• FRP Holdings, Inc. (Nasdaq: FRPH) Announces Results For The First Quarter Ended March 31, 2023

    Source: Nasdaq GlobeNewswire / 10 May 2023 10:48:56   America/Chicago

    JACKSONVILLE, Fla., May 10, 2023 (GLOBE NEWSWIRE) -- FRP Holdings, Inc. (NASDAQ-FRPH) 

    First Quarter Operational Highlights

    • 34.9% increase in pro-rata NOI ($6.99 million vs $5.18 million) over first quarter 2022
    • Mining Royalties had its highest revenue quarter ever for the second quarter in a row; 10.77% increase in royalties per ton
    • 27.5% increase in Asset Management revenue versus same period last year; 60.6% increase in Asset Management NOI versus first quarter 2022

    First Quarter Consolidated Results of Operations

    Net income for the first quarter of 2023 was $565,000 or $.06 per share versus $672,000 or $.07 per share in the same period last year. The first quarter of 2023 was impacted by the following items:

    • Operating profit increased $1,490,000 compared to the same quarter last year due to improved revenues and profits in all four segments.
    • Interest expense increased $268,000 compared to the same quarter last year due to less capitalized interest. We capitalized less interest because of fewer in-house and joint venture projects under development this quarter compared to last year.
    • Interest income increased $1,484,000 due primarily to an increase in interest earned on cash equivalents.
    • Equity in loss of Joint Ventures increased $2,021,000 due to losses during lease up at The Verge and .408 Jackson.
    • First quarter last year included a $733,000 gain on sales of excess property at Brooksville.

    First Quarter Segment Operating Results

    Asset Management Segment:

    Total revenues in this segment were $1,070,000, up $231,000 or 27.5%, over the same period last year. Operating profit was $295,000, up $147,000 from $148,000 in the same quarter last year. Revenues and operating profit are up because of rent growth at Cranberry Run, full occupancy at 1865 62nd Street which was placed into service in the fourth quarter of 2021. We now have nine buildings in service at three different locations totaling 548,785 square feet of office and industrial. At quarter end, we were 99.4% leased and 91.4% occupied. Net operating income in this segment was $787,000, up $297,000 or 60.6% compared to the same quarter last year.

    Mining Royalty Lands Segment:

    Total revenues in this segment were $3,282,000 versus $2,425,000 in the same period last year. Total operating profit in this segment was $2,790,000, an increase of $701,000 versus $2,089,000 in the same period last year. This increase is the result of the additional royalties from the acquisition in Astatula, Florida, which we completed at the beginning of the second quarter 2022, as well as increases in revenue at nearly every active location. Net Operating Income this quarter for this segment was $3,148,000, up $856,000 or 37% compared to the same quarter last year.

    Development Segment:

    With respect to ongoing projects:

    • We are the principal capital source of a residential development venture in Prince George’s County, Maryland known as “Amber Ridge.” Of the $18.5 million in committed capital to the project, $17.1 million in principal draws have taken place through quarter end. Through the end of March 31, 2023, 144 of the 187 units have been sold, and we have received $17.5 million in preferred interest and principal to date.
    • Bryant Street is a mixed-use joint venture between the Company and MRP in Washington, DC consisting of four buildings: The Coda, The Chase 1A, The Chase 1B, and one commercial building 90% leased to an Alamo Draft House movie theater. At quarter end, the Coda was 93.51% leased and 92.86% occupied, The Chase 1B was 89.44% leased and 85.71% occupied, and The Chase 1A was 89.53% leased and 93.60% occupied. In total, at quarter end, Bryant Street’s 487 residential units were 90.8% leased and occupied. Its commercial space was 84.2% leased and 79.0% occupied at quarter end.
    • Lease-up is now underway at The Verge, and at quarter end, the building was 32.0% leased and 23.6% occupied. Retail at this location is 45.0% leased. The Verge received its final certificate of occupancy this past quarter. This is our third mixed-use project in the Anacostia waterfront submarket in Washington, DC.
    • .408 Jackson is our second joint venture project in Greenville. Leasing began in the fourth quarter of 2022 with residential units 52.9% leased and 29.1% occupied at quarter end. Retail at this location is 100% leased and currently under construction and expected to open during the fourth quarter of this year. The building received its final certificate of occupancy this past quarter.
    • Final vertical construction at the Hollander Business Park was completed in the quarter with delivery of 1941 62nd Street, a 101,750 square foot build-to-suit warehouse. Subsequent to quarter end, the park was fully leased and occupied.
    • Grading permits for a 258,545 square-foot warehouse building on Chelsea Road in Aberdeen, Maryland were submitted to the governing agencies for approval. Subsequent to the end of the quarter, Harford County issued a moratorium on any future industrial development with the exception of projects that had already received preliminary site plan approval. Because this project qualified for the exception, it is not subject to the moratorium and can proceed as planned.  

    Stabilized Joint Venture Segment:

    In the fourth quarter of 2022, as part of our new partnership with Steuart Investment Company and MidAtlantic Realty Partners, we sold a 20% ownership interest in a tenancy-in-common (TIC) of Dock 79 and The Maren for $65.3 million, $44.5 million attributable to the Company, placing a combined valuation of the two buildings at $326.5 million.

    Total revenues in this segment were $5,276,000, an increase of $216,000 versus $5,060,000 in the same period last year. The Maren’s revenue was $2,591,000 an increase of 7.5% and Dock 79 revenues increased $34,000 to $2,685,000 or 1.3%. Total operating profit in this segment was $804,000, an increase of $438,000 versus $366,000 in the same period last year. Pro-rata net operating income this quarter for this segment was $2,022,000, down $116,000 or 5.4% compared to the same quarter last year because of the sale of our 20% TIC interest in both properties to SIC, mitigated by $222,000 in NOI from our pro-rata share Riverside.

    At the end of March, The Maren was 96.59% leased and 93.18% occupied. Average residential occupancy for the quarter was 95.54%, and 50% of expiring leases renewed with an average rent increase on renewals of 7.98%. The Maren is a joint venture between the Company and MRP and SIC, in which FRP Holdings, Inc. is the majority partner with 56.3% ownership.

    Dock 79’s average residential occupancy for the quarter was 92.79%, and at the end of the quarter, Dock 79’s residential units were 92.46% leased and 93.44% occupied. This quarter, 65.12% of expiring leases renewed with an average rent increase on renewals of 4.52%. Dock 79 is a joint venture between the Company and MRP and SIC, in which FRP Holdings, Inc. is the majority partner with 52.8% ownership.

    During the third quarter of 2022, we achieved stabilization at our Riverside Joint Venture in Greenville, South Carolina. At quarter end, the building was 96.5% leased with 95.0% occupancy. Average occupancy for the quarter was 94.42% with 55.17% of expiring leases renewing with an average rental increase of 11.40%. Riverside is a joint venture with Woodfield Development and the Company owns 40% of the venture.

    Summary and Outlook

    Royalty revenue for this quarter was up 35.35% over the same period last year. This marks the third year in a row we have begun the year with the best first quarter of revenue in segment history. It also marks the second quarter in a row with the highest revenue quarter for any period ever. Revenue for the last twelve months was $11,540,000, an increase of 20.51% over the same period last year. This is the first time we have achieved revenues in this segment surpassing $11 million in any twelve-month period.

    In Stabilized Joint Ventures, both The Maren and Dock 79 enjoyed renewal rates in line with expectations (50.00% and 65.12% respectively) and strong increases in rents on those renewals (7.98% and 4.52% respectively). Pro-rata NOI is down for the segment, which is to be expected after selling 20% of our share to SIC. NOI for the two projects as a whole increased 5.3% compared to the same period last year ($3,302,000 vs $3,137,000).   Riverside in Greenville (which was added to this segment in the third quarter of last year) has maintained strong occupancy (94.42% this quarter) post stabilization. The renewal rate on expiring leases (55.17%) is in line with expectations, but the increase on renewals of 11.40% speaks to the attractiveness of the asset and the strength of this market. Our pro-rata share of NOI at Riverside this quarter was $222,000.

    In our Asset Management Segment, overall leasing and occupancy increased compared to the same period last year leading to a 60.6% increase in Net Operating Income. We are currently 100% leased, and 91.4% occupied at our industrial assets. When the final tenant takes occupancy at 1841 62nd Street in the second quarter of 2023, we will be 100% leased and occupied at all 515,077 square feet of our industrial compared to 75.0% leased and 52.5% occupied on 413,327 square feet at the end of 2021.

    We will continue to monitor how inflation and interest rates affect our plans moving forward. We have a long-term vision for the future of the Company, but we are not going to rush into anything if the cost of material and debt prevent us from making a reasonable risk adjusted return. As we mentioned in our shareholder letter, we have no plans to institute a major share buyback plan or special dividend, but if we feel like we can repurchase shares at a meaningful discount to net asset value, we will continue to nibble around the edges. We have excellent assets in place; our cash is generating a reasonable return; and we can afford to be patient about putting our plan in place.

    Conference Call

    The Company will host a conference call on Thursday, May 11, 2023 at 10:00 a.m. (EDT). Analysts, stockholders and other interested parties may access the teleconference live by calling 1- 800-245-3047 (passcode 57458) within the United States. International callers may dial 1-203-518-9783 (passcode 57548). Audio replay will be available until May 25, 2023 by dialing 1-888-566-0825 (no passcode required) within the United States. International callers may dial 1-402-220-0427. An audio replay will also be available on the Company’s investor relations page (https://www.frpdev.com/investor-relations/) following the call.

    Investors are cautioned that any statements in this press release which relate to the future are, by their nature, subject to risks and uncertainties that could cause actual results and events to differ materially from those indicated in such forward-looking statements. These include, but are not limited to: the impact of the Covid-19 Pandemic on our operations and financial results; the possibility that we may be unable to find appropriate investment opportunities; levels of construction activity in the markets served by our mining properties; demand for flexible warehouse/office facilities in the Baltimore-Washington-Northern Virginia area; demand for apartments in Washington D.C. and Greenville, South Carolina; our ability to obtain zoning and entitlements necessary for property development; the impact of lending and capital market conditions on our liquidity; our ability to finance projects or repay our debt; general real estate investment and development risks; vacancies in our properties; risks associated with developing and managing properties in partnership with others; competition; our ability to renew leases or re-lease spaces as leases expire; illiquidity of real estate investments; bankruptcy or defaults of tenants; the impact of restrictions imposed by our credit facility; the level and volatility of interest rates; environmental liabilities; inflation risks; cybersecurity risks; as well as other risks listed from time to time in our SEC filings; including but not limited to; our annual and quarterly reports. We have no obligation to revise or update any forward-looking statements, other than as imposed by law, as a result of future events or new information. Readers are cautioned not to place undue reliance on such forward-looking statements.

    FRP Holdings, Inc. is a holding company engaged in the real estate business, namely (i) leasing and management of commercial properties owned by the Company, (ii) leasing and management of mining royalty land owned by the Company, (iii) real property acquisition, entitlement, development and construction primarily for apartment, retail, warehouse, and office, (iv) leasing and management of a residential apartment building.

    FRP HOLDINGS, INC. AND SUBSIDIARIES
    CONSOLIDATED STATEMENTS OF INCOME
    (In thousands except per share amounts)
    (Unaudited)
      THREE MONTHS ENDED
      MARCH 31,
      2023 2022
    Revenues:    
    Lease revenue $6,832   6,282 
    Mining lands lease revenue  3,282   2,425 
    Total revenues  10,114   8,707 
             
    Cost of operations:        
    Depreciation, depletion and amortization  2,780   2,898 
    Operating expenses  1,740   1,808 
    Property taxes  947   1,028 
    Management company indirect  839   774 
    Corporate expenses
    		  954   835 
    Total cost of operations  7,260   7,343 
             
    Total operating profit  2,854   1,364 
             
    Net investment income  2,382   898 
    Interest expense  (1,006)  (738)
    Equity in loss of joint ventures  (3,625)  (1,604)
    Gain on sale of real estate  10   733 
             
    Income before income taxes  615   653 
    Provision for income taxes  209   249 
             
    Net income  406   404 
    Gain (loss) attributable to noncontrolling interest  (159)  (268)
    Net income attributable to the Company $565   672 
             
    Earnings per common share:        
    Net income attributable to the Company-        
    Basic $0.06   0.07 
    Diluted $0.06   0.07 
             
    Number of shares (in thousands) used in computing:        
    -basic earnings per common share  9,416   9,366 
    -diluted earnings per common share  9,456   9,417 


    FRP HOLDINGS, INC. AND SUBSIDIARIES
    CONSOLIDATED BALANCE SHEETS
    (Unaudited) (In thousands, except share data)
     
      March 31 December 31
    Assets: 2023 2022
    Real estate investments at cost:        
    Land $141,578   141,579 
    Buildings and improvements  281,193   270,579 
    Projects under construction  2,663   12,208 
    Total investments in properties  425,434   424,366 
    Less accumulated depreciation and depletion  59,940   57,208 
    Net investments in properties  365,494   367,158 
             
    Real estate held for investment, at cost  10,298   10,182 
    Investments in joint ventures  144,677   140,525 
    Net real estate investments  520,469   517,865 
             
    Cash and cash equivalents  173,299   177,497 
    Cash held in escrow  585   797 
    Accounts receivable, net  1,333   1,166 
    Unrealized rents  937   856 
    Deferred costs  2,410   2,343 
    Other assets  566   560 
    Total assets $699,599   701,084 
             
    Liabilities:        
    Secured notes payable $178,594   178,557 
    Accounts payable and accrued liabilities  3,169   5,971 
    Other liabilities  1,886   1,886 
    Federal and state income taxes payable  313   18 
    Deferred revenue  201   259 
    Deferred income taxes  68,013   67,960 
    Deferred compensation  1,357   1,354 
    Tenant security deposits  881   868 
    Total liabilities  254,414   256,873 
             
    Commitments and contingencies        
             
    Equity:        
    Common stock, $.10 par value
    25,000,000 shares authorized,
    9,503,633 and 9,459,686 shares issued
    and outstanding, respectively    		  950   946 
    Capital in excess of par value  66,281   65,158 
    Retained earnings  342,882   342,317 
    Accumulated other comprehensive income (loss), net  (902)  (1,276)
    Total shareholders’ equity  409,211   407,145 
    Noncontrolling interest  35,974   37,066 
    Total equity  445,185   444,211 
    Total liabilities and equity $699,599   701,084 

    Asset Management Segment:

      Three months ended March 31    
    (dollars in thousands) 2023 % 2022 % Change %
                 
    Lease revenue $1,070   100.0%  839   100.0%  231   27.5%
                             
    Depreciation, depletion and amortization  278   26.0%  234   27.9%  44   18.8%
    Operating expenses  141   13.2%  168   20.0%  (27)   -16.1%
    Property taxes  60   5.6%  53   6.3%  7   13.2%
    Management company indirect  114   10.6%  92   11.0%  22   23.9%
    Corporate expense  182   17.0%  144   17.2%  38   26.4%
                             
    Cost of operations  775   72.4%  691   82.4%  84   12.2%
                             
    Operating profit $295   27.6%  148   17.6%  147   99.3%

    Mining Royalty Lands Segment:

      Three months ended March 31    
    (dollars in thousands) 2023 % 2022 % Change %
                 
    Mining lands lease revenue $3,282   100.0%  2,425   100.0%  857   35.3%
                             
    Depreciation, depletion and amortization  183   5.6%  55   2.3%  128   232.7%
    Operating expenses  17   0.5%  15   0.6%  2   13.3%
    Property taxes  69   2.1%  65   2.7%  4   6.2%
    Management company indirect  116   3.5%  107   4.4%  9   8.4%
    Corporate expense  107   3.3%  94   3.9%  13   13.8%
                             
    Cost of operations  492   15.0%  336   13.9%  156   46.4%
                             
    Operating profit $2,790   85.0%  2,089   86.1%  701   33.6%

    Development Segment:

      Three months ended March 31
    (dollars in thousands) 2023 2022 Change
           
    Lease revenue $ 486   383   103 
                 
    Depreciation, depletion and amortization  55   45   10 
    Operating expenses  94   211   (117) 
    Property taxes  287   355   (68)
    Management company indirect  511   490   21 
    Corporate expense  574   521   53 
                 
    Cost of operations  1,521   1,622   (101) 
                 
    Operating loss $(1,035)  (1,239)  204 

    Stabilized Joint Venture Segment:

      Three months ended March 31    
    (dollars in thousands) 2023 % 2022 % Change %
                 
    Lease revenue $5,276   100.0%  5,060   100.0%  216   4.3%
                             
    Depreciation, depletion and amortization  2,264   42.9%  2,564   50.7%  (300)  -11.7%
    Operating expenses  1,488   28.2%  1,414   27.9%  74   5.2%
    Property taxes  531   10.1%  555   11.0%  (24)  -4.3%
    Management company indirect  98   1.9%  85   1.7%  13   15.3%
    Corporate expense  91   1.7%  76   1.5%  15   19.7%
                             
    Cost of operations  4,472   84.8%  4,694   92.8%  (222)  -4.7%
                             
    Operating profit $804   15.2%  366   7.2%  438   119.7%

    Non-GAAP Financial Measures.

    To supplement the financial results presented in accordance with GAAP, FRP presents certain non-GAAP financial measures within the meaning of Regulation G promulgated by the Securities and Exchange Commission. We believe these non-GAAP measures provide useful information to our Board of Directors, management and investors regarding certain trends relating to our financial condition and results of operations. Our management uses these non-GAAP measures to compare our performance to that of prior periods for trend analyses, purposes of determining management incentive compensation and budgeting, forecasting and planning purposes. We provide Pro-rata net operating income (NOI) because we believe it assists investors and analysts in estimating our economic interest in our consolidated and unconsolidated partnerships, when read in conjunction with our reported results under GAAP. This measure is not, and should not be viewed as, a substitute for GAAP financial measures.

    Pro-rata Net Operating Income Reconciliation           
    Three months ended 03/31/23 (in thousands)           
         Stabilized      
     Asset   Joint Mining Unallocated FRP
     Management Development Venture Royalties Corporate Holdings
     Segment Segment Segment Segment Expenses Totals
    Net Income (loss) 215   (2,608)  (255)  2,034   1,020   406 
    Income Tax Allocation 80   (967)  (36)  754   378   209 
    Income (loss) before income taxes 295   (3,575)  (291)  2,788   1,398   615 
                            
    Less:                       
    Unrealized rents 82   —   —   48   —   130 
    Gain on sale of real estate —   —   —   10   —   10 
    Interest income —   972   —   —   1,410   2,382 
    Plus:                       
    Unrealized rents —   —   45   —   —   45 
    Equity in loss of Joint Ventures —   3,512   101   12   —   3,625 
    Interest Expense —   —   994   —   12   1,006 
    Depreciation/Amortization 278   55   2,264   183   —   2,780 
    Management Co. Indirect 114   511   98   116   —   839 
    Allocated Corporate Expenses 182   574   91   107   —   954 
                            
    Net Operating Income (loss) 787   105   3,302   3,148   —   7,342 
                            
    NOI of noncontrolling interest —   —   (1,502)  —   —   (1,502)
    Pro-rata NOI from unconsolidated joint ventures —   926   222   —   —   1,148 
                            
    Pro-rata net operating income$787   1,031   2,022   3,148   —   6,988 


    Pro-rata Net Operating Income Reconciliation           
    Three months ended 03/31/22 (in thousands)           
         Stabilized      
     Asset   Joint Mining Unallocated FRP
     Management Development Venture Royalties Corporate Holdings
     Segment Segment Segment Segment Expenses Totals
    Net Income (loss) 108   (1,541)  (274)  2,050   61   404 
    Income Tax Allocation 40   (572)  (2)  760   23   249 
    Income (loss) before income taxes 148   (2,113)  (276)  2,810   84   653 
                            
    Less:                       
    Unrealized rents 128   —   —   53   —   181 
    Gain on sale of real estate —   —   —   733   —   733 
    Equity in gain of Joint Ventures —   —   85   —   —   85 
    Interest income —   803   —   —   95   898 
    Plus:                       
    Unrealized rents —   —   46   —   —   46 
    Equity in loss of Joint Ventures —   1,677   —   12   —   1,689 
    Interest Expense —   —   727   —   11   738 
    Depreciation/Amortization 234   45   2,564   55   —   2,898 
    Management Co. Indirect 92   490   85   107   —   774 
    Allocated Corporate Expenses 144   521   76   94   —   835 
                            
    Net Operating Income (loss) 490   (183)  3,137   2,292   —   5,736 
                            
    NOI of noncontrolling interest —   —   (999)  —   —   (999)
    Pro-rata NOI from unconsolidated joint ventures —   441   —   —   —   441 
                            
    Pro-rata net operating income$490   258   2,138   2,292   —   5,178 
                            

     


    Contact: 
John D. Baker III
Chief Financial Officer 
904/858-9100

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