FRP HOLDINGS, INC. 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, 2021 or [_] 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, 2021 Common Stock, $.10 par value per share 9,411,028 shares 1 FRP HOLDINGS, INC. FORM 10-Q QUARTER ENDED SEPTEMBER 30, 2021 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 20 Item 3. Quantitative and Qualitative Disclosures about Market Risks 35 Item 4. Controls and Procedures 35 Part II. Other Information Item 1A. Risk Factors 35 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 2 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-K and other factors that might cause differences, some of which could be material, 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; 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. These forward-looking statements are made as of the date hereof based on management’s current expectations, and the Company does not undertake an obligation to update such statements, whether as a result of new information, future events or otherwise. 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. 3 PART I. FINANCIAL INFORMATION, ITEM 1. FINANCIAL STATEMENTS 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 See accompanying notes. 4 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 See accompanying notes. 5 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, 2021 2020 2021 2020 Net income (loss) $ ( 113 ) 5,271 41,043 10,747 Other comprehensive income net of tax: Minimum pension liability, net of income tax effect of $ 0 , $ 53 , $ 0 and $ 53 — 143 — 143 Unrealized gain (loss) on investments sale, net of income tax effect of $ ( 28 ) , $ ( 126 ) , $ ( 179 ) and $ ( 26 ) ( 75 ) ( 341 ) ( 482 ) ( 70 ) Comprehensive income (loss) $ ( 188 ) 5,073 40,561 10,820 Less comp. income attributable to Noncontrolling interest $ ( 465 ) ( 184 ) 12,236 ( 475 ) Comprehensive income attributable to the Company $ 277 5,257 28,325 11,295 See accompanying notes 6 FRP HOLDINGS, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS NINE MONTHS ENDED SEPTEMBER 30, 2021 AND 2020 (In thousands) (Unaudited) 2021 2020 Cash flows from operating activities: Net income $ 41,043 10,747 Adjustments to reconcile net income to net cash provided by continuing operating activities: Depreciation, depletion and amortization 9,772 4,572 Deferred income taxes 9,273 2,421 Equity in loss of joint ventures 3,997 3,773 Gain on remeasurement of invest in real estate partnership ( 51,139 ) — Gain on sale of equipment and property ( 876 ) ( 9,343 ) Stock-based compensation 1,006 1,241 Realized gain on available for sale investments — ( 297 ) Net changes in operating assets and liabilities: Accounts receivable 639 ( 377 ) Deferred costs and other assets 151 ( 178 ) Accounts payable and accrued liabilities ( 442 ) 440 Income taxes payable and receivable 2,539 ( 340 ) Other long-term liabilities 437 694 Net cash provided by operating activities 16,400 13,353 Cash flows from investing activities: Investments in properties ( 11,555 ) ( 3,200 ) Investments in joint ventures ( 10,031 ) ( 12,297 ) Return of capital from investments in joint ventures 20,100 1,386 Purchases of investments available for sale — ( 24,584 ) Proceeds from sales of investments available for sale 69,865 57,240 Cash at consolidation of real estate partnership 3,704 — Proceeds from the sale of assets 934 19,257 Cash held in escrow 30 ( 15,073 ) Net cash provided by investing activities 73,047 22,729 Cash flows from financing activities: Proceeds from long-term debt 92,070 — Repayment of long-term debt ( 90,000 ) — Debt issue costs ( 704 ) — Distribution to noncontrolling interest ( 1,846 ) ( 713 ) Repurchase of company stock ( 264 ) ( 15,687 ) Exercise of employee stock options 269 — Net cash used in financing activities ( 475 ) ( 16,400 ) Net increase in cash and cash equivalents 88,972 19,682 Cash and cash equivalents at beginning of year 73,909 26,607 Cash and cash equivalents at end of the period $ 162,881 46,289 See accompanying notes. 7 FRP HOLDINGS, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF SHAREHOLDERS’ EQUITY NINE MONTHS ENDED SEPTEMBER 30, 2021 AND 2020 (In thousands, except share amounts) Accumulated Total Capital in Other Comp- Share Non- Common Stock Excess of Retained rehensive holders’ Controlling Total Shares Amount Par Value Earnings Income, net Equity Interest Equity Balance at June 30, 2021 9,411,028 $ 941 $ 57,360 $ 337,992 $ 268 $ 396,561 $ 31,724 $ 428,285 Stock option grant compensation — — 17 — — 17 — 17 Restricted stock compensation — — 135 — — 135 — 135 Net income — — — 352 — 352 ( 465 ) ( 113 ) Distributions to partners — — — — — — ( 1,319 ) ( 1,319 ) Unrealized loss on investment, net — — — — ( 75 ) ( 75 ) — ( 75 ) Shares granted to employees, value Shares granted to employees Restricted stock award Shares purchased and cancelled Shares granted to Directors value Shares granted to Directors shares minimum pension liability Restricted stock award Restricted stock award, shares Exercise of stock options Exercise of stock options, shares Contributions from partners Shares purchased and cancelled, shares Balance at September 30, 2021 9,411,028 $ 941 $ 57,512 $ 338,344 $ 193 $ 396,990 $ 29,940 $ 426,930 Balance at December 31, 2020 9,363,717 $ 936 $ 56,279 $ 309,764 $ 675 $ 367,654 $ 14,999 $ 382,653 Stock option grant compensation — — 52 — — 52 — 52 Restricted stock compensation — — 404 — — 404 — 404 Shares granted to Employees 1,098 — 50 — — 50 — 50 Restricted stock award 27,778 3 ( 3 ) — — — — — Shares granted to Directors 9,105 1 499 — — 500 — 500 Exercise of stock options 15,334 1 268 — — 269 — 269 Shares purchased and cancelled ( 6,004 ) — ( 37 ) ( 227 ) — ( 264 ) — ( 264 ) Contributions from partners — — — — — — 4,551 4,551 Net income — — — 28,807 — 28,807 12,236 41,043 Distributions to partners — — — — — — ( 1,846 ) ( 1,846 ) Unrealized loss on investment, net — — — — ( 482 ) ( 482 ) — ( 482 ) Balance at September 30, 2021 9,411,028 $ 941 $ 57,512 $ 338,344 $ 193 $ 396,990 $ 29,940 $ 426,930 Balance at June 30, 2020 9,563,144 $ 956 $ 57,107 $ 310,486 $ 1,194 $ 369,743 $ 16,058 $ 385,801 Stock option grant compensation — — 24 — — 24 — 24 Restricted stock compensation — — 46 — — 46 — 46 Shares purchased and cancelled ( 81,506 ) ( 8 ) ( 487 ) ( 2,838 ) — ( 3,333 ) — ( 3,333 ) Net income — — — 5,455 — 5,455 ( 184 ) 5,271 Distributions to partners — — — — — — ( 305 ) ( 305 ) Minimum pension liability, net — — — — 143 143 — 143 Unrealized gain on investment, net — — — — ( 341 ) ( 341 ) — ( 341 ) Balance at September 30, 2020 9,481,638 $ 948 $ 56,690 $ 313,103 $ 996 $ 371,737 $ 15,569 $ 387,306 Balance at December 31, 2019 9,817,429 $ 982 $ 57,705 $ 315,278 $ 923 $ 374,888 $ 16,757 $ 391,645 Stock option grant compensation — — 71 — — 71 — 71 Restricted stock compensation — — 140 — — 140 — 140 Shares granted to Employees 11,448 1 529 — — 530 — 530 Shares granted to Directors 12,050 1 499 — — 500 — 500 Restricted stock award 20,520 2 ( 2 ) — — — — — Shares purchased and cancelled ( 379,809 ) ( 38 ) ( 2,252 ) ( 13,397 ) — ( 15,687 ) — ( 15,687 ) Net income — — — 11,222 — 11,222 ( 475 ) 10,747 Distributions to partners — — — — — — ( 713 ) ( 713 ) Minimum pension liability, net — — — — 143 143 — 143 Unrealized loss on investment, net — — — — ( 70 ) ( 70 ) — ( 70 ) Balance at September 30, 2020 9,481,638 $ 948 $ 56,690 $ 313,103 $ 996 $ 371,737 $ 15,569 $ 387,306 8 FRP HOLDINGS, INC. AND SUBSIDIARIES CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS SEPTEMBER 30, 2021 (Unaudited) (1) Description of Business and Basis of Presentation . FRP Holdings, Inc. is a holding company engaged in various real estate businesses, namely (i) mining royalty land ownership and leasing, (ii) land acquisition, entitlement and development primarily for future warehouse/office or residential building construction, (iii) ownership, leasing, and management of residential apartment buildings, and (iv) warehouse/office building ownership, leasing and management. 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”) and Florida Rock Properties, Inc. (“Properties”), Riverfront Investment Partners I, LLC, and commencing March 31, 2021 also Riverfront Investment Partners II, LLC (See Note 12). Our investment in the Brooksville joint venture, BC FRP Realty joint venture, Riverfront Investment Partners II, LLC prior to March 31, 2021, Bryant Street Partnerships, 1800 Half Street and Greenville/Woodfield are accounted for under the equity method of accounting (See 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. The Company uses the cost method to account for its investment in DST Hickory Creek because it does not have significant influence over operating and financial policies. 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, 2021 are not necessarily indicative of the results that may be expected for the year ending December 31, 2021. 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, 2020. (2) Recently Issued Accounting Standards . None. (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 commercial properties. The flex/office warehouses in the Asset Management Segment were sold and reclassified to discontinued operations leaving only two commercial properties and one recent industrial acquisition, Cranberry Run, which we purchased in 2019. In July 2020 we sold our property located at 1801 62 nd Street, our most recent spec building in Hollander Business Park, which had joined Asset Management April 1, 2019. 9 Our Mining Royalty Lands segment owns several properties comprising approximately 15,000 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 for their highest and best use for 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 two joint ventures in the segment, Riverfront Investment Partners I, LLC (“Dock 79”) and Riverfront Investment Partners II, LLC (“The Maren”) are consolidated. The Maren was consolidated effective March 31, 2021 and prior periods are still reflected under the equity method. The ownership of Dock 79 and The Maren (commencing March 31, 2021) attributable to our partner MidAtlantic Realty Partners, LLC (MRP) is 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 are reported in net income, including both the amounts attributable to the Company and the noncontrolling interest. The Maren is reflected in Equity in loss of joint ventures on the Consolidated Statements of Income for the periods up to March 31, 2021 but is reflected like Dock 79 for periods commencing April 1, 2021. 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, 2021 2020 2021 2020 Revenues: Revenues Asset management $ 619 721 1,919 2,089 Revenues Mining royalty lands 2,249 2,507 7,198 7,094 Revenues Development 401 290 1,169 862 Revenues Stabilized Joint Venture 5,204 2,580 12,535 7,685 Revenues 8,473 6,098 22,821 17,730 Operating profit (loss): Before corporate expenses: Operating profit before corporate expenses Asset management $ 169 200 528 700 Operating profit before corporate expenses Mining royalty lands 2,037 2,291 6,531 6,486 Operating profit before corporate expenses Development ( 404 ) ( 659 ) ( 1,201 ) ( 2,136 ) Operating profit before corporate expenses Stabilized Joint Venture ( 413 ) 386 ( 1,357 ) 1,379 Operating profit before corporate expenses Operating profit before corporate expenses 1,389 2,218 4,501 6,429 Corporate expenses: Corporate expenses Allocated to asset management ( 180 ) ( 165 ) ( 682 ) ( 738 ) Corporate expenses Allocated to mining royalty lands ( 69 ) ( 53 ) ( 258 ) ( 234 ) Corporate expenses Allocated to development ( 326 ) ( 381 ) ( 1,267 ) ( 1,710 ) Corporate expenses Allocated to stabilized joint venture ( 82 ) ( 38 ) ( 279 ) ( 168 ) Corporate expenses Total corporate expenses ( 657 ) ( 637 ) ( 2,486 ) ( 2,850 ) Operating profit $ 732 1,581 2,015 3,579 Interest expense $ 414 46 1,785 142 10 Depreciation, depletion and amortization: Depreciation, depletion and amortization Asset management $ 137 137 408 529 Depreciation, depletion and amortization Mining royalty lands 38 60 161 160 Depreciation, depletion and amortization Development 53 53 159 160 Depreciation, depletion and amortization Stabilized Joint Venture 3,568 1,188 8,899 3,557 Depreciation, depletion and amortization $ 3,796 1,438 9,627 4,406 Capital expenditures: Capital expenditures Asset management $ 100 233 318 787 Capital expenditures Mining royalty lands — — — — Capital expenditures Development 4,237 1,754 10,443 2,371 Capital expenditures Stabilized Joint Venture 373 46 794 42 Capital expenditures $ 4,710 2,033 11,555 3,200 Identifiable net assets September 30, December 31, Identifiable net assets 2021 2020 Assets Asset management $ 11,127 11,172 Assets Mining royalty lands 37,205 37,387 Assets Development 185,500 196,212 Assets Stabilized Joint Venture 268,907 130,472 Investments available for sale Investments available for sale at fair value 4,315 75,609 Cash Cash items 163,383 74,105 Assets Unallocated corporate assets 8,316 11,403 Assets $ 678,753 536,360 (4) Related Party Transactions . The Company is a party to a Transition Services Agreement which resulted from our January 30, 2015 spin-off of Patriot Transportation Holding, Inc. (Patriot). The Transition 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, 2021. The consolidated statements of income reflect charges and/or allocation from Patriot for these services of $ 260,000 and $ 290,000 for the three months ended September 30, 2021 and 2020 and $ 772,000 and $ 870,000 for the nine months ended September 30, 2021 and 2020, respectively. These charges are reflected as part of corporate expenses. To determine these allocations between FRP and Patriot as set forth in the Transition 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, 2021 2020 Fixed rate mortgage loans, 3.03% interest only, matures 4/1/2033 $ 178,371 89,964 Credit agreement — — Long-term debt $ 178,334 89,964 11 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 will be a maximum of 1.50 % over Daily 1-Month LIBOR, which may be reduced quarterly to 1.25 % or 1.0 % over Daily 1-Month LIBOR if the Company meets a specified ratio of consolidated debt to consolidated total capital, as defined which excludes FRP Riverfront. 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, 2021, there was no debt outstanding on this revolver, $ 506,000 outstanding under letters of credit and $ 19,494,000 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 1.08238 % on September 30, 2021. The credit agreement contains certain conditions and financial covenants, including a minimum tangible net worth and dividend restriction. As of September 30, 2021, these covenants would have limited our ability to pay dividends to a maximum of $ 228 million combined. On November 17, 2017, Dock 79 borrowed a principal sum of $ 90,000,000 pursuant to a Loan Agreement and Deed of Trust Note entered into with EagleBank. The loan was secured by the Dock 79 real property and improvements, bore a fixed interest rate of 4.125 % per annum and had a term of 120 months . The loan was paid in full on March 19, 2021. A prepayment penalty of $ 900,000 was recorded into interest expense in the quarter ending March 31, 2021. Effective March 31, 2021, the Company consolidated the assets (at current fair value), liabilities and operating results of our Riverfront Investment Partners II, LLC partnership (“The Maren”) which was previously accounted for under the equity method. As such the full amount of our mortgage loan was recorded in the consolidated financial statements. 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 . Debt cost amortization of $ 37,000 and $ 113,000 was recorded during the three and nine months ended September 30, 2021, respectively. During the three months ended September 30, 2021 and September 30, 2020 the Company capitalized interest costs of $ 999,000 and $ 948,000 , respectively. During the nine months ended September 30, 2021 and September 30, 2020 the Company capitalized interest costs of $ 2,892,000 and $ 2,823,000 , respectively. The Company was in compliance with all debt covenants as of September 30, 2021. (6) Earnings per Share . The following details the computations of the Basic and Diluted Earnings Per Common Share (in thousands, except per share amounts): 12 Three Months ended Nine Months ended September 30, September 30, 2021 2020 2021 2020 Weighted average common shares outstanding during the period – shares used for basic earnings per common share 9,363 9,517 9,352 9,646 Common shares issuable under share-based payment plans which are potentially dilutive 36 28 38 35 Common shares used for diluted earnings per common share 9,399 9,545 9,390 9,681 Net income attributable to the Company $ 352 5,455 28,807 11,222 Earnings per common share: -basic $ 0.04 0.57 3.08 1.16 -diluted $ 0.04 0.57 3.07 1.16 For the nine months ended September 30, 2021, 19,950 shares attributable to outstanding stock options were excluded from the calculation of diluted earnings per share because their inclusion would have been anti-dilutive. For the three and nine months ended September 30, 2020, 74,065 and 53,545 shares attributable to outstanding stock options were excluded from the calculation of diluted earnings per share because their inclusion would have been anti-dilutive. During the first nine months of 2021 the Company repurchased 6,004 shares at an average cost of $ 43.95 . During the first nine months of 2020 the Company repurchased 379,809 shares at an average cost of $ 41.30 . (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 29 % and 41 %, risk-free interest rate of 1.0 % to 2.9 % and expected life of 3.0 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 2021, 8,896 shares of restricted stock were granted to employees that will vest over the next four years . In January 2021, 18,882 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 2020, 20,520 shares of restricted stock were granted to employees as part of a long-term incentive plan that will vest over the next five years . The number of common shares available for future issuance was 397,747 at September 30, 2021. In March 2021 and March 2020, 1,098 and 11,448 shares of stock, respectively, were granted to employees rather than stock options as in prior years. 13 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, 2021 2020 2021 2020 Stock option grants $ 17 24 52 71 Restricted stock awards 135 46 404 140 Employee stock grant — — 50 530 Annual director stock award — — 500 500 Stock compensation $ 152 70 1,006 1,241 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 December 31, 2020 120,089 $ 35.33 5.3 $ 1,531 Exercised ( 15,334 ) $ 17.54 $ ( 115 ) Outstanding at September 30, 2021 104,755 $ 37.93 5.1 $ 1,416 Exercisable at September 30, 2021 92,407 $ 36.87 4.8 $ 1,212 Vested during nine months ended September 30, 2021 — $ — The aggregate intrinsic value of exercisable in-the-money options was $ 1,761,000 and the aggregate intrinsic value of outstanding in-the-money options was $ 1,884,000 based on the market closing price of $ 55.92 on September 30, 2021 less exercise prices. The unrecognized compensation cost of options granted to FRP employees but not yet vested as of September 30, 2021 was $ 146,000 , which is expected to be recognized over a weighted-average period of 2.1 years . Gains of $ 602,000 were realized by option holders during the nine months ended September 30, 2021. 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 Exercise Remaining Grant Date Restricted stock Shares Price Term (yrs) Fair Value(000's) Non-vested at December 31, 2020 20,520 $ 46.30 3.4 $ 950 Time-based awards granted 8,896 45.55 405 Performance-based awards granted 18,882 45.55 860 Non-vested at September 30, 2021 48,298 $ 45.87 3.3 $ 2,215 Total compensation cost of restricted stock granted but not yet vested as of September 30, 2021 was $ 1,515,000 which is expected to be recognized over a weighted-average period of 3.6 years . 14 (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, 2021, there was $ 506,000 outstanding under letters of credit. The letters of credit were issued to guarantee certain obligations to state agencies related to real estate development. (9) Concentrations . The mining royalty lands segment has a total of five tenants currently leasing mining locations and one lessee that accounted for 23.8 % of the Company’s consolidated revenues during the nine months ended September 30, 2021, and $ 294,000 of accounts receivable at September 30, 2021. 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, 2021, the Company was invested in two corporate bonds with maturities in January 2022. The unrealized gain on these bonds of $ 16,000 was recorded as part of comprehensive income and was based on the estimated market value by National Financial Services, LLC (“NFS”) obtained from sources that may include pricing vendors, broker/dealers who clear through NFS and/or other sources (Level 2). The amortized cost of the investments was $ 4,299,000 and the carrying amount and fair value of such bonds were $ 4,315,000 as of September 30, 2021. At September 30, 2021 and 2020, the carrying amount reported in the consolidated balance sheets for cash and cash equivalents and revolving credit approximate their fair value based upon the short-term nature of these items. 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, 2021, the carrying amount and fair value of such other long-term debt was $ 178,371,000 and $ 173,634,000 , respectively. At September 30, 2020, the carrying amount and fair value of such other long-term debt was $ 89,027,000 and $ 95,138,000 , respectively. 15 (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 (1) As of September 30, 2021 Brooksville Quarry, LLC 50.00 % $ 7,463 14,332 ( 66 ) ( 32 ) BC FRP Realty, LLC 50.00 % 5,454 22,612 ( 227 ) ( 113 ) Riverfront Holdings II, LLC (1) — — ( 760 ) ( 628 ) Bryant Street Partnerships 61.36 % 59,899 201,144 ( 3,566 ) ( 3,234 ) Hyde Park — — — — DST Hickory Creek 26.65 % 6,000 46,560 ( 325 ) 257 Amber Ridge Loan 12,471 12,471 — — 1800 Half St. Owner, LLC 61.37 % 38,456 76,829 19 25 Greenville/Woodfield Partnerships 40.00 % 16,232 80,476 ( 680 ) ( 272 ) Total $ 145,975 454,424 ( 5,605 ) ( 3,997 ) The Company's Share of Profit Common Total Total Assets of Profit (Loss) (Loss) of the Ownership Investment The Partnership Of the Partnership Partnership (1) As of December 31, 2020 Brooksville Quarry, LLC 50.00 % $ 7,499 14,347 ( 78 ) ( 39 ) BC FRP Realty, LLC 50.00 % 5,184 22,747 ( 411 ) ( 207 ) Riverfront Holdings II, LLC 80.00 % 23,533 108,538 ( 4,573 ) ( 3,907 ) Bryant Street Partnerships 61.36 % 60,159 173,814 ( 836 ) ( 2,130 ) Hyde Park 591 591 — — DST Hickory Creek 26.65 % 6,000 47,761 ( 367 ) 339 Amber Ridge Loan 10,026 10,026 — — 1800 Half St. Owner, LLC 61.37 % 37,875 54,275 158 164 Greenville/Woodfield Partnerships 40.00 % 16,204 46,457 182 90 Total $ 167,071 478,556 ( 5,925 ) ( 5,690 ) (1) : Riverfront Holdings II, LLC was consolidated on March 31, 2021. Bryant Street Partnerships includes $ 674,000 in 2021 and $ 1,146,000 in 2020 for the Company’s share of preferred interest and $ 354,000 in 2021 and $ 471,000 in 2020 for amortization of guarantee liability related to the Bryant Street loan. The Major classes of assets, liabilities and equity of the Company’s Investments in Joint Ventures as of September 30, 2021 are summarized in the following two tables (in thousands): 16 Investments in Apartment/Mixed Use Joint Ventures as of September 30, 2021 As of September 30, 2021 Total Riverfront Bryant Street DST Hickory 1800 Half St. Greenville/ Apartment/ Holdings II, LLC Partnership Creek Partnership Woodfield Mixed Use Investments in real estate, net $ 0 198,039 44,224 73,580 80,261 $ 396,104 Cash and cash equivalents 0 848 978 439 207 2,472 Unrealized rents & receivables 0 1,892 1,004 0 8 2,904 Deferred costs 0 365 354 2,810 0 3,529 Total Assets $ 0 201,144 46,560 76,829 80,476 $ 405,009 Secured notes payable $ 0 116,705 29,325 0 35,879 $ 181,909 Other liabilities 0 7,620 162 15,766 5,370 28,918 Capital - FRP 0 58,014 4,550 37,483 15,691 115,738 Capital – Third Parties 0 18,805 12,523 23,580 23,536 78,444 Total Liabilities and Capital $ 0 201,144 46,560 76,829 80,476 $ 405,009 Investments in Joint Ventures as of September 30, 2021 As of September 30, 2021 Brooksville BC FRP Amber Ridge Apartment/ Grand Quarry, LLC Realty, LLC Hyde Park Loan Mixed Use Total Investments in real estate, net. $ 14,283 21,627 0 12,471 396,104 $ 444,485 Cash and cash equivalents 49 231 0 0 2,472 2,752 Unrealized rents & receivables 0 470 0 0 2,904 3,374 Deferred costs 0 284 0 0 3,529 3,813 Total Assets $ 14,332 22,612 0 12,471 405,009 $ 454,424 Secured notes payable $ 0 11,524 0 0 181,909 $ 193,433 Other liabilities 81 138 0 0 28,918 29,137 Capital - FRP 7,463 5,475 0 12,471 115,738 141,147 Capital - Third Parties 6,788 5,475 0 0 78,444 90,707 Total Liabilities and Capital $ 14,332 22,612 0 12,471 405,009 $ 454,424 The Company’s capital recorded by the unconsolidated Joint Ventures is $ 4,828,000 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, 2020 are summarized in the following two tables (in thousands): Investments in Apartment/Mixed Use Joint Ventures as of December 31, 2020 As of December 31, 2020 Total Riverfront Bryant Street DST Hickory 1800 Half St. Greenville/ Apartment/ Holdings II, LLC Partnership Creek Partnership Woodfield Mixed Use Investments in real estate, net $ 105,737 173,560 45,379 37,452 42,668 $ 404,796 Cash and cash equivalents 2,626 111 1,202 14,011 3,554 21,504 Unrealized rents & receivables 13 58 775 2 0 848 Deferred costs 162 85 405 2,810 235 3,697 Total Assets $ 108,538 173,814 47,761 54,275 46,457 $ 430,845 Secured notes payable $ 64,982 72,471 29,291 0 1,776 $ 168,520 Other liabilities 4,189 22,952 107 1,953 4,774 33,975 Capital - FRP 34,667 58,559 4,894 37,466 15,963 151,549 Capital - Third Parties 4,700 19,832 13,469 14,856 23,944 76,801 Total Liabilities and Capital $ 108,538 173,814 47,761 54,275 46,457 $ 430,845 17 Investments in Joint Ventures as of December 31, 2020 As of December 31, 2020 Brooksville BC FRP Amber Ridge Apartment/ Grand Quarry, LLC Realty, LLC Hyde Park Loan Mixed Use Total Investments in real estate, net. $ 14,287 22,067 591 10,026 404,796 $ 451,767 Cash and cash equivalents 55 90 0 0 21,504 21,649 Unrealized rents & receivables 0 254 0 0 848 1,102 Deferred costs 5 336 0 0 3,697 4,038 Total Assets $ 14,347 22,747 591 10,026 430,845 $ 478,556 Secured notes payable $ 0 12,370 0 0 168,520 $ 180,890 Other liabilities 28 123 0 0 33,975 34,126 Capital - FRP 7,499 5,127 591 10,026 151,549 174,792 Capital - Third Parties 6,820 5,127 0 0 76,801 88,748 Total Liabilities and Capital $ 14,347 22,747 591 10,026 430,845 $ 478,556 The amount of consolidated retained earnings (accumulated deficit) for these joint ventures was $ ( 7,660,000 ) and $ ( 8,278,000 ) as of September 30, 2021 and December 31, 2020, respectively. The income statements of the Bryant Street Partnerships are as follows (in thousands): Bryant Street Bryant Street Partnerships Partnerships Total JV Company Share Nine Months ended Nine Months ended September 30, September 30, 2021 2021 Revenues: Rental Revenue $ 1,153 $ 707 Revenue – other 190 117 Total Revenues 1,343 824 Cost of operations: Depreciation and amortization 1,482 909 Operating expenses 1,938 1,190 Property taxes 255 156 Total cost of operations 3,675 2,255 Total operating profit ( 2,332 ) ( 1,431 ) Interest expense ( 1,234 ) ( 1,803 ) Net loss before tax ( 3,566 ) ( 3,234 ) (12) Consolidation of Riverfront Investment Partners II, LLC. Riverfront Holdings II, LLC . On May 4, 2018, the Company and MRP Realty formed a Joint Venture to develop the second phase only of the four phase master development known as Riverfront on the Anacostia in Washington, D.C. The purpose of the Joint Venture is to develop and own a 250,000 -square-foot mixed-use development which supports 264 residential units and 6,937 square feet of retail. The Company contributed land with an agreed to value of $ 16,300,000 (cost basis of $ 4.6 million ) and $ 6.2 million of cash to the Joint Venture for an 80 % stake in the venture. MRP contributed capital of $ 5.6 million to the joint venture including development costs paid prior to formation of the joint venture and a $ 725,000 development fee. The Company further agreed to fund $ 13.75 million preferred equity financing at 7.5 % interest rate all of which was advanced and repaid with interest in March 2021. The Company’s equity interest in the joint venture was previously accounted for under the equity method of accounting as MRP acts as the administrative agent of the 18 joint venture and oversees and controls the day-to-day operations of the project. In March 2021, Phase II (The Maren) reached stabilization. Stabilization in this case means 90 % of the individual apartments have been leased and are 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 results 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, beginning March 31, 2021, the Company consolidated the assets (at fair value), liabilities and operating results of the joint venture. This consolidation resulted in a gain on remeasurement of investment in real estate partnership of $ 51,139,000 of which $ 13,965,000 was attributed to the noncontrolling interest. In accordance with the terms of the Joint Venture agreements, the Company used the fair value amount at date of conversion and calculated an adjusted ownership under the Conversion election. As such for financial reporting purposes effective March 31, 2021, the Company ownership is based upon this substantive profit sharing arrangement and is 70.41 % on a prospective basis as agreed to by FRP and MRP. Maren consolidation at stabilization As of March 31, 2021 Riverfront Gain on Holdings II, LLC Remeasurement Revised Land $ 6,472 $ 22,858 $ 29,330 Building and improvements, net 87,269 23,531 110,800 Project under construction 258 — 258 Value of leases in place — 4,750 4,750 Cash 3,704 — 3,704 Cash held in escrow 336 — 336 Accounts receivable 707 — 707 Prepaid expenses 197 — 197 Total Assets $ 98,943 $ 51,139 $ 150,082 Long-term Debt $ 88,000 $ — $ 88,000 Amortizable debt costs ( 1,072 ) — ( 1,072 ) Other liabilities 441 — 441 Equity – FRP 7,026 37,174 44,200 Equity - MRP 4,548 13,965 18,513 Total Liabilities and Capital $ 98,943 $ 51,139 $ 150,082 (13) Subsequent Event . On October 8, 2021, the Company entered into a loan agreement with a Baltimore developer to be the principal capital source of a residential development venture in Harford County, Maryland to be known as “Aberdeen Station.” We have committed up to $ 31.1 million in exchange for an interest rate of 10 % plus a portion of the sales proceeds based upon the project IRR. This project will hold 344 residential lots. We are currently pursuing entitlements and the loan agreements anticipates taking the development to record plat in two phases potentially through June 30, 2026. 19 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 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: Lands leased to mining companies, some of which will have second lives as development properties; Residential apartments in Washington, D.C.; Warehouse or office properties in the Mid-Atlantic states either existing or under development; Mixed use properties under development in Washington, D.C. or Greenville, South Carolina; and Properties held for sale. We believe our present capital structure, liquidity and land provide us with years of opportunities to increase recurring revenue and long-term value for our shareholders. We intend to focus on our core business activity of real estate development, asset management and operations. We are developing a broad range of asset types that we believe will provide acceptable rates of return, grow recurring revenues and support future business. Capital commitments will be funded with cash proceeds from completed projects, existing cash, owned-land, partner capital and financing arrangements. We do not anticipate immediate benefits from investments. Timing of projects may be subject to delays caused by factors beyond our control. Reportable Segments We conduct primarily all of our business in the following four reportable segments: (1) asset management (2) mining royalty lands (3) development and (4) stabilized joint ventures. For more information regarding our reportable segments, see Note 3. Business Segments of our condensed consolidated financial statements included in this quarterly report. 20 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 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, 2021, the Asset Management Segment owned three commercial properties 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 95.1% 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 68.6% occupied and 96.6% leased. The property is subject to commercial leases with various tenants. Management focuses on several factors to measure our success on a comparative basis in this segment. The major factors we focus on are (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), (5) building and refurbishing assets to meet Class A and Class B institutional grade classifications, and (6) reducing complexities and deferred capital expenditures to maximize sale price. Mining Royalty Lands Segment. Our Mining Royalty Lands segment owns several properties comprising approximately 15,000 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 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. Our mining properties had estimated remaining reserves of 506 million tons as of December 31, 2020, after a total of 8.5 million tons were consumed in 2020. 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. 21 Significant “2 nd life” Mining Lands: Location Acreage Status Brooksville, Fl 4,280 +/- Development of Regional of Impact and County Land Use and Master Zoning in place for 5,800 residential unit, mixed-use development Ft. Myers, FL 1,907 +/- Approval in place for 105, 1 acre, waterfront residential lots after mining completed. Total 6,187 +/- Development Segment. Through our Development segment, we own and are continuously monitoring for their “highest and best use” 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, 2021, this segment owned the following development parcels: 1) 14 acres of horizontally developed land with 247,995 square feet in three industrial buildings under construction at Hollander 95 Business Park in Baltimore City, Maryland. 2) 55 acres of land that will be capable of supporting over 625,000 square feet of industrial product located at 1001 Old Philadelphia Road in Aberdeen, Maryland. 3) 17 acres of land in Harford County, Maryland that will support 250,000 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 $6,126,000 Hampstead Trade Center, MD 73 Residential zoning applied for in preparation for sale $9,545,000 Square 664E, on the Anacostia River in DC 2 Under lease to Vulcan Materials as a concrete batch plant through 2026 $7,719,000 Total 77.5 $23,390,000 22 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 85,681 square feet of retail partially completed 61.36% Hyde Park residential development in Essexshire, MD Property sold, $3.5 million investment in exchange for an interest rate of 10% and a preferred return of 20% 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 also entitled to a portion of proceeds from sale Financing 1800 Half Street property in Buzzard Point area of Washington, D.C. MRP Realty Construction of ten-story structure with 344 apartments and 11,246 square feet of ground floor retail underway 61.37% .408 Jackson property in Greenville, SC Woodfield Development Construction of mixed-use project with 227 multifamily units and 4,700 square feet of retail space began in May 2020 40% Riverside property 1430 Hampton Avenue, Greenville, SC Woodfield Development Construction of 200-unit apartment project began in February 2020 40% 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 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 (1) As of September 30, 2021 Brooksville Quarry, LLC 50.00 % $ 7,463 14,332 (66 ) (32 ) BC FRP Realty, LLC 50.00 % 5,454 22,612 (227 ) (113 ) RiverFront Holdings II, LLC (1) — — (760 ) (628 ) Bryant Street Partnerships 61.36 % 59,899 201,144 (3,566 ) (3,234 ) Hyde Park — — — — DST Hickory Creek 26.65 % 6,000 46,560 (325 ) 257 Amber Ridge Loan 12,471 12,471 — — 1800 Half St. Owner, LLC 61.37 % 38,456 76,829 19 25 Greenville/Woodfield Partnerships 40.00 % 16,232 80,476 (680 ) (272 ) Total $ 145,975 454,424 (5,605 ) (3,997 ) 23 (1) Riverfront Holdings II, LLC was consolidated on March 31, 2021, and reflected in Stabilized Joint Ventures. The major classes of assets, liabilities and equity of the Company’s Investments in Joint Ventures as of September 30, 2021, are summarized in the following two tables (in thousands): As of September, 2021 Total Riverfront Bryant Street DST Hickory 1800 Half St. Greenville/ Apartment/ Holdings II, LLC Partnership Creek Partnership Woodfield Mixed Use Investments in real estate, net $ 0 198,039 44,224 73,580 80,261 $ 396,104 Cash and cash equivalents 0 848 978 439 207 2,472 Unrealized rents & receivables 0 1,892 1,004 0 8 2,904 Deferred costs 0 365 354 2,810 0 3,529 Total Assets $ 0 201,144 46,560 76,829 80,476 $ 405,009 Secured notes payable $ 0 116,705 29,325 0 35,879 $ 181,909 Other liabilities 0 7,620 162 15,766 5,370 28,918 Capital - FRP 0 58,014 4,550 37,483 15,691 115,738 Capital – Third Parties 0 18,805 12,523 23,580 23,536 78,444 Total Liabilities and Capital $ 0 201,144 46,560 76,829 80,476 $ 405,009 As of September 30, 2021 Brooksville BC FRP Amber Ridge Apartment/ Grand Quarry, LLC Realty, LLC Hyde Park Loan Mixed Use Total Investments in real estate, net. $ 14,283 21,627 0 12,471 396,104 $ 444,485 Cash and cash equivalents 49 231 0 0 2,472 2,752 Unrealized rents & receivables 0 470 0 0 2,904 3,374 Deferred costs 0 284 0 0 3,529 3,813 Total Assets $ 14,332 22,612 0 12,471 405,009 $ 454,424 Secured notes payable $ 0 11,524 0 0 181,909 $ 193,433 Other liabilities 81 138 0 0 28,918 29,137 Capital - FRP 7,463 5,475 0 12,471 115,738 141,147 Capital - Third Parties 6,788 5,475 0 0 78,444 90,707 Total Liabilities and Capital $ 14,332 22,612 0 12,471 405,009 $ 454,424 Stabilized Joint Venture Segment. Currently the segment includes three stabilized joint ventures which own, lease and manage buildings. These assets create revenue and cash flows through tenant rental payments, and reimbursements for building operating costs. The 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 18,000 square feet of retail MRP Realty Consolidated 66% The Maren apartments Washington, D.C. 264 residential units and 6,937 square feet of retail MRP Realty Consolidated as of March 31, 2021 70.41% DST Hickory Creek 294 apartment units in Henrico County, MD Capital Square Cost Method 26.6% 24 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 Comparative Results of Operations for the Three months ended September 30, 2021 and 2020 Consolidated Results (dollars in thousands) Three Months Ended September 30, 2021 2020 Change % Revenues: Lease Revenue $ 6,224 $ 3,591 $ 2,633 73.3 % Mining lands lease revenue 2,249 2,507 (258 ) -10.3 % Total Revenues 8,473 6,098 2,375 38.9 % Cost of operations: Depreciation/Depletion/Amortization 3,796 1,438 2,358 164.0 % Operating Expenses 1,557 892 665 74.6 % Property Taxes 986 706 280 39.7 % Management company indirect 745 844 (99 ) -11.7 % Corporate Expense 657 637 20 3.1 % Total cost of operations 7,741 4,517 3,224 71.4 % Total operating profit 732 1,581 (849 ) -53.7 % Net investment income, including realized gains of $0 and $55 943 1,814 (871 ) -48.0 % Interest Expense (414 ) (46 ) (368 ) 800.0 % Equity in loss of joint ventures (1,244 ) (1,788 ) 544 -30.4 % Gain on sale of real estate — 5,732 (5,732 ) -100.0 % Income before income taxes 17 7,293 (7,276 ) -99.8 % Provision for income taxes 130 2,022 (1,892 ) -93.6 % Net income (loss) (113 ) 5,271 (5,384 ) -102.1 % Loss attributable to noncontrolling interest (465 ) (184 ) (281 ) 152.7 % Net income attributable to the Company $ 352 $ 5,455 $ (5,103 ) -93.5 % 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. 25 Asset Management Segment Results 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 % 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 62 nd 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 62 nd 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 Results 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 % 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. 26 Development Segment Results 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 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 260,000 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 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, now known as The Verge 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. 27 Stabilized Joint Venture Segment Results 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 % 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 28 Comparative Results of Operations for the Nine months ended September 30, 2021 and 2020 Consolidated Results (dollars in thousands) Nine Months Ended September 30, 2021 2020 Change % Revenues: Lease Revenue $ 15,623 $ 10,636 $ 4,987 46.9 % Mining lands lease revenue 7,198 7,094 104 1.5 % Total Revenues 22,821 17,730 5,091 28.7 % Cost of operations: Depreciation/Depletion/Amortization 9,627 4,406 5,221 118.5 % Operating Expenses 3,792 2,598 1,194 46.0 % Property Taxes 2,764 2,089 675 32.3 % Management company indirect 2,137 2,208 (71 ) -3.2 % Corporate Expense 2,486 2,850 (364 ) -12.8 % Total cost of operations 20,806 14,151 6,655 47.0 % Total operating profit 2,015 3,579 (1,564 ) -43.7 % Net investment income, including realized gains of $0 and $297 3,366 5,915 (2,549 ) -43.1 % Interest Expense (1,785 ) (142 ) (1,643 ) 1157.0 % Equity in loss of joint ventures (3,997 ) (3,773 ) (224 ) 5.9 % Gain on remeasurement of investment in real estate partnership 51,139 — 51,139 0.0 % Gain on sale of real estate 805 9,329 (8,524 ) -91.4 % Income before income taxes 51,543 14,908 36,635 245.7 % Provision for income taxes 10,500 4,161 6,339 152.3 % Net income 41,043 10,747 30,296 281.9 % Gain (loss) attributable to noncontrolling interest 12,236 (475 ) 12,711 -2676.0 % Net income attributable to the Company $ 28,807 $ 11,222 $ 17,585 156.7 % 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. 29 Asset Management Segment Results 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 % 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 62 nd 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 62 nd Street. Mining Royalty Lands Segment Results 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 % 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. Development Segment Results 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 30 Stabilized Joint Venture Segment Results 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 % 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. 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, 2021, we had $163,383,000 of cash and cash equivalents along with $4,315,000 of investments available for sale. As of September 30, 2021, we had no debt borrowed under our $20 million Wells Fargo revolver, $506,000 outstanding under letters of credit and $19,494,000 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 31 each of the periods presented (in thousands of dollars): Nine months Ended September 30, 2021 2020 Total cash provided by (used for): Operating activities $ 16,400 13,353 Investing activities 73,047 22,729 Financing activities (475 ) (16,400 ) Increase in cash and cash equivalents $ 88,972 19,682 Outstanding debt at the beginning of the period 89,964 88,925 Outstanding debt at the end of the period 178,371 89,027 Operating Activities - Net cash provided by operating activities for the nine months ended September 30, 2021 was $16,400,000 versus $13,353,000 in the same period last year. The Gain on remeasurement of investment in real estate partnership and related deferred income taxes were both non-cash adjustments to net income to arrive at net cash provided by operating activities. Investing Activities - Net cash provided by investing activities for the nine months ended September 30, 2021 was $73,047,000 versus $22,729,000 in the same period last year. The $50 million increase was primarily due to a return of our preferred equity financing with interest of $16.1 million from The Maren, $24.6 million decrease in purchases of corporate bonds due to lack of attractive investment opportunities, a $12.6 million increase on maturities and sales of our corporate bond portfolio, and $3.7 million for cash on the books of The Maren upon consolidation. At September 30, 2021, the Company was invested in two corporate bonds with maturities in January 2022. The unrealized gain on these bonds of $16,000 was recorded as part of comprehensive income and was based on the estimated market value by National Financial Services, LLC (“NFS”) obtained from sources that may include pricing vendors, broker/dealers who clear through NFS and/or other sources (Level 2). The Company recorded no realized gains or losses on bonds that matured or were sold in 2021. Financing Activities – Net cash used in investing activities was $475,000 versus $16,400,000 in the same period last year due primarily due to the refinancing of Dock 79 for $1.4 million more net of debt issuance costs than the amount matured and $15.4 million lower repurchases of company stock. Credit Facilities - On February 6, 2019, the Company entered into a First Amendment to the 2015 Credit Agreement (the "Credit Agreement") with Wells Fargo Bank, N.A. (Wells Fargo”). The Credit Agreement modifies the Company’s prior Credit Agreement with Wells Fargo, dated January 30, 2015. The Credit Agreement establishes a five-year revolving credit facility with a maximum facility amount of $20 million. The interest rate under the Credit Agreement will be a maximum of 1.50% over Daily 1-Month LIBOR, which may be reduced quarterly to 1.25% or 1.0% over Daily 1-Month LIBOR if the Company meets a specified ratio of consolidated total debt to consolidated total capital. A commitment fee of 0.25% per annum is payable quarterly on the unused portion of the commitment but the amount may be reduced to 0.20% or 0.15% if the Company meets a specified ratio of consolidated total debt to consolidated total capital. The credit agreement contains certain conditions and financial covenants, including a minimum tangible net worth and dividend restriction. As of September 30, 2021, these covenants would have limited our ability to pay dividends to a maximum of $228 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. Effective March 31, 2021, the Company consolidated the assets (at current 32 fair value), liabilities and operating results of our Riverfront Investment Partners II, LLC partnership (The Maren) which was previously accounted for under the equity method. As such the full amount of our mortgage loan was recorded in the consolidated financial statements. Cash Requirements – The Company currently expects its capital expenditures for the remainder of 2021 to include approximately $9.3 million for real estate including investments in joint ventures, which will be funded mostly out of cash and investments on hand, cash generated from operations and property sales, or borrowings under our credit facilities. 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. Our Dock 79 and The Maren properties in Washington, D.C. suffered the principal impacts to our business from the pandemic during 2020 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. It is possible that some of these same conditions may impact our ability to lease retail spaces in Washington, D.C. and Greenville. We anticipate that these impacts will continue 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 62 nd 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 33 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. 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. 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 34 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, 2021 was Daily 1-Month LIBOR plus 1.0%. The applicable margin for such borrowings will be increased in the event that our debt to capitalization ratio as calculated under the Wells Fargo Credit Agreement Facility exceeds a target level. The Company did not have any variable rate debt at September 30, 2021, 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, 2021, 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, 2020, 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 35 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 (c) Total Number of Shares (d) Purchased Approximate (a) As Part of Dollar Value of Total (b) 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 — $ — — $ 9,363,000 August 1 through August 31 — $ — — $ 9,363,000 September 1 through September 30 — $ — — $ 9,363,000 Total — $ — — (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. 36 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, 2021 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) 37 FRP HOLDINGS, INC. FORM 10-Q FOR THE THREE MONTHS ENDED SEPTEMBER 30, 2021 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. 101.XSD XBRL Taxonomy Extension Schema 101.CAL XBRL Taxonomy Extension Calculation Linkbase 101.DEF XBRL Taxonomy Extension Definition Linkbase 101.LAB XBRL Taxonomy Extension Label Linkbase 101.PRE XBRL Taxonomy Extension Presentation Linkbase 38