FRP Holdings, Inc. (NASDAQ: FRPH) Announces Results for the Third Quarter and Nine Months Ended September 30, 2023

JACKSONVILLE, Fla., Nov. 08, 2023 (GLOBE NEWSWIRE) -- FRP Holdings, Inc. (NASDAQ-FRPH) –

Third Quarter Operational Highlights (compared to the same quarter last year)

• 29.5% increase in pro-rata NOI ($8.09 million vs $6.24 million)
• Mining royalty revenue increased 24.7%; 19.2% increase in royalties per ton
• 54.2% increase in Asset Management revenue; 58.2% increase in Asset Management NOI
  
  

Third Quarter Consolidated Results of Operations

Net income for the third quarter of 2023 was $1,259,000 or $.13 per share versus $480,000 or $.05 per share in the same period last year. The third quarter of 2023 was impacted by the following items:

• Operating profit increased $1,047,000 compared to the same quarter last year due to improved revenues in all four segments.
• Interest income increased $1,512,000 due primarily to an increase in interest earned on cash equivalents ($1,118,000) and increased income from our lending ventures ($349,000).
• Interest expense increased $378,000 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 quarter compared to last year.
• Equity in loss of Joint Ventures increased $1,035,000 primarily due to increased losses during lease up at The Verge ($856,000).

Third Quarter Segment Operating Results

Asset Management Segment:

Total revenues in this segment were $1,442,000, up $507,000 or 54.2%, over the same period last year. Operating profit was $520,000, up $255,000 from $265,000 in the same quarter last year. Revenues and operating profit are up because of full occupancy at 1841 62^nd Street (compared to 22.7% same period last year) and the addition of 1941 62^nd Street to this segment in March 2023. We now have nine buildings in service at three different locations totaling 515,077 square feet of industrial and 33,708 square feet of office. At quarter end, we were 95.6% leased and 95.6% occupied. Net operating income in this segment was $1,096,000, up $403,000 or 58.2% compared to the same quarter last year.

Mining Royalty Lands Segment:

Total revenues in this segment were $3,082,000 versus $2,471,000 in the same period last year. Total operating profit in this segment was $2,509,000, an increase of $509,000 versus $2,000,000 in the same period last year. This increase is the result of increases in revenue at nearly every active location. Net Operating Income this quarter for this segment was $2,837,000, up $501,000 or 21.4% compared to the same quarter last year.

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 of committed capital to the project, $17.3 million in principal draws have taken place through quarter end. Through the end of September 30, 2023, 175 of the 187 units have been sold, and we have received 19.6 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 three apartment buildings with ground floor retail and one commercial building which is fully leased. At quarter end, Bryant Street's 487 residential units were 94.5% leased and 94.5% occupied. Its commercial space was 95.9% leased and 79.1% occupied at quarter end.
• Lease-up is underway at The Verge, and at quarter end, the building was 89.5% leased and 74.1% occupied inclusive of 25 units licensed to Placemaker Management for a short-term corporate rental program. Retail at this location is 45.2% 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. Leasing began in the fourth quarter of 2022 with residential units 93.4% leased and 86.8% occupied at quarter end. Retail at this location is 100% leased and currently under construction and expected to open this winter. 
• Windlass Run, our suburban office and retail joint venture with St. John Properties, Inc. signed a new office lease for 2,752 square feet bringing the office portion of the project to 82.1% leased and 78.3% occupied.  Additional retail space at this site is 38.2% leased and 22.9% occupied.
• This past quarter we broke ground on a new speculative warehouse project in Aberdeen, Maryland on Chelsea Road. This Class A, 259,200 square foot building due to be complete in the 3^rd quarter of 2024.

Stabilized Joint Venture Segment:

Total revenues in this segment were $5,633,000, an increase of $157,000 versus $5,476,000 in the same period last year. The Maren's revenue was $2,670,000, an increase of 2.4% and Dock 79 revenues increased $95,000 to $2,963,000 or 3.3%. Total operating profit in this segment was $840,000, a decrease of $66,000 versus $906,000 in the same period last year. During the quarter we experienced water damage to an elevator that resulted in a $100,000 insurance deductible expense. Pro-rata net operating income this quarter for this segment was $2,038,000, down $665,000 or 24.6% compared to the same quarter last year because of the sale of our 20% Tenancy-In-Common (TIC) interest in both properties to Steuart Investment Company (SIC), mitigated by $231,000 in pro-rata NOI from our share of the Riverside joint venture in Greenville, SC.

At the end of September, The Maren was 93.18% leased and 93.94% occupied. Average residential occupancy for the quarter was 95.57%, and 59.70% of expiring leases renewed with an average rent increase on renewals of 3.18%. 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 the quarter was 95.08%, and at the end of the quarter, Dock 79's residential units were 93.44% leased and 95.74% occupied. This quarter, 71.43% of expiring leases renewed with an average rent increase on renewals of 2.30%. 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.

During the third quarter of 2022, we achieved stabilization at our Riverside Joint Venture in Greenville, South Carolina. At quarter end, the building was 94.5% leased with 91.5% occupancy. Average occupancy for the quarter was 92.92% with 52.83% of expiring leases renewing with an average rental increase of 8.55%. Riverside is a joint venture with Woodfield Development and the Company owns 40% of the venture.

Nine Months Operational Highlights (compared to the same period last year)

• 26.2% increase in pro-rata NOI ($22.69 million vs $17.97 million)
• Mining Royalties increased 23.8%; 13% increase in royalties per ton
• 46.4% increase in Asset Management revenue; 46.2% increase in Asset Management NOI
  
  

Nine Months Consolidated Results of Operations

Net income for the first nine months of 2023 was $2,422,000 or $.26 per share versus $1,809,000 or $.19 per share in the same period last year. The first nine months of 2023 was impacted by the following items:

• Operating profit increased $3,238,000 compared to the same period last year due to improved revenues and profits in all four segments.
• Management company indirect increased $393,000 due to merit increases and new hires along with recruiting costs.
• Interest income increased $5,001,000 due primarily to an increase in interest earned on cash equivalents ($3,637,000) and increased income from our lending ventures ($1,228,000).
• Interest expense increased $1,036,000 compared to the same period last year due to less capitalized interest. We capitalized less interest because of fewer in-house and joint venture projects under development compared to last year.
• Equity in loss of Joint Ventures increased $5,337,000 primarily due to increased losses during lease up at The Verge ($4,096,000) and .408 Jackson ($642,000).
• The first nine months of 2022 included a $874,000 gain on sales of excess property at Brooksville.

Nine Months Segment Operating Results

Asset Management Segment:

Total revenues in this segment were $3,932,000, up $1,246,000 or 46.4%, over the same period last year. Operating profit was $1,225,000, up $618,000 from $607,000 in the same period last year. Revenues and operating profit are up partly because of rent growth at Cranberry Run, but primarily because of full occupancy at 1865 and 1841 62^nd Street and the addition of 1941 62^nd Street to this segment in March 2023. Net operating income in this segment was $2,726,000, up $862,000 or 46.2% compared to the same period last year.

Mining Royalty Lands Segment:

Total revenues in this segment were $9,628,000 versus $7,779,000 in the same period last year. Total operating profit in this segment was $8,031,000, an increase of $1,592,000 versus $6,439,000 in the same period last year. This increase is the result of the additional royalties from the acquisition in Astatula, Florida, which we completed at the beginning of the second quarter 2022, as well as increases in revenue at nearly every active location. Net Operating Income in this segment was $9,110,000, up $1,737,000 or 24% compared to the same period last year. As reported in a subsequent event note in the 10-Q from the quarter ended June 30, 2023, in August we received notification of an overpayment of $842,000 at a quarry where we share a property line within the pit. The operator incorrectly identified the reserves being mined as belonging to the Company instead of our neighboring landlord. After auditing and confirming the tenant's findings, the Company has reached a resolution with the tenant to allow the overpayment to be deducted from a portion of future royalties, and we have worked with the tenant to improve processes and controls to prevent an incident of this type and magnitude from occurring in the future. This will impact future royalty revenue and revenue growth until the overpayment is satisfied.

Stabilized Joint Venture Segment:

In the fourth quarter of 2022, as part of our new partnership with Steuart Investment Company and MidAtlantic Realty Partners, we sold a 20% ownership interest in a tenancy-in-common (TIC) 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.

Total revenues in this segment were $16,454,000, an increase of $493,000 versus $15,961,000 in the same period last year. The Maren's revenue was $7,900,000, an increase of 5.7%, and Dock 79 revenues increased $66,000 or .8% to $8,553,000. Total operating profit in this segment was $2,556,000, an increase of $365,000 versus $2,191,000 in the same period last year. Pro-rata net operating income for this segment was $6,212,000, down $1,029,000 or 14.2% compared to the same period last year because of the sale of our 20% TIC interest in both properties to SIC, mitigated by $676,000 in pro-rata NOI from our share of the Riverside joint venture.

At the end of September, The Maren was 93.18% leased and 93.94% occupied. Average residential occupancy for the first nine months of 2023 was 96.11%, and 50.66% of expiring leases renewed with an average rent increase on renewals of 4.86%. 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 the first nine months of 2023 was 94.21%, and at the end of the quarter, Dock 79's residential units were 93.44% leased and 95.74% occupied. Through the first nine months of the year, 67.90% of expiring leases renewed with an average rent increase on renewals of 3.11%. 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.

During the third quarter of 2022, we achieved stabilization at our Riverside Joint Venture in Greenville, South Carolina. At end of September, the building was 94.5% leased with 91.5% occupancy. Average occupancy for the first nine months of 2023 was 94.26% with 56.03% of expiring leases renewing with an average rental increase of 10.25%. Riverside is a joint venture with Woodfield Development and the Company owns 40% of the venture.

Summary and Outlook

Royalty revenue for this quarter was up 24.7% over the same period last year, and royalty revenue for the first nine months is up 23.8%. The last three quarters have been the three highest revenue quarters in this segment's history. Mining royalty revenue for the last twelve months is $12.53 million, a 24.7% increase over the same period last year, and the segment's highest revenue total over any twelve-month period.

In the Stabilized Joint Venture segment, pro-rata NOI is down for the segment for both the quarter and the first nine months, which is to be expected after selling 20% of our share of Dock 79 and The Maren to SIC. NOI for the two projects as a whole increased 1.0% ($10,163,000 vs $10,063,000) for the first nine months compared to the same period last year. At Dock 79, average occupancy (95.08%) remains in line with historic expectations, but the high renewal rate (71.43%) with reduced increases (2.30%) is consistent with a post-Covid glut in apartment supply in the DC market as evidenced by the negative trade-outs (-4.60%) we're seeing at that building. The Maren performed slightly better with strong renewals (59.70%) at higher increases (3.18%) and positive trade-outs (4.60%), but at rates lower than we have experienced in the past prior to the second quarter of this year. Riverside in Greenville (which was added to this segment in the third quarter of 2022) has maintained strong occupancy (93.65% LTM) in its first year post-stabilization. Renewal rates for the quarter (52.83%) and year-to-date (56.03%) are consistent with expected results, and the increase on renewals (8.55% for Q3, 10.25% YTD) remain high. Our pro-rata share of NOI at Riverside this quarter was $231,000 and $676,000 for the first nine months.

In our Asset Management Segment, occupancy and our overall square-footage have increased since the third quarter of 2022, leading to a 46.2% increase in NOI for the first nine months compared to the same period last year. We are 95.6% leased and occupied on 548,785 square feet compared to 85.9% occupied on 447,035 square feet at the end of the third quarter of 2022.

As mentioned last quarter and in our recent Investor Day presentation, the heady cocktail of inflation, interest rates, increased construction costs, and a softening in the DC market because of an influx of new apartment projects have led us to shift our development strategy away from new developments in DC for the time being. We are shifting towards (relatively) less capital-intensive projects like warehouse construction, where we can use our cash on hand to finance construction on an all equity basis and develop in-demand industrial product while the interest rates on construction loans keep most development on the sidelines. To that end, we are underway on the construction of a $30 million spec warehouse project at our Chelsea site in Aberdeen, MD. We anticipate shell completion on this 259,200 square-foot building in the third quarter of 2024. We will continue to do the predevelopment work required to prepare the first phase of our partnership with SIC and MRP for vertical construction, but we will pause at that point until interest rates and construction costs come back in line with what's required to make a reasonable return. We still have the utmost confidence in our assets and the markets in which they thrive. To that end, during the first nine months of 2023 we repurchased 36,909 shares at an average cost of $54.19 per share.

Conference Call

The Company will host a conference call on Thursday, November 9, 2023 at 10:00 a.m. (EDT). Analysts, stockholders and other interested parties may access the teleconference live by calling 1-800-274-8461 (passcode 82391) within the United States. International callers may dial 1-203-518-9814 (passcode 82391). Audio replay will be available until November 23, 2023 by dialing 1-888-567-0675 within the United States. International callers may dial 1-402-530-0417. No passcode needed. An audio replay will also be available on the Company's investor relations page (https://www.frpdev.com/investor-relations/) following the call.

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 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. 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,
	2023				2022				2023				2022
Revenues:
Lease revenue	$	7,509				6,823				21,773				19,850
Mining lands lease revenue		3,082				2,471				9,628				7,779
Total Revenues		10,591				9,294				31,401				27,629
Cost of operations:
Depreciation, depletion and amortization		2,816				2,744				8,415				8,510
Operating expenses		2,012				1,967				5,574				5,316
Property taxes		919				1,034				2,745				3,103
Management company indirect		1,059				966				2,938				2,545
Corporate expenses		889				734				3,212				2,876
Total cost of operations		7,695				7,445				22,884				22,350
Total operating profit		2,896				1,849				8,517				5,279
Net investment income		2,700				1,188				8,207				3,206
Interest expense		(1,116	)			(738	)			(3,251	)			(2,215	)
Equity in loss of joint ventures		(2,913	)			(1,878	)			(10,585	)			(5,248	)
Gain (loss) on sale of real estate		(1	)			141				7				874
Income before income taxes		1,566				562				2,895				1,896
Provision for (benefit from) income taxes		467				178				898				526
Net income		1,099				384				1,997				1,370
Loss attributable to noncontrolling interest		(160	)			(96	)			(425	)			(439	)
Net income attributable to the Company	$	1,259				480				2,422				1,809
Earnings per common share:
Net income attributable to the Company-
Basic	$	0.13				0.05				0.26				0.19
Diluted	$	0.13				0.05				0.26				0.19
Number of shares (in thousands) used in computing:
-basic earnings per common share		9,423				9,397				9,423				9,382
-diluted earnings per common share		9,460				9,433				9,463				9,423

FRP HOLDINGS, INC. AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

(Unaudited) (In thousands, except share data)

		September 30				December 31
Assets:		2023				2022
Real estate investments at cost:
Land		$	141,578				141,579
Buildings and improvements			282,379				270,579
Projects under construction			4,689				12,208
Total investments in properties			428,646				424,366
Less accumulated depreciation and depletion			65,444				57,208
Net investments in properties			363,202				367,158
Real estate held for investment, at cost			10,510				10,182
Investments in joint ventures			154,025				140,525
Net real estate investments			527,737				517,865
Cash and cash equivalents			166,028				177,497
Cash held in escrow			646				797
Accounts receivable, net			1,683				1,166
Unrealized rents			1,452				856
Deferred costs			3,028				2,343
Other assets			583				560
Total assets		$	701,157				701,084
Liabilities:
Secured notes payable		$	178,668				178,557
Accounts payable and accrued liabilities			3,689				5,971
Other liabilities			1,886				1,886
Federal and state income taxes payable			704				18
Deferred revenue			1,029				259
Deferred income taxes			67,903				67,960
Deferred compensation			1,395				1,354
Tenant security deposits			889				868
Total liabilities			256,163				256,873
Commitments and contingencies
Equity:
Common stock, $.10 par value 25,000,000 shares authorized, 9,477,104 and 9,459,686 shares issued and outstanding, respectively			948				946
Capital in excess of par value			67,168				65,158
Retained earnings			343,002				342,317
Accumulated other comprehensive loss, net			(328	)			(1,276	)
Total shareholders' equity			410,790				407,145
Noncontrolling interest			34,204				37,066
Total equity			444,994				444,211
Total liabilities and equity		$	701,157				701,084

Asset Management Segment:

	Three months ended September 30
(dollars in thousands)	2023				%				2022				%				Change				%
Lease revenue	$	1,442				100.0	%			935				100.0	%			507				54.2	%
Depreciation, depletion and amortization		369				25.5	%			219				23.4	%			150				68.5	%
Operating expenses		173				12.0	%			162				17.3	%			11				6.8	%
Property taxes		62				4.3	%			53				5.7	%			9				17.0	%
Management company indirect		141				9.8	%			109				11.7	%			32				29.4	%
Corporate expense		177				12.3	%			127				13.6	%			50				39.4	%
Cost of operations		922				63.9	%			670				71.7	%			252				37.6	%
Operating profit	$	520				36.1	%			265				28.3	%			255				96.2	%

Mining Royalty Lands Segment:

		Three months ended September 30
(dollars in thousands)		2023				%				2022				%				Change				%
Mining lands lease revenue		$	3,082				100.0	%			2,471				100.0	%			611				24.7	%
Depreciation, depletion and amortization			138				4.5	%			172				7.0	%			(34	)			-19.8	%
Operating expenses			18				0.6	%			18				0.7	%			—				0.0	%
Property taxes			181				5.9	%			69				2.8	%			112				162.3	%
Management company indirect			137				4.4	%			129				5.2	%			8				6.2	%
Corporate expense			99				3.2	%			83				3.4	%			16				19.3	%
Cost of operations			573				18.6	%			471				19.1	%			102				21.7	%
Operating profit		$	2,509				81.4	%			2,000				80.9	%			509				25.5	%

Development Segment:

		Three months ended September 30
(dollars in thousands)		2023				2022				Change
Lease revenue		$	434				412				22
Depreciation, depletion and amortization			44				47				(3	)
Operating expenses			48				250				(202	)
Property taxes			121				355				(234	)
Management company indirect			665				625				40
Corporate expense			529				457				72
Cost of operations			1,407				1,734				(327	)
Operating loss		$	(973	)			(1,322	)			349

Stabilized Joint Venture Segment:

		Three months ended September 30
(dollars in thousands)		2023				%				2022				%				Change				%
Lease revenue		$	5,633				100.0	%			5,476				100.0	%			157				2.9	%
Depreciation, depletion and amortization			2,265				40.2	%			2,306				42.1	%			(41	)			-1.8	%
Operating expenses			1,773				31.5	%			1,537				28.1	%			236				15.4	%
Property taxes			555				9.8	%			557				10.2	%			(2	)			-0.4	%
Management company indirect			116				2.1	%			103				1.9	%			13				12.6	%
Corporate expense			84				1.5	%			67				1.2	%			17				25.4	%
Cost of operations			4,793				85.1	%			4,570				83.5	%			223				4.9	%
Operating profit		$	840				14.9	%			906				16.5	%			(66	)			-7.3	%

Asset Management Segment:

		Nine months ended September 30
(dollars in thousands)		2023				%				2022				%				Change				%
Lease revenue		$	3,932				100.0	%			2,686				100.0	%			1,246				46.4	%
Depreciation, depletion and amortization			1,006				25.6	%			683				25.4	%			323				47.3	%
Operating expenses			490				12.4	%			441				16.4	%			49				11.1	%
Property taxes			185				4.7	%			158				5.9	%			27				17.1	%
Management company indirect			396				10.1	%			301				11.2	%			95				31.6	%
Corporate expense			630				16.0	%			496				18.5	%			134				27.0	%
Cost of operations			2,707				68.8	%			2,079				77.4	%			628				30.2	%
Operating profit		$	1,225				31.2	%			607				22.6	%			618				101.8	%

Mining Royalty Lands Segment:

		Nine months ended September 30
(dollars in thousands)		2023				%				2022				%				Change				%
Mining lands lease revenue		$	9,628				100.0	%			7,779				100.0	%			1,849				23.8	%
Depreciation, depletion and amortization			472				4.9	%			416				5.4	%			56				13.5	%
Operating expenses			51				0.5	%			50				0.6	%			1				2.0	%
Property taxes			324				3.4	%			203				2.6	%			121				59.6	%
Management company indirect			390				4.1	%			346				4.4	%			44				12.7	%
Corporate expense			360				3.7	%			325				4.2	%			35				10.8	%
Cost of operations			1,597				16.6	%			1,340				17.2	%			257				19.2	%
Operating profit		$	8,031				83.4	%			6,439				82.8	%			1,592				24.7	%

Development Segment:

		Nine months ended September 30
(dollars in thousands)		2023				2022				Change
Lease revenue		$	1,387				1,203				184
Depreciation, depletion and amortization			140				139				1
Operating expenses			215				541				(326	)
Property taxes			587				1,066				(479	)
Management company indirect			1,822				1,621				201
Corporate expense			1,918				1,794				124
Cost of operations			4,682				5,161				(479	)
Operating loss		$	(3,295	)			(3,958	)			663

Stabilized Joint Venture Segment:

		Nine months ended September 30
(dollars in thousands)		2023				%				2022				%				Change				%
Lease revenue		$	16,454				100.0	%			15,961				100.0	%			493				3.1	%
Depreciation, depletion and amortization			6,797				41.3	%			7,272				45.6	%			(475	)			-6.5	%
Operating expenses			4,818				29.3	%			4,284				26.9	%			534				12.5	%
Property taxes			1,649				10.0	%			1,676				10.5	%			(27	)			-1.6	%
Management company indirect			330				2.0	%			277				1.7	%			53				19.1	%
Corporate expense			304				1.9	%			261				1.6	%			43				16.5	%
Cost of operations			13,898				84.5	%			13,770				86.3	%			128				0.9	%
Operating profit		$	2,556				15.5	%			2,191				13.7	%			365				16.7	%

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 09/30/23 (in thousands)
									Stabilized
	Asset								Joint				Mining				Unallocated				FRP
	Management				Development				Venture				Royalties				Corporate				Holdings
	Segment				Segment				Segment				Segment				Expenses				Totals
Net Income (loss)	$	892				(7,192	)			(816	)			5,842				3,270				1,996
Income Tax Allocation		331				(2,667	)			(145	)			2,168				1,212				899
Income (loss) before income taxes		1,223				(9,859	)			(961	)			8,010				4,482				2,895
Less:
Unrealized rents		531				—				—				143				—				674
Gain on sale of real estate		—				—				—				10				—				10
Interest income		—				3,692				—				—				4,515				8,207
Plus:
Unrealized rents		—				—				117				—				—				117
Loss on sale of real estate		2				—				1				—				—				3
Equity in loss of Joint Ventures		—				10,256				298				31				—				10,585
Professional fees - other		—				—				59				—				—				59
Interest Expense		—				—				3,218				—				33				3,251
Depreciation/Amortization		1,006				140				6,797				472				—				8,415
Management Co. Indirect		396				1,822				330				390				—				2,938
Allocated Corporate Expenses		630				1,918				304				360				—				3,212
Net Operating Income		2,726				585				10,163				9,110				—				22,584
NOI of noncontrolling interest		—				—				(4,627	)			—				—				(4,627	)
Pro-rata NOI from unconsolidated joint ventures		—				4,054				676				—				—				4,730
Pro-rata net operating income	$	2,726				4,639				6,212				9,110				—				22,687

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

The following tables represent the Joint Venture and Development pro-rata NOI by project:

Development Segment:
			FRP				Bryant Street				BC FRP				.408				Verge				Total
Nine months ended			Portfolio				Partnership				Realty, LLC				Jackson				Partnership				Pro-rata NOI
9/30/2023			585				3,595				251				350				(142	)			4,639
9/30/2022			(404	)			1,853				277				(10	)			(224	)			1,492

Stabilized Joint Venture Segment:
											Riverside				Total
Nine months ended			Dock 79				The Maren				Joint Venture				Pro-rata NOI
9/30/2023			2,825				2,711				676				6,212
9/30/2022			3,316				3,535				390				7,241

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