FRP NASDAQ: FRPH said its second-quarter results were largely in line with management’s expectations as industrial leasing activity improved but lease execution remained uneven, while multifamily operations in Washington, D.C., continued to face supply and delinquency pressures.
President and Chief Operating Officer David deVilliers III said the company generated approximately $9.4 million in pro forma net operating income, or NOI, and approximately $4.1 million in funds from operations, or FFO, equal to $0.21 per share, during the quarter. FRP ended the period with about $130 million of liquidity, including approximately $101 million of cash.
Management said it is directing most future discretionary growth capital toward industrial real estate, while continuing to operate and maximize the value of its multifamily and mining-royalty businesses. DeVilliers said the company views industrial properties serving logistics, manufacturing, distribution and service users as its most attractive long-term investment opportunity.
Industrial portfolio expands as leasing activity rises
FRP said its acquisition of Altman Logistics over the past year expanded both the scale of its industrial platform and its operating capabilities. As its current industrial development pipeline is delivered through the first quarter of next year, the company expects its industrial portfolio to grow to about 2.1 million square feet from approximately 800,000 square feet at the end of 2025.
The company has signed about 20,700 square feet of industrial leases and has approximately 97,500 square feet in active lease negotiations, according to deVilliers. Chief Investment Officer Mark Levy said FRP has more than 110,000 square feet of renewals and pending new transactions in process.
“Tenant decision making remains deliberate and transaction timelines remain longer than historical norms,” Levy said, though he added that activity has increased significantly and tenants generally continue to report solid operating results and strong balance sheets.
Levy said national industrial construction activity has contracted by roughly 60% from its 2022-2023 peak, while absorption has strengthened. He said FRP expects a more favorable supply-demand environment for projects delivering in the near term, particularly in Florida, New Jersey and Maryland, where regulatory constraints and development restrictions limit new supply.
In Maryland, management said occupancy in its same-store industrial portfolio, including Hollander Business Park and Cranberry Business Park, declined to 70.6% from 92% in the first quarter of 2025. DeVilliers attributed the decline to several tenant departures, including government tenants, and one tenant bankruptcy. The company said it is seeing increased activity and negotiations at Cranberry.
Levy said the Chelsea industrial project, delivered last year, has faced longer tenant decision cycles and competition from available space and incentives in southern New Jersey. FRP does not currently plan to develop additional speculative space at its Mechanics Valley and Crouse sites, he said, unless market fundamentals become more durable. The company instead plans to market those sites for build-to-suit opportunities and maintain their development readiness.
In Florida, Levy characterized Broward County as highly supply constrained. FRP is close to signing a roughly 25,000-square-foot lease at its Davie project at what he described as a strong rental rate. The Davie building has not yet been delivered. Management also cited strong activity at its Lakeland property, though no leases have yet been signed there, and said Camp Lake is positioned to benefit from population growth and demand from local service businesses.
Mining offsets some multifamily and leasing headwinds
Mining generated approximately $4.1 million of NOI in the quarter, up about 12% from a year earlier. DeVilliers said the business provides durable recurring cash flow with little incremental capital requirement and supports FRP’s development strategy and balance-sheet flexibility.
The company lowered its full-year NOI outlook to approximately $36.2 million from an original plan of $37.1 million. Management said the approximately $900,000 reduction reflects about $800,000 from delayed industrial lease-up and $1 million of operating headwinds in the Washington, D.C., multifamily portfolio, partly offset by approximately $850,000 of stronger-than-expected mining performance.
FRP’s multifamily development pipeline includes 510 units in Greenville, South Carolina, and Estero, Florida, expected to deliver in the first quarter of 2028. The additions would expand the company’s multifamily portfolio to 2,337 units from 1,827 units. Across industrial and multifamily projects, the company cited approximately $506 million of total project costs and approximately $34 million of expected stabilized NOI, of which FRP’s share is approximately $16.6 million.
Washington multifamily faces trade-out and delinquency pressures
Management said Greenville multifamily operations continue to perform well, while Washington, D.C., remains pressured by new supply, concessions and tenant delinquencies. DeVilliers said renewal rent increases at the company’s D.C. properties were positive and above 1.5% during the quarter, but rents on new leases following tenant departures were approximately 10% below prior tenant levels.
He said about 8% of tenants were not paying rent and that eviction timelines in the district can extend 12 to 18 months. FRP’s tenant renewal rate is above 50%, while economic occupancy increased by approximately 75 basis points during the quarter, according to deVilliers.
Chief Executive Officer John Baker III said the company’s D.C. delinquency issues have persisted for several years, while increased apartment supply in the Anacostia submarket has more recently pressured trade-outs. Management described the supply issue as cyclical, but said it does not expect delinquency challenges tied to the district’s regulatory environment to improve soon.
Capital allocation and expenses discussed
Several shareholders on the call urged FRP to consider dividends or stock repurchases. Baker said management will generally favor investing capital in projects while development opportunities remain available. He said buybacks in the near term would be conducted opportunistically, while a meaningful repurchase program or dividend could become part of the company’s approach if it reaches a point where cash generation exceeds available projects.
On expenses, Baker said general and administrative costs should be considered largely flat at their current run rate because the company has built out its team and does not expect material new hiring. DeVilliers added that first-quarter G&A included more than $500,000 of one-time audit and legal expenses related to a closing that are not expected to recur.
FRP reported debt service coverage of approximately 2.82 times and net debt equal to approximately 19% of fair market value. Management said its priorities remain industrial lease-up, stabilizing projects already under development, preserving balance-sheet strength and selectively investing in long-term industrial growth.
About FRP (NASDAQ:FRPH)
FRP Holdings, Inc NASDAQ: FRPH is an industrial services holding company that provides asset integrity and life-extension solutions to heavy-industry clients. Through its operating subsidiaries, FRP offers a broad suite of non-destructive testing (NDT), inspection services, mechanical maintenance, protective coatings, thermal spray and surface-preparation services. These offerings help clients maintain and extend the service life of critical equipment and infrastructure across multiple sectors.
The company's core activities include ultrasonic, radiographic and magnetic-particle testing, site-based inspections, welding and fabrication support, and specialized coating applications designed to withstand extreme environments.
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