FRP Holdings, Inc. (Nasdaq: FRPH) Announces Results for the

JACKSONVILLE, Fla., March 07, 2019 (GLOBE NEWSWIRE) -- FRP Holdings, Inc. (NASDAQ-FRPH)

Fourth Quarter Consolidated Results of Operations

Net income for the fourth quarter of 2018 was $706,000 or $.07 per share versus $13,203,000 or $1.31 per share in the same period last year. Income from discontinued operations for the fourth quarter of 2018 was $20,000 or $.00 per share versus $6,034,000 or $.60 per share in the same period last year. The fourth quarter of 2017 included a reduction of $12,043,000, or $1.20 per share, in the provision for income taxes resulting from revaluing the Company’s net deferred tax liabilities per the Tax Cuts and Jobs Act of 2017. This positively impacted net income by the same amount.

The fourth quarter of 2018 was impacted by the following items:

Interest income is reduced by a $905,000 realized loss on the sale of bonds during the quarter.
Corporate expense includes $372,000 for the annual director stock grant and $100,000 for stock options granted to employees.
Operating expenses includes $218,000 professional fees related to organization of the Bryant St. joint venture.
Operating expenses include $276,000 in due diligence costs on the CSX Fort Smallwood potential purchase.
Interest income includes the $81,000 preferred return on The Maren.
Loss on joint ventures includes $64,000 for our share of the loss.

The fourth quarter of 2017 included consulting fees of $200,000 charged to discontinued operations.

Fourth Quarter Segment Operating Results

Asset Management Segment:

Most of the Asset Management Segment was reclassified to discontinued operations leaving only three office buildings. Total revenues in this segment were $592,000, up $18,000 or 3.1%, over the same period last year. Operating profit was $261,000, up $33,000 compared to the same quarter last year due to lower allocation of corporate expenses.

Mining Royalty Lands Segment:

Total revenues in this segment were $2,187,000 versus $1,860,000 in the same period last year. Total operating profit in this segment was $1,950,000, an increase of $254,000 versus $1,696,000 in the same period last year.

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.”
We finished shell construction this past quarter 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 subsequent to the end of the year in January. We are now in the process of leasing these four single-story buildings totaling 100,000 square feet of office and retail space.
We are the principal capital source of a residential development venture in Essexshire now 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. This project will hold 125 town homes and 4 single family lots and is currently in the entitlement process.
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 will be our first building with a 32-foot clear and should come on line in the second quarter of 2019.
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.

Stabilized Joint Venture Segment:

Average occupancy for the quarter was 94.63%, and at the end of the fourth quarter Dock 79 was 96.39% leased and 95.08% occupied. During the fourth quarter, 65.57% of expiring leases renewed with an average increase in rent of 3.36%. Dock 79 is a joint venture between the Company and MRP, in which FRP Holdings, Inc. is the majority partner with 66% ownership.

Calendar Year 2018 Consolidated Results of Operations

Net income for 2018 was $124,472,000 or $12.32 per share versus $41,750,000 or $4.16 per share in the same period last year. Income from discontinued operations for 2018 was $122,129,000 or $12.09 per share versus $11,003,000 or $1.10 per share in the same period last year. Interest income was reduced by realized losses on bond and bond fund sales of $1,195,000 in 2018. Calendar year 2017 included a gain on remeasurement of investment of $60.2 million in the Company’s Dock 79 real estate partnership as a result of the asset’s stabilization and the ensuing change in control of the partnership for accounting purposes. This change in control brought with it this substantial and non-taxable gain. The gain is based on the difference between the carrying value and the fair value of all assets and liabilities in the partnership and is included in income from continuing operations before income taxes. Calendar year 2017 also included a gain of $12,043,000, or $1.20 per share, due to a reduction in the provision for income taxes resulting from revaluing the Company’s net deferred tax liabilities per the Tax Cuts and Jobs Act of 2017.

Total revenues were $22,022,000, up 41.1%, versus the same period last year, primarily because of the addition of rental revenues from Dock 79 when its results were consolidated starting in July 2017.

Calendar Year 2018 Segment Operating Results

Asset Management Segment:

Total revenues in this segment were $2,309,000, up $25,000 or 1.1%, over the same period last year. Operating profit of $898,000 was up $17,000 compared to the same period last year.

Mining Royalty Lands Segment:

Total revenues in this segment were $8,139,000 versus $7,241,000 in the same period last year. Total operating profit in this segment was $7,290,000, an increase of $725,000 versus $6,565,000 in the same period last year.

Stabilized Joint Venture Segment:

Average occupancy for 2018 was 94.77%, and at the end of 2018 Dock 79 was 96.39% leased and 95.08% occupied. Through calendar year 2018, 58.40% of expiring leases renewed with an average increase in rent of 3.29%. 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

2018 was among the more important years in the history of this company. Our mining royalty segment had its biggest year ever in terms of both revenue and operating profit; we broke ground on The Maren, Phase II of RiverFront on the Anacostia; and we entered an incredibly important joint venture with MRP in our Bryant Street Project. But without a doubt, the most important event was the sale of our industrial real estate portfolio. This asset sale provides us with substantial liquidity heading into a period of economic uncertainty when liquidity may be at a premium. At the very least, it gives us the very enviable problem of what to do with a substantial amount of money. We have said before that because we believe that we sold at the top, we are not anxious to turn around and reinvest at the top. Though we believe there are still some investment opportunities out there right now that make financial sense—Bryant Street is an excellent example—we would like to hold on to most of the cash until asset prices cool off and the economic future becomes a little clearer.

We end the year a very different company than we started, and yet a number of things remain the same—we still have some of the best assets in the businesses we are involved in and our management team remains committed to maximizing the value of your investment. Central to both those issues is how we decide to redeploy the proceeds of the warehouse sale, so please, at the risk of repeating ourselves, rest assured that we will not squander this opportunity.

Conference Call

The Company will also host a conference call on Thursday, March 7, 2019 at 1:00 p.m. (EST). 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/frp030719. For the archived audio via the internet, click on the following linkhttp://archive.conferenceamerica.com/archivestream/frp030719.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 15511787. 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.

Contact:	John D. Milton, Jr.
	Chief Financial Officer	904/858-9100

FRP HOLDINGS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
(In thousands except per share amounts)
(Unaudited)

	THREE MONTHS ENDED						TWELVE MONTHS ENDED
	DECEMBER 31,						DECEMBER 31,
	2018			2017			2018			2017
Revenues:
Rental revenue	$	3,282			3,206			13,219			7,815
Mining Royalty and rents		2,165			1,842			8,050			7,153
Revenue – reimbursements		205			165			753			634
Total Revenues		5,652			5,213			22,022			15,602

Cost of operations:
Depreciation, depletion and amortization		1,548			2,631			7,898			5,934
Operating expenses		1,334			824			4,285			2,136
Environmental remediation recovery		—			—			(465	)		—
Property taxes		676			632			2,625			2,016
Management company indirect		399			333			1,765			1,295
Corporate expenses (Note 4 Related Party)		1,042			670			3,952			3,180
Total cost of operations		4,999			5,090			20,060			14,561

Total operating profit		653			123			1,962			1,041

Net investment income, including realized losses		797			—			2,672			—
Interest expense		(685	)		(1,958	)		(3,103	)		(2,741	)
Equity in loss of joint ventures		(52	)		(9	)		(88	)		(1,598	)
Gain on remeasurement of investment in real estate partnership		—			—			—			60,196
Gain on investment land sold		43			—			40			—

Income (loss) before income taxes		756			(1,844	)		1,483			56,898
Provision for (benefit from) income taxes		255			(8,021	)		524			7,350
Income from continuing operations		501			6,177			959			49,548

Income from discontinued operations, net of tax		20			6,034			122,129			11,003

Net income		521			12,211			123,088			60,551
Gain (loss) attributable to noncontrolling interest		(185	)		(992	)		(1,384	)		18,801
Net income attributable to the Company	$	706			13,203			124,472			41,750

Earnings per common share:
Income from continuing operations-
Basic	$	0.05			0.62			0.10			4.97
Diluted	$	0.05			0.61			0.09			4.94
Discontinued operations-
Basic	$	0.00			0.60			12.16			1.10
Diluted	$	0.00			0.60			12.09			1.10
Net income attributable to the Company-
Basic	$	0.07			1.32			12.40			4.19
Diluted	$	0.07			1.31			12.32			4.16

Number of shares (in thousands) used in computing:
-basic earnings per common share		10,049			10,011			10,040			9,975
-diluted earnings per common share		10,094			10,070			10,105			10,040

FRP HOLDINGS, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(In thousands, except share data)
(Unaudited)

	December 31			December 31
Assets:	2018			2017
Real estate investments at cost:
Land	$	83,721			87,235
Buildings and improvements		144,543			147,670
Projects under construction		6,683			1,764
Total investments in properties		234,947			236,669
Less accumulated depreciation and depletion		28,394			26,755
Net investments in properties		206,553			209,914

Real estate held for investment, at cost		7,167			7,176
Investments in joint ventures		88,884			13,406
Net real estate investments		302,604			230,496

Cash and cash equivalents		22,547			4,524
Cash held in escrow		202			333
Accounts receivable, net		564			615
Investments available for sale at fair value		165,212			—
Federal and state income taxes receivable		9,854			2,962
Unrealized rents		53			223
Deferred costs		773			2,708
Other assets		455			179
Assets of discontinued operations		3,224			176,694
Total assets	$	505,488			418,734

Liabilities:
Secured notes payable, current portion	$	—			125
Secured notes payable, less current portion		88,789			90,029
Accounts payable and accrued liabilities		3,545			2,081
Environmental remediation liability		100			2,037
Deferred revenue		27			107
Deferred income taxes		27,981			25,982
Deferred compensation		1,450			1,457
Tenant security deposits		53			54
Liabilities of discontinued operations		288			32,280
Total liabilities		122,233			154,152

Commitments and contingencies

Equity:
Common stock, $.10 par value 25,000,000 shares authorized, 9,969,174 and 10,014,667 shares issued and outstanding, respectively		997			1,001
Capital in excess of par value		58,004			55,636
Retained earnings		306,307			186,855
Accumulated other comprehensive income (loss), net		(701	)		38
Total shareholders’ equity		364,607			243,530
Noncontrolling interest MRP		18,648			21,052
Total equity		383,255			264,582
Total liabilities and shareholders’ equity	$	505,488			418,734

Asset Management Segment:

	Three months ended December 31
(dollars in thousands)	2018		%			2017		%			Change			%

Rental revenue	$	569		96.1	%		553		96.3	%		16			2.9	%
Revenue-reimbursements		23		3.9	%		21		3.7	%		2			9.5	%

Total revenue		592		100.0	%		574		100.0	%		18			3.1	%

Depreciation, depletion and amortization		135		22.8	%		127		22.1	%		8			6.3	%
Operating expenses		117		19.8	%		118		20.6	%		(1	)		-0.8	%
Property taxes		42		7.1	%		39		6.8	%		3			7.7	%
Management company indirect		30		5.0	%		26		4.5	%		4			15.4	%
Corporate expense		7		1.2	%		36		6.3	%		(29	)		-80.6	%

Cost of operations		331		55.9	%		346		60.3	%		(15	)		-4.3	%

Operating profit	$	261		44.1	%		228		39.7	%		33			14.5	%

Mining Royalty Lands Segment:

	Three months ended December 31
(dollars in thousands)	2018		%			2017		%

Mining Royalty and rents	$	2,165		99.0	%		1,842		99.0	%
Revenue-reimbursements		22		1.0	%		18		1.0	%

Total revenue		2,187		100.0	%		1,860		100.0	%

Depreciation, depletion and amortization		53		2.4	%		19		1.0	%
Operating expenses		40		1.8	%		38		2.0	%
Property taxes		87		4.0	%		64		3.5	%
Corporate expense		57		2.6	%		43		2.3	%

Cost of operations		237		10.8	%		164		8.8	%

Operating profit	$	1,950		89.2	%		1,696		91.2	%

Development Segment:

	Three months ended December 31
(dollars in thousands)	2018			2017			Change

Rental revenue	$	144			184			(40	)
Revenue-reimbursements		118			115			3

Total revenue		262			299			(37	)

Depreciation, depletion and amortization		57			74			(17	)
Operating expenses		580			41			539
Property taxes		269			277			(8	)
Management company indirect		314			267			47
Corporate expense		874			296			578

Cost of operations		2,094			955			1,139

Operating loss	$	(1,832	)		(656	)		(1,176	)

Stabilized Joint Venture Segment:

	Three Months Ended December 31
(dollars in thousands)	2018		%			2017			%

Rental revenue	$	2,569		98.4	%		2,470			99.6	%
Revenue-reimbursements		42		1.6	%		10			.4	%

Total revenue		2,611		100.0	%		2,480			100.0	%

Depreciation and amortization		1,303		49.9	%		2,411			97.2	%
Operating expenses		597		22.9	%		627			25.3	%
Property taxes		278		10.6	%		252			10.2	%
Management company indirect		55		2.1	%		40			1.6	%
Corporate expense		104		4.0	%		38			1.5	%

Cost of operations		2,337		89.5	%		3,368			135.8	%

Operating profit	$	274		10.5	%	$	(888	)		-35.8	%

Asset Management Segment:

	Twelve months ended December 31
(dollars in thousands)	2018		%			2017		%			Change			%

Rental revenue	$	2,212		95.8	%		2,203		96.5	%		9			0.4	%
Revenue-reimbursements		97		4.2	%		81		3.5	%		16			19.8	%

Total revenue		2,309		100.0	%		2,284		100.0	%		25			1.1	%

Depreciation, depletion and amortization		540		23.4	%		512		22.4	%		28			5.5	%
Operating expenses		452		19.6	%		489		21.4	%		(37	)		-7.6	%
Property taxes		164		7.1	%		148		6.5	%		16			10.8	%
Management company indirect		102		4.4	%		100		4.4	%		2			2.0	%
Corporate expense		153		6.6	%		154		6.7	%		(1	)		-0.6	%

Cost of operations		1,411		61.1	%		1,403		61.4	%		8			0.6	%

Operating profit	$	898		38.9	%		881		38.6	%		17			1.9	%

Mining Royalty Lands Segment:

	Twelve months ended December 31
(dollars in thousands)	2018		%			2017		%

Mining Royalty and rents	$	8,050		98.9	%		7,153		98.8	%
Revenue-reimbursements		89		1.1	%		88		1.2	%

Total revenue		8,139		100.0	%		7,241		100.0	%

Depreciation, depletion and amortization		198		2.4	%		110		1.5	%
Operating expenses		168		2.1	%		159		2.2	%
Property taxes		269		3.3	%		240		3.3	%
Corporate expense		214		2.6	%		167		2.3	%

Cost of operations		849		10.4	%		676		9.3	%

Operating profit	$	7,290		89.6	%		6,565		90.7	%

Development Segment:

	Twelve months ended December 31
(dollars in thousands)	2018			2017			Change

Rental revenue	$	753			785			(32	)
Revenue-reimbursements		453			445			8

Total revenue		1,206			1,230			(24	)

Depreciation, depletion and amortization		228			337			(109	)
Operating expenses		1,198			200			998
Environmental remediation recovery		(465	)		—			(465	)
Property taxes		1,037			1,108			(71	)
Management company indirect		1,312			1,113			199
Corporate expense		1,984			1,231			753

Cost of operations		5,294			3,989			1,305

Operating loss	$	(4,088	)		(2,759	)		(1,329	)

Stabilized Joint Venture Segment:

	Twelve Months Ended December 31
(dollars in thousands)	2018			%			2017			%

Rental revenue	$	10,254			98.9	%		4,827			99.6	%
Revenue-reimbursements		114			1.1	%		20			.4	%

Total revenue		10,368			100.0	%		4,847			100.0	%

Depreciation and amortization		6,932			66.9	%		4,975			102.7	%
Operating expenses		2,467			23.8	%		1,288			26.6	%
Property taxes		1,155			11.1	%		520			10.7	%
Management company indirect		351			3.4	%		82			1.7	%
Corporate expense		393			3.8	%		65			1.3	%

Cost of operations		11,298			109.0	%		6,930			143.0	%

Operating profit	$	(930	)		-9.0	%	$	(2,083	)		-43.0	%

FRP HOLDINGS, INC. AND SUBSIDIARIES
DISCONTINUED OPERATIONS
(In thousands except per share amounts)
(Unaudited)

	THREE MONTHS ENDED						TWELVE MONTHS ENDED
	DECEMBER 31,						DECEMBER 31,
	2018			2017			2018			2017
Revenues:
Rental revenue	$	189			5,936			9,791			22,570
Revenue – reimbursements		33			1,306			2,307			5,019
Total Revenues		222			7,242			12,098			27,589

Cost of operations:
Depreciation, depletion and amortization		30			1,871			3,161			7,598
Operating expenses		48			915			1,742			3,485
Property taxes		20			800			1,286			3,008
Management company indirect		—			192			1,360			734
Corporate expenses		4			200			1,462			200
Total cost of operations		102			3,978			9,011			15,025

Total operating profit		120			3,264			3,087			12,564

Interest expense		—			(495	)		(587	)		(1,582	)
Gain on sale of buildings		(92	)		—			164,915			—

Income before income taxes		28			2,769			167,415			10,982
Provision for (benefit from) income taxes		8			(3,265	)		45,286			(21	)

Income from discontinued operations	$	20			6,034			122,129			11,003

Earnings per common share:
Income (loss) from discontinued operations-
Basic	$	0.00			0.60			12.16			1.10
Diluted	$	0.00			0.60			12.09			1.10

FRP Holdings, Inc. (Nasdaq: FRPH) Announces Results for the Fourth Quarter and Year Ended December 31, 2018

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