Good day and welcome to the FRP Holdings Conference Call. At this time, I would like to turn the conference over to John Baker, Chairman and CEO. Please go ahead, sir.

My name is John Baker, and I’m Executive Chairman and CEO of FRP Holdings. With me today are David deVilliers, Jr., our President; John Milton, our Executive Vice President and General Counsel; John Klopfenstein, our Chief Accounting Officer; David deVilliers III, our Executive Vice President; and John Baker III, our CFO and Treasurer. Thank you for joining us today, and we welcome you to our quarterly investors call. Before we begin, let me remind you that any statements made today, which relate to the future, or by their nature, subject to risks and uncertainties that could cause actual results and events to differ materially from those forward-looking statements. I refer you to our SEC filings, which outline the risk inherent in our business and business model, and caution investors not to place undue influence on such forward-looking statements. The quarter ending March 31, 2020, continued our efforts to redeploy the proceeds from our warehouse sale in the high-quality real estate projects, and additionally, to repurchase shares of the company in an opportunistic way. As to the latter, during the quarter, we purchased 82,491 shares of FRP stock at an average of $41.47 per share. We believe this is well below its intrinsic value, even if you haircut valuations with the coronavirus’ fair of shares. During the quarter, our net income was $1.618 million or $0.15 per share versus $1.898 million or $0.19 per share in the first quarter of last year. The shortfall was caused by the timing of stock compensation of $601,000 versus $29,000 a year ago. We changed from options to grants, and it cinched the full value of the grants in the quarter instead of over the life of the options. The value of the grants was the same as the Blackstone’s value of the options, only…

Thank you, John, and good morning to those on the call today. Let me now add a bit of detail to the operational highlights for the quarter provided by John in his opening remarks. Our Asset Management segment now consists of 4 commercial properties: the Cranberry Business Center in Harford County, Maryland; the completed Hollander spec industrial building in Baltimore, Maryland; the land parcel at 21st Street in Jacksonville, Florida; and lastly, our home office, multi-tenanted building in Sparks, Maryland. This last year, the company completed the liquidation of assets that made up the entire warehouse platform just prior to its sale in May 2018. We saw a leasing success with our new projects this quarter, growing occupancy at Cranberry to 54% from 26.1% at the end of December. Significant $2 million renovation project is now nearly complete and the upgrades to the buildings have been well received by the market. Total revenues for this business segment were $652,000, up 1.7% over the same period last year, but with an operating loss of $131,000, which was down $65,000 from the $66,000 loss in the same quarter last year. It is difficult, however, to compare quarter-over-quarter metrics for this business segment due to different assets held during the periods of time being compared. In the Mining and Royalties segment, as John articulated earlier, total revenues were $2.185 million versus $2.229 million in the same period last year. Total operating profit in this segment was $2.904 million (sic) [$1.904 million], a decrease of $97,000 in the same period last year. The primary reason for this decrease in revenue and operating profit is that double minimum royalties are no longer being paid at Lake Louisa due to our tenant having received the final permit to begin mining in July of 2019, the timing…

Thank you, David. I agree with David, we like these projects and we like the optionality that our cash and liquidity gives us. So let us now see if there are any questions.

At this time, we’ll open the floor for questions. [Operator Instructions] We’ll take our first question in queue. Caller, please identify yourself, proceed with your question.

Hi, guys. This is Steve Farrell calling from Oppenheimer and Close. Congratulations on a pretty strong quarter given the environment. I hope you’re staying safe and healthy.

Thank you.

My question is about the Maren. Given the current environment and I know we don’t know when it will end, but do you have like an updated timeline on when you think that Maren will have similar occupancy levels as Dock 79?

Well, it’s hard really to say. I mean, currently, we are operating somewhat related to our budget, which is somewhere around 15 units per month, and so far, so good. So it’s hard to say as we move forward.

Okay. And you’ve continued to lease 15 units a month even in the past 2 months there?

Yes, sir. We have.

Okay. And I don’t know if there are questions behind me, but I do have a few more if you don’t mind.

Sure.

Are you seeing more opportunities now to start deploying cash? And if so, which segment?

I’m sorry, I didn’t quite hear the question.

I think there are plenty of opportunities to deploy the cash. I think we’re going to take a pause. Well, we’ve got several – big projects for us going on. And we want to let them get up and get settled and see how they lease up. Just being careful to protect the cash, of course, is one thing. The other thing is, as – if this thing stretches out, and I believe it will, there will be some incredible opportunities. And the normal returns that we would expect to get from these projects could double or triple as you get a chance to pick up something that just can’t be supported by the existing owners. So we’re going to go into opportunistic mode and watch and wait.

Great, thank you. And, all right, when you’re looking at new opportunities, are you also factoring in right now the current price and considering being more aggressive with buybacks in lieu of the new opportunities?

We have been. We have been. As I mentioned, we bought quite a bit of stock in the first quarter and have continued to do so. We just – yesterday at our Board meeting, we got additional authority to buy another $10 million of stock.

Great. Thank you for the information.

[Operator Instructions] And we’ll take our next question. Caller, please identify yourself and proceed with your question.

Hey, fellows. This is Curtis Jensen. Can you hear me?

Yes, sir.

Can you give us a sense of the demographic of the folks that are moving into the Maren? And then, also the economic – remind us of the economic split with MRP.

David?

Sure. I’ll take that one. Good morning, Curtis. Dave deVilliers again.

Hi, David.

The demographics are, obviously, a little bit – probably more towards the millennial groups, Curtis. I’d say 25 to 35 are the majority of our – of the age limits of our tenants. That’s number one. To answer the second part of your question, our ownership interest in Dock 79 is 66%.

And at the Maren, is it the same JV or is it a separate JV?

It’s a separate JV. And there’s a potential waterfall that could dilute FRP’s ownership a bit, but we – that doesn’t happen until we get to stabilization. At the moment, we have an 80% ownership interest in that project.

Okay. And then just thinking about, I think John alluded to a softening economy and potentially weaker employment trends. Is there anything that kind of gives you pause about maybe the supply and demand fundamentals for DC multifamily?

Everything gives us pause right now. We’d be crazy if we didn’t. What gives us optimism is the Amazon coming in Northern Virginia is well within reach of both Bryant Street by the Metro or certainly the Maren by Metro. Washington has its own ecosystem. It seems to grow and grow. And so, we’ve got lots of reasons for optimism. A thought process you can engage in is that our NOIs were down about 15% in 2008 and 2009, or I should say, our partner, MRP’s NOIs on similar projects were down around 15% in that period. And so, if this goes on for a long time, we could see some deterioration as our tenants suffer. But so far, we have not seen it.

And would you be able to share any sort of the NOI hit from the retail at Dock 79?

David?

We don’t really know the extent, Curtis. I mean, obviously, how long it will be before they can open back up again. But everyone was – obviously, the retail guys closed down in mid-March. And so, if you look at the 3, it’s probably somewhere around $40,000 to $50,000 a month. I think that – and so, if you figured that they would go through June, that’s 3 months. And then, you could think that there’s some sort of a phase-in of rents and operating expense reimbursement as they come back online. So it’s really kind of hard to say. But if you look at Dock 79 as a whole, I believe that the retail component of our NOI is less than 10%.

Okay. And last thing is, do you use an external manager for your fixed income? Or are you just kind of buying treasuries yourself?

We use an external manager.

Okay. All right, thank you guys.

[Operator Instructions] Speakers, there are no more questions in queue at this time.

Well, thank all of you for joining us today. We appreciate your interest in the company. And we hope that you stay well. Thanks very much.