FRP Holdings Inc (FRPH) 2022 Q4 法說會逐字稿

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

And it is now my pleasure to turn the call over to John Baker. Please go ahead.

Good morning. I'm John Beger, the 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 Presicent.

As a reminder, 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.

To supplement the financial results presented in accordance with the generally accepted accounting principles, FRP presents certain non-GAAP financial measures within the meaning of Regulation G promulgated by the Securities and Exchange Commission. The non-GAAP financial measures referenced in this call is net operating income or NOI. FRP uses this non-GAAP financial measure to analyze its operations and to monitor, assess and identify meaningful trends in its operating and financial performance. This measure is not and should not be viewed as a substitute for GAAP financial measures. For earnings of our GAAP to net income, please refer to the segment titled non-GAAP financial measures on Page 13 of our most recent earnings release.

Now for financial highlights from the fourth quarter. Net income for the fourth quarter of 2022 was $2,756 million or $0.29 per share versus a net loss of $593,000 or $0.06 per share in the same period last year. Net income for the fourth quarter compared to the previous year was impacted by a $653,000 decrease in amortization expense, a $678,000 decrease in operation expense, $1.4 million increase in net investment income, offset by a $311,000 increase in interest expense.

Fourth quarter pro rata NOI for all segments was $6,260 million versus 3,690 million in the same period last year for an increase of 58.2%. Highlights for calendar year 2022 include net income of $4,565 million or $0.48 per share versus $28,215 million or $3 per share in 2021. The primary reason for the decrease in net income compared to 2021 was because 2021 included a gain of $51.1 million on the remeasurement of investment in the Maryland real estate partnership, which is included in income before income taxes. This gain on remeasurement was mitigated by a $10.1 million provision for taxes and a $14 million attributable to noncontrolling interest.

Net operating income for 2022 was $24.23 million versus $17.56 million in 2021, for an increase of 43%. David will touch on operations with greater depth and detail in his remarks, but I will briefly mention a few operational highlights as soon as the siren passes in case you all can hear that. This year saw major increases in revenue and NOI across all 3 of our operating segments. Asset Management had a 43% increase in revenue and a 39.2% increase in NOI for the year. Mining royalties revenue this year in 2022 increased 12.9% over 2021 to $10.69 million, passing the $10 million mark for the first time in a calendar year. And NOI increased 13.6% over 2021 to $10.15 million. In 2022, stabilized joint venture saw a 21.7% increase in revenue to $21.44 million and a 17% increase in pro rata NOI to $9.47 million.

Now if I could turn things over to David H. deVilliers, Jr., to walk you through our segments in more detail. David?

Thank you, John, and good day to those on the call this morning. Today, I'd like to offer a bit of a fact on our financial results for this past quarter. Though our business segments are important silos in which to report and analyze the company, operationally, we have some overlap and synergies that can be difficult to follow using the reportable business segments that John referenced in his opening remarks. So allow me to shine a light on the day-to-day of FRP using a more operational perspective versus GAAP.

So basically, we employ a 4-pronged approach to our business since 2018 when we liquidated our legacy warehouse portfolio. In-house, which includes our industrial, commercial and land development platform, these properties are developed, managed and owned 100% by FRP. Then we have the mining and royalties. We have third-party ventures, which is [Indiscernible] a project developed in conjunction with third parties where FRP is the major owner that relies on third-party platforms to perform the lion's share of the entitlements, constructing and the day-to-day operations. And fourth, lending ventures where we are the principal capital source for residential land development activities and sales.

Relative to our in-house industrial platform or asset management, increased occupancies and rental rates combined to produce a substantial increase in net operating income for these operations, from a negative $268,000 in Q4 of 2021 to a positive of $902,000 for Q4 2022. Cranberry Run Business Park in Aberdeen, Maryland became fully occupied in the first quarter of '22 and remains 100% occupied. The [Technical Issues] buildings at Hollander Business Park totaling some 145,000 square feet completed in late December of 2021, along with our final warehouse of Hollander business park totaling 101,750 square feet should all become fully occupied in the second quarter.

On the predevelopment front, we have 3 projects in the queue. The permitting process is currently underway for an approximate 259,000 square foot warehouse building on our 17-acre parcel in the Perryman industrial section of Harford County, Maryland. Not too distant from our other assets in Aberdeen. Depending on market conditions and local government posture, construction on this project could begin as early as Q2 '23.

In the fall of '22, we purchased 170 acres of industrial land in Northeast Cecil County, Maryland. This plot of ground will hold a 900,000 square foot distribution warehouse. Initial predevelopment activities have commenced and assuming favorable market conditions, we expect to construct this warehouse in '24 or '25.

Finally, in Q3 of '22, we completed the annexation process of the 55 acres we own in Harford County, Maryland, that was purchased in 2020. Entitlements and building designs create up to 675,000 square feet of warehouse product will follow in 2024, with construction to follow in '25 or '26. Existing land leases for the stores of trailers on-site help to offset our carrying entitlement costs on this process.

Finally, completion of these 3 aforementioned land development projects plus the final warehouse at Hollander will add just shy of 2 million square feet of additional warehouse product to our industrial platform, that when added to the other assets in operation at Hollander Business Park and Cranberry, will total nearly 2.4 million square feet. With the increased occupancy of the new buildings at Hollander and the fully occupied Cranberry Run Business Park, NOI in this segment should trend positively throughout the remainder of the year.

Mining and Royalty, as John mentioned in his opening remarks, our Mining and Royalty division saw total revenues for the quarter of $2.9 million versus $2,267 million in the same period last year. This is the most revenue in any quarter ever for this segment. Operating profit was $2,452 million, an increase of $485,000 over the same period last year. NOI in this segment was $2,779, up 30% over Q4 2021.

Moving on to our third-party joint ventures. Currently, we maintain both stabilized and projects under development with 3 distinct partners: MRP Realty, Woodfield Development, and St. John's Properties. Projects that reach 90% occupancy for a period of 90 days are considered stabilized, otherwise, the remain in development.

As of the end of the year, 2022, our JV program included 7 mixed-use projects, 6 apartment retail and 1 office retail project in various stages of development and operations. Concentrating on the apartment retail projects, I offer the following highlights. 4 apartment retail projects are located in Washington, D.C., where MRP is our joint venture partner. These projects are Dock79, Maren, Bryant Street Phase 1, and Verge. Doc79 and Maren remain better than 93% occupied on average for the quarter. And with the last retail suite of Dock79 being leased prior to the end of the year, the retail component of both buildings is now fully leased.

Bryant Street Phase 1, our transit-oriented mixed-use project just north of Union Station in D.C., saw its total residential occupancy increase to 89.5% and retail occupancy remained at 71.4% as of year-end. Several small retail tenants that will make up our food hall concept are due to open for business at Bryant Street over the next several weeks, helping to bolster the retail component, which has been severely curtailed by an elongated permitting time frame and supply chain issues.

Our newest project in D.C., Verge, welcomed its first tenant just before Thanksgiving, and at quarter's end was 13.7% leased and 9.6% occupied. Nearly half of the 84,000 -- excuse me, 8,400 square feet of retail space at Verge is leased with design underway. Our 2 apartment retail projects in Greenville, South Carolina, with Woodfield as our development partner are doing quite well. Riverside's 200 apartments were 18 months old in February, joining Dock and Maren is our third stabilized asset in Q3 of '22. Riverside was 92.5% occupied and 98% leased as of the end of the fourth quarter.

408 Jackson's 227 apartments were placed in service just before the end of the year and its 100th apartment went under lease on March 1. 408s 4,500 square feet of retail is 100% pre-leased with interior construction now underway. Greenville is an exciting secondary market in the Southern Sunbelt dar. The city is seeing accelerating growth and we continue to look at for additional opportunities in this part of the country.

So to summarize, at year's end, the 6 apartment retail projects, including Dock 79, Maren, Bryant Street, Verge, Riverside and 408 Jackson totaled 1,827 apartments in operation, which represents a 67% increase over the fourth quarter last year. Strong renewals and rental rate increases, along with lease-up of the placed-in-service projects help to increase FRP's share of the NOI for these 6 projects to $2.6 million in the fourth quarter '22, a 29% increase over the same period last year.

Finally, as a postscript to our third-party joint venture program, I have a few items to mention. Our Hickory Creek project of 294 DST investment in Richmond, Virginia was sold in the fourth quarter of '22, with sale proceeds to the company amounting to $8.83 billion on an initial investment of $6 million. Total distributions for the year prior to the sale totaled an additional $332,000. Also in November, we entered into a new partnership with Steuart Investment Company and our existing partners of over a decade, MRP Realty, for the development of up to 10 mixed-use projects in the Anacostia and Buzzard Point submarkets of Southeast Washington, D.C. These projects will come from 4 parcels owned by Steuart, phases 3 and 4 of our Riverfront development, our site currently leased to Vulcan Materials and the existing mixed-use department retail properties, Maren and Verge owned by MRP and Indiscernible plan.

Upon completion, these 10 projects will comprise over 3 million square feet of mixed-use development, including approximately 3,000 residential units and 150,000 square feet of retail. This partnership will solidify a generational opportunity to create and exclusively control a unique waterfront destination among multiple projects with the freedom to pursue development opportunities that are unavailable to individual forces. Together these parcels represent over 0.25 mile of uninterrupted waterfront along the Anacostia River at the southern entrance to our nation's capital.

As part of the newly formed partnership, we, along with our partner, MRP, sold a 20% tenant and common interest in both Dock79 and Maren to Steuart Investment Company. The gross sale amounted to $65.3 million or the equivalent of over $570,000 per Indiscernible $44.5 million of which represented FRPs share of the sale. Predevelopment activities on Phase 1 conceptionally planned for 500-plus apartments and 10,000 square feet retail located on 1 of the 4 parcels that Steuart brings to the venture has commenced, and we anticipate a shovel-ready project sometime in late '23 or early '24.

Looking on to our last operational enterprise lending ventures. The first of our 2 current lending venture projects, Amber Ridge and PG County, Maryland is coming to a close. The total commitment to this project was $18.5 million. 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.

As of year-end, the horizontal development was complete at 135 of the total 187 lots, all of which are under contract to sale have been taken down with $16.6 million, inclusive of interest having been returned to FRP as of 12/31/20. Our current lending venture now known as Aberdeen Overlook is 110-acre residential development project in Aberdeen, Maryland, consisting of 344 lots. Subsequent to year-end, entitlements were complete, which was a condition precedent to the purchase of the land, which occurred in January. We've committed $31.1 million in funding under similar terms to Amber Ridge of this program. We have a contract of sale for all 344 lots from a national homebuilder inclusive of 222 and 122 single -family lots that included a deposit of $3.3 million. Needless to say, we're watching this project closely as homebuilding throughout the country has slipped dramatically, but we do have certain safeguards in place and demand in the fourth quarter in this particular submarket far outweighed the supply.

In March of 2020, when the world shut down, FRP maintained a portfolio of 510,000 square feet of operating industrial office and retail space and 599 apartments. Today, FRP has over 760,000 square feet of operating industrial office and retail space and 1,827 operating apartment units. We also have over 435 acres of land in our development pipeline that support over 3 million square feet of additional development. FRP is at the dawn of an era of growth, all made possible by the breadth of opportunity we have been able to cultivate through the leveraging of our financial foundation, which uniquely enables us to capitalize on great projects and sometimes make hard decisions matter.

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

Thank you, David. Not to put too fine a point on it, but 2022 was a big, big year for the company. Financially, in 2022, we saw meaningful increases across all operating segments, with every segment having its biggest year for revenue, operating profit and NOI since the asset sale in 2018. Operationally, in 2022, all of our asset management properties are fully leased. We finished construction and began lease-up on the verge and 408 Jackson. We secured permanent financing for Riverside, and we purchased a new mining royalty property, which is now our biggest royalty producer.

Strategically, with our new partnership with Steuart and MRP, we have the ability to build something really, really special in one of the great cities of the world, 3 million square feet, 3,000 units, 150,000 square feet of retail and all of it encompassing the south entrance of the nation's capital. It's a really amazing opportunity. And most importantly, we are now on track to diligently and deliberately put all of our cash and cash equivalents to work. The next 10 to 15 years are going to transform this company, but it all started in 2022.

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

[Operator Instructions] And our first question comes from Emerito Quintana from Numantia. Your line is open.

Hi, guys. It's Emerito again from Spain. I'm interested on the sale of your interest of the Maren and Doc79 because if I'm correct, there was 2 mortgages of $180 million on both buildings. -- so your net interest, I think it's more like $100 million, if I'm correct. So the 20% is $20 million net of mortgages.

That's pretty close.

Pretty dose Okay.

Are you talking about...

$20 million net of mortgages.

In FRP.

Okay. Thank you. And another question. What's the growth -- of the price per ton of aggregates without the new acquisition?

If you remove the new acquisition from aggregate royalties, it would have -- we still would have had a bigger year than last year, but it would have been, like maybe 3%. And I'm just doing this top of my head from my recollection of looking at it. But it would have been more, not 16% more like it was, but you still saw volume and some price growth even without the new acquisition.

Okay, understood. Thank you.

And our next question comes from Bill Chen from Rhizome Partners. Your line is open.

Hi, guys.

Good morning, Bill. How are you?

Good. Nice day here in New York. So hope you guys are getting some nice weather there as well. I have a bunch of questions written down and then also ask -- as I do the math for the cash that you have right now, and I sat down a bit of math calculation, a private market valuation for the company. And I know you guys said previously when you buy back shares, you want to be stealing it. And does that have to do with the fact that the aggregate business is such a good business and all these projects are working, they're leasing up and stabilizing, they're performing well. I'm kind of getting to a NAV that's in the high double digits, low triple digits and at where you trade up today if you were to buy back shares. I mean that's my definition is stealing shares. And also I voiced this in the past in our conversations. I mean, I would just love to own more of the aggregate business on the waterfront and then to the extent that we do buy bar shares, the -- to own more of this incredible aggregate business, which is nothing that I've seen anywhere in any of my other investments. I'm just saying from someone who owns a great chunk is a meaningful position in my portfolio, I'm comfortable only more of the aggregate business and the waterfront in D.C. and your Greenville projects. Just letting you guys know that from one long-term shareholders perspective, I have no problem if we wind up -- if every shareholder wind up owning more and more of the aggregate business. And I'll touch back offline, what I'll share with some of the -- how I come to my NAV analysis of what I think our private market valuation and why I think in the mid-50s with where the prior market value of almost 100 why I think that's essentially the definition of stealing it when we buy back shares.

And also, I mean, this observation also comes at just the cash balance is so high right now, and I've done a fairly exhaustive analysis on where the cash needs are and also what some of the stabilized assets will start to generate in terms of cash flow. So take all of that into consideration. I know this is long and winded, but this is something that I've been thinking about a lot and I've been paying a lot of attention to it.

And then the -- in terms of questions, the -- I'm a little bit surprised -- positively surprised by the fact that the Aberdeen station that there's -- is that contract -- is there a contract? Or is that just a verbal agreement to buy those lots because given everything that we've been hearing, I'm a little bit surprised that there is a buy for all those lots rather than partial takedowns of those lots. Could you provide a little bit more detail there?

Sure. Hi, Bill. Dave DeVilliers. There is a contract to sale with a national homebuilder. They have supplied a $3.2 million nonrefundable deposit. They're going to buy the lots down over a period of time, and there's a stipulated amount each quarter. And the -- of the 344 lots, there's about 4 or maybe even as many as 5 different types of price points. So even though it's a lot of lots, they're kind of broken down into 5 different types. So that will enable them to draw down quicker. But no, the -- this whole program is fully under contract. And so we're off to the races. I know that as you say, homebuilding throughout the country is not the greatest, and we certainly are watching it closely. But the interesting thing here is that the supply is virtually nonexistent where we are. And so the curve is in such great shape as it relates to demand over supply, that certainly does help us in this regard.

Got you. No, that's great color. And have we actually -- has the company actually advanced any of the funding for this project yet? I mean -- I don't think I saw any draw on the capital.

Yes, we have after the quarter. The idea was the -- some of it hadn't been advanced before the end of the year, about $1.5 million. We went through all of the entitlements -- or excuse me, our borrower went through all of the entitlements, received record land, which was a condition precedent to buying the raw land, which was done in early January.

Okay. Got you. Thank you. That's great color and thank you very much for that. On the project -- on the warehouse project that may go -- may start construction in Q2, what -- that's -- I mean, I guess at this point, you think we're going to build it that will be a spec build. But what would be -- give you the go and no-go on that project? I know what the rents and the occupancies are fairly attractive right now, but I'd just like to understand what will be the decision to decide go and no go on that project?

Well, first of all, we're not quite at the finish line with our entitlements in the county is going through different types of protocols as to what the near future holds for some some considerations there. But what we look for is we do a market study, the occupancy -- excuse me, the vacancies are very low right now. The rents have not moved down at all. Actually, they are flat -- they actually picked up a little bit for this type of a building. So -- and actually, some of our construction costs for the first time, and I can't remember how long some of those costs actually went down when we first did the job out in October, some of the projects actually down right after the first of the year. So we're going to look at it and like we always do and decide whether we want to go forward with it in the second quarter or not, we don't want to wait too long because of the weather here. We don't want to be building this thing over the winter. So we'll see over the next 60 days the direction we want to take.

Got you, got you. And one last question. You mentioned that there is a trailer storage on that 600 square foot site and industrial outdoor storage has kind of become a thing. I mean it's always the thing, but it's a -- I become aware of it in the last year or two. Is there an opportunity given that we're sitting on 20,000 acres of land in Georgia and Florida on those pits to kind of set aside some of these parcels for industrial outdoor storage because there are sites that were where it is a large parcel of land for parking of trucks and service vehicles have become harder to come by. I mean, is that an opportunity that the company is thinking about? Is there a demand for them in those markets, in those 12 or 13 sites down in Georgia -- for even in Manassas, right, is that a potential there? Is there some potential there?

Probably not on the mining side, Bill, just because that kind of falls under the purview of our operating tenants, and I don't think they'd want a bunch of trailers and building equipment, interfering with their ability to mine or get around the site.

Got you. Got you. Is there any sites where they're mining is so far away? Because some of these sites are so big. Like I understand it if it's a 9,000 acre site. But if some of these sites are 1,000 to 2,000 acres and like is there some opportunity where we could go to them and maybe it's like a revenue split or something, we're very far away from where they're actually actively mining. What is that you saw much?

They might consider it too much, I think. Obviously, it never hurts back and I think that's a really interesting suggestion. We probably only have the potential for it in sites closer to cities in rural Florida that might not be a very robust business, but potentially outside of Atlanta, we'd have to just dig in and see what the -- what each site could support and then gauge our tenants' appetite for that kind of deal. And they probably wouldn't be gung ho about it unless there was something in it for them, but 50% or something is better than 100% or nothing. So I think it's a really interesting suggestion. Thank you.

Good. No problem. And I don't want to hog the call, but one last question, if I may. The hurricane that went through Fort Myers, I think when [Indiscernible] and that will likely lead to more mining out of the Fort Myers side, which means that lake will be, I guess, a lot to be ready, I guess, a little sooner than before. Are we still unlike 20.6, 2027 kind of time line for those sites to be ready -- the portfolio like that Phase 1 to be completed and then those lots potentially being ready for sale?

That's when the -- we expect them to be done mining with that phase. I don't -- I really can say that the lots are going to be 100% ready by then. But that is -- Vulcan is on pace to be done with that phase of [Indiscernible] And they even without the hurricane, they were mining that section of the quarry fast as humanly possible. I think they want to be done with that side of that mine prior to construction on the Alico Road extension, which is connecting one part of Fort Myers to another, and it's a huge priority for the county. And -- they don't want to have to be hauling rock across a road construction site if they don't have to. So I think demand in that area was fairly robust even prior to the hurricane and obviously trying to get done before the road extension, they were going to look through that as quick as they could. I think maybe the increased demand, is it going to move them along any faster, but it probably will affect price.

Got you. Got you. Thank you. I have no further questions. Thank you, gentlemen.

Thanks, Bill. Our next question comes from Stephen Farrell from Oppenheimer Close. Your line is open.

Good morning.

Good morning, Stephen, how are you?

I'm good and well. I just have a few quick questions. You talked about occupancy rates at Bryant Street. Can you talk a little bit on how you juggle the rental rates versus getting heads in the apartments there?

Well, we operate through, obviously, our property management, software programs, and those units are individually priced literally every day. So pricing can change effectively in a 24-hour period, and that's kind of what we do. The idea, obviously, to your comment about heads and beds, when you first start out, also, there's a lot of factors that go into it. One is the time of year when we've opened up, for example, we opened up Verge in late November, could not have for a worse time to open up just by virtue of the weather and that sort of thing. And so that we're starting to put some discounts on the base rate for those. They're starting to come into the building. We're starting to see some warm weather. cherry blossoms are supposed to come out, and so the rents are going to start running up and actually have started to run up a little bit. But it's a gain that you play literally on a daily basis through a majority program.

And you talked about the seasonality there. So Dock79, the renewal rates were quite a bit lower than the Maren. Do you think that's something that will pick up as it gets warmer and...

When you say renewal rates, you mean the numbers or the dollars?

The percentage, I think the renewal rates was 42% of expiring leases versus 62%?

Right. We had -- it just depends on the timing of what leases expire. We did have several people come in that are actually we're not going to other apartments. They were leaving DC or looking to buy a house or different reasons. We weren't losing them to other -- to the competition. And it's pretty cyclical. We usually try to run about 50% to 55% on a success rate in order to try to maximize the profitability of the units.

Stephen, I think one factor that may explain to the discrepancy between Marie and Dock renewal rates is -- when you think about when each building came online, Dock got the full force of rental freezes on renewals, whereas the Maren had been open for a year, maybe 1.5 years into COVID before renewals started becoming an issue. So I think part of it could be explained by Dock79 tenants didn't have to worry about rent renewals, rent increases on renewals for a much longer period of time than anyone at the Maren until the Maren was probably a little bit closer to market. And I think there's some sticker shock for tenants as rents or market as opposed to frozen.

One last piece of that, too, is depending on which ones come up for renewal, if there are the affordable housing units, the people that are living there, in some cases, their income gets too high and they don't qualify for the affordable units and they got to go. So that could play into as far as well.

And at the verge, you mentioned offering some discounts. The rents are picking up. Where are they now kind of versus Doc79and also just in the Maren and then also just versus what your expectations were?

Well, let's see, first of all, the Maren is probably one of the more expensive units that we have and then followed by Dock. Verge is running about right now, probably about 10% less. The neighborhood is still under development, more so than Dock demand. But we're pretty optimistic about where things are going, especially when the spring hits, so it's still a little bit too early to tell considering the amount of people that we've got leased up and occupied. That would be a better question to ask after during the spring, we'll have a much better indication of where things are.

Okay. And when do you anticipate financing permanent or temporary financing on the verge and what would that look like in a same question with Bryant Street?

Well, obviously, we'd like to go to permanent financing as quickly as we can because permanent financing is usually running about 150 basis points less than the floating construction loans. So we're going to be going through that on Bryant Street, hopefully, when we get to be -- we get a little bit further into the spring, the retail function has been curtailed by, as I said in my opening remarks. The D.C. government has been very, very, very difficult to work with as it relates to getting the tenant improvement permits. I mean, almost to the point where we're wondering whether they even want to have tenants in Washington, D.C. But we're getting through it. And the supply chain issues with those type of specialty things that go into restaurants and tenant improvements have been tough as well. So we'd like to get into Bryant probably sometime third quarter maybe. Verge, we've got 344 units. It's going to be a while before we get that place to a point where it would be stabilized. So it's probably going to be running under that construction loan at least through probably most of this year.

Got it. And the last question with -- on the residential side, are the partners in South Carolina, what are they seeing in terms of the demand down there? And is there any additional opportunities that they've been coming across?

We've been looking at some. I think I mentioned it. We actually -- I was there last week with them. We've got a couple of -- some -- their eyes on some things. We are, as I said, excited about that part of the country. As you can see from the 2 projects that we have, we leased -- we're about 44%, 45% leased at 408 Jackson and we just opened up in December. The concessions have been virtually nonexistent in both of those projects down there. So we're certainly bullish on the area and have our eyes open.

Thank you. And last question, and Bill kind of talked about the cash flows. And do you have a ballpark on the dollar value you're going to spend on development activities in 2023 between warehouses and the Steuart deal?

Well, I'll take a run at that first, John. I don't have my numbers here in front of me, but obviously, one of the -- nothing has to be done. We don't want to do anything just for the sake of doing it. For example, the warehouse that we have on the plan table, the 260,000 square foot warehouse. If we don't like the look of the market or for some reason something comes bump in the night, we don't feel like it's the right time, then we'll pass and just push it off. So that's probably -- that's anywhere from $10 million to $17 million over the next 12 months.

We also have Phase 1 of the Steuart MRP, FRP investment that will may be shovel ready in the fourth quarter of this year. But based on interest rates and rates and the construction costs, we don't know if that, that's going to be a viable project at least in our minds, and that would as well. So it really depends on the market. We don't have to be building something just for the sake of building it. We've got plenty to do without it. So it really kind of depends on the wins of the -- the economic wins over the next 6 to 12 months.

And with the Steuart partnership, you mentioned that the environment is not supportive and you can kind of delay that. There was the provision for building every 4 years. Is that something that's flexible and...

Yes. Yes.

[Speech Overlap] due diligence every 4 years or break ground?

Well, when you get these permits or get these approvals, they're only good for a certain period of time. So it's kind of a push full. We had to use something kind of as a framework for which to create this program. So it's so massive and actually it's so exciting. And we're all in this together. So Steuart is going to stay in as a partner just like MRP and FRP. And nobody wants to go into a project unless they feel really good about it upfront. So kind of up to us -- the partner is to determine when and if we want to start a new one.

And how did that affect additional developments there? Would that push back the second building or development?

Second building. I don't understand what you mean the second building. If we were going to get Steuart base to the delaying for a year or so delay the time line of everything. Pushes everything back. Everything is fungible. There's no exact science to this. We will tie one project in with the next. If there's some overriding reason to do more than one at the same time, which I don't know what that is, but we're very flexible as to how and when we do these.

And it's good. Thanks you, guys.

Thanks, Stephen.

And our next question is a follow-up from Emerito Quintana from Numantia. Your line is open.

Good morning. Emerito again.

Hey, Emerito.

I was just wondering. Hi. I was just wondering if you plan to make an Investor Day this year or maybe next year? And I'm also interested on Bill's question about your thoughts on fair value per share maybe because I'm also getting near $100 per share on a very detailed some of the parts.

Emerito, we are planning on doing an Investor Day and kind of details of that will come out over in the next couple of months. But that was a an opportunity that we really, really enjoyed. And I don't know if we're yet the size of a company that demands one every year. But I think every 2 years is about right for now. And that was a really special event and so much fun to present the properties for investors. And I don't think that's something we should pass up. So short answer to your question, yes, we are planning on doing an Investor Day. We'll get the details out to you all soon.

And on your -- the NAV analysis, I mean, very, very fortunate that our investors have the faith and the same path in our assets that we do. We don't have a concerted share buyback plan right now. Obviously, we love the assets that we have. But whether it's a dividend or share buybacks, there is a plan for all this money at least for now. And it's our belief because we're a growing company that the cash and cash equivalents that we have are best put to use in the form of new investments or as a capital cushion to protect the investments that we already have. We're going to continue to monitor it the same way you all are. And if we come to the same conclusion that it's trading at such a steep discount that we can't afford to buy asset, we might nibble here and there, but it's not going to be a steady concerted plan to buy back shares.

Okay, okay. Thank you very much.

And it does appear that there are no further questions over the line at this time.

All right. Well, thank you guys so much for your interest in the company. We're going to get back to work to grow shareholder value.

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