[Operator Instructions] I would now like to turn the conference over to Mr. John Baker III. Please go ahead, sir.

Good morning. I am John Baker III, Chief Financial Officer and Treasurer of FRP Holdings. And with me today are David deVilliers Jr., our President; John Milton, our Executive Vice President and General Counsel; John Klopfenstein, our Chief Accounting Officer; and David deVilliers III, our Executive Vice President. Before we begin, let me remind you that any statements 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 risks and uncertainties are listed in our SEC filings. We have no obligation to revise or update any forward-looking statements except as imposed by law, as a result of future events or information. You are, of course, used to hearing the voice of a different and more experienced, maybe more capable, John Baker. Our Chairman and CEO had a scheduling conflict, and I drew the short straw of having to fill his very big shoes. This will be old news to anyone who attended our annual meeting yesterday, but during the quarter ended March 31, 2021, we had two important accomplishments in our Riverfront on the Anacostia Project. First, we secured a $92 million refinancing of Dock 79, as well as permanent refinancing of the Marin for $88 million. These are 12-year interest only loans at 3.03% and will significantly lower our debt service at Dock 79. In addition to paying off the construction loan at the Marin, as well as the mezzanine financing we provided to the project. Secondly, the Marin achieved stabilization in March, meaning 90% of the individual apartments were leased and occupied. As a result of that, the Company is now considered for accounting purposes to have control of the partnership without any…

Thank you, John. And good morning to those on the call today. I'll now offer some detail to the highlights provided by John in his opening remarks. As our asset management segment with the final disposition of two heritage properties in 2019, we completed the liquidation of a little over 4 million square feet of warehouse assets that made up this business segment, leaving just the Company's 33,000 square foot multi-tenanted home office building in Sparks, Maryland and the vacant lot in Jacksonville, Florida that at one time housed Florida Rock Industries home office that remains under lease to Vulcan Materials until 2026. We are constantly seeking value-add purchase opportunities, and will continue to construct speculative-type buildings upon our land inventory when available. In early 2019, we added an asset to this business segment through the purchase of the Cranberry Run business park in Aberdeen, Maryland. A 268,000 square foot multi-building warehouse park that was in dire need of rehabilitation. We completed an extensive renovation of the park and associated buildings late last year. And as of March 31, the asset was 87.6% occupied. Total revenues for this business segment for the quarter were up 9.2% over the same period, last year. $712,000 with an operating profit of $17,000, up 148,000 from a loss of $131,000 the same period last year. Increased revenues and profits for this quarter were mainly attributable to the stronger occupancies at Cranberry Run. I won't give any further detail on the mining and royalty segment because John took care of that in his opening remarks. Quite an amazing program that the mining and royalty segment is on. With respect to ongoing and new projects in the development segment, we have many highlights to provide. At quarter's end Phase one of our joint venture with John…

Thank you, David. Now, we're happy at this point the open up the call for any questions that you might have.

Thank you. At this time, we will open the floor for any questions. [Operator Instructions] We'll take our first question. This comes from Kevin with Via Mizner Capital.

Congratulations on the first quarter. Just had some questions on the language. In the last paragraph, there's some pretty bold language. I think the wording was substantially more multi-family. If you guys could just touch upon, are you guys pivoting the ship to become multi-family mainly? Could you see another doubling or so in the portfolio next couple of years? Some color there would be great.

Thank you, Kevin. What we meant by substantially more multi-family is -- Kevin, do you mind muting your line? It's getting a little feedback. What we meant by substantially more multi-family is just sort of our development pipeline is, as you know, by our definition, substantially more multi-family. If you look at where the Company was a year ago, we had one multi-family building. Now we have two. Then this year, we'll have our first project in Greenville, and then four buildings at Bryant Street, and two more projects coming on a year after that. It's just definitely a huge period of transition for us, as you know several multi-family projects under development start to come online in the next 24 months. That's where the substantially more multi-family line came from.

We'll take our next question. This comes from Curtis Jensen with Robotti & Company.

Couple of questions. One on the Marin, given the change of control, does FRP's share stay at 80% of the joint venture?

They need to….

David, you want to?

Yes. Curtis, there's a program. There is a promote there. There's a process that requires us to go through a kind of a monetization process which will then upon an agreed-upon value that comes through various sources, not the least of which are appraisals. There'll be a waterfall program that will reduce our ownership a little bit like it did in Dock 79. We went from, I think, some 77% to 66% of the Dock. We're not quite ready yet to get into the negotiations with them, but yes, that'll happen.

And then would you anticipate maybe disclosing the appraisal in a 10-Q?

When the process is complete, I'm sure we will.

All right. Do you have in your ballpark of what the construction costs were for the building?

The total project was about $113 million and the construction contract was $71 million.

Okay. What are you seeing in terms of cost inflation around materials, labor, anything and availability of such? Anything that is troubling you or status quo?

All of the above, Curtis. I think we all know that construction pricing has been pretty substantial here over the last nine months or even a year because of the closing of, for example, the closing of lumber mills in Canada, as demand for residential is skyrocketed. So there's been a lot of increases. We've seen an increase in lumber go actually two to three folds. It's come back a little bit, but it's out there. Relative to our projects, all of the buying has taken place and we're in pretty good shape there. So now we're dealing in some instances with deliveries, but not necessarily cost increases because we're past that.

All right. And then, just kind of a hypothetical, the administration's talking about changes to the tax laws, including potentially, changes to the 10-31, which I assume would have some impact to the real estate industry commercial real estate industry broadly in you folks? Would such a thing kind of impact your potential sale decisions and has management started thinking about this at all, would you, for example, re-examine the idea of converting to a REIT or would such a thing even makes sense? I realize I'm dealing in hypotheticals here, but any color on that or thoughts?

I think it's a little early to tell, Curtis. A lot of the projects that we have ongoing right now are opportunities on projects where you're going to have to hold the projects for a minimum of at least through 2026. So not a whole lot we can do there. And they're all kind of grandfathered within the program that they're on. So we're very opportunistic in our programming these days, and we look at each project and we'll try to make the best of every project we do as it relates to construction pricing efficiency, the quality of the program. And that's the primary goal as we get these complete, then we'll take a look at it then.

Thank you, Curtis. I think we've been hearing about the death knell of the 10-31 like on exchange for going on 40 years now. If it happens, it happens, but I think we have always been reluctant to let the tax tail wag the dog, so to speak. So we'll just sort of wait and see.

And we'll take our next question from Bill Chen with Rhizome Partners.

Question on the Marin that $10 million was so in taxes, tax provision, is that a cash provision or is that a gap?

Bill. It's a deferred tax liability, not a non-cash.

Got you. And the Brookfield, I know that's kind of been an asset that hasn't really been front and center, but given everything that's happening in Florida and the net migration to Florida, is there any timeline for the development of that asset in the next three years, or away beyond that?

I think it would be beyond that. Brookfield happened in the last real estate boom when Hernando County seemed about as hot a place as there was, and then it wasn't. And I think for a long time, we've been happy to get the mining royalties there, and it was sort of a one day, but not today and you are correct that our thinking on that has somewhat changed as people have been moving to Florida for a long time. But they've really been moving to Florida in the last year. And so we have started to just put out feelers and do some market studies on that market and piece of property way more than we had in the years previously. So nothing concrete, but it's definitely become more front and center in our thinking than, than say a year or so ago.

Yes. Can you remind me, what has been zoned for lots or we got to take that through an amendment process?

It's zoned for residential. We have a DRI in place, and it's also zoned for a couple of golf courses, but, sort of beyond preliminary stuff, we'd have to build all the infrastructure and everything like that.

Got you.

Bill, just to add. It's kind of a master plan as much as a bubble diagram that has pods of different types of uses. You can't really call it a planned unit of development, but it's a massive concept land that takes over just about every type of actual asset class.

And then I'll give a little bit of background. I'm no stranger to investing in master plan communities. I think someone once told me that at early on, it's literally just a sketch on the napkin. And as time progressed, you can get more granular. But if I remember correctly, that's like a 4,000 acre site. So if like any -- if you want like how many lots, like if we were to put up on the air and just say like is that a 10,000 community condo site potentially or something -- some ballpark would be helpful in terms of understanding what the potential value maybe.

I don't think we have enough there to know, Bill. At one time it was substantial, but we aren’t really far enough along to get into that.

Got you. And my last question on would be on the reconversion. We did a lot of work back in 2017/2018 to convert FRP into a REIT. And as I look forward, about a year or three from now, with the Bryant Street coming online and 1800 Catholic coming online, and some of the projects in Greenville coming online, I backed into what I think the NOI and FFOs could potentially be from some of those projects. It seems like it makes sense in 2020, late 2022 or 2023 to do kind of not revisit, or maybe that's a timing because that actually will bring cash flow to distribute to shareholders. And then thoughts on that?

Was the question on whether or not we're thinking of becoming a REIT as we add more multi-family?

Yes. As the multi-family stabilize and gets leased up.

Yes. Probably not. I think one of the issues that we ran into every time we looked at a reconversion was, our mining royalty income is considered a nonreadable income for whatever arcane tax reasons and I believe only a quarter of your income can be nonreadable. So that was back when we were generating a lot of income from our warehouses and had lower mining royalty income. And obviously that situation has flipped substantially. So I think that you will obviously continue to just explore whatever options make the most no sense. We would never rule anything out, but I would say don't hold your breath on a re-election.

I was not aware of that 25% rule. And now that you mentioned that, it makes a lot of sense why the Company was moving forward back in that point 2017 timeline, because the warehouse was, if I remember correctly about 21 million of NOI and the royalty were a smaller portion back then. I have no further questions.

And we'll take our next question. This comes from John Deysher with Pinnacle Value.

Back to the 1031 exchange discussion. I realize that you're kind of in a wait and see position with the rest of us, but can you remind us which of the current properties you have or acquired with some element of 1031 exchange embedded in it?

The property we just acquired around our warehouse, the crouch property is a 1031. And I don't recall, David, can you recall any of the other properties that are 1031?

Hickory Creek was part of a 1031 until it [indiscernible] statutory trust. And that's about it. [indiscernible]

Hampstead, yes. Hampstead is part of 1033 and then as John Milton mentioned, the property that we bought at Crouse is a 1031, and then Hickory Creek.

So just to recap, the Crouse property and Hickory Creek, were they only 1031 exchange properties in the current portfolio?

And Hampstead, our 118-acre residential development project.

We'd have to get back with you on that.

Yes.

Okay, and it doesn't seem like a 1031 exchanges are an overwhelming portion of the current portfolio.

That's correct.

[Operator Instructions] We'll take our next question from Stephen Farrell with Oppenheimer.

You mentioned that the 57% lease and the Coda, which is up pretty significantly since the end of the quarter. And you've mentioned that the trap had increased. What type of competition are you seeing in the surrounding area around Bryant Street?

Well, there's competition kind of everywhere throughout that area, Stephen. And I think the thing that we believe that we have a little bit of an advantage is because especially as time goes on, as we are literally right at the entrance to the red line there. And we're also adjacent to the bike trail. And we also, because of its size and critical mass, you can create a real sense of place at Bryant Street. If you watch the annual presentation or more importantly, we would invite you and everyone on the call to visit our revamped website, www.frpdev.com. And you can see by looking at the pictures that we create this sense of place within the four buildings. And so we have a lot of outside activities and activated areas. Which a lot of places don't have, and we think that's going to bode really well for us as we move forward.

And in the surrounding area there, you seeing sort of a lull in construction or new projects coming online around when the next three buildings are going to be completed? Can you give any color on that?

The next three buildings are within months of being completed, actually, so we're close to being completed from a construction standpoint. There's cranes in the air everywhere and has been for a while in DC. So it's really kind of hard to say, but once again, we have our property management group Bozzuto is doing a great job through its software program. Literally looking at every apartment that comes online and how it's been leasing. We've actually reduced the discount that we were given by half of one over the last several weeks. So actually, sometimes competition really helps. You're no longer a pioneer in there, you're just becoming part of the city. So in some instances it actually can help. But again, we believe because of the retail component that we have, that that's really going to benefit our apartments.

And I've checked out the Coda website. And actually after I started seeing ads and I've seen ads on Google search and across banners on other websites, what is the overall advertising strategy for the property?

Stephen, I haven't spoken to our property manager. I think there's three active campaigns. It's people who have, either live or have toured some of the surrounding competition, there's site retargeting, people who've visited the Coda's website and then search retargeting people of search keywords related to the Coda and Bryant Street.

And what type of return are you expecting from the online advertising? You said you've reduced the discount. And so I'm guessing you're seeing strong demand. How do you quantify any return from online advertising?

In terms of like a cost per acquisition, is that where you're looking for?

Yes.

Just what kind of hit rates you generate. I think for the streaming or online advertising, it's like $56, $57 per acquisition. It's a little bit higher than Facebook advertising, which is $42. But I think that the streaming is a little more effective and certainly more effective than like print advertising. But I mean, to give you an idea, you could put out like 18,000 commercial views and you get 19 of those people walking onto the property. So you got to put yourself out there to generate any kind of traction.

Great. Thank you. And it was mentioned earlier on the call that the increase in labor costs and raw materials, does that change the development of the Aberdeen property at all in the future? Are you looking, any acquisitions or ad-ons, would it be more brownfield, existing developments?

We look at all developments. We have a tremendous amount of people out on the street that are kind of looking for us. And so we just look at each one as it comes along. And I think location is probably the single most important piece of it. The number one, number two, from a value add standpoint, it's kind of the pound per foot that we're not going to pay too much going in. And we also look to buy land since we've been doing it for I'm embarrassed to say almost 40 years, pretty good at picking parcels that we feel are properly priced. And then we'll let the market decide what and when and how we're going to build the buildings depending on what they are going forward.

And at this time we have no further questions. I would now like to turn the call back to Mr. Baker for any closing and final remarks.

Since there are no further questions, we would just like to thank everyone for their continued interest in the Company. Appreciate all.

Thank you. Ladies and gentlemen, this concludes today's conference. We thank you for your attendance and participation. You may now disconnect.