FRP Holdings, Inc.

Good morning, ladies and gentlemen, and welcome to the FRP Holdings, Inc. second quarter 2026 earnings call. All lines have been placed on a listen-only mode, and the call will be open for questions and comments following the management presentation. At this time, it is my pleasure to call over to Matt McNulty.

Thank you, Mike. Good morning, and thank you for joining us today. I'm Matt McNulty, Chief Financial Officer of FRP Holdings, Inc., and with me as speakers today are John Baker III, our CEO, David deVilliers III, our President and Chief Operating Officer, and Mark Levy, our Chief Investment Officer. Also joining us on the call are John Baker II, our Chairman, David deVilliers Jr., our Vice Chairman, John Milton, our Executive Vice President, and John Klopfenstein, our Chief Accounting Officer. As a reminder, any statements on the call which relate to the future are by their nature Subject to risks and uncertainties that could cause actual results and events to differ materially from those indicated in such forward-looking statements. These risks and uncertainties are listed in our SEC filings. Additionally, 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. The non-GAAP financial measures referenced in this call are net operating income, or NOI, Pro Rata NOI, Funds from Operations, or FFO, and FFO per share. We also reference debt service coverage and net debt as a percentage of the fair market value, which are not measures calculated in accordance with GAAP. FRP uses these non-GAAP financial measures to analyze its operations and to monitor, assess, and identify meaningful trends in our operating and financial performance. These measures are not and should not be viewed as a substitute for GAAP financial measures. To reconcile net operating income to GAAP net income, please refer to our most recently filed 10 earnings press release and our quarterly earnings deck published on our website. I will now turn the call over to our President and Chief Operating Officer, David deVilliers III, for his report on operations. David.

Thank you, Matt, and good morning, everyone. The second quarter unfolded largely as we expected. Industrial leasing continues to take longer than we originally underwrote, but tenant activity continues to improve. Our balance sheet remains exceptionally strong, and our long-term strategy has not changed. Let me begin with where FRP is headed, because it frames everything we do. At FRP, disciplined capital allocation is at the core of our strategy. We continually evaluate where each incremental dollar can earn the highest long-term risk-adjusted return. That philosophy has created a portfolio and pipeline that includes industrial, multifamily, and mining royalties. Each business generates recurring NOI, creates long-term shareholder value, and plays an important role in our company.

As we look ahead, however,

We believe our greatest opportunity is industrial. Industrial real estate includes logistics, manufacturing, distribution and service-oriented industrial users. This offers the most attractive long-term investment opportunity across our markets. Accordingly, we expect most of our future discretionary growth capital to be invested in expanding our industrial portfolio. We are not changing who FRP is. We are changing where incremental capital goes. Our objective is to grow industrial into a larger contributor to NOI and FFO over time while continuing to own, operate, develop, and maximize the value of our multifamily and mining businesses. Our riverfront project along the Anacostia River illustrates that philosophy well. It is not simply another multifamily development. It is a legacy land position where years of entitlement, infrastructure investment, and development have created value and returns that would be difficult to replicate by acquiring a comparable site today. Those legacy opportunities remain an important part of FRP's long-term value creation.

Together,

These three businesses provide recurring NOI, financial strength, and the flexibility to continue investing for the long term. We are executing that strategy from a position of financial strength. We ended the quarter with approximately $130 million of liquidity, including approximately $101 million of cash, supported by a conservatively leveraged balance sheet. That financial strength gives us the flexibility to lease, stabilize, and selectively invest while maintaining the discipline that has long defined FRP. For the quarter, we generated approximately $9.4 million of pro-rata NOI and FFO of approximately $4.1 million, or 21 cents per share. During the past year, the acquisition of the Altman Logistics, have significantly expanded both the scale of our industrial platform and the operating capabilities needed to execute this strategy. As our current industrial development pipeline delivers to the first quarter of next year, our industrial portfolio will grow from approximately 800,000 square feet at the end of 2025 to approximately 2.1 million square feet. Encouragingly, leasing momentum continues to improve. property tours, proposals, tenant discussions, and active negotiations have all increased across multiple markets. We have signed approximately 20,700 square feet and have another approximately 97,500 square feet in active lease negotiations. While lease execution remains uneven, tenant activity today is materially stronger than it was a year ago, giving us greater confidence that occupancy and FFO will improve as more of those discussions convert into signed leases. Mining generated approximately $4.1 million of NOI during the quarter, an increase of approximately 12% year over year. It remains a highly efficient business that produces durable, recurring cash flow while requiring very little incremental capital and continues to provide important funding and balance sheet flexibility for our development strategy. The multifamily development pipeline will deliver 510 units in Greenville, South Carolina and Estero, Florida in the first quarter of 2028, growing the portfolio from 1,827 units to 2,337 units. Within multifamily, the operating environment remains mixed. Greenville continues to perform well. while Washington D.C. continues to be affected by elevated new supply and higher delinquency. We continue to view the supply pressures as cyclical rather than structural, although collections and delinquency remain influenced by the district's regulatory environment. Our focus is straightforward. Operate the portfolio well, complete the developments already underway, and continue creating long-term value through disciplined execution. Multifamily remains an important business for FRP, just as mining remains an important business, and together they complement the continued growth of our industrial platform. Together, our industrial and multifamily development pipeline discussed above represents approximately $506 million of total project costs, and approximately $34 million of expected stabilized NOI, of which approximately $16.6 million is FRP share. Our objective is straightforward. Deliver these projects, lease them, stabilize them and maximize the value they create for shareholders. We now expect full year NOI of approximately $36.2 million. compared with our original plan of $37.1 million. The roughly $900,000 reduction primarily reflects $800,000 from delayed industrial lease-up and $1 million of operating headwinds in our Washington, D.C., multifamily portfolio. This is partially offset by the $850,000 of stronger-than-expected mining performance. Near-term FFO will continue to reflect lease-up timing, elevated platform costs, and higher interest expense. Importantly, the investments we have made in people, systems, and technology have established the operating platform needed to support a much larger company and should generate meaningful operating leverage as occupancy improves. Our balance sheet remains one of our greatest competitive advantages with debt service coverage of approximately 2.82 times and net debt equal to approximately 19% of fair market value and substantial available liquidity. Our strategy is straightforward. Continue leasing our industrial portfolio, deliver and stabilize the developments already underway, and Mark Levy, our Chief Investment Officer.

Thank you, David, and good morning. I'd like to spend a few minutes providing some perspective on our industrial portfolio, what we are seeing in the leasing market today, and how we are positioning the business as the current development cycle continues to evolve. An important place to start is where we are in the lifecycle of the portfolio. A significant portion of our development pipeline has either only recently delivered or is still approaching completion. This is against the backdrop of improving leasing fundamentals. Although tenant decision-making remains deliberate and transaction timelines remain longer than historical norms, activity overall has significantly increased as tenants across the spectrum continue to have solid operational results and maintain strong corporate balance sheets. Most tenants are focused on the necessary investment to continue growth and increase market share. We are observing a manifestation of this across our portfolio. We currently have in process more than 110,000 square feet of renewals and pending new transactions, which is significant in the context of our available vacancies, and have seen a notable increase in new-to-market leasing activity, particularly at Delray, Davie, and Lakeland, the latter two of which have not yet reached substantial completion. While concessions remain elevated prior Relative to prior cycles, rental rates have remained quite resilient. The supply environment is also becoming increasingly constructive. Nationally, the industrial construction pipeline has contracted roughly 60% from its 2022-2023 cycle peak. At the same time, absorption is strengthening. We believe this combination should create an increasingly favorable supply-demand environment for projects delivering in the near-immediate term. This dynamic is particularly evident in our core markets of Florida, New Jersey, and Maryland, where regulatory constraints, development restrictions, and community opposition have made bringing new industrial supply to market increasingly difficult. Last, we have made meaningful changes to how we approach leasing and marketing across the portfolio. We have changed almost all elements of our leasing playbook, anchored by leaning heavily into longstanding relationships with tenants and the brokerage community. Those relationships are an important competitive advantage and differentiator as we work to convert this activity to executed leases. Looking ahead, our priorities are consistent and remain unchanged. We remain focused on incremental improvements in occupancy quarter over quarter, while selectively advancing new opportunities in core logistics markets supported by long-term demand drivers and meaningful barriers to entry. While the near-term objectives of leasing are indisputable, It is equally important we seek to build enterprise scale as we transition to a highly focused industrial operating and investment platform. With that, I'll turn the call over to John Baker for his closing remarks.

Thank you, Mark, and good morning to everyone on the call. Overall results for the quarter were down modestly versus a year ago, but largely in line with our expectations, reflecting the occupancy pressures that have affected our DC multifamily assets, and our Maryland industrial portfolio over the past several quarters. Those headwinds are still with us. But as I said last quarter, we've begun to see increased inquiry and leasing activity across most of our markets. That activity and engagement with potential tenants remains much higher than last year. We just have yet to see that activity and engagement translate into additional signed leases. The optimism I expressed in Q1 remains, albeit a more cautious optimism, But as David said, execution is the priority, and we are focused on the things we can control. We have strengthened our leasing team to bring it in line with our stated focus of getting our industrial and logistics assets leased and stabilized. As I've said before, the single most important lever we have to improve the company's performance is same-store leasing. It has the most immediate impact and requires very little capital relative to development. It remains management's top priority, and while we did not see our efforts translate into tangible results, all of us are of one mind that given our assets and the team behind them, we will. Focusing on process over results is a cliché for a reason. It's true. Operator, let's open the call for questions.

The floor is now open for questions. If you wish to ask a question at this time, Please press star 1 on your keypad to join the queue. We do ask if listening on speakerphone this morning that you pick your handset up while asking your question for optimal sound quality. Once again, please press star 1 on your keypad now to join the queue to ask a question.

Please hold a moment while we poll for questions. Our question comes from Bill with Horizon Partners.

Hey, guys. I'm trying to figure out what's going on in multifamily in D.C. We own Camden and obviously rent and NOI trends are weak, you know, everywhere in D.C. in the Sunbelt. But it seems like the DC assets owned by FRP is getting hit a little bit harder. Could you provide some color on that?

Sure, Bill. Good to hear from you. I mean, to get a little granular with DC, I would say that our renewal increases, we are seeing, you Across the board, I would say all of them are above 1.5% in terms of renewal increases for this quarter. Where we're really getting hit is trade-outs. When people leave and we've got to bring new tenants in, the trade-out rates are 10% lower than the previous tenant. So there's a focus on keeping tenants for sure, and our renewal rates on tenants are above 50%. So that's the good part. The tough part is about 8% of these tenants aren't paying. And that's the real headwind. And it's really a product of, you know, and the district's policies. And right now, the court systems are packed with all of us trying to get these tenants out. I mean, we're looking at 12 months, 18 months to get these tenants out. So once a tenant stops paying, and that delinquency stays with us for a long, long time. and that's kind of the landscape down in D.C. right now. And I don't see it changing anytime soon. We're getting better at interviewing and preempting delinquencies, which has helped some. I would say that our economic Occupancy this quarter has ticked up probably 75 basis points, and we hope to continue to see that trend. But we still have a pretty significant delinquency headwind from occupancy to economic occupancy.

So, I would like to clarify, is that consistent across Marin, Doc, 79, Bryan Street, and Verge, or is it more heavily weighted towards, say, Bryan Street, which is, I spent a lot of time on the ground there. The Marin and Doc are, you know, in my opinion, are one of the more premier assets down there with Mark Levy. leading rent. Is the issue across the whole portfolio in D.C., or is it just specific to certain properties?

It's across the board. It's across the board.

It really is. Yeah, unfortunately, it's all related to what David said. It's the district's policies on on being able to evict tenants, and it takes so long that people have learned this. I mean, there's all scams out there about it, and they're coming into the building knowing they're never going to pay rent, so it doesn't matter what building it is. If they can get past the guard gate and get a lease signed, they don't intend to pay. That's the big problem, and it's not everybody, obviously. I mean, most people are good people, and they pay the rent. There's a small... portion of people out there that have figured out this problem and are taking advantage of it, and the district's got to do something to fix it.

And David, correct me if I'm wrong, but the issue of Dillington Seas has been something of a constant, and the extent to which it impacts us has sort of ebbed and flowed from quarter to quarter. The real issue that's been hitting us hard lately is the just increased supply and the kind of Anacostia sub-market of D.C., right?

The supply really hurts us on the trade-outs. We're trying to compete with all these new deliveries and concessions are up. To attract trade-outs, we've got to compete against that. That's a piece of it. Again, as the supply gets filled and that asset moves into a more stabilized position, we're all on a more equal playing field and we see that coming out. But the delinquencies are, you know, I don't see that changing anytime soon. That is a big, big hit for us.

I think to your point, we've been dealing with the delinquency issue for the last few years, for sure. I think it's ticked up slightly in the last six to nine months.

Well, I appreciate the color and the... I'm just a little bit surprised because Camden is our biggest position and 13% of their footprint, I mean 13% of the NOI is in D.C. And I met with them for the past few years. They told us about this particular issue in Atlanta. And it was a big issue for them in Atlanta. with the frauds, and I have never heard of them mention anything about DC being, and I'm aware, I'm aware that this is an issue. People are very entrepreneurial, as you could say, if they could get a year of free rent. But I, you know, it's just not an issue that they're dealing with. I don't know if it's better Detection, the use of AI, whatever it may be. But I'm just a little bit surprised by the delta between what you guys are facing and the degree of delinquency versus, you know, what they are. It's just not even mentioned about whenever I talk with them and we, you know, we had a face-to-face with them in June. So I would encourage the team to, yeah.

So Camden's located where?

They have 60,000 units, and 13% of their NOI is in the D.C., Northern Virginia area. Gotcha. I mean, that's insignificant. I mean, they have 60,000, 13% of that, and that's a lot of units. I mean, they definitely have exposure to the area. I mean, my suggestion would be they're clearly doing something where they're not dealing with this level of tenants not paying. I would definitely look into what kind of tools they're implementing because I think the screening process needs to improve here.

Yeah, we agree that the screening – and we have been working on that with our property manager for the last 18 months and have implemented some new things. And they've been pleased with some of the results of being able to detect fraud in ways they couldn't before. So we'll continue to work on it for sure. We know it's an issue.

What's – you know – I know a few years ago we were all real excited about some of the acquisitions that we've made in the Maryland area for industrials and you know Cranberry for a little while looked like a really good use of capital and you know that was very quickly leased up and then we kind of had I was a little bit surprised by a lot of tenants leaving there. And then Chelsea, I think that's still really, I mean, that's functionally all vacant right now. Can we just help me understand what's going on there? I know that U.S. overall vacancy is higher, but again, it's just, The degree of delta, I know you guys have a smaller portfolio, so if you get a couple of leases that don't come through, it's magnified. But again, what's going on with the Maryland-Boltimore market as it relates to warehouses? I kind of thought that Chelsea would be a little bit further along on the lease up. and I don't know, I can't tell what percent Occupy Lease Cranberry is these days. If you could provide some color, that would be helpful.

Sure. I'll start and I will hand it over to Mark. As it relates to, I would call our Maryland same store, which is really the Hollander Business Park in Baltimore City. and the Cranberry Business Park in Harford County. That same store portfolio in Maryland was 92% occupied Q1 2025. And to your point, over time, currently it sits at 70.6% occupied. And we lost a number of tenants, a lot of government tenants, and we had one tenant that basically went bankrupt and we had to throw them out, which was a big, big headwind. We have tremendous activity at Cranberry right now and we really see that taking up into next quarter. We have a number of renewals that we're working on right now and we've got a number of tenants that we're in lease negotiations with right now, and we hope to see some changes here in the very, very near future. You know, Chelsea we delivered last year. It's a product, you know, of really, really long, long decision cycles for tenants. And with that, I'll kind of turn it over to Mark to give, you know, additional color on the market and what he's seeing on the ground.

Yeah, so really what we're seeing overall is that, you know, Hartford County and Cecil County, sort of call it the Baltimore north markets, really I would describe those markets as being caught between sort of larger logistics markets. And what is happening is that a number of larger users, call it north of 250,000 square feet, have been really looking at consolidation and figuring out ways that they can centralize their distribution operations to service a much larger region. And so that is just a part of the overall evolution of sort of the dynamics around sort of supply chain. So what is happening is that users are really looking at locations that allow them to essentially get from call it Richmond to New York City within kind of a day's drive. And so oftentimes a lot of those decisions lean into markets like Pennsylvania and New Jersey. There's been a tremendous amount of vacancy in southern New Jersey, what I would describe as south of exit six on the turnpike. And there has been a tremendous opportunity for tenants to take advantage of the oversupply that has existed there and that has frankly captured a lot of the tenant demand that is in the market. That is sort of compounded by the fact that a lot of those sites in New Jersey have economic incentives associated with them, i.e. pilots and other job creation incentives which further create a delta between Chelsea and those opportunities. So that's kind of where we've been. The good news is that a lot of that space has really been absorbed. So the amount of supply that remains, competitive supply that remains, is a fraction of what it has been over the last, call it, 15 months. And there is very few new projects in the pipeline. So we are sort of seeing an opening relative to being able to capture some of that demand just based on pure availability. So that is kind of what I would sort of describe as the story over the last, you know, 15 to 24 months overall. I think relative to Cranberry, you know, look, I think it's, you know, the local tenant pool is not very deep. You're talking about generally smaller tenants that are looking at that project. That tenant pool tends to draft off of larger tenants. and there are ancillary businesses that are sort of created or grow based on servicing a larger tenant base. So given that that market has been slow, there has not been a lot of sort of organic growth within that local tenant pool. Cranberry is not going to attract a tenant from outside of the market. It is really going to, again, it's very organic in nature. So those are the reasons, but I would tell you that optimistically, for the reasons that I just mentioned, I think that we have sort of turned the corner relative to that. We've got a couple of builder suits that we're looking at that are fairly large, and especially in our phase two at Kraus. So I do think that there are better days ahead for the market.

I mean, I've been following this company for, I've been a shareholder for 12 years now. I don't know, somewhere in that range. And, you know, I've seen a lot. You mentioned built-to-suit and you mentioned Krause. Is the strategy going forward to do any more spec or, I mean, you know, Krause is 635,000 square foot. as a shareholder, I'd be very worried about doing a spec on something like Kraus or Mechanics Valley given the size.

Well, yeah, look, I don't think the business plan today is to build or to deliver more spec space into the market unless sort of the fundamentals would dictate otherwise. You know, the build-to-suit market is unique in the sense that there are very specialized operational requirements that tenants have that oftentimes cannot be accommodated in a spec building, at least cost-effectively. So I think our focus relative to Mechanics Valley and Krause is to continue to market those sites relative to build-to-suit opportunities. And if the fundamentals in the market change and we see some durability in those fundamentals, then I think we will obviously have a conversation as to whether or not it makes sense to develop a spec project but I don't, there is no immediate or near term plans to do that. I think there are plans though to have those sites shovel ready and to get the entitlements perfected so if there is an opportunity to execute that we are in a position to do so quickly.

Okay. And Mark, I'm in since I got you here. The The projects in Broward County, Camp Lake, Davie, and Lakeland now represents a big chunk of the company's asset. Could you give some color on kind of the leasing outlook or just kind of updates on those properties?

Sure. So in Broward County, you know, I think by all measures, Broward County, Florida is probably the most supply constrained sub market in the country with a sub 4% vacancy rate and extraordinarily high barriers to entry relative to identifying new development opportunities. Our site in Davie is really at the intersection of two major highway systems, actually three major highway systems, 595, the Florida Turnpike, and I-95, and it's very centrally located to both the airport and Port Everglades. So it's a very unique asset in terms of its location. The building is not yet delivered. We are very close to signing a lease at a very strong rental rate for roughly 25,000 square feet, which I think will be a good bellwether for activity in the market. But we feel very, very confident that we will be highly successful in the lease-up of that project at rental rates that may set sort of new precedent in the market. As it relates to central Florida, that is really sort of the population growth story in Florida. There has been tremendous migration from inside or within the state of Florida to the I-4 corridor specifically. and there's also a number of tenants that are looking to consolidate operations that may exist separately within sort of the Tampa and Orlando market. So again, similar to what we talked about in the Northeast, there are tenants that are looking at a consolidation play in a central location that allows them to service a larger sort of population base. So ultimately, That is one of the primary drivers of Lakeland. We are seeing really a tremendous amount of activity there. We have not signed any leases. The building is not complete, but we're seeing very strong activity. Camp Lake is really a population growth story as well. It's more of a localized sort of service business type opportunity. So think about, you know, home services and contractor requirements, things like that. based on the large expansion of the residential base in sort of Lake County and the surrounding geography, that is really driving a lot of the demand for Camp Lake, which is very early in the process. So I hope that answers your question. Certainly, I'm happy to dive in deeper if you'd like.

No, that's helpful. And, you know, I don't have any more questions, but, you know, I think I just want to share some thoughts as somebody who's been a shareholder for 12 years and who once owned, you know, was probably like a top five, top ten shareholding company. I just want to say that given that the 10-year is almost 5% at this point, we've had, you know, one thing that I want the management and the board to think seriously about is there has to be a strategy to return some capital to shareholder either in the form of dividends or stock buybacks. And I say this as somebody who's owned this stock for 12 years. So I'm not someone here who's looking for some sort of quick catalyst. I've been with this company for a really long time. And, you know, We could buy REITs, really high-quality ones, that pay 6% dividend yield. That's also going to grow that dividend. And in the face of that kind of opportunity, there's a real opportunity cost. But I think what's more important is that there has to be some thought into... Five years from now, are we going to be still here and saying we're going to go on another round of huge build-out? I think there is a happy medium where the company could set aside a certain amount of cash flow, even a small one, into either share buybacks, and not a share buyback just to offset management stock-based comps, but you know to buy back shares so that capital could be returned to shareholders and also do so accretively or you know pay a dividend because as someone who's been with the company for 12 years I think I've earned the right to speak my mind freely and I think that if there is no thought that goes into any form of capital return I mean the whole point of owning Real estate and hard asset is that we do share in some sort of cash flow at some point. And, you know, it's been a really long time. And I think that in five years from now, when all these assets stabilize, this company should have a lot of cash flow, a lot more cash flow than it does today. And that is something that I think management team and board really have to think about because if there's no thought given, you know, if there's no thought on it, Then it's just another company that's just going to invest a lot more capital into the ground, into building to grow a bigger pie. But we're not, you know, what are we going to share in some of the cash flow? So that's, you know, I just want to speak my mind freely. I know many people on this call, many, many years, I think highly of you. But I thought that I think that's an area that we're a company really haven't really done much on. So that's it. And thank you for answering my questions today. And thank you for allowing me to express my thoughts.

Absolutely, Bill. Yeah, we hear you for sure. And we appreciate you expressing your thoughts.

Yeah.

Thank you, Bill.

We now have Steven Farrell with Oppenheimer.

Morning.

Morning, Steven. Steven.

I just have a quick question. There was a recent deal across from Bryan Street. Do you guys have any comment on that or what are your thoughts?

Steven, if it's the deal that I'm thinking about, it did come up. We are in negotiations. are refinancing Bryant Street. And one of the major pieces to refinancing is the appraisal, and it did show up there. And I think it's a good indication of where that market is right now. And I think that's my comment. I think that's a good, good I think that's a good comp of where things are right now. I believe it was the Trammell Crow, the Rowan building. The Rowan, yeah, that building. Yeah, and it kind of closed at a 6% cap rate. And I think that's a good indication of what people think about you know, D.C. and that market right now. That's kind of my thought on that.

Just from that, how do you think Bryan Street compares just as, you know, a not only like location, but this as retail? I don't believe that had any retail. Is Bryan Street more attractive just compared to that asset or no? Very similar.

I am always partial to our assets. And I'll leave it at that.

Okay. And with the development pipeline and what we have coming in the next, we'll call it to the end of 2027, I know we have the Opportunity Zone Taxes, I think, are in the first quarter next year. How much cash on the balance sheet is right now earmarked for developments and future use?

So, Steven, most of our capital has already been spent for our, I'll call it, our deliveries that I talked about. You know, the equity capital always goes in up front. and we've kind of committed all that. And as it relates to, you know, kind of vertical construction capital, I would say that I think about, you know, $8 million is going out over the next, you know, two quarters and that's really going into woven. And other than that, all of our vertical kind of capital has already been deployed. What we're focused on right now is deploying capital for leasing. And that comes when we have leases and we think that's a good use of capital. You know, we're going to continue to entitle and get shovel ready our sites. So when things, when we see the markets improve, you know, we're ready to, you know, to attack that and hopefully have an advantage over others. So the capital earmarked, is really for leasing and for entitlements. And that's what we have a good stable of cash or liquidity to do. Right now, we've got $100 million of cash. We've got a line of credit that kind of gives us $130 million of liquidity. And that's more than enough liquidity to deal with entitlements and leasing and opportunities.

And how are you judging future opportunities versus a buyback now? I mean, just in a simple term of thinking about it, you've got a $36 million NOI, market cap's about $430, which is above an 8% yield for a collection of assets that have a cap rate that's much lower. So what's sort of like your... overall thought process on buybacks versus future developments?

I think as long as we've got projects to put capital into and we are always going to opt for money into new projects over a dividend or share buybacks. I feel like right now we've got a lot on our plate, and I think given kind of the sort of economic uncertainty, it makes sense to hold on to cash to be able to play defense and offense. We reached a point of, you know, where we have more cash coming in than projects to put money into than, you know, A dividend or a meaningful share buyback program would be, you know, part of what we do. That's not the case right now. And I think that any share buybacks in the near term will be done just sort of opportunistically.

And that's sort of where we are with that.

Okay. That's all I have. Thank you.

Thanks, David. Our next questioner is David Foley with Eastbrook Capital Management.

Hi, good morning. I just had a quick question on G&A costs that look like they've gone up a lot, especially over the, you know, first six months of this year with the prior six months. Should we think about those G&A costs of where they've been in this first six months of this year running at a flat rate for the year, or will they come down some, or what do you see going on with them? Thanks.

Flat rate is a good way to think of it. We've kind of built out our team, and we have no real new hires on the horizon.

Yeah, I think the only thing in there, David, is there was not a million, but more than a half a million of sort of one-time costs in the first quarter in G&A on audit fees and legal fees that were sort of all related to that closing that won't recur, but the rest of it is pretty much a flat run rate. Okay. Thank you.

I also just, you know, similar sentiments to the former caller about buybacks or dividends at some point here. Thank you. Y'all have a good day.

Thanks, David. We now have Ted Goins with Salel.

Good morning. Thank you for taking my questions. So our first questioner, Bill, good to have you on the call. We've all sort of leaned into your asking a lot of the heavier questions. Thank you for doing that over the years. When y'all were talking about the D.C. market and the delinquency issues and the challenges, and it doesn't seem like the baseball stadium is enough. And I'm wondering, we have two more plats. and we have the bulkhead. Is there a talk or is there a view around developing more of an office-related ecosystem in that area or are we just dependent on kind of absorption and then we have the low-cost land so we're the next to build? How do y'all sort of envision that area five, six, seven, eight years from now?

Yeah, I don't think office is in there. Go ahead, David, sorry.

No, I agree. I mean, at one point when you looked at, you know, I'll call it our riverfront properties, which we called at one point phases 1, 2, 3, and 4. Phase 1 is Dock 79. Phase 2 is Marin. And at one point, you know, phase 3 was an office and phase 4 was a hotel. And in looking at that area and what was going on, We believe that that is a great multifamily area. There's some headwinds right now. It's still the nation's capital. It's still the southern entrance to the nation's capital. It's on the waterfront. We've owned that land for a while. It has a very, very low basis. I think there's a great opportunity to, one, maximize the value of the land that we have. and at some point, you know, create, you know, a multifamily, you know, waterfront portfolio there in phase three and phase four and even 664A. You know, that's what we see now. We certainly are not breaking ground right now, you know, given what's going on there. But seven, eight years from now, we'll continue to monitor the market continue to monitor the debt markets and construction costs and where our delinquencies are going. We've got great, great intel into that area. The data that we have is real. It's in our sandbox and we'll see where it goes and make the right decision.

And with regards to the bulkhead or 664 as you describe it. I have this recollection that that lease period was around now? Correct. Do we have better economics from that in a relatively short period of time?

We are currently in discussions with with the tenant that's been there for a very, very long time. And we expect them to stay there until we're ready to develop or until it becomes a nuance or nuisance to our adjacent properties, which at this point it's just not. So we expect them to be there for a while until we're ready to break ground and develop that site.

I suspect that's a tricky one both ways, so good luck with that. Can we talk about the lease absorptions that are occurring, that will occur in the warehouses in Florida? How do you intend to communicate that to your investors? Is that going to be through the quarterly earnings release, or do you intend to sort of issue press releases so we can follow the progress along there?

Okay.

And I read an article recently. We probably all read the same articles about, you know, demand for real estate in Florida. And have you all moved up a timeframe on Brooksville at all?

Moved up the timeframe for developing it?

Yes. Yes.

Yeah, I mean, there was never a time frame. It's just purely a function of, you know, the right developer coming along and wanting to take that property down. So the calcium mining is a really wonderful interim use. Someday when somebody wants to develop that land, you know, they'll approach us, but, you know, There's no time frame.

Okay. And I think I read most regulatory filings reasonably well, but not always. There was a fairly significant, it looked like a purchase in mid-March by our chairman. Am I reading that correctly? That was an outright purchase of shares?

Correct. Yes.

Congratulations on that, and thank you. I don't have any more questions. Thank you.

Thanks, Ted.

We now hear from Morris Propp with Propp Company.

Hi. I don't think I've been on the call before. I'm your fourth largest shareholder, outside shareholder. And I'm old, and I've come across many developers who love to develop, and they focus on developing. They love it, and they don't make money at it. Many even go bankrupt. You guys are management heavy. And it's all, you're talking about developing. Stop developing. Start managing your properties. The first thing I would do is not do anything more in blue states. We own real estate in blue states that we've been liquidating because it's an anchor. It's a political anchor. Landlords have no power. None. You're witnessing that. You're witnessing that in D.C. You can't even enforce your rents. No more blue states. No more money spent in blue states. I would say to you, start putting your properties on the market in blue states. And as far as, you know, you develop stuff, but you don't manage it. Your earlier caller talked about buybacks. I mean, what is the matter with you people? You get this beautiful cash flow coming in from your mining revenues, royalties, and you think you can just go piss it all away. I'm really, really disappointed that you are still talking about, you know, spending another nickel in a blue state. I mean, you don't learn. Get your properties leased or put them on the market. Get out of there. Start buying back your shares. Act responsibly and all of you should take a 20% cut of your salaries. I mean, you've not been performing. You have not managed your properties and stopped new developments. I'm your fourth largest shareholder, and I thought maybe it was time for somebody to really get really pissed. Thank you.

Thanks, Morris. Thanks, Morris.

We have again...

Mike, we're having a hard time hearing you.

Bill?

Hello?

Hey, hello?

Yeah. Hello?

Hi.

Can you hear us? Yes, I can hear you guys. I just want to I just want to I was going to talk about buybacks today earlier, but since other callers have brought it up, I just want to express my opinion that not every day that you get a company where the NAV is almost $40, you're trading at $21.50, everybody could do the math. If you buy back shares... you're gonna make over 80, you're gonna make 80, 90% on that capital. There is no development projects out there that will give you that kind of guarantee return. I wish I ran a public traded company where I get to just, you know, buy back as many shares as I can at 80, 90% accretion. The math is the math. It's very simple. I would say that I don't care about the trading liquidity. Nobody that owns this company cares about trading liquidity at this point. Buying back your share will send a signal to the market that the management team here cares that this is trading at a deep discount. I was not going to talk about My previous comment was about buyback, returning capital at some point in the future. But since the topic got brought up, and then the answer given, I thought, was just really, really, you know, like I really disagree with it. It's just not the right use of capital. If you can make 80%, 90% buyback shares, just do that. That's it. That's it. I do not... I wouldn't go so far to say that get all your investments out of blue states. I wouldn't go that far. But I would say that right now, if there's one thing you could do to show shareholders that you care and that you have an instant capital allocation, you buy back shares. And if the pushback on that is that you mark all this capital for all that stuff, I would say that the order of priority would be you set aside the capital for leasing, you set aside the capital for any sorts of debt that you may have to refi, and then if you've got a shovel in the ground, if you're already committed to building something, you admit construction, you set aside the capital for that. Any other capital that you have in excess of that should absolutely be earmarked towards buying back shares. This is not a topic that I was going to get into today, but since it was brought up by other shareholders and also the company's answer to this just kind of got me a little fired up. I think that it just, the fact that this is such simple math, such an easy lever to pull, and also I just want to say, we own Camden. Camden sold their California assets and bought back 6%, 7% of their shares in the past year. They did a $3 billion buying asset, 1031, and they bought back shares, bought back 7% of their shares at nearly a 7% cap rate. Fantastic use of capital. We're seeing every single large blue chip REIT that we own There is another company, A.H. Realty Trust, in your neck of the world that just bought back, I think, 6% or 7% of shares just this year, just this year alone. Every REIT that we talked to have told us, this is not 2021. This is not 2023. Buybacks is absolutely a part of the capital allocation. This runs from REITs that are half a billion up to $20 billion that we talked to you. And I think it's just absolutely tone deaf to just say that, you know, if there is an opportunity to go do development, we're going to do development. No, you're trading at 2150. You know, the liquidity, the trading liquidity has always been an issue. But I think if you actually bought back 10, 20, $30 million worth of shares, I think the market will actually care. Thank you.

Thanks, Bill. Thanks, Bill. There are no further questions in the queue. We did hear closing remarks from management prior to our Q&A session. So this does conclude our conference call for today. Great.

Great. All right. That was something. Thank you all for your continued interest in the company. And this concludes the call. Thanks.

Okay. You may now disconnect your lines at this time and have a good day.