Q2 2024 Summary
Published Feb 18, 2025, 5:23 PM UTC- FRP Holdings is poised to capitalize on their significant land holdings in high-demand areas such as Florida, where demand for land is exceeding inflation, potentially unlocking substantial value as development opportunities arise, particularly in sites like Fort Myers and Lake County. Management is ready to develop assets as soon as they are capable of being developed, which could lead to significant future growth.
- The company is confident in leasing their new Chelsea industrial project at $10 per square foot, higher than initial assumptions, in a market with low vacancy around 5%, indicating strong demand that could lead to substantial revenue upon completion.
- FRP Holdings is experiencing positive rent growth on renewals in their multifamily assets, particularly in the D.C. area, with renewal rental rates showing positive growth and a majority of trade-out rental rates being positive, demonstrating resilience and potential for improved NOI.
- The company's ability to monetize its significant land holdings in Florida and Georgia may be delayed due to ongoing mining operations, with executives indicating that development is "not near term", potentially postponing expected revenues. ,
- At the Maren property, new lease trade-outs were negative by 1.8%, suggesting pressure on rental rates and potential challenges to maintaining or growing NOI in this segment.
- There is uncertainty regarding the future use of the company's site in Jacksonville, with no clear plan beyond potential "equipment storage", which may result in underutilization of assets and lower returns compared to higher-value developments.
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Dividend Initiation
Q: Will the company consider initiating a dividend?
A: A shareholder suggested that the management team and Board should consider initiating a dividend to signal an intention to return capital to shareholders. Management acknowledged the feedback and mentioned that the idea has been discussed internally. -
Fort Myers Quarry Development
Q: Any update on monetizing land in Florida and Georgia?
A: The company is exploring development opportunities for their quarry in Fort Myers due to the planned construction of Alico Road, expected around 2027-2028. While mining operations may stop because hauling aggregate across the new highway is impractical, they are considering future uses of the land. However, significant infrastructure like water, sewer, and zoning changes are needed before development can occur. -
NOI Decrease at Dock 79 and Maren
Q: Is the drop in NOI due to lower occupancy and rising expenses?
A: For Q2 2024 compared to Q2 2023, there was a 3.5% decrease in NOI at Dock 79 and Maren, with occupancy about 1% lower. This erosion is seen in Q2 alone; year-to-date figures are even. -
Rental Trends in DC Properties
Q: Are new leases seeing negative rent trade-outs?
A: At Dock 79 and Riverside, they had positive trade-outs on new leases. At Maren, new lease trade-outs were negative 1.8%. -
Chelsea Warehouse Leasing
Q: Can we assume Chelsea will lease at $9 per square foot?
A: They are currently marketing Chelsea at $10 per square foot for year one. The final rate will depend on tenant improvements, lease term, and annual escalations. The market vacancy for their product type is about 5%. -
Rental Rates at Dock 79 and Maren
Q: Why are renewal rates at Dock 79 outpacing Maren?
A: Dock 79 is catching up in rental growth after previously focusing on maintaining occupancy. They are now able to push rents more, and Dock's lower initial rental rates make increases more attractive. They hope this trend continues. -
Potential Use of Jacksonville Site
Q: Could the vacant Jacksonville site become a warehouse?
A: They are uncertain about its viability as an industrial asset but consider equipment storage as its best use for now. With 2-3 years left on the current lease, they will explore options as the lease end nears, ensuring the site doesn't remain vacant.