Item 2. Properties
Item 2. PROPERTIES.
The Company owns (predominately in fee simple but
also through ownership of interests in joint ventures) approximately 20,000 acres of land in Florida, Georgia, Maryland, Virginia, South
Carolina, and the District of Columbia. This land is generally held by the Company in four distinct segments: (i) Asset Management Segment
(land owned and operated as income producing rental properties in the form of commercial properties), (ii) Mining Royalty Lands Segment
(land owned and leased to mining companies for royalties or rents), (iii) Development Segment (land owned and held for investment to be
further developed for future income production or sales to third parties), and (iv) Stabilized Joint Venture Segment (ownership, leasing
and management of buildings through joint ventures).
Asset Management Segment. As of December 31,
2021, the Asset Management Segment owned four 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 81.0% occupied and 100.0% leased. The property is subject
to commercial leases with various tenants.
4) Hollander 95 Business Park in Baltimore City, Maryland
consists of two buildings totaling 145,590 square feet that were completed in the fourth quarter of 2021 and are 29.1% leased.
On May 21, 2018, the Company completed the disposition
of 40 industrial warehouse properties and three additional land parcels to an affiliate of Blackstone Real Estate Partners VIII, L.P.
for $347.2 million. The Company sold an additional warehouse property, which was excluded from the initial sale due to the tenant exercising
its right of first refusal to purchase the property, to the same buyer for $11.7 million on June 28, 2019. The warehouse portfolio sale
resulted in the disposition of all of the Company’s industrial flex/office warehouse properties prior to the sale date and constituted
a major strategic shift and, as a result, these properties have been reclassified as discontinued operations for all periods presented
in the financial statements filed herewith.
Mining Royalty Lands Segment.
Introduction.
Pursuant to amendments to Regulation S-K of the Securities
Act of 1933 (“Regulation S-K”) adopted by the Securities and Exchange Commission in 2018, effective for fiscal years beginning
on or after January 1, 2021, registrants with material mining operations must disclose certain information in their Securities and Exchange
Act filings concerning mineral resources and mineral reserves, in accordance with to Subpart 1300 of Regulation S-K. This section of
Item 2 provides summary information about our overall portfolio of mining royalty properties.
Our mining leases do not require tenants to furnish
technical report summaries that meet the requirements of Rule 1302, and the Company does not otherwise have access to the technical data
required to determine precise amounts of each class of mineral resource or probable or proven resources. In accordance with Rule 1303(a)(3),
the Company is providing all required information in its possession or which it
can obtain without incurring an unreasonable burden or expense.
13
The Company periodically engages consultants to examine reserve estimates
and geological studies conducted by tenants and their industry professionals.
Locations. The following map presents
the locations of the Company’s mining properties, which are discussed by segment (as reported in the Company’s financial statements)
below:
Mining Properties . T he Company owns
a fee simple interest in 13 open pit aggregates quarries located in Florida, Georgia and Virginia, which comprise approximately 15,000
total acres. The Company’s quarries are subject to mining leases with various tenants, including Vulcan Materials, Martin Marietta,
Cemex, Argos, and The Concrete Company. Aggregates consist of crushed stone, sand, gravel, fill dirt, limestone and calcium and are used
primarily in construction applications.
Nine of the Company’s quarries (located in Grandin,
FL, Fort Myers, FL, Keuka, FL, Newberry, FL, Astatula, FL, Columbus, GA, Macon, GA, Tyrone, GA, and Manassas, VA; comprising 12,649 acres
in the aggregate) are currently being mined, and four of the Company’s quarries (located in Marion County, FL, Lake Louisa, FL,
and Lake Sand, FL and Forest Park, GA; comprising 2,452 acres in the aggregate) are leased but are not currently being mined. Our typical
mining lease requires the tenant to pay the Company a royalty based on the number of tons of mined materials sold from our mining property
during a given fiscal year multiplied by a percentage of the average annual sales price per ton sold. In certain locations, typically
where the reserves on the property have been depleted but the tenant still has a need for the leased land, we collect a minimum annual
rental amount. In the fiscal years ended December 31, 2021, 2020 and 2019, aggregate tons sold with respect to the Company’s mining
properties were approximately 7,575,000, 8,206,000 and 7,815,000, respectively.
In May 2014, the Company entered into an amendment
to our lease with Vulcan for our Fort Myers location requiring that the mining be accelerated and that the mining plan be conformed to
accommodate the future construction of up to 105 residential dwelling units around the mined lakes. In return, the Company granted
14
Lee
County an option to purchase a right of way for a connector road that would benefit the residential area on our property and to place
a conservation easement on part of the property, which the County exercised in 2020. Mining activity commenced in 2017 following Lee County’s
issuance of a mine operating permit allowing Vulcan to begin production.
In November 2017, Lake County commissioners voted
to approve a permit to Cemex to mine the Company’s land in Lake Louisa, Florida. The county issued the permit in July 2019. After
completing the work necessary to prepare this site to become an active sand mine, Cemex expects to begin mining by March 2023.
Brooksville Joint Venture. Additionally,
through a joint venture with Vulcan Materials, the Company owns a 50% interest in 4,280 acres of mixed-use property in Brooksville, Florida,
a portion of which comprises an aggregates quarry that is mined by Vulcan Materials. The Company entered into the joint venture in 2006
for the purpose of jointly owning and developing the land as a mixed-use community. In April 2011, the Florida Department of Community
Affairs issued its final order approving the development of the project consisting of 5,800 residential dwelling units and over 600,000
square feet of commercial and 850,000 of light industrial uses. Zoning for the project was approved by the County in August 2012. Vulcan
Materials still mines on the property and the Company receives 100% of the royalty on all tons sold at the Brooksville property. During
2017, the Company extended the mining lease on this property for an additional ten years (through 2032) in exchange for an increase in
production of 100,000 tons by December 31, 2023. In the fiscal years ended December 31, 2021, 2020, and 2019, aggregate tons sold were
approximately 280,000, 285,000 and 295,000, respectively.
Other Properties. The Company also owns
an additional 107 acres of investment property in Brooksville, Florida.
Development Segment – Warehouse/Office Land.
At December 31, 2021, this segment owned the following
future development parcels:
1) 6 acres of horizontally developed land with 101,750 square feet in one industrial building 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.
Development Segment – Land Held for Investment
or Sale.
At December 31, 2021, this segment owned the following
development parcels:
1) Riverfront on the Anacostia: The Riverfront on the Anacostia property is a 5.8-acre parcel of real estate
in Washington, D.C. that fronts the Anacostia River and is adjacent to the Washington Nationals Baseball Park. A revised Planned Unit
Development (PUD) plan was approved in 2012 and permits the Company to develop, in four phases, a four-building, mixed-use project, containing
approximately 1,161,050 square feet. The approved development includes numerous publicly accessible open spaces and a waterfront esplanade
along the Anacostia River. The first phase (now known as Dock 79), which was completed through a joint venture with MRP Realty, and which
consisted of a single building with residential and retail uses, became our fourth business segment in July 2017, now known as the Stabilized
Joint Venture Segment. The second phase (now known as The Maren), also completed through a joint venture with MRP Realty and consists
of a single building with residential and retail uses, was added to the Stabilized Joint Venture Segment effective March 31, 2021. The
final two phases, Phase 3 and Phase 4 remain under a first-stage PUD approval expiring April 5, 2023, permitting 599,545
square feet of development.
15
2) Hampstead Trade Center: The Hampstead Trade Center property in Hampstead, Carroll County, Maryland is
a 118-acre parcel located adjacent to the State Route 30 bypass. The parcel was previously zoned for industrial use, but our request for
rezoning for residential use was approved in December 2018. Management believes this to be a higher and better use of the property. We
are fully engaged in the formal process of seeking PUD entitlements for this tract, which is now known as “Hampstead Overlook”.
3) Bryant Street: On December 24, 2018 the Company and MRP Realty formed four partnerships to purchase and
develop approximately five acres of land at 500 Rhode Island Ave NE, Washington, D.C. This property is the first phase of the Bryant Street
Master Plan. The property is located in an Opportunity Zone, which provides tax benefits in the new communities development program as
established by Congress in the Tax Cuts and Jobs Act of 2017. This first phase is a mixed-use development which supports 487 residential
units and 91,661 square feet of first floor and stand-alone retail on approximately five acres of the roughly 12-acre site. Construction
is complete and leasing efforts are under way.
4) 1800 Half Street: On December 20, 2019 the Company and MRP formed a joint venture to acquire and develop
a mixed-use project located at 1800 Half Street, Washington, D.C. This property is located in the Buzzard Point area of Washington, DC,
less than half a mile downriver from Dock 79 and the Maren. It lies directly between our two acres on the Anacostia currently under lease
by Vulcan and Audi Field, the home stadium of the DC United. The project is located in an Opportunity Zone, which provides tax benefits
in the new communities’ development program as established by Congress in the Tax Cuts and Jobs Act of 2017. The ten-story structure
will have 344 apartments and 11,246 square feet of ground floor retail.
5) Square 664E: The Company’s Square 664E property is approximately two acres situated on the Anacostia
River at the base of South Capitol Street less than half a mile down river from our Riverfront on the Anacostia property. This property
is currently under lease to Vulcan Materials for use as a concrete batch plant through 2026. In March 2017, reconstruction of the bulkhead
was completed at a cost of $4.2 million in anticipation of future high-rise development.
6) .408 Jackson: In December 2019, the Company entered into a joint venture with a new partner, Woodfield
Development, for the acquisition and development of a mixed-use project known as “.408 Jackson” in Greenville, South Carolina.
Woodfield specializes in Class-A multi-family, mixed use developments primarily in the Carolinas and DC. The project is located across
the street from Greenville’s minor league baseball stadium and will hold 227 multi-family units and 4,539 square feet of retail
space. It is located in an Opportunity Zone, which provides tax benefits in the new communities’ development program as established
by Congress in the Tax Cuts and Jobs Act of 2017.
7) Riverside: In December 2019, the Company entered into a joint venture with Woodfield Development for the
acquisition and development of a 200-unit multi-family apartment project located at 1430 Hampton Avenue, Greenville, South Carolina. The
project is located in an Opportunity Zone, which provides tax benefits in the new communities’ development program as established
by Congress in the Tax Cuts and Jobs Act of 2017.
8) Windlass Run: In March 2016, the Company entered into an agreement with St. Johns Properties Inc., a Baltimore
development company, to jointly develop the remaining lands of our Windlass Run Business Park, located in Middle River, Maryland, into
a multi-building business park consisting of approximately 329,000 square feet of single-story office space. The project will take place
in several phases, with construction of the first phase, which includes two office buildings and two retail buildings totaling 100,030-square-feet
(inclusive of 27,950 retail), commenced in the fourth quarter of 2017 and was completed in January 2019. At December 31, 2021 Phase I
was 48.0% leased and 46.7% occupied, the subsequent phases will follow as each phase is stabilized.
16
Stabilized Joint Venture Segment.
At December 31, 2021, this segment owned the following
stabilized joint ventures:
1) Dock 79: Dock 79 (Phase I of the Riverfront on the Anacostia development) is a 305-unit residential apartment
building with approximately 14,430 square feet of first floor retail space. The property is situated on approximately 2.1 acres of land
located on Potomac Avenue in Washington, DC, across the street from the Nationals Park.
2) The Maren: The Maren (Phase II of the Riverfront on the Anacostia development) is a 264-unit residential
apartment building with 6,758 square feet of retail space.
3) DST Hickory Creek: In July 2019, the Company completed a like-kind exchange by reinvesting $6,000,000
into a Delaware Statutory Trust (DST) known as CS1031 Hickory Creek DST. The DST owns a 294-unit garden-style apartment community located
in Henrico County, Virginia known as Hickory Creek, which consists of 19 three-story apartment buildings containing 273,940 rentable square
feet. Hickory Creek was constructed in 1984 and substantially renovated in 2016. The Company is 26.649% beneficial owner and receives
monthly distributions.
Item 3. LEGAL PROCEEDINGS.
None.
Item 4. MINE SAFETY DISCLOSURES.
None.
17
PART II
Text extracted from the filing as submitted to EDGAR. Formatting, tables and exhibits are simplified for reading; the original document is authoritative for anything you rely on.