Earnings Call: Q1 2021

May 4, 2021

Excuse me, everyone. We now have all of our speakers in conference. Please be aware that each of your lines is in a listen only mode. At the conclusion of today's presentation, we will open the floor for questions. Instructions will be given as to the procedure to follow if you would like to ask a question at that time. 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 DeVillier Jr, our President John Milton, our Executive Vice President and General Counsel John Kauffenstein, our Chief Accounting Officer and David DeVillier 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 new 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 03/31/2021, we had two important accomplishments in our riverfront on the Anacostia project. First, secured a $92,000,000 refinancing of Dock 79 as well as permanent refinancing of the Marin for $88,000,000 These are twelve year interest only loans at 3.03% and will significantly lower our debt service at Joc 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 transfer of consideration and is required to write up the value of the assets and liabilities to their fair market value. Previously, the Marin joint venture was accounted for under the equity method and prior periods are still reflected using that method. Starting in April, all the Marin's revenues and expenses are reported in the corresponding categories in the consolidated statement of income, including the amounts attributable to the company and our partner MRP Realty. The amount of new income attributable to our partners is clearly identified as non controlling interest. Because of the increased depreciation and amortization attributable to the company as a result of consolidating the marriage results into our income statement, the impact on net income going forward may in fact be negative, but the positive impact on our NOI and cash flow will be significant. Now let me turn to financial highlights. Net income for the first quarter was $28,373,000 or $3.03 per share versus $1,618,000 or $0.16 per share in the same period last year. The lion's share of this increase is a result of the stabilization of the Marin and subsequent fair write up to fair value, which resulted in a gain of $51,100,000 on the remeasurement of investment in the Marin Real Estate Partnership, which is included in income before taxes. This gain on remeasurement is mitigated by 10,300,000 provision for taxes and a $13,000,000 attributable to non controlling interest. Additionally, we were positively impacted by a decrease in expenses. During the same period last year, professional fees were $260,000 higher primarily because of environmental claims on our Anacostia property, which we settled at the end of last year. We also had stock compensation expenses of $202,000 compared to $601,000 this quarter last year due to the timing of stock grants. Finally, this quarter our loss on joint ventures increased $993,000 This is primarily due to a $248,000 increased loss at the Marin prior to stabilization and a $663 increased loss at Bryant Street. At this point last year, the Marin was not in service and we hadn't yet started leasing efforts at Bryant Street. Aggregates royalties income this quarter increased by 5.95% compared to the same period last year. The $2,315,000 in revenue this quarter is the best first quarter in revenue in the segment's history. This is the third quarter in a row where royalties during the pandemic have exceeded those prior. And with royalty revenue of $9,600,000 over the last twelve months, this is also the first time we have surpassed the $9,500,000 revenue threshold in any consecutive twelve month period. On a big picture level, this is also the closest and sometime that we as a nation have been to a major national infrastructure bill. Both parties have submitted infrastructure plans, albeit very different ones. Hopefully they can do what Congress is designed to do and come up with a compromise both sides can live with. Any kind of infrastructure bill in addition to being sorely needed would of course positively impact this segment. We still retain high levels of liquidity relative to our size with roughly $160,000,000 in cash and bonds as well as a $20,000,000 line of credit. While we are busier than ever in terms of sourcing deals to redeploy our cash, this substantial capital cushion is more precious to us than it has ever been. With vaccination numbers on the rise, a path back to a, you know, normal world is still starting to or slowly starting to materialize, but we are not out of the woods by any stretch. We remain extremely optimistic about our projects under development, but our liquidity allows us the luxury of that optimism. We will continue to be opportunistic with our share buybacks. This past quarter, we purchased 6,004 shares at an average cost of $43.95 per share. Now if I could turn things over to David DeVillier, Jr. To walk you through our segments in more detail. David? 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 to our Asset Management segment, with the final disposition of two heritage properties in 2019, we completed the liquidation of a little over 4,000,000 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 twenty nineteen, 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, dollars 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 profit 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. It's 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 St. John Properties consisting of four buildings totaling 72,080 square feet of single story office and 27,950 square feet of small bay retail space in Baltimore County, Maryland, remained as it was at the end of twenty twenty, being 46.7% leased overall. This asset class of office and retail has been devastated by the pandemic, but the tenants at Wimless have kept current with their rental payments. Two, after the sale of our 94,000 square foot warehouse in the third quarter of last year, we were encouraged by the velocity of its submarket and began construction of two speculative shell warehouse buildings totaling a 45,750 square feet at the Hollander Business Park near the Port Of Baltimore. Like their predecessor, these are state of the art class a concrete tilt wall buildings with twenty eight and thirty two foot clear ceiling heights built to Baltimore City green building standards. Leasing efforts are ongoing and we expect to complete these buildings in the third quarter of this year. Next, we continue with the PUD entitlement process at Hampstead Overlook, our 118 acre development track in Hampstead, Maryland. Concept plan approved at the end of last year calls for 164 single and 91 townhome units. We are currently seeking preliminary plan review from local agencies as the next step in the development process. We are optimistic that 2021 will be the year of substantial progress towards this goal. Next, as an update to our lending venture activities, all of the entitlements were completed in 2020 at our Hyde Park project in Baltimore County, Maryland, and a homebuilder purchased all 26 residential lots prior to our initiating any infrastructure development activities. All principal and accrued interest has been repaid and part of the profits have been received. Additional profits are expected in the second or third quarter of this year, which is quicker than expected due to the strong demand for housing, resulting in an overall internal rate of return on our initial $3,500,000 investment of over 27% or over $1,000,000 Relative to our other lending venture, there's also a residential development project called Amber Ridge and located in Prince George's County, Maryland. Our total commitment for this project is $18,500,000 As with our Hyde Park venture, the investment includes a charged 10% interest rate and a minimum preferred return of 20% above which a profit induced waterfall determines the final split of proceeds similar to Hyde Park. Entitlements are complete, land development has commenced and two national homebuilders are under contract to purchase all 187 lots after completion of the infrastructure development. The first set of finished lots are due to be delivered to the purchasers in the third quarter of this year. At the end of twenty eighteen, we entered into our third joint venture project with MRP to develop the first phase of a mixed use residential and retail development known as Bryant Street, which is adjacent to the Red Line Metro Station in Northeast Washington DC. As a transit oriented development, immediate access to public transportation options is a critical feature to the design and marketing of this project. The first building named CODA was placed in service on January one of this year and received final certificates of occupancy on April 1 for all of its 154 apartments. Our leasing team has done a herculean job of leasing during the period from January through March and at the end of the quarter the building was 35.7% leased. As the weather has gotten warmer and project completion is on the horizon being 94% at quarter's end, the traffic has picked up and as of yesterday, Kota was 57.1% leased and 34.4% occupied. Not unexpectedly, we are keeping a watchful eye on the completion of construction and the delivering of such a large project during a pandemic, but we are certainly encouraged by the recent velocity. In total, phase one will consist of 487 apartments in three buildings and 86,100 square feet of first floor and freestanding retail. Approximately 51%, excuse me, 51,000 square feet of the retail is now pre leased. This property is located in a designated opportunity zone which allows us to defer a significant tax liability. In December of twenty nineteen, the company entered into its fourth joint venture with MRP for the development of another mixed use project known as 1800 Half Street. And in August of this past year, we began construction. The development is located in the Buzzard Point area of Washington DC, less than half a mile downriver from Dock 79 in Merritt. It lies directly between our two acres on the Anacostia, currently under lease development materials, and Audi Field, the home stadium of the DC United soccer franchise. 10 story structure will have three forty four apartments and 11,246 square feet with ground floor retail and is scheduled for completion in the third quarter of twenty twenty two. At quarter's end, 1800 Half Street was 16% complete. This project is also located in an opportunity zone. In the waning hours of 2019, we entered into two joint venture agreements with Woodfield Development, a new strategic partner to invest distinct projects in Greenville, South Carolina. Woodfield has vast experience developing residential and mixed use projects throughout the Southeast in Washington DC. The first joint venture called Riverside is a 200 unit apartment project. Construction began in the first quarter of twenty twenty and is on schedule to be complete in the third quarter of this year. The second JV with Woodfield is a two twenty seven unit multifamily development entitled 0.408 Jackson, a nod to Shoeless Joe Jackson, an adjacent to Greenville's Minor League baseball stadium. This project will also include 4,700 square feet of retail space. Construction began in May of twenty twenty and should be complete in the third quarter of twenty twenty two. FRP has invested $15,900,000 in capital gains funds for 40% ownership interest in these two South Carolina projects, which are both opportunities on investments, which will allow us to defer a total of $4,300,000 in federal taxes. To close out 2020, in November we completed the purchase of a 55 acre tract of land in Aberdeen, Maryland, which faces the Cranberry Run Business Center for ten point five million dollars This project will be known as Cranberry Run Business Center Phase 2 and could support up to 675,000 square feet of warehouse product in a robust distribution market. This purchase will expand our industrial land holdings to allow us to continue the industrial development program beyond the remaining building lot at Hollander Business Park in Baltimore City. We are currently petitioning for annexation to bring all parcels that make up the assemblage into the same municipal boundaries. This process will take the rest of this year, and we will begin the design process in the end. Existing land leases for the storage of trailers on-site will help to offset our carrying and entitlement costs. We are hopeful we can begin construction here in late twenty twenty two or early twenty twenty three. Just last month, in April, we entered into a build to suit long term lease agreement for 101,750 square foot warehouse building on the last remaining building lot at the Hollander Business Park. We expect to begin construction in the third quarter of this year and to deliver the project to the tenant in the fourth quarter of twenty twenty two. Moving on to our stabilized joint ventures business segment. In July of twenty nineteen, we completed a partial ten thirty one like kind exchange by investing $6,000,000 for a 26.6% beneficial interest in a statutory excuse me, Delaware Statutory Trust or DST that owns a 294 unit garden style apartment community known as Hickory Creek located in Henrico County, Virginia. The complex was constructed in 1984 and substantially renovated in 02/2016. The business plan calls for further rehabilitation to departments generating value added rents prior to selling the project after an appropriate hold period. We continue to receive monthly distributions from operations at Hickory Creek. In the first quarter of twenty twenty one, distributions were $84,000 equal to a 5.65% per annum on our investment. Occupancy averaged above 95% for the year and the first quarter with a collection rate and 12 COVID payment plans representing less than 3% of revenues. To round out the quarter, Phase two of our riverfront on the Anacostia project in Washington, D. C. Known as Marin reached stabilization or 90% occupancy of its two sixty four apartment units in March of this year. And as a result of this milestone, we'll join Dock seventy nine and Hickory Creek in our stabilized joint ventures business segment. At quarter end, '90 '2 point '8 percent of the apartments were leased and 92.04% were occupied. Relative to the 6,900 square feet of First Floor retail, 100% of the space currently scheduled for the third and fourth quarter of this year. As with Dock seventy nine, this is a joint venture with MRP or Mid Atlantic Realty Partners in which FRP is the majority partner. Of particular note, this building received its final certificate of occupancy at the March 2020 and reached stabilization of 90% in less than twelve months, a significant feat on its own, but during the pandemic, it's something else. Relative to Dock seventy nine, its three zero five apartments were 94.1% leased and occupied at the end of this quarter. The retention rate was 60% similar to what it was last quarter. Rent however was flat due to government imposed restrictions on rent increases due to COVID. Net operating income for the quarter was $1,530,000 down $278,000 over the same period last year due to the aforementioned government imposed rent freeze and lower traffic through our three restaurants and parking facilities. All in all, Dock 79 fared quite well over the past year despite the significant interruptions we all experienced. Those seriously impacted by COVID with shutdowns, reduced capacity, canceled stadium events, and general uncertainty, our three retail tenants at Dock 79, which total approximately 10 and a half thousand square feet with a total 14,000 square feet of retail space, seemed to be holding their own and looking forward to warmer weather and better u better utilization of their outdoor spaces. In early April, remaining retail space became leased and we look forward to full occupancy in 2021. Dock '70 '9 was our first joint venture with MRP in which we, are the majority partner with 66% ownership position. We have touched a few times on the impact COVID has had on FRP. Spring is upon us and the baseball is back at National Stadium and vaccines are being widely received. These are strong signals for us personally and as a business that new life, new energy, and new opportunities are on the horizon. However, make note, we're not immune to the effects of this terrible global disease that has monopolized the world's attention throughout the past year. FRP has significantly adjusted its operations, withstood infected employees and contractors, held the hands of tenants paralyzed by new government regulations preventing their opening for business, and witnessed the carnage of life and enterprise in many terms. All the while, we are immensely grateful that as a business and a collection of professionals, we stand atop a solid financial foundation that uniquely enables us to progress as an organization with a steadfast mission that followed closely should insulate us from the troubles others face. Thank you and I'll now turn the call back to John. Thank you, David. Now we're happy at this point to open up the call for any questions that you might have. Thank you. At this time, we will open the floor for questions. And we'll take our first question. This comes from Kevin with V. A. M. S. Capital. Hello? Yes, your line is open. Hi, guys. Congratulations on had some questions on the language. In the last paragraph. There's some pretty bold language. I think the wording was substantially more multifamily. So you guys could just touch upon, are you guys, you know, pivoting the ship to become multifamily mainly? Could we see another doubling or so in the portfolio in the next couple of years? Just some color there would be great. Yes. Thank you, Kevin. What we meant by substantially more multifamily is Kevin, do you mind muting your line and getting a little feedback? What we meant by substantially more multifamily is just sort of our development pipeline has, you know, by our definition substantially more multifamily. And, you know, if you look at where the company was a year ago, we had one multifamily building. Now we have two. And then this year, we'll have our first project in Greenville and then four buildings at Bryant Street and two more projects coming on the year after that. It's just definitely a huge period of transition for us as several multifamily projects under development start to come online in the next twenty four months. So that's where the substantially more multifamily line came from. Awesome. Thank you. That was my question. You. And we'll take our next question. This comes from Curtis Jensen with Robotti and Company. Hey, good morning. Can you hear me? Yes, sir. Good morning, Curtis. Of questions. One on the Marin, given the change of control, is FRP share stay at 80% of the joint venture? Need to David, do you want to Yes. Curtis, there's a program, there's 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 seventy nine. That's this is there's a we went from, I think, some 77%. It went to 66% of dock. We're not quite ready yet to get into the negotiations with them, but yes, that will happen. And then would you anticipate maybe disclosing the appraisal in a 10 Q? When I when the process is complete, we most we I'm sure we will. Alright. And what what could you have a in your a ballpark of what the construction costs were for the building? I mean The construction the total project was about $113,000,000 and the construction contract was 71,000,000 Okay. I mean, what what are you seeing in terms of cost inflation around materials, labor, any I mean, anything in availability of such, Anything that is troubling you or status quo? All of the above, Curtis. I mean, everyone I mean, like, I think we all know that the 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 has skyrocketed. So there's, you know, there's been a lot We've seen increase in lumber go actually two to threefold. It's come back a little bit, but it's out there. I mean, relative to our projects, you know, our projects, know, all of the the 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. 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 and you folks. I mean, would such a thing kind of impact your potential sale decisions and kinda, I mean, management started thinking about this at all, would you, for example, reexamine the idea of converting to a reader? Would such a thing even make sense? I mean, 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. I mean, lot of the projects that we have ongoing right now are opportunity zone projects where you have to hold the, you know, hold the the projects for a minimum of at least through 2026. Yep. So, you know, not a whole lot we can do there, and they're all kinda grandfathered within the program that that they're on. So, you know, we're very opportunistic in our programming these days, and we look at each project and we try to make the best of of every project that 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. Yeah, Curtis. I we've been hearing about the death now of the $10.31 Lichen exchange for going on twenty, forty years. Yeah, forty 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. Makes sense. Thank you. Thank you. And we'll take our next question from Bill Chen with Ryzome Partners. Hi, guys. Hi, Bill. Question on the Marin, ten million dollars or so in taxes, tax provision. Is that a cash provision or is that a GAAP provision? Bill, it's a deferred tax liability of non cash. Got you. Thank you. And Brookfield, I know that's kind of been an asset that hasn't really been, you know, 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, say, three years or are we beyond that? I I think it would be beyond that. You know, Brooksville happened in in in the last real estate boom and when Hernando County seemed about as hot a place as there there was, and then it wasn't. And I think we for a long time, we've been happy to to get the mining royalties there, and it was sort of a one day but not today. And you are correct and, you know, that our thinking on that has somewhat changed as, you know, 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 the years previously. So nothing concrete, but it's definitely become more front and center in our thinking than say a year or so ago. Got you. Is there can you remind me what that has been zoned for? Has it been zoned for lots already or we we gotta take that through an settlement process? It's it's zoned for residential. We have a a DRI in place, and I think it's also, you know, zoned for a couple golf courses. But, you know, sort of beyond preliminary stuff, we'd have to, you know, build all the infrastructure and everything like that. Got you. Phil, just to add, John, it's kind of a master plan, you know, kind of as much as a bubble diagram that has pods of different types of uses, just about, you you can't really call it a plan unit development, but it's a massive concept plan that takes over just about every type of asset class. Mhmm. Mhmm. Mhmm. And I'll give a little bit of background. I'm no stranger to to investing in Mass Applying Communities. So I think someone once told me that at at early on, it's it's literally just a sketch on the napkin. And as time progressed, you get more granular. But I is that if I remember correctly, that's like a 4,000 acre site. Right? So if, like, any a few on, like, how many lots, like like, if we were to put our in the air and just say, like, is that is that, like, a 10,000 community kind of site potentially? Or, like, like, some something some ballpark would be helpful in terms of understanding what what what the potential value may be. I don't think we have enough there to know, Bill. I mean, at one time, we were it it it was substantial, but we are we aren't really far enough along to get into that. Yeah. Gotcha. And my last question would be on the the reconversion. The the company did a lot of work back in 2017, '20 '18 to convert FRP into a read. And as I look forward about a year or two from now with the Bryan Street coming online and 1,800 cap coming online and some of the project in Greenville coming online, you know, I kind of backed into what I think the, the NOI and FFOs could potentially be from some of those projects. It it seems like it it makes sense in 2020, like, late twenty twenty two or or 2023 to kind of not revisit or maybe that's a timing because there actually will be cash flow to distribute to shareholders and then thoughts on that? Sorry, Bill, was the question on is whether or not we're thinking of becoming a REIT as we add more multifamily? Yeah. As as the multifamily stabilize and gets, you know, leased up. Probably not. Yeah. 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 non readable income for whatever, you know, arcane tax reasons. And I believe only a quarter of your income can be non readable. 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 slipped substantially. So I think that we'll obviously continue to explore whatever options make the most sense. We would never rule anything out. But I would say don't hold your breath on a reelection. Thank you for that explanation. I was not aware of the the 25% rule. And now that you mentioned it, it makes a lot of sense why the company was moving forward back in that 2017 timeline because the warehouse was, if I remember correctly, about 21,000,000 of NOI and the, the royalty were a smaller portion back then. So thank you for giving that explanation. I have no further questions. Thank you for your time and great execution. Thanks, Bill. Thanks, Bill. Thank you. And we'll take our next question. This comes from John Deysher with Pinnacle Value. Good morning. Thanks for taking my question. Back to the 10:31 exchange discussion, I realize 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 were acquired with some element of ten thirty one exchange embedded in it? The the warehouse that we the property we just acquired around our warehouse, the Krausz property, is a ten thirty one. And I don't recall David, can you recall the any of the other properties that are 1031? Hickory Creek was part of the 1031 until it Right. Delaware Statutory Trust. Yep. And that's about it. Winston, run? I don't think so. Or the Hampstead. Hampstead, yeah. That was part of the it a 10/30 Part October. But Hampstead is part of a October. And and as John Milton mentioned, the the property that we bought at Krausz is a ten thirty one. Okay. And then Hickory Creek. So just to recap, the Krausz property in Hickory Creek were the only ten thirty one exchange properties in the current portfolio? And Hampstead, our 18 acre residential development project. We'd have to get back with you on that. Yes. Okay. But it doesn't seem like ten thirty one exchanges are an overwhelming portion of the current portfolio. That's correct. Thank you very much. Yes, sir. Thank you. We'll take our next question from Steven Farrell with Oppenheimer. You mentioned the 57% leased on Dakota, which is up pretty significantly since the end of the quarter. You mentioned that traffic had increased. What type of competition are you seeing in the surrounding area around Bryan Street? Well, there's competition kind of everywhere throughout that area, Steven. And I think the thing that we think we believe that we have, a little bit of a of an advantage is because, especially as time goes on, is we are literally at the entrance. We are right at the, 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 Bryan Street if you watch the the annual presentation or more importantly, we would 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 where the four buildings. And so we have a lot of exterior, a lot of outside activities and activated areas, which a lot of places don't have. And we think that's gonna bode really well for us as we move forward. In the surrounding area that area there, are you seeing sort of a lull in construction or new projects coming online around when the next three buildings are gonna be completed? Can you give any color on that? The next three buildings are within months of being completed. Actually, you know, so we're 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 kinda hard to to say. But once again, you know, we have our our property management group, Azuto, is doing a great job through its software program, literally looking at every apartment that comes online and and and how it's been leasing. We've actually reduced the discount that we were given by half a month in the over the last several weeks. So act and sometimes competition really helps. You know? You you're no longer a pioneering area. You're just becoming part of the city. So so in some instances, it actually can help. But we again, we believe because of the retail component that we have that that's really gonna benefit our 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? Yeah, Steven. I haven't spoken to our property manager. I think there are three active campaigns. It's people who have either lived or have toured some of the, you know, surrounding competition. There's site retargeting. People have visited the website and then search retargeting. People have searched 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? I think you've in terms of like a cost per acquisition, is that what you're looking for? Or just what kind of hit rate do you generate? I think for streaming or online advertising, it's like $56.57 dollars 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. It's kind of you got to put yourself out there to generate any kind of traction. Great. Thank you. And it was mentioned earlier on the call about the increased labor costs in raw materials. Does that change the development of the Aberdeen property at all in the future? Are you looking, you know, any acquisitions or add ons? Would it be more brownfield existing developments? We look at we look at all all developments. We've there's a we have a tremendous amount of people out in the street that we that are kind of looking for us. And so we just look at each one as as it comes along. I think location is probably the single most important piece of it, number one. Number two, from a value add standpoint, it's kind of the pound per pound per foot that we're not gonna pay too much going in. And we're also not gonna we also look to buy land since we've been doing it for, I'm embarrassed to say, almost forty years. Pretty good at at, picking parcels that we feel are are properly priced. And then we'll let the market decide what, when and how we're going to build the buildings depending on what they are going forward. Great. Thank you for that. That's all I have. Thank you, Stephen. Thank you. And at this time, we have no further questions. I would now like to turn the call back to Mr. Baker for any closing or final remarks. Since there are no further questions, we would just like to thank everyone for their continued interest in the company. Appreciate all you all. Thank you. Ladies and gentlemen, this concludes today's conference. We thank you for your attendance and participation. You may now disconnect.