Excuse me, ladies and gentlemen. We now have our speakers in conference. [Operator Instructions].

At that time, further instructions will be given as the procedure to follow if you would like to ask a question. .

It is now my pleasure to turn the conference over to Mr. John Baker. Sir, please begin. .

Good afternoon. I'm John Baker, III, Chief Financial Officer and Treasurer of FRP Holdings. And with me today are David deVilliers, Jr., our President; John Milton, our Executive Vice President and General Counsel; John Klopfenstein, our Chief Accounting Officer; and David deVilliers, III, our Executive Vice President. .

Before we begin, let me remind you that any statements on this call, 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 risks and uncertainties are listed in our SEC filings.

We have no obligation to revise or update any forward-looking statements except imposed by law as a result of future events or new information. .

Now let me turn to financial highlights. Net income for the third quarter was $352,000 or $0.04 per share versus $5,455,000 or $0.57 per share in the same period last year.

Some of this decrease is a result of lower interest income due to bond maturities and the fact that The Maren's permanent refinancing paid off our preferred loan to the JV, so we are no longer receiving a return on that loan. .

We also had an increase in interest expense relative to last year as a result of stabilization of The Maren prior to consolidating The Maren onto our books, our share of the merits interest expense was included in the loss from joint venture line rather than interest expense.

The Maren's increased -- interest expense is mitigated to some extent by the lower interest rate on the refinanced Dock 79 loan. However, the lion's share of this increase is attributable to a decrease in the gain on sale of real estate.

We sold 2 properties this quarter last year for a gain of $5.73 million, and there were no such gains this quarter to offset that decrease. .

For the first 9 months, net income was $28, 807,000 or $3.07 per share versus $11,322,000 or $1.16 per share in the same period last year. The bulk of this is a result of the gain remeasurement of The Maren at 51.1 million mitigated by $10.1 million provision for taxes; $14 million attributable to noncontrolling interest.

We also experienced $3.24 million in amortization expense of the $4.75 million fair value of Maren's leases in place as part of the gain on remeasurement. .

One, easement sale last quarter with a gain of $805,000 compared to sales during the first 9 months of last year with gains of $9.3 million to $9 million. .

I don't want to delve too deeply to operations and spoil David's remarks. But I wanted to touch on a few operational highlights. This quarter, we completed the purchase of what we are calling our Chelsea property. This is a 17-acre track in Harford County, Maryland, which we purchased in September for just under $2 million.

And it will be a cable supporting 250,000 square feet of industrial development, which we plan on just being on building 250,000 square feet. We plan to start construction on that building at the end of 2022 once entitlement work is done.

This is another step in furthering our commitment to industrial development and bolstering our land bank as we move beyond our remaining developable land at Hollander. .

We are now into the second reporting period with a stabilized and consolidated Maren standing side-by-side with Dock 79, and both buildings are 100% commercially leased and both buildings had average occupancies this quarter in excess of 95%. .

This is also the fourth quarter in a row where Doc 79 ended the quarter with occupancy greater than 94%, which is the first time that's happened with that building.

So I don't think it can be overstated how impressive this accomplishment is given that the streak, for a lack of a better term, began while The Maren was leasing up at an incredibly high rate and then continued past The Maren's stabilization.

It speaks to both the desirability of the environment and the sense of place we and our partners have created and it demonstrates that these buildings, the sum of the 2 buildings is greater than the parts. They're just better together than they are on their own. .

Aggregates royalties income this quarter decreased compared to the same period last year, but it was up for the first 9 months, making this the highest revenue total for this segment through the first 9 months in its history.

Our revenue total of $7.198 million through the first 9 months is more money than our royalties generated in any fiscal year prior to 2017. .

The first 9 months is greater than any fiscal year prior to 2017, which I think is pretty incredible. This is the third quarter in a row where the trailing 12 months revenue for aggregates royalties exceeded $9.5 million. And prior to 2021, we had never achieved revenue that high in any 12-month period.

We touched on this at our Investor Day, but this is the closest we've been in some time doing infrastructure bill becoming law. .

This is already a very busy time for the aggregates industry. So any additional demand like the kind we see should this build become along with stretched supply when supply is already stretched pretty thin, which should lead to meaningful price increases still. The bill has to become wall. So fingers crossed.

We still retain high levels of liquidity relative to our size with over $160 million in cash and bonds as well as a $20 million line of credit. However, looking down our development pipeline. We believe should everything go according to plan that we will be able to put all of our cash to use and return it to you in the form of new investments. .

Now if I could turn things over to David deVilliers Jr. to walk through our segments in more detail.

David?.

Thank you, John. And good afternoon to those on the call today. It was mentioned during our recent Investors Day presentation in Washington, D.C. that FRP has been quietly engaged in a 4-pronged investment strategy of investing cash reserves with a goal towards increasing profitability and shareholder value.

To supplement the information detailed in the press release and the 10-Q, I'd like to take a slightly different approach today by providing you with a window into the 4 prongs of focus that both helped build the FRP of yesteryear and are central to our operations and balance sheet today.

That being, one, our in-house industrial and commercial development platform; two, mining and royalties; three, third-party joint ventures; and four, lending ventures. .

Relative to our in-house industrial commercial activities, Cranberry Run Business Park, our 268,000 square foot value-add purchase and rehabilitation project was 96.6% leased at quarter's end, versus 78.6% for the same period last year.

As of today, we're happy to report the park is 100% leased with full occupancy expected in the first quarter of 2022. .

Our multi-tenanted suburban office building [indiscernible] is FRP's Maryland offices was 95% leased and occupied quarter's act. Our vacant lot in Jacksonville remains fully leased to Vulcan Materials through Q1 2026.

NOI for these 3 assets that make up the Asset Management business segment,was $468,000 for the quarter versus $506,000 in the same period last year, reduction in NOI comes as a result of the sale of our Hollander Spec building in July 2020. .

Our 2 new speculative Shell warehouse buildings totaling 145,700 square feet at the Hollander Business Park near the Port of Baltimore, our state-of-the-art Class A concrete tilt wall buildings with 28- and 32-foot clear ceiling heights built to Baltimore City green building standards.

64% of the first of Building 1 is preleased, and we are encouraged by the continued activity in this submarket and interest in these buildings. Both buildings are expected to have certificates of occupancy by year-end 2021. .

In the second quarter of this year, we executed a build-to-suit lease for a new 101,750 square foot facility at 1941 Second Street, the last building lot in Hollander Business Park.

We commenced construction on this project in September and expect to deliver the building to the tenant before the end of calendar year 2022, completing all construction activities at Hollander Business Park.

This last project marks the culmination of an in-house development endeavor that will have included entitlements and land development of over 50 acres, in-house construction and delivery of over 410,000 square feet in 7 buildings.

The development of Hollander Business Park replaced a blighted former public housing complex and has created hundreds of jobs in Baltimore City. .

In order to maintain our industrial development pipeline, last November, we purchased a 55-acre tract of land in Aberdeen, Maryland, adjacent to the Cranberry Business Park for $10.5 million.

This project is now known as Cranberry Run Business Center Phase 2 and will support up to 675,000 square feet of warehouse product in a robust distribution market. Entitlement process will take us through next year, and we have begun the design process in the end.

Existing land leases for the storage of trailers on-site will help to offset our carrying and entitlement costs. Average monthly revenue from land leases for the third quarter were in excess of $43,000. We're hopeful we can begin vertical construction in this site sometime in 2023. .

In September of this year, we completed the purchase of 17 acres of industrial land in the [indiscernible] County. John mentioned this purchase in his opening remarks.

We've begun the design an preliminary entitlement process to allow construction of approximately 250,000 square foot warehouse facility and hope to commence construction here in Q2 of 2022. .

Lastly, we are under contract for 130-acre industrial track in Cecil County, Maryland, quite convenient to Interstate 95. .

The site could support approximately 900,000 square feet of industrial development. If our due diligence warrants, we would look to close on the purchase in Q2 or Q2, Q3 of 2022 after entitlements are complete. .

So to summarize our warehouse platform as of September 30, 268,000 square feet is operating at 96.5% leased -- excuse me, now 100% leased. 247,340 square feet is under construction and 58.3% leased. 930,000 square feet is in the entitlement phase and 900,000 square feet of product is under contract.

Assuming a successful completion to the due diligence phase of the property under contract, that would total over 2.3 million square feet of warehouse development, ranging from under contract to operate. The pretty significant move back into warehouse development after our sale of about 4.1 million square feet in May of 2018. .

Relative to the Mining and Royalties platform, John III described the highlights of this business segment. So I'll move on to #3 of our 4-pronged attack moving on to our third-party joint ventures. .

At quarter end, Phase 1 of our joint venture with St. John Properties, which consists of 4 buildings totaling 72,080 square feet of single-story office and 27,950 square feet of small bay retail space in Baltimore County, Maryland, remained 48.1% leased and 48% occupied. .

Our 26.6% beneficial interest in the Delaware Statutory Trust, or DST, that owns a 294-unit garden-style apartment community known as Hickory Creek, located in Henrico County, Virginia remained above the 95% occupancy level, and we continue to receive our monthly distributions from operations at Hickory Creek. .

On the mixed-use development front, Dock 79, 305 apartments were 95.94% occupied on average for the quarter and 92.8% leased. 94.8% of the apartments were occupied at quarter's end, marking the fourth quarter in a row with occupancy above 94%. Our retention rated dock was 57.8%.

However, rental rates continue to be flat due to government-imposed restrictions on rent increases due to COVID. These restrictions are currently scheduled to expire at the end of the year. .

Dock 79 has quite well over the past 1.5 years despite the significant interruptions we all experienced.

Though seriously impacted by COVID with shutdowns, reduced capacity, canceled stadium events and general uncertainty, our 3 retail tenants at Dock 79, which total approximately 10,500 square feet of the 14,000 square foot total retail space seem to have turned a corner and are holder up.

significant headway toward normalcy with the loosening of some restrictions, warmer weather, better utilization of outdoor spaces and stadium events with spectators is now being realized. In early April of this year, the remaining retail space dock became leased, and we look forward to full occupancy in late spring of next year. .

Dock 79 was our first joint venture with MidAtlantic Realty Partners, or MRP, and we maintained a 66% ownership position. .

In the second quarter of this year, Phase 2 of our Riverfront on the Anacostia project in Washington, D.C., known as Maren, reached stabilization or 90% occupancy of its 264 apartment units. And as a result of this milestone joins Dock 79 at Hickory Creek and our stabilized joint ventures business segment. .

At quarter end, 93.6% of the apartments were leased and 95.5% were occupied. Average occupancy for the quarter was 95.92%, with retention rate of 71.9%. .

Relative to the 6,900 square feet of first floor retail. 100% of the space is leased with 24% occupancy as of September 30, and the balance of the space is currently scheduled to open for business by the end of this year. As with Dock 79, this is a joint venture with MRP, which MRP is the majority partner at 7.41%. .

As John mentioned earlier, this building received its final certificate of occupancy at the end of March 2020 and reached stabilization of 90% in less than 12 months. This is a testament to the quality of location and product lever to the market and the skill of leadership on the ground managing the day-to-day operations. .

Revenues for the quarter for both Dock 79 and Maren were $5.2 million, up 101% over the same period last year, primarily due to Maren's lease-up. .

Maren's revenue represents $2.43 billion and Dock 79 claims, $2.78 million in revenue, which included an increase for Dock 79 for 96,000 over the same period. .

Total NOI at Dock 79, Maren and Hickory Creek, which make up the stabilized joint venture business segment, was $3.1 million, up $1.48 million, which is 90.5% over this period last year. Thanks, again, to the addition of Maren to this business segment and its leasing success. .

Moving on with our development programming. Our Bryant Street project, a third JV with MRP, has begun to move from construction to operation. The first building named Coda received final certificates of occupancy in April 1 of this year for its 154 apartments. Thanks to Herculean efforts from our leasing team and despite COVID challenges.

Coda was 95.5% leased and 93.5% occupied at the end of this quarter. .

Chase Building 1B opened in August and was 48.1% leased and 23.5% leased occupied at quarter's end. Chase IA will receive its occupancy certificate this month and begin its leasing. .

In total, Brian Street Phase 1 will consist of 487 apartments in 3 buildings and 91,661 square feet of first floor freestanding and open-air retail. 71,383 square feet or 78% of the retail is now pre-leased and expected to open for operations beginning at the end of this year and running into the first 2 quarters of 2022.

This property is located in a designated opportunity zone, which allows us to defer a significant tax liability. .

Our fourth next use joint venture project with MRP called The Verge at 1800 Half Street in Southwest Washington, D.C., just a few blocks down river from Maren and Dock 79 was 45% complete at quarter end. The 10-story structure will have 344 apartments and 11,246 square feet of ground floor retail and is scheduled for completion in Q3 of 2022.

This project is also located in an opportunity zone. .

Relative to our 2 joint venture projects with Woodfield Development, these are located in Greenville, South Carolina. The first called Riverside is a 200-unit 3 building apartment project. This project began pre-leasing August 1, and at quarter end was 34.5% leased and 22.5% occupied. .

The second project called .408 Jackson is a 277-unit multifamily development, including 4,700 square feet of retail space. Construction is currently 70% complete and should open in Q3 of 2022. .

So to summarize, relative to our third-party joint ventures in mixed-use developments we are currently invested in 6 projects totaling 1,827 apartment units with 127,000 square feet of retail. .

At quarter end, Dock 79, Maren, Riverside and 1 of the 3 residential buildings at Bryant Street totaling 923 apartments were up and operate. and 10,500 square feet of retail tenants are occupying their respective spaces and paying rent.

The remaining requirements and retail spaces will be completed and coming online from now through the next 12 to 15 months. .

Moving on to our lending ventures. We have 2 ongoing at the moment. One lending venture called Amber Ridge is located in Prince George's County, Maryland. We are the principal capital source for this project with a total commitment of $18.5 million.

Investment includes a charged 10% interest rate and a minimum preferred return of 20%, above which a profit-induced waterfall determines the final split of proceeds. Entitlements are complete and land development is fully underway and 2 national homebuilders under contract to purchase all 187 lots after completion of the infrastructure development. .

At quarter's end, the first set of 16 finished lots were delivered to the purchasers, returning over $4 million in preferred interest and principal back to FRP. .

Our newest lending venture is called Presbyterian Homes and is located in the Harford County market. We are the principal capital source for this project with a total commitment of $31.1 million. The project will consist of approximately 340 building lots. .

Like Amber Ridge, the investment includes a charged 10% interest rate and a minimum return of 20%. The strategy is to advance the project to record plat then upon a binding contract or contracts with a homebuilder initiate the horizontal development stage to create finished lots, which upon completion would be transferred to the home brand place. .

COVID-19 still warrants mentioned in any company update. FRP had a productive and busy summer despite the arrival of the Delta variant Our retail and restaurant tenants operated at full swing and life is showing more signs of normalcy every day.

Our warehouse tenants seem to have never skipped a beat, and our base is growing constantly as evidenced by our rapid lease-up at Banbury run and continued strong activity at Hollander. .

So far, we have dealt successfully with increasing material costs and delays on construction projects, and we have continued to power through land development processes. We've been extremely fortunate that our employees and partners have remained healthy throughout the pandemic. .

Operationally, we have been forced to pivot multiple times to accommodate new restrictions regulation or common sense measures to prevent the spread of COVID. From an investment perspective, our warehouse platform is performing quite well.

Construction materials needs have given rise to record mining revenues and we continue to identify new opportunities despite raucous competition for deals.

The timing for construction and delivery of several of our multifamily and next use project has allowed us to capitalize on the reemergence of activity due in part to our unique features and strategic locations. .

Notwithstanding all the good news, we do expect to see the continuation of limited retail and office leasing as some business categories remain uncertain amidst a unique regulatory and public health climate. We are cautiously optimistic but also realistic about the velocity of certain real estate products.

We now have employees back in the office collaborating and interacting on a regular basis. FRP is feeling more like itself again, and we're looking forward to a return to daily operations that are more recognized for the last 19 months. .

All the while, we remain grateful that as a company and a group of professionals, we are solidly grounded and uniquely prepared to progress as an organization to our mission that served us well both before and during COVID-19. .

Thank you, and I'll now return the call back to John. .

Thank you, David. Now at this point, we're happy to open up the call for any questions that any of you might have. .

[Operator Instructions].

It's Curtis Jensen. Just a few questions. First on mining royalties. The Vulcan lease at Fort Myers, it looks like in your presentation that expired and April of this year. Do you know if that was renewed? I know there was like a 15-year option for that merchant. .

They exercised the renewal option. .

No surprise.

And just given sort of the growing demand regionally, are there any prospects for some of the other properties that are leased but not currently being mined to start mining?.

Are you asking if the... .

Yes. I think you've got 3 properties with a lease to Vulcan and 1 to CEMEX and they're not currently being mined, but there's a lease on them and you're getting royalties and I just didn't know if there were some prospects for those properties to -- for the tenant to come in and start mining. .

The most -- kind of imminent one of those to start in the next year, so the CEMEX. They've -- it took a long time for that site to get permitted. And then as part of their permitting improve County Road and connected from 1 part of the county to another and then build a plant.

Part of the reason that the aggregates industry is so attractive in terms of the ability to raise prices and keep them up is that it's hard to get permitted and CEMEX and what they've gone through. Down Lake Louisa has proved positive of that. .

So long story short, they will get around to it. Some of the other sites like Lake Sand, Vulcan lease is another part of the land adjacent to ours, and our reserves were [indiscernible] and you need a special type of dragline to get into those reserves, which requires getting it down there and is capital intensive.

And so the we're basically mining the rest of the reserves before they turn around and get into ours. So that one is just going to be the minimum for a while. .

Forest Park, up in Georgia, has a ton of reserves underneath the plant. They also have a lot of reserves but they just haven't gotten to. Obviously, they're not going to move the plant until they absolutely have to. And that's just where our portion of those reserves are. So again, long walk for a short drink of water.

Lake Louisa is going to be the one that gets mined first. Lake Sand will eventually get mine d. And Forest Park, absolutely, will get mined. I'm trying to think of the other 2. .

Maren's done. .

Maren's done. And then I don't know about Air Grove, but they still have reserves or if they're completely done. But that's it. .

Okay. And is Vulcan at [indiscernible]? I know they sounded like they shifted some of some things.

And are they going to return to kind of debt operating back to where they were?.

Yes, it's the -- the property line kind of goes right through the middle of the pit. So that's just part of the mining there. You're sort of bouncing around from site to site. But I don't think there's a renewal on that lease. And there's a meaningful amount of reserves left there.

And in the works at [indiscernible], we've got a long way to go in a short time, we get there. They're going to have to mine that they have every incentive to mine it. So they'll be back on that land probably pretty soon. .

Okay. And then just shifting over to -- I don't want to dominate the questions here, but a couple more at Dock and Maren, I guess the NOI was -- for the quarter was $3.1 million. If you look out to kind of 2022 and you assume your retail is at 100%, you get a little bit of a rent bump starting maybe Q2 or something. Your financing stable, obviously.

I mean have you guys started to think about what kind of budget NOI you would have for 2022 there?.

Yes, well -- we obviously have some , but that's -- we don't want to speculate on it and then be wrong, which is not helpful to you, but it's just been kind of how we did that. .

And then I'll just shift over... .

Just to add something to John's comment, Curtis. The good thing is that restrictions will be lifted by the government. We weren't allowed to do anything with rental rate increases or were we allowed to evict somebody to notice money. And that's going to be up here shortly, but we fall about 60 days behind just by virtue of the lease-up program.

So we're hopeful. But you don't know market is going to dictate those actions and -- but we're kind of hopeful that we'll -- that we'll do -- certainly do as well and if not better than we did this year. .

Okay. And then you mentioned a new lending venture. .

Yes. .

I guess was that funded after the end of the third quarter? Or is it starting to be funded or?.

Yes. We -- it's a long-term project. These things can go 4 to 5 years from the beginning all the way up through. But it's a $31.1 million commitment. And it's going to -- we're doing it the same way we did with Hyde Park, which we sold and got all the -- then made a pretty nice profit in Amber Ridge, but this is the newest one.

And we have a deposit in for the property, and we're actually in parallel going through some entitlement work with the necessary government agencies. We don't have to buy the property until we get most of the entitlements already done. .

All right.

And last question, I'll turn it over is, if you think about your build-out at Hollander, you add Aberdeen, Hartford and now [indiscernible] County, over the next 2 to 3 years? I mean, are we -- is that -- because there was a comment in the press release about using up all your cash, I mean, is that going to -- do you think that could absorb another $50 million to $100 million over the next 3 years or something or?.

Obviously, when we start. But as I said in my narrative over the -- we have a warehouse platform and pipeline. It could be as high as 2.4 million square feet. And then we really need to determine the appropriate time and market conditions, and that's sort of thing to see when they would develop.

But we'd like to think if the market stays where it is, that we would be under full development, and that's where we would be heading. .

Yes. Curt, obviously, the expanding our land bank and developing more warehouses will be part of how we use our cash. And Phase III, Phase IV, the site where Vulcan is now and the Anacostia River, those are going to be very big uses of cash for us as well.

And then there's the potential for Bryant Street Phase 2, and potentially additional development in Greenville. So we -- it's going to be spread across all of our different platforms. .

But it sounds like there's pretty productive use for your cash over the next, call it, 3 to 4 years?.

Yes. .

Here comes our next question. .

It's Stephen Farrell here. Well, I just have a few quick questions.

In regards to the 2 industrial buildings at [indiscernible] Business Park being completed this quarter, are constructing with the last building? Or are you seeing pressure there?.

Well, they're almost done. So a lot of the purchasing was done, we were able to solidify a lot of the more expensive materials early on, but there's -- it's a little bit more expensive than the last one, yes. Rents are a little bit higher, too. .

Okay. And if you look at the industrial pipeline, you have the -- you mentioned earlier the 930,000 square feet in entitlement phase and another $900,000 under contract.

If we go through the development of all that, is it correct to assume that you'd earmark about $140 million to $160 million to develop those?.

Well, it depends on what the construction pricing is at the time. A lot of factors determine what -- how we move forward. But I would say, yes. .

Okay. And you just mentioned earlier, you also have the potential for Anastasia Phase III, Bryant Street Phase II, do you expect over the next 3 or so years to be able to fund all these projects from cash? Or would you consider financing on some of the industrial projects. .

Well, we have -- historically, we have built the warehouse facilities out of cash, and we, because of the joint venture nature of these mixed-use programs, have gotten construction loans and then when properly stabilized, we moved to permanent financing. And that's been the process that we've gone through.

And that's not to say that we wouldn't change, but it's probably the direction we would go going forward. .

Yes, Stephen, and part of that is a result of we do these warehouse projects entirely in how on our own. And so -- There's no partnership, no one else's capital constraints to consider, and we've got the cash to do it. And on the multifamily stuff, we're usually partners with people on these deals.

And that's sort of the name of the game with the multifamily is you put debt on them. So we're sort of going along and get along in that regard. .

Okay. And last question. And you sort of alluded to it earlier. We don't know exactly when the rent freezes will be up. But if they do expire at the end of the year. Do you expect to be sort of aggressive in raising rents? Or are you going to focus on keeping occupancy where it is in a more gradual rent increase. .

We look at the -- our property management company at those 2 projects with most of them, we have a software project program that literally looks at though every apartment every day. And so we obviously look to expand the rent the best we can. And there's kind of a -- I guess there's kind of a equilibrium there.

You don't want to have a renewal rate that's higher than, say, 55% or 60% because if you do, you're wondering if you shouldn't be raising the reps, but we also want to keep heads and beds too. So it's a balance. But we feel pretty good about where we are today. And hopefully, we can do a little bit better in the upcoming months. .

Speakers, there are no further questions in queue. .

All right. Well, if that's it. We really appreciate you all continued interest in the company, and we're going to get back to work and try to make all some money. Thank you, again. .

Thank you, ladies and gentlemen. This concludes today's teleconference. Thank you for your participation. You may now disconnect..