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While our core focus is industrial, we will continue to partner on multifamily projects that meet our return thresholds. We believe these are an effective hedge of our aggressive industrial strategy. We will always try to exploit our competitive advantage in the asset class we have the most experience in, but real estate is cyclical and there will almost certainly come a day where the state of the industrial market will make us glad we continued to pursue multifamily development. In 2025, we anticipate moving forward with two multifamily projects outside the DC area, one in South Carolina and the other in southwest Florida, which will add 810 units and $6 million in pro rata NOI upon stabilization.

Fourth Quarter Highlights.

• 21% increase in pro rata Net Operating Income (NOI) ($9.1 million vs $7.6 million)

• 21% increase in the Multifamily segment’s NOI

• Mining Royalty Land's revenue increased 19%, and segment NOI increased 34%
  

COMPARATIVE RESULTS OF OPERATIONS

Consolidated Results

Net income for the fourth quarter of 2024 was $1,679,000 or $.09 per share versus $2,880,000 or $.15 per share last year. Pro rata NOI for the fourth quarter of 2024 was $9,103,000 versus $7,553,000 last year.

• General and administrative expense increased $572,000 over the same period last year due primarily to the implementation of our executive succession and transition plan that commenced in May, 2024.

• Net investment income decreased $373,000 due to reduced income from our lending ventures ($96,000), and decreased preferred interest ($346,000) due to the conversion of FRP preferred equity to common equity at Bryant Street. This decrease was mitigated by increased earnings on cash equivalents ($69,000).

• Interest expense decreased $396,000 compared to the same period last year as we capitalized $427,000 more interest, partially offset by increased costs related to the increase in our line of credit with Wells Fargo. More interest was capitalized due to increased in-house and joint venture projects under development this quarter compared to last year.

• Equity in loss of Joint Ventures increased $1,425,000 due primarily to a one-time gain of $1,886,000 received in the fourth quarter of last year versus an expense of $124,000 in this year’s fourth quarter in connection with the loan guarantee on our Bryant Street multifamily development.   Notwithstanding the negative impact of the loan guarantee on this year’s fourth quarter versus last year, we saw improved operating results at The Verge ($486,000) and .408 Jackson ($90,000) compared to the same quarter last year.

Multifamily Segment (pro rata consolidated and pro rata unconsolidated)

For ease of comparison all the figures in the tables below include the results for Bryant Street, .408 Jackson, and The Verge from the prior period (when these projects were still in our Development segment).

The combined consolidated and unconsolidated pro rata net operating income this year for this segment was $4,286,000, up $758,000 or 22% compared to $3,528,000 last year. Most of this increase was from the lease up of The Verge which contributed $690,000 of pro rata NOI compared to $182,000 in the Development segment last year, an increase of $508,000. Same store NOI (Dock, Maren & Riverside) increased $228,000 or 12%.

Multifamily Segment (Consolidated - Dock & Maren)

Total revenues for our two consolidated joint ventures (Dock & Maren) were $5,504,000, an increase of $134,000 versus $5,370,000 last year. Total operating profit before G&A for the consolidated joint ventures was $1,398,000, up 4% versus $1,350,000 last year.

Multifamily Segment (Pro rata unconsolidated)

For our four unconsolidated joint ventures, pro rata revenues were $5,162,000, an increase of $839,000 or 19% compared to $4,323,000 in the same period last year. Pro rata operating profit before G&A was $206,000 versus a loss of $106,000 last year, an increase of $312,000.

Industrial and Commercial Segment

Total revenues in this segment were $1,268,000, down $154,000 or 11%, over last year. Operating profit before G&A was $626,000, down $203,000 or (24.5%) from $829,000 last year. Revenues and operating profit are down due to $222,000 of allowance for uncollectible revenue on one tenant in the process of eviction. We were 95.6% leased and occupied during both periods inclusive of the uncollectable space leased. Net operating income in this segment was $992,000, down $180,000 or 15% compared to last year due to the uncollectible revenue.

Mining Royalty Lands Segment Results

Total revenues in this segment were $3,459,000, an increase of $560,000 or 19% versus $2,899,000 last year. Last year’s fourth quarter was negatively impacted by the deduction of $223,000 as a credit for a (prior overpayment of royalties at one location).   Royalty tons were up 11%. Total operating profit before G&A in this segment was $3,198,000, an increase of $445,000 versus $2,753,000 last year. Net operating income in this segment was $3,505,000, up $895,000 or 34% compared to last year due to the increased revenues and a beneficial/ positive swing in the unrealized revenue of $310,000.

Development Segment Results

With respect to ongoing Development Segment projects:

• We entered into two new joint venture agreements in early 2024 with BBX Logistics. The first joint venture is a 200,000 square-foot warehouse development project in Lakeland, FL, and the second joint venture is a 182,000 square-foot warehouse redevelopment project in Broward County, FL. We anticipate construction to start on both projects in the second quarter of 2025.

• Last summer we broke ground on a new speculative warehouse project in Aberdeen, MD on Chelsea Road. This Class A, 258,000 square foot building is due to be completed in the 1st quarter of 2025.

• We are the principal capital source to develop 344 residential lots on 110 acres in Harford County, MD. We have funded $26.5 million of our $31.1 million total commitment. A national homebuilder is under contract to purchase all 222 townhome lots and 122 single family lots. At year end, 100 lots have been sold and $15.3 million of preferred interest and principal has been returned to the Company of which $4.0 million was booked as profit to the Company.
  

Highlights of the year ending 12/31/24.

• 20% increase in Net Income ($6.4 million vs $5.3 million)

• 26% increase in pro rata NOI ($38.1 million vs $30.2 million)

• The Mining Royalty Lands Segment's pro rata NOI includes a $2.2 million increase in unrealized revenues primarily due to a one-time, $1.9 million minimum royalty payment that applies to the prior twenty-four months as the tenant failed to meet a production requirement contained in the lease. This revenue was straight-lined over the estimated remaining 20 year life of the lease.

• 34% increase in the Multifamily segment’s pro rata NOI primarily due to lease up of Bryant St., 408 Jackson, and The Verge. This comparison includes the results for these three projects from the same period last year (when these projects were still in our Development segment).

• Industrial and Commercial revenue increased 5%, and segment NOI increased 17%
  

COMPARATIVE RESULTS OF OPERATIONS

Consolidated Results

Net income for 2024 was $6,385,000 or $.34 per share versus $5,302,000 or $.28 per share last year. Pro rata NOI for 2024 was $38,139,000 versus $30,240,000 last year.

• Pro rata NOI includes a one-time, minimum royalty payment of $1,853,000 that applies to the prior twenty-four months as the tenant failed to meet a production requirement contained in the lease. This revenue was straight-lined over the estimated remaining 20 year life of the lease.

• General and administrative expense increased $1,305,000 over the same period last year due primarily to the implementation of our executive succession and transition plan that commenced in May, 2024.

• Net investment income increased $215,000 due to increased earnings on cash equivalents ($1,321,000) and increased income from our lending ventures ($1,059,000), partially offset by decreased preferred interest ($2,165,000) due to the conversion of FRP preferred equity to common equity at Bryant Street.

• Interest expense decreased $1,165,000 compared to the same period last year as we capitalized $1,296,000 more interest, partially offset by increased costs related to the increase in our line of credit with Wells Fargo. More interest was capitalized due to increased in-house and joint venture projects under development this quarter compared to last year.

• Equity in loss of Joint Ventures improved $578,000 due to improved results at our unconsolidated joint ventures. Results improved at The Verge ($2,445,000) and .408 Jackson ($259,000) but that improvement was mostly offset by a $2,255,000 increase in loan guarantee expense. The Company recorded a gain on loan guarantee of $1,886,000 in December 2023 as the guarantee liability was relieved upon the refinancing of the Bryant Street debt versus an expense of $496,000 in 2024 stemming from the guarantee of the new Bryant Street loan.
  

Multifamily Segment (pro rata consolidated and pro rata unconsolidated)

For ease of comparison all the figures in the tables below include the results for Bryant Street, .408 Jackson, and The Verge from the prior period (when these projects were still in our Development segment).

The combined consolidated and unconsolidated pro rata net operating income this year for this segment was $18,177,000, up $4,634,000 or 34% compared to $13,543,000 last year. Most of this increase was from the lease up of Bryant Street, .408 Jackson, and The Verge. These three projects contributed $9,740,000 of pro rata NOI to this segment compared to $5,466,000 in the Development segment last year, an increase of $4,274,000. Same store NOI (Dock, Maren & Riverside) increased $360,000 or 4%.

Multifamily Segment (Consolidated - Dock & Maren)

Total revenues for our two consolidated joint ventures (Dock & Maren) were $22,096,000, an increase of $272,000 versus $21,824,000 last year. Total operating profit before G&A for the consolidated joint ventures was $5,825,000, an increase of $1,285,000, or 28% versus $4,540,000 last year primarily due to lower depreciation and operating expense. Depreciation decreased as some of the assets became fully depreciated. Operating expenses decreased due to lower maintenance, utilities, insurance and marketing costs.

Multifamily Segment (Pro rata unconsolidated)

For our four unconsolidated joint ventures, pro rata revenues were $20,335,000, an increase of $5,635,000 or 38% compared to $14,700,000 in the same period last year. Pro rata operating profit before G&A was $1,609,000 versus a loss of $1,542,000 last year, an increase of $3,151,000.

Industrial and Commercial Segment

Total revenues in this segment were $5,621,000, up $267,000 or 5%, over last year. Operating profit before G&A was $3,110,000, up $30,000 or 1% from $3,080,000 last year. Revenues and operating profit are up because of full occupancy at 1841 62nd Street (which had only $11,000 of revenue in the first quarter last year) and the addition of 1941 62nd Street to this segment in March 2023 less $222,000 of allowance for uncollectible revenue on one tenant in the process of eviction. We were 95.6% leased and occupied during 2024 inclusive of the uncollectable space leased. Net operating income in this segment was $4,547,000, up $649,000 or 17% compared to last year partially due to $549,000 more unrealized rental revenue in the prior year due to rent abatements that expired in 2023.

Mining Royalty Lands Segment Results

Total revenues in this segment were $12,852,000, an increase of $325,000 or 3% versus $12,527,000 last year despite a 3% decrease in royalty tons sold compared to 2023. Royalty revenues were impacted by the deduction of royalties to resolve an $842,000 overpayment. During the year, the tenant withheld $619,000 in royalties otherwise due to the Company with the remainder ($223,000) withheld in the fourth quarter of 2023. There are no further amounts to be withheld moving forward. Total operating profit before G&A in this segment was $11,853,000, an increase of $319,000 versus $11,534,000 last year. Net operating income in this segment was $14,396,000, up $2,676,000 or 23% compared to last year mostly due to a one-time, minimum royalty payment at one location which is straight-lined across the estimated remaining 20 year life of the lease for GAAP revenue purposes.

Development Segment Results

CONSOLIDATED BALANCE SHEETS 
(In thousands, except share data)

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. We believe these non-GAAP measures provide useful information to our Board of Directors, management and investors regarding certain trends relating to our financial condition and results of operations. Our management uses these non-GAAP measures to compare our performance to that of prior periods for trend analyses, purposes of determining management incentive compensation and budgeting, forecasting and planning purposes. We provide Pro rata net operating income (NOI) because we believe it assists investors and analysts in estimating our economic interest in our consolidated and unconsolidated partnerships, when read in conjunction with our reported results under GAAP. This measure is not, and should not be viewed as, a substitute for GAAP financial measures. For ease of comparison all the figures in the tables below include the results for Bryant Street, .408 Jackson, and The Verge in the Multifamily segment for all periods shown.

Pro Rata Net Operating Income Reconciliation
Twelve months ended 12/31/24 (in thousands)