FRP Q1 2025 Earnings Report

FRP EPS Results

• Actual EPS: $0.09
• Consensus EPS: N/A
• Beat/Miss: N/A
• One Year Ago EPS: N/A

FRP Revenue Results

• Actual Revenue: $10.31 million
• Expected Revenue: N/A
• Beat/Miss: N/A
• YoY Revenue Growth: N/A

FRP Announcement Details

• Quarter: Q1 2025
• Date: 5/12/2025
• Time: After Market Closes
• Conference Call Date: Tuesday, May 13, 2025
• Conference Call Time: 9:00AM ET

FRP (NASDAQ:FRPH) engages in the real estate business in the United States. It operates through four segments: Industrial and Commercial, Mining Royalty Lands, Development, and Multifamily. The Industrial and Commercial segment owns, leases, and manages commercial properties. The Mining Royalty Lands segment leases and manages mining royalties owned by the company primarily in Florida, Georgia, and Virginia. The Development segment owns and monitors the use of parcels of land that are in various stages of development; and acquires, constructs, and develops primarily for apartment, retail, warehouse, and office buildings. The Multifamily segment owns, leases, and manages buildings through joint ventures. The company was incorporated in 2014 and is based in Jacksonville, Florida.

FRP Q1 2025 Earnings Call Transcript

Key Takeaways

• Net income rose 31.4% year-over-year to $1.7 million ($0.09 per share) and pro rata NOI increased 10% to $9.4 million, driven by strong mining royalty (919% increase), multifamily, and development contributions, while industrial/commercial NOI dipped due to a tenant eviction.
• Over the past three years, FRP has achieved a 21.8% CAGR in pro rata NOI, though management expects growth to slow in the near term as the current development pipeline—including the Chelsea project—progresses through construction and lease-up before contributing meaningful NOI.
• The company’s industrial and commercial development pipeline will expand from 550,000 sq ft to over 2.7 million sq ft, highlighted by a completed 258,000 sq ft Parriman warehouse and JVs on 200,000 sq ft in Lakeland and 182,000 sq ft in Broward, with four key buildings targeting 850,000 sq ft and $7.9–9.2 million annual NOI by stabilization.
• The multifamily segment, comprising 1,827 apartments (94% occupied) and 25,000 sq ft of retail (74.8% occupied), delivered a 4% same-store revenue increase with flat NOI due to higher expenses, while renewal rates averaged over 2% rent growth despite competitive new deliveries in the DC market.
• Looking ahead, FRP anticipates flat to slightly negative NOI in 2025 amid new spec building carry-costs and stabilization headwinds, while pursuing its long-term strategy to double the industrial platform over five years and commence two new multifamily projects adding 810 units and an estimated $6 million NOI.

Presentation

[Operator]

Good day, everyone, and welcome to the FRP Holdings Inc. Twenty twenty five First Quarter Earnings Call. At this time, all participants are in a listen only mode. Later, there will be a question and answer session.

[Operator]

Please be advised that today's call is being recorded. Should you require operator assistance, you may press 0. I'd now like to turn the floor over to Matt McNulty. Please go ahead.

[Matthew Mcnulty, CFO & Treasurer at FRP]

Thank you, Jamie. Good morning. I'm Matt McNulty, Chief Financial Officer of FRP Holdings Inc. And with me today are John Baker III, our CEO David DeVillier III, our Chief Operating Officer David DeVillier Jr, former President John Baker II, our Chairman John Milton, our Executive Vice President and General Counsel and John Clopenstein, our Chief Accounting Officer.

[Matthew Mcnulty, CFO & Treasurer at FRP]

First, let me run through

[Matthew Mcnulty, CFO & Treasurer at FRP]

a brief disclosure regarding forward looking statements and non GAAP measurements used by the company. As a reminder, any statements on this call, 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 risks and uncertainties are listed in our SEC filings. We have no obligation to revise or update any forward looking statements except as imposed by law as a result of future events or new information. To supplement the financial results presented in accordance with Generally Accepted Accounting Principles, FRP presents certain non GAAP financial measures within the meaning of G promulgated by the Securities and Exchange Commission.

[Matthew Mcnulty, CFO & Treasurer at FRP]

The non GAAP financial measures referenced in this call are net operating income and pro rata net operating income. FRP uses these non GAAP financial measures to analyze its operations and to monitor, assess and identify meaningful trends in its operating and financial performance. This measure is not and should not be viewed as a substitute for GAAP financial measures. To reconcile net operating income to GAAP net income, please refer to the segment titled non GAAP financial matters in our most recent earnings release. Any reference to cap rates, asset values, per share values or the analysis of the estimated value of our assets, net of debt and liabilities, are for illustrative purposes only as a reflection of how management views its various assets for purposes of informing management decisions and do not necessarily reflect the price that would be obtained upon a sale of the asset or the associated cost for tax liability.

[Matthew Mcnulty, CFO & Treasurer at FRP]

Now for the financial highlights following our first quarter results. Net income for the first quarter increased 31.4% to 1,700,000 or $09 per share versus $1,300,000 or $07 per share in the same period last year. The company's pro rata share of NOI in the first quarter increased 10% year over year to $9,400,000 mostly driven by higher contributions from our multifamily developments and mining royalty segments. Versus last year, the multifamily segment contributed an additional $141,000 of NOI. The mining segment contributed an additional $524,000 of NOI and the development segment another $185,000 of NOI.

[Matthew Mcnulty, CFO & Treasurer at FRP]

It is worth noting that our industrial and commercial segment NOI decreased by $20,000 year over year due to the vacancy and uncollectible revenue as result of a tenant that was evicted during the quarter. Over the last three years, we have grown pro rata NOI at a compound annual growth rate of 21.8%. We anticipate that this growth rate will continue to slow in the near term as our current pipeline of projects in development, which includes our new Chelsea project, move through their respective construction and lease up phases and then begin to generate meaningful new NOI over the next few years. Earlier today, we posted to our website a brief slide show of financial highlights for the first quarter, which includes for illustrative purposes an estimated value of our real estate assets net of debt and liabilities. Again, we provide this information to reflect how management uses various assets for the purpose of informing management decisions and do not necessarily reflect the price that will be obtained upon the sale of the asset or the associated costs or tax liability.

[Matthew Mcnulty, CFO & Treasurer at FRP]

I will now turn the call over to our COO, David DeVillier III, for his report on operations. David?

[David deVilliers, President & COO at FRP]

Thank you, Matt, and good morning to those on the call. Allow me to provide additional insight into the first quarter results of the company. Starting with our commercial and industrial segment, this segment consists of nine buildings totaling nearly 550,000 square feet, which are mainly warehouses in the state of Maryland. At quarter end, 85.2% of the buildings were leased and occupied. Total revenues and NOI for the quarter totaled 1,300,000 and $1,100,000 respectively, a decrease of 72% over the same period last year.

[David deVilliers, President & COO at FRP]

The decrease was due to a 57,000 square foot tenant, which is 10% of this business segment, defaulting on its case obligations and subsequent eviction in q one twenty twenty five. Moving on to the results of our mining and royalty business segment. This division consists of 16 minuteing locations, predominantly located in Florida and Georgia, with one mine in Virginia. Total revenues and NOI for the quarter totaled $3,200,000 and $3,300,000 respectively, an increase of 919% over the same period last year. As for our multifamily segment, this business segment consists of 1,827 apartments and over a 25,000 square feet of retail located in Washington DC and South Carolina.

[David deVilliers, President & COO at FRP]

At quarter end, the apartments were 94% occupied, and the retail space was 74.8% occupied. Total revenues and NOI for the quarter were $14,300,000 and $8,000,000 respectively. FRP share of revenues and NOI for the quarter totaled $8,300,000 and $4,600,000 respectively. This is an increase over prior quarters due to the verge being included in this segment as of 07/01/2024. The first contributed 1,400,000.0 and 753,000 in revenue and NOI this quarter.

[David deVilliers, President & COO at FRP]

As a same store comparison, which includes DOC, Marin, Riverside, four zero eight Jackson and Bryant Street, FRP share of revenues and NOI for the quarter totaled $6,900,000 and $3,900,000 respectively, a revenue increase of 4% with NOI flat over the same period last year due primarily to higher operating expenses at DOC and Marin. As stated in previous quarters, new deliveries in the DC market will continue to put pressure on vacancies, concessions, and revenue growth in the foreseeable future. Management continues to be diligent in tenant retention and rental rates in the market. We are pleased to have renewal success rates ranging from 47% to 75% with renewal rental rates trending over 2% on average in Q1. Trade out rates were slightly negative at our Greenville, South Carolina properties, and we saw negative trade out rates at our DC properties.

[David deVilliers, President & COO at FRP]

Now on to the development segment. In terms of our commercial industrial development pipeline, our 258,000 square foot state of the art class a warehouse building in the Parriman industrial sector of Hartford County, Maryland is complete and ready to accept tenants. Beginning April 1, the asset will move from development to the industrial commercial segment. Which will impact NOI negatively until it is occupied and stabilized, where after the operating expenses can be passed through to tenants, and we can receive rent revenue. FRP and Altman Logistics Partners entered into a joint venture partnership where FRP is a 90% owner on a 200,000 square foot class a warehouse building in Lakeland, Florida.

[David deVilliers, President & COO at FRP]

The construction loan and general contractor agreements executed, and vertical construction will take place in q two twenty twenty five. This project is estimated to cost some hundred and $41 per square foot with $9 triple net rents. FRP and Altman also partnered on a two building industrial project totaling over a hundred and 82,000 square feet in Broward County, Florida, where FRP is an 80% owner. The site is minutes from Port Everglades in the Fort Lauderdale Hollywood International Airport with frontage on I 59 D 5 accessing the Florida Turnpike and I-ninety 5. We are deep into the construction drilling and permit stage on this project.

[David deVilliers, President & COO at FRP]

The construction loan and general contractor agreements are executed, and we expect vertical construction to take place in q two twenty twenty five. The project is estimated to cost some $327 per square foot with $20 triple net rents. In Cecil County, Maryland, along the I 95 Corridor, we are in the middle of predevelopment activities on a 70 acres of industrial land that will support a 900,000 square foot distribution center. Off-site road improvements, reforestation codes, and obtaining off wetland mitigation permits delayed our entitlement process, and we expect permits in early twenty twenty six. Finally, we are in the initial permitting stage for our 55 acre tract in Harbour County, Maryland.

[David deVilliers, President & COO at FRP]

The intent is to obtain permits for four buildings totaling from 635,000 square feet of industrial product. Existing land leases for the storage of trailers on-site help to offset our carrying and entitlement costs until we are ready to build. We expect to submit our initial development plan in q two twenty twenty five, which puts us on track to have vertical construction permits in 2026. Completion of these industrial commercial development projects will add over 2,100,000 square feet of additional industrial commercial product to our industrial platform, growing the business segment from 550,000 square feet to over 2,700,000 square feet. As stated in previous calls, permitting, constructing, and leasing the Parriman, Lakeland, Fort Lauderdale, and the initial 212,000 square foot building in Hartford County is our focus and goal over the next three years.

[David deVilliers, President & COO at FRP]

These four buildings represent over 850,000 square feet of new industrial commercial product with a total project cost of a hundred and 40 6 million. When stabilized, these projects are expected to generate annual NOI between 8,700,000.0 to 10,200,000.0 with FRSP share of NOI ranging from $7,900,000 to $9,200,000 Turning to our principal capital source strategy, or Remedy Ventures. Aberdeen overlook consists of three forty four lots located on a 10 acres in Aberdeen, Maryland. We have committed 31,100,000.0 in funding, 26,600,000.0 was drawn out of quarter end, and over 19,100,000.0 in preferred interest and principal payments were received to date. And National Home Builder is under contract to purchase all the finished building lots by q four twenty twenty seven.

[David deVilliers, President & COO at FRP]

Hundred and '30 '3 of the 344 lots were closed upon, and we expect to generate interest and profits of some $11,200,000 resulting in a 36% profit on funds drawn. In closing, uncertainty around trade policy, the economy, and financial markets has caused leasing activity to slow. However, rental rates remain strong. Industrial space under construction has fallen below pre pandemic norms, and we expect market vacancies to top out in 2025, which should bode well for demand and rent growth as we deliver our new industrial projects. In 2025, with the delivery of our 258,000 square foot Perryman warehouse, we will have over 430,000 square feet of vacant or rolling over space in our industrial commercial segment, all located in Maryland.

[David deVilliers, President & COO at FRP]

This has the potential to impact NOI in the short term but will allow us to retenant these spaces under current market rates, bolstering NOI upon lease up and occupancy. The average rental rate of the expiring industrial leases was $6.55 triple net, and we are hopeful most of our new rental rates start in the sevens or greater. We expect short term SOFR rates to remain stable for most of the year with a slight chance of a potential rate cut deep into Q4. We were able to take advantage of the treasury dip in March and locked in a ten year permanent loan at a fixed 6.4% interest rate on our two office buildings. At Bryant Street, we will continue to watch the ten year treasury and debt spreads to see if a more permanent and favorable debt structure is viable and accretive to our cash flow.

[David deVilliers, President & COO at FRP]

It is our plan to continue to monitor these data points, assess the impact tariffs may have on steel, lumber, gypsum and other construction products and make careful, calculated and informed decisions moving forward. Thank you, and I'll now turn the call over to John Baker III, our CEO.

[John Baker III, CEO at FRP]

Thank you, David, and good morning to those on the call. Last quarter, we used this call to caution investors to temper their expectations for NOI growth in 2025. We've been on a remarkable run fueled by new industrial projects as well as the lease up of three multifamily projects that resulted in a 21% compound annual growth rate for NOI since 2021.

[John Baker III, CEO at FRP]

Despite the positive first quarter results, I. E, a 32% increase in net income versus Q1 twenty twenty four and a 10% increase in NOI compared to the same period last year, same factors that led us to caution our investors are evident in our first quarter results. Most of the income and NOI growth came from increases in mine royalties, interest income from our lending ventures and improved occupancy at the Verge, a project that was not yet stabilized in the first quarter last year. Industrial NOI is down compared to last year from vacancies at our Cranberry Business Park, and we'll take a further temporary hit when our newest spec industrial building is added to this segment in the second quarter. But these buildings have real operating expenses that will negatively impact NOI until we get those spaces leased and occupied.

[John Baker III, CEO at FRP]

Starting in the second quarter, all our multifamily assets will have been stabilized for a full year, so the NOI bump we experienced this quarter from the final bit of lease up at The Verge will be difficult to achieve through organic same store growth, particularly as we compete with a number of new projects coming online in the Anacostia submarket of D. C. We are pleased with this quarter's results, but I continue to caution our shareholders to expect flat to slightly negative NOI results overall in 2025 since the temporary headwinds we're up against may be too heavy a lift for mine royalties to offset. Our focus in 2025 is to set the company up for our next stage of NOI growth. We will do that in part by getting Cranberry and Chelsea fully occupied, but mostly it means putting money to work in new projects.

[John Baker III, CEO at FRP]

As David mentioned, we have closed on the construction loans for both our industrial JVs with BVX and anticipate breaking ground in the second quarter. We will continue entitlement work on our industrial pipeline in Maryland in order to be shovel ready in 2026 and we anticipate bolstering that pipeline with an additional land purchase and or JV this year. We remain on track to deliver three new industrial assets every two years with the goal of doubling the size of our industrial segment over the next five years. As mentioned last quarter, we anticipate beginning construction this year on two multifamily projects, the first in Greenville and the second outside Fort Myers, Florida. These two projects will add eight ten units and estimated $6,000,000 NOI upon stabilization.

[John Baker III, CEO at FRP]

No CEO wants to pour water on a positive quarter, but we have never been a quarter to quarter company. Our focus is and has always been growing the value of the company over the long term. Our shift in strategy is essential to that, and we expect 2025 to be the year of growing pains in that shift. We count ourselves extremely fortunate to have an investor base with the same long term view for capital appreciation that we do, but we certainly don't take it for granted. I will now turn the call over to any questions that you might have.

[Operator]

Thank you. Once again, that is star one to signal and star two to remove yourself, and I'll pause for just a moment to allow customs to queue. And once again, that is star one to signal. It appears that we have no questions at this time. I'll turn the floor back over to management for any additional or closing comments.

[David deVilliers, President & COO at FRP]

We appreciate your interest and investment in the company, and this concludes the call.

[Operator]

Thank you. Once again, ladies and gentlemen, that will conclude today's call. Thank you for your participation. You may disconnect at this time, and have a wonderful rest of your day.

Participants

Executives

• Matthew Mcnulty, CFO & Treasurer
• David deVilliers, President & COO
• John Baker III, CEO