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

    المصدر: Nasdaq GlobeNewswire / 07 نوفمبر 2022 12:25:16   America/New_York

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

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