FRP HOLDINGS, INC. Q4 FY2024 earnings call

Management Statement and Operational Highlights

• David deVilliers III discussed segment results, noting challenges in Commercial/Industrial due to tenant default and growth in Mining/Royalty.
• Outlined development pipeline: Perryman industrial warehouse nearing completion, Florida industrial projects in construction drawing and permit stage, Broward County industrial project in pre-development, and Cecil County and Harford County developments in various stages.
• Aberdeen Overlook capital strategy: $31.1M committed, $26.5M drawn, expecting $6.8M profit.
• John Baker III highlighted NOI growth over 3 years, expectations for 2025 NOI to be flat or slightly below 2024, $71M equity investment across sectors, and focus on industrial development with consideration for multifamily if return thresholds met.

Segment Performance

• Commercial and Industrial: Consists of 9 buildings (nearly 550,000 sq ft) in Maryland. At quarter end, 95.6% occupied. Q4 revenues and NOI were $1.3 million and $992,000, down 11% and 15% y/y due to a 50,000 sq ft tenant default.
• Mining and Royalty: 16 mining locations in FL, GA, VA. Q4 revenues and NOI were $3.5 million and $3.5 million, up 19% and 34% y/y.
• Multifamily: 1,827 apartments and ~125,000 sq ft retail in DC and SC. 92.8% occupied apartments and 62.6% retail. Q4 revenues and NOI were $14.1 million and $7.6 million, with FRP's share at $8.2 million and $4.3 million, up due to new joint ventures included as of 2024.

Guidance

• NOI in 2025 expected to remain flat or slightly below 2024.
• $71 million in equity capital investment across Industrial and Multifamily in 2025.
• Plans for industrial developments in Florida (Lakeland, Fort Lauderdale) and Maryland, with vertical construction expected in 2025-2026.
• Anticipate moving forward with two Multifamily developments in Florida and SC adding 810 units and ~$6M NOI upon stabilization.

Risks

• Tariffs impacting construction costs, particularly for Multifamily projects.
• Potential rate cuts affecting floating rate loans and refinancing plans.
• Vacancies in Industrial/Commercial segment (Cranberry, Chelsea) impacting short-term NOI.
• Challenges in entitlements and permitting for development projects delaying timelines.

Q: Could you clarify the $71 million in equity capital investment breakdown?

A: David deVilliers III responded that ~$21 million for Florida industrial projects (vertical construction and entitlements), ~$35 million for Multifamily projects in Estero, FL and Greenville, SC, with additional capital for leasing CapEx and land purchases.

Q: What are the unlevered returns on development projects?

A: Matthew McNulty stated unlevered returns are generally in the 6.5% to 7% range in the first year of stabilization, trended, with current rental rates and 2%-2.5% escalators considered.

Q: Any commentary on dividend request?

A: Matthew McNulty acknowledged Bill Chen's feedback and stated they will dig into cap rates to better approximate market values and consider adjustments if warranted, but no immediate plans for dividends were confirmed.