FRP HOLDINGS INC
For the period ended Sep 30, 2024. Filed Nov 6, 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.
Sep 30, 2024 · Filed Nov 6, 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 2024-06-30; filed 2024-08-07.
0000844059-24-000039
Item 2. Management's Discussion and Analysis of Financial Condition and Results of OperationsCurrent report: 10-Q
Period ended 2024-09-30; filed 2024-11-06.
0000844059-24-000041
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 110 previous paragraphs and 118 current paragraphs.
56 unchanged; 40 reworded; 20 added; 14 removed; 0 previous and 2 current paragraphs rearranged.
Tables are not compared: 26 previous and 27 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 (20)
Current report
The following table presents the calculation of the Company's pro rata share of certain balance sheet items by segment as of September 30, 2024:
Current report
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.
Current report
Shell construction is nearly complete for our Chelsea Project in Harford County, MD, which we expect to come in under budget and exceed our underwriting expectations upon stabilization. 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 intotal 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.
Current report
Third Quarter Highlights
Current report
•39% increase in pro rata NOI ($11.3 million vs $8.1 million)
Current report
•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.
Current report
•Interest expense decreased $374,000 compared to the same quarter last year as we capitalized $408,000 more interest this quarter, partially offset byhigher costs related to the increase in our line of credit with
Current report
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.
Current report
Multifamily Segment (Pro rata consolidated and pro rata unconsolidated)
Current report
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).
Current report
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.
Current report
Nine Month Highlights
Current report
•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
Current report
•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.
Current report
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.
Current report
Multifamily Segment (Pro rata consolidated and pro rata unconsolidated)
Current report
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).
Current report
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
Current report
On July 25, 2022 the Greenville partnership at Riverside secured a $32,000,000 loan with a fixed rate of 4.92% from Synovus Bank, replacing the $22,800,000 loan with Truist Bank. It is an eight year loan maturing July 25, 2030. 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.
Current report
Non-GAAP Financial Measures.
Removed paragraphs (14)
Previous 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.
Previous 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.
Previous 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.
Previous report
Second Quarter Highlights
Previous report
•21% increase in pro rata NOI ($9.2 million vs $7.6 million)
Previous 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).
Previous report
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 report
▪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 report
Six Month Highlights
Previous report
•22% increase in pro rata NOI ($17.8 million vs $14.6 million)
Previous 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).
Previous 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.
Previous report
Non-GAAP Financial Measure.
Previous report
The following tables detail the Development and Multifamily Segment pro rata NOI by project:
Reworded paragraphs (40)
Previous wording
The following discussion includes a non-GAAP financial measure within the meaning of Regulation G promulgated by the Securities and Exchange Commission to supplement the financial results as reported in accordance with GAAP. The non-GAAP financial measure discussed is pro rata net operating income (NOI). The Company uses this metric to analyze its continuing operations and to monitor, assess, and identify meaningful trends in its operating and financial performance. This measure is not, and should not be viewed as, a substitute for GAAP financial measures. Refer to “Non-GAAP Financial Measure” below in this quarterly report for a more detailed discussion, including reconciliations of this non-GAAP financial measure to its most directly comparable GAAP financial measure.
Current wording
The following discussion includes non-GAAP financial measures within the meaning of Regulation G promulgated by the Securities and Exchange Commission to supplement the financial results as reported in accordance with GAAP. The non-GAAP financial measures discussed are operating profit before G&A and pro rata net operating income (NOI). The Company uses these metrics to analyze its continuing operations and to monitor, assess, and identify meaningful trends in its operating and financial performance. These measures are not, and should not be viewed as, a substitute for GAAP financial measures. Refer to “Non-GAAP Financial Measure” below in this quarterly report for a more detailed discussion, including reconciliations of this non-GAAP financial measure to its most directly comparable GAAP financial measure.
Previous wording
Warehouse or office properties in Maryland or Florida either existing or under development;
Current wording
Warehouse or office properties in Maryland and Florida either existing or under development;
Previous wording
Mixed use properties under development in Washington, D.C., Greenville, SC or Florida; and
Current wording
Mixed use properties under development in Washington, D.C., Greenville, SC and Florida; and
Previous 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:
Current wording
At quarter end, the segment included six 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
The major expenses in this segment are comprised of collection and accounting for royalties, management’s oversight of the mining leases, land entitlement for post-mining uses and property taxes at our non-leased locations and at our Grandin location which, unlike our other leased mining locations, are not entirely paid by the tenant. As such, our costs in this business are very low as a percentage of revenue, are relatively stable and are not affected by increases in production at our locations. Our current mining tenants include Vulcan Materials, Martin Marietta, Cemex, Argos and The Concrete Company.
Current wording
The major expenses in this segment are comprised of collection and accounting for royalties, management’s oversight of the mining leases, land entitlement for post-mining uses and property taxes at our non-leased locations and at our Grandin location which, unlike our other leased mining locations, are not entirely paid by the tenant. As such, our costs in this business are very low as a percentage of revenue, are relatively stable and are not affected by increases in production at our locations. Our current mining tenants include Vulcan Materials, Martin Marietta, Cemex, Summit Materials and The Concrete Company.
Previous wording
The major classes of assets, liabilities and equity of the Company’s Investments in Joint Ventures as of June 30, 2024 are summarized in the following two tables (in thousands):
Current wording
The major classes of assets, liabilities and equity of the Company’s unconsolidated joint ventures as of September 30, 2024 are summarized in the following two tables (in thousands):
Previous wording
•188% increase in Net Income ($3.3 million vs $1.2 million)
Current wording
•8% increase in Net Income ($1.4 million vs $1.3 million)
Previous wording
•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 wording
•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).
Previous wording
•41% increase in Industrial and Commercial segment NOI
Current wording
•10% increase in Industrial and Commercial segment NOI
Previous 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:
Current wording
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 thethird 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:
Previous 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.
Current wording
•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.
Previous wording
•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 wording
•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 byincreased earnings on cash equivalents ($292,000).
Previous 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.
Current wording
Wells Fargo. More interest was capitalized due to increased in-house and joint venture projects under development this quarter compared to last year.
Previous wording
•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 wording
•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.
Previous wording
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 wording
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.
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 Bryant Street and .408 Jackson moved from our Development Segment to this segment upon stabilization as of the beginning of 2024.
Current wording
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.
Previous 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.
Current wording
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%,
Previous wording
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 wording
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.
Previous 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.
Current wording
▪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.
Previous wording
•242% increase in Net Income ($2.0 million vs $598,000)
Current wording
•94% increase in Net Income ($4.7 million vs $2.4 million)
Previous wording
•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 wording
•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).
Previous wording
•16% increase in Industrial and Commercial revenue and 44% increase in that segment’s NOI
Current wording
•11% increase in Industrial and Commercial revenue and 30% increase in that segment’s NOI
Previous wording
Comparative Results of Operations for the Six months ended June 30, 2024 and 2023
Current wording
Comparative Results of Operations for the Nine months ended September 30, 2024 and 2023
Previous wording
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 wording
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:
Previous 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.
Current wording
•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.
Previous wording
•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 wording
•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.
Previous wording
•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 wording
•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.
Previous wording
•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 wording
•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).
Previous 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.
Current wording
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.
Previous 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.
Current wording
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.
Previous wording
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 wording
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).
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 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.
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 September 30, 2024, we had $144,681,000 of cash and cash equivalents. As of September 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
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.
Current wording
Operating Activities -Net cash provided by operating activities for the nine months ended September 30, 2024 was $21,404,000 versus $20,721,000 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.
Previous 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).
Current wording
At September 30, 2024, the Company was invested in U.S. Treasury notes valued at $117,933,000 maturing in 2024. The unrealized gain on these investments of $89,000 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 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.
Current wording
Investing Activities - Net cash used in investing activities for the nine months ended September 30, 2024 was $46,974,000 versus $28,556,000 in the same period last year. The $18.4 million increase was primarily due to a $42.5 million increase in property due to $30.3 million invested by the Company and BBX in the consolidated warehouse joint ventures and active Company warehouse construction partially offset by a $17.4 million decrease in investments in joint ventures due to lower capital calls and lending activity, and a $6.9 million increase in return of capital from joint ventures due to permanent financing at .408 Jackson and higher lending venture returns.
Previous 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.
Current wording
Financing Activities – Net cash provided by financing activities was $12,696,000 versus $3,634,000 required in the same period last year primarily due $15.1 million of contributions from BBX toward our consolidated partnerships versus the same period last year including$2.0 million repurchase of stock partially offset by the exercise of employee stock options.
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 June 30, 2024, these covenants would have limited our ability to pay dividends to a maximum of $100.4 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 September 30, 2024, these covenants would have limited our ability to pay dividends to a maximum of $102.6 million combined.
Previous wording
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.
Current wording
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 opportunity zone holding period lapses in 2030, when a sale could take place and the tax on gain is forgiven.
Previous 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.
Current wording
Cash Requirements – The Company expects to invest $16 million into our existing real estate holdings and joint ventures during the remainder of 2024 and $213 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.
Previous wording
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.
Current wording
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.
Rearranged current paragraphs (2)
Current report — wording carried from elsewhere
Our Multifamily Segment consists of two consolidated joint ventures (Dock 79 and The Maren).
Current report — wording carried from elsewhere
$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%.