FRP HOLDINGS INC
For the period ended Jun 30, 2024. Filed Aug 7, 2024.
View on SEC.govAbout this filing
A company's report for each of its first three quarters. The financial statements are not audited. It shows how the business has moved since the last annual report, and what management says changed.
Jun 30, 2024 · Filed Aug 7, 2024
FRPH$18.63+1.8%Stored close · as of Nov 6, 2026
What changed in Management’s Discussion and Analysis?
Read the current filingPrevious report: 10-Q
Period ended 2024-03-31; filed 2024-05-14.
0000844059-24-000032
Item 2. Management's Discussion and Analysis of Financial Condition and Results of OperationsCurrent report: 10-Q
Period ended 2024-06-30; filed 2024-08-07.
0000844059-24-000039
Item 2. Management's Discussion and Analysis of Financial Condition and Results of OperationsThe baseline is this issuer’s latest earlier reporting period of the same form that was filed before the current report. A previous 10-Q is a different quarter, not a year-over-year comparison. Amendments are excluded.
Compared 81 previous paragraphs and 110 current paragraphs.
41 unchanged; 31 reworded; 32 added; 8 removed; 1 previous and 6 current paragraphs rearranged.
Tables are not compared: 27 previous and 26 current tables excluded. Dates, whitespace, punctuation and numbering changes are ignored; changes to financial figures remain significant.
A changed paragraph is not evidence that risk increased or decreased. An unchanged paragraph does not establish that risk stayed the same.
Added paragraphs (32)
Current report
1)54 acres of land that will be capable of supporting up to 635,000 square feet of industrial product located at 1001 Old Philadelphia Road in Aberdeen, MD.
Current report
2)17 acres of land in Harford County, MD that accommodates a 258,000 square foot speculative warehouse project on Chelsea Road under construction due to be complete in the fourth quarter of 2024.
Current report
Executive Summary and Analysis– Net Income increased by 242% in the second quarter and 188% for the first six months compared to last year, despite operating profit remaining more or less flat. This increase is due both to the improved performance of the Verge during lease-up and increased net investment income from the steady sale of lots this year at Aberdeen Overlook, our most recent Lending Venture. In the second quarter, Aberdeen Overlook generated $1.5 million in investment income compared to $564,000 in the second quarter last year from a previous lending venture, Amber Ridge. In the first six months, Aberdeen Overlook generated $2.1 million in investment income compared to $614,000 last year from Amber Ridge. While Lending Ventures are not necessarily part of our long-term core business strategy, they have been an effective way to put our balance sheet to work to generate real cash at better returns than treasuries.
Current report
The Company continued to grow Pro rata Net Operating Income (NOI) at the same meaningful clip that we have achieved over the last 36 months (21.6% CAGR since the same period in 2021). In the second quarter, we saw a 21.2% improvement in NOI compared to the same period last year, and a 21.7% increase in NOI in the first six months compared to the same period last year. The Industrial and Commercial and Multifamily Segments were the primary drivers of this increase. We grew our Industrial and Commercial NOI by 41% in the second quarter and 44% in the first six months when compared to the same periods last year as we burned through a rent abatement period (unrealized revenue) at two buildings at Hollander Business Park in 2023 and started generating real cash flow. Multifamily pro rata NOI increased by 84% this quarter and 88% for the first six months when compared to the same periods last year, mostly due to the stabilization of .408 Jackson and Bryant Street. The addition of the Verge to this segment later this year should only serve to increase the performance of this segment on an NOI basis.
Current report
In keeping with our strategy to grow our industrial footprint, in July, we closed on the purchase of the land for our industrial joint venture in Broward County, FL for a total purchase price of $24.5 million, of which we contributed $12.25 million. Per our partnership agreement, we represent 80% of the equity capital in this 182,000 square-foot class A building. We also closed on the land for our other industrial JV in Lakeland, FL at the end of the first quarter of this year for a total purchase price of $2.8 million. We will account for 90% of the equity capital for this 200,000 square-foot industrial project. Total expected capex for these projects is $57 million and $28 million respectively with total equity capital of $26 million and $13 million and an expected start of construction by March of 2025 for both projects. We are in the home stretch on finishing shell construction on our Chelsea project in Harford County, MD. This 258,000 square-foot industrial building should be complete in the fourth quarter of this year with an expected total project cost, including land, of $30 million. We have underwritten all these projects at an unlevered 6-7% yield on cost but expect to outperform these assumptions.
Current report
Second Quarter Highlights
Current report
•242% increase in Net Income ($2.0 million vs $598,000)
Current report
•21% increase in pro rata NOI ($9.2 million vs $7.6 million)
Current report
•84% increase in the Multifamily segment’s pro rata NOI due to the transfer of Bryant St. and .408 Jackson to this segment from our Development segment at the beginning of this fiscal year
Current report
•41% increase in Industrial and Commercial segment NOI
Current report
•Net investment income increased $583,000 due to increased earnings on cash equivalents ($408,000) and increased income from our lending ventures ($781,000), partially offset by decreased preferred interest ($606,000) due to the conversion of FRP preferred equity to common equity at Bryant Street.
Current report
•Equity in loss of Joint Ventures improved $1,323,000 due to improved results of our unconsolidated joint ventures. Results improved at The Verge ($891,000), .408 Jackson ($225,000), Bryant Street ($159,000), and BC Realty ($55,000).
Current report
Total revenues for our two consolidated joint ventures were $5,496,000, a decrease of $49,000 versus $5,545,000 in the same period last year. Total operating profit for the consolidated joint ventures was $1,130,000, an increase of $218,000, or 24% versus $912,000 in the same period last year primarily because of less depreciation expense.
Current report
For our three unconsolidated joint ventures, pro rata revenues were $3,865,000, an increase of $905,000 or 31% compared to $2,960,000 in the same period last year. Pro rata operating profit was $508,000, an increase of $455,000 or 858% versus $53,000 in the same period last year. For ease of comparison these figures and the tables include the results for Bryant Street and .408 Jackson from the same period last year (when these projects were still in our Development segment).
Current report
Six Month Highlights
Current report
•188% increase in Net Income ($3.3 million vs $1.2 million)
Current report
•22% increase in pro rata NOI ($17.8 million vs $14.6 million)
Current report
•88% increase in the Multifamily segment’s pro rata NOI due to the transfer of Bryant St. and .408 Jackson to this segment from our Development segment at the beginning of the year
Current report
•16% increase in Industrial and Commercial revenue and 44% increase in that segment’s NOI
Current report
Consolidated Results
Current report
Net income for the firstsix months of 2024 was $3,345,000 or $.18 per share versus $1,163,000 or $.06 per share in the same period last year. Pro rata NOI for the firstsix months of 2024 was $17,764,000 versus$14,602,000 in the same period last year. The firstsix months of 2024 were impacted by the following items:
Current report
•Net investment income increased $984,000 due to increased earnings on cash equivalents ($960,000) and increased income from our lending ventures ($1,230,000), partially offset by decreased preferred interest ($1,206,000) due to the conversion of FRP preferred equity to common equity at Bryant Street.
Current report
•Equity in loss of Joint Ventures improved $1,929,000 due to improved results at our unconsolidated joint ventures. Results improved at The Verge ($1,587,000), .408 Jackson ($273,000), and BC Realty ($110,000).
Current report
Multifamily Segment (Consolidated)
Current report
Multifamily Segment (Pro rata unconsolidated)
Current report
For our three unconsolidated joint ventures, pro rata revenues were $7,578,000, an increase of $1,912,000 or 34% compared to $5,666,000 in the same period last year. Pro rata operating profit was $917,000, an increase of $654,000 or 249% versus $263,000 in the same period last year. For ease of comparison these figures and the tables include the results for Bryant Street and .408 Jackson from the same period last year (when these projects were still in our Development segment).
Current report
The combined consolidated and unconsolidated pro rata net operating income this quarter for this segment was $7,853,000, up $3,679,000 or 88% compared to $4,174,000 in the same period last year. Substantially all of this increase was from the addition of Bryant Street and .408 Jackson from Development to this segment at the beginning of 2024 as same store NOI was more or less flat. These two projects contributed $3,689,000 of pro rata NOI to this segment compared to$2,451,000 in the Development segment in the same period last year, an increase of $1,238,000.
Current report
Industrial and Commercial Segment
Current report
Mining Royalty Lands Segment Results
Current report
Total revenues in this segment were $6,194,000, a decrease of $352,000 or 5% versus $6,546,000 in the same period last year. Royalty tons were down 10%. Total operating profit in this segment was $5,089,000, a decrease of $433,000 versus $5,522,000 in the same period last year. Net operating income in this segment was $5,788,000, down $485,000 or 8% compared to the same period last year. The primary factor in the decrease is the deduction of royalties to resolve an $842,000 overpayment which we referenced previously. Through the first two quarters of this year, the tenant has withheld $566,000 in royalties otherwise due to the Company.
Current report
Development Segment Results
Current report
Operating Activities -Net cash provided by operating activities for the six months ended June 30, 2024 was $15,082,000 versus $12,853,000 in the same period last year. Income and NOI increased substantially but net cash provided by operating activities of the company excludes the unconsolidated joint ventures where much of the increase occurred.
Removed paragraphs (8)
Previous report
First Quarter Highlights
Previous report
Interest income increased $401,000 due to an increase in interest earned on cash equivalents ($552,000), increased income from our lending ventures ($449,000), partially offset by decreased preferred interest ($600,000).
Previous report
Equity in loss of Joint Ventures decreased $606,000 primarily due to lease-up of The Verge.
Previous report
For our three unconsolidated joint ventures pro-rata revenues were $3,713,000, an increase of $1,007,000 or 37% compared to $2,706,000 the same period last year. Pro-rata operating profit was $409,000, an increase of $199,000 or 95% versus $210,000 in the same period last year. For the purposes of these comparisons, results from the Development Segment for the three joint ventures stabilized at the beginning of 2024 are included in the same quarter last year.
Previous report
**Operating Activities -**Net cash provided by operating activities for the three months ended March 31, 2024 was $2,906,000 versus $4,687,000 in the same period last year. The decrease was primarily due to a $1,649,000 larger reduction in accounts payable and accrued liabilities.
Previous report
Summary and Outlook. This quarter represented another meaningful step in the growth of this Company. The brisk pace at which we grew pro-rata NOI in 2023 continued into the first quarter of this year as we saw a 22% increase over the same period last year. The primary driver for this increase was our Multifamily Segment, due in part to the stabilization of .408 Jackson and Bryant Street. The addition of these two assets to this business segment, as well as the improved performance of Dock 79 and Maren drove the segment’s 92% increase in pro-rata NOI over the same period last year.
Previous report
As we have communicated on a number of occasions recently, we have shifted our development focus primarily towards industrial projects. The returns are currently better than most multifamily projects, and are less capital intensive and less reliant on debt. Industrial development has always been our core competency and we are excited to flex that muscle in markets both familiar and new.
Previous report
Finally, this quarter, we entered into two separate joint venture agreements to develop industrial product in Florida. These projects represent our first industrial developments outside of the Mid-Atlantic. In entering Broward County and the I-4 corridor in Lakeland, we are expanding into two of the best growth markets in the United States. Our share of the industrial projects we have in development represents $191 million in capex, a portion which will be financed with debt. $27 million of that has been spent already, but we anticipate putting the remainder to use in the next two to three years if market conditions are right. We have underwritten these projects with a 6-7% NOI yield on cost.
Reworded paragraphs (31)
Previous wording
The following discussion and analysis of our financial condition and results of operations should be read in conjunction with the accompanying unaudited consolidated financial statements and related notes in Item 1 and with the audited consolidated financial statements and the related notes included in our annual report on Form 10-K. The statements in this discussion regarding industry outlook, our expectations regarding our future performance, liquidity and capital resources and other non-historical statements in this discussion are forward-looking statements. These forward-looking statements are subject to risks and uncertainties, including the risks and uncertainties described in
Current wording
The following discussion and analysis of our financial condition and results of operations should be read in conjunction with the accompanying unaudited consolidated financial statements and related notes in Item 1 and with the audited consolidated financial statements and the related notes included in our annual report on Form 10-K. The statements in this discussion regarding industry outlook, our expectations regarding our future performance, liquidity and capital resources and other non-historical statements in this discussion are forward-looking statements. These forward-looking statements are subject to risks and uncertainties, including the risks and uncertainties described in “Forward-Looking Statements” below and “Risk Factors” on page 5 of our annual report on Form 10-K. Our actual results may differ materially from those contained in or implied by any forward-looking statements. We assume no obligation to revise or publicly release any revision to any forward-looking statements contained in this quarterly report on Form 10-Q, unless required by law.
Previous wording
We believe our present capital structure, liquidity and land provide us with years of opportunities to increase recurring revenue and long-term value for our shareholders. We intend to focus on our core business activity of real estate development, asset management and operations. We are developing a broad range of asset types that we believe will provide acceptable rates of return, grow recurring revenues and support future business. Capital commitments will be funded with cash proceeds from completed projects, existing cash, owned-land, partner capital and financing arrangements. We do not anticipate immediate benefits from investments. Timing of projects may be subject to delays caused by factors beyond our control.
Current wording
We believe our present capital structure, liquidity and land provide us with years of opportunities to increase recurring revenue and long-term value for our shareholders. We intend to focus on our core business activity of real estate development, asset management and operations. We are developing a broad range of asset types that we believe will provide acceptable rates of return, grow recurring revenues and support future business. Capital commitments will be funded with cash proceeds from completed projects, existing cash, owned-land, partner capital and financing arrangements. Timing of projects may be subject to delays caused by factors beyond our control.
Previous wording
At quarter end, the segment included five stabilized joint ventures which own and manage apartment buildings and the retail associated with each development. These assets create revenue and cash flows through tenant rental payments, and reimbursements for building operating costs. The Company’s residential units typically lease for 12 – 15-month lease terms. 90 days prior to the expiration, as long as there is no balance due, the tenant is offered a renewal. If no notice to move out or renew is made, then the leases go month-to-month until notification of termination or renewal is received. Renewal terms are typically 9 – 12 months. The Company also leases retail spaces at apartment/mixed-use properties. The retail leases are typically 10 -15-year leases with options to renew for another 5 years. Retail leases at these properties also include percentage rents which average 3-6% of annual sales for the tenant that exceed a breakpoint stipulated by each individual lease. All base rent revenue is recognized on a straight-line basis. The major cash outlays incurred in this segment are for property taxes, full service maintenance, property management, utilities and marketing. The five multifamily properties are as follows:
Current wording
At quarter end, the segment included five stabilized joint ventures which own and manage apartment buildings and any retail associated with a development. These assets create revenue and cash flows through tenant rental payments, and reimbursements for building operating costs. The Company’s residential units typically lease for 12 – 15-month lease terms. 90 days prior to the expiration, as long as there is no balance due, the tenant is offered a renewal. If no notice to move out or renew is made, then the leases go month-to-month until notification of termination or renewal is received. Renewal terms are typically 9 – 12 months. The Company also leases retail spaces at apartment/mixed-use properties. The retail leases are typically 10 -15-year leases with options to renew for another five years. Retail leases at these properties also include percentage rents which collect on average 3-6% of annual sales when a tenant exceeds a breakpoint stipulated by each individual lease. All base rent revenue is recognized on a straight-line basis. The major cash outlays incurred in this segment are for property taxes, full service maintenance, property management, utilities and marketing. The five multifamily properties are as follows:
Previous wording
As of March 31, 2024, the Industrial and Commercial Segment includes nine buildings at four commercial properties owned by the Company in fee simple as follows:
Current wording
As of June 30, 2024, the Industrial and Commercial Segment includes four commercial properties owned by the Company in fee simple as follows:
Previous wording
34 Loveton Circle in suburban Baltimore County, MD consists of one office building totaling 33,708 square feet which is 90.8% occupied (16% of the space is occupied by the Company for use as our Baltimore headquarters). The property is subject to commercial leases with various tenants.
Current wording
1)34 Loveton Circle in suburban Baltimore County, MD consists of one office building totaling 33,708 square feet which is 90.8% occupied (16% of the space is occupied by the Company for use as our Baltimore headquarters). The property is subject to commercial leases with various tenants.
Previous wording
155 E. 21 st Street in Duval County, FL was an office building property that remains under lease through March 2026. We permitted the tenant to demolish all structures on the property during 2018.
Current wording
2)155 E. 21 st Street in Duval County, FL was an office building property that remains under lease through March 2026. We permitted the tenant to demolish all structures on the property during 2018.
Previous wording
Cranberry Run Business Park in Harford County, MD consists of five industrial buildings totaling 267,737 square feet which are 92.1% occupied and 92.1% leased. The property is subject to commercial leases with various tenants.
Current wording
3)Cranberry Run Business Park in Harford County, MD consists of five industrial buildings totaling 267,737 square feet which are 92.1% occupied and 92.1% leased. The property is subject to commercial leases with various tenants.
Previous wording
Hollander 95 Business Park in Baltimore City, MD consists of three industrial buildings totaling 247,340 square feet and two ground leases that are 100.0% leased and 100.0% occupied.
Current wording
4)Hollander 95 Business Park in Baltimore City, MD consists of three industrial buildings totaling 247,340 square feet and two ground leases that are 100.0% leased and 100.0% occupied.
Previous wording
Management focuses on several factors to measure our success on a comparative basis in this segment. The major factors we focus on are (1) net operating income growth, (2) growth in occupancy, (3) average annual occupancy rate (defined as the occupied square feet at the end of each month during a fiscal year divided by the number of months to date in that fiscal year as a percentage of the average number of square feet in the portfolio over that same time period), (4) tenant retention success rate (as a percentage of total square feet to be renewed), (5) building and refurbishing assets to meet Class A and Class B institutional grade classifications, and (6) reducing complexities and deferred capital expenditures to maximize sale price.
Current wording
Management focuses on and compares several measures of success in this segment (1) net operating income growth, (2) average annual occupancy rate (defined as the occupied square feet at the end of each month during a fiscal year divided by the number of months to date in that fiscal year as a percentage of the average number of square feet in the portfolio over that same time period), and (3) tenant retention success rate (as a percentage of total square feet to be renewed). Among the ways we improve these metrics are focusing on tenant retention and occupancy growth, building and refurbishing assets to meet Class A and Class B institutional grade classifications, and minimizing deferred capital expenditures and asset complexities.
Previous wording
Through our Development segment, we own and are continuously monitoring for “the highest and best use” of several parcels of land that are in various stages of development. Our overall strategy in this segment is to convert all our non-income producing lands into income production through (i) an orderly process of constructing new commercial and residential buildings for us to own and operate or (ii) a sale to, or joint venture with, outside parties. Additionally, our Development segment will purchase or form joint ventures on new developments of land not previously owned by the Company.
Current wording
Through our Development segment, we own and are continuously monitoring for “the highest and best use” of several parcels of land that are in various stages of development. Our overall strategy in this segment is to convert all our non-income producing lands into income production through (i) an orderly process of constructing new commercial and residential buildings for us to own and operate or (ii) a sale to, or joint venture with, outside parties. Additionally, our Development segment will purchase land or form joint ventures for new developments of land not previously owned by the Company.
Previous wording
The Company is in predevelopment work to get shovel ready on two projects in Maryland: the first is on 170 acres of land in Cecil County, MD that can accommodate 900,000 square feet of industrial development; and the second is on 54 acres of land in Aberdeen, MD capable of supporting up to 650,000 square feet of industrial product. We expect both projects to be ready to go vertical in the next eighteen months. We are also underway on the construction of a $30 million, 259,200 square-foot spec warehouse project at our Chelsea site in Aberdeen, MD, which we plan to deliver in the third quarter of 2024.
Current wording
3)170 acres of land in Cecil County, MD that can accommodate 900,000 square feet of industrial development.
Previous wording
Net income for the first quarter of 2024 was $1,301,000 or $.07 per share versus $565,000 or $.03 per share in the same period last year. These earnings per share are adjusted to reflect the 2 for 1 stock split that was effective April 12, 2024. The first quarter of 2024 was impacted by the following items:
Current wording
Net income for the second quarter of 2024 was $2,044,000 or $.11 per share versus $598,000 or $.03 per share in the same period last year. Pro rata NOI for thesecond quarter of 2024 was $9,230,000 versus$7,614,000 in the same period last year. The second quarter of 2024 was impacted by the following items:
Previous wording
Operating profit increased slightly as favorable results in Multifamily and Industrial and Commercial were offset by lower Mining royalties and higher Development Segment losses.
Current wording
•Operating profit increased slightly as favorable results in Multifamily, Industrial and Commercial, and Development were partially offset by lower Mining royalties and higher General and administrative costs.
Previous wording
Interest expense decreased $95,000 compared to the same quarter last year due to $127,000 more capitalized interest and increased costs related to our credit agreement. More interest was capitalized due to increased in-house and joint venture projects under development this quarter compared to last year.
Current wording
•Interest expense decreased $300,000 compared to the same quarter last year due to $334,000 more capitalized interest partially offset by increased costs related to our larger credit agreement. More interest was capitalized due to increased in-house and joint venture projects under development this quarter compared to last year.
Previous wording
Our Multifamily Segment consists of two consolidated joint ventures (Dock 79 and The Maren) and three unconsolidated joint ventures (Bryant Street, Riverside, and .408 Jackson). Riverside achieved stabilization in 2022 while the other two moved from our Development Segment to this segment upon stabilization as of the beginning of 2024.
Current wording
Our Multifamily Segment consists of two consolidated joint ventures (Dock 79 and The Maren) and three unconsolidated joint ventures (Bryant Street, Riverside, and .408 Jackson). Riverside achieved stabilization in 2022 while Bryant Street and .408 Jackson moved from our Development Segment to this segment upon stabilization as of the beginning of 2024.
Previous wording
The combined consolidated and unconsolidated pro-rata net operating income this quarter for this segment was $3,883,000, up $1,861,000 or 92% compared to $2,022,000 in the same quarter last year. During the same quarter last year, Bryant Street and .408 Jackson were in the Development segment and contributed $1,233,000 of pro-rata NOI.
Current wording
The combined consolidated and unconsolidated pro rata net operating income this quarter for this segment was $3,970,000, up $1,818,000 or 84% compared to $2,152,000 in the same quarter last year. Substantially all of this increase was from the transfer of Bryant Street and .408 Jackson from Development to this segment at the beginning of 2024 as same store NOI was more or less flat. These two projects contributed $1,900,000 of pro rata NOI to this segment compared to $1,218,000 in the Development segment in the same quarter last year, an increase of $682,000.
Previous wording
Total revenues in this segment were $2,963,000, a decrease of $319,000 or 9.7% versus $3,282,000 in the same period last year. Royalty tons were down 14%. Total operating profit in this segment was $2,446,000, a decrease of $344,000 versus $2,790,000 in the same period last year. Net Operating Income this quarter for this segment was $2,760,000, down $388,000 or 12% compared to the same quarter last year. Among the reasons for this decrease is a shift in production off our land in Manassas and a decrease in production at our Ft. Myers quarry because of weather-related delays and slowdowns. There was also a large beach restoration project completed early last year from our Keuka location. This individual project accounted for over 82,000 tons in sales in the first quarter of last year and there was no need to repeat it this year. The primary reason for the decrease, however, is the deduction of royalties to resolve an $842,000 overpayment, as referenced in our 10-Q from the quarter ended June 30, 2023. Through a temporary amendment to our mining lease, the tenant deducted $289,000 in royalties otherwise due the Company this quarter. The outstanding balance on this overpayment is $335,000. Excluding that adjustment, royalties per ton increased 13%.
Current wording
Total revenues in this segment were $3,231,000, a decrease of $33,000 or 1% versus $3,264,000 in the same period last year. Royalty tons were down 5%. Total operating profit in this segment was $2,643,000, a decrease of $89,000 versus $2,732,000 in the same period last year. Net Operating Income this quarter for this segment was $3,028,000, down $97,000 or 3% compared to the same quarter last year. The primary reason for these decreases is the deduction of royalties to resolve an $842,000 overpayment, as referenced in our 10-Q from the quarter ended June 30, 2023. As part of the ongoing resolution of this overpayment, this quarter, the tenant withheld $277,000 in royalties otherwise due the Company. The outstanding balance on this overpayment credit is $53,000 which we expect will be exhausted in the first month of the third quarter of this year.
Previous wording
We entered into two new joint venture agreements this quarter 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 160,000 square-foot warehouse redevelopment project in Broward County, FL.
Current wording
▪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.
Previous wording
Last summer we broke ground on a new speculative warehouse project in Aberdeen, MD on Chelsea Road. Vertical construction is underway. This Class A, 259,200 square foot building is due to be complete in the 4th quarter of 2024.
Current wording
▪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.
Previous wording
Lease-up is nearing completion at The Verge. At quarter end, the building was 94.2% leased and 91.6% occupied. Retail at this location is 45.2% leased. This is our third mixed-use project in the Anacostia waterfront submarket in Washington, DC.
Current wording
▪The Verge has achieved residential stabilization and will move to our Multifamily segment on July 1, 2024. At quarter end, the building was 93.3% leased and 90.7% occupied. This is our third mixed-use project in the Anacostia waterfront submarket in Washington, DC.
Previous wording
We are the principal capital source for a residential development venture in Harford County, MD known as Aberdeen Overlook. The project includes 110 acres and 344 residential building lots. We have committed $31.1 million to the project with $23.1 million currently drawn. A national homebuilder is under contract to purchase all 222 townhomes and 122 single family dwelling lots. As of quarter-end 23 lots had been sold and $5.8 million of preferred interest and principal has been returned to the company.
Current wording
▪We are the principal capital sourceto develop 344 residential lots on 110 acres in Harford County, MD. We have funded $24.6 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, 78 lots have been sold and $12.7 million of preferred interest and principal has been returned to the company of which $3.2 million was booked as profit to the Company.
Previous wording
Total revenues for our two consolidated joint ventures were $5,414,000, an increase of $138,000 versus $5,276,000 in the same period last year. Total operating profit in this segment was $1,212,000, an increase of $408,000, or 51% versus $804,000 in the same period last year.
Current wording
Total revenues for our two consolidated joint ventures were $10,910,000, an increase of $89,000 versus $10,821,000 in the same period last year. Total operating profit for the consolidated joint ventures was $2,342,000, an increase of $626,000, or 36% versus $1,716,000 in the same period last year primarily because of less depreciation expense.
Previous wording
Total revenues in this segment were $1,453,000, up $383,000 or 36%, over the same period last year. Operating profit was $562,000, up $267,000 or 91% from $295,000 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 same period last year) and the addition of 1941 62nd Street to this segment in March 2023. 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. We were 95.6% leased and occupied during the entire quarter. Net operating income in this segment was $1,159,000, up $372,000 or 47% compared to the same quarter last year.
Current wording
Total revenues in this segment were $2,898,000, up $408,000 or 16%, over the same period last year. Operating profit was $1,052,000, up $347,000 or 49% from $705,000 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 $2,346,000, up $716,000 or 44% compared to the same period last year partially due to $401,000 more unrealized rental revenue in the prior year due to rent abatements that expired in 2023.
Previous wording
Liquidity and Capital Resources. The growth of the Company’s businesses requires significant cash needs to acquire and develop land or operating buildings and to construct new buildings and tenant improvements. As of March 31, 2024, we had $152,484,000 of cash and cash equivalents. As of March 31, 2024, we had no debt borrowed under our $35 million Wells Fargo revolver, $898,000 outstanding under letters of credit and $34,102,000 available to borrow under the revolver. On March 19, 2021, the Company refinanced Dock 79 and The Maren projects pursuant to separate Loan Agreements and Deed of Trust Notes entered into with Teachers Insurance and Annuity Association of America, LLC. Dock 79 and The Maren borrowed principal sums of $92,070,000 and $88,000,000 respectively, in connection with the refinancing.
Current wording
Liquidity and Capital Resources. The growth of the Company’s businesses requires significant cash needs to acquire and develop land or operating buildings and to construct new buildings and tenant improvements. As of June 30, 2024, we had $156,929,000 of cash and cash equivalents. As of June 30, 2024 we had no debt borrowed under our $35 million Wells Fargo revolver, $548,000 outstanding under letters of credit and $34,452,000 available to borrow under the revolver. On March 19, 2021, the Company refinanced Dock 79 and The Maren projects pursuant to separate Loan Agreements and Deed of Trust Notes entered into with Teachers Insurance and Annuity Association of America, LLC. Dock 79 and The Maren borrowed principal sums of $92,070,000 and $88,000,000 respectively, in connection with the refinancing.
Previous wording
At March 31, 2024, the Company was invested in U.S. Treasury notes valued at $141,603,000 maturing in 2024. The unrealized loss on these investments of $150 was recorded as part of comprehensive income and was based on the estimated market value by Wells Fargo Bank, N.A. (Level 1).
Current wording
At June 30, 2024, the Company was invested in U.S. Treasury notes valued at $136,493,000 maturing in 2024. The unrealized gain on these investments of $3,000 was recorded as part of comprehensive income and was based on the estimated market value by Wells Fargo Bank, N.A. (Level 1).
Previous wording
Investing Activities - Net cash used in investing activities for the three months ended March 31, 2024 was $7,225,000 versus $8,755,000 in the same period last year. The $1.5 million decrease was primarily due to a $5 million increase in property due to active warehouse construction, a $5 million decrease in investments in joint ventures due to lower capital calls and lending activity, and a $1.5 million increase in return of capital form joint ventures due to permanent financing at .408 Jackson mostly offset by lower lending venture returns.
Current wording
Investing Activities - Net cash used in investing activities for the six months ended June 30, 2024 was $14,219,000 versus $21,931,000 in the same period last year. The $7.7 million decrease was primarily due to a $11.8 million decrease in investments in joint ventures due to lower capital calls and lending activity, a $6.9 million increase in return of capital form joint ventures due to permanent financing at .408 Jackson and higher lending venture returns partially offset by a $10.3 million increase in property due to active warehouse construction.
Previous wording
Financing Activities – Net cash required by financing activities was $752,000 versus $130,000 in the same period last year primarily due to the exercise of employee stock options in the same period last year.
Current wording
Financing Activities – Net cash required by financing activities was $1,489,000 versus $1,882,000 in the same period last year primarily due to $1.0 million repurchase of stock mostly offset by the exercise of employee stock options in the same period last year.
Previous wording
Credit Facilities - On December 22, 2023, the Company entered into a 2023 Amended and Restated Credit Agreement (the "Credit Agreement") with Wells Fargo Bank, N.A. (“Wells Fargo”). The Credit Agreement modifies the Company’s prior Credit Agreement with Wells Fargo, dated January 30, 2015. The Credit Agreement establishes a three-year revolving credit facility with a maximum facility amount of $35 million. The interest rate under the Credit Agreement will be 2.25% over Daily Simple SOFR. A commitment fee of 0.35% per annum is payable quarterly on the unused portion of the commitment. The credit agreement contains certain conditions and financial covenants, including a minimum tangible net worth and dividend restriction. As of March 31, 2024, these covenants would have limited our ability to pay dividends to a maximum of $96.9 million combined.
Current wording
Credit Facilities - On December 22, 2023, the Company entered into a 2023 Amended and Restated Credit Agreement (the "Credit Agreement") with Wells Fargo Bank, N.A. (“Wells Fargo”). The Credit Agreement modifies the Company’s prior Credit Agreement with Wells Fargo, dated January 30, 2015. The Credit Agreement establishes a three-year revolving credit facility with a maximum facility amount of $35 million. The interest rate under the Credit Agreement will be 2.25% over Daily Simple SOFR. A commitment fee of 0.35% per annum is payable quarterly on the unused portion of the commitment. The credit agreement contains certain conditions and financial covenants, including a minimum tangible net worth and dividend restriction. As of June 30, 2024, these covenants would have limited our ability to pay dividends to a maximum of $100.4 million combined.
Previous wording
On December 4, 2023 the Bryant Street partnership secured a $110,000,000 loan with a floating rate equal to SOFR plus 2.9% from Rialto Capital Management, replacing the $132,000,000 loan with Capital One. It is a 3-year loan with 2 one-year extensions. A SOFR rate cap was secured at 5.35% from Chatham Financial creating an effective interest rate ceiling of 8.25%. The loan has a floor interest rate of 6.90%. FRP will look to secure a fixed permanent loan in the future when interest rates are more favorable.
Current wording
On December 4, 2023 the Bryant Street partnership secured a $110,000,000 loan with a floating rate equal to SOFR plus 2.9% from Rialto Capital Management, replacing the $132,000,000 loan with Capital One. It is a three year loan with two one-year extensions. A SOFR rate cap was secured at 5.35% from Chatham Financial creating an effective interest rate ceiling of 8.25%. The loan has a floor interest rate of 6.90%. FRP will look to secure a fixed permanent loan in the future when interest rates are more favorable.
Previous wording
On January 30, 2024 the Greenville partnership at .408 Jackson secured a $49,450,000 loan with a fixed rate of 5.59% from Fannie Mae, replacing the $36,000,000 loan with First National Bank. It is a 7-year loan maturing January 1, 2031. The interest rate was favorable given the current market conditions and the term coincides with when the opportunity zone holding period lapses in 2030, when a sale could take place and the tax on gain is forgiven. As a result of the larger loan $5 million of our capital was returned to the Company
Current wording
On January 30, 2024 the Greenville partnership at .408 Jackson secured a $49,450,000 loan with a fixed rate of 5.59% from Fannie Mae, replacing the $36,000,000 loan with First National Bank. It is a seven year loan maturing February 1, 2031. The interest rate was favorable given the current market conditions and the term coincides with when the opportunity zone holding period lapses in 2030, when a sale could take place and the tax on gain is forgiven. As a result of refinancing, the Company received a $5 million return of capital.
Previous wording
Cash Requirements – The Company expects to invest $57 million into our existing real estate holdings and joint ventures during the remainder of 2024 and $193 million beyond 2024 for projects currently in our pipeline, with such capital being funded from cash and investments on hand, cash generated from operations, property sales, distributions from joint ventures, or borrowings under our credit facilities.
Current wording
Cash Requirements – The Company expects to invest $46 million into our existing real estate holdings and joint ventures during the remainder of 2024 and $196 million beyond 2024 for projects currently in our pipeline, with such capital being funded from cash and investments on hand, cash generated from operations, property sales, distributions from joint ventures, or borrowings under our credit facilities.
Rearranged current paragraphs (6)
Current report — wording carried from elsewhere
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
Current report — wording carried from elsewhere
Total revenues in this segment were $1,445,000, up $25,000 or 2%, over the same period last year. Operating profit was $490,000, up $80,000 or 20% 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. Theses assets were 95.6% leased and occupied during the entire quarter. Net operating income in this segment was $1,187,000, up $344,000 or 41% compared to the same quarter last year primarily due to $335,000 more unrealized rental revenue in the prior year due to rent abatements that expired in 2023.
Current report — wording carried from elsewhere
Comparative Results of Operations for the Six months ended June 30, 2024 and 2023
Current report — wording carried from elsewhere
•Operating profit increased slightly as favorable results in Multifamily, Industrial and Commercial, and Development were partially offset by lower Mining royalties and higher General and administrative costs.
Current report — wording carried from elsewhere
•Interest expense decreased $395,000 compared to the same period last year due to $461,000 more capitalized interest partially offset by increased costs related to our larger credit agreement. More interest was capitalized due to increased in-house and joint venture projects under development this quarter compared to last year.
Current report — wording carried from elsewhere
On April 25, 2024 the Verge partnership secured a $68,862,000 loan with a fixed rate of 5.72% from Fannie Mae, replacing the $72,823,000 loan with Truist Bank. It is a seven year loan maturing May 1, 2031. The interest rate was favorable given the current market conditions and the term coincides with when the opportunity zone holding period lapses in 2030, when a sale could take place and the tax on gain is forgiven.
Rearranged previous paragraphs (1)
Previous report — wording carried elsewhere
“Forward-Looking Statements” below and “Risk Factors” on page 5 of our annual report on Form 10-K. Our actual results may differ materially from those contained in or implied by any forward-looking statements. We assume no obligation to revise or publicly release any revision to any forward-looking statements contained in this quarterly report on Form 10-Q, unless required by law.