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, 2019
FRP Holdings, Inc. (NASDAQ-FRPH) Jacksonville, Florida; May 6, 2019 -
First Quarter Consolidated Results of Operations
Net income for the first quarter of 2019 was $1,898,000 or $.19 per share
versus $1,560,000 or $.15 per share in the same period last year. Income from
discontinued operations for the first quarter of 2019 was $86,000 or $.01 per
share versus $1,722,000 or $.17 per share in the same period last year.
First Quarter Segment Operating Results
Asset Management Segment:
------------------------
Most of the Asset Management Segment was reclassified to discontinued
operations leaving only three commercial properties and one recent industrial
acquisition, Cranberry Run, which we purchased this quarter for $6,411,000.
Cranberry Run is a five-building industrial park in Harford County, MD totaling
268,010 square feet of industrial/flex space. The park is currently 26% leased
and occupied, and it is our plan to make $1,455,000 in improvements in order to
re-lease the property for a total investment of $29.35 per square foot. This
past quarter, we entered into a Purchase and Sale Agreement to sell 7030 Dorsey
Road in Anne Arundel County, one of the three commercial properties remaining
from the asset sale last May, for $8,823,000. The study period for the
purchaser expired April 15, 2019 and we expect to close in the second quarter
of 2019. Total revenues in this segment were $641,000, up $60,000 or 10.3%,
over the same period last year. Operating loss was ($66,000), down $322,000
compared to the same quarter last year due to higher allocation of corporate
expenses and operating losses associated with the Cranberry Run acquisition.
Mining Royalty Lands Segment:
----------------------------
Total revenues in this segment were $2,229,000 versus $1,772,000 in the same
period last year. Total operating profit in this segment was $2,001,000, an
increase of $460,000 versus $1,541,000 in the same period last year. Among the
reasons for this increase in revenue and operating profit is the contribution
from our Ft. Myers quarry, the revenue from which, now that mining has begun
in earnest, was more than double the minimum royalty we have been receiving
until recently.
Development Segment:
-------------------
The Development 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, now known as
"Hampstead Overlook." This past quarter, Hampstead Overlook received
non-appealable rezoning from industrial to residential.
* We finished shell construction in December on the two office
buildings in the first phase of our joint venture with St. John
Properties. Shell construction of the two retail buildings was
completed in January. We are now in the process of leasing these four
single-story buildings totaling 100,030 square feet of office and
retail space. Phase I is currently 44% leased.
* We are the principal capital source of a residential development
venture in Essexshire known as "Hyde Park." We have committed up to
$9.2 million in exchange for an interest rate of 10% and a preferred
return of 20% after which a "waterfall" determines the split of
proceeds from sale. Hyde Park will hold 122 town homes and 4 single
family lots and received a non-appealable Plan Approval this past
quarter. We are now in the process of obtaining record plat and
construction drawing approval as well as seeking proposals from
residential home builders.
* During the second quarter of 2018, we began construction on a
94,350-square foot spec building at Hollander Business Park. This
Class "A" facility is our first building with a 32-foot clear. Shell
construction was completed subsequent to the end of the quarter and
we are now in the process of leasing up the building.
* In April, we began construction on Phase II of our RiverFront on the
Anacostia project, now known as "The Maren." We expect to deliver the
building in the first half of 2020.
* In December 2018, the Company entered into a joint venture agreement
with MidAtlantic Realty Partners (MRP) for the development of the
first phase of a multifamily, mixed-use development in northeast
Washington, DC known as "Bryant Street." FRP contributed $32 million
for common equity and another $23 million for preferred equity to the
joint venture. Construction began in February 2019 and should be
finished in 2021.
Stabilized Joint Venture Segment:
--------------------------------
Average occupancy for the quarter was 93.49%, and at the end of the quarter
Dock 79 was 94.75% leased and 93.11% occupied. During the first quarter,
60.87% of expiring leases renewed with an average increase in rent of 2.58%.
Net Operating Income for this segment was $1,630,679, up $145,282 or 9.78%
compared to the same quarter last year. Dock 79 is a joint venture between
the Company and MRP, in which FRP Holdings, Inc. is the majority partner with
66% ownership.
Summary and Outlook
We began this year a very different company than we were at the start of 2018.
The asset sale of nearly a year ago has dramatically reshaped the landscape
of our business and our direction forward. The disposition of over 40
buildings, the infrastructure required to support it, and the cash we retained
from that disposition has shifted our focus towards development as the number
of ongoing projects in our development segment demonstrates. Despite or maybe
because of the lack of consensus regarding economic forecasts, indicators, and
the volatility of markets, we believe we are in an enviable financial position
given our current liquidity. Though we, like any other company, would stand to
benefit from the rising tide of this nearly unprecedented stretch of economic
growth, the cash and investments on our balance sheet allow us to play defense
and protect our assets should a downturn present itself as our projects are
coming online, while also allowing us to play offense should that same
downturn create opportunities to grow our business segments via attractively
priced acquisitions. It is because we prize this liquidity so much, that we
remain steadfast in our commitment to redeploy these proceeds as carefully as
we possibly can. The substantial amount of dry powder retained from the sale
affords this company an amazing opportunity that we are loathe to squander.
We have some of the best assets in the business segments in which we compete,
as demonstrated by another amazing quarter from our mining royalties segment
and the continued ability to grow rents at Dock 79, and we will not make any
further investments unless they fall in line with the quality of assets and
opportunities of your company as it is situated presently. To that end, we
have been repurchasing shares of the Company when we believe it is
underpriced. This past quarter we repurchased 35,932 shares at an average
price of $47.71.
Conference Call
The Company will also host a conference call on Monday, May 6, 2019 at 2:00
p.m. (EDT). Analysts, stockholders and other interested parties may access
the teleconference live by calling 1-800-311-9406 (passcode 939063) within
the United States. International callers may dial 1-334-323-7224 (passcode
939063). 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/frp050619. For the
archived audio via the internet, click on the following link
http://archive.conferenceamerica.com/archivestream/frp050619.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 54972211. 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.
Investors are cautioned that any statements in this press release which
relate to the future are, by their nature, subject to risks and uncertainties
that could cause actual results and events to differ materially from those
indicated in such forward-looking statements. These include, but are not
limited to: the possibility that we may be unable to find appropriate
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) leasing and management of commercial properties owned by the
Company, (ii) leasing and management of mining royalty land owned by the
Company, (ii) real property acquisition, entitlement, development and
construction primarily for apartment, retail, warehouse, and office,
(iv) leasing and management of a residential apartment building.
FRP HOLDINGS, INC. AND SUBSIDIARIES
-----------------------------------
CONSOLIDATED STATEMENTS OF INCOME
(In thousands except per share amounts)
(Unaudited)
THREE MONTHS ENDED
MARCH 31,
2019 2018
-------- --------
Revenues:
Lease revenue $ 3,485 3,303
Mining lands lease revenue 2,229 1,772
-------- -------
Total Revenues 5,714 5,075
Cost of operations:
Depreciation, depletion and amortization 1,487 2,398
Operating expenses 882 865
Property taxes 753 675
Management company indirect 592 361
Corporate expenses (Note 4 Related Party) 645 679
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Total cost of operations 4,359 4,978
Total operating profit 1,355 97
Net investment income, including realized
gains of $119 and $0 1,810 5
Interest expense (588) (843)
Equity in loss of joint ventures (264) (12)
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Income (loss) from continuing operations
before income taxes 2,313 (753)
Provision for (benefit from) income taxes 672 (60)
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Income (loss) from continuing operations 1,641 (693)
Income from discontinued operations,
net of tax 86 1,722
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Net income 1,727 1,029
Income (loss) attributable to
noncontrolling interest (171) (531)
Net income attributable to the Company $ 1,898 1,560
======== =======
Earnings per common share:
Income (loss) from continuing operations-
Basic $ 0.16 (0.07)
Diluted $ 0.16 (0.07)
Discontinued operations-
Basic $ 0.01 0.17
Diluted $ 0.01 0.17
Net income attributable to the Company-
Basic $ 0.19 0.16
Diluted $ 0.19 0.15
Number of shares (in thousands)
used in computing:
-basic earnings per common share 9,952 10,015
-diluted earnings per common share 9,996 10,085
FRP HOLDINGS, INC. AND SUBSIDIARIES
-----------------------------------
CONSOLIDATED BALANCE SHEETS
(Unaudited) (In thousands except share data)
March 31, December 31,
2019 2018
-------------- --------------
Assets:
Real estate investments at cost:
Land $ 85,072 83,721
Buildings and improvements 149,505 144,543
Projects under construction 7,086 6,683
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Total investments in properties 241,663 234,947
Less accumulated depreciation and depletion 29,847 28,394
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Net investments in properties 211,816 206,553
Real estate held for investment, at cost 7,167 7,167
Investments in joint ventures 94,294 88,884
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Net real estate investments 313,277 302,604
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Cash and cash equivalents 29,641 22,547
Cash held in escrow 185 202
Accounts receivable, net 688 564
Investments available for sale at fair value 148,778 165,212
Federal and state income taxes receivable 8,349 9,854
Unrealized rents 665 53
Deferred costs 990 773
Other assets 459 455
Assets of discontinued operations 3,091 3,224
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Total assets $ 506,123 505,488
============== ==============
Liabilities:
Secured notes payable $ 88,823 88,789
Accounts payable and accrued liabilities 1,851 3,545
Environmental remediation liability 100 100
Deferred revenue 831 27
Deferred income taxes 27,981 27,981
Deferred compensation 1,448 1,450
Tenant security deposits 244 53
Liabilities of discontinued operations 243 288
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Total liabilities 121,521 122,233
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Commitments and contingencies
Equity:
Common stock, $.10 par value
25,000,000 shares authorized,
9,933,242 and 9,969,174 shares issued
and outstanding, respectively 993 997
Capital in excess of par value 57,824 58,004
Retained earnings 306,704 306,307
Accumulated other comprehensive income, net 859 (701)
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Total shareholders' equity 366,380 364,607
Noncontrolling interest MRP 18,222 18,648
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Total equity 384,602 383,255
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Total liabilities and shareholders' equity $ 506,123 505,488
Asset Management Segment:
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Three months ended March 31
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(dollars in thousands) 2019 % 2018 % Change %
-------- ------- -------- ------- -------- -------
Lease revenue $ 641 100.0% 581 100.0% 60 10.3%
Depreciation, depletion and amortization 177 27.6% 131 22.6% 46 35.1%
Operating expenses 209 32.6% 128 22.0% 81 63.3%
Property taxes 56 8.8% 39 6.7% 17 43.6%
Management company indirect 102 15.9% 24 4.1% 78 325.0%
Corporate expense 163 25.4% 3 0.5% 160 5333.3%
-------- ------- -------- ------- -------- -------
Cost of operations 707 110.3% 325 55.9% 382 117.5%
-------- ------- -------- ------- -------- -------
Operating profit $ (66) -10.3% 256 44.1% (322) -125.8%
======== ======= ======== ======= ======== =======
Mining Royalty Lands Segment:
----------------------------
Three months ended March 31
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(dollars in thousands) 2019 % 2018 % Change %
-------- ------- -------- ------- -------- -------
Mining lands lease revenue $ 2,229 100.0% 1,772 100.0% 457 25.8%
Depreciation, depletion and amortization 52 2.3% 54 3.0% (2) -3.7%
Operating expenses 16 0.7% 40 2.3% (24) -60.0%
Property taxes 68 3.1% 60 3.4% 8 13.3%
Management company indirect 49 2.2% - 0.0% 49 0.0%
Corporate expense 43 1.9% 77 4.3% (34) -44.2%
-------- ------- -------- ------- -------- -------
Cost of operations 228 10.2% 231 13.0% (3) -1.3%
-------- ------- -------- ------- -------- -------
Operating profit $ 2,001 89.8% 1,541 87.0% 460 29.9%
======== ======= ======== ======= ======== =======
Development Segment:
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Three months ended March 31
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(dollars in thousands) 2019 2016 Change
-------- -------- --------
Lease revenue $ 269 297 (28)
Depreciation, depletion and amortization 58 57 1
Operating expenses 46 118 (72)
Property taxes 323 268 55
Management company indirect 395 241 154
Corporate expense 399 419 (20)
-------- -------- --------
Cost of operations 1,221 1,103 118
-------- -------- --------
Operating loss $ (952) (806) (146)
======== ======== ========
Stabilized Joint Venture Segment:
--------------------------------
Three months ended March 31
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(dollars in thousands) 2019 % 2018 % Change %
-------- ------- -------- ------- -------- -------
Lease revenue $ 2,575 100.0% 2,425 100.0% 150 6.2%
Depreciation, depletion and amortization 1,200 46.6% 2,156 88.9% (956) -44.3%
Operating expenses 611 23.7% 579 23.9% 32 5.5%
Property taxes 306 11.9% 308 12.7% (2) -0.6%
Management company indirect 46 1.8% 96 3.9% (50) -52.1%
Corporate expense 40 1.6% 142 5.9% (102) -71.8%
-------- ------- -------- ------- -------- -------
Cost of operations 2,203 85.6% 3,281 135.3% (1,078) -32.9%
-------- ------- -------- ------- -------- -------
Operating profit $ 372 14.4% (856) -35.3% 1,228 -143.5%
FRP HOLDINGS, INC. AND SUBSIDIARIES
-----------------------------------
DISCONTINUED OPERATIONS
(In thousands except per share amounts)
(Unaudited)
THREE MONTHS ENDED
MARCH 31,
2019 2018
-------- --------
Lease revenue 238 7,547
Cost of operations:
Depreciation, depletion and amortization 29 1,885
Operating expenses 95 1,178
Property taxes 20 798
Management company indirect - 178
Corporate expenses - 747
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Total cost of operations 144 4,786
Total operating profit 94 2,761
Interest expense - (400)
Gain on sale of buildings 23 -
-------- -------
Income before income taxes 117 2,361
Provision for income taxes 31 639
-------- -------
Income from discontinued operations 86 1,722
======== =======
Earnings per common share:
Income from discontinued operations-
Basic 0.01 0.17
Diluted 0.01 0.17
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 is
net operating income (NOI). FRP uses this non-GAAP financial measure
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.
Net Operating Income Reconciliation
Three months ended 03/31/19 (in thousands)
Stabilized
Asset Joint Mining Unallocated FRP
Management Development Venture Royalties Corporate Holdings
Segment Segment Segment Segment Expenses Totals
---------- ----------- ---------- ---------- ---------- ----------
Income (loss) from continuing operations (48) (716) (196) 1,452 1,149 1,641
Income Tax Allocation (18) (266) (9) 539 426 672
---------- ----------- ---------- ---------- ---------- ----------
Income (loss) from continuing operations
before income taxes (66) (982) (205) 1,991 1,575 2,313
Less:
Unrealized rents 3 - 28 - - 31
Interest income - 224 - - 1,586 1,810
Plus:
Unrealized rents - - - 122 - 122
Equity in loss of Joint Venture - 254 - 10 - 264
Interest Expense - - 577 - 11 588
Depreciation/Amortization 177 58 1,200 52 - 1,487
Management Co. Indirect 102 395 46 49 - 592
Allocated Corporate Expenses 163 399 40 43 - 645
---------- ----------- ---------- ---------- ---------- ----------
Net Operating Income 373 (100) 1,630 2,267 - 4,170
Net Operating Income Reconciliation
Three months ended 03/31/18 (in thousands)
Stabilized
Asset Joint Mining Unallocated FRP
Management Development Venture Royalties Corporate Holdings
Segment Segment Segment Segment Expenses Totals
---------- ----------- ---------- ---------- ---------- ----------
Income (loss) from continuing operations 187 (584) (1,383) 1,115 (28) (693)
Income Tax Allocation 69 (217) (316) 414 (10) (60)
---------- ----------- ---------- ---------- ---------- ----------
Income (loss) from continuing operations
before income taxes 256 (801) (1,699) 1,529 (38) (753)
Less:
Unrealized rents - - 52 - - 52
Other income - 5 - - - 5
Plus:
Unrealized rents 20 - - 119 - 139
Equity in loss of Joint Venture - - - 12 - 12
Interest Expense - - 843 - - 843
Depreciation/Amortization 131 57 2,156 54 - 2,398
Management Co. Indirect 24 241 96 - - 361
Allocated Corporate Expenses 3 419 142 77 38 679
---------- ----------- ---------- ---------- ---------- ----------
Net Operating Income 434 (89) 1,486 1,791 - 3,622