Description

FRP Holding Write-up

This is a timely idea; the company will be reporting today and will likely print a $40mm GAAP net income due to the stabilization of their development project in DC.  This is a large number that is expected to hit the tape today and may attract algo and quant buyers. 

Introduction

Have you ever wondered “Is there anything left that will not be disrupted by Amazon and technology in general?”  Would you like to invest in something that would require the bending of the Newtonian laws of physics to impair the investment?  Do you suffer from brain damage trying to calculate the odds of Amazon coming after your company’s profit margin?  Do you want to own hard assets as an inflation hedge as our government prints money like it is toilet paper?  Do you want thematic exposure to Joe Biden’s infrastructure plan? Do you want to buy these assets at roughly 55-60 cents on the dollar with exposure to the Washington DC’s new waterfront development?  How about an opportunity to generate real estate private equity IRR of over 20% with limited leverage?

Well, ladies and gentleman, I present to you FRP Holdings: A real estate holding company with great assets, great management and selling at a great price. What do you get with FRPH? How about the following:

1.      Great multi-family and development assets primarily located in Washington, DC ($307mm Value)

2.      Rock Pits and Land located in Florida and Georgia ($230mm Value)

3.      Cash ($150mm)

4.      Miscellaneous Warehouses and Land ($79mm)

Total Value: 741mm (766mm aggregate value less $25mm NPV of income tax liabilities)

How would you like to pay $465mm for great assets conservatively worth $741mm with management buying back shares to increase your ownership at 60 cents on the dollar? Did I mention there is an upcoming catalyst during Q1 reporting? Well, read on if you want to hear about a great real estate investment opportunity:

1)      Rock Pits (One of the World’s Best Businesses) and Land ($230mm Value) 

Why are rock pits such good businesses you ask?  A ton of gravel and sand only sell for about $10, but it costs about $0.15 to truck it a mile.  A rock pit 50 miles away will have a $7.50 cost disadvantage on something that you sell for $10.  Who wants rock pits in their neighborhoods?  Nobody!  They are noisy, generate a lot of dust, truck traffic, and look ugly.  Trust me, I have been to a dozen of them.  They are real eye sores. This is not quite on the level of a landfill, but it is pretty close.  Getting the permits to mine can take 5-10 years.  In 2020, I was able to look at a private deal of a bankrupted landowner who was counting on the mining permits being approved.  The neighbors fought hard, and the mining company ultimately had to plant trees and agreed to all sorts of concessions.  Don’t believe me?  Peter Lynch even talked about rock pits in his famous book “One Up On Wall Street;”

“What makes a rock pit valuable is that nobody else can compete with it. The nearest rival owner from two towns over isn’t going to haul his rocks into your territory because the trucking bills would eat up all his profit. No matter how good the rocks are in Chicago, no Chicago rock-pit owner can ever invade your territory in Brooklyn or Detroit. Due to the weight of rocks, aggregates are exclusive franchise. You don’t have to pay a dozen lawyers to protect it.”

FRP Holdings owns over a dozen sites in Florida and Georgia that sit on about 500 million tons of reserves which equates to about 60 years of reserve life.  The company has royalty agreements with Vulcan Materials, CeMex, and others to mine the land.  Although FRP Holdings has never fully disclosed the details of the contract.  It is generally 10% of the revenue generated by these lessees subject to a minimum payment even if they are not mining on the land.  In 2020, the royalty business generated roughly $8.5mm of operating income.  After all, there really is not much to do but just collect a royalty check for FRP Holdings.  In my interaction with them, they have jokingly called this a “ham sandwich” business.  On the upside, this business benefits from growth in volume and pricing.  In a typical upcycle, you can see a 10% increase in volume which would result in a 10% increase in price as well.  This will bring the $8.5mm to over $10mm in operating income. 

What is something like this worth?  One way to value it is to apply the 2 best pure play public comps of Martin Marietta and Vulcan Materials.  The right metric would be EV/(EBITDA – CapEx).   Martin Marietta and Vulcan both operate the aggregate sites and they have heavy opex and capex commitments.  One can argue that a royalty business that takes a % of top line revenue with a guaranteed minimum is much better than a hybrid business subject to industry volume demands.  Both Martin Marietta and Vulcan Materials trade at roughly 25.9 times multiple.  This would imply $221mm for the royalty business.  You can also value the rocks on a $ per ton of reserve basis.  In this case, MLM and VMC trades at $1.52 per ton of reserve. 

We have tracked quite a few private transactions and they all trade over $1.00 per ton of reserve.  To be fair, these transactions are both the landlord and the operations.  So if we were to just split it down the middle and say that the royalty business is the better landlord business and assign it 50% of the value, we are still fairly conservative:

·         One private comp that is very representative is Martin Marietta’s purchase of Bluegrass in 2018 which valued the deal at $1.64 billion for 2.2 billion of reserves.  This equates to $0.75 per ton of reserves. 

·         Another sizable deal is Martin Marietta’s purchase of Texas Industries for $2.7 bn which purchased 1.68 billion tons of reserves.  This equates to $1.61 per ton of reserve. 

·         In 2012/2013, Vulcan also entered into two volumetric production deals with Plum Creek Timber Company which sold 398mm of volumetric production for $227mm.  This equates to $0.56 per ton.  Our understanding is that Vulcan was over-levered after they acquired Florida Rock Industries prior to the financial crisis and they were in dire need of cash so this is a fairly distressed deal.  

We value the aggregate business at about $170mm for the royalty stream. The $170mm will constitute about a 5% cap rate for a high-quality asset or about $0.34 per ton of reserve.  If the infrastructure plan gets passed, this will likely increase to a 6% cap rate. 

Since investing is all about discounted cash flow, does it make sense to pay 20x multiple for something that may be fully depleted in 60 years?  This is something that I struggled with for a while and I have grown to really appreciate the true “owners economic” of rock pits over time.  A simple DCF works like this.  An investor pays $170mm for the royalty business and gets a 5% yield today and a 3-4% price increase every year.  If you run this DCF, paying $170mm for this royalty stream yields an 8-9% unlevered return in the next 60 years.  In a ZIRP world devoid of yield, earning 8-9% unlevered return on something that we can be 97% certain of maintaining its pricing power and cashflow generation in 50 years is very valuable.   

Land Holdings

FRP Holdings also owns a 2,000-acre site in Fort Myers where Vulcan is currently mining on an accelerated basis.  When mining is done in the next 5 years, it will form a gorgeous lake filled with turquoise water that is unique to the geography of Fort Myers.  If you browse Zillow, you will see that homes on 0.75 acres sell for $4mm in the area.   FRP Holdings has already received zoning for 105 one acre water front sites upon mining completion. If we assume that land costs 20% of the final build value, a one-acre site likely sells for $1mm which would equate to $105mm today. To reach a net present value, we apply a 12% discount rate and a 3% annual price increase which gets us to about $45mm of NPV today.  This is inexact, but I think it is fair and reasonable.  In addition, FRP Holdings owns a large site called Brooksville JV about an hour north of Tampa.  We believe this is worth $15mm to FRP Holding.  If you believe that there will be more net migration from the two coasts to Florida to take advantage of the weather and taxes, this is a great play. 

Let’s do a sanity check.  We value the aggregate business at about $230mm in total which consists of the $170mm for the royalty stream and about $60mm for the near-term land holdings that will generate $232mm of cashflow in the next 10 years; and we will still hold onto more than 50 years worth of reserves plus the terminal land value.  The reserve life is likely longer than 60 years present day because as they dig further down, they tend to discover more rocks and sand that they cannot report today under GAAP rules.  It is likely that FRP Holdings has 80-100 years worth of reserves today.  I was able to confirm this with management under noticing that their reserves have not decreased in the last 4-5 years despite annual depletion. 

This business also gives you exposure to infrastructure and sunbelt population migration as people continue to move to Georgia and Florida.  From an investment perspective, people will also get excited because of the thematic play on this idea.  If I have learned anything about the investment business it’s that investors sometimes care less about under-valuation, they care more about thematic plays and the “current hot” plays.  FRP Holdings has plenty of these attributes while still trading at a huge discount.          

2)      Trophy Washington DC Multi-Family Portfolio ($307mm)

The common narrative of gateway city multi-family is that people packed up and moved out of NYC, SF, and Washington DC.  This caused occupancy to plummet by 15% and rent to drop by another 15% which results in NOI being down 30-50%.  What if I were to tell you that there is a landlord that kept occupancy at 93-94% last year and kept rent flat.  As a matter of fact, they complained that they could not raise rent during 2020 due to the Washington DC rent moratorium.  They also have a new building coming online next door that started leasing on April 1^st 2020.  What a nightmare scenario!!  This is the kind of real estate nightmare tales that a silver-haired veteran talk about.  What if I were to tell you that the new building next door leased up 45% of their units during Q2 of 2020 when brokers had to conduct digital tours via Facetime?  What if the building achieved 90% leasing in 11 months?  What if rent is actually 10% higher in the new building for a similar product?  Would you accuse me of promoting some sort of real estate fairy tale?  This is exactly what occurred in FRP Holding’s multi-family buildings in the Navy Yard in Washington DC. 

Navy Yard Assets

FRPH owns 4 assets in the Navy Yards which is a successful development in Washington DC on the Anacostia River. These assets consist of 2 leased up multi-family buildings and 2 additional development sites right next to the buildings. The first building is called Dock 79 which consists of 305 multi-family units and 4 restaurant spaces.  The second building is called The Maren which consists of 264 units and 6,900 sqft of retail space.  They are next to each other and sit between the Anacostia river in DC and the Washington National Stadium.  Both buildings have great views of the water and are connected to Capitol Riverfront outdoor space which consists of river walk trails, restaurants, public space, lawns, etc. 

https://www.dock79.com/dock-79-washington-dc/

https://marendc.com/

What caused these 2 assets to perform so well during a crazy 2020?  DC traditionally has been known to be more recession-resistant as the government is the largest employer.  In addition, the area’s location is unique.  About 15% of the tenants are senior Navy officers who work in the Navy Yard.  About 20% are lobbyists who work on Capitol Hill which is about a 20-minute walk.  Another 20% are accountants at big 4 accounting firms.  1% are MLB players who play for the Washington Nationals across the street.  This is a very captive and non-cyclical tenant roster (except for ball players in 2020) that should resist the change of time.  I doubt any lobbyist wants to do their work remotely.  We have also spent years on the ground here spending four figures eating and drinking at various restaurants in the neighborhood.  We are convinced that this is one of the most exciting neighborhoods in DC that offers great outdoor amenities, nicer buildings with tons of amenities such as roof top pools, tenant lounges, gyms, and water front exposure which DC lacks.  There are only 3 areas of developed waterfront in DC, Navy Yard, Buzzard Point (still to be developed) and The Wharf and FRPH owns assets in two of areas.

During the Q4 earnings call, the company announced that they will be putting 12-year fixed rate, interest only mortgages on both properties with a 3.03% interest rate.  Come at me inflation!  I double dog dare you!!!  We value both properties at 4.25% cap rate.  This is because all class A multi-family buildings trade with a 4 handle in the US.  Given the amenities, waterfront constraint, and how they performed in 2020, I believe a 4.25% cap rate makes sense.  As a sanity check, an institution can easily earn 10-12% levered returns if they put a 55% LTV 10-12 year mortgage on the property.  The assumptions are unheroic with 2-3% rent increases.  This translates into almost 6% levered cash yield which should increase 2-3% a year.  The leverage acts as a multiplier and brings the levered return to 10.9% if we assume the same exit cap rate of 4.25%. 

In a ZIRP world, pension funds, endowments, and insurance companies are starved for these types of returns.  Even if we apply a 6% exit cap rate which is a pretty nuclear outcome, we can still underwrite to a 6% levered IRR assuming 3% NOI growth.  But I suspect that a 6% cap rate would imply a higher inflation which implies 5-6% NOI growth and the results will likely still result in a 10% levered IRR.  Net sale proceeds will be lower, but it will be mitigated by higher levered cashflow in the next 10 years.   

Next to The Maren and Dock 79, the company owns development rights for another 600,000 sqft.  When the company developed Dock 79, the project economics were a bit uncertain as that was the first project on the 6-acre site owned by FRP Holdings.  6 years later, the performance of the first 2 buildings have exceeded every expectation I had.  We have looked at private comps for land transactions in the Navy Yard and they tend to go for $85/sqft for development rights.  But these transactions do not have waterfront exposure and they were done between 2014-2019.  Since we have visited these sites on multiple occasions over several years, we are comfortable saying that development sites today are worth much more than $85/sqft.  But we will use $85/sqft to be conservative.  Adding Dock 79, The Maren, and Phase 3 and 4 gets us too about $161.3mm in total value:

Dock 79 - $171mm less $92mm of mortgage less 34% non-controlling interest = $52.1mm

The Maren - $153mm less $70mm of construction loan add $15.5mm of preferred less 34% non-controlling interest = $60mm of value

Phase 3 and 4 = 600,000 sqft @ $85/sqft = $51mm

Total value of $163.1mm

What is exciting about Phase 3 and Phase 4 is that the successful development of Dock 79 and The Maren bode well for the success of these 2 as well.  We estimate that the development projects have generally resulted in about a doubling of the common equity over 3-4 years for these projects.  This is a great way for the company to allocate additional capital in the future and drive additional growth in NOI and FFO over time.

Buzzard Point Assets

A little bit further down river, in an area known as Buzzard Point, FRP Holdings owns 2 assets known as 1800 Half Street and Square 664E.  1800 Half Street is a 10 story, 344 apartment and 11,245 sqft multi-family joint venture project with MRP Realty (the developers on Dock 79 and The Maren) that FRPH invested $37.3mm into.  This is an opportunity zone investment and saved the company about $10mm in taxes if I remember correctly.   I think this project will do well in 5 years, but it will likely not experience the same fanfare as Dock 79 or The Maren.  This is because, Buzzard Point has less neighborhood amenities and less existing density than the Navy Yard.   It is also further away from the Metro station.  1800 Half Street does not have water frontage.  I think tax savings is a big driving factor in the decision here. 

On the other hand, there is a ton of public and private interest in seeing Buzzard Point experience the same kind of renaissance as the Navy Yard.  10-12 years ago, the Navy Yard was an industrial back water.  The only thing of note was the Washington National Stadium.  But many developers built simultaneously which created a critical mass of restaurants, residents, and outdoor open space. We believe the same thing is happening in Buzzard Point.  Current development projects Buzzard point include RiverPoint and 1900 Half Street which are multi-family projects in current lease-up; Peninsula 88 is a waterfront condo project that just came online, and Cambria Hotel is a new hotel that was delivered this year.  The good news is that when 1800 Half Street is delivered in 2022, there will be an existing core infrastructure in place.  Another feature of Buzzard Point is the Audi Soccer Stadium which serves as the home of D.C. United and as a community venue that hosts events and group work outs.  From our conversation with local residents, it is heavily utilized by the community.  We value the 1800 Half Street assets at a cost of $37.3mm. 

Square 664E is a 2-acre site being leased to Vulcan Materials as a concrete batch plant.   This site sits on the water in front of 1800 Half Street.  Vulcan has a lease that expires on August 31^st, 2021 but will extend an additional 5 years.  This is the perfect set up actually.  When the lease expires in 2026, FRP Holdings will be ready to build another 350k sqft luxury high-rise building.  We value this asset at $75/sqft which equates to $26.3mm.  Thus, the Buzzard Point assets total $63.6mm. 

Bryant Street Asset

This is another joint venture with MRP Realty.  Bryant Street is located 2 stations north of Union Station on the Red Metro Line called Rhode Island Ave – Brentwood.  This is a 5-acre site that will contain 487 units, 4 buildings, and includes a food hall and a movie theater.   It’s a 3-minute walk up a pedestrian bridge to get to the station which gets you to Union Station which connects to all areas of DC.  This is also an opportunity zone investment.  We have visited this site on 2-3 occasions.  We will sum it up as a “great location, neighborhood could be better.”  There have been more projects announced in the area since FRP Holdings made their investment.  The neighborhood currently sits in a great location but the demographics consist of those in the lower-income bracket and amenities for the city-dwelling young millennials are currently lacking.  These additional investments will create more amenities and features that will attract more tenants.  FRP invested $23mm in preferred equity earning 8.0% returns plus $32mm in common equity in exchange for a 61% interest in the JV.  The project is currently 92% complete with one building complete and currently in lease up status.  The remaining buildings will be delivered this summer when herd immunity will likely be in common place.   We conservatively value this project at book value of $58.6mm.  In reality, FRP Holdings and MRP Realty have consistently shown a track record of generating 20+% IRR on the common equity.  At 92% completion, we probably should add a 1.3x-1.4x multiplier to the common equity which will result in over $70mm of current value.  Of all of FRP Holding’s assets, we think that the common equity interests in 1800 Half Street and Bryant Street have the highest degree of uncertainty.   We think the preferred equity in Bryant Street will be money good.  Thus, this accounts for about $69mm or $7.40 per share of value. 

Miscellaneous Multi-family Assets

FRPH’s miscellaneous projects include 3 multi-family investments in Richmond, VA and Greenville, SC. FRP Holdings invested $6mm in DST Hickory Creek, a garden-style 294-unit multi-family apartment complex in Richmond, VA.  Richmond is one of those rare MF markets where rent was up about 6% in 2020.  The value has likely increased.  FRP Holdings receives a 6% annual distribution from this project.  The company also invested $16mm in 2 opportunity zone development projects in Greenville, SC.  Everything that we have read is that Greenville, SC is going through a renaissance and one of the areas benefitting from the net migration to the sunbelt.  The city has the potential to be the next Nashville or Austin on a smaller scale.  We think these projects are fine.   These miscellaneous projects are worth $22mm at cost. 

Multi-Family Summary Valuation

Navy Yard – Dock 79, The Maren, Phase 3 & 4 = $163.1mm

Buzzard Point - $63.6mm

Bryant Street - $58.6mm

DST Hickory/Greenville/Woodfield - $22mm

Total - $307.3mm

It is important to note that these valuations are likely conservative because the company has historically been a good capital allocator that earns double digit returns on common equity in the developments.  We use invested capital when in reality the value has grown due to entitlement, development, and lease up.  We tend to update our model as the projects are leased up and stabilized. 

3)      Cash Balance ($150mm)

They own $74mm of cash and $75.6mm of short-term fixed income instruments.  This is about $150mm of cash or roughly 33% of the market cap.  

4)      Miscellaneous Warehouses and Land (79.2mm)

1.      227k sqft of warehouse land at Hollander Business Park - @ 30/sqft = $6.8mm

2.      Recently acquired industrial land located at 1001 Old Philadelphia Road capable of supporting 625k of warehouse development - $10.5mm @ purchase price

3.      Cranberry Run Warehouse – 268k sqft value add warehouse 88% leased $21mm @ $80/sqft

4.      Hampstead Trade Center – 118-acre parcel seeking PUD entitlement for single family homes and townhouses = $8.9mm book value 

5.      Windlass Run – 329k sqft office project – $11mm

6.      34 Loveton Circle – 33.7k sqft office 16% occupied by FRPH’s Mid Atlantic executives - $6mm

7.      155 E 21^st Street – Jacksonville.  This is a former office building under lease with Vulcan through 2026.  Vulcan has demo’d the site but still pays rent. - $5mm

8.      Amber Ridge – Acted as a lender with 10% interest rate and 20% preferred return for 187 single-family town homes.  Under contract with 2 home builders to buy all lots upon completion of infrastructure development.  $10mm

5)      Summary Valuation

Multi-Family $307mm (Net of debt and JV interest)

Aggregates - $230mm

Cash - $150mm

Miscellaneous Warehouses and Land - $79.2mm (Net of debt and JV Interest)

Less NPV of income tax liabilities - $25mm

Divided by 9.36 shares outstanding

NAV/Share = $79.2 vs current share price of $49.22 or 62 cents on the dollar currently

Year End NAV of 2021 will likely be $85-88 per share depending on how many shares they buy back and the “write up” of Bryant Street after they lease up the building. 

Please note that these are based on Dec 31^st, 2021 financial figures.  The company has a tendency to increase NAV/Share by $1.50/2.00 a quarter through developments, cash generation, land appreciation, project completions, and share buybacks.  We update our valuation model almost quarterly and we can easily see accretion to NAV in this range.  

Management Team Quality

We have learned the hard way over the years that it is better to get in bed with good management teams.  The Bakers, John II and John III are high quality people who manage this company like a real family office rather than those characters who use swaps to obtain 6x leverage.  They are not interested in building an empire either.  Blackstone approached the company and offered them $359mm for their warehouse portfolio in 2018 and they sold.  From my 6 years of talking to the current CEO, CFO, head of development and the former CFO, everyone has been the salt of the earth kind of guy.  They have spent the time to explain to me why they have a unique business and why they are in no hurry to get rich, because they are quite wealthy already.  Current CEO, John Baker II, sold Florida Rock Industries to Vulcan Materials just before the financial crisis.  In both sales processes, they were approached and offered a very attractive price and they took the offer.  They have told me that they do not view themselves as operating a business.  They view themselves as operating a collection of assets and everything is for sale.  They are bothered by the gap between price and NAV.  If it takes selling the company to close it, they will do it. But it has to be a good price.  

What else have they done to create shareholder value?  At one point, FRP Holdings was combined with a company called Patriot Transportation which delivers fuel.  They spun that off because the trucking business was 80% of the revenue and only 10-20% of the value.  They also do not want a big fire ball of an accident and have some plaintiffs reach into the rock pit and real estate side of the business.  The spin was done to high light value of the hard assets and to ring fence liabilities.  Subsequent to the spinoff, they announced a REIT conversion.  This plan was shelved because Blackstone would buy their warehouse portfolio which took away the bulk of the distributable cashflow. 

Since 2018, they have bought back $35mm of shares which resulted in 6.5% reduction in shares outstanding.  They accelerated share buyback in 2020 buying back more than 5% of the shares outstanding at about $41.78.  I have a fondness for management teams that somehow have the cash and the guts to buy back shares during a year like 2020.     

So far, this management team has done everything that I would have done and they consistently surprise me positively with the investment and development outcomes.  They are first rate business people.

Why Is This Cheap?

The company owns a ton of assets that don’t currently generate any cashflow.  It is difficult to do the NAV analysis because you cannot just use a NOI figure and put a cap rate on it.  Some assets require a NOI/Cap rate analysis, some require a book value, some require looking at aggregate transactions.  But this will likely change by year end 2022.  By then The Maren and Bryant should be consolidated and the revenue and NOI figures should flow through the income statement.  This will suddenly reveal an incremental $18-19mm of NOI.  I believe algorithms will pick on this and FRP Holdings will become easier to screen.  As a matter of fact, The Maren reached stabilization and they will have to consolidate the results in the Q1 2021 quarter.  As such, they will likely write up the value to reflect the market value of The Maren.  I estimate a headline figure of roughly $40mm.  This could cause a short-term re-rate of 10% due to the algorithms picking up and or buyside becoming aware that they just complete a very successful new development. 

Additional Catalysts

The company continues to buy back shares.  We have done an analysis where we determined that 50% of the share holders are not sellers.  As the company continues to buy back shares, it continues to deplete sellers in the market.  Why are people selling?  I suspect that even the large mutual funds do not fully understand the value here and the pace of value creation.  In my conversation with other investor, people tend to be overly conservative rather than underwrite to the proper market value.  We do not aim for more decimal points of precision, we try to be more accurate in terms of whether the DC multi-family is a 4.25% cap rate or 5.5% cap rate.  Another way to think about the share buyback in 2020 is that the company actually bought back 10% of the public float.  There will be an inflection point when there will no longer be shares to purchase at the current price. 

How to Think About Expected Returns

One of the push backs is “who cares, FRP Holdings should trade at a perpetual discount to NAV.”  Let’s assume that the company is generating 6.5% ROE due to it being under levered at the moment.  I think that the ROE will trend towards 10% in the next few years.  This will likely be due to a combination of developing the land parcels and putting 50-60% long term mortgages on the property.  Using that math that I laid out earlier, it can easily achieve 10-11% levered returns.  The aggregate business generates 9% unlevered returns.  But I doubt they will ever put any leverage on it due to their conservative nature.  Shares currently create a 61% accretion and a 73% year end 2021 accretion.  Thus, an investor is capturing a 12-16% return on a look-through basis at $49 per share.  If the price to NAV discount closes, it can bring a 3-year CAGR to the 20-25% range.  We model an exit at 85% of NAV of $105 in year end 2023 which implies a 22% IRR over 2.75 years.  These are real estate private equity like returns without the single asset concentration risk and the boat load of leverage that comes with those projects.  I think public RE companies trade at large discounts when 1) asset quality is poor 2) capital allocation is subpar or 3) management team treats minority shareholders poorly.  None of these problems exist in this scenario.  Thus, we believe some discount is warranted and hence use an 85% exit price in our model.

Summary

FRP Holdings is a sleep-well-at-night investment where one can potentially compound at 22% in the next 2.75 years assuming an exit at 85% of NAV.  While it may not be the highest return in a portfolio, I think it is an outstanding anchor in a well-constructed portfolio.  The upcoming GAAP “write up” of The Maren could act as a 10% catalyst.  FRP Holdings can also become an interesting thematic play on the recently announced Biden Infrastructure bill that focus on roads and bridges.  It is also a thematic play on bigger Federal government in Washington, DC and net migration to sunbelt states such as Georgia and Florida.     

Catalyst

Earnings today.  Headline number of $40mm of GAAP Net Income likely 

Picking up steam as a thematic play on infrastructure and Sunbelt homebuilding exposure 

Price to NAV discount closing 

Continued share buyback