FRPH FRP Holdings Inc

FRP Holdings, Inc. (NASDAQ-FRPH)  –

Second Quarter Operational Highlights

• 16.3% increase in pro-rata NOI ($7.61 million vs $6.55 million) over second quarter 2022
• Mining royalties’ highest second quarter ever in terms of revenue; royalty revenue increased 13.2% over second quarter 2022; 9.9% increase in royalties per ton  
• 55.7% increase in Asset Management revenue versus same period last year; 23.8% increase in Asset Management NOI versus second quarter 2022

Second Quarter Consolidated Results of Operations

Net income for the second quarter of 2023 was $598,000 or $.06 per share versus $657,000 or $.07 per share in the same period last year. The second quarter of 2023 was impacted by the following items:

• Operating profit increased $701,000 compared to the same quarter last year due to improved revenues.
• Management company indirect increased $235,000 due to merit increases and new hires along with recruiting costs.
• Interest expense increased $390,000 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.
• Interest income increased $2,005,000 due primarily to an increase in interest earned on cash equivalents and increased income from our lending ventures.
• Equity in loss of Joint Ventures increased $2,281,000 primarily due to losses during lease up at The Verge and .408 Jackson.

Second Quarter Segment Operating Results

Asset Management Segment:

Total revenues in this segment were $1,420,000, up $508,000 or 55.7%, over the same period last year. Operating profit was $410,000, up $216,000 from $194,000 in the same quarter last year. Revenues and operating profit are up because of full occupancy at 1841 and 1865 62nd Street (compared to 43.4% and 64.1% occupancy in the second quarter of 2022, respectively) and the addition of 1941 62nd Street to this segment in March 2023. 1941 62nd Street is a 101,750 square-foot build-to-suit, which is fully leased and occupied. 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 $843,000, up $162,000 or 23.8% compared to the same quarter last year.

Mining Royalty Lands Segment:

Total revenues in this segment were $3,264,000 versus $2,883,000 in the same period last year. Total operating profit in this segment was $2,732,000, an increase of $382,000 versus $2,350,000 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 $3,125,000, up $380,000 or 14% 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 in committed capital to the project, $17.2 million in principal draws have taken place through quarter end. Through the end of June 30, 2023, 164 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 four buildings: The Coda, The Chase 1A, The Chase 1B, and one commercial building which became fully leased this quarter, 90% of which is leased to an Alamo Draft House movie theater. At quarter end, the Coda was 95% leased and 94.8% occupied and the two buildings that comprise the Chase were 90.69% leased and 92.49% occupied. In total, at quarter end, Bryant Street’s 487 residential units were 92.2% leased and 93.2% 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 68.6% leased and 43.3% 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 85.9% leased and 76.2% occupied at quarter end. Retail at this location is 100% leased and currently under construction and expected to open during the fourth quarter of this year.
• Windlass Run, our suburban office and retail joint venture with St. John Properties, Inc. signed a new office lease for 12,126 square feet bringing the office portion of the project to 78.28% leased and 61.45% occupied. Additional retail space at this site is 22.86% leased and 13.46% occupied.

Stabilized Joint Venture Segment:

Total revenues in this segment were $5,545,000, an increase of $120,000 versus $5,425,000 in the same period last year. The Maren’s revenue was $2,640,000 an increase of 7.4% and Dock 79 revenues decreased $62,000 to $2,906,000 or 2.1%. Total operating profit in this segment was $912,000, a decrease of $7,000 versus $919,000 in the same period last year. Pro-rata net operating income this quarter for this segment was $2,152,000, down $248,000 or 10.3% compared to the same quarter last year because of the sale of our 20% TIC interest in both properties to SIC, mitigated by $223,000 in pro rata NOI from our share of the Riverside joint venture in Greenville, SC.

At the end of June, The Maren was 92.42% leased and 94.32% occupied. Average residential occupancy for the quarter was 96.88%, and 39.62% of expiring leases renewed with an average rent increase on renewals of 5.66%. 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 94.75%, and at the end of the quarter, Dock 79’s residential units were 91.48% leased and 95.41% occupied. This quarter, 65.31% of expiring leases renewed with an average rent increase on renewals of 3.20%. 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 97.0% leased with 95.5% occupancy. Average occupancy for the quarter was 95.42% with 61.76% of expiring leases renewing with an average rental increase of 11.96%. Riverside is a joint venture with Woodfield Development and the Company owns 40% of the venture.

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

• 24.5% increase in pro-rata NOI ($14.60 million vs $11.73 million)
• Mining Royalties increased 23.3%; 10.1% increase in royalties per ton  
• 42.2% increase in Asset Management revenue; 39.2% increase in Asset Management NOI

Six Months Consolidated Results of Operations

Net income for the first six months of 2023 was $1,163,000 or $.12 per share versus $1,329,000 or $.14 per share in the same period last year. The first six months of 2023 was impacted by the following items:

• Operating profit increased $2,191,000 compared to the same period last year due to improved revenues and profits in all four segments.
• Management company indirect increased $300,000 due to merit increases and new hires along with recruiting costs.
• Interest expense increased $658,000 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.
• Interest income increased $3,489,000 due primarily to an increase in interest earned on cash equivalents and increased income from our lending ventures.
• Equity in loss of Joint Ventures increased $4,302,000 primarily due to losses during lease up at The Verge and .408 Jackson.
• The first six months of 2022 included a $733,000 gain on sales of excess property at Brooksville.

Six Months Segment Operating Results

Asset Management Segment:

Total revenues in this segment were $2,490,000, up $739,000 or 42.2%, over the same period last year. Operating profit was $705,000, up $363,000 from $342,000 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 62nd Street and the addition of 1941 62nd Street to this segment in March 2023. Net operating income in this segment was $1,630,000, up $459,000 or 39.2% compared to the same period last year.

Mining Royalty Lands Segment:

Total revenues in this segment were $6,546,000 versus $5,308,000 in the same period last year. Total operating profit in this segment was $5,522,000, an increase of $1,083,000 versus $4,439,000 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 $6,273,000, up $1,236,000 or 25% compared to the same period last year.

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 $10,821,000, an increase of $336,000 versus $10,485,000 in the same period last year. The Maren’s revenue was $5,231,000, an increase of 7.5% and Dock 79 revenues decreased $29,000 to $5,591,000 or .5%. Total operating profit in this segment was $1,716,000, an increase of $431,000 versus $1,285,000 in the same period last year. Pro-rata net operating income for this segment was $4,174,000, down $364,000 or 8.0% compared to the same period last year because of the sale of our 20% TIC interest in both properties to SIC, mitigated by $445,000 in pro rata NOI from our share of the Riverside joint venture.

At the end of June, The Maren was 92.42% leased and 94.32% occupied. Average residential occupancy for the first six months of 2023 was 96.37%, and 43.53% of expiring leases renewed with an average rent increase on renewals of 6.64%. 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 six months of 2023 was 93.77%, and at the end of the quarter, Dock 79’s residential units were 91.48% leased and 95.41% occupied. Through the first six months of the year, 65.22% of expiring leases renewed with an average rent increase on renewals of 3.74%. 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 June, the building was 97.0% leased with 95.5% occupancy. Average occupancy for the first six months of 2023 was 94.92% with 58.73% of expiring leases renewing with an average rental increase of 11.76%. 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 13% over the same period last year, and royalty revenue for the first six months is up 23%. 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 $11.92 million, a 21% 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 six 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 2.56% ($6,841,000 vs $6,670,000) for the first six months compared to the same period last year. After taking a dip in the first quarter, average occupancy at Dock 79 is back where we expect it to be (94.75%). The effort to get it back to where it should be is largely responsible for the flattening in rental increases (3.20% in the second quarter vs 4.52% in the first quarter) as well as the 3% loss on trade-outs. The Maren maintained a strong average occupancy this quarter (96.88%), though renewal rates (39.62%), increases (5.66%), and trade outs (6.0%) were slightly below what we’ve achieved in the past.    Riverside in Greenville (which was added to this segment in the third quarter of last year) has maintained strong occupancy (95.42% this quarter) post stabilization. The renewal rate for the first six months (58.73%) is good, but the average increase on renewals of 11.76% is exceptional. These metrics continue to reinforce our faith in this market as well as the quality of the asset. Our pro-rata share of NOI at Riverside this quarter was $223,000 and $445,000 for the first six months.

In our Asset Management Segment, occupancy and our overall square-footage have increased since the second quarter of 2022, leading to a 39.2% increase in NOI for the first six months compared to the same period last year. We are 95.6% leased and occupied on 548,785 square feet compared to 84.3% occupied on 447,035 square feet at the end of the second quarter of 2022.

Inflation and the upward pressure on interest rates, while potentially softening, remain an obstacle for any developer. We have benefitted from the effect of these forces on rents and royalties, but the compression of future margins from hard costs and financing is a real problem for development. In (relatively) less capital-intensive projects like warehouse construction, this situation is potentially beneficial, because 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. But in the instance of multi-family development, where a construction loan is an absolute necessity, we will in all likelihood sit tight for the time being. In regards to the first phase of our partnership with SIC and MRP, we will continue to pursue entitlements and all work required to prepare the project for development, but will delay vertical construction until the lending markets soften. As we mentioned last quarter, we have a long-term vision for the company, and we’re not going to rush into anything and take on additional development risk if market conditions prevent us from making a reasonable return. We still have the utmost confidence in our assets and the markets in which they thrive. To that end, this past quarter we repurchased 18,340 shares at average cost of $54.52 per share.

We would like to remind our investors that we are holding an Investor Day on October 11, 2023 in Washington D.C. Investor Day presentations will begin at 10:00 A.M. EDT at Dock 79 and will be followed by a Q&A session. The event will feature presentations from its executive management team. For information on the event and to RSVP, please email InvestorDay@frpdev.com.   A live webcast and presentation materials will be available to all interested parties at https://www.frpdev.com/investor-relations/. For those unable to join the live webcast, a replay will be available on our website shortly after the event.

Conference Call

The Company will host a conference call on Thursday, August 10, 2023 at 9:30 a.m. (EDT). Analysts, stockholders and other interested parties may access the teleconference live by calling 1- 800-274-8461 (passcode 40104) within the United States. International callers may dial 1-203-518-9814 (passcode 40104). Audio replay will be available until August 24, 2023 by dialing 1-888-562-2817 (no passcode required) within the United States. International callers may dial 1-402-220-7354. 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 a residential apartment building.

FRP HOLDINGS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
(In thousands except per share amounts)
(Unaudited)
	THREE MONTHS ENDED													SIX MONTHS ENDED
	JUNE 30,													JUNE 30,
	2023					2022								2023								2022
Revenues:
Lease revenue	$	7,432						6,745								14,264								13,027
Mining lands lease revenue		3,264						2,883								6,546								5,308
Total Revenues		10,696						9,628								20,810								18,335
Cost of operations:
Depreciation, depletion and amortization		2,819						2,868								5,599								5,766
Operating expenses		1,822						1,541								3,562								3,349
Property taxes		879						1,041								1,826								2,069
Management company indirect		1,040						805								1,879								1,579
Corporate expenses		1,369						1,307								2,323								2,142
Total cost of operations		7,929						7,562								15,189								14,905
Total operating profit		2,767						2,066								5,621								3,430
Net investment income		3,125						1,120								5,507								2,018
Interest expense		(1,129	)					(739		)						(2,135		)						(1,477		)
Equity in loss of joint ventures		(4,047	)					(1,766		)						(7,672		)						(3,370		)
Gain (loss) on sale of real estate		(2	)					—								8								733
Income before income taxes		714						681								1,329								1,334
Provision for (benefit from) income taxes		222						99								431								348
Net income		492						582								898								986
Loss attributable to noncontrolling interest		(106	)					(75		)						(265		)						(343		)
Net income attributable to the Company	$	598						657								1,163								1,329
Earnings per common share:
Net income attributable to the Company-
Basic	$	0.06						0.07								0.12								0.14
Diluted	$	0.06						0.07								0.12								0.14
Number of shares (in thousands) used in computing:
-basic earnings per common share		9,432						9,384								9,424								9,375
-diluted earnings per common share		9,466						9,424								9,463								9,416

FRP HOLDINGS, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(Unaudited) (In thousands, except share data)
	June 30				December 31
Assets:	2023				2022
Real estate investments at cost:
Land	$	141,578				141,579
Buildings and improvements		282,070				270,579
Projects under construction		2,667				12,208
Total investments in properties		426,315				424,366
Less accumulated depreciation and depletion		62,720				57,208
Net investments in properties		363,595				367,158
Real estate held for investment, at cost		10,392				10,182
Investments in joint ventures		152,587				140,525
Net real estate investments		526,574				517,865
Cash and cash equivalents		166,537				177,497
Cash held in escrow		823				797
Accounts receivable, net		1,472				1,166
Unrealized rents		1,299				856
Deferred costs		2,620				2,343
Other assets		571				560
Total assets	$	699,896				701,084
Liabilities:
Secured notes payable	$	178,631				178,557
Accounts payable and accrued liabilities		3,153				5,971
Other liabilities		1,886				1,886
Federal and state income taxes payable		186				18
Deferred revenue		891				259
Deferred income taxes		67,903				67,960
Deferred compensation		1,381				1,354
Tenant security deposits		873				868
Total liabilities		254,904				256,873
Commitments and contingencies
Equity:
Common stock, $.10 par value 25,000,000 shares authorized, 9,495,673 and 9,459,686 shares issued and outstanding, respectively		950				946
Capital in excess of par value		67,028				65,158
Retained earnings		342,610				342,317
Accumulated other comprehensive loss, net		(712	)			(1,276	)
Total shareholders’ equity		409,876				407,145
Noncontrolling interest		35,116				37,066
Total equity		444,992				444,211
Total liabilities and equity	$	699,896				701,084

Asset Management Segment:

	Three months ended June 30
(dollars in thousands)	2023				%			2022			%			Change			%
Lease revenue	$	1,420			100.0	%		912			100.0	%		508			55.7	%
Depreciation, depletion and amortization		359			25.3	%		230			25.2	%		129			56.1	%
Operating expenses		176			12.4	%		111			12.2	%		65			58.6	%
Property taxes		63			4.4	%		52			5.7	%		11			21.2	%
Management company indirect		141			9.9	%		100			10.9	%		41			41.0	%
Corporate expense		271			19.1	%		225			24.7	%		46			20.4	%
Cost of operations		1,010			71.1	%		718			78.7	%		292			40.7	%
Operating profit	$	410			28.9	%		194			21.3	%		216			111.3	%

Mining Royalty Lands Segment:

	Three months ended June 30
(dollars in thousands)	2023				%			2022			%			Change			%
Mining lands lease revenue	$	3,264			100.0	%		2,883			100.0	%		381			13.2	%
Depreciation, depletion and amortization		151			4.6	%		189			6.6	%		(38	)		-20.1	%
Operating expenses		16			0.5	%		17			0.6	%		(1	)		-5.9	%
Property taxes		74			2.3	%		69			2.4	%		5			7.2	%
Management company indirect		137			4.2	%		110			3.8	%		27			24.5	%
Corporate expense		154			4.7	%		148			5.1	%		6			4.1	%
Cost of operations		532			16.3	%		533			18.5	%		(1	)		-0.2	%
Operating profit	$	2,732			83.7	%		2,350			81.5	%		382			16.3	%

Development Segment:

	Three months ended June 30
(dollars in thousands)	2023				2022			Change
Lease revenue	$	467			408			59
Depreciation, depletion and amortization		41			47			(6	)
Operating expenses		73			80			(7	)
Property taxes		179			356			(177	)
Management company indirect		646			506			140
Corporate expense		815			816			(1	)
Cost of operations		1,754			1,805			(51	)
Operating loss	$	(1,287	)		(1,397	)		110

Stabilized Joint Venture Segment:

	Three months ended June 30
(dollars in thousands)	2023				%			2022			%			Change			%
Lease revenue	$	5,545			100.0	%		5,425			100.0	%		120			2.2	%
Depreciation, depletion and amortization		2,268			40.9	%		2,402			44.3	%		(134	)		-5.6	%
Operating expenses		1,557			28.1	%		1,333			24.6	%		224			16.8	%
Property taxes		563			10.2	%		564			10.4	%		(1	)		-0.2	%
Management company indirect		116			2.1	%		89			1.6	%		27			30.3	%
Corporate expense		129			2.3	%		118			2.2	%		11			9.3	%
Cost of operations		4,633			83.6	%		4,506			83.1	%		127			2.8	%
Operating profit	$	912			16.4	%		919			16.9	%		(7	)		-0.8	%

Asset Management Segment:

	Six months ended June 30
(dollars in thousands)	2023				%			2022			%			Change			%
Lease revenue	$	2,490			100.0	%		1,751			100.0	%		739			42.2	%
Depreciation, depletion and amortization		637			25.6	%		464			26.5	%		173			37.3	%
Operating expenses		317			12.7	%		279			15.9	%		38			13.6	%
Property taxes		123			4.9	%		105			6.0	%		18			17.1	%
Management company indirect		255			10.3	%		192			11.0	%		63			32.8	%
Corporate expense		453			18.2	%		369			21.1	%		84			22.8	%
Cost of operations		1,785			71.7	%		1,409			80.5	%		376			26.7	%
Operating profit	$	705			28.3	%		342			19.5	%		363			106.1	%

Mining Royalty Lands Segment:

	Six months ended June 30
(dollars in thousands)	2023				%			2022			%			Change			%
Mining lands lease revenue	$	6,546			100.0	%		5,308			100.0	%		1,238			23.3	%
Depreciation, depletion and amortization		334			5.1	%		244			4.6	%		90			36.9	%
Operating expenses		33			0.5	%		32			0.6	%		1			3.1	%
Property taxes		143			2.2	%		134			2.5	%		9			6.7	%
Management company indirect		253			3.8	%		217			4.1	%		36			16.6	%
Corporate expense		261			4.0	%		242			4.6	%		19			7.9	%
Cost of operations		1,024			15.6	%		869			16.4	%		155			17.8	%
Operating profit	$	5,522			84.4	%		4,439			83.6	%		1,083			24.4	%

Development Segment:

	Six months ended June 30
(dollars in thousands)	2023				2022			Change
Lease revenue	$	953			791			162
Depreciation, depletion and amortization		96			92			4
Operating expenses		167			291			(124	)
Property taxes		466			711			(245	)
Management company indirect		1,157			996			161
Corporate expense		1,389			1,337			52
Cost of operations		3,275			3,427			(152	)
Operating loss	$	(2,322	)		(2,636	)		314

Stabilized Joint Venture Segment:

	Six months ended June 30
(dollars in thousands)	2023				%			2022			%			Change			%
Lease revenue	$	10,821			100.0	%		10,485			100.0	%		336			3.2	%
Depreciation, depletion and amortization		4,532			41.9	%		4,966			47.4	%		(434	)		-8.7	%
Operating expenses		3,045			28.1	%		2,747			26.2	%		298			10.8	%
Property taxes		1,094			10.1	%		1,119			10.7	%		(25	)		-2.2	%
Management company indirect		214			2.0	%		174			1.6	%		40			23.0	%
Corporate expense		220			2.0	%		194			1.8	%		26			13.4	%
Cost of operations		9,105			84.1	%		9,200			87.7	%		(95	)		-1.0	%
Operating profit	$	1,716			15.9	%		1,285			12.3	%		431			33.5	%

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
Six months ended 06/30/23 (in thousands)
								Stabilized
	Asset							Joint			Mining			Unallocated			FRP
	Management				Development			Venture			Royalties			Corporate			Holdings
	Segment				Segment			Segment			Segment			Expenses			Totals
Net Income (loss)	$	513			(5,257	)		(509	)		4,018			2,133			898
Income Tax Allocation		190			(1,950	)		(90	)		1,490			791			431
Income (loss) before income taxes		703			(7,207	)		(599	)		5,508			2,924			1,329
Less:
Unrealized rents		420			—			—			97			—			517
Gain on sale of real estate		—			—			—			10			—			10
Interest income		—			2,561			—			—			2,946			5,507
Plus:
Unrealized rents		—			—			100			—			—			100
Loss on sale of real estate		2			—			—			—			—			2
Equity in loss of Joint Ventures		—			7,446			202			24			—			7,672
Professional fees - other		—			—			59			—			—			59
Interest Expense		—			—			2,113			—			22			2,135
Depreciation/Amortization		637			96			4,532			334			—			5,599
Management Co. Indirect		255			1,157			214			253			—			1,879
Allocated Corporate Expenses		453			1,389			220			261			—			2,323
Net Operating Income (loss)		1,630			320			6,841			6,273			—			15,064
NOI of noncontrolling interest		—			—			(3,112	)		—			—			(3,112	)
Pro-rata NOI from unconsolidated joint ventures		—			2,205			445			—			—			2,650
Pro-rata net operating income	$	1,630			2,525			4,174			6,273			—			14,602

Pro-rata Net Operating Income Reconciliation
Six months ended 06/30/22 (in thousands)
								Stabilized
	Asset							Joint			Mining			Unallocated			FRP
	Management				Development			Venture			Royalties			Corporate			Holdings
	Segment				Segment			Segment			Segment			Expenses			Totals
Net Income (loss)	$	249			(3,351	)		(92	)		3,758			422			986
Income Tax Allocation		93			(1,242	)		92			1,393			12			348
Income (loss) before income taxes		342			(4,593	)		—			5,151			434			1,334
Less:
Unrealized rents		196			—			—			105			—			301
Gain on sale of real estate		—			—			—			733			—			733
Equity in gain of Joint Ventures		—			—			171			—			—			171
Interest income		—			1,563			—			—			455			2,018
Plus:
Unrealized rents		—			—			51			—			—			51
Equity in loss of Joint Ventures		—			3,520			—			21			—			3,541
Interest Expense		—			—			1,456			—			21			1,477
Depreciation/Amortization		464			92			4,966			244			—			5,766
Management Co. Indirect		192			996			174			217			—			1,579
Allocated Corporate Expenses		369			1,337			194			242			—			2,142
Net Operating Income (loss)		1,171			(211	)		6,670			5,037			—			12,667
NOI of noncontrolling interest		—			—			(2,132	)		—			—			(2,132	)
Pro-rata NOI from unconsolidated joint ventures		—			1,192			—			—			—			1,192
Pro-rata net operating income	$	1,171			981			4,538			5,037			—			11,727

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