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 June 30, 2022 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 August 12, 2022 Common Stock, $.10 par value per share 9,455,096 shares 1 FRP HOLDINGS, INC. FORM 10-Q QUARTER ENDED JUNE 30, 2022 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. 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) June 30, 2022 December 31, 2021 Assets: Real estate investments at cost: Land $ 135,139 123,397 Buildings and improvements 268,156 265,278 Projects under construction 11,149 8,668 Total investments in properties 414,444 397,343 Less accumulated depreciation and depletion 51,889 46,678 Net investments in properties 362,555 350,665 Real estate held for investment, at cost 9,969 9,722 Investments in joint ventures 139,655 145,443 Net real estate investments 512,179 505,830 Cash and cash equivalents 159,262 161,521 Cash held in escrow 765 752 Accounts receivable, net 1,423 793 Investments available for sale at fair value — 4,317 Federal and state income taxes receivable — 1,103 Unrealized rents 806 620 Deferred costs 2,065 2,726 Other assets 540 528 Total assets $ 677,040 678,190 Liabilities: Secured notes payable $ 178,483 178,409 Accounts payable and accrued liabilities 4,815 6,137 Other liabilities 1,886 1,886 Federal and state income taxes payable 398 — Deferred revenue 223 369 Deferred income taxes 64,180 64,047 Deferred compensation 1,307 1,302 Tenant security deposits 811 790 Total liabilities 252,103 252,940 Commitments and contingencies — — Equity: Common stock, $ .10 par value 25,000,000 shares authorized, 9,455,096 and 9,411,028 shares issued and outstanding, respectively 945 941 Capital in excess of par value 58,872 57,617 Retained earnings 339,081 337,752 Accumulated other comprehensive income (loss), net ( 1,096 ) 113 Total shareholders’ equity 397,802 396,423 Noncontrolling interest MRP 27,135 28,827 Total equity 424,937 425,250 Total liabilities and equity $ 677,040 678,190 See accompanying notes. 4 FRP HOLDINGS, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF INCOME (In thousands except per share amounts) (Unaudited) THREE MONTHS ENDED SIX MONTHS ENDED JUNE 30, JUNE 30, 2022 2021 2022 2021 Revenues: Lease revenue $ 6,745 5,861 13,027 9,399 Mining lands lease revenue 2,883 2,634 5,308 4,949 Total Revenues 9,628 8,495 18,335 14,348 Cost of operations: Depreciation, depletion and amortization 2,868 4,388 5,766 5,831 Operating expenses 1,541 1,394 3,349 2,235 Property taxes 1,041 1,000 2,069 1,778 Management company indirect 805 822 1,579 1,392 Corporate expenses (Note 4 Related Party) 1,307 1,050 2,142 1,829 Total cost of operations 7,562 8,654 14,905 13,065 Total operating profit (loss) 2,066 ( 159 ) 3,430 1,283 Net investment income 1,120 1,048 2,018 2,423 Interest expense ( 739 ) ( 446 ) ( 1,477 ) ( 1,371 ) Equity in loss of joint ventures ( 1,766 ) ( 1,118 ) ( 3,370 ) ( 2,753 ) Gain on remeasurement of investment in real estate partnership — — — 51,139 Gain on sale of real estate — 805 733 805 Income before income taxes 681 130 1,334 51,526 Provision for (benefit from) income taxes 99 ( 151 ) 348 10,370 Net income 582 281 986 41,156 Gain (loss) attributable to noncontrolling interest ( 75 ) 199 ( 343 ) 12,701 Net income attributable to the Company $ 657 82 1,329 28,455 Earnings per common share: Net income attributable to the Company- Basic $ 0.07 0.01 0.14 3.04 Diluted $ 0.07 0.01 0.14 3.03 Number of shares (in thousands) used in computing: -basic earnings per common share 9,384 9,353 9,375 9,347 -diluted earnings per common share 9,424 9,390 9,416 9,385 See accompanying notes. 5 FRP HOLDINGS, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (In thousands except per share amounts) (Unaudited) THREE MONTHS ENDED SIX MONTHS ENDED JUNE 30, JUNE 30, 2022 2021 2022 2021 Net income $ 582 281 986 41,156 Other comprehensive income net of tax: Unrealized loss on investments sale, net of income tax effect of $ ( 133 ) , $ ( 61 ) , $ ( 448 ) and $ ( 151 ) ( 359 ) ( 165 ) ( 1,209 ) ( 407 ) Comprehensive income $ 223 116 ( 223 ) 40,749 Less comp. income attributable to Noncontrolling interest $ ( 75 ) 199 ( 343 ) 12,701 Comprehensive income (loss) attributable to the Company $ 298 ( 83 ) 120 28,048 See accompanying notes 6 FRP HOLDINGS, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS SIX MONTHS ENDED JUNE 30, 2022 AND 2021 (In thousands) (Unaudited) 2022 2021 Cash flows from operating activities: Net income $ 986 41,156 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation, depletion and amortization 5,890 5,951 Deferred income taxes 133 9,273 Equity in loss of joint ventures 3,370 2,753 Gain on remeasurement of invest in real estate partnership — ( 51,139 ) Gain on sale of equipment and property ( 733 ) ( 835 ) Stock-based compensation 1,026 854 Net changes in operating assets and liabilities: Accounts receivable ( 630 ) 554 Deferred costs and other assets ( 1,294 ) 280 Accounts payable and accrued liabilities ( 1,468 ) 819 Income taxes payable and receivable 1,501 940 Other long-term liabilities 26 357 Net cash provided by operating activities 8,807 10,963 Cash flows from investing activities: Investments in properties ( 17,411 ) ( 6,845 ) Investments in joint ventures ( 4,261 ) ( 4,768 ) Return of capital from investments in joint ventures 6,677 17,119 Proceeds from sales of investments available for sale 4,317 42,502 Cash at consolidation of real estate partnership — 3,704 Proceeds from the sale of assets 741 878 Cash held in escrow ( 13 ) ( 152 ) Net cash (used in) provided by investing activities ( 9,950 ) 52,438 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 ( 1,349 ) ( 527 ) Repurchase of company stock — ( 264 ) Exercise of employee stock options 233 269 Net cash (used in) provided by financing activities ( 1,116 ) 844 Net increase (decrease) in cash and cash equivalents ( 2,259 ) 64,245 Cash and cash equivalents at beginning of year 161,521 73,909 Cash and cash equivalents at end of the period $ 159,262 138,154 Supplemental disclosure of cash flow information: Cash paid (received) during the period for: Interest 1,475 1,370 Income taxes ( 1,734 ) 7 See accompanying notes. 7 FRP HOLDINGS, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF SHAREHOLDERS’ EQUITY SIX MONTHS ENDED JUNE 30, 2022 AND 2021 (In thousands, except share amounts) (Unaudited) Accumulated Other Comp- Total Capital in rehensive Share Non- Common Stock Excess of Retained Income holders’ Controlling Total Shares Amount Par Value Earnings (loss), net Equity Interest Equity Balance at April 1, 2022 9,431,994 $ 943 $ 57,812 $ 338,424 $ ( 737 ) $ 396,442 $ 27,788 $ 424,230 Stock option grant compensation — — 17 — — 17 — 17 Restricted stock compensation — — 162 — — 162 — 162 Shares granted to employees Restricted stock award Shares granted to Directors 11,232 1 649 — — 650 — 650 Forfeiture of restricted stock award Exercise of stock options 11,870 1 232 — — 233 — 233 Net income — — — 657 — 657 ( 75 ) 582 Distributions to partners — — — — — — ( 578 ) ( 578 ) Unrealized loss on investment, net — — — — ( 359 ) ( 359 ) — ( 359 ) Balance at June 30, 2022 9,455,096 $ 945 $ 58,872 $ 339,081 $ ( 1,096 ) $ 397,802 $ 27,135 $ 424,937 Balance at January 1, 2022 9,411,028 $ 941 $ 57,617 $ 337,752 $ 113 $ 396,423 $ 28,827 $ 425,250 Stock option grant compensation — — 34 — — 34 — 34 Restricted stock compensation — — 292 — — 292 — 292 Shares granted to Employees 865 — 50 — — 50 — 50 Restricted stock award 21,464 2 ( 2 ) — — — — — Shares granted to Directors 11,232 1 649 — — 650 — 650 Forfeiture of restricted stock award ( 1,363 ) — — — — — — — Exercise of stock options 11,870 1 232 — — 233 — 233 Net income — — — 1,329 — 1,329 ( 343 ) 986 Distributions to partners — — — — — — ( 1,349 ) ( 1,349 ) Unrealized loss on investment, net — — — — ( 1,209 ) ( 1,209 ) — ( 1,209 ) Balance at June 30, 2022 9,455,096 $ 945 $ 58,872 $ 339,081 $ ( 1,096 ) $ 397,802 $ 27,135 $ 424,937 Balance at April 1, 2021 9,387,823 $ 939 $ 56,474 $ 337,910 $ 433 $ 395,756 $ 31,879 $ 427,635 Stock option grant compensation — — 18 — — 18 — 18 Restricted stock compensation — — 134 — — 134 — 134 Shares granted to employees Restricted stock award Shares granted to Directors 9,105 1 499 — — 500 — 500 Forfeiture Exercise of stock options 14,100 1 235 — — 236 — 236 Contributions from partners — — — — — — 3 3 Net income — — — 82 — 82 199 281 Distributions to partners — — — — — — ( 357 ) ( 357 ) Unrealized loss on investment, net — — — — ( 165 ) ( 165 ) — ( 165 ) Balance at June 30, 2021 9,411,028 $ 941 $ 57,360 $ 337,992 $ 268 $ 396,561 $ 31,724 $ 428,285 Balance at January 1, 2021 9,363,717 $ 936 $ 56,279 $ 309,764 $ 675 $ 367,654 $ 14,999 $ 382,653 Stock option grant compensation — — 35 — — 35 — 35 Restricted stock compensation — — 269 — — 269 — 269 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 — — — 28,455 — 28,455 12,701 41,156 Distributions to partners — — — — — — ( 527 ) ( 527 ) Unrealized loss on investment, net — — — — ( 407 ) ( 407 ) — ( 407 ) Balance at June 30, 2021 9,411,028 $ 941 $ 57,360 $ 337,992 $ 268 $ 396,561 $ 31,724 $ 428,285 8 FRP HOLDINGS, INC. AND SUBSIDIARIES CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS JUNE 30, 2022 (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 six months ended June 30, 2022 are not necessarily indicative of the results that may be expected for the year ending December 31, 2022. 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, 2021. (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. During the fourth quarter of 2021 we completed construction on two buildings in our Hollander Business Park which were subsequently added to this segment. Our Mining Royalty Lands segment owns several properties comprising approximately 16,650 acres currently under lease for mining rents or royalties (this does not include the 4,280 acres owned in our Brooksville joint venture with Vulcan Materials). Other than one location in Virginia, all of these properties are located in Florida and Georgia. Through our Development segment, we own and are continuously assessing 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. 9 The Stabilized Joint Venture segment includes joint ventures which own, lease and manage buildings that have met our initial lease up criteria. Two of our joint ventures in the segment, Riverfront Investment Partners I, LLC (“Dock 79”) and Riverfront Investment Partners II, LLC (“The Maren”) are consolidated. The 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 Six Months ended June 30, June 30, 2022 2021 2022 2021 Revenues: Revenues Asset management $ 912 588 1,751 1,300 Revenues Mining royalty lands 2,883 2,634 5,308 4,949 Revenues Development 408 451 791 768 Revenues Stabilized Joint Venture 5,425 4,822 10,485 7,331 Revenues 9,628 8,495 18,335 14,348 Operating profit (loss): Before corporate expenses: Operating profit before corporate expenses Asset management $ 419 128 711 359 Operating profit before corporate expenses Mining royalty lands 2,498 2,400 4,681 4,494 Operating profit before corporate expenses Development ( 581 ) ( 411 ) ( 1,299 ) ( 797 ) Operating profit before corporate expenses Stabilized Joint Venture 1,037 ( 1,226 ) 1,479 ( 944 ) Operating profit before corporate expenses Operating profit before corporate expenses 3,373 891 5,572 3,112 Corporate expenses: Corporate expenses Allocated to asset management ( 225 ) ( 288 ) ( 369 ) ( 502 ) Corporate expenses Allocated to mining royalty lands ( 148 ) ( 108 ) ( 242 ) ( 189 ) Corporate expenses Allocated to development ( 816 ) ( 522 ) ( 1,337 ) ( 941 ) Corporate expenses Allocated to stabilized joint venture ( 118 ) ( 132 ) ( 194 ) ( 197 ) Corporate expenses Total corporate expenses ( 1,307 ) ( 1,050 ) ( 2,142 ) ( 1,829 ) Corporate expenses $ 2,066 ( 159 ) 3,430 1,283 Interest expense Interest expense $ 739 446 1,477 1,371 Depreciation, depletion and amortization: Depreciation, depletion and amortization Asset management $ 230 134 464 271 Depreciation, depletion and amortization Mining royalty lands 189 58 244 123 Depreciation, depletion and amortization Development 47 53 92 106 Depreciation, depletion and amortization Stabilized Joint Venture 2,402 4,143 4,966 5,331 Depreciation, depletion and amortization $ 2,868 4,388 5,766 5,831 Capital expenditures: Capital expenditures Asset management $ 145 139 595 218 Capital expenditures Mining royalty lands 11,126 — 11,217 — Capital expenditures Development 2,426 2,907 5,379 6,206 Capital expenditures Stabilized Joint Venture 78 412 220 421 Capital expenditures $ 13,775 3,458 17,411 6,845 10 Indentifiable net assets June 30, December 31, Identifiable net assets 2022 2021 Assets Asset management $ 24,340 23,897 Assets Mining royalty lands 48,835 37,627 Assets Development 175,925 176,386 Assets Stabilized Joint Venture 261,594 266,429 Investments available for sale Investments available for sale at fair value — 4,317 Cash Cash items 160,027 162,273 Assets Unallocated corporate assets 6,319 7,261 Assets $ 677,040 678,190 (4) Related Party Transactions . The Company is a party to an Administrative Services Agreement which resulted from our January 30, 2015 spin-off of Patriot Transportation Holding, Inc. (Patriot). The Administrative Services Agreement sets forth the terms on which Patriot will provide to FRP certain services that were shared prior to the Spin-off, including the services of certain shared executive officers. The boards of the respective companies amended and extended this agreement for one year effective April 1, 2022. The consolidated statements of income reflect charges and/or allocation from Patriot for these services of $ 224,000 and $ 256,000 for the three months ended June 30, 2022 and 2021 and $ 447,000 and $ 512,000 for the six months ended June 30, 2022 and 2021, respectively. These charges are reflected as part of corporate expenses. To determine these allocations between FRP and Patriot as set forth in the Administrative Services Agreement, we employ an allocation method to allocate said expenses and thus we believe that the allocations to FRP are a reasonable approximation of the costs related to FRP’s operations, but any such related-party transactions cannot be presumed to be carried out on an arm’s-length basis. (5) Long-Term Debt . The Company’s Outstanding debt , net of unamortized debt issuance costs, consisted of the following (in thousands): June 30, December 31, 2022 2021 Fixed rate mortgage loans, 3.03 % interest only, matures 4/1/2033 $ 180,070 180,070 Unamortized debt issuance costs ( 1,587 ) ( 1,661 ) Credit agreement — — Long term debt $ 178,483 178,409 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 June 30, 2022, 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 11 2.71314 % on June 30, 2022. The credit agreement contains certain conditions and financial covenants, including a minimum tangible net worth and dividend restriction. As of June 30, 2022, these covenants would have limited our ability to pay dividends to a maximum of $ 246 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 $ 38,000 was recorded during the three months ended June 30, 2022 and 2021 and $ 74,000 and $ 76,000 during the six months ended June 30, 2022 and 2021, respectively. During the three months ended June 30, 2022 and June 30, 2021 the Company capitalized interest costs of $ 672,000 and $ 966,000 , respectively. During the six months ended June 30, 2022 and June 30, 2021 the Company capitalized interest costs of $ 1,346,000 and $ 1,894,000 , respectively. The Company was in compliance with all debt covenants as of June 30, 2022. (6) Earnings per Share . The following details the computations of the Basic and diluted earnings per common share (in thousands, except per share amounts): Three Months ended Six Months ended June 30, June 30, 2022 2021 2022 2021 Weighted average common shares outstanding during the period – shares used for basic earnings per common share 9,384 9,353 9,375 9,347 Common shares issuable under share based payment plans which are potentially dilutive 40 37 41 38 Common shares used for diluted earnings per common share 9,424 9,390 9,416 9,385 Net income attributable to the Company $ 657 82 1,329 28,455 Earnings per common share: -basic $ 0.07 0.01 0.14 3.04 -diluted $ 0.07 0.01 0.14 3.03 12 For the three and six months ended June 30, 2022, the Company did not have any outstanding anti-dilutive stock options. For the three and six months ended June 30, 2021, 6,680 and 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. During the first six months of 2021 the Company repurchased 6,004 shares at an average cost of $ 43.95 . (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 1.4 % 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 2022, 7,448 shares of restricted stock were granted to employees that will vest over the next four years . In January 2022, 14,016 shares of restricted stock were granted to employees as part of a long-term incentive plan that will vest over the next five years . In 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 2022 and March 2021, 865 and 1,098 shares of stock, respectively, were granted to employees. 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 366,723 at June 30, 2022. The Company recorded the following Stock compensation expense in its consolidated statements of income (in thousands): Three Months ended Six Months ended June 30, June 30, 2022 2021 2022 2021 Stock option grants $ 17 18 34 35 Restricted stock awards 162 134 292 269 Employee stock grant — — 50 50 Annual director stock award 650 500 650 500 Stock compensation $ 829 652 1,026 854 A Summary of changes in outstanding options is presented below (in thousands, except share and per share amounts): 13 Weighted Weighted Weighted Number Average Average Average Of Exercise Remaining Grant Date Options Shares Price Term (yrs) Fair Value(000's) Outstanding at January 1, 2022 104,755 $ 37.93 4.8 $ 1,416 Exercised ( 11,870 ) $ 19.69 $ ( 100 ) Outstanding at June 30, 2022 92,885 $ 40.27 4.9 $ 1,316 Exercisable at June 30, 2022 84,716 $ 39.72 4.7 $ 1,181 Vested during six months ended June 30, 2022 — $ — The aggregate intrinsic value of exercisable in-the-money options was $ 1,748,000 and the aggregate intrinsic value of outstanding in-the-money options was $ 1,865,000 based on the market closing price of $ 60.35 on June 30, 2022 less exercise prices. The unrecognized compensation cost of options granted to FRP employees but not yet vested as of June 30, 2022 was $ 94,000 , which is expected to be recognized over a weighted-average period of 1.4 years . 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 January 1, 2022 46,074 $ 45.88 3.1 $ 2,114 Time-based awards granted 7,448 57.80 431 Performance-based awards granted 14,016 57.80 810 Vested ( 7,813 ) 46.30 ( 362 ) Forfeited ( 1,363 ) 46.30 ( 63 ) Non-vested at June 30, 2022 58,362 $ 50.20 3.4 $ 2,930 Total unrecognized compensation cost of restricted stock granted but not yet vested as of June 30, 2022 was $ 2,144,000 which is expected to be recognized over a weighted-average period of 3.5 years . (8) Contingent Liabilities . The Company may be involved in litigation on a number of matters and is subject to certain claims which arise in the normal course of business. The Company has retained certain self-insurance risks with respect to losses for third party liability and property damage. In the opinion of management, none of these matters are expected to have a material adverse effect on the Company’s consolidated financial condition, results of operations or cash flows. The Company is subject to numerous environmental laws and regulations. The Company believes that the ultimate disposition of currently known environmental matters will not have a material effect on its financial position, liquidity, or operations. The Company can give no assurance that previous environmental studies with respect to its properties have revealed all potential environmental contaminants; that any previous owner, occupant or tenant did not create any material environmental condition not known to the Company; that the current environmental condition of the properties will not be affected by tenants and occupants, by the condition of nearby properties, or by unrelated third 14 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 June 30, 2022, 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. The Company and MRP guaranteed $ 26 million of the construction loan on the Bryant Street Partnerships in exchange for a 1 % lower interest rate. The Company and MRP have a side agreement limiting the Company’s guarantee to its proportionate ownership. The value of the guarantee was calculated at $ 1.9 million based on the present value of the 1 % interest savings over the anticipated 48 -month term. This amount is included as part of the Company’s investment basis and is amortized to expense over the 48 months. The Company will evaluate the guarantee liability based upon the success of the project and assuming no payments are made under the guarantee the Company will have a gain for $ 1.9 million when the loan is paid in full. Borrower may prepay a portion of the unpaid principal to satisfy such tests. (9) Concentrations . The mining royalty lands segment has a total of five tenants currently leasing mining locations and one lessee that accounted for 22.3 % of the Company’s consolidated revenues during the six months ended June 30, 2022, and $ 385,000 of accounts receivable at June 30, 2022. 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 June 30, 2022, the Company was invested in U.S. Treasury notes valued at $ 140,883,000 maturing in late 2022 through 2024. The unrealized loss on these investments of $ 1,699,000 was recorded as part of comprehensive income and based on the market value (Level 1). At June 30, 2022 and 2021, the carrying amount reported in the consolidated balance sheets for cash and cash equivalents including U.S. Treasury notes was adjusted to fair value as described above. The fair values of the Company’s other mortgage notes payable were estimated based on current rates available to the Company for debt of the same remaining maturities. At June 30, 2022, the carrying amount and fair value of such other long-term debt was $ 180,070,000 and $ 152,988,000 , respectively. At June 30, 2021, the carrying amount and fair value of such other long-term debt was $ 178,334,000 and $ 175,625,000 , respectively. (11) Investments in Joint Ventures . The Company has investments in joint ventures, primarily with other real estate developers. Joint ventures where FRP is not the primary beneficiary are reflected in the line “Investment in joint ventures” on the balance sheet and “Equity in loss of joint ventures” on the income statement. The assets of these joint ventures are restricted to use by the joint ventures and their obligations can only be settled by their assets or additional contributions by the partners. The following table summarizes the Company’s Investments in unconsolidated joint ventures (in thousands): 15 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 June 30, 2022 Brooksville Quarry, LLC 50.00 % $ 7,546 14,461 ( 42 ) ( 21 ) BC FRP Realty, LLC 50.00 % 5,485 22,115 ( 90 ) ( 45 ) Bryant Street Partnerships 61.36 % 58,253 203,480 ( 4,787 ) ( 3,186 ) Aberdeen Station Loan 917 917 — — DST Hickory Creek 26.65 % 6,000 45,186 ( 271 ) 171 Amber Ridge Loan 6,234 6,234 — — 1800 Half St. Owner, LLC 61.37 % 39,112 119,957 — ( 64 ) Greenville/Woodfield Partnerships 40.00 % 16,108 92,947 ( 563 ) ( 225 ) Total $ 139,655 505,297 ( 5,753 ) ( 3,370 ) 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, 2021 Brooksville Quarry, LLC 50.00 % $ 7,488 14,301 ( 82 ) ( 41 ) BC FRP Realty, LLC 50.00 % 5,530 22,470 ( 230 ) ( 115 ) Riverfront Holdings II, LLC (1) — — ( 760 ) ( 628 ) Bryant Street Partnerships 61.36 % 59,558 204,082 ( 6,084 ) ( 4,954 ) Aberdeen Station Loan 514 514 — — DST Hickory Creek 26.65 % 6,000 46,048 ( 481 ) 343 Amber Ridge Loan 11,466 11,466 — — 1800 Half St. Owner, LLC 61.37 % 38,693 93,932 12 20 Greenville/Woodfield Partnerships 40.00 % 16,194 87,731 ( 948 ) ( 379 ) Total $ 145,443 480,544 ( 8,573 ) ( 5,754 ) (1): Riverfront Holdings II, LLC was consolidated on March 31, 2021. Bryant Street Partnerships included $ 234,000 in 2021 for the Company’s share of preferred interest and $ 236,000 in 2022 and $ 236,000 in the first half of 2021 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 June 30, 2022 are summarized in the following two tables (in thousands): Investments in Apartment/Mixed Use Joint Ventures as of June 30, 2022 As of June 30, 2022 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 $ 0 195,633 43,124 119,311 92,149 $ 450,217 Cash and cash equivalents 0 2,831 579 646 466 4,522 Unrealized rents & receivables 0 4,859 1,181 0 14 6,054 Deferred costs 0 157 302 0 318 777 Total Assets $ 0 203,480 45,186 119,957 92,947 $ 461,570 Secured notes payable $ 0 128,697 29,360 47,128 51,148 $ 256,333 Other liabilities 0 3,077 144 11,876 3,402 18,499 Capital - FRP 0 54,814 4,179 37,414 15,359 111,766 Capital – Third Parties 0 16,892 11,503 23,539 23,038 74,972 Total Liabilities and Capital $ 0 203,480 45,186 119,957 92,947 $ 461,570 16 Investments in Joint Ventures as of June 30, 2022 As of June 30, 2022 Brooksville BC FRP Aberdeen Amber Ridge Apartment/ Grand Quarry, LLC Realty, LLC Loan Loan Mixed Use Total Investments in real estate, net $ 14,279 21,305 917 6,234 450,217 $ 492,952 Cash and cash equivalents 178 224 0 0 4,522 4,924 Unrealized rents & receivables 0 431 0 0 6,054 6,485 Deferred costs 4 155 0 0 777 936 Total Assets $ 14,461 22,115 917 6,234 461,570 $ 505,297 Secured notes payable $ 0 11,093 0 0 256,333 $ 267,426 Other liabilities 42 164 0 0 18,499 18,705 Capital - FRP 7,546 5,429 917 6,234 111,766 131,892 Capital - Third Parties 6,873 5,429 0 0 74,972 87,274 Total Liabilities and Capital $ 14,461 22,115 917 6,234 461,570 $ 505,297 The Company’s capital recorded by the unconsolidated Joint Ventures is $ 7,764,000 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, 2021 are summarized in the following two tables (in thousands): Investments in Apartment/Mixed Use Joint Ventures as of December 31, 2021 As of December 31, 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 $ 0 199,730 43,840 93,504 87,421 $ 424,495 Cash and cash equivalents 0 1,123 827 428 279 2,657 Unrealized rents & receivables 0 2,925 1,044 0 5 3,974 Deferred costs 0 304 337 0 26 667 Total Assets $ 0 204,082 46,048 93,932 87,731 $ 431,793 Secured notes payable $ 0 119,201 29,337 18,404 44,309 $ 211,251 Other liabilities 0 9,066 115 14,470 4,462 28,113 Capital - FRP 0 57,555 4,423 37,478 15,584 115,040 Capital – Third Parties 0 18,260 12,173 23,580 23,376 77,389 Total Liabilities and Capital $ 0 204,082 46,048 93,932 87,731 $ 431,793 Investments in Joint Ventures as of December 31, 2021 As of December 31, 2021 Brooksville BC FRP Aberdeen Amber Ridge Apartment/ Grand Quarry, LLC Realty, LLC Loan Loan Mixed Use Total Investments in real estate, net $ 14,281 21,561 514 11,466 424,495 $ 472,317 Cash and cash equivalents 18 312 0 0 2,657 2,987 Unrealized rents & receivables 0 368 0 0 3,974 4,342 Deferred costs 2 229 0 0 667 898 Total Assets $ 14,301 22,470 514 11,466 431,793 $ 480,544 Secured notes payable $ 0 11,384 0 0 211,251 $ 222,635 Other liabilities 0 140 0 0 28,113 28,253 Capital - FRP 7,488 5,473 514 11,466 115,040 139,981 Capital - Third Parties 6,813 5,473 0 0 77,389 89,675 Total Liabilities and Capital $ 14,301 22,470 514 11,466 431,793 $ 480,544 The amount of consolidated retained earnings (accumulated deficit) for these joint ventures was $ ( 11,400,000 ) and 17 $ ( 8,942,000 ) as of June 30, 2022 and December 31, 2021, respectively. The income statements of the Bryant Street Partnerships are as follows (in thousands): Bryant Street Bryant Street Bryant Street Bryant Street Partnerships Partnerships Partnerships Partnerships Total JV Total JV Company Share Company Share Six Months ended Six Months ended Six Months ended Six Months ended June 30, June 30, June 30, June 30, 2022 2021 2022 2021 Revenues: Rental Revenue $ 4,018 $ 180 $ 2,465 $ 111 Revenue – other 733 77 450 47 Total Revenues 4,751 257 2,915 158 Cost of operations: Depreciation and amortization 3,260 776 2,000 476 Operating expenses 2,523 1,117 1,548 686 Property taxes 578 119 355 73 Total cost of operations 6,361 2,012 3,903 1,235 Total operating loss ( 1,610 ) ( 1,755 ) ( 988 ) ( 1,077 ) Interest expense ( 3,177 ) ( 655 ) ( 2,198 ) ( 1,130 ) Net loss before tax $ ( 4,787 ) $ ( 2,410 ) $ ( 3,186 ) $ ( 2,207 ) The income statements of the Greenville Woodfield Riverside Partnership are as follows (in thousands): Woodfield Woodfield Riverside Partnership Riverside Partnership Total JV Company Share Six Months ended Six Months ended June 30, June 30, 2022 2022 Revenues: Rental Revenue $ 1,335 $ 534 Revenue – other 86 34 Total Revenues 1,421 568 Cost of operations: Depreciation and amortization 765 306 Operating expenses 601 240 Property taxes 317 127 Total cost of operations 1,683 673 Total operating loss ( 262 ) ( 105 ) Interest expense ( 301 ) ( 120 ) Net loss before tax $ ( 563 ) $ ( 225 ) 18 (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 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 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 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., Greenville, South Carolina and Richmond, Virginia; 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 Company’s industrial warehouses typically lease for terms ranging from 3 – 10 years often with 1 or 2 renewal options. All base rent revenue is recognized on a straight-lined basis. All of the commercial warehouse leases are triple net and common area maintenance costs (CAM Revenue) are billed monthly, and insurance and real estate taxes are billed annually. 34 Loveton is the only office product wherein all leases are full service therefore there is no CAM revenue. Office leases are also recognized on a straight-lined basis. The major cash outlays incurred in this segment are for operating expenses, real estate taxes, building repairs, lease commissions and other lease closing costs, construction of tenant improvements, capital to acquire existing operating buildings and closing costs related thereto and personnel costs of our property management team. As of June 30, 2022, 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 100% leased and occupied. 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 2021and are 69.1% leased and 52.8% occupied. 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 16,650 acres currently under lease for mining rents or royalties (excluding the 4,280 acres owned by our Brooksville joint venture with Vulcan Materials). Other than one location in Virginia, all of these properties are located in Florida and Georgia. The Company leases land under long-term leases that grant the lessee the right to mine and sell reserves from our property in exchange for royalty payments. A typical lease has an option to extend the lease for additional terms. The typical lease in this segment requires the tenant to pay us a royalty based on the number of tons of mined materials sold from our property during a given fiscal year multiplied by a percentage of the average annual sales price per ton sold. As a result of this royalty payment structure, we do not bear the cost risks associated with the mining operations, however, we are subject to the cyclical nature of the construction markets in these states as both volumes and prices tend to fluctuate through those cycles. In certain locations, typically where the reserves on our property have been depleted but the tenant still has a need for the leased land, we collect a minimum annual rental amount. We believe strongly in the potential for future growth in construction in Florida, Georgia, and Virginia which would positively benefit our profitability in this segment. In the fiscal year ended December 31, 2021, a total of 8 million tons were mined. 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. 21 Additionally, these locations provide us with opportunities for valuable “second lives” for these assets through proper land planning and entitlement. 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 June 30, 2022, this segment owned the following development parcels: 1) Six acres of horizontally developed land at Hollander Business Park in Baltimore, City, Maryland with one 101,750 square feet industrial build-to-suit currently under construction. 2) 55 acres of land that will be capable of supporting over 690,000 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 258,545 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 $6,166,000 Hampstead Trade Center, MD 118 Residential zoning applied for in preparation for sale $9,968,000 Square 664E, on the Anacostia River in DC 2 Under lease to Vulcan Materials as a concrete batch plant through 2026 $7,594,000 Total 122.5 $23,728,000 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 91,661 square feet of retail partially completed 61.36% Aberdeen Station residential development in Harford County, Maryland $31.1 million in exchange for an interest rate of 10% and a 20% preferred return after which the Company is also entitled to a portion of proceeds from sale Financing Amber Ridge residential development in Prince George’s County, Maryland $18.5 million in exchange for an interest rate of 10% and a preferred return of 20% after which the Company is 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 underway on ten-story structure with 344 apartments and 8,356 square feet of ground floor retail 61.37% .408 Jackson property in Greenville, SC Woodfield Development Construction underway on mixed-use project with 227 multifamily units and 4,539 square feet of retail space began in May 2020 40% Riverside property 1430 Hampton Avenue, Greenville, SC Woodfield Development Construction underway on 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 June 30, 2022 Brooksville Quarry, LLC 50.00 % $ 7,546 14,461 (42 ) (21 ) BC FRP Realty, LLC 50.00 % 5,485 22,115 (90 ) (45 ) Bryant Street Partnerships 61.36 % 58,253 203,480 (4,787 ) (3,186 ) Aberdeen Station Loan 917 917 — — DST Hickory Creek 26.65 % 6,000 45,186 (271 ) 171 Amber Ridge Loan 6,234 6,234 — — 1800 Half St. Owner, LLC 61.37 % 39,112 119,957 — (64 ) Greenville/Woodfield Partnerships 40.00 % 16,108 92,947 (563 ) (225 ) Total $ 139,655 505,297 (5,753 ) (3,370 ) 23 The major classes of assets, liabilities and equity of the Company’s Investments in Joint Ventures as of June 30, 2022, are summarized in the following two tables (in thousands): As of June 30, 2022 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 $ 0 195,633 43,124 119,311 92,149 $ 450,217 Cash and cash equivalents 0 2,831 579 646 466 4,522 Unrealized rents & receivables 0 4,859 1,181 0 14 6,054 Deferred costs 0 157 302 0 318 777 Total Assets $ 0 203,480 45,186 119,957 92,947 $ 461,570 Secured notes payable $ 0 128,697 29,360 47,128 51,148 $ 256,333 Other liabilities 0 3,077 144 11,876 3,402 18,499 Capital - FRP 0 54,814 4,179 37,414 15,359 111,766 Capital – Third Parties 0 16,892 11,503 23,539 23,038 74,972 Total Liabilities and Capital $ 0 203,480 45,186 119,957 92,947 $ 461,570 As of June 30, 2022 Brooksville BC FRP Aberdeen Amber Ridge Apartment/ Grand Quarry, LLC Realty, LLC Loan Loan Mixed Use Total Investments in real estate, net $ 14,279 21,305 917 6,234 450,217 $ 492,952 Cash and cash equivalents 178 224 0 0 4,522 4,924 Unrealized rents & receivables 0 431 0 0 6,054 6,485 Deferred costs 4 155 0 0 777 936 Total Assets $ 14,461 22,115 917 6,234 461,570 $ 505,297 Secured notes payable $ 0 11,093 0 0 256,333 $ 267,426 Other liabilities 42 164 0 0 18,499 18,705 Capital - FRP 7,546 5,429 917 6,234 111,766 131,892 Capital - Third Parties 6,873 5,429 0 0 74,972 87,274 Total Liabilities and Capital $ 14,461 22,115 917 6,234 461,570 $ 505,297 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 Company’s residential spaces generally lease for 12 – 15-month lease terms and 90 days prior to the expiration, as long as there is no balance due, the tenant is offered a renewal. If no notice to move out or renew is made, then the leases go to month to month until notification of termination or renewal is received. Renewal terms are typically 9 – 12 months. From March 2020 through the end of 2021, we were prohibited from increasing rent on renewals by emergency measures in Washington, DC designed to ease the burden of the pandemic on its citizens. These measures expired at the end of 2021. The Company also leases retail spaces at apartment/mixed-use properties. The retail leases are typically 10 -15-year leases with options to renew for another 5 years. Retail leases at these properties also include percentage rents which average 3-6% of annual sales for the tenant that exceed a breakpoint stipulated by each individual lease. All base rent revenue is recognized on a straight-line basis. The major cash outlays incurred in this segment are for property taxes, full service maintenance, property management, utilities and marketing. The three stabilized joint venture properties are as follows: 24 Property and Occupancy JV Partner Method of Accounting % Ownership Dock 79 apartments Washington, D.C. 305 apartment units and 14,430 square feet of retail MRP Realty Consolidated 66% The Maren apartments Washington, D.C. 264 residential units and 6,758 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% Second Quarter Operational Highlights · Dock 79 ended the reporting period with average residential occupancy above 95% for the fifth straight quarter · 7.33% increase on renewals at Dock 79 · Best second quarter of revenue for mining royalties in segment’s history · 55.1% increase in Asset Management Revenue versus same period last year · 16.0% increase in NOI ($6.94 million vs $5.98 million) compared to same period last year Comparative Results of Operations for the Three months ended June 30, 2022 and 2021 Consolidated Results (dollars in thousands) Three Months Ended June 30, 2022 2021 Change % Revenues: Lease Revenue $ 6,745 $ 5,861 $ 884 15.1 % Mining lands lease revenue 2,883 2,634 249 9.5 % Total Revenues 9,628 8,495 1,133 13.3 % Cost of operations: Depreciation/Depletion/Amortization 2,868 4,388 (1,520 ) -34.6 % Operating Expenses 1,541 1,394 147 10.5 % Property Taxes 1,041 1,000 41 4.1 % Management company indirect 805 822 (17 ) -2.1 % Corporate Expense 1,307 1,050 257 24.5 % Total cost of operations 7,562 8,654 (1,092 ) -12.6 % Total operating profit (loss) 2,066 (159 ) 2,225 -1399.4 % Net investment income 1,120 1,048 72 6.9 % Interest Expense (739 ) (446 ) (293 ) 65.7 % Equity in loss of joint ventures (1,766 ) (1,118 ) (648 ) 58.0 % Gain on sale of real estate — 805 (805 ) -100.0 % Income before income taxes 681 130 551 423.8 % Provision for (benefit from) income taxes 99 (151 ) 250 -165.6 % Net income 582 281 301 107.1 % Gain (loss) attributable to noncontrolling interest (75 ) 199 (274 ) -137.7 % Net income attributable to the Company $ 657 $ 82 $ 575 701.2 % 25 Net income for the second quarter of 2022 was $657,000 or $.07 per share versus $82,000 or $.01 per share in the same period last year. The second quarter of 2022 was impacted by the following items: The quarter includes $152,000 amortization expense compared to $1,868,000 in the same quarter last year 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 expense increased $293,000 compared to the same quarter last year due to capitalizing less interest due to the lower amount of in-house and joint venture projects under development. Equity in loss of Joint Ventures increased $648,000 primarily due to increased depreciation and amortization at our joint ventures due to buildings placed in service. The same quarter last year included $805,000 for an easement and sale of excess land in the Mining Royalty Lands Segment. Asset Management Segment Results Three months ended June 30 (dollars in thousands) 2022 % 2021 % Change % Lease revenue $ 912 100.0 % 588 100.0 % 324 55.1 % Depreciation, depletion and amortization 230 25.2 % 134 22.8 % 96 71.6 % Operating expenses 111 12.2 % 74 12.6 % 37 50.0 % Property taxes 52 5.7 % 42 7.1 % 10 23.8 % Management company indirect 100 10.9 % 210 35.7 % (110 ) -52.4 % Corporate expense 225 24.7 % 288 49.0 % (63 ) -21.9 % Cost of operations 718 78.7 % 748 127.2 % (30 ) -4.0 % Operating profit (loss) $ 194 21.3 % (160 ) -27.2 % 354 -221.3 % Total revenues in this segment were $912,000, up $324,000 or 55.1%, over the same period last year. Operating profit was $194,000, up $354,000 from an operating loss of $(160,000) in the same quarter last year. Operating profit is up primarily because Cranberry Run is now 100% leased and occupied compared to 77.6% leased and 59.7% occupied at the end of the same quarter last year. Revenues are up because of Cranberry Run as well as the addition of our two most recent spec buildings at Hollander Business Park which were under construction during the same period last year. Mining Royalty Lands Segment Results Three months ended June 30 (dollars in thousands) 2022 % 2021 % Change % Mining lands lease revenue $ 2,883 100.0 % 2,634 100.0 % 249 9.5 % Depreciation, depletion and amortization 189 6.6 % 58 2.2 % 131 225.9 % Operating expenses 17 0.6 % 12 0.5 % 5 41.7 % Property taxes 69 2.4 % 68 2.6 % 1 1.5 % Management company indirect 110 3.8 % 96 3.6 % 14 14.6 % Corporate expense 148 5.1 % 108 4.1 % 40 37.0 % Cost of operations 533 18.5 % 342 13.0 % 191 55.8 % Operating profit $ 2,350 81.5 % 2,292 87.0 % 58 2.5 % Total revenues in this segment were $2,883,000 versus $2,634,000 in the same period last year. Total operating profit 26 in this segment was $2,350,000, an increase of $58,000 versus $2,292,000 in the same period last year. This increase is primarily the result of the additional royalties from the acquisition in Astatula, FL which we completed at the beginning of this quarter. Development Segment Results Three months ended June 30 (dollars in thousands) 2022 2021 Change Lease revenue $ 408 451 (43 ) Depreciation, depletion and amortization 47 53 (6 ) Operating expenses 80 45 35 Property taxes 356 364 (8 ) Management company indirect 506 400 106 Corporate expense 816 522 294 Cost of operations 1,805 1,384 421 Operating loss $ (1,397 ) (933 ) (464 ) With respect to ongoing projects: We are the principal capital source of a residential development venture in Prince George’s County, Maryland known as “Amber Ridge.” Of the $18.5 million in committed capital to the project, $16.8 million in principal draws have taken place to date. Through the end of the first half of 2022, 99 of the 187 units have been sold, and we have received $13,040,000 in preferred interest and principal to date. Bryant Street is a mixed-use joint venture between the Company and MRP in Washington, DC consisting of four buildings, The Coda, The Chase 1A, The Chase 1B, and one commercial building 90% leased to an Alamo Draft House movie theater. At quarter end, the Coda was 96.75% leased and 95.45% occupied, The Chase 1B was 85.71% leased and 78.26% occupied, and The Chase 1A was 72.67% leased and 62.79% occupied. In total, at quarter end, Bryant Street’s 487 residential units were 84.6% leased and 78.2% occupied. Its commercial space was 82.5% leased and 69.2% occupied at quarter end. We began construction on our 1800 Half Street joint venture project, now known as The Verge, at the end of August 2020. We expect the building to be complete in the third quarter of 2022. As of the end of the second quarter, the project was 91.34% complete. This is our third mixed use project in the Anacostia waterfront submarket in Washington, DC. Leasing began on Riverside in the third quarter 2021 and the building was 97% leased and 91% occupied at the end of the quarter. .408 Jackson is our second joint venture project in Greenville and is currently under construction. This project is 94.09% complete and we expect to complete construction and begin leasing in fourth quarter of 2022. Stabilized Joint Venture Segment Results Three months ended June 30 (dollars in thousands) 2022 % 2021 % Change % Lease revenue $ 5,425 100.0 % 4,822 100.0 % 603 12.5 % Depreciation, depletion and amortization 2,402 44.3 % 4,143 85.9 % (1,741 ) -42.0 % Operating expenses 1,333 24.6 % 1,263 26.2 % 70 5.5 % Property taxes 564 10.4 % 526 10.9 % 38 7.2 % Management company indirect 89 1.6 % 116 2.4 % (27 ) -23.3 % Corporate expense 118 2.2 % 132 2.8 % (14 ) -10.6 % Cost of operations 4,506 83.1 % 6,180 128.2 % (1,674 ) -27.1 % Operating profit (loss) $ 919 16.9 % (1,358 ) -28.2 % 2,277 -167.7 % 27 Total revenues in this segment were $5,425,000, an increase of $603,000 versus $4,822,000 in the same period last year. The Maren’s revenue was $2,457,000 and Dock 79 revenues increased $307,000. Total operating profit in this segment was $919,000 an increase of $2,277,000 versus an operating loss of $(1,358,000) in the same period last year. Net Operating Income this quarter for this segment was $3,533,000, up $496,000 or 16.3% compared to the same quarter last year. At the end of June, The Maren was 93.93% leased and 96.21% occupied. Average residential occupancy for the quarter was 95.34%, and 65.38% of expiring leases renewed with an average rent increase on renewals of 4.60%. 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 96.39%, and at the end of the quarter, Dock 79’s residential units were 94.8% leased and 94.1% occupied. This quarter, 60.78% of expiring leases renewed with an average rent increase on renewals of 7.33%. Dock 79 is a joint venture between the Company and MRP, in which FRP Holdings, Inc. is the majority partner with 66% ownership. Second quarter distributions from our CS1031 Hickory Creek DST investment were $86,000. Six Months Operational Highlights · 34.7% increase in asset management revenue versus first six months of last year · Highest six-month total of mining royalties revenue in segment’s history · 65.52% renewal rate at Dock 79 with 6.41% increase on renewals through first six months · 24.0% increase in NOI ($12.67 million vs $10.22 million) compared to first six months last year Comparative Results of Operations for the Six months ended June 30, 2022 and 2021 Consolidated Results (dollars in thousands) Six Months Ended June 30, 2022 2021 Change % Revenues: Lease Revenue $ 13,027 $ 9,399 $ 3,628 38.6 % Mining lands lease revenue 5,308 4,949 359 7.3 % Total Revenues 18,335 14,348 3,987 27.8 % Cost of operations: Depreciation/Depletion/Amortization 5,766 5,831 (65 ) -1.1 % Operating Expenses 3,349 2,235 1,112 49.8 % Property Taxes 2,069 1,778 291 16.4 % Management company indirect 1,579 1,392 187 13.4 % Corporate Expense 2,142 1,829 313 17.1 % Total cost of operations 14,905 13,065 1,840 14.1 % Total operating profit 3,430 1,283 2,147 167.3 % Net investment income 2,018 2,423 (405 ) -16.7 % Interest Expense (1,477 ) (1,371 ) (106 ) 7.7 % Equity in loss of joint ventures (3,370 ) (2,753 ) (617 ) 22.4 % Gain on remeasurement of investment in real estate partnership — 51,139 (51,139 ) -100.0 % Gain on sale of real estate 733 805 (72 ) -8.9 % Income before income taxes 1,334 51,526 (50,192 ) -97.4 % Provision for income taxes 348 10,370 (10,022 ) -96.6 % Net income 986 41,156 (40,170 ) -97.6 % Gain (loss) attributable to noncontrolling interest (343 ) 12,701 (13,044 ) -102.7 % Net income attributable to the Company $ 1,329 $ 28,455 $ (27,126 ) -95.3 % 28 Net income attributable to the Company for the first half of 2022 was $1,329,000 or $.14 per share versus $28,455,000 or $3.03 per share in the same period last year. The first half of 2022 was impacted by the following items: The period includes $468,000 amortization expense compared to $1,868,000 in the same period last year 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. The period includes $733,000 gain on sales of excess property at Brooksville while the same quarter last year included $805,000 for a Grandin easement and sale of Brooksville excess land. Interest income decreased $405,000 due to bond maturities and the repayment of the Company’s preferred interest in The Maren upon the building’s refinancing. Equity in loss of Joint Ventures increased $617,000 primarily due to increased depreciation and amortization at our joint ventures due to buildings placed in service. Net income for the first half of 2021 included a 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 was mitigated by a $10.1 million provision for taxes and $14.0 attributable to noncontrolling interest. Asset Management Segment Results Six months ended June 30 (dollars in thousands) 2022 % 2021 % Change % Lease revenue $ 1,751 100.0 % 1,300 100.0 % 451 34.7 % Depreciation, depletion and amortization 464 26.5 % 271 20.8 % 193 71.2 % Operating expenses 279 15.9 % 213 16.4 % 66 31.0 % Property taxes 105 6.0 % 80 6.2 % 25 31.3 % Management company indirect 192 11.0 % 377 29.0 % (185 ) -49.1 % Corporate expense 369 21.1 % 502 38.6 % (133 ) -26.5 % Cost of operations 1,409 80.5 % 1,443 111.0 % (34 ) -2.4 % Operating profit (loss) $ 342 19.5 % (143 ) -11.0 % 485 -339.2 % Total revenues in this segment were $1,751,000, up $451,000 or 34.7%, over the same period last year. Operating profit was $342,000, up $485,000 from an operating loss of $(143,000) in the same period last year. Mining Royalty Lands Segment Results Six months ended June 30 (dollars in thousands) 2022 % 2021 % Change % Mining lands lease revenue $ 5,308 100.0 % 4,949 100.0 % 359 7.3 % Depreciation, depletion and amortization 244 4.6 % 123 2.5 % 121 98.4 % Operating expenses 32 0.6 % 23 0.5 % 9 39.1 % Property taxes 134 2.5 % 131 2.6 % 3 2.3 % Management company indirect 217 4.1 % 178 3.6 % 39 21.9 % Corporate expense 242 4.6 % 189 3.8 % 53 28.0 % Cost of operations 869 16.4 % 644 13.0 % 225 34.9 % Operating profit $ 4,439 83.6 % 4,305 87.0 % 134 3.1 % 29 Total revenues in this segment were $5,308,000 versus $4,949,000 in the same period last year. Total operating profit in this segment was $4,439,000, an increase of $134,000 versus $4,305,000 in the same period last year. Development Segment Results Six months ended June 30 (dollars in thousands) 2022 2021 Change Lease revenue $ 791 768 23 Depreciation, depletion and amortization 92 106 (14 ) Operating expenses 291 71 220 Property taxes 711 727 (16 ) Management company indirect 996 661 335 Corporate expense 1,337 941 396 Cost of operations 3,427 2,506 921 Operating loss $ (2,636 ) (1,738 ) (898 ) Stabilized Joint Venture Segment Results Six months ended June 30 (dollars in thousands) 2022 % 2021 % Change % Lease revenue $ 10,485 100.0 % 7,331 100.0 % 3,154 43.0 % Depreciation, depletion and amortization 4,966 47.4 % 5,331 72.7 % (365 ) -6.8 % Operating expenses 2,747 26.2 % 1,928 26.3 % 819 42.5 % Property taxes 1,119 10.7 % 840 11.5 % 279 33.2 % Management company indirect 174 1.6 % 176 2.4 % (2 ) -1.1 % Corporate expense 194 1.8 % 197 2.7 % (3 ) -1.5 % Cost of operations 9,200 87.7 % 8,472 115.6 % 728 8.6 % Operating profit (loss) $ 1,285 12.3 % (1,141 ) -15.6 % 2,426 -212.6 % In March 2021, we reached stabilization on Phase II (The Maren) of the development known as RiverFront on the Anacostia in Washington, D.C. 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 the prior 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 $10,485,000, an increase of $3,154,000 versus $7,331,000 in the same period last year. The Maren’s revenue was $4,866,000 and Dock 79 revenues increased $450,000. Total operating profit in this segment was $1,285,000, an increase of $2,426,000 versus an operating loss of $(1,141,000) in the same period last year. Net Operating Income for this segment was $6,670,000, up $2,099,000 or 45.92% compared to the same period last year. All of these increases over the first six months last year are primarily due to the Maren’s consolidation into this segment in March 31, 2021. The Maren’s average residential occupancy for the first six months of 2022 was 95.24%, and 63.53% of expiring leases renewed with an average rent increase on renewals of 3.69%. The Maren is a joint venture between the 30 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 six months of 2022 was 95.79%. Through the first six months of the year, 65.52% of expiring leases renewed with a 6.41% increase on renewals. Dock 79 is a joint venture between the Company and MRP, in which FRP Holdings, Inc. is the majority partner with 66% ownership. Distributions from our CS1031 Hickory Creek DST investment were $171,000 for the first six 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 June 30, 2022, we had $159,262,000 of cash and cash equivalents. As of June 30, 2022, 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 each of the periods presented (in thousands of dollars): Six months Ended June 30, 2022 2021 Total cash provided by (used for): Operating activities $ 8,807 10,963 Investing activities (9,950 ) 52,438 Financing activities (1,116 ) 844 Increase (decrease) in cash and cash equivalents $ (2,259 ) 64,245 Outstanding debt at the beginning of the period 178,409 89,964 Outstanding debt at the end of the period 178,483 178,334 Operating Activities - Net cash provided by operating activities for the six months ended June 30, 2022 was $8,807,000 versus $10,963,000 in the same period last year. In the prior 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. At June 30, 2022, the Company was invested in U.S. Treasury notes valued at $140,883,000 maturing in late 2022 through 2024. The unrealized loss on these investments of $1,699,000 was recorded as part of comprehensive income and based on the market value (Level 1). Investing Activities - Net cash used in investing activities for the six months ended June 30, 2022 was $9,950,000 versus cash provided by investing activities of $52,438,000 in the same period last year. The $62 million decrease was primarily due to a $10.6 million increase in the purchase of property, $38.2 million decrease on maturities and sales of our corporate bond portfolio, a $10.4 million decrease on the return of our preferred equity financing with the prior year including interest of $16.1 million from The Maren, and the prior year including $3.7 million for cash on the books of The Maren upon consolidation. Financing Activities – Net cash used in investing activities was $1,116,000 versus cash provided of $844,000 in the same period last year primarily due to the prior year refinancing of Dock 79 for $1.4 million more net of debt issuance costs than the amount matured. 31 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 June 30, 2022, these covenants would have limited our ability to pay dividends to a maximum of $246 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 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 2022 to include approximately $36.4 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. We have continued operations throughout the pandemic and have made every effort to act in accordance with national, state, and local regulations and guidelines. During 2020, Dock 79 and The Maren most directly suffered the impacts to our business from the pandemic due to our retail tenants being unable to operate at capacity, the lack of attendance at the Washington Nationals baseball park and the rent freeze imposed by the District. In 2021, the Delta and Omicron variants of the virus impacted our businesses, but because of the vaccine and efforts to reopen the economy, while still affected, they were not impacted to the extent that they were in 2020. Bryant Street has continued to experience the impact of the pandemic as result of low ridership on the DC Metro, easy access to which was one of the principal features/amenities of the development. It is possible that this version of the virus and its succeeding variants may impact our ability to lease retail spaces in Washington, D.C. and Greenville. We expect our business to be affected by the pandemic for as long as government intervention and regulation is required to combat the threat. Summary and Outlook . Royalty revenue for the quarter was up 9.44% versus the same period last year and revenue for the first six months increased 7.26% versus the same period the year before. This is the highest second-quarter revenue total in this segment’s history, the highest six-month revenue total in the segment’s history, and the first time we have ever eclipsed $5 million in revenue in the first six months (or any six-month period). As mentioned previously, this jump in revenue is primarily the result of the acquisition we completed at the beginning of this quarter of a new mining royalty property in Astatula, FL. The additional royalties along with increased infrastructure spending and pressure on supply should continue to help push price and volumes and drive this segment forward. This is the first full quarter where we have had the ability to raise rents on renewals at Dock 79 and the Maren. Both properties performed well with 65.38% of expiring leases at the Maren renewing with an average increase of 4.60%, and 60.78% of expiring leases at Dock 79 renewing with an average of 7.33%. When we could not renew an existing residential lease and instead signed a new tenant, we saw in increase in rent on these “trade-outs” of 11.75% at Dock 79 and 10.58% at The Maren. Dock 79 experienced the effects of the rent freeze to a greater extent than the Maren, so it is not surprising that a return to market rents has had a greater effect on its renewal increases as well as these trade- 32 outs. Increased inflation has also played a part in driving these increases. However, we believe that this also speaks to the demand these assets generate in a competitive market and confirms our “long” position in this submarket with these assets as well as the ones we have in our development pipeline. Demand for industrial space remains high and Asset Management’s performance this quarter speaks to that. Cranberry Run is 100% leased and occupied for the second straight quarter and as a result achieved first six-month revenues 34.19% higher than last year. Our other two properties (our home office in Maryland and Vulcan’s former Jacksonville office) remain essentially unchanged and fully leased. As to the immediate future of this segment, we anticipate shell completion of our final building at Hollander by the end of 2022. This 101,750 square foot warehouse is a build-to-suit with a 10-year lease, which will positively impact revenue, operating profit, and NOI for some time. Looking back on the first six months, the numbers speak to both organic growth in all our income producing segments as well as the benefit of two full quarters of a stabilized and consolidated Maren. The one major headwind in our income statement is the increase in equity in loss in joint venture. This is both a function of the equity method of accounting and the nature of our multifamily assets prior to stabilization. What one line item encompassing several properties simply cannot tell you, and perhaps where an NOI number is more illustrative, is how we are incrementally growing the value of this Company. Development and lease-up are always going to be expensive and a damper on earnings, and, good, bad, or indifferent, are simply the price you pay for future income and cashflow. We count ourselves extremely fortunate to have a shareholder base that can see the big picture and understands what we are building towards. We have several meaningful events and milestones heading our way with what remains of the year: the stabilization of both Bryant Street; stabilization and permanent financing for Riverside; completion of construction on and the commencement of leasing for both .408 Jackson in Greenville and The Verge in Washington, DC. We are working diligently to conservatively convert our existing cash into new investments, cautiously optimistic as ever, but ever mindful of our duty to be responsible stewards of your capital. 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 Six months ended 06/30/22 (in thousands) Stabilized Asset Joint Mining Unallocated FRP Management Development Venture Royalties Corporate Holdings Segment Segment Segment Segment Expenses Totals Net Income (loss) $ 249 (3,351 ) (92 ) 3,758 422 986 Income Tax Allocation 93 (1,242 ) 92 1,393 12 348 Income (loss) before income taxes 342 (4,593 ) — 5,151 434 1,334 Less: Unrealized rents 196 — — 105 — 301 Gain on sale of real estate — — — 733 — 733 Equity in gain of Joint Ventures — — 171 — — 171 Interest income — 1,563 — — 455 2,018 Plus: Unrealized rents — — 51 — — 51 Equity in loss of Joint Ventures — 3,520 — 21 — 3,541 Interest Expense — — 1,456 — 21 1,477 Depreciation/Amortization 464 92 4,966 244 — 5,766 Management Co. Indirect 192 996 174 217 — 1,579 Allocated Corporate Expenses 369 1,337 194 242 — 2,142 Net Operating Income (loss) $ 1,171 (211 ) 6,670 5,037 — 12,667 33 Net Operating Income Reconciliation Six months ended 06/30/21 (in thousands) Stabilized Asset Joint Mining Unallocated FRP Management Development Venture Royalties Corporate Holdings Segment Segment Segment Segment Expenses Totals Net Income (loss) $ (123 ) (1,629 ) 38,591 3,731 586 41,156 Income Tax Allocation (46 ) (604 ) 9,601 1,383 36 10,370 Income (loss) before income taxes (169 ) (2,233 ) 48,192 5,114 622 51,526 Less: Gain on remeasurement of real estate investment — — 51,139 — — 51,139 Gain on investment land sold — — — 831 — 831 Unrealized rents 11 — — 113 — 124 Interest income — 1,779 — — 644 2,423 Plus: Unrealized rents — — 8 — — 8 Loss on sale of land 26 — — — — 26 Equity in loss of Joint Venture — 2,274 457 22 — 2,753 Interest Expense — — 1,349 — 22 1,371 Depreciation/Amortization 271 106 5,331 123 — 5,831 Management Co. Indirect 377 661 176 178 — 1,392 Allocated Corporate Expenses 502 941 197 189 — 1,829 Net Operating Income (loss) $ 996 (30 ) 4,571 4,682 — 10,219 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 June 30, 2022 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 June 30, 2022, 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 June 30, 2022, 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, 2021, which could materially affect our business, financial condition or future results. The risks described in our Annual Report on Form 10-K are not the only risks facing our Company. Additional risks and uncertainties not currently known to us or that we currently deem to be immaterial also may materially adversely affect our business, financial condition and/or operating results. 35 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) April 1 through April 30 — $ — — $ 9,363,000 May 1 through May 31 — $ — — $ 9,363,000 June 1 through June 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: August 12, 2022 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 JUNE 30, 2022 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 104. Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101) 38