Release Date: August 08, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Net income for the second quarter increased by 242% to $2 million, driven by improved performance in multifamily developments and lending ventures.
- Pro rata NOI grew at a compound annual growth rate of 21.6% over the last three years, maintaining a 22% increase in the second quarter of 2024.
- Multifamily segment saw significant growth, with pro rata NOI increasing by 84% in the quarter compared to 2023.
- Industrial and commercial NOI increased by 41% in the second quarter, attributed to the end of rent abatement periods.
- The company is expanding its industrial footprint with several projects in the pipeline, expected to add over 2.1 million square feet of industrial space.
Negative Points
- Revenues and operating profit remained largely flat despite the increase in net income.
- Mining and royalty business segment experienced a decrease in revenues and NOI due to a reduction in royalties.
- The multifamily segment faces pressure from an abundance of supply in the D.C. market, affecting vacancies and revenue growth.
- Rising real estate taxes and insurance premiums are potential headwinds for NOI growth.
- The company does not currently have leases in place for some of its upcoming industrial projects, which could impact future occupancy rates.
Q & A Highlights
Q: Just a quick question with the two Florida developments, the expected CapEx, $57 million and $28 million, does that include the purchase of land?
A: Yes, it does. The discrepancy in cost per square foot is due to differences in rental rates and land costs between Lakeland and Broward County, Florida. Broward County has higher rental rates and more expensive land, which drives up costs.
Q: Is there a lease in place for the Chelsea project when construction is finished?
A: No, there is not currently a lease in place. However, we do not anticipate any issues filling the space due to strong market demand and the quality of the product.
Q: On Dock 79 and Maren, it looks like renewal rates at Dock were outpacing Maren. Is there any color you can provide on that?
A: Dock has had lower rental rates historically, which are now being adjusted. We are seeing effective rent growth at Dock, which is catching up to Maren. This is partly due to a focus on maintaining occupancy at Dock previously.
Q: Can we assume Chelsea's kind of get about $9 in net per square foot?
A: We are currently marketing Chelsea at $10 per square foot. The final rate will depend on tenant improvements, lease term, and annual escalations.
Q: Is there any update on potential monetization of land assets in Florida and Georgia?
A: We are monitoring opportunities, particularly with infrastructure developments like Alico Road in Fort Myers. However, near-term monetization is not expected as mining operations continue, and utilities need to be brought in for development.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
