FRP Holdings, Inc. (FRPH) is a diversified real estate company with a focus on development, asset management, and operations. The company's portfolio spans several asset classes, including residential apartments, industrial/commercial properties, and mining royalty lands. With a strong balance sheet, strategic partnerships, and a seasoned management team, FRP Holdings is well-positioned to capitalize on emerging opportunities in the real estate market.
Business Overview
FRP Holdings operates through four reportable segments: Multifamily, Industrial and Commercial, Mining Royalty Lands, and Development. The Multifamily segment owns and manages apartment communities in Washington, D.C. and Greenville, South Carolina, totaling 1,483 units. The Industrial and Commercial segment owns and leases nine warehouse and office properties, primarily in Maryland, totaling 515,077 square feet of industrial space and 33,708 square feet of office space. The Mining Royalty Lands segment owns approximately 16,650 acres of land, predominantly in Florida and Georgia, that are leased to mining operators. The Development segment focuses on acquiring, entitling, and developing land for income-producing assets that are then transferred to the company's other segments.Financials
In the fiscal year ended December 31, 2023, FRP Holdings reported annual net income of $5,302,000, annual revenue of $41,506,000, annual operating cash flow of $32,971,000, and annual free cash flow of $81,671,000. The company's strong financial performance is a testament to its diversified business model and prudent management.For the first quarter of 2024, the company reported net income of $1,301,000, up 130% from the same period in the prior year. This increase was driven by a $95,000 decrease in interest expense, a $400,000 increase in interest income, and a $600,000 decrease in equity and loss of joint ventures due to the lease-up of the Verge project. Pro-rata net operating income for the first quarter increased 22% to $8.53 million, primarily due to a 92% increase in Multifamily NOI and a 36% increase in Industrial and Commercial NOI compared to the same period in 2023.
Multifamily Segment
The Multifamily segment, which includes the company's consolidated joint ventures (Dock 79 and The Maren) and three unconsolidated joint ventures (Bryant Street, Riverside, and .408 Jackson), reported a 92% increase in pro-rata NOI for the first quarter of 2024 compared to the same period in 2023. This was driven by improved results at Dock 79 and The Maren, as well as the addition of the Bryant Street and .408 Jackson projects to the segment after they achieved stabilization.Industrial and Commercial Segment
The Industrial and Commercial segment, which owns and leases nine buildings totaling 548,785 square feet, reported a 36% increase in revenue and a 47% increase in NOI for the first quarter of 2024 compared to the same period in 2023. This was primarily due to the full occupancy of the 1841 62nd Street property and the addition of the 1941 62nd Street property to the segment in March 2023.Mining Royalty Lands Segment
The Mining Royalty Lands segment reported a 9.7% decrease in revenue and a 12% decrease in NOI for the first quarter of 2024 compared to the same period in 2023. This was primarily due to a reduction in royalties at the company's Manassas quarry to resolve a $842,000 overpayment by the tenant in 2023.Development Segment
The Development segment is focused on acquiring, entitling, and developing land for income-producing assets that are then transferred to the company's other segments. During the first quarter of 2024, the company entered into two new joint venture agreements with BBX Logistics to develop industrial projects in Lakeland, Florida and Broward County, Florida. The company also has several other development projects in the pipeline, including a 259,200 square-foot speculative warehouse project in Aberdeen, Maryland and 170 acres of land in Cecil County, Maryland that can accommodate 900,000 square feet of industrial development.Liquidity
As of March 31, 2024, FRP Holdings had $152,484,000 in cash and cash equivalents and no debt borrowed under its $35 million revolving credit facility. The company has a strong balance sheet and ample liquidity to fund its development pipeline and pursue new opportunities.Outlook
FRP Holdings has shifted its development focus primarily towards industrial projects, which the company believes offer better returns and are less capital-intensive than multifamily projects. The company has underwritten $191 million in CapEx for its industrial development pipeline, targeting a 6-7% NOI yield on cost.The company's ability to pivot between asset classes is a key strength, as it allows FRP Holdings to adapt to changing market conditions and capitalize on the most attractive opportunities. With a seasoned management team, strategic partnerships, and a strong financial position, the company is well-positioned to execute on its growth strategies and create value for shareholders.