Item 1A. RISK FACTORS.
Our future results may be affected by a number
of factors over which we have little or no control. The following issues, uncertainties, and risks, among others, should be considered
in evaluating our business and outlook. Also, note that additional risks not currently identified or known to us could also negatively
impact our business or financial results.
Risks Relating to the COVID-19
Pandemic
The current pandemic of the novel coronavirus
COVID-19 could materially and adversely impact or disrupt our financial condition, results of operations, cash flows and performance.
Since being reported in December 2019, the
novel coronavirus (COVID-19) pandemic has had repercussions across regional and global economies and financial markets. The outbreak
of COVID-19 has significantly adversely impacted global economic activity, contributed to significant volatility and negative pressure
in financial markets and increased economic uncertainty. In response to the pandemic, many states and cities in which we own properties
have instituted quarantines, restrictions on travel, restrictions on types of business that may continue to operate, and/or restrictions
on the types of construction projects that may continue. In
response to these restrictions and to protect
employee safety, many of our employees continue to work remotely.
The restrictions in place as a result of the
COVID-19 pandemic are negatively impacting many industries, especially the commercial real estate industry and mixed-use properties,
which have apartment dwellers, small businesses, and restaurants as tenants. The significance, extent and duration of the impacts
of the COVID-19 pandemic on our business and operations are dependent on factors that cannot be accurately predicted at this time,
such as the continued severity and spread of the virus, the period of time during which mandated social distancing or other mitigation
measures remain in place, and the timetable for implementing effective treatments and vaccines.
The financial performance of our mixed-use
properties in Washington, D.C. (The Maren and Dock 79) has been adversely affected by the COVID-19 pandemic due to restrictions
on the operation of local businesses, the rent freeze on lease renewals imposed in Washington, D.C., and the lack of fan attendance
at the Washington Nationals baseball park. At this time, the Company anticipates that these factors will continue to impact The
Maren and Dock 79 for at least the first half of 2021, which will adversely affect our financial condition, results of operations
and cash flows.
Additionally, the COVID-19 pandemic could materially
and adversely affect our ability to complete pending and planned construction projects in a timely manner due to restrictions imposed
on construction activities, delays in the permitting process or delays in the supply of materials or labor necessary for construction.
Risks Relating to our Business
A decline in the economic conditions in
Baltimore and Washington, D.C. markets could adversely affect our business.
Nearly all of our commercial and residential/mixed
use properties are located in the Baltimore area and Washington, D.C. We are, therefore, subject to increased exposure (positive
or negative) to economic and other competitive factors specific to markets in confined geographic areas. Our operations may also
be affected if too many competing properties are built in these markets. An economic downturn in these markets could adversely
affect our operation. We cannot be sure that these markets will continue to grow or demand the type of assets in our portfolio.
We conduct a significant portion of our
operations through joint ventures, which may lead to disagreements with our joint venture partners and adversely affect our interests
in the joint ventures.
We currently are a party to several joint ventures
and we may enter into additional joint ventures in the future. In each of our existing joint ventures, the consent of our joint
venture partner is required to take certain actions, and in some cases will share equal voting control. Our joint venture partners,
as well as future partners, may have interests that are different from ours which may result in conflicting views as to the conduct
of the joint ventures. In the event that we have a disagreement with a joint venture partner as to the resolution of a particular
issue to come before the joint venture, or as to the conduct or management of the joint venture generally, we may not be able to
resolve such disagreement in our favor and such a disagreement could have a material adverse effect on our interest in the joint
venture or on the business of the joint venture generally.
Our business may be adversely affected by
seasonal factors and harsh weather conditions.
The Mining Royalty Lands Segment and the Development
Segment could be adversely affected by reduced construction and mining activity during periods of inclement weather. These factors
could cause our operating results to fluctuate from quarter to quarter. An occurrence of unusually harsh or long-lasting inclement
weather such as hurricanes, tornadoes and heavy snowfalls could have an adverse effect on our operations and profitability.
Our business could be negatively impacted
by cyberattacks targeting our computer and
telecommunications systems and infrastructure,
or targeting those of our third-party service providers.
Our business, like other companies in our industry,
has become increasingly dependent on digital technologies, including technologies that are managed by third-party service providers
on whom we rely to help us collect, host or process information. Such technologies are integrated into our business operations.
Use of the internet and other public networks for communications, services, and storage, including "cloud" computing,
exposes all users (including our business) to cybersecurity risks.
While we and our third-party service providers
commit resources to the design, implementation, and monitoring of our information systems, there is no guarantee that our security
measures will provide absolute security. Despite these security measures, we may not be able to anticipate, detect, or prevent
cyberattacks, particularly because the methodologies used by attackers change frequently or may not be recognized until launched,
and because attackers are increasingly using techniques designed to circumvent controls and avoid detection. We and our third-party
service providers may therefore be vulnerable to security events that are beyond our control, and we may be the target of cyber-attacks,
as well as physical attacks, which could result in information security breaches and significant disruption to our business.
Our revenues depend in part on construction sector activity,
which tends to be cyclical.
Our Mining Royalty Lands Segment revenues are
derived from royalties on construction aggregates mined on our properties. Thus, our results depend in part on residential, commercial
and infrastructure construction activity and spending levels. The construction industry in our markets tends to be cyclical. Construction
activity and spending levels vary across our markets and are influenced by interest rates, inflation, consumer spending habits,
demographic shifts, environmental laws and regulations, employment levels and the availability of funds for public infrastructure
projects. Economic downturns may lead to recessions in the construction industry, either in individual markets or nationally.
Our operations are subject to various environmental
laws and regulations, the violation of which could result in substantial fines or penalties.
Liability for environmental contamination
on real property owned by the Company may include the following costs, without limitation: investigation and feasibility study
costs, remediation costs, litigation costs, oversight costs, monitoring costs, institutional control costs, penalties from state
and federal agencies and third-party claims. These costs could be substantial and in extreme cases could exceed the value of the
contaminated property. Moreover, on-site operations may be suspended until certain environmental contamination is remediated and/or
permits are received, and governmental agencies can impose permanent restrictions on the manner in which a property may be used
depending on the extent and nature of the contamination. This may result in a breach of the terms of the lease entered into with
our tenants. Governmental agencies also may create liens on contaminated sites for damages it incurred to address such contamination.
In addition, the presence of hazardous substances at, on, under or from a property may adversely affect our ability to sell the
property or borrow funds using the property as collateral, thus harming our financial condition.
The presence of contaminated material at
our RiverFront on the Anacostia development site will subject us to substantial environmental liability and costs as construction
proceeds.
With respect
to our RiverFront on the Anacostia site in Washington, D.C., preliminary environmental testing has indicated the presence of contaminated
material that will have to be specially handled in excavation in conjunction with construction. While we have recovered and will
continue to seek partial reimbursement for these costs from neighboring property owners, we still expect to incur significant environmental
costs in connection with construction.
During the quarter ending December 31, 2015,
management successfully completed negotiations and entered into a $3.0 million settlement of environmental claims on all four phases
against our former tenant at the Riverfront on the Anacostia property and continues to pursue settlement negotiations with other
potentially responsible parties. The total remediation expense for Phase I of this development
was $1.833 million.
The Company executed a letter of intent with
MRP Realty in May 2016 to develop Phase II of the Riverfront on the Anacostia project and recorded an estimated environmental remediation
expense of $2.0 million for the Company’s estimated liability under the proposed agreement. The Company substantially completed
the remediation and reduced the estimated liability in the quarter ending September 30, 2018 by $465,000 and further reduced the
liability $92,000 to zero in 2020.
The Company has no obligation to remediate
this contamination on Phases III and IV of the development until such time as it makes a commitment to commence construction on
each phase. The Company's actual expense to address this issue may be materially higher or lower than the expense previously recorded
depending upon the actual costs incurred.
Uninsured losses could significantly reduce
our earnings.
We self-insure for a portion of our claims
exposure resulting from workers’ compensation, auto liability, general liability and employees’ health insurance. We
also are responsible for our legal expenses relating to such claims. We maintain insurance above the amounts for which we self-insure
with licensed insurance carriers. Although we believe the aggregate insurance limits should be sufficient to cover reasonably expected
claims, it is possible that one or more claims could exceed our aggregate coverage limits. Additionally, there are certain losses,
such as losses from hurricanes, terrorism, wars or earthquakes, where insurance is limited or not economically justifiable. If
the Company experiences an uninsured loss of real property, we could lose both the invested capital and anticipated revenues associated
with such property. We accrue currently for estimated incurred losses and expenses and periodically evaluate and adjust our claims
accrued liability to reflect our experience. However, ultimate results may differ from our estimates, which could result in losses
greater than accrued amounts.
We may be unable to renew leases or re-lease
properties as leases expire.
When a lease expires, a tenant may elect not
to renew it. If that occurs, we may not be able to lease the property on similar terms. The terms of renewal or re-lease (including
the cost of required renovations and concessions to tenants) may be less favorable than the prior lease. If we are unable to lease
all or substantially all of our properties, or if the rental rates upon such re-leasing are significantly lower than expected rates,
our cash generated before debt repayments and capital expenditures may be adversely affected.
We may be unable to lease currently vacant
properties.
If we are unable to obtain leases sufficient
to cover carrying costs, then our cash flows may be adversely affected.
The bankruptcy or insolvency of significant
tenants with long-term leases may adversely affect income produced by our properties.
Should tenants default on their obligations,
our cash flow would be adversely affected, and we may not be able to find another tenant to occupy the space under similar terms
or may have to make expenditures to retrofit or divide the space. Additionally, we may have to incur a non-cash expense for a significant
amount of deferred rent revenue generated from the accounting requirement to straight-line rental revenues. The bankruptcy or insolvency
of a major tenant may also adversely affect the income produced by a property. If any of our tenants become a debtor in a case
under the U.S. Bankruptcy Code, we cannot evict that tenant solely because of its bankruptcy. The bankruptcy court may authorize
the tenant to reject and terminate its lease with the Company. Our claim against such a tenant for unpaid future rent would be
subject to a statutory limitation that may be substantially less than the remaining rent actually owed to us under the tenant’s
lease. Any shortfall in rent payments could adversely affect our cash flow.
Our inability to obtain necessary approvals
for property development could adversely affect our profitability.
We may be unable to obtain, or incur delays
in obtaining, necessary zoning, land-use, building, occupancy
and other required governmental permits and
authorizations, which could result in increased costs or abandonment of certain projects. Before we can develop a property, we
must obtain a variety of approvals from local and state governments with respect to such matters as zoning, density, parking, subdivision,
site planning and environmental issues. Legislation could impose moratoriums on new real estate development or land-use conversions
from mining to development. These factors may reduce our profit or growth and may limit the value of these properties.
Real estate investments are not as liquid
as other types of assets.
The illiquid nature of real estate investments
may limit our ability to react promptly to changes in economic or other conditions. In addition, significant expenditures associated
with real estate investments, such as mortgage payments, real estate taxes and maintenance costs, are generally not reduced when
circumstances cause a reduction in income from the investments. Thus, the illiquid nature of our real estate investments could
adversely affect our profitability under certain economic conditions.
Our debt service obligations may have adverse
consequences on our business operations.
We use debt to finance our operations,
including acquisitions of properties. As of December 31, 2020, we had outstanding non-recourse mortgage indebtedness of
$90,000,000, secured by developed real estate properties having a carrying value of $89,964,000. Our use of debt may have
adverse consequences, including the following:
· We may not be able to refinance or extend our existing debt.
Our uncollateralized revolving credit agreement
restricts our ability to engage in some business activities.
Our uncollateralized revolving credit agreement
contains customary negative covenants and other financial and operating covenants that, among other things:
· restricts our ability to incur certain additional indebtedness;
· restricts our ability to make certain investments;
· restricts our ability to merge with another company;
· restricts our ability to pay dividends;
· requires us to maintain financial coverage ratios; and
· requires us to not encumber certain assets except as approved by the lenders.
These restrictions could cause us to default
on our unsecured line of credit or negatively affect our operations.
The replacement of LIBOR with an alternative
reference rate may adversely affect interest expense related to outstanding debt and our financial results.
The United Kingdom’s Financial Conduct
Authority (FCA) has announced that it would phase out LIBOR as a benchmark by the end of 2021. It is unclear if LIBOR will cease
to exist at that time or if new methods of calculating LIBOR will be established such that it continues to exist after 2021. If
LIBOR ceases to exist, we will likely need to agree upon a replacement index with our lenders, which would require an amendment
to our borrowing arrangements that use LIBOR as a factor in determining the interest rate (including our credit agreement with
Wells Fargo), and the interest rate thereunder will likely change.
The U.S. Federal Reserve, in conjunction with
the Alternative Reference Rates Committee, a steering committee comprised of large U.S. financial institutions, is considering
replacing U.S. dollar LIBOR with a new index, the Secured Overnight Financing Rate (SOFR), calculated using short-term repurchase
agreements backed by Treasury securities. Whether or not SOFR, or another alternative reference rate, attains market traction as
a LIBOR replacement tool remains in question.
The transition to an alternative rate will
require careful and deliberate consideration and implementation so as to not disrupt the stability of financial markets. There
is no guarantee that a transition from LIBOR to an alternative will not result in financial market disruptions, significant increases
in benchmark rates, or borrowing costs to borrowers, any of which could have an adverse effect on our business, results of operations
and financial condition. Furthermore, any changes announced by the FCA, U.S. Federal Reserve, or other regulators in the method
pursuant to which the reference rates are determined may result in a sudden or prolonged increase or decrease in the reported reference
rates, which could have an adverse effect on our interest payments and our results of operations and financial condition.
Fluctuations in value of Bond Portfolio
and losses on bonds sold.
As of December 31, 2020, the Company had total
investments of $75,609,000 in corporate bonds with maturities ranging from 2021 through 2022. The Company measures the fair value
of these investments on a quarterly basis and recognizes the unrealized gain or loss in its comprehensive income. As a result,
the Company’s comprehensive income will be impacted by factors outside our control such as fluctuations in interest rates
that impact the value of our investment portfolio. The Company could incur losses should it sell the bonds prior to maturity or
if the bond issuer does not redeem the bond at par.
Our Asset Management and Development Segments
face competition from numerous sources.
As a developer of apartments, retail, flexible
warehouse and office space, we compete with numerous developers, owners and operators of real estate, many of whom own properties
similar to ours in the same submarkets in which our properties are located. If our competitors offer space at rental rates below
current market rates, or below the rental rates we currently charge our tenants, we may lose potential tenants and we may be pressured
to reduce our rental rates to an amount lower than we currently charge in order to retain tenants when our tenants’ leases
expire. As a result, our financial condition, results of operations, cash flow and ability to satisfy our debt service obligations
could be materially adversely affected.
Construction costs may be higher than anticipated.
Our long-term business plan includes a number
of construction projects. The construction costs of these projects may exceed original estimates and possibly make the completion
of a property uneconomical. Building material commodity shortages, construction delays or stoppages or rapidly escalating construction
costs may out-pace market rents, which would adversely affect our profits. The market environment and existing lease commitments
may not allow us to raise rents to cover these higher costs.
Risks Relating to our Common Stock
Certain shareholders have effective control of a significant
percentage of FRP's common stock and
would have significant influence on the outcome of any shareholder
vote.
As of December 31, 2020, our Chief Executive
Officer, John D. Baker, II beneficially owned approximately 14.8% of the outstanding shares of our common stock (79.8% of which
are held in trusts under which voting power is shared with other family members) and members of his family who are (i) officers
or directors of the company, (ii) required to report their beneficial ownership on Schedule 13D or Schedule 13G, or (iii) are members
of his immediate family beneficially own, collectively, an additional 20.8% of the outstanding shares of our common stock. As a
result, these individuals effectively may have the ability to direct the election of all members of our board of directors and
to exercise a controlling influence over its business and affairs, including any determinations with respect to mergers or other
business combinations involving the Company, its acquisition or disposition of assets, its borrowing of monies, its issuance of
any additional securities, its repurchase of common stock and its payment of dividends.
Provisions in our articles of incorporation and bylaws and certain
provisions of Florida law could delay or prevent a change in control of FRP.
The existence of some provisions of our articles
of incorporation and bylaws and Florida law could discourage, delay or prevent a change in control of FRP that a shareholder may
consider favorable. These include provisions:
providing that directors may be removed by
our shareholders only for cause;
authorizing a large number of shares of stock
that are not yet issued, which would allow FRP’s board of directors to issue shares to persons friendly to current management,
thereby protecting the continuity of its management, or which could be used to dilute the stock ownership of persons seeking to
obtain control of FRP;
prohibiting shareholders from calling special
meetings of shareholders or taking action by written consent; and
imposing advance notice requirements for nominations
of candidates for election to our board of directors at the annual shareholder meetings.
These provisions apply even if a takeover offer
may be considered beneficial by some shareholders and could delay or prevent an acquisition that our board of directors determines
is not in the Company’s or the shareholders’ best interests.
FRP may issue preferred stock with terms
that could dilute the voting power or reduce the value of our common stock.
Our articles of incorporation authorize us
to issue, without the approval of our shareholders, one or more classes or series of preferred stock having such designations,
powers, preferences and relative, participating, optional and other rights, and such qualifications, limitations or restrictions
as our board of directors generally may determine. The terms of one or more classes or series of preferred stock could dilute the
voting power or reduce the value of FRP's common stock. For example, FRP could grant holders of preferred stock the right to elect
some number of its directors in all events or on the happening of specified events or the right to veto specified transactions.
Similarly, the repurchase or redemption rights or dividend, distribution or liquidation preferences FRP could assign to holders
of preferred stock could affect the residual value of the common stock.
Item 1B. UNRESOLVED STAFF COMMENTS.
None.
Item 2. PROPERTIES.
The Company owns (predominately in fee simple
but also through ownership of interests in joint ventures) approximately 20,000 acres of land in Florida, Georgia, Maryland, Virginia,
South Carolina, and the District of Columbia. This land is generally held by the Company in four distinct segments: (i) Asset Management
Segment (land owned and operated as income producing rental properties in the form of commercial properties), (ii) Mining Royalty
Lands Segment (land owned and leased to mining companies for royalties or rents), (iii) Development Segment (land owned and held
for investment to be further developed for future income production or sales to third parties), and (iv) Stabilized Joint Venture
Segment (ownership, leasing and management of buildings through joint ventures).
Asset Management Segment. As of December
31, 2020, the Asset Management Segment owned three commercial properties in fee simple as follows:
1) 34 Loveton Circle in suburban Baltimore
County, Maryland consists of one office building totaling 33,708 square feet which is 95.1% occupied (16% of the space is occupied
by the Company for use as our Baltimore headquarters). The property is subject to commercial leases with various tenants.
2) 155 E. 21st Street in Duval County,
Florida was an office building property that remains under lease through March 2026. We permitted the tenant to demolish all structures
on the property during 2018.
3) Cranberry Run Business Park in Hartford
County, Maryland consists of five office buildings totaling 268,010 square feet which are 87.6% occupied. The property is subject
to commercial leases with various tenants.
On May 21, 2018, the Company completed the
disposition of 40 industrial warehouse properties and three additional land parcels to an affiliate of Blackstone Real Estate Partners
VIII, L.P. for $347.2 million. The Company sold an additional warehouse property, which was excluded from the initial sale due
to the tenant exercising its right of first refusal to purchase the property, to the same buyer for $11.7 million on June 28, 2019.
The warehouse portfolio sale resulted in the disposition of all of the Company’s industrial flex/office warehouse properties
prior to the sale date and constituted a major strategic shift and, as a result, these properties have been reclassified as discontinued
operations for all periods presented in the financial statements filed herewith.
Mining Royalty Lands Segment – Mining
Properties. The following table sets forth a summary of the mining royalty lands owned by the Company or its subsidiaries in
fee simple and estimated reserves at December 31, 2020. These properties are subject to mining leases with various tenants, including
Vulcan Materials, Martin Marietta, Cemex, Argos, and The Concrete Company.
The Company owns nine properties currently being
mined in Grandin, Fort Myers, Keuka, Newberry,
and Astatula, Florida; Columbus, Macon, and
Tyrone, Georgia; and Manassas, Virginia
The Company owns four properties that are leased
for mining but are not currently being mined in
In May 2014, the Company entered into an amendment
to our lease with Vulcan for our Fort Myers location requiring that the mining be accelerated and that the mining plan be conformed
to accommodate the future construction of up to 105 residential dwelling units around the mined lakes. In return, the Company granted
Lee County an option to purchase a right of way for a connector road that would benefit the residential area
on our property and to place a conservation
easement on part of the property, which the County exercised in 2020. Mining activity commenced in 2017 following Lee County’s
issuance of a mine operating permit allowing Vulcan to begin production.
In November 2017, Lake County commissioners
voted to approve a permit to Cemex to mine the Company’s land in Lake Louisa, Florida. The county issued the permit in July
2019. After completing the work necessary to prepare this site to become an active sand mine, Cemex expects to begin mining by
the end of 2021.
Mining Royalty Lands Segment - Brooksville
Joint Venture. In 2006, a subsidiary of the Company entered into a joint venture agreement with Vulcan Materials Company to
jointly own and develop approximately 4,280 acres of land near Brooksville, Florida as a mixed-use community. In April 2011, the
Florida Department of Community Affairs issued its final order approving the development of the project consisting of 5,800 residential
dwelling units and over 600,000 square feet of commercial and 850,000 of light industrial uses. Zoning for the project was approved
by the County in August 2012. Vulcan Materials still mines on the property and the Company receives 100% of the royalty on all
tons sold at the Brooksville property. In 2020, 285,000 tons were sold, and estimated reserves were 4,326,000 as of December 31,
2020. During 2017, the Company extended the mining lease on this property for an additional ten years (through 2032) in exchange
for an increase in production of 100,000 tons by December 31, 2023.
Mining Royalty Lands Segment - Other Properties.
The segment also owns an additional 160 acres of investment property in Brooksville, Florida.
Development Segment – Warehouse/Office
Land.
At December 31, 2020 this segment owned the
following future development parcels:
Development Segment – Land Held for
Investment or Sale.
At December 31, 2020, this segment owned the
following development parcels:
Stabilized Joint Venture Segment.
We renamed this segment from RiverFront on
the Anacostia to the Stabilized Joint Venture Segment as we intend to transfer additional joint ventures from our Development Segment
into this segment as they reach stabilization.
At December 31, 2020, this segment owned the
following stabilized joint ventures:
Item 3. LEGAL PROCEEDINGS.
Through its joint venture with MRP Realty,
the Company is redeveloping the property located at 680 Rhode Island Avenue N.E. in Washington, D.C. In connection with the redevelopment,
the Company discovered and removed three underground storage tanks. Post-excavation sampling of the sidewall and soil was conducted
to investigate the potential extent of contamination. The sidewall sampling detected the presence of some petroleum-related contaminants,
only two of which (ethylbenzene and naphthalene) were detected at concentrations that exceeded applicable regulatory limits in
a limited area of the sidewall.
On March 20, 2020, the Department of Energy
and the Environment (“DOEE”) issued a Comprehensive Site Assessment Directive Letter dated March 20, 2020 (the “Directive”).
The Directive indicated that DOEE’s Underground Storage Tank Branch had opened a Leaking Underground Storage Tank case relating
to the former tanks, and directed preparation of a Work Plan and CSA report “to delineate the extent of both groundwater
and soil contamination.” Notably, the Directive indicated that whether a Corrective Action Plan would be needed would be
determined following DOEE’s review of the CSA report.
Based on work conducted by the joint venture’s
environmental consultant, the Company believes that any offsite contamination is unrelated to the tanks removed from the joint
venture’s property. The Company does not believe that this case will have a material adverse impact on the Company.
Additionally, Note 12 to the consolidated financial
statements included in the accompanying 2020 Annual Report to Shareholders is incorporated herein by reference.
Item 4. MINE SAFETY DISCLOSURES.
None.
PART II
Item 5. MARKET FOR REGISTRANT'S COMMON EQUITY,
RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES.
There were approximately 339 holders of record
of FRP Holdings, Inc. common stock, $.10 par value, as of December 31, 2020. The Company's common stock is traded on the Nasdaq
Stock Market (Symbol FRPH).
Price Range of Common Stock. Information
concerning stock prices is included under the caption "Quarterly Results" on page 9 of the Company's 2020 Annual Report
to Shareholders, and such information is incorporated herein by reference.
Dividends. The Company has not paid
a cash dividend in the past and it is the present policy of the Board of Directors not to pay cash dividends. Information concerning
restrictions on the payment of cash dividends is included in Note 4 to the consolidated financial statements included in the accompanying
2020 Annual Report to Shareholders, and such information is incorporated herein by reference.
Securities Authorized for Issuance Under
Equity Compensation Plans. Information regarding securities authorized for issuance under equity compensation plans is included
in Item 12 of Part III of this Annual Report on Form 10-K, and such information is incorporated herein by reference.
Purchases of Equity Securities by the Issuer
and Affiliated Purchasers
(c)
Total
Number of
Shares (d)
Purchased Approximate
(a) As Part of Dollar Value of
Total (b) Publicly Shares that May
Number of Average Announced Yet Be Purchased
Shares Price Paid Plans or Under the Plans
Period Purchased per Share Programs or Programs (1)
October 1
Through
November 1
Through
December 1
Through
(1) On February 4, 2015, the Board
of Directors authorized management to expend up to $5,000,000 to repurchase shares of the Company’s common stock from time
to time as opportunities arise. On December 5, 2018, the Board of Directors approved a $10,000,000 increase in the Company’s
stock repurchase authorization. On August 5, 2019, the Board of Directors approved a $10,000,000 increase in the Company’s
stock repurchase authorization. On May 6, 2020, the Board of Directors approved a $10,000,000 increase in the Company’s stock
repurchase authorization. On August 26, 2020, the Board of Directors approved a $10,000,000 increase in the Company’s stock
repurchase authorization.
Item 6. SELECTED FINANCIAL DATA.
Information required in response to this Item
6 is included under the caption "Five Year Summary" on page 9 of the Company's 2020 Annual Report to Shareholders and
such information is incorporated herein by reference.
Item 7. MANAGEMENT'S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF OPERATION.
Information required in response to Item 7
is included under the caption "Management’s Discussion and Analysis of Financial Condition and Results of Operation"
on pages 10 through 21 of the Company’s 2020 Annual Report to Shareholders, and such information is incorporated herein by
reference.
Item 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES
ABOUT MARKET RISK.
Interest Rate Risk - We are exposed
to the impact of interest rate changes through our variable-rate borrowings under our Credit Agreement with Wells Fargo.
Under the Wells Fargo Credit Agreement, the
applicable margin for borrowings at December 31, 2020 was Daily 1 Month LIBOR plus 1.0%. The applicable margin for such borrowings
will be increased in the event that our debt to capitalization ratio as calculated under the Wells Fargo Credit Agreement Facility
exceeds a target level.
The Company did not have any variable rate
debt outstanding at December 31, 2020, so a sensitivity analysis was not performed to determine the impact of hypothetical changes
in interest rates on the Company’s results of operations and cash flows.
For our debt instruments with variable interest
rates, changes in interest rates affect the amount of interest expense incurred. The following table provides information about
the Company’s long-term debt and variable rate debt outstanding at December 31, 2020 (dollars in thousands):
There Fair
Scheduled
maturities of
long-term debt:
Item 8. FINANCIAL STATEMENTS
AND SUPPLEMENTARY DATA.
Information required in response to this Item
8 is included under the caption "Quarterly Results" on page 9 and on pages 22 through 41 of the Company's 2020 Annual
Report to Shareholders. Such information is incorporated herein by reference.
Item 9. CHANGES IN AND DISAGREEMENTS WITH
ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE.
None.
Item 9A. CONTROLS AND PROCEDURES.
CONCLUSION REGARDING THE EFFECTIVENESS OF
DISCLOSURE CONTROLS AND PROCEDURES
Under the supervision and with the participation
of our management, including our principal executive officer, principal financial officer and chief accounting officer, we conducted
an evaluation of our disclosure controls and procedures, as such terms is defined under Rule 13a-15(e) promulgated under the Exchange
Act. Based on this evaluation, our principal executive officer, our principal financial officer and our chief
accounting officer concluded that our disclosure
controls and procedures were effective as of the end of the period covered by this Annual Report.
MANAGEMENT’S REPORT ON INTERNAL CONTROL
OVER FINANCIAL REPORTING
Our management is responsible for establishing
and maintaining adequate internal control over financial reporting, as such term is defined in Exchange Act Rule 13a-15(f). Under
the supervision and with the participation of our management, including our principal executive officer, principal financial officer
and principal accounting officer, we conducted an evaluation of the effectiveness of our internal control over financial reporting
based on the framework in the Internal Control-Integrated Framework (2013) issued by the Committee of Sponsoring Organizations
of the Treadway Commission (COSO). Based on our evaluation under the framework in the Internal Control-Integrated Framework
(2013), our management concluded that our internal control over financial reporting was effective as of December 31, 2020.
This Annual Report does not include an attestation
report of our Independent Registered Certified Public Accounting Firm, Hancock Askew & Co., LLP, regarding internal control
over financial reporting. Management’s report was not subject to attestation by our Independent Registered Certified Public
Accounting Firm pursuant to rules of the Securities and Exchange Commission that permit the Company to provide only management’s
report in this Annual Report.
CHANGE IN INTERNAL CONTROL OVER FINANCIAL
REPORTING
During the fourth quarter of 2020, there were
no changes in our internal control over financial reporting that have materially affected, or are reasonably likely to materially
affect, our internal control over financial reporting.
INHERENT LIMITATIONS OVER INTERNAL CONTROLS
Our internal control over financial reporting
is designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of consolidated
financial statements for external purposes in accordance with generally accepted accounting principles. Our internal control over
financial reporting includes those policies and procedures that:
Internal control over financial reporting cannot
provide absolute assurance of achieving financial reporting objectives because of its inherent limitations, including the possibility
of human error and circumvention by collusion or overriding of controls. Accordingly, even an effective internal control system
may not prevent or detect material misstatements on a timely basis. Also, projections of any evaluation of effectiveness to future
periods are subject to the risk that controls may become inadequate because of changes in conditions or that the degree of compliance
with the policies or procedures may deteriorate.
ITEM 9B. OTHER INFORMATION.
None.
PART III
Item 10. DIRECTORS, EXECUTIVE OFFICERS AND
CORPORATE GOVERNANCE.
The Company has adopted a Financial Code of
Ethical Conduct applicable to its principal executive officers, principal financial officers and principal accounting officers.
A copy of this Financial Code of Ethical Conduct is filed as Exhibit 14 to this Form 10-K. The Financial Code of Ethical Conduct
is also available on our web site at www.frpdev.com/investor-relations/corporate-governance/.
The rest of the information required in response
to this Item 10 is included under the captions “Board of Directors & Corporate Governance”, “Our Executive
Officers”, “Securities Ownership” in the Company's Proxy Statement, and such information is incorporated herein
by reference. The Proxy Statement will be filed with the Securities and Exchange Commission not later than March 31, 2021.
Item 11. EXECUTIVE COMPENSATION.
Information required in response to this Item
11 is included under the caption “Executive Compensation” in the Company's Proxy Statement, and such information is
incorporated herein by reference. The Proxy Statement will be filed with the Securities and Exchange Commission not later than
March 31, 2021.
Item 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL
OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS.
Equity Compensation Plan Information
Number of Securities
remaining available
Number of Securities for future issuance
to be issued upon Weighted average under equity
exercise of exercise price of compensation plans
outstanding options, outstanding options, (excluding securities
warrants and rights warrants and rights reflected in column (a))
Plan Category (a) (b) (c)
Equity compensation plans
Equity compensation plans
not approved by security holders 0 0 0
subject
to the satisfaction of certain performance criteria and the recipient’s continued service to the Company, a number of shares
of restricted stock, which number will be calculated after the applicable performance period by dividing the pre-determined value
of each award by the closing price of our common stock on the date the restricted stock is issued. The aggregate value of the
performance share awards shown in table is $237,500. For illustrative purposes, the maximum payout of the performance share awards
has been assumed, and the number of performance share awards has been calculated using our closing stock price on March 8, 2021
($51.95). The performance share awards are subject to partial or complete forfeiture if the vesting criteria are not met. Because
some or all of the performance share awards may not vest, and because the number of shares of restricted stock to be issued thereunder
is dependent on future stock prices, columns (a) and (c) may overstate or understate expected dilution.
The remainder of the information
required in response to this Item 12 is included under the captions “Securities Ownership” in the Company's Proxy Statement,
and such information is incorporated herein by reference. The Proxy Statement will be filed with the Securities and Exchange Commission
not later than March 31, 2021.
Item 13. CERTAIN RELATIONSHIPS
AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE.
Information required in response to this Item
13 is included under the captions “Related Party Transactions” and “Board of Directors & Corporate Governance”
in the Company's Proxy Statement, and such information is incorporated herein by reference. The Proxy Statement will be filed with
the Securities and Exchange Commission not later than March 31, 2021.
Item 14. PRINCIPAL ACCOUNTING
FEES AND SERVICES.
Information required in response to this Item
14 is included under the captions “Proposal 2: The Auditor Proposal” in the Company’s Proxy Statement, and such
information is incorporated herein by reference. The Proxy Statement will be filed with the Securities and Exchange Commission
not later than March 31, 2021.
PART IV
Item 15. EXHIBITS, FINANCIAL
STATEMENT SCHEDULE.
(a) (1) and (2) Financial Statements
and Financial Statement Schedule.
The response to this item is
submitted as a separate section. See Index to Financial Statements and Financial Statement Schedule on page 24 of this Form 10-K.
(3) Exhibits.
The response to this item is
submitted as a separate section. See Exhibit Index on pages 24 through 25 of this Form 10-K.
SIGNATURES
Pursuant to the requirements of Section 13
or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned,
thereunto duly authorized.
FRP Holdings, Inc.
Date: March 19, 2021 By JOHN D. BAKER II
John D. Baker II
Chief Executive Officer
(Principal Executive Officer)
By JOHN D. BAKER, III
John D. Baker, III.
Treasurer and Chief Financial Officer
(Principal Financial Officer)
By JOHN D. KLOPFENSTEIN
John D. Klopfenstein
Controller and Chief Accounting
Officer (Principal Accounting Officer)
Pursuant to the requirements of the Securities
Exchange Act of 1934, this report has been signed below by the following persons on behalf of the registrant and in the capacities
indicated on March 19, 2021.
(Principal Executive Officer)
FRP HOLDINGS, INC.
FORM 10-K FOR THE FISCAL
YEAR ENDED DECEMBER 31, 2020
EXHIBIT INDEX
Item 15(a)(3)
4.3 Description of Registrant’s Common Stock.
31.1 Certification of John D. Baker II.
31.2 Certification of John D. Baker III.
31.3 Certification of John D. Klopfenstein.
101.INS XBRL Instance Document
101.XSD XBRL Taxonomy Extension Schema
101.CAL XBRL Taxonomy Extension Calculation Linkbase
101.DEF XBRL Taxonomy Extension Definition Linkbase
101.LAB XBRL Taxonomy Extension Label Linkbase
101.PRE XBRL Taxonomy Extension Presentation Linkbase
FRP HOLDINGS, INC.
INDEX TO FINANCIAL STATEMENTS
AND FINANCIAL STATEMENT SCHEDULE
(Item 15(a) (1) and 2))
Page
Consolidated Financial Statements:
Consolidated balance sheets at December 31, 2020 and 2019 25 (a)
Consolidated statements of income 23 (a)
Consolidated statements of comprehensive income 24 (a)
Consolidated statements of cash flows 26 (a)
Consolidated statements of shareholders' equity 27 (a)
Notes to consolidated financial statements 28-40 (a)
Reports of Independent Registered Certified Public Accounting Firm 42-43 (a)
Selected quarterly financial data (unaudited) 6-10 (a)
Consent of Independent Registered Certified Public Accounting Firm 25 (b)
Report of Independent Registered Certified Public Accounting Firm
on Financial Statement Schedule 25 (b)