FRP Holdings, Inc. (NASDAQ: FRPH) Announces Results for the Third Quarter and Nine Months Ended September 30, 2020

Jacksonville, Florida, UNITED STATES


JACKSONVILLE, Fla., Nov. 04, 2020 (GLOBE NEWSWIRE) -- FRP Holdings, Inc. (NASDAQ-FRPH) 

Third Quarter Consolidated Results of Operations

Net income for the third quarter of 2020 was $5,455,000 or $.57 per share versus $2,001,000 or $.20 per share in the same period last year. The third quarter of 2020 was impacted by the following items:

  • Interest expense decreased $83,000 as we capitalized more interest on our joint venture construction projects.
  • Loss on joint ventures increased $1,042,000 primarily due to operating loss at the Maren due to leasing efforts.
  • Gain on sale of $5,732,000 from the sale of our building at 1801 62nd Street and the sale of 87 acres of our Ft. Myers property compared to $126,000 in the same period last year.

Loss from discontinued operations for the third quarter of 2019 was ($13,000) or $.00 per share. The third quarter of 2019 included a $144,000 realized gain on bonds called early.

Third Quarter Segment Operating Results

Asset Management Segment:

Most of the Asset Management Segment was reclassified to discontinued operations leaving two commercial properties as well as Cranberry Run, which we purchased in the first quarter of 2019, and 1801 62nd Street which joined this segment on April 1 of 2019 and sold this quarter. Cranberry Run is a five-building industrial park in Harford County, MD totaling 268,010 square feet of industrial/ flex space and at quarter end was 78.6% leased and occupied. Total revenues in this segment were $721,000, up $291,000 or 67.7%, over the same period last year. Operating profit was $35,000, up $195,000 from an operating loss of ($160,000) in the same quarter last year due to 1801 62nd St being fully leased and occupied, improved leasing at Cranberry offset by the sale of 7030 Dorsey Road in June 2019.

Mining Royalty Lands Segment:

Total revenues in this segment were $2,507,000 versus $2,302,000 in the same period last year. Total operating profit in this segment was $2,238,000, an increase of $179,000 versus $2,059,000 in the same period last year.

Development Segment:

The Development segment is responsible for (i) seeking out and identifying opportunistic purchases of income producing warehouse/office buildings, and (ii) developing our non-income producing properties into income production.

With respect to ongoing projects:

  • We are in the PUD entitlement process for our 118-acre tract in Hampstead, Maryland, now known as “Hampstead Overlook.”  Hampstead Overlook received Concept Plan approval from the Town of Hampstead for 164 single and 91 town home residential units in February 2020, and the project is currently under Preliminary Plan review with the governing agencies.
  • This quarter we received permit entitlements for two industrial buildings at Hollander Business Park totaling 146,000 square feet.  We have started construction and anticipate shell completion in the third quarter of 2021.
  • We finished shell building construction in December 2018 on the two office buildings in the first phase of our joint venture with St. John Properties.  Shell building construction of the two retail buildings was completed in January 2019. 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 47% leased and 44% occupied.
  • We are the principal capital source of a residential development venture in Baltimore County, Maryland known as “Hyde Park.”  We have committed up to $3.5 million in exchange for an interest rate of 10%. Additional proceeds and interest payments above a 20% preferred return on capital determine a split of profits.  Entitlements for the development of the property are complete, and a homebuilder is under contract to purchase all the 126 recorded building lots.  The first phase of settlement occurred in May 2020, resulting in a $2.67 million principal and interest payment, with subsequent payments of $1.26 million in principal and interest payments in the third quarter. Currently all principal and $322,605 in accrued interest has been repaid.
  • We are the principal capital source of a residential development venture in Prince George’s County, Maryland known as “Amber Ridge.”  We have committed up to $18.5 million in exchange for an interest rate of 10%.   Additional proceeds and interest payments above a 20% preferred return on capital determine a split of profits.  Amber Ridge will hold 187 town homes.  We are currently pursuing entitlements, mass grading the site, and have two homebuilders under contract to purchase all 187 units upon completion of development infrastructure.
  • In April 2018, we began construction on Phase II of our RiverFront on the Anacostia project, now known as “The Maren.”  The 14-story project has 264 units and 6,937 net leasable square feet of ground floor retail and received its certificate of occupancy at the end of September.  Lease-up commenced in earnest in the second week of March.  At the end of the quarter, the Maren’s residential units were 76.14% leased, and 68.94% occupied.
  • In December 2018, the Company entered into a joint venture agreement with MidAtlantic Realty Partners (MRP) for the development of the first phase of a multifamily, mixed-use development in northeast Washington, DC known as “Bryant Street.”  The project is comprised of four buildings, with 487 units and 85,681 net leasable square feet of retail.  FRP contributed $32 million in common equity and another $23 million in preferred equity to the joint venture.  Construction began in February 2019 and as of the end of the quarter was 78.00% complete.  Bryant Street is currently on time, within budget, and expected to be complete in the fourth quarter of 2021, with the first of the four buildings delivering in the fourth quarter of 2020.  This project is located in an opportunity zone and has allowed us to defer $14.9 million in taxes associated with the sale of our industrial assets.
  • In December 2019, the Company entered into a joint venture agreement with MRP for the development of a mixed-use project known as “1800 Half Street.” The development is located in the Buzzard Point area of Washington, DC, less than half a mile downriver from Dock 79 and the Maren. It lies directly between our two acres on the Anacostia, currently under lease by Vulcan, and Audi Field, the home stadium of the DC United. The 10-story structure will have 344 apartments and 11,246 square feet of ground floor retail.  FRP contributed $37.3 million in common equity. The project is a qualified opportunity zone investment and will defer just over $10 million in taxes associated with the sale of our industrial assets. In June 2020, we closed on a $74 million construction loan, and we began construction at the end of August.
  • In December 2019, the company entered into two joint ventures in Greenville, SC with a new partner, Woodfield Development. Woodfield specializes in Class-A multi-family, mixed use developments primarily in the Carolinas and DC.  Our first joint venture with them is a 200-unit multifamily project known as “Riverside.”  FRP contributed $6.2 million in common equity for a 40% ownership interest.  Construction began in February 2020 and should be complete in the third quarter of 2021. The second joint venture in Greenville with Woodfield is a 227-unit multifamily development known as “.408 Jackson.” It will have 4,700 square feet of retail and is located across the street from Greenville’s minor league baseball stadium.  FRP contributed $9.7 million in common equity for a 40% ownership interest.  Construction began in May 2020 and should be complete in the second quarter of 2022. Both projects are qualified opportunity investments and will defer a combined $4.3 million in taxes.

Stabilized Joint Venture Segment:

Dock 79’s average residential occupancy for the quarter was 93.29%, and at the end of the quarter, Dock 79’s residential units were 90.49% leased and 94.43% occupied. This quarter, 52.31% of expiring leases renewed with no increase in rent due to the mandated rent freeze on renewals in DC. Net Operating Income this quarter for this segment was $1,634,000, down $215,000 or 11.63% compared to the same quarter last year. Dock 79 is a joint venture between the Company and MRP, in which FRP Holdings, Inc. is the majority partner with 66% ownership.

In July 2019, the Company completed a like-kind exchange by reinvesting $6,000,000 into a Delaware Statutory Trust (DST) known as CS1031 Hickory Creek DST. The DST owns a 294-unit garden-style apartment community known as Hickory Creek consisting of 19 three-story apartment buildings containing 273,940 rentable square feet.  Hickory Creek was constructed in 1984 and substantially renovated in 2016 and is located in suburban Richmond, Virginia. The Company is 26.649% beneficial owner and receives monthly distributions.   Third quarter distributions were $86,000. The project is a qualified 1031 like-kind exchange investment and will defer $790,000 in taxes associated with the sales of 7030 Dorsey Road and 1502 Quarry Drive.

Impact of the COVID-19 Pandemic.  The COVID-19 pandemic is having an extraordinary impact on the world economy and the markets in which we operate. As an essential business, we have continued to operate throughout the pandemic in accordance with White House guidance and orders issued by state and local authorities. We have implemented social distancing and other measures to protect the health of our employees and customers. While we recognize the importance of social distancing, stay at home and telework measures to protect human health, as long as the rules and regulations related to the pandemic remain in place, they may adversely affect our business. The effects on our business include but are not limited to: our retail tenants will not being able to operate at capacity and retail leasing demand may be dampened as such; we will not be able to raise rents on renewals in Washington, D.C.; and any mandated interruption in construction could negatively affect our construction costs on development projects.  We are negotiating with our retail tenants on rent abatements and cash flow adjustments that will adversely affect our NOI. We anticipate that the pandemic will continue to have negative impacts on the overall economy that is likely to have a negative impact on many of our tenants. During this period, we will continue to fulfill our duty to operate while managing our business in a prudent fashion.

Nine Months Consolidated Results of Operations.

Net income for first nine months of 2020 was $11,222,000 or $1.16 per share versus $13,724,000 or $1.38 per share in the same period last year. Income from discontinued operations for the first nine months of 2019 was $6,849,000 or $.69 per share. Income from continuing operations increased $4,252,000 or 66% and was impacted by the following items:

  • Corporate expense stock compensation of $1,241,000 compared to $206,000 in the same period last year due the timing of stock grants.
  • Interest expense decreased $847,000 as we capitalized more interest on our joint venture construction projects.
  • Loss on joint ventures increased $2,491,000 primarily due to our share of the Bryant Street preferred interest, $354,000 amortization of guarantee liability related to the Bryant Street loan, $2,121,000 operating loss at the Maren due to pre-leasing efforts, partially offset by interest income generated in our opportunity zone investments prior to the funds being deployed.
  • Gain on sale of $9,329,000 compared to $662,000 in the same period last year from the sale of the three remaining lots at our Lakeside Business Park, 1801 62nd Street, Gulf Hammock, and 87 acres from our Ft. Myers property.

Nine Months Segment Operating Results

Asset Management Segment:

Most of the Asset Management Segment was reclassified to discontinued operations leaving two commercial properties as well as Cranberry Run, which we purchased in the first quarter of 2019, and 1801 62nd Street which joined this segment on April 1 of 2019, but was sold in July 2020. Cranberry Run is a five-building industrial park in Harford County, MD totaling 268,010 square feet of industrial/ flex space and at quarter end was 78.6% leased and occupied. Total revenues in this segment were $2,089,000, up $356,000 or 20.5%, over the same period last year. Operating loss was ($38,000), down $199,000 from an operating loss of ($237,000) in the same period last year due to higher allocation of corporate expenses.  

Mining Royalty Lands Segment:

Total revenues in this segment were $7,094,000 versus $7,164,000 in the same period last year. Total operating profit in this segment was $6,252,000, a decrease of $230,000 versus $6,482,000 in the same period last year. The primary reason for this decrease is that we are no longer receiving double minimums at our Lake Louisa property, because our tenant, Cemex, received its final permit to begin mining the property in July 2019.    

Stabilized Joint Venture Segment:

Dock 79’s average residential occupancy for the first nine months was 92.80%, and at the end of the third quarter, Dock 79’s residential units were 90.49% leased and 94.43% occupied. For the first nine months, 56.22% of expiring leases renewed with an average increase in rent on those renewals of 0.41% due to the mandated rent freeze on renewals that went into effect in March. Net Operating Income for this segment was $5,100,000, down $246,000 or 4.6% compared to the same period last year. Dock 79 is a joint venture between the Company and MRP, in which FRP Holdings, Inc. is the majority partner with 66% ownership.

Distributions for Hickory Creek were $254,000 for the first nine months. The project is a qualified 1031 like-kind exchange investment in a Delaware Statutory Trust of which the Company is a 26.659% beneficial owner.

Summary and Outlook

As we have settled into a post-COVID world, we remain fortunate and pleasantly surprised with how well our assets have responded. Aggregates royalties this quarter were well ahead of the same period last year, and we are now only 1% off of last year’s record numbers through the first nine months. And like last year, the royalties we have collected through the first nine months exceed the royalties we collected in any entire year prior to 2017. Unrelated to any mining activity, Lee County exercised their option to buy 87 acres from our quarry in Ft. Myers for $2.2 million in order to extend Alico Road and ease traffic in the area. This road extension will benefit any second life developments on our property once the reserves are depleted.      

The lease up of the Maren continues to exceed our expectations. The building received its final certificate of occupancy at the end of September and is now officially “complete.” We signed 91 leases this past quarter and moved in 125 tenants. At quarter end, the building was 76% leased and 69% occupied, putting us within shouting distance of stabilization.  

Unfortunately for Dock 79, the rent freeze on renewals was extended through the end of the year. Because our apartments come up for renewal two months prior to the end of the lease, we will not have the ability to increase rent on renewals for the rest of the year. In all likelihood the first quarter of 2021 will be affected as well. The current environment is less than ideal for our three retail tenants, but they are all currently open and serving customers. Occupancy remains above 90% and renewals are still in line with where they were in a pre-COVID world. We believe that the rapid lease-up of the Maren and the continued success of Dock 79 speak to the quality of these assets and the desirability of their location. Despite major construction and no baseball, waterfront real estate still demands a premium, and as working from home becomes more and more common, it is possible that the environment afforded by these assets has only served to increase their appeal.

Industrial has responded well to the pandemic, as evidenced by the sale in July of 1801 62nd Street at Hollander Business Park for $12.3 million. We had no issues with tenants paying rent and do not expect to. We had some concerns regarding our office tenants, but every tenant is currently paying rent and the only issue we had with back rent is one tenant who owes $6,500 for the month of April.   

We are half a year into this pandemic, and we have been very fortunate. Our assets have performed nearly as well and sometimes better than they did a year ago. But while the people of this country have gotten used to life during a pandemic, COVID-19 as an economic factor may just be ramping up. Government intervention has shielded people and businesses from some of the financial realities of this disease, and as that well of assistance starts to dry up, it is possible that the second wave of the disease may be the first wave of real economic distress. We have yet to see any reason why our assets will not continue to perform well during this unusual time, but we have the safety net of a conservative balance sheet and substantial cash reserves to tide us over if they do. Regardless of what is happening right now or in the near future, we believe strongly in the long run viability of our business and its assets. The money we put back into it in the form of share buybacks is representative of that. To that end, during the first nine months of 2020, the Company repurchased 379,809 shares at an average cost of $41.30 per share.

Conference Call

The Company will host a conference call on Thursday, November 5, 2020 at 9:00 a.m. (EST). Analysts, stockholders and other interested parties may access the teleconference live by calling 1-877-271-1828 (passcode 58158510) within the United States.  International callers may dial 1-334-323-9871 (passcode 58158510).  Computer audio live streaming is available via the Internet through this link http://stream.conferenceamerica.com/frp110520. For the archived audio via the internet, click on the following link http://archive.conferenceamerica.com/archivestream/frp110520.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 69160033.  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 reinvestment opportunities for the proceeds from the Sale Transaction; 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 Richmond, Virginia; 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,
  2020 2019 2020 2019
Revenues:                
     Lease revenue $3,591   3,581   10,636   10,796 
     Mining lands lease revenue  2,507   2,302   7,094   7,164 
 Total Revenues  6,098   5,883   17,730   17,960 
                 
Cost of operations:                
     Depreciation, depletion and amortization  1,438   1,431   4,406   4,390 
     Operating expenses  892   952   2,598   2,744 
     Property taxes  706   740   2,089   2,206 
     Management company indirect  844   670   2,208   1,872 
     Corporate expenses  637   732   2,850   1,928 
Total cost of operations  4,517   4,525   14,151   13,140 
                 
Total operating profit  1,581   1,358   3,579   4,820 
                 
Net investment income, including realized gains of $55, $144, $297 and $591, respectively  1,814   2,019   5,915   5,813 
Interest expense  (46)  (129)  (142)  (989)
Equity in loss of joint ventures  (1,788)  (746)  (3,773)  (1,282)
Gain on sale of real estate  5,732   126   9,329   662 
                 
Income from continuing operations before income taxes  7,293   2,628   14,908   9,024 
Provision for income taxes  2,022   726   4,161   2,529 
Income from continuing operations   5,271   1,902   10,747   6,495 
                 
Income (loss) from discontinued operations, net  —     (13)  —     6,849 
                 
Net income  5,271   1,889   10,747   13,344 
Loss attributable to noncontrolling interest  (184)  (112)  (475)  (380)
Net income attributable to the Company $5,455   2,001   11,222   13,724 
                 
Earnings per common share:                
Income from continuing operations-                
    Basic $0.55   0.19   1.11   0.66 
    Diluted $0.55   0.19   1.11   0.65 
Discontinued operations-                
    Basic $—     —     —     0.69 
    Diluted $—     —     —     0.69 
Net income attributable to the Company-                
    Basic $0.57   0.20   1.16   1.39 
    Diluted $0.57   0.20   1.16   1.38 
                 
Number of shares (in thousands) used in computing:          
    -basic earnings per common share  9,517   9,843   9,646   9,903 
    -diluted earnings per common share  9,545   9,886   9,681   9,945 
                 

FRP HOLDINGS, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(Unaudited)
(In thousands, except share data)

  September 30 December 31
Assets: 2020 2019
Real estate investments at cost:        
Land $80,494   84,383 
Buildings and improvements  141,146   147,019 
Projects under construction  2,442   1,056 
Total investments in properties  224,082   232,458 
Less accumulated depreciation and depletion  33,684   30,271 
Net investments in properties  190,398   202,187 
         
Real estate held for investment, at cost  9,101   8,380 
Investments in joint ventures  167,586   160,452 
Net real estate investments  367,085   371,019 
         
Cash and cash equivalents  46,289   26,607 
Cash held in escrow  15,259   186 
Accounts receivable, net  923   546 
Investments available for sale at fair value  104,624   137,867 
Unrealized rents  530   554 
Deferred costs  921   890 
Other assets  499   479 
Total assets $536,130   538,148 
         
Liabilities:        
Secured notes payable $89,027   88,925 
Accounts payable and accrued liabilities  3,052   2,431 
Other liabilities  1,886   1,978 
Deferred revenue  609   790 
Federal and state income taxes payable  164   504 
Deferred income taxes  52,532   50,111 
Deferred compensation  1,240   1,436 
Tenant security deposits  314   328 
Total liabilities  148,824   146,503 
         
Commitments and contingencies        
         
Equity:        
Common stock, $.10 par value 25,000,000 shares authorized,
9,481,638 and 9,817,429 shares issued
and outstanding, respectively
  948   982 
Capital in excess of par value  56,690   57,705 
Retained earnings  313,103   315,278 
Accumulated other comprehensive income, net  996   923 
Total shareholders’ equity  371,737   374,888 
Noncontrolling interest MRP  15,569   16,757 
Total equity  387,306   391,645 
Total liabilities and shareholders’ equity $536,130   538,148 
         

Asset Management Segment:

  Three months ended September 30    
(dollars in thousands) 2020 % 2019 % Change %
             
Lease revenue $721   100.0%  430   100.0%  291   67.7%
                         
Depreciation, depletion and amortization  137   19.0%  154   35.8%  (17)  -11.0%
Operating expenses  139   19.3%  108   25.1%  31   28.7%
Property taxes  43   5.9%  70   16.3%  (27)  -38.6%
Management company indirect  202   28.0%  90   20.9%  112   124.4%
Corporate expense  165   22.9%  168   39.1%  (3)  -1.8%
                         
Cost of operations  686   95.1%  590   137.2%  96   16.3%
                         
Operating profit $35   4.9%  (160)  -37.2%  195   -121.9%
                         

Mining Royalty Lands Segment:

  Three months ended September 30    
(dollars in thousands) 2020 % 2019 % Change %
             
Mining lands lease revenue $2,507   100.0%  2,302   100.0%  205   8.9%
                         
Depreciation, depletion and amortization  60   2.4%  36   1.6%  24   66.7%
Operating expenses  16   0.6%  44   1.9%  (28)  -63.6%
Property taxes  59   2.4%  66   2.9%  (7)  -10.6%
Management company indirect  81   3.2%  53   2.3%  28   52.8%
Corporate expense  53   2.1%  44   1.9%  9   20.5%
                         
Cost of operations  269   10.7%  243   10.6%  26   10.7%
                         
Operating profit $2,238   89.3%  2,059   89.4%  179   8.7%
                         

Development Segment:

  Three months ended September 30 
(dollars in thousands) 2020 2019 Change 
        
Lease revenue $290   307   (17) 
              
Depreciation, depletion and amortization  53   54   (1) 
Operating expenses  62   105   (43) 
Property taxes  330   300   30  
Management company indirect  504   477   27  
Corporate expense  381   479   (98) 
              
Cost of operations  1,330   1,415   (85) 
              
Operating loss $(1,040)  (1,108)  68  
              

Stabilized Joint Venture Segment:

  Three months ended September 30    
(dollars in thousands) 2020 % 2019 % Change %
             
Lease revenue $2,580   100.0%  2,844   100.0%  (264)  -9.3%
                         
Depreciation, depletion and amortization  1,188   46.0%  1,187   41.7%  1   0.1%
Operating expenses  675   26.2%  695   24.4%  (20)  -2.9%
Property taxes  274   10.6%  304   10.7%  (30)  -9.9%
Management company indirect  57   2.2%  50   1.8%  7   14.0%
Corporate expense  38   1.5%  41   1.5%  (3)  -7.3%
                         
Cost of operations  2,232   86.5%  2,277   80.1%  (45)  -2.0%
                         
Operating profit $348   13.5%  567   19.9%  (219)  -38.6%
                         

Asset Management Segment:

  Nine months ended September 30    
(dollars in thousands) 2020 % 2019 % Change %
             
Lease revenue $2,089   100.0%  1,733   100.0%  356   20.5%
                         
Depreciation, depletion and amortization  529   25.3%  527   30.4%  2   0.4%
Operating expenses  332   15.9%  492   28.4%  (160)  -32.5%
Property taxes  91   4.4%  216   12.5%  (125)  -57.9%
Management company indirect  437   20.9%  265   15.3%  172   64.9%
Corporate expense  738   35.3%  470   27.1%  268   57.0%
                         
Cost of operations  2,127   101.8%  1,970   113.7%  157   8.0%
                         
Operating profit $(38)  -1.8%  (237)  -13.7%  199   -84.0%
                         

Mining Royalty Lands Segment:

  Nine months ended September 30    
(dollars in thousands) 2020 % 2019 % Change %
             
Mining lands lease revenue $7,094   100.0%  7,164   100.0%  (70)  -1.0%
                         
Depreciation, depletion and amortization  160   2.3%  130   1.8%  30   23.1%
Operating expenses  43   0.6%  75   1.1%  (32)  -42.7%
Property taxes  191   2.7%  203   2.8%  (12)  -5.9%
Management company indirect  214   3.0%  151   2.1%  63   41.7%
Corporate expense  234   3.3%  123   1.7%  111   90.2%
                         
Cost of operations  842   11.9%  682   9.5%  160   23.5%
                         
Operating profit $6,252   88.1%  6,482   90.5%  (230)  -3.5%
                         

Development Segment:

  Nine months ended September 30 
(dollars in thousands) 2020 2019 Change 
        
Lease revenue $862   892   (30) 
              
Depreciation, depletion and amortization  160   161   (1) 
Operating expenses  415   246   169  
Property taxes  1,019   918   101  
Management company indirect  1,404   1,314   90  
Corporate expense  1,710   1,219   491  
              
Cost of operations  4,708   3,858   850  
              
Operating loss $(3,846)  (2,966)  (880) 
              

Stabilized Joint Venture Segment:

  Nine months ended September 30    
(dollars in thousands) 2020 % 2019 % Change %
             
Lease revenue $7,685   100.0%  8,171   100.0%  (486)  -5.9%
                         
Depreciation, depletion and amortization  3,557   46.3%  3,572   43.7%  (15)  -0.4%
Operating expenses  1,808   23.5%  1,931   23.6%  (123)  -6.4%
Property taxes  788   10.2%  869   10.6%  (81)  -9.3%
Management company indirect  153   2.0%  142   1.8%  11   7.7%
Corporate expense  168   2.2%  116   1.4%  52   44.8%
                         
Cost of operations  6,474   84.2%  6,630   81.1%  (156)  -2.4%
                         
Operating profit $1,211   15.8%  1,541   18.9%  (330)  -21.4%
                         

Discontinued Operations:

  Three months ended Nine months ended
  September 30, September 30,
  2019 2019
Lease Revenue $   460 
         
Cost of operations:        
Depreciation, depletion and amortization  (24)  17 
Operating expenses  12   246 
Property taxes     46 
Management company indirect      
Corporate expenses      
Total cost of operations  (12)  309 
         
Total operating profit  12   151 
         
Interest expense      
Gain (loss) on sale of buildings  (30)  9,238 
         
Income (loss) before income taxes  (18)  9,389 
Provision for (benefit from) income taxes  (5)  2,540 
         
Income (loss) from discontinued operations $(13)  6,849 
         
Earnings per common share:        
Income (loss) from discontinued operations-        
Basic $0.00   0.69 
Diluted $0.00   0.69 
         

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 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.

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 


Net Operating Income Reconciliation           
Nine months ended 09/30/19 (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 218   (2,236)  304   4,796   3,413   6,495 
Income Tax Allocation 81   (829)  253   1,778   1,246   2,529 
Income (loss) from continuing operations before income taxes 299   (3,065)  557   6,574   4,659   9,024 
                        
Less:                       
Gains on sale of buildings 536         126      662 
Unrealized rents       25         25 
Interest income    1,123         4,690   5,813 
Plus:                       
Unrealized rents 5         184      189 
Equity in loss of Joint Venture    1,222   26   34      1,282 
Interest Expense       958      31   989 
Depreciation/Amortization 527   161   3,572   130      4,390 
Management Co. Indirect 265   1,314   142   151      1,872 
Allocated Corporate Expenses 470   1,219   116   123      1,928 
                        
Net Operating Income (loss) 1,030   (272)  5,346   7,070      13,174 


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