FRP Holdings, Inc. (NASDAQ: FRPH) Announces Results for the Third Quarter and Nine Months Ended September 30, 2024
JACKSONVILLE, Fla., Nov. 06, 2024 (GLOBE NEWSWIRE) -- FRP Holdings, Inc. (NASDAQ-FRPH),
FRP Holdings is a real estate asset developer and manager across three differing asset classes including Multifamily, Industrial and Commercial, and Mining and Royalty.
Third Quarter Highlights
8% increase in Net Income ($1.4 million vs $1.3 million)
39% increase in pro rata NOI ($11.3 million vs $8.1 million)
Pro rata NOI includes a one-time, catch-up, minimum royalty payment of $1.9 million that applies to the prior twenty-four months as the tenant failed to meet a production requirement contained in the lease. This revenue was straight-lined over the life of the lease.
23% increase in the Multifamily segment's pro rata NOI primarily due to lease up of Bryant St., 408 Jackson, and The Verge. This comparison includes the results for these three projects from the same period last year (when these projects were still in our Development segment).
10% increase in Industrial and Commercial segment NOI
Executive Summary and Analysis, In the third quarter, the Company saw a 39% improvement in pro rata NOI compared to the same period last year, and a 28% increase in pro rata NOI in the first nine months compared to the same period last year. This is consistent with the 26.4% CAGR at which we have grown pro rata NOI over the last three years on a trailing twelve month basis. The growth in pro rata NOI for the third quarter was driven by increases across all segments but particularly in the Mining and Royalties segment (80% increase). The substantial increase in Mining Royalty NOI was due to a $2 million increase in unrealized revenue. This was mostly the result of a one-time, minimum royalty payment at one location which is straight-lined across the life of the lease for GAAP revenue purposes.
Shell construction is nearly complete for our Chelsea Project in Harford County, MD, which we expect to come in under budget. We are working to get shovel ready the sites of our two industrial JV's in Florida with an anticipated construction start for both in March of 2025. These three projects represent 640,000 square feet of new, Class A, industrial product requiring $116 million in total capex and are in keeping with our stated strategy of focusing on industrial development. We have underwritten all these projects at an unlevered 6-7% yield.
Comparative Results of Operations for the Three months ended September 30, 2024 and 2023
Consolidated Results
(dollars in thousands)
Three Months EndedSeptember 30,
2024
2023
Change
%
Revenues:
Lease revenue
$
7,434
7,509
$
(75
)
-1.0
%
Mining royalty and rents
3,199
3,082
117
3.8
%
Total revenues
10,633
10,591
42
.4
%
Cost of operations:
Depreciation, depletion and amortization
2,551
2,816
(265
)
-9.4
%
Operating expenses
1,860
2,012
(152
)
-7.6
%
Property taxes
850
919
(69
)
-7.5
%
General and administrative
2,289
1,948
341
17.5
%
Total cost of operations
7,550
7,695
(145
)
-1.9
%
Total operating profit
3,083
2,896
187
6.5
%
Net investment income
2,304
2,700
(396
)
-14.7
%
Interest expense
(742
)
(1,116
)
374
-33.5
%
Equity in loss of joint ventures
(2,839
)
(2,913
)
74
-2.5
%
(Loss) gain on sale of real estate
—
(1
)
1
-100.0
%
Income before income taxes
1,806
1,566
240
15.3
%
Provision for income taxes
427
467
(40
)
-8.6
%
Net income
1,379
1,099
280
25.5
%
Income (loss) attributable to noncontrolling interest
18
(160
)
178
-111.3
%
Net income attributable to the Company
$
1,361
1,259
$
102
8.1
%
Net income for the third quarter of 2024 was $1,361,000 or $.07 per share versus $1,259,000 or $.07 per share in the same period last year. Pro rata NOI for the third quarter of 2024 was $11,272,000 versus $8,085,000 in the same period last year including the one-time, $1.9 million royalty payment referenced in the third quarter highlights. The third quarter of 2024 was impacted by the following items:
Operating profit increased 6% as favorable results in Multifamily, Industrial and Commercial, and Mining were partially offset by higher net Development segment and General and administrative costs.
Net investment income decreased $396,000 due to reduced income from our lending ventures ($75,000) and decreased preferred interest ($613,000) due to the conversion of FRP preferred equity to common equity at Bryant Street partially offset by increased earnings on cash equivalents ($292,000).
Interest expense decreased $374,000 compared to the same quarter last year as we capitalized $408,000 more interest this quarter, partially offset by higher costs related to the increase in our line of credit with Wells Fargo. More interest was capitalized due to increased in-house and joint venture projects under development this quarter compared to last year.
Equity in loss of Joint Ventures improved $74,000 due to improved results of our unconsolidated joint ventures. Results improved at The Verge ($372,000) due to lease up but were lower at .408 Jackson ($104,000) due to an increased real estate tax assessment and BC Realty ($196,000) due to a $302,000 write off of design costs for offices on phase II as we made the decision to repurpose the plan to a higher and better use.
Multifamily Segment (Consolidated)
Our Multifamily Segment has two consolidated joint ventures (Dock 79 and The Maren).
Three months ended September 30
(dollars in thousands)
2024
%
2023
%
Change
%
Lease revenue
$
5,682
100.0
%
5,633
100.0
%
49
.9
%
Depreciation and amortization
1,985
35.0
%
2,265
40.1
%
(280
)
-12.4
%
Operating expenses
1,573
27.7
%
1,773
31.5
%
(200
)
-11.3
%
Property taxes
565
9.9
%
555
9.9
%
10
1.8
%
Cost of operations
4,123
72.6
%
4,593
81.5
%
(470
)
-10.2
%
Operating profit before G&A
$
1,559
27.4
%
1,040
18.5
%
519
49.9
%
Total revenues for our two consolidated joint ventures were $5,682,000, an increase of $49,000 versus $5,633,000 in the same period last year. Total operating profit before G&A for the consolidated joint ventures was $1,559,000, an increase of $519,000, or 50% versus $1,040,000 in the same period last year primarily due to lower depreciation and operating expenses. Depreciation decreased as some of the assets became fully depreciated. Operating expenses decreased due to lower maintenance, utilities, insurance and marketing costs.
Multifamily Segment (Pro rata unconsolidated)
Our Multifamily Segment has four unconsolidated joint ventures (Bryant Street, The Verge, Riverside, and .408 Jackson). Riverside was moved from the Development segment to the Multifamily segment in 2022, Bryant Street and .408 Jackson moved as of the beginning of 2024 and The Verge moved effective July 1, 2024, each upon reaching lease up stabilization.
Three months ended September 30
(dollars in thousands)
2024
%
2023
%
Change
%
Lease revenue
$
5,119
100.0
%
4,103
100.0
%
1,016
24.8
%
Depreciation and amortization
2,228
43.5
%
1,813
44.2
%
415
22.9
%
Operating expenses
1,895
37.0
%
1,652
40.3
%
243
14.7
%
Property taxes
467
9.1
%
487
11.9
%
(20
)
-4.1
%
Cost of operations
4,590
89.7
%
3,952
96.3
%
638
16.1
%
Operating profit before G&A
$
529
10.3
%
151
3.7
%
378
250.3
%
For our four unconsolidated joint ventures, pro rata revenues were $5,119,000, an increase of $1,016,000 or 25% compared to $4,103,000 in the same period last year. Pro rata operating profit before G&A was $529,000, an increase of $378,000 or 250% versus $151,000 in the same period last year.
Multifamily Segment (Pro rata consolidated and pro rata unconsolidated)
For ease of comparison all the figures in the tables below include the results for Bryant Street, .408 Jackson, and The Verge from the same period last year (when these projects were still in our Development segment).
Three months ended September 30
(dollars in thousands)
2024
%
2023
%
Change
%
Lease revenue
$
8,215
100.0
%
7,171
100.0
%
1,044
14.6
%
Depreciation and amortization
3,316
40.4
%
3,049
42.5
%
267
8.8
%
Operating expenses
2,749
33.5
%
2,622
36.6
%
127
4.8
%
Property taxes
774
9.4
%
788
11.0
%
(14
)
-1.8
%
Cost of operations
6,839
83.3
%
6,459
90.1
%
380
5.9
%
Operating profit before G&A
$
1,376
16.7
%
712
9.9
%
664
93.3
%
Depreciation and amortization
3,316
3,049
267
Unnrealized rents & other
30
64
(34
)
Net operating income
$
4,722
57.5
%
3,825
53.3
%
897
23.5
%
The combined consolidated and unconsolidated pro rata net operating income this quarter for this segment was $4,722,000, up $897,000 or 23% compared to $3,825,000 in the same quarter last year. Most of this increase was from the lease up of Bryant Street, .408 Jackson, and The Verge. These three projects contributed $2,542,000 of pro rata NOI to this segment compared to $1,787,000 in the Development segment in the same quarter last year, an increase of $755,000. Same store NOI increased $142,000 or 7%,
Apartment Building
Units
Pro rata NOIQ3 2024
Pro rata NOIQ3 2023
Avg.OccupancyQ3 2024
Avg.OccupancyCY 2023
RenewalSuccessRateQ3 2024
Renewal% increaseQ3 2024
Dock 79 Anacostia DC
305
$964,000
$952,000
94.0%
94.4%
71.4%
2.9%
Maren Anacostia DC
264
$973,000
$855,000
94.9%
95.6%
50.7%
2.3%
Riverside Greenville
200
$243,000
$231,000
94.0%
94.5%
56.0%
2.7%
Bryant Street DC
487
$1,537,000
$1,210,000
91.5%
92.9%
56.7%
2.0%
.408 Jackson Greenville
227
$362,000
$284,000
94.5%
59.9%
52.9%
6.1%
Verge Anacostia DC
344
$643,000
$293,000
90.1%
47.3%
63.6%
3.9%
Multifamily Segment
1,483
$4,722,000
$3,825,000
92.8%
81.0%
Industrial and Commercial Segment
Three months ended September 30
(dollars in thousands)
2024
%
2023
%
Change
%
Lease revenue
$
1,455
100.0
%
1,442
100.0
%
13
0.9
%
Depreciation and amortization
360
24.7
%
369
25.6
%
(9
)
(2.4
%)
Operating expenses
185
12.7
%
173
12.0
%
12
6.9
%
Property taxes
68
4.7
%
62
4.3
%
6
9.7
%
Cost of operations
613
42.1
%
604
41.9
%
9
1.5
%
Operating profit before G&A
$
842
57.9
%
838
58.1
%
4
0.5
%
Depreciation and amortization
360
369
(9
)
Unrealized revenues
7
(111
)
118
Net operating income
$
1,209
83.1
%
$
1,096
76.0
%
$
113
10.3
%
Total revenues in this segment were $1,455,000, up $13,000 or 1%, over the same period last year. Operating profit before G&A was $842,000, up $4,000 or 0.5% over the same quarter last year. We now have nine buildings in service at three different locations totaling 515,077 square feet of industrial and 33,708 square feet of office. These assets were 95.6% leased and occupied during the entire quarter. Net operating income in this segment was $1,209,000, up $113,000 or 10% compared to the same quarter last year primarily due to more unrealized rental revenue in the prior year due to rent abatements that expired in 2023.
Mining Royalty Lands Segment Results
Three months ended September 30
(dollars in thousands)
2024
%
