FRP Holdings, Inc. (NASDAQ: FRPH) Announces Results for the Third Quarter and Nine Months Ended September 30, 2021

Jacksonville, Florida, UNITED STATES


JACKSONVILLE, Fla., Nov. 03, 2021 (GLOBE NEWSWIRE) -- FRP Holdings, Inc. (NASDAQ-FRPH)

Third Quarter Operational Highlights

  • Dock 79 ended the reporting period with residential occupancy above 94% for the fourth straight quarter
  • Leasing efforts have begun at Riverside as well as the second building at Bryant Street, Chase 1B
  • Average residential occupancy above 95% for the quarter for both Dock 79 and The Maren
  • Both Dock 79 and The Maren are now 100% commercially leased

Third Quarter Consolidated Results of Operations

Net income attributable to the Company for the third quarter of 2021 was $352,000 or $.04 per share versus $5,455,000 or $.57 per share in the same period last year. The third quarter of 2021 was impacted by the following items:

  • Interest income decreased $871,000 due to bond maturities and the repayment of the Company’s preferred interest in The Maren upon the building’s refinancing.
  • Interest expense increased $368,000 due to interest on The Maren’s debt, partially offset by a lower interest rate on the refinanced Dock 79 debt.
  • Gain from sale of real estate decreased $5,732,000 because of two property sales during the same period last year. The sale of our building at 1801 62nd Street and 87 acres at Ft. Myers resulted in a gain of $5,732,000 in the third quarter of 2020 and there were no such gains this quarter to offset the decrease.

Third Quarter Segment Operating Results

Asset Management Segment:

Total revenues in this segment were $619,000, down $102,000 or 14.1%, over the same period last year due to the sale of our warehouse 1801 62nd Street in July 2020 which had $59,000 of revenues in the same quarter last year. Operating loss was $(11,000), down $46,000 from an operating profit of $35,000 in the same quarter last year primarily due to the sale of 1801 62nd Street. Cranberry Run, which we purchased in the first quarter of 2019, is a five-building industrial park in Harford County, Maryland totaling 267,737 square feet of industrial/ flex space and at quarter end was 96.6% leased and 68.6% occupied compared to 78.6% leased and occupied at the end of the same quarter last year. Our other two properties remain substantially leased during both periods, with 34 Loveton 95.1% occupied and Vulcan’s former Jacksonville office (now a vacant lot), fully leased through March 2026.

Mining Royalty Lands Segment:

Total revenues in this segment were $2,249,000 versus $2,507,000 in the same period last year. Total operating profit in this segment was $1,968,000, a decrease of $270,000 versus $2,238,000 in the same period last year. This decrease is a result of Vulcan temporarily shifting operations off of our land in Manassas this quarter as part of their mining plan.
   
Development Segment:

With respect to developments in the quarter on ongoing projects:

  • This quarter, we purchased 17 acres in Harford County, Maryland for $1.96 million for the purposes of industrial development. We are pursuing entitlements on the land, and we anticipate beginning construction in the third quarter of 2022 on a 250,000 square foot, Class A warehouse which will comprise the entirety of the developable space on the site.
  • In the third quarter of 2020, we received permit entitlements for two industrial buildings at Hollander Business Park. We have started construction and anticipate shell completion in the fourth quarter of 2021. Of this project’s 145,750 square feet, 42,405 square feet are pre-leased. We have started construction on a build-to-suit building totaling 101,750 square feet. We estimate shell completion and occupancy in the fourth quarter of 2022.
  • With respect to our joint venture with St. John Properties, we are now in the process of leasing these four single-story buildings totaling 100,030 square feet of office and retail space. At quarter end, Phase I was 48.1% leased and 46.8% occupied.
  • We are the principal capital source of a residential development venture in Prince George’s County, Maryland known as “Amber Ridge.”  Of the $18.5 million in committed capital to the project, $15.3 million in principal draws have taken place to date. Through the end of the third quarter, 16 of the 187 units have been sold, and we have received $4,126,179 in preferred interest and principal to date.
  • The Coda, the first of our four buildings at Bryant Street joint venture, received a final certificate of occupancy on April 1, 2021, and leasing efforts are under way. At quarter end, the Coda was 95.5% leased and 93.5% occupied. Leasing began in August on the second building at Bryant Street, known as the Chase 1B. At quarter end, this building was 48.1% leased and 23.5% occupied. Leasing of the third building, the Chase 1A, should begin in the fourth quarter. The fourth building which is purely a commercial space is 90% leased to Alamo Draft House. We expect it to open in the fourth quarter of this year. In total, at quarter end, two of our four buildings have their certificate of occupancy, and Bryant Street’s 488 residential units are 46.1% leased and 37.3% occupied. Its commercial space is 74.9% leased with no occupancy currently.
  • We began construction on our 1800 Half Street joint venture project at the end of August 2020 and expect the building to be complete in the third quarter of 2022. As of the end of the third quarter, the project was 45.61% complete.
  • At quarter end, our Riverside joint venture project in Greenville, South Carolina is 98% complete and awaiting its final certificate of occupancy. Leasing began this quarter and the building is 35% leased and 23% occupied.
  • At quarter end, our .408 Jackson joint venture project in Greenville, South Carolina is 70% complete. We expect to complete construction and begin leasing in third quarter of 2022.

Stabilized Joint Venture Segment:

In March 2021, we reached stabilization on Phase II (The Maren) of the development known as RiverFront on the Anacostia in Washington, D.C., a 250,000-square-foot mixed-use development which supports 264 residential units and 6,937 square feet of retail developed by a joint venture between the Company and MRP. Stabilization in this case means 90% of the individual apartments had been leased and occupied by third party tenants. Upon reaching stabilization, the Company has, for a period of one year, the exclusive right to (i) cause the joint venture to sell the property or (ii) cause the Company’s and MRP’s percentage interests in the joint venture to be adjusted so as to take into account the contractual payouts assuming a sale at the value of the development at the time of this “Conversion Election”. Reaching stabilization resulted in a change of control for accounting purposes as the veto rights of the minority shareholder lapsed and the Company became the primary beneficiary. As such, as of March 31, 2021, the Company consolidated the assets (at current fair value based on appraisal), liabilities and operating results of the joint venture. Up through the first quarter of this year, accounting for The Maren was reflected in Equity in loss of joint ventures on the Consolidated Statements of Income. Starting April 1, 2021, all the revenue and expenses are accounted for in the same manner as Dock 79 in the stabilized joint venture segment.

Total revenues in this segment were $5,204,000, an increase of $2,624,000 versus $2,580,000 in the same period last year. The Maren’s revenue was $2,428,000 and Dock 79 revenues increased $196,000. Total operating loss in this segment was $(495,000), a decrease of $843,000 versus a profit of $348,000 in the same period last year. The quarter includes $1,373,000 amortization expense of the $4,750,000 fair value of The Maren’s leases-in-place established when we booked this asset as part of the gain on remeasurement upon consolidation of this Joint Venture. Net Operating Income this quarter for this segment was $3,113,000, up $1,479,000 or 90.51% compared to the same quarter last year due to The Maren’s consolidation into this segment.

At the end of September, The Maren was 93.56% leased and 95.45% occupied. Average residential occupancy for the quarter was 95.92%, and 71.91% of expiring leases renewed with no increase in rent due to the mandated rent freeze on renewals in DC. The Maren is a joint venture between the Company and MRP, in which FRP Holdings, Inc. is the majority partner with 70.41% ownership.

Dock 79’s average residential occupancy for the quarter was 95.94%, and at the end of the quarter, Dock 79’s residential units were 93.11% leased and 94.75% occupied. This quarter, 57.75% of expiring leases renewed with no increase in rent due to the mandated rent freeze on renewals in DC. Dock 79 is a joint venture between the Company and MRP, in which FRP Holdings, Inc. is the majority partner with 66% ownership.

Third quarter distributions from our CS1031 Hickory Creek DST investment were $86,000.

Nine Months Operational Highlights

  • Highest mining royalty revenue total through the first nine months in segment’s history
  • Three straight quarters of mining revenue for the LTM higher than $9.5 million

Nine Months Consolidated Results of Operations

Net income attributable to the Company for the first nine months of 2021 was $28,807,000 or $3.07 per share versus $11,222,000 or $1.16 per share in the same period last year. The first nine months of 2021 was impacted by the following items:

  • Gain of $51.1 million on the remeasurement of investment in The Maren real estate partnership, which is included in Income before income taxes. This gain on remeasurement is mitigated by a $10.1 million provision for taxes and $14.0 million attributable to noncontrolling interest.
  • The period includes $3,241,000 amortization expense of the $4,750,000 fair value of The Maren’s leases-in-place established when we booked this asset as part of the gain on remeasurement upon consolidation of this Joint Venture.
  • Interest income decreased $2,549,000 due to bond maturities and the repayment of the Company’s preferred interest in The Maren upon the building’s refinancing.
  • Interest expense increased $1,643,000 due to a $900,000 prepayment penalty on the Dock 79 refinancing plus interest on The Maren’s debt partially offset by a lower interest rate on Dock 79.
  • Gain from sale of real estate decreased $8,524,000. The prior quarter included $805,000 for an easement and sale of excess land in the Mining Royalty Lands Segment. The prior year included a gain of $9,329,000 from the sale of the three remaining lots at our Lakeside Business Park, 1801 62nd Street, our inactive and depleted quarry land at Gulf Hammock, and 87 acres from our Ft. Myers property.

Nine Months Segment Operating Results

Asset Management Segment:

Total revenues in this segment were $1,919,000, down $170,000 or 8.1%, over the same period last year due to the sale of our warehouse 1801 62nd Street in July 2020 which had $423,000 of revenues in the same period last year. Operating loss was ($154,000), down $116,000 from an operating loss of ($38,000) in the same period last year primarily due to the sale of 1801 62nd Street.

Mining Royalty Lands Segment:

Total revenues in this segment were $7,198,000 versus $7,094,000 in the same period last year. Total operating profit in this segment was $6,273,000, an increase of $21,000 versus $6,252,000 in the same period last year.
   
Stabilized Joint Venture Segment:

Total revenues in this segment were $12,535,000, an increase of $4,850,000 versus $7,685,000 in the same period last year. The Maren’s revenue was $4,591,000 and Dock 79 revenues increased $260,000. Total operating loss in this segment was ($1,636,000), a decrease of $2,847,000 versus a profit of $1,211,000 in the same period last year. The period includes $3,241,000 amortization expense of the $4,750,000 fair value of The Maren’s leases-in-place established when we booked this asset as part of the gain on remeasurement upon consolidation of this Joint Venture. Net Operating Income for this segment was $7,684,000, up $2,584,000 or 50.67% compared to the same period last year due to The Maren’s consolidation into this segment.

Since The Maren achieved stabilization on the last day of March, average residential occupancy is 94.86% and 68.15% of expiring leases have renewed with no increase in rent due to the mandated rent freeze on renewals in DC.   The Maren is a joint venture between the Company and MRP, in which FRP Holdings, Inc. is the majority partner with 70.41% ownership.

Dock 79’s average residential occupancy for the first nine months of 2021 was 95.43%. Through the first nine months of the year, 59.33% of expiring leases renewed with no increase in rent due to the mandated rent freeze on renewals in DC. Dock 79 is a joint venture between the Company and MRP, in which FRP Holdings, Inc. is the majority partner with 66% ownership.

In March, we completed a refinancing of Dock 79 as well as securing permanent financing for The Maren. This $180 million loan ($92 million for Dock 79, $88 million for The Maren) lowers the interest rate at Dock 79 from 4.125% to 3.03%, defers any principal payments for 12 years for both properties, and repays the $13.75 million in preferred equity along with $2.3 million in accrued interest.

Distributions from our CS1031 Hickory Creek DST investment were $257,000 for the first nine months of the year.

Impact of the COVID-19 Pandemic

Though circumstances have improved, the COVID-19 pandemic continues to have an extraordinary impact on the world economy and the markets in which we operate. We have continued operations throughout the pandemic and have made every effort to act in accordance with national, state, and local regulations and guidelines. During 2020, Dock 79 and The Maren most directly suffered the impacts to our business from the pandemic due to our retail tenants being unable to operate at capacity, the lack of attendance at the Washington Nationals baseball park and the rent freeze imposed by the District. This year, because of the vaccine, herd immunity, and efforts to reopen the economy, our businesses were affected though not to the same extent as 2020. Some of the same conditions remain in place, and it is possible that they may impact our ability to lease retail spaces in Washington, D.C. and Greenville. We expect our business to be affected by the pandemic for at least the remainder of 2021. 

Summary and Outlook

Although royalty revenue is down this quarter compared to the same quarter last year, royalty revenue for the first nine months was $7,198,000, an increase of 1.46% over the same period last year and the highest revenue total for the first nine months in the segment’s history. Revenue for the last twelve months was $9,581,000, an increase of 1.09% over calendar year 2020. This marks the third straight quarter where the last twelve months’ revenue exceeded $9.5 million.

For the fourth quarter in a row, Dock 79’s occupancy has been above 94% at quarter end. This is the very first time Dock 79 has ended the four straight quarters with an occupancy higher than 94%.

With The Maren’s stabilization at the end of March this year, we are now in our second reporting period with The Maren consolidated on to our books. Because of the increased depreciation and amortization attributable to the Company as a result of consolidating The Maren’s results into our income statement, the impact on net income may in fact be negative for some time, but the positive impact on our NOI and cash flow will be significant. The Maren was 93.56% leased and 95.45% occupied at quarter end, and its retail space is 100% leased with occupancy expected in the fourth quarter of this year once build out is complete. It has been over a year since the District put in place the “emergency” measures which have prevented us from raising rents on renewals. This has obviously mitigated our ability to grow NOI at Dock 79. With The Maren now going through its first generation of renewals, it too is feeling the effect of these emergency measures. It is our understanding that these measures are set to expire but not prior to the end of the year. Because renewal negotiations take place several weeks in advance, if the emergency measures expire at year end, we will not see any practical effect to rent increases until February 2022.
   
We remain pleased with the current direction of our asset management segment, particularly the industrial assets. The speed with which we leased up and then sold our building at 1801 62nd Street last year strengthened our commitment to industrial development. We have a build-to-suit and two spec buildings under construction at Hollander and those three buildings will complete any development at Hollander for the foreseeable future. Because of that, we have bolstered our land bank with the $10.5 million purchase of 55 acres in Aberdeen, Maryland as well as this quarter’s purchase of 17 acres in Harford County, Maryland. Once entitled, this property will be capable of supporting over 625,000 square feet of industrial product and will be essential for future industrial development as we finish developing our remaining inventory at Hollander Business Park.

At the end of September, we held our very first Investor Day. We hope it was the first of many and the last one we hold virtually. The event afforded us an opportunity to take stock of where we are now and where we are headed. The first nine months have seen the stabilization, consolidation, and permanent financing of The Maren; the refinancing of Dock 79; leasing begin at Bryant St and Riverside in Greenville; a build-to-suit opportunity at Hollander as well as the mining royalties’ highest nine-month revenue performance. That is a lot to take stock of in a short period of time, but we are more excited about where we are headed. In the not-so-distant future, we will finish construction and start leasing Half Street and .408 Jackson; we will finish construction on three warehouses and begin work on allowing our landbank to accommodate our next generation of industrial development; and hopefully, we will not only see the passage but the practical effects of an infrastructure bill on our mining royalties income. We mentioned this at the Investor Day, but, assuming all goes according to plan, it is our belief that over the next few years, we will put all of our cash to use in new projects. We will continue to be opportunistic in repurchasing stock. During 2021, the Company repurchased 6,004 shares at an average cost of $43.95 per share.

Conference Call

The Company will also host a conference call on Thursday, November 4, 2021 at 12:30 p.m. (EDT). Analysts, stockholders and other interested parties may access the teleconference live by calling 1-877-271-1828 (passcode 47240873) within the United States. International callers may dial 1-334-323-9871 (passcode 47240873). Computer audio live streaming is available via the Internet through this link http://stream.conferenceamerica.com/frp110421. For the archived audio via the internet, click on the following link http://archive.conferenceamerica.com/archivestream/frp110421.mp3. An audio replay will be available for sixty days following the conference call. To listen to the audio replay, dial toll free 1-877-919-4059, international callers dial 1-334-323-0140. The passcode of the audio replay is 29813855. Replay options: “1” begins playback, “4” rewind 30 seconds, “5” pause, “6” fast forward 30 seconds, “0” instructions, and “9” exits recording. There may be a 30-40 minute delay until the archive is available following the conclusion of the conference call.

Investors are cautioned that any statements in this press release which relate to the future are, by their nature, subject to risks and uncertainties that could cause actual results and events to differ materially from those indicated in such forward-looking statements. These include, but are not limited to: the impact of the COVID-19 Pandemic on our operations and financial results; 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., Richmond, Virginia, 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; cybersecurity 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.

FRP Holdings, Inc. is a holding company engaged in the real estate business, namely (i) leasing and management of 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) leasing and management of a residential apartment building.

 
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,
  2021 2020 2021 2020
Revenues:                
Lease revenue $6,224   3,591   15,623   10,636 
Mining lands lease revenue  2,249   2,507   7,198   7,094 
Total Revenues  8,473   6,098   22,821   17,730 
                 
Cost of operations:                
Depreciation, depletion and amortization  3,796   1,438   9,627   4,406 
Operating expenses  1,557   892   3,792   2,598 
Property taxes  986   706   2,764   2,089 
Management company indirect  745   844   2,137   2,208 
Corporate expenses  657   637   2,486   2,850 
Total cost of operations  7,741   4,517   20,806   14,151 
                 
Total operating profit  732   1,581   2,015   3,579 
                 
Net investment income, including realized gains of $0 $55, $0 and $297, respectively  943   1,814   3,366   5,915 
Interest expense  (414)  (46)  (1,785)  (142)
Equity in loss of joint ventures  (1,244)  (1,788)  (3,997)  (3,773)
Gain on remeasurement of investment in real estate partnership        51,139    
Gain on sale of real estate     5,732   805   9,329 
                 
Income before income taxes  17   7,293   51,543   14,908 
Provision for income taxes  130   2,022   10,500   4,161 
                 
Net income (loss)  (113)  5,271   41,043   10,747 
Gain (loss) attributable to noncontrolling interest  (465)  (184)  12,236   (475)
Net income attributable to the Company $352   5,455   28,807   11,222 
                 
Earnings per common share:                
Net income attributable to the Company-                
Basic $0.04   0.57   3.08   1.16 
Diluted $0.04   0.57   3.07   1.16 
                 
Number of shares (in thousands) used in computing:           
-basic earnings per common share  9,363   9,517   9,352   9,646 
-diluted earnings per common share  9,399   9,545   9,390   9,681 


 
FRP HOLDINGS, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(Unaudited) (In thousands, except share data)
 
  September 30, 2021 December 31, 2020
Assets:    
Real estate investments at cost:        
Land $123,397   91,744 
Buildings and improvements  255,366   141,241 
Projects under construction  13,799   4,879 
Total investments in properties  392,562   237,864 
Less accumulated depreciation and depletion  44,266   34,724 
Net investments in properties  348,296   203,140 
         
Real estate held for investment, at cost  9,559   9,151 
Investments in joint ventures  145,975   167,071 
Net real estate investments  503,830   379,362 
         
Cash and cash equivalents  162,881   73,909 
Cash held in escrow  502   196 
Accounts receivable, net  991   923 
Investments available for sale at fair value  4,315   75,609 
Federal and state income taxes receivable  2,082   4,621 
Unrealized rents  580   531 
Deferred costs  3,047   707 
Other assets  525   502 
Total assets $678,753   536,360 
         
Liabilities:        
Secured notes payable $178,371   89,964 
Accounts payable and accrued liabilities  3,706   3,635 
Other liabilities  1,886   1,886 
Deferred revenue  470   542 
Deferred income taxes  65,379   56,106 
Deferred compensation  1,247   1,242 
Tenant security deposits  764   332 
Total liabilities  251,823   153,707 
         
Commitments and contingencies        
         
Equity:        
Common stock, $.10 par value
25,000,000 shares authorized,
9,411,028 and 9,363,717 shares issued
and outstanding, respectively
  941   936 
Capital in excess of par value  57,512   56,279 
Retained earnings  338,344   309,764 
Accumulated other comprehensive income, net  193   675 
Total shareholders’ equity  396,990   367,654 
Noncontrolling interest MRP  29,940   14,999 
Total equity  426,930   382,653 
Total liabilities and shareholders’ equity $678,753   536,360 
         

Asset Management Segment:

  Three months ended September 30    
(dollars in thousands) 2021 % 2020 % Change %
             
Lease revenue $619   100.0%  721   100.0%  (102)  -14.1%
                         
Depreciation, depletion and amortization  137   22.1%  137   19.0%     0.0%
Operating expenses  76   12.3%  139   19.3%  (63)  -45.3%
Property taxes  37   6.0%  43   5.9%  (6)  -14.0%
Management company indirect  200   32.3%  202   28.0%  (2)  -1.0%
Corporate expense  180   29.1%  165   22.9%  15   9.1%
                         
Cost of operations  630   101.8%  686   95.1%  (56)  -8.2%
                         
Operating profit (loss) $(11)  -1.8%  35   4.9%  (46)  -131.4%
                         

Mining Royalty Lands Segment:

  Three months ended September 30    
(dollars in thousands) 2021 % 2020 % Change %
             
Mining lands lease revenue $2,249   100.0%  2,507   100.0%  (258)  -10.3%
                         
Depreciation, depletion and amortization  38   1.7%  60   2.4%  (22)  -36.7%
Operating expenses  11   0.5%  16   0.6%  (5)  -31.3%
Property taxes  68   3.0%  59   2.4%  9   15.3%
Management company indirect  95   4.2%  81   3.2%  14   17.3%
Corporate expense  69   3.1%  53   2.1%  16   30.2%
                         
Cost of operations  281   12.5%  269   10.7%  12   4.5%
                         
Operating profit $1,968   87.5%  2,238   89.3%  (270)  -12.1%
                         

Development Segment:

  Three months ended September 30
(dollars in thousands) 2021 2020 Change
       
Lease revenue $401   290   111 
             
Depreciation, depletion and amortization  53   53    
Operating expenses  62   62    
Property taxes  355   330   25 
Management company indirect  335   504   (169)
Corporate expense  326   381   (55)
             
Cost of operations  1,131   1,330   (199)
             
Operating loss $(730)  (1,040)  310 
             

Stabilized Joint Venture Segment:

  Three months ended September 30    
(dollars in thousands) 2021 % 2020 % Change %
             
Lease revenue $5,204   100.0%  2,580   100.0%  2,624   101.7%
                         
Depreciation, depletion and amortization  3,568   68.6%  1,188   46.0%  2,380   200.3%
Operating expenses  1,408   27.0%  675   26.2%  733   108.6%
Property taxes  526   10.1%  274   10.6%  252   92.0%
Management company indirect  115   2.2%  57   2.2%  58   101.8%
Corporate expense  82   1.6%  38   1.5%  44   115.8%
                         
Cost of operations  5,699   109.5%  2,232   86.5%  3,467   155.3%
                         
Operating profit (loss) $(495)  -9.5%  348   13.5%  (843)  -242.2%
                         

Asset Management Segment:

  Nine months ended September 30    
(dollars in thousands) 2021 % 2020 % Change %
             
Lease revenue $1,919   100.0%  2,089   100.0%  (170)  -8.1%
                         
Depreciation, depletion and amortization  408   21.3%  529   25.3%  (121)  -22.9%
Operating expenses  289   15.0%  332   15.9%  (43)  -13.0%
Property taxes  117   6.1%  91   4.4%  26   28.6%
Management company indirect  577   30.1%  437   20.9%  140   32.0%
Corporate expense  682   35.5%  738   35.3%  (56)  -7.6%
                         
Cost of operations  2,073   108.0%  2,127   101.8%  (54)  -2.5%
                         
Operating loss $(154)  -8.0%  (38)  -1.8%  (116)  305.3%
                         

Mining Royalty Lands Segment:

  Nine months ended September 30    
(dollars in thousands) 2021 % 2020 % Change %
             
Mining lands lease revenue $7,198   100.0%  7,094   100.0%  104   1.5%
                         
Depreciation, depletion and amortization  161   2.2%  160   2.3%  1   0.6%
Operating expenses  34   0.5%  43   0.6%  (9)  -20.9%
Property taxes  199   2.8%  191   2.7%  8   4.2%
Management company indirect  273   3.8%  214   3.0%  59   27.6%
Corporate expense  258   3.6%  234   3.3%  24   10.3%
                         
Cost of operations  925   12.9%  842   11.9%  83   9.9%
                         
Operating profit $6,273   87.1%  6,252   88.1%  21   0.3%
                         

Development Segment:

  Nine months ended September 30
(dollars in thousands) 2021 2020 Change
       
Lease revenue 1,169   862   307 
             
Depreciation, depletion and amortization  159   160   (1
Operating expenses  133   415   (282
Property taxes  1,082   1,019   63 
Management company indirect  996   1,404   (408
Corporate expense  1,267   1,710   (443
             
Cost of operations  3,637   4,708   (1,071
             
Operating loss $(2,468)  (3,846)  1,378 
             

Stabilized Joint Venture Segment:

  Nine months ended September 30    
(dollars in thousands) 2021 % 2020 % Change %
             
Lease revenue $12,535   100.0%  7,685   100.0%  4,850   63.1%
                         
Depreciation, depletion and amortization  8,899   71.0%  3,557   46.3%  5,342   150.2%
Operating expenses  3,336   26.6%  1,808   23.5%  1,528   84.5%
Property taxes  1,366   11.0%  788   10.2%  578   73.4%
Management company indirect  291   2.3%  153   2.0%  138   90.2%
Corporate expense  279   2.2%  168   2.2%  111   66.1%
                         
Cost of operations  14,171   113.1%  6,474   84.2%  7,697   118.9%
                         
Operating profit (loss) $(1,636)  -13.1%  1,211   15.8%  (2,847)  -235.1%
                         

Non-GAAP Financial Measures

To supplement the financial results presented in accordance with GAAP, FRP presents certain non-GAAP financial measures within the meaning of Regulation G promulgated by the Securities and Exchange Commission. The non-GAAP financial measure included in this quarterly report is net operating income (NOI). FRP uses this non-GAAP financial measure to analyze its 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.

            
Net Operating Income Reconciliation           
Nine months ended 09/30/21 (in thousands)           
     Stabilized      
 Asset   Joint Mining Unallocated FRP
 Management Development Venture Royalties Corporate Holdings
 Segment Segment Segment Segment Expenses Totals
Net Income (loss) (130)  (2,521)  37,874   5,159   661   41,043 
Income Tax Allocation (50)  (933)  9,506   1,913   64   10,500 
Income (loss) before income taxes (180)  (3,454)  47,380   7,072   725   51,543 
                        
Less:                       
Gain on remeasurement of real estate investment       51,139         51,139 
Gain on investment land sold          831      831 
Unrealized rents 49      149   166      364 
Interest income    2,608         758   3,366 
Plus:                       
Loss on sale of land 26               26 
Equity in loss of Joint Venture    3,594   371   32      3,997 
Interest Expense       1,752      33   1,785 
Depreciation/Amortization 408   159   8,899   161      9,627 
Management Co. Indirect 577   996   291   273      2,137 
Allocated Corporate Expenses 682   1,267   279   258      2,486 
                        
Net Operating Income (loss) 1,464   (46)  7,684   6,799      15,901 


Net Operating Income Reconciliation           
Nine months ended 09/30/20 (in thousands)           
     Stabilized      
 Asset   Joint Mining Unallocated FRP
 Management Development Venture Royalties Corporate Holdings
 Segment Segment Segment Segment Expenses Totals
Income (loss) from continuing operations 2,745   (2,055)  864   7,200   1,993   10,747 
Income Tax Allocation 1,018   (762)  496   2,670   739   4,161 
Income (loss) from continuing operations before income taxes 3,763   (2,817)  1,360   9,870   2,732   14,908 
                        
Less:                       
Equity in profit of Joint Ventures       254         254 
Gains on sale of buildings 3,801   1,877      3,651      9,329 
Unrealized rents 147         178      325 
Interest income    3,146         2,769   5,915 
Plus:                       
Unrealized rents       11         11 
Equity in loss of Joint Venture    3,994      33      4,027 
Interest Expense       105      37   142 
Depreciation/Amortization 529   160   3,557   160      4,406 
Management Co. Indirect 437   1,404   153   214      2,208 
Allocated Corporate Expenses 738   1,710   168   234      2,850 
                        
Net Operating Income (loss) 1,519   (572)  5,100   6,682      12,729 


Contact:  John D. Baker III 
  Chief Financial Officer904/858-9100