November Bob irish - 2025/12/04 16:23 EST - Transcript

Attendees

Bob Irish, Justin Ford

Transcript

Bob Irish: Bob Irish here with our monthly call with Justin Ford of PAX Properties. Today we're going to update you on all the standalone investments in Florida and of course keep you a breast of the underlying investments in the CAP plus diversified income fund. every month say it again throughout real estate booms and busts packs properties has never failed to produce a positive result for investors or…

Bob Irish: missed a mortgage payment. With that said, Justin, great to have you back. How are you doing?

Justin Ford: I'm doing great,…

Justin Ford: How are you?

Bob Irish: I'm doing I couldn't help but reflect on our call actually about a year ago and you had the phrase stabilized in 25. here we are towards the end of 25.

Bob Irish: Why don't you give us an update on where we are in terms of stabilizing in 25? I think we're kind of pretty stable.

Bob Irish: I think

Justin Ford: That's correct.

Justin Ford: So, we'll start with the two renovation properties in Tallahassee. So, the Swan, which was the former 7Hill Suites at that point was 25% occupied and we were in the middle of another round of  little about $2 and half million dollars worth of construction putting kitchens in. Today, all that construction is done. We're 71% leased and we're looking at a new refi there that will return significant capital to packs to support other properties. the zero interest loan there, but we'll talk about that later. and then Monarch also was starting renovations and we had maybe a dozen people there.

Justin Ford: We had been playing previously with short-term rentals there. but Monarch, this month, we are finishing the first of two buildings. By the end of the month, we expect to be actually starting leasing the first of two buildings and…

Bob Irish: Right. Right. Oklahoma

Justin Ford: the second building is 90% done and by the time the first building is done leasing at the end of January, the second building should be ready for lease as well. So those two have dramatically changed in that time. Those are the ones that needed to make the biggest jump to stabilization. And then if we go to Oklahoma. Yeah. Because there was another Ascend. At that point, we had just finished significant renovations. We went through all those delays because of the 72 balconies we had to build that the city hit us with. at this point last year,…

Justin Ford: we were about 65% occupied. And for the last six months, we've averaged about 95%    occupancy.

Bob Irish: Great.

Justin Ford: And we pushed rents quite a bit. Elevate at that time which is in Oklahoma of course had been consistently around low 90s, occasionally the high 80s. but Elevate for the last I'd say five out of last six months has been also in the mid So 95% also. and we've also p pushed rents there a little bit. and then also over in Tulsa, we were always in the low 90s there. We've averaged that for most months. that Tulsa, we've actually managed to push rents a bit because we hadn't pushed rents there as much. So rents the average rent there in Tulsa is probably up a good five to 7% in Tulsa,…

Bob Irish: Great.

Justin Ford: So we've done those are the major ones that faced the hurdle and stabilization. everything else had already been stabilized. and I'll just give you a quick update on those.

Bob Irish: Right. yeah.

Justin Ford: Vero, looking at selling. they were creative offers that that didn't come through. so we continue to operate that. We've won that for over 12 years. We've paid double digit returns quarterly basically since the beginning but the challenge with Vero is the market is down.  We're still outperforming For every dollar the comps set makes our repar we make about a$120 to a$125 but the market is down 30 to 40%. it's really down. So we're just plugging through on Vero right now. Of course we continue to pay the dividends distributions on that one because our basis is so low. But this is basically a negative quarter for us.

Justin Ford: But we're forecasting a very strong first quarter in Vero and we are entertaining in Vero putting on a flag to boost the revenue in this tough time quality in it would be one of the first flags we ever put on. We kept one before. the reason for that is we're the only midscale in that market and the only quality in is within 20 miles of us and their average daily rate is significantly higher than the independents. There's some pluses and minuses for that. when we would only sell to a person interested with quality in flag. but that's the math and the conversations we've been having and…

00:05:00

Bob Irish: Great.

Justin Ford: we've gone into deep detail. But regardless, again, because the base is so low, we're heading to a very strong first quarter.  bureau should have a decent 2026. If the market comes back, it should have a very good 2026, but we're still outperforming our comp set. if we jump up to Ocala, our equal at one point we were averaging just under a million dollars in NOI up until about 15 months ago.

Justin Ford: And then we boosted and then we grew and we used to compare oursel against the economy set and then we were doing so well we started to compare oursel against the midscale and we're even beating the midscale now because the market is down there too we're down a little bit but we're still way belove…

Bob Irish: What?

Justin Ford: where we were. I said I know I was just under a million for a long time then we got it up to over 1.3. we're just under 1.2 given that the market's down. But again, we're consistently beating our new higher comp set by, typically 5 to 7%. So, we're doing our part, but again, if interest rates come down a little bit, if the various of the macro factors settle down a little bit and economy picks up,…

Justin Ford: we'll do very very well. If it doesn't, we're still Doing tremendous well there.

Bob Irish: Great. …

Justin Ford: Yep. Correct.

Bob Irish: go I think that one of the reasons that stabilizing 25 was so important as a goal was by stabilizing you enable refies to happen.

Justin Ford: Okay.

Bob Irish: And so why don't you give us the outlook on the refi situation sort of across the board?

Justin Ford: So, we'll start in Oklahoma where we have three agency loans. We're at Apex.  shooting for a Fanny May that will pay off the existing mortgage, lower the rate and should the schedule to return about 7 to $800,000 to the fund on that. right now that was with Northark doesn't have what's called a small balance loan Freddy Mack program. and it doesn't have a balance sheet program where they also lend their own money. So we had also discussions with a company we've done two loans with before,  Greystone did a $13 million bridge at Renaissance and then a $17 million Fanny May at 4%. So, they've come up and they've offered us some compelling options that may now give us actually an extra million dollars rather than $700,000. We're not sure. but we're giving them that shot. If so, we've already had the appraisal.

Justin Ford: came in at about 74 which is more than enough to get that 47 that we were going to get from Fanny May through North Mark…

Bob Irish: Okay.

Justin Ford: but now we think we might get five or a little bit more with Greystone. So we'll know that in the next week or so. if we go to Elevate we're looking to get about 9 million right now. Elevate's been performing beautifully.  95% last month because it's a slow month and we had some moveouts. We dropped to 92 which is usually nothing. that's actually still good typically. But because of that their underwriting they changed $6,000 a month equates to $72,000 a year equates to about $700,000 in loan proceeds. So we're thinking what elevates doing fine right now. we're going to continue to crank. We're back up to 90. I think we're at 96 97 right now.

Justin Ford: We're going to see if we can hold that for a couple months and then go back and get that closer to 9 million rather than the low8s. So, we're waiting for our window. And again, if interest rates should come down a bit, I've written a letter to Santa Claus. And if they should come down a little bit, great. But if they don't, we'll still be fine. we'll lower our rate, we'll get a little bit of proceeds. then when you go to ascend, that's a seven six to seven month process.  We started about two months ago. We got It came in at a good number about 16.1 million. The HUD is a 35-year loan amortization. They give you 87% I'm sorry. So the loan could be around 13 to 13.5 million there. which recapizes that entire balance sheet, brings down a cost of capital significantly. we're having a call with them next week again.

Justin Ford: that's scheduled to close around April. So when we close on that will save hundreds of thousands of dollars of cash flow just right there at that property. those are the Oklahoma properties which are all in the fund and I'll mention just the step away from finance for a moment just to cover our other fund properties port St.

00:10:00

Justin Ford: We entered contract to sell that little parcel after all. We got the offer and we signed the contract. It's going to be for a million bucks. Again, it's kind of like Yep.

Bob Irish: Yeah. Fantastic.

Bob Irish: That's great.

Justin Ford: 's I mean, they have another, let's say, five months. So, after they do their due diligence, they can pull out. They only put up 25,000, which is fine. but it's a significant chain. It's called Murphy's Oil. but it's kind of found money because we sell that. we probably invested 35 grand to get to this point. so that's found money. It doesn't affect the value of The rest of the center still be nine acres on this great location, same income. but talking of that income, we think that's going to be very strong in 2026 because we have this dental practice I was talking about. We're expecting them to sign their lease in early January and they have 17 or 18 locations.

Justin Ford: And these dental practices pay more. where we might get, $12 to $13 a foot for the space we're leasing to them because of the nature of their buildout and so forth. We're getting closer to low 20s 20. So it's going to be significantly more. we have the United Parcel Service signed their lease and we're also expecting that other local bait and tackle to sell. So again, right now we're in the low will be in the high 90s occupancy should these leases get signed in January which is what we expect and…

Bob Irish: Right.

Justin Ford: so that's looking good. I just wanted to touch base on Port St. John on the other refies on the two conversion properties. They're not ready for permanent debt. That's the lower cost long-term 30-yearization type stuff like 10 years ready

Bob Irish: Right. Yeah.

Justin Ford: because even Swan's only at 71%. We got to be in the 90s to really get that. but we have an offer for a good bridge loan which will basically cost about what our bridge is now, but give us significant capital out. And also at Swan, we think we're going to get the same thing. And Swan will return probably about a few million dollars in investor capital as well.

Bob Irish: Okay.

Justin Ford: So, these are all processes that the holidays are going to slow it up a little bit, but they're all moving forward. and then as far as Renaissance performance, it continues to grow. we're waiting to see if we get those tax abatements at Renaissance and at Monarch and at Swan. Those could be significant. Those tax abatements would greatly increase the value of those properties. and also increase our ability to actually pull extra money out of Swan, which we weren't quite ready to do with the current valuation. but that tax abatement and any lower interest rates and

Justin Ford: so forth would do it. So I would say where we stabilize in 25 we're going to get the debt fixed in 26. that's and then we're working on all that.

Bob Irish: Fantastic.

Bob Irish: Hey, …

Bob Irish: speaking of debt, are there still any more of those 1% a month loans available? Okay.

Justin Ford: Always on the waiting list.

Justin Ford: We ask people to just put their name on the waiting list and if we could use some, then we'll reach out to the folks on the waiting list as and just email myself and my son I'm Justinpropies.com. He's chrispaxpropies.com. and put in the subject line 1% a month notes.

Bob Irish: Perfect. Justin,…

Justin Ford: Okay. Nope.

Bob Irish: anything else to add before we sign off?

Justin Ford: Just Bob, I wish you a very merry Christmas and a happy new year. Though we will touch base hopefully with an end of year recap.