FRP Holdings, Inc.

Good day, everyone, and welcome to today's earnings conference call. At this time, all participants are in a listen-only mode. Later, you will have an opportunity to ask questions during the question and answer session. You may register to ask a question at any time by pressing the star and one keys on your touchtone phone. Please note this call may be recorded. It is now my pleasure to turn today's program over to John Baker, the 3rd, Sir, please begin.

Good morning. I'm John Baker III, Chief Financial Officer and Treasurer of FRP Holdings. And with me today are David DeVilliers, Jr., our President, John Baker II, our Chairman and CEO, John Milton, our Executive Vice President and General Counsel, John Koppenstein, our Chief Accounting Officer, and David DeVilliers III, our Executive Vice President. As a reminder, 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 as imposed by law as a result of future events or new information. To supplement the financial results presented in accordance generally accepted accounting principles, FRP presents certain non-GAAP financial measures within the meaning of Regulation G promulgated by the Securities and Exchange Commission. The non-GAAP financial measure referenced in this call is net operating income, or NOI. FRP uses this non-GAAP financial measure to analyze its operations and to monitor, assess, and identify meaningful trends in its operating and financial performance. This measure is not and should not be viewed as a substitute for GAAP financial measures. To reconcile GAAP to net operating income, excuse me, to reconcile GAAP to net income, please refer to the segment titled Non-GAAP Financial Measures on pages 9 and 10 of our most recent earnings release. Now for our financial highlights from the fourth quarter. Net income for the first quarter was $565,000 or $0.06 per share versus $672,000 or $0.07 per share in the same period last year. Net income for the first quarter compared to the previous year was impacted primarily by an increase of $2,021,000 in equity and loss of joint venture from two projects and lease up, as well as a $733,000 gain last year from the sale of excess property in Brixhill, Florida. First quarter pro rata NOI for all segments was $6,990,000 versus $5.18 million in the same period last year for an increase of 34.9%. David will touch on operations with greater depth and detail in his remarks, but I will briefly mention a few operational highlights. Asset management increased revenues by 27.5% and NOI by 60.6% compared to the first quarter last year. Total revenues in the mining revenue segment increased 35.3% compared to the first quarter last year. And NOI in the first quarter of this year increased 37% over Q1 2022. For the second quarter in a row, Mining Royalties experienced its highest revenue total ever for any quarter. This is the first quarter the segment has cleared $3 million revenue, and the first time it has surpassed $11 million in revenue in any trailing 12-month period. Now, if I could turn things over to David DeVilliers, Jr. to walk you through our segments in more detail. David?

DAVID DEVILLIERS, JR.: : Thank you, John, and good morning to those on the call. For the past few quarters, I'd like to provide you with a slightly different perspective on the results of the company from an operational standpoint. We report our business segments in designated silos, which are important in analyzing the company. However, operationally, we have overlap and synergies that are difficult to follow using the business segments as reported. So, departing from GAAP and employing a day-to-day look at FRP, let me offer the following. The company's approach is four-pronged, and this has been the core of our business since mid-2018 when we liquidated our legacy warehouse portfolio. First, in-house asset management includes our industrial, commercial, and land development platform. These properties are developed, managed, and owned 100% by FRP. Then, of course, there's the mining and royalties. Three is the third-party joint ventures, which as the name implies, are projects developed in conjunction with third parties, where FRP is the major owner but relies on seasoned and respected third-party operating partners to perform the lion's share of entitlements, construction, and day-to-day operations. And our last segment, the lending ventures, where we are the principal capital source for residential land development activities. Relative to our in-house industrial platform or asset management, delivery and occupancy at our three buildings at Holliver Business Park as well as rent growth on renewals at Cranberry have produced a healthy lift to more than double the NOI for this period last year with Q123 NOI of $891,550 over Q122 NOI of $308,777. As of last month, our three buildings in Holland are totaling 247,000 square feet are fully leased and occupied. Cranberry Run Business Park, a renovated 268,000 square foot multi-tenanted building warehouse park in Aberdeen, Maryland, remains fully occupied in the first quarter of 2023. capping off five straight quarters of full occupancy at this location. Our industrial pipeline is strong, with three projects in the queue. We completed annexation on a 55-acre tract of land in Aberdeen, adjacent to Cranberry Business Park, and will soon begin the building design to create up to 609,000 square feet of warehouse product. Existing land leases for the storage of trailers on site help to offset our carrying entitlement costs. We are hopeful we can begin construction there in 2025. In Northeast Maryland, along the I-95 corridor, we own 170 acres of industrial land that will ultimately support a 900,000 square foot distribution center. Pre-development activities here are ongoing, and pending favorable market conditions, we expect to break ground as early as 2024. Finally, our 17-acre parcel in the Perryman industrial section of Harford County, Maryland, not too distant from our other assets in Aberdeen, is moving through the entitlement process, and we expect a building permit to be issued shortly for a 259,000 square foot warehouse. Dependent on final market dynamics, construction on this project could begin as early as the summer. Completion of these three land development projects, plus the recently delivered warehouse at Hollander, will add over 1.9 million square feet of additional warehouse product to our industrial platform, that when added to the assets already in operation at Hollander Business Park and Cranberry Run, will total over 2.35 million square feet. Relative to our mining and royalty segment, our mining and royalty division saw total revenues for the quarter of $3. $1,282,000 versus $2,425,000 in the same period last year. As John echoed in his opening remarks, this is record revenue for any quarter in the mining and royalty segment for the second quarter in a row. NOI was $3,148,000, an increase of 37% over the same period last year. Moving on to our third-party joint ventures, currently we operate both stabilized and development projects with three distinct partners, MRP, Woodfield, and St. John Properties. The difference between development and stabilized, as it relates to our business segments, being an initial occupancy level of 90% for a minimum of 90 days. Our JV platform includes seven mixed-use projects totaling 1,827 apartments, 72,000 square feet of one-story office, and 226,000 square feet of retail, all of which have completed construction. Four projects are located in Washington, D.C., where MRP Realty is our joint venture partner. These include Doc79, Marin, Bryant, Phase 1, and our most recent completion, Burge. In Washington, D.C., our neighboring projects, Doc79 and Marin, where our partners include both MRP Realty and most recently, Stewart Investment Company, remain healthy with occupancies of 93.4% and 93.2% respectively at quarters end with all retail fully leased. Our newest project in the district, Burge, received its final certificate of occupancy in the first quarter and was 32% leased and 24% occupied, with nearly half of 45% of the retail spoken for at quarter's end. Our final DC project is Brine Street, a multi-building transit-oriented mixed-use project located on the Red Line in northeast Washington, D.C. Bryan Street contains two residential projects, Chase and Coda, as well as a movie theater-anchored retail building and a flexible outdoor use fully leased to a unique entertainment concept called Metro Bar. At the end of the first quarter, Bryan Street's residential units were 90.8% occupied, and its retail components were 84.2% leased and 79% occupied. Our food hall, Bryant Street Market, which occupies about 10,000 square feet, opened in March and has seen early success with its first four tenants, including a last visit last week by the President and Vice President of the United States in celebration of Cinco de Mayo. Moving on to South Carolina, our two projects in Greenville with Woodfield Development are seeing great success. Riverside, which sits on the Swamp Rabbit River Trail, a popular recreation corridor in Greenville, opened its 200 apartments for lease in August of 21 and was 95% occupied as of the end of the first quarter. 408 Jackson, another mixed-use project, is located downtown and shares a street and plaza with Floor Field, the stadium home of the Greenville Drive, which is an affiliate of the Boston Red Sox baseball team. 408 Jackson was placed in service during the fourth quarter of 22, and as of quarter end was 53% leased and 29% occupied, with its retail component fully leased and targeting opening by the fourth quarter of this year. The last project that makes up our third-party joint venture division is undertaken with St. John's Property. A pioneer in flex development and former national developer of the year, With St. John, we are developing windless run Middle River, Maryland that includes 72,000 square feet of single story office and 27,950 square feet of retail. This project continues to be 50.7% leased and 48% occupied. So to summarize, relative to our third party joint ventures, FRP's 52% ownership share of the NOI for these seven projects was $2,868,573 for first quarter 23 versus $2,496,129 in the same quarter last year. That's a 14.9% increase. Lastly, our lending ventures. segment this last leg our operating stool is a program where we provide working capital towards the entitlement and horizontal development and future sale of single-family residential projects and ultimately sales to national home builders the first of our two current projects is amber ridge in pg county maryland with a total commitment to this project of 18 and a half million dollars The investment includes a charged 10% interest rate and a minimum preferred return of 20%, above which a profit-induced waterfall determines the final split proceeds. As of the end of the quarter, 144 lots had been taken down, with the final 43 lots expected to be taken down by the end of this year. Our other current lending venture is called Presbyterian Homes. 344-lot, 110-acre residential development project in Arity, Maryland. We've committed $31.1 million in funding under similar terms to Amber Ridge. A national home builder is under contract to purchase all lots, which will include 222 townhomes and 122 single-family dwellings. Horizontal construction has begun, and we expect the first lots to be taken down in Q4 of 23. In closing, we are very pleased that the company has been able to continue to surpass itself in terms of earnings and adapt to difficult market conditions. We've flourished in a constantly changing environment, and we've been able to do so thanks to the strength of our balance sheet and the consistent efforts of our talented team. We look forward to building upon our successes and finding new ways to capitalize on our unique position in the marketplace. Thank you, and I will turn it back to John.