Williams406

First, MCF is now a part of an enterprise that isn't that small anymore. I don't know enough about Independence's asset base yet to answer the valuation question. I see some things in common with INDT here post merger in that the combined company will have a lower cost of capital than MCF did, and scale it did not have. If this becomes KKR's main energy investment vehicle, it will be able to swing pretty big in a field where I suspect there are some big swings over the next few years.

MCF combining with KKR energy sub. Goff on call: "Adds a zero to deals we can do." https://contango.com/

TwoCitiesCapital, I tuned in to the earnings call yesterday and about half of the investor day call today (first half with Cataford) and didn't pick up on anything warranting a big sell off. Not sure I'd attribute the price movement to any revelation of fundamental deterioration. Same basic story long-term shareholders are familiar with. Maybe someone was looking for a positive surprise and didn't get it. Maybe someone wanted cable exposure and thought Altius was Altice and realized their mistake. Maybe someone saw a whale dumping shares at $17.50 and got scared?

Champion's David Cataford joined the Altius investor day presentation. He stated "targeting Kami for quite a while" giving me the impression not just an opportunistic, distressed add-on. Feasibility study being re-done to focus on highest-grade ore. I think I heard some reference to 8-12 million tonnes/year.

No, nothing on the call yesterday. Page 12 of 2020 AR, bottom of first column.

Phase 3 of Riverfront looks like commercial, with phase 4 slated for hotel/residential, both phases with ground-floor retail. Given that Maren and Dock 79 are not in opportunity zones requiring a 10-year hold and the company's stated strategy of not holding stabilized real estate long term, anyone see a sale of Maren and Dock 79 in the near future? Maybe wait for rent escalation if rent freezes in DC are lifted?

Some personal experience in support of the strength of the tailwinds driving Sunbelt population growth: I moved from a "failed" midwestern state to the Sunbelt within the past two years. Roughly concurrently or subsequently, I know personally a dozen families that have moved just to my area from my old stomping grounds (literally the same city). These aren't recent retirees moving to FL, nor am I. In a couple cases, those families have also brought retired parents with them and siblings' families. The families, in all cases have kids still at home, pre-college. They pulled them from schools. Many left jobs, though in several cases had transportable jobs (or decided to re-build a business in a new place.) In short, there were social and career barriers to making the move. The cost of living differential was significant, allowed an easy underwriting of the move financially for most, but has always been there. Political trends were a big immediate factor (I'll leave that there), but the critical mass idea comes in to play. Two of us made the move independently, but others had the same desire to move somewhere else. It took knowing others who had made the move, who you could talk to about their experience, to get them over the hump. Nearby is a high-end retirement community and I've met some residents there. They moved more recently from my same state in the Midwest and mentioned getting hit with an "exit" tax at the municipal level (technically I think its a house transfer tax). A common refrain from me and many of these new Sunbelters is "Why didn't I do this sooner?" Winters are milder and shorter. Costs are lower. We have Costco nearby. Great restaurants. Housing around me is largely SF and is extremely hot. 20+ offers right away and you better have everything lined up. Land, same story. Low inventory. It has been a strong market for 10+ years but went red-hot in the past year. Realtors are happy. We live in between two good-sized cities that are both on fire and are getting some population growth here due to "overflow" from those cities. Certainly some investors/flippers are in the market, but I think a lot of demand here, at least, is people, new to the area trying to buy a house. A lot of people are on the move and many of them are coming to the Sunbelt. I'm not sure what interrupts that. Tailwinds for now.

Haven't looked at this thread in a while. Gregmal, thepupil...I gotta start seeing new people. REIT conversion may well be back on the table for FRP. Most of their recent investments require a 10-year holding period due to Opportunity zone rules. Since tabling the REIT conversion, they've said they will no longer be in the business of holding real estate long term, but plans are made for changing and the Bakers have a habit of mixing things up in unexpected ways. Another thing to consider with FRP is growth. From the 2020 shareholder letter: "FRP entered 2020 with one building and 305 units and we will exit 2021 with seven buildings and 1,256 units...two more projects and 671 units will follow in 2022." Maren, phase two of their DC, Anacostia development was nearing stabilization at year end--almost certainly there as I speak. Expect a non-recourse loan/cash out soon. They claim that leased up a lot faster than they planned under pre-covid expectations.

Ericopoly, I'm pretty sure you do have a different mindset than the typical retail investor. The sales channel here are brokers and RIA's so you have to think about the incentives of the brokers/advisers as well. In a market dislocation where you have worried clients do you recommend redemption of non-publicly-traded preferreds--which aren't showing a decline on the monthly statements--at a penalty or do you dump other things that are more obviously painful to mollify the client?

To Ericopoly's read-through on the press release that management would rather buy more MF than reduce preferred outstanding and the shell game of issuing preferreds/buying office/selling office/buying MF: I don't know this management team well at all, but perusing the shareholder letters from 2018-2020, listening to the recent earnings call, and following the transactions over the past year or so, I get the strong sense that Joel Murphy assumed the CEO role (January 2020) with the intent to disrupt the status quo a bit. 2018's letter--signed by Silverstein (COO and President, founder)--acknowledges some push-back on the diversification strategy while defending it and claims the preferred-funding system are a key, positive differentiator for the company. 2019's letter, the first signed by Joel Murphy after he assumed the CEO spot January 1, 2020, introduced the phrase, repeated in 2020 that "what got us here won't get us there." A couple months after Murphy assumed the CEO spot, Silverstein resigns both from his operating role and the Board and returns to practicing law. I suspect there was some disagreement about the path forward. This is a different management team than the one that issued preferred stock to buy office properties. Murphy has communicated the intent to follow a different path than his predecessors and has taken major steps consistent with that. What the balance looks like between growing MF and reducing net preferreds, we'll see.

I'll have what thepupil's having. "embrace the 4.0 cap..." Wax in the ears and lash me to the mast, lads!

My big question a few weeks ago was how willing the company would be to part with office and/or retail. While I don't know that retail is any sort of sacred cow, I note that PAC's CEO was CEO of the retail division from 2014-2020. Maybe they go 100% MF, but I'd be okay with MF and Retail (New Market) provided they focus on preferred stock reduction. What I want to see now (assuming rest of Office sold soon): Call as much preferred as the call schedule allows and add nothing to MF. The portfolio--sans office--is great, trim the few non-sunbelt MF properties. Your balance sheet is the problem, not a poor portfolio. Fix that and your equity comp and my equity position make us happy.

If I'm reading things right, after this transaction, PAC still has about 40% of pre-sale leaseable square footage (office) and 47% of office NOI they are looking to sell.

FRP Holdings owns aggregate royalties in VA, GA, and FL, so I think that biz serves as a data point for Sunbelt construction activity/population growth. From the 2020 FRP shareholder letter: "Yet the shock we feared would finally precipitate a down cycle after a decade of growth, did not appear to impact this segment and may have actually spurred further growth. Volumes for our mining royalties business grew by 160,000 tons in 2020, but volumes for the last seven months of 2020 actually grew by 499,000 tons—meaning all of our volume growth happened during the pandemic. This phenomenon bears out in housing data. Coming out of the initial shock of the pandemic, as of September 30, 2020, Florida and Georgia were significantly outpacing the national average for new housing permits issued. As migration into the sunbelt continues, we stand particularly well positioned to benefit from it. Aggregates prices are particularly “sticky” because of the high barriers to entry inherent to the industry from both a capital and regulatory perspective. And if you look at pre-COVID numbers, of the top 15 states by aggregates volume in 2019, Florida, Georgia, and Virginia ranked fifth, third, and first in pricing per ton, respectively. All three were still below 70% of their peak volumes. Even if volumes do not reach the levels the industry and our markets experienced nearly a decade and a half ago, there is clearly still room for volume growth, and the ability to push prices remains unimpeded."

Well said, thepupil. It sounds like we are in a similar position--I have a small starter stake here and see enough to really want more at a lower price. To illustrate the position JOE has in Bay/Walton counties and PCB, specifically, look at what the Phillip Griffitts, Sr. Parkway is. To ease congestion around Pier Park North (JOE owned), Parkway was built through JOE land with city, county, state funds. Now JOE has all that road frontage and accessibility deeper in to its acreage off the coast. Second phase of parkway going in, $11 million cost footed by city/county/state. https://www.newsherald.com/story/news/local/2021/03/30/panama-city-beach-opening-phase-2-phillip-griffitts-sr-parkway-summer/6979500002/ I imagine force vectors, one from the coast to inland (of course), and the other from Latitude Margaritaville Watersound development that is just starting (about 6-7 miles inland, I think), heading toward each other. Much of the acreage in between is JOE country. Minto is a good partner and does things well. It's nice to have land in the path of development, JOE is going to get that from two directions. This new health campus, grocery stores, etc. will follow population growth. Virtuous cycle stuff. JOE isn't going to run out of projects for a very long time and the JV cash flow will stack up over time. Look at the prices they are getting at Camp Creek: https://ir.joe.com/news-releases/news-release-details/st-joe-company-sells-all-23-homesites-first-offering-watersound. Crazy. Camp Creek isn't on the water.