UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
_________________
FORM
_________________
| (Mark One) |
| [ |
QUARTERLY REPORT PURSUANT TO SECTION 13 OR
15(d)
|
or
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TRANSITION REPORT PURSUANT TO SECTION 13 OR
15(d) For the transition period from_________ to _________ |
Commission File Number:
_____________________
(Exact name of registrant as specified in its charter)
_____________________
|
(State or other jurisdiction of incorporation or organization) |
(I.R.S. Employer Identification No.) | |
|
|
||
| (Address of principal executive offices) | (Zip Code) |
(Registrant’s telephone number, including area code)
| Title of each class | Trading Symbol | Name of each exchange on which registered | |||
Indicate by check mark whether the registrant
(1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months
(or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements
for the past 90 days.
Indicate by check mark whether the registrant
has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405
of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “non-accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
| Large accelerated filer [_] | Accelerated filer [_] | |
| Smaller reporting company | ||
| Emerging growth company |
||
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. [_]
Indicate by check mark whether the registrant
is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes [_]
Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date.
| Class | Outstanding at November 9, 2023 | |||||
| Common Stock, $.10 par value per share | shares |
| 1 |
FRP HOLDINGS, INC.
FORM 10-Q
QUARTER ENDED SEPTEMBER 30, 2023
CONTENTS
Page No.
| Preliminary Note Regarding Forward-Looking Statements | 3 | ||||
| Part I. Financial Information | |||||
| Item 1. | Financial Statements | ||||
| Consolidated Balance Sheets | 4 | ||||
| Consolidated Statements of Income | 5 | ||||
| Consolidated Statements of Comprehensive Income | 6 | ||||
| Consolidated Statements of Cash Flows | 7 | ||||
| Consolidated Statements of Shareholders’ Equity | 8 | ||||
| Condensed Notes to Consolidated Financial Statements | 9 | ||||
| Item 2. | Management's Discussion and Analysis of Financial Condition and Results of Operations | 19 | |||
| Item 3. | Quantitative and Qualitative Disclosures about Market Risks | 35 | |||
| Item 4. | Controls and Procedures | 35 | |||
| Part II. Other Information | |||||
|
Item 1A. |
Risk Factors | 36 | |||
| Item 2. | Purchase of Equity Securities by the Issuer | 36 | |||
| Item 6. | Exhibits | 36 | |||
| Signatures | 37 | ||||
| Exhibit 31 | Certifications pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 | 39 | |||
| Exhibit 32 | Certifications pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 | 42 | |||
| 2 |
Preliminary Note Regarding Forward-Looking Statements.
This Quarterly Report on Form 10-Q, together with other statements and information publicly disseminated by us, contains “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. The words or phrases “anticipate,” “estimate,” “believe,” “budget,” “continue,” “could,” “intend,” “may,” “plan,” “potential,” “predict,” “seek,” “should,” “will,” “would,” “expect,” “objective,” “projection,” “forecast,” “goal,” “guidance,” “outlook,” “effort,” “target” and similar expressions identify forward-looking statements. Such statements reflect management’s current views with respect to financial results related to future events and are based on assumptions and expectations that may not be realized and are inherently subject to risks and uncertainties, many of which cannot be predicted with accuracy and some of which might not even be anticipated. Future events and actual results, financial or otherwise, may differ, perhaps materially, from the results discussed in the forward-looking statements. Risk factors discussed in Item 1A of this Form 10-Q and other factors that might cause differences, some of which could be material, 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; cyber security 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. Additional information regarding these and other risk factors may be found in the Company’s other filings made from time to time with the Securities and Exchange Commission.
| 3 |
PART I. FINANCIAL INFORMATION, ITEM 1. FINANCIAL STATEMENTS
FRP HOLDINGS, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(Unaudited) (In thousands, except share data)
| September 30, 2023 | December 31, 2022 | |||||||
| Assets: | ||||||||
| Real estate investments at cost: | ||||||||
| Land | $ | |||||||
| Buildings and improvements | ||||||||
| Projects under construction | ||||||||
| Total investments in properties | ||||||||
| Less accumulated depreciation and depletion | ||||||||
| Net investments in properties | ||||||||
| Real estate held for investment, at cost | ||||||||
| Investments in joint ventures | ||||||||
| Net real estate investments | ||||||||
| Cash and cash equivalents | ||||||||
| Cash held in escrow | ||||||||
| Accounts receivable, net | ||||||||
| Unrealized rents | ||||||||
| Deferred costs | ||||||||
| Other assets | ||||||||
| Total assets | $ | |||||||
| Liabilities: | ||||||||
| Secured notes payable | $ | |||||||
| Accounts payable and accrued liabilities | ||||||||
| Other liabilities | ||||||||
| Federal and state income taxes payable | ||||||||
| Deferred revenue | ||||||||
| Deferred income taxes | ||||||||
| Deferred compensation | ||||||||
| Tenant security deposits | ||||||||
| Total liabilities | ||||||||
| Commitments and contingencies | ||||||||
| Equity: | ||||||||
|
Common stock, $ par value shares authorized, and shares issued and outstanding, respectively |
||||||||
| Capital in excess of par value | ||||||||
| Retained earnings | ||||||||
| Accumulated other comprehensive loss, net | ( |
) | ( |
) | ||||
| Total shareholders’ equity | ||||||||
| Noncontrolling interest | ||||||||
| Total equity | ||||||||
| Total liabilities and equity | $ | |||||||
See accompanying notes.
| 4 |
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 | $ | |||||||||||||||||||||
| Mining lands lease revenue | ||||||||||||||||||||||
| Total Revenues | ||||||||||||||||||||||
| Cost of operations: | ||||||||||||||||||||||
| Depreciation, depletion and amortization | ||||||||||||||||||||||
| Operating expenses | ||||||||||||||||||||||
| Property taxes | ||||||||||||||||||||||
| Management company indirect | ||||||||||||||||||||||
| Corporate expenses (Note 4 Related Party) | ||||||||||||||||||||||
| Total cost of operations | ||||||||||||||||||||||
| Total operating profit | ||||||||||||||||||||||
| Net investment income | ||||||||||||||||||||||
| Interest expense | ( |
) | ( |
) | ( |
) | ( |
) | ||||||||||||||
| Equity in loss of joint ventures | ( |
) | ( |
) | ( |
) | ( |
) | ||||||||||||||
| Gain (loss) on sale of real estate | ( |
) | ||||||||||||||||||||
| Income before income taxes | ||||||||||||||||||||||
| Provision for income taxes | ||||||||||||||||||||||
| Net income | ||||||||||||||||||||||
| Loss attributable to noncontrolling interest | ( |
) | ( |
) | ( |
) | ( |
) | ||||||||||||||
| Net income attributable to the Company | $ | |||||||||||||||||||||
| Earnings per common share: | ||||||||||||||||||||||
| Net income attributable to the Company- | ||||||||||||||||||||||
| Basic | $ | |||||||||||||||||||||
| Diluted | $ | |||||||||||||||||||||
| Number of shares (in thousands) used in computing: | ||||||||||||||||||||||
| -basic earnings per common share | ||||||||||||||||||||||
| -diluted earnings per common share | ||||||||||||||||||||||
See accompanying notes.
| 5 |
FRP HOLDINGS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
(In thousands except per share amounts)
(Unaudited)
| THREE MONTHS ENDED | NINE MONTHS ENDED | |||||||||||||||
| SEPTEMBER 30, | SEPTEMBER 30, | |||||||||||||||
| 2023 | 2022 | 2023 | 2022 | |||||||||||||
| Net income | $ | |||||||||||||||
| Other comprehensive income (loss) net of tax: | ||||||||||||||||
| Unrealized gain/(loss) on investments, net of income tax effect of $ |
( |
) | ( |
) | ||||||||||||
| Minimum pension liability, net of income tax effect of $( |
( |
) | ( |
) | ||||||||||||
| Comprehensive income (loss) | $ | ( |
) | |||||||||||||
| Less comp. income (loss) attributable to Noncontrolling interest | $ | ( |
) | ( |
) | ( |
) | ( |
) | |||||||
| Comprehensive income attributable to the Company | $ | |||||||||||||||
See accompanying notes
| 6 |
FRP HOLDINGS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
NINE MONTHS ENDED SEPTEMBER 30, 2023 AND 2022
(In thousands) (Unaudited)
| 2023 | 2022 | ||||||||
| Cash flows from operating activities: | |||||||||
| Net income | $ | ||||||||
| Adjustments to reconcile net income to net cash provided by continuing operating activities: | |||||||||
| Depreciation, depletion and amortization | |||||||||
| Deferred income taxes | ( |
) | |||||||
| Equity in loss of joint ventures | |||||||||
| Gain on sale of equipment and property | ( |
) | ( |
) | |||||
| Stock-based compensation | |||||||||
| Net changes in operating assets and liabilities: | |||||||||
| Accounts receivable | ( |
) | ( |
) | |||||
| Deferred costs and other assets | ( |
) | ( |
) | |||||
| Accounts payable and accrued liabilities | ( |
) | ( |
) | |||||
| Income taxes payable and receivable | |||||||||
| Other long-term liabilities | |||||||||
| Net cash provided by operating activities | |||||||||
| Cash flows from investing activities: | |||||||||
| Investments in properties | ( |
) | ( |
) | |||||
| Investments in joint ventures | ( |
) | ( |
) | |||||
| Return of capital from investments in joint ventures | |||||||||
| Proceeds from sales of investments available for sale | |||||||||
| Proceeds from the sale of assets | |||||||||
| Cash held in escrow | |||||||||
| Net cash used in investing activities | ( |
) | ( |
) | |||||
| Cash flows from financing activities: | |||||||||
| Distribution to noncontrolling interest | ( |
) | ( |
) | |||||
| Repurchase of company stock | ( |
) | |||||||
| Exercise of employee stock options | |||||||||
| Net cash used in financing activities | ( |
) | ( |
) | |||||
| Net decrease in cash and cash equivalents | ( |
) | ( |
) | |||||
| Cash and cash equivalents at beginning of year | |||||||||
| Cash and cash equivalents at end of the period | $ | ||||||||
| Supplemental disclosure of cash flow information: | |||||||||
| Cash paid (received) during the period for: | |||||||||
| Interest | |||||||||
| Income taxes | ( |
) | |||||||
See accompanying notes.
| 7 |
FRP HOLDINGS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF SHAREHOLDERS’ EQUITY
THREE AND NINE MONTHS ENDED SEPTEMBER 30, 2023 AND 2022
(In thousands, except share amounts) (Unaudited)
| Accumulated | |||||||||||||||||||||||||||||||
| Other Comp- | Total | ||||||||||||||||||||||||||||||
| Capital in | rehensive | Share | Non- | ||||||||||||||||||||||||||||
| Common Stock | Excess of | Retained | Income | holders’ | Controlling | Total | |||||||||||||||||||||||||
| Shares | Amount | Par Value | Earnings | (loss), net | Equity | Interest | Equity | ||||||||||||||||||||||||
| Balance at July 1, 2023 | $ | $ | $ | $ | ( |
) | $ | $ | $ | ||||||||||||||||||||||
| Stock option grant compensation | — | |
|
|
|||||||||||||||||||||||||||
| Restricted stock compensation | — | ||||||||||||||||||||||||||||||
| Shares purchased and cancelled | ( |
) | ( |
) | ( |
) | ( |
) | ( |
) | ( |
) | |||||||||||||||||||
| Net income | — | |
|
( |
) | ||||||||||||||||||||||||||
| Distributions to partners | — | |
|
( |
) | ( |
) | ||||||||||||||||||||||||
| Minimum pension liability, net | — | |
( |
) | ( |
) | |
( |
) | ||||||||||||||||||||||
| Unrealized gain on investment, net | — | |
|
||||||||||||||||||||||||||||
| Balance at September 30, 2023 | $ | $ | $ | $ | ( |
) | $ | $ | $ | ||||||||||||||||||||||
| Balance at January 1, 2023 | $ | $ | $ | $ | ( |
) | $ | $ | $ | ||||||||||||||||||||||
| Exercise of stock options | |||||||||||||||||||||||||||||||
| Stock option grant compensation | — | |
|
|
|||||||||||||||||||||||||||
| Restricted stock compensation | — | ||||||||||||||||||||||||||||||
| Shares granted to Employees | |||||||||||||||||||||||||||||||
| Restricted stock award | ( |
) | |||||||||||||||||||||||||||||
| Shares purchased and cancelled | ( |
) | ( |
) | ( |
) | ( |
) | ( |
) | ( |
) | |||||||||||||||||||
| Shares granted to Directors | |||||||||||||||||||||||||||||||
| Net income | — | |
|
( |
) | ||||||||||||||||||||||||||
| Distributions to partners | — | |
|
( |
) | ( |
) | ||||||||||||||||||||||||
| Minimum pension liability, net | — | |
( |
) | ( |
) | |
( |
) | ||||||||||||||||||||||
| Unrealized gain on investment, net | — | |
|
||||||||||||||||||||||||||||
| Balance at September 30, 2023 | $ | $ | $ | $ | ( |
) | $ | $ | $ | ||||||||||||||||||||||
| Balance at July 1, 2022 | $ | $ | $ | $ | ( |
) | $ | $ | $ | ||||||||||||||||||||||
| Stock option grant compensation | — | |
|
|
|||||||||||||||||||||||||||
| Restricted stock compensation | — | ||||||||||||||||||||||||||||||
| Net income | — | |
|
( |
) | ||||||||||||||||||||||||||
| Distributions to partners | — | |
|
|
( |
) | ( |
) | |||||||||||||||||||||||
| Unrealized loss on investment, net | — | |
|
( |
) | ( |
) | |
( |
) | |||||||||||||||||||||
| Balance at September 30, 2022 | $ | $ | $ | $ | ( |
) | $ | $ | $ | ||||||||||||||||||||||
| Balance at January 1, 2022 | $ | $ | $ | $ | $ | $ | $ | ||||||||||||||||||||||||
| Stock option grant compensation | — | |
|
|
|||||||||||||||||||||||||||
| Restricted stock compensation | — | ||||||||||||||||||||||||||||||
| Shares granted to Employees | |||||||||||||||||||||||||||||||
| Restricted stock award | ( |
) | |||||||||||||||||||||||||||||
| Shares granted to Directors | |||||||||||||||||||||||||||||||
| Forfeiture of restricted stock award | ( |
) | |||||||||||||||||||||||||||||
| Exercise of stock options | |||||||||||||||||||||||||||||||
| Net income | — | |
|
( |
) | ||||||||||||||||||||||||||
| Distributions to partners | — | |
|
|
( |
) | ( |
) | |||||||||||||||||||||||
| Unrealized loss on investment, net | — | |
|
( |
) | ( |
) | |
( |
) | |||||||||||||||||||||
| Balance at September 30, 2022 | $ | $ | $ | $ | ( |
) | $ | $ | $ | ||||||||||||||||||||||
See accompanying notes.
| 8 |
FRP HOLDINGS, INC. AND SUBSIDIARIES
CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
SEPTEMBER 30, 2023
(Unaudited)
(1) Description of Business and Basis of Presentation.
FRP Holdings, Inc. is a holding company engaged in the investment and development of real estate , namely (i) leasing and management of industrial and 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) management of mixed use residential/retail properties owned through our joint ventures.
The accompanying consolidated financial statements include the accounts of FRP Holdings, Inc. (the “Company” or “FRP”) inclusive of our operating real estate subsidiaries, FRP Development Corp. (“Development”), Florida Rock Properties, Inc. (“Properties”), Riverfront Investment Partners I, LLC, and Riverfront Investment Partners II, LLC. Our investments accounted for under the equity method of accounting are detailed in Note 11. Our ownership of Riverfront Investment Partners I, LLC and Riverfront Investment Partners II, LLC includes a non-controlling interest representing the ownership of our partner.
These statements have been prepared in accordance with accounting principles generally accepted in the United States of America for interim financial information and the instructions to Form 10-Q and do not include all the information and footnotes required by accounting principles generally accepted in the United States of America for complete financial statements. In the opinion of management, all adjustments (primarily consisting of normal recurring accruals) considered necessary for a fair statement of the results for the interim periods have been included. Operating results for the nine months ended September 30, 2023 are not necessarily indicative of the results that may be expected for the year ending December 31, 2023. The accompanying consolidated financial statements and the information included under the heading "Management's Discussion and Analysis of Financial Condition and Results of Operations" should be read in conjunction with the Company's consolidated financial statements and related notes included in the Company’s Form 10-K for the year ended December 31, 2022.
(2) Recently Issued Accounting Standards.
In June 2016, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update (ASU) 2016 - 13, "Financial Instruments - Credit Losses," which introduced new guidance for an approach based on expected losses to estimate credit losses on certain types of financial instruments. This standard was effective for the Company as of January 1, 2023. There was no impact on our financial statements at adoption.
(3) Business Segments.
The Company is reporting its financial performance
based on
The Asset Management Segment owns, leases and manages
in-service commercial properties wholly owned by the Company. Currently this includes
Our Mining Royalty Lands segment owns several properties
totaling approximately
Through our Development segment, we own and are continuously assessing the highest and best use of several parcels of land that are in various stages of development. Our overall strategy in this segment is to convert all of our non-income producing lands into income production through (i) an orderly process of constructing new buildings for us to
| 9 |
own and operate or (ii) a sale to, or joint venture with, third parties. Additionally, our Development segment will form joint ventures on new developments of land not previously owned by the Company.
The Stabilized Joint Venture segment includes
joint ventures which own, lease and manage buildings that have met our initial lease-up criteria.
Operating results and certain other financial data for the Company’s business segments are as follows (in thousands):
| Three Months ended | Nine months ended | |||||||||||||||
| September 30, | September 30, | |||||||||||||||
| 2023 | 2022 | 2023 | 2022 | |||||||||||||
| Revenues: | ||||||||||||||||
| Asset management | $ | |||||||||||||||
| Mining royalty lands | ||||||||||||||||
| Development | ||||||||||||||||
| Stabilized Joint Venture | ||||||||||||||||
| Operating profit (loss): | ||||||||||||||||
| Before corporate expenses: | ||||||||||||||||
| Asset management | $ | |||||||||||||||
| Mining royalty lands | ||||||||||||||||
| Development | ( |
) | ( |
) | ( |
) | ( |
) | ||||||||
| Stabilized Joint Venture | ||||||||||||||||
| Operating profit before corporate expenses | ||||||||||||||||
| Corporate expenses: | ||||||||||||||||
| Allocated to asset management | ( |
) | ( |
) | ( |
) | ( |
) | ||||||||
| Allocated to mining royalty lands | ( |
) | ( |
) | ( |
) | ( |
) | ||||||||
| Allocated to development | ( |
) | ( |
) | ( |
) | ( |
) | ||||||||
| Allocated to stabilized joint venture | ( |
) | ( |
) | ( |
) | ( |
) | ||||||||
| Total corporate expenses | ( |
) | ( |
) | ( |
) | ( |
) | ||||||||
| $ | ||||||||||||||||
| Interest expense | $ | |||||||||||||||
| Depreciation, depletion and amortization: | ||||||||||||||||
| Asset management | $ | |||||||||||||||
| Mining royalty lands | ||||||||||||||||
| Development | ||||||||||||||||
| Stabilized Joint Venture | ||||||||||||||||
| $ | ||||||||||||||||
| Capital expenditures: | ||||||||||||||||
| Asset management | $ | |||||||||||||||
| Mining royalty lands | ||||||||||||||||
| Development | ||||||||||||||||
| Stabilized Joint Venture | ( |
) | ||||||||||||||
| $ | ||||||||||||||||
| 10 |
Identifiable net assets
| September 30, | December 31, | |||||||
| Identifiable net assets | 2023 | 2022 | ||||||
| Asset management | $ | |||||||
| Mining royalty lands | ||||||||
| Development | ||||||||
| Stabilized Joint Venture | ||||||||
| Cash items | ||||||||
| Unallocated corporate assets | ||||||||
| $ |
(4) Related Party Transactions.
The Company is a party to an Administrative Services Agreement which resulted from our January 30, 2015 spin-off of Patriot Transportation Holding, Inc. (Patriot). The Administrative Services Agreement sets forth the terms on which Patriot will provide to FRP certain services that were shared prior to the Spin-off, including the services of certain shared executive officers. The boards of the respective companies amended and extended this agreement for one year effective April 1, 2023.
The consolidated statements of income reflect
charges and/or allocation from Patriot for these services of $
To determine these allocations between FRP and Patriot as set forth in the Administrative Services Agreement, we employ an allocation method to allocate said expenses and thus we believe that the allocations to FRP are a reasonable approximation of the costs related to FRP’s operations, but any such related-party transactions cannot be presumed to be carried out on an arm’s-length basis.
(5) Long-Term Debt.
The Company’s Outstanding debt, net of unamortized debt issuance costs, consisted of the following (in thousands):
| September 30, | December 31, | |||||||
| 2023 | 2022 | |||||||
| Fixed rate mortgage loans, |
$ | |||||||
| Unamortized debt issuance costs | ( |
) | ( |
) | ||||
| Credit agreement | ||||||||
| Long term debt | $ | |||||||
On February 6, 2019, the Company entered
into a First Amendment to the 2015 Credit Agreement (the “Credit Agreement”) with Wells Fargo Bank, N.A. (“Wells Fargo”),
effective February 6, 2019. The Credit Agreement modifies the Company’s prior Credit Agreement with Wells Fargo dated January 30,
2015. The Credit Agreement establishes a -year revolving credit facility with a maximum facility amount of $
| 11 |
Company meets a specified ratio of consolidated
total debt to consolidated total capital. The Credit Agreement contains certain conditions, affirmative financial covenants and negative
covenants. As of September 30, 2023, there was
On March 19, 2021, the Company refinanced
Dock 79 and The Maren pursuant to separate Loan Agreements and Deed of Trust Notes entered into with Teachers Insurance and Annuity Association
of America, LLC. Dock 79 and The Maren borrowed principal sums of $
Debt cost amortization of $
The Company was in compliance with
| Three Months ended | Nine months ended | ||||||||||||||
| September 30, | September 30, | ||||||||||||||
| 2023 | 2022 | 2023 | 2022 | ||||||||||||
| Weighted average common shares outstanding during the period – shares used for basic earnings per common share | |||||||||||||||
| Common shares issuable under share based payment plans which are potentially dilutive | |||||||||||||||
|
Common shares used for diluted earnings per common share |
|||||||||||||||
| Net income attributable to the Company | $ | ||||||||||||||
| Earnings per common share: | |||||||||||||||
| -basic | $ | ||||||||||||||
| -diluted | $ | ||||||||||||||
| 12 |
For the three and nine months ended September 30, 2023, the Company outstanding anti-dilutive stock options. For the three and nine months ended September 30, 2022, the Company outstanding anti-dilutive stock options.
During the first nine months of 2023 the Company repurchased shares at an average cost of $.
The Company has
The Company utilizes the Black-Scholes valuation model for estimating fair value of stock compensation for options awarded to officers and employees. Each grant is evaluated based upon assumptions at the time of grant. The assumptions were dividend yield, expected volatility between % and %, risk-free interest rate of % to % and expected life of to years.
The dividend yield of is based on the fact that the Company does not pay cash dividends and has no present intention to pay cash dividends. Expected volatility is estimated based on the Company’s historical experience over a period equivalent to the expected life in years. The risk-free interest rate is based on the U.S. Treasury constant maturity interest rate at the date of grant with a term consistent with the expected life of the options granted. The expected life calculation is based on the observed and expected time to exercise options by the employees.
In January 2023, shares of restricted stock were granted to employees that will vest over the next years. In January 2023, shares of restricted stock were granted to employees as part of a long-term incentive plan that will vest over the next years. In March 2023, shares of restricted stock were granted to employees under the terms of the 2021 long-term incentive plan. In January 2022, shares of restricted stock were granted to employees that will vest over the next years. In January 2022, shares of restricted stock were granted to employees as part of a long-term incentive plan that will vest over the next years. In March 2023 and March 2022, and shares of stock, respectively, were granted to employees. The number of common shares available for future issuance was at September 30, 2023.
| Three Months ended | Nine months ended | |||||||||||||||
| September 30, | September 30, | |||||||||||||||
| 2023 | 2022 | 2023 | 2022 | |||||||||||||
| Stock option grants | $ | |||||||||||||||
| Restricted stock awards | ||||||||||||||||
| Employee stock grant | ||||||||||||||||
| Annual director stock award | ||||||||||||||||
| Stock compensation | $ | |||||||||||||||
| 13 |
| Weighted | Weighted | Weighted | ||||||||||||
| Number | Average | Average | Average | |||||||||||
| Of | Exercise | Remaining | Grant Date | |||||||||||
| Options | Shares | Price | Term (yrs) | Fair Value(000's) | ||||||||||
| Outstanding at January 1, 2023 | $ | $ | ||||||||||||
| Exercised | ( |
) | $ | $ | ( |
) | ||||||||
| Outstanding at September 30, 2023 | $ | $ | ||||||||||||
| Exercisable at September 30, 2023 | $ | $ | ||||||||||||
|
Vested during nine months ended September 30, 2023 |
$ | |||||||||||||
The aggregate intrinsic value of exercisable in-the-money options was $ and the aggregate intrinsic value of outstanding in-the-money options was $ based on the market closing price of $ on September 29, 2023 less exercise prices.
The unrecognized compensation cost of options granted to FRP employees but not yet vested as of September 30, 2023 was $, which is expected to be recognized over a weighted-average period of months.
| Weighted | Weighted | Weighted | ||||||||||||
| Number | Average | Average | Average | |||||||||||
| Of | Grant Date | Remaining | Grant Date | |||||||||||
| Restricted stock | Shares | Fair Value | Term (yrs) | Fair Value(000's) | ||||||||||
| Non-vested at January 1, 2023 | $ | $ | ||||||||||||
| Time-based awards granted | ||||||||||||||
| Performance-based awards granted | ||||||||||||||
| Vested | ( |
) | ( |
) | ||||||||||
| Non-vested at September 30, 2023 | $ | $ | ||||||||||||
Total unrecognized compensation cost of restricted stock granted but not yet vested as of September 30, 2023 was $ which is expected to be recognized over a weighted-average period of .
(8) Contingent Liabilities.
The Company may be involved in litigation on a number of matters and is subject to certain claims which arise in the normal course of business. The Company has retained certain self-insurance risks with respect to losses for third party liability and property damage. In the opinion of management, none of these matters are expected to have a material adverse effect on the Company’s consolidated financial condition, results of operations or cash flows.
The Company is subject to numerous environmental laws and regulations. The Company believes that the ultimate disposition of currently known environmental matters will not have a material effect on its financial position, liquidity, or operations. The Company can give no assurance that previous environmental studies with respect to its properties have revealed all potential environmental contaminants; that any previous owner, occupant or tenant did not create any
| 14 |
material environmental condition not known to the Company; that the current environmental condition of the properties will not be affected by tenants and occupants, by the condition of nearby properties, or by unrelated third parties; and that changes in applicable environmental laws and regulations or their interpretation will not result in additional environmental liability to the Company.
As of September 30, 2023, there was $
The Company and MidAtlantic Realty Partners (MRP)
guaranteed $
(9) Concentrations.
The mining royalty lands segment has a total
of
(10) Fair Value Measurements.
Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. The fair value hierarchy prioritizes the inputs to valuation techniques used to measure fair value into three broad levels. Level 1 means the use of quoted prices in active markets for identical assets or liabilities. Level 2 means the use of values that are derived principally from or corroborated by observable market data. Level 3 means the use of inputs are those that are unobservable and significant to the overall fair value measurement.
At September 30, 2023, the Company was invested
in U.S. Treasury notes valued at $
At September 30, 2023 and December 31, 2022, the carrying amount reported in the consolidated balance sheets for cash and cash equivalents including U.S. Treasury notes was adjusted to fair value as described above.
The fair values of the Company’s other
mortgage notes payable were estimated based on current rates available to the Company for debt of the same remaining maturities. At September
30, 2023, the carrying amount and fair value of such other long-term debt was $
(11) Investments in Joint Ventures.
The Company has investments in joint ventures, primarily with other real estate developers. Joint ventures where FRP is not the primary beneficiary are reflected in the line “Investment in joint ventures” on the balance sheet and “Equity in loss of joint ventures” on the income statement. The assets of these joint ventures are restricted to use by the joint ventures and their obligations can only be settled by their assets or additional contributions by the partners.
| 15 |
The following table summarizes the Company’s Investments in unconsolidated joint ventures (in thousands):
| The | |||||||||||||||
| Company's | |||||||||||||||
| Share of Profit | |||||||||||||||
| Common | Total | Total Assets of | Profit (Loss) | (Loss) of the | |||||||||||
| Ownership | Investment | The Partnership | Of the Partnership | Partnership | |||||||||||
| As of September 30, 2023 | |||||||||||||||
| Brooksville Quarry, LLC | % | $ | ( |
) | ( |
) | |||||||||
| BC FRP Realty, LLC | % | ( |
) | ( |
) | ||||||||||
| Buzzard Point Sponsor, LLC | % | ||||||||||||||
| Bryant Street Partnerships | % | ( |
) | ( |
) | ||||||||||
| Lending ventures | |||||||||||||||
| Estero Partnership | % | ||||||||||||||
| Verge Partnership | % | ( |
) | ( |
) | ||||||||||
| Greenville Partnerships | % | ( |
) | ( |
) | ||||||||||
| Total | $ | ( |
) | ( |
) |
| The | |||||||||||||||
| Company's | |||||||||||||||
| Share of Profit | |||||||||||||||
| Common | Total | Total Assets of | Profit (Loss) | (Loss) of the | |||||||||||
| Ownership | Investment | The Partnership | Of the Partnership | Partnership | |||||||||||
| As of December 31, 2022 | |||||||||||||||
| Brooksville Quarry, LLC | % | $ | ( |
) | ( |
) | |||||||||
| BC FRP Realty, LLC | % | ( |
) | ( |
) | ||||||||||
| Buzzard Point Sponsor, LLC | % | ||||||||||||||
| Bryant Street Partnerships | % | ( |
) | ( |
) | ||||||||||
| Lending ventures | |||||||||||||||
| DST Hickory Creek | % | ||||||||||||||
| Estero Partnership | % | ||||||||||||||
| Verge Partnership | % | ( |
) | ( |
) | ||||||||||
| Greenville Partnerships | % | ( |
) | ( |
) | ||||||||||
| Total | $ | ( |
) | ( |
) |
The major classes of assets, liabilities and equity of the Company’s Investments in Joint Ventures as of September 30, 2023 are summarized in the following two tables (in thousands):
|
| |||||||||||||||||||||||
| As of September 30, 2023 | Total | ||||||||||||||||||||||
| Buzzard Point | Bryant Street | Estero | Verge | Greenville | Apartment/ | ||||||||||||||||||
| Sponsor, LLC | Partnership | Partnership | Partnership | Partnership | Mixed-Use | ||||||||||||||||||
| Investments in real estate, net | $ | $ | |||||||||||||||||||||
| Cash and cash equivalents | |||||||||||||||||||||||
| Unrealized rents & receivables | |||||||||||||||||||||||