FRP Holdings, Inc. (FRPH) Earnings Call Transcript & Summary

A lot of thanks and good morning to [indiscernible] Investor Day here on September 15, [indiscernible]. First of all, [indiscernible]. I'd also like to acknowledge MRP, guys in MRP. There's a lot of them here. There are partners here in D.C. Obviously, [indiscernible] I probably spent more time with John Baker over the last close to [ 2.5 ] years of my life. But again, great partnerships, and [indiscernible]. Also, we've got John Baker, our Chairman; John, III, CFO; David deVilliers, Executive Vice President, [indiscernible] Thanks for coming.[indiscernible]

Thank you, David, and thank to you all for being here.

We can't hear you.

Can hear or can't?

Who is supposed to turn that all up? How do we do that over at Zoom? Can you hear us now?

Much better. Thank you.

Thank you for letting us know. I appreciate you joining us today. I think we've got an interesting day for you. Hopefully, you will enjoy the presentation and learn a little bit about FRP. And if you get the time with the information, maybe watch a little baseball this afternoon. Before we begin, let me remind you that some of our statements today may contain forward-looking statements within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities and Exchange Act of 1934. Such statements reflect management's current views with respect to financial results related to future events and are based on assumptions and expectations that may not be realized and are inherently subject to risks and uncertainties. Future events and actual results, financial or otherwise, may differ, perhaps materially, from such forward-looking statements. I apologize for that. That's just a safe harbor thing we have to say being a public company, but the good news is it enables us to talk to you and answer your questions and really get into the future without worrying about what might happen. As you will hear today, we are really bullish about our ability to redeploy the funds that we gained when we sold our warehouse portfolio in late 2018. Because of COVID and the uncertainty that it brought to all of us personally, but to the economy, we have intentionally kept our cash and equivalents very high. We've completed Phase 2 of our Anacostia project, The Maren, as we sit here today. And we've reached stabilization far quicker than any of us ever dreamed. I think David will say it, but I think we underwrote this project, assuming we would reach 15 units a month [indiscernible]. Again, thank you, [ Stacy ], and the people that helped make that happen. We've embarked on a new mixed-use project on Bryant Street, which is adjacent to the Washington Metro, north of Union Station, and another project right down the river at 1800 Half Street, which we call The Verge. Additionally, we invested in 2 mixed-use projects in Greenville, South Carolina, one of which has begun leasing and is off to a great start. All 4 of these projects, they are not bare but Half Street, Bryant Street and 2 Greenville sites were opportunity zones. And you all may remember while that was a creation from tax law, right, it sheltered substantially all of our gains from the sale of the warehouse. And we'll have great shelter aspects going forward if those zones are successful. But by definition, they are in the areas that are developed. They're not tendering it and another reason to watch and be careful as we develop and see how these projects go. The first building is completed at Bryant Street. It's called the Coda. We were really surprised. I was stunned at how fast that leads to, which is a really good sign because it was in the middle of a construction zone. It is on the edge of development and yet once again, right at that 30 units a month lease-up. So pretty exciting and a really good sign of what's going on. So that gives us optimism about the other 3 projects as well. And so we are kind of recalibrating. And assuming they do all turn out as well as we think and the COVID situation is positive and the economy is going like we all hope it will, we're going to be aggressive in adding income-producing projects and holding them to provide an accelerating and a substantial growth rate for our net operating income and NAV here at FRP. We will also continue to develop industrial buildings in our home market as we've seen incredible appetite in new warehouses and strong rental rates for such projects. We had made the decision from some of our warehouse portfolio that we would continue to build warehouses that typically we would probably sell then once we got to stabilization. I think we're making a pivot on that because the rents are higher than we expected, the demand is great and it fits right into the strategy of growing NOI and NAV and as the corporate taxes go up or 1031 is eliminated, all the more reason to build and hold while we've been building zone. Our 15,000 acres of aggregate royalty properties continue to perform exceptionally well. Every year seems to be a new record. Everything I thought I knew about the aggregates business has been turned on its ear when you go through deep recession, the pandemic and you have record sales and profits. Just that's not the way they'd love to go, but we're happy that that's what's happening. And the new infrastructure bill that we have, assuming it passes, and we all know that's not for sure, but assuming it passes, that's going to add substantial tailwinds to that business. We benefit by royalties as revenues go up. So as volumes go up, as prices go up, that drops straight to our bottom line. There's no cost of sale whatsoever, especially on an incremental basis. So we're excited about the opportunity with that infrastructure bill [indiscernible]. So our goal going forward is being utilized on a strong balance sheet to grow the company. We see excellent opportunities with our existing partners. And while we have always prided ourselves as being conservative capital allocators, I can tell you, we, while being thoughtful, are going to be more aggressive with our cash than we've been for the last year or 2. That we will afford it, literally, and make sure that COVID didn't got a stand. The strong cash position that we've got, some $170 million, combined with the great cash flow of nearly $10 million a year from the aggregate properties as well as the projects that were coming on and bringing in more have given us great cause for optimism. So let me turn it over now to John Baker, III, who will talk more about the presentation today and we'll talk about it later. Thank you, guys.

Good morning. I'm John Baker, III, CFO of FRP Holdings, Inc. and thank you to everyone here today and following along. I'm going to briefly go through some financial highlights. It will be news to anyone if you didn't [indiscernible] who has been following the company, but kind of the tail of the tape over the next few financial slides is the addition of The Maren. I had the pleasure of leading our first quarter earnings call when we announced the consolidation of this wonderful roof over our heads. And at the time, I mentioned that bringing The Maren on our balance sheet and even in our income statement will see an increase in revenue, obviously, increase in tax flow and NOI. But probably a negative impact on earnings and operating profit just because of the increases in depreciation and invitation in projects like this one, particularly in the first year. So you'd see immediately in this first slide that revenues went up, operating profit went down. NOI is up. And the big number that kind of jumps off the screen is the net income from operations. That is really just a result of the write-up to fair value of The Maren that we experienced when we brought it onto the lot. You can see that along the balance sheet. Go to the next slide. Same is true for our trailing 12-month highlights. Again, revenues are up, operating profit is. Revenues, NOI, a big jump because of The Maren and quite substantially. Numbers that really jump out here are the increase in earnings per share and the decrease in share repurchases. The earnings per share again is because of the write-up to fair value. Share repurchases are down for a good reason. We were aggressive about buying shares when we thought we could get the stock at a steal. And unfortunately, it's [indiscernible] follows. One note about this slide, net cash provided by operations, that's down and it was kind of up unsustainably, so primarily just because of the timing of some of our opportunity zone investments led to some tax refunds and deferred taxes. So that's the reason for it. This slide gives a quick summary of the book up of The Maren conversion. And this is, I guess, actually the agreement that we came through with. We came to fair market value of $151 million. And based on our agreement with MRP, our partner, this increased valuation of the building resulted in a change in ownership. Ours went down, theirs went up. And you've got a net increase in FRP equity of $37 million. The Maren, once again, is kind of underwriting all over our balance sheet. You can see it on the very top line, $140 million increase in net investment in properties. That is The Maren. And again, it's all over the balance sheet on the liability side. We did the long-term financing for The Maren, and that went up. Nothing particularly complicated about that. And you can also see that MRP's noncontrolling interest went up with the consolidation in there as well. These are business segments, Mining Royalty, Stabilized Joint Ventures, Asset Management and Development. I'm going to briefly touch on some of our Mining Royalty highlights because it's the least complicated business we have and the only one that I'm capable of discussing with any degree of intelligence. We have 13 properties totaling 15,000 acres. This business is the heritage of the company Florida Rock Industries, which we originally spun out of the 1986. Most of our royalty properties are a results of the spin-off and subsequent sale leaseback agreements we have with Florida Rock Industries, which is now Vulcan Materials. So we had 13 properties, primarily in Florida and Georgia. We have 1 in Virginia. And we have about 0.5 billion tons of sand, limestone and hard rock reserves. The past 12 months have been very, very good to this segment. We had our highest revenue in total in fiscal year and calendar year 2020. And we followed that up with the best first quarter we've ever had, the best second quarter we've ever had, which -- then it was the best first 6 months we've ever had. And as a result, it was the best trailing 12 months we had ever ad. It's the first time that I think we've ever had higher than $9.5 million in trailing 12 months' revenue, and then we followed that up with the first time we'd ever had $9.75 million trailing 12 months after that. So it's been -- the segments have a really amazing run. We were also able to increase the minimum rents on some of our royalty agreements as a result of a lease extension. And then looking ahead, fingers crossed, the infrastructure bill would obviously positively impact the segment, not as much in regards to tons but it will definitely have a huge impact on prices. So fingers crossed. Briefly touch on these numbers here, but they just kind of serve to illustrate what a run that this business segment has been on. First time, as I mentioned, in any trailing 12 months to pass $9.75 million. Crossing the $9 million revenue threshold a few years ago felt like such a big accomplishment, close to $10 million. So it's, again, a great run for this segment. This slide is just a breakdown of our properties and is really better consumed kind of on the side. Just for anyone unfamiliar with our royalty properties, it's a breakdown of the location, who the tenant is, how long the leases are in place and minimal rent and whatnot. I think this is a really powerful slide. It takes us all the way back to 2006 which, particularly in Florida, was the peak of aggregate volumes. And if you look at the total tons, we haven't gotten anywhere close to where we were in 2006, even now into really booming Florida, 80% of -- 80% of the total tons of 2006, and yet you're at 60%, 70% higher. And you can see that in the average royalty per ton. It just shows you that the pricing power of the aggregate industry has really pushed price over time, particularly it has different quarry sites throughout the business and being able to grow prices by, I'm sorry, over 13 years, that's obviously well beyond inflation. And this speaks to what we love about it essentially. I think this is a really impactful slide. It shows you the revenue growth of our Mining and Royalty revenue stream versus Vulcan Materials in Martin Marietta who are 2 of the very best in the business and push price as hard as anyone. And they've had 6% and a nearly 7% year-over-year revenue growth. We've had 8%, and it has nothing to do with anything we've done. We're not setting prices, but it just shows you that our quarry sites are in some of the best pricing markets, both Vulcan and Martin and all of our other tenants have. And very proud of our locations and the quality of our aggregates assets. This is an interesting slide. I think for people who are unfamiliar with the aggregates business, it might be hard for them to value our royalty stream. It's not a -- and so how would you evaluate it? I think a good starting point would just be to look at our trailing 12 months and operating income at Martin Marietta and both in trailing 12 months average EBITDA multiples. And I think that it will be a good starting point to give you a sort of range of how we value those. And just in closing, touching a little more on the infrastructure bill. Again, fingers crossed. But the proposed plan is about $550 billion in hard infrastructure. It's a huge infrastructure bill, but the part that most concerns our business is the hard infrastructure, meaning roads, highways, bridges. You need to make big rocks into little rocks. And it's going to add a 20% increase to plan spending on its hard infrastructure between 2022 and 2026. As seen and as we've talked about throughout this presentation, this business segment is already pretty hot. And so to add a 20% increase to demand in this industry is going to really stress supply where supply is already very stretched. And why I mentioned earlier, it's going to be -- you might not see the initial surge in tons just because a lot of ores and sand plants are already at capacity or close to it. Where you're really going to see the impact is in price. And kind of beauty of planned infrastructure spending over the course of 5 years is the rollout of that planned spending will allow operators to invest ahead of time to increase capacity. So you'll see price go up initially, and then as operators invest in property plant equipment along as well. But it's only a 5-year planned spending. They're not going to push all their chips in. There's 5 years and then the bottom drives that afterwards. So it's playing a huge investment in property plant equipment. Why? I think you'll see a bigger increase in price than before. But anyway, that's all I have. I'm going to turn it over to David deVilliers, Jr., our President and COO.

Awesome. So thank you, John, both Johns. And again, welcome, everyone. What I thought I would do today is basically highlight to you all the other 3 legs of FRP's development platform. As you heard from John about the Mining Royalties segment, that's a hard act to follow, but we'll see what we can do. So this is our Stabilized Joint Ventures business segment. It consists of 3 properties. Obviously, the first one being Dock 79, which was our first joint venture with MRP. I think we started -- well, I started trying to title this property back in 1993 when we opened it back. We really got into it by 2011. I think John Baker is going high school. So that's the Dock 79. Obviously, The Maren, the flagship, that's a tough act to follow, but we think we've got enough ideas and programs and people and projects that we think we could do that again and continue. There we go. So much for that. Next slide, please. This is Hickory Creek. Hickory Creek was a 1031 deal that we did when we joint-ventured with the group of Capital Square 1031. It's a DST, which allows for us to defer through the 1031 program, and we invested about $6 million into that growth land. It's a -- anyway, Hickory Creek is in Henrico County, South Richmond is a Class B, part complex, 294 apartments. The idea was these guys bought the buildings, the complex, some had already done heavy lifting but all real heavy renovations probably will go back in [indiscernible]. And they sold it. We collected and we're doing things like changing out the vanities, the countertops, that sort of stuff. So a value-add program, hold it for 3, 5, 7 years and you spin it out, but it is qualified because of 1031. Next slide. There's some quick comparative metrics here for Dock 79. The average occupancy for the year-over-year was 95%, which is incredible, over 92% retail. We picked up the final lease down on there next to the order. [indiscernible] lease was executed last week, so we're moving forward there. Our success rate for renewals was 60.76% versus 58.3%. Problem here is, although the NOI was down about 7%, expenses continue to go up, but government says you can't raise your prices. And we can't pick anybody out, that's not fair. So that's kind of where we are now. So we feel that as the government lifts the program and all of that goes away, we think we'll be able to move on. This is Maren. You've heard about it from John. I mean look at the difference. The average occupancy for the 6 months was 91% versus 13.1%, the same period last year. So that bought a little over $1 million of NOI into FRP's pockets, which obviously were in the negative [indiscernible]. Hickory Creek, again, we invest that. It's a return of our investment. And we're getting about 5.6%, 5.7% after-tax return on the distribution. And then obviously, we look for a big bump when we go to sell that property. In our Asset Management and Development division, this is some properties up at the picture. You'll see more some of our warehouses at Loveton. Highlights in the Asset Management. We only have 3 assets in there right now because we sold all of the warehouses issued now in 2019. The good thing is that 34 Loveton is our 33,000 square foot multi-tenant office buildings where we house our office in. That's 95.1%. Cranberry Business Park, which we purchased as a value-add program for less than $30 a foot. Bigger [indiscernible] warehouse program for a $30 a foot. We put a bunch of money into it. And right now, it's 96.5% leased. And the last piece is 21st Street in Jacksonville. That was the old Florida Rock Industries' office building, which then Vulcan took over. Subsequent to that, I believe their lease goes through 2026. And then we'll have to figure out what to do with the property after that. Moving on now to our properties under development and our ongoing joint venture. This is Bryant Street. Now you are going to see that later on today. As John mentioned, this is a massive project for us in MRP. It's only second stop north of the Union Station. It's a 4-building complex, if you will. So it's 487 apartments and 89,284 square foot of retail. So Coda. As John mentioned, Coda, in mid-late December of 2020, it was [indiscernible] with miserable weather. The concrete is stuck to the flood at the front door. The first occupant took place on January 1, and I think we all celebrated the [indiscernible]. So now as of September 1, the property is 95% leased and 93% occupied, which is pretty amazing. Now granted, we gave some -- there are some discounts. The discount is probably to what our asking to around is probably close to about 16%, 17% of it, John? But we felt we got to see heads in beds than just looking for the revenue, which is why we're 93% occupied as opposed to [indiscernible]. Chase, the 2 buildings you'll see, the total 333 apartments. First occupant we've opened it up. We did not do any pre-leasing. We opened it up the 15th of August. It's 12% leased, which is basically 40 units. That property is a bit. Good thing about that is leasing continues to be robust. We had 25 units leased over the last 30 days. Again, it's a little bit more than what was [indiscernible]. Strong leasing velocity, which will -- this is really pretty incredible, I think. We have a total of 89,285 square feet of retail space at Bryant Street Phase 1. The Alamo Drafthouse, which is one of the buildings, about 45,540. The smallest shop, which is 23,000 square foot. The total small shop would be like a small single shop of 2,500, 3,000 feet. 23,000 feet of that 13,500 square feet was leased, leased to sign. Our food hall concept, we all still trying to figure out how that's going to work, but we're excited about the low pacing. We'll all see that debate go. There's $9,400 2,500 square feet. We're about 1/3 mix there. And then we have an outside pop-up space that's a floor area that's going to house a building at some point in time in the future that we have -- again, we'll see it today as we call the Metro Bar, which goes outside entertainment activities, food, beverage and it's been very, very well received. So here we are at still on the pandemic and still trying to figure out who's on first with COVID to 77% leased. Great story. We haven't gotten any money yet, but we've got to start to get them leased and get them signed. So Bryant Street, as I said, this is -- this area is Phase 1. There's 2 more phases left in Bryant Street. We'll see that today. The future there is somewhere in the neighborhood of about 800,000 square feet or said another way, about 800-plus-or-minus apartments, maybe about plus or minus 160,000 square feet of retail, of which one of them would be a grocery store. So that's the second and third phase is that we're all starting to take a look at. Next slide. So this is the 1 of 2 projects we have in Greenville, South Carolina, we had with our partner Woodfield Development. They are headquartered in Westland, Virginia. We like Greenville. We think Greenville, South Carolina is a strong market. The demographics is really raising. So this is the first one that we did. It's 200 units. We opened up -- again, opened up for leasing at 7/15/21, with 17% -- 27% leased and 13% occupied. We've leased over 30 units in the last 30 days with no concessions. So that's a pretty strong market. The other one that we have down in South Carolina also with Woodfield is .408 Jackson. It's not that far -- quite that far along, about 55% complete. So leasing will look to begin in the summer of 2022. You see on the lower part of the picture there, if this thing works, but that's for field, which is the baseball field for the Boston Red Sox team right across the street. So when this building is finished, that road that you see there will not be a road that we culminate with the stores, retail and others. This area sits about less than 3/4 of a mile if go down that road. This back of -- the back of D.C. and back to our friends from MRP. You'll see it when you look out the front. And by the way, as John Baker, who was going to give us a little bit of a history of Riverfront at site plans after Q&A. But this is Half Street, The Verge, that sits out there. Right now, it's about 27% complete. This is an over picture because we're now topped out and the skin is starting to go around it. Things are going really well down there. The contractor is doing a superb job. 344 apartments. And again, the leasing still will start this summer. Next slide. This is what we think it's going to look like, it was an office rendering. Every time we look at these buildings and we try to figure out what it looks like, they'd say, well, we put up a markup. And they say, "Well, what do you think?" And my question is, "What colors?" and they say, "Well, it's blue or white." I'm not color blind so I'm not allowed that had anything to do with colors. I'm guessing that this isn't blue or white, but it seems like pretty hesitant. Okay. So let me take a minute here to summarize our mixed-use platform. This is something that FRP has always done as a warehouse development company and a mining program. It's a long way from either one of those. So what this slide tells you, which is a lot, that we have a total of 1,827 apartment units. They're complete or under development. Literally, 127,000 square feet of retail. And only 2 of these buildings are paybacks. So what does that mean? So if we look at the second quarter of 2020, we had 305 completions, so 17% of total. And FRP's net operating income was $1.1 million. So now fast-forward to Q2 2021, we now have 31% of those occupied at [indiscernible]. And the NOI jumps to $2.2 million. Q2 2022, you go to 69% of those units. Q2 '23, all 1,827 units we project to be 100%. What does that mean? I'm not going to do the math for you, but if we take the $2.2 million and you divide it by 569, that's somewhere between $12,000 and $15,000 a unit. So that could be a significant driver. Next, the other interesting thing about this is that all that you see there, the capital is already committed. So of the projects that are still underdeveloped, that's excluding Dock and Maren, the total project commitment of tenant equity is $468 million. FRP's equity on average at 53% -- 55.3% of the total, which is $113.1 million or $271 million as a whole. And through 6/30/21, we committed to use that. So the interesting thing is, all these things were coming through, we've already got the funds. This is another one of our joint ventures. This is in Baltimore County, Maryland, with a group called St. John Properties. They're one of the largest warehouse developers in and around Maryland. They have a little bit over 19 million square feet. We're doing a joint venture with them. This is once a first-floor office and single-story, freestanding retail. Not doing too well really, but we think it is an incredible location, got great demographics, drive-by count is huge, so the office of the 100,000 square feet of Phase 1, roughly 72,000 feet office at 61.5% leased and occupied and paid in rent. Retailer, 28,000 feet. And so those 2 buildings at 13.5% leased. We're excited about that program. It's just that the asset classes we know [indiscernible]. So now let's move on to FRP's in-house warehouse development platform. Some of you may remember, we sold our entire portfolio of [indiscernible] in May 2019. It looks like -- so now we're back at it. These 2 buildings here in the middle, over 145,000 [indiscernible]. These 2 shells, the ones in the middle, will be completed this quarter. And building is at 42%, 42,000 square feet. The building up there on the right, that's the 94,000 square foot building that we built, leased out and sold. On the left, we don't have the [indiscernible]. Next one. This is the last building lot at Hollander Business Park, and we have a build-to-suit that literally started, I guess, last week right there. This is the last we'll see the other buildings up on the right. This is a build-to-suit, a real strong tenant of 101,000 square feet, single tenant building, 10-year term. Building to start construction and we look to occupy that building [indiscernible]. So that's the last lot in Hollander. So again, we've been in the warehouse development business for 30 years. So we've gone out, we bought -- purchased some property. This is the Crouse property, which is 55 acres in Harford County. That's a 4-piece stock market. That will hold 675,000 square feet. It happens to be right surrounding our Cranberry Business Park at [indiscernible]. Good thing about this property it's going to take a while to take it through entitlement but we have a lot of stellar stores with some of the larger tenants around [indiscernible]. So right now, this property has generated -- over the last quarter it has generated past $42,000 a month average rental for [indiscernible]. So I'll report the property while it's going through. This is another piece of sales and growth property probably within 2 or 3 miles of Crouse. We bought this property in August, several [ bond ] in August. 17 acres, again, Harford County, Maryland. We start the filing process get the permit for that building. This is other property. We have this under process, going through due diligence phase. The capacity we can tell you by year-end. Things are going pretty well. This is 130 acres in Cecil County, with about 5 miles north of the other 2. Again, part of that Northeast -- 95 Northeast submarket. The Crouse is somewhere in the neighborhood of 45 million square feet, CBRE, I think that's a great market piece. And I think that's at the [indiscernible]. This will hold 900,000 square feet. So what does that mean? So our warehouse platform summary, we have 268,000 square feet that's operating. It is monitored. It's 96.5% lease. We got 247,000 square feet under construction mode, of which 58.3% is leased. We have 930,000 square feet under the entitlement phase, properties at the circuit. And after, we proceed forward a settlement, on the other invest 900,000 square feet. That's 3.3 million square feet total. So just for kicks, I said, "Well, okay, we sold the 94,000 square foot building very similar in July 2020, greater than the $130 a square foot. The gain on the sale was $40 a square foot. I'm not saying that we're going to do it. I'm not saying when, but just do the modification, it's is not a fail-proof process. So another leg of our development platform sold is our Lending Ventures. Lending Ventures is a land development program that we have been in the land Development business [indiscernible]. We do not want to take our eye off the ball on our warehouse program, and our land development of people are doing things other than that. So we got into a program, again, a joint venture with someone who used to be the President of Beazer Homes. He got out of Beazer, went to Wieland, knows that group. So we got into a program with him. It's a partnership where we advance funds through him. We get a 10% accrued interest rate. And then beyond anything above 20% and the whole property has been paid out, then we share some of the things and share the profits. This is one of the ones we did. This is 25 acres, 126 lots in Baltimore County. This was a small program because we didn't take it through the full horizontal development. Guys think that we'll take it at record flat. We said, we'll sell it, why not. So we generated $3.5 million investment. We generated a little over $1 million in interest and shared profits. After sold, we finished that in second quarter. Next one. Amber Ridge, another lending venture. It's 15 acres in PG County, 197 lots. This program, they're under contract of sale to 2 national homebuilders. We have a big deposit from them. And we are going through, as you can see, the land development phase of this program. They take these lots down. Previously, a great take, I would say. The first lot takedown began in [indiscernible]. This whole program, we got through this, all of the entitlements and getting through approvals and permits during COVID. That's a pretty amazing thing to be able to do. First lot takedown began in August, early August. Now we take it down 28 lots per month -- per quarter, and there are timing or something a little bit more. This is the latest one. This is in Harford County, Maryland. Again, another lending venture of 110 acres, 342 lots, a little bit larger principal loan, 4.5-year time frame going through the entitlement phase. But as you can see up there, it's not a -- it's a very, very well-developed area. The demographics have grown dramatically over the last 2 or 3 years [indiscernible]. So with all of that, what else do we have? Well, we still have future development. We have Riverfront Phases 3 and 4, which are going to sit right over here, and that's about 500,000 square feet, plus or minus 500 bps. We have Square 664E, which is the Vulcan site of the individual sold. Right now, that's approved to somewhere, I think we're going to get somewhere between around 385,000 feet, plus or minus 400. Bryant Street, as I said before, Phase 2 and 3, think of it as a big project. Then we have Windlass, which is our joint venture with St. John for the office and retail as we still have more than 220,000 feet that we can develop there. And then we have one more residential program which is called Hampstead Residential, which is in Carroll County, Maryland. 255 units and 73 acres, fundamentally financed approval with that. Also future development. We are always following the second life properties. John, III is talking about that. We have a huge program, Brooksville. That's how many acres, John? 5,000 acres that we have. We have onset plan approved. It's called [indiscernible] that's a joint venture right now with Vulcan Materials. Another kind if Fort Myers site gets approved, 108 lots around that, even have a lake. And the lots down there, they were available for foreign group influx. We've got some time, I forgot what happened. I think [indiscernible]. So we have a lot going on. We have -- we certainly have a lot of future development, and we're constantly looking. And so with that, I'll ask John, II come up and summarize. And then after John, after Q&A, I've asked John Baker from MRP to do a little bit of a presentation on Riverfront, again some slides for paper. We're going to go to kind of show you this area. We're going to take a walk through some of the managers in The Maren. We're going to walk through to hop around the [indiscernible] and then we're going to run off to the Bryant Street. The folks up there look forward to taking us all through the tour bus. It was kind of pretty fascinating. We're getting summer heat.

Thank you, David, and thank you, John. We are excited about the opportunity. We've got the cash. We've got great markets. We've got really good backlog of terrific projects and we're working to [indiscernible]. So thank you. You all have been very patient, our shareholders, with us as we [indiscernible] pass through COVID. Science should [indiscernible] have the opportunity to [indiscernible]. So with that, are there any questions you all have?

One question is from [ Herbert Fox ], [ Visor Capital ]. He wants to know what is [indiscernible]

Game plan for Brooksville is relate to the market who's got overpopulated with [indiscernible] lots. At some point, it's going to be like we bought through -- it's a bunch of worries. We've got 36 holes of golf that laid out through there, all 36 are in, so it's something you don't see everyday. So we are digging in some lakes, but the golf post [indiscernible].

Next question comes from Jason of [indiscernible] Partners. Over $100 million of cash on the balance sheet and cash from the operations are improving some multifamily portfolio in the [indiscernible]. Is there a point where cash return to shareholders is on right now as management has enabled the final [indiscernible]?

Well, unless it provides [indiscernible], I would say, yes. If we eliminated the [indiscernible] opportunities, is it because of the account made you whatever, we have not promised it. But we'll look at it. We're not, say, we are [indiscernible] that's not what I think is going to happen. What I think is going to happen is the firm will continue the run for a while. We're going to use that cash [indiscernible]. That is a little over $170 million lately. So we've got a lot mapped out. I think we've got a lot of projects that we can prudently invest in to improve it. So my hope is that there will be no dividends. Once we get and allow to get $50 million or $60 million, they'll now think that's down than start to have it...

I'm sorry, we can't hear you again.

Thank you. Is this any better?

Much better. Much better.

Did you hear that answer, Kevin, at all?

I did. The last 20 seconds were really choppy. If it's -- could you go over one more time, please?

Sure. The thumbnail sketch is if things go like we think they will, there won't be a dividend until we get $50 or $60 million of NAV, at which time we would do it. If the economy doesn't allow it, if COVID is raging and we're not comfortable embarking on new projects, then we will give you a onetime dividend to get the cash off our balance sheet and back to the rightful owners. My hope is that our plan would be to build it out and [indiscernible].

There was a question about how exactly [indiscernible].

I think we just discussed that in the beginning, the typical royalty as a percent of revenue. So whether you get more volume or more price, it's all positive for us. Other questions?

Yes. I guess I have a question. This hard pivot that you guys are doing, where did this change in direction come from just on the narrative level? You guys basically a couple of years ago, 5 years ago, decided to -- what was the impetus? Or is there a new idea, a new direction? Just historically, where did this all come from? And is it an individual's idea? Or is it the corporation just sees that multifamily is the most rational, highest-return bets right now? What made the pivot? Just curious.

Fair question. Our plan all along was to develop the multifamily operations that we're looking at, especially here in D.C. We weren't sure whether we would hold or sell. We're pretty well decided that we will hold, especially as we go into the [indiscernible] you cannot do tax-saving opportunity zone projects. You almost got to hold for 10 years. So we're going to -- that evolved, I'd say, normally. What is the pivot is that we are building more warehouses and keeping them while we have been building them and selling them. And the reason being is the returns are so much better than we ever thought they would be. And so it's just we change when the market change.

Awesome. Flexibility is always a great thing. I guess those are my questions. I just have one piece of feedback for you guys. I mean this company you guys have is a gem. It's a diamond in the rough. And you guys -- the feedback for this Investor Day, I'm pretty sure this is the first one you guys ever had. This is -- just wanted to say that's fantastic because this is not being understood. So this sort of information about the company and outreach is, in my mind, fantastic.

Appreciate it.

We got a question from Curtis Jensen.

Let me repeat the question. We were talking about the new industrial property in Aberdeen. One of the projects is 600,000 square feet, one is 900,000 square feet. Curtis wanted to know how would that build-out occur. How long would it take to get that to stabilization? David, why don't you come here.

One of the things that we did, just to back up just a bit, probably remember, we were kind of heavy on undeveloped land for many years. And so that's probably not a great thing to do. So we made pipeline needs with some profitable balance. All in all, lo and behold, we build everything pretty quickly than we want to sell them. So I'm like, now going to make changes in the pipeline. And so we started to look again. So along comes the Crouse property. There's a lot of heir on the Crouse property. One of the things, but part of the property was in aggregate and the other part of the property is a market cap. So we've gone through the process of annexing into aggregates, so that we're dealing with one set of developed restrictions as opposed to 2. So that takes time. So we feel that, all things being equal, correct me if I'm wrong, David, it's that we look, if things go well there, we'll start the entitlement process probably first quarter of 2022. And we could look, if things went well, that was the only one project that we have and we felt we wanted to do. We'll start that building probably in 2022, probably first quarter. You don't want to be starting a building in Maryland. You're from the Northeast, you normally mess around with cold weather and that kind of stuff. It's just not on a good move and [indiscernible]. Let's do it ourselves. That's when [indiscernible]. So fall back to the Chelsea Road property, we purchased that one. Again, that 1 was 2 parcels, neither of which had a whole lot of value. David and a couple in his group figured out how to put it together and convinced people to sell the property. Both properties at the same -- ultimately the same purses. So that gave us the opportunity to build a nice sized warehouse with about 259,000 feet. It's literally sandwiched between a lot of larger industrial building. That building could start probably in 2022. So again, we don't like to have too many eggs in a particular submarket. We don't want to be building a lot of square footage in the same submarket. We look to move around. So with Chelsea and the Crouse are both kind of the same submarket. We would have those 2 under construction at the same time. Of course, we couldn't any way because of COVID. But the Mechanics Valley is about 20-some miles up the road. So it's a kind of a different submarket. They call it the filling submarket as opposed to God knows before they come up with exact returns. Of course, the best people work with us to work and help merge them [indiscernible]. So that's a different market. That -- the plan there is we have a -- we're not even ready to -- if we go through the purchase of that property, we're not even going to buy or actually settle on that property. So certainly, the title is to come. There's no order, super. There's nothing within a mile. I know where [indiscernible] they found us then, but you have to be [indiscernible] right now. So it's going to take some time, but that's the kind of thing that we've been doing for 30 years. So that's -- ideally, that property will be purchased in late '22, maybe purchased in '22, then we could be going through some entitlements. We'll probably look to get a building permit. I don't know that we would go forward with a building that large without some interest, I don't know. But we want to get it ready so that when the beauty contest happens when you're looking for a large tenant, we can say we've got the property, we've got the permit, we've got the money. Get you a pretty good leg up on it. [indiscernible] Yes, sir, there are. But again, our -- what we know -- what our plan is we've created a 5-year business plan that says everything is going to be great, right? That kind of -- and then we take a look at how our balance sheet is going to be affected, make sure that the liquidity is there so some of us can sleep at night. [indiscernible] says, I can't see we can do that here, that kind of stuff. So we go through all of that. And so we set the parameters and then the Board through John, II and the Board, it kind of created the plan. So we kind of have an idea of what we're doing going forward. We have some projects in the queue. We're looking at new projects literally as we speak. So again, we try to stay out in front of our business as opposed to similarly once that you guys look like a problem [indiscernible] we got to get upfront business however way we want. That's going to depend too here.

Are there any more questions on the -- from our Zoom participants? [Operator Instructions] So the question is regarding Fort Myers. How much infrastructure is going to be required to get development in place? And would that be something [indiscernible] on the go?

The answer is we don't know. It will depend on the market. We're talking about 6 years out. I think the important thing would be again working on making sure we've got all the permits, getting things lined up well. When that band is turned over to us, that we can move either always not [indiscernible] would be to turn it over to the revolver and take cash, buy upfront, take no risk. That will weight with risk accrual and that's what we're going to do at that time. And I will tell you that is really mean development, some debt. And the water in those [indiscernible]. You've got about 2 miles in each of the watch. The watch will have seen $1 million lots or smaller and power away. So it's going to be a real opportunity that we want to do that. Well, thank you, guys. I really can't tell you how much it means to me that you all are here in person or on Zoom and having answers. We will continue with these. We're talking this morning about whether it makes sense to do it every 2 years or every 1 year. We'll get feedback from you all as to what you think makes sense. But you've got a great rest of the day for those that are here, and thank everybody for calling in. Let's move on outside and have John Baker give us a local history and what's out there.

Got your back there, buddy.

Thanks to all.

Thank you all.