David deVilliers: Thank you for that, Bill. We appreciate — obviously, we appreciate all of your thoughts. And it’s — and hopefully, we can continue to stay the course and continue to build on the relationship.
Bill Chen: Yes. Yes. I’m not going anywhere, guys. I’m not going anywhere. You guys will have to deal with me for a long time.
David deVilliers: That’s a great problem for us to have.
Bill Chen: I mean, it creates a minor problem that I won’t sell anything, so there’s no liquidity in the stock.
David deVilliers: Appreciate all the your royalty and your support, your candor, we really do.
Bill Chen: Yes. I appreciate everything you guys do, and that’s all the questions and comments I have.
Operator: We will take our next question from Bill Ratner, private investor.
Unidentified Analyst: I was just wondering if you could flesh out a bit the cash balance, how much of that is earmarked for capital versus what is essentially freely available for things like share repurchases and other discretionary types of investments?
John Baker: Bill, I believe we have in the ballpark of $80 million earmarked for capital expenditures for 2024. And we obviously want to keep a pretty healthy capital cushion, and we have plans beyond 2025. The stock price will obviously dictate the extent to which we make share repurchases. But in terms of any kind of meaningful share repurchase program. I think that we would — in terms of major blocks of capital, it’s all going to go back into — to developing assets as opposed to share repurchases. We’re going to nibble opportunistically if we have a chance, but it’s not going to be a meaningful amount compared to what we put into development.
Unidentified Analyst: And then with respect to the aggregates assets, you said that you don’t factor in the second life value into your NAV analysis. If you were to include that second life value, can you provide any parameters around what you think an appropriate second-life valuation would be for your assets?
John Baker: Bill, I think that’s — it’s so nebulous given the time line of those events. The two that come to mind Fort Myers and like Lisa Brookville as well. And we’re a long ways away from Fort Myers and and Lake Lalisa. Yes, I think that it would just be a pie in the sky number. It’s essentially raw land and so in terms of going through entitlements and zoning and permitting, just if I were to give you a number, it wouldn’t be based on anything in reality. So we have sort of nothing to base it on. So right now we prefer not to guess.
Unidentified Analyst: Is your comment around entitlements, perhaps suggesting that there might not be as much land value as investors might think because the entitlement process, the costs involved would be pretty significant relative to the second-line value? Or is it just more that it’s so far out in the future that it doesn’t want to make a call?
John Baker: Yes.
Unidentified Analyst: Okay. And then one last question. Going back to the previous questioner. So this Martin Marietta transaction seemed like a very high multiple. And if you look at Martin Marietta stock and stocks of comparable companies, these companies are trading at very high valuations. You guys are clearly very opportunistic investors. Can you just comment on why you would continue to own these assets as opposed to monetizing them and what appears to be a pretty robust environment for these types of assets?
John Baker: That’s an interesting question. I think if you look at the way that they’ve pushed price, just the accelerated growth of our income stream as good as the valuations are, I think we’re going to take a bet on them outpacing the present value. And to Bill’s point, slapping a EBITDA multiple on the royalty stream that maybe that’s not the appropriate way to look at it. And I don’t know Vulcan or Martin or any of our other tenants appetite for pouring money into reserves that they already control. I think everybody is kind of happy with the way things are. We certainly are. And just from an after-tax perspective, if we had a $300 million transaction that we — desperate to make. Maybe that would be a source of liquidity, but to just sell the asset and pay the taxes on it.
That’s certainly not the best use of the money we generate from those assets. And they are also just a — I mean, they have been — I mean $10 million a year with no debt on it is a tremendous cash flow engine to fuel debt redevelopment. So I think we’re really happy with that income stream the way it is. But if you want to pay those valuations for them, we’re all years.
Unidentified Analyst: Well, it just seems to me that you don’t know until you go out and hire a banker and run a process. And in an environment maybe like 12 to 24 months ago, the likelihood of finding a good bid might have been not there, but the market has — it seems like the market changed from my perspective. But maybe to your point, they already control the assets. So what’s the point, but you never know until you hire a banker.
John Baker: Very true. I think we would know just given our relationship to Martin and Vulcan, if they had an appetite for buying those assets, we’d probably hear about it. Astatula, the purchase of the Blandford property, we were able to accomplish that because of our relationship with Vulcan, and they just as the policy didn’t want to put money into reserves that they already controlled. You are correct in that you don’t ask, don’t get, but I think if they wanted to buy them — the second, they want to buy them, we’re going to hear about it.
