10-Q 1 frphmarq21.htm FRPH MARCH 2021 FORM 10Q

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

_________________

FORM 10-Q

_________________

(Mark One)

[X ]

QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended March 31, 2021

[ ]

TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from_________ to _________

Commission File Number: 001-36769

_____________________

FRP HOLDINGS, INC.

(Exact name of registrant as specified in its charter)

_____________________

Florida		47-2449198
(State or other jurisdiction of incorporation or organization)		(I.R.S. Employer Identification No.)

200 W. Forsyth St., 7th Floor, Jacksonville, FL		32202
(Address of principal executive offices)		(Zip Code)

904-396-5733

(Registrant’s telephone number, including area code)

Title of each class		Trading Symbol		Name of each exchange on which registered
Common Stock, $.10 par value		FRPH		NASDAQ

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. Yes [x] No [_]

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). Yes [x] No [_]

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 [_]
Non-accelerated filer [x]		Smaller reporting company [x]
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 [_] No [x]

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 May 11, 2021
	Common Stock, $.10 par value per share				9,396,928 shares

FRP HOLDINGS, INC.

FORM 10-Q

QUARTER ENDED MARCH 31, 2021

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	22

Item 3.	Quantitative and Qualitative Disclosures about Market Risks	36

Item 4.	Controls and Procedures	36

	Part II. Other Information

Item 1.	Legal Proceedings	37
Item 1A.	Risk Factors	37

Item 2.	Purchase of Equity Securities by the Issuer	38

Item 6.	Exhibits	38

Signatures		39

Exhibit 31	Certifications pursuant to Section 302 of the Sarbanes-Oxley Act of 2002	41

Exhibit 32	Certifications pursuant to Section 906 of the Sarbanes-Oxley Act of 2002	44

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-K and other factors that might cause differences, some of which could be material, include, but are not limited to: the impact of the Covid-19 Pandemic on our operations and financial results; the possibility that we may be unable to find appropriate investment opportunities; levels of construction activity in the markets served by our mining properties; demand for apartments in Washington D.C. and Richmond, Virginia; 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.

These forward-looking statements are made as of the date hereof based on management’s current expectations, and the Company does not undertake an obligation to update such statements, whether as a result of new information, future events or otherwise. 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.

PART I. FINANCIAL INFORMATION, ITEM 1. FINANCIAL STATEMENTS

FRP HOLDINGS, INC. AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

(Unaudited) (In thousands, except share data)

	March 31		December 31
Assets:	2021		2020
Real estate investments at cost:
Land	$	121,074		91,744
Buildings and improvements		255,429		141,241
Projects under construction		8,352		4,879
Total investments in properties		384,855		237,864
Less accumulated depreciation and depletion		39,528		34,724
Net investments in properties		345,327		203,140

Real estate held for investment, at cost		9,309		9,151
Investments in joint ventures		143,900		167,071
Net real estate investments		498,536		379,362

Cash and cash equivalents		116,843		73,909
Cash held in escrow		534		196
Accounts receivable, net		1,531		923
Investments available for sale at fair value		51,171		75,609
Federal and state income taxes receivable		4,509		4,621
Unrealized rents		532		531
Deferred costs		5,866		707
Other assets		509		502
Total assets	$	680,031		536,360

Liabilities:
Secured notes payable	$	178,321		89,964
Accounts payable and accrued liabilities		3,478		3,635
Other liabilities		1,886		1,886
Deferred revenue		527		542
Deferred income taxes		66,420		56,106
Deferred compensation		1,244		1,242
Tenant security deposits		520		332
Total liabilities		252,396		153,707

Commitments and contingencies

Equity:
Common stock, $.10 par value 25,000,000 shares authorized, 9,387,823 and 9,363,717 shares issued and outstanding, respectively		939		936
Capital in excess of par value		56,474		56,279
Retained earnings		337,910		309,764
Accumulated other comprehensive income, net		433		675
Total shareholders’ equity		395,756		367,654
Noncontrolling interest MRP		31,879		14,999
Total equity		427,635		382,653
Total liabilities and shareholders’ equity	$	680,031		536,360

See accompanying notes.

FRP HOLDINGS, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF INCOME

(In thousands except per share amounts)

(Unaudited)

	THREE MONTHS ENDED
	MARCH 31,
	2021			2020
Revenues:
Lease revenue	$	3,538			3,598
Mining lands lease revenue		2,315			2,185
Total revenues		5,853			5,783

Cost of operations:
Depreciation, depletion and amortization		1,443			1,468
Operating expenses		841			925
Property taxes		778			737
Management company indirect		570			672
Corporate expenses (Note 4 Related Party)		779			1,187
Total cost of operations		4,411			4,989

Total operating profit		1,442			794

Net investment income, including realized gains of $0 and $108		1,375			1,991
Interest expense		(925	)		(51	)
Equity in loss of joint ventures		(1,635	)		(642	)
Gain on remeasurement of investment in real estate partnership		51,139			—
Gain on sale of real estate		—			8

Income before income taxes		51,396			2,100
Provision for income taxes		10,521			601

Net income		40,875			1,499
Gain (loss) attributable to noncontrolling interest		12,502			(119	)
Net income attributable to the Company	$	28,373			1,618

Earnings per common share:
Net income attributable to the Company-
Basic	$	3.04			0.17
Diluted	$	3.03			0.16

Number of shares (in thousands) used in computing:
-basic earnings per common share		9,341			9,803
-diluted earnings per common share		9,376			9,833

See accompanying notes.

FRP HOLDINGS, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

(In thousands except per share amounts)

(Unaudited)

	THREE MONTHS ENDED
	MARCH 31,
	2021			2020
Net income	$	40,875			1,499
Other comprehensive income net of tax:
Unrealized loss on investments available for sale,		(242	)		(1,126	)
net of income tax effect of ($90) and ($417)
Comprehensive income	$	40,633			373

Less comp. income attributable to noncontrolling interest		12,502			(119	)

Comprehensive income attributable to the Company	$	28,131			492

See accompanying notes

FRP HOLDINGS, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS

THREE MONTHS ENDED MARCH 31, 2021 AND 2020

(In thousands) (Unaudited)

	2021			2020
Cash flows from operating activities:
Net income	$	40,875			1,499
Adjustments to reconcile net income to
net cash provided by continuing operating activities:
Depreciation, depletion and amortization		1,502			1,526
Deferred income taxes		10,314			—
Equity in loss of joint ventures		1,635			642
Gain on remeasurement of invest in real estate partnership		(51,139	)		—
Gain on sale of equipment and property		—			(8	)
Stock-based compensation		202			601
Realized gain on available for sale investments		—			(108	)
Net changes in operating assets and liabilities:
Accounts receivable		99			(292	)
Deferred costs and other assets		243			(183	)
Accounts payable and accrued liabilities		(613	)		(855	)
Income taxes payable and receivable		112			182
Other long-term liabilities		190			979
Net cash provided by operating activities		3,420			3,983

Cash flows from investing activities:
Investments in properties		(3,387	)		(487	)
Investments in joint ventures		(1,918	)		(3,600	)
Return of capital from investments in joint ventures		16,426			1,485
Purchases of investments available for sale		—			(24,748	)
Proceeds from sales of investments available for sale		23,701			11,857
Cash at consolidation of real estate partnership		3,704			—
Proceeds from the sale of assets		—			8
Cash held in escrow		(2	)		(3	)
Net cash provided by (used in) investing activities		38,524			(15,488	)

Cash flows from financing activities:
Proceeds from long-term debt		92,070			—
Repayment of long-term debt		(90,000	)		—
Debt issue costs		(679	)		—
Distribution to noncontrolling interest		(170	)		(306	)
Repurchase of company stock		(264	)		(3,421	)
Exercise of employee stock options		33			—
Net cash provided by (used in) financing activities		990			(3,727	)

Net increase (decrease) in cash and cash equivalents		42,934			(15,232	)
Cash and cash equivalents at beginning of year		73,909			26,607
Cash and cash equivalents at end of the period	$	116,843			11,375

See accompanying notes.

FRP HOLDINGS, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF SHAREHOLDERS’ EQUITY

THREE MONTHS ENDED MARCH 31, 2021 AND 2020

(In thousands, except share amounts)


		Three Months Ended March 31, 2021
												Accumulated			Total
						Capital in						Other Comp-			Share			Non-
	Common Stock					Excess of			Retained			rehensive			holders’			Controlling			Total
	Shares			Amount		Par Value			Earnings			Income, net			Equity			Interest			Equity
Balance at December 31, 2020		9,363,717		$	936	$	56,279		$	309,764		$	675		$	367,654		$	14,999		$	382,653

Stock option grant compensation							17									17						17
Restricted stock compensation							135									135						135
Shares granted to Employees		1,098					50									50						50
Restricted stock award		27,778			3		(3	)								—						—
Exercise of stock options		1,234					33									33						33
Shares purchased and cancelled		(6,004	)				(37	)		(227	)					(264	)					(264	)
Contributions from partners																			4,548			4,548
Net income										28,373						28,373			12,502			40,875
Distributions to partners																			(170	)		(170	)
Unrealized loss on investment, net													(242	)		(242	)					(242	)

Balance at March 31, 2021		9,387,823		$	939	$	56,474		$	337,910		$	433		$	395,756		$	31,879		$	427,635


		Three Months Ended March 31, 2020
													Accumulated			Total
							Capital in						Other Comp-			Share			Non-
	Common Stock						Excess of			Retained			Rehensive			holders’			Controlling			Total
	Shares			Amount			Par Value			Earnings			Income, net			Equity			Interest			Equity
Balance at December 31, 2019		9,817,429		$	982		$	57,705		$	315,278		$	923		$	374,888		$	16,757		$	391,645

Stock option grant compensation								24									24						24
Restricted stock compensation								47									47						47
Shares granted to Employees		11,448			1			529									530						530
Restricted stock award		20,520			2			(2	)								—						—
Shares purchased and cancelled		(82,491	)		(8	)		(485	)		(2,928	)					(3,421	)					(3,421	)
Net income											1,618						1,618			(119	)		1,499
Distributions to partners																				(306	)		(306	)
Unrealized loss on investment, net														(1,126	)		(1,126	)					(1,126	)

Balance at March 31, 2020		9,766,906		$	977		$	57,818		$	313,968		$	(203	)	$	372,560		$	16,332		$	388,892

FRP HOLDINGS, INC. AND SUBSIDIARIES

CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

MARCH 31, 2021

(Unaudited)

(1) Description of Business and Basis of Presentation.

FRP Holdings, Inc. is a holding company engaged in various real estate businesses, namely (i) mining royalty land ownership and leasing, (ii) land acquisition, entitlement and development primarily for future warehouse/office or residential building construction, (iii) ownership, leasing, and management of residential apartment buildings, and (iv) warehouse/office building ownership, leasing and management.

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”) and Florida Rock Properties, Inc. (”Properties”), RiverFront Investment Partners I, LLC, and commencing March 31, 2021 also RiverFront Investment Partners II, LLC (See Note 12). Our investment in the Brooksville joint venture, BC FRP Realty joint venture, RiverFront Investment Partners II, LLC prior to March 31, 2021, Bryant Street Partnerships, 1800 Half Street and Greenville/Woodfield are accounted for under the equity method of accounting (See 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. The Company uses the cost method to account for its investment in DST Hickory Creek because it does not have significant influence over operating and financial policies.

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 three months ended March 31, 2021 are not necessarily indicative of the results that may be expected for the year ending December 31, 2021. 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, 2020.

(2) Recently Issued Accounting Standards.

None.

(3) Business Segments.

The Company is reporting its financial performance based on four reportable segments, Asset Management, Mining Royalty Lands, Development and Stabilized Joint Venture, as described below.

The Asset Management segment owns, leases and manages commercial properties. The flex/office warehouses in the Asset Management Segment were sold and reclassified to discontinued operations leaving only two commercial properties and one recent industrial acquisition, Cranberry Run, which we purchased in 2019. In July 2020 we sold our property located at 1801 62^nd Street, our most recent spec building in Hollander Business Park, which had joined Asset Management April 1, 2019.

Our Mining Royalty Lands segment owns several properties comprising approximately 15,000 acres currently under lease for mining rents or royalties (this does not include the 4,280 acres owned in our Brooksville joint venture with Vulcan Materials). Other than one location in Virginia, all of these properties are located in Florida and Georgia.

Through our Development segment, we own and are continuously assessing for their highest and best use for 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 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. Two of our two joint ventures in the segment, Riverfront Investment Partners I, LLC (“Dock 79”) and RiverFront Investment Partners II, LLC (“The Maren”) are consolidated. The Maren was consolidated effective March 31, 2021 and prior periods are still reflected under the equity method. The ownership of Dock 79 and The Maren (commencing March 31, 2021) attributable to our partner MidAtlantic Realty Partners, LLC (MRP) is reflected on our consolidated balance sheet as a noncontrolling interest. Such noncontrolling interests are reported on the Consolidated Balance Sheets within equity but separately from shareholders' equity. On the Consolidated Statements of Income, all of the revenues and expenses from Dock 79 are reported in net income, including both the amounts attributable to the Company and the noncontrolling interest. The Maren is reflected in Equity in loss of joint ventures on the Consolidated Statements of Income but will be reflected like Dock 79 for periods commencing April 1, 2021. The amounts of consolidated net income attributable to the noncontrolling interest is clearly identified on the accompanying Consolidated Statements of Income.

Operating results and certain other financial data for the Company’s business segments are as follows (in thousands):

	Three Months ended
	March 31,
	2021			2020
Revenues:
Asset management	$	712			652
Mining royalty lands		2,315			2,185
Development		317			293
Stabilized Joint Venture		2,509			2,653
		5,853			5,783

Operating profit (loss):
Before corporate expenses:
Asset management	$	231			177
Mining royalty lands		2,094			2,001
Development		(386	)		(774	)
Stabilized Joint Venture		282			577
Operating profit before corporate expenses		2,221			1,981
Corporate expenses:
Allocated to asset management		(214	)		(308	)
Allocated to mining royalty lands		(81	)		(97	)
Allocated to development		(419	)		(712	)
Allocated to Stabilized Joint Venture		(65	)		(70	)
Total corporate expenses		(779	)		(1,187	)
	$	1,442			794

Interest expense	$	925			51

Depreciation, depletion and amortization:
Asset management	$	137	192
Mining royalty lands		65	38
Development		53	54

Capital expenditures:
Asset management	$	79	213
Mining royalty lands		—	—
Development		3,299	297
Stabilized Joint Venture		9	(23	)
	$	3,387	487

		March 31,	December 31,
Identifiable net assets		2021	2020

Asset management	$	11,013	11,172
Mining royalty lands		37,335	37,387
Development		176,239	196,212
Stabilized Joint Venture		274,774	130,472
Investments available for sale at fair value		51,171	75,609
Cash items		117,377	74,105
Unallocated corporate assets		12,122	11,403
	$	680,031	536,360

(4) Related Party Transactions.

The Company is a party to a Transition Services Agreement which resulted from our January 30, 2015 spin-off of Patriot Transportation Holding, Inc. (Patriot). The Transition 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, 2021.

The consolidated statements of income reflect charges and/or allocation from Patriot for these services of $256,000 and $290,000 for the three months ended March 31, 2021 and 2020, respectively. These charges are reflected as part of corporate expenses.

To determine these allocations between FRP and Patriot as set forth in the Transition 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.

Long-term debt is summarized as follows (in thousands):

	March 31,		December 31,
	2021		2020
Riverfront permanent loan	$	178,321		89,964
Less portion due within one year		—		—
	$	178,321		89,964

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 five-year revolving credit facility with a maximum facility amount of $20 million. The interest rate under the Credit Agreement will be a maximum of 1.50% over Daily 1-Month LIBOR, which may be reduced quarterly to 1.25% or 1.0% over Daily 1-Month LIBOR if the Company meets a specified ratio of consolidated debt to consolidated total capital, as defined which excludes FRP Riverfront. A commitment fee of 0.25% per annum is payable quarterly on the unused portion of the commitment but the amount may be reduced to 0.20% or 0.15% if the 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 March 31, 2021, there was no debt outstanding on this revolver, $448,000 outstanding under letters of credit and $19,552,000 available for borrowing. The letters of credit were issued to guarantee certain obligations to state agencies related to real estate development. Most of the letters of credit are irrevocable for a period of one year and typically are automatically extended for additional one-year periods. The letter of credit fee is 1% and applicable interest rate would have been 1.1085% on March 31, 2021. The credit agreement contains certain conditions and financial covenants, including a minimum tangible net worth and dividend restriction. As of March 31, 2021, these covenants would have limited our ability to pay dividends to a maximum of $228 million combined. The Company was in compliance with all covenants as of March 31, 2021.

On November 17, 2017, Dock 79 borrowed a principal sum of $90,000,000 pursuant to a Loan Agreement and Deed of Trust Note entered into with EagleBank. The loan was secured by the Dock 79 real property and improvements, bore a fixed interest rate of 4.125% per annum and had a term of 120 months. The loan was paid in full on March 19, 2021. A prepayment penalty of $900,000 was recorded into interest expense in the quarter ending March 31, 2021.

Effective March 31, 2021 the Company consolidated the assets (at current fair value), liabilities and operating results of our Riverfront Investment Partners II, LLC partnership (“The Maren”) which was previously accounted for under the equity method. As such the full amount of our mortgage loan was recorded in the consolidated financial statements.

On March 19, 2021, the Company refinanced Dock 79 and The Maren projects 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 sum of $92,070,000 and $88,000,000 respectively, in connection with the refinancing. The loans are separately secured by the Dock 79 and The Maren real property and improvements, bear a fixed interest rate of 3.03% per annum, and require monthly payments of interest only with the principal in full due April 1, 2033. Either loan may be prepaid subsequent to April 1, 2024 subject to yield maintenance premiums. Either loan may be transferred to a qualified buyer as part of a one-time sale subject to a 60% loan to value, minimum of 7.5% debt yield and a 0.75% transfer fee.

Debt cost amortization of $38,000 and $34,000 was recorded during the three months ended March 31, 2021, respectively. During the three months ended March 31, 2021 and March 31, 2020 the Company capitalized interest costs of $928,000 and $935,000, respectively.

(6) Earnings per Share.

The following details the computations of the basic and diluted earnings per common share (in thousands, except per share amounts):

	Three Months ended
	March 31,
	2021		2020
Weighted average common shares outstanding
during the period – shares used for basic
earnings per common share		9,341		9,803

Common shares issuable under share based
payment plans which are potentially dilutive		35		30

Common shares used for diluted
earnings per common share		9,376		9,833


Net income attributable to the Company	$	28,373	1,618

Earnings per common share:
-basic	$	3.04	0.17
-diluted	$	3.03	0.16

For the three months ended March 31, 2021, 19,950 shares attributable to outstanding stock options were excluded from the calculation of diluted earnings per share because their inclusion would have been anti-dilutive. For the three months ended March 31, 2020, 29,925 shares attributable to outstanding stock options were excluded from the calculation of diluted earnings per share because their inclusion would have been anti-dilutive.

During the first three months of 2021 the Company repurchased 6,004 shares at an average cost of $43.95. During the first three months of 2020 the Company repurchased 82,491 shares at an average cost of $41.47.

(7) Stock-Based Compensation Plans.

The Company has two Stock Option Plans (the 2006 Stock Incentive Plan and the 2016 Equity Incentive Option Plan) under which options for shares of common stock were granted to directors, officers and key employees. The 2016 plan permits the grant of stock options, stock appreciation rights, restricted stock awards, restricted stock units, or stock awards. The options awarded under the plans have similar characteristics. All stock options are non-qualified and expire ten years from the date of grant. Stock based compensation awarded to directors, officers and employees are exercisable immediately or become exercisable in cumulative installments of 20% or 25% at the end of each year following the date of grant. When stock options are exercised the Company issues new shares after receipt of exercise proceeds and taxes due, if any, from the grantee.

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 no dividend yield, expected volatility between 29% and 41%, risk-free interest rate of 1.0% to 2.9% and expected life of 3.0 to 7.0 years.

The dividend yield of zero 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 2021, 8,896 shares of restricted stock were granted to employees that will vest over the next four years. In January 2021, 18,882 shares of restricted stock were granted to employees as part of a long-term incentive plan that will vest over the next five years. In March 2020, 20,520 shares of restricted stock were granted to employees as part of a long-term incentive plan that will vest over the next five years. The number of common shares available for future issuance was 405,751 at March 31, 2021. In March 2021 and March 2020, 1,098 and 11,448 shares of stock, respectively, were granted to employees rather than stock options as in prior years.

The Company recorded the following stock compensation expense in its consolidated statements of income (in thousands):

	Three Months ended
	March 31,
	2021		2020
Stock option grants	$	17		24
Restricted stock awards		135		47
Employee stock grant		50		530
Annual director stock award		—		—
	$	202		601

A summary of changes in outstanding options is presented below (in thousands, except share and per share amounts):

				Weighted		Weighted	Weighted
	Number			Average		Average	Average
	Of			Exercise		Remaining	Grant Date
Options	Shares			Price		Term (yrs)	Fair Value(000's)

Outstanding at December 31, 2020		120,089		$	35.33	5.3	$	1,531
Exercised		(1,234	)	$	26.97		$	(15	)
Outstanding at March 31, 2021		118,855		$	35.42	5.0	$	1,516

Exercisable at March 31, 2021		106,507		$	34.20	4.7	$	1,312

Vested during three months ended
March 31, 2021		—					$	—

The aggregate intrinsic value of exercisable in-the-money options was $1,600,000 and the aggregate intrinsic value of outstanding in-the-money options was $1,641,000 based on the market closing price of $49.22 on March 31, 2021 less exercise prices.

The unrecognized compensation cost of options granted to FRP employees but not yet vested as of March 31, 2021 was $180,000, which is expected to be recognized over a weighted-average period of 2.6 years.

Gains of $26,000 were realized by option holders during the three months ended March 31, 2021.

A summary of changes in restricted stock awards is presented below (in thousands, except share and per share amounts):

			Weighted		Weighted	Weighted
	Number		Average		Average	Average
	Of		Exercise		Remaining	Grant Date
Restricted stock	Shares		Price		Term (yrs)	Fair Value(000's)

Non-vested at December 31, 2020		20,520	$	46.30	3.4	$	950
Time-based awards granted		8,896		45.55			405
Performance-based awards granted		18,882		45.55			860
Non-vested at March 31, 2021		48,298	$	45.87	3.8	$	2,215

Total compensation cost of restricted stock granted but not yet vested as of March 31, 2021 was $1,831,000 which is expected to be recognized over a weighted-average period of 4.0 years.

(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 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 March 31, 2021 there were $448,000 outstanding under letters of credit. The letters of credit were issued to guarantee certain obligations to state agencies related to real estate development.

(9) Concentrations.

The mining royalty lands segment has a total of five tenants currently leasing mining locations and one lessee that accounted for 30.6% of the Company’s consolidated revenues during the three months ended March 31, 2021 and $270,000 of accounts receivable at March 31, 2021. The termination of these lessees’ underlying leases could have a material adverse effect on the Company. The Company places its cash and cash equivalents with Wells Fargo Bank and First Horizon Bank. At times, such amounts may exceed FDIC limits.

(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 March 31, 2021 the Company was invested in 20 corporate bonds with individual maturities ranging from 2021 through 2022. The unrealized gain on these bonds of $345,000 was recorded as part of comprehensive income and was based on the estimated market value by National Financial Services, LLC (“NFS”) obtained from sources that may include pricing vendors, broker/dealers who clear through NFS and/or other sources (Level 2). The amortized cost of the investments was $51,171,000 and the carrying amount and fair value of such bonds were $51,171,000 as of March 31, 2021.

At March 31, 2021 and 2020, the carrying amount reported in the consolidated balance sheets for cash and cash equivalents and revolving credit approximate their fair value based upon the short-term nature of these items.

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 March 31, 2021, the carrying amount and fair value of such other long-term debt was $178,321,000 and $169,355,000, respectively. At March 31, 2020, the carrying amount and fair value of such other long-term debt was $88,959,000 and $95,486,000, respectively.

(11) Investments in Joint Ventures.

Brooksville. In 2006, the Company entered into a Joint Venture Agreement with Vulcan Materials Company to jointly own and develop approximately 4,300 acres of land near Brooksville, Florida. Under the terms of the joint venture, FRP contributed its fee interest in approximately 3,443 acres formerly leased to Vulcan under a long-term mining lease which had a net book value of $2,548,000. Vulcan is entitled to mine a portion of the property until 2032 and pay royalties to the Company. FRP also contributed $3,018,000 for one-half of the acquisition costs of a 288-acre contiguous parcel. Vulcan contributed 553 acres that it owned as well as its leasehold interest in the 3,443 acres that it leased from FRP and $3,018,000 for one-half of the acquisition costs of the 288-acre contiguous parcel. The joint venture is jointly controlled by Vulcan and FRP. Distributions will be made on a 50-50 basis except for royalties and depletion specifically allocated to the Company. Other income for the three months ended March 31, 2021 includes a loss of $11,000 representing the Company’s portion of the loss of this joint venture.

BC FRP Realty (Windlass Run). In 2016, the Company entered into an agreement with a Baltimore development company (St. John Properties, Inc.) to jointly develop the remaining lands of our Windlass Run Business Park. The 50/50 partnership initially calls for FRP to combine its 25 acres (valued at $7,500,000) with St. John Properties’ adjacent 10 acres fronting on a major state highway (valued at $3,239,536) which resulted in an initial cash distribution of $2,130,232 to FRP in May 2016. Thereafter, the venture will jointly develop the combined properties into a multi-building business park to consist of approximately 329,000 square feet of single-story office space. On September 28, 2017 BC FRP Realty, LLC obtained $17,250,000 of construction financing commitments for four buildings through September 15, 2022 from BB&T at 2.5% over Daily 1-Month LIBOR. The balance outstanding on these loans at March 31, 2021 was $11,969,000.

Bryant Street Partnerships. On December 24, 2018 the Company and MRP formed four partnerships to purchase and develop approximately five acres of land at 500 Rhode Island Ave NE, Washington, D.C. This property is the first phase of the Bryant Street Master Plan. The property is located in an Opportunity Zone, which provides tax benefits in the new communities development program as established by Congress in the Tax Cuts and Jobs Act of 2017. The Company contributed cash of $32 million in exchange for a 61.36% common equity in the partnership. The Company also contributed cash of $23 million as preferred equity financing at 8.0% interest rate. The Company records interest income for this loan and a loss in equity in ventures for our 61.36% equity in the partnership. On March 13, 2019 the partnerships closed on a construction loan with a group of lenders for up to $132 million at an interest rate of 2.25% over Daily 1-Month LIBOR. The loan matures March 13, 2023 with up to two extensions of one year each upon certain conditions including, for the first, a debt service coverage of at least 1.10 and a loan-to-value that does not exceed 65% and for the second, a debt service coverage of 1.25 and a maximum loan-to-value of 65%. Borrower may prepay a portion of the unpaid principal to satisfy such tests. The loan balance at March 31, 2021 was $95,967,000. The Company and MRP guaranteed $26 million of the loan in exchange for a 1% lower interest rate. The Company and MRP have a side agreement limiting the Company’s guarantee to its proportionate ownership. The value of the guarantee was calculated at $1.9 million based on the present value of the 1% interest savings over the anticipated 48 month term. This amount is included as part of the Company’s investment basis and is amortized to expense over the 48 months. The Company’s equity interest in the joint venture is accounted for under the equity method of accounting as all the major decisions are shared equally.

Hyde Park. On January 27, 2018 the Company entered into a loan agreement with a Baltimore developer to be the principal capital source of a residential development venture in Essexshire now known as “Hyde Park.” We have committed up to $3.5 million in exchange for an interest rate of 10% and a preferred return of 20% after which the Company is also entitled to a portion of proceeds from sale. Entitlements for the development of the property are complete, a homebuilder is under contract to purchase all of the 126 recorded building lots. The first phase of settlement occurred in May 2020, resulting in a $2.67 million principal and interest payment, with subsequent payments of $1.13 million in principal and interest payments in the third quarter of 2020.

DST Hickory Creek. In July 2019, the Company invested $6 million in 1031 proceeds from two sales in 2019 into a Delaware Statutory Trust (DST) known as CS1031 Hickory Creek Apartments, DST. The Company is 26.65% beneficial owner and receives monthly distributions. The DST owns a 294-unit garden-style apartment community consisting of 19 three-story apartment buildings containing 273,940 rentable square feet on approximately 20.4 acres of land. The property was constructed in 1984 and substantially renovated in 2016. The DST purchased the property in April, 2019 for $45,600,000 with ten-year financing obtained for $29,672,000 at 3.74% with a 30-year amortization period, interest only for five years. The Company’s equity interest in the trust is accounted for under the cost method because we don’t have significant influence over the operating and financial policies. Monthly distributions are recorded as equity in gain or loss of joint ventures. Distributions of $84,000 were received in 2021.

Amber Ridge. On June 26, 2019 the Company entered into a loan agreement with a Baltimore developer to be the

principal capital source of a residential development venture in Prince Georges County, Maryland known as “Amber Ridge.” We have committed up to $18.5 million in exchange for an interest rate of 10% and a preferred return of 20% after which the Company is also entitled to a portion of proceeds from sale. This project will hold 187 single-family town homes. We are currently pursuing entitlements and have two homebuilders under contract to purchase all of the 187 units upon completion of development infrastructure.

1800 Half Street. On December 20, 2019 the Company and MRP formed a joint venture to acquire and develop a mixed-use project located at 1800 Half Street, Washington, D.C. This property is located in the Buzzard Point area of Washington, DC, less than half a mile downriver from Dock 79 and the Maren. It lies directly between our two acres on the Anacostia currently under lease to Vulcan and Audi Field, the home stadium of the DC United. The project is located in an Opportunity Zone, which provides tax benefits in the new communities’ development program as established by Congress in the Tax Cuts and Jobs Act of 2017. The Company contributed cash of $37.3 million. MRP will contribute the remainder of its equity in 2020. The land was acquired in two pieces over the first half of 2020. On June 26, 2020 the partnership closed on a construction loan with Truist Bank for up to $74 million at an interest rate of 2.25% over Daily 1-Month LIBOR. The loan matures June 26, 2024 with one extension of two years requiring a .25% fee, paying principal monthly under a 30-year amortization schedule, and meeting a 9.9% debt yield after the first year. The ten-story structure will have 344 apartments and 11,246 square feet of ground floor retail. The Company’s equity interest in the joint venture is accounted for under the equity method of accounting because all major decisions are shared equally.

Greenville/Woodfield Partnerships. On December 23, 2019 the Company and Woodfield Development formed a joint venture to develop a mixed-use project in Greenville SC known as .408 Jackson located across the street from Greenville’s minor league baseball stadium. The project will hold 227 multifamily units and 4,700 square feet of retail space. It is located in an Opportunity Zone, which provides tax benefits in the new communities’ development program as established by Congress in the Tax Cuts and Jobs Act of 2017. On April 28, 2020 the partnership closed on a construction loan with First National Bank of Pennsylvania for up to $36 million at an interest rate of 2.00% over Daily 1-Month LIBOR. The loan matures on April 28, 2025 and the payment terms are interest only through April 28, 2024 and fixed principal payments of $17,765 plus interest through April 28, 2025 when all unpaid principal is due. There is an option of one extension of two years requiring a .1% fee, maintaining a 1.20-to-1 Debt Service Coverage Ratio, the loan is free from outstanding default events and the appraisal value is 60% of the loan amount. If extension is accepted principal payments of $17,765 plus interest will continue until maturity when all unpaid principal is due. The loan balance at March 31, 2021 was $1,857,000. The Company contributed cash of $9.7 million in exchange for a 40% common equity in the joint venture. The Company’s equity interest in the joint venture is accounted for under the equity method of accounting through the construction and lease up period. Woodfield personally guaranteed the loan and will be managing the projects day to day operations. Major decisions for the entity must be made unanimously between both members.

On December 23, 2019 the Company and Woodfield formed a joint venture to develop a 200-unit multifamily apartment project located at 1430 Hampton Avenue, Greenville, SC. The project is located in an Opportunity Zone, which provides tax benefits in the new communities’ development program as established by Congress in the Tax Cuts and Jobs Act of 2017. The Company contributed $6.2 million in exchange for a 40% common equity in the joint venture. On February 14, 2020, Woodfield Riverside OZB, LLC closed on a construction loan with Truist Bank for up to $22.8 million at an interest rate of 2.25% over Daily 1-Month LIBOR. When the Certificate of Occupancy is received, the interest rate reduces to 2.05% over Daily 1-Month LIBOR. The loan matures February 10, 2024 with two one-year extension options after initial 48 month term amortizing payments over 30 years, and meeting Debt Service Coverage Ratio of not less than 1.25-to-1.0. The loan balance at March 31, 2021 was $8,307,000. The Company’s equity interest in the joint venture is accounted for under the equity method of accounting through the construction and lease up period. Woodfield personally guaranteed the loan and will be managing the projects day to day operations. Major decisions for the entity must be made unanimously between both members.

Investments in 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 (1)

As of March 31, 2021
Brooksville Quarry, LLC	50.00	%	$	7,487	14,315	(22	)	(11	)
BC FRP Realty, LLC	50.00	%		5,387	22,715	(52	)	(26	)
RiverFront Holdings II, LLC (1)				—	—	(760	)	(639	)
Bryant Street Partnerships	61.36	%		59,907	187,509	(1,137	)	(1,061	)
Hyde Park				591	591	—		—
DST Hickory Creek	26.65	%		6,000	47,469	(99	)	84
Amber Ridge Loan				10,197	10,197	—		—
1800 Half St. Owner, LLC	61.37	%		38,027	59,005	16		18
Greenville/Woodfield Partnerships	40.00	%		16,304	57,092	—		—
Total			$	143,900	398,893	(2,054	)	(1,635	)

								The
								Company's
								Share of Profit
	Common			Total	Total Assets of	Profit (Loss)		(Loss) of the
	Ownership			Investment	The Partnership	Of the Partnership		Partnership (1)

As of December 31, 2020
Brooksville Quarry, LLC	50.00	%	$	7,499	14,347	(78	)	(39	)
BC FRP Realty, LLC	50.00	%		5,184	22,747	(411	)	(207	)
RiverFront Holdings II, LLC	80.00	%		23,533	108,538	(4,573	)	(3,907	)
Bryant Street Partnerships	61.36	%		60,159	173,814	(836	)	(2,130	)
Hyde Park				591	591	—		—
DST Hickory Creek	26.65	%		6,000	47,761	(367	)	339
Amber Ridge Loan				10,026	10,026	—		—
1800 Half St. Owner, LLC	61.37	%		37,875	54,275	158		164
Greenville/Woodfield Partnerships	40.00	%		16,204	46,457	182		90
Total			$	167,071	478,556	(5,925	)	(5,690	)

(1): RiverFront Holdings II, LLC was consolidated on March 31, 2021. RiverFront Holdings II, LLC includes $286,000 in 2020 for the Company’s share of preferred interest. Bryant Street Partnerships includes $234,000 in 2021 and $1,146,000 in 2020 for the Company’s share of preferred interest and $118,000 in 2021 and $471,000 in 2020 for amortization of guarantee liability related to the Bryant Street loan.

The Company’s Investments in Joint Ventures as of March 31, 2021 are summarized in the following two tables (in thousands):

	As of March 31, 2021										Total
	RiverFront		Bryant Street		DST Hickory		1800 Half St.		Greenville/		Apartment/
	Holdings II, LLC		Partnership		Creek		Partnership		Woodfield		Mixed Use

Investments in real estate, net	$	0		186,148		44,972		46,099		56,946	$	334,165
Cash and cash equivalents		0		1,092		1,251		10,096		146		12,585
Unrealized rents & receivables		0		203		858		0		0		1,061
Deferred costs		0		66		388		2,810		0		3,264
Total Assets	$	0		187,509		47,469		59,005		57,092	$	351,075


Secured notes payable	$	0	93,798	29,303	0	9,789	$	132,890
Other liabilities		0	16,180	219	4,206	7,396		28,001
Capital - FRP		0	58,139	4,783	37,482

SEC Form 10-Q filed by FRP Holdings, Inc.