# FRP Holdings, Inc.: Form 10-Q for the period ended Jun 30, 2023

- Company: [FRP Holdings, Inc.](/companies/frph.md) (CIK 844059)
- Form: 10-Q
- Filed: 2023-08-10
- Accepted by EDGAR: Aug 10, 2023, 14:03 ET
- Period: 2023-06-30
- Accession: 0000844059-23-000032
- Inline XBRL: yes
- Main document: https://www.sec.gov/Archives/edgar/data/844059/000084405923000032/frphjunq23.htm
- All documents and exhibits: https://www.sec.gov/Archives/edgar/data/844059/000084405923000032/

## Figures reported in this filing

Standardized XBRL line items for the period ended 2023-06-30.

| Line item | Period | Value | XBRL concept |
| --- | --- | ---: | --- |
| Revenue | 3 months, 2023-04-01 to 2023-06-30 | $10.7m | us-gaap:Revenues |
| Revenue | 6 months, 2023-01-01 to 2023-06-30 | $20.8m | us-gaap:Revenues |
| Operating income | 3 months, 2023-04-01 to 2023-06-30 | $2.8m | us-gaap:OperatingIncomeLoss |
| Operating income | 6 months, 2023-01-01 to 2023-06-30 | $5.6m | us-gaap:OperatingIncomeLoss |
| Interest expense | 3 months, 2023-04-01 to 2023-06-30 | $1.1m | us-gaap:InterestExpense |
| Interest expense | 6 months, 2023-01-01 to 2023-06-30 | $2.1m | us-gaap:InterestExpense |
| Income tax | 3 months, 2023-04-01 to 2023-06-30 | $222.0k | us-gaap:IncomeTaxExpenseBenefit |
| Income tax | 6 months, 2023-01-01 to 2023-06-30 | $431.0k | us-gaap:IncomeTaxExpenseBenefit |
| Net income | 3 months, 2023-04-01 to 2023-06-30 | $598.0k | us-gaap:NetIncomeLoss |
| Net income | 6 months, 2023-01-01 to 2023-06-30 | $1.2m | us-gaap:NetIncomeLoss |
| Diluted EPS | 3 months, 2023-04-01 to 2023-06-30 | $0.06 | us-gaap:EarningsPerShareDiluted |
| Diluted EPS | 6 months, 2023-01-01 to 2023-06-30 | $0.12 | us-gaap:EarningsPerShareDiluted |
| Basic EPS | 3 months, 2023-04-01 to 2023-06-30 | $0.06 | us-gaap:EarningsPerShareBasic |
| Basic EPS | 6 months, 2023-01-01 to 2023-06-30 | $0.12 | us-gaap:EarningsPerShareBasic |
| Diluted shares (weighted) | 3 months, 2023-04-01 to 2023-06-30 | 9,466,000 shares | us-gaap:WeightedAverageNumberOfDilutedSharesOutstanding |
| Diluted shares (weighted) | 6 months, 2023-01-01 to 2023-06-30 | 9,463,000 shares | us-gaap:WeightedAverageNumberOfDilutedSharesOutstanding |
| Operating cash flow | 6 months, 2023-01-01 to 2023-06-30 | $12.9m | us-gaap:NetCashProvidedByUsedInOperatingActivities |
| Capital expenditure | 3 months, 2023-04-01 to 2023-06-30 | $979.0k | us-gaap:PaymentsToAcquirePropertyPlantAndEquipment |
| Capital expenditure | 6 months, 2023-01-01 to 2023-06-30 | $2.2m | us-gaap:PaymentsToAcquirePropertyPlantAndEquipment |
| Share repurchases | 6 months, 2023-01-01 to 2023-06-30 | $1.0m | us-gaap:PaymentsForRepurchaseOfCommonStock |
| Cash and equivalents | at 2023-06-30 | $166.5m | us-gaap:CashAndCashEquivalentsAtCarryingValue |
| Total assets | at 2023-06-30 | $699.9m | us-gaap:Assets |
| Total liabilities | at 2023-06-30 | $254.9m | us-gaap:Liabilities |
| Long-term debt | at 2023-06-30 | $178.6m | us-gaap:LongTermDebt |
| Shareholders' equity | at 2023-06-30 | $409.9m | us-gaap:StockholdersEquity |

## Management's discussion and analysis

As filed, 51,313 characters.

The following discussion and analysis of our financial condition and results of operations should be read in conjunction with the accompanying unaudited consolidated financial statements and related notes in Item 1 and with the audited consolidated financial statements and the related notes included in our annual report on Form 10-K. The statements in this discussion regarding industry outlook, our expectations regarding our future performance, liquidity and capital resources and other non-historical statements in this discussion are forward-looking statements. These forward-looking statements are subject to risks and uncertainties, including the risks and uncertainties described in “Forward-Looking Statements” below and “Risk Factors” on page 5 of our annual report on Form 10-K. Our actual results may differ materially from those contained in or implied by any forward-looking statements. We assume no obligation to revise or publicly release any revision to any forward-looking statements contained in this quarterly report on Form 10-Q, unless required by law.

The following discussion includes a non-GAAP financial measure within the meaning of Regulation G promulgated by the Securities and Exchange Commission to supplement the financial results as reported in accordance with GAAP. The non-GAAP financial measure discussed is pro-rata net operating income (NOI). The Company uses this metric to analyze its continuing operations and to monitor, assess, and identify meaningful trends in its operating and financial performance. This measure is not, and should not be viewed as, a substitute for GAAP financial measures. Refer to

“Non-GAAP Financial Measure” below in this quarterly report for a more detailed discussion, including reconciliations of this non-GAAP financial measure to its most directly comparable GAAP financial measure.

**Business Overview -** FRP Holdings, Inc. is a real estate development, asset management and operating company businesses. Our properties are located in the Mid-Atlantic and southeastern United States and consist of:

Mining royalty lands, some of which will have second lives as development properties;

Residential apartments in Washington, D.C. and Greenville, South Carolina;

Warehouse or office properties in the Mid-Atlantic states either existing or under development;

Mixed use properties under development in Washington, D.C. or Greenville, South Carolina; and

Properties held for sale.

We believe our present capital structure, liquidity and land provide us with years of opportunities to increase recurring revenue and long-term value for our shareholders. We intend to focus on our core business activity of real estate development, asset management and operations. We are developing a broad range of asset types that we believe will provide acceptable rates of return, grow recurring revenues and support future business. Capital commitments will be funded with cash proceeds from completed projects, existing cash, owned-land, partner capital and financing arrangements. We do not anticipate immediate benefits from investments. Timing of projects may be subject to delays caused by factors beyond our control.

### Reportable Segments

We conduct primarily all of our business in the following four reportable segments: (1) asset management (2) mining royalty lands (3) development and (4) stabilized joint ventures. For more information regarding our reportable segments, see Note 3. *Business Segments* of our condensed consolidated financial statements included in this quarterly report.

### Asset Management Segment.

The Asset Management segment owns, leases and manages commercial properties. These assets create revenue and cash flows through tenant rental payments, lease management fees and reimbursements for building operating costs. The Company’s industrial warehouses typically lease for terms ranging from 3 – 10 years often with one or two renewal options. All base rent revenue is recognized on a straight-lined basis. All of the commercial warehouse leases are triple net and common area maintenance costs (CAM Revenue) are billed monthly, and insurance and real estate taxes are billed annually. 34 Loveton is the only office product wherein all leases are full service therefore there is no CAM revenue. Office leases are also recognized on a straight-lined basis. The major cash outlays incurred in this segment are for operating expenses, real estate taxes, building repairs, lease commissions and other lease closing costs, construction of tenant improvements, capital to acquire existing operating buildings and closing costs related thereto and personnel costs of our property management team.

As of June 30, 2023, the Asset Management Segment includes nine buildings at four commercial properties owned by the Company in fee simple as follows:

1\) 34 Loveton Circle in suburban Baltimore County, Maryland consists of one office building totaling 33,708 square feet which is 90.8% occupied (16% of the space is occupied by the Company for use as our Baltimore headquarters). The property is subject to commercial leases with various tenants.

2\) 155 E. 21st Street in Duval County, Florida was an office building property that remains under lease through March 2026. We permitted the tenant to demolish all structures on the property during 2018.

3\) Cranberry Run Business Park in Hartford County, Maryland consists of five office buildings totaling 267,737 square feet which are 92.1% occupied and 92.1% leased. The property is subject to commercial leases with various tenants.

4\) Hollander 95 Business Park in Baltimore City, Maryland consists of three buildings totaling 247,340 square feet that are 100.0% leased and 100.0% occupied.

Management focuses on several measures of success on a comparative basis in this segment: (1) net operating income growth, (2) growth in occupancy, (3) average annual occupancy rate (defined as the occupied square feet at the end of each month during a fiscal year divided by the number of months to date in that fiscal year as a percentage of the average number of square feet in the portfolio over that same time period), (4) tenant retention success rate (as a percentage of total square feet to be renewed).

### Mining Royalty Lands Segment.

Our Mining Royalty Lands segment owns several properties totaling approximately 16,650 acres currently under lease for mining rents or royalties (excluding the 4,280 acres owned by our Brooksville joint venture with Vulcan Materials). Other than one location in Virginia, all of these properties are located in Florida and Georgia. The Company leases land under long-term leases that grant the lessee the right to mine and sell reserves from our property in exchange for royalty payments. A typical lease has an option to extend the lease for additional terms. The typical lease in this segment requires the tenant to pay us a royalty based on the number of tons of mined materials sold from our property during a given fiscal year multiplied by a percentage of the average annual sales price per ton sold. As a result of this royalty payment structure, we do not bear the cost risks associated with the mining operations, however, we are subject to the cyclical nature of the construction markets in these states as both volumes and prices tend to fluctuate through those cycles. In certain locations, typically where the reserves on our property have been depleted but the tenant still has a need for the leased land, we collect a minimum annual rental amount. We believe strongly in the potential for future growth in construction in Florida, Georgia, and Virginia which would positively benefit our profitability in this segment.

The major expenses in this segment are comprised of collection and accounting for royalties, management’s oversight of the mining leases, land entitlement for post-mining uses and property taxes at our non-leased locations and at our Grandin location which, unlike our other leased mining locations, are not entirely paid by the tenant. As such, our costs in this business are very low as a percentage of revenue, are relatively stable and are not affected by increases in production at our locations. Our current mining tenants include Vulcan Materials, Martin Marietta, Cemex, Argos and The Concrete Company.

Additionally, these locations provide us with opportunities for valuable “second lives” for these assets through proper land planning and entitlement.

### Significant “ Second Life” Mining Lands:

| Location | Acreage | Status |
| --- | --- | --- |
| Brooksville, FL | 4,280 +/- | Development of Regional of Impact and County Land Use and Master Zoning in place for 5,800 residential unit, mixed-use development |
| Ft. Myers, FL | 1,907 +/- | Approval in place for 105, 1 acre, waterfront residential lots after mining completed. |
| **Total** | **6,187 +/-** |  |

### Development Segment.

Through our Development segment, we own and are continuously monitoring the highest and best use of several parcels of land that are in various stages of development. Our overall strategy in this segment is to convert all our non-income producing lands into income production through (i) an orderly process of constructing new commercial and residential buildings for us to own and operate or (ii) a sale to, or joint venture with, third parties. Additionally, our Development segment will purchase or form joint ventures on new developments of land not previously owned by the Company.

Revenues in this segment are generated predominately from land sales and interim property rents. The significant cash outlays incurred in this segment are for land acquisition costs, entitlement costs, property taxes, design and permitting, the personnel costs of our in-house management team and horizontal and vertical construction costs.

### Development Segment – Warehouse/Office Land.

At June 30, 2023, this segment owned the following future development parcels:

1\) 54 acres of land that can support over 690,000 square feet of industrial product located at 1001 Old Philadelphia Road in Aberdeen, Maryland.

2\) 17 acres of land in Harford County, Maryland that can accommodate 259,000 square feet of industrial development.

3\) 170 acres of land in Cecil County, Maryland that can accommodate 900,000 square feet of industrial development.

We also have three properties that were either spun-off to us from Florida Rock Industries in 1986 or acquired by us from unrelated third parties. These properties, as a result of our “highest and best use” studies, are being prepared for income generation through sale or joint venture with third parties, and in certain cases we are leasing these properties on an interim basis for an income stream while we wait for the development market to mature.

### Development Segment - Significant Investment Lands Inventory:

| Location | Approx. Acreage | Status | NBV |
| --- | ---: | --- | ---: |
| Riverfront on the Anacostia Phases III-IV | 2.5 | Conceptual design program ongoing | $6,534,000 |
| Hampstead Trade Center, MD | 118 | Residential zoning applied for in preparation for sale | $10,409,000 |
| Square 664E, on the Anacostia River in DC | 2 | Under lease to Vulcan Materials as a concrete batch plant through 2026 | $7,427,000 |
| **Total** | **122.5** |  | $24,370,000 |

### Development Segment - Investments in Joint Ventures

The third leg of our Development Segment consists of investments in joint ventures for properties in development. The Company has investments in joint ventures, primarily with other real estate developers which are summarized below:

| Property | JV Partner | Status | % Ownership |
| --- | --- | --- | ---: |
| Brooksville Quarry, LLC near Brooksville, Florida | Vulcan Materials Company | Future planned residential development of 3,500 acres which are currently subject to mining lease | 50% |
| BC FRP Realty, LLC for 35 acres in Maryland | St John Properties | Development of 329,000 square feet multi-building business park in progress | 50% |
| Bryant Street Partnerships for 5 acres of land in Washington, D.C. | MRP Realty | Mixed-use development with 487 residential units and 91,607 square feet of retail is in final stages of lease-up | 61.36% |

22

| Aberdeen Station residential development in Harford County, Maryland Amber Ridge residential development in Prince George’s County, Maryland |  | $31.1 million in exchange for an interest rate of 10% and a 20% preferred return after which the Company is also entitled to a portion of proceeds from sale $18.5 million in exchange for an interest rate of 10% and a preferred return of 20% after which the Company is entitled to a portion of proceeds from sale | Financing Financing |
| --- | --- | --- | ---: |
| The Verge at 1800 Half Street property in Buzzard Point area of Washington, D.C. | MRP Realty | Eleven-story structure with 344 apartments and 8,536 square feet of ground floor retail has final certificate of occupancy and currently underway with lease-up | 61.37% |
| .408 Jackson property in Greenville, SC | Woodfield Development | Mixed-use project with 227 multifamily units and 4,539 square feet of retail space has final certificate of occupancy and currently underway with lease-up | 40% |
| Estero | Woodfield Development | Pre-development activities for a mixed-use project with 554 multifamily units, 72,000 square feet of commercial space, 41,000 square feet of office space and a boutique 170-key hotel | 16% |
| FRP/MRP Buzzard Point Sponsor, LLC | MRP Realty | Pre-development activities for phase one of property owned by Steuart Investment Company (SIC) under a Contribution and Pre-Development Agreement between this partnership and SIC | 50% |
| Woven property in Greenville, SC | Woodfield Development | Pre-development activities for an apartment building | 50% |

Joint ventures where FRP is not the primary beneficiary (including those in the Stabilized Joint Venture Segment) are reflected in the line “Investment in joint ventures” on the balance sheet and “Equity in loss of joint ventures” on the income statement. The following table summarizes the Company’s investments in unconsolidated joint ventures (in thousands):

| As of June 30, 2023 | Common Ownership | Total Investment | Total Assets of The Partnership | Profit (Loss) Of the Partnership | The Company's Share of Profit (Loss) of the Partnership |
| --- | ---: | ---: | ---: | ---: | ---: |
| Brooksville Quarry, LLC | 50.00% | $7,496 | 14,367 | (48) | (24) |
| BC FRP Realty, LLC | 50.00% | 5,180 | 21,959 | (350) | (175) |
| Buzzard Point Sponsor, LLC | 50.00% | 2,150 | 4,300 | — | — |
| Bryant Street Partnerships | 61.36% | 61,448 | 196,532 | (5,296) | (3,348) |
| Lending ventures |  | 22,033 | 11,448 | — | — |
| Estero Partnership | 16.00% | 3,600 | 38,541 | — | — |
| Verge Partnership | 61.37% | 38,626 | 132,101 | (5,383) | (3,303) |
| Greenville Partnerships | 40.00% | 12,054 | 98,683 | (2,056) | (822) |
| Total |  | $152,587 | 517,931 | (13,133) | (7,672) |

23

The major classes of assets, liabilities and equity of the Company’s Investments in Joint Ventures as of June 30, 2023 are summarized in the following two tables (in thousands):

|  | As of June 30, 2023 Buzzard Point Sponsor, LLC | Bryant Street Partnership | Estero Partnership | Verge Partnership | Greenville Partnership | Total Apartment/ Mixed-Use |
| --- | ---: | ---: | ---: | ---: | ---: | ---: |
| Investments in real estate, net | $0 | 189,926 | 33,787 | 129,828 | 97,201 | $450,742 |
| Cash and cash equivalents | 0 | 1,137 | 4,725 | 1,917 | 1,304 | 9,083 |
| Unrealized rents & receivables | 0 | 4,668 | 29 | 184 | 26 | 4,907 |
| Deferred costs | 4,300 | 801 | 0 | 172 | 152 | 5,425 |
| Total Assets | $4,300 | 196,532 | 38,541 | 132,101 | 98,683 | $470,157 |
| Secured notes payable | $0 | 116,884 | 16,000 | 71,664 | 67,382 | $271,930 |
| Other liabilities | 0 | 2,553 | 12 | 1,166 | 2,705 | 6,436 |
| Capital - FRP | 2,150 | 59,440 | 3,605 | 36,421 | 11,102 | 112,718 |
| Capital – Third Parties | 2,150 | 17,655 | 18,924 | 22,850 | 17,494 | 79,073 |
| Total Liabilities and Capital | $4,300 | 196,532 | 38,541 | 132,101 | 98,683 | $470,157 |

|  | As of June 30, 2023 Brooksville Quarry, LLC | BC FRP Realty, LLC | Lending Ventures | Apartment/ Mixed-Use | Total Grand Total |
| --- | ---: | ---: | ---: | ---: | ---: |
| Investments in real estate, net | $14,342 | 21,077 | 11,448 | 450,742 | $497,609 |
| Cash and cash equivalents | 21 | 215 | 0 | 9,083 | 9,319 |
| Unrealized rents & receivables | 0 | 392 | 0 | 4,907 | 5,299 |
| Deferred costs | 4 | 275 | 0 | 5,425 | 5,704 |
| Total Assets | $14,367 | 21,959 | 11,448 | 470,157 | $517,931 |
| Secured notes payable | $0 | 10,586 | (10,586) | 271,930 | $271,930 |
| Other liabilities | 43 | 1,127 | 0 | 6,436 | 7,606 |
| Capital – FRP | 7,496 | 5,123 | 22,034 | 112,718 | 147,371 |
| Capital - Third Parties | 6,828 | 5,123 | 0 | 79,073 | 91,024 |
| Total Liabilities and Capital | $14,367 | 21,959 | 11,448 | 470,157 | $517,931 |

### Stabilized Joint Venture Segment.

At quarter end, the segment included three stabilized joint ventures which own, lease and manage buildings. These assets create revenue and cash flows through tenant rental payments, and reimbursements for building operating costs. The Company’s residential spaces generally lease for 12 – 15-month lease terms and 90 days prior to the expiration, as long as there is no balance due, the tenant is offered a renewal. If no notice to move out or renew is made, then the leases go to month to month until notification of termination or renewal is received. Renewal terms are typically 9 – 12 months. From March 2020 through the end of 2021, we were prohibited from increasing rent on renewals by emergency measures in Washington, DC designed to ease the burden of the pandemic on its citizens. These measures expired at the end of 2021. The Company also leases retail spaces at apartment/mixed-use properties. The retail leases are typically 10 -15-year leases with options to renew for another five years. Retail leases at these properties also include percentage rents which average 3-6% of annual sales for the tenant that exceed a breakpoint stipulated by each individual lease. All base rent revenue is recognized on a straight-line basis. The major cash outlays incurred in this segment are for property taxes, full service maintenance, property management, utilities and marketing. The three stabilized joint venture properties are as follows:

| Property and Occupancy | JV Partner | Method of Accounting | % Ownership |
| --- | --- | --- | ---: |
| Dock 79 apartments, Washington, D.C. 305 apartment units and 14,430 square feet of retail | MRP Realty | Consolidated | 66% |
| The Maren apartments, Washington, D.C. 264 residential units and 6,811 square feet of retail | MRP Realty | Consolidated as of March 31, 2021 | 70.41% |
| Riverside apartments Greenville, SC. 200 residential units with no retail component | Woodfield Development | Equity Method | 40% |

### Second Quarter Operational Highlights

16.3% increase in pro-rata NOI ($7.61 million vs $6.55 million) over second quarter 2022

Mining royalties’ highest second quarter in terms of revenue; royalty revenue increased 13.2% over second quarter 2022; 9.9% increase in royalties per ton

55.7% increase in Asset Management revenue versus same period last year; 23.8% increase in Asset Management NOI versus second quarter 2022

Comparative Results of Operations for the Three months ended June 30, 2023 and 2022

### Consolidated Results

*(dollars in thousands)*

| Revenues: | Three months ended June 30, 2023 | 2022 | Change% |  |
| --- | ---: | ---: | ---: | ---: |
| Lease Revenue | $7,432 | $6,745 | $687 | 10.2% |
| Mining lands lease revenue | 3,264 | 2,883 | 381 | 13.2% |
| Total Revenues | 10,696 | 9,628 | 1,068 | 11.1% |
| **Cost of operations:** |  |  |  |  |
| Depreciation/Depletion/Amortization | 2,819 | 2,868 | (49) | -1.7% |
| Operating Expenses | 1,822 | 1,541 | 281 | 18.2% |
| Property Taxes | 879 | 1,041 | (162) | -15.6% |
| Management company indirect | 1,040 | 805 | 235 | 29.2% |
| Corporate Expense | 1,369 | 1,307 | 62 | 4.7% |
| Total cost of operations | 7,929 | 7,562 | 367 | 4.9% |
| **Total operating profit** | 2,767 | 2,066 | 701 | 33.9% |
| Net investment income | 3,125 | 1,120 | 2,005 | 179.0% |
| Interest Expense | (1,129) | (739) | (390) | 52.8% |
| Equity in loss of joint ventures | (4,047) | (1,766) | (2,281) | 129.2% |
| Gain (loss) on sale of real estate | (2) | — | (2) | 0.0% |
| Income before income taxes | 714 | 681 | 33 | 4.8% |
| Provision for income taxes | 222 | 99 | 123 | 124.2% |
| Net income | 492 | 582 | (90) | -15.5% |
| Loss attributable to noncontrolling interest | (106) | (75) | (31) | 41.3% |
| **Net income attributable to the Company** | $598 | $657 | $(59) | -9.0% |

25

Net income for the second quarter of 2023 was $598,000 or $.06 per share versus $657,000 or $.07 per share in the same period last year. The second quarter of 2023 was impacted by the following items:

Operating profit increased $701,000 compared to the same quarter last year due to improved revenues.

Management company indirect increased $235,000 due to merit increases and new hires along with recruiting costs.

Interest expense increased $390,000 compared to the same quarter last year due to less capitalized interest. We capitalized less interest because of fewer in-house and joint venture projects under development this quarter compared to last year.

Interest income increased $2,005,000 due primarily to an increase in interest earned on cash equivalents and increased income from our lending ventures.

Equity in loss of Joint Ventures increased $2,281,000 primarily due to losses during lease up at The Verge and .408 Jackson.

### Asset Management Segment Results

|  | Three months ended June 30 |  |  |
| --- | ---: | ---: | ---: |
| (dollars in thousands) | 2023% | 2022% | Change% |
| Lease revenue | $1,420 100.0% | 912 100.0% | 508 55.7% |
| Depreciation, depletion and amortization | 359 25.3% | 230 25.2% | 129 56.1% |
| Operating expenses | 176 12.4% | 111 12.2% | 65 58.6% |
| Property taxes | 63 4.4% | 52 5.7% | 11 21.2% |
| Management company indirect | 141 9.9% | 100 10.9% | 41 41.0% |
| Corporate expense | 271 19.1% | 225 24.7% | 46 20.4% |
| Cost of operations | 1,010 71.1% | 718 78.7% | 292 40.7% |
| Operating profit | $410 28.9% | 194 21.3% | 216 111.3% |

Total revenues in this segment were $1,420,000, up $508,000 or 55.7%, over the same period last year. Operating profit was $410,000, up $216,000 from $194,000 in the same quarter last year. Revenues and operating profit are up because of full occupancy at 1841 and 1865 62nd Street (compared to 43.4% and 64.1% occupancy in the second quarter of 2022, respectively) and the addition of 1941 62nd Street to this segment in March 2023. 1941 62nd Street is a 101,750 square-foot build-to-suit, which is fully leased and occupied. We now have nine buildings in service at three different locations totaling 515,077 square feet of industrial and 33,708 square feet of office. At quarter end, we were 95.6% leased and 95.6% occupied. Net operating income in this segment was $843,000, up $162,000 or 23.8% compared to the same quarter last year.

### Mining Royalty Lands Segment Results

|  | Three months ended June 30 |  |  |
| --- | ---: | ---: | ---: |
| (dollars in thousands) | 2023% | 2022% | Change% |
| Mining lands lease revenue | $3,264 100.0% | 2,883 100.0% | 381 13.2% |
| Depreciation, depletion and amortization | 151 4.6% | 189 6.6% | (38) -20.1% |
| Operating expenses | 16 0.5% | 17 0.6% | (1) -5.9% |
| Property taxes | 74 2.3% | 69 2.4% | 5 7.2% |
| Management company indirect | 137 4.2% | 110 3.8% | 27 24.5% |
| Corporate expense | 154 4.7% | 148 5.1% | 6 4.1% |
| Cost of operations | 532 16.3% | 533 18.5% | (1) -0.2% |
| Operating profit | $2,732 83.7% | 2,350 81.5% | 382 16.3% |

26

Total revenues in this segment were $3,264,000 versus $2,883,000 in the same period last year. Total operating profit in this segment was $2,732,000, an increase of $382,000 versus $2,350,000 in the same period last year. This increase is the result of increases in revenue at nearly every active location. Net Operating Income this quarter for this segment was $3,125,000, up $380,000 or 14% compared to the same quarter last year.

### Development Segment Results

*(dollars in thousands)*

|  | Three months ended June 30 2023 | 2022 | Change |
| --- | ---: | ---: | ---: |
| Lease revenue | $467 | 408 | 59 |
| Depreciation, depletion and amortization | 41 | 47 | (6) |
| Operating expenses | 73 | 80 | (7) |
| Property taxes | 179 | 356 | (177) |
| Management company indirect | 646 | 506 | 140 |
| Corporate expense | 815 | 816 | (1) |
| Cost of operations | 1,754 | 1,805 | (51) |
| Operating loss | $(1,287) | (1,397) | 110 |

With respect to ongoing projects:

We are the principal capital source of a residential development venture in Prince George’s County, Maryland known as “Amber Ridge.” Of the $18.5 million in committed capital to the project, $17.2 million in principal draws have taken place through quarter end. Through the end of June 30, 2023, 164 of the 187 units have been sold, and we have received $19.6 million in preferred interest and principal to date.

Bryant Street is a mixed-use joint venture between the Company and MRP in Washington, DC consisting of four buildings: The Coda, The Chase 1A, The Chase 1B, and one commercial building which became fully leased this quarter, 90% of which is leased to an Alamo Draft House movie theater. At quarter end, the Coda was 95% leased and 94.8% occupied and the two buildings that comprise the Chase were 90.69% leased and 92.49% occupied. In total, at quarter end, Bryant Street’s 487 residential units were 92.2% leased and 93.2% occupied. Its commercial space was 95.9% leased and 79.1% occupied at quarter end.

Lease-up is underway at The Verge, and at quarter end, the building was 68.6% leased and 43.3% occupied. Retail at this location is 45.2% leased. This is our third mixed-use project in the Anacostia waterfront submarket in Washington, DC.

.408 Jackson is our second joint venture project in Greenville. Leasing began in the fourth quarter of 2022 with residential units 85.9% leased and 76.2% occupied at quarter end. Retail at this location is 100% leased and currently under construction and expected to open during the fourth quarter of this year.

Windlass Run, our suburban office and retail joint venture with St. John Properties, Inc. signed a new office lease for 12,126 square feet bringing the office portion of the project to 78.28% leased and 61.45% occupied. Retail space at this site is 22.86% leased and 13.46% occupied.

### Stabilized Joint Venture Segment Results

|  | Three months ended June 30 |  |  |
| --- | ---: | ---: | ---: |
| (dollars in thousands) | 2023% | 2022% | Change% |
| Lease revenue | $5,545 100.0% | 5,425 100.0% | 120 2.2% |
| Depreciation, depletion and amortization | 2,268 40.9% | 2,402 44.3% | (134) -5.6% |
| Operating expenses | 1,557 28.1% | 1,333 24.6% | 224 16.8% |
| Property taxes | 563 10.2% | 564 10.4% | (1) -0.2% |
| Management company indirect | 116 2.1% | 89 1.6% | 27 30.3% |
| Corporate expense | 129 2.3% | 118 2.2% | 11 9.3% |
| Cost of operations | 4,633 83.6% | 4,506 83.1% | 127 2.8% |
| Operating profit | $912 16.4% | 919 16.9% | (7) -0.8% |

Total revenues in this segment were $5,545,000, an increase of $120,000 versus $5,425,000 in the same period last year. The Maren’s revenue was $2,640,000 an increase of 7.4% and Dock 79 revenues decreased $62,000 to $2,906,000 or 2.1%. Total operating profit in this segment was $912,000, a decrease of $7,000 versus $919,000 in the same period last year. Pro-rata net operating income this quarter for this segment was $2,152,000, down $248,000 or 10.3% compared to the same quarter last year because of the sale of our 20% TIC interest in both properties to SIC, mitigated by $223,000 in pro-rata NOI from our share Riverside joint venture in Greenville, SC.

At the end of June, The Maren was 92.42% leased and 94.32% occupied. Average residential occupancy for the quarter was 96.88%, and 39.62% of expiring leases renewed with an average rent increase on renewals of 5.66%. The Maren is a joint venture between the Company and MRP and SIC, in which FRP Holdings, Inc. is the majority partner with 56.3% ownership.

Dock 79’s average residential occupancy for the quarter was 94.75%, and at the end of the quarter, Dock 79’s residential units were 91.48% leased and 95.41% occupied. This quarter, 65.31% of expiring leases renewed with an average rent increase on renewals of 3.20%. Dock 79 is a joint venture between the Company and MRP and SIC, in which FRP Holdings, Inc. is the majority partner with 52.8% ownership.

During the third quarter of 2022, we achieved stabilization at our Riverside Joint Venture in Greenville, South Carolina. At quarter end, the building was 97.0% leased with 95.5% occupancy. Average occupancy for the quarter was 95.42% with 61.76% of expiring leases renewing with an average rental increase of 11.96%. Riverside is a joint venture with Woodfield Development and the Company owns 40% of the venture.

### Six Months Operational Highlights

24.5% increase in pro-rata NOI ($14.60 million vs $11.73 million)

Mining Royalties increased 23.3%; 10.1% increase in royalties per ton

42.2% increase in Asset Management revenue; 39.2% increase in Asset Management NOI

Comparative Results of Operations for the Six months ended June 30, 2023 and 2022

### Consolidated Results

*(dollars in thousands)*

| Revenues: | Six months ended June 30, 2023 | 2022 | Change% |  |
| --- | ---: | ---: | ---: | ---: |
| Lease Revenue | $14,264 | $13,027 | $1,237 | 9.5% |
| Mining lands lease revenue | 6,546 | 5,308 | 1,238 | 23.3% |
| Total Revenues | 20,810 | 18,335 | 2,475 | 13.5% |
| **Cost of operations:** |  |  |  |  |
| Depreciation/Depletion/Amortization | 5,599 | 5,766 | (167) | -2.9% |
| Operating Expenses | 3,562 | 3,349 | 213 | 6.4% |
| Property Taxes | 1,826 | 2,069 | (243) | -11.7% |
| Management company indirect | 1,879 | 1,579 | 300 | 19.0% |
| Corporate Expense | 2,323 | 2,142 | 181 | 8.5% |
| Total cost of operations | 15,189 | 14,905 | 284 | 1.9% |
| **Total operating profit** | 5,621 | 3,430 | 2,191 | 63.9% |
| Net investment income | 5,507 | 2,018 | 3,489 | 172.9% |
| Interest Expense | (2,135) | (1,477) | (658) | 44.5% |
| Equity in loss of joint ventures | (7,672) | (3,370) | (4,302) | 127.7% |
| Gain on sale of real estate | 8 | 733 | (725) | -98.9% |
| Income before income taxes | 1,329 | 1,334 | (5) | -0.4% |
| Provision for income taxes | 431 | 348 | 83 | 23.9% |
| Net income | 898 | 986 | (88) | -8.9% |
| Loss attributable to noncontrolling interest | (265) | (343) | 78 | -22.7% |
| **Net income attributable to the Company** | $1,163 | $1,329 | $(166) | -12.5% |

Net income for the first six months of 2023 was $1,163,000 or $.12 per share versus $1,329,000 or $.14 per share in the same period last year. The first six months of 2023 was impacted by the following items:

Operating profit increased $2,191,000 compared to the same period last year due to improved revenues and profits in all four segments.

Management company indirect increased $300,000 due to merit increases and new hires along with recruiting costs.

Interest expense increased $658,000 compared to the same period last year due to less capitalized interest. We capitalized less interest because of fewer in-house and joint venture projects under development compared to last year.

Interest income increased $3,489,000 due primarily to an increase in interest earned on cash equivalents and increased income from our lending ventures.

Equity in loss of Joint Ventures increased $4,302,000 primarily due to losses during lease up at The Verge and .408 Jackson.

The first six months of 2022 included a $733,000 gain on sales of excess property at Brooksville.

### Asset Management Segment Results

|  | Six months ended June 30 |  |  |
| --- | ---: | ---: | ---: |
| (dollars in thousands) | 2023% | 2022% | Change% |
| Lease revenue | $2,490 100.0% | 1,751 100.0% | 739 42.2% |
| Depreciation, depletion and amortization | 637 25.6% | 464 26.5% | 173 37.3% |
| Operating expenses | 317 12.7% | 279 15.9% | 38 13.6% |
| Property taxes | 123 4.9% | 105 6.0% | 18 17.1% |
| Management company indirect | 255 10.3% | 192 11.0% | 63 32.8% |
| Corporate expense | 453 18.2% | 369 21.1% | 84 22.8% |
| Cost of operations | 1,785 71.7% | 1,409 80.5% | 376 26.7% |
| Operating profit | $705 28.3% | 342 19.5% | 363 106.1% |

29

Total revenues in this segment were $2,490,000, up $739,000 or 42.2%, over the same period last year. Operating profit was $705,000, up $363,000 from $342,000 in the same period last year. Revenues and operating profit are up partly because of rent growth at Cranberry Run, but primarily because of full occupancy at 1865 and 1841 62nd Street and the addition of 1941 62nd Street to this segment in March 2023. Net operating income in this segment was $1,630,000, up $459,000 or 39.2% compared to the same period last year.

### Mining Royalty Lands Segment Results

|  | Six months ended June 30 |  |  |
| --- | ---: | ---: | ---: |
| (dollars in thousands) | 2023% | 2022% | Change% |
| Mining lands lease revenue | $6,546 100.0% | 5,308 100.0% | 1,238 23.3% |
| Depreciation, depletion and amortization | 334 5.1% | 244 4.6% | 90 36.9% |
| Operating expenses | 33 0.5% | 32 0.6% | 1 3.1% |
| Property taxes | 143 2.2% | 134 2.5% | 9 6.7% |
| Management company indirect | 253 3.8% | 217 4.1% | 36 16.6% |
| Corporate expense | 261 4.0% | 242 4.6% | 19 7.9% |
| Cost of operations | 1,024 15.6% | 869 16.4% | 155 17.8% |
| Operating profit | $5,522 84.4% | 4,439 83.6% | 1,083 24.4% |

Total revenues in this segment were $6,546,000 versus $5,308,000 in the same period last year. Total operating profit in this segment was $5,522,000, an increase of $1,083,000 versus $4,439,000 in the same period last year. This increase is the result of the additional royalties from the acquisition in Astatula, Florida, which we completed at the beginning of the second quarter 2022, as well as increases in revenue at nearly every active location. Net Operating Income in this segment was $6,273,000, up $1,236,000 or 25% compared to the same period last year.

### Development Segment Results

*(dollars in thousands)*

|  | Six months ended June 30 2023 | 2022 | Change |
| --- | ---: | ---: | ---: |
| Lease revenue | $953 | 791 | 162 |
| Depreciation, depletion and amortization | 96 | 92 | 4 |
| Operating expenses | 167 | 291 | (124) |
| Property taxes | 466 | 711 | (245) |
| Management company indirect | 1,157 | 996 | 161 |
| Corporate expense | 1,389 | 1,337 | 52 |
| Cost of operations | 3,275 | 3,427 | (152) |
| Operating loss | $(2,322) | (2,636) | 314 |

### Stabilized Joint Venture Segment Results

|  | Six months ended June 30 |  |  |
| --- | ---: | ---: | ---: |
| (dollars in thousands) | 2023% | 2022% | Change% |
| Lease revenue | $10,821 100.0% | 10,485 100.0% | 336 3.2% |
| Depreciation, depletion and amortization | 4,532 41.9% | 4,966 47.4% | (434) -8.7% |
| Operating expenses | 3,045 28.1% | 2,747 26.2% | 298 10.8% |
| Property taxes | 1,094 10.1% | 1,119 10.7% | (25) -2.2% |

30

|  |  |  |  |  |  |  |
| --- | ---: | ---: | ---: | ---: | ---: | ---: |
| Management company indirect | 214 | 2.0% | 174 | 1.6% | 40 | 23.0% |
| Corporate expense | 220 | 2.0% | 194 | 1.8% | 26 | 13.4% |
| Cost of operations | 9,105 | 84.1% | 9,200 | 87.7% | (95) | -1.0% |
| Operating profit | $1,716 | 15.9% | 1,285 | 12.3% | 431 | 33.5% |

In the fourth quarter of 2022, as part of our new partnership with Steuart Investment Company and MidAtlantic Realty Partners, we sold a 20% ownership interest in a tenancy-in-common (TIC) of Dock 79 and The Maren for $65.3 million, $44.5 million attributable to the Company, placing a combined valuation of the two buildings at $326.5 million.

Total revenues in this segment were $10,821,000, an increase of $336,000 versus $10,485,000 in the same period last year. The Maren’s revenue was $5,231,000 an increase of 7.5% and Dock 79 revenues decreased $29,000 to $5,591,000 or .5%. Total operating profit in this segment was $1,716,000, an increase of $431,000 versus $1,285,000 in the same period last year. Pro-rata net operating income for this segment was $4,174,000, down $364,000 or 8.0% compared to the same period last year because of the sale of our 20% TIC interest in both properties to SIC, mitigated by $445,000 in pro-rata NOI from our share of the Riverside joint venture.

At the end of June, The Maren was 92.42% leased and 94.32% occupied. Average residential occupancy for the first six months of 2023 was 96.37%, and 43.53% of expiring leases renewed with an average rent increase on renewals of 6.64%. The Maren is a joint venture between the Company and MRP and SIC, in which FRP Holdings, Inc. is the majority partner with 56.3% ownership.

Dock 79’s average residential occupancy for the first six months of 2023 was 93.77%, and at the end of the quarter, Dock 79’s residential units were 91.48% leased and 95.41% occupied. Through the first six months of the year, 65.22% of expiring leases renewed with an average rent increase on renewals of 3.74%. Dock 79 is a joint venture between the Company and MRP and SIC, in which FRP Holdings, Inc. is the majority partner with 52.8% ownership.

During the third quarter of 2022, we achieved stabilization at our Riverside Joint Venture in Greenville, South Carolina. At end of June, the building was 97.0% leased with 95.5% occupancy. Average occupancy for the first six months of 2023 was 94.92% with 58.73% of expiring leases renewing with an average rental increase of 11.76%. Riverside is a joint venture with Woodfield Development and the Company owns 40% of the venture.

**Liquidity and Capital Resources.** The growth of the Company’s businesses requires significant cash needs to acquire and develop land or operating buildings and to construct new buildings and tenant improvements. As of June 30, 2023, we had $166,537,000 of cash and cash equivalents. As of June 30, 2023, we had no debt borrowed under our $20 million Wells Fargo revolver, $432,000 outstanding under letters of credit and $19,568,000 available to borrow under the revolver. On March 19, 2021, the Company refinanced Dock 79 and The Maren projects pursuant to separate Loan Agreements and Deed of Trust Notes entered into with Teachers Insurance and Annuity Association of America, LLC. Dock 79 and The Maren borrowed principal sums of $92,070,000 and $88,000,000 respectively, in connection with the refinancing.

**Cash Flows** - The following table summarizes our cash flows from operating, investing and financing activities for each of the periods presented (in thousands of dollars):

| Total cash provided by (used for): | Six months Ended June 30, 2023 | 2022 |
| --- | ---: | ---: |
| Operating activities | $12,853 | 8,807 |
| Investing activities | (21,931) | (9,950) |
| Financing activities | (1,882) | (1,116) |
| Increase (decrease) in cash and cash equivalents | $(10,960) | (2,259) |

31

|  |  |  |
| --- | ---: | ---: |
| Outstanding debt at the beginning of the period | 178,557 | 178,409 |
| Outstanding debt at the end of the period | 178,631 | 178,483 |

**Operating Activities -** Net cash provided by operating activities for the six months ended June 30, 2023 was $12,853,000 versus $8,807,000 in the same period last year. The increase was primarily due to increases in operating profit and interest income while the increased joint venture losses are reflected in investing activities.

At June 30, 2023, the Company was invested in U.S. Treasury notes valued at $151,861,000 maturing in 2023. The unrealized loss on these investments of $1,108,000 was recorded as part of comprehensive income and was based on the estimated market value by Wells Fargo Bank, N.A. (Level 1).

**Investing Activities** - Net cash used in investing activities for the six months ended June 30, 2023 was $21,931,000 versus $9,950,000 in the same period last year. The $12 million increase was primarily due to a $22.4 million increase in investments in joint ventures partially offset by reduced asset management investments as we were building a warehouse in the same period last year. The increased investment in our joint ventures included $8 million for FRP’s share of a $13 million paydown of the loan at Bryant Street, $11 million for our Aberdeen Station lending venture, $3.4 million for the impact of higher interest rates at Verge, and $1.9 million for predevelopment activities for our next potential apartment projects in Washington, D.C. and in Greenville.

**Financing Activities –** Net cash required by financing activities was $1,882,000 versus $1,116,000 in the same period last year primarily due to the exercise of employee stock options and the repurchase of company stock in the six months ended June 30, 2023.

**Credit Facilities -** On February 6, 2019, the Company entered into a First Amendment to the 2015 Credit Agreement (the "Credit Agreement") with Wells Fargo Bank, N.A. (Wells Fargo”). The Credit Agreement modifies the Company’s prior Credit Agreement with Wells Fargo, dated January 30, 2015. The Credit Agreement establishes a five-year revolving credit facility with a maximum facility amount of $20 million. The interest rate under the Credit Agreement will be a maximum of 1.50% over Daily 1-Month LIBOR, which may be reduced quarterly to 1.25% or 1.0% over Daily 1-Month LIBOR if the Company meets a specified ratio of consolidated total debt to consolidated total capital. A commitment fee of 0.25% per annum is payable quarterly on the unused portion of the commitment but the amount may be reduced to 0.20% or 0.15% if the Company meets a specified ratio of consolidated total debt to consolidated total capital. The credit agreement contains certain conditions and financial covenants, including a minimum tangible net worth and dividend restriction. As of June 30, 2023, these covenants would have limited our ability to pay dividends to a maximum of $249 million combined.

On March 19, 2021, the Company refinanced Dock 79 and The Maren projects pursuant to separate Loan Agreements and Deed of Trust Notes entered into with Teachers Insurance and Annuity Association of America, LLC. Dock 79 and The Maren borrowed principal sums of $92,070,000 and $88,000,000 respectively, in connection with the refinancing. The loans are separately secured by the Dock 79 and The Maren real property and improvements, bear a fixed interest rate of 3.03% per annum, and require monthly payments of interest only with the principal in full due April 1, 2033. Either loan may be prepaid subsequent to April 1, 2024, subject to yield maintenance premiums. Either loan may be transferred to a qualified buyer as part of a one-time sale subject to a 60% loan to value, minimum of 7.5% debt yield and a 0.75% transfer fee.

**Cash Requirements –** The Company currently expects its capital expenditures for the remainder of 2023 to include approximately $38.2 million for investment into our existing real estate holdings and partnerships as well as new real estate assets and joint ventures, with such capital being funded from cash and investments on hand, cash generated from operations and property sales, or borrowings under our credit facilities.

**Summary and Outlook**. Royalty revenue for this quarter was up 13% over the same period last year, and royalty revenue for the first six months is up 23%. The last three quarters have been the three highest revenue quarters in the segment’s history. Mining royalty revenue for the last twelve months is $11.92 million, a 21% increase over the same period last year, and the segment’s highest revenue total over any twelve-month period.

In the Stabilized Joint Venture segment, pro-rata NOI is down for the segment for both the quarter and the first six months, which is to be expected after selling 20% of our share of Dock 79 and The Maren to SIC. NOI for the two projects as a whole increased 2.56% ($6,841,000 vs $6,670,000) for the first six months compared to the same period last year. After taking a dip in the first quarter, average occupancy at Dock 79 is back where we expect it to be (94.75%). The effort to get it back to where it should be is largely responsible for the flattening in rental increases (3.20% in the second quarter vs 4.52% in the first quarter) as well as the 3% loss on trade-outs. The Maren maintained a strong average occupancy this quarter (96.88%), though renewal rates (39.62%), increases (5.66%), and trade outs (6.0%) were slightly below what we’ve achieved in the past. Riverside in Greenville (which was added to this segment in the third quarter of last year) has maintained strong occupancy (95.42% this quarter) post stabilization. The renewal rate for the first six months (58.73%) is good, but the average increase on renewals of 11.76% is exceptional. These metrics continue to reinforce our faith in this market as well as the quality of the asset. Our pro-rata share of NOI at Riverside this quarter was $223,000 and $445,000 for the first six months.

In our Asset Management Segment, occupancy and our overall square-footage have increased since the second quarter of 2022, leading to a 39.2% increase in NOI for the first six months compared to the same period last year. We are 95.6% leased and occupied on 548,785 square feet compared to 84.3% occupied on 447,035 square feet at the end of the second quarter of 2022.

Inflation and the upward pressure on interest rates, while potentially softening, remain an obstacle for any developer. We have benefitted from the effect of these forces on rents and royalties, but the compression of future margins from hard costs and financing is a real problem for development. In (relatively) less capital-intensive projects like warehouse construction, this situation is potentially beneficial, because we can use our cash on hand to finance construction on an all equity basis and develop in-demand industrial product while the interest rates on construction loans keep most development on the sidelines. But in the instance of multi-family development, where a construction loan is an absolute necessity, we will in all likelihood sit tight for the time being. In regards to the first phase of our partnership with SIC and MRP, we will continue to pursue entitlements and all work required to prepare the project for development, but will delay vertical construction until the lending markets soften. As we mentioned last quarter, we have a long-term vision for the company, and we’re not going to rush into anything and take on additional development risk if market conditions prevent us from making a reasonable return. We still have the utmost confidence in our assets and the markets in which they thrive. To that end, this past quarter we repurchased 18,340 shares at average cost of $54.52 per share.

### Non-GAAP Financial Measure.

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.

| Pro-rata Net Operating Income Reconciliation Six months ended 06/30/23 (in thousands) | Asset Management Segment | Development Segment | Stabilized Joint Venture Segment | Mining Royalties Segment | Unallocated Corporate Expenses | FRP Holdings Totals |
| --- | ---: | ---: | ---: | ---: | ---: | ---: |
| Net Income (loss) | $513 | (5,257) | (509) | 4,018 | 2,133 | 898 |
| Income Tax Allocation | 190 | (1,950) | (90) | 1,490 | 791 | 431 |
| Income (loss) before income taxes | 703 | (7,207) | (599) | 5,508 | 2,924 | 1,329 |
| Less: |  |  |  |  |  |  |
| Unrealized rents | 420 | — | — | 97 | — | 517 |
| Gain on sale of real estate | — | — | — | 10 | — | 10 |
| Interest income | — | 2,561 | — | — | 2,946 | 5,507 |
| Plus: |  |  |  |  |  |  |
| Unrealized rents | — | — | 100 | — | — | 100 |
| Loss on sale of real estate | 2 | — | — | — | — | 2 |
| Equity in loss of Joint Ventures | — | 7,446 | 202 | 24 | — | 7,672 |
| Professional fees - other | — | — | 59 | — | — | 59 |
| Interest Expense | — | — | 2,113 | — | 22 | 2,135 |
| Depreciation/Amortization | 637 | 96 | 4,532 | 334 | — | 5,599 |
| Management Co. Indirect | 255 | 1,157 | 214 | 253 | — | 1,879 |
| Allocated Corporate Expenses | 453 | 1,389 | 220 | 261 | — | 2,323 |
| Net Operating Income (loss) | 1,630 | 320 | 6,841 | 6,273 | — | 15,064 |
| NOI of noncontrolling interest | — | — | (3,112) | — | — | (3,112) |
| Pro-rata NOI from unconsolidated joint ventures | — | 2,205 | 445 | — | — | 2,650 |
| Pro-rata net operating income | $1,630 | 2,525 | 4,174 | 6,273 | — | 14,602 |

| Pro-rata Net Operating Income Reconciliation Six months ended 06/30/22 (in thousands) | Asset Management Segment | Development Segment | Stabilized Joint Venture Segment | Mining Royalties Segment | Unallocated Corporate Expenses | FRP Holdings Totals |
| --- | ---: | ---: | ---: | ---: | ---: | ---: |
| Net Income (loss) | $249 | (3,351) | (92) | 3,758 | 422 | 986 |
| Income Tax Allocation | 93 | (1,242) | 92 | 1,393 | 12 | 348 |
| Income (loss) before income taxes | 342 | (4,593) | — | 5,151 | 434 | 1,334 |
| Less: |  |  |  |  |  |  |
| Unrealized rents | 196 | — | — | 105 | — | 301 |
| Gain on sale of real estate | — | — | — | 733 | — | 733 |
| Equity in gain of Joint Ventures | — | — | 171 | — | — | 171 |
| Interest income | — | 1,563 | — | — | 455 | 2,018 |
| Plus: |  |  |  |  |  |  |
| Unrealized rents | — | — | 51 | — | — | 51 |
| Equity in loss of Joint Ventures | — | 3,520 | — | 21 | — | 3,541 |
| Interest Expense | — | — | 1,456 | — | 21 | 1,477 |
| Depreciation/Amortization | 464 | 92 | 4,966 | 244 | — | 5,766 |
| Management Co. Indirect | 192 | 996 | 174 | 217 | — | 1,579 |
| Allocated Corporate Expenses | 369 | 1,337 | 194 | 242 | — | 2,142 |
| Net Operating Income (loss) | 1,171 | (211) | 6,670 | 5,037 | — | 12,667 |
| NOI of noncontrolling interest | — | — | (2,132) | — | — | (2,132) |
| Pro-rata NOI from unconsolidated joint ventures | — | 1,192 | — | — | — | 1,192 |
| Pro-rata net operating income | $1,171 | 981 | 4,538 | 5,037 | — | 11,727 |

34

## Market risk

As filed, 719 characters.

**Interest Rate Risk** - We are exposed to the impact of interest rate changes through our variable-rate borrowings under our Credit Agreement with Wells Fargo.

Under the Wells Fargo Credit Agreement, the applicable margin for borrowings at June 30, 2023 was Daily 1-Month LIBOR plus 1.0%. The applicable margin for such borrowings will be increased in the event that our debt to capitalization ratio as calculated under the Wells Fargo Credit Agreement Facility exceeds a target level.

The Company did not have any variable rate debt at June 30, 2023, so a sensitivity analysis was not performed to determine the impact of hypothetical changes in interest rates on the Company’s results of operations and cash flows.

## Controls and procedures

As filed, 1,932 characters.

### CONCLUSION REGARDING THE EFFECTIVENESS OF DISCLOSURE CONTROLS AND PROCEDURES

The Company maintains disclosure controls and procedures that are designed to ensure that information required to be disclosed in the Company’s reports under the Securities Exchange Act of 1934, as amended (the “Exchange Act”), is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms, and that such information is accumulated and communicated to management, including the Company’s Chief Executive Officer (“CEO”) and Chief Financial Officer (“CFO”), as appropriate, to allow timely decisions regarding required disclosure.

The Company also maintains a system of internal accounting controls over financial reporting that are designed to provide reasonable assurance to the Company’s management and Board of Directors regarding the preparation and fair presentation of published financial statements.

All control systems, no matter how well designed, have inherent limitations. Therefore, even those systems determined to be effective can provide only reasonable assurance of achieving the desired control objectives.

As of June 30, 2023, the Company, under the supervision and with the participation of the Company's management, including the CEO, CFO and CAO, carried out an evaluation of the effectiveness of the design and operation of the Company's disclosure controls and procedures. Based on this evaluation, the Company’s CEO, CFO and CAO concluded that the Company's disclosure controls and procedures are effective in alerting them in a timely manner to material information required to be included in periodic SEC filings.

There have been no changes in the Company’s internal controls over financial reporting during our most recent fiscal quarter that have materially affected, or are reasonably likely to materially affect, the Company’s internal control over financial reporting.

## Risk factors

As filed, 602 characters.

In addition to the other information set forth in this report, you should carefully consider the factors discussed in Part I, “Item 1A. Risk Factors” in our Annual Report on Form 10-K for the year ended December 31, 2022, which could materially affect our business, financial condition or future results. The risks described in our Annual Report on Form 10-K are not the only risks facing our Company. Additional risks and uncertainties not currently known to us or that we currently deem to be immaterial also may materially adversely affect our business, financial condition and/or operating results.

Filed Aug 10, 2023.
Source: SEC EDGAR, the filing index for accession 0000844059-23-000032. Last ingested by Listed: Nov 4, 2026, 18:49 ET. No prices; not investment advice.