FRP (FRPH) - 2025 Q1 - Quarterly Results

Overview and Financial Highlights FRP Holdings saw significant Q1 2025 Net Income and pro rata NOI growth, driven by mining and multifamily, while focusing on new developments Executive Summary and Analysis FRP Holdings reported a 31% Net Income and 10% pro rata NOI increase in Q1 2025, driven by mining and multifamily, focusing on new developments despite headwinds Q1 2025 vs Q1 2024 Performance | Metric | Q1 2025 (in millions) | Q1 2024 (in millions) | Change | | :--- | :--- | :--- | :--- | | Net Income | $1.71 | $1.30 | +31.4% | | EPS | $0.09 | $0.07 | +28.6% | | Pro Rata NOI | $9.36 | $8.53 | +10% | - Key performance drivers for the quarter include increased mining royalty revenue, improved occupancy at The Verge, and higher interest income from lending ventures[3] - The company warns of temporary headwinds, including a tenant default in the Industrial segment and a glut of new projects in the Washington, D.C. multifamily market, which may temper future growth[3][4] - The strategic focus for 2025 is on new developments, including breaking ground on two industrial JVs and starting construction on two multifamily projects (810 units), aiming to double the industrial segment's size over five years[5] First Quarter Highlights Q1 2025 saw Net Income up 31% and pro rata NOI up 10%, with Multifamily and Mining Royalty Lands NOI increasing, despite a decline in Industrial and Commercial NOI - Net Income: Increased 31% to $1.7 million from $1.3 million[8] - Pro Rata NOI: Increased 10% to $9.4 million from $8.5 million[8] - Multifamily NOI: Increased 3%, mainly from improved occupancy at The Verge[8] - Industrial & Commercial NOI: Decreased 2% due to a tenant eviction and write-off[8] - Mining Royalty Lands NOI: Increased 19%[8] Consolidated Financial Performance Q1 2025 consolidated revenues slightly increased, but operating profit declined; improved joint venture results and reduced interest expense led to higher net income Comparative Results of Operations Q1 2025 consolidated revenues rose 1.7% to $10.3 million, but operating profit fell 19.3%; Net Income increased 31.4% to $1.71 million, driven by improved JV results and lower interest expense Consolidated Results of Operations (in thousands) | Metric | Q1 2025 | Q1 2024 | Change | % Change | | :--- | :--- | :--- | :--- | :--- | | Total Revenues | $10,306 | $10,133 | $173 | 1.7% | | Total Operating Profit | $2,325 | $2,882 | ($557) | -19.3% | | Equity in loss of joint ventures | ($2,031) | ($3,019) | $988 | -32.7% | | Net income attributable to the Company | $1,710 | $1,301 | $409 | 31.4% | - Operating profit decreased by 19% primarily due to higher General & Administrative expenses related to an executive succession plan and an industrial tenant default[9] - The improvement in 'Equity in loss of Joint Ventures' was driven by better results at The Verge ($409k), Bryant Street ($444k), and BC Realty ($107k), attributed to improved occupancy and lower variable rate interest expenses[11] - Interest expense decreased by $216,000 as the company capitalized $211,000 more in interest this quarter due to increased development activity[9] Segment Performance Analysis This section analyzes the performance of Multifamily, Industrial and Commercial, Mining Royalty Lands, and Development segments, detailing their contributions and operational changes Multifamily Segment Multifamily segment pro rata NOI rose 3.1% to $4.63 million in Q1 2025, driven by improved occupancy at The Verge, with overall portfolio occupancy reaching 94.0% Multifamily Segment Pro Rata Performance (in thousands) | Metric | Q1 2025 | Q1 2024 | Change | % Change | | :--- | :--- | :--- | :--- | :--- | | Lease Revenue | $8,305 | $7,883 | $422 | 5.4% | | Operating Profit before G&A | $1,423 | $1,170 | $253 | 21.6% | | Net Operating Income (NOI) | $4,630 | $4,489 | $141 | 3.1% | Key Property Performance Q1 2025 | Property | Avg. Occupancy | Pro Rata NOI (in thousands) | Renewal Success | | :--- | :--- | :--- | :--- | | Dock 79 | 95.6% | $905 | 65.1% | | Maren | 93.9% | $855 | 52.5% | | Bryant Street | 92.5% | $1,539 | 47.1% | | Verge | 93.5% | $753 | 75.0% | Consolidated Multifamily (Dock 79 & The Maren) Consolidated multifamily properties Dock 79 and The Maren saw a 17% decrease in operating profit before G&A to $1.21 million, driven by increased operating expenses - Operating profit before G&A for consolidated properties decreased by $239,000 (17%) year-over-year, primarily due to higher operating expenses and property taxes[19] Pro Rata Unconsolidated Multifamily Unconsolidated multifamily JVs achieved strong growth, with pro rata revenues up 8% to $5.35 million and operating profit before G&A surging 97% to $751,000 - Pro rata operating profit before G&A for unconsolidated JVs increased by $370,000 (97%) year-over-year, driven by improved performance at The Verge, Bryant Street, and .408 Jackson[21] Industrial and Commercial Segment Industrial and Commercial segment NOI declined 2% to $1.14 million in Q1 2025, and operating profit before G&A fell 21% due to a tenant default and eviction, reducing occupancy to 85.2% Industrial and Commercial Segment Performance (in thousands) | Metric | Q1 2025 | Q1 2024 | Change | % Change | | :--- | :--- | :--- | :--- | :--- | | Lease Revenue | $1,347 | $1,453 | ($106) | -7.3% | | Operating Profit before G&A | $643 | $812 | ($169) | -20.8% | | Net Operating Income (NOI) | $1,139 | $1,159 | ($20) | -1.7% | - Occupancy for the quarter was 85.2%, down from 95.6% in Q1 2024, due to an eviction of a tenant for failure to pay rent[23] Mining Royalty Lands Segment Mining Royalty Lands segment showed strong Q1 2025 performance, with revenues up 9% to $3.23 million and NOI up 19% to $3.28 million, despite a 10% decrease in royalty tons Mining Royalty Lands Segment Performance (in thousands) | Metric | Q1 2025 | Q1 2024 | Change | % Change | | :--- | :--- | :--- | :--- | :--- | | Mining Royalty Revenue | $3,234 | $2,963 | $271 | 9.1% | | Operating Profit before G&A | $2,965 | $2,724 | $241 | 8.8% | | Net Operating Income (NOI) | $3,284 | $2,760 | $524 | 19.0% | - Royalty tons decreased by 10% compared to the prior year, which had a project-specific spike in demand. However, royalty revenue per ton increased by 7% (excluding the prior year's overpayment deduction)[24] Development Segment The Development segment advanced key projects in Q1, securing construction loans for two new industrial JVs, completing a spec warehouse, and progressing residential lot sales - Entered two new industrial JVs with Altman Logistics for warehouse projects in Lakeland, FL (200,000 sq-ft) and Broward County, FL (182,000 sq-ft). Construction is anticipated to start in Q2 2025[25] - Completed shell construction on the Chelsea Road spec warehouse in Aberdeen, MD, which is now in the lease-up phase as of April 1, 2025[25] - In the Harford County, MD residential lot development, 133 lots have been sold, and $19.1 million has been returned to the company, of which $4.8 million was booked as profit[25] Financial Statements This section presents the company's consolidated balance sheets, detailing assets, liabilities, and equity as of March 31, 2025 Consolidated Balance Sheets As of March 31, 2025, FRP Holdings reported total assets of $717.1 million, a decrease from year-end 2024, with total liabilities and equity also slightly decreasing Consolidated Balance Sheet Highlights (in thousands) | Account | March 31, 2025 | December 31, 2024 | | :--- | :--- | :--- | | Net Real Estate Investments | $568,015 | $573,060 | | Cash and Cash Equivalents | $142,932 | $148,620 | | Total Assets | $717,123 | $728,485 | | Secured Notes Payable | $178,250 | $178,853 | | Total Liabilities | $256,627 | $259,372 | | Total Equity | $460,496 | $469,113 | Non-GAAP Financial Measures This section reconciles non-GAAP financial measures, specifically Pro Rata Net Operating Income (NOI), to their most directly comparable GAAP measures Pro Rata Net Operating Income (NOI) Reconciliation This section reconciles Q1 2025 GAAP Net Income of $1.63 million to Pro Rata NOI of $9.36 million, a non-GAAP measure used by management to analyze performance trends Pro Rata NOI Reconciliation Q1 2025 (in thousands) | Segment | Pro Rata NOI | | :--- | :--- | | Industrial and Commercial | $1,139 | | Development | $311 | | Multifamily | $4,630 | | Mining Royalties | $3,284 | | Total Pro Rata NOI | $9,364 | Pro Rata NOI Reconciliation Q1 2024 (in thousands) | Segment | Pro Rata NOI | | :--- | :--- | | Industrial and Commercial | $1,159 | | Development | $126 | | Multifamily | $4,489 | | Mining Royalties | $2,760 | | Total Pro Rata NOI | $8,534 | Other Information This section provides details on the upcoming conference call and important forward-looking statements Conference Call Information A conference call to discuss quarterly results is scheduled for Tuesday, May 13, 2025, at 9:00 a.m. EDT, with access details for live participation and replay - A conference call is scheduled for Tuesday, May 13, 2025, at 9:00 a.m. (EDT). An audio replay will be available until May 27, 2025[32] Forward-Looking Statements This section includes a standard safe harbor statement, cautioning that forward-looking statements are subject to risks like development, tenant defaults, and interest rate volatility - The report includes a disclaimer that forward-looking statements are subject to risks and uncertainties that could cause actual results to differ materially. These include development risks, tenant demand, interest rates, and competition[34]