very affordable because the NOI has grown so quickly, and you're starting off at a very low base, at a very low amount.

Bill Chin: Like any update on. Any near term monetization, or just, and by near term, I've been like within five years, right, of turning them into potentially home building lots, et cetera, like any commentary on that would be helpful. Yeah, Bill, go ahead, David. Bill, I was going to say, you know, at one of our quarries in Fort Myers, Lee County purchased land from us to put a major road through it, called Aliko Road, you know, that's going to cause, you know, that's going to cause probably some of the mining operations to stop there, you know, cause you can't exactly bring, you know, large aggregate vehicles across a major highway.

Bill Chen: So that's something to think about. You know, sometimes on these earnings calls, I like to use the call to kind of express some of my thoughts. And a lot of it comes from talking to other shareholders and other prospective shareholders, you know, who kind of bought this. And I think it will also help with trading liquidity, which is kind of a perpetual issue that the company deals with. So it's not a question. It's more of, you know, sharing some of the feedback that I get when I talk to other shareholders.

Speaker Change: So that's something to think about, you know, sometimes on these earnings calls I like to use.

Speaker Change: Unknown Speaker The call to kind of express some of some, some of the

Speaker Change: Unknown Speaker My thoughts, and a lot of it comes from

Speaker Change: talking to other shareholders and other prospective shareholders, you know, who kind of have bought this up. And I think it will also help with the trading liquidity, which is kind of a perpetual issue that the company deal with.

Speaker Change: So it's not a question, it's more of sharing some of the feedbacks that I have when I talk to other shareholders.

John Baker: No, Bill, that's really good feedback. I'd be lying if I said that it's not something that we've, an idea that we've at least bounced around. So I appreciate you sharing that.

Speaker Change: No, Bill, that's really good feedback.

Bill: I'd be lying if I said that it's not something that we've, an idea that we've at least bounced around. So I appreciate you sharing that.

Bill Chin: You know, and when stuff like that comes up, you know, we look at it to see if there's a second life, to see if we can do something with it. You know, near term, I don't think that's something near term, you know, a lot has to happen for a major road to be built in, you know, water, sewer, and zoning, but that's the type of stuff that we're just, we're keeping an eye on, you know, and if there's a way to squeeze some dollars out of property that otherwise is going to sit vacant, you know, that's what we're going to do.

Bill Chen: Well, well, thank you. And I'm glad that you know it's been thought about internally. And I have no further questions.

Bill: Well, thank you, and I'm glad that, you know, it's been thought about internally and I have no further questions.

Operator: Operator, It appears we have no further questions at this time. I will now turn the program back over to our presenters for any additional or closing remarks.

Speaker Change: It appears we have no further questions at this time. I will now turn the program back over to our presenters for any additional or closing remarks.

John Baker: Thank you all, and we, of course, appreciate your continued investment and interest in the company. Thanks. Bye.

Operator: This does conclude today's program. Thank you for your participation. You may disconnect at any time.

Speaker Change: Thank you all and we of course appreciate your continued investment and interest in the company. Thanks. Bye.

Bill Chin: Yeah, Bill, just to take you back on what David said, Volkan is going to get every petal on a live stone out of Fort Myers, that there is to get prior to Olico Road being built, that's just too valuable to them, and so that they are hustling to get that, to get it in mind, so that they can get to the other side of the road and continue mining, and like the second phase of that, but those are, you know, I wouldn't say the top of mind, but we certainly revisit them often and continue to talk internally about, you know, what development will look like there, but particularly that site, you know, you're going to need, you're going to need to bring in some utilities with that road to make it happen, and until that road's built, it's not going to be possible to develop it, we are going to make sure that, you know, we're ready to develop that stuff as soon as it's capable of being developed. You know, I remember it was a time when, you know, the bridge, the frigid-duckler bridge would need it to be built in the O1 demo, and I thought, man, that's going to take at least 15-20 years, but that happened in a much shorter time period than I thought.

Speaker Change: This does conclude today's program. Thank you for your participation. You may disconnect at any time.

Speaker Change: to

Bill Chin: You know, in the Lyco Road, is that, you know, building the Lyco Road, is that, is that a three-year, is that a five-year, is that a ten-year, or what? Yeah, I probably had 2027, 2028, something like that. Okay. Because in New York, when we say we're going to do something, we've been a lot of 30 years later. So, guys, it's one of the sure-of-the-world scene case there. Okay, that's helpful. It's a priority for the county.

Bill Chin: The road is going to open up a lot for them. I would say it's probably the county's top priority. Don't you? That's helpful. Am I thinking too fast here because like driven past, late Louisa years ago, this is like eight years ago. And if I remember correctly, that's like right by Disney where all these subdivisions are going up. Like, like, is there any potential to have being sold to some, you know, home developer in the near term, meaning like five, ten years for those lots?

Bill Chin: No, I think, first of all, Symmax is going to have to start mining, which hasn't happened yet. And I think they'd have to mine a pretty meaningful portion of the property just to get the kind of mail you'd want to develop it, which we're going to be making good money while they're doing that. And, God, that place is going to be, you know, the proverbial hole in the doughnut even when we can go about developing the first phase of it.

Bill Chin: And it is within kind of this overall concept plan in Lake County called Wellness Way. Everybody knows developments coming there. It's just going to be a little bit before we do, but I think that, you know, whatever you, however long you have to wait, the demand for land down there as well, defeating, you know, inflation. So I don't think we're losing any money by setting tight. Yeah, we're going to be generating income as Symmax finds it.

Bill Chin: Just be patient. Well, I mean, you know, it's not a bad. It's not a bad thing to let everything else appreciate and get built out, right? Like, you know, your home and don't have. So that's, is there a reason why that Symmax? I mean, it's unbelievable because, you know, it was eight years ago when I drove across the actually maybe nine now. But, you know, Symmax still hasn't started. Like, what's any timeline when they may start mining that?

Bill Chin: I don't know. They, they know they own it or at least have a lease on it. And I think that kind of the biggest. First portal to them, getting in there and mining, they were required to extend some county roads at their expense, that was part of getting permits, and they do have other assets in that area, and so maybe the, it's not as if they were immediately running out of reserves and they could supply their, the Raymix operations with what they already had, they will mine it eventually, and I know that, and we are happy to collect the minimum royalty payments in the meantime.

Bill Chin: That's another, another product that the price is exceeding the inflation, so again, I don't think we're losing any money by them, not mining it. The, the site in Jacksonville, I know I'm jumping around a little bit, but you know, I just have all these thoughts in my head, but the site in Jacksonville, that's now a vacant site, could that potentially be a warehouse? I don't know about, a warehouse, but I think it could be, it could definitely be like equipment storage.

Bill Chin: Yeah, it's, you know, nothing we have to worry about, like, immediately, but I think, you know, there's two or three years left on that lease, as we kind of get to a year or six months out, I think that someone will start exploring kind of its next phase, but it'll, it will not sit there vacant. Okay. And like, how big of the, how many, how many square foot could be built on that site? I don't know about, it's viability as a future industrial asset. I think equipment storage, at least for the time being, is the best, the best use.

Bill Chin: And I don't think I have more questions, but I just kind of want to leave the management team with the, with a thought. I've been tracking the company as an assureholder for nine years since 2015, 2014, 2015, so maybe 10 years now. And I, you know, track the cash flow, track the NOI. And I, I think that the, you know, the management team of the boys should start thinking about initiating a dividend.

Bill Chin: I know, I know there's a lot of projects in the pipeline. I know you guys do a great, you know, great job putting that capital to work, but I think that I also know that because I've been a shareholder for 19 years, and I know you're intentions, but that's, that's not necessarily the case for the casual shareholder or, or prospective shareholder. And I think they're, they're, you know, I know, I know you guys went out and hired really good IR team.

Bill Chin: I know that you guys are trying to increase visibility. So in today's environment, when you could get, you know, 4% to your treasury, 5% in the mid-America trade is paying almost a 4% yield. I think that there is competitively, you know, the company could be helped by initiating a 1% dividend because most of the capital could still be allocated. And that would be, you know, maybe, you know, just five million dollars a year.

Bill Chin: I did some math before jumping on the call. I think we're going to be running at, you know, over 40 million dollars of NLI once Chelsea gets leads, once the verge gets, you know, consolidated. And, you know, a lot of these assets don't have debt on their debt service are a minimal. And there's still a lot of cash on the balance sheet. So I think that initiating a 1% dividend will be good.

Bill Chin: It will bring, I think, I think more important than anything else is signals, it signals to the casual shareholder and the prospective shareholder that there is an intention to return, you know, to return some of the capital to shareholders eventually. And I think if you start at 1%, you could have that dividend easily grow 10% the year or even 15% the year. And it will still be very, very affordable because the NLI is grown so quickly.

Bill Chin: And you're starting off at a very low base at a very low amount. So that's something to think about, you know, sometimes on these aren't called. I like to use the cost to kind of express some of some of the my thoughts and a lot of it comes from talking to other shareholders, another prospective shareholders, you know, who kind of have walked us up. And I think it will also help with the trading liquidity, which is kind of a perpetual issue that the company deal with.

Bill Chin: So it's not a question, it's more, it's more of, you know, sharing some of the feedbacks that I have when I talk to other shareholders. No, Bill, that's really good feedback and I'd be lying. I said that it's not something that we've an idea that we've released bounce around so I appreciate you sharing that.

Bill Chin: Well thank you and I'm glad that you know it's been thought about internally and I have no further questions.

Operator: It appears we have no further questions at this time.

Operator: I will now turn the program back over to our presenters for any additional or closing remarks. Thank you all and we of course appreciate your continued investment and interest in the company. Thanks. Bye.

Operator: This does conclude today's program.

Operator: Thank you for your participation. You may disconnect at any time.