FRP (NASDAQ:FRPH) is prioritizing the lease-up of its industrial properties as it works to turn development spending into recurring earnings, executives said on the company’s third-quarter 2026 earnings call.
The company reported a net loss of $0.06 per share for the nine months ended September 30, compared with a profit of $0.16 per share a year earlier. CFO Matt McNulty attributed the change in part to lower interest and lending venture income, higher general and administrative expenses following the Altman acquisition, and weaker performance at its Washington, D.C., multifamily and industrial properties.
Those pressures were partially offset by improvements in mining royalties and the development segment, McNulty said. FRP expects full-year 2026 pro rata net operating income, or NOI, of approximately $35.8 million and funds from operations, or FFO, of $15.6 million. Its 2025 pro rata NOI was $37.9 million.
Industrial Leasing Takes Priority
President and Chief Operating Officer David deVilliers III said the third quarter was FRP’s most active leasing quarter since the second quarter of 2021. The company signed approximately 127,000 square feet of leases and extensions, including 61,000 square feet of new leases and 60,000 square feet of renewals.
Average occupancy across nine in-service buildings in the same-store Maryland portfolio, excluding Chelsea, was 71.4%, down from 72.4% a year earlier. Occupancy at the end of the quarter was 74.3%, and approximately 399,000 square feet remained available for lease in Maryland, deVilliers said.
The new leases, spanning Maryland and Florida, represent approximately $1.1 million in annual base rent plus operating expense reimbursements. The renewals secure approximately $488,000 in annual base rent, with starting rates 4.1% above prior rents. Those figures are at the property level, before adjusting for FRP’s ownership interests.
Rent will not begin immediately on all the signed space. One new lease commenced in September, while two Florida leases are expected to begin paying rent in 2027 after free-rent periods. The renewals begin in April 2027.
FRP expects its Lakeland and Davie warehouses to be substantially complete in the fourth quarter, followed by Camp Lake in the first quarter of 2027. Together with the Chelsea warehouse delivered in 2025, the projects represent approximately 1 million square feet. At stabilization, the four assets could generate approximately $12 million in annual pro rata NOI and $7 million in annual FFO, deVilliers said.
He cautioned that property costs and taxes, as well as interest that was previously capitalized, will affect results before rental income fully offsets them. Across its existing assets, FRP sees potential for approximately $50 million in annualized pro rata NOI and $20 million in FFO at stabilization, dependent on leasing, occupancy and funding remaining leasing costs.
Multifamily Weakness and Mining Growth
Multifamily pro rata NOI fell $542,000, or 12%, to $4 million in the quarter. Average occupancy was 93% across 1,827 units. DeVilliers said Bryan Street accounted for more than half of the decline because of lower occupancy, higher operating expenses and increased concessions.
Mining generated $4.1 million in quarterly NOI, up 10%, and $12 million through nine months, up 12%. DeVilliers said the segment provides cash flow with limited incremental capital requirements, helping support industrial investment.
Capital Commitments and Refinancing
FRP held $73.2 million in cash equivalents and restricted cash at September 30. It had drawn $12 million under its $50 million Wells Fargo credit facility, with $37.5 million remaining available, deVilliers said.
The company expects approximately $3 million of maintenance and development investment for the remainder of 2026 and approximately $57 million across 2027 and 2028. It also faces a $20.5 million opportunity zone tax liability in 2027.
Loans representing approximately $166 million of FRP’s share have initial maturities over the next 24 months. CEO John Baker III said the company does not yet know whether refinancing will require principal paydowns, which will depend on property performance and lender requirements.
Asked whether FRP should repurchase shares, McNulty said the company does not believe it is a good time to return capital given its commitments, tax liability and refinancing needs. DeVilliers said repurchases are not permanently ruled out, but the immediate priority is funding industrial leasing and maintaining balance sheet flexibility.
About FRP (NASDAQ:FRPH)
FRP Holdings, Inc is a real estate company that owns, develops and manages industrial and commercial properties. The company’s portfolio includes warehouses, distribution facilities, office properties and other income-producing real estate, with a focus on markets in the eastern United States.
FRP Holdings also operates a mining royalties business. Through this segment, the company owns mineral properties and leases them to third-party operators that extract construction aggregates and other materials.
