FRP HOLDINGS, INC. - Quarter Report: 2023 September (Form 10-Q)

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

_________________

FORM 10-Q

_________________

(Mark One)

[X ]

QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended September 30, 2023

[ ]

TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from_________ to _________

Commission File Number: 001-36769

_____________________

FRP HOLDINGS, INC.

(Exact name of registrant as specified in its charter)

_____________________

Florida		47-2449198
(State or other jurisdiction of incorporation or organization)		(I.R.S. Employer Identification No.)

200 W. Forsyth St., 7th Floor, Jacksonville, FL		32202
(Address of principal executive offices)		(Zip Code)

904-396-5733

(Registrant’s telephone number, including area code)

Title of each class		Trading Symbol		Name of each exchange on which registered
Common Stock, $.10 par value		FRPH		NASDAQ

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes [x] No [_]

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes [x] No [_]

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “non-accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer [_]		Accelerated filer [_]
Non-accelerated filer [x]		Smaller reporting company [x]
Emerging growth company [_]

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. [_]

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes [_] No [x]

Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date.

	Class				Outstanding at November 9, 2023
	Common Stock, $.10 par value per share				9,477,104 shares

FRP HOLDINGS, INC.

FORM 10-Q

QUARTER ENDED SEPTEMBER 30, 2023

CONTENTS

Page No.

Preliminary Note Regarding Forward-Looking Statements		3

	Part I. Financial Information

Item 1.	Financial Statements
	Consolidated Balance Sheets	4
	Consolidated Statements of Income	5
	Consolidated Statements of Comprehensive Income	6
	Consolidated Statements of Cash Flows	7
	Consolidated Statements of Shareholders’ Equity	8
	Condensed Notes to Consolidated Financial Statements	9

Item 2.	Management's Discussion and Analysis of Financial Condition and Results of Operations	19

Item 3.	Quantitative and Qualitative Disclosures about Market Risks	35

Item 4.	Controls and Procedures	35

	Part II. Other Information

Item 1A.	Risk Factors	36

Item 2.	Purchase of Equity Securities by the Issuer	36

Item 6.	Exhibits	36

Signatures		37

Exhibit 31	Certifications pursuant to Section 302 of the Sarbanes-Oxley Act of 2002	39

Exhibit 32	Certifications pursuant to Section 906 of the Sarbanes-Oxley Act of 2002	42

Preliminary Note Regarding Forward-Looking Statements.

This Quarterly Report on Form 10-Q, together with other statements and information publicly disseminated by us, contains “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. The words or phrases “anticipate,” “estimate,” “believe,” “budget,” “continue,” “could,” “intend,” “may,” “plan,” “potential,” “predict,” “seek,” “should,” “will,” “would,” “expect,” “objective,” “projection,” “forecast,” “goal,” “guidance,” “outlook,” “effort,” “target” and similar expressions identify forward-looking statements. Such statements reflect management’s current views with respect to financial results related to future events and are based on assumptions and expectations that may not be realized and are inherently subject to risks and uncertainties, many of which cannot be predicted with accuracy and some of which might not even be anticipated. Future events and actual results, financial or otherwise, may differ, perhaps materially, from the results discussed in the forward-looking statements. Risk factors discussed in Item 1A of this Form 10-Q and other factors that might cause differences, some of which could be material, include, but are not limited to: the possibility that we may be unable to find appropriate investment opportunities; 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. and Greenville, South Carolina; 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; cyber security 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. Additional information regarding these and other risk factors may be found in the Company’s other filings made from time to time with the Securities and Exchange Commission.

PART I. FINANCIAL INFORMATION, ITEM 1. FINANCIAL STATEMENTS

FRP HOLDINGS, INC. AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

(Unaudited) (In thousands, except share data)

	September 30, 2023			December 31, 2022
Assets:
Real estate investments at cost:
Land	$	141,578			141,579
Buildings and improvements		282,379			270,579
Projects under construction		4,689			12,208
Total investments in properties		428,646			424,366
Less accumulated depreciation and depletion		65,444			57,208
Net investments in properties		363,202			367,158

Real estate held for investment, at cost		10,510			10,182
Investments in joint ventures		154,025			140,525
Net real estate investments		527,737			517,865

Cash and cash equivalents		166,028			177,497
Cash held in escrow		646			797
Accounts receivable, net		1,683			1,166
Unrealized rents		1,452			856
Deferred costs		3,028			2,343
Other assets		583			560
Total assets	$	701,157			701,084

Liabilities:
Secured notes payable	$	178,668			178,557
Accounts payable and accrued liabilities		3,689			5,971
Other liabilities		1,886			1,886
Federal and state income taxes payable		704			18
Deferred revenue		1,029			259
Deferred income taxes		67,903			67,960
Deferred compensation		1,395			1,354
Tenant security deposits		889			868
Total liabilities		256,163			256,873

Commitments and contingencies		—			—

Equity:
Common stock, $.10 par value 25,000,000 shares authorized, 9,477,104 and 9,459,686 shares issued and outstanding, respectively		948			946
Capital in excess of par value		67,168			65,158
Retained earnings		343,002			342,317
Accumulated other comprehensive loss, net		(328	)		(1,276	)
Total shareholders’ equity		410,790			407,145
Noncontrolling interest		34,204			37,066
Total equity		444,994			444,211
Total liabilities and equity	$	701,157			701,084

See accompanying notes.

FRP HOLDINGS, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF INCOME

(In thousands except per share amounts)

(Unaudited)


	THREE MONTHS ENDED						NINE MONTHS ENDED
	SEPTEMBER 30,						SEPTEMBER 30,
	2023			2022			2023			2022
Revenues:
Lease revenue	$	7,509			6,823			21,773			19,850
Mining lands lease revenue		3,082			2,471			9,628			7,779
Total Revenues		10,591			9,294			31,401			27,629

Cost of operations:
Depreciation, depletion and amortization		2,816			2,744			8,415			8,510
Operating expenses		2,012			1,967			5,574			5,316
Property taxes		919			1,034			2,745			3,103
Management company indirect		1,059			966			2,938			2,545
Corporate expenses (Note 4 Related Party)		889			734			3,212			2,876
Total cost of operations		7,695			7,445			22,884			22,350

Total operating profit		2,896			1,849			8,517			5,279

Net investment income		2,700			1,188			8,207			3,206
Interest expense		(1,116	)		(738	)		(3,251	)		(2,215	)
Equity in loss of joint ventures		(2,913	)		(1,878	)		(10,585	)		(5,248	)
Gain (loss) on sale of real estate		(1	)		141			7			874

Income before income taxes		1,566			562			2,895			1,896
Provision for income taxes		467			178			898			526

Net income		1,099			384			1,997			1,370
Loss attributable to noncontrolling interest		(160	)		(96	)		(425	)		(439	)
Net income attributable to the Company	$	1,259			480			2,422			1,809

Earnings per common share:
Net income attributable to the Company-
Basic	$	0.13			0.05			0.26			0.19
Diluted	$	0.13			0.05			0.26			0.19

Number of shares (in thousands) used in computing:
-basic earnings per common share		9,423			9,397			9,423			9,382
-diluted earnings per common share		9,460			9,433			9,463			9,423

See accompanying notes.

FRP HOLDINGS, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

(In thousands except per share amounts)

(Unaudited)


	THREE MONTHS ENDED						NINE MONTHS ENDED
	SEPTEMBER 30,						SEPTEMBER 30,
	2023			2022			2023			2022
Net income	$	1,099			384			1,997			1,370
Other comprehensive income (loss) net of tax:
Unrealized gain/(loss) on investments, net of income tax effect of $145, $(120), $360 and $(568)		392			(324	)		972			(1,533	)
Minimum pension liability, net of income tax effect of $(3), $0, $(8) and $0		(8	)		—			(24	)		—
Comprehensive income (loss)	$	1,483			60			2,945			(163	)

Less comp. income (loss) attributable to Noncontrolling interest	$	(160	)		(96	)		(425	)		(439	)

Comprehensive income attributable to the Company	$	1,643			156			3,370			276

See accompanying notes

FRP HOLDINGS, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS

NINE MONTHS ENDED SEPTEMBER 30, 2023 AND 2022

(In thousands) (Unaudited)

	2023			2022
Cash flows from operating activities:
Net income	$	1,997			1,370
Adjustments to reconcile net income to net cash provided by continuing operating activities:
Depreciation, depletion and amortization		8,557			8,696
Deferred income taxes		(57	)		133
Equity in loss of joint ventures		10,585			5,248
Gain on sale of equipment and property		(14	)		(901	)
Stock-based compensation		1,472			1,302
Net changes in operating assets and liabilities:
Accounts receivable		(517	)		(737	)
Deferred costs and other assets		(538	)		(2,160	)
Accounts payable and accrued liabilities		(1,512	)		(1,440	)
Income taxes payable and receivable		686			1,559
Other long-term liabilities		62			105
Net cash provided by operating activities		20,721			13,175

Cash flows from investing activities:
Investments in properties		(4,634	)		(26,137	)
Investments in joint ventures		(31,648	)		(20,838	)
Return of capital from investments in joint ventures		7,559			13,327
Proceeds from sales of investments available for sale		—			4,317
Proceeds from the sale of assets		16			952
Cash held in escrow		151			170
Net cash used in investing activities		(28,556	)		(28,209	)

Cash flows from financing activities:
Distribution to noncontrolling interest		(2,437	)		(1,937	)
Repurchase of company stock		(2,000	)		—
Exercise of employee stock options		803			233
Net cash used in financing activities		(3,634	)		(1,704	)

Net decrease in cash and cash equivalents		(11,469	)		(16,738	)
Cash and cash equivalents at beginning of year		177,497			161,521
Cash and cash equivalents at end of the period	$	166,028			144,783

Supplemental disclosure of cash flow information:
Cash paid (received) during the period for:
Interest		3,248			2,212
Income taxes		622			(1,734	)

See accompanying notes.

FRP HOLDINGS, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF SHAREHOLDERS’ EQUITY

THREE AND NINE MONTHS ENDED SEPTEMBER 30, 2023 AND 2022

(In thousands, except share amounts) (Unaudited)


													Accumulated
													Other Comp-			Total
							Capital in						rehensive			Share			Non-
	Common Stock						Excess of			Retained			Income			holders’			Controlling			Total
	Shares			Amount			Par Value			Earnings			(loss), net			Equity			Interest			Equity
Balance at July 1, 2023		9,495,673		$	950		$	67,028		$	342,610		$	(712	)	$	409,876		$	35,116		$	444,992
Stock option grant compensation		—			—			16			—			—			16			—			16
Restricted stock compensation		—			—			255			—			—			255			—			255
Shares purchased and cancelled		(18,569	)		(2	)		(131	)		(867	)		—			(1,000	)		—			(1,000	)
Net income		—			—			—			1,259			—			1,259			(160	)		1,099
Distributions to partners		—			—			—			—			—			—			(752	)		(752	)
Minimum pension liability, net		—			—			—			—			(8	)		(8	)		—			(8	)
Unrealized gain on investment, net		—			—			—			—			392			392			—			392
Balance at September 30, 2023		9,477,104		$	948		$	67,168		$	343,002		$	(328	)	$	410,790		$	34,204		$	444,994

Balance at January 1, 2023		9,459,686		$	946		$	65,158		$	342,317		$	(1,276	)	$	407,145		$	37,066		$	444,211
Exercise of stock options		17,735			2			801			—			—			803			—			803
Stock option grant compensation		—			—			49			—			—			49			—			49
Restricted stock compensation		—			—			773			—			—			773			—			773
Shares granted to Employees		928			—			50			—			—			50			—			50
Restricted stock award		25,284			2			(2	)		—			—			—			—			—
Shares purchased and cancelled		(36,909	)		(3	)		(260	)		(1,737	)		—			(2,000	)		—			(2,000	)
Shares granted to Directors		10,380			1			599			—			—			600			—			600
Net income		—			—			—			2,422			—			2,422			(425	)		1,997
Distributions to partners		—			—			—			—			—			—			(2,437	)		(2,437	)
Minimum pension liability, net		—			—			—			—			(24	)		(24	)		—			(24	)
Unrealized gain on investment, net		—			—			—			—			972			972			—			972
Balance at September 30, 2023		9,477,104		$	948		$	67,168		$	343,002		$	(328	)	$	410,790		$	34,204		$	444,994

Balance at July 1, 2022		9,455,096		$	945		$	58,872		$	339,081		$	(1,096	)	$	397,802		$	27,135		$	424,937
Stock option grant compensation		—			—			18			—			—			18			—			18
Restricted stock compensation		—			—			258			—			—			258			—			258
Net income		—			—			—			480			—			480			(96	)		384
Distributions to partners		—			—			—			—			—			—			(588	)		(588	)
Unrealized loss on investment, net		—			—			—			—			(324	)		(324	)		—			(324	)
Balance at September 30, 2022		9,455,096		$	945		$	59,148		$	339,561		$	(1,420	)	$	398,234		$	26,451		$	424,685

Balance at January 1, 2022		9,411,028		$	941		$	57,617		$	337,752		$	113		$	396,423		$	28,827		$	425,250
Stock option grant compensation		—			—			52			—			—			52			—			52
Restricted stock compensation		—			—			550			—			—			550			—			550
Shares granted to Employees		865			—			50			—			—			50			—			50
Restricted stock award		21,464			2			(2	)		—			—			—			—			—
Shares granted to Directors		11,232			1			649			—			—			650			—			650
Forfeiture of restricted stock award		(1,363	)		—			—			—			—			—			—			—
Exercise of stock options		11,870			1			232			—			—			233			—			233
Net income		—			—			—			1,809			—			1,809			(439	)		1,370
Distributions to partners		—			—			—			—			—			—			(1,937	)		(1,937	)
Unrealized loss on investment, net		—			—			—			—			(1,533	)		(1,533	)		—			(1,533	)
Balance at September 30, 2022		9,455,096		$	945		$	59,148		$	339,561		$	(1,420	)	$	398,234		$	26,451		$	424,685

See accompanying notes.

FRP HOLDINGS, INC. AND SUBSIDIARIES

CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

SEPTEMBER 30, 2023

(Unaudited)

(1) Description of Business and Basis of Presentation.

FRP Holdings, Inc. is a holding company engaged in the investment and development of real estate , namely (i) leasing and management of industrial and commercial properties owned by The Company, (ii) leasing and management of mining royalty land owned by The Company, (iii) real property acquisition, entitlement, development and construction primarily for apartment, retail, warehouse, and office, (iv) management of mixed use residential/retail properties owned through our joint ventures.

The accompanying consolidated financial statements include the accounts of FRP Holdings, Inc. (the “Company” or “FRP”) inclusive of our operating real estate subsidiaries, FRP Development Corp. (“Development”), Florida Rock Properties, Inc. (“Properties”), Riverfront Investment Partners I, LLC, and Riverfront Investment Partners II, LLC. Our investments accounted for under the equity method of accounting are detailed in Note 11. Our ownership of Riverfront Investment Partners I, LLC and Riverfront Investment Partners II, LLC includes a non-controlling interest representing the ownership of our partner.

These statements have been prepared in accordance with accounting principles generally accepted in the United States of America for interim financial information and the instructions to Form 10-Q and do not include all the information and footnotes required by accounting principles generally accepted in the United States of America for complete financial statements. In the opinion of management, all adjustments (primarily consisting of normal recurring accruals) considered necessary for a fair statement of the results for the interim periods have been included. Operating results for the nine months ended September 30, 2023 are not necessarily indicative of the results that may be expected for the year ending December 31, 2023. The accompanying consolidated financial statements and the information included under the heading "Management's Discussion and Analysis of Financial Condition and Results of Operations" should be read in conjunction with the Company's consolidated financial statements and related notes included in the Company’s Form 10-K for the year ended December 31, 2022.

(2) Recently Issued Accounting Standards.

In June 2016, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update (ASU) 2016 - 13, "Financial Instruments - Credit Losses," which introduced new guidance for an approach based on expected losses to estimate credit losses on certain types of financial instruments. This standard was effective for the Company as of January 1, 2023. There was no impact on our financial statements at adoption.

(3) Business Segments.

The Company is reporting its financial performance based on four reportable segments, Asset Management, Mining Royalty Lands, Development and Stabilized Joint Venture, as described below.

The Asset Management Segment owns, leases and manages in-service commercial properties wholly owned by the Company. Currently this includes nine warehouses in two business parks, an office building partially occupied by the Company, and two ground leases.

Our Mining Royalty Lands segment owns several properties totaling approximately 16,650 acres currently under lease for mining rents or royalties (this does not include the 4,280 acres owned in our Brooksville joint venture with Vulcan Materials). Other than one location in Virginia, all of these properties are located in Florida and Georgia.

Through our Development segment, we own and are continuously assessing 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 of our non-income producing lands into income production through (i) an orderly process of constructing new buildings for us to

own and operate or (ii) a sale to, or joint venture with, third parties. Additionally, our Development segment will form joint ventures on new developments of land not previously owned by the Company.

The Stabilized Joint Venture segment includes joint ventures which own, lease and manage buildings that have met our initial lease-up criteria. Two of our joint ventures in the segment, Riverfront Investment Partners I, LLC (“Dock 79”) and Riverfront Investment Partners II, LLC (“The Maren”) are consolidated. The ownership of Dock 79 and The Maren attributable to our partners are reflected on our consolidated balance sheet as a noncontrolling interest. Such noncontrolling interests are reported on the Consolidated Balance Sheets within equity but separately from shareholders' equity. On the Consolidated Statements of Income, all of the revenues and expenses from Dock 79 and The Maren are reported in net income, including both the amounts attributable to the Company and the noncontrolling interest. The amounts of consolidated net income attributable to the noncontrolling interest is clearly identified on the accompanying Consolidated Statements of Income.

Operating results and certain other financial data for the Company’s business segments are as follows (in thousands):


		Three Months ended						Nine months ended
		September 30,						September 30,
		2023			2022			2023			2022
	Revenues:
Revenues	Asset management	$	1,442			935			3,932			2,686
Revenues	Mining royalty lands		3,082			2,471			9,628			7,779
Revenues	Development		434			412			1,387			1,203
Revenues	Stabilized Joint Venture		5,633			5,476			16,454			15,961
Revenues			10,591			9,294			31,401			27,629

	Operating profit (loss):
	Before corporate expenses:
Operating profit before corporate expenses	Asset management	$	697			392			1,855			1,103
Operating profit before corporate expenses	Mining royalty lands		2,608			2,083			8,391			6,764
Operating profit before corporate expenses	Development		(444	)		(865	)		(1,377	)		(2,164	)
Operating profit before corporate expenses	Stabilized Joint Venture		924			973			2,860			2,452
Operating profit before corporate expenses	Operating profit before corporate expenses		3,785			2,583			11,729			8,155
	Corporate expenses:
Corporate expenses	Allocated to asset management		(177	)		(127	)		(630	)		(496	)
Corporate expenses	Allocated to mining royalty lands		(99	)		(83	)		(360	)		(325	)
Corporate expenses	Allocated to development		(529	)		(457	)		(1,918	)		(1,794	)
Corporate expenses	Allocated to stabilized joint venture		(84	)		(67	)		(304	)		(261	)
Corporate expenses	Total corporate expenses		(889	)		(734	)		(3,212	)		(2,876	)
Operating profit		$	2,896			1,849			8,517			5,279

Interest expense	Interest expense	$	1,116			738			3,251			2,215

	Depreciation, depletion and amortization:
Depreciation, depletion and amortization	Asset management	$	369			219			1,006			683
Depreciation, depletion and amortization	Mining royalty lands		138			172			472			416
Depreciation, depletion and amortization	Development		44			47			140			139
Depreciation, depletion and amortization	Stabilized Joint Venture		2,265			2,306			6,797			7,272
Depreciation, depletion and amortization		$	2,816			2,744			8,415			8,510
	Capital expenditures:
Capital expenditures	Asset management	$	12			202			557			797
Capital expenditures	Mining royalty lands		—			1			—			11,218
Capital expenditures	Development		2,179			8,548			3,640			13,927
Capital expenditures	Stabilized Joint Venture		258			(25	)		437			195
Capital expenditures		$	2,449			8,726			4,634			26,137

Identifiable net assets

			September 30,	December 31,
	Identifiable net assets		2023	2022

Assets	Asset management	$	39,155	26,053
Assets	Mining royalty lands		48,126	48,494
Assets	Development		194,297	188,834
Assets	Stabilized Joint Venture		251,677	257,535
Cash	Cash items		166,674	178,294
Assets	Unallocated corporate assets		1,228	1,874
Assets		$	701,157	701,084

(4) Related Party Transactions.

The Company is a party to an Administrative Services Agreement which resulted from our January 30, 2015 spin-off of Patriot Transportation Holding, Inc. (Patriot). The Administrative Services Agreement sets forth the terms on which Patriot will provide to FRP certain services that were shared prior to the Spin-off, including the services of certain shared executive officers. The boards of the respective companies amended and extended this agreement for one year effective April 1, 2023.

The consolidated statements of income reflect charges and/or allocation from Patriot for these services of $236,000 and $223,000 for the three months ended September 30, 2023 and 2022 and $687,000 and $670,000 for the nine months ended September 30, 2023 and 2022, respectively. These charges are reflected as part of corporate expenses.

To determine these allocations between FRP and Patriot as set forth in the Administrative Services Agreement, we employ an allocation method to allocate said expenses and thus we believe that the allocations to FRP are a reasonable approximation of the costs related to FRP’s operations, but any such related-party transactions cannot be presumed to be carried out on an arm’s-length basis.

(5) Long-Term Debt.

The Company’s Outstanding debt, net of unamortized debt issuance costs, consisted of the following (in thousands):

	September 30,			December 31,
	2023			2022
Fixed rate mortgage loans, 3.03% interest only, matures 4/1/2033	$	180,070			180,070
Unamortized debt issuance costs		(1,402	)		(1,513	)
Credit agreement		—			—
Long term debt	$	178,668			178,557

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”), effective February 6, 2019. 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 through June 30, 2023 was 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 met a specified ratio of consolidated debt to consolidated total capital, as defined which excludes FRP Riverfront. Starting July 1, 2023 the interest rate was .75% to 1.5% over the Federal Funds rate depending on the same ratio. 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, affirmative financial covenants and negative covenants. As of September 30, 2023, there was no debt outstanding on this revolver, $823,000 outstanding under letters of credit and $19,177,000 available for borrowing. The letters of credit were issued to guarantee certain obligations to state agencies related to real estate development. Most of the letters of credit are irrevocable for a period of one year and typically are automatically extended for additional one-year periods. The letter of credit fee is 1% and applicable interest rate would have been 6.1% on September 30, 2023. The credit agreement contains certain conditions and financial covenants, including a minimum tangible net worth and dividend restriction. As of September 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 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.

Debt cost amortization of $37,000 was recorded during the three months ended September 30, 2023 and 2022 and $111,000 was recorded during the nine months ended September 30, 2023 and 2022. During the three months ended September 30, 2023 and 2022 the Company capitalized interest costs of $297,000 and $673,000, respectively. During the nine months ended September 30, 2023 and September 30, 2022 the Company capitalized interest costs of $986,000 and $2,019,000, respectively.

The Company was in compliance with all debt covenants as of September 30, 2023.

(6) Earnings per Share.

The following details the computations of the Basic and diluted earnings per common share (in thousands, except per share amounts):


	Three Months ended				Nine months ended
	September 30,				September 30,
	2023		2022		2023		2022
Weighted average common shares outstanding during the period – shares used for basic earnings per common share		9,423		9,397		9,423		9,382

Common shares issuable under share based payment plans which are potentially dilutive		37		36		40		41

Common shares used for diluted earnings per common share		9,460		9,433		9,463		9,423

Net income attributable to the Company	$	1,259		480		2,422		1,809

Earnings per common share:
-basic	$	0.13		0.05		0.26		0.19
-diluted	$	0.13		0.05		0.26		0.19

For the three and nine months ended September 30, 2023, the Company did not have any outstanding anti-dilutive stock options. For the three and nine months ended September 30, 2022, the Company did not have any outstanding anti-dilutive stock options.

During the first nine months of 2023 the Company repurchased 36,909 shares at an average cost of $54.19.

(7) Stock-Based Compensation Plans.

The Company has two Stock Option Plans (the 2006 Stock Incentive Plan and the 2016 Equity Incentive Option Plan) under which options for shares of common stock were granted to directors, officers and key employees. The 2016 plan permits the grant of stock options, stock appreciation rights, restricted stock awards, restricted stock units, or stock awards. The options awarded under the plans have similar characteristics. All stock options are non-qualified and expire ten years from the date of grant. Stock based compensation awarded to directors, officers and employees are exercisable immediately or become exercisable in cumulative installments of 20% or 25% at the end of each year following the date of grant. When stock options are exercised, the Company issues new shares after receipt of exercise proceeds and taxes due, if any, from the grantee.

The Company utilizes the Black-Scholes valuation model for estimating fair value of stock compensation for options awarded to officers and employees. Each grant is evaluated based upon assumptions at the time of grant. The assumptions were no dividend yield, expected volatility between 31.5% and 41.2%, risk-free interest rate of 2.0% to 2.9% and expected life of 5.0 to 7.0 years.

The dividend yield of zero is based on the fact that the Company does not pay cash dividends and has no present intention to pay cash dividends. Expected volatility is estimated based on the Company’s historical experience over a period equivalent to the expected life in years. The risk-free interest rate is based on the U.S. Treasury constant maturity interest rate at the date of grant with a term consistent with the expected life of the options granted. The expected life calculation is based on the observed and expected time to exercise options by the employees.

In January 2023, 7,980 shares of restricted stock were granted to employees that will vest over the next four years. In January 2023, 15,032 shares of restricted stock were granted to employees as part of a long-term incentive plan that will vest over the next five years. In March 2023, 2,272 shares of restricted stock were granted to employees under the terms of the 2021 long-term incentive plan. In January 2022, 7,448 shares of restricted stock were granted to employees that will vest over the next four years. In January 2022, 14,016 shares of restricted stock were granted to employees as part of a long-term incentive plan that will vest over the next five years. In March 2023 and March 2022, 928 and 865 shares of stock, respectively, were granted to employees. The number of common shares available for future issuance was 343,677 at September 30, 2023.

The Company recorded the following Stock compensation expense in its consolidated statements of income (in thousands):


	Three Months ended				Nine months ended
	September 30,				September 30,
	2023		2022		2023		2022
Stock option grants	$	16		18		49		52
Restricted stock awards		255		258		773		550
Employee stock grant		—		—		50		50
Annual director stock award		—		—		600		650
Stock compensation	$	271		276		1,472		1,302

A Summary of changes in outstanding options is presented below (in thousands, except share and per share amounts):

				Weighted		Weighted	Weighted
	Number			Average		Average	Average
	Of			Exercise		Remaining	Grant Date
Options	Shares			Price		Term (yrs)	Fair Value(000's)

Outstanding at January 1, 2023		88,295		$	40.33	4.4	$	1,271
Exercised		(17,735	)	$	45.27		$	(190	)
Outstanding at September 30, 2023		70,560		$	39.09	3.3	$	1,081

Exercisable at September 30, 2023		66,570		$	38.68	3.2	$	1,015

Vested during nine months ended September 30, 2023		—					$	—

The aggregate intrinsic value of exercisable in-the-money options was $1,018,000 and the aggregate intrinsic value of outstanding in-the-money options was $1,050,000 based on the market closing price of $53.97 on September 29, 2023 less exercise prices.

The unrecognized compensation cost of options granted to FRP employees but not yet vested as of September 30, 2023 was $11,000, which is expected to be recognized over a weighted-average period of two months.

A Summary of changes in restricted stock awards is presented below (in thousands, except share and per share amounts):

				Weighted		Weighted	Weighted
	Number			Average		Average	Average
	Of			Grant Date		Remaining	Grant Date
Restricted stock	Shares			Fair Value		Term (yrs)	Fair Value(000's)

Non-vested at January 1, 2023		50,496		$	50.42	3.0	$	2,546
Time-based awards granted		7,980			53.86			430
Performance-based awards granted		17,304			53.92			933
Vested		(6,211	)		46.49			(289	)
Non-vested at September 30, 2023		69,569		$	52.03	2.8	$	3,620

Total unrecognized compensation cost of restricted stock granted but not yet vested as of September 30, 2023 was $2,725,000 which is expected to be recognized over a weighted-average period of 3.1 years.

(8) Contingent Liabilities.

The Company may be involved in litigation on a number of matters and is subject to certain claims which arise in the normal course of business. The Company has retained certain self-insurance risks with respect to losses for third party liability and property damage. In the opinion of management, none of these matters are expected to have a material adverse effect on the Company’s consolidated financial condition, results of operations or cash flows.

The Company is subject to numerous environmental laws and regulations. The Company believes that the ultimate disposition of currently known environmental matters will not have a material effect on its financial position, liquidity, or operations. The Company can give no assurance that previous environmental studies with respect to its properties have revealed all potential environmental contaminants; that any previous owner, occupant or tenant did not create any

material environmental condition not known to the Company; that the current environmental condition of the properties will not be affected by tenants and occupants, by the condition of nearby properties, or by unrelated third parties; and that changes in applicable environmental laws and regulations or their interpretation will not result in additional environmental liability to the Company.

As of September 30, 2023, there was $823,000 outstanding under letters of credit. The letters of credit were issued to guarantee certain obligations to state agencies related to real estate development.

The Company and MidAtlantic Realty Partners (MRP) guaranteed $26 million of the construction loan on the Bryant Street Partnerships in exchange for a 1% lower interest rate. The Company and MRP have a side agreement limiting the Company’s guarantee to its proportionate ownership. The value of the guarantee was calculated at $1.9 million based on the present value of the 1% interest savings over the anticipated 48-month term. This amount is included as part of the Company’s investment basis and is amortized to expense over the 48 months. The Company will evaluate the guarantee liability based upon the success of the project and assuming no payments are made under the guarantee the Company will have a gain for $1.9 million when the loan is paid in full. Borrower may prepay a portion of the unpaid principal to satisfy such tests.

(9) Concentrations.

The mining royalty lands segment has a total of five tenants currently leasing mining locations and one lessee that accounted for 24.6% of the Company’s consolidated revenues during the nine months ended September 30, 2023, and $502,000 of accounts receivable at September 30, 2023. The termination of these lessees’ underlying leases could have a material adverse effect on the Company. The Company places its cash and cash equivalents with Wells Fargo Bank and First Horizon Bank. At times, such amounts may exceed FDIC limits.

(10) Fair Value Measurements.

Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. The fair value hierarchy prioritizes the inputs to valuation techniques used to measure fair value into three broad levels. Level 1 means the use of quoted prices in active markets for identical assets or liabilities. Level 2 means the use of values that are derived principally from or corroborated by observable market data. Level 3 means the use of inputs are those that are unobservable and significant to the overall fair value measurement.

At September 30, 2023, the Company was invested in U.S. Treasury notes valued at $148,768,000 maturing in 2023 through early 2024. The unrealized loss on these investments of $571,000 was recorded as part of comprehensive income and based on the estimated market value by Wells Fargo Bank, N.A. (Level 1).

At September 30, 2023 and December 31, 2022, the carrying amount reported in the consolidated balance sheets for cash and cash equivalents including U.S. Treasury notes was adjusted to fair value as described above.

The fair values of the Company’s other mortgage notes payable were estimated based on current rates available to the Company for debt of the same remaining maturities. At September 30, 2023, the carrying amount and fair value of such other long-term debt was $180,070,000 and $136,928,000, respectively. At September 30, 2022, the carrying amount and fair value of such other long-term debt was $180,070,000 and $142,753,000, respectively.

(11) Investments in Joint Ventures.

The Company has investments in joint ventures, primarily with other real estate developers. Joint ventures where FRP is not the primary beneficiary 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 assets of these joint ventures are restricted to use by the joint ventures and their obligations can only be settled by their assets or additional contributions by the partners.

The following table summarizes the Company’s Investments in unconsolidated joint ventures (in thousands):

								The
								Company's
								Share of Profit
	Common			Total	Total Assets of	Profit (Loss)		(Loss) of the
	Ownership			Investment	The Partnership	Of the Partnership		Partnership

As of September 30, 2023
Brooksville Quarry, LLC	50.00	%	$	7,486	14,372	(62	)	(31	)
BC FRP Realty, LLC	50.00	%		5,077	22,164	(556	)	(278	)
Buzzard Point Sponsor, LLC	50.00	%		2,292	4,584	—		—
Bryant Street Partnerships	61.36	%		61,140	195,915	(7,876	)	(4,931	)
Lending ventures				25,084	14,428	—		—
Estero Partnership	16.00	%		3,600	38,703	—		—
Verge Partnership	61.37	%		37,535	130,978	(7,161	)	(4,395	)
Greenville Partnerships	40.00	%		11,811	98,617	(2,376	)	(950	)
Total			$	154,025	519,761	(18,031	)	(10,585	)

								The
								Company's
								Share of Profit
	Common			Total	Total Assets of	Profit (Loss)		(Loss) of the
	Ownership			Investment	The Partnership	Of the Partnership		Partnership

As of December 31, 2022
Brooksville Quarry, LLC	50.00	%	$	7,522	14,374	(84	)	(42	)
BC FRP Realty, LLC	50.00	%		5,453	21,825	(358	)	(175	)
Buzzard Point Sponsor, LLC	50.00	%		1,453	2,906	—		—
Bryant Street Partnerships	61.36	%		55,561	199,774	(10,339	)	(6,829	)
Lending ventures				16,476	5,577	—		—
DST Hickory Creek	26.65	%		—	—	10,960		3,164
Estero Partnership	16.00	%		3,600	38,505	—		—
Verge Partnership	61.37	%		38,471	131,128	(1,841	)	(1,129	)
Greenville Partnerships	40.00	%		11,989	96,551	(1,775	)	(710	)
Total			$	140,525	510,640	(3,437	)	(5,721	)

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


	As of September 30, 2023										Total
	Buzzard Point		Bryant Street		Estero		Verge		Greenville		Apartment/
	Sponsor, LLC		Partnership		Partnership		Partnership		Partnership		Mixed-Use

Investments in real estate, net	$	0		187,693		34,416		129,145		96,834	$	448,088
Cash and cash equivalents		0		1,661		4,287		1,170		1,595		8,713
Unrealized rents & receivables		0		6,141		0		309		83		6,533
Deferred costs		4,584		420		0		354		105		5,463
Total Assets	$	4,584		195,915		38,703		130,978		98,617	$	468,797

Secured notes payable	$	0		116,922		16,000		72,402		67,414	$	272,738
Other liabilities		0		2,786		174		1,102		2,243		6,305
Capital - FRP		2,292		59,132		3,605		35,261		10,858		111,148
Capital – Third Parties		2,292		17,075		18,924		22,213		18,102		78,606
Total Liabilities and Capital	$	4,584		195,915		38,703		130,978		98,617	$	468,797


	As of September 30, 2023									Total
	Brooksville		BC FRP		Lending			Apartment/		Grand
	Quarry, LLC		Realty, LLC		Ventures			Mixed-Use		Total

Investments in real estate, net	$	14,343		21,260		14,428			448,088	$	498,119
Cash and cash equivalents		27		74		0			8,713		8,814
Unrealized rents & receivables		0		457		0			6,533		6,990
Deferred costs		2		373		0			5,463		5,838
Total Assets	$	14,372		22,164		14,428			468,797	$	519,761

Secured notes payable	$	0		11,856		(10,656	)		272,738	$	273,938
Other liabilities		64		266		0			6,305		6,635
Capital – FRP		7,487		5,021		25,084			111,148		148,740
Capital - Third Parties		6,821		5,021		0			78,606		90,448
Total Liabilities and Capital	$	14,372		22,164		14,428			468,797	$	519,761

The Company’s capital recorded by the unconsolidated Joint Ventures is $5,285,000 less than the Investment in Joint Ventures reported in the Company’s consolidated balance sheet due primarily to capitalized interest.

The major classes of assets, liabilities and equity of the Company’s Investments in Joint Ventures as of December 31, 2022 are summarized in the following two tables (in thousands):


	As of December 31, 2022										Total
	Buzzard Point		Bryant Street		Estero		Verge		Greenville		Apartment/
	Sponsor, LLC		Partnership		Partnership		Partnership		Partnership		Mixed-Use

Investments in real estate, net	$	0		192,904		33,008		130,616		95,883	$	452,411
Cash and cash equivalents		0		1,349		5,497		359		567		7,772
Unrealized rents & receivables		0		5,128		0		14		13		5,155
Deferred costs		2,906		393		0		139		88		3,526
Total Assets	$	2,906		199,774		38,505		131,128		96,551	$	468,864

Secured notes payable	$	0		129,263		16,000		66,584		64,954	$	276,801
Other liabilities		0		2,338		5		5,328		3,014		10,685
Capital - FRP		1,453		53,553		3,600		36,348		11,087		106,041
Capital – Third Parties		1,453		14,620		18,900		22,868		17,496		75,337
Total Liabilities and Capital	$	2,906		199,774		38,505		131,128		96,551	$	468,864


	As of December 31, 2022									Total
	Brooksville		BC FRP		Lending			Apartment/		Grand
	Quarry, LLC		Realty, LLC		Ventures			Mixed-Use		Total

Investments in real estate, net	$	14,307		21,059		5,547			452,411	$	493,324
Cash and cash equivalents		66		99		0			7,772		7,937
Unrealized rents & receivables		0		422		0			5,155		5,577
Deferred costs		1		245		30			3,526		3,802
Total Assets	$	14,374		21,825		5,577			468,864	$	510,640

Secured notes payable	$	0		10,899		(10,899	)		276,801	$	276,801
Other liabilities		0		338		0			10,685		11,023
Capital – FRP		7,522		5,294		16,476			106,041		135,333
Capital - Third Parties		6,852		5,294		0			75,337		87,483
Total Liabilities and Capital	$	14,374		21,825		5,577			468,864	$	510,640

The amount of consolidated retained earnings (accumulated deficit) for these joint ventures was $(20,837,000) and $(13,115,000) as of September 30, 2023 and December 31, 2022, respectively.

The income statements of the Bryant Street Partnerships are as follows (in thousands):

	Bryant Street			Bryant Street			Bryant Street			Bryant Street
	Partnerships			Partnerships			Partnerships			Partnerships
	Total JV			Total JV			Company Share			Company Share
	Nine months ended			Nine months ended			Nine months ended			Nine months ended
	September 30,			September 30,			September 30,			September 30,
	2023			2022			2023			2022
Revenues:
Rental Revenue	$	9,322		$	6,718		$	5,720			$	4,123
Revenue – other		1,784			1,306			1,095				801
Total Revenues		11,106			8,024			6,815				4,924

Cost of operations:
Depreciation and amortization		5,202			4,995			3,192				3,065
Operating expenses		4,384			3,846			2,690				2,360
Property taxes		789			878			484				539
Total cost of operations		10,375			9,719			6,366				5,964

Total operating profit/(loss)		731			(1,695	)		449				(1,040	)
Interest expense		(8,607	)		(5,437	)		(5,380	)			(3,703	)

Net loss before tax	$	(7,876	)	$	(7,132	)	$	(4,931	)		$	(4,743	)

The income statements of the Greenville Partnerships are as follows (in thousands):

	Greenville			Greenville			Greenville			Greenville
	Partnerships			Partnerships			Partnerships			Partnerships
	Total JV			Total JV			Company Share			Company Share
	Nine months ended			Nine months ended			Nine months ended			Nine months ended
	September 30,			September 30,			September 30,			September 30,
	2023			2022			2023			2022
Revenues:
Rental Revenue	$	4,875		$	2,234		$	1,950			$	894
Revenue – other		405			125			162				50
Total Revenues		5,280			2,359			2,112				944

Cost of operations:
Depreciation and amortization		2,118			1,162			847				465
Operating expenses		1,784			906			714				363
Property taxes		882			476			353				190
Total cost of operations		4,784			2,544			1,914				1,018

Total operating profit/(loss)		496			(185	)		198				(74	)
Interest expense		(2,872	)		(697	)		(1,148	)			(279	)

Net loss before tax	$	(2,376	)	$	(882	)	$	(950	)		$	(353	)

The income statements of the Verge Partnership are as follows (in thousands):

	Verge			Verge
	Partnership			Partnership
	Total JV			Company Share
	Nine months ended			Nine months ended
	September 30,			September 30,
	2023			2023
Revenues:
Rental Revenue	$	2,042		$	1,254
Revenue – other		320			196
Total Revenues		2,362			1,450

Cost of operations:
Depreciation and amortization		2,958			1,815
Operating expenses		2,057			1,263
Property taxes		741			455
Total cost of operations		5,756			3,533

Total operating profit		(3,394	)		(2,083	)
Interest expense		(3,767	)		(2,312	)

Net profit before tax	$	(7,161	)	$	(4,395	)

ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

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 Maryland 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 September 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. 21^st 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, one-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 September 30, 2023, this segment owned the following future development parcels:

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

17 acres of land in Harford County, Maryland with a 259,200 square feet speculative warehouse project on Chelsea Road under construction due to be complete in the third quarter of 2024.

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	$6,595,000
Hampstead Trade Center, MD	118	Residential zoning applied for in preparation for sale	$10,515,000
Square 664E, on the Anacostia River in DC	2	Under lease to Vulcan Materials as a concrete batch plant through 2026	$7,385,000
Total	122.5		$24,495,000

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%
Aberdeen Station residential development in Harford 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	Financing
Amber Ridge residential development in Prince George’s County, Maryland		$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
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 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 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):

								The
								Company's
								Share of Profit
	Common			Total	Total Assets of	Profit (Loss)		(Loss) of the
	Ownership			Investment	The Partnership	Of the Partnership		Partnership

As of September 30, 2023
Brooksville Quarry, LLC	50.00	%	$	7,486	14,372	(62	)	(31	)
BC FRP Realty, LLC	50.00	%		5,077	22,164	(556	)	(278	)
Buzzard Point Sponsor, LLC	50.00	%		2,292	4,584	—		—
Bryant Street Partnerships	61.36	%		61,140	195,915	(7,876	)	(4,931	)
Lending ventures				25,084	14,428	—		—
Estero Partnership	16.00	%		3,600	38,703	—		—
Verge Partnership	61.37	%		37,535	130,978	(7,161	)	(4,395	)
Greenville Partnerships	40.00	%		11,811	98,617	(2,376	)	(950	)
Total			$	154,025	519,761	(18,031	)	(10,585	)

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

	As of September 30, 2023										Total
	Buzzard Point		Bryant Street		Estero		Verge		Greenville		Apartment/
	Sponsor, LLC		Partnership		Partnership		Partnership		Partnership		Mixed-Use

Investments in real estate, net	$	0		187,693		34,416		129,145		96,834	$	448,088
Cash and cash equivalents		0		1,661		4,287		1,170		1,595		8,713
Unrealized rents & receivables		0		6,141		0		309		83		6,533
Deferred costs		4,584		420		0		354		105		5,463
Total Assets	$	4,584		195,915		38,703		130,978		98,617	$	468,797

Secured notes payable	$	0		116,922		16,000		72,402		67,414	$	272,738
Other liabilities		0		2,786		174		1,102		2,243		6,305
Capital - FRP		2,292		59,132		3,605		35,261		10,858		111,148
Capital – Third Parties		2,292		17,075		18,924		22,213		18,102		78,606
Total Liabilities and Capital	$	4,584		195,915		38,703		130,978		98,617	$	468,797

	As of September 30, 2023									Total
	Brooksville		BC FRP		Lending			Apartment/		Grand
	Quarry, LLC		Realty, LLC		Ventures			Mixed-Use		Total

Investments in real estate, net	$	14,343		21,260		14,428			448,088	$	498,119
Cash and cash equivalents		27		74		0			8,713		8,814
Unrealized rents & receivables		0		457		0			6,533		6,990
Deferred costs		2		373		0			5,463		5,838
Total Assets	$	14,372		22,164		14,428			468,797	$	519,761

Secured notes payable	$	0		11,856		(10,656	)		272,738	$	273,938
Other liabilities		64		266		0			6,305		6,635
Capital – FRP		7,487		5,021		25,084			111,148		148,740
Capital - Third Parties		6,821		5,021		0			78,606		90,448
Total Liabilities and Capital	$	14,372		22,164		14,428			468,797	$	519,761

Stabilized Joint Venture Segment.

At quarter end, the segment included three stabilized joint ventures which own, lease and manage apartment 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. 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	52.8%
The Maren apartments, Washington, D.C. 264 residential units and 6,811 square feet of retail	MRP Realty	Consolidated as of March 31, 2021	56.33%
Riverside apartments Greenville, SC. 200 residential units with no retail component	Woodfield Development	Equity Method	40%

Third quarter Operational Highlights (compared to the same quarter last year)

29.5% increase in pro-rata NOI ($8.09 million vs $6.24 million) over third quarter 2022

Mining royalty revenue increased 24.7%; 19.2% increase in royalties per ton

54.2% increase in Asset Management revenue; 58.2% increase in Asset Management NOI

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

Consolidated Results

(dollars in thousands)	Three months ended September 30,
	2023			2022			Change			%
Revenues:
Lease Revenue	$	7,509		$	6,823		$	686			10.1	%
Mining lands lease revenue		3,082			2,471			611			24.7	%
Total Revenues		10,591			9,294			1,297			14.0	%

Cost of operations:
Depreciation/Depletion/Amortization		2,816			2,744			72			2.6	%
Operating Expenses		2,012			1,967			45			2.3	%
Property Taxes		919			1,034			(115	)		-11.1	%
Management company indirect		1,059			966			93			9.6	%
Corporate Expense		889			734			155			21.1	%
Total cost of operations		7,695			7,445			250			3.4	%

Total operating profit		2,896			1,849			1,047			56.6	%

Net investment income		2,700			1,188			1,512			127.3	%
Interest Expense		(1,116	)		(738	)		(378	)		51.2	%
Equity in loss of joint ventures		(2,913	)		(1,878	)		(1,035	)		55.1	%
Gain (loss) on sale of real estate		(1	)		141			(142	)		-100.7	%
Income before income taxes		1,566			562			1,004			178.6	%
Provision for income taxes		467			178			289			162.4	%

Net income		1,099			384			715			186.2	%
Loss attributable to noncontrolling interest		(160	)		(96	)		(64	)		66.7	%
Net income attributable to the Company	$	1,259		$	480		$	779			162.3	%

Net income for the third quarter of 2023 was $1,259,000 or $.13 per share versus $480,000 or $.05 per share in the same period last year. The third quarter of 2023 was impacted by the following items:

Operating profit increased $1,047,000 compared to the same quarter last year due to improved revenues in all four segments.

Interest income increased $1,512,000 due primarily to an increase in interest earned on cash equivalents ($1,118,000) and increased income from our lending ventures ($349,000).

Interest expense increased $378,000 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.

Equity in loss of Joint Ventures increased $1,035,000 primarily due to increased losses during lease up at The Verge ($856,000).

Asset Management Segment Results

	Three months ended September 30
(dollars in thousands)	2023		%			2022		%			Change		%

Lease revenue	$	1,442		100.0	%		935		100.0	%		507		54.2	%

Depreciation, depletion and amortization		369		25.5	%		219		23.4	%		150		68.5	%
Operating expenses		173		12.0	%		162		17.3	%		11		6.8	%
Property taxes		62		4.3	%		53		5.7	%		9		17.0	%
Management company indirect		141		9.8	%		109		11.7	%		32		29.4	%
Corporate expense		177		12.3	%		127		13.6	%		50		39.4	%

Cost of operations		922		63.9	%		670		71.7	%		252		37.6	%

Operating profit	$	520		36.1	%		265		28.3	%		255		96.2	%

Total revenues in this segment were $1,442,000, up $507,000 or 54.2%, over the same period last year. Operating profit was $520,000, up $255,000 from $265,000 in the same quarter last year. Revenues and operating profit are up because of full occupancy at 1841 62nd Street (compared to 22.7% same period last year) and the addition of 1941 62nd Street to this segment in March 2023. 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 $1,096,000, up $403,000 or 58.2% compared to the same quarter last year.

Mining Royalty Lands Segment Results

	Three months ended September 30
(dollars in thousands)	2023		%			2022		%			Change			%

Mining lands lease revenue	$	3,082		100.0	%		2,471		100.0	%		611			24.7	%

Depreciation, depletion and amortization		138		4.5	%		172		7.0	%		(34	)		-19.8	%
Operating expenses		18		0.6	%		18		0.7	%		—			0.0	%
Property taxes		181		5.9	%		69		2.8	%		112			162.3	%
Management company indirect		137		4.4	%		129		5.2	%		8			6.2	%
Corporate expense		99		3.2	%		83		3.4	%		16			19.3	%

Cost of operations		573		18.6	%		471		19.1	%		102			21.7	%

Operating profit	$	2,509		81.4	%		2,000		80.9	%		509			25.5	%

Total revenues in this segment were $3,082,000 versus $2,471,000 in the same period last year. Total operating profit in this segment was $2,509,000, an increase of $509,000 versus $2,000,000 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 $2,837,000, up $501,000 or 21.4% compared to the same quarter last year.

Development Segment Results

	Three months ended September 30
(dollars in thousands)	2023			2022			Change

Lease revenue	$	434			412			22

Depreciation, depletion and amortization		44			47			(3	)
Operating expenses		48			250			(202	)
Property taxes		121			355			(234	)
Management company indirect		665			625			40
Corporate expense		529			457			72

Cost of operations		1,407			1,734			(327	)

Operating loss	$	(973	)		(1,322	)		349

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 of committed capital to the project, $17.3 million in principal draws have taken place through quarter end. Through the end of September 30, 2023, 175 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 three apartment buildings with ground floor retail and one commercial building which is fully leased. At quarter end, Bryant Street’s 487 residential units were 94.5% leased and 94.5% 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 89.5% leased and 74.1% occupied inclusive of 25 units licensed to Placemaker Management for a short-term corporate rental program. 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 in Greenville. Leasing began in the fourth quarter of 2022 with residential units 93.4% leased and 86.8% occupied at quarter end. Retail at this location is 100% leased and currently under construction and expected to open this winter.
Windlass Run, our suburban office and retail joint venture with St. John Properties, Inc. signed a new office lease for 2,752 square feet bringing the office portion of the project to 82.1% leased and 78.3% occupied. Additional retail space at this site is 38.2% leased and 22.9% occupied.
This past quarter we broke ground on a new speculative warehouse project in Aberdeen, Maryland on Chelsea Road. This Class A, 259,200 square foot building is due to be complete in the third quarter of 2024.

Stabilized Joint Venture Segment Results

	Three months ended September 30
(dollars in thousands)	2023		%			2022		%			Change		%

Lease revenue	$	5,633		100.0	%		5,476		100.0	%		157		2.9	%

Depreciation, depletion and amortization		2,265	40.2	%	2,306	42.1	%	(41	)	-1.8	%
Operating expenses		1,773	31.5	%	1,537	28.1	%	236		15.4	%
Property taxes		555	9.8	%	557	10.2	%	(2	)	-0.4	%
Management company indirect		116	2.1	%	103	1.9	%	13		12.6	%
Corporate expense		84	1.5	%	67	1.2	%	17		25.4	%

Cost of operations		4,793	85.1	%	4,570	83.5	%	223		4.9	%

Operating profit	$	840	14.9	%	906	16.5	%	(66	)	-7.3	%

Total revenues in this segment were $5,633,000, an increase of $157,000 versus $5,476,000 in the same period last year. The Maren’s revenue was $2,670,000 an increase of 2.4% and Dock 79 revenues increased $95,000 to $2,963,000 or 3.3%. Total operating profit in this segment was $840,000, a decrease of $66,000 versus $906,000 in the same period last year. During the quarter we experienced water damage to an elevator that resulted in a $100,000 insurance deductible expense. Pro-rata net operating income this quarter for this segment was $2,038,000, down $665,000 or 24.6% compared to the same quarter last year because of the sale of our 20% Tenancy-In-Common (TIC) interest in both properties to SIC, mitigated by $231,000 in pro-rata NOI from our share of the Riverside joint venture in Greenville, SC.

At the end of September, The Maren was 93.18% leased and 93.94% occupied. Average residential occupancy for the quarter was 95.57%, and 59.70% of expiring leases renewed with an average rent increase on renewals of 3.18%. 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 95.08%, and at the end of the quarter, Dock 79’s residential units were 93.44% leased and 95.74% occupied. This quarter, 71.43% of expiring leases renewed with an average rent increase on renewals of 2.30%. 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 94.5% leased with 91.5% occupancy. Average occupancy for the quarter was 92.92% with 52.83% of expiring leases renewing with an average rental increase of 8.55%. Riverside is a joint venture with Woodfield Development and the Company owns 40% of the venture.

Nine months Operational Highlights

26.2% increase in pro-rata NOI ($22.69 million vs $17.97 million)

Mining Royalties increased 23.8%; 13% increase in royalties per ton

46.4% increase in Asset Management revenue; 46.2% increase in Asset Management NOI

Comparative Results of Operations for the Nine months ended September 30, 2023 and 2022

Consolidated Results

(dollars in thousands)	Nine months ended September 30,
	2023		2022		Change		%
Revenues:
Lease Revenue	$	21,773	$	19,850	$	1,923		9.7	%
Mining lands lease revenue		9,628		7,779		1,849		23.8	%
Total Revenues		31,401		27,629		3,772		13.7	%

Cost of operations:
Depreciation/Depletion/Amortization		8,415			8,510			(95	)	-1.1	%
Operating Expenses		5,574			5,316			258		4.9	%
Property Taxes		2,745			3,103			(358	)	-11.5	%
Management company indirect		2,938			2,545			393		15.4	%
Corporate Expense		3,212			2,876			336		11.7	%
Total cost of operations		22,884			22,350			534		2.4	%

Total operating profit		8,517			5,279			3,238		61.3	%

Net investment income		8,207			3,206			5,001		156.0	%
Interest Expense		(3,251	)		(2,215	)		(1,036	)	46.8	%
Equity in loss of joint ventures		(10,585	)		(5,248	)		(5,337	)	101.7	%
Gain on sale of real estate		7			874			(867	)	-99.2	%
Income before income taxes		2,895			1,896			999		52.7	%
Provision for income taxes		898			526			372		70.7	%

Net income		1,997			1,370			627		45.8	%
Loss attributable to noncontrolling interest		(425	)		(439	)		14		-3.2	%
Net income attributable to the Company	$	2,422		$	1,809		$	613		33.9	%

Net income for the first nine months of 2023 was $2,422,000 or $.26 per share versus $1,809,000 or $.19 per share in the same period last year. The first nine months of 2023 was impacted by the following items:

Operating profit increased $3,238,000 compared to the same period last year due to improved revenues and profits in all four segments.

Management company indirect increased $393,000 due to merit increases and new hires along with recruiting costs.

Interest income increased $5,001,000 due primarily to an increase in interest earned on cash equivalents ($3,637,000) and increased income from our lending ventures ($1,228,000).

Interest expense increased $1,036,000 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.

Equity in loss of Joint Ventures increased $5,337,000 primarily due to increased losses during lease up at The Verge ($4,096,000) and .408 Jackson ($642,000).

The first nine months of 2022 included a $874,000 gain on sales of excess property at Brooksville.

Asset Management Segment Results

	Nine months ended September 30
(dollars in thousands)	2023		%			2022		%			Change		%

Lease revenue	$	3,932		100.0	%		2,686		100.0	%		1,246		46.4	%

Depreciation, depletion and amortization		1,006		25.6	%		683		25.4	%		323		47.3	%
Operating expenses		490		12.4	%		441		16.4	%		49		11.1	%
Property taxes		185		4.7	%		158		5.9	%		27		17.1	%
Management company indirect		396		10.1	%		301		11.2	%		95		31.6	%
Corporate expense		630		16.0	%		496		18.5	%		134		27.0	%

Cost of operations		2,707		68.8	%		2,079		77.4	%		628		30.2	%

Operating profit	$	1,225		31.2	%		607		22.6	%		618		101.8	%

Total revenues in this segment were $3,932,000, up $1,246,000 or 46.4%, over the same period last year. Operating profit was $1,225,000, up $618,000 from $607,000 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 62^nd Street and the addition of 1941 62^nd Street to this segment in March 2023. Net operating income in this segment was $2,726,000, up $862,000 or 46.2% compared to the same period last year.

Mining Royalty Lands Segment Results

	Nine months ended September 30
(dollars in thousands)	2023		%			2022		%			Change		%

Mining lands lease revenue	$	9,628		100.0	%		7,779		100.0	%		1,849		23.8	%

Depreciation, depletion and amortization		472		4.9	%		416		5.4	%		56		13.5	%
Operating expenses		51		0.5	%		50		0.6	%		1		2.0	%
Property taxes		324		3.4	%		203		2.6	%		121		59.6	%
Management company indirect		390		4.1	%		346		4.4	%		44		12.7	%
Corporate expense		360		3.7	%		325		4.2	%		35		10.8	%

Cost of operations		1,597		16.6	%		1,340		17.2	%		257		19.2	%

Operating profit	$	8,031		83.4	%		6,439		82.8	%		1,592		24.7	%

Total revenues in this segment were $9,628,000 versus $7,779,000 in the same period last year. Total operating profit in this segment was $8,031,000, an increase of $1,592,000 versus $6,439,000 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 $9,110,000, up $1,737,000 or 24% compared to the same period last year. As reported in a subsequent event note in the 10-Q from the quarter ended June 30, 2023, in August we received notification of an overpayment of $842,000 at a quarry where we share a property line within the pit. The operator incorrectly identified the reserves being mined as belonging to the Company instead of our neighboring landlord. After auditing and confirming the tenant’s findings, the Company has reached a resolution with the tenant to allow the overpayment to be deducted from a portion of future royalties, and we have worked with the tenant to improve processes and controls to prevent an incident of this type and magnitude from occurring in the future. This will impact future royalty revenue and revenue growth until the overpayment is satisfied.

Development Segment Results

	Nine months ended September 30
(dollars in thousands)	2023			2022			Change

Lease revenue	$	1,387			1,203			184

Depreciation, depletion and amortization		140			139			1
Operating expenses		215			541			(326	)
Property taxes		587			1,066			(479	)
Management company indirect		1,822			1,621			201
Corporate expense		1,918			1,794			124

Cost of operations		4,682			5,161			(479	)

Operating loss	$	(3,295	)		(3,958	)		663

Stabilized Joint Venture Segment Results

	Nine months ended September 30
(dollars in thousands)	2023		%			2022		%			Change			%

Lease revenue	$	16,454		100.0	%		15,961		100.0	%		493			3.1	%

Depreciation, depletion and amortization		6,797		41.3	%		7,272		45.6	%		(475	)		-6.5	%
Operating expenses		4,818		29.3	%		4,284		26.9	%		534			12.5	%
Property taxes		1,649		10.0	%		1,676		10.5	%		(27	)		-1.6	%
Management company indirect		330		2.0	%		277		1.7	%		53			19.1	%
Corporate expense		304		1.9	%		261		1.6	%		43			16.5	%

Cost of operations		13,898		84.5	%		13,770		86.3	%		128			0.9	%

Operating profit	$	2,556		15.5	%		2,191		13.7	%		365			16.7	%

In the fourth quarter of 2022, as part of our new partnership with SIC and MRP, 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 $16,454,000, an increase of $493,000 versus $15,961,000 in the same period last year. The Maren’s revenue was $7,900,000, an increase of 5.7%, and Dock 79 revenues increased $66,000 or .8% to $8,553,000. Total operating profit in this segment was $2,556,000, an increase of $365,000 versus $2,191,000 in the same period last year. Pro-rata net operating income for this segment was $6,212,000, down $1,029,000 or 14.2% compared to the same period last year because of the sale of our 20% TIC interest in both properties to SIC, mitigated by $676,000 in pro-rata NOI from our share of the Riverside joint venture.

At the end of September, The Maren was 93.18% leased and 93.94% occupied. Average residential occupancy for the first nine months of 2023 was 96.11%, and 50.66% of expiring leases renewed with an average rent increase on renewals of 4.86%. 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 nine months of 2023 was 94.21%, and at the end of the quarter, Dock 79’s residential units were 93.44% leased and 95.74% occupied. Through the first nine months of the year, 67.90% of expiring leases renewed with an average rent increase on renewals of 3.11%. 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 September, the building was 94.5% leased with 91.5% occupancy. Average occupancy for the first nine months of 2023 was 94.26% with 56.03% of expiring leases renewing with an average rental increase of 10.25%. 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 September 30, 2023, we had $166,028,000 of cash and cash equivalents. As of September 30, 2023, we had no debt borrowed under our $20 million Wells Fargo revolver, $823,000 outstanding under letters of credit and $19,177,000 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):

	Nine months
	Ended September 30,
	2023			2022
Total cash provided by (used for):
Operating activities	$	20,721			13,175
Investing activities		(28,556	)		(28,209	)
Financing activities		(3,634	)		(1,704	)
Decrease in cash and cash equivalents	$	(11,469	)		(16,738	)

Outstanding debt at the beginning of the period		178,557			178,409
Outstanding debt at the end of the period		178,668			178,520

Operating Activities - Net cash provided by operating activities for the nine months ended September 30, 2023 was $20,721,000 versus $13,175,000 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 September 30, 2023, the Company was invested in U.S. Treasury notes valued at $148,768,000 maturing in 2023 through early 2024. The unrealized loss on these investments of $571,000 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 nine months ended September 30, 2023 was $28,556,000 versus $28,209,000 in the same period last year. Investments in properties was $4.6 million for the 9 months ended September 30, 2023 and included the start of construction on a new speculative warehouse project in Aberdeen, Maryland on Chelsea Road. Investments in properties during the nine months ended September 30, 2022 was $26.1 million which included the $11.6 million purchase of Astatula mining land, $6.7 million for 170 acres in Cecil County Maryland to accommodate 900,000 square feet of industrial development, and the completion of the build-to-suite at 1941 62^nd Street. Investments in joint ventures was $31.6 million for the nine months ended September 30, 2023 and included $8 million for FRP’s share of a $13 million paydown of the loan at Bryant Street, $15.5 million for our Aberdeen Station lending venture, $3.4 million for the impact of higher interest rates at Verge, and $2.1 million for predevelopment activities for our next potential apartment projects in Washington, D.C. and in Greenville. Investments in joint ventures was $20.8 million for the 9 months ended September 30, 2022 and included $12.9 million for the lending ventures including the Windlass loan and $3.6 million for our Estero joint venture.

Financing Activities – Net cash required by financing activities was $3,634,000 versus $1,704,000 in the same period last year primarily due to the exercise of employee stock options and the repurchase of company stock in the nine months ended September 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 the Federal Funds Rates, which may be reduced quarterly to 1.25% or .75% over the Federal Funds Rate 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 September 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 $22.3 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 24.7% over the same period last year, and royalty revenue for the first nine months is up 23.8%. The last three quarters have been the three highest revenue quarters in this segment’s history. Mining royalty revenue for the last twelve months is $12.53 million, a 24.7% 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 nine 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 1.0% ($10,163,000 vs $10,063,000) for the first nine months compared to the same period last year. At Dock 79, average occupancy (95.08%) remains in line with historic expectations, but the high renewal rate (71.43%) with reduced increases (2.30%) is consistent with a post-Covid glut in apartment supply in the DC market as evidenced by the negative trade-outs (-4.60%) we’re seeing at that building. The Maren performed slightly better with strong renewals (59.70%) at higher increases (3.18%) and positive trade-outs (4.60%), but at rates lower than we have experienced in the past prior to the second quarter of this year. Riverside in Greenville (which was added to this segment in the third quarter of 2022) has maintained strong occupancy (93.65% LTM) in its first year post-stabilization. Renewal rates for the quarter (52.83%) and year-to-date (56.03%) are consistent with expected results, and the increase on renewals (8.55% for Q3, 10.25% YTD) remain high. Our pro-rata share of NOI at Riverside this quarter was $231,000 and $676,000 for the first nine months.

In our Asset Management Segment, occupancy and our overall square-footage have increased since the third quarter of 2022, leading to a 46.2% increase in NOI for the first nine months compared to the same period last year. We are 95.6% leased and occupied on 548,785 square feet compared to 85.9% occupied on 447,035 square feet at the end of the third quarter of 2022.

As mentioned last quarter and in our recent Investor Day presentation, the heady cocktail of inflation, interest rates, increased construction costs, and a softening in the DC market because of an influx of new apartment projects have led us to shift our development strategy away from new developments in DC for the time being. We are shifting towards (relatively) less capital-intensive projects like warehouse construction, where 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. To that end, we are underway on the construction of a $30 million spec warehouse project at our Chelsea site in Aberdeen, MD. We anticipate shell completion on this 259,200 square-foot building in the third quarter of 2024.We will continue to do the predevelopment work required to prepare the first phase of our partnership with SIC and MRP for vertical construction, but we will pause at that point until interest rates and construction costs come back in line with what’s required to make a reasonable return. We still have the utmost confidence in our assets and the markets in which they thrive. To that end, during the first nine months of 2023 we repurchased 36,909 shares at an average cost of $54.19 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
Nine months ended 09/30/23 (in thousands)
						Stabilized
	Asset					Joint			Mining		Unallocated		FRP
	Management		Development			Venture			Royalties		Corporate		Holdings
	Segment		Segment			Segment			Segment		Expenses		Totals
Net Income (loss)	$	892		(7,192	)		(816	)		5,842		3,270		1,996
Income Tax Allocation		331		(2,667	)		(145	)		2,168		1,212		899
Income (loss) before income taxes		1,223		(9,859	)		(961	)		8,010		4,482		2,895

Less:
Unrealized rents		531		—			—			143		—		674
Gain on sale of real estate		—		—			—			10		—		10
Interest income		—		3,692			—			—		4,515		8,207
Plus:
Unrealized rents		—		—			117			—		—		117
Loss on sale of real estate		2		—			1			—		—		3
Equity in loss of Joint Ventures		—		10,256			298			31		—		10,585
Professional fees - other		—		—			59			—		—		59
Interest Expense		—		—			3,218			—		33		3,251
Depreciation/Amortization		1,006		140			6,797			472		—		8,415
Management Co. Indirect		396		1,822			330			390		—		2,938
Allocated Corporate Expenses		630		1,918			304			360		—		3,212

Net Operating Income		2,726		585			10,163			9,110		—		22,584

NOI of noncontrolling interest		—		—			(4,627	)		—		—		(4,627	)
Pro-rata NOI from unconsolidated joint ventures		—		4,054			676			—		—		4,730

Pro-rata net operating income	$	2,726		4,639			6,212			9,110		—		22,687

Pro-Rata Net Operating Income Reconciliation
Nine months ended 09/30/22 (in thousands)
						Stabilized
	Asset					Joint			Mining		Unallocated		FRP
	Management		Development			Venture			Royalties		Corporate		Holdings
	Segment		Segment			Segment			Segment		Expenses		Totals
Net income (loss)	$	443		(4,953	)		(166	)		5,311		735		1,370
Income tax allocation		164		(1,837	)		101			1,969		129		526
Income (loss) before income taxes		607		(6,790	)		(65	)		7,280		864		1,896

Less:
Unrealized rents		223		—			(62	)		153		—		314
Gain on sale of real estate		—		—			—			874		—		874
Interest income		—		2,311			—			—		895		3,206
Plus:
Equity in loss of joint ventures		—		5,143			72			33		—		5,248
Interest expense		—		—			2,184			—		31		2,215
Depreciation/amortization		683		139			7,272			416		—		8,510
Management company indirect		301		1,621			277			346		—		2,545
Allocated Corporate expenses		496		1,794			261			325		—		2,876
Net operating income (loss)		1,864		(404	)		10,063			7,373		—		18,896

NOI of noncontrolling interest		—		—			(3,212	)		—		—		(3,212	)
Pro-rata NOI from unconsolidated joint ventures		—		1,896			390			—		—		2,286

Pro-rata net operating income	$	1,864		1,492			7,241			7,373		—		17,970

The following tables represent the Joint Venture and Development pro-rata NOI by project:

Development Segment:
	FRP		Bryant Street	BC FRP	.408		Verge		Total
Nine months ended	Portfolio		Partnership	Realty, LLC	Jackson		Partnership		Pro-rata NOI
9/30/2023	585		3,595	251	350		(142	)	4,639
9/30/2022	(404	)	1,853	277	(10	)	(224	)	1,492

Stabilized Joint Venture Segment:
			Riverside	Total
Nine months ended	Dock 79	The Maren	Joint Venture	Pro-rata NOI
9/30/2023	2,825	2,711	676	6,212
9/30/2022	3,316	3,535	390	7,241

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISKS

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 September 30, 2023 was the Federal Funds Rate plus .75%. 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 September 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.

ITEM 4. CONTROLS AND PROCEDURES

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 September 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.

PART II. OTHER INFORMATION

Item 1A. RISK FACTORS

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.

Item 2. PURCHASES OF EQUITY SECURITIES BY THE ISSUER


						Total
						Number of
						Shares
						Purchased		Approximate
						As Part of		Dollar Value of
		Total				Publicly		Shares that May
		Number of		Average		Announced		Yet Be Purchased
		Shares		Price Paid		Plans or		Under the Plans
Period		Purchased		per Share		Programs		or Programs ⁽¹⁾
	July 1 through July 31		—	$	—		—	$	8,363,000
	August 1 through August 31		—	$	—		—	$	8,363,000
	September 1 through September 30		18,569	$	53.85		18,569	$	7,363,000

	Total		18,569	$	53.85		18,569

(1)

On February 4, 2015, the Board of Directors authorized management to expend up to $5,000,000 to repurchase shares of the Company’s common stock from time to time as opportunities arise. On December 5, 2018, the Board of Directors approved a $10,000,000 increase in the Company’s stock repurchase authorization. On August 5, 2019, the Board of Directors approved a $10,000,000 increase in the Company’s stock repurchase authorization. On May 6, 2020, the Board of Directors approved a $10,000,000 increase in the Company’s stock repurchase authorization. On August 26, 2020, the Board of Directors approved a $10,000,000 increase in the Company’s stock repurchase authorization.

Item 6. EXHIBITS

(a)

Exhibits. The response to this item is submitted as a separate Section entitled "Exhibit Index", on page 38.

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this Report to be signed on its behalf by the undersigned thereunto duly authorized.

		FRP Holdings, Inc.


Date: November 9, 2023	By	JOHN D. BAKER II
		John D. Baker II
		Chief Executive Officer
		(Principal Executive Officer)


	By	JOHN D. BAKER III
		John D. Baker III.
		Treasurer and Chief Financial Officer
		(Principal Financial Officer)


	By	JOHN D. KLOPFENSTEIN
		John D. Klopfenstein
		Controller and Chief Accounting
		Officer (Principal Accounting Officer)

FRP HOLDINGS, INC.

FORM 10-Q FOR THE THREE MONTHS ENDED SEPTEMBER 30, 2023

EXHIBIT INDEX

(31)(a)	Certification of John D. Baker II.
(31)(b)	Certification of John D. Baker III.
(31)(c)	Certification of John D. Klopfenstein.
(32)	Certification of Chief Executive Officer, Chief Financial Officer, and Chief Accounting Officer under Section 906 of the Sarbanes-Oxley Act of 2002.

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