FRP Holdings, Inc. (NASDAQ: FRPH) Announces Results for the Third Quarter and Nine Months Ended September 30, 2022

FRP Holdings, Inc.

JACKSONVILLE, Fla., Nov. 07, 2022 (GLOBE NEWSWIRE) -- FRP Holdings, Inc. (NASDAQ-FRPH) –

Third Quarter Operational Highlights

• 41.6% increase in Pro-rata NOI ($6.24 million vs $4.41 million) over third quarter 2021

• 6.09% increase on renewals at Dock 79

• 8.06% increase on renewals at The Maren

• 9.85% increase in mining royalty revenue over third quarter 2021

• 51.1% increase in Asset Management Revenue versus same period last year

• Riverside achieved stabilization this quarter and is now part of our Stabilized JV segment. At quarter end the JV was 95% leased and 92% occupied.

• Lease-up now underway at The Verge
  

Third Quarter Consolidated Results of Operations

Net income for the third quarter of 2022 was $480,000 or $.05 per share versus $352,000 or $.04 per share in the same period last year. The third quarter of 2022 was impacted by the following items:

• The quarter includes $72,000 amortization expense compared to $1,373,000 in the same quarter last year of the $4,750,000 fair value of The Maren’s leases-in-place established when we booked this asset as part of the gain on remeasurement upon consolidation of this Joint Venture.

• Net investment income increased $245,000 due to a $42,000 increase in preferred interest from our joint ventures and a $338,000 increase for interest earned on cash equivalents, mitigated by a $135,000 decrease in interest from our lending ventures.

• Interest expense increased $324,000 compared to the same quarter last year due to capitalizing less interest due to the lower amount of in-house and joint venture projects under development.

• Equity in loss of Joint Ventures increased $634,000 primarily due to increased depreciation and amortization at our joint ventures due to buildings placed in service.

• Professional fees increased $232,000 over the same period last year.
  

Third Quarter Segment Operating Results

Asset Management Segment:

Total revenues in this segment were $935,000, up $316,000 or 51.1%, over the same period last year. Operating profit was $265,000, up $276,000 from an operating loss of $(11,000) in the same quarter last year. Operating profit is up primarily because Cranberry Run is now 100% leased and occupied compared to 96.6% leased and 68.6% occupied at the end of the same quarter last year. Revenues are up because of Cranberry Run as well as the addition of our two most recent spec buildings at Hollander Business Park which were under construction during the same period last year.

Mining Royalty Lands Segment:

Total revenues in this segment were $2,471,000 versus $2,249,000 in the same period last year. Total operating profit in this segment was $2,000,000, an increase of $32,000 versus $1,968,000 in the same period last year. This increase is primarily the result of the additional royalties from the acquisition in Astatula, FL which we completed at the beginning of the second quarter offset by a prior year adjustment made in the current year for Newberry and a Manassas annual volumetric adjustment. Royalties were negatively impacted by a $300,000 adjustment from overpayment on royalties between 2019-2021 for the property in Newberry, FL leased by Argos for the manufacture of cement products.

Development Segment:

With respect to ongoing projects:

• We are the principal capital source of a residential development venture in Prince George’s County, Maryland known as “Amber Ridge.” Of the $18.5 million in committed capital to the project, $16.9 million in principal draws have taken place through quarter end. Through the end of the first nine months of 2022, 124 of the 187 units have been sold, and we have received $15.5 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 96.10% leased and 94.81% occupied, The Chase 1B was 80.75% leased and 83.85% occupied, and The Chase 1A was 83.72% leased and 81.98% occupied. In total, at quarter end, Bryant Street’s 487 residential units were 86.7% leased and 86.7% 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 seven of the eleven floors. We expect the final certificate of occupancy in the fourth quarter. 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 is currently under construction. This project is 98.62% complete and we expect to complete construction and begin leasing in fourth quarter of 2022.

• In September, the Company closed on the purchase of 170 acres in the North East, Maryland for $6.5 million. We are currently pursuing entitlements to begin construction on a 900,000 square-foot warehouse.

• In August, we invested $3.6 million for a minority 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.

Stabilized Joint Venture Segment:

Total revenues in this segment were $5,476,000, an increase of $272,000 versus $5,204,000 in the same period last year. The Maren’s revenue was $2,608,000 and Dock 79 revenues increased $93,000. Total operating profit in this segment was $906,000 an increase of $1,401,000 versus an operating loss of $(495,000) in the same period last year. Pro-rata net operating income this quarter for this segment was $2,702,000, up $641,000 or 31.1% compared to the same quarter last year.

At the end of September, The Maren was 93.56% leased and 96.21% occupied. Average residential occupancy for the quarter was 96.85%, and 65.15% of expiring leases renewed with an average rent increase on renewals of 8.06%. The Maren is a joint venture between the Company and MRP, in which FRP Holdings, Inc. is the majority partner with 70.41% ownership.

Dock 79’s average residential occupancy for the quarter was 94.93%, and at the end of the quarter, Dock 79’s residential units were 94.43% leased and 96.72% occupied. This quarter, 53.97% of expiring leases renewed with an average rent increase on renewals of 6.09%. Dock 79 is a joint venture between the Company and MRP, in which FRP Holdings, Inc. is the majority partner with 66% ownership.

This 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 is currently 95% leased with 92% occupancy. Riverside is a joint venture with Woodfield Development and the Company owns 40% of the venture.

Third quarter distributions from our CS1031 Hickory Creek DST investment were $110,000.

Nine Months Operational Highlights

• 40.0% increase in asset management revenue versus first nine months of last year

• Highest nine-month total of mining royalties revenue in segment’s history, 8.07% increase in revenue over first nine months of 2021. $10.05 million in revenue over last twelve months.

• 32.10% increase in our pro rata NOI ($17.97 million vs $13.60 million) compared to first nine months last year
  

Nine Months Consolidated Results of Operations

Net income attributable to the Company for the first nine months of 2022 was $1,809,000 or $.19 per share versus $28,807,000 or $3.07 per share in the same period last year. The first nine months of 2022 was impacted by the following items:

• The period includes $540,000 amortization expense compared to $3,241,000 in the same period last year of the $4,750,000 fair value of The Maren’s leases-in-place established when we booked this asset as part of the gain on remeasurement upon consolidation of this Joint Venture.

• The period includes $874,000 gain on sales of excess property at Brooksville.

• Net investment income decreased $160,000 due to a $103,000 decrease in preferred interest from our joint ventures and a $208,000 decrease in interest from our lending ventures, offset by a $151,000 increase for interest earned on cash equivalents.

• Equity in loss of Joint Ventures increased $1,251,000 primarily due to increased depreciation and amortization at our joint ventures due to buildings placed in service.

Net income for the first nine months of 2021 included a gain of $51.1 million on the remeasurement of investment in The Maren real estate partnership, which is included in Income before income taxes. This gain on remeasurement was mitigated by a $10.1 million provision for taxes and $14.0 million attributable to noncontrolling interest.

Nine Months Segment Operating Results

Asset Management Segment:

Total revenues in this segment were $2,686,000, up $767,000 or 40.0%, over the same period last year. Operating profit was $607,000, up $761,000 from an operating loss of $(154,000) in the same period last year.

Mining Royalty Lands Segment:

Total revenues in this segment were $7,779,000 versus $7,198,000 in the same period last year. Total operating profit in this segment was $6,439,000, an increase of $166,000 versus $6,273,000 in the same period last year. Royalties were negatively impacted by a $300,000 adjustment from overpayment on royalties between 2019-2021 for the property in Newberry, FL leased by Argos for the manufacture of cement products.

Stabilized Joint Venture Segment:

In March 2021, we reached stabilization on Phase II (The Maren) of the development known as RiverFront on the Anacostia in Washington, D.C. As such, as of March 31, 2021, the Company consolidated the assets (at current fair value based on appraisal), liabilities and operating results of the joint venture. Up through the first quarter of the prior year, accounting for The Maren was reflected in Equity in loss of joint ventures on the Consolidated Statements of Income. Starting April 1, 2021, all the revenue and expenses are accounted for in the same manner as Dock 79 in the stabilized joint venture segment.

Total revenues in this segment were $15,961,000, an increase of $3,426,000 versus $12,535,000 in the same period last year. The Maren’s revenue was $7,474,000 and Dock 79 revenues increased $543,000. Total operating profit in this segment was $2,191,000, an increase of $3,827,000 versus an operating loss of $(1,636,000) in the same period last year. Pro-rata net operating income for this segment was $7,241,000, up $1,286,000 or 21.60% compared to the same period last year. All of these increases over the first nine months last year are primarily due to the Maren’s consolidation into this segment in March 31, 2021.

The Maren’s average residential occupancy for the first nine months of 2022 was 95.78%, and 61.31% of expiring leases renewed with an average rent increase on renewals of 7.23%. The Maren is a joint venture between the Company and MRP, in which FRP Holdings, Inc. is the majority partner with 70.41% ownership.

Dock 79’s average residential occupancy for the first nine months of 2022 was 95.66%. Through the first nine months of the year, 64.83% of expiring leases renewed with a 5.79% increase on renewals. Dock 79 is a joint venture between the Company and MRP, in which FRP Holdings, Inc. is the majority partner with 66% ownership.

This 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 95% leased with 92% occupancy at quarter end. Riverside is a joint venture with Woodfield Development and the Company owns 40% of the venture.

Distributions from our CS1031 Hickory Creek DST investment were $281,000 for the first nine months of the year.

Impact of the COVID-19 Pandemic.

We have continued operations throughout the pandemic and have made every effort to act in accordance with national, state, and local regulations and guidelines. During 2020, Dock 79 and The Maren most directly suffered the impacts to our business from the pandemic due to our retail tenants being unable to operate at capacity, the lack of attendance at the Washington Nationals baseball park and the rent freeze imposed by the District. In 2021, the Delta and Omicron variants of the virus impacted our businesses, but because of the vaccine and efforts to reopen the economy, while still affected, they were not impacted to the extent that they were in 2020. It is possible that this version of the virus and its succeeding variants may impact our ability to lease retail spaces in Washington, D.C. and Greenville. We expect our business to be affected by the pandemic for as long as government intervention and regulation is required to combat the threat.

Summary and Outlook

Royalty revenue for the quarter was up 9.85% versus the same period last year and revenue for the first nine months increased 8.07%. This is the highest nine-month revenue in the segment’s history and the first time we have achieved $10 million in revenue in the segment over any twelve-month period. Despite a one-time, $300,000 negative adjustment for overpayment of royalties between 2019-2021 at our Newberry Cement property, we were able to achieve these increases primarily because of the additional royalties from our new mining royalty property in Astatula, FL.

This is just the second full quarter where we had the ability to raise rents on renewals in DC. This quarter, 65.15% of expiring leases at Maren renewed with an average increase on renewals of 8.06%, and 53.97% of expiring leases renewed at Dock 79 with an average increase of 6.09%. When we could not renew an existing residential lease, we saw a year-to-date increase in rent on those “trade outs” of 9.90% at the Maren and 11.50% at Dock 79. As noted previously, this quarter we added our Riverside JV to this segment when it stabilized in September. Subsequent to the end of the quarter, our Hickory Creek DST was sold and the Company received $8.83 million from the sale on an investment of $6 million. We are currently exploring opportunities for reinvesting these proceeds.

The Asset Management segment continues its strong performance through this quarter. All of our industrial assets are 100% leased, and our other two properties (our home office in Maryland and Vulcan’s former Jacksonville office) remain essentially unchanged and fully leased). This segment’s revenue for both this quarter and the first nine months are up 51% and 40% respectively due to the addition of and increased occupancy at our two most recent spec buildings at Hollander. We anticipate shell completion of our final building at Hollander by the end of 2022 and occupancy before the end of the first quarter of next year. This 101,750 square foot warehouse is a build-to-suit with a 10-year lease, which will positively impact revenue, operating profit, and NOI for some time.

This quarter saw the stabilization of Riverside, lease-up begin at The Verge, and meaningful growth across all segments in terms of revenue and NOI. Looking ahead, we have to achieve stabilization and pursue permanent financing for Bryant Street as well as complete construction on and begin lease-up at .408 Jackson.   Inflation and rising interest rates are real but their long-term effect on our assets is still unclear. The beauty of our balance sheet is that it allows us to play offense and defense and the fact of the matter is, we will probably have to do a little of both. Fortunately, we can.

Conference Call

The Company will host a conference call on Wednesday, November 9, 2022 at 3:00 p.m. (EDT).  Analysts, stockholders and other interested parties may access the teleconference live by calling 1-800-274-8461 (passcode 56787) within the United States. International callers may dial 1-203-518-9783 (passcode 56787). Audio replay will be available until November 22, 2022 by dialing 1-800-839-3740 (passcode 17717) within the United States. International callers may dial 1-402-220-7239 (passcode 17717). An audio replay will also be available on the Company’s investor relations page (https://www.frpdev.com/investor-relations/) following the call. The Company will also be posting a brief slideshow with financial highlights from the third quarter and year-to-date on our website on Monday, November 7. This will be available on the Company’s investor relations page under Investor Presentations. For information on our commitment to best practices in Environmental, Social, and Governance matters, please visit the ESG section of our website at https://www.frpdev.com/investor-relations/esg-report/.

Investors are cautioned that any statements in this press release which relate to the future are, by their nature, subject to risks and uncertainties that could cause actual results and events to differ materially from those indicated in such forward-looking statements. These include, but are not limited to: the impact of the COVID-19 Pandemic on our operations and financial results; the possibility that we may be unable to find appropriate investment opportunities; levels of construction activity in the markets served by our mining properties; demand for flexible warehouse/office facilities in the Baltimore-Washington-Northern Virginia area; demand for apartments in Washington D.C., Richmond, Virginia, and Greenville, South Carolina; our ability to obtain zoning and entitlements necessary for property development; the impact of lending and capital market conditions on our liquidity; our ability to finance projects or repay our debt; general real estate investment and development risks; vacancies in our properties; risks associated with developing and managing properties in partnership with others; competition; our ability to renew leases or re-lease spaces as leases expire; illiquidity of real estate investments; bankruptcy or defaults of tenants; the impact of restrictions imposed by our credit facility; the level and volatility of interest rates; environmental liabilities; inflation risks; cybersecurity risks; as well as other risks listed from time to time in our SEC filings; including but not limited to; our annual and quarterly reports. We have no obligation to revise or update any forward-looking statements, other than as imposed by law, as a result of future events or new information. Readers are cautioned not to place undue reliance on such forward-looking statements.

FRP Holdings, Inc. is a holding company engaged in the real estate business, namely (i) leasing and management of commercial properties owned by The Company, (ii) leasing and management of mining royalty land owned by The Company, (iii) real property acquisition, entitlement, development and construction primarily for apartment, retail, warehouse, and office, (iv) leasing and management of residential apartment buildings.

FRP HOLDINGS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
(In thousands except per share amounts)
(Unaudited)

	THREE MONTHS ENDED													NINE MONTHS ENDED
	SEPTEMBER 30,													SEPTEMBER 30,
	2022					2021								2022								2021
Revenues:
Lease revenue	$	6,823						6,224								19,850								15,623
Mining lands lease revenue		2,471						2,249								7,779								7,198
Total Revenues		9,294						8,473								27,629								22,821
Cost of operations:
Depreciation, depletion and amortization		2,744						3,796								8,510								9,627
Operating expenses		1,967						1,557								5,316								3,792
Property taxes		1,034						986								3,103								2,764
Management company indirect		966						745								2,545								2,137
Corporate expenses		734						657								2,876								2,486
Total cost of operations		7,445						7,741								22,350								20,806
Total operating profit		1,849						732								5,279								2,015
Net investment income		1,188						943								3,206								3,366
Interest expense		(738	)					(414		)						(2,215		)						(1,785		)
Equity in loss of joint ventures		(1,878	)					(1,244		)						(5,248		)						(3,997		)
Gain on remeasurement of investment in real estate partnership		—						—								—								51,139
Gain on sale of real estate		141						—								874								805
Income before income taxes		562						17								1,896								51,543
Provision for income taxes		178						130								526								10,500
Net income (loss)		384						(113		)						1,370								41,043
Gain (loss) attributable to noncontrolling interest		(96	)					(465		)						(439		)						12,236
Net income attributable to the Company	$	480						352								1,809								28,807
Earnings per common share:
Net income attributable to the Company-
Basic	$	0.05						0.04								0.19								3.08
Diluted	$	0.05						0.04								0.19								3.07
Number of shares (in thousands) used in computing:
-basic earnings per common share		9,397						9,363								9,382								9,352
-diluted earnings per common share		9,433						9,399								9,423								9,390

FRP HOLDINGS, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(Unaudited) (In thousands, except share data)

	September 30, 2022				December 31, 2021
Assets:
Real estate investments at cost:
Land	$	141,564				123,397
Buildings and improvements		268,132				265,278
Projects under construction		13,295				8,668
Total investments in properties		422,991				397,343
Less accumulated depreciation and depletion		54,523				46,678
Net investments in properties		368,468				350,665
Real estate held for investment, at cost		10,079				9,722
Investments in joint ventures		147,703				145,443
Net real estate investments		526,250				505,830
Cash and cash equivalents		144,783				161,521
Cash held in escrow		582				752
Accounts receivable, net		1,530				793
Investments available for sale at fair value		—				4,317
Federal and state income taxes receivable		—				1,103
Unrealized rents		830				620
Deferred costs		2,469				2,726
Other assets		546				528
Total assets	$	676,990				678,190
Liabilities:
Secured notes payable	$	178,520				178,409
Accounts payable and accrued liabilities		4,720				6,137
Other liabilities		1,886				1,886
Federal and state income taxes payable		456				—
Deferred revenue		346				369
Deferred income taxes		64,180				64,047
Deferred compensation		1,310				1,302
Tenant security deposits		887				790
Total liabilities		252,305				252,940
Commitments and contingencies
Equity:
Common stock, $.10 par value 25,000,000 shares authorized, 9,455,096 and 9,411,028 shares issued and outstanding, respectively		945				941
Capital in excess of par value		59,148				57,617
Retained earnings		339,561				337,752
Accumulated other comprehensive income (loss), net		(1,420	)			113
Total shareholders’ equity		398,234				396,423
Noncontrolling interest MRP		26,451				28,827
Total equity		424,685				425,250
Total liabilities and equity	$	676,990				678,190

Asset Management Segment:

	Three months ended September 30
(dollars in thousands)	2022				%				2021				%				Change				%
Lease revenue	$	935				100.0	%			619				100.0	%			316				51.1	%
Depreciation, depletion and amortization		219				23.4	%			137				22.1	%			82				59.9	%
Operating expenses		162				17.3	%			76				12.3	%			86				113.2	%
Property taxes		53				5.7	%			37				6.0	%			16				43.2	%
Management company indirect		109				11.7	%			200				32.3	%			(91	)			-45.5	%
Corporate expense		127				13.6	%			180				29.1	%			(53	)			-29.4	%
Cost of operations		670				71.7	%			630				101.8	%			40				6.3	%
Operating profit (loss)	$	265				28.3	%			(11	)			-1.8	%			276				-2509.1	%

Mining Royalty Lands Segment:

	Three months ended September 30
(dollars in thousands)	2022				%				2021				%				Change				%
Mining lands lease revenue	$	2,471				100.0	%			2,249				100.0	%			222				9.9	%
Depreciation, depletion and amortization		172				7.0	%			38				1.7	%			134				352.6	%
Operating expenses		18				0.7	%			11				0.5	%			7				63.6	%
Property taxes		69				2.8	%			68				3.0	%			1				1.5	%
Management company indirect		129				5.2	%			95				4.2	%			34				35.8	%
Corporate expense		83				3.4	%			69				3.1	%			14				20.3	%
Cost of operations		471				19.1	%			281				12.5	%			190				67.6	%
Operating profit	$	2,000				80.9	%			1,968				87.5	%			32				1.6	%

Development Segment:

	Three months ended September 30
(dollars in thousands)	2022				2021				Change
Lease revenue	$	412				401				11
Depreciation, depletion and amortization		47				53				(6	)
Operating expenses		250				62				188
Property taxes		355				355				—
Management company indirect		625				335				290
Corporate expense		457				326				131
Cost of operations		1,734				1,131				603
Operating loss	$	(1,322	)			(730	)			(592	)

Stabilized Joint Venture Segment:

	Three months ended September 30
(dollars in thousands)	2022				%				2021				%				Change				%
Lease revenue	$	5,476				100.0	%			5,204				100.0	%			272				5.2	%
Depreciation, depletion and amortization		2,306				42.1	%			3,568				68.6	%			(1,262	)			-35.4	%
Operating expenses		1,537				28.1	%			1,408				27.0	%			129				9.2	%
Property taxes		557				10.2	%			526				10.1	%			31				5.9	%
Management company indirect		103				1.9	%			115				2.2	%			(12	)			-10.4	%
Corporate expense		67				1.2	%			82				1.6	%			(15	)			-18.3	%
Cost of operations		4,570				83.5	%			5,699				109.5	%			(1,129	)			-19.8	%
Operating profit (loss)	$	906				16.5	%			(495	)			-9.5	%			1,401				-283.0	%

Asset Management Segment:

	Nine months ended September 30
(dollars in thousands)	2022				%				2021				%				Change				%
Lease revenue	$	2,686				100.0	%			1,919				100.0	%			767				40.0	%
Depreciation, depletion and amortization		683				25.4	%			408				21.3	%			275				67.4	%
Operating expenses		441				16.4	%			289				15.0	%			152				52.6	%
Property taxes		158				5.9	%			117				6.1	%			41				35.0	%
Management company indirect		301				11.2	%			577				30.1	%			(276	)			-47.8	%
Corporate expense		496				18.5	%			682				35.5	%			(186	)			-27.3	%
Cost of operations		2,079				77.4	%			2,073				108.0	%			6				0.3	%
Operating profit (loss)	$	607				22.6	%			(154	)			-8.0	%			761				-494.2	%

Mining Royalty Lands Segment:

	Nine months ended September 30
(dollars in thousands)	2022				%				2021				%				Change				%
Mining lands lease revenue	$	7,779				100.0	%			7,198				100.0	%			581				8.1	%
Depreciation, depletion and amortization		416				5.4	%			161				2.2	%			255				158.4	%
Operating expenses		50				0.6	%			34				0.5	%			16				47.1	%
Property taxes		203				2.6	%			199				2.8	%			4				2.0	%
Management company indirect		346				4.4	%			273				3.8	%			73				26.7	%
Corporate expense		325				4.2	%			258				3.6	%			67				26.0	%
Cost of operations		1,340				17.2	%			925				12.9	%			415				44.9	%
Operating profit	$	6,439				82.8	%			6,273				87.1	%			166				2.6	%

Development Segment:

	Nine months ended September 30
(dollars in thousands)	2022				2021				Change
Lease revenue	$	1,203				1,169				34
Depreciation, depletion and amortization		139				159				(20	)
Operating expenses		541				133				408
Property taxes		1,066				1,082				(16	)
Management company indirect		1,621				996				625
Corporate expense		1,794				1,267				527
Cost of operations		5,161				3,637				1,524
Operating loss	$	(3,958	)			(2,468	)			(1,490	)

Stabilized Joint Venture Segment:

	Nine months ended September 30
(dollars in thousands)	2022				%				2021				%				Change				%
Lease revenue	$	15,961				100.0	%			12,535				100.0	%			3,426				27.3	%
Depreciation, depletion and amortization		7,272				45.6	%			8,899				71.0	%			(1,627	)			-18.3	%
Operating expenses		4,284				26.9	%			3,336				26.6	%			948				28.4	%
Property taxes		1,676				10.5	%			1,366				11.0	%			310				22.7	%
Management company indirect		277				1.7	%			291				2.3	%			(14	)			-4.8	%
Corporate expense		261				1.6	%			279				2.2	%			(18	)			-6.5	%
Cost of operations		13,770				86.3	%			14,171				113.1	%			(401	)			-2.8	%
Operating profit (loss)	$	2,191				13.7	%			(1,636	)			-13.1	%			3,827				-233.9	%

Non-GAAP Financial Measures.

To supplement the financial results presented in accordance with GAAP, FRP presents certain non-GAAP financial measures within the meaning of Regulation G promulgated by the Securities and Exchange Commission. 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 analyses, 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 analysts 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
Nine months ended 09/30/22 (in thousands)
									Stabilized
	Asset								Joint				Mining				Unallocated				FRP
	Management				Development				Venture				Royalties				Corporate				Holdings
	Segment				Segment				Segment				Segment				Expenses				Totals
Net income (loss)	$	443				(4,953	)			(166	)			5,311				735				1,370
Income tax allocation		164				(1,837	)			101				1,969				129				526
Income (loss) before income taxes		607				(6,790	)			(65	)			7,280				864				1,896
Less:
Unrealized rents		223				—				(62	)			153				—				314
Gain on sale of real estate		—				—				—				874				—				874
Interest income		—				2,311				—				—				895				3,206
Plus:
Equity in loss of joint ventures		—				5,143				72				33				—				5,248
Interest expense		—				—				2,184				—				31				2,215
Depreciation/amortization		683				139				7,272				416				—				8,510
Management company indirect		301				1,621				277				346				—				2,545
Allocated Corporate expenses		496				1,794				261				325				—				2,876
Net operating income (loss)		1,864				(404	)			10,063				7,373				—				18,896
NOI of noncontrolling interest		—				—				(3,212	)			—				—				(3,212	)
Pro-rata NOI from unconsolidated joint ventures		—				1,896				390				—				—				2,286
Pro-rata net operating income	$	1,864				1,492				7,241				7,373				—				17,970

Pro-Rata Net Operating Income Reconciliation
Nine months ended 09/30/21 (in thousands)
									Stabilized
	Asset								Joint				Mining				Unallocated				FRP
	Management				Development				Venture				Royalties				Corporate				Holdings
	Segment				Segment				Segment				Segment				Expenses				Totals
Net income (loss)	$	(130	)			(2,521	)			37,874				5,159				661				41,043
Income tax allocation		(50	)			(933	)			9,506				1,913				64				10,500
Income (loss) before income taxes		(180	)			(3,454	)			47,380				7,072				725				51,543
Less:
Gain on remeasurement of real estate investment		—				—				51,139				—				—				51,139
Gain on investment land sold		—				—				—				831				—				831
Unrealized rents		49				—				149				166				—				364
Interest income		—				2,608				—				—				758				3,366
Plus:
Loss on sale of land		26				—				—				—				—				26
Equity in loss of joint ventures		—				3,594				371				32				—				3,997
Interest expense		—				—				1,752				—				33				1,785
Depreciation/amortization		408				159				8,899				161				—				9,627
Management company indirect		577				996				291				273				—				2,137
Allocated Corporate expenses		682				1,267				279				258				—				2,486
Net operating income (loss)		1,464				(46	)			7,684				6,799				—				15,901
NOI of noncontrolling interest		—				—				(2,638	)			—				—				(2,638	)
Pro-rata NOI from unconsolidated joint ventures		—				(569	)			909				—				—				340
Pro-rata net operating income	$	1,464				(615	)			5,955				6,799				—				13,603

CONTACT: Contact: John D. Baker III Chief Financial Officer 904/858-9100