What changed in this filing

/stocks — the workspaceLOADING

Item 9A. Controls and Procedures

2023-03-23 compared with 2022-03-30 · 854 added, 853 removed, 1898 unchanged (47% of the section changed)

5 unchanged sentences

of our disclosure controls and procedures, as such terms are defined under Rule 13a-15(e) promulgated under the Exchange Act.

this evaluation, our principal executive officer, our principal financial officer and our chief accounting officer concluded that our

disclosure controls and procedures were effective as of the end of the period covered by this Annual Report.

this evaluation, our principal executive officer, our principal financial officer and our principal accounting officer concluded that

our disclosure controls and procedures were effective as of the end of the period covered by this Annual Report.

MANAGEMENT’S REPORT ON INTERNAL CONTROL OVER

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period by dividing the pre-determined value of each award by the closing price of our common stock on the date the restricted stock is

The aggregate value of the performance share awards shown in table is $215,000.

For illustrative purposes, the maximum

payout of the performance share awards

has been assumed, and the number of performance share awards has been calculated using our closing stock price on March 2, 2022 ($58.06).

The performance share awards are subject to partial or complete forfeiture if the vesting criteria are not met.

Because some or all of

the performance share awards may not vest, and because the number of shares of restricted stock to be issued thereunder is dependent on

future stock prices, columns (a) and (c) may overstate or understate expected dilution.

The aggregate value of the

performance share awards shown in

table is $325,920.

For illustrative purposes, the maximum payout of the performance share awards has been assumed, and the number of performance

share awards has been calculated using our closing stock price on March 2, 2023 ($54.32).

The performance share awards are subject to

partial or complete forfeiture if the vesting criteria are not met.

Because some or all of the performance share awards may not vest,

and because the number of shares of restricted stock to be issued thereunder is dependent on future stock prices, columns (a) and (c)

may overstate or understate expected dilution.

Because there is no exercise price associated with the performance share awards,

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PRINCIPAL ACCOUNTING FEES AND

Our independent registered accounting firm is

Hancock Askew & Co., LLP , Jacksonville, Florida , Firm 794 .

Information required in response to this Item 14 is included under

the captions “Proposal 2:

The Auditor Proposal” in the Company’s Proxy Statement, and such information is

incorporated herein by reference.

Our independent registered accounting firm is Hancock

Askew & Co., LLP , Jacksonville, Florida , Firm 794 .

Information required in response to this Item 14 is included under the captions

The Auditor Proposal” in the Company’s Proxy Statement, and such information is incorporated herein by

The Proxy Statement will be filed with the Securities and Exchange Commission not later than March 31, 2023.

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Chief Executive Officer

/s/ Charles E.

Commander III

/s/ Martin E.

(Principal Executive Officer)

1 unchanged sentence

(Principal Financial Officer)

/s/ Nicole B.

Controller and Chief Accounting Officer

(Principal Accounting Officer)

/s/ Martin E.

/s/ William H.

Commander III

/s/Margaret Wetherbee

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Management Security Agreements between the Company and certain officers, incorporated herein by reference to a form of agreement previously filed (as Exhibit (10)(I)) with Form S-4 dated December 13, 1988.

FRP Holdings, Inc.

F RP Holdings, Inc.

2006 Stock Incentive Plan, incorporated herein by reference to an appendix to the Company’s Proxy Statement dated December 29, 2005.

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Jacksonville, Florida

We hereby consent to the incorporation by reference in the Registration Statements on Form S-8 (No.

We hereby consent to the incorporation

by reference in the Registration Statements on Form S-8 (No.

333- 125099, 333-131475 and 333-216025) of FRP Holdings, Inc.

of our report dated March 30, 2022, relating to the consolidated financial statements which appear in the Annual Report to Shareholders incorporated by reference herein.

of our report

dated March 22, 2023, relating to the consolidated financial statements which appear in the Annual Report to Shareholders incorporated

by reference herein.

Respectfully submitted,

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Our strategy consists

of a re-deployment of proceeds from the May 2018 warehouse sale into asset classes that allow management to exploit its knowledge and

The asset classes of choice are mixed-use, raw land, existing buildings, and strategic partnerships located in core markets

with growth potential.

Emphasis will be placed on generating returns through opportunistic disposition versus cash-flow and long-term

appreciation.

of the re-deployment of cash from asset sales, real estate operations, and mining royalties, into new assets that allow management to

exploit its knowledge and expertise.

The asset classes of choice are mixed-use, industrial, raw land, existing buildings, and repeatable

strategic partnerships located in core markets with growth potential.

Emphasis will be placed on generating returns through opportunistic

disposition, as well as cash-flow and long-term appreciation.

We strive to improve

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and connections to maximize value and NOI growth, and (3) manage our capital structure in an efficient and responsible manner, with a

watchful eye on projected future market conditions and trends to facilitate timely disposition of selected assets, (4) balancing growth

against market pressure.

watchful eye on projected future market conditions and trends to facilitate timely disposition of selected assets, (4) diligent, sustainable

To Our Shareholders,

There is a concept in the study of cognitive behavior

known as “recency bias.” It is a phenomenon you are no doubt familiar with even if you have never heard the term.

memory bias that favors recent events over historical ones, granting what is fresh in our memory a potency lacking in the more distant

This bias leads us to immediately declare the Chiefs-Bills playoff game as the greatest of all time (though that might actually

A C-SPAN clip causes us to claim (incorrectly) that America has never been more politically divided, allowing the partisan name-calling

of today to seem more bitter than the Civil War.

So, as we look forward into 2022 with 2021 fresh in our minds, some might feel a sense

of frustration.

With the seemingly never-ending conveyor belt of new Covid variants, the looming specter of inflation, the moving targets

of herd immunity and normalcy—there is a temptation, and even a compulsion, to get caught up in the moment and think that after

another year of uncertainty, we are right back where we started, cautiously optimistic perhaps, but more cautious than optimistic.

progress has been made, second verse same as the first.

And yet, that description could not be less accurate.

2020 was a truly awful year—in another example

of recency bias, some were (mistakenly) inclined to call it the worst year in American history.

It was chaotic, uncertain, and downright

scary—a period of time when keeping one’s head above water felt like real progress.

That is not an accurate description of

most of 2021, particularly for this Company.

In 2020, we were happy to see our assets behave normally in abnormal times.

This year, we

wanted to move beyond normal, and begin enacting the first stage of a meaningful period of growth for this Company.

By and large, we have

delivered on that.

This year saw the stabilization of The Maren;

permanent financing of the Maren and the refinancing of Dock 79 at extremely favorable terms;

the completion of construction on Riverside,

our first multifamily joint venture in Greenville, South Carolina;

and the completion of construction at Bryant Street, where our anchor

retail tenant is in and operating and residential occupancy is over 50%.

In 2021, we finished construction on two new warehouses at our

Hollander Business Park and began construction on a third, effectively exhausting all available developable inventory in our land bank,

and we sought to remedy exhausting our land bank by purchasing 17 acres of future industrial space.

Finally, after years of speculating

on when, and even if, it might happen, Congress passed an infrastructure bill which should have a meaningful impact on future mining royalty

We ended 2020 with 569 multifamily units, 267,737 square feet of industrial, and $17,051,000 in NOI.

At the end of 2021, we

had 1,256 multifamily units, 413,327 square feet of industrial, and $20,815,000 in NOI.

Despite selling our warehouse portfolio in 2018, we

remain committed to industrial real estate as an asset class through value-add purchases like Cranberry Run as well as developing our

remaining pad sites at Hollander Business Park.

2021 represented a big step forward in that commitment.

As mentioned previously, this

year we completed construction on two new warehouses at Hollander totaling 145,590 square feet, we began construction on a 101,750 square-foot,

build-to-suit, and we purchased 17 acres in Harford County, Maryland where we plan to develop a 250,000 square foot, Class A warehouse

which will comprise the entirety of the developable space on the site.

That is 497,000 square feet of industrial development.

to the 625,000 square feet of industrial development we have planned for our Crause Property adjacent to Cranberry Run which we purchased

last year, then we are talking about over a million square feet of industrial that did not exist prior to Covid.

The 2021 highlights of the Stabilized Joint Venture

segment have been mentioned previously but bear repeating.

In March, the Maren achieved stabilization, meaning 90% of its units were leased

and occupied, triggering a change in control with the end result being that the asset is now consolidated on to our books in exactly the

same way Dock 79 is.

Its balance sheet is now part of our balance sheet and its income statement flows through the Company’s income

In addition to the one-time gain on remeasurement of $51.1 million, this consolidation has impacted and will continue to impact

our depreciation and amortization, greatly increasing both.

As a result, the impact on net income may in fact be negative for some time,

but the positive impact on our NOI and cash flow will be significant.

Around the same time that the Maren reached stabilization, the Company

simultaneously negotiated both the permanent financing of the Maren and a refinancing of Dock 79.

This $180 million loan ($92 million

for Dock 79, $88 million for The Maren) lowered the interest rate at Dock 79 from 4.125% to 3.03%, deferred any principal payments for

12 years for both properties, and repaid our $13.75 million in preferred equity along with $2.3 million in accrued interest.

Covid measures continue to hamstring our retail tenants,

but a full baseball season with fans , particularly in the warm weather months when outdoor seating is not a problem, was

especially meaningful for our retail tenants in light of the

difficulties they faced in 2020.

Build out of The Maren’s second retail space was completed at the beginning of 2022 and the retail tenant is open for business.

Occupancy was strong throughout the year for both assets.

Dock 79 was more than 94% occupied at the end of each

quarter in 2021 which is the first such year for this asset.

Average annual occupancy was 95.47% for Dock 79, which is in line with the

highest average annual occupancy we’ve ever had there and an improvement over 2020’s rate of 93.13%.

Average occupancy at

the Maren since stabilization was 94.84%.

Renewal rates on expiring leases were strong for both buildings.

62.20% of Dock 79’s expiring

leases renewed vs 57.14% in 2020, and as the first generation of leases at the Maren expired, 67.40% renewed.

These are positive developments,

to be sure, but the ability to grow NOI was mitigated severely by the fact that the District kept emergency protocols in place, preventing

us from evicting non-paying tenants and raising rent on renewals.

Though evictions remain a long and complicated process, the prohibition

on raising rents was allowed to lapse at the end of 2021.

Since we start renewal discussions several weeks in advance of expiration, the

prospect of rent increases will not kick in until February, and it remains to be seen if the renewal rates we saw during the rent freeze

persist when rents start moving more in line with where the market rather than the District dictates.

Construction continues on The Verge, our joint venture

with MRP in Buzzard Point, as well as .408 Jackson, our joint venture with Woodfield Development.

We expect both projects to be complete

and leasing to begin in the third quarter of 2022.

More pressing, as alluded to earlier, is the fact that we have finished construction

on both Bryant Street and Riverside.

Bryant Street is a joint venture with MRP for the first phase of a multi-family mixed use project

in northeast Washington, DC.

We have invested $32 million in common equity and another $23 million in preferred equity in this four building,

487-unit development.

From both a capital and size perspective, Bryant Street is a big bet on the DC multi-family market.

is now complete on all four buildings, leasing is underway, and our retail anchor, Alamo Drafthouse Cinema, is open for business.

end, Bryant Street’s residential units are 56.1% leased and 50.9% occupied, and its commercial space is 82.5% leased and 61.7% occupied.

Bryant Street’s primary amenities are the Alamo Drafthouse and its proximity to the DC Metro.

Public transportation and indoor entertainment

are not yet the draws they used to be, but this project is an opportunity zone investment, and it is our intent to retain the property

for the ten-year hold period required to realize the full tax benefits associated with this program.

We have a lengthy investment time

horizon on this project and we still believe the long term fundamentals are in place to make it successful.

As mentioned previously, this

year we also completed construction on Riverside, our first multifamily joint venture in Greenville, South Carolina.

Leasing began in

the third quarter on this 200-unit project, and at year end, it is 60% leased and 49% occupied.

The aggregates business is cyclical.

Its three main

drivers are home construction, commercial construction, and infrastructure, and the first two correlate very strongly with the economy

and business cycle.

A decade of more-or-less uninterrupted growth combined with the pricing power of aggregates producers has been very

kind to our mining tenants and this Company in turn.

Since 2011, our royalty income has achieved a compound annual growth rate of 9%,

which while impressive, is perhaps unsustainable.

Trees, as the saying goes, do not grow to the sky.

If growth is the story of this Company

over the past year, mining royalties is seemingly the only segment that does not fit that narrative.

Royalty revenue was slightly down

this year, and while steady, revenue has been more or less flat for the last three years (2019:

$9.44 million;

9.48 million;

$9.47 million).

A cursory glance at the numbers might lead a reasonable person to conclude that the segment has peaked or at the very

least plateaued.

Anyone paying attention to this sector knows this is not the case.

In 2019, the Company achieved $9 million in mining

royalty revenue for the very first time.

In 2020, we were able to improve on the previous year’s mark despite the loss of double

minimums at our Lake Louisa location which left a $350,000 hole in revenue.

In 2021, Vulcan temporarily shifted its mining activity off

our portion of the Manassas quarry leading to a $600,000 decrease in royalties at the location compared to 2020, and yet total royalty

revenue remained largely unaffected.

That royalties were more or less flat two years in a row, despite major shortfalls in revenue at

specific locations, demonstrates the resilience of this segment and the quality of our tenants and locations.

We have market exposure

in three of the country’s best aggregate producing states both in terms of production and pricing.

Florida and Georgia, where the

bulk of our assets are located, have benefited in particular from accelerated migration to the Sun Belt where job growth and housing starts

continue to outpace the national average.

These are markets where aggregates demand is already high, so the Infrastructure Investment

and Jobs Act will meaningfully impact our mining tenants.

In whatever form this Act’s $110 billion investment in hard infrastructure

makes its way down to the markets our mining assets serve, the result will be an increase in demand when demand is already incredibly

high and supply is stretched.

This should lead to meaningful price increases.

We have always had the utmost confidence in our assets,

but we are particularly excited to see how they will perform in the next few years.

Every pandemic is different, but the one thing they

have in common is that they have all ended.

The same will be true for

Unfortunately, 2021 was not the year it happened.

and probably the world are suffering from Covid fatigue, and each variant that extends the abnormality that is our new, or at least current

normal, aggravates us.

That aggravated recency bias can cause us to lose sight of how far we have come in the last two years.

true for this nation and it is true for this Company.

As you have read in this letter, 2021 was a period of very meaningful growth where

we increased NOI by 22.11%, expanded our number of available multi-family units by 120.74%, and grew our industrial square footage by

We are by no means at the finish line.

This is merely the first step in a process to put our excess capital to work.

are pleased with the initial results, we will continue to work to ensure that, recency bias or not, this Company— your Company—is

one you are proud to own.

Time is a funny thing.

The same summer

day that seems to last forever to the boy, is more or less the blink of an eye to his father.

A school year is an eternity to a student,

and yet the same year for the teacher or the parent running carpool passes so quickly as to have almost ended moments after it began.

The way time seemingly speeds up as one gets older is the basis of a theory that in terms of the way we perceive time, our lives

are halfway over by the time we turn 18.

Youth, maybe even more than we realized, is wasted on the young.

That’s a pretty depressing

And yet it gives one heart that even though time appears to move faster and faster, a lot can still happen in a year.

had so much going on in 2022, that it is hard to fathom (what with time moving so fast) that we got it all done in just 365 days.

we made our first mining royalty acquisition in a decade with our purchase of the Bland Property in Astatula, Florida, which helped propel

us to our largest revenue year ever for that segment.

2022 saw the stabilization and permanent financing of Riverside in Greenville, South

Carolina, as well as the completion of construction on and lease-up of both .408 Jackson (also in Greenville) and The Verge in DC.

2022, we added to our industrial development pipeline with the purchase of a new site in Cecil County, Maryland capable of supporting

900,000 square feet of industrial development, and we passed a major pre-development milestone with the unappealable annexation into Aberdeen,

Maryland of our 54 acres adjacent to Cranberry Run Business Park on which we plan to build 690,000 square feet of industrial.

year saw meaningful increases in revenue, operating profit, and pro-rata NOI across all segments with the highest pro-rata NOI total ever

for Stabilized Joint Ventures (17.05% increase to $9.47 million vs $8.09 million in 2021), the highest NOI total for Mining Royalties

(13.62% increase to $10.15 million vs $8.94 million in 2021), and the highest NOI total (39.22% increase to $2.67 million vs $1.92 million

in 2021) for our Asset Management segment since the sale of our warehouse portfolio in 2018.

Far and away the biggest news of 2022, however,

was our announcement in the beginning of the fourth quarter of our agreement to partner with Steuart Investment Company (SIC) and MidAtlantic

Realty Partners (MRP) in developing our collective properties in the Capitol Riverfront and Buzzard Point submarkets of Washington, DC.

We’ve mentioned the details of this agreement a number of times, but it bears repeating—this partnership plans to build over

three million square feet of mixed-use development comprising 3,000 residential units and 150,000 square feet of retail spread amongst

10 distinct multi-family projects (including Dock 79, The Maren, and The Verge) on or near the water.

This deal took over two years of

overtures, meetings, and negotiations to put in place, but the end result, in the words of Hamlet, “is a consummation devoutly to

be wished.” It will take over a decade to realize, but when all is said and done, your Company will have a meaningful share of nearly

every asset visible from the south entrance of the nation’s capital.

ASSET MANAGEMENT

The Asset Management segment, our industrial

assets in particular, produced strong results in 2022.

Increased occupancy and rent increases at our Cranberry Run Business Park as well

as full occupancy at one of the two new spec buildings at Hollander accounted for a 43% increase in revenue over calendar year 2021 as

well as a 39.22% increase in NOI.

All seven of our industrial assets are 100% leased, and six of the seven industrial buildings in-service

are 100% occupied with occupancy expected on the seventh in the first half of 2023.

Looking forward, we have completed construction on

a 101,750 square foot build-to-suit warehouse project and are awaiting the final certificate of occupancy and expect the tenant to move

in some time in the first half of 2023.

We have three other properties in our industrial development pipeline in various stages of predevelopment:

170 acres in Cecil County, Maryland, purchased in September 2022 and capable of supporting 900,000 square feet of industrial for which

we are currently pursuing entitlements;

17 acres in Aberdeen, Maryland where we have submitted grading and building permit applications

for 259,000 square-foot warehouse;

and a 54 acre site adjacent to our Cranberry Run Business Park capable of 690,000 square feet of industrial

which was just annexed into the town of Aberdeen, Maryland.

Given the current state and recent performance of our industrial portfolio,

management is excited to move forward with these projects in what has been, along with mining royalties, this Company’s “bread

and butter.” With nearly 1,850,000 square feet of potential industrial in our development pipeline, when the dust settles on these

projects, we will have expanded our existing industrial footprint by 358% to roughly 2.4 million square feet.

STABILIZED JOINT VENTURES

Stabilized Joint Ventures experienced a

shot in the arm to begin the year as the District of Columbia finally lifted its emergency protocols and allowed for rent increases on

Both properties benefitted from this return to free market economics.

This year, 61.45% of expiring leases at The Maren renewed

with an average increase in rent of 8.17%, and 61.40% of expiring leases renewed at Dock 79 with an average increase in rent of 5.91%.

Increases seemed to pick

up steam over the course of the year, culminating

in fourth quarter renewals of 42.31% of expiring leases at Dock 79 and 61.90% at The Maren, with an average rent increase on renewals

of 8.89% and 11.14% respectively.

This year we began to track “trade outs”—the increase in rent on a new lease when

we were not able to renew an expiring one.

In 2022, we saw an increase in rent on these trade outs of 7.4% at The Maren and 12.6% at Dock.

Inflation certainly has something to do with the numbers you’re seeing here, but it also demonstrates the extent to which rents

were held back by DC’s emergency protocols and just how far we had to push rents to get them back in line with what they should

have been barring restrictions.

Of course, the desirability of the assets in question had something to do with why we were able to attempt

this in the first place.

As mentioned previously, as part of the deal we reached in the fourth quarter with Steuart Investment Company,

SIC is now a 20% partner in both Dock 79 and The Maren.

SIC paid $65.3 million for their 20% stake, which places a $326.5 million combined

valuation on Dock 79 and The Maren.

Point being, we are excited about this new partnership and what it will build, but SIC’s

investment in our Riverfront projects shows how excited it is about what we have already built.

In the third quarter of 2022, we added

Riverside, our joint venture with Woodfield Development in Greenville, South Carolina, to the Stabilized Joint Ventures Segment after

it achieved stabilization (90% occupancy for 90 days).

As mentioned previously, we were concurrently able to permanently finance this

joint venture with a $32 million loan with a term of eight years at a fixed rate of 4.92%.

This loan is interest-only for the first five

years and has no prepayment penalty after the first three.

Riverside achieved stabilization in what management believed was a remarkably

short period of time (even accounting for how fast time passes for adults).

Lease-up began in the third quarter of 2021 and we achieved

stabilization in the third quarter of 2022.

That and the fact that the building’s 200 units were 98% leased with 92.5% occupancy

at year end speaks to the strength of the Greenville market and gives us confidence as we begin lease-up of .408 Jackson, our second joint

venture with Woodfield in Greenville.

MINING ROYALTIES

2022 was a huge year for mining royalties.

In the fourth quarter, the segment had its highest revenue quarter ever ($2.9 million), closing the books on its best year ever.

to 2022, mining royalties had never achieved $10 million in revenue in any fiscal year.

In 2022, this segment had over $10 million in

Surpassing the $10 million mark with $10.7 million in revenue, a 12.9% improvement over 2021, was primarily due to the acquisition

of the Bland Property (adjacent to, and part of the same Vulcan sand plant as our existing land in Astatula, Florida).

As you may recall,

we purchased this property in April of 2022 for $11.6 million.

This was the first property added to this segment since 2012 and only the

second property we’ve purchased for mining royalties since 1986.

It contains roughly 21.8 million tons in sand reserves on 1,500

acres and right now is our biggest royalty producing property by revenue.

Looking into 2023, we are still confident in the underlying

fundamentals of this business.

Increased demand in 2022 made for meaningful price increases (Martin Marietta:

10.5% increase on average

selling price over 2021, Vulcan Materials:

12.4% increase on average selling price in Q3 2022), and demand should remain strong in 2023

Total federal highway spending is expected to be in the ballpark of $72 billion this year, and over $102 billion in highway,

bridge, and tunnel projects were awarded in 2022, a 24% increase over the previous year.

The Cornyn-Padilla amendment to the 2023 Congressional

Appropriations Bill, now allows states to divert unused Covid relief funds for infrastructure projects.

To that end, in June 2022, Florida

released the largest budget in the history of the Florida Department of Transportation with over $12 billion in planned infrastructure

investment over the course of five years.

The boost in demand from the increase in infrastructure investments described above should translate

into price increases and help continue to drive the bottom line in this segment.

It has been management’s goal for

the last five years to put the proceeds of the asset sale to work in new projects.

While we have continued to put money to work in the

form of new investments, the goal of having a home for all our excess cash has eluded us.

Naturally it follows that since our last major

round of share buybacks in 2021, we have received a number of inquiries regarding our plans for returning at least part of the cash on

our balance sheet to investors in the form of additional buybacks or dividends.

If it was ever a consideration, the agreement with SIC

and MRP has eliminated it.

With the industrial and multifamily projects we have in front of us, it will take all of our current cash as

well as future cash flow to be able to make the equity investments that we have laid out over the next decade plus while maintaining a

reasonable capital cushion.

It is true that we are not building everything at once, and in every proforma we have run, there is always

a healthy amount of cash in the till.

But as we grow and have multiple projects in various stages of development, we believe our cash

is entirely too important as a capital cushion to risk what we’ve built by committing to dividends or further leveraging the Company

through a meaningful buyback program.

It is management’s position that dividends are for mature companies, not growing ones.

for the time being, we are definitely a growth company.

The near-term macroeconomic future is somewhat murky

to say the very least.

Inflation and economic growth play a daily tug-of-war with an increasingly schizophrenic market.

While we are planning

to grow, we are not going to be so committed to our current vision that it risks what has already been built.

We have been very conservative

in how we’ve grown the assets we own outright, and we have been just as careful in choosing partners in our joint ventures that

share our same attitude of deliberate, considerate growth and investment.

Whether a recession is around the corner, or the Fed can achieve

a soft landing is important to us, but it will not make or break this Company or our ability to grow it.

To borrow from Hamlet again,

“There is a special providence in the fall of a sparrow.

If it be now, ‘tis not to come;

if it be not to come, it will be

if it be not now, yet it will come.

The readiness is all.” This Company— your Company—will be ready.

Respectfully yours,

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As of December 31,

2021, the Asset Management Segment owned four commercial properties in fee simple as follows:

2022, the Asset Management Segment includes eight buildings at four commercial properties owned by the Company in fee simple as follows:

1) 34 Loveton Circle in suburban Baltimore County,

11 unchanged sentences

4) Hollander 95 Business Park in Baltimore City, Maryland

consists of two buildings totaling 145,590 square feet that were completed in the fourth quarter of 2021 and are 29.1% leased.

On May 21, 2018, the Company completed the disposition

of 40 industrial warehouse properties and three additional land parcels to an affiliate of Blackstone Real Estate Partners VIII, L.P.

for $347.2 million.

The Company sold an additional warehouse property, which was excluded from the initial sale due to the tenant exercising

its right of first refusal to purchase the property, to the same buyer for $11.7 million on June 28, 2019.

The warehouse portfolio sale

resulted in the disposition of all of the Company’s industrial flex/office warehouse properties prior to the sale date and constituted

a major strategic shift and, as a result, these properties have been reclassified as discontinued operations for all periods presented

in the financial statements filed herewith.

consists of two buildings totaling 145,590 square feet that were completed in the fourth quarter of 2021 and are 100.0% leased and 45.4%

Mining Royalty Lands Segment – Mining Properties.

The Company owns a fee simple interest in 13 open pit aggregates quarries located in Florida, Georgia and

Virginia, which comprise approximately 15,000 total acres.

The Company’s quarries are subject to mining leases with various tenants,

including Vulcan Materials, Martin Marietta, Cemex, Argos, and The Concrete Company.

Aggregates consist of crushed stone, sand, gravel,

fill dirt, limestone and calcium and are used primarily in construction applications.

The Company owns a fee simple interest in 14 open pit aggregates quarries located in Florida, Georgia and Virginia, which comprise approximately

16,650 total acres.

The Company’s quarries are subject to mining leases with various tenants, including Vulcan Materials, Martin

Marietta, Cemex, Argos, and The Concrete Company.

Aggregates consist of crushed stone, sand, gravel, fill dirt, limestone and calcium

and are used primarily in construction applications.

Nine of the Company’s quarries (located in Grandin,

FL, Fort Myers, FL, Keuka, FL, Newberry, FL, Astatula, FL, Columbus, GA, Macon, GA, Tyrone, GA, and Manassas, VA;

comprising 12,649 acres

in the aggregate) are currently being mined, and four of the Company’s quarries (located in Marion County, FL, Lake Louisa, FL,

and Lake Sand, FL and Forest Park, GA;

comprising 2,452 acres in the aggregate) are leased but are not currently being mined.

mining lease requires the tenant to pay the Company a royalty based on the number of tons of mined materials sold from our mining property

during a given fiscal year multiplied by a percentage of the average annual sales price per ton sold.

In certain locations, typically

where the reserves on the property have been depleted but the tenant still has a need for the leased land, we collect a minimum annual

rental amount.

In the fiscal years ended December 31, 2021, 2020 and 2019, aggregate tons sold with respect to the Company’s mining

properties were approximately 7,575,000, 8,206,000 and 7,815,000, respectively.

totaling 13,876 acres)

are currently being mined, and five of the Company’s quarries (located in Marion County, FL, Lake Louisa, FL, Astatula, FL, Lake

Sand, FL and Forest

totaling 2,778

acres) are leased but are not currently being mined.

Our typical mining lease requires the tenant to pay the Company a royalty based on

the number of tons of mined materials sold from our mining property during a given fiscal year multiplied by a percentage of the average

annual sales price per ton sold.

In certain locations, typically where the reserves on the property have been depleted but the tenant

still has a need for the leased land, we collect a minimum annual rental amount.

In the fiscal years ended December 31, 2022, 2021 and

2020, aggregate tons sold with respect to the Company’s mining properties were approximately 9,525,000, 7,575,000 and 8,206,000,

respectively.

In May 2014, the Company entered into an amendment

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The county issued the permit in July 2019.

completing the work necessary to prepare this site to become an active sand mine, Cemex expects to begin mining by March 2023.

expects to begin mining after completing the work necessary to prepare this site to become an active sand mine.

Mining Royalty Lands Segment - Brooksville Joint

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In 2022, 244,000 tons were sold.

During 2017, the Company extended the mining lease on this property for an additional ten years (through

2032) in exchange for an increase in production of 100,000 tons by December 31, 2023.

Mining Royalty Lands Segment - Other Properties .

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future development parcels:

1) 6 acres of horizontally developed land with 101,750 square feet in one industrial building under construction

at Hollander 95 Business Park in Baltimore City, Maryland.

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 awaiting final certificate of occupancy.

2) 54 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 250,000 square feet of industrial development.

3) 17 acres of land in Harford County, Maryland that can accommodate 259,000 square feet of industrial development.

4) 170 acres of land Cecil County, Maryland that can accommodate 900,000 square feet of industrial development.

Development Segment – Land Held for Investment

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of a single building with residential and retail uses, was added to the Stabilized Joint Venture Segment effective March 31, 2021.

final two phases, Phase 3 and Phase 4 remain under a first-stage PUD approval expiring April 5, 2023, permitting 599,545 square feet of

final two phases,

Phase 3 and Phase 4 remain under a first-stage

PUD approval expiring April 5, 2023, permitting 500,000 square feet of development.

2) Hampstead Trade Center:

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is complete and leasing efforts are under way.

4) 1800 Half Street:

On December 20, 2019 the Company and MRP formed a joint venture to acquire and develop

a mixed-use project located at 1800 Half Street, Washington, D.C.

This property is located in the Buzzard Point area of Washington, DC,

less than half a mile downriver from Dock 79 and the Maren.

It lies directly between our two acres on the Anacostia currently under lease

by Vulcan and Audi Field, the home stadium of the DC United.

The project is located in an Opportunity Zone, which provides tax benefits

in the new communities’ development program as established by Congress in the Tax Cuts and Jobs Act of 2017.

The ten-story structure

will have 344 apartments and 11,246 square feet of ground floor retail.

4) The Verge:

On December 20, 2019 the Company and MRP formed a joint venture to acquire and develop a mixed-use

project located at 1800 Half Street, Washington, D.C.

This property is located in the Buzzard Point area of Washington, DC, less than

half a mile downriver from Dock 79 and The Maren.

It lies directly between our two acres on the Anacostia currently under lease by Vulcan

and Audi Field, the home stadium of the DC United.

The project is located in an Opportunity Zone, which provides tax benefits in the new

communities’ development program as established by Congress in the Tax Cuts and Jobs Act of 2017.

The eleven-story structure has

344 apartments and 8,536 square feet of ground floor retail.

Construction is complete and leasing is under way.

5) Square 664E:

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The project is located across

the street from Greenville’s minor league baseball stadium and will hold 227 multi-family units and 4,539 square feet of retail

It is located in an Opportunity Zone, which provides tax benefits in the new communities’ development program as established

by Congress in the Tax Cuts and Jobs Act of 2017.

7) Riverside:

In December 2019, the Company entered into a joint venture with Woodfield Development for the

acquisition and development of a 200-unit multi-family apartment project located at 1430 Hampton Avenue, Greenville, South Carolina.

project is located in an Opportunity Zone, which provides tax benefits in the new communities’ development program as established

by Congress in the Tax Cuts and Jobs Act of 2017.

the street from Greenville’s minor league baseball stadium and holds 227 multi-family units and 4,539 square feet of retail space.

It is located in an Opportunity Zone, which provides tax benefits in the new communities’ development program as established by

Congress in the Tax Cuts and Jobs Act of 2017.

The temporary certificate of occupancy was received in December 2022.

Leasing began in

the fourth quarter of 2022 with residential units 21.6% leased and 4.9% occupied at quarter end.

Retail at this location is 100%.

Company owns 40% of the development.

6) Windlass Run:

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Johns Properties Inc., a Baltimore

development company, to jointly develop the remaining lands of our Windlass Run Business Park,

located in Middle River, Maryland, into

development company, to jointly develop the remaining lands of our Windlass Run Business Park, located in Middle River, Maryland, into

a multi-building business park consisting of approximately 329,000 square feet of single-story office space.

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was 50.7% leased and 48.0% occupied, the subsequent phases will follow as each phase is stabilized.

In August 2022, the Company invested $3.6 million for a 16% interest in a joint venture with Woodfield

Development to purchase and develop 46 acres in Estero, FL into a mixed-use project with 554 multifamily units, 72,000 square feet of

commercial space, 41,000 square feet of office space and a boutique 170-key hotel.

While the joint venture attempts to rezone the property,

the Company will receive a preferred return of 8% with an option to roll its investment into equity in the vertical development or exit

at that point.

Stabilized Joint Venture Segment.

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July 1, 2017 the Company ownership is based upon this substantive profit-sharing arrangement and is 66.0% on a prospective basis.

fourth quarter 2022, as part of our new partnership with SIC and MRP, we sold a 20% interest in a tenancy-in-common of Dock 79 where FRP

Holdings, Inc.

is the majority partner with a 52.8% ownership.

2) The Maren:

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to develop and own a 250,000-square-foot mixed-use development which supports 264 residential units and 6,758 square feet of retail.

up commenced in March 2020 and rent stabilization of the residential units of 90% occupied was achieved in March 2021.

commenced in March 2020 and rent stabilization of the residential units of 90% occupied was achieved in March 2021.

Reaching stabilization

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and is 70.41% on a prospective basis as agreed to by FRP and MRP.

3) DST Hickory Creek:

In July 2019, the Company completed a like-kind exchange by reinvesting $6,000,000

into a Delaware Statutory Trust (DST) known as CS1031 Hickory Creek DST.

The DST owns a 294-unit garden-style apartment community located

in Henrico County, Virginia known as Hickory Creek, which consists of 19 three-story apartment buildings containing 273,940 rentable square

Hickory Creek was constructed in 1984 and substantially renovated in 2016.

The Company is 26.649% beneficial owner and receives

monthly distributions.

During fourth quarter 2022, as part of our new partnership with SIC

and MRP, we sold a 20% interest in a tenancy-in-common of The Maren where FRP Holdings, Inc.

is the majority partner with a 56.3% ownership.

3) Riverside:

On December 23, 2019 the Company and Woodfield formed a joint venture to develop a 200-unit

residential apartment project located at 1430 Hampton Avenue, Greenville, SC.

The project is located in an Opportunity Zone, which provides

tax benefits in the new communities’ development program as established by Congress in the Tax Cuts and Jobs Act of 2017.

contributed $6.2 million in exchange for a 40% ownership in the joint venture.

Five Year Summary

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Total Fiscal Year 2022

Operating profit (loss)

Income (loss) from continuing operations

Net income (loss) attributable to the Company

Operating profit

Income from continuing operations

Net income attributable to the Company

Earnings per common share (a):

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Total Fiscal Year 2021

Operating profit

Income from continuing operations

Net income attributable to the Company

Operating profit (loss)

Income (loss) from continuing operations

Net income (loss) attributable to the Company

Earnings per common share (a):

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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.

The non-GAAP financial measure discussed is pro-rata 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.

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Residential apartments in Washington,

and Greenville, South Carolina;

Warehouse or office properties

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Highlights of 2022 .

Dock 79’s average annual occupancy was above

95% for the second time ever.

Third year in a row with mining royalties in excess

· 43.0% increase in asset management revenue versus

· Highest twelve-month total of mining royalties revenue

in segment’s history;

12.9% increase in revenue over calendar year 2021.

First year with over $10 million in revenue as well as

· 37.98% increase in our pro-rata NOI ($24.23 million

vs $17.56 million) compared to last year.

· Each segment’s highest revenue, operating profit,

and NOI total since asset sale in 2018.

· Sale of Hickory Creek for $8.83 million on an investment

of $6 million.

Grew NOI by 22.11% from $17.05 million in 2020 to

$20.82 million in 2021

With construction complete on both Bryant Street

and Riverside, this year the Company added 687 residential units, an increase of 120.74% over last year

· The Maren reached stabilization meaning 90% of the

individual apartments had been leased and occupied by third party tenants.

This event triggered a change in control and the Company consolidated

the assets (at current fair value), liabilities and operating results of the joint venture.

· Deal signed with Steuart Investment Company (SIC)

and MidAtlantic Realty Partners (MRP) for development of ten mixed-use projects in Capitol Riverfront and Buzzard Point submarkets of

DC including sale of 20% ownership

interest in tenancy-in-common (TIC) of Dock 79 and The Maren for $65.3 million, $44.5 million attributable to the Company.

Asset Management Segment.

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As of December 31, 2022, the Asset Management Segment

owned four commercial properties in fee simple as follows:

includes eight buildings at four commercial properties owned by the Company in fee simple as follows:

1) 34 Loveton Circle in suburban Baltimore County,

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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 29.1% leased.

consists of two buildings totaling 145,590 square feet that were completed in the fourth quarter of 2021and are 100.0% leased and 45.4%

Management focuses on several factors to measure our

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in this segment.

fiscal year ended December 31, 2021, a total of 8

million tons were mined.

In the fiscal year ended December 31, 2022, a total of 9.5 million tons were mined.

The major expenses in this segment are comprised of

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future development parcels:

1) 6 acres of horizontally developed land with 101,750 square feet in one industrial building under construction

at Hollander 95 Business Park in Baltimore City, Maryland.

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 awaiting final certificate of occupancy.

2) 54 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 250,000 square feet of industrial development.

3) 17 acres of land in Harford County, Maryland that can accommodate 259,000 square feet of industrial development.

4) 170 acres of land in Cecil County, Maryland that can accommodate 900,000 square feet of industrial development.

We also have three properties that were either spun-off

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$18.5 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

1800 Half Street property in Buzzard Point area of Washington, D.C.

Construction of ten-story structure with 344 apartments and 11,246 square feet of ground floor retail underway

The Verge at 1800 Half Street property in Buzzard Point area of Washington, D.C.

Construction of eleven-story structure with 344 apartments and 8,536 square feet of ground floor retail underway

.408 Jackson property in Greenville, SC

1 unchanged sentence

Construction of mixed-use project with 227 multifamily units and 4,539 square feet of retail space began in May 2020

Riverside property 1430 Hampton Avenue, Greenville, SC

Woodfield Development

Construction of 200-unit apartment project began in February 2020

Mixed-use project with 554 multifamily units, 72,000 square feet of commercial space, 41,000 square feet of office space and a boutique 170-key hotel

FRP/MRP Buzzard Point Sponsor, LLC

Pre-development activities for phase one of property owned by Steuart Investment Company (SIC) under a Contribution and Pre-Development Agreement between this partnership and SIC

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):

(including those in the Stabilized Joint Venture Segment) 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):

Share of Profit

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Of the Partnership

Partnership (1)

As of December 31, 2022

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BC FRP Realty, LLC

Riverfront Holdings II, LLC (1)

Buzzard Point Sponsor, LLC

Bryant Street Partnerships

Aberdeen Station Loan

Lending ventures

DST Hickory Creek

Amber Ridge Loan

Estero Partnership

1800 Half St.

Greenville/Woodfield Partnerships

(1) Riverfront Holdings II, LLC was consolidated on

March 31, 2021, and reflected in Stabilized Joint Ventures.

Greenville Partnerships

The major classes of assets, liabilities and equity

1 unchanged sentence

As of December 31, 2022

Buzzard Point

Bryant Street

1800 Half St.

Holdings II, LLC

Investments in real estate, net

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Stabilized Joint Venture Segment .

Currently the segment includes three stabilized joint

ventures which own, lease and manage buildings.

At year end, the segment included three stabilized

joint ventures which own, lease and manage buildings.

These assets create revenue and cash flows through tenant rental payments, and reimbursements

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If no notice to move out or renew is made, then

the leases go to month to

month until notification of termination or renewal

the leases go to month to month until notification of termination or renewal is received.

Renewal terms are typically 9 – 12 months.

In 2021, due to the DC legislation in place freezing rent increases

as a part of a covid relief plan, FRP was unable to increase rental rates for renewals.

This legislation was lifted in February 2022.

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

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:

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.

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:

Property and Occupancy

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305 apartment units and 14,430 square feet of retail

MRP Realty/SIC

The Maren apartments Washington, D.C.

264 residential units and 6,758 square feet of retail

MRP Realty/SIC

Consolidated as of March 31, 2021

DST Hickory Creek 294 apartment units in Henrico County, MD

Capital Square

Riverside apartments 1430 Hampton Avenue, Greenville, SC

Woodfield Development

Equity Method

COMPARATIVE RESULTS OF OPERATIONS

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Total operating profit

Net investment income, including realized gains

of $0 and $298

Net investment income

Interest Expense

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Provision for income taxes

Gain (loss) attributable to noncontrolling interest

(Loss) gain attributable to noncontrolling interest

Net income attributable to the Company

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$4,565,000 or $.48 per share versus $28,215,000 or $3.00 per share in the same period last year.

The calendar year 2021 was impacted

by the following items:

Gain of $51.1 million on the remeasurement of investment

in The Maren real estate partnership, which is included in Income before income taxes.

This gain on remeasurement is mitigated by a $10.1

million provision for taxes and $14.0 million attributable to noncontrolling interest.

The period includes $3,899,000 amortization expense

of the $4,750,000 fair value of The Maren’s leases-in-place established when we booked this asset as part of the gain on remeasurement

upon consolidation of this Joint Venture.

Operating expenses includes $807,000 expense for

non-refundable deposit of $500,000 and due diligence costs on a potential warehouse property where the acquisition has recently been determined

to be considered less than probable.

The prior year included a $250,000 credit for settlement of environmental claims on our Anacostia

Interest income decreased $3,200,000 due to bond

maturities and the repayment of the Company’s preferred interest in The Maren upon the building’s refinancing.

Interest expense increased $1,204,000 due to interest

on The Maren’s debt consolidated in April partially offset by a lower interest rate on Dock 79.

The current year included a $900,000

prepayment penalty on Dock 79 while last year included $902,000 accelerated amortization of deferred loan fees at Dock 79 in anticipation

of the early refinancing.

Gain from sale of real estate decreased $8,365,000.

The year included $805,000 for an easement and sale of excess land in the Mining Royalty Lands Segment.

The prior year included a gain

of $9,170,000 primarily due to the sale of the three remaining lots at our Lakeside Business Park, 1801 62 nd Street, our inactive

and depleted quarry land at Gulf Hammock, and 87 acres from our Ft.

Myers property.

Net income for calendar year 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

This gain on remeasurement was mitigated by a $10.1 million provision for taxes and $14.0 million attributable to noncontrolling

The calendar year 2022 was impacted by the following items:

· The period includes $547,000 amortization expense compared to $3,899,000

in the same period last year.

Amortization expense in 2021 was impacted by 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 value placed

on these leases was amortized over the life of the leases, which was on average one year.

· Net investment income increased $1,258,000 due to a $1,119,000 increase

in interest earned on cash equivalents, a $199,000 increase in income from our lending ventures.

Investment income was mitigated by a

$60,000 decrease in preferred interest from our joint ventures due to the repayment of our preferred equity interest in The Maren.

· Interest expense increased $741,000 compared to the same quarter last year

due to less capitalized interest.

We capitalized less interest because of fewer in-house and joint venture projects under development

this year compared to last year.

· Equity in loss of Joint Ventures decreased $33,000 due to a $2,832,000 gain

on the sale of DST Hickory Creek mostly offset by increased depreciation and amortization at our joint ventures due to buildings placed

· The period includes $874,000 in gain on sales of excess property at Brooksville

compared to $805,000 for an easement and sale of excess property in the same segment in the prior year.

Asset Management Segment Results

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Cost of operations

Operating loss

Total revenues in this segment were $2,575,000, down

$172,000 or 6.3%, over the same period last year due to the sale of our warehouse 1801 62nd Street in July 2020 which had $423,000 of

revenues in the same period last year.

Operating loss was $(231,000), up $(229,000) from an operating loss of $(2,000) in the same period

last year primarily due to the sale of 1801 62nd Street.

Operating profit (loss)

Total revenues in this segment were $3,681,000, up

$1,106,000 or 43.0%, over the same period last year.

Operating profit was $960,000, up $1,191,000 from an operating loss of $(231,000)

in the same period last year.

Revenues and operating profit are up because of improved occupancy and rent growth at Cranberry Run and

full occupancy at 1865 62nd Street which was placed into service in the fourth quarter of 2021.

Net Operating Income this year for this

segment was $2,666,000 up $751,000 or 39.2% compared to calendar year 2021.

Mining Royalty Lands Segment Results

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$9,465,000 in the same period last year.

Total operating profit in this segment was $8,240,000, a decrease of $101,000 versus $8,341,000

Total operating profit in this segment was $8,891,000, an increase of $651,000 versus $8,240,000

in the same period last year.

This increase is primarily the result of the additional royalties from the acquisition in Astatula, Florida,

which we completed at the beginning of the second quarter.

Development Segment Results

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Equity in loss of Joint Venture

Gain on sale of real estate

Interest earned

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With respect to ongoing projects:

In the third quarter, we purchased 17 acres in Harford County, Maryland for $1.96 million for the

purposes of industrial development.

We are pursuing entitlements on the land, and we anticipate beginning construction in the third quarter

of 2022 on a 250,000 square foot, Class A warehouse which will comprise the entirety of the developable space on the site.

As referenced previously, during the fourth quarter, we completed construction on two industrial

buildings totaling approximately 146,000 square feet at Hollander Business Park.

These assets are now a part of the Asset Management segment.

Construction on the build-to-suit building totaling 101,750 square feet continues and we estimate shell completion and occupancy in the

fourth quarter of 2022.

With respect to our joint venture with St.

John Properties, we are now in the process of leasing

these four single-story buildings totaling 100,030 square feet of office and retail space.

At quarter end, Phase I was 48.1% leased and

46.8% occupied.

We are the principal capital source of a residential development venture in Prince George’s

County, Maryland known as “Amber Ridge.” Of the $18.5 million in committed capital to the project, $15.9 million in

principal draws have taken place to date.

Through the end of the fourth quarter, 34 of the 187 units have been sold, and we have received

$6,362,000 in preferred interest and principal to date.

The Coda, the first of our four buildings at Bryant Street joint venture, received a final certificate

of occupancy on April 1, 2021, and leasing efforts are under way.

At quarter end, the Coda was 93.5% leased and 95.5% occupied.

began in August on the second building at Bryant Street, known as the Chase 1B.

At quarter end, this building was 62.7% leased and 55.9%

Leasing of the third building, the Chase 1A, began during the fourth quarter and at quarter end, this building was 16.3% leased

and 6.4% occupied.

The fourth building which is purely a commercial space is 90% leased to Alamo Draft House and opened in December.

total, at quarter end, all four buildings now have their certificate of occupancy, and Bryant Street’s 487 residential units are

56.1% leased and 50.9% occupied.

Its commercial space is 82.5% leased and 61.7% occupied at quarter end.

We began construction on our 1800 Half Street joint venture project at the end of August 2020 and

expect the building to be complete in the third quarter of 2022.

As of the end of the fourth quarter, the project was 67.01% complete.

At quarter end, our first joint venture in Greenville, South Carolina is now complete and has received

its final certificate of occupancy.

Leasing began on Riverside in the third quarter and the building is 60% leased and 49% occupied.

Jackson is our second joint venture project in Greenville and is currently under construction.

This project is 83.23% complete and we

expect to complete construction and begin leasing in third quarter of 2022.

· 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,

$16.9 million in principal draws have taken place through quarter end.

Through the end of 2022, 135 of the 187 units have been sold, and

we have received $16.6 million 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 93.51% leased and 92.86% occupied, The Chase 1B was 86.96% leased and 87.58% occupied,

and The Chase 1A was 88.37% leased and 88.37% occupied.

quarter end, Bryant Street’s 487

residential units were 89.5% leased and 89.5% occupied.

Its commercial space was 84.2% leased and 71.4% occupied at quarter end.

· Lease-up is now underway at The Verge.

We have temporary certificates of

occupancy for all eleven floors and anticipate the final certificate of occupancy in the first quarter of 2023.

The Verge was 13.7% leased

and 9.6% occupied at year end.

Retail at this location is 85% leased.

This is our third mixed-use project in the Anacostia waterfront

submarket in Washington, DC.

· .408 Jackson is our second joint venture project in Greenville and received

its temporary certificate of occupancy in December 2022.

Leasing began in the fourth quarter of 2022 with residential units 21.6% leased

and 4.9% occupied at quarter end.

Retail at this location is 100% leased.

· Grading and building permits for a 258,545 square-foot warehouse building

on Chelsea Road in Aberdeen, Maryland were submitted to the governing agencies for approval.

· In October, we received initial approval for the annexation into Aberdeen,

Maryland of our property adjacent to Cranberry Run Business Park.

In December, this annexation was finalized and rendered unappealable.

This 54-acre site will support up to 690,000 square feet of warehouse development.

· All inspections for the build to suit warehouse project totaling 101,750

square-foot, located at 1941 62 nd Street in Baltimore City, were complete except for final occupancy inspections.

· Subsequent to the end of the quarter, we financed the purchase of what will

be our next lending venture.

We are the principal capital source of a residential development venture in Aberdeen, Maryland known as “Aberdeen

Overlook.” We have committed $31.1 million in exchange for an interest rate of 10% and a preferred return of 20% after which a “waterfall”

determines the split of proceeds from sale.

Aberdeen Overlook will hold 159 townhomes, 122 single family homes, and 63 villa homes.

are currently pursuing entitlements and have a homebuilder under contract to purchase all 344 lots upon completion of development infrastructure.

Stabilized Joint Venture Segment Results

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Operating profit (loss)

In March 2021, we reached stabilization on Phase II

(The Maren) of the development known as RiverFront on the Anacostia in Washington, DC.

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 $21,443,000, an

1 unchanged sentence

The Maren’s revenue was $10,045,000 and Dock 79 revenues

increased $422,000.

Total operating loss in this segment was $(1,630,000), a decrease of $3,109,000 versus a profit of $1,479,000 in the

same period last year.

The period includes $3,899,000 amortization expense of the $4,750,000 fair value of The Maren’s leases-in-place

established when we booked this asset as part of the gain on remeasurement upon consolidation of this Joint Venture.

Net Operating Income

for this segment was $10,816,000, up $4,164,000 or 62.6% compared to the same period last year due to The Maren’s consolidation

into this segment.

Since The Maren achieved stabilization on the last

day of March, average residential occupancy is 94.84% and 67.40% of expiring leases have renewed with no increase in rent due to the mandated

rent freeze on renewals in DC.

The Maren is a joint venture between the Company and MRP, in which FRP Holdings, Inc.

is the majority partner

with 70.41% ownership.

increased $770,000 to $11,398,000.

Total operating profit in this segment was $3,220,000, an increase of $4,850,000 versus an operating

loss of $(1,630,000) in the same period last year.

Pro-rata net operating income for this segment was $9,469,000, up $1,379,000 or 17.05%

compared to the same period last year.

All of these increases over last year are primarily due to The Maren’s consolidation into

this segment in March 31, 2021.

Fourth quarter, as part of our new partnership with

SIC and MRP, we sold a 20% ownership interest in a tenancy-in-

common (IC) of Dock 79 and The Maren for $65.3 million,

$44.5 million attributable to the Company, placing a combined valuation of the two buildings at $326.5 million.

At the end of December, The Maren was 92.80% leased

and 96.59% occupied.

The Maren’s average residential occupancy for calendar year 2022 was 95.69%, and 61.45% of expiring leases

renewed with an average rent increase on renewals of 8.17%.

The Maren is a joint venture between the Company and MRP and SIC, in which

FRP Holdings, Inc.

is the majority partner with 56.3% ownership.

Dock 79’s average residential occupancy for

2021 was 95.47%.

Through the year, 62.20% of expiring leases renewed with no increase in rent due to the mandated rent freeze on renewals

Dock 79 is a joint venture between the

Company and MRP, in which FRP Holdings, Inc.

majority partner with 66% ownership.

In March, we completed a refinancing of Dock 79 as

well as securing permanent financing for The Maren.

This $180 million loan ($92 million for Dock 79, $88 million for The Maren) lowers

the interest rate at Dock 79 from 4.125% to 3.03%, defers any principal payments for 12 years for both properties, and repays our $13.75

million preferred equity investment in The Maren along with $2.3 million in accrued interest.

Distributions from our CS1031 Hickory Creek DST investment

were $343,000 for 2021.

calendar year 2022 was 95.13%, and at the end of the year, Dock 79’s residential units were 93.44% leased and 90.49% occupied.

the year, 61.40% of expiring leases renewed with a 5.91% increase on renewals.

Dock 79 is a joint venture between the Company and MRP

and SIC, in which FRP Holdings, Inc.

is the majority partner with 52.8% ownership.

Third quarter we achieved stabilization at our Riverside

Joint Venture in Greenville South Carolina, meaning that the building had 90% occupancy for 90 days.

The building’s 200 residential

units were 98% leased with 92.5% occupancy at year end.

The joint venture was also able to achieve permanent financing in third quarter

The $32 million loan is interest only for five years with a term of eight years at a fixed rate of 4.92% with no prepayment penalty

after three years.

Riverside is a joint venture with Woodfield Development and the Company owns 40% of the venture.

Hickory Creek DST was sold and the Company received

$8.83 million from the sale on an investment of $6 million.

Prior to the sale distributions to the Company were $332,000 for the year.

Summary and Outlook

Mining royalties had its highest revenue quarter ever

providing a fitting capstone to a year that saw both royalty revenue and NOI surpass $10 million for the first time.

The extent to which

royalty revenue in 2022 eclipsed the previous year (12.9% improvement) or any year (12.7% improvement over 2020, previously the segment’s

highest revenue year) is due in large part to the purchase of the Bland property in April 2022.

However, even without the addition of

this latest royalty property, 2022 would have been the segment’s best revenue year.

It is management’s belief that the performance

of this segment this year and over the last several years (8.1% cumulative aggregate growth rate since 2017) speaks not only to the attractiveness

of the aggregates industry as an investment, but also to the quality of our assets and operating tenants.

This year, 61.45% of expiring leases at Maren renewed

with an average increase on renewals of 8.17%, and 61.40% of expiring leases renewed at Dock 79 with an average increase of 5.91%.

we could not renew an existing residential lease, we saw a year-to-date increase in rent on those “trade outs” of 7.4% at

The Maren and 12.6% at Dock 79.

With this being the first full year with The Maren in this segment, the 17% increase in NOI for this segment

is mostly attributable to an additional quarter of The Maren operating versus last year.

However, the ability to raise rents on renewals

while retaining tenants at the rate that we did both Dock 79 and The Maren played a meaningful part in increasing NOI.

As mentioned previously,

Steuart Investment Company is now a 20% partner in these assets.

We are enthusiastic about this partnership, and the combined valuation

($326.5 million) SIC placed on these assets through its investment demonstrates that our new partners have every bit as much faith in

these assets as we do.

The Asset Management segment performed well in 2022.

All of our industrial assets are 100% leased, and six of the seven buildings in service are 100% occupied.

The uptick in occupancy, particularly

at Cranberry, largely explains the increase in revenue, operating profit, and NOI in 2022, as well as the fact that this is the best year

this segment has experienced since we sold the bulk of our industrial portfolio in 2018.

Looking forward into 2023, we expect our last

two buildings at Hollander (a build to suit, and a spec building currently 100% leased but 0% occupied) to achieve occupancy sometime

in the first half of next year, which will increase our occupied square footage for industrial by 54.3% and will positively impact revenue,

operating profit, and NOI for some time.

Financially, operationally, and strategically, 2022

was a big year for the Company.

The Bland property was our first addition to the mining royalties segment since 2012 and only our second

acquisition since 1986, and it was instrumental in the segment achieving the results it did this past year.

This year, we secured permanent

financing on Riverside and completed construction and began lease-up on The Verge and .408 Jackson.

2022 saw the purchase of a new site

County Maryland capable of supporting 900,000 square

feet of industrial development and the annexation into the town of Aberdeen, Maryland of our property at 1001 Old Philadelphia Road which

begins the process of 690,000 square feet of industrial development at that site.

Each segment achieved its highest revenue, operating

profit, and NOI total since the asset sale in 2018.

However, the biggest news of 2022 came at the beginning of the fourth quarter when

we finalized the details of our agreement with SIC and MRP.

If all goes according to plan, this partnership will be developing assets

together for well over a decade and in the end will have over three million square feet of mixed-use development in DC’s Capitol

Riverfront and Buzzard Point submarkets.

With 3,000 residential units and 150,000 square feet of retail spread amongst ten distinct multifamily

projects on or adjacent to the water, this is a unique opportunity to expand upon our existing footprint in DC and end up controlling

nearly every asset visible from the south entrance to the nation’s capital.

On a macro level, the immediate future remains unclear.

On any given day, we are treated with predictions and prognostications that cover every shade of the economic color wheel.

Inflation and

rising interest rates appear to be our reality for at least the immediate future, yet so do low unemployment and job growth.

of whatever the immediate future holds, it is our belief that with the assets we have in place, the partners we have chosen, and the steps

we have made to ensure deliberate, responsible growth over the long haul, your company is on its way to building something very special.

LIQUIDITY AND CAPITAL RESOURCES

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significant cash needs to acquire and develop land or operating buildings and to construct new buildings and tenant improvements.

December 31, 2021, we had $161,521,000 of cash and cash equivalents along with $4,317,000 of investments available for sale.

As of December

31, 2021, we had no debt borrowed under our $20 million Wells Fargo revolver, $506,000 outstanding under letters of credit and $19,494,000

available to borrow under the revolver.

On March 19, 2021, the Company refinanced Dock 79 and The Maren projects pursuant to separate

Loan Agreements and Deed of Trust Notes entered into with Teachers Insurance and Annuity Association of America, LLC.

Dock 79 and The

Maren borrowed principal sums of $92,070,000 and $88,000,000 respectively, in connection with the refinancing.

December 31, 2022, we had $177,497,000 of cash and cash equivalents.

As of December 31, 2022, we had no debt borrowed under our $20 million

Wells Fargo revolver, $562,000 outstanding under letters of credit and $19,438,000 available to borrow under the revolver.

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

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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.

by operating activities in 2021.

Net cash provided by operating activities in 2021

was $22,242,000 versus $18,613,000 in 2020.

Net cash used in operating activities of discontinued operations in 2019 was $1,742,000.

cash provided by operating activities of continuing operations was lower primarily due to the prior year deferral of income taxes related

to a 1031 exchange on the sales of 1502 Quarry Drive and 7020 Dorsey Road and the prior year placement of $50 million in two opportunity

Current income tax expense in 2019 included

an $13,797,000 provision to return adjustment related to the deferral of current federal and state taxes due in connection with $50 million

additional Opportunity Zone investment funds invested in June of 2019 but applied to the 2018 returns.

In addition, 2019 included an additional

deferral reduction of $4,213,000 of current state taxes related to the $55 million Opportunity Zone investment in December of 2018 which

were deferred rather than our prior 2018 tax position that the state taxes would not conform to the federal treatment.

The aggregate of

the provision to return adjustments in 2019 of $18 million offset current tax provision of $2 million absent these adjustments for a net

current tax benefit of $16 million.

As of December 31, 2020 the company has deferred taxes of approximately $31 million associated with

$112 million of gains on sales reinvested through Opportunity Zone investments.

These taxes are deferred until the earlier of the sale

of the related investments or December 31, 2026 and 10% of gains are excluded from tax once the investments are held five years plus an

additional 5% is excluded at seven years.

Investing Activities – Net cash provided

by investing activities in 2021 was $66,601,000 versus $50,527,000 in 2020.

The increase was due primarily due to a return of our preferred

equity financing with interest of $16.1 million from The Maren, $5.3 million return of capital from Amber Ridge, $24.6 million decrease

in purchases of corporate bonds due to lack of attractive investment opportunities, and $3.7 million for cash on the books of The Maren

upon consolidation mostly offset by a $15.9 million decrease on maturities and sales of our corporate bond portfolio and the $18.3 million

decrease in proceeds from the sale of assets as the prior year included the sale of the three remaining lots at our Lakeside Business

Park, 1801 62 nd Street, Gulf Hammock, and 87 acres from our Ft.

Myers property.

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 in 2021.

As of December 31, 2022 the company had

deferred taxes of approximately $31 million associated with $112 million of gains on sales reinvested through Opportunity Zone investments.

These taxes are deferred until the earlier of the sale of the related investments or December 31, 2026 and 10% of gains are excluded from

tax once the investments are held five years plus an additional 5% is excluded at seven years.

Investing Activities – Net cash used

in investing activities in 2022 was $23,196,000 versus cash provided by investing activities of $66,601,000 in 2021.

The decrease was

due primarily due to increased investment in properties of $11 million, increased investments in joint ventures of $8 million and reduced

proceeds from sales of corporate bonds of $65.6 million.

In 2022 the Company invested $11 million in mining land and $11 million to pay

off debt in our BC Realty, LLC joint venture.

Net cash provided by investing activities in 2021

was $50,527,000 versus cash used in investing activities of $33,819,000 in 2019.

The increase was due primarily to the proceeds on the

sale of investments available for sale offset by the purchase of investments available for sale, the proceeds from the sale of the three

remaining lots at our Lakeside Business Park, 1801 62 nd Street, Gulf Hammock, and 87 acres form our Ft.

Myers property, offset

by the purchase of property at 1001 Old Philadelphia Road.

was $66,601,000 versus $50,527,000 in 2020.

The increase was due primarily due to a return of our preferred equity financing with interest

of $16.1 million from The Maren, $5.3 million return of capital from Amber Ridge, $24.6 million decrease in purchases of corporate bonds

due to lack of attractive investment opportunities, and $3.7 million for cash on the books of The Maren upon consolidation mostly offset

by a $15.9 million decrease on maturities and sales of our corporate bond portfolio and the $18.3 million decrease in proceeds from the

sale of assets as the prior year included the sale of the three remaining lots at our Lakeside Business Park, 1801 62 nd Street,

Gulf Hammock, and 87 acres from our Ft.

Myers property.

At December 31, 2022, the Company was invested in

two corporate bonds valued at $4,266,000 with maturities in January 2022 and U.S.

Treasury notes valued at $161,585,000 maturing in late 2023.

The unrealized loss on these investments of $42,000 was recorded as part of comprehensive income and was based on the estimated

market value by National Financial Services, LLC (“NFS”) obtained from sources that may include pricing vendors, broker/dealers

who clear through NFS and/or other sources (Level 2).

The Company recorded no realized gains or losses on bonds that matured or were sold

The unrealized loss on these investments of $1,903,000 was recorded

as part of comprehensive income and was based on the estimated market value by Wells Fargo Bank, N.A.

Financing Activities – Net

cash required by financing activities was $1,231,000 versus $21,838,000 in the same period last year primarily due the refinancing of

Dock 79 for $1.4 million more net of debt issuance costs than the amount matured and $21.0 million lower repurchases of company stock.

cash provided by financing activities was $16,834,000 versus cash required by financing activities of $1,231,000 in the same period last

year primarily due the $27.9 million contribution for 20% ownership of Dock & Maren by our new limited partner (less $9.3 million

distributed to MRP) and prior year refinancing of Dock 79 for $1.4 million more net of debt issuance costs than the amount matured.

Net cash required by financing activities

in 2020 $21,838,000 versus $9,144,000 in 2019 primarily due to the increased purchase of company stock in 2020.

was $1,231,000 in 2021 versus $21,838,000 in 2020 primarily due the refinancing of Dock 79 for $1.4 million more net of debt issuance

costs than the amount matured and $21.0 million lower repurchases of company stock.

Credit Facilities - On February 6,

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Cash Requirements – The Company expended

capital of $29,431,000 during 2021 for real estate development including investments in joint ventures.

These capital expenditures were

funded from cash and investments on hand, cash generated from operations and property sales, or borrowings under our credit facilities.

The Company expects to make capital and

investments in joint ventures of $54.7 million in

2022 to be funded from cash on hand and cash generated from operations.

capital of $27,615,000 during 2022 for real estate development including investments in joint ventures and the purchase of mining property.

These capital expenditures were funded from cash and investments on hand, cash generated from operations and property sales, or borrowings

under our credit facilities.

The Company expects to invest $83 million into our existing real estate holdings and partnerships as well

as new real estate assets and joint ventures during 2023, with such capital being funded from cash and investments on hand, cash generated

from operations and property sales, or borrowings

under our credit facilities.

Rising interest rates and cost inflation will require that we closely scrutinize these investments before

pulling the trigger on them.

Non-GAAP Financial Measures.

To supplement the financial results presented in accordance

with GAAP, FRP presents a non-GAAP financial measure within the meaning of Regulation G promulgated by the Securities and Exchange Commission.

The non-GAAP financial measure included in this Annual Report on Form 10-K 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.

measure is not, and should not be viewed as, a substitute for GAAP financial measures.

Net Operating Income Reconciliation

with GAAP, FRP presents certain non-GAAP financial measures within the meaning of Regulation G promulgated by the Securities and Exchange

We believe these non-GAAP measures provide useful information to our Board of Directors, management and investors regarding

certain trends relating to our financial condition and results of operations.

Our management uses these non-GAAP measures to compare our

performance to that of prior periods for trend analysis, purposes of determining management incentive compensation and budgeting, forecasting

and planning purposes.

We provide Pro-rata net operating income (NOI) because we believe it assists investors and analysis in estimating

our economic interest in our consolidated and unconsolidated partnerships, when read in conjunction with our reported results under GAAP.

This measure is not, and should not be viewed as, a substitute for GAAP financial measures.

Pro-Rata Net Operating Income Reconciliation

Twelve months ended 12/31/22 (in thousands)

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Income (loss) before income taxes

Gain on remeasurement of real estate investment

Gain on investment land sold

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Interest income

Loss on sale of land

Equity in loss of Joint Venture

Equity in (gain)/loss of Joint Venture

Interest Expense

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Net Operating Income (loss)

NOI of noncontrolling interest

Pro-rata NOI from unconsolidated joint ventures

Pro-Rata net operating income

Net Operating Income Reconciliation

Twelve months ended 12/31/21 (in thousands)

Income (loss) from continuing operations

Net Income (loss)

Income Tax Allocation

Income (loss) from continuing operations before income taxes

Equity in profit of Joint Ventures

Gains on sale of buildings

Income (loss) before income taxes

Gain on remeasurement of real estate investment

Gain on investment land sold

Unrealized rents

Interest income

Unrealized rents

Loss on sale of land

Equity in loss of Joint Venture

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Net Operating Income (loss)

NOI of noncontrolling interest

Pro-rata NOI from unconsolidated joint ventures

Pro-Rata net operating income

OFF-BALANCE SHEET ARRANGEMENTS

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does not have any other off-balance sheet arrangements that either have, or are reasonably likely to have, a current or future material

effect on its

financial condition.

effect on its financial condition.

CRITICAL ACCOUNTING POLICIES

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from future taxable income.

To the extent recovery is not probable, a valuation allowance is established and included as an expense as

part of our income tax provision.

No valuation allowance was recorded at December 31, 2021, as all deferred tax assets are considered

more likely than not to be realized.

Significant judgment is required in determining and assessing the impact of complex tax laws and

certain tax-related contingencies on the provision for income taxes.

As part of the calculation of the provision for income taxes, we

assess whether the benefits of our tax positions are at least more likely than not of being sustained upon audit based on the technical

merits of the tax position.

For tax positions that are more likely than not of being sustained upon audit, we accrue the largest amount

of the benefit that is more likely than not of being sustained in our consolidated financial statements.

Such accruals require estimates

and judgments, whereby

actual results could vary materially from

these estimates.

Further, a number of years may elapse before a particular matter, for which an established accrual was made, is audited

and resolved.

To the extent recovery is not probable, a valuation allowance is established and included as

an expense as part of our income tax provision.

No valuation allowance was recorded at December 31, 2022, as all deferred tax

assets are considered more likely than not to be realized.

Significant judgment is required in determining and assessing the impact of

complex tax laws and certain tax-related contingencies on the provision for income taxes.

As part of the calculation of the provision

for income taxes, we assess whether the benefits of our tax positions are at least more likely than not of being sustained upon audit

based on the technical merits of the tax position.

For tax positions that are more likely than not of being sustained upon audit, we accrue

the largest amount of the benefit that is more likely than not of being sustained in our consolidated financial statements.

Such accruals

require estimates and judgments, whereby actual results could vary materially from these estimates.

Further, a number of years may elapse

before a particular matter, for which an established accrual was made, is audited and resolved.

Most of the Company’s operating expenses

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Gain on sale of real estate

Income from continuing operations before income taxes

Income before income taxes

Provision for income taxes

Income from continuing operations

Income from discontinued operations, net of tax

Gain (loss) attributable to noncontrolling interest

(Loss) gain attributable to noncontrolling interest

Net income attributable to the Company

Earnings per common share:

Income from continuing operations-

Discontinued operations-

Net Income attributable to the Company -

Number of shares (in thousands) used in computing:

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Other comprehensive income (loss) net of tax:

Unrealized (loss) gain on investments, net of income tax effect of $ ( 194 ) , $ ( 145 ) and $ 602

Unrealized loss on investments, net of income tax effect of $ ( 504 ), $ ( 194 ) and $ ( 145 )

Minimum pension liability, net of income tax effect of $ ( 11 ) , $ ( 15 ) and $ 53

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Other liabilities

Federal and state income taxes payable

Deferred revenue

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Total shareholders’ equity

Noncontrolling interest MRP

Noncontrolling interests

Total liabilities and equity

See accompanying notes.

CONSOLIDATED STATEMENTS OF CASH FLOWS – Years ended December 31

CONSOLIDATED STATEMENTS OF CASH FLOWS

– Years ended December 31

(In thousands)

Cash flows from operating activities:

to reconcile net income to net cash provided by continuing operating activities:

Income from discontinued operations, net

Adjustments to

reconcile net income to net cash provided by operating activities:

Depreciation, depletion and amortization

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Other long-term liabilities

Net cash provided by operating activities of continuing operations

Net cash used in operating activities of discontinued operations

provided by operating activities

Net cash provided by operating activities

Cash flows from investing activities:

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Proceeds from sale of assets

Net cash provided by (used in) investment activities of continuing operations

Net cash provided by investing activities of discontinued operations

Net cash provided by (used in) investing activities

Net cash (used in) provided by investing activities

Cash flows from financing activities:

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Debt issue costs

Contribution from partner

Distribution to noncontrolling interest

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Exercise of employee stock options

Net cash used in financing activities of continuing operations

Net cash used in financing activities of discontinued operations

Net cash used in financing activities

Net cash provided by (used in) financing activities

Net increase in cash and cash equivalents

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Supplemental disclosures of cash flow information:

Cash paid during the year for:

Interest, net of capitalized amounts

Income taxes (refunded) paid

Cash paid (received) during the year for:

See accompanying notes.

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Exercise of stock options

Stock option grant

Stock option grant compensation

Restricted stock compensation

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Minimum pension liability, net

Unrealized gain on investment, net

Unrealized loss on investment, net

Balance at December 31, 2020

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Restricted stock award

Shares purchased and cancelled

Contributions from partners

Shares purchased

Forfeiture of restricted stock award

Contributions from partner

Reallocation of partners’ interest

Reallocation income tax expense

Distributions to partners

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(the “Company”)

is a holding company engaged in various real estate businesses.

is a holding company engaged in the investment and development of real estate.

The segments of the Company include:

(i) leasing and management of commercial

properties owned by the Company (the “Asset Management Segment”), (ii) leasing and management of mining royalty land owned

by the Company (the “Mining Royalty Lands Segment”), (iii) real property acquisition, entitlement, development and construction

primarily for apartment, retail, warehouse, and office buildings either alone or through joint ventures (the “Development Segment”),

(iv) ownership, leasing and management of buildings through joint ventures (the “Stabilized Joint Venture Segment”).

(i) leasing and management

of industrial and commercial properties owned by the Company (the “Asset Management Segment”), (ii) leasing and management

of mining royalty land owned by the Company (the “Mining Royalty Lands Segment”), (iii) real property acquisition, entitlement,

development and construction primarily for apartment, retail, warehouse, and office (the “Development Segment”), (iv) management

of mixed-use residential/retail properties owned through our joint ventures (the “Stabilized Joint Venture Segment”).

FRP Holdings, Inc.

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a Maryland corporation (“Development”) and Florida Rock Properties, Inc., a Florida corporation (“Properties”),

and the various subsidiaries of each.

On May 21, 2018, the Company completed the disposition

of 40 industrial warehouse properties and three additional land parcels to an affiliate of Blackstone Real Estate Partners VIII, L.P.

for $ 347.2 million .

One warehouse property valued at $ 11.7 million was excluded from the sale due to the tenant exercising its right of

first refusal to purchase the property.

On June 28, 2019, the Company completed the sale of the excluded property to the same buyer for

$ 11.7 million .

This resulted in the disposition of all of the Company’s industrial flex/office warehouse properties prior to the

sale date and constituted a major strategic shift and as a result, these properties have been reclassified as discontinued operations

for all periods presented.

The Asset Management segment currently contains four commercial properties.

and the various subsidiaries and joint ventures of each.

CONSOLIDATION - The consolidated financial

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In March 2021,

Riverfront II, LLC reached stabilization which resulted in a change of control for accounting purposes as the veto rights of the minority

shareholder lapsed and the Company became the primary beneficiary.

As such, effective March 31, 2021 the Company consolidated the assets

(at fair value), liabilities and operating results of our Riverfront Investment Partners II, LLC joint venture (“The Maren”)

which was previously accounted for under the equity method.

Subsequent to the March 31, 2021 consolidation, the ownership of The Maren

attributable to our partner MRP Realty 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.

Riverfront Investment Partners II, LLC reached stabilization which resulted in a change of control for accounting purposes as the veto

rights of the minority shareholder lapsed and the Company became the primary beneficiary.

As such, effective March 31, 2021 the Company

consolidated the assets (at fair value), liabilities and operating results of our Riverfront Investment Partners II, LLC joint venture

(“The Maren”) which was previously accounted for under the equity method.

Subsequent to the March 31, 2021 consolidation,

the ownership of The Maren attributable to our partner MRP Realty 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.

In 2022 we sold a 20 % ownership interest in a tenancy-in-common (TIC) of Dock 79 and The Maren to a new partner

Steuart Investment Company (SIC).

The Company continues to consolidate both properties because of continued control over major decisions

for both properties.

CASH AND CASH EQUIVALENTS - The Company

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– Acquisitions of rental property, including any associated intangible assets, are measured at fair value at the date of acquisition.

Any liabilities assumed or incurred are recorded at their fair value at the time of acquisition.

The fair value of the acquired property

is allocated between land and building (on an as-if vacant basis) based on management’s estimate of the fair value of those components

for each type of property and to tenant improvements based on the depreciated replacement cost of the tenant improvements, which approximates

their fair value.

Any liabilities assumed or incurred are

recorded at their fair value at the time

of acquisition.

The fair value of the acquired property is allocated between land and building (on an as-if vacant basis) based on management’s

estimate of the fair value of those components for each type of property and to tenant improvements based on the depreciated replacement

cost of the tenant improvements, which approximates their fair value.

The fair value of the in-place leases is recorded as follows:

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INVESTMENTS IN JOINT VENTURES - The Company

uses the equity method to account for its investments in Brooksville, BC FRP Realty, and Greenville/Woodfield, in which it has a voting

interest of 50% or less and has significant influence but does not have control.

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.

uses the equity method to account for its investments in Brooksville, BC FRP Realty, Estero, FRP/MRP Buzzard Point Sponsor, and Greenville/Woodfield,

in which it has a voting interest of 50 % or less and has significant influence but does not have control.

The Company uses the equity

method to account for its investment in the Bryant Street Partnerships and 1800 Half Street, in which it has a voting interest in excess

of 50% because all major decisions are shared equally.

Under the equity method, the investment is originally recorded at cost and adjusted

to recognize the Company’s share of net earnings or losses of the investee, limited to the extent of the Company’s investment

in and advances to the investee and financial guarantees on behalf of the investee that create additional basis.

The Company regularly

monitors and evaluates the realizable value of its investments.

When assessing an investment for an other-than-temporary decline in value,

the Company considers such factors as, the performance of the investee in relation to its own operating targets and its business plan,

the investee’s revenue and cost trends, as well as liquidity and cash position, and the outlook for the overall industry in which

the investee operates.

method to account for its investment in the Bryant Street Partnerships and The Verge at 1800 Half Street, in which it has a voting interest

in excess of 50% because all major decisions are shared equally.

Under the equity method, the investment is originally recorded at cost

and adjusted to recognize the Company’s share of net earnings or losses of the investee, limited to the extent of the Company’s

investment in and advances to the investee and financial guarantees on behalf of the investee that create additional basis.

regularly monitors and evaluates the realizable value of its investments.

When assessing an investment for an other-than-temporary decline

in value, the Company considers such factors as, the performance of the investee in relation to its own operating targets and its business

plan, the investee’s revenue and cost trends, as well as liquidity and cash position, and the outlook for the overall industry in

which the investee operates.

From time to time, the Company may consider third party evaluations or valuation reports.

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This evaluation

is based on factors including, but not limited to,

changes in facts or circumstances, changes

in tax law and expiration of statutes of limitations, effectively settled issues under audit, and audit activity.

Such a change in recognition

or measurement would result in the recognition of a tax benefit or an additional charge to the tax provision.

It is the Company's policy

to recognize as additional income tax expense the items of interest paid and

penalties directly related to income taxes.

is based on factors including, but not limited to, changes in facts or circumstances, changes in tax law and expiration of statutes of

limitations, effectively settled issues under audit, and audit activity.

Such a change in recognition or measurement would result in the

recognition of a tax benefit or an additional charge to the tax provision.

It is the Company's policy to recognize as additional income

tax expense the items of interest paid and penalties directly related to income taxes.

STOCK BASED COMPENSATION – The Company

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after the grant date.

The fair value of each grant is estimated on the date of grant using the Black-Scholes option-pricing model.

assumptions used in the model and current year impact are discussed in Note 7.

The fair value of

each grant is estimated on the date of grant using the Black-Scholes option-pricing model.

The assumptions used in the model and current

year impact are discussed in Note 7.

DEFERRED COMPENSATION PLAN - The Company

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losses that are not included in net income, but rather are recorded directly in shareholders’ equity.

RECENTLY ISSUED ACCOUNTING STANDARDS – In February

2016, the FASB issued ASU No.

2016-02, “Leases (Topic 842)”, which requires lessees to recognize a right-to-use asset and

a lease obligation for all leases.

The Company is not a significant lessee.

Lessors will account for leases using an approach that is

substantially equivalent to existing accounting standards.

The Company's existing leases will continue to be classified as operating leases.

Leases entered into after the effective date of the new standard may be classified as operating or sales-type leases, based on specific

classification criteria.

Operating leases will continue to have a similar pattern of recognition as under current GAAP.

Sales-type lease

accounting, however, will result in the recognition of selling profit at lease commencement, with interest income recognized over the

life of the lease.

The new standard also includes a change to the treatment of internal leasing costs and legal costs, which can no longer

be capitalized.

Only incremental costs of a lease that would not have been

incurred if the lease had not been obtained may be

deferred as initial direct costs.

The new standard also requires lessors to exclude from variable payments certain lessor costs, such

as real estate taxes, that the lessor contractually requires the lessee to pay directly to a third party on its behalf.

The new standard

requires our expected credit loss related to the collectability of lease receivables to be reflected as an adjustment to the line item

Lease Revenue.

Additionally, the new standard requires lessors to allocate the consideration in a contract between the lease component

(right to use an underlying asset) and non-lease component (transfer of a good or service that is not a lease).

However, lessors are provided

with a practical expedient, elected by class of underlying asset, to account for lease and non-lease components of a contract as a single

lease component if certain criteria are met.

The terms of the Company's leases generally provide that the Company is entitled to receive

reimbursements from tenants for operating expenses such as real estate taxes, insurance and common area maintenance, in addition to the

base rental payments for use of the underlying asset.

Under the new standard, common area maintenance is considered a non-lease component

of a lease contract, which would be accounted for under Topic 606.

However, the Company will apply the practical expedient to account

for its lease and non-lease components as a single, combined operating lease component.

While the timing of recognition should remain

the same, the Company is no longer presenting reimbursement revenue from tenants separately in our Consolidated Statements of Income beginning

January 1, 2019.

The new standard along with the adoption of

2018-11, Leases - Targeted Improvements which the FASB issued in July 2018, was adopted effective January 1, 2019 and we have

elected to use January 1, 2019 as our date of initial application.

We elected the package of practical expedients permitted under the

transition guidance within the new standard.

By adopting these practical expedients, we were not required to reassess (1) whether an existing

contract meets the definition of a lease;

(2) the lease classification for existing leases;

or (3) costs previously capitalized as initial

direct costs.

The adoption of this guidance did not have a material impact on our financial statements.

RECENTLY ISSUED ACCOUNTING STANDARDS – None.

Investments in Joint Ventures .

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contributions by the partners.

On October 8, 2021 the Company entered into a loan

agreement with a Baltimore developer to be the principal capital source of a residential development venture in Harford County, Maryland

known as “Aberdeen Station.” We have committed up to $ 31.1 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.

This project will hold 344 single-family homes

and town homes.

During the year we had two new investments in unconsolidated

joint ventures:

Estero - In August of 2022, we invested $ 3.6

million for a 16 % interest in a joint venture with Woodfield Development to purchase 46 acres in Estero, FL.

While the joint venture attempts

to rezone the property, the Company will receive a preferred return of 8 % with an option to roll its investment into equity in the vertical

development or exit at that point.

The Company’s equity interest in the joint venture is accounted for under the equity method of

accounting because of the Company’s significant influence in the development process.

Lending Ventures – In September of 2022,

we paid off and extended for up to 3 years the secured note on the property

in our BC FRP Realty, LLC joint venture advancing

a total of $ 11.3 million of the maximum commitment of $ 16 million .

This is included in our Lending Ventures investments in the tables

that follow along with our residential real estate development investments at Aberdeen and Amber Ridge.

The loan on the BC FRP Realty,

LLC joint venture statement is reclassified to equity in the Lending Ventures table.

FRP/MRP Buzzard Point Sponsor, LLC –

This partnership has been engaged in pre-development activities for phase one of property owned by Steuart Investment Company (SIC) under

a Contribution and Pre-Development Agreement between this partnership and SIC.

The following table summarizes the Company’s

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BC FRP Realty, LLC

Riverfront Holdings

Buzzard Point Sponsor, LLC

Bryant Street Partnerships

Aberdeen Station Loan

Lending ventures

DST Hickory Creek

Amber Ridge Loan

Estero Partnership

1800 Half St.

Greenville/Woodfield Partnerships

Greenville Partnerships

Share of Profit

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BC FRP Realty, LLC

Riverfront Holdings II, LLC

Riverfront Holdings

Bryant Street Partnerships

Aberdeen Station Loan

DST Hickory Creek

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1800 Half St.

Greenville/Woodfield Partnerships

Greenville Partnerships

Riverfront Holdings II, LLC was consolidated on March 31, 2021.

Bryant Street Partnerships

includes $ 747,000

in 2021 and $ 1,146,000

in 2020 for the Company’s share of preferred interest and $ 471,000

in 2021 and $ 471,000

in 2020 for amortization of guarantee liability related to the Bryant Street loan.

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):

includes $747,000 in 2021 for the Company’s share of preferred interest and $471,000 in 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 December 31, 2022 are summarized in the following two tables (in thousands):

Investments in Apartment/Mixed Use Joint

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As of December 31, 2022

Buzzard Point

Bryant Street

1800 Half St.

Holdings II, LLC

Investments in real estate, net

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Bryant Street

Company Share

Rental Revenue

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Total cost of operations

Total operating profit (loss)

Total operating loss

Interest expense

Net loss before tax

The income statements of the Greenville Woodfield

Riverside Partnership are as follow (in thousands):

Riverside Partnership

Company Share

Rental Revenue

Revenue – other

Total Revenues

Cost of operations:

Depreciation and amortization

Operating expenses

Property taxes

Total cost of operations

Total operating loss

Interest expense

Net loss before tax

Related Party Transactions .

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charges and/or allocation from Patriot for these services of $ 893,000 and $ 1,025,000 for 2022 and 2021, respectively.

These charges

are reflected as part of corporate expenses.

These charges are

reflected as part of corporate expenses.

To determine these allocations between FRP

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On February 6, 2019, the Company entered

into a First Amendment to the 2015 Credit Agreement (the “Credit

Agreement”) with Wells Fargo Bank,

(“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 December 31, 2021, there was no debt outstanding on this revolver, $ 506,000 outstanding under letters of credit and $ 19,494,000

available for borrowing.

The letters of credit were issued to guarantee certain obligations to state agencies related to real estate development.

Most of the letters of credit are irrevocable for a period of one year and typically are automatically extended for additional one-year

The letter of credit fee is 1 % and applicable interest rate would have been 1.10425 % on December 31, 2021.

The credit agreement

contains certain conditions and financial covenants, including a minimum tangible net worth and dividend restriction.

As of December 31,

2021, these covenants would have limited our ability to pay dividends to a maximum of $ 246 million combined.

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,

The Credit Agreement establishes a five -year revolving credit facility with a maximum facility amount of $ 20 million .

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.

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 December 31, 2022, there was no debt outstanding on

this revolver, $ 562,000 outstanding under letters of credit and $ 19,438,000 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 5.36871 % on December 31, 2022.

The credit agreement contains certain conditions and financial covenants,

including a minimum tangible net worth and dividend restriction.

As of December 31, 2022, these covenants would have limited our ability

to pay dividends to a maximum of $ 249 million combined.

On November 17, 2017, Dock 79 borrowed a

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In 2021, due to the DC legislation in place freezing rent increases as a part of

a covid relief plan, FRP was unable

to increase rental rates for renewals.

This legislation

was lifted in February 2022.

a covid relief plan, FRP was unable to increase rental rates for renewals.

This legislation was lifted in February 2022.

The Company also leases retail spaces at apartment/mixed-use

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individual lease.

All base rent revenue is recognized on a straight-line basis.

All base rent

revenue is recognized on a straight-line basis.

Commercial & Office

The Company’s industrial warehouses typically

lease for terms ranging from 3 – 10 years often with 1 or 2 renewal options.

lease for terms ranging from 3 – 10 years often with one or two renewal options.

All base rent revenue is recognized on a straight-lined

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Common shares used for diluted earnings per common share

Income from continuing operations

Discontinued operations

Net income attributable to the Company

Basic earnings per common share:

Income from continuing operations

Discontinued operations

Net income attributable to the Company

Diluted earnings per common share:

Income from continuing operations

Discontinued operations

Net income attributable to the Company

For 2021 and 2020, 6,680 and 53,545 shares,

respectively, attributable to outstanding stock options were excluded from the calculation of diluted earnings per share because their

inclusion would have been anti-dilutive.

Earnings per common share:

For 2022 the Company did not have any outstanding

anti-dilutive stock options.

For 2021, 6,680 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 2021 the Company repurchased 6,004

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During 2020 the Company repurchased 510,145 shares at an average cost of $ 41.78 .

During 2019 the

Company repurchased 169,251 shares at an average cost of $ 48.51 .

Stock-Based Compensation Plans .

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stock were granted to employees that will vest over the next four years.

In January 2021, 18,882 shares of restricted stock were

granted to employees as part of a long-term incentive plan that will vest over the next five years .

In March 2020, 20,520 shares of

restricted stock were granted to employees as part of a long-term incentive plan that will vest over the next five years .

of common shares available for future issuance was 403,499 at December 31, 2021.

In March 2021 and March 2020, 1,098 and 11,448

shares of stock, respectively, were granted to employees rather than stock options as in prior years.

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 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 367,641 at December 31, 2022.

In January 2022, January 2021 and March 2020, 865 , 1,098 and 11,448 shares

of stock, respectively, were granted to employees rather than stock options as in prior years.

The Company recorded the following Stock

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Employee stock grant

Unrestricted employee stock award

Annual director stock award

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Fair Value(000's)

at January 1, 2019

at December 31, 2019

at December 31, 2020

at December 31, 2021

Vested during twelve months ended

Outstanding at

January 1, 2020

Outstanding at

December 31, 2020

Outstanding at

December 31, 2021

Outstanding at

December 31, 2022

Exercisable at

December 31, 2022

Vested during

twelve months ended

December 31, 2022

The following table summarizes information

concerning Stock options outstanding at December 31, 2022:

Summary of stock options outstanding

Range of Exercise

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Non-vested at December 31, 2021

Time-based awards granted

Performance-based awards granted

Non-vested at December 31, 2022

Total unrecognized compensation cost of

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Continuing operations

Discontinued operations

Income tax expense benefit

Comprehensive income

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Current income tax expense

The deferred taxes in 2020 are primarily

related to the bonus depreciation on property placed in service.

Taxes in 2020 were favorably impacted by $ 1,100,000 due to a carryback

of our 2020 tax net operating loss to fiscal 2016 when the federal tax rate was 35 %.

Current income tax expense in 2019 includes a $ 13,797,000

provision to return adjustment related to the deferral of current federal and state taxes due in connection with $ 50 million additional

Opportunity Zone investment funds invested in June of 2019 but applied to the 2018 returns.

In addition, 2019 includes an additional deferral

reduction of $ 4,213,000 of current state taxes related to the $ 55 million Opportunity Zone investment in December of 2018 which were deferred

rather than our prior 2018 tax position that the state taxes would not conform to the federal treatment.

The aggregate of the provision

to return adjustments in 2019 of $ 18 million offset current tax provision of $ 2 million absent these adjustments for a net current tax

benefit of $ 16 million .

The deferred taxes are primarily related

to the bonus depreciation on property placed in service.

Taxes in 2020 were favorably impacted by $ 1,100,000 due to a carryback of our

2020 tax net operating loss to fiscal 2016 when the federal

tax rate was 35 %.

As of December 31, 2022 the company has

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shown above and the amount computed at the statutory Federal income tax rate follows (in thousands):

Income tax reconciliation

Year Ended December 31

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and penalties, and adjustments to prior year estimates.

The types of temporary differences and their

related tax effects that give rise to Deferred tax assets and deferred tax liabilities are presented below (in thousands):

types of temporary differences and their related tax effects that give rise to deferred tax assets and deferred tax liabilities are

presented below (in thousands):

Temporary tax differences

Deferred tax liabilities:

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Net deferred tax liability

NOL Carryovers

Other Items - All Gross

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The Asset Management Segment owns, leases and manages

commercial properties.

The flex/office warehouses in the Asset Management Segment were sold and reclassified to discontinued operations

leaving only two commercial properties and one recent industrial acquisition,

Cranberry Run Business Park, which we purchased in 2019.

In July 2020 we sold our property located at 1801 62 nd Street in Hollander

Business Park, which had joined Asset Management April 1, 2019.

During the fourth quarter of 2021 we completed construction on two buildings

in our Hollander Business Park.

in-service commercial properties wholly owned by the Company.

Currently this includes seven warehouses in two business parks, an office

building partially occupied by the Company, and two ground leases.

Our Mining Royalty Lands segment owns several properties

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The amounts of consolidated net income attributable to the noncontrolling

interest is clearly identified on the accompanying Consolidated Statements of Income.

On May 21, 2018, the Company completed the

disposition of 40 industrial warehouse properties and three additional land parcels to an affiliate of Blackstone Real Estate Partners VIII,

for $ 347.2 million .

One warehouse property valued at $ 11.7 million was excluded from the sale due to the tenant exercising its right

of first refusal to purchase the property.

On June 28, 2019, the Company completed the sale of the excluded property to the same buyer

for $ 11.7 million .

This sale constituted a major strategic shift and as a result, these properties have been reclassified as discontinued

operations for all periods presented.

interest is clearly identified on the

accompanying Consolidated Statements of

Operating results and certain other financial

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to the overall fair value measurement.

At December 31, 2021, the Company was invested in

two corporate bonds valued at $ 4,266,000 with maturities in January 2022 and U.S.

At December 31, 2022, the Company was invested U.S.

Treasury notes valued at $ 161,585,000 maturing in late 2023.

The unrealized loss on these investments of $ 42,000 was recorded as part of comprehensive income and was based on the estimated

market value by National Financial Services, LLC (“NFS”) obtained from sources that may include pricing vendors, broker/dealers

who clear through NFS and/or other sources (Level 2).

The Company recorded no realized gains or losses on bonds that matured or were sold in 2021.

The amortized cost of the investments in

corporate bonds approximates fair value as of December 31, 2021.

The unrealized loss on these investments of $ 1,903,000 was recorded as part

of comprehensive income and was based on the estimated market value by Wells Fargo Bank, N.A.

At December 31, 2022 and 2021, the carrying

amount reported in the consolidated balance sheets for cash and cash

equivalents including U.S.

amount reported in the consolidated balance sheets for cash and cash equivalents including U.S.

Treasury notes was adjusted to fair value

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into various contracts to develop and maintain real estate with remaining commitments totaling $ 2,133,000 .

As of December 31, 2022, we had additional

financing commitments to our residential development lending ventures totaling $ 30.8 million of which $ 8.3 million is budgeted for

Concentrations .

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The 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 noncontrolling interest.

of investment in real estate partnership of $ 51,139,000 of which $ 13,965,000 was attributed to noncontrolling interest.

Provision for income taxes in the fourth quarter of

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net in the consolidated balance sheets.

The value of the in-place lease intangibles will be amortized to amortization expense over the

remaining lease terms.

The fair value assigned pertaining to the above market in-place leases values are amortized as a reduction to rental

revenue, and the below market in-place lease values are amortized as an increase to rental revenue over the remaining non-cancelable terms

of the respective leases.

The value of the in-place lease intangibles will be amortized over the remaining lease terms.

The fair value assigned pertaining to the above market in-place leases values are amortized as a reduction to rental revenue, and the

below market in-place lease values are amortized as an increase to rental revenue over the remaining non-cancelable terms of the respective

The Company reviews intangible assets for

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lease intangibles

Discontinued Operations .

On May 21, 2018, the Company completed the disposition

of 40 industrial warehouse properties and three additional land parcels to an affiliate of Blackstone Real Estate Partners VIII, L.P.

for $ 347.2 million .

One warehouse property valued at $ 11.7 million was excluded from the sale due to the tenant exercising its right of

first refusal to purchase the property.

On June 28, 2019, the Company completed the sale of the excluded property to the same buyer for

$ 11.7 million .

properties comprised substantially all the assets of our Asset Management segment and have been reclassified as discontinued

operations for all periods presented.

The Results of operations associated with discontinued operations for the year ended December 31,

2019 was as follows (in thousands):

Year Ended December 31,

Lease Revenues

Cost of operations:

Depreciation, depletion and amortization

Operating expenses

Property taxes

Management company indirect

Corporate expenses

Total cost of operations

Total operating profit

Interest expense

Gain on sale of buildings

Income before income taxes

Provision for (benefit from) income taxes

Income from discontinued operations

Contributions from partner .

On November 4, 2022 the Company sold a 20 %

ownership interest in tenancy-in-common (TIC) of Dock 79 and The Maren for $ 65.3 million to a new partner Steuart Investment Company

Net of the mortgage assumption of $ 36.0 million and the Company’s share of transfer taxes and other transactions costs

of $ 1.4 million the net contribution was $ 27.9 million .

Of this amount $ 9.3 million was distributed to MRP and $ 18.6 million to the

A reallocation of partners’ interest of $ 7.7 million was recorded to Capital in excess of par value for the

difference between the $ 18.6 million consideration received by the company and the net book value of the Company’s share of

Deferred income tax expense of $ 2.1 million was recorded to Capital in excess of par value on the Company’s

reallocation.

The Company continues to consolidate both properties because of continued control over major decisions for both

Subsequent Events .

Report of Management

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Opinion on the Financial Statements

We have audited the accompanying consolidated balance

sheets of FRP Holdings, Inc.

(the “Company”) as of December 31, 2021 and 2020, the related consolidated statements of income,

comprehensive income, shareholders’ equity, and cash flows for each of the years in the three-year period ended December 31, 2021,

and the related notes (collectively referred to as the “consolidated financial statements”).

In our opinion, the consolidated

financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2021 and 2020,

and the results of its operations and its cash flows for each of the years in the three-year period ended December 31, 2021, in conformity

with accounting principles generally accepted in the United States of America.

We have audited the accompanying consolidated

balance sheets of FRP Holdings, Inc.

(the “Company”) as of December 31, 2022 and 2021, and the related consolidated

statements of income, comprehensive income, shareholders’ equity, and cash flows for each of the years in the three-year

period ended December 31, 2022, and the related notes (collectively referred to as the “consolidated financial

statements”).

In our opinion, the consolidated financial statements present fairly, in all material respects, the financial

position of the Company as of December 31, 2022 and 2021, and the results of its operations and its cash flows for each of the years

in the three-year period ended December 31, 2022, in conformity with accounting principles generally accepted in the United States

Basis for Opinion

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Description of Matter

At December 31, 2021 the Company’s investments in real estate were

$506 million including unconsolidated real estate ventures of $145 million.

As explained in Note 1 to the consolidated financial statements,

the Company enters into real estate investments and performs an assessment as to which method of accounting is appropriate, whether the

proper accounting is to

whether to use the cost or equity method to account for an investment or whether to consolidate such investment.

Note 2 to the consolidated financial

statements provides a detail of unconsolidated real estate investments.

Application and auditing of the accounting

treatment of the Company’s real estate investments, including the process of evaluating the use of the cost or equity method of

accounting or the evaluation of criteria for consolidation based on the variable interest entity (VIE) model or a voting interest entity

(VOE) model, is complex and requires significant judgment.

This evaluation and analysis include the determination of which party, if any,

has power to direct the activities most significant to the economic performance of each real estate venture and whether the venture has

sufficient equity to finance its activities without additional subordinated support.

Factors considered by management in determining whether

the Company has the power to direct the activities include voting rights, involvement in day-to-day capital allocation and operating decisions

At December 31, 2022, the Company’s investments

in real estate were $518 million including unconsolidated real estate ventures of $141 million.

As explained in Note 1 to the consolidated

financial statements, the Company enters into real estate investments and performs an assessment as to which method of accounting is appropriate,

whether the proper accounting is to

determine whether to use the cost or equity method

to account for an investment or whether to consolidate such investment.

Note 2 to the consolidated financial statements provides a detail

of unconsolidated real estate investments.

Application and auditing of the accounting treatment

of the Company’s real estate investments, including the process of evaluating the use of the cost or equity method of accounting

or the evaluation of criteria for consolidation based on the variable interest entity (VIE) model or a voting interest entity (VOE) model,

is complex and requires significant judgment.

This evaluation and analysis include the determination of which party, if any, has power

to direct the activities most significant to the economic performance of each real estate venture and whether the venture has sufficient

equity to finance its activities without additional subordinated support.

Factors considered by management in determining whether the

Company has the power to direct the activities include voting rights, involvement in day-to-day capital allocation and operating decisions

and the extent of the Company’s involvement in the entity.

How We Addressed the Matter in Our Audit

We obtained an understanding, evaluated

the design, and tested the operating effectiveness of relevant controls over the Company’s qualitative analysis that determines whether

the Company has control over the venture, through influence, voting interest or through the presence of a variable interest in a real

estate venture that would require consolidation.

For all investments in real estate ventures,

our procedures include reading the operating agreements and other relevant documents and evaluating the structure and terms of the agreements

We obtained an understanding, evaluated the design

and tested the operating effectiveness of relevant controls over the Company’s qualitative analysis that determines whether the

Company has control over the venture, through influence, voting interest or through the presence of a variable interest in a real estate

venture that would require consolidation.

For all investments in real estate ventures, our

procedures include reading the operating agreements and other relevant documents and evaluating the structure and terms of the agreements

and reviewing management’s evaluation of control over the entity and the applicability of the variable interest model as compared

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financial interest that should be considered.

We take into consideration evidence obtained in other areas

of the audit, such as review of board minutes and status of the projects development to determine if any reconsideration of the findings

is necessary.

We take into consideration evidence obtained in other areas of the audit, such as review

of board minutes and status of the projects development to determine if any reconsideration of the findings is necessary.

Hancock Askew & Co., LLP

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Foley & Lardner

Shad III (2)(4)

Retired Owner, Bozard Ford Company

Surface (2)(3)(4)

Chief Executive Officer of Covis Services

Executive Chairman of Regency Centers Corporation

Thomas (2)(3)(4)

President of Baptist Medical Center Jacksonville

Walton (2)(3)(4)

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Annual Meeting

Shareholders are cordially invited to attend

the 2022 annual meeting of shareholders on Wednesday, May 11, 2022 at 11:00 a.m., Eastern Daylight Time, at The River Club, Ortega Room,

on the 34th floor of the Wells Fargo Building located at One Independent Drive, Jacksonville, Florida 32202.

Shareholders are cordially invited to

attend the 2023 annual meeting of shareholders on Wednesday, May 10, 2023 at 11:00 a.m., Eastern Daylight Time.

meeting will be held virtually.

To participate in the annual meeting, go to www.frpdev.com, click the Investors tab, and then click

the link titled “2023 Annual Shareholders Meeting”.

Transfer Agent

25 unchanged sentences

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-K

Item 9A. Controls and Procedures