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 September30, 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 NOI Q3 2024 | Pro rata NOI Q3 2023 | Avg. Occupancy Q3 2024 | Avg. Occupancy CY 2023 | Renewal Success Rate Q3 2024 | Renewal % increase Q3 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 | % | 2023 | % | Change | % | |||||||||||||||
| Mining royalty and rent revenue | $ | 3,199 | 100.0 | % | 3,082 | 100.0 | % | 117 | 3.8 | % | |||||||||||
| Depreciation, depletion and amortization | 163 | 5.1 | % | 138 | 4.4 | % | 25 | 18.1 | % | ||||||||||||
| Operating expenses | 20 | 0.6 | % | 18 | 0.6 | % | 2 | 11.1 | |||||||||||||
| Property taxes | 70 | 2.2 | % | 181 | 5.9 | % | (111 | ) | -61.3 | % | |||||||||||
| Cost of operations | 253 | 7.9 | % | 337 | 10.9 | % | (84 | ) | -24.9 | % | |||||||||||
| Operating profit before G&A | $ | 2,946 | 92.1 | % | 2,745 | 89.1 | % | 201 | 7.3 | % | |||||||||||
| Depreciation and amortization | 163 | 138 | 25 | ||||||||||||||||||
| Unrealized revenues | 1,994 | (46 | ) | 2,040 | |||||||||||||||||
| Net operating income | $ | 5,103 | 159.5 | % | $ | 2,837 | 92.1 | % | $ | 2,266 | 79.9 | % | |||||||||
Total revenues in this segment were $3,199,000, an increase of $117,000 or 3.8% versus $3,082,000 in the same period last year. Royalty tons were down 3%. Total operating profit before G&A in this segment was $2,946,000, an increase of $201,000 versus $2,745,000 in the same period last year due to higher revenues and lower property taxes. Net Operating Income this quarter for this segment was $5,103,000, up $2,266,000 or 80% compared to the same quarter last year mostly due to a $2,040,000 increase in unrealized revenues. 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.
Development Segment Results
| Three months ended September 30 | ||||||||||
| (dollars in thousands) | 2024 | 2023 | Change | |||||||
| Lease revenue | $ | 297 | 434 | (137 | ) | |||||
| Depreciation, depletion and amortization | 43 | 44 | (1 | ) | ||||||
| Operating expenses | 82 | 48 | 34 | |||||||
| Property taxes | 147 | 121 | 26 | |||||||
| Cost of operations | 272 | 213 | 59 | |||||||
| Operating profit before G&A | $ | 25 | 221 | (196 | ) | |||||
With respect to ongoing Development Segment projects:
- We entered into two new joint venture agreements in early 2024 with BBX Logistics. The first joint venture is a 200,000 square-foot warehouse development project in Lakeland, FL, and the second joint venture is a 182,000 square-foot warehouse redevelopment project in Broward County, FL. We anticipate construction to start on both projects in the first quarter of 2025.
- Last summer we broke ground on a new speculative warehouse project in Aberdeen, MD on Chelsea Road. Vertical construction is underway. This Class A, 258,000 square foot building is due to be complete in the 4th quarter of 2024.
- We are the principal capital source to develop 344 residential lots on 110 acres in Harford County, MD. We have funded $25.5 million of our $31.1 million total commitment. A national homebuilder is under contract to purchase all 222 townhome lots and 122 single family lots. At quarter-end, 79 lots have been sold and $12.9 million of preferred interest and principal has been returned to the company of which $3.6 million was booked as profit to the Company.
Nine Month Highlights
- 94% increase in Net Income ($4.7 million vs $2.4 million)
- 28% increase in pro rata NOI ($29.0 million vs $22.7 million), including the one-time, $1.9 million minimum royalty payment referenced previously
- 39% 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).
- 11% increase in Industrial and Commercial revenue and 30% increase in that segment’s NOI
Comparative Results of Operations for the Nine months ended September30, 2024 and 2023
Consolidated Results
| (dollars in thousands) | Nine Months EndedSeptember 30, | ||||||||||||||
| 2024 | 2023 | Change | % | ||||||||||||
| Revenues: | |||||||||||||||
| Lease revenue | $ | 21,850 | 21,773 | $ | 77 | .4 | % | ||||||||
| Mining royalty and rents | 9,393 | 9,628 | (235 | ) | -2.4 | % | |||||||||
| Total revenues | 31,243 | 31,401 | (158 | ) | -.5 | % | |||||||||
| Cost of operations: | |||||||||||||||
| Depreciation/depletion/amortization | 7,629 | 8,415 | (786 | ) | -9.3 | % | |||||||||
| Operating expenses | 5,429 | 5,574 | (145 | ) | -2.6 | % | |||||||||
| Property taxes | 2,517 | 2,745 | (228 | ) | -8.3 | % | |||||||||
| General and administrative | 6,883 | 6,150 | 733 | 11.9 | % | ||||||||||
| Total cost of operations | 22,458 | 22,884 | (426 | ) | -1.9 | % | |||||||||
| Total operating profit | 8,785 | 8,517 | 268 | 3.1 | % | ||||||||||
| Net investment income | 8,795 | 8,207 | 588 | 7.2 | % | ||||||||||
| Interest expense | (2,482 | ) | (3,251 | ) | 769 | -23.7 | % | ||||||||
| Equity in loss of joint ventures | (8,582 | ) | (10,585 | ) | 2,003 | -18.9 | % | ||||||||
| Gain on sale of real estate | — | 7 | (7 | ) | -100.0 | % | |||||||||
| Income before income taxes | 6,516 | 2,895 | 3,621 | 125.1 | % | ||||||||||
| Provision for income taxes | 1,743 | 898 | 845 | 94.1 | % | ||||||||||
| Net income | 4,773 | 1,997 | 2,776 | 139.0 | % | ||||||||||
| Income (loss) attributable to noncontrolling interest | 67 | (425 | ) | 492 | -115.8 | % | |||||||||
| Net income attributable to the Company | $ | 4,706 | $ | 2,422 | $ | 2,284 | 94.3 | % | |||||||
Net income for the first nine months of 2024 was $4,706,000 or $.25 per share versus $2,422,000 or $.13 per share in the same period last year. Pro rata NOI for the first nine months of 2024 was $29,036,000 versus $22,687,000 in the same period last year. The first nine months of 2024 were impacted by the following items:
- Operating profit increased 3.1% as favorable results in Multifamily and Industrial and Commercial were mostly offset by lower Mining profits and higher net Development and General and administrative costs.
- Pro rata NOI includes a one-time, catch-up, minimum royalty payment of $1,853,000 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.
- Net investment income increased $588,000 due to increased earnings on cash equivalents ($1,252,000) and increased income from our lending ventures ($1,155,000), partially offset by decreased preferred interest ($1,819,000) due to the conversion of FRP preferred equity to common equity at Bryant Street.
- Interest expense decreased $769,000 compared to the same period last year as we capitalized $869,000 more interest, partially offset by increased 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 $2,003,000 due to improved results at our unconsolidated joint ventures. Results improved at The Verge ($1,959,000) and .408 Jackson ($169,000).
Multifamily Segment (Consolidated)
| Nine Months Ended September 30, | |||||||||||||||||||
| (dollars in thousands) | 2024 | % | 2023 | % | Change | % | |||||||||||||
| Lease revenue | $ | 16,592 | 100.0 | % | 16,454 | 100.0 | % | 138 | .8 | % | |||||||||
| Depreciation and amortization | 5,947 | 35.9 | % | 6,797 | 41.3 | % | (850 | ) | -12.5 | % | |||||||||
| Operating expenses | 4,553 | 27.4 | % | 4,818 | 29.3 | % | (265 | ) | -5.5 | % | |||||||||
| Property taxes | 1,665 | 10.0 | % | 1,649 | 10.0 | % | 16 | 1.0 | % | ||||||||||
| Cost of operations | 12,165 | 73.3 | % | 13,264 | 80.6 | % | (1,099 | ) | -8.3 | % | |||||||||
| Operating profit before G&A | $ | 4,427 | 26.7 | % | 3,190 | 19.4 | % | 1,237 | 38.8 | % | |||||||||
Total revenues for our two consolidated joint ventures were $16,592,000, an increase of $138,000 versus $16,454,000 in the same period last year. Total operating profit before G&A for the consolidated joint ventures was $4,427,000, an increase of $1,237,000, or 39% versus $3,190,000 in the same period last year primarily due to lower depreciation and operating expense. 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)
| Nine Months Ended September 30, | |||||||||||||||||||
| (dollars in thousands) | 2024 | % | 2023 | % | Change | % | |||||||||||||
| Lease revenue | $ | 15,173 | 100.0 | % | 10,377 | 100.0 | % | 4,796 | 46.2 | % | |||||||||
| Depreciation and amortization | 6,747 | 44.5 | % | 5,854 | 56.4 | % | 893 | 15.3 | % | ||||||||||
| Operating expenses | 5,358 | 35.3 | % | 4,667 | 45.0 | % | 691 | 14.8 | % | ||||||||||
| Property taxes | 1,665 | 11.0 | % | 1,292 | 12.5 | % | 373 | 28.9 | % | ||||||||||
| Cost of operations | 13,770 | 90.8 | % | 11,813 | 113.8 | % | 1,957 | 16.6 | % | ||||||||||
| Operating profit | $ | 1,403 | 9.2 | % | (1,436 | ) | (13.8 | %) | 2,839 | ||||||||||
For our four unconsolidated joint ventures, pro rata revenues were $15,173,000, an increase of $4,796,000 or 46% compared to $10,377,000 in the same period last year. Pro rata operating profit before G&A was $1,403,000, an increase of $2,839,000 versus a loss of $1,436,000 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 prior periods (when these projects were still in our Development segment).
| Nine Months Ended September 30, | |||||||||||||||||||
| (dollars in thousands) | 2024 | % | 2023 | % | Change | % | |||||||||||||
| Lease revenue | $ | 24,214 | 100.0 | % | 19,343 | 100.0 | % | 4,871 | 25.2 | % | |||||||||
| Depreciation and amortization | 10,006 | 41.3 | % | 9,565 | 49.4 | % | 441 | 4.6 | % | ||||||||||
| Operating expenses | 7,844 | 32.4 | % | 7,324 | 37.9 | % | 520 | 7.1 | % | ||||||||||
| Property taxes | 2,570 | 10.6 | % | 2,188 | 11.3 | % | 382 | 17.5 | % | ||||||||||
| Cost of operations | 20,420 | 84.3 | % | 19,077 | 98.6 | % | 1,343 | 7.0 | % | ||||||||||
| Operating profit before G&A | $ | 3,794 | 15.7 | % | 266 | 1.4 | % | 3,528 | 1326.3 | % | |||||||||
| Depreciation and amortization | 10,006 | 9,565 | 441 | ||||||||||||||||
| Unnrealized rents & other | 91 | 184 | (93 | ) | |||||||||||||||
| Net operating income | $ | 13,891 | 57.4 | % | 10,015 | 51.8 | % | 3,876 | 38.7 | % | |||||||||
The combined consolidated and unconsolidated pro rata net operating income this quarter for this segment was $13,891,000, up $3,876,000 or 39% compared to $10,015,000 in the same period last year. Most of this increase was from the lease up of Bryant Street, .408 Jackson, and The Verge. These three projects contributed $7,547,000 of pro rata NOI to this segment compared to $3,803,000 in the Development segment in the same period last year, an increase of $3,744,000. Same store NOI increased $132,000 or 2%.
| Apartment Building | Units | Pro rata NOI YTD 2024 | Pro rata NOI YTD 2023 | Avg. Occupancy YTD 2024 | Avg. Occupancy CY 2023 | Renewal Success Rate YTD 2024 | Renewal % increase YTD 2024 | ||
| Dock 79 Anacostia DC | 305 | $2,842,000 | $2,825,000 | 94.1% | 94.4% | 68.3% | 3.2% | ||
| Maren Anacostia DC | 264 | $2,820,000 | $2,711,000 | 94.5% | 95.6% | 56.8% | 2.2% | ||
| Riverside Greenville | 200 | $682,000 | $676,000 | 93.6% | 94.5% | 57.5% | 3.1% | ||
| Bryant Street DC | 487 | $4,588,000 | $3,595,000 | 91.9% | 92.9% | 57.5% | 2.8% | ||
| .408 Jackson Greenville | 227 | $1,000,000 | $350,000 | 94.6% | 59.9% | 53.3% | 5.0% | ||
| Verge Anacostia DC | 344 | $1,959,000 | -$142,000 | 89.7% | 47.3% | 67.4 % | 1.8% | ||
| Multifamily Segment | 1,483 | $13,891,000 | $10,015,000 | 92.7% | |||||
Industrial and Commercial Segment
| Nine Months Ended September 30, | |||||||||||||||||||||
| (dollars in thousands) | 2024 | % | 2023 | % | Change | % | |||||||||||||||
| Lease revenue | $ | 4,353 | 100.0 | % | 3,932 | 100.0 | % | 421 | 10.7 | % | |||||||||||
| Depreciation and amortization | 1,083 | 24.8 | % | 1,006 | 25.6 | % | 77 | 7.7 | % | ||||||||||||
| Operating expenses | 591 | 13.6 | % | 490 | 12.5 | % | 101 | 20.6 | % | ||||||||||||
| Property taxes | 195 | 4.5 | % | 185 | 4.7 | % | 10 | 5.4 | % | ||||||||||||
| Cost of operations | 1,869 | 42.9 | % | 1,681 | 42.8 | % | 188 | 11.2 | % | ||||||||||||
| Operating profit before G&A | $ | 2,484 | 57.1 | % | 2,251 | 57.2 | % | 233 | 10.4 | % | |||||||||||
| Depreciation and amortization | 1,083 | 1,006 | 77 | ||||||||||||||||||
| Unrealized revenues | (12 | ) | (531 | ) | 519 | ||||||||||||||||
| Net operating income | $ | 3,555 | 81.7 | % | $ | 2,726 | 69.3 | % | $ | 829 | 30.4 | % | |||||||||
Total revenues in this segment were $4,353,000, up $421,000 or 11%, over the same period last year. Operating profit before G&A was $2,484,000, up $233,000 or 10% from $2,251,000 in the same quarter last year. Revenues and operating profit are up because of full occupancy at 1841 62nd Street (which had only $11,000 of revenue in the first quarter last year) and the addition of 1941 62nd Street to this segment in March 2023. We were 95.6% leased and occupied during the entire period. Net operating income in this segment was $3,555,000, up $829,000 or 30% compared to the same period last year partially due to $519,000 more unrealized rental revenue in the prior year due to rent abatements that expired in 2023.
Mining Royalty Lands Segment Results
| Nine Months Ended September 30, | |||||||||||||||||||||
| (dollars in thousands) | 2024 | % | 2023 | % | Change | % | |||||||||||||||
| Mining royalty and rent revenue | $ | 9,393 | 100.0 | % | 9,628 | 100.0 | % | (235 | ) | -2.4 | % | ||||||||||
| Depreciation, depletion and amortization | 471 | 5.0 | % | 472 | 4.9 | % | (1 | ) | -0.2 | % | |||||||||||
| Operating expenses | 53 | 0.6 | % | 51 | 0.5 | % | 2 | 3.9 | |||||||||||||
| Property taxes | 214 | 2.3 | % | 324 | 3.4 | % | (110 | ) | -34.0 | % | |||||||||||
| Cost of operations | 738 | 7.9 | % | 847 | 8.8 | % | (109 | ) | -12.9 | % | |||||||||||
| Operating profit before G&A | $ | 8,655 | 92.1 | % | 8,781 | 91.2 | % | (126 | ) | -1.4 | % | ||||||||||
| Depreciation and amortization | 471 | 472 | (1 | ) | |||||||||||||||||
| Unrealized revenues | 1,765 | (143 | ) | 1,908 | |||||||||||||||||
| Net operating income | $ | 10,891 | 115.9 | % | $ | 9,110 | 94.6 | % | $ | 1,781 | 19.5 | % | |||||||||
Total revenues in this segment were $9,393,000, a decrease of $235,000 or 2% versus $9,628,000 in the same period last year. Royalty revenues were impacted by the deduction of royalties to resolve an $842,000 overpayment which we referenced previously. Through the first three quarters of this year, the tenant has withheld $619,000 in royalties otherwise due to the Company with the remainder ($223,000) withheld in the fourth quarter of 2023. There are no further amounts to be withheld moving forward. Royalty tons were down 8%. Total operating profit before G&A in this segment was $8,655,000, a decrease of $126,000 versus $8,781,000 in the same period last year. Net operating income in this segment was $10,891,000, up $1,781,000 or 20% compared to the same period last year mostly due to a $1,908,000 increase in unrealized revenues (see discussion in the Mining segment’s quarterly analysis).
Development Segment Results
| Nine Months Ended September 30, | ||||||||||
| (dollars in thousands) | 2024 | 2023 | Change | |||||||
| Lease revenue | $ | 905 | 1,387 | (482 | ) | |||||
| Depreciation, depletion and amortization | 128 | 140 | (12 | ) | ||||||
| Operating expenses | 232 | 215 | 17 | |||||||
| Property taxes | 443 | 587 | (144 | ) | ||||||
| Cost of operations | 803 | 942 | (139 | ) | ||||||
| Operating profit before G&A | $ | 102 | 445 | (343 | ) | |||||
| FRP HOLDINGS, INC. AND SUBSIDIARIES | |||||||
| CONSOLIDATED BALANCE SHEETS | |||||||
| (Unaudited) (In thousands, except share data) | |||||||
| Assets: | September 30 2024 | December 31 2023 | |||||
| Real estate investments at cost: | |||||||
| Land | $ | 168,958 | 141,602 | ||||
| Buildings and improvements | 283,104 | 282,631 | |||||
| Projects under construction | 29,414 | 10,845 | |||||
| Total investments in properties | 481,476 | 435,078 | |||||
| Less accumulated depreciation and depletion | 75,183 | 67,758 | |||||
| Net investments in properties | 406,293 | 367,320 | |||||
| Real estate held for investment, at cost | 11,290 | 10,662 | |||||
| Investments in joint ventures | 157,272 | 166,066 | |||||
| Net real estate investments | 574,855 | 544,048 | |||||
| Cash and cash equivalents | 144,681 | 157,555 | |||||
| Cash held in escrow | 981 | 860 | |||||
| Accounts receivable, net | 1,826 | 1,046 | |||||
| Federal and state income taxes receivable | — | 337 | |||||
| Unrealized rents | 1,395 | 1,640 | |||||
| Deferred costs | 2,569 | 3,091 | |||||
| Other assets | 611 | 589 | |||||
| Total assets | $ | 726,918 | 709,166 | ||||
| Liabilities: | |||||||
| Secured notes payable | $ | 178,816 | 178,705 | ||||
| Accounts payable and accrued liabilities | 6,060 | 8,333 | |||||
| Other liabilities | 1,487 | 1,487 | |||||
| Federal and state income taxes payable | 452 | — | |||||
| Deferred revenue | 2,392 | 925 | |||||
| Deferred income taxes | 68,356 | 69,456 | |||||
| Deferred compensation | 1,451 | 1,409 | |||||
| Tenant security deposits | 801 | 875 | |||||
| Total liabilities | 259,815 | 261,190 | |||||
| Commitments and contingencies | — | — | |||||
| Equity: | |||||||
| Common stock, $.10 par value 25,000,000 shares authorized, 19,030,474 and 18,968,448 shares issued and outstanding, respectively | 1,903 | 1,897 | |||||
| Capital in excess of par value | 68,313 | 66,706 | |||||
| Retained earnings | 350,588 | 345,882 | |||||
| Accumulated other comprehensive income, net | 80 | 35 | |||||
| Total shareholders’ equity | 420,884 | 414,520 | |||||
| Noncontrolling interests | 46,219 | 33,456 | |||||
| Total equity | 467,103 | 447,976 | |||||
| Total liabilities and equity | $ | 726,918 | 709,166 | ||||
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. For ease of comparison all the figures in the tables below include the results for Bryant Street, .408 Jackson, and The Verge in the Multifamily segment for all periods shown.
| Pro rata Net Operating Income Reconciliation | |||||||||||||||||||
| Nine months ended 09/30/24 (in thousands) | |||||||||||||||||||
| Industrial and Commercial Segment | Development Segment | Multifamily Segment | Mining Royalties Segment | Unallocated Corporate Expenses | FRP Holdings Totals | ||||||||||||||
| Net income (loss) | $ | 1,222 | (2,498 | ) | (3,951 | ) | 5,884 | 4,116 | 4,773 | ||||||||||
| Income tax allocation | 376 | (767 | ) | (1,224 | ) | 1,808 | 1,550 | 1,743 | |||||||||||
| Income (loss) before income taxes | 1,598 | (3,265 | ) | (5,175 | ) | 7,692 | 5,666 | 6,516 | |||||||||||
| Less: | |||||||||||||||||||
| Unrealized rents | 12 | — | — | — | — | 12 | |||||||||||||
| Interest income | 2,995 | 5,800 | 8,795 | ||||||||||||||||
| Plus: | |||||||||||||||||||
| Unrealized rents | — | — | — | 1,765 | — | 1,765 | |||||||||||||
| Professional fees | — | — | 15 | — | — | 15 | |||||||||||||
| Equity in loss of joint ventures | — | 2,081 | 6,466 | 35 | — | 8,582 | |||||||||||||
| Interest expense | — | — | 2,348 | — | 134 | 2,482 | |||||||||||||
| Depreciation/amortization | 1,083 | 128 | 5,947 | 471 | — | 7,629 | |||||||||||||
| General and administrative | 886 | 4,281 | 788 | 928 | — | 6,883 | |||||||||||||
| — | |||||||||||||||||||
| Net operating income (loss) | 3,555 | 230 | 10,389 | 10,891 | — | 25,065 | |||||||||||||
| NOI of noncontrolling interest | — | — | (4,727 | ) | — | — | (4,727 | ) | |||||||||||
| Pro rata NOI from unconsolidated joint ventures | — | 469 | 8,229 | — | — | 8,698 | |||||||||||||
| Pro rata net operating income | $ | 3,555 | 699 | 13,891 | 10,891 | — | 29,036 | ||||||||||||
| Pro rata Net Operating Income Reconciliation | |||||||||||||||||||
| Nine months ended 09/30/23 (in thousands) | |||||||||||||||||||
| Industrial and Commercial Segment | Development Segment | Multifamily Segment | MiningRoyalties Segment | Unallocated Corporate Expenses | FRP Holdings Totals | ||||||||||||||
| Net income (loss) | $ | 892 | (7,192 | ) | (816 | ) | 5,842 | 3,270 | 1,996 | ||||||||||
| Income tax allocation | 331 | (2,667 | ) | (145 | ) | 2,168 | 1,212 | 899 | |||||||||||
| Income (loss) before income taxes | 1,223 | (9,859 | ) | (961 | ) | 8,010 | 4,482 | 2,895 | |||||||||||
| Less: | |||||||||||||||||||
| Unrealized rents | 531 | — | — | 143 | — | 674 | |||||||||||||
| Gain on sale of real estate | — | — | — | 10 | — | 10 | |||||||||||||
| Interest income | — | 3,692 | — | — | 4,515 | 8,207 | |||||||||||||
| Plus: | |||||||||||||||||||
| Unrealized rents | — | — | 117 | — | — | 117 | |||||||||||||
| Loss on sale of real estate | 2 | — | 1 | — | — | 3 | |||||||||||||
| Professional fees | — | — | 59 | — | — | 59 | |||||||||||||
| Equity in loss of joint ventures | — | 10,256 | 298 | 31 | — | 10,585 | |||||||||||||
| Interest Expense | — | — | 3,218 | — | 33 | 3,251 | |||||||||||||
| Depreciation/amortization | 1,006 | 140 | 6,797 | 472 | — | 8,415 | |||||||||||||
| General and administrative | 1,026 | 3,740 | 634 | 750 | — | 6,150 | |||||||||||||
| Net operating income (loss) | 2,726 | 585 | 10,163 | 9,110 | — | 22,584 | |||||||||||||
| NOI of noncontrolling interest | — | — | (4,627 | ) | — | — | (4,627 | ) | |||||||||||
| Pro rata NOI from unconsolidated joint ventures | — | 251 | 4,479 | — | — | 4,730 | |||||||||||||
| Pro rata net operating income | $ | 2,726 | 836 | 10,015 | 9,110 | — | 22,687 | ||||||||||||
Conference Call
The Company will host a conference call on Wednesday, November 6, 2024 at 4:00 p.m. (EDT). Analysts, stockholders and other interested parties may access the teleconference live by calling1-800-343-5172 (passcode 83364) within the United States.International callers may dial 1-203-518-9856 (passcode 83364). Audio replay will be available until November 20, 2024 by dialing1-800-753-5207within the United States.International callers may dial 1-402-220-2156. No passcode needed. 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 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 MidAtlantic and Florida; multifamily demand 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 residential apartment buildings.
| Contact: | John D. Baker III | |
| Chief Executive Officer | (904) 858-9100 |