Good day, everyone, and welcome to today's FRP Holdings, Inc. earnings call. [Operator Instructions] Please note, this call may be recorded..

It is now my pleasure to turn the conference over to Chairman and CEO, John D. Baker, II. .

Welcome to FRP Holdings conference call to review the fourth quarter and year-end results for 2021.

I'm John Baker, Chairman and CEO of FRP, and on the line with me today are David deVilliers, Jr., our President; John Baker, III, our CFO; David deVilliers, III, Executive Vice President; John Klopfenstein, our Chief Accounting Officer; and John Milton..

Before we begin, let me caution you that any statements made on this call which relate to the future are, by their nature, subject to risks and uncertainties that could cause actual results and events to differ materially from those indicated in such forward-looking statements.

These include, but are not limited to, the risks listed from time to time in our SEC filings, including our annual and quarterly reports. We have no obligation to revise or update any forward-looking statements other than imposed by law as a result of future events or new information..

Revenues for the 3 months ended December 31, 2021, were $8.399 million, up from $5.833 million in 2020. Operating profit was $259,000 versus $1.555 million a year ago. And net income was a loss of $592,000 or $0.06 versus a profit of $1.493 million or $0.16 a year ago.

Driving these results were the -- first, the inclusion of our second mixed-use project in Washington, D.C., The Maren, which was completed and reached stabilization early in the year. This accounts for the increase in revenues..

Also attributed to The Maren was $659,000 in expense as the quarterly amortization of the fair value of the leases in place established when we booked this asset as part of the gain on remeasurement upon consolidation of this joint venture early in the year.

Also contributing to the higher expense was a charge of $807,000 for a nonrefundable deposit of $0.5 million in due diligence costs on a potential warehouse property where the acquisition has recently been determined to be considered less than probable..

The same quarter last year included a credit of $250,000 for settlement of an environmental claim on our Anacostia property. Also affecting the quarter was a decrease in interest income of $651,000 due to bond maturities and the repayment of the preferred loan on The Maren JV upon the building's refinancing..

For the full year, net income was $28.215 million or $3 a share. The key items was $26 million in gain from the remeasurement of the value of The Maren upon reaching stabilization and the $8.240 million of operating profit from our mining royalties.

This was offset by the $807,000 in due diligence and deposit costs mentioned earlier, also by $3.899 million in amortization expense of the value placed on The Maren's leases in place as part of the write-up of that asset upon stabilization..

Now if I may, I will turn it over to David deVilliers, Jr. to walk you through our segments' performance.

David?.

Thank you, John, and good day to those on the call this afternoon. I'd like to offer a window on our operations today and give some detail to John's opening remarks.

Through our business segments -- though our business segments are important silos in which to report and analyze the company, operationally, we have some overlap and synergies that can be difficult to follow using our reportable business segments. So allow me to shine a light on the day-to-day at FRP..

Basically, we employ a 4-pronged approach to our business since 2018 when we liquidated our legacy warehouse portfolio. They would include our in-house, which includes our industrial, commercial and land development platform. These properties are developed, managed and owned 100% by FRP.

The second leg of our stool is third-party joint ventures, which as the name states are projects done in conjunction with third parties, where FRP is the major owner but rely on third-party platforms to perform much of the day-to-day operations. And of course, we have mining and royalties, which has not changed.

And the fourth leg of our stool is the lending ventures, where we are the principal capital source for residential land development activities..

So relative to our in-house platform, in the third quarter of 2020, we sold a newly constructed and leased 94,000 square foot building in our Hollander Business Park, realizing a gain of $3.8 million or $40 per square foot. Adjacent to that site, in the fourth quarter of 2021, we delivered 2 speculative warehouses for a total of 145,540 square feet.

One of these buildings totaling 66,000 square feet is now fully leased with occupancy scheduled for the second quarter of this year..

Also in Q3 of 2021, we broke ground on 101,750 square foot build-to-suit warehouse building that will cap off the final building at Hollander Business Park. We expect to complete and provide occupancy to the tenant by year-end..

At the close of the year, Cranberry Business Park, our renovated 268,000 square foot multibuilding warehouse park, was 100% leased and on schedule to be fully operated in this quarter, the first quarter of 2022, up from 87.6% occupied over the same period last year..

To continue our pipeline of industrial building pads, we have begun seeking entitlements for the 55-acre track we purchased in late 2020. We expect this process to be complete later this year and have begun the building design process in the interim to create 675,000 square feet of warehouse product.

Existing land leases for the storage of trailers on site will help to offset our carrying and entitlement costs in this tract of land. We are hopeful we can begin construction here in 2023..

Finally, in September of 2021, we purchased another 17-acre parcel [ and pairing an ] industrial section of Harford County, Maryland, not too distant from the Cranberry Business Park. We've begun both building design and initial entitlement work on this site, which could support up to 250,000 square feet of warehouse buildings.

Depending on market dynamics, construction on this project could begin as early as Q3 '22..

Completion of these 2 new projects plus the build-to-suit warehouse currently under construction at Hollander will add another 1 million square feet of warehouse product to our industrial in-house platform that, when added to the assets in operation at Hollander Business Park and Cranberry Run, will total over 1.4 million square feet..

Although the NOI for our in-house operations was flat being $453,000 for Q4 2021 versus $466,000 in Q4 2020, all of the new buildings opened at the end of this past year and what will be coming online in this year should provide a substantial lift to our NOI in 2022..

Relative to our mining and royalty, FRP maintains ownership of over 15,000 acres of mining lands under lease to major aggregate companies who pay rent and royalties. When possible, we then convert the mining land to higher and better use upon having reached the end of its useful life as an aggregate facility.

Our mining and royalty division saw total revenues for the quarter of $2.267 million versus $2.383 million in the same period last year. NOI was $2.137 million, a decrease of 3.7% or $83,000 over the same period last year. This decrease reflects the tenant temporarily shifting operations off our site in Manassas, Virginia for part of the year..

MRP, Woodfield and St. John Properties as well as an investment in a Delaware Statutory Trust with a group called Capital Square. As of 12/31, our joint venture platform includes 8 mixed-use projects in various stages of development and operation. 4 are located in Washington, D.C. with MRP as our joint venture partner.

These projects are Dock 79, Maren, Bryant Street Phase 1 and Verge. Verge will not be ready until third quarter of this year for any tenants..

As of 12/31/21, 786 of the 1,026 apartments in operation were leased. This is up significantly from 2021 at the beginning of the year because it was -- we were at 564 -- excuse me, 569 units..

We also have 2 mixed units projects in Greenville, South Carolina. This is where Woodfield is our development partner. Riverside opened its 200 apartments for lease in August and was 49% occupied at year's end. .408 Jackson will be placed in service in the third quarter of this year..

Two additional projects that make up the balance of our third-party joint venture platform are Hickory Creek with Capital Square and an office retail project with St. John Properties. Hickory Creek's 294 units remained above 95% occupancy for the year, while our joint venture with St.

John that includes 72,000 square feet of single-story office and 27,850 square feet of retail remained at 46% occupied..

So to summarize, relative to our third-party joint ventures in mixed-use developments, not counting Capital Square at Hickory Creek and St. John, we are currently invested in 6 projects totaling 1,827 apartment units and 127,000 square feet of retail.

At quarter end, only Dock 79, Maren, Riverside and Bryant Street totaling 1,256 apartments were operating, and 62,000 square feet of retail tenants were occupying their respective spaces. The remaining apartments and retail spaces will be completed and ready for occupancy over the next 12 months..

Net operating income for these assets was $2.1 million for FRP for the fourth quarter of 2021 versus $1.4 billion in the fourth quarter of 2020. So 2022 should be a very telling story about the growth of our third-party joint venture program..

The last leg of our operating stool is lending ventures. This is a program where we provide working capital toward the entitlement and horizontal development of single-family residential projects, and ultimately, a sale to national homebuilders. Our current project in the -- under development this year is Amber Ridge.

Our total commitment for this project is $18.5 million. As with our Hyde Park venture that was concluded and we sold in 2020, this investment includes a charged interest rate and a minimum preferred return of 20%, above which a profit-induced waterfall determines the final split of proceeds..

Entitlements at Amber Ridge are complete. Land development is underway, and 2 national homebuilders are under contract to purchase all 187 lots. As at -- of the year-end, 34 lots had been taken down with $6.3 million returned as of 12/31, of which $1.300 million of that was interest income.

As of the end of February, over 50 -- excuse me, 51 lots had been taken down..

Our current lending structure is also called Presbyterian Homes, which is a new project, a 344-lot, 110-acre development in Aberdeen, Maryland. We plan to provide up to $31.1 million in funding under similar terms to previous projects. Entitlements are underway and are the conditions precedent to settling on the land..

No discussion today is complete without a nod to COVID-19. We have touched a few times on the impact COVID has had on FRP and our customers. We have been very fortunate as a company, both in life and business, throughout this global pandemic.

FRP has remained a healthy concern that has been able to continue to grow and prosper despite the significant challenges we've all faced. We know we are not immune to the effects of this terrible global disease, but we are getting very close to normal at FRP with our team back in the office and warm weather on the way.

We remain at the ready to assist our tenants, navigate these ever-changing waters and continue to grow our portfolio..

As a business and a collection of professionals, we stand atop of solid foundation financially that uniquely enables us to both capitalize on opportunities and make hard decisions sometimes not to perform.

It is this mission that has proven to insulate us from much of the troubles other have faced and is rooted and committed and focused on the fundamentals that guide how and where are we baking and maintaining investments..

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

Thank you, David. We'll now open the floor for any questions that any of you all may have. .

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

Can you hear me okay?.

Yes. .

Yes. .

A couple of things. I know you have a note on your operating expenses, including that nonrefundable deposit of $500,000.

So are deposits of that size kind of the norm for that kind of project you were looking at?.

Well, every project -- this is David. This is a fairly large -- well, the purchase price on the land is about $7 million, like $6.5 million. We put the property under contract in early in 2020. We weren't going to buy it until it was -- we felt really comfortable. And so the study period was extremely long.

And so part of the way we've gotten through some of these things is putting up deposits. And it's been so long and we've been through so many twists and turns, we decided that if -- actually, if you think of it as a 10% of a deposit, 10% of the $6.5 million will be $650,000. So it's not completely out of the ordinary..

The $500,000 deposit that went hard was really our hedge against the possibility of something not going well for this raw land piece purchase. And we'd rather do it that way and be able to hopefully get to a positive conclusion, but we just aren't there yet. .

So is this the 130 acres that seems like supposed to be a warehouse space in Cecil County?.

Yes, sir. That can take up to 900,000 square feet, we believe. .

And what -- can you identify the issues? Or is it still kind of in negotiation? Or is it dead in the water?.

No, it's not. It's -- if you look at a raw land purchase, Curtis, kind of like a great big mosaic. This is a raw piece of land that needs water, sewer, has all sorts of normal issues that we go through.

It's just that it's -- the water situation there, it's a public-private partnership between a private water company and the local town that has the wells. And there's only certain ways that the private utility company can charge its ultimate user. And that's regulated by the Public Service Commission..

So it's just a myriad of steps that you have to go through that's taking an unusual amount of time, especially during the middle of COVID. And so we can't completely say exactly what these costs are because somebody might say something, but until you get it in writing, it's no -- we don't believe that it's real.

So we haven't been able to feel completely comfortable to move forward. .

But to answer your question, Curtis, it's still under negotiation. It's not dead. .

Okay. All right. Good. On the royalties, I guess, the Manassas wrinkle was -- that's a relatively small property with no minimums. Is that... .

It's not a small property, but it does not have a meaningful minimum. You're correct in that, Curtis. And the pit is divided up between our property. And I think at one time, it was 2 others, but now it's just one other. And based on the mining plan, they moved between the 2 property owners. And so they should be coming back to our land this year. .

You make a good point. We would never enter into a lease without a minimum today. This was entered into 50 years ago, and it's just something we've inherited. .

Yes.

Do they give you much notice when they're going to move -- they're going to do that kind of maneuver? And do they give you a little explanation of what their mine plan is going to be? Or they just -- 1 month to the next, they decide they're going to move their equipment or whatever?.

Their mine plan is, for lack of a better term, is sort of their business. And I don't think the person operating the quarry gives any thought to who owns which land. So we don't get any notice until we... .

Got it. And then I guess on the breakout of the -- like the NOI reconciliation. Is that -- there's a tax allocation with a positive $2.4 million under mining royalties. But then if you look at under the segment, it's -- so you've got -- under the segment is like an operating profit of $8.2 million, but in NOI reconciliation, it looks like $8.9 million.

And I'm kind of figuring -- I'm trying to figure out what the delta is and which one is closer to cash. .

The cash, Curtis, would be the NOI schedule. Of course, NOI excludes overheads, and those are real cash expenses, so keep that in mind. But the difference between the $9 million number and the $8.2 million number would be other income. In this particular case, it's a gain on some property sales that we had. .

Okay. Let me just see. I think that will just about do -- I guess last question on stabilized JVs.

I couldn't quite tell -- is your retail full for -- was it full for Q4 at The Maren and Dock 79?.

Go ahead, David. .

The Maren was full. The major tenant moved in, in December. And then we have a lease executed for the remaining 24% at Dock, which is about 35 -- around 3,500 feet. The lease is executed. And they're going through the planning and the permitting for that space. That will probably be open up sometime this summer.

So effectively, we're 100% leased, but we're not 100% occupied. .

And then are you allowed to raise rents at this point?.

We are now. .

Okay.

And part of your rent on the retail is point-of-sales percentage, right?.

Yes, sir. Over a certain amount. .

Okay. All right. I assume if you got the retail full and assuming we don't cancel the baseball season and with the ability to raise some rent, that's definitely within your control. .

Correct. Yes. .

Hopefully, the NOI will be up next year if -- or this year, all else being equal. .

We hope so. It's -- D.C. is an interesting place to do business, especially as it relates to COVID. And obviously, the weather has a lot to do with the success of these restaurants and the baseball. We've already lost 2 games apparently, but at least we think that the baseball season is going to be there. Cautiously optimistic. .

And our next question comes from Bill Chen with Rhizome Partners. .

I got a bunch of questions like Curtis, so I'll just dive right into there. The first question is on the consolidation. When Dock 79 and Maren stabilized, you guys consolidated the results and issued the press release that had disclosed a GAAP gain that reflects the value creation from the development.

So the question is when Bryant Street stabilize, which I think will be 2022, maybe differ, one, will you consolidate the financials? Or would it become a line item in equity earnings? And then the second question would be, would you also issue -- disclose the GAAP gain so that the market can understand the value creation from the development?.

It's John Klopfenstein here. The reason that we recorded a gain upon the consolidation of Dock 79 and The Maren is because we had a provision in our joint venture agreement, which allowed us to force the sale of the property, basically put us in control of the joint venture, even though we shared other decisions equally.

Bryant Street has no such clause because it's an opportunity zone. So we can't sell it anytime soon or don't prefer to sell anytime soon. So at this time, we don't anticipate consolidating Bryant Street. And so there will be no gain to record on the change in that status. .

I would think -- Bill, in answer to your second part of your question, that while we wouldn't attribute the value to it, we would be very clear what the NOI was in the project. .

Certainly. .

Yes. We do what we can to make it easy for shareholders to determine the value of the stabilized assets. .

Got you. Well, I mean, we certainly appreciate that very much. And then, I guess, just to confirm, if my memory serves me correctly, I think we're at [ 50% ] of the interest. Is it that with the allocation to the JV partner that falls below [ 50% ] and then you don't consolidate that? Is that the main reason? Or... .

Why we're not consolidating Bryant Street? Is that the question?.

Yes, yes, yes. .

It's primarily because we share all decisions equally. In other words, we cannot force any sort of transaction or any other major event without agreement with our partner. .

What is that percentage?.

Our percent is about 51%. .

51%. Okay. Yes. .

I just -- I'm looking at Dock 79 and The Maren and traditionally I've seen about 10 -- I think for Dock 79, that's a -- went from 80% to 66%, if I remember correctly; and then for The Maren, it went from 80% to 71%. So somewhere between a 9% and a 14% drop-off in owner share. We started at 51%. I'm just trying to do the math of where we wind up at.

So I'm just kind of guessing based on the economics on Dock 79 and The Maren. .

David, do you have any comments on when the waterfall for Bryant Street occurs?.

Bill, I guess I would -- go ahead, David. .

That would [ chase ] them around. I think the waterfall doesn't happen until the end of the [ house ] period. .

The end of the opportunity zone period?.

Yes. For some reason, it fell down below 50%, we have the right to take it back up over 50%. .

Okay. Got you. Got you. That's helpful.

Does that mean that we get -- as long as we hold our property, we get 50% of the distribution, which that will be different than Dock 79 and The Maren?.

I don't know why it would be different, Bill. We get the distributions based on whatever the ownership interest is at the time. .

No. I'm just saying the -- you're saying -- all right. Maybe I'm understanding the end of the opportunity zone period because I'm generally thinking 10 years out. Maybe you meant something different. .

Yes. .

Okay.

So we would have 50% ownership until the end of 10-year period for the opportunity zone?.

Yes. So until the crystallization would happen, which been -- correct, we would get what we started out with until something like that happened. .

Yes. The difference between the 2, Bill, in this case would be that the waterfall for Dock 79 and The Maren was based on a -- just coming up with the value for the building, whereas this will be a traditional waterfall based on sale proceeds. .

Got you. And that's 10 years out. Okay. Got you. .

Or monetization -- sale being monetization, having a refi. .

Okay. Got you. Got you. No, that's -- I'm actually glad I asked that question because that's a little bit better than I anticipated. Okay. So yes, I'm looking forward to stabilizing Bryant Street. Should be exciting..

The second question is on the Greenville. All the [ publicly traded ] [indiscernible] multifamily recently reported double-digit rent growth.

Are you seeing similar results in the Greenville projects?.

Well, we have 2 of them, as you know, Bill. One of them is Riverside. I will say this, that it opened up in August, and it is -- I think it was -- at least as of last week, it was 73% leased and 60-some percent occupied. And we have not offered any discount off the face rent. And of course, .408 Jackson doesn't even come into play until the summer.

But it's been pretty -- it's been very, very strong. .

Got you. Yes. No, we're -- I'm just seeing that [ some ] multifamily just been absolutely on fire. Could you guys go back to my previous question on Bryant Street? You guys disclosed a leasing and occupancy figure as of year-end 2021.

Can you disclose what that number is as of end of February?.

I don't think we have those numbers in front of us, Bill. So I don't think we want to talk about them off the top of our heads. .

Okay. Let me see. My next question -- well -- okay. My next question is on the renewal of Dock 79 and Maren. They're in the mid- to high 60s renewal rate, which is about 10%, 15% higher than normal, if I remember correctly.

What do you think the existing rent is? I mean, like how much is that below market? Was that -- the way I'm reading it is that people are wanting to stay because they're getting a good deal. .

Well, I think they're getting the deal that they had before. Two things -- a couple of things. I mean, obviously, COVID has wreaked havoc down there as far as apartments moving out, moving in, holding rents. Everything you can think of that benefits the tenant, it was there. And so the fact that they renewed at a set particular rate, that didn't change.

You could argue both sides of that sense, right, that they were paying a market -- above market rate before, but they're still willing to pay it again; or vice versa, that they felt that it was low and they wanted to stay.

It's tough to draw any real conclusions with what's happening with renewals just by virtue of having to deal with the regulations that D.C. imposed on the landlords. .

Yes. I mean one thing to bear in mind, Bill, is that you can't raise rents on renewals. So 55%, 60%, 65% renew. That's still 35% of renewals that are moving out, and the people that replace them are paying market rates.

So I don't know what percentage of our tenants are paying the exact same rent that they were paying on March 1, 2020, but I wouldn't bet it's a huge portion. It's just you prefer to keep your tenants in the building because it's less expensive to go and find a new tenant. .

Any answer we give you would be pure speculation. And -- but it's a very important question. And we are focused on seeing what we can do as far as raising rates now that we've got the ability to do it..

I think you're aware of this, Bill, but our leasing agents literally change the price daily based on supply and demand. So once we get a trend, which surely should be by the next quarter, we'll have a good feel and can answer your question without just popping something off the top of our head. .

I appreciate that. The -- and so on to next question. On the Hollander spec building, I'm seeing -- based on the reports that I see, I'm seeing market rent for that type of product in the mid-$6 to $7 range.

Is that in line with what you guys are seeing for the 2 spec buildings?.

Pretty much, yes. I mean, obviously, it depends on -- you kind of have to look a little bit closer underneath the tent. But a lot of times, it has to do with what the tenant improvements are that determines what the rents are. But those rents don't sound too far off. .

Okay. Yes. Let's see. On the Phase 3 and Phase 4 for the RiverFront, now that the -- we have inflation, we have cost inflation, labor shortages.

Any thoughts on what it would cost today to kind of recreate -- like if you were going to build something like The Maren on Phase 3, like what percent higher would it cost to build Phase 3 today?.

Hard to say, Bill. Like John said, this is purely speculative. I mean the rates are going to go up and down. We've seen -- actually, it's interesting. We saw steel go down for the first time in a while on a project -- on a warehouse project we were doing, actually went backwards. So it would certainly be higher. We're seeing -- pick a number.

It could be anywhere from 10% to 15% more, it depends. It depends on when you do it and what you build..

There's a lot of pieces that go into the cost. How big are the apartments? What kind of medium-income apartment percentage you have to put. I mean there's a lot of pieces that go into making up the total project to see whether it's economically feasible or not. .

Do we need to build -- set aside a portion towards affordable for Phase 3 and Phase 4?.

The zoning commission will require it. It's called inclusionary zoning. You had that up in New York. .

Well, I mean, I'm very -- that figure is up to 30% up here, 30%, 35%. So... .

Not that high here. It's in the 10% range here. .

10%.

Would that be required on both or just one of those?.

Well, if they're both residential, the feeling is most likely. I mean the inclusionary zoning is not going to go away. If anything, it's going to get -- going to grow a little bit, but we just don't know what it is yet. We're not in front of the zoning commission yet. We're not that deep into predevelopment.

We're still trying to round out what the actual [ footprints ] are going to look like now that the bridge is almost complete. .

Got you. Got you. Okay. That's helpful.

Final question, thoughts on macro with the inflationary rates, interest rates and cost inflation, how that impacts -- just would love to hear your thoughts on it in general and also how that relates to positioning with regard to capital allocation to build, to -- just like the 2 investment projects, to buy something that may be existing or -- so just broad question, just love to hear your thoughts on that.

.

Bill, this is John. That's what you call a game-time decision, when you look at the cost of the building and then you look at the cost of what rents have done. I think I know what's going through your mind is that if the cost of construction goes up, the cost of getting new product is going to need to have a higher rental rate.

And hopefully, we benefit from that -- from the old wins as well as the new..

But the free market capitalism is a funny thing. And we'll just have to take a look at it, but that's what we do. I mean we're going to take a look at that equation before we would ever start a building. .

Inflation is pretty -- it's just kind of a double-edged sword for our business. It means rents are growing up, but it affects cap rates. Mining royalties have traditionally outpaced inflation. So that's a good thing. Interest rates going up is a bad thing for any new financing we do. But I don't think these are particularly profound insights. .

On that thought, given that -- I mean, we got kind of amazing rates when we refinanced Dock 79 and The Maren.

Any thoughts on if we were to go to market today and try to put the same type of mortgage on Bryant Street, what that cost of debt will be today?.

I haven't really looked at it, Bill. I mean, obviously, you're starting to see rates creep up. We also have -- we don't overly finance these projects either.

So we usually get the best rates that we can, but we don't -- we haven't really been looking because we haven't -- we're going to start because we've got some construction loans that will start to -- actually, no.

We -- all the construction -- the 2 construction loans that we have remaining in Verge and Riverside and even .408 have several extensions on them. So we're not [ under the ] position where we have to go looking for anything, but we'll probably start next quarter just to take a peek out in the market and see what kind of rates we can get. .

But I'm sure like Bryant Street is probably the furthest along -- or actually, I mean, Riverside is maybe even further along, right? I mean I'm sure you're looking at Bryant Street permanent financing solutions. .

We'll start looking at both. I mean Bryant Street is a little bit more complicated because it's got retail and substantial amount of retail, which incidentally, is some 80-some percent leased out of 91,000 square feet. But it takes a while to get them in. It takes a while to get them financed. And Riverside doesn't have any retail.

So Riverside will probably be a pretty easy one. .

Our next question comes from Stephen Farrell with Oppenheimer + Close. .

I have a quick question and a follow-up on what Bill was asking with Bryant Street in regards to the consolidation.

Is there any restrictions to refinancing the construction loan, either prior to stabilization or just as long as it's opportunity investment?.

No, sir. There are no restrictions. .

And what would that look like? Would any of the refinancing just stay with the properties? Or can it be distributed to the JV partners?.

Well, there's certainly -- there's a bunch of opportunity zone restrictions. There's some preferred equity there that might want to become -- might want to come out. And so -- but it's hard to say. I think -- I don't know for sure. I believe that you can do certain things as long as it doesn't go over a certain percentage of what the original was. .

And you're leasing up pretty nice at the properties there.

Is there a little bit of seasonality in the leasing compared to Dock and Maren?.

It's -- seasonality means the type of year. January, February -- December, January and February are the worst months to lease just historically. The weather and people just don't want to be moving around then for some reason.

Summertime, the end of the second quarter and all of the third quarter are the 2 big months -- or the 2 quarters that are the most opportune for leasing. So we're excited about Verge coming online in hopefully July. We were extremely fortunate when the first building of Bryant Street came. It came out in December, and it was snowing.

So it's hard to say. But generally, the times are better in the spring and summer and early fall than they are now. .

And at the Chase 1A and 1B, are you offering any concessions there?.

Yes, we do. It's about a 17% concession coming in. .

And is that -- I know you guys use the software, and you're changing prices frequently. .

Daily. .

Is that kind of consistent with other properties in the area? And is it leasing up at a similar rate to those?.

It's -- well, yes, we are. We are certainly staying well within the velocity of the other places around us. In addition to changing rates on a daily basis, it's also the different types of unit.

Actually, the algorithms are set up so that if one unit is leasing up a little bit quicker than the others, we'd like to -- we might look to take a little bit of that discount away. It literally does it every day for all of the units. But we are definitely holding -- we're holding up with our competition for sure. .

And at The Maren and Dock 79, what is your approach going to be for looking at raising rents versus occupancy?.

Well, it's a game. It's an art, not a science, right? I mean, if you get up around 94% occupancy, at 95%, you wonder whether you've got -- you shouldn't be trying to steal a little bit more money.

But that's one of the things that we really feel pretty good about, is the group that we have -- Kettler does a great job in that we have leasing calls every week and literally have these discussions on a weekly basis as to what to do. .

And for the renewals, is there a limit on the amount of increase that you can do year-over-year? Or... .

No. There's no regulations other than what we come up with our own. I think somebody mentioned it earlier, your spot is usually somewhere in the 50% to 55% range. If you're doing -- if you're renewing higher than that, then you're not renewing for enough. And if you're lower than that, you were trying to renew for too much.

So I think the set point is usually somewhere around 50% to 55%. .

And it seems like Amber Ridge, you're kind of picking up some pace in the units there that are being sold.

If we keep going at this current pace, what -- how do you see the payout from Amber Ridge?.

Well, it's -- let's see, we were at 34 at the end of the year that we're out of 187 gone. And then we were at 51 at the end of February, which is that first quarter of 2022, and we've got a program with both builders to kind of take so many down on a quarterly basis. They're running a little bit ahead of schedule.

So at 29 units or so a quarter, we would -- we're still -- we've still got a lot left, but the pace has definitely been more than what we have thought..

And then speaking with both of our -- both the builders, they seem to be very proactive and moving forward. And so we may get a few -- we may get more out this year than we thought. And if this year was supposed to be somewhere in the 80 to 100 range, I think we're going to -- we like to think we might get past that.

We won't be out, but we're a lot -- we'll be a lot closer. .

And I know you talked about the warehouse deal that hasn't completely fallen through.

And if that doesn't pan out, do you think that changes your pipeline materially? And kind of how are you viewing that -- what would you look to replace it with if it doesn't go through?.

Well, we want to -- obviously, our plan is to maintain a pipeline. We've been pretty successful with the industrial platform over the years. And so we do have the Crouse property, which is the 55-acre site, can actually take 2 buildings, a 600,000 and a 75,000 or some other variance, depending on what the day is.

And then our Chelsea property takes 250,000, which we haven't started yet. We're out at Hollander completely. So we are -- we will be in the market. We don't want to get overly full of pipeline properties because we don't want to get back into having too much of an overhang there..

But if it -- we're always looking. They're not easy to find. We've constantly got people on the street looking for us. We've bid on more possible raw land programs as you can imagine, but we're very diligent in kind of looking at what we believe is the appropriate finished lot cost. And I think sometimes we may be too conservative. We don't know.

But certainly, the value has jumped up on this warehouse land over the last 18 months to 2 years. We don't know whether that's going to be sustainable, but we're always looking. .

And in the surrounding areas there, do you think there's more room for capacity? And is there a lot of capacity coming on in the next year or 2?.

Not a lot, but a lot is a relative term. Where we are right now, we've got properties that -- one is the 250,000. It sits among a bunch of giants of over 1 million square feet. And so we're thinking we can sneak something in because tenants -- these large tenants are always looking for additional storage..

And so to answer your question, there's not a whole lot of vacancy in the markets that we're serving up in the -- [indiscernible] [ 95 ] in Northeast. The vacancy, I think, at the end of the year was around 3%. It's pretty low. .

And there are no further questions at this time. I would now like to turn the floor back to John Baker for any additional or closing remarks. .

Well, thank you all for joining us today. We appreciate your interest in the company. 2021 was an important year for us. We stabilized The Maren, continued strong cash flows from our royalties, and we made a lot of progress in running out our newest mixed-use project in D.C. called Bryant Street and also Riverside in Greenville..

Looking through the balance of this year, as David mentioned, the .408 Jackson and Greenville and The Verge in D.C. should be coming on late this summer or early in the fall. And they will be coming on quickly after we've made progress, hopefully, to close out Bryant. We'll have 3 new warehouses at Hollander and hopefully be well on our way.

One of them, of course, is a build-to-suit, and the other 2, there's been a lot of velocity, and we're optimistic about those..

4 in D.C., 2 in Greenville and 1 in Richmond as well as the 3 warehouses and an office retail park in Baltimore. This is a dramatic transformation since our warehouse sale in 2018. And yet, we still have $160 million in cash to fund future growth and to provide a safety net in these crazy times..

Thanks again. We look forward to talking to you next quarter. And I think a lot of these questions you all have asked will be much clearer as we get into summertime or late spring and seeing the velocity that goes on in the leasing and our ability to raise rents. I'm excited about the idea of opportunity to raise rents.

Certainly, all over the country, they're going up like crazy. And I would hope D.C. would follow suit..

But thank you all for joining us. I hope you have a great day. .

And thank you, everyone. This does conclude today's call. You may now disconnect..