FRPH - Earnings call transcript Q3 2017

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Operator

[Operator Instructions] It is now my pleasure to turn the conference over to John Baker, the Chairman and CEO of FRP Holdings. Mr. Baker, you may begin.

John Baker

Thank you and good afternoon everyone. I am John Baker, Chairman and CEO of FRP Holdings, Inc. on our are our CFO; Chief Officer. today President; deVilliers, Treasurer me Accounting Milton, John and with the David call our and And John Klopfenstein,

made me by those are nature indicated the materially results management’s subject company uncertainties statements are not that made of Before and the current and their such remind risks in expectations. could begin, to relate statements. on And to let of new obligation any whether we These forward-looking an from statements or information, that today, to events forward-looking which statements, future differ you future as actual does result today, undertake as such events based update otherwise. a to

in $X,XXX,XXX Securities last for made time-to-time income gain or of net third of versus million increase investment in Additional information regarding $X.XX was XX estate Exchange Washington these and of quarter this income in share and results on partnership of the per DC. found company’s with a re-measurement was from the real other for $XX.X the $XX,XXX,XXX Highlighting X months share. Driving per Dock maybe risk the Commission. net dramatic the year our the or same filings $X.XX factors

During its the XX% apartments. or quarter, of the project plus occupancy achieved stabilization

under write the is for was to control market value. to As fair partnership a required joint result and Dock the of the without consideration equity that, liabilities XX venture now the considered of assets the have and their transfer the accounting purposes value is Previously, method. accounted for to company any of of up

revenues reported company net of new of the attributable is income, as XX of partners the income as MRP statement Dock area, expenses interest. clearly consolidated amount and the to our non-controlling The to attributable income, identified partner including amounts all our Realty. and the On are

of the Royalty aspects Lands segment, a an company. dramatic and June Management quarter. mining Asset Occupancy Myers, Fort made the Florida. XX.X%, XX.X% Materials significant segment of in in in permits In re-measurement, increase from began of was of of was single property to the progress Looking X.X% end on our past there Vulcan increased received our our impact the other the Company, tenant, our Mining at

revenues the to of begin impact this impactful were minimums being not the While recovered, in fourth in beginning prepaid will quarter quarter. revenues royalties they because

to estimate of a years developable important lake As are this to the we the large X-acre as mining lead mining, X of which XXX to be royalties conclusion the at in a now. themselves, XX will development lots from

now that will we meaningful financial Dock Additionally, results XX% the be and are leased XX, forward. at going occupied XX%

In project re-measurement, included negative into and the $X,XXX,XXX While project resulting the will income be from the begin which kick forward net the the quarter, from third the result retail be that was will and a this next of limited the NOI project, portion from going year. to the in the revenues actually as project from from depreciation amortization increased the net income operating significant. of may

about the Given more X flow to of cash along are the we company, company Anacostia projects the this the of the DC, forward XX developing we excited the substantial River impact look as to years. in project in future next

XXXX, say. significant remain and as this tax or to the way we real that’s one to you specifically to corporation. meanwhile, In this for a is code not convert will that be advantages clarity know, disadvantages but revisions. and other is in there to in be Presumably, to postpone matter to structure. able will decided ourselves position on a until worked future XXXX, There estate us investment C the our hard decision we have And trust. as Finally, to we’ve to

to over it turn you me let could, our David David? our deVilliers, President, through walk to I segments. if Now

David deVilliers

those Thank and the this afternoon. day call to on you, good John

income, quarter busy to say, from had building articulated segment, we opening Asset and I remarks, of total effect last Net same business must due year increased rent segments. Relative the flat operating and As was unrealized a the straight-lining leases, period primarily our his free contained all to an Management platform productive rent with at periods in of revenues John mostly occupancy. $X,XXX,XXX a versus new over though, of quarter increase our that in the component, feet over were with total ended up quarter. excluded for calculation. and X.X% XXX,XXX year quarter building for just an as X,XXX,XXX reimbursements to last mainly which the feet is the from the feet, due square year, same X.X% period of operating We our same $X,XXX,XXX increased to of platform expenses ended straight-lined occupied rents this square higher square higher NOI result last or a

June the quarter increased XX.X% from Our on from XX.X% ended June and September. XX previous of end at XX% occupancy to footage level the XX.X% XX leased square to from

the same-store, maintenance the over X,XXX,XXX reimbursable is to As quarter to XX.X% months the leases year. the and vacancies, X% common This an as higher X,XXX,XXX. primarily from reimbursables costs. as NOI long-term XX decrease same due and last basis corresponding to operating building from single area increased annual to temporary points large partially same of offset several average income for increased and well And for was period to by the quarter beginning from slightly occupancy tenanted the down new

a to tonnages believe previous Total this the of more weather period the mining higher $XXX,XXX same declined profit revert year at decrease over XX% decreases of This in last and the As $X,XXX,XXX. volumes $X,XXX,XXX do for foreseeable to back in will ended royalty at revenues and operating just or the in in because Cement. versus mainly segment cost business main $XXX,XXX sold driver locations to our Therefore, incurs Newberry continues future and minimal to With levels year. quarter and volumes was growth. to last We by Land Keuka normalized and $X,XXX,XXX, our that Georgia Florida significant in same several period segment, is segment activity Construction, our the to to as this I respect construction generates segment is improve. revenues, behind stated before, as this but quarter Capital were accomplish which Patriot Virginia. final over to of objectives. the this our in this attributable ongoing expenditures million, most This Business construction at is building was Park in building its spec park. of Manassas, our latest $X.X for due Development

phase RiverFront; include the present refining the disposition. time property to for refinancing further Dock projects, PUD it order a venture three, multifamily addition ongoing application In types in amount for The the the one, assets appropriate its and for capital partner, an our actual next XX during capital many joint of the to of at plan with for Phase activities maximize Hampstead was on the the spent extensive product with strategies to several and to outlays, working our including: upcoming MRP of marketing leasing, quarter RiverFront; authorities. two, expedite is predevelopment to ultimately profitability X

with new retail venture we from was buildings, Dock of our and that initiate space. our other will ultimately his XXX,XXX Of mentioned was on X this Groundbreaking joint Finally, and of exciting XX, small project an to office feet single-storey bay XX% standpoint, construction single-storied square opening office four Park which of totaling Phase working note, September and retail refine remarks, ultimately have bay and now square in leased XX Windlass John of total late operational partner small joint our Business further includes been of for in as occupied. August. XXX,XXX project, as venture, feet XX over Dock XX.X% Run

at the and the leases hard an of about beginning this of of generation in first vacated remain the quarter, inordinate of The some retention tenants unforeseen, it that our In of were expired markets locations as the future. result both better rental strong we importantly, working average for has serve. barring we since foreseeable than positive have budgeted. velocity been continue of the of a that will marketplace backfilling increase warehouse year to something was believe rate amount More XX% fiscal our over of are on of X.XX%, we and the and metrics as the conclusion, which excess feel

to now call And We Thank also new of a look the the projects production. lot back them to John. will income you. queue forward converting and have I turn exciting in into

John Baker

David. Thanks,

Now if it questions. for up will I open we may,

Operator

[Operator Instructions] & Jensen from Robotti Company. first Curtis with question Our comes

Curtis Jensen

Good afternoon, everybody.

John Baker

afternoon. Good

Curtis Jensen

Looking John said think at – Dock but rental XX it, revenue, and the that numbers in the revenue I the release, quarter I press for of the is the guess? XXX% that’s

John Baker

It’s XXX% during revenue period. the of the

Curtis Jensen

XX% period economic is or XX% is – FRP’s interest was? still whatever it the During and interest your

John Baker

timing, As a results for certain and incentive the stabilization partnership call in could of achieved then partner, if result it interest agreement the and financial rents had and remeasurement, they development an improve. their MRP of the, terms we

interest has their now a And XX% of ours XX%. to so that, is about and as result improved about

David deVilliers

portion the in reflected the like XX% of XX. whatever. income what’s That’s that’s that So interest non-controlling or

John Baker

Correct.

Curtis Jensen

of Line Salt Okay. and like there other What’s the status the Phase at X? the retail

David deVilliers

Salt up to It’s operating Line well months. budget. X has relative for doing their been extremely about and

So they at current are one the actually only time. operating the that’s

to the other done try tenant to of open after – the ones baseball looking be to sometime first that other fair are the them, There construction. March. improvement probably are of in with opening up the season work under The the and a of is year early they of amount rest and has coordinate the

Curtis Jensen

ahead. view Okay. What’s – go your

John Baker

rent And a leases spaces. those X good got there in spaces. of have we Curtis, the on deal free of X retail is

as next on anything before operating far well net an getting year spaces. retail impact we the So it income, be as these having start in will from

Curtis Jensen

what retail assuming just or would the Can a leased ballpark share side had stabilized like look stream XXX% you in rental you it?

John Baker

year? and I retail that the think just a appraisers me I Well, $XXX,XXX the correct numbers, under if be is will this income wrong, stabilized David, have their am used

David deVilliers

That’s correct. That’s John. correct,

Curtis Jensen

what’s… Okay. multifamily XX% Phase a or number building, kind mean, like on margin I of What’s I cash a X, a mean, is NOI reasonable good

John Baker

again, appraiser XX% NOI was Well, Curtis, about XX% what – we have came of with or up stabilization. what the

have we $XX rents. of got roughly So million

is number pretty good. So your

Curtis Jensen

minute. And how it partnership with set X have through in of then and there? more a Phases of will on forth the there does just The I different the over so it questions. – mean, and a same is I is up MRP like kind deal? couple partnership LLC and X turn I with MRP

John Baker

and X the negotiated. is X been X have Phase Phase same. Phase not

Curtis Jensen

Okay.

John Baker

interest MRP has and in X time. no this at X

Curtis Jensen

in that? Bridge doing what is Douglass And development, terms or anything on the there of is update any the or city the funds appropriation anything of status Okay. of – like

David deVilliers

named. has Curtis, apparently, It’s the program. supposedly design-build been a contractor

field So, should the in sometime year. to start of after things the first happen probably calendar the

Curtis Jensen

or side great. a the of other kind exogenous about then a budget, couple And hurricanes you some of given the little, out going ramping mining and you budget is had royalties Fort locations just think year thing events? Okay, up Myers on normalization do last at assuming how next no for

John Milton

to Well, at revenue speculate, stream expect being from we hard it’s of the we what Fort will have and that do about this Myers $XXX,XXX quarry, by to add the up is additional but what operating, time. $XXX,XXX through

So, we good estimate on with up it basis, you an took have $XXX,XXX, annual would $XXX,XXX, this today. just what year you add and we if end this as have

Curtis Jensen

Okay. Alright, thanks a lot.

Operator

question with Management. comes Asset next RCS Carlson from Our Richard

Richard Carlson

XX that did is interest, On that’s the you the say partners’ Dock $X,XXX,XXX, gross segment, the quarter, for correct? again, before your

John Baker

Yes.

Richard Carlson

Okay. it since And a appears? for to is so going while depreciation this – operating is than profit greater an for have and revenue, sure not the quite

John Baker

NOI. It will will have it but profit, operating not have

Richard Carlson

NOI. ahead, am sorry. Why Go it will I have NOI?

John Baker

– Because is profit operating net is whereas a measure, includes NOI cash the...

John Milton

depreciation. The

John Baker

The depreciation.

Richard Carlson

will Dock you balance release XX the be sheet, tell Exactly. books? – I carry so Did it in the value the your you in guess us that for XX-Q. you new didn’t Can you

John Milton

$XXX.X appraiser the The gave and building in the of a the for million leases us place. value land,

Richard Carlson

Okay.

it’s only of huge guess So very much. of I it’s pretty are kind low two cap rate questions, have. affairs Those Thank that of the the there I a number. has state you demand.

John Baker

Thank you, Richard.

Operator

with Chen Our question Bill from next comes Rhizome Partners.

Bill Chen

guys. Hi,

John Baker

Bill. afternoon, Good

Bill Chen

acres years. parts in one XXX few a a to that we what’s you guess, like and builder many is, was estimated can that on look When wholesale question the Myers, could have about transaction am I better mentioned what can will understand so that maybe questions. in assuming I I that that look different then will X in a monetize just I like? Fort wondering to the just future? the we finish and mining When that, that got asset, time XX I sell transaction we,

John Baker

from to you but a before think from and development figure your right, road could that’s ourselves, the now. do assumption needs now it long about it sell as sell lots. is will and is long actually I but lots would other finished not we and out want built time we was expectation it wholesale if a My – that’s time to be today done

Bill Chen

it. Got

infrastructure on of we ballpark that back have any the sort like actually in – just roads obviously, place, range terms helpful? the would to Okay. and to what potential sense that on build going be, Myer, would cost some put in – Fort That’s if all that of be

John Baker

that. we don’t have Well, Yes.

Bill Chen

I will move okay. on. Yes,

On convert XX% the to rules into re-conversion – really I income know number. of the taxable this

So and how if a what’s then it really we convert cash sense much two of one, kind to tax we out? pay of to REIT, parts, have today our any do

John Baker

Well, that convert tax will the investor’s to at all, the time, the will – whatever the a won’t will first the of be on is because rate tax be REIT income. rate we the apply paying tax after investors the tax rate

We to XX% are of required income. distribute taxable

Bill Chen

Yes.

out is what say to – that way the we we income. trying I of how that, So depreciation I that am there have lot depreciation should lot of what trying that shield to understand of a figure am a taxable is the I lot have –

is am Do we – I it some net we not NOI, of is what any to understanding probably a depreciation. it figure it’s that that probably XX% approximately? figure of So, of have become out is XX% elect trying of REIT, to number what is, do if

John Milton

Bill, if a election, the but make and numbers that in running yet. gotten we based are our to we would staying we budget there decide are REIT C-corp we that. point do this on at time haven’t We

David deVilliers

so today the little it, pre-tax, net royalties would the read, be so royalties a you Bill, paying out. what sum about retained. And our of elaborate be ground if that would is royalties income we rents, stream just would think not ex And as we converted you to the all that bit, be

So would probably depreciation which income, royalties like you two-thirds of plus and the paid say, amortization, out. it’s includes be pre-tax

John Milton

pay out I – of you majority out royalties. the pay not think you would the

John Baker

would You not.

John Milton

to You about XX% They you actually the would rent structure. royalties, ask would pay those the would retain the ground corporate be pay out you be they the of would taxed in portion it of which royalties.

David deVilliers

are You I sorry. am right.

John Milton

But Yes. are there not yet. we

Bill Chen

on the cash tax Okay, that yes. are income the And available? are is that today basis paying is provisioning a number what it’s we or a we same as tax then GAAP number about that’s like for

David deVilliers

new can paid recent liability our placed historically, expense. depreciation have And much fairly Well, than versus see tax if look our similar. you be depreciation our deferred the expenses have Dock tax Bill, have income buildings, tax would been, we at our what statement, we the long-term, primarily less because so, actual over flow of you including that bonus or tax what service. But is on some tax the year into cash the of the built-in in XX

Bill Chen

through have okay. on Got hopefully, Okay, very That’s question And it. I questions, a really, can – two we go helpful. more them.

an into before a On lot free we the basis into phase think they would to flowing have basis cash through understand need these what turn run-rate rent get you be a quarterly and can a side, go if about help annual free Asset get that of we NOIs. through actually or we cash that rents on of either me Management I kind Anyway phase?

John Baker

too that’s speculative to Bill, answer.

these vacant impacted We and that, am severely space re-leasing it I we But would budgeting as haven’t some rate just just projected success be at our sorry. of forward by going are today. again,

Bill Chen

it. Got

in year? And to usual of some year – volumes run, XXXX, of understand I in last than higher was – regard XXXX? business, to volume am in locations sort there if just last that we that long there then versus and the in trying if see question I have am our to along this was trying some excess Okay. the is don’t royalty, some just

John Baker

to the little is, And in and Manassas, at Newberry. a answer that yes, Keuka in little bit bit a

Bill Chen

you. Thank Okay. Those are all questions. my

Operator

[Operator Instructions] Okay.

Our with Henderson next Management. comes question Rutabaga Robert from Capital

Robert Henderson

does Phase that number the X XX X? Good Phase number refer through of to or does the earlier, X for gave afternoon. The current you value appraiser’s to that Dock refer of XXX.X,

John Baker

X. that’s Phase No, just

Robert Henderson

Okay, good. Thank you.

Operator

the I showing no am questions And Okay. queue. further in

John Baker

And Okay. forward interest talking next joining Well, look We quarter. for us. to FRP. thank to you in we your appreciate all you

Operator

you. Thank and gentlemen, teleconference. today’s this concludes Ladies

You disconnect. now may

FRP (FRPH) 3 Nov 172017 Q3 Earnings call transcript