July Update with Justin Ford and Bob Irish

Jul 30, 2026

Pax Properties Monthly Update with Bob Irish - Transcript

Bob Irish: Bob Irish here with our monthly call with Justin Ford of Pax Properties. Today, as we usually do, we're going to update you on all the standalone investments in Florida and also keep you ab breast of the underlying investments in the clap in the cap plus diversified income fund. I say it every month, I'll say it again throughout real estate booms and busts. Pax properties has never failed to produce a positive result for investors or miss a mortgage payment. With that said, Justin, how are you? Nice to have you back.

Justin Ford: I'm doing well, Bob. Thank you. How are you?

Bob Irish: I'm doing just great. I'm doing just great. Justin, I thought we might divide the call up into two sections today. Let's talk about two things. First, let's run quickly through the ops, the operations of the properties, and kind of what's going on there, but I know there's been a lot of refi activity, financial stuff.

 

Bob Irish: Let's get to that in part two,

Justin Ford: Yeah,

Bob Irish: if you will. Does that sound good?

Justin Ford: sounds great. You know, it's funny. When I first started um real estate, I was doing little properties and you invested in a lot of them. And there was this one u investor I had. He's a big guy,

Bob Irish: Yeah.

Justin Ford: developed billions of dollars, just really, really great guy. And he came down and saw my little 10-unit property that I just renovated. You might have been an investor, too. And he goes, "Wow." He goes, "You're an op you're an operations guy." And I thought to myself, "Isn't everyone in real estate an operations guy?" But later, I learned that not everyone is. Some guys are really just finance guys and they find people to execute the operations and all that kind of stuff. And I met a friend uh another guy a long time later who's basically a finance guy putting together the money

Bob Irish: right?

​

 

Justin Ford: side. And I said, you know, you frustrate me because you have more units than I do, but you don't even know what a toilet flapper is. You know, he's and uh and you know, unfortunately, a lot of those finance guys have got caught in this in this in this in this kind of cycle uh because it's been it's been tough. So ops for me is everything because you don't find you can't finance a property with good debt unless you're operating well. So it all starts with operations and execution. And having said that, we really have a great team. Uh we put together systems and processes and um the operations are really strong right now. So I'll take you through the properties on the op side and then we can pause and I'll take you back through them on the finance

Bob Irish: Okay, that sounds great.

Justin Ford: side.

Bob Irish: Why don't we Why don't we start?

Justin Ford: Excellent. Yep.

Bob Irish: No.

Justin Ford: Our further south of this point property and our and our last remaining hotel.

 

Justin Ford: I might have mentioned a couple months ago, I think it won the trip advisor's top award again, the travel's choice award.

Bob Irish: I'm just getting bored with that,

Justin Ford: It's one right.

Bob Irish: Justin. It always is winning the top award, but I like hearing it every month.

Justin Ford: Right. Yep. Yep.

Bob Irish: Go ahead.

Justin Ford: And uh it's usually rated one or two. I didn't check it today, but it's top rated. And we are we are beating our comps consistently, sometimes by a couple points, sometimes by five or six. Um, the market, however, in Ocala is still down. It's down around 23%. Um, part of that months ago, it was a local thing. There was a horse virus or something that seems to be in the in the rearview mirror now, but of course there's, you know, gas prices are a big thing for people travel and um that's a challenge and many other things. But again, we're grabbing our market share and so we're doing well and we're paying uh we're paying that that nice new loan we put on the uh the SBA loan that allowed us to return a lot of money to investors.

​

Justin Ford: So, Ocala is doing well and is the hospitality market should it uh come back to its former strength in the next year or so, we expect to do even better. But right now, we're doing well even in a market that's a little bit down.

Bob Irish: Super. Let's go to

Justin Ford: Okay, we'll start with our uh our um renovated property. And again,

Bob Irish: Tallahassee.

Justin Ford: this is another one that gets boring. That's a Renaissance. 98% uh occupancy, 99% uh pre-lease. So 90 98% lease, 99% pre-leas. So, you know, performing really well. The average uh occupancy rates in the market right now around 93 94% in most of our markets and uh we've made moves recently to push that up and try to average mid to high 90s. And we're doing it certainly at the Renaissance. And as a result, it's um its trailing 12 earnings exceeded I think for the first time $1.6 million. It was about $1.61 million. So Renaissance is doing well.

 

ish: Fantastic.

Justin Ford: We're easily paying that 4% debt and delivering 10% uh returns to investors just as like at Ocala since the beginning. They've made between 8 and 10% cumulatively since the beginning. So the Renaissance is doing well and we think we're in a in a new era of super high occupancy there uh going forward.

Bob Irish: Fantastic. Let's talk about the two uh former hotels and how those are doing.

Justin Ford: Right.

Bob Irish: You want to start with the uh the old Baymont, now known as Monarch, or you want to start with

Justin Ford: Yep. Let's start with Swan since that's the one that's closest to stabilized.

Bob Irish: Swan?

Justin Ford: So Swan today is 85% occupied and 95% pre pre-leased.

Bob Irish: Wow.

Justin Ford: So it was 85% leased, 95% pre-leased. And uh it's performing beautifully. It's beautiful property. We have we have record traffic now coming in. So, we think we'll be, you know, solid 90 mid 90% at least by the end of August. And we've already started to talk about lenders uh because of where we are.

 

​

Justin Ford: You really need to be in 90 the mid 90s or low 90s to really get that process going, but we already have people interested. So, that's performing extremely well. Um, and a lot of the techniques we're applying over there that we've learned as far as lease up goes,

Bob Irish: Great.

Justin Ford: uh, we just put on a new marketing engine, a local marketing engine up there that turned out to be very good for us. And we also are applying it at Monarch. So Monarch, we're still finishing some last things with construction, but it hasn't prevented us from leasing up. So we're at 21% % occupied, 21% leased, and 27% pre-leased at Monarch. And we expect to knock off the last few details that the uh building department wanted to uh this month

Bob Irish: Okay.

Justin Ford: in August. So, our goal with Monarch is to be, you know, by the end of this year between 60 and 70% leased. And uh so far, it looks like we're on track to do

Bob Irish: Excellent.

​

 

Justin Ford: that.

Bob Irish: Excellent. Okay. Well, uh I think it's time to go to Oklahoma.

Justin Ford: Joe and we'll start in Tulsa, our oldest owned property out there. Uh we had a property manager was a good guy with us a couple years, recently left. Um he was a little bit of a got a little temperamental I guess or something. But and I knew him to be that way. He was a good guy. I had lunch with him. He would tell me I would occasionally, you know, cut his own throat just by blowing up for whatever reason. Uh but in any case, so he left. And uh what I really like about you know the team we have the group we built is that we can we can those changes will happen you for good or bad reasons people will leave in key positions and we'll work hard we have people to step in temporarily we'll find another good person and that's where we are right now we have a new manager there we had our regional who's over in Oklahoma City step in for a little while and help out and we're 96% leased and 96% pre-leased so we haven't really missed a beat there at Apex.

 

​

Bob Irish: Thanks.

Justin Ford: It's looking good.

Bob Irish: That's great. Uh, you want to go to more at this point?

Justin Ford: Well, actually, let's go to Oklahoma City. We'll go to Elevate because that's our second oldest owned property out there.

Bob Irish: Elevate. Okay.

Justin Ford: Uh, Elevate, we're working on that refi. Um, we'll talk about that in a moment, but the operations are certainly backing it up because we're at 97% lease there. We have one move out, so we'll be 96% lease, but again, that could we could add that tenant back or a couple more tenants in a few days. But again, it's another property where rather than, you know, hitting the low 90s, we're now hitting the mid to high 90s on a consistent basis. So, Oklahoma City is doing great. And then, um, the last one in our portfolio out there is uh, Ascend. Uh, Ascend is at 95% leased and 97% pre-leased. So, again, another high performer and that's the one where we're working on the HUD loan.

 

​

Justin Ford: But again, I'll touch on all the refies in a moment.

Bob Irish: Right.

Justin Ford: Um, if you want, we'll go to our shopping center real quick.

Bob Irish: Yeah.

Justin Ford: Talk about that.

Bob Irish: Let's go to Port St.

Justin Ford: Port St. John's has been,

Bob Irish: John.

Justin Ford: you know, 90 I think it's 94% occupied. We only have that one bay that's vacant and we're we've been working on selling that out parcel and we have a phone call tomorrow between the developers and um the real estate guy for Aldi's. They're working out one little detail, Bob. So the lease has to be amended because um Murphy's Oil, you know, has the right to sell beer and wine, you know, but they have to get that blessed by Aldi since Aldi is the master tenant in the whole place. So Aldi has signed it off. But so all Murphy's has 500 feet to sell their beer and wine, which is which is enough depending how thirsty you are, I guess. But so but it also says in proposed change.

​

Justin Ford: It was include uh plus aisle space and all these next out plus a isisle space. So tomorrow, you know, so tomorrow we're going to see if we can get whatever that means an extra 100 ft to sit there and look at the wine and the beer uh and get this deal done. But uh I'm pretty sure it will be worked out. The guy real estate guys immunable. I think it's just a question of getting people on the phone. And should that happen, we could close on the sale of that. Um it's scheduled for August 31st actually. So um we'll see what happens tomorrow, but we're closer than we've ever been.

Bob Irish: Wow.

Justin Ford: Uh that's a million dollar sale. You know, we'll have some expenses and so forth, but it'll net over 900 to um uh to the property, which is a nice little windfall because it was just a formerly outused uh out parcel that we figured out how to market.

Bob Irish: Sure. Sure.

Justin Ford: So So we're we're glad about that.

 

​

Bob Irish: Never heard of the concept of Isisle space before.

Justin Ford: Yeah. Right. Exactly.

Bob Irish: I guess I I guess it's a thing.

Justin Ford: It's probably important. Yeah. Um Okay. So now now what I will do is we'll touch a little bit on the finance we going got going on.

Bob Irish: Yeah.

Justin Ford: So so far this year and what's been a challenging year. Uh we've done five refies and we sold uh VR long sold property good sales. So those are those have been six very important financial moves. Right now we have two refi. And by the way, in the process, you know, we returned um probably over $5 million to investors. You know, little around four or so in Nocal and another one and change at Vero. And um so with these two refs we're working on, we'll return probably another $15 million is what we're looking for. So the um so the the Elevate refi, we're working with a local bank there. Um they've been underwriting a little bit slowly, but they're we're moving ahead and uh our our loan officer says he expects us to close in early August.

 

​

Justin Ford: Um that'll be basically a cash neutral deal.

Bob Irish: Okay.

Justin Ford: Uh we'll pay off the first mortgage and some private investor notes. We might have to kick in a couple hundred,000 actually to pay off the final bit from all the cash we have in the fund right now from the refies we did at at Swan and Monarch. Um but that should close in the first half of August. HUD was also supposed to close the HUD on more that's a that was going to be a $14 million loan. Um now it's probably $13 million loan because the way interest rates have moved up on us. Uh but that will still be more than enough to pay off um the first mortgage and all the secondary debt. We're expecting to pull out maybe $700,000 for the fund. We don't think that will happen now. Um but at least we're bringing down the cost of debt significantly there. So, but that now because the they were asking for certain modifications on the survey because F is very particular and has all these legal very specific requirements.

 

Justin Ford: uh that to make those modifications, the surveyor took far too long and I think he delivered on the final one today. So now we're we're looking for early September close on that uh September 10th.

Bob Irish: Okay.

Justin Ford: Um that means investors in the fund we can't distribute anything. All the cash we have in the fund or any cash we might receive uh from a HUD refi which now looks doubtful. We can't do that until we close the HUD refi. So it's going to be it's going to be mid September before we uh before we return make start return capital not return capital to start to um I'm sorry uh distributions

Bob Irish: Good distributions.

Justin Ford: correct so um so those two uh again the the HUD refi has been approved uh by Northmark who facilitates the loan and by HUD itself Northark actually makes a loan with HUD backing uh so it's been approved at both levels it's just this final these final details they took forever the the legal requirements is substantial. You'll find many real estate investors who shy away from HUD loans specifically because of the twists and turns we're going through given the fact that this was a renovation that took uh much longer than we wanted when we had to over uh redo those uh 72 balconies.

 

Justin Ford: And so our budget went up. We needed to maximize uh uh leverage get to get the biggest loan we could to pay off all the debt and bring bring it down to the best possible terms. HUD fit that bill. Uh but it's it's taken a while and uh we we've gone through these twists and turns, but we're we we're very confident that we're going to close in early September. Now, that's uh that's where we are with HUD. Um and then again on the Swan, we'll know if we have a loan um a new loan commitment probably by late August because it'll be in the 90s at that point. And also, we're waiting for our real estate trim notice that tells you what your taxes going to be in the in the year going forward. Once the the underwriters look at that and they're assured that the taxes are not going to be hiked uh dramatically under the new

Bob Irish: right?

Justin Ford: use, uh we hope to get a better loan for Swan uh because of that. So, making progress uh on those fronts.

 

​

Justin Ford: The last one after Swan will be Monarch. Of course, we can't really have the conversation to get into a uh a loan on Monarch until um until that's in the 90s. How However, one thing we're doing on finances, so right now our debt, our bridge debt should cost us around 10 and a half%. Aside from the points we pay when we when we have to loan, it's expensive. That that's what bridge debt is when you're doing construction and so forth. It can be higher than that actually. But what we may do is we may go into what's called a bridge to perm uh with an agency. So like uh if we decide to do a HUD for Swan, we may put work with a lender who knows that the HUD is basically pre-approved essentially. And so they'll give us money at a cheaper rate at 8%. Well, we go through the whole rigma roll with HUD, which takes six to seven months,

Bob Irish: Right.

Justin Ford: and then and then go into a 35 year amortized uh higher leverage loan that allows us to retire some of the uh some Next.

 

​

Justin Ford: access that there. So, that's where we are. Operations are, you know, performing very, very strongly. Um, we've executed um some important refies and and a property sale and we'll and we're working hard on executing uh three more three more important refies. Two by mid September and uh and the other early next year. So, so far so good. We just like things to go a little quicker, but we're doing all we can on our side.

Bob Irish: Well, we said upfront we were going to talk about two things. The ops sound just fantastic and uh you know you've turned it the ops seem to be running themselves. You've turned into a finance

Justin Ford: Yeah,

Bob Irish: guy.

Justin Ford: we that's kind of Yeah, that's funny. But I always know what a toilet flap is. Believe me, when they call me and they tell me I know what they're talking

Bob Irish: Yeah.

Justin Ford: about exactly.

Bob Irish: And you know about space now. A lot of a lot of people don't know about that.

Justin Ford: No,

Bob Irish: Well,

Justin Ford: no,

Bob Irish: this has been a great update. Uh, anything you want to add before we sign off,

Justin Ford: no. I think that about covers it. I I hope we're going to have a very firm by next time we meet,

Bob Irish: Justin?

Justin Ford: we'll talk about the elevator loan being closed and we'll we'll be just perhaps a couple weeks away from closing the HUD, but we'll and we'll I'm putting out um you know, the quarterly reports in next week. So, folks will be um have the recent financials and a further update there.

Bob Irish: Okay, sounds great, Justin.

Justin Ford: Always a

Bob Irish: Thanks so much. Great to see you again. I look forward to talking with you next

Justin Ford: pleasure, Bob. Thank

Bob Irish: month.

Justin Ford: you.