Item 1. Business
Item 1. BUSINESS.
FRP Holdings, Inc., a Florida corporation (the “Company”)
was incorporated on April 22, 2014 in connection with a corporate reorganization that preceded the Spin-off of Patriot Transportation
Holding, Inc. The Company’s predecessor issuer was formed on July 20, 1998. The business of the Company is conducted through our
wholly-owned subsidiaries FRP Development Corp., a Maryland corporation, and Florida Rock Properties, Inc., a Florida corporation, and
the various subsidiaries and joint ventures of each.
Our Business. The Company is a holding company
engaged in various real estate businesses. Our business segments are: (i) leasing and management of industrial and commercial properties
(the “Industrial and Commercial Segment” previously named “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 multifamily, industrial and commercial, or residential either alone or through joint ventures
(the “Development Segment”), (iv) ownership, leasing and management of apartment buildings through joint ventures (the “Multifamily
Segment” previously named “Stabilized Joint Venture Segment”).
The Industrial and Commercial Segment owns, leases
and manages in-service commercial properties wholly owned by the Company or through joint ventures. Currently this includes eight 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
totaling approximately 16,650 acres currently under lease for mining rents or royalties and an additional 4,280 acres through our Brooksville
joint venture with Vulcan Materials. Other than one location in Virginia, all of our mining properties are located in Florida and
Georgia.
Our Development Segment owns and continuously monitors
the highest and best use of parcels of land that are in various stages of development. The overall strategy for this segment is to
convert all of our non-income producing property into income-producing property through (i) an orderly process of constructing new apartment,
retail, warehouse, and office buildings to be operated by the Company or (ii) a sale to, or joint venture with, third parties. Additionally,
our Development Segment will form joint ventures on new developments of land not previously owned by the Company.
The Multifamily Segment includes joint ventures which
own, lease and manage buildings that have met our initial lease-up criteria. We intend to transfer additional joint ventures from our
Development Segment into this segment as they reach stabilization. Stabilization occurs when a minimum occupancy threshold has been achieved
for a certain period of time.
Competition. As a developer, we compete with
numerous developers, owners and operators of real estate, many of whom own properties similar to ours in the same submarkets in which
our properties are located. Price, location, rental space availability, flexibility of design and property management services are the
major factors that affect competition.
Customers. In the Mining Royalty Lands Segment,
we have a total of five tenants currently leasing our mining locations, and Vulcan Materials Company (“Vulcan” or “Vulcan
Materials”) accounted for 24% of the Company’s consolidated revenues in 2023. An event affecting Vulcan’s ability to
perform under its lease agreements could materially impact the Company’s results.
Sales and Marketing. We use national brokerage
firms to assist us in marketing our vacant properties. Our hands-on in-house management team focuses on tenant satisfaction during the
life of the lease which we have found to be very beneficial with respect to our tenant renewal success rate over the years.
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Financial Information. Financial information
is discussed by industry segment in Note 10 to the consolidated financial statements included in the accompanying 2023 Annual Report to
Shareholders, which is incorporated herein by reference.
Environmental Matters. The Company incurs costs
from time to time to investigate and remediate environmental contamination on its real estate, in particular, in connection with our Development
Segment. The Company's mining leases contain provisions under which the lessee is responsible for environmental liabilities and reclamation
of mining sites at least to the extent required by law.
Human Capital. The Company employed 15 people
and was provided services by three executive officers under a related party agreement at December 31, 2023. Our small but dedicated workforce
has extraordinarily low turnover, and the average tenure of our employee is 12.3 years. We are committed to an inclusive and diverse culture
and do not tolerate any sort of discrimination. We maintain a whistleblower hotline allowing employees to report complaints on an anonymous
basis.
Company Website. The Company’s website
may be accessed at www.frpdev.com. All of our filings with the Securities and Exchange Commission are accessible through our website promptly
after filing. This includes annual reports on Form 10-K, proxy statements, quarterly reports on Form 10-Q, current reports filed or furnished
on Form 8-K and all related amendments.