Strategic Transition and Platform Scaling
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Management characterized 2025 as a transition year focused on expanding scale and capabilities, specifically through the Altman Industrial acquisition which added 1.6 million square feet of pipeline.
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The strategic shift for 2026 moves from investment and repositioning toward execution, focusing on converting vacant industrial square footage into durable cash flow.
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Industrial occupancy declines were attributed to anticipated lease rollover timing, though leasing velocity was slower than expected due to lengthened tenant decision cycles.
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The multifamily segment faced headwinds from supply pressure in Washington D.C., resulting in increased concessions and continued delinquency challenges despite stable performance in South Carolina.
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Management highlighted a significant valuation gap, with an estimated NAV per share of $37.60 compared to recent trading prices between $20 and $24.
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The Mining and Royalties segment continues to serve as a high-margin stabilizer, providing durable cash flow with minimal capital requirements to support balance sheet flexibility.
2026 Investment Framework and Growth Outlook
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2026 is designated as an investment year with G&A expected to rise to $15-$16 million to support the infrastructure of the expanded Altman platform.
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Management expects G&A as a percentage of NOI to be elevated in the low 40% range before trending toward the low 20% range as development stabilizes.
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The industrial strategy targets a path to stabilization in the low 90% occupancy range over the next 18 to 24 months, representing $3.3 million in incremental annual NOI.
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Development remains the primary value driver with a $441 million pipeline expected to generate approximately $30 million in stabilized incremental NOI over time.
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Capital allocation will prioritize completing the current pipeline and formalizing a deployment model focused on infill land positions with structural barriers to entry.
Operational Risks and Structural Adjustments
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Operating expense pressures and retail revenue softness impacted multifamily results, particularly in the competitive D.C. market.
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The Altman acquisition introduces a merchant build-and-sell component to the business model, allowing for capital recycling and fee income alongside long-term holds.
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Management noted that while D.C. Rental Reform Acts are intended to assist with the eviction cycle, the process remains protracted, taking roughly 13 to 15 months.
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Liquidity of $144 million and a net debt to enterprise value of 21% are maintained to fund development without reliance on asset sales.
Q&A Session Insights
Absorption of new multifamily supply in the D.C. market
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Approximately 2,000 new units recently came online near company assets, leading to intense competition and rental concessions of 2 to 3 months.
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While velocity is good and units are being absorbed, the supply pressure has forced a balance between maintaining occupancy and managing rental growth.
Impact of delinquencies on economic occupancy and eviction timelines
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Delinquencies represent approximately 5% of vacancy, and while recent legislative changes in D.C. aim to help landlords, the eviction cycle has not yet meaningfully shortened.
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Management noted that a cycle that should ideally take 3 months is currently taking closer to 13 to 15 months.
Industrial leasing velocity and tenant decision-making trends
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Tenant demand is characterized as more deliberate rather than absent, with longer internal sign-off processes and increased focus on labor adjacency and transportation costs.
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Early 2026 has shown increased activity, including more tours and proposals, which management attributes to both market stabilization and improved internal execution.
Status of Florida and New Jersey development deliveries
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Major Florida assets are delivering this summer with equity fully funded; remaining capital will be drawn from construction loans.
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New Jersey projects are also nearing shell completion this summer, with the focus shifting toward marketing and stabilization.
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