FRP HOLDINGS, INC./NEWS
Contact: John D. Milton, Jr.
Chief Financial Officer 904/858-9100
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FRP HOLDINGS, INC. (NASDAQ: FRPH) ANNOUNCES RESULTS
FOR THE FIRST QUARTER ENDED MARCH 31, 2018.
FRP Holdings, Inc. (NASDAQ-FRPH) Jacksonville, Florida; May 8, 2018 -
First Quarter Consolidated Results of Operations.
Net income for the first quarter of 2018 was $1,560,000 or $.15 per share
versus $1,443,000 or $.14 per share in the same period last year. Total
revenues were $12,622,000, up 35.4%, versus the same period last year,
primarily because of the addition of rental revenues from Dock 79. Our net
income was adversely impacted by $747,000 in expenses related to the pending
sale of our industrial warehouse portfolio.
First Quarter Segment Operating Results.
Asset Management Segment:
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Total revenues in this segment were $8,128,000, up $843,000 or 11.6%, over
the same period last year. Net Operating Income (NOI) in this segment for the
first quarter increased slightly to $5,857,000, compared to $5,689,000 in the
same period last year. We ended the first quarter with total occupied square
feet of 3,721,213 versus 3,525,234 at the end of the same period last year,
an increase of 5.6% or 195,979 square feet. Our overall occupancy rate was
93.4%.
This past quarter we entered into contract to sell 41 industrial warehouses
and two adjacent lots to an affiliate of Blackstone Real Estate Partners for
a total purchase price of $358.9 million. Pending shareholder approval at our
annual meeting on May 14, we expect to close on this transaction the following
week. These properties comprise substantially all the assets of our Asset
Management Segment. We are currently exploring options to reinvest a
significant portion of the proceeds into opportunities more in line with our
other business segments where recently we have enjoyed better returns.
Mining Royalty Lands Segment:
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Total revenues in this segment were $1,772,000 versus $1,762,000 in the same
period last year. Total operating profit in this segment was $1,541,000, a
decrease of $18,000 versus $1,559,000 in the same period last year.
Land Development and Construction Segment:
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The Land Development and Construction segment is responsible for (i) seeking
out and identifying opportunistic purchases of income producing warehouse/
office buildings, and (ii) developing our non-income producing properties
into income production.
With respect to ongoing projects:
* We are fully engaged in the formal process of seeking PUD entitlements
for our 118 acre tract in Hampstead, Maryland.
* Last year we began construction on a 96,047 square foot building at
Patriot Business Center that we expect to finish in the second quarter
of 2018. This building is included in the sale to Blackstone.
* We began construction in the third quarter of last year on our joint
venture with St. John Properties and expect to complete construction
of the first phase of this project in the third quarter of 2018. This
first phase will comprise four buildings totaling 100,000 square feet
of office and retail space.
* Our Essexshire residential project totaling 129 single family building
lots is moving towards entitlement.
* We are in the process of designing and permitting a 95,000 square foot
spec building at Hollander Business Park. We expect to begin
construction during the second quarter of 2018.
RiverFront on the Anacostia Segment:
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At the end of the first quarter, Dock 79 was 90.8% leased and 91.8% occupied.
As the first "generation" of leases expire, the renewal rate of 61.9% during
the first quarter is in line with expectations while the average rent increase
of 2.8% is better than expected.
Summary and Outlook.
This past quarter was one of our most important ever for obvious reasons.
Our portfolio of industrial real estate took decades to put together. Most
of the assets came from land we purchased, developed, and managed in-house.
The amount of sweat equity our Baltimore office put into those assets would
have given even the most unsentimental seller a moment's hesitation. However,
because of the reduction in corporate income tax rates in this low cap rate
environment, the opportunity to sell was simply too good to pass up.
Though monumental, the sale of such a substantial portion of this company will
not leave us wanting for things to do. We still have vacant lots at Hollander
and Lakeside that we intend to develop, and the remaining phases of RiverFront
on the Anacostia will require our attention for the next decade at least. Our
aggregates royalties and the second life of those quarries will be generating
returns for this company and occupying the time of its management for longer
than many of us will be around.
In the short term, though, we will be hard at work on Phase II of RiverFront
on the Anacostia and our other ongoing projects; but most importantly, we
will be determining the highest and best use for the proceeds of the sale.
Subsequent Events.
Subsequent to the end of last quarter, in April, construction began on Phase II
of our RiverFront on the Anacostia project, which we expect to deliver in the
first or second quarter of 2020.
Conference Call.
The Company will also host a conference call on Tuesday, May 8, 2018 at 2:00
p.m. (EDT). Analysts, stockholders and other interested parties may access
the teleconference live by calling 1-800-311-9406 (passcode 15482) within the
United States. International callers may dial 1-334-323-7224 (passcode 15482).
Computer audio live streaming is available via the Internet through the
Company's website at www.frpholdings.com. You may also click on this link for
the live streaming http://stream.conferenceamerica.com/frp050818. For the
archived audio via the internet, click on the following link
http://archive.conferenceamerica.com/archivestream/frp050818.mp3. If using the
Company's website, click on the Investor Relations tab, then select the
earnings conference stream. An audio replay will be available for sixty days
following the conference call. To listen to the audio replay, dial toll free
1-877-919-4059, international callers dial 1-334-323-0140. The passcode of the
audio replay is 49397561. Replay options: "1" begins playback, "4" rewind
30 seconds, "5" pause, "6" fast forward 30 seconds, "0" instructions, and "9"
exits recording. There may be a 30-40 minute delay until the archive is
available following the conclusion of the conference call.
FRP Holdings, Inc. (FRP) is engaged in the real estate business through its
subsidiaries FRP Development Corp. and Florida Rock Properties, Inc.
FRP acquires, constructs, leases, operates and manages land and buildings to
generate both current cash flows and long-term capital appreciation. FRP also
owns real estate which is leased under mining royalty agreements or held for
investment.
Investors are cautioned that any statements in this press release which
relate to the future are, by their nature, subject to risks and uncertainties
that could cause actual results and events to differ materially from those
indicated in such forward-looking statements. These include, but are not
limited to, the occurrence of any event, change or other circumstances that
could give rise to the termination of the Agreement of Purchase and Sale by
and between the Company and BRE Foxtrot Parent, LLC, dated March 22, 2018
(the "Sale Agreement"); the risks that any of the closing conditions to the
Sale Agreement may not be satisfied in a timely manner; any litigation in
connection with the Sale Agreement; the possibility that the announcement and
pendency of the Sale Transaction may adversely affect our remaining business;
the possibility that our business and financial performance may be adversely
affected if we fail to complete the Sale Transaction; the fact that our
executive officers may have interests in the Sale Transaction in addition to
the interests of the shareholders generally; the fact that the Sale Agreement
limits our ability to pursue alternative transactions; the possibility that
we may be unable to find appropriate reinvestment opportunities for the
proceeds from the Sale Transaction; levels of construction activity in the
markets served by our mining properties, demand for flexible warehouse/office
facilities in the Baltimore-Washington-Northern Virginia area, demand for
apartments in Washington D.C., our ability to obtain zoning and entitlements
necessary for property development, the impact of lending and capital market
conditions on our liquidity, our ability to finance projects or repay our
debt, general real estate investment and development risks, vacancies in our
properties, risks associated with developing and managing properties in
partnership with others, competition, our ability to renew leases or
re-lease spaces as leases expire, illiquidity of real estate investments,
bankruptcy or defaults of tenants, the impact of restrictions imposed by our
credit facility, the level and volatility of interest rates, environmental
liabilities, inflation risks, cybersecurity risks, as well as other risks
listed from time to time in our SEC filings, including but not limited to,
our annual and quarterly reports. We have no obligation
to revise or update any forward-looking statements, other than as imposed by
law, as a result of future events or new information. Readers are cautioned
not to place undue reliance on such forward-looking statements.
FRP Holdings, Inc. is a holding company engaged in the real estate business,
namely (i) warehouse/office/residential building ownership, leasing and
management, (ii) mining royalty land ownership and leasing, (iii) land
acquisition, entitlement and development primarily for future warehouse/office
or residential building construction, and (iv) leasing and management of a
residential apartment building.
FRP HOLDINGS, INC. AND SUBSIDIARIES
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CONSOLIDATED STATEMENTS OF INCOME
(In thousands except per share amounts)
(Unaudited)
THREE MONTHS ENDED
MARCH 31,
2018 2017
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Revenues:
Rental revenue $ 9,165 6,283
Mining Royalty and rents 1,750 1,739
Revenue - reimbursements 1,707 1,300
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Total Revenues 12,622 9,322
Cost of operations:
Depreciation, depletion and amortization 4,283 2,059
Operating expenses 2,043 1,001
Property taxes 1,473 1,062
Management company indirect 539 469
Corporate expenses (Note 4 Related Party) 1,426 1,327
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Total cost of operations 9,764 5,918
Total operating profit 2,858 3,404
Interest income 5 -
Interest expense (1,243) (248)
Equity in loss of joint ventures (12) (771)
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Income before income taxes 1,608 2,385
Provision for income taxes 579 942
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Net income 1,029 1,443
Loss attributable to noncontrolling interest (531) -
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Net income attributable to the Company $ 1,560 1,443
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Earnings per common share:
Basic $ 0.16 0.15
Diluted $ 0.15 0.14
Number of shares (in thousands)
used in computing:
-basic earnings per common share 10,015 9,931
-diluted earnings per common share 10,085 10,001
Asset Management Segment:
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Three months ended March 31
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(dollars in thousands) 2018 % 2017 % Change %
-------- ------- -------- ------- -------- -------
Rental revenue $ 6,571 80.8% 6,103 83.8% 468 7.7%
Revenue-reimbursements 1,557 19.2% 1,182 16.2% 375 31.7%
-------- ------- -------- ------- -------- -------
Total revenue 8,128 100.0% 7,285 100.0% 843 11.6%
Depreciation, depletion and amortization 2,016 24.8% 1,965 27.0% 51 2.6%
Operating expenses 1,306 16.0% 895 12.3% 411 45.9%
Property taxes 837 10.3% 737 10.1% 100 13.6%
Management company indirect 202 2.5% 187 2.6% 15 8.0%
Corporate expense 788 9.7% 753 10.3% 35 4.6%
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Cost of operations 5,149 63.3% 4,537 62.3% 612 13.5%
-------- ------- -------- ------- -------- -------
Operating profit $ 2,979 36.7% 2,748 37.7% 231 8.4%
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Mining Royalty Lands Segment:
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Three months ended March 31
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(dollars in thousands) 2018 % 2017 %
-------- ------- -------- -------
Mining Royalty and rents $ 1,750 98.8% 1,739 98.7%
Revenue-reimbursements 22 1.2% 23 1.3%
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Total revenue 1,772 100.0% 1,762 100.0%
Depreciation, depletion and amortization 54 3.0% 39 2.2%
Operating expenses 40 2.3% 39 2.2%
Property taxes 60 3.4% 59 3.3%
Corporate expense 77 4.3% 66 3.8%
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Cost of operations 231 13.0% 203 11.5%
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Operating profit $ 1,541 87.0% 1,559 88.5%
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Land Development and Construction Segment:
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Three months ended March 31
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(dollars in thousands) 2018 2017 Change
-------- -------- --------
Rental revenue $ 181 180 1
Revenue-reimbursements 116 95 21
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Total revenue 297 275 22
Depreciation, depletion and amortization 57 55 2
Operating expenses 118 67 51
Property taxes 268 266 2
Management company indirect 241 282 (41)
Corporate expense 419 508 (89)
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Cost of operations 1,103 1,178 (75)
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Operating loss $ (806) (903) 97
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Dock 79 Segment:
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Three months ended March 31
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(dollars in thousands) 2018 % 2017 %
-------- ------- -------- -------
Rental revenue $ 2,413 99.5% - -%
Revenue-reimbursements 12 .5% - -%
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Total revenue 2,425 100.0% - -%
Depreciation and amortization 2,156 88.9% - -%
Operating expenses 579 23.9% - -%
Property taxes 308 12.7% - -%
Management company indirect 96 3.9% -
Corporate expense 142 5.9% - -%
-------- ------- -------- -------
Cost of operations 3,281 135.3% - -%
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Operating profit $ (856) -35.3% $ - -%
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Non-GAAP Financial Measures.
To supplement the financial results presented in accordance with GAAP, FRP
presents certain non-GAAP financial measures within the meaning of Regulation G
promulgated by the Securities and Exchange Commission. The non-GAAP financial
measure included in this quarterly report are net operating income (NOI). FRP
uses these non-GAAP financial measures 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,
substitutes for GAAP financial measures.
Net Operating Income Reconciliation
Three months ended 03/31/18 (in thousands)
Asset Land Riverfront Mining FRP
Management Development Anacostia Royalties Holdings
Segment Segment Segment Segment Totals
---------- ---------- ---------- ---------- ----------
Income from continuing operations 1,962 (584) (1,464) 1,115 1,029
Income Tax Allocation 727 (217) (345) 414 579
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Income from continuing operations
before income taxes 2,689 (801) (1,809) 1,529 1,608
Less:
Unrealized rents 129 - 52 - 181
Other income - 5 - - 5
Plus:
Unrealized rents - - - 119 119
Equity in loss of Joint Venture - - - 12 12
Lease intangible rents 1 - - - 1
Interest Expense 290 - 953 - 1,243
Depreciation/Amortization 2,016 57 2,156 54 4,283
Management Co. Indirect 202 241 96 - 539
Allocated Corporate Expenses 788 419 142 77 1,426
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Net Operating Income (loss) 5,857 (89) 1,486 1,791 9,045
Net Operating Income Reconciliation
Three months ended 03/31/17 (in thousands)
Asset Land Mining FRP
Management Development Royalties Holdings
Segment Segment Segment Totals
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Income (loss) from continuing operations 1,512 (1,007) 938 1,443
Income Tax Allocation 988 (658) 612 942
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Inc. (loss) from continuing operations
before income taxes 2,500 (1,665) 1,550 2,385
Less:
Lease intangible rents 3 - - 3
Plus:
Unrealized rents 39 - 109 148
Equity in loss of Joint Venture - 762 9 771
Interest Expense 248 - - 248
Depreciation/Amortization 1,965 55 39 2,059
Management Co. Indirect 187 282 - 469
Allocated Corporate Expenses 753 508 66 1,327
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Net Operating Income (loss) 5,689 (58) 1,773 7,404